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
Wednesday, May 19, 2010
Saturday, October 17, 2009
Biggest economies try
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.
Wednesday, October 14, 2009
US retail sales fell in September by the largest amount in 2009
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."
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."
Tuesday, July 7, 2009
New York Late Money Rates
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).
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).
Thursday, June 11, 2009
Microsoft Money Plus ....
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.
Monday, April 27, 2009
Money talk at conventions
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.
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.
Wednesday, April 8, 2009
The UK economy could decline for another year and take a further two years to recover
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.
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.
Sunday, March 29, 2009
IBQ: Calls grow for new global currency; Euro drops again
The foreign exchange market remained highly volatile last week with the US Dollar starting weaker across the board to end the week on a stronger footing, driven by plans and announcements from the US Federal Reserve and US Treasury. The Euro dropped to 1.3255 levels after reaching a high of 1.3735. The Sterling Pound ended the week at 1.4320 after trading between the high and low of 1.4778 and 1.4266. The Japanese Yen dropped to 98.80 levels after reaching a high of 95.40. Finally, the Australian Dollar and Swiss Franc range traded between 0.6893 to 0.7093 and 1.1168 to 1.1435, respectively.
Calls for new global currency
Last week, China’s Central Bank proposed replacing the US Dollar as the international reserve currency with a new global system controlled by the International Monetary Fund (IMF), aiming to create a reserve currency that is disconnected from individual nations and is able to remain stable in the long run. China being the largest holder of foreign exchange reserves, around $2tn, of which around 80 percent is estimated to be in US Dollar, might be concerned about the potential inflationary risk of the US Federal Reserve printing money.
Despite the fact that any shift away from the dollar as a reserve currency would have a massive impact on the US markets, Tim Geithner initially said that the US is willing to explore China’s proposal to give a synthetic global currency a larger role in the international financial system. He also said that the future of the US Dollar in the world system would rest on the US government’s ability to overcome the financial crisis. However, he later mentioned that such a move could take years to implement and that dollar will keep its status as the top reserve currency for a long time. The comments had a major impact on the FX market as the US Dollar dropped substantially when the news came out.
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.
Saturday, March 28, 2009
Top Earners in New York
Top Earners in New York ........
Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks .
The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.
Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.
Officials said that Mr. Paterson, who has argued for months that new income taxes should be a last resort in balancing the budget, accepted the plan after winning significant spending cuts in areas like health care and education.
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.
Tuesday, March 24, 2009
The U.S. economy does not survive
Over the American economy's disappearing jobs and plummeting growth, here's mind bender for you: There is no U.S. economy. The national economy, as we traditionally think of it, is a myth. A fake. Over.So contend Bruce Katz, Mark Muro and Jennifer Bradley in the latest issue of the journal "Democracy." The United States is not a single unified economy, they say, nor even a breakdown of 50 state economies. Instead, the country's 100 largest metropolitan regions are the real drivers of economic activity, generating two-thirds of the nation's jobs and three-quarters of its output. The sooner we reorient federal economic policies to support this "MetroNation," the quicker we can fix the mess we're in.
"America can no longer pretend that it is a single economy, nor can it imagine that it is a nation of independent, small towns, punctuated by large but isolated urban centers," the Brookings Institution scholars argue. "It must embrace its metropolitan future."
The authors criticize one-size-fits-all federal rules -- on everything from transportation infrastructure policy to workforce training programs -- that stifle the creativity of metro areas and hamper their ability to tailor growth and development efforts to local needs.
But before trying to rework the relationship between the states and Washington, step one may be rethinking what we should even call these places. The "California" economy is really the "San Francisco-Los Angeles-San Diego-San Jose" economy, with those metro areas making up 72 percent of the state's GDP. And Chicago is not Chicago, but the "Chicago-Naperville-Joliet, IL-IN-WI" region, the authors write, almost apologetically. "Unwieldy as they may be, these bureaucratic handles encode the boundary-jumping, state-spanning, increasingly complex reach of metropolitan life."
Monday, March 23, 2009
A succesful U.S. Treasury plan to rid bank balance sheets of poorly performing assets may be the key to unclogging the arteries of global credit marke
New U.S. bank diagram welcomed by funds and debt markets. U.S. Treasury Secretary Timothy Geithner provided further details of the complex program which could rid U.S. bank balance sheets of up to $1 trillion of bad assets. The highlight of the programs was the generous financing offered by the government to persuade private investors to participate.The Treasury plans to team with investors to buy up to a half-trillion dollars of bad bank assets in hopes of opening up lending again.
An earlier smaller $80 bln plan, known as the Super SIV, failed in October 2007, and the original $700 bln Troubled Assets Relief Program (TARP) failed in late 2008 due to a lack of participation by private investors.
Early market reaction to the U.S. Treasury's latest plan appeared to be more positive on Monday.
"My own view is the plan is a sensible one," Byron Wien, chief investment officer of Pequot Capital Management, told the Reuters Private Equity and Hedge Fund Summit on Monday. "This is a PIMCO, BlackRock sort of thing, where some credit-oriented hedge funds will participate."
The plan is being launched at a time when lawmakers are furious about big bonus payments to executives at bailout recipient American International Group.
In an effort to spur investor participation, U.S. Treasury Secretary Timothy Geithner said private partners in his plan will not face the tough executive pay restrictions that apply to recipients of government bailouts.
GENEROUS INCENTIVES
The main incentive for private investors to participate in the latest U.S. Treasury plan appeared to be generous financing terms to boost the return on the investment.
As well as the initial financing from the Treasury and private investors, the Federal Deposit Insurance Corp (FDIC), a U.S. banking regulator, and the Federal Reserve will be tapped to offer further financing.
Under one part of the plan focused on bad loans, the Treasury will provide up to 80 percent of initial capital alongside investment by private funds. The FDIC would then offer debt financing for up to six times the pooled amount.
In addition, the Treasury will approve up to five investment managers and match their money one-for-one. It will then offer debt financing for 50 percent of the combined capital pool to buy securities banks want to unload.
Two major U.S. money managers, BlackRock and PIMCO, expressed interest in participating in the toxic-assets plan, which could produce big profits.
"From PIMCO's perspective, we are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer," Bill Gross, PIMCO's co-chief investment officer, told Reuters in an interview.
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.
Sunday, March 22, 2009
The Australian share market ended higher Monday amid growing expectations U.S.
Australia Shares End 2.4% Higher on US.The Australian share market ended higher Monday amid growing expectations U.S. Treasury will please investors with details of its plans to rid troubled banks of toxic assets.
The big local banks and miners led the S&P/ASX 200 up 2.4%, or 84.5 points, to 3550.3 despite the Dow Jones Industrial Average falling 1.65% Friday.
U.S. Treasury Secretary Timothy Geithner is expected to reveal a three-pronged program to deal with troubled assets on banks' books later Monday involving a series of public-private investments.
A senior trader at a large investment bank noted that DJIA futures had risen 1.7% in anticipation of Geithner's announcement.
"There are press reports circulating that it's going to be a pretty proactive plan of significant size," the trader said.
There is also mounting speculation that Japan is devising another national stimulus package, the trader said. Asian stocks rose in afternoon trading Monday, with the Nikkei up 2.5% and the Hang Seng up 3.1%.
Australian banking stocks all posted solid gains with Australia & New Zealand Banking Group up 4.8% to A$15.25 and Westpac Banking Corp. up 4.3% to A$18.95.
Market leader BHP Billiton added 3.5% to A$33.32 and rival diversified miner Rio Tinto surged 7.9% to A$50.53.
The senior trader said that in the short-term, there still seems to be momentum behind a recent two-week rebound in global equities. "But what we're finding is more clients would like to see the market consolidate for a while before continuing the recovery," he said. "But in these extraordinary markets, who knows."
Lisa Jarvis, a private client advisor at ABN AMRO Morgans in Sydney, said sentiment remains cautious, with the market still watching for signs of whether the U.S. stimulus and bailout packages are making a significant impact.
Also making news Monday, Oz Minerals requested a trading halt on its shares ahead of an announcement on regulatory approvals relating to the A$2.6 billion takeover offer for the struggling copper, gold and zinc miner by China Minmetals Nonferrous Metals Co.
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.
Wednesday, March 18, 2009
American consumers are at their lowest level of confidence
According to the government report, the CPI rose 0.4% in February, the largest one-month gain since July of last year and to make matters worse, the rate of inflation came on top of a 0.3% increase the prior month.
With lawmakers focusing on the governments economic bailout plan, the price of gasoline was to blame for the largest segment of consumer inflation whereas prior to the presidential election Democrats were grandstanding loudly about manipulation of fuel prices until after their Party won the White House. Now that Dems are in control of Congress its all about spending while taxpayers are put on the line to foot the bill.
Tuesday, energy prices rose as hints of an end to the US recession took hold on the commodity exchange trading floor in New York. If the recession is showing signs of ending, energy price speculation will only inflate the cost consumers pay at the pump and could give rise to even more inflation when the government releases its next Consumer Price Index for March.
Today's CPI report showed that February core consumer prices, which exclude energy and food, rose 0.2%, the same level of inflation when compared to January.
Energy prices rose 3.3% in February, the biggest month-over-month gain since last July when prices jumped 8.3%. But the good news is, when comparing the rate of inflation for energy in February to the year-ago period, consumer prices were down 18.5%. But a year-ago, consumers were still in a spending mood, unaware that a recession was at hand.
The US Department of Labor also indicated in its February CPI report that clothing costs increased 1.3%, the biggest monthly gain in 18 years. Auto prices also rose in February, gaining 0.8%, which was the highest rate of inflation since the Fall of 2004.
In other economic news, producer prices inched up 0.1% in February compared to a 0.8% gain the prior month. The PPI, which tracks the rate of inflation on prices received by farms, factories and refineries, indicates alongside today's consumer inflation rate that economic deflation concerns have decreased.
Deflation would mean an economic downward spiral that could push the US economy into a depression. But in looking back to February of 2008, the government now admits that the US economy was already headed towards a recession. That being the case, a year from now, the Obama administration may come clean in calling the current economy depressed.
The rate of unemployment will continue to remain high and while signs of recovery are around, factory workers at the world's biggest heavy equipment maker, Caterpillar (NYSE: CAT), were told that an additional 2,400 of them were being laid off, 1,700 of those in Illinois where Caterpillar is headquartered.
Thursday, the US Department of Labor will release its weekly initial jobless claims report that is expected to show continuing high levels of unemployment.
While the rate of inflation continues to rise for consumers, job security remains the number one issue in US households.
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.
Tuesday, March 17, 2009
The U.S. mantra of spend, spend, spend is starting to wear thin on the other side of the pond.
Treasury Secretary Timothy Geithner testifies on Capitol Hill Thursday before the Senate Budget Committee.
Europeans Could Balk at Geithner's Call for More Spending.the U.S. calls for more spending to jumpstart the global economy, more Eastern European countries are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups .
European countries appear to be at odds with Treasury Secretary Timothy Geithner's fresh calls to unleash more stimulus money and free up a half-trillion dollars to lend to struggling countries.
It could lead to a tense discussion as Geithner heads to Britain to meet with finance officials from the Group of 20 nations Friday and Saturday. Those meetings come ahead of an April 2 summit of the G-20 in London.
As the U.S. calls for more spending, more Eastern European countries also are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups -- but does the rest of the world have the money to give?
"We're just getting into the worst of the crisis in a global sense," said Ralph Bryant, a senior fellow at the Brookings Institution who specializes in international economic issues. "Many developing countries ... are just beginning to feel the really bad effects."
But European Union leaders recently rejected a request from Hungary for $241 billion in bailout money for the region.
"I think they're on a different page," Bryant said of U.S. and European financial officials. He said the calls by the U.S. for more stimulus money and international aid likely will stir controversy at the upcoming meetings.
Geithner on Wednesday called for a tenfold increase in the size of an emergency fund the IMF uses to help countries in trouble -- to as much as $500 billion. He also endorsed the IMF's call for countries to enact stimulus packages worth, on average, 2 percent of their GDP.
But in a report last week, the IMF said the U.S. was the only one of the world's seven rich industrial nations -- the Group of Seven -- on track to meet that goal.
"I think that the United States has actually taken a significant lead on a number of these steps that are required," President Obama said Wednesday, calling for "concerted action around the global to jumpstart the economy" at the G-20 meeting.
Some European nations are reticent to take on the kind of national debt the United States has been accumulating in recent months. European critics have charged that the United States' demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis. At a meeting this week of finance ministers of the 27-nation European Union, officials said they were doing enough already to support the world economy.
"Recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking," Luxembourg Finance Minister Jean-Claude Juncker was quoted as saying after the meeting.
German Finance Minister Peer Steinbrueck recently said finance ministers from the EU's 27 nations were not pleased at U.S. suggestions that Europe has not done enough to stimulate the global economy.
Germany has been criticized for its reluctance to spend and stimulate its economy, Europe's largest. Their stimulus package was about 1.5 percent of its GDP this fiscal year, according to the IMF report. France's was about half that. (Meanwhile, countries like China and Saudi Arabia met or exceeded the United States' level of stimulus spending.)
However, European nations apparently are preparing to sign on to at least a partial version of the calls by the U.S. for more IMF funding.
The Times of London reported Thursday that the European Union was considering lending between $75 billion and $100 billion to the IMF to boost its lending ability. The Union also reportedly is calling for countries to help double IMF resources from $250 billion to $500 billion.
That $250 billion includes the $50 billion fund that the United States is talking about increasing. Calls to boost the fund have mounted as developing countries hit hard by the global downturn, particularly in Eastern Europe, have so far tapped about $50 billion from the IMF since November.
It's unclear whether European nations will go as far as Geithner is suggesting in helping the IMF, however. Bryant said a number of European countries favor raising some of the money from powerhouses like China, rather than shouldering so much of the cost.
The IMF reacted favorably to Geithner's announcement.
"We welcome the proposal from the U.S. Treasury. It's a very positive step toward assuring the global financial system that the IMF has the appropriate level of resources to meet the needs of its members," IMF spokesman William Murray said. He said the IMF is "optimistic" it can at least double its resources in the way the EU is suggesting.
Japan already has committed to lending an additional $100 billion.
Obama and Geithner kept high hopes about the upcoming meetings.
"I'm actually optimistic about the prospects," Obama said Wednesday, citing recent meetings he had with British Prime Minister Gordon Brown and Japanese Prime Minister Taro Aso.
"Everybody understands that we're in this together. I think the G-20 countries are going to be seeking a lot of cooperation."
Geithner said he would seek to build a "new consensus" in London on how to establish a "substantial and sustained program of support for recovery and growth."
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."
Monday, March 16, 2009
Switzerland is relaxing key bank secrecy laws
UK Prime Minister Gordon Brown yesterday hailed announcement that Switzerland is relaxing key bank secrecy laws .Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones.
The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April.
As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.
The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens.
UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."
Sunday, March 15, 2009
UBS bank plans to cut up to 5,000 senior and management jobs
Switzerland's biggest bank UBS cutting 5,000 senior and management jobs in the next few weeks.
2,500 management positions could go in UBS's dominant and profitable wealth management division, which accounts for 50,000 of the bank's total 77,000 staff.
A UBS spokesman declined to comment on the report.
Last week UBS said it was restructuring its Swiss business structure into four regions from eight, and trimming its top management. But it said the changes did not mean any more job cuts than the 600-800 positions it already plans to cut in Switzerland as part of thousands of job losses globally.
In February UBS said after announcing a record loss it would cut 2,000 jobs to take staff to about 75,000 by the middle of this year.
UBS is struggling to rebuild its once powerful brand and focus on its core Swiss business after massive investments in risky U.S. assets forced it to make more writedowns than any other European bank and accept government backing.
Saturday, March 14, 2009
The San Francisco Chronicle's largest employees' union has approved a tentative labor agreement
Chronicle union agrees to agreement concessions.SF record workers agree cost-cutting actions.Union members passed the agreement Saturday by a 10-1 margin, said Chronicle reporter Michael Cabanatuan, president of the Northern California Media Workers Guild. The union represents about 500 editorial, advertising and circulation workers.
The concessions include less vacation time and longer work weeks for the same wage.
"As I've mentioned before, this agreement is critical to ensuring the survival of The Chronicle," said Frank Vega, the paper's chairman and publisher, in an internal memo to employees. "I appreciate the willingness of our employees to work with us to make the difficult decisions that need to be made during these difficult times."
The Chronicle's owner, Hearst Corp., has warned that it would be forced to sell or close the paper if expenses were not reduced quickly. The company reported that The Chronicle lost more than $50 million in 2008 and was expected to lose even more than that this year.
The union is bracing for the paper to cut about 150 guild-covered jobs, Cabanatuan said. The newspaper's management had threatened to lay off 225.
The agreement approved Saturday also includes a better severance package for employees who are laid off or accept buyouts than was previously offered. They will receive two weeks of pay per year of service — not to exceed one year's salary — and health benefits for the length of the severance package.
Even with a tentative agreement approved, there remains another key hurdle: getting similar concessions from the International Brotherhood of Teamsters Local 853, which represents about 420 other employees.
Frank J. Vega, chairman and publisher of The Chronicle, said in a statement earlier this week that an agreement with the Teamsters is needed "to ensure the newspaper's survival."
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