Screen Survivors

European markets steady after ECB rate cut (AP) AP - European stock markets recouped some earlier losses Thursday after the European Central Bank cut interest rates again and ahead of an expected solid opening on Wall Street. Asian markets fell sharply earlier as investors played catch-up. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 2:31 pm US producer prices continue to slide US wholesale prices fell for the fifth consecutive month in December on waning demand for raw materials Source: Financial Times - US homepage | 15 Jan 2009 | 2:28 pm Apple co-founder Steve Jobs to take medical leave of absence In a move that shocked the technology sector and sent Apple shares careening, Chief Executive Steve Jobs says he taking a medical leave of absence until the end of June. Tim Cook, chief operating officer, will fill in for Jobs as he battles an unspecified health problem. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:28 pm Rio Tinto to close smelter and cut 500 jobs Rio Tinto is to shut down its Anglesey aluminium smelter with the possible loss of 500 jobs as part of a wider reduction in production capacity. Source: Latest Business News from Times Online | 15 Jan 2009 | 2:26 pm Steve Jobs on leave Apple Inc. CEO Steve Jobs said Wednesday he will take a leave of absence from the computer and music player maker because of health issues. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 2:24 pm Warning: Falling price zone ahead Rarely has the potential for lower prices been so scary. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 2:24 pm FTSE 100 down 12.74 at 4,167.90 (AP) AP - Share prices on the London Stock Exchange were lower at midday Thursday. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 2:23 pm Stock futures point to flat open (AP) AP - Stock futures pointed to a flat open Thursday, as investors took in stride a pair of weak readings on the economy and a discouraging outlook from JPMorgan Chase & Co. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 2:23 pm BofA worry and Apple to offset JPMorgan at open (Reuters) Reuters - Stocks were set to open little changed on Thursday as reassuring quarterly results from JPMorgan Chase were offset by worries stemming from news of a push by Bank of America for more government aid. Source: Yahoo! News: Business | 15 Jan 2009 | 2:22 pm BofA worry and Apple to offset JPMorgan at open NEW YORK (Reuters) - Stocks were set to open little changed on Thursday as reassuring quarterly results from JPMorgan Chase were offset by worries stemming from news of a push by Bank of America for more government aid. Source: Reuters: Business News | 15 Jan 2009 | 2:22 pm BofA worry and Apple to offset JPMorgan at open (Reuters) Reuters - Stocks were set to open little changed on Thursday as reassuring quarterly results from JPMorgan Chase were offset by worries stemming from news of a push by Bank of America for more government aid. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 2:22 pm Economic data fuel gloom on Wall Street Wall Street stocks were set to extend recent losses after the latest bleak economic data threatened to offset better-than-expected results from JPMorgan. Source: Financial Times - US homepage | 15 Jan 2009 | 2:22 pm IRS expands free online filing program (AP) AP - Want a quick tax refund? File your federal tax returns electronically. Source: Yahoo! News: Business | 15 Jan 2009 | 2:22 pm Sentry(R)Safe Introduces a Record Twenty-Four Innovative Gun Safe Models at SHOT 2009 - SentrySafe Continues to Provide Quality Gun Protection and Storage Options at Affordable Prices - ORLANDO, Fla., Jan. 15 /PRNewswire/ --... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:18 pm Boardwalk REIT announces January monthly distribution CALGARY, Jan. 15 /PRNewswire-FirstCall/ - Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX) has declared its January 2009 distribution in the amount of 15.00... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:17 pm KeyBanc Lowers Estimates and Price Targets On Payment Processors MasterCard (MA) and Visa (V) KeyBanc is lowering estimates and price targets for payment processors, including MasterCard (NYSE: MA) and Visa (NYSE: V). The firm said they are taking a far more cautious approach than the Street and are reducing volume and transaction assumptions virtually across the board. Read more... Source: 24/7 Wall St. | 15 Jan 2009 | 2:16 pm Wholesale prices fall for 5th straight month Wholesale prices fell in December for the fifth month in a row, according to a key government inflation report released Thursday. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 2:16 pm JPMorgan profit slumps on writedowns NEW YORK (Reuters) - JPMorgan Chase & Co's fourth-quarter profit plunged 76 percent as it wrote down bad loans, signaling that even the bank that has avoided the worst of the credit crunch is struggling with the recession. Source: Reuters: Business News | 15 Jan 2009 | 2:16 pm JPMorgan profit slumps on writedowns (Reuters) Reuters - JPMorgan Chase & Co's fourth-quarter profit plunged 76 percent as it wrote down bad loans, signaling that even the bank that has avoided the worst of the credit crunch is struggling with the recession. Source: Yahoo! News: Business | 15 Jan 2009 | 2:16 pm Jobless claims rebound, inflation muted (Reuters) Reuters - The number of workers filing new claims for unemployment aid rebounded last week after a brief slowdown, data showed on Thursday, as employers slashed jobs to cope with a worsening economic downturn. Source: Yahoo! News: Business | 15 Jan 2009 | 2:13 pm Jobless claims rebound, inflation muted WASHINGTON (Reuters) - The number of workers filing new claims for unemployment aid rebounded last week after a brief slowdown, data showed on Thursday, as employers slashed jobs to cope with a worsening economic downturn. Source: Reuters: Business News | 15 Jan 2009 | 2:13 pm Dems unveil $825 billion stimulus measure House Democrats are circulating an $825 billion economic stimulus measure that emphasizes health care, education and highway construction as well as tax cuts for individuals and businesses. Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:13 pm Wall Street headed for mixed open U.S. stocks were set for a mixed open lower Thursday, on a plethora of corporate and economic information. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 2:12 pm Ronex Holdings Commences Cash Tender Offer for Retalix TEL AVIV, Israel, January 15 /PRNewswire-FirstCall/ -- Ronex Holdings, Limited Partnership ("Ronex"), an Israeli limited partnership wholly-owned by the FIMI... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:12 pm UBS, HSBC reportedly may be liable for $3.2 bln Madoff losses European banking giants UBS and HSBC may be liable for around $3.2 billion of losses from the Bernard Madoff scandal due to their role as custodians of funds in Ireland and Luxembourg, according to a report. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:11 pm Sarkozy asks French banks to suspend bonuses French President Nicolas Sarkozy on Thursday asked French banks to suspend bonuses for top executives for 2008. Sarkozy announced a euro360 billion bailout package for French financial... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:10 pm Autodesk to miss earnings target, cut 750 jobs Autodesk lowers its fourth-quarter forecast, plans to cut about 10% of its workforce and says it's spinning off a business, as it moves to lower its expenses in a tough economy. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:09 pm Economic Report: U.S. PPI falls for fifth straight month as energy, food drop December's rate of inflation at the wholesale level falls for the fifth consecutive month, Labor Department data show. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:09 pm New jobless claims up more than expected WASHINGTON (Reuters) - The number of workers filing new claims for unemployment benefits rebounded last week after a brief holiday-induced slowdown, government data showed on Thursday, suggesting that the year-long recession was deepening. Source: Reuters: Business News | 15 Jan 2009 | 2:08 pm India names 3 more to board of Satyam after fraud Indian authorities named three more business leaders to the board of embattled outsourcing giant Satyam Services Ltd. on Thursday in an attempt to help the company recover from a massive... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:07 pm Metals Stocks: Gold rises after hitting five-week low Gold futures rose for the first time in four sessions, as investors bought the metal after it hit a five-week low in the previous day. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:07 pm Government apologises over Equitable Life failure The Government formally apologised today to more than a million Equitable Life policyholders for a decade of regulatory failures that helped to wipe out a slice of their life savings when Europe's largest mutual almost collapsed. Source: Latest Business News from Times Online | 15 Jan 2009 | 2:06 pm Brown and Merkel vow to renew relations with US British prime minister Gordon Brown and German chancellor Angela Merkel pledged to renew relations with the US in order to support the global economy and restore trust in financial markets Source: Financial Times - US homepage | 15 Jan 2009 | 2:06 pm Stock futures point to flat open Stock futures pointed to a flat open Thursday, as investors took in stride a pair of weak readings on the economy and a discouraging outlook from JPMorgan Chase & Co. The Labor... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:05 pm Futures Movers: Oil falls after data shows rise in jobless claims Oil futures fall below $37 a barrel, as a rise in jobless claims and a build in crude inventories weighed on investor sentiment. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:05 pm Eli Lilly to pay $1.42 billion to resolve Zyprexa probes BOSTON (Reuters) - Eli Lilly and Co said on Thursday it will pay about $1.42 billion to settle criminal and civil investigations into the marketing of its antipsychotic drug Zyprexa and has agreed to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act. Source: Reuters: Business News | 15 Jan 2009 | 2:03 pm Insurer UnitedHealth to pay $350M for settlement Managed-care company UnitedHealth Group says it will pay $350 million to settle a class-action lawsuit over reimbursement for out-of-network medical claims. The agreement resolves a case Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:03 pm Bond Report: Treasurys steady after jobless claims, price data Treasurys were little changed after the Labor Department said initial claims for unemployment benefits rose and wholesales prices declined. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:03 pm JPMorgan Chase posts surprise profit JPMorgan Chase reported a profit for the quarter Thursday, even though the company took a hit in its investment banking business and set aside a chunk of cash for looming loan losses. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 2:01 pm Earnings Watch: Updates, advisories and surprises A roundup of the latest corporate earnings reports and what companies are saying about future quarters. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:01 pm NewsWatch: U.S. futures flat-to-weak on Apple, economy worries U.S. stock futures trade lower as worries about the health of Apple CEO Steve Jobs spells pressure in the tech sector, while results at J.P. Morgan Chase weren't enough to restore faith in the financial sector. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 2:00 pm Raytheon Awarded $12.2 Million Miniature Air Launched Decoy-Jammer Study Contract TUCSON, Ariz., Jan. 15, 2009 /PRNewswire/ -- The U.S. Air Force awarded Raytheon Company (NYSE: RTN) a $12.2 million contract to study the feasibility of increasing power and... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:00 pm Lean Budgets Don't Impede Creativity, Say Most Advertising and Marketing Execs MENLO PARK, Calif., Jan. 15 /PRNewswire/ -- When the going gets tough, the tough get more creative, a new survey suggests. Forty percent of marketing and advertising... Source: RSS feed - channel BNewsBusiness | 15 Jan 2009 | 2:00 pm Associated British Foods reports revenue rise (AP) AP - Associated British Foods PLC on Thursday reported a 21 percent rise in revenue in late 2008 from the same period last year, citing strong sales from retailer Primark. Source: Yahoo! News: Business | 15 Jan 2009 | 1:57 pm Nortel UK enters administration The UK arm of telephone equipment maker Nortel goes into administration, after its US parent filed for bankruptcy protection. Source: BBC News | Business | World Edition | 15 Jan 2009 | 1:54 pm Eurozone interest rates cut to 2% The European Central Bank (ECB) cuts eurozone interest rates to 2% as it continues efforts to aid an economic recovery. Source: BBC News | Business | World Edition | 15 Jan 2009 | 1:53 pm Microsoft mulls job cuts: report SAN FRANCISCO (Reuters) - Microsoft Corp is considering significant layoffs across its various divisions, The Wall Street Journal reported on Wednesday, citing people familiar with the company's plans. Source: Reuters: Business News | 15 Jan 2009 | 1:53 pm European car sales drop the most in 15 years Last year was the worst for European car sales in 15 years, with 2008 sales falling by 8%, a trade group says. Source: MarketWatch.com - Top Stories | 15 Jan 2009 | 1:52 pm New jobless claims up more than expected (Reuters) Reuters - The number of workers filing new claims for unemployment benefits rebounded last week after a brief holiday-induced slowdown, government data showed on Thursday, suggesting that the year-long recession was deepening. Source: Yahoo! News: Business | 15 Jan 2009 | 1:48 pm Economic Data Shows Recovery More Than Elusive This morning we had several key pieces of economic data in weekly jobless claims and in the ever-important reading of wholesale inflation measured via the producer price index.  Interestingly enough, the NY Fed manufacturing data showed an improvement.  Or at least it was less-bad. PPI came out at -1.9% for December on the headline, and the core reading on an ex-food and ex-energy basis showed a reading of +0.2%. Both were in-line with expectations.  PPI was expected at -2.0% on the headline and -0.1% on the core reading. The weekly jobless claims also came out showing that 524,000 filed for benefits, up 54,000 from last week.   Economists were looking for roughly 500,000 after two straight reports of the under-500K reports. What is interesting is that the continuing jobless claims actually fell by 115,000 to 4.497 million. The Empire Manufacturing index for January came in at -22.81, which is better than the -27.88 seen in December.  New orders continued near record lows and shipments and employment continued to weaken. Manufacturers in the NY FED district also predicted that they would see a workforce decline of 2.4% on average in the upcoming year. What is becoming evident is that regardless of the economic data, the hopes of a V-Recovery in the economy are at least seeming like the chances are dropping each day or each week.  The recession is real, even by the government's own admission now, and some are calling for things to get far worse than 95% of our population has ever seen in our lifetimes here in the U.S. Jon C. Ogg January 15, 2009 Source: 24/7 Wall St. | 15 Jan 2009 | 1:43 pm Foreclosures up a record 81% in 2008 U.S. foreclosure filings spiked by more than 81% in 2008, a record, according to a report released Thursday, and they're up 225% compared with 2006. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 1:43 pm Jobless claims surge The number of Americans filing for first-time unemployment benefits rose more than expected to 524,000, breaking the half-million mark for the first time in 2009, according to a government report released Thursday. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 1:41 pm Obama's SEC pick to face reform-minded Congress (Reuters) Reuters - President-elect Barack Obama's choice to lead the U.S. Securities and Exchange Commission will be grilled Thursday on how she intends to overhaul an agency widely blamed for failing to help prevent the biggest financial crisis in decades. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 1:34 pm Steve Jobs takes medical leave SAN FRANCISCO (Reuters) - Apple chief and tech visionary Steve Jobs will take a leave of absence till end-June because of health problems "more complex" than thought, backtracking on reassurances, stunning investors and sending its shares skidding 10 percent on Wednesday. Source: Reuters: Business News | 15 Jan 2009 | 1:28 pm Government Solutions Are Slowing the Economy By John Tamny  RealClearMarkets A recent newspaper headline asked a question that's presently on the minds of many Americans: "How long will the economic plunge go on?" Depending on the person answering the question, one might among other things hear "when taxes are reduced" or "when housing recovers." Both answers are surely appealing, but then it's also true that the U.S. economy has boomed with tax rates much higher than those at present, not to mention that even in its weakened state, prices today point to a housing market better than the one Americans experienced when this decade began. Perhaps a better question to ask might be what the federal government is doing right now to make the economy worse, or what the government could stop doing so that the economy starts growing again. In this case, the answers to our present economic difficulties are many. Read more... Source: 24/7 Wall St. | 15 Jan 2009 | 1:28 pm ECB cuts rates by 50 points to 2% Eurozone interest rates have been cut by a half percentage point to a three-year low amid rising alarm about Europe's economic downturn Source: Financial Times - US homepage | 15 Jan 2009 | 1:24 pm Primark and Mothercare defy high street gloom Primark, the discount fashion chain, and Mothercare, the baby and children's retailer, today emerged as the big winners from an otherwise gloomy Christmas trading season on the high street, with both businesses recording strong festive sales. Source: Latest Business News from Times Online | 15 Jan 2009 | 1:18 pm New team to tackle Nigeria crisis Nigeria's President Umaru Yar'Adua sets up a team of economic advisors, as he warns of a looming financial crisis. Source: BBC News | Business | World Edition | 15 Jan 2009 | 1:17 pm Europe cuts interest rate to 2 per cent The European Central Bank (ECB) spurned calls today for a drastic cut in interest rates despite a deepening slump in the eurozone economy, ordering only a modest half-point reduction. Source: Latest Business News from Times Online | 15 Jan 2009 | 1:10 pm Societe Generale Analyst Calls For Depression The French has turned to a trait which has been uncommon in the European country. One of the most well-regarded analysts at Societe Generale says that it is time for the US to gird for a depression. The notion that the economy might recover is useless. According to Reuters, Albert Edwards believes that  While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere." That "elsewhere" would be China. "It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression." Douglas A. McIntyre Source: 24/7 Wall St. | 15 Jan 2009 | 12:59 pm Eli Lilly in $1.4B Zyprexa settlement Read full story for latest details. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 12:59 pm Opening Bell: 01.15.09 Dimon Not A Fan Of 2009 (FT) You can listen to the J.P. Morgan webcast (requires registration) at 7:45. Some highlights from the 4Q Earnings Release: * $2.4B Loss in IB * In Card Services, "Net interest income was $4.3 billion, up $1.2 billion, or 38%, from the prior year, driven by the impact of the Washington Mutual transaction, higher average managed loan balances, and wider loan spreads." * Retail banking reported a Net Income of $1.0B, up 85% * "Checking accounts totaled 24.5 million, including 12.6 million attributable to the Washington Mutual transaction, an increase of 13.7 million, or 126%." * "Average total deposits grew to $339.8 billion, including $126.3 billion attributable to the Washington Mutual transaction, an increase of $131.4 billion, or 63%." * "Average mortgage loans were $150.0 billion, up $105.5 billion, or 237%, due to the Washington Mutual transaction. Mortgage loan originations were $28.1 billion, down 30% from the prior year and down 25% from the prior quarter." * "Total third-party mortgage loans serviced were $1.2 trillion, an increase of $557.9 billion, or 91%, predominantly due to the Washington Mutual transaction." * Commercial banking showed a Net Income of $480MM. * AUM $1.1T * AM 4Q Net Revenue $1.66B, Net Income $255MM * Corporate/PE Net Income was $1.545B * "The Private Equity portfolio totaled $6.9 billion, compared with $7.2 billion in the prior year and $7.5 billion in the prior quarter. The portfolio represented 5.8% of total stockholders' equity less goodwill, down from 9.2% in the prior year and 7.5% in the prior quarter." Full supplement. Also of note: J.P. Morgan's numbers officially put Citi into "Bitch Bank" status. Perhaps you should consider adopting some rules from the Peruvian legal system into your atmosphere Mr. Pandit. ECB Lowers Rate 50bps (Bloomberg) Move along, move along: nothing to see here. Lehman's Cash Position Improving, Despite Bankruptcy (WSJ) This would be funny if it didn't still hurt: "Lehman Brothers Holdings Inc. and numerous U.S. affiliates have increased their cash balance to about $6 billion since falling into bankruptcy protection in September, when the companies had $3.3 billion, according to Lehman advisers." Chavez Reopens Oil Bids To The Evil West (NYT) "[F]aced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks -- including Chevron, Royal Dutch/Shell and Total of France -- promising them access to some of the world's largest petroleum reserves, according to energy executives and industry consultants here." ICE Emerging In Bid For CDS Clearinghouse (Bloomberg) "Analysts at Morgan Stanley and CreditSights Inc. said this week that Atlanta-based Intercontinental, also known as ICE, will likely be the industry choice to back the contracts because of its partnership with Goldman Sachs Group Inc.,JPMorgan Chase & Co. and seven other banks that account for over 80 percent of the trading. A clearinghouse may earn as much as $400 million in annual revenue, according to Keefe Bruyette & Woods Inc." ICE's biggest competition in the bid for CDS supremacy was the CME. Source: Dealbreaker | 15 Jan 2009 | 12:45 pm Top Pre-Market Analyst Upgrades (ABC, DLTR, ECL, MOT, PRSP) These are some of the top pre-market analyst upgrades we have seen this Thursday morning with more than two hours until the market opens: AmerisourceBergen (ABC) Raised to Outperform at Oppenheimer. Dollar Tree (DLTR) Raised to Neutral at Goldman Sachs. Ecolab (ECL) Raised to Outperform at Baird. Motorola (MOT) Raised to Overweight at JPMorgan. Prosperity Bancshares (PRSP) Raised to Buy at SunTrust. Jon C. Ogg January 15, 2009 Source: 24/7 Wall St. | 15 Jan 2009 | 12:42 pm Top Pre-Market Analyst Downgrades (AEG, AAPL, BHP, CSIQ, CWST, JASO, MTB, NT, RRGB, STP, TRMB, WMI) These are some of the top pre-market analyst downgrades we have seen this Thursday morning with more than two hours until the market opens: Aegon (AEG) Cut to Sell at UBS. Apple (AAPL) Cut to Underperform at RBC. BHP Billiton (BHP) Cut to Neutral at Credit Suisse. Canadian Solar (CSIQ) Cut to Neutral at Broadpoint AmTech. Casella Waste Systems (CWST) Cut to Neutral at JPMorgan. JA Solar (JASO) Cut to Neutral at Broadpoint AmTech. M&T Bank (MTB) Started as Underperform at FBR. Nortel (NT) Cut to Underperform at CIBC. Red Robin Gourmet (RRGB) Cut to Neutral at Piper Jaffray. Suntech Power (STP) Cut to Neutral at Broadpoint AmTech. Trimble Navigation (TRMB) Cut to Underweight at JPMorgan. Waste Management (WMI) Cut to Neutral at JPMorgan. Jon C. Ogg January 15, 2009 Source: 24/7 Wall St. | 15 Jan 2009 | 12:39 pm JPMorgan beats forecast despite profit fall JPMorgan Chase, which last year rescued rival Bear Stearns, today surprised investors by reporting a $5.6 billion profit during the fourth quarther but warned that economics conditions were likely to worsen even further.$ Source: Latest Business News from Times Online | 15 Jan 2009 | 12:39 pm Google laying off 100 Read full story for latest details. Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 12:36 pm Airbus takes top planemaking spot European planemaker Airbus outstrips rival Boeing on plane deliveries and orders in 2008 after the US firm was hit by a strike. Source: BBC News | Business | World Edition | 15 Jan 2009 | 12:34 pm JPMorgan profit falls 76% JP Morgan Chase reported fourth quarter profits of $702m, or 7 cents a share, beating analysts' expectations that it would break even or suffer a slight loss Source: Financial Times - US homepage | 15 Jan 2009 | 12:18 pm Airbus forecasts 'very challenging' year Net new orders fell 42% last year from record levels in 2007, but the European group re-established its clear lead in the global commercial aircraft industry, beating Boeing in terms of both orders and deliveries Source: Financial Times - US homepage | 15 Jan 2009 | 12:13 pm Satyam shares plunge by a third Shares of fraud-hit Satyam Computers in India slump by a third after a board member rules out accepting government money. Source: BBC News | Business | World Edition | 15 Jan 2009 | 12:11 pm Help! My company cut my 401(k) match Question: My company has suspended matching contributions in my 401(k). I'm unsure what to do, but I'm thinking of rolling my 401(k) into an IRA account. Is that a good idea? --Brian, Taylor, Michigan Source: Business and financial news - CNNMoney.com | 15 Jan 2009 | 12:05 pm World stocks slide as New Year optimism fades (AFP) AFP - Asian and European stocks fell sharply on Thursday, with Tokyo slumping almost five percent to a one-month low, following another deluge of grim economic and corporate news. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 12:04 pm Medical leave for Apple boss Jobs Apple chief Steve Jobs is taking leave until the end of June, saying his health issues were more complex than he thought. Source: BBC News | Business | World Edition | 15 Jan 2009 | 11:58 am JP Morgan (JPM) Holds The Line For The Banking Industry, Again Analysts have been concerned that JP Morgan (JPM), considered the most successful of the large US banks, might miss its numbers and turn in a loss The financial firm held the line and left some hope that the entire industry may not fall into another chaotic and destructive round of losses and government rescues. Citigroup (C) and Bank of America (BAC) has already said their most recent quarters were tough and  they may need more outside capital. By contrast, JP Morgan made money and matched Wall St. analyst estimates. The bank reported fourth-quarter 2008 net income of $702 million, compared with net income of $3.0 billion in the fourth quarter of 2007. Earnings per share were $0.07, compared with $0.86 in the fourth quarter of 2007. Jamie Dimon, JPM''s CEO said that some of his firm's businesses did have a hard quarter. These included leveraged loans, derivatives and trading. But, he added "the integration of our recently-acquired Washington Mutual franchise has progressed well, and we continued to grow in Treasury & Securities Services and Commercial Banking. We also opened millions of new checking and credit card accounts, experienced net inflows in assets under management, and gained Investment Banking market share in all major fee categories." Between the lines, Dimon was saying that a bank built well by M&A transactions, even in a difficult period, can prosper, at least compared to the competition. By contrast to what has happened at Bank of America and Citigroup, it was a message that management count. The financial supermarket concept is not dead. It was just ruined for a time by people who did not know what they were doing. Douglas A. McIntyre Source: 24/7 Wall St. | 15 Jan 2009 | 11:50 am EU to attend gas summit in Moscow EU officials plan to join Russia and Ukraine in Moscow talks to resolve the crisis that has shut down Russian gas supplies. Source: BBC News | Business | World Edition | 15 Jan 2009 | 11:41 am UBS ordered to return Madoff-related funds A Luxembourg judge has ordered UBS's unit there to hand over €30m that French investment house Oddo et Cie has been trying to withdraw from a fund that had invested with Bernard Madoff, the US financier charged with running a $50bn fraud scheme Source: Financial Times - US homepage | 15 Jan 2009 | 11:31 am Sales Of The PC, The Automobile Of The 21st Century, Fall On Hard Times During the last half of the 20th Century every family wanted to have a car, and most bought one.. In many cases they got two or three. The automobile was a status symbol, and a symbol of freedom, that was more than matched by its utility. Some time around the 1970s, the car business had its first unimaginable crisis due to big cars and expensive gas. Since those car companies didn't learn anything from that experience, there have been episodic auto sector crises since then. And the whole world knows now what this inability to learn from their mistakes has done to the car companies. In the 1990s, the PC started to become a part of most American homes, and businesses. It was remarkably useful and it was a source of endless amusement and another kind of freedom, the freedom to communicate 24/7.. In addition, the PC was a relatively safe way to occupy the under-aged. Video game sales ignited on the PC before the game console was commonplace. PC sales have started to fall year-over-year due the bad economy and the resulting change in the spending patterns of most of the population. According to the AP, "Global shipments of personal computers posted their first quarterly decline in six years during the last three months of 2008." As might be expected, sales in the US fell more sharply than most anywhere else, down 3.5%. But, a huge number of American homes have more than one PC. The need to replace them is falling as the greater processing power makes it unnecessary for new machines to be purchased as frequently. And, to top that off, people do not want to spend $1,000 when money is tight. The question about the PC market is whether it will ever completely recover. Cheap and functional cars have been in vogue for several years. PC consumers are moving to relatively inexpensive netbooks and smartphones. The margins on a $300 netbook don't match those of a $1.500 laptop with a dual processor and special video chip. The best years of being in the PC business may be over. Douglas A. McIntyre Source: 24/7 Wall St. | 15 Jan 2009 | 11:31 am The Ominous Sign Of Laying Off People At Profitable Companies (DELL)(MSFT)(GOOG)(MOT) Motorola (MOT) will lay off 4,000 more people this year. In the fourth quarter, it sold only half as many handsets as it did in the same quarter a year ago. The decision makes sense even if it is gutting the company. Motorola may not be able to stay in business beyond the middle of the year. The other news about jobs cuts in the last day is that many are happening at companies which are profitable, and, in some cases, remarkably successful. Dell (DELL) may take out more people according to industry rumors. It is certainly making staff take forced vacations. Dell does make money and has a healthy balance sheet, but recent industry figures show it lost a great deal of market share in the last quarter of 2008. Google (GOOG), which, by some measure is the most successful technology company in the world, laid off 100 recruiters. That may not seem like many people, but when the HR departments begins to disappear, so does the hiring. Most media reports say that Google is quietly cutting staff and leaving office space it rented only a year ago. The most stunning report about job cuts is that Microsoft (MSFT) may prune several thousand people. According to The Wall Street Journal, "the Redmond, Wash., giant is considering layoffs across its various divisions, a rare occurrence for the world's largest software company". There are only a handful of companies in the world with Microsoft's cash balance and the ability of its operations to add to that significantly every quarter. In a recession, it is expected that firms which are on the ropes will make large cuts. It is less frequent when extremely successful companies start to throw people out. It is a sign that, even with all of their financial strengths, they see the recession extending long and deep. Cuts by healthy companies may be a much better leading economic indicator that layoffs at firms which may not make it at all. Douglas A. McIntyre Source: 24/7 Wall St. | 15 Jan 2009 | 11:13 am Bank Of America (BAC) And The Incredible Disappearing TARP Congress is fighting with both the administration that is leaving and the one that is coming  about what should happen to the $350 billion left in the TARP. Most legislators do not seem to be happy about how Treasury Secretary Henry Paulson spent the first $350 billion. Too much of it got invested in banks and car companies. Not enough went to help mortgage holders. Whether it is practical to help people with troubled home loans one-by-one may be beside the point. The fight over the TARP will be vicious. Saying that taxpayers will get their money back by saving the housing market probably creates good will politically. The TARP may simply disappear before the debate about how it should be used is over. Bank of America (BAC) is negotiating with the government for billions and billions of dollars to close its acquisition of Merrill Lynch. That was not how it was supposed to work. BAC was supposed to have had the balance sheet to afford both Merrill and Countrywide. Sitting on the government's side of the table in the talks with Bank of America are officials from Treasury, the Fed, and the FDIC. The deposit insurance agency does not have the capital to bail out a lot of big banks. It has to worry about work-outs for smaller ones that are failing. The Fed is willing to lend big banks money for a short term. It is not likely to get into the business of trading cash for equity. The Treasury has already been through a round of throwing money at financial firms in exchange for equity and the possible right of making sure bank executives get the salaries they deserve rather than the ones their boards give them. Once Congress does go along with letting Obama's Treasury Secretary have access to the $350 billion still left from the money that was allocated for the TARP, a great deal of it may be going right back out to banks. The forecast now is that Citigroup (C) could lose $10 billion this quarter. A look at what is happening to consumer credit, LBOs, and the alarming increase in corporate bankruptcies means that Citi may need more than one injection of capital this year. The same holds true for Bank of America and a number of other financial firms which have not yet telegraphed their Q4 numbers. The fight over the use of the TARP funds may be academic. The money has already been spent. Douglas A. McIntyre Source: 24/7 Wall St. | 15 Jan 2009 | 10:55 am Mortgage lending dives 60% to record low Lenders implored the Government today to do more to stop the mortgage drought from worsening even further after the number of new home loans granted in November plunged by 60 per cent to a new low. Source: Latest Business News from Times Online | 15 Jan 2009 | 10:48 am HK index falls 3.4 pct as HSBC plumbs decade low (AP) AP - Hong Kong's main stock index fell over 3 percent Thursday amid a regional sell-off, with heavyweight lender HSBC tumbling to its lowest level in nearly a decade. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 10:39 am Euro inflation hits 26-month low Eurozone inflation fell to a 26-month low in December, raising expectations that eurozone interest rates will be cut later. Source: BBC News | Business | World Edition | 15 Jan 2009 | 10:36 am Why Not Us? Military Contractors Won't Get Stimulated I thought EVERYBODY was getting a piece of the financial stimulus. (even us). Well, according to Congressional Quarterly, defense contractors are not so lucky. To be sure, some defense companies had sought to obtain weapons funding in the stimulus bill, particularly after the Obama transition team asked military acquisition offices for information on projects that might create jobs, said lobbyists who requested anonymity. "In December, defense lobbyists went nuts," one said. But it became clear that weapons projects were not what the Obama team was looking for, they said. And justifying such spending was difficult after the increases of recent years. ... the Aerospace Industries Association has spent nearly $2 million on ads to convince decision makers that the defense sector plays an important role in the economy. The group is under no illusions that the rate of growth in defense spending since the Sept. 11, 2001, terrorist attacks can be sustained, but it hopes to limit the cutbacks. » E-Mail This     » Add to Del.icio.us Source: NPR Blogs: Planet Money | 15 Jan 2009 | 10:30 am Eurotunnel sees fall in revenues Channel Tunnel operator Eurotunnel sees three-month revenues fall 24%, partly due to the impact of September's fire. Source: BBC News | Business | World Edition | 15 Jan 2009 | 10:11 am Sales slide at Currys and Argos Sales at several of Britain's top High Street retailers fall markedly as a result of the economic slowdown. Source: BBC News | Business | World Edition | 15 Jan 2009 | 9:56 am Bank of America in talks for more bailout funds WASHINGTON/NEW YORK (Reuters) - Bank of America, the largest U.S. bank, is close to getting billions of dollars more in federal support from taxpayers, a person familiar with the matter said on Wednesday. Source: Reuters: Business News | 15 Jan 2009 | 9:56 am London stock market opens down (AFP) AFP - London's stock market was down on Thursday after slumping the day before on poor US economic data and mounting worries about the banking sector. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 8:42 am MUFG warns of $3.2bn share trading loss The relentless slide of Japanese stock prices took a further toll on Mitsubishi UFJ Financial Group, which said it would book a $3.2bn securities loss in the third quarter Source: Financial Times - US homepage | 15 Jan 2009 | 8:39 am Delta eyes 2,000 job cuts via early retirement TOKYO (Reuters) - Delta Air Lines Inc, which took over rival Northwest Airlines last year, said it expects about 2,000 staff to opt for an early retirement program as it aims to trim capacity as much as 8 percent this year. Source: Reuters: Business News | 15 Jan 2009 | 8:38 am China shares mixed amid global sell-off (AP) AP - Chinese shares were mixed Thursday, with developers up on a government report of stronger bank lending and auto stocks down despite a new tax cut aimed at boosting sales. Source: Yahoo! News: Business | 15 Jan 2009 | 8:30 am China shares mixed amid global sell-off (AP) AP - Chinese shares were mixed Thursday, with developers up on a government report of stronger bank lending and auto stocks down despite a new tax cut aimed at boosting sales. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 8:30 am Yahoo CEO says instinct to keep search business: report (Reuters) - Yahoo Inc's new chief executive, Carol Bartz, told employees on Wednesday her gut instinct is to hang on to the company's search business, the Dow Jones newswire reported. Source: Reuters: Business News | 15 Jan 2009 | 8:26 am Japan stocks tumble on fresh economic woes (AP) AP - Japanese stocks retreated Thursday, as renewed concerns about the banking industry and dismal data triggered fresh pessimism about the world's two biggest economies. Source: Yahoo! News: Stock Markets News | 15 Jan 2009 | 8:14 am Google to lay off 100 recruiters, close engineering offices The Web search giant says it needs to make cuts in the face of a broad advertising slowdown. Google Inc., the... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am In Baghdad, taking the wheel With violence reduced drastically, new cars have become the latest must-have for those who can afford it, as they get rid of clunkers they had stuck with to avoid kidnappings. ... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am JPMorgan plans expansion in California It will rebrand Washington Mutual branches it acquired last year and expects to open 20 new ones. After buying... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Economy starting '09 on weaker footing, Fed reports Federal Reserve data show a slowdown across the country. Retailers have a cautious outlook. The U.S. economy started... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am NAMM chief Joe Lamond is upbeat about music equipment sales 'The way music fits into our society, there's just a steady consumer demand,' says the trade group president. The group's annual trade show starts today in Anaheim. ... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Yes, Jobs' health is investors' business With its ailing and absent leader still pulling the strings, Apple is putting its solicitude toward him ahead of corporate responsibility. ... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Wall Street can't find its footing The Dow and other major gauges are down sharply on the Commerce Department's report that December sales were down 2.7%, twice as much as analysts expected. Citigroup leads the fall in bank stocks. ... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Flick freaks find a home at Flixster The social networking start-up for movie buffs hopes to prove its value to Hollywood studios. Diana Noble, a 32-year-old... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Motorola to cut 4,000 more jobs in 2009 The reductions are in addition to 3,000 announced last year. Most of the cuts will occur in the mobile devices business. ... Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Long-struggling Nortel files for bankruptcy TORONTO -- Nortel Networks Corp. spent years ringing up multiple rounds of layoffs as it tried to fix big problems in its business. But it couldn't ward off the recession. Source: RSS feed - channel BNPaperBusiness | 15 Jan 2009 | 8:00 am Key vows strong action as economy grinds to a halt Prime Minister John Key is promising strong measures to stimulate the economy in the face of Treasury forecasts that growth could grind to a halt this year. He said today the international recession had deteriorated since December... Source: New Zealand Herald - Business | 15 Jan 2009 | 7:57 am Australian stocks: Market suffers biggest one-day fall this year MELBOURNE - The Australian share market fell heavily on Thursday in its biggest one-day fall so far this calendar year. Resources stocks were hammered after United States markets dropped sharply overnight amid worries over the... Source: New Zealand Herald - Business | 15 Jan 2009 | 7:14 am Apple's Jobs takes medical leave, shares tumble (Reuters) Reuters - Apple Inc chief and tech visionary Steve Jobs will take a leave of absence till end-June because of health problems "more complex" than thought, backtracking on reassurances, stunning investors and sending its shares skidding 10 percent on Wednesday. Source: Yahoo! News: Business | 15 Jan 2009 | 7:07 am Currency: Dollar hits lowest level in five weeks The New Zealand dollar was dumped in afternoon trading. The NZ dollar was buying US53.40c at 5pm, its lowest level in five weeks. It closed its local session yesterday at US55.60c. The NZ dollar had been weak overnight in London... Source: New Zealand Herald - Business | 15 Jan 2009 | 6:53 am Nissan Motor set to post first loss in a decade Nissan Motor, Japan’s third-largest carmaker, is likely to plunge into an operating loss for the first time since Carlos Ghosn took over as president of the sprawling industrial giant a decade ago, analysts are warning. Source: Latest Business News from Times Online | 15 Jan 2009 | 6:39 am NZ stocks: Market down as global stocks fall The New Zealand share market fell today as the global financial story turned sour again. The Tokyo and Australian share markets slid 4 per cent after US stocks fell to six-week lows on Wednesday on worries about steeper losses... Source: New Zealand Herald - Business | 15 Jan 2009 | 6:20 am How to Get Your Finances Ready for the Obama Era When it comes to the economy, Barack Obama has been managing expectations the way Joe Torre managed the 1990s Yankees: with grim-faced seriousness and an aversion to rah-rah cheerleading. Just as Torre never promised great results from his teams of all-stars, Obama never misses a chance to remind the voting public that there are “no shortcuts or quick fixes to this crisis.” But the ongoing recession and market turmoil have driven expectations through the roof all the same. It’s a rare event indeed when a cabinet pick can drive the Dow up 500 points, or when a president-elect can draw a nationwide audience with radio addresses about the economy. (Franklin Roosevelt didn’t launch his “fireside chats” until after he got sworn in.) Starting Jan. 20, Obama’s own economic dream team officially takes the field—carrying all those expectations with them. But how much can any president really do to turn around a $15 trillion economy? Obama’s agenda is certainly ambitious, and the new Oval Office occupant will have enlarged Democratic majorities in Congress and even some Republicans lining up behind his rescue plans. On the other hand, Obama doesn’t have the overwhelming public support FDR enjoyed or the arm-twisting savvy of a Lyndon Johnson. And the entitlement programs that those big-government presidents enacted may tie the new president’s hands. Federal spending now accounts for almost 20 percent of U.S. economic activity—compared with about 7 percent when FDR took office—in large part due to Social Security and Medicare. Roosevelt nearly doubled the federal budget in his first term to launch public-works programs and unemployment benefits, but Obama has less room to maneuver, explains Babson College history professor James Hoopes; a similar expansion of federal debt today “would have terrible consequences in terms of cramping other economic activity or boosting inflation.” With Obama finally taking the reins, SmartMoney decided to take a look at his odds of success—not only the likelihood of getting his agenda passed during his first-year presidential honeymoon but also of actually turning around the economy in the coming year. After all, the debate on his ambitious efforts on taxes, energy policy and even health care—and what it all may mean to Americans’ personal finances—has already begun. Here’s our take. The First Weeks Obama’s been talking for months about jump-starting the economy with a massive stimulus package, and it’s almost certain to be what he’s working on the first days after taking the oath of office. But while the outgoing Bush administration tried to stimulate the economy with tax rebates, Obama will focus on government spending—at least $480 billion for starters, with the likelihood of more to come in hopes of creating millions of jobs. The plan is to invest heavily in infrastructure and green technology while providing money to the states to shore up their yawning budget deficits. The logic behind Obama’s plan: Boost the earning power of those who are struggling—unemployed construction workers, say—and they’ll spend that income in ways that boost the broader economy. There’s evidence that Obama’s approach is the more effective one. A tax-rebate stimulus “is the equivalent of a sugar shock,” says James Galbraith, a professor at the University of Texas who gave advice to the Obama campaign. “You mail the checks in July, and by August we’re back in the soup.” A recent study by Moody’s Economy.com found that for every $1 spent on a lump-sum tax rebate, the country’s GDP grows by only $1.02 within the first year; spend the same dollar on aid to state governments and infrastructure and the economy grows by $1.36 and $1.59, respectively. Investing in construction of roads, schools and water-treatment plants, Galbraith and others argue, will create employment opportunities for years to come. But critics counter that because of the legwork and logistics involved in getting infrastructure investments up and running, the benefits might not be felt immediately or even until 2010. Some of Obama’s other priorities, of course, are also aimed at saving jobs. The Center for Automotive Research has estimated that a General Motors bankruptcy could drive 2.5 million people out of work—one reason Obama will face pressure to provide more help to Detroit. And the stimulus package is part of a plan to spend $150 billion over 10 years on renewable energy and other green investments, part of a shift that the U.S. Conference of Mayors estimated could help create 4.2 million jobs by 2038. Jennifer Amann, a senior researcher with the American Council for an Energy-Efficient Economy, sees potential for jobs like energy auditors, who inspect homes for leaks or inefficiencies. “It’s not like you can ship that job overseas,” she says. Though big spending projects may command the headlines, Obama will also try to make good on the blizzard of tax breaks he promised during his campaign. His proposed tax credits—most targeted at middle- and lower-income families—would cover expenses like child care and education and offer incentives for buying homes or saving for retirement. Roberton Williams of the Tax Policy Center explains that unlike typical rebates, most of Obama’s credits are refundable, meaning families making too little to owe income taxes will get their credits in cash, “putting money in the hands of the folks who are the most likely to need to spend it.” And research suggests that such credits do more than straightforward rebates to boost the economy. The Obamas—a couple that was still saddled with student loans well into their 30s—are also likely to take a stab at whittling down college debt. The president-elect wants to more than double the $1,800-a-year tax credit for college tuition and fees, which would apply to families making up to about $115,000 a year. But “things are never as simple as they seem,” notes Lauren Asher, vice president of the Institute for College Access and Success. In the past, for-profit colleges have often either raised tuition or decreased their own student aid to offset such gains in federal aid. For now most college funding advisers are assuming that strapped parents won’t see much relief. Next Up It’s hard to imagine an economic turnaround happening without some kind of solution to the housing crisis. The havoc that falling home prices have wreaked on the financial markets is, of course, just part of the problem. Every home foreclosure drags down the resale prices of the homes around it. And for every dollar lost in property value, consumer spending drops by five or six cents a year—scary stuff, considering American home values have declined by more than $5 trillion since the real estate slump began. But consensus on the best housing fix has been hard to find. Mortgage rates have dropped steadily without doing much to put a floor under housing prices. On the campaign trail, Obama advocated giving bankruptcy judges power to restructure mortgages. But that idea was recently defeated three times in the Senate. Mortgage bankers dislike the restructured loans so much, they refer to them as “cram downs,” because banks are forced to take them without financial incentives. Critics say they’ll also drive up borrowing costs, especially in struggling local housing markets. Obama is weighing other options—including reviving the Depression-era Home Owners’ Loan Corporation, which bought distressed mortgages from banks. Also gaining attention is a proposal by Sheila Bair, head of the Federal Deposit Insurance Corporation, to restructure 2.2 million mortgages so payments are reduced to 31 percent of a holder’s gross monthly income. Under Bair’s plan, the government would cover some losses from any defaults and pay $1,000 per rewritten loan, an arrangement more palatable to skittish lenders. But consumers in “upside down” loans—where they owe more than their home is worth—wouldn’t have that situation remedied. If there’s one thing that could make a housing-market rescue look easy, it’s health care reform. The country certainly needs it, with 46 million uninsured people and millions more threatened economically by bills they can’t pay. Businesses and even insurers who were once leery of widespread reform are now rallying behind it, in a bid to control their own soaring health care costs. Any attempt to corral this enormous sector of the economy would be complex and expensive. But Obama has insisted that health care policy can’t wait long. During his campaign, the president-elect proposed a plan that would let workers either keep their employer-provided insurance or buy insurance on a new national exchange; low-income workers would get subsidies to pay their premiums, and no one could be rejected by insurers for preexisting conditions. Democratic Sens. Max Baucus and Ted Kennedy have been trying to hash out a plan that could be palatable to the GOP and industry. But each senator may also introduce his own bill, and there are signs that their ideas will have key differences from Obama’s. “You’ve got all these warring old bulls on Capitol Hill,” says Grace-Marie Turner, president of the Galen Institute, a research group that favors free-market approaches to health care reform. “I’m not convinced they’ll accomplish anything.” Whether ObamaCare would actually curb health costs—themselves a drag on the economy—is an open question. The U.S. system currently spends about $27,000 per family of four; Obama has said he’d cut that by $2,500. He proposes to test drugs against each other to determine the most cost-effective therapies and to back adoption of electronic medical records. But critics doubt those reforms can produce significant savings, at least in the short term. Down the Road It’s a safe bet that Obama’s energy advisers had a different read on the film An Inconvenient Truth than the folks close to former oilman George W. Bush. What’s more surprising: Even with gas prices dropping, the Obama team will likely get started this year on an extremely aggressive energy agenda. The decision to replace Rep. John Dingell, a Michigan Democrat loath to challenge Detroit, with environmentally minded Rep. Henry Waxman (D–Calif.) as head of the House Energy and Commerce Committee, means that body is likely to consider aggressive cap and trade legislation—which tries to lower greenhouse gas emissions by charging companies for the pollution they pump into the air—for the first time ever. Leaders have said they could pass that, and mandate wider use of renewable resources, by 2010. A cap-and-trade program probably would hit consumers at the gas pump. It would also have fairly big consequences for manufacturing businesses. Gilbert Metcalf, a professor of economics at Tufts University, has calculated that if carbon credits cost $15 per ton, a typical rate, slight price increases would ripple through all kinds of products that take energy to produce—things like clothing and cleaning products. He estimates that the average household cost of living would increase by 1.5 to 1.9 percent, with costs at the higher end of that range in Midwestern states like Indiana, Ohio and Iowa, which are more dependent on high-polluting fuels like coal for electricity. Whatever happens with this “carbon tax,” it seems likely that other tax increases—at least at the federal level—will be off the table for a while. Obama’s intention to “spread the wealth around” made for some fiery campaign exchanges; his full tax plan involved increasing capital gains, dividend and income taxes for families pulling in $250,000 or more per year, mostly by repealing cuts enacted under Bush. But with the economy far from stable, more analysts now expect Congress to hold off on any increases until the beginning of 2011, after the Bush cuts expire. By then, with any luck, politicians will be arguing over slices of a much bigger economic pie. Matthew Heimer contributed to this story. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved. Source: SmartMoney.com | 15 Jan 2009 | 5:00 am A Healthy Dose of Insurance FOR ALL THE UNCERTAINTIES IN today's world, there's at least one safe bet: Unhappy patients will continue to sue their doctors. And that is excellent news for American Physicians Capital, a specialized provider of malpractice insurance for doctors. "It's difficult to find any company more insulated from economic weakness than this one," says Michael Nannizzi, an analyst with Oppenheimer. Doctors, he points out, have little choice but to buy malpractice insurance, and that has made for a $10 billion-a-year industry in the U.S. The trick, of course, is for insurers to understand medical risks, set the correct level of premiums, and then handle claims strictly, to minimize the payouts. "Everything comes down to experience," says Nannizzi. "APC has that in spades." That's why Nannizzi, for one, is bullish on the stock (ACAP). Although it's up about 20% in just the past month, partly the result of being added to the Standard & Poor's 500 index, the stock could keep moving higher as the company bolsters its already-strong competitive position. APC, based in East Lansing, Mich., concentrates on insuring medical groups and individual doctors, rather than hospitals. With 9,000 groups and physicians, it accounts for more than 70% of the nonhospital markets in its core region of Illinois, Ohio, Kentucky and New Mexico. What is more, its client base is expanding by 5% a year. It could grow even faster with acquisitions, but that isn't the agenda just now. "If a company expands too quickly out of its footprint, it can get destroyed later," says Chief Executive Kevin Clinton. Surprisingly, Clinton says calculating medical risks is the least complicated part of the insurance equation. Statistically the possibility of a malpractice suit can be easily determined for different specialties -- it is somewhat higher for neurosurgeons and obstetricians, for example, and lower for family practitioners. Annual premiums are adjusted accordingly, varying between more than $200,000 and less than $20,000. The company generally averages one lawsuit a year for every 10 doctors it insures, in line with national numbers. And it has found ways to cut claims. For example, it has instituted formal training for doctors on how to improve communication with patients. And two years ago APC told its lawyers to stop accepting "court-house-step" settlement offers. APC used to figure such last-minute deals saved money by avoiding court legal fees. But the company also found the settlements encouraged more claims from certain attorneys. The stance has helped cut claims in half compared with five years ago. Typically, APC reckons to pay out on about 20% of the lawsuits, but Clinton says the size of the settlements has been trending significantly lower: "Part of it is probably the new hard-line way we fight cases, and part of it is reform that has set damage caps. But part is also due to the way juries have stopped giving ridiculous billion- dollar awards. They seem to have realized that this was quite literally destroying the practice of medicine and driving good doctors away." As all that suggests, strong legal skills can come in handy. And APC, observers say, has a thorough grasp of individual state laws, having operated in each of its main states for at least 10 years, and in some cases more than 30 years. ULTIMATELY, AN INSURANCE company is only as good as the capital reserves it has built up to pay off claims. On that score, Nannizzi says, Clinton has had a measurable impact since he took over as CEO in 2004. The analyst says: "Today, APC has the most conservative portfolio of any company I know." APC's $750 million investment portfolio includes only one small equity stake, a $15 million holding in a Texas malpractice insurer (possibly a future acquisition target). Roughly 20% of the money is in Fannie Mae, Freddie Mac and Ginnie Mae paper. Another 20% is in investment-grade corporate debt, and the balance is in high-quality municipals. More than withstanding market turmoil, the portfolio is estimated to have risen in value since the end of September. Still, some analysts see little additional upside in the stock, saying the stock is trading at a relatively high 1.6 times book value, compared with 1.4 a few weeks ago and some rivals' 1.3. Plus, earnings are expected to dip this year, to $4.24 a share, as a result of what looks to be a temporary round of price cutting among local competitors. Earnings could rebound in 2010, to $4.47. Book value, at $28 a share, understates APC's real worth. Oppenheimer's Nannizzi points out that APC has about $92 million in reserves that are no longer needed, equal to about $10 a share. That puts true book value at about $38. With return on equity of 16%, the company's value is sure to keep climbing. That's hardly financial malpractice. The Bottom Line Although the stock has surged some 20% in the past month, it could climb even further, due to solid growth in the business and a conservatively managed investment portfolio. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved. Source: SmartMoney.com | 15 Jan 2009 | 5:00 am 4 "Safety" Stocks That Look Overpriced (Screens) A defensive business with a high stock price is no refuge. Earlier this week I cited a brewer, a drug maker and a car-parts distributor as companies that might hold onto sales or even increase them while shoppers are loath to spend. Heart pills are what economists call an inelastic good; customers keep buying even when their incomes drop. Cheap beer and wheel struts are “inferior” goods. That’s not a value judgment, but rather an observation that falling incomes actually lift demand as customers pass up new cars and pricey ale. Plenty of companies sell inelastic or inferior goods and services, and investors have shown a strong preference of late for their shares. Last year the S&P 500 index, which tracks the broad American stock market, lost more than 38%. But drug makers within the index lost only 21%. The sole car-parts chain, AutoZone (AZO), gained 2%. Deep discounters like Wal-Mart (WMT) surged 9%. That has led to what I’ll call General Mills (GIS) syndrome. Sales-wise, the company is as safe as any cereal aisle name. When customers feel the economy is after their Lucky Charms, they cling tighter, or switch to a store brand that’s often quietly made by the same company. Empty restaurants and full dinner tables at home mean General Mills is growing. Sales are seen increasing 7% in its fiscal year to May 25 and more than 3% the year after. But in late October I noted that General Mills had gained 19% since I recommended it in February, outperforming the market by 50 percentage points. Suddenly, it looked expensive. It has since lost 9%, versus a 6% drop for the market, and isn’t yet cheap. Shares fetch 16 times trailing earnings at a time when the broad stock market goes for 13 times earnings. The 2.9% dividend yield is safe, but you can get more than that in a broad-market index fund or a bank certificate of deposit. Below are some other defensive names with indefensible prices. Movies on DVD might still qualify as inferior goods in the economic sense, since they’re cheaper than a trip to the multiplex. Indeed, Netflix (NFLX) is growing its sales at about 13% a year. But increasingly, DVDs also qualify as inconvenient compared with movies streamed over the Internet. Netflix offers a streaming service for a small portion of its movies. It’s great if your must-see list includes the sequel to “Ace Ventura.” (There was one.) If not, Apple’s (AAPL) $4 new releases might prove more tempting. In fairness, the Netflix service is new and its selection seems to be improving, and DVDs are far from dead. But I don’t want to own Netflix shares at 22 times earnings in hopes its online service will prove as dominant as its mailbox one. Constellation Brands (STZ) looks like a bargain at just nine times earnings, and the booze distributor is expected to grow profits 8% this year. But it has more debt than stock market value. That doesn’t mean it’s in financial trouble, but it does mean the company’s true price — the one you’d have to pay to own it free and clear — is around 19 times earnings. That’s no bargain. Worse, Constellation pays no dividend. Finally, Abbott Laboratories (ABT) has plump profit margins and what suddenly qualifies as enviable growth. Earnings per share are expected to increase 10% this year. Shares go for 15 times earnings, which is only ambitious, not nutty. But I’m wondering why Abbott, faced with the best stock buyer’s market in a generation, just agreed to pay $22 a share for American Medical Optics (EYE), which makes eye surgery lasers and cataract implants. The price works out to 29 times earnings. Add the debt Abbott will assume and you’re at 62 times earnings — yikes. If Abbott had a burning wish to spend $2.8 billion, the deal’s cost, and if it didn’t want to repay its own debt, it might better have paid a one-time dividend of 3.6%, thereby topping up the stock’s undersized yield of 2.9%.
Company	Ticker	Industry	Stock Price	Price Change 52 Weeks (%)	Price/Earnings
Abbott Laboratories	ABT	Drugs	$49.47	-17.45	14.9
Constellation Brands	STZ	Liquor & Wine	14.90	-30.70	8.8
General Mills	GIS	Packaged Food	58.75	3.91	14.9
Netflix	NFLX	Movie Rentals	29.54	29.73	22.4
S&P 500			842.62	-40.50	13.0

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

4 Ways to Land a Better Deal on a Home (Deal of the Day)

For prospective homeowners, it's hard to ignore the sales pitch: Home values nationwide have fallen on average some 20%, while mortgage rates are hovering around a 28-year low.

According to the Standard & Poor’s/Case-Shiller Home Price Indices, existing single-family home prices are back to their March 2004 levels, with values for single-family homes down more than 23% in 20 cities as of October. Meanwhile, the average interest rate on a 30-year fixed-rate mortgage is 5.01%, down from 5.87% from about a year ago, according to Freddie Mac. And once popular 5/1 conforming adjustable rate mortgages currently carry a rate of 5.49%, down from 5.63% last year.

“While home prices are likely to fall even more, mortgage rates may have reached their lowest point,” says Stu Feldstein, president of SMR Research, a Hackettstown, N.J.-based financial services research firm.

Just because lenders are offering such favorable rates doesn't mean they'll go easy on prospective homeowners, though. House hunters need to have a credit score of at least 660 to 680 and be prepared to make a down payment of 20% or more, says Feldstein.

For those who fit the bill, here are four tips for getting an even better deal on a home:

Haggle

Given the glut of homes on the market, prospective home buyers shouldn't be afraid to low-ball an offer or, for that matter, negotiate other perks such as having the seller pay for closing costs or requesting the washer and dryer come with the home.

Before making an offer, find out how long the house has been on the market and why the seller is moving. That way you can gauge the seller's willingness to negotiate. If the house has been on the market for at least eight months, the seller will probably be more prone to lowering their asking price, says Feldstein. Likewise, if the seller is eager to move -- say they need to relocate for a job or they're about to have another child -- they will probably be more flexible on price.

Shop Around for Rates

To land the lowest mortgage rate possible, get at least three competitive bids from lenders, says Danielle Babb, a real estate analyst and professor of economics and statistics at Northcentral University in Arizona.

Be prepared to show income, asset and employment verification, including copies of your 1040 forms from the past couple of years, pay stubs, bank statements and even your employer’s phone number. The more paperwork you provide the less risky you appear to the lender, which will be more likely to refrain from tacking more fees or points onto your mortgage.

Tap Into New Tax Benefits

Buy a house no later than June 30 and you may qualify for a new tax credit that at most equals the lesser of 10% of the home price or $7,500 ($3,750 if you are married, but filing separately).

You can claim this credit on your 2008 1040 form. Any amount that remains after the credit is used will go toward offsetting your federal income tax bill. There are, however, several caveats. You’re only eligible if you haven't owned a principal residence in the U.S. during the three-year period leading up to the purchase date. And, you'll have to repay the credit over 15 years. So, say you claim the credit on your 2008 tax return, you’ll have to start repaying it with the 2009 tax return. (The 2009 tax return will include an extra line for this credit, and home buyers will either owe more in taxes or receive a smaller refund.) In short, the perk to this credit is that it functions like a temporary, no-interest loan.

Choose a Location That's Likely to Rebound

Before you make an offer on a house, consider where it's located and how that location will affect its value in the near and long term.

Houses in cities and towns that haven’t been hit very hard by foreclosures are likely to see their value increase much faster when the real estate market recovers than areas flooded with "for sale" signs and foreclosures. Foreclosed homes sell for anywhere between 30% to 70% of their value, and that keeps the value of the homes in the area from rebounding, says Babb.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Mortgage rates keep falling as BNZ, Kiwibank jump aboard

Property values still falling, but impact of big rate cuts emerge

Jobless to reach 7.5pc, economy near standstill - Treasury

Jobs' hiatus pushes quiet exec into Apple's top spot

Power grid upgrade in north rejected

BofA seeks new loan from US government

Blackstone staffer charged with insider trading

Trends & Innovations - Wednesday

Spiffed-Up Restaurants And Menus Help Burger King To Growth

In Brief - Wednesday

After The Close - Wednesday

Business Briefs - Wednesday

Giant telco gear-maker files for bankruptcy protection

Lord Mandelson says Royal Mail needs millions for 'gale-force change'

HMV Group plugs into live music market

Global Infrastructure Partners to join bid battle for Gatwick

The 25 Worst Business Failures in History

It is said that up to 50% of businesses fail within five years of inception. Most of these business start and end in obscurity. A few of them, however, start up with the verve of a cannonball, only to crash with equal fanfare. Some of the companies listed below, like Enron and DeLorean, exemplify this cataclysmic appeal. Others, like Pan Am and Woolworth’s, just tug at our heartstrings.

Check out the 25 worst business failures in history below:

25. Fashion Café

Want some Newports with that iceberg lettuce?

A restaurant that serves gargantuan burgers and fried appetizers founded by a bunch of supermodels and fey fashionistas didn’t work? Hmm, I wonder why. “The $20 Salad Extraordinaire,” created exclusively for Naomi Campbell, reportedly consisted of a glass of champagne, a pack of Newports and two slices of tomato accompanied by an iceberg leaf. Famed restaurateur Tommaso Buti was the “brains” behind the operation. He over-franchised the cafes, was accused of mismanagement, then followed Christy Turlington in selling his stake in the company. Buti, already accused of defrauding investors, was arrested in 2000 and charged with wire fraud, conspiracy, money laundering, and transportation of stolen property.

24. CBGB

A legend turns into a men’s store

In 2006, after 33 years of offering up legends like the Talking Heads, Blondie, Misfits and the stalwart Ramones, CBGB, the most famous underground alt-rock/punk club in the world, closed its doors. It was shuttered to make way for a high-end men’s fashion store. Patti Smith gave the historic club an emotional, if punk, goodbye by tearing the stage and room apart. Ironically, the very same shrine that so many skinny-jean hipsters and adrenaline-fueled punks would come to mourn was originally started by Hilly Kristal as a venue for his favorite music: “Country, Blue Grass and Blues.”

23. The Edsel

Ford’s biggest flop

In 1958, Ford’s newest vehicle, launched on “E-Day,” flailed, flopped, and imploded. Ford kept the Edsel under wraps as a new kind of futuristic, experimental car. One fateful day in 1958, the Edsel was revealed…and immediately faceplanted. This car of the future was blah by anyone’s standards. By November 1959, when Ford finally mercy-killed the Edsel, it had lost an estimated $250 million–nearly $2 billion in today’s dollars. Edsel is now synonymous with a marketing business failure.

22. Flooz.com

The name says it all

Flooz.com blew through up to $50 million dollars trying to convince new Internet users that money online would work like frequent flier miles or gift cards. Part of that money went to a notoriously bad ad campaign featuring Whoopi Goldberg (before she was cool again). And the name? Flooz is derived from the Arabic word for money. In August, 2001 the company folded their chairs and went home. Apparently, people could just use their credit cards. Whoops!

21. The Hit Factory

A New York classic goes condo

Deep in New York, in the heart of Hell’s Kitchen, The Hit Factory was one the world’s most recognized recording Studios. Started by Edward Germano in 1975, it saw everyone from Tony Bennett to U2 record amazing tracks. After Germano’s death in 2003, his wife Janice took over operations. Citing the “digital age,” she closed the doors and sold the building, moving the operations to an existing Hit Factory in Miami. Troy Germano, Edward’s son, later acknowledged publicly that his mother simply closed it out of greed. She wanted to move to Miami and thought she could make good money on the building’s sale. It is now a luxury condominium complex, with prices starting at $1 million.

20. Betamax

BetaWrong

I could give you facts, figures, and dates to support why Betamax failed so miserably, but that would be a blog post unto itself. Suffice it to say: Betamax was bulky, complicated, ugly, expensive, publicly ridiculed, horribly marketed, disdained by the media, and only capable of sixty minutes of recording and playback. The capper? Most Hollywood movies that people rented were just a little bit over one hour. Too bad…and good riddance.

19. SwissAir

The “Flying Bank” ends up buried

The former national airline of Switzerland, Swissair, used to be so financially stable that it was known as the “Flying Bank.” Founded in 1931, Swissair epitomized international transportation until the late 1990s, when the airline’s board decided to follow an aggressive borrowing and acquisition policy called the Hunter strategy. Then, the terrorist attacks of September 11, 2001 put a void in the company’s plans Swissair found itself hamstrung with debt. Unlike some other airlines, however, Swissair couldn’t handle the financial hit. Mismanagement and bad ideas—trundling large sums of cash to purchase fuel at foreign airports, for example—left the airline gasping for oxygen. In 2002, Switzerland was embarrassed to lose its national icon for good.

18. Ponzi’s Security Exchange Company

Bernie Madoff’s famous forebear

It’s quite an achievement to have a breed of financial scam named after yourself. Charles Ponzi, an Italian immigrant, ran a staggering 6-month pyramid scheme in 1920 by gaining investments (over $15 million) from an ever-growing pool of more than 40,000 investors. Ponzi would use “profits” from new investors to pay “interest” to old ones. Using a trade system of international reply coupons for postage stamps and leveraging exchange rates, Ponzi made a lot of people money through the “Securities Exchange Company,” which claimed to leverage exchange rates through an international postage stamp reply coupon trading system (this mouthful of a phrase reminds me of how people described derivatives in 2008). But his scheme ruined lives–including Charles’ own. After jumping a few bails, he did prison time from 1926 through 1934. Years later, he died, penniless, in a Brazil charity hospital, half-blind and partially paralyzed.

17. Woolworth’s

The bad economy bullies Woolies towards its own demise

Brits, who held “Woolies” close to their hearts, were were crushed when this comfort food and houseware retailer closed its last 807 stores after nearly 100 years of service on High Street and beyond. At one time, Woolworths was the leading music retailer in the entire U.K. During the 1950s and 60s, the store was instrumental to the Beatles’ sales success Indeed, Woolies also played a role in breaking Madonna to the rest of the world. Hey, she’s a Brit now. Maybe she’ll pony up the cash to save them? Not likely.

16. Premier Smokeless Cigarette

Taste-wise, charcoal just doesn’t cut it

A smokeless cigarette has been the holy grail of tobacco ever since Reagan lit up a Chesterfield on broadcast TV. In an effort to reduce the harmful effects of inhaling cigarette smoke, RJ Reynolds launched the Premier cigarette, a “smokeless nicotine delivery mechanism that looks and feels like a premium cigarette,” in 1988. The product ended up a miserable flop. Not only did this expensive cig taste like charcoal, it ended up being employed by drug users as a handy “delivery mechanism” for substances other than tobacco. The cost of the project? A cool $1 billion.

15. Bre-X Minerals

Fool’s gold strikes again

If someone tells you they’ve struck gold on the isle of Borneo, grab your money and run the other way. In 1995, Bre-X Minerals was a tiny mining company based in Calgary with stock worth under $1 when they announced they had found extensive deposits of Gold in Busang, Indonesia. As a result, their stock shot to almost $300 CAD a share. A series of strange events, including a man fallen from a helicopter and eaten by tigers, roused enough suspicion to unravel the fraud. By 199, an outside analysis of the sites samples revealed that Bre-X had faked their findings by “salting” samples with gold dust. Within weeks, the NASDAQ and TSX delisted the company, which at one point held a market cap of $4.4 billion. Investors slapped their foreheads, and Bre-X Minerals slunk into history as a major business failure.

14. IndyMac

IndySplat

On July 11, 2008 the FDIC seized the assets of the largest Savings and Loan in Los Angeles and the 7th largest loan originator in the country. The seizure sparked rumors of bank runs. It also gave the public the first real, Main Street glimpse of the Financial Crisis of 2008. IndyMac was founded in 1995 as Countrywide Mortgage Investment. Its purpose was to provide a means of collateralizing loans too high in value for Fannie Mae and Freddie Mac to service. At the time of its seizure, IndyMac held nearly $30 billion in assets, making it the fourth largest bank failure in history.

13. Edison Records

First isn’t always best

It’s always difficult being first. Thomas Edison founded the first record company and invented the phonograph, the first device made for recording and playback of sound, in 1877. This achievement led to all of the music industry as we now know it. Surprisingly, it was also the first dictaphone in history used by businesses. World War I shortened the supply of materials Edison could use for his highly secret wax recipe, used in manufacturing. The company’s market share fell. As other companies seized the opportunity the make “needle-cut” records (an Edison Labs invention) Edison Records lost customers and credibility. It closed its doors in 1929.

12. Tucker Automobiles

There’s a reason only four of them ever died

The ambitious car company that Preston Tucker started was only in business one year (‘47-‘48). It produced a mere of 51 cars, but its story remains enshrined in museums, car clubs, film and even a video game where everyone drives a Tucker. The fatal flaw? Offering customers the option to buy their accessories before their car was built. This program started a witch-hunt by the SEC. Amid accusations of fraud and the “Big Three’s” influence over government, Tucker Automobiles went belly-up. I will spare you the argument of whether it was the best car ever made, but out of that original 51, 47 Tuckers still exist today. Let that be your clue.

11. Sharper Image

Buy, but do not inhale

Started in 1977 as a catalog selling jogging watches, the Sharper Image eventually grew into a high-end customer electronics store. As iPods and other branded, high-tech items took over the store’s traditional market share, it launched into the infomercial business with the Oreck vacuum and Ionic Breeze. Unfortunately, the Ionic Breeze did not purify the air as it said it did. After losing a lawsuit against Consumer Reports for a negative review, the testing company released findings that the Ionic breeze actually produced trace levels of ozone. In 2008, the store went bankrupt, forcing shoppers to buy their overpriced, Japanese made, brushed steel, throw-away executive gifts elsewhere.

10. Washington Mutual Bank

See bank run

WaMu was America’s largest Savings and Loan association, the sixth largest bank in the U.S., and (drumroll please…) the largest bank failure in history. Let that sink in for a minute. After a 10-day run on the bank in late September 2008, with total withdrawals in excess of $16 billion USD–almost 10% of the deposits–the FDIC seized WaMu’s assets. JPMorgan Chase bought WaMu subsidiaries the next day for what many suspect at pennies on the dollar. The holding company is currently in Chapter 11.

9. Enron

They made the E crooked for a reason

Enron was an energy sector leader that started to dabble in e-commerce and exotic investment areas, such as weather futures. In 2001, Enron, once valued at $90 billion and the 7th largest company in the United States, went bankrupt. It took jobs, investor savings, retiree futures and even some lives with it. In following years, it emerged that they shredded documents, started partnerships with their own shell companies, and engaged in massive inside trading. Enron is now synonymous with the business outcomes of galloping greed.

8. Polaroid

Go digital or die

Shake it like a Polaroid picture! You know you’re good when your name is the product. (Hello, Kleenex). But while you and I were buying our first digital camera, printing pictures and later taking photos with our phones and PDA’s, the execs at Polaroid were snapping and shaking their pictures into oblivion. So loved was the brand that countless people took daily shots of and created art, diaries and literature using these magical snapshots taped to their walls or to the street. The leader of an amazing niche technology that so enriched anyone born before 1980, Polaroid went bankrupt in 2005. The name may emerge again, but the brand and the impact will always be retro.

7. Atkins Nutritionals

Fadkins takes a bad fall

Apparently, bread won. Remember when all of your friends ordered their lunch without the bun and no potatoes, but with lard-laden beef and cheese? Atkins engineered the “low-carb” craze, a fad diet claiming you could “lose fat by eating fat.” Dr. Robert Atkins released Dr. Atkins’ Diet Revolution in 1972. In 1992, revised version gained popularity; the fad really took off at the beginning of millennium. Questions arose from the medical community about the diet’s long-term effects. Countless others, from the FDA to top chefs, also lined up to take shots at it. In 2003, it was reported to a skeptical public that the good doctor slipped on an icy sidewalk and died. The company went bankrupt within two years amidst the suspicion that his diet killed him. Meanwhile, a fickle public ditched low-card for the next fad. A year later, a leaked medical examinations report revealed that Dr. Atkins, 72, had a history of heart attack and congestive heart failure. He weighed 258 pounds at death.

6. Bethlehem Steel

When service kills steel

Everything you know about historic America has Bethlehem Steel in it. Founded when James Buchanan was our nation’s president, Bethlehem Steel was the backbone of the first blasting furnace, railroads, skyscrapers, coal, nuclear reactors, warships, cargo vessels, large construction projects like arenas, and other major infrastructural accomplishments. However, the company never adjusted to the new service-based economy that gained ground in the 1990s. Cheap imports worsened the situation. Bethlehem Steel, a piece of American history, disappeared forever when it filed for bankruptcy in 2001.

5. Pets.com

Big isn’t better

Pet’s can’t drive, and sock puppets make bad spokespeople, but Pets.com made the dot-com bubble their own in 2000. They overexpanded by opening a nationwide network of warehouses nationwide too quickly (taking a hint from Starbucks). Unfortunately, profits never caught up with media buys for commercials. In marketing, nothing is worse than having everyone know who you are and no one interested in what you sell. Widely recognized as the icon or poster child for dot-com failure, its stock went from over $11 in early 2000 to just $.19 on Election Day that same year, when the company closed its doors.

4. White Star Lines’ “Titanic”

A disaster of titanic proportions

White Star Lines, which built the Titanic, has oddly disappeared from the lore surrounding the fated giant. The fated vessel was conceived of in 1907, when executives Bruce Ismay and Lord Pirrie drastically changed and expanded their shipping transportation business to compete with Cunard’s new luxury oceanliners. The result was a line of gargantuan luxury liners that moved more passengers and freight than anyone else on the market. Three ships came out of the venture: The Olympic, the Titanic, and the Gigantic. You know the rest of the story. Cue the music!

3. Commodore Computers

You can’t kill the C64

Between 1983-1986, Apple, IBM, and Atari computer were quaking in their boots. The reason? The Commodore 64 was selling 2 million units a year and dominated nearly 50% of the total market. As the company tried to innovate by releasing the Commodore plus/4, a faster, smarter version with a color screen, they alienated their original customer base. The new model was incompatible with the cherished C64. Commodore tried to discontinue the old line in the US by 1990 and announced it would stop shipping them in 1995. The tactic didn’t work. Customers all over Europe continued to snap up the C64s until it became impossible for the company to manufacture them at a reasonable price without selling new, more expensive models. As they say, “you can’t kill the C64.” The company went bankrupt in the spring 1994.

2. DeLorean Motor Company

A man, his cocaine, and his car

As is often the case in the automobile industry, it’s hard to separate the man from the vehicle. John DeLorean was a hero amongst the very rich for creating the kind of car the future promised. With a stainless steel-skinned body, sleek lines and doors that opened vertically (gull wings), his DMC-12 hit the streets in 1980. Over the next three years, only 8,900 cars would be made. The car played a feature role in “Back to the Future” and become a potent status symbol. Then, in 1983, a sting revealed John on tape saying “this cocaine is as good as gold,” referring to a suitcase full of drugs valued at $24 million. Later acquitted on entrapment grounds and cleared of defrauding his partners, he would never gain the investor’s trust again.

1. Pan Am

The icon that didn’t pan out

It’s amazing how a country’s identity can be so closely tied to a business. Such was the case with PanAm. Founded in 1927, the airline was a part of American culture for the better part of the 20th century. It lead the industry in international flights and luxury travel. It was also the first airline to make widespread use of jumbo jets, and the first to use an air staff of stewardesses as a PR focal point. Little girls grew up wanting to be PanAm stewardesses, and boys grew up wanting to pilot one of the fleet. Heck, the Beatles arrived on one. Unfortunately, as an American icon, PanAm was also a target for terrorism. A few horrific incidents, coupled with the increased global competition that came with deregulation, caused the airline—and its accompanying era—to collapse in 1991.

Write-Offs: 01.14.09

$$$ "The U.S. government is close to committing billions in additional aid to Bank of America as the nation's largest bank by assets tries to digest its Jan. 1 acquisition of Merrill Lynch, according to people familiar with the situation." [WSJ]

$$$ Shoot Bernie [Cityfile]

$$$ 12 private jets, a helicopter and $30m worth of art [FT Alphaville]

$$$ Madoff now traveling in bullet proof vest, as though there are people who want him dead. [Daily Intel]

Suavenomics: A New Spin on Stimulus Lingo

Suave is offering people a free bottle of shampoo today only, January 14, via a slick marketing campaign it calls “Suavenomics.” Go to Suave.com to grab your freebie.

Here’s an excerpt from the press release:

Suave, America’s leading value beauty brand, is issuing a Beauty Stimulus Package on Jan. 14th and for one day is offering every American a free full-size bottle of Suave. Consumers can log on to Suave.com on Jan. 14th for details on how to receive a free bottle of the brand’s high performance hair or skin products.

Nearly three-quarters (74 percent) of families are more worried about their finances than they were a year ago and almost all (95 percent) agreed that they are looking for products that give more “bang for the buck” in the current climate. In fact, the majority (two-thirds) agree they do not have to spend a lot of money to get high quality products.

I love this press release. It is so telling of tactics that work in a bad economy. Suave has always been around as a budget brand, a hair shy of generic, nicely scented, geared at people who care about cost more than upmarket hair. In good times, there’s no reason to pay attention to the brand.

Now, however, they’re offering a free bottle, informed-sounding statistics, and slick, news-y catchphrases that fit their product’s goal like a glove. Only in a bad economy can a combination of news, statistics, and a free bottle of shampoo garner the kind of hype that Suavenomics is today.

I clicked onto the Suave.com homepage to see what else they had going. On it, I found a row images of mothers with their children. Each image navigates to a video of said mom talking about her beauty needs (the one I navigated to wants to look glam again), and how a Suave stylist helped her achieve the look, on a budget, with Suave products. It reminds me of the before/after testimonials that sometimes appear in magazines. Another nice move by Unilever, targeting budget- and image-conscious moms.

Heck, in this economy, the company could focus on a variety of demographics: Teens, college students, freelancers, unemployed people, about anyone who is skimping big-time on spending. This is certainly a discounter’s heyday. Props to Unilever for knowing how to take advantage of the opportunity.

Boston Advisors' Vogelzang Likes Emerging Market ETFs

Get Well, Steve

PRESS RELEASE: Apple Media Advisory

Dow Jones News Service via Dow Jones

Apple CEO Steve Jobs today sent the following email to all Apple employees:

Team,

I am sure all of you saw my letter last week sharing something very personal with the Apple community. Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

I have asked Tim Cook to be responsible for Apple's day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.

I look forward to seeing all of you this summer.

Steve

Apple: Jobs to Take Medical Leave of Absence [WSJ]

VIX Index of U.S. Stock Option Prices Advances 13.6% to 49.14

Pandit: "Our commitment to our clients remains unchanged."

From: vikrampandit@citi.com

Sent: Wednesday, January 14, 2009 2:10 PM

Subject: Message from Vikram

Another Schrenker Victim

Heritage Wealth Management, LLC, a San Diego firm apparently having nothing to do with everyone's favorite DB Cooper wannabe is enduring quite a branding thanks to an unfortunate coincidence, namely, the similarity in name to Schrenker's "Heritage Wealth Management, Inc.

A notice on the San Diego firm's website informs us:

Please be assured that our company, Heritage Wealth Management, LLC, has no connections or affiliations with Marcus Schrenker, the Indianapolis-based company or its associates.

Heritage Wealth Management, LLC is an independently-owned firm and Registered Investment Adviser registered with the Securities & Exchange Commission (SEC). We are required by law to disclose any and all material affiliations; either with persons or with entities which can be verified here.

Earlier: Today's Ponzi Trifecta Begins?

EFG-Hermes' Malik Says UAE Won't Grow in 2009

Hear: The News Today, Oh, Boy

The lucky ones at this tech firm got pay cuts.

Listener letter after the jump.

 

A number of listeners have asked us to look at what's happening inside our own industry -- media. Magazines have been shutting down, newspapers are canceling home delivery and furloughing staff, publications are moving online, radio networks are laying off workers. Which is just the half of it, really.

Today on Planet Money:

-- A newspaper carrier says the print edition he delivers is now too light for him to throw it onto porches properly.

-- Economist Anita McGahan, author of How Industries Evolve, studies what's known as punctuated change. She says the line between shifting and dying is not always apparent, at the time. But the first company to figure out what comes next wins.

Bonus for the Twitter crowd: Follow @themediaisdying.

Download the podcast; or subscribe. Intro music: Billy Joel's "We Didn't Start the Fire." Find us: Twitter/ Facebook/ Flickr.

About today's picture, Michael writes from Minnesota:

It is layoff day here at Seagate Technology.

. . .

Those of us who are left are subjected to a pay cut of at least 10%. I am an engineer who designs computer chips and never in my 20 year career have I been subjected to an outright pay cut.

CNN has more news on this particular layoff/pay cut story.

» E-Mail This     » Add to Del.icio.us

Best Podcast Fail

Inspired by the Fail Blog.

 

Congratulations to our friends over at EconTalk who captured the title of the 2008 Weblog Best Podcast Award. Despite our best efforts, Planet Money came in third behind EconTalk and the much loved Harry Podcast Mugglecast. There's always next year.

» E-Mail This     » Add to Del.icio.us

Madoff: Bail, No Jail

Second verse, same as the first. Madoff's house arrest at 133 East 64th Street upheld. Attorney Ira Sorkin still sticking with the "millions in dollars worth of jewelry sent to family members were just Hannukah gifts" story. Sorkin also communicated that Bernie "wants to make investors whole again," so that's nice.

Paul Krugman Sees Need to Get Stimulus Plan Out `Fast'

It's All A Game

If all this talk over quantitative easing and split-strike conversions has left you with a headache, surf on over to the Bailout Game for minutes of mindless fun. Let the ax fall on your favorite investment banks, automakers and government-sponsored entities and watch the carnage unfold! (Thanks, Clusterstock!)

» E-Mail This     » Add to Del.icio.us

Fib It, Baby.

Key to Dennis Bolze's success? Fibonacci Trader Corporation. A sharp Dealbreaker made the connection.

Dear Investors

2008 numbers are in.

Barclays's Shah Says Corporate Defaults Will Be Higher in 2010

A Giving Life. A Magical Chalet. The Stuff of Fairytales.

Ok, how could you not see this coming. Shameless self-promotion runs strong in these (alleged) frauds. This October 2008 profile has got to be the most surreal thing we have ever seen, including the revelation that fugitive trader Dennis Bolze had a friend "fake my $100 million lottery winnings."

The origins of the White Shadow's success? Read on:

Dennis, who grew up in Pennsylvania, attended Georgia Tech with plans of becoming an attorney. However, he quickly determined that law wasn't for him, and took a summer job as a runner at the Chicago Mercantile Exchange. One quiet morning on the floor, Dennis doodled. An executive scolded him, but Dennis replied, "In about 15 minutes, the market is going to go crazy; I'm just waiting." Sure enough, the market exploded just as he had predicted. The next day the same executive came to him to ask how he'd foreseen the day's events. Dennis, it turns out, had been studying the trades, reading trade materials, and creating charts to calculate fluctuations in the market. He had also been studying the work of W.D. Gann, a financial advisor/trader in the stock markets during the early 20th century. Made famous for forecasting the Great Crash of 1929 and subsequent depression, his methods are still widely used.

And we thought Marcus DB's capture was going to slow things down around here.

A Giving Life [Cityview]

Earlier: January Is International Fugitive Month

Hahn Says Citigroup Represents 'Normal Downside' of Industry

It Gets Better

A clever Dealbreaker reader (aren't you all) found the trading blog of cleverer-at-escape-than-DB-Schenker fugitive Dennis Bolze. A long, rambling piece riddled with low-brow anti-democrat and anti-Obama material, and a stack of those cutsie-annoying internet joke photos that your aunt won't stop sending you. The thing goes back to 2005 if you can believe that, and certainly presents a wealth of insight into the criminal mind for those who can endure the drivel.

We love the header:

If you are new to trading, before you go out and buy into to someone that claims to have the holy grail take a day and read thru this blog. If it sounds to good to be true, well it just might be. Why put your money on the line following someone when all you really need is to find your own way....there is a lot of crap out there......BE SAFE and email me at dbolzes@chartertn.net Also visit http://www.mytradersparadise.com

That link returns this:

Dear Clients of Dennis Bolze,

It is with my deepest sympathies that I write this notice to you. I am the administrator or webmaster of this domain and my name is Dawn Suiter, and I am located near Gatlinburg, TN USA. I have worked for Dennis Bolze for many years now on several of his website projects including this website, we communicated nearly every day regarding website updates & changes.

On December 26, 2008 I went to Dennis's house because he was late paying me a large balance due for work completed. He ceased communications with me around December 17th, which is why I went to his home personally. I spoke to his wife & she explained that Dennis was in fact missing and had also ceased communications with her around the 19th. In their last conversation he clearly told her that he would not be coming back.

Oh me oh my.

Take a look before someone yanks it, or our traffic shuts it down.

Update: CONTEST: The reader finding the most amusingly ironic passage will get a "Don't Short Me Bro" mug.

Our favorite passage so far after the jump.

Earlier: January Is International Fugitive Month

Germany mulling partial nationalisation of HRE bank: party spokesman (AFP)

AFP - The German government is considering partially nationalising distressed mortgage lender Hypo Real Estate (HRE), a spokesman for Chancellor Angela Merkel's CDU party told AFP on Wednesday.

Loyalty Programs Make Customers Feel Like They Have Status Over Others

A recent Chicago Journal of Consumer Research study found that businesses can make consumers feel more special by creating multi-tiered loyalty programs, which pander to a sense of status:

Many businesses create loyalty programs to confer a sense of status to their customers. Examples are platinum, gold, and silver charge cards, or red and blue membership levels. The study provides insight for planning programs that enhance consumers’ perception of status.

“We find that increasing the number of elites in the top tier dilutes their perception of status, but adding a subordinate elite tier enhances their perceptions of status,” write the authors. “Thus, if the firm creates a larger top tier while adding a second status tier rather than persisting with a single small top tier, it can recognize more customers without decreasing the perceptions of status among its most elite.” In other words, being in the gold level is more special if there is a silver level below.

Good point. If a customer enters a loyalty program at the silver level, it’s safe to assume they will aspire to, or at least feel somewhat off-put by, the existence of a gold level. And, as the study shows, gold-level customers get a status boost through the existence of a lower tier.

Tangentially, social networking popped into my mind when I read this article. Sites like Facebook are forever looking for ways to monetize. And users of those sites are looking for status, mainly by accumulating friends. What if sites introduced loyalty tiers? For example, users with more than 200 friends would automatically qualify for a silver tier. That tier would offer certain perks not available to people with fewer friends. With that loyalty in place, sites could more easily charge for certain services, or offer exclusive partner deals.

Now, I’m off to lunch, courtesy of my extra-special platinum credit card…

Some Problems With Keynes

You've been hearing a lot about John Maynard Keynes, the British economist of the early 20th century who, 63 years after his death, is suddenly the single-most important thinker if you want to understand President-elect Obama's plan to get us out of this economic whole.

We're going to do a lot on Keynes. I'm on Morning Edition this Friday and This American Life over the weekend talking about the man.

I've been reading the masterful biography by Robert Skidelsky. Just get it. It's fun and fascinating even if Keynes were not, suddenly, basically running our country.

And I will give plenty of time on this blog and the podcast and on the radio to Keynes's important ideas, but I have to get some things off my chest: the things about Keynes that absolutely drive me crazy. That make me furious and frustrated and angry.

Keynes didn't like Jews.

I spoke with a British Jewish historian who told me most Brits of his day didn't like Jews. And Keynes did have some close Jewish friends.

But I don't find it all that easy to give Keynes a pass. His dislike of Jews was somewhat central to how he understood economics.

Keynes had this idea that Jews had brought the idea of longing for immortality to Pagan Europe. He saw that longing as positive but felt that many Jews distorted it into a longing for money. He thought that the Jews influenced the rest of Europe to love money too much and that had ruined much of European civilization. Keynes believed that by 2020, European civilization would have gotten past its Jewish-inspired love of money and would focus on other things.

It doesn't seem necessary to comment too much on this. One Jewish correspondent pointed out to Keynes that Jews don't actually spend a lot of time thinking about immortality. That's more of a Christian thing. Keynes just ignored that

Keynes didn't like Americans.

OK, this is pretty standard, too, of the time. He found Americans, largely, stupid and incapable of using their vast wealth to run the world. He came to the US as rarely as possible.

Keynes didn't like the working class.

He--again, like many Brits of his day--believed that the purpose of civilization is to create opportunities to experience great art and great thoughts. He was dismissive of the masses who are incapable of experiencing true beauty. He didn't believe the goal of an economy is to get the highest number of people to have decent material conditions. He believed the goal is to have a small elite enjoy art and culture.

Keynes was so narrow-minded.

He had this tiny little world: Cambridge artists and intellectuals. He didn't like people who went to Oxford and wouldn't even bother to think about anyone who went somewhere else. While he traveled the world and met countless world leaders, he doesn't seem particularly worldly. Everywhere he went, he was thinking about a handful of elite snobs in London and Oxford. That was his perspective.

Now, I am not sure all of this is an argument against his ideas. (There are good arguments against his ideas, but ad hominems are always weak tea, as I imagine Keynes saying). I certainly don't think Mr. Obama should avoid a fiscal stimulus because the guy who came up with the idea is a bit of a jerk. (Again, there are other arguments against fiscal stimulus, but jerkiness doesn't merit serious consideration).

But I do find it worth noting that Keynes, hero to so many union members and working class folks around the world, was an elitist, socially conservative snob who wouldn't find it pleasant to spend even a moment with the people who support his ideas the most.

» E-Mail This     » Add to Del.icio.us

Translation software opens up doors

Will transition to digital TV be delayed?

Safety net needed as we wait for help

Poking a hole in the bubble theory

Inventories drop as sales plummet

New Heathrow runway plans hit skids

Driscoll Says U.S. Consumers Losing Access to Credit

Nortel goes from bubble to bankruptcy

Citi's sell-off ushers in consolidation era

Nortel Networks Files for Chapter 11 Bankruptcy

Major telephone equipment manufacturer Nortel Networks filed for Chapter 11 bankruptcy protection today. P2PNet News has a good summary of the details:

“The move came a day before the Canadian telecommunications company was due to make a $107-million interest payment on its debt.”

“The board of directors of North America’s largest telecom equipment maker met in Toronto on Tuesday night to discuss the company’s financial options. In a release, the company said the decision to file for protection was a unanimous move by its board.”

No surprise that the continent’s largest maker of business phones and networks is having trouble sustaining itself in a time of mass office closures. I vote that if Nortel slims down, it will survive–their product selection offers several promising elements, especially vis-a-vis building national network infrastructure at home and abroad (assuming that traditional business demand levels won’t cut decent sales within the next few years).

In a way, I’m glad, amidst all this bad news, that we’re not hearing about Chapter 7, either for Nortel or anyone else.

Fadel Gheit Sees Oil Prices Between $45 to $55 a Barrel in 2009

Sanford Bernstein's Hintz Says Citigroup Is a `Forced Seller'

Former SEC Head Levitt Says Giethner Tax Questions 'Real Blow'

Women Gets 32,000 to 1 Return on Junk Glass Vase

From Ananova:

A woman who bought a plant and vase for £1 at a car boot sale has sold the glass container for £32,000.

The couple has since sold the antique at a London auction for £32,450.

Who needs investing when you can make those kinds of returns antiquing?

Nortel Pulls the Plug

Wells Fargo Prime Rate Credit Card Eases the Credit Crunch for Consumers

The new Wells Fargo Prime Rate Credit Card offers a panacea to shady interest rate hikes, a former specialty of the credit card industry. The premise of the card is that its rates never go higher than the Prime Rate, a rate used and referenced by banks.

Today’s WSJ prime rate is an indulgent 3.25%. Makes you want to spend, doesn’t it?

The catch is, of course, in the fine print:

The Prime Rate APR does not apply to cash advances. If a minimum monthly payment is not received for two consecutive billing periods or the new balance shown on your billing statement exceeds your account’s credit limit for two consecutive billing periods, the Default Rate, as described in your Customer Agreement and Disclosure Statement, may apply.

The card only works for people who use their credit responsibly in the first place. People who tend to forgo payments will find themselves in the very situation they’re trying to avoid–a jacked-up “default rate.”

Nonetheless, this is the best news to come out of the credit crunch in some time. The Prime Rate card is a sweet deal for anyone who doesn’t pay off their entire bill monthly, and needs a card to carry debt. I hope other banks follow suite.

Closing Time

The Commanding Heights

I've had the benefit of having the past few weeks off. I got a lot of reading done and have been able to catch up on a ton of movies. (The Wrestler is not as good as people say it is, but Frost/Nixon and Milk were much better than I expected. I'm betting it's Frank Langella for Best Actor.)

One other thing I did was rewatch the six-hour PBS documentary "Commanding Heights: The Battle for the World Economy" that aired back in 2002. I remember seeing it then and, while having a few key issues with it, liked it a lot. The series is based on a book by Daniel Yergin - who is best known for writing the terffic The Prize: The Epic Quest for Oil, Money, and Power, that won the Pulitzer Prize for General Non-Fiction in 1992 - and Joseph Stanislaw, first published in 1998. It is available on DVD but also free on PBS's website.

I think the series is fascinating background for anyone trying to put what is happening to today's economy in larger context.

In short, the book and documentary attempt to trace the rise of free markets during the last century, as well as the process of globalization. The title comes from a speech by Vladimir Lenin, who used the phrase "commanding heights" to refer to the segments of the economy that largely control or support the others, such as oil, railroads, banking and steel.

The authors label the era prior to World World I as the "First Era of Globalization," when the push toward free markets, immigration and international trade expanded like no time before it in history. They then trace the massive public distrust of corporations and wealthy individuals that grew from the Great Depression and how socialism and Marxism continued to grow in popularity around the world and threatened the very existence of American-led capitalism.

The series spends a good deal of time on the work of economist John Maynard Keynes, who came to be widely accepted in Western economies in the middle of the last century and is central to the developed world's response to the current economic crisis.

Finally, the last half touches on how the political pendulum change of the 1980s ushered in a change of economic policy around the globe, most notably in the United Kingdom and the United States with the elections of Margaret Thatcher and Ronald Reagan and, later, the demise of the Soviet Union. An interesting bonus: they spend a good amount of time on the resurrection of Austrian School economist Friedrich von Hayek, who opposed government regulation other infringements on a pure free market, and the rise of Milton Friedman, who is most known today for discounting the using of inflationary monetary policies to set economic growth.

Daniel Yergin and Joseph Stanislaw clearly end with a warm and clear embrace for where capitalism stood at the close of the 20th century and missed some big nuances in the process in my opinion. To be fair, they do (lightly) suggest that globalization may not last unless more of the Third World soon sees more benefits from capitalism.

Trust me: it's worth a watch, or read, if you decide to pick up the book. If you do, we'd love to hear your take on what this all might say about our current situation.

» E-Mail This     » Add to Del.icio.us

The Other Side Of Short Selling

Our Twitter pal @imajes sent in a question:

"In a short-selling scenario, what does the person loaning the stock have to gain?"

Briefly, short-selling stock is a technique used by investors who try to profit from the falling price of a stock.Short selling may sound confusing, but it's actually a simple, if risky, investing strategy.

Say you decide to short a stock. First, it you don't have to own a stock to "short" it. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered.

When you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. How much you make or lose from here depends on what happens to the stock's price.

If the price of the shares drops, you have to "cover" your bet by buying back the shares, and the broker returns them to the lender. Your profit is the difference between the price at which the stock was sold and the cost to buy it back.

But here's your risk. If the price of the shares increases, you have to buy it back at the higher price, and you lose money. Whoever loaned the shares can make out big. If, say, the stock rises 100%, they just made a lot of money.

» E-Mail This     » Add to Del.icio.us

Where Are The Jobs?

With the ranks of the unemployed swelling and domestic opportunities sparse, job-seekers may need to look far afield for their next gig. For those willing to venture down under, the Queensland, Australia, government recently began advertising The Best Job In The World -- "taking care" of a tropical island near the Great Barrier Reef.

According to reports, responsibilities include walking the island, snorkeling and "maybe cleaning the pool." If it's any indication of the competition for the job, my browser has spent the past ten minutes trying to load the web site. Can Planet Money offer any application tips? All we can recommend is remembering that Queensland is the Smart State.

» E-Mail This     » Add to Del.icio.us

Bernanke on You Tube

After speaking publicly at the London School of Economics on Tuesday-- his first speech since the Fed's decision to lower rates to 0.25% in December -- Federal Reserve chairman Ben Bernanke held a 20-minute question and answer session that is available online.

During it, Bernanke makes a strong defense of the government's recent role in dealing with Fannie Mae and Freddie Mac (natch), predicts job growth may return as early as late this year or early next and has an interesting exchange with an economist in the crowd about whether once again in-fashion John Maynard Keynes would support capital injections in banks over greater federal stimulus. (Bernanke dodged that one but said that while stability in the financial sector may not be "sufficient" to induce economy recovery but is "necessary.")

» E-Mail This     » Add to Del.icio.us

Layoff Etiquette for Goood Times and Bad

Is 2009 the year of the layoff? According to the recent employment figures, in December 2008 alone more than 500,000 U.S. workers lost their jobs. That number is almost 2 million for the last four months of the year. If the trend continues, you may find yourself on one or another end of a layoff. Here are some tips if you’re in the position of having to let people go.

When Good Employees Cost Too Much
It’s true that good help is hard to find. No business owner I know likes to let go of valued employees. However, the deepening recession has caused business owners and managers in many industries across the country to face the painful prospect of laying off good employees.
 
Steve Fox is a labor and employment attorney in the Dallas offices of Fish & Richardson. He warns that with “such an emotional and potentially perilous decision, managers should take pains to handle these difficult tasks the right way for everyone involved.” He says it doesn’t necessarily get easier the more you do it.

“Employers who approach this task lightly often end up with dismal results.”

I think it’s a safe bet he means legal trouble.

Proper Layoff Etiquette
While important to the bottom line, handling necessary layoffs in an unprofessional manner makes the whole process more difficult for affected workers and can significantly harm a business’s reputation. According to Fox, employers facing this inherently difficult task should take some basic steps to ensure that the process goes as smooth as possible for all parties:
 
· Decide what you’re going to say ahead of time. From a legal standpoint, employers are not required to give an explanation for why someone’s being laid off, but it’s often a good idea.

· Unless a company is going out of business, some employees end up staying and some are laid off. While no explanation is required, clarification is important so that terminated workers don’t believe they are being laid off for any reasons that are protected by law, such as age, gender, disability and race.

· Be compassionate and respectful. That means making sure that affected employees learn the news from you and not from the rumor mill.

· Keep the affected worker in mind when choosing the best time and place to break the news.

· Have a witness to observe all communications during the process.
 
Following these rules will not only result in a better workplace morale and less emotional strife, but also may save you from a lawsuit. They’re good reminders for all economic times – good and bad.

Image Credit: latch.r, Flickr

AIG In 14,000 Words

I finally carved out enough time to read the Washington Post series on the near-death of AIG. It's quite good, has interviews with many central figures. And it's told not in black and white, but shades of grey, the villains unclear.

Though there certainly were those who worried:

Park spelled out his reasoning in meetings and conversations with colleagues over the next several weeks. It was as if he had scratched the needle across an old record album at full volume.

And those who did not:

"It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions," Cassano said.

Amusingly, while I was reading the article this Google-supplied ad popped up at the bottom of the page:

Credit Default Swap Trade US High-Grade And Credit Default Swaps Now. Get More Info! www.MarketAxess.com

» E-Mail This     » Add to Del.icio.us