World Business News Headlines for March 10, 2009

Vikram Pandit Is Not Happy With Citi's Share Price

In case there was any confusion about that. Via the Journal, VP's memo to the troops last evening.

Dear Citi Colleagues,
After a broad sell off in the markets last week, I thought I would give you a quick update on our position.

Despite the steps we've taken to strengthen our capital base, I am, like you, disappointed with our current stock price and the broad-based misperceptions about our company and its financial position. I don't believe it reflects the strengths of Citi; our newly strengthened capital base, our unique global franchise and most importantly, the quality of our people. These are unprecedented times in the markets, but over time, the markets will recognize the many strengths of Citi.

Source: Dealbreaker | 10 Mar 2009 | 1:22 pm

Opening Bell: 03.10.09

Meredith Whitney On The Perils Of Credit Cards (Reuters)
She has a point in that the reduction of credit limits will cause a hiccup in consumer confidence; you can't limit the amount of money people have access to and expect them to spend all the same. But, at this point there's no saving consumer confidence, it's very much down the toilet. Baby's gone with the bath water.

"Just six months ago, I estimated that at least $2 trillion of available credit-card lines would be expunged from the system by the end of 2010. However, today, that estimate now looks optimistic, as available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone. My revised estimates are that over $2 trillion of credit-card lines will be cut inside of 2009, and $2.7 trillion by the end of 2010."

Vikram Announces Best Quarter Since 2007 (Bloomberg)
With a metric asston of losses under its collective belt, Vikram and gang have announced they're having the best quarter since 2007.

In related news, the government has been meeting to plan on what to do next when Citi fucks up (but it's not expecting Citi to fuck up, just planning for it.) Meeting attendees included: ".. the Treasury Department, Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corp."

I'm rooting for Citi at this point. I've pulled a switcheroo. I don't like the government licking its chops to get a hold of a bank (such as it is) - it makes me nervous.

J.P. Morgan Tops M&A Rankings (MarketWatch)
"J.P. Morgan ranks first in the global M&A advisory league table with $190.3 billion of deals, up from second place this time last year, Dealogic said.

Morgan Stanley and Goldman Sachs rank as second and third, the firm added."

A Retouch Of The Lehman PE House (FT)
Mostly done before, but worth a quick read.

J.P. Morgan To Dump Bear Wagner (WSJ)
Estimated price is in the $30MM range - down from $625 in 2001.

Unemployment Could Hit 9.4% (Bloomberg)
"The U.S. jobless rate will reach 9.4 percent this year and remain elevated through at least 2011, threatening the nation's longer-term growth potential, a monthly Bloomberg News survey indicated.

The peak in unemployment surpasses the 8.8 percent estimated last month, according to the median of 54 projections in a survey taken from March 2 to March 9. The average rate for the next two years will exceed the 25-year high of 8.1 percent reached in February, the survey shows."

Source: Dealbreaker | 10 Mar 2009 | 1:00 pm

US job prospects hit 27-year low

US companies' plans for hiring staff are at their weakest since the recession of 1982, a new survey says.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 12:23 pm

Study Claims Average Cell Phone User Pays $3.02/Minute

cellphone

Found this odd claim reported in the Christian Science Monitor:

In San Diego, mobile users pay more than $3 per minute on average. The Utility Consumers’ Action Network surveyed 700 cellphone users and found that the average cellphone bill went down since 2004, falling from $57.92 for a single-line account to $37.15 today.

However, “cost per minute can be outrageous,” says the report. “Doing the simplest of calculations – dividing the total cost by the number of minutes – we find that the average ‘account’ is paying $3.02 a minute.” This average is driven up by a small slice of consumers who buy large plans but rarely use them. If you cut out these big-spenders, the average falls somewhere between 50 cents and $1 per minute – far more than the “10 cents a minute” claim made in many ads.

The study says that part of the problem comes from consumers overestimating how many minutes they need, which makes them overpay for plans (study claims that they only use 32% of their total time allowance). In addition, consumers rarely change their contracts once they’ve signed up.

This is a strange study. How could an average cell phone user possibly pay $3/minute? The study doesn’t mention data usage, cost of the phone (which is heavily discounted with most contracts), night/weekend/anytime minutes, text messaging, or taxes.

The study (located here) needs to clarify its claims. At the moment, they don’t make much sense.

Source: Business Pundit | 10 Mar 2009 | 12:23 pm

Global economy could contract in 2009: IMF (AFP)

AFP - The global economy could contract for the first time in 60 years in 2009, International Monetary Fund Managing Director Dominique Strauss-Kahn warned on Tuesday.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 12:20 pm

GlobalBroker.com Announces Launch of Online Worldwide Commercial Real Estate Property Marketplace

DENVER, March 10 /PRNewswire/ -- GlobalBroker.com (GB) announces the launch of a unique online marketplace which connects commercial real estate owners, buyers, tenants,...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:16 pm

TacticalTradingSignal.com Outperforms the Major Indices in 2008

SALINA, Kan., March 10 /PRNewswire/ -- TacticalTradingSignal.com announced today that they have outperformed the S&P 500 index in 2008. According to TimerTrac.com, a leading...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:15 pm

Mark-to-Market Doesn’t Destroy, It Reveals Destruction

By John Tamny RealClearMarkets

Back during the Internet IPO boom, companies ranging from Netscape to Priceline to Expedia went public with no earnings to speak of whatsoever. Retail giant Amazon.com was jokingly referred to as ‘Amazon.org’ due to its lack of profits. Despite their heavy losses, investors bought into the aforementioned concepts based on the belief that in the future, their losses would turn into gains.

This is notable today given all the talk about mark-to-market (MTM) accounting. To its opponents, MTM lies at the heart of our economic difficulties. MTM naysayers argue that an accounting measure which requires firms to value assets at market prices discovered in very thin markets is in particular driving banks into insolvency. If a more liberal form of accounting were applied, presently insolvent banks would be healthier on paper and solvent.

SNAPSHOT - Financial Crisis - 1200 GMT

- World economy to contract in "Great Recession", IMF head Strauss-Kahn says
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:10 pm

European equities rally on bargain hunting (AFP)

AFP - European stocks rebounded Tuesday, despite a new 26-year low in Tokyo, as investors fished for bargain stocks following recent turmoil in the banking sector.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 12:10 pm

EU approves GM oilseed rape T45 for feed, food use

BRUSSELS, March 10 (Reuters) - The European Commission said on Tuesday it had cleared GM oilseed rape T45 for feed and food uses and import and processing.
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:07 pm

EADS hit on fears for transporter project

A €20 billion (£18.3 billion) project to build military transporter aircraft for Nato risks being scrapped next month, EADS, the aerospace group, warned today.
Source: Latest Business News from Times Online | 10 Mar 2009 | 12:06 pm

A fixedrate mortgage will help you beat the house price falls

A drop in house prices of 6 per cent over six months would put a borrower who has a 75 per cent LTV on a loan size of £187500 in the 90 per cent LTV bracket.
Source: Telegraph Finance | 10 Mar 2009 | 12:03 pm

UPDATE 1-EBay seeks OK for staff option exchange program

NEW YORK, March 10 (Reuters) - eBay Inc is asking its stockholders to approve a one-time program to let employees exchange their "underwater" stock options for restricted stock units at a set ratio, according...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:03 pm

Anheuser-Busch Distributor Mississippi Distributors Inc. Signs Deal with Innovative Beverage to Carry drank(TM) in Northwest Mississippi

HOUSTON and BATESVILLE, Miss., March 10 /PRNewswire-FirstCall/ -- Innovative Beverage Group Holdings, Inc. (OTC.PK: IBGH) announced today that it has signed a deal with...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:02 pm

UPDATE 1-Russia, Hungary plan South Stream gas pipeline JV

MOSCOW, March 10 (Reuters) - Russia and Hungary plan to create a joint venture to work on the Hungarian section of the South Stream natural gas pipeline, Russian Prime Minister Vladimir Putin said on Tuesday...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:01 pm

New California Survey Shows Only 28% of Small Business Owners Approve of New $787B Stimulus Bill

More Than 50% Say Their Business is 'Unhealthy' or in 'Danger of Closing' LOS ALTOS, Calif., March 10 /PRNewswire/ -- MerchantCircle, the largest...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:00 pm

New Florida Survey Shows Only 20% of Small Business Owners Approve of New $787B Stimulus Bill

More Than 54% Say Their Business is 'Unhealthy' or in 'Danger of Closing' LOS ALTOS, Calif., March 10 /PRNewswire/ -- MerchantCircle, the largest...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:00 pm

Hawk Announces Full Year and Fourth Quarter 2008 Results

- Full year net sales increased by 24.9% over prior year period to record $269.6 million; fourth quarter net sales increased by 5.5% to $57.9 million - Full year...
Source: RSS feed - channel BNewsBusiness | 10 Mar 2009 | 12:00 pm

Stock futures rise on Citi, Geithner reassurances (Reuters)

Reuters - Stock futures rose on Tuesday as reassuring comments from Citigroup about the bank's performance fueled a run-up in financials and investors became hopeful about Washington's efforts to revive the economy.

Source: Yahoo! News: Business | 10 Mar 2009 | 11:59 am

Stock futures rise on Citi, Geithner reassurances

NEW YORK (Reuters) - Stock futures rose on Tuesday as reassuring comments from Citigroup about the bank's performance fueled a run-up in financials and investors became hopeful about Washington's efforts to revive the economy.

Source: Reuters: Business News | 10 Mar 2009 | 11:59 am

Stock futures rise on Citi, Geithner reassurances (Reuters)

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 11:59 am

Stock futures point higher ahead of open (AP)

AP - Wall Street appeared headed for a rebound Tuesday, with stock futures pointing higher after weeks of unrelenting selling.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 11:57 am

European markets buoyed by Citigroup hopes (AP)

AP - European stock markets rallied Monday on hopes that the worst may be over for Citigroup Inc. after a leaked memo from the company's chief executive Vikram Pandit indicated that the troubled U.S. banking giant enjoyed its best financial performance in over a year during the first two months of 2009.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 11:57 am

Dalai Lama demands autonomy for Tibet

The Dalai Lama marked his 50 years in exile by demanding "meaningful autonomy" for his Tibetan homeland, where Chinese authorities tightened security to stifle protests against their rule
Source: Financial Times - US homepage | 10 Mar 2009 | 11:52 am

China prices fall for first time since 2002 (AFP)

AFP - China reported its first drop in consumer prices in more than six years on Tuesday, adding to worries about how the world's third-largest economy is weathering the global slowdown.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 11:51 am

Syrian stock market starts trade with six companies

Trading on Syria's stock exchange kicks off, marking a crucial step as the country liberalises its state-controlled economy
Source: BBC News | Business | World Edition | 10 Mar 2009 | 11:51 am

CEO Pandit says Citi had strong start to 2009 (Reuters)

Reuters - Citigroup Inc was profitable in the first two months of 2009 and is confident about its capital strength after tough internal stress tests, Chief Executive Vikram Pandit told staff in an open letter.
Source: Yahoo! News: Business | 10 Mar 2009 | 11:50 am

CEO Pandit says Citi had strong start to 2009

LONDON (Reuters) - Citigroup Inc was profitable in the first two months of 2009 and is confident about its capital strength after tough internal stress tests, Chief Executive Vikram Pandit told staff in an open letter.

Source: Reuters: Business News | 10 Mar 2009 | 11:50 am

World in grip of 'great recession', warns IMF

The world is in the grip of a "great recession" in which the global economy could shrink for the first time since the Second World War, the International Monetary Fund (IMF) warned today.
Source: Latest Business News from Times Online | 10 Mar 2009 | 11:47 am

Gold: 'Inflation will beat deflation and gold will hit 3000'

Gold looks set to move substantially higher as governments all around the world embark on a programme of "quantitative easing"
Source: Telegraph Finance | 10 Mar 2009 | 11:46 am

Top Analyst Downgrades (APOG, BJS, BJ, HAL, KEG, NBR, OMC, PTEN, PCG, SLB, WMT)

These are some of the top pre-market analyst downgrades and negative calls we have seen early this Tuesday morning:

Apogee (APOG) Cut to Sell at Piper Jaffray.
BJ Services (BJS) Cut to Sector Perform at RBC.
BJ’s Wholesale (BJ) Cut to Underperform at Credit Suisse.
Halliburton (HAL) Cut to Sector Perform at RBC.
Key Energy (KEG) Cut to Sector Perform at RBC.
Nabors (NBR) Cut to Sector Perform at RBC.
Omnicom (OMC) Cut to Sell at Deutsche Bank.
Patterson-UTI (PTEN) Cut to Underperform at RBC.
PG&E (PCG) Cut to Neutral at Credit Suisse.
Schlumberger (SLB) Cut to Sector Perform at RBC.
Wal-Mart (WMT) Cut to Hold from Buy at Citigroup.

JON C. OGG

Tagged: APOG, BJ, BJS, HAL, KEG, NBR, OMC, PCG, PTEN, SLB, WMT

Source: 247 Wall Street | 10 Mar 2009 | 11:41 am

Top Analyst Upgrades (BIG, GLW, DRIV, DUK, KSS, MEOH, PFE, STP, TRV, WYE)

These are the top pre-market analyst upgrades and positive calls we have seen from analysts this Tuesday morning:

Big Lots (BIG) Raised to Buy at Soleil.
Corning (GLW) Raised to Buy at Collins Stewart.
Digital River (DRIV) Raised to Buy at Deutsche Bank.
Duke Energy (DUK) Raised to Outperform at Credit Suisse.
Kohl’s (KSS) Raised to Buy at BofA Merrill.
Methanex (MEOH) Raised to Outperform at CIBC.
Pfizer (PFE) Raised to Buy at UBS.
Suntech Power (STP) Raised to Market Weight at Thomas Weisel.
Travelers (TRV) Started as Outperform at Oppenheimer.
Wyeth (WYE) Raised to Buy at UBS.

JON C. OGG

Tagged: BIG, DRIV, DUK, GLW, KSS, MEOH, PFE, STP, TRV, WYE

Source: 247 Wall Street | 10 Mar 2009 | 11:33 am

EADS profit rises 89% helped by revalued contract provisions

EADS on Tuesday reports an 89% jump in fourth-quarter profit, helped by the revaluation of some contract provisions, but warns of potential further charges related to its A400M military transport aircraft.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 11:33 am

Stocks set to step forward

Stocks were set to bounce up at Tuesday's open, boosted by comments from Citigroup's CEO about the company's profitability, as investors await remarks from Fed chairman Ben Bernanke and look for a break in the global economic malaise.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 11:32 am

Pandit memo: Citi profitable in 2009

Read full story for latest details.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 11:28 am

Treasurys sink ahead of $34B auction

Treasury prices slipped Tuesday, as investors awaited yet another large government debt auction.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 11:24 am

US to get tough on trading rules

Ron Kirk, the man poised to become the US's top trade official, says the new administration's priority is ensuring countries play by trade rules.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 11:21 am

U.S. weighs further steps for Citi if needed: report

(Reuters) - U.S. officials are examining what fresh steps they may need to take to stabilize Citigroup Inc if its problems mount, the Wall Street Journal said, citing people familiar with the matter.

Source: Reuters: Business News | 10 Mar 2009 | 11:19 am

Sickly U.S. economy set for 2nd half rebound: survey

WASHINGTON (Reuters) - The recession-hit U.S. economy is proving weaker than economists expected just a month ago, but forecasters still think a recovery is in the cards for later this year, a survey released on Tuesday showed.

Source: Reuters: Business News | 10 Mar 2009 | 11:16 am

Who Do We Blame? --- Please, Tell Us.

We are starting to think about our next big project for NPR and This American Life.

We might do something on who is to blame for the current crisis and we'd like your help.

For many, the answer is obvious. The problem is that there are lots of folks with different obvious answers.

Right now, I'd like to get some input: who do you blame and why?

Here's a list of the people and institutions I hear most often. Please note: I am NOT saying this is my list of who I think should be blamed or that I agree with all of the reasoning. This is just a list of what I hear from others. Some, I think, are probably certainly to blame, others that I've listed are almost certainly not.

Who would you add to this list?

Banks.
Bank CEOs or bank risk managers.

Credit Ratings Agencies.

Over-reliance on ridiculously complex computer models.

Financial Engineers.
Over-reliance on ridiculously complex financial instruments.

Homeowners who default.

Deregulation.
Ronald Reagan.
Bill Clinton.
Phil Gramm.
The repeal of Glass-Steagall.

Too much regulation.
Mark-to-market accounting rules.
Community Reinvestment Act.

George W. Bush
It happened on his watch.
He was anti-regulation.

Global imbalances.
China buying too much US debt.
Europe and Japan not growing fast enough.

Lack of a gold peg to the dollar.

Capitalism.
These kinds of booms and busts are endemic to the system.

All of us.
We consumers just got too much in debt.

Who am I missing?

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 10 Mar 2009 | 11:12 am

Global jobs downturn seen continuing: Manpower

NEW YORK (Reuters) - A measure of U.S. employment expectations fell to its lowest level since 1982, amid fresh evidence the job market slowdown is rapidly becoming a global phenomenon, according to a quarterly survey by Manpower Inc released on Tuesday.

Source: Reuters: Business News | 10 Mar 2009 | 11:11 am

Holy Spidey vision: Marvel hits the Web

Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 11:10 am

FTSE adds 1.25% (AFP)

AFP - London stocks rebounded on Tuesday as investors fished for bargains following recent turmoil in the banking sector.

Source: Yahoo! News: Stock Markets News | 10 Mar 2009 | 11:05 am

Chinese CPI falls for first time in six years

Consumer prices in China fell for the first time in more than six years last month, sending the world’s third-largest economy into technical deflation as officials described the outlook as grim.
Source: Latest Business News from Times Online | 10 Mar 2009 | 11:04 am

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 | 10 Mar 2009 | 11:01 am

Oil steady at $47

Read full story for latest details.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 10:57 am

Worst collapse in UK manufacturing in four decades

The "horrendous" scale of Britain's industrial recession has been laid bare by figures showing that manufacturing output is declining at the fastest rate since records began more than 40 years ago.
Source: Telegraph Finance | 10 Mar 2009 | 10:57 am

IMF warns of Great Recession, Africa at risk (Reuters)

Reuters - The International Monetary Fund on Monday warned that the world economy will likely contract this year in a "Great Recession" and African leaders said the financial crisis could undo hard-won social-economic gains.
Source: Yahoo! News: Business | 10 Mar 2009 | 10:56 am

IMF warns of Great Recession, Africa at risk

DAR ES SALAAM (Reuters) - The International Monetary Fund on Monday warned that the world economy will likely contract this year in a "Great Recession" and African leaders said the financial crisis could undo hard-won social-economic gains.

Source: Reuters: Business News | 10 Mar 2009 | 10:56 am

Indications: U.S. stock futures climb as bank execs defend performance

U.S. stock futures rose on Tuesday, as the chief executives of beleaguered banks Citigroup and Bank of America defended their performance and as mergers-and-acquisitions activity drew renewed attention following Dow Chemical’s move to go ahead with a stalled buyout and reports Genentech was on the verge of being fully acquired.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:55 am

UK manufacturing shrinks further

Manufacturing output in the UK declined for the 11th straight month in January, official figures show.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 10:52 am

Survey: 'Employers will continue to run lean'

With the unemployment rate at a 25-year high, employers indicate that hiring isn't likely to pick up anytime soon, according to a staffing firm survey released Tuesday.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 10:49 am

London Markets: Upgrades for Barclays, Man Group lead London financials

London stocks were higher on Tuesday, with beaten-down financials driving the gains, and led by hedge fund group Man and Barclays after analyst upgrades for both.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:48 am

Currencies: Dollar retreats as global equities bounce

LONDON (MarketWatch) -- The U.S. dollar turned lower Tuesday, losing support as world equity markets rebounded from recent losses.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:45 am

Barclays 'mulls Treasury option'

Barclays Bank is reportedly looking into whether to join the government's asset insurance scheme.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 10:38 am

A $21.6 billion test drive

The Obama administration's top auto advisors were in the Detroit area Monday to meet with officials from General Motors and Chrysler, test drive a new electric car and try to chart a course for the industry's rescue.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 10:36 am

Banks' future woes in one word: Plastic

Major banks have been hit hard by bad mortgages. Now, fears are growing that troubled financial institutions are going to have another consumer headache to deal with: credit card defaults.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 10:35 am

Movers & Shakers: Tuesday's biggest gaining and declining stocks

MarketWatch's daily rundown of stocks likely to make moves in trading Tuesday.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:34 am

Output slump weighs on pound

The pound fell to a five-week low against the euro on Tuesday as UK economic data heightened the gloom surrounding the currency.Figures showed UK industrial output slumped by more than expected in January,...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 10:32 am

'Global growth to slow below zero'

Read full story for latest details.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 10:28 am

Text of Citigroup memo sent by CEO Vikram Pandit

Text of the memo sent by Citi CEO Vikram Pandit, saying the bank was profitable during the first two months of the year.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:21 am

World in grip of 'Great Recession' IMF warns

The world is now in the grip of the "great recesssion" and global economic growth could dip below zero for the first time in sixty years said Dominique StraussKahn the head of the IMF.
Source: Telegraph Finance | 10 Mar 2009 | 10:20 am

Pandit Say Citigroup (C) Off To Great Start For The Quarter

Citigroup (C) CEO Vikram Pandit says that the bank is having a great quarter. That must be true because he says it is, although his comments in the past have not always been spot on.

According to the FT, Pandit sent a note around to workers at the bank saying ‘We were profitable through the first two months of 2009 and are having are best quarter-to-date performance since the third quarter of 2007.”

Pandit’s enthusiasm may be masking some of the bank’s problems. There is certainly no guarantee that when it comes time to close the books on Q1 that a lot of the troubled asset on Citi’s balance sheet will not have to be written down. It may also have to account for credit card defaults and failure of some of the LBO loans that it made.

Other than that, everything is fine.

Douglas A. McIntyre

Tagged: C

Source: 247 Wall Street | 10 Mar 2009 | 10:19 am

Germany's exports down by a fifth

German exports fall by more than 20% in January as the economic downturn hits overseas demand.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 10:17 am

Insurance bounce leads FTSE financials higher

London stocks moved higher after a slow start on Tuesday as financial stocks, under fire in recent sessions, enjoyed a strong rally and overshadowed losses for oil and drugs groups.The benchmark FTSE 100...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 10:15 am

IMF predicts a global recession

The world economy is likely to shrink for the first time in decades this year, the head of the International Monetary Fund warns.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 10:11 am

Industrial output falls at fastest rate since 1981

British industrial output, which accounts for 18 per cent of the country's economic output, slumped at the fastest rate in nearly 30 years in January, indicating that the recession is tightening its grip.
Source: Latest Business News from Times Online | 10 Mar 2009 | 10:07 am

Europe Markets: Banks, autos help European shares come off multiyear lows

European shares rebound off 12-year lows, as a double upgrade for Daimler injects some life back into the auto sector and as Barclays sets the pace for gains in the banking sector.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:07 am

Credit Cards: Weighing Bad Debt Against Any Debt At All

Bank uber-analyst Meredith Whitney wrote in The Wall Street Journal that the economy will have more problems as banks take credit cards away from people to prevent bad debt write-offs. She says “Just six months ago, I estimated that at least $2 trillion of available credit-card lines would be expunged from the system by the end of 2010. However, today, that estimate now looks optimistic, as available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone.”

That leaves a possible revival of consumer spending in a hell of a mess. Most consumers are having such a rough time with their current debt along with the possibility of unemployment that they are hardly spending any money at all. If the economy begins to get better, their credit cards may have been taken away by their banks. They may have a tiny big of money to spend, but no easy way to do so. That should slow the recovery by a significant amount.

Then there are those few people who do have money now and might be enticed to spend it as deflation brings the prices for almost everything down. And there are people who will have more money because of proposed tax cuts. Without credit cards, will those people pay cash? Not likely.

Banks have already pulled massive amounts of credit out of the system by denying new loans to businesses and consumers. And extinction of the credit card will make that a lot worse. The only solution may be for the Treasury to issue plastic to consumers. Instead of the MasterCard (MA) or Visa (V) logo, they can carry a picture of President Obama.

Douglas A. McIntyre

Tagged: MA, V

Source: 247 Wall Street | 10 Mar 2009 | 10:06 am

Hong Kong boosts Asia-Pacific markets

Hong Kong shares led the Asia-Pacific region's markets marginally higher on Tuesday boosted by HSBC, which rallied after a 42 per cent decline over the past week following the announcement of its share...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 10:06 am

Eight arrested over £40m mortgage fraud

Eight people were arrested this morning in raids by police investigating a suspected £40 million mortgage fraud.
Source: Latest Business News from Times Online | 10 Mar 2009 | 10:06 am

Corrections: Man Group leads rebound for London financials

A MarketWatch report dated March 10 gave an incorrect attribution to a market comment from Capital Spreads. The comments were made by Simon Denham, managing director at Capital Spreads, not Andrew Wilde.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 10:03 am

“The Great Recession”: The Art Of Naming Things Before They Happen

The head of the IMF is calling the period that the world is in now and is likely to stay in for some time “The Great Recession”. According to Reuters, he said “The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes.”

That assessment may be correct, but there are a number of factors that could make it wrong.

The issue of whether unemployment could rise to 14% or 15% in the US won’t be known until well into next year. GDP contraction in the American economy could move to 10%. If those things happen, China will fall like a bowling pin as demand for its exports evaporates.

As part of a series of events that would be triggered by a further collapse of the US economy, aid to struggling nations could nearly disappear as developed countries work feverishly on their own troubles.

Or, the US, EU, UK, and China economic stimulus packages could actually take hold in the later part of this year, and the global recession could begin to turn into a recovery. Central banks may have poured enough capital into their financial systems so that there is an improvement in the balance sheets of the large private money center firms, and as a consequence lending to consumers and businesses will to revive.

Giving this economic period a name, which is almost certainly premature, is not going to affect the outcome. It is really only useful to get press.

Douglas A. McIntyre

Source: 247 Wall Street | 10 Mar 2009 | 9:47 am

Whitney says credit cards are the next credit crunch: report

(Reuters) - Prominent banking analyst Meredith Whitney warned that "credit cards are the next credit crunch," as contracting credit lines will lower consumer spending and hurt the U.S. economy.

Source: Reuters: Business News | 10 Mar 2009 | 9:29 am

Another Look At The Fate Of The US Retail Industry

AlixPartners, a turnaround firm, said at the beginning of the year that 10% to 26% of retailers were in financial distress and were in danger of filing for Chapter 11. It is worth considering how the researchers came up with that number, given that there are tens of thousands of retailers and hundreds of thousands of stores in America. Why wasn’t the number 9% or 27%? The answer is that the forecast is virtually useless, something like counting the number of poisonous snakes in an “Indian Jones” movie.

The only way to see what will happen in the retail industry in the next several quarters is to watch it like a hawk today. The first impression that many people get is that the retail business is OK because Wal-Mart is doing so well. But, Wal-Mart is the exception to the rule. Sam Walton’s company continues do well because its tremendous buying power, distribution, and brand allows it to attract customers who get relatively high quality products for very little money. Its success removes a great deal of the foot traffic from the rest of the industry.

For a more realistic view of how stores are fairing under the withering decrease in demand caused by the recession, Ann Taylor (ANN) is a good example for analysis. In the fourth quarter, its sales dropped 20% to $483 million. It will close 163 of its stores. That is from a total of 935. The company’s stock now trades at $2.82, down from a 52-week high of $29.23. Most of that collapse occurred over the last six months.

Ann Taylor does not sell expensive clothes and accessories and it does not sell cheap ones. That puts it right in the center of the drop-off in middle class buying power. Firms including Liz Claiborne (LIZ) and Talbot’s (TAL) are in about the same spot. Ann Taylor is probably much better off than genuinely failing retailers including Bon-Ton (BONT) and Gap (GPS). Ann Taylor, of course, is not Wal-Mart which will most likely stay in a world all its own for the duration of the downturn.

In the meantime, Ann Taylor will close nearly 20% of its stores. The company has 5,500 workers. A lot of those people will lose their jobs. Closing 20% of the Ann Taylor stores is probably about right. This forecast is as accurate as any available because it is based on real trends in the retail industry.

If large retailers close 20% or so of their stores, most of them will avoid becoming distressed or candidates for Chapter 11. The AjixPartner’s estimate was too high and did not take into account the rate at which the industry could cut off limbs to save the body.

Is the fate of retailers likely to be better than some of the most pessimistic forecasts? Yes. But, for this to happen big retail operations will have to do the hard thing and lots of people will lose their jobs.

Douglas A. McIntyre

Tagged: ANN, BONT, GPS, LIZ, TAL, WMT

Source: 247 Wall Street | 10 Mar 2009 | 9:26 am

Barclays warned on toxic asset dumping

Barclays was warned that its balance sheet would be subject to forensic Treasury examination if it decided to dump toxic assets on the taxpayer
Source: Financial Times - US homepage | 10 Mar 2009 | 9:21 am

When China and Brazil Become A Better Investment Than The US

Now that most investors, both institutional and individual, have lost a large portion of their stock market holdings, all that most people want to know is how they can get their money back. The easy answer is that they probably won’t get their money back, at least not over the next five or ten years. But, that kind of answer is never satisfactory.

One well-known market analyst suggests that putting money into the stock markets in China and Brazil will pay off better than keeping capital in US equities. According to Reuters, Mohamed El-Erian, chief executive at Pimco, the world’s biggest bond fund manager, said about China and Brazil, “The case for optimism comes from the fact that these countries entered today’s global crisis with better initial conditions.”

In horse racing and boxing, experts will point out that a strong start does not mean a strong finish. China is a case in point. Its GDP has grown at a rate of about 10% a year for a decade. The government has done whatever it needed to do to keep the economy on track. It has underwritten the build-up of the manufacturing sector, the telecom and electric infrastructure, and a large and complex financial system. It has also sold parts of the nation’s largest companies to the public to give the companies more access to capital. The communist central government says it will put about $585 billion into the domestic economy in order to stimulate consumption and business expansion.

It is hard to see how China could fail with its plans to keep its GDP growing rapidly with such an impressive arsenal. It looks almost as good as the one that the US had in the 1920s and Japan did in the 1980s.

Of course, the Chinese economic leaders have read all of the analysis about what caused economic collapses in large nations during the past. China has certain advantages that have never been present in another rapidly growing country. The country has both an abundance of national resources and a large supply of workers who can be trained to work in factories. China has also grown and continues to grow with virtually no restrictions on how industry effects the environment. The World Bank estimated that 700,000 Chinese die prematurely due to poor air quality. Perhaps the best way to look at that number is that it is the price of progress.

China has obviously demonstrated that it has both the will and the capacity to exceed the growth of any other large nation in the world. But, what is rarely if ever mentioned by the government is that the nation’s economic fate is not in its own hands.

Recently The Wall Street Journal reported that “Goldman Sachs estimates that China’s economy grew 2.6% in the October-December period from the July-September quarter. The OECD puts the quarter-on-quarter growth for the same period at 0.3%.” The numbers are telling in two ways. The first is that estimates of economic activity on the mainland are imprecise. The second is that China’s growth rate may have already have slowed considerably.

None of the current explanations of China’s GDP growth are able to explain the discrepancy between China’s GDP growth and the sharp drop in imports among the developed nations. China does not have another set of nations that it can send its goods in order to replace the diminished demand from the US, Japan, and Europe. As unemployment in these regions continues to rise, and that looks like a certainty now, China’s ability to send its manufactured goods overseas drops each month.

So far this year, the Shanghai Composite, the best measurement of stock values in China, is up over 20%. Those making the argument that the world’s most populous nation will have a strong year can point to that number as an indication of optimism. The trouble with the theory is that when the Asian nation’s economy was at its most robust, in 2007 and early 2008, the same index of China’s stock fell from a level of 6,000 to 1,700 where it bottomed five months ago. This must be what the head of Pimco meant when he said that investing in Chinese stocks is the best game in town.

Douglas A. McIntyre

Source: 247 Wall Street | 10 Mar 2009 | 9:19 am

Darling urges mutual EU support

UK chancellor Alistair Darling calls on the EU to offer more help to member states at most risk of financial crisis.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 9:18 am

Developing economies are about to feel the pain

The World Bank's estimate of negative global growth in 2009 looks right.
Source: Telegraph Finance | 10 Mar 2009 | 9:13 am

New Moody’s Company “Dead Pool” May Wreck A Lot Of Companies

Moody’s has come out with a list of 283 companies that are at great risk of defaulting on their debt. The Wall Street Journal got a copy of the list so each of the firms can face customers, suppliers, and creditors who will have fresh questions about whether these corporations will fail.

Because they are on a list from Moody’s published by The Wall Street Journal, their fates may be sealed even though they might not have been if the list never saw the light of day.

Many of the firms on the “Bottom Rung” list, as Moody’s calls it, are clearly beyond help. Chrysler and Rite Aid (RAD) probably fall into that category. But, some of the other firms whose names made the honor roll are likely to pull through the downturn. Of course, Moody’s has made that a bit less likely.

AMR (AMR), which is in the “Bottom Rung” has a relatively strong balance sheet. With fuel costs down, even a drop in passengers is not likely to put the company into Chapter 11. The same can probably be said for Level 3 (LVLT) and AMD (AMD). Being on the “Bottom Rung” has moved these companies into hot water.

Douglas A. McIntyre

Tagged: AMD, AMR, LVLT, RAD

Source: 247 Wall Street | 10 Mar 2009 | 9:11 am

RBS to pump £800m of taxpayers' money into pension schemes

Bank is to use taxpayers' money to bolster pensions which include the £703000 payout to exchief Sir Fred Goodwin.
Source: Telegraph Finance | 10 Mar 2009 | 9:10 am

BAA cargo traffic dives 21% on economic slump

Britain’s biggest airports suffered a plunge in cargo traffic of more than 20 per cent last month in the latest sign of the rapid decline of the UK economy.
Source: Latest Business News from Times Online | 10 Mar 2009 | 9:01 am

China says US naval ship broke the law

China said that a US Navy ship involved in a confrontation with its fleet off the southern island of Hainan had violated international and Chinese laws
Source: Financial Times - US homepage | 10 Mar 2009 | 8:56 am

Driving a bargain

Given the ongoing state of the economy, hearing about automotive bargains may be cold comfort. But if you are in the position to pick up some new sheet metal, there has never been a better time.
Source: Business and financial news - CNNMoney.com | 10 Mar 2009 | 8:44 am

EADS to pay back €5.7bn if Nato cancels A400M military plane

Airbus parent EADS said it would have to pay back €5.7bn £5.2bn in predelivery payments if European Nato countries cancel its delayed A400M military transport plane.
Source: Telegraph Finance | 10 Mar 2009 | 8:39 am

Hilton Hotels to unveil new lifestyle brand

Hilton Hotels Corporation, the American hotel behemoth, will unveil its new lifestyle hotel brand, to be named Denizen, today.
Source: Latest Business News from Times Online | 10 Mar 2009 | 8:37 am

Financials help Asia rebound; Nikkei sinks further

Most Asian markets end higher Tuesday, with financial stocks getting some respite from recent heavy selling following the lead of some of their U.S. counterparts overnight.

Source: MarketWatch.com - Top Stories | 10 Mar 2009 | 8:33 am

Chinese prices record rare fall

Chinese consumer prices showed an annual fall in February for the first time since 2002, figures show.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 8:10 am

Hong Kong investigates HSBC share plunge

HSBC's 24pc plunge in Hong Kong on Monday has prompted a government investigation and the stock exchange to consider bringing forward changes to end ofday trading processes. The shares rallied 15pc.
Source: Telegraph Finance | 10 Mar 2009 | 8:09 am

Profits fall at Greggs bakeries

Bakery chain Greggs reports a 3.3% fall in profits for 2008, blaming the rising cost of ingredients and energy.
Source: BBC News | Business | World Edition | 10 Mar 2009 | 8:00 am

Antofagasta profits slide as copper prices tumble

Antofagasta the world's largest copper producer saw its annual profits fall last year as the global downturn hit commodity pricesumbled last year.
Source: Telegraph Finance | 10 Mar 2009 | 7:59 am

Media Digest 3/10/2009 Reuters, WSJ, NYTimes, FT, Bloomberg

According to the head of the FDIC, a “bad bank” system could jumpstart the US economy.

Reuters reports that some economists believe that the US economy will start to rebound in the second half of the year.

Reuters says that the Dow Chemical (DOW) merger with Rohm and Haas (ROH) will now go through.

Reuters reports that Eli Broad who invested in AIG (AIG) has given up hope that the company will recover.

Reuters reports that the US is weighing future aid for Citigroup, if needed.

Reuters reports that Moody’s (MDO) has listed those companies at greatest risk for default.

Reuters reports the Manpower says the global downturn in the job market is continuing.

Reuters reports that the US auto task force met with GM (GM), Chrysler, and the UAW.

The Wall Street Journal reports that Roche is near a deal to buy Genentech (DNA).

The Wall Street Journal reports that the UAW has agreed to concessions to Ford (F).

The Wall Street Journal writes that central bankers in Europe are beginning to see signs of hope that the economy will recover.

The Wall Street Journal reported that oil is rising putting $50 in sight.

The Wall Street Journal reports that airlines are hitting trouble as customers flee.

The Wall Street Journal reports that Sun (JAVA) is seeking new customers for flash-based storage.

The Wall Street Journal reports that the head of IBM (IBM) says that the company will “go on the offensive”.

The Wall Street Journal reports that China consumer prices fell causing concern about deflation.

The Wall Street Journal reports that Bank of America (BAC) keeps saying it is not Citigroup.

The Wall Street Journal reports that US firms in China are bringing down their expectations.

The Wall Street Journal reports that TI (TXN) narrowed its forecast for this quarter.

The Wall Street Journal reports that Palm (PALM) moved to raise cash.

The New York Times reports that investors in biotech companies are losing patience.

The New York Times reports that ‘quants” tried to out smart Wall St.

The New York Times reports that EADS made a profit for the year.

The New York Times reports that short sellers are showing a knack for deals.

The FT reports that Europe rejects a US call for additional stimulus.

The FT reports that Citigroup did well in the first two months of the year.

The FT reports that more concerns have hit the credit markets.

The FT reports that Barclays (BCS) has been warned about toxic asset dumping.

Bloomberg reports that hedge funds may cut 20,000 jobs this year.

Bloomberg reportd that a survey of economists says joblessness will reach 9.4% this year.

Douglas A. McIntyre

Tagged: AIG, BAC, BCS, C, DNA, DOW, F, GM, IBM, JAVA, MDO, PALM, ROH, TXN

Source: 247 Wall Street | 10 Mar 2009 | 7:58 am

Cattles suspends three more directors in probe

Cattles, the consumer loans group, admitted today that it had breached its banking covenants, prompting another profit warning, and suspended three more key directors from its credit business after uncovering a "breakdown" in its internal controls.
Source: Latest Business News from Times Online | 10 Mar 2009 | 7:47 am

FDIC's Bair: Bad assets plan can jump-start U.S. economy

WASHINGTON (Reuters) - The U.S. government's plan to strip banks of troubled assets could force some firms to record large losses, but the move would help restore confidence in the banking system, the head of the Federal Deposit Insurance Corp. said in an interview in Tuesday's Washington Post.

Source: Reuters: Business News | 10 Mar 2009 | 7:25 am

Student consultants teach firms how to get to the next level

Many colleges and universities provide low-cost or even free help to small companies looking for an edge during a lingering recession.

Empire Building Services owner Suzanne DeRossett still refers to the thick report put together three years ago by a team of student consultants from Cal State Fullerton for her janitorial firm.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Oil price jumps, but retail gasoline rises slightly in U.S., California

Crude gains $1.55 to finish at $47.07 a barrel Monday, the highest close since Jan. 6. The average price of a gallon of self-serve regular gasoline rises 0.7 of a cent nationwide and in the state, where it reaches $2.196.

Crude oil on Monday reached its highest closing price since January on concern that oil producers might agree to hold back more production when they meet in Vienna this weekend.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

No sign yet of bear-market bounce

Stocks are sure to rally, then the slide will resume, some analysts predict. But on Monday the Dow slumps 79.89 points, or 1.2%, to 6,547.05. The S&P 500 index slides 1%, and the Nasdaq drops 2%.

Even in the worst bear markets, stocks are supposed to bounce periodically.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Disney shareholders want say on executive compensation

The company has said it's opposed to giving investors a nonbinding advisory vote. Preliminary results of the proposal are due out at a meeting today.

A group of Walt Disney Co. shareholders wants a say on the wages and benefits paid to the company's executives.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Lockheed blows hot air under Raptor's wings

Ads for the F-22 military jet don t show the plane but use jobs as a weapon.

The F-22 Raptor is sex on carbon fiber wings. This is America's premier air superiority fighter, and it's a bad, bad monkey. At an F-22 demonstration at the Reno Air Show in September, I nearly passed out from testosterone poisoning.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Big Pharma bulks up with Merck-Schering deal

The proposed merger may counter problems with competition and the development pipeline but could result in 16,000 layoffs. TARP money aids the industry's consolidation trend.

Big Pharma got bigger on Monday with Merck Co.'s announcement that it would acquire rival Schering-Plough Corp. in a cash-and-stock transaction worth $41.1 billion. And the deal is being made easier by U.S. taxpayers.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

U.S. high court to hear suit over fees

The justices' decision could make it easier for fund investors to challenge the levies.

Critics have long complained that mutual fund fees are too high, wrongfully enriching Wall Street at the expense of ordinary Americans.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Autism patients in California are dealt insurance setback

The Department of Managed Health Care declines to require carriers to pay for applied behavior analysis, an expensive therapy that insurers contend is an educational service, not medicine.

California regulators said Monday that insurers must provide speech, occupational and physical therapies to their autistic members but rejected pleas to require insurers to cover the cost of behavior therapy that aims to help patients live in society.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Sale of Long Beach site where studio is planned now in jeopardy

Plans for a $500-million movie studio on the site of a former Boeing Co. airplane factory in Long Beach are on hold because a long-pending sale of the property fell out of escrow, Boeing said Monday.

Source: L.A. Times - Business | 10 Mar 2009 | 7:00 am

Big Pharma bulks up with Merck-Schering deal

No sign yet of bear-market bounce

Stocks are sure to rally, then the slide will resume, some analysts predict. But on Monday the Dow slumps 79.89 points, or 1.2%, to 6,547.05. The S&P; 500 index slides 1%, and the Nasdaq drops 2%...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 7:00 am

Lockheed blows hot air under Raptor's wings

Ads for the F-22 military jet don t show the plane but use jobs as a weapon. The F-22 Raptor is sex on carbon...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 7:00 am

Student consultants teach firms how to get to the next level

Many colleges and universities provide low-cost or even free help to small companies looking for an edge during a lingering recession. ...
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 7:00 am

Sale of Long Beach site where studio is planned now in jeopardy

Plans for a $500-million movie studio on the site of a former Boeing Co. airplane factory in Long Beach are on hold because a long-pending sale of the property fell out of escrow, Boeing said Monday.
Source: RSS feed - channel BNPaperBusiness | 10 Mar 2009 | 7:00 am

Oil price jumps, but retail gasoline rises slightly in U.S., California

Clive Cowdery's role in £5bn Resolution sale to Pearl investigated by FSA

One of the City's most colourful entrepreneurs Clive Cowdery is being investigated by the Financial Services Authority FSA "in relation to certain actions" during the sale of his closedlife insurance company Resolution Plc to Pearl Assurance last year.
Source: Telegraph Finance | 10 Mar 2009 | 6:22 am

China prices fall for first time in six years

Chinese consumer prices in February fell for the first time in more than six years with the benchmark consumer price index falling 1.6% from a year earlier, down from a 1% rise in January
Source: Financial Times - US homepage | 10 Mar 2009 | 6:17 am

NZ stocks: market inches lower in quiet session

The sharemarket closed a touch lower today with little in the way of company news to provide direction. The benchmark NZSX-50 index closed down 6.47 points, or 0.26 per cent, at 2462.7, having lost just 1.9 points yesterday. Turnover...
Source: New Zealand Herald - Business | 10 Mar 2009 | 6:07 am

Currency: Dollar lifts off low against US

The New Zealand dollar recovered from early weakness today but risk aversion meant it remained subdued. By 5pm, the kiwi was at US49.76c from US50.25c late yesterday afternoon, having hit a low of US49.17c during the day. Against...
Source: New Zealand Herald - Business | 10 Mar 2009 | 5:53 am

Citi has strong start to the year

Citigroup has had its best profit performance in over a year in the first two months of 2009 and has generated revenue of more than $19bn despite growing uncertainties over its future, chief executive Vikram Pandit told employees
Source: Financial Times - US homepage | 10 Mar 2009 | 5:32 am

Moody's lists companies at debt default risk: report

NEW YORK (Reuters) - Companies ranging from Eastman Kodak to Unisys are at risk of defaulting on their debt in the eyes of credit ratings agency Moody's Investors Service, according to the Wall Street Journal.

Source: Reuters: Business News | 10 Mar 2009 | 5:03 am

Lower fares for US travellers lifts Air NZ bookings

The number of passengers from the United States booking with Air New Zealand has lifted in recent weeks, as the airline offers lower price fares amid global economic gloom. Group general manager international airline Ed Sims said...
Source: New Zealand Herald - Business | 10 Mar 2009 | 4:57 am

FDIC's Bair: Bad assets plan can jump-start U.S. economy (Reuters)

Reuters - The U.S. government's plan to strip banks of troubled assets could force some firms to record large losses, but the move would help restore confidence in the banking system, the head of the Federal Deposit Insurance Corp. said in an interview in Tuesday's Washington Post.
Source: Yahoo! News: Business | 10 Mar 2009 | 4:31 am

Sickly U.S. economy set for 2nd half rebound: survey (Reuters)

Reuters - The recession-hit U.S. economy is proving weaker than economists expected just a month ago, but forecasters still think a recovery is in the cards for later this year, a survey released on Tuesday showed.

Source: Yahoo! News: Business | 10 Mar 2009 | 4:27 am

AgResearch, Lincoln University merger planned

Merging AgResearch into Lincoln University is unlikely to cause job cuts among researchers and academic staff - but there is potential for jobs to be lost among support staff, the organisations say. AgResearch board chairman Sam...
Source: New Zealand Herald - Business | 10 Mar 2009 | 4:00 am

Case Closed: Stocks Work

THIS YEAR MARKS THE 30TH ANNIVERSARY of a famous Business Week cover story "The Death of Equities." Along with those scary words, the magazine's Aug. 13, 1979, cover read, "How inflation is destroying the stock market." But starting around that time, investors could have beaten inflation quite handily by snapping up stocks and holding them for five or 10 years.

Buying the stock market at the close of 1979 would have yielded, after inflation, an average annual return of 7.3% over the next five years. An even higher five-year return of 9.47% could have been captured by going long at the end of 1978. The 10-year performance would have been healthier still, yielding 9.52% or 10.75%, depending on whether the investor bought at the close of '78 or '79.

With the stock market in the throes of yet another near-death experience, another rebirth could be in the offing. Five- and 10-year returns on stocks through year-end 2008 have run negative, and would have looked even worse at the lows of last week. But based on the historical record, performances like these bode well for the next five to 10 years.

THE HISTORICAL RECORD SHOWS that for 20- and 30- year periods, inflation-adjusted returns on stocks have never been negative. Over the 137 years from 1871 through 2008, returns after inflation for 20- and 30-year intervals have been consistently positive. Median returns over the 20-year intervals have been 6.85%, and for 30-year intervals, 6.23%.

With this consistently strong performance over long periods, it stands to reason that below-par returns over five- and 10-year intervals would tend to be followed by much better results over the subsequent five- and 10-year intervals. And in fact, the historical record shows that, following below-average returns over five and 10 years, subsequent periods of similar length do tend to perform better than average.

An investor whose retirement is drawing near might take heed: Investing in stocks today could help produce the cash you will need five or 10 years down the road.

Those who plan to retire in less than 10 years would benefit if the historical trends hold true. Positive returns over the next 20 or 30 years would only make retirement more of a breeze.

Critics of stocks as vehicles for retirement often rig their case by assuming that investors entered and exited with the worst possible timing, buying at peaks and liquidating at bottoms.

But diversification over time -- buying and selling periodically, rather than all at once -- can be quite effective. Most investors would be foolish to liquidate all their stock holdings on the day their retirement begins, unless they feel endowed with timing skills that few can claim. If they plan to live 20 years past their retirement, they might plan to hold on to at least part of their holdings for 15 to 20 years.

And of course, retirement accounts are set up in such a way that buying can occur in installments over many years. The acquisition of stocks can therefore be diversified over time, along with the process of liquidation.

From this perspective, useful insights can be gleaned from the exhaustive record originally pieced together by Wharton School finance professor Jeremy Siegel for his best-selling book, Stocks for the Long Run, now in its fourth edition.

Siegel has amassed data on rolling five-year periods dating back to 1871 (1871-1876, 1872-1877 and so on). He has similar data on rolling 10-, 20- and 30-year periods.

Why begin with 1871? Prof. Siegel can also provide data going back to 1802, but prior to 1871, the quality of the data isn't particularly reliable, and data over the past 137 years are more than sufficient to reveal the long-term performance of stocks as an asset class.

The data can track all failed stocks into bankruptcy, so there is no "survivors' bias," a common flaw in historical analysis. And Siegel adds that, even in the 1800s, the U.S. stock market featured a fair range of different industries, roughly similar to more recent eras.

Siegel has analyzed the data in terms of "total returns" after inflation. All publicly traded stocks are bought on a capitalization-weighted basis, with all dividends reinvested. Average annual returns benefit from the magic of compounding. Thus, for example, $1 invested at 6.26% over 30 years becomes an inflation-adjusted $6.13 with compounding.

For any given holding period from year-end close to year-end close, no taxes are assumed -- not unrealistic, given the advent of tax-deferred accounts. Perhaps a tad unrealistically, management fees aren't factored in, either. But in the era of index funds and exchange-traded funds, such fees are lower than ever. Some ETFs charge as little as seven one-hundredths of a percent.

JEREMY SCHWARTZ, RESEARCH director of WisdomTree Asset Management -- a firm with which Siegel is affiliated -- updated Siegel's figures at Barron's request. We asked him to line up the worst-performing quartile of 10-year stretches since 1971 and then see how the following 10 years performed in each case. That meant examining about 30 intervals of poor performance.

The result: In each case -- without exception -- the subsequent 10-year periods performed better and ran positive. The median performance for each was 8.17%, 1.33 percentage points higher than the median for all 10-year intervals.

Schwartz performed the same exercise for the worst quartile of five-year returns. Here the finding was that, in 25 out of the 31 cases, the subsequent five-year periods performed better and ran positive. The median performance for all these cases was 9.47%, 2.50 percentage points higher than the median for all five-year intervals.

Prof. Siegel also compares long-term equity performance with returns in U.S. Treasury bonds -- an apt comparison for risk-averse investors seeking reliable income in retirement. Assuming buy-and-hold strategies in Treasuries over 20- and 30-year intervals, how often did the inflation-adjusted income and possible capital gains from bonds prove superior to the returns of stocks?

Answer: Through 2008, stocks have always done better than Treasury bonds over 30-year periods. And over 20 years, stocks bested Treasuries in all but a little over 5% of the cases.

Despite the bear market of 2008, long-term returns through year end were fairly good, running 5.17% annually for the previous 20 years and 6.6% for the previous 30. But what if the investor had the bad luck to liquidate at of the close of February '09? Add these two disastrous months to the 20- and 30-year holding periods, and returns would have been 4.09% and 5.86%, respectively.

Why do stocks tend to do better over the long run than either bonds or inflation? Mainly because their returns are driven by rising profits -- which in turn are driven by real growth in the U.S. economy. That's why stocks can be indispensable for retirement planning.

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 | 10 Mar 2009 | 4:00 am

Is Your Bank Healthy? How to Diagnose It (Consumer Action)

The Federal Deposit Insurance Corporation, or FDIC, has been guaranteeing deposits since 1933 -- and since then, consumers have not lost a single penny.

But now the banking system is so stressed that the FDIC itself is running out of money. Currently, the government agency covers up to $250,000 per account (that amount is good through Dec. 31 when it may drop back down to $100,000).

The organization, which is funded by insurance premiums paid by banking institutions, recently doubled those premiums to raise extra cash. Now it's turning to Uncle Sam for more help. Last week, FDIC Chairwoman Sheila Bair requested that the government more than triple the organization's borrowing authority from $30 billion to $100 billion.

We're not telling you to take your money out of the bank. Indeed, almost everyone expects the government to find a way to keep deposits insured should more banks fail.

But just how likely is it that you'll wind up relying on the FDIC's insurance anyway? If you're curious about the health of your bank, you can get a pretty solid picture by looking at some basic numbers that publicly-held banks must disclose in their annual financial reports filed with the Securities and Exchange Commission. (Privately-held banks, meanwhile, have to file what are known as “call reports” with the FDIC, which contain this information as well.)

Here are four key numbers that will tell you whether your bank is the epitome of health or gasping its final breath.

1. The Tier 1 ratio

The Tier 1 ratio tells you how much capital a bank has set aside to absorb losses. “Essentially, it shows how strong its balance sheet is,” says Chris Fortune, an analyst at investment firm T. Rowe Price who covers regional banks. Generally, a Tier 1 ratio needs to be at least 6% for a bank to be well capitalized, but in today’s environment, banks should have 8% or 9% to be considered healthy, he says. Look for Tier 1 information in the Management Discussion section in 10-K Annual Report forms.

Spotlight onJ.P. Morgan Chase (JPM). According to its 2008 annual report, the bank’s Tier 1 capital ratio at year-end was 10.9%.

2. The nonperforming asset ratio

The nonperforming asset ratio, also known as NPA ratio, tells you how much exposure your bank has to assets that are a potential problem. Loans that are 90 or more days late, for example, are considered nonperforming assets. This ratio is determined by dividing these problem assets by the bank's total assets. “Today, anything below 1% is really good,” says Fortune. “Below 2% is OK. And, as you start to get above 4%, you start to worry.”

Spotlight onBank of America (BAC). In its 2008 annual report, the bank reported that its nonperforming loans and leases are 1.77% of its total loans and leases.

3. Tangible common equity ratio

The tangible common equity ratio shows how much of a loss a bank can take, as a percentage of assets, before common shareholders are wiped clean, says Jamie Peters, an equity analyst with financial research firm Morningstar. If a bank’s common equity ratio is 3%, for example, the bank would have to write off 3% of its assets before shareholders lose everything. (As a rule of thumb, anything below 3% is too low, says Peters.)

Figuring this ratio out is tricky, since banks don't generally disclose it in their financial statements. To calculate it, divide your bank’s tangible common equity by its tangible assets. (Tangible common equity is total shareholders’ equity minus preferred stock minus goodwill and intangibles; tangible assets is total assets minus goodwill and intangibles). All of the numbers you need to calculate this are listed in the bank’s balance sheets.

Spotlight onCitigroup (C). Its tangible common ratio was 1.5% before the government stepped in to bail it out. If everything works well, the ratio should be over 4%, says Peters.

4. Loan loss reserves

This is the amount a bank has set aside to deal with problem loans. This figure will give you a good idea of the bank's ability to remain healthy in an unhealthy environment. To calculate your bank’s loan loss reserve ratio, simply divide its allowance for loan losses by its total loan portfolio. The higher the percentage, the better your bank’s ability is to cover potential losses. A reserve of 1% or less is considered weak, according to Fortune, while anything over 2% is considered strong.

Spotlight onWells Fargo (WFC). The bank’s allowance for loan losses was slightly over $21 billion at the end of 2008, while its total loan portfolio was $864.8 billion: a healthy 2.4%.

Source: SmartMoney.com | 10 Mar 2009 | 4:00 am

Goldilocks Stocks (Screens)

It’s easy to find companies with heaps of excess cash. The trouble is, a mountain of cash isn’t a particularly promising sign. Studies show cash-rich companies are more likely than not to pursue acquisitions. Pfizer (PFE) and Merck (MRK) are recent examples. Other studies show that most acquisitions end up losing shareholders money. Put the two together and you get, well, a 1999 study published in the Journal of Finance that concluded cash-rich acquirers destroy an average of seven cents in value for each dollar in cash they were clutching before the deal.

That’s a pity. It helps explain why Merck shares plunged Monday after investors learned of its gargantuan marriage to Schering-Plough (SGP), and why Pfizer stock has fallen much further than the broad market since January, when it announced its purchase of Wyeth, for which it’s spending all of its cash, taking on plenty of debt and halving its dividend payment.

That leaves stock buyers with two unattractive extremes: Financially strapped companies seem poised to fail, but cash-rich ones look likely to lose, too. Much as I like Apple’s (AAPL) products, I wouldn’t go anywhere near the stock until it releases some of that $25 billion it’s sitting on in the form of a big dividend. Otherwise it might do something dumb with the money. Same with the other technology wunderkind I recently pooh-poohed . These include Dell (DELL), Google (GOOG), eBay (EBAY), Yahoo (YHOO) and Microsoft (MSFT). To Microsoft’s credit, its stock already carries a market-average dividend yield of 3.2%. To its discredit, the high yield is owed in part to the stock price plunging since Microsoft tried last year to buy Yahoo at a price anyone with a calculator could see was too rich by a factor of three.

Financial capacity — cash and borrowing power — is a fine thing for companies to have right now. But in searching for it, try to look for companies that also have a culture of funneling cash to stockholders, instead of letting it pile too high.

Exxon (XOM) has plenty of cash, but not a ridiculous amount, considering its size. Shares yield 2.4%. The company could easily afford to pay out twice as much, but oil drillers are capital-hungry businesses, and Exxon’s cash should be put to profitable use now that the price of reserves and equipment has fallen. The stock goes for 13 times this year’s earnings estimate.

Booze distributors generally like to pile on the leverage, but Brown-Forman (BFB) has a relatively unencumbered balance sheet. The stock yields an affordable 2.7% and trades at 14 times earnings. Cheaper companies abound right now, but unlike most, Brown is expected to grow its sales and profits this year and next. Liquor sales, keep in mind, tend to hold up well in a slow economy. (Some of us are thinking about carrying a flask to work once the Dow falls below 6000.)

Becton Dickinson (BDX) is also growing sales and profits. It makes and distributes medical supplies which, notwithstanding the swelling ranks of the jobless and uninsured, aren’t especially sensitive to the economy, either. Becton has a dash of cash and another of debt, and its dividend costs barely more than a quarter of profits. Shares at less than 13 times earnings yield 2.1%.

Source: SmartMoney.com | 10 Mar 2009 | 4:00 am

7 Ways to Dig Up More Money for College (Deal of the Day)

For many high school seniors (and their parents), the moment of truth is about to arrive. In the next several weeks, they'll not only find out which colleges they were accepted to, but also how much money those schools are willing to give them.

Unfortunately, many students will be disappointed -- at least when it comes to their financial aid package. Demand for financial aid has skyrocketed for the 2009-10 academic year and schools can't afford to extend more aid than they could in the past, says Rod Bugarin, a financial aid and admissions counselor at New York-based IvyWise, an independent college-counseling company. (Bugarin is a former financial aid officer at Brown University and Columbia University.)

As a result, many families will find themselves falling significantly short when it comes to affording tuition (and room and board). Here's how you can start digging up some extra cash for your kid's college tab:

Appeal for More

Feel as if you've been shortchanged by the school's financial aid office? Call them to appeal for more money. As students start rejecting schools' admission offers, more money opens up that you could have a shot at.

This method is most effective if a parent has undergone a financial hardship, such as the loss of a job or unexpected medical bills, since they initially filed their financial aid forms. Be prepared to present your 2009 tax returns and a list of monthly income and expenses, says Bugarin. In addition, point out nondiscretionary expenses that may impact a financial aid officer’s decision, like tax bills or certain types of debt.

Ask the school to match (or beat) a better offer

Sometimes one school can be extremely generous with their aid offers, while another, quite similar school, can be...well, stingy.

If this happens to you, tell the financial aid office at the college that a school of similar rank has offered your son or daughter more aid. The financial aid officer may match the package or increase it, says Bugarin. The worst-case scenario: The financial aid office sticks to its initial offer.

Parents: Apply for a PLUS Loan

Parents might want to consider a Parent Loan for Undergraduate Students (PLUS), which covers all the costs of tuition and board, minus any grant money the student receives. These loans tend to carry favorable interest rates and repayment terms compared with private loans, says Kalman Chany, president of New York-based Campus Consultants, which provides financial aid assistance to college students and their families.

PLUS loans can be secured through the federal government 's Direct Loan Program (assuming the school participates in this program) or through a bank. Maximum fixed interest rates on these loans are 7.9% and 8.5%, respectively.

Apply for an Unsubsidized Stafford Loan

Even if a student doesn't qualify for a subsidized Stafford or a Perkins loan in their financial aid package, they can still apply for an unsubsidized Stafford loan.

These loans offer up to $5,500 to freshman students, regardless of their financial status. (Loan limits change based on the school year the student is in.) Unsubsidized Stafford loans carry a 6.8% fixed rate, which begins accruing after the loan is disbursed to the school.

How to apply: If the school is part of the direct lending program (meaning it receives loans from the federal government), students can apply for the loan through the college's financial aid office. If the school participates in the Federal Family Education Loan Program (FFELP), students will have to apply at a bank.

Take Advantage of Tax Credits

The stimulus package created the American Opportunity Education tax credit, which offers a maximum of $2,500 toward college tuition and related expenses for 2009 and 2010. The new credit replaces the Hope Scholarship Credit, which offered a maximum tax credit of $1,800. And while the Hope Credit only applied to tuition paid for the first two years of college, this law makes it applicable to the first four years -- and makes it partially refundable.

(For more on how the stimulus plan aims to help college students pay for college in upcoming years, read our story.)

Consider Scholarships, but Proceed With Caution

Scholarships can add that extra boost to help students get by during the school year. But there's a pretty big tradeoff. In most cases, scholarships reduce your financial aid package even if you receive a scholarship during the school year. (Ask your college if they have an "outside scholarship policy" that assesses how your financial aid package may change should you receive a scholarship.)

Call the admissions office (or look on the college's web site) to see which scholarships they offer, the eligibility requirements and how to apply.

Last Resort: Private Loans

Private student loans are hard to come by these days, since many private lenders have dropped out of business altogether. Those remaining have made it very difficult to qualify for a loan. Students will need a high credit score or a creditworthy cosigner.

If you do manage to land a private loan, expect to pay a higher rate as it matures. Private loans carry variable interest rates so it’s impossible to predict what the rate will be from month to month -- let alone four years from now.

Source: SmartMoney.com | 10 Mar 2009 | 4:00 am

Bonding With Fixed-Income ETFs

It's no secret that investors fleeing the relentless decline in equities have crowded into the relative safety of bonds, hoping to preserve capital and grab some yield. The global flight to quality -- not to mention the Fed's zero-interest-rate policy -- has the 10-year Treasury throwing off just 2.8%. Hey, no risk, no return.

But bond mutual funds and single-issue debt aren't the only places shell-shocked investors can look to safeguard principal -- and maybe even enjoy some positive returns. For those who are so inclined, fixed-income exchange-traded funds offer cheap, liquid and transparent options, and in some cases they're actually a superior alternative to their mutual fund counterparts.

High-Grade Corporate Debt

In many ways the market for corporate debt is in a sweet spot these days. Corporations are hungry for extra cash to fund everything from acquisitions to stock buybacks, says Tom Lydon, president of Global Trends Investments and ETF Trends. The environment is also issuer-friendly, thanks to low interest rates and high demand.

If you're looking to add exposure to high-grade corporate debt, iShares iBoxx $ Investment Grade Corporate Bond fund (LQD) has a lot going for it. This ETF has $8.7 billion in assets and is highly diversified, with none of its 100 or so holdings accounting for more than 1.3% of the total pie. Perhaps most important, all its bonds, from companies like IBM (IBM) and Pepsi (PEP), are rated BBB or higher.

True, LQD is off more than 5% year to date as investors took profits out of a once-crowded trade, but then that also offers new investors a more attractive entry point. For the last three months LQD has returned 1%, while the yield stands at 5.8%.

There are a few caveats with LQD, however, as James Shelton, chief investment officer at Kanaly Trust, points out. "LQD does have about 20% exposure to banks, and that sounds a little high," Shelton says. "I'm OK with it but people should bear that in mind. And then from time to time you could pay a premium to net asset value."

Apart from those issues, Shelton sees LQD as a good way to gain broad access to investment-grade corporate credits. And at 0.15%, the expense ratio could hardly be more friendly.

High-Yield Corporate Debt

No doubt there is a case to be made for adding high-yield corporate debt (cough, junk bonds) to your portfolio, as SmartMoney's Donald Luskin has argued. But ETFs, namely the iShares iBoxx $ High Yield Corporate Bond fund (HYG), are not the way to do it.

First, here's what's good about the HYG junk bond ETF: It boasts more than $2 billion in assets, and has returned 1% the last three months. Better still, the yield tops 11%. HYG is also pretty well diversified with none of its 54 holdings accounting for more than 2.9% of the total. The 0.5% expense ratio is attractive as well.

But HYG is down 16.6% in 2009, showing any return comes with much greater risk -- and therein lies the rub.

"I don't like to use ETFs for high-yield debt because I think we are headed for a massive wave of defaults," says Shelton. "I don't think you want to own the asset class in a broad sense. If you can find a good high-yield bond manager to avoid some of the big defaults that are coming, that might make sense."

In other words, this is a case where a little active management is required to separate the solvent from the soon-to-be broke. As Kevin Mahn, portfolio manager at SmartGrowth Mutual Funds and chief investment officer at Hennion & Walsh, says: "If you are going to range into high yield, there is value in having an expert."

Treasury and Munis

Treasury debt and municipal bonds are two areas where ETFs make more sense than many of their mutual fund counterparts. "Do we really want to pay an active manager to buy a government bond or municipal bond portfolio for us?" Mahn asks. "Why not pay a lower expense ratio, get index-like returns and get that volatility dampener with a very predictable ETF?"

Treasury ETFs run across the yield curve, from the SPDR Barclays Capital 1-3 Month T-Bill (BIL) to the iShares Barclays 1-3 Year Treasury Bond (SHY) to the Vanguard Extended Duration Treasury (EDV). And for those betting on the galloping return of inflation, there's the iShares Barclays TIPS Bond (TIP), among other products.

But Treasury ETFs are a simpler matter than municipal bond ETFs, where the risk of default is a very high concern.

The key is to stick to high-quality, general obligation bonds because the default rates are extremely low and the federal government may even purchase muni debt in the future, Shelton says. It's also a good idea to stick to shorter, rather than longer maturities, such as iShares S&P Short Term National Municipal Bond Fund (SUB).

"For investors who are looking to step out just a little bit on the yield curve from cash, I think SUB is a good choice," Shelton says. "Holdings have a duration of about two years and it yields about 2%, tax free."

As for longer-term munis? Treat them like junk bonds and pay a little extra for active, expert management.

Source: SmartMoney.com | 10 Mar 2009 | 4:00 am

Sixty-five jobs to go at Blue Mountain Lumber

Otago timber mill Blue Mountain Lumber is set to lose 65 jobs out of 110 as a result of the economic slowdown and "longstanding challenges". The mill at Conical Hill near Tapanui is owned by Winstone Pulp International (WPI), itself...
Source: New Zealand Herald - Business | 10 Mar 2009 | 3:50 am

Car industry taskforce checks out electric cars

WARREN, Michigan - Four members of President Barack Obama's autos task force spent much of yesterday driving General Motors' electric vehicles and touring a Chrysler pickup truck factory. The members, led by Wall Street financier...
Source: New Zealand Herald - Business | 10 Mar 2009 | 3:30 am

More glimmers of hope in the housing market?

A further indicator has emerged suggesting some signs of hope for the troubled housing market. BNZ's latest confidence survey, carried out among the 16,000 readers of its Weekly Overview, shows a general deterioration in sentiment...
Source: New Zealand Herald - Business | 10 Mar 2009 | 3:00 am

Payouts for dairy tipped to recover

The recession has helped slash dairy sector earnings but payouts will bounce back, analysts say. Dairy giant Fonterra has progressively cut this season's forecast payout from $7 to $5.10 per kg of milksolids, compared with last...
Source: New Zealand Herald - Business | 10 Mar 2009 | 2:30 am

YouTube blocks music videos to UK users

The US-based online video company's move follows a failure to reach agreement on a new royalties deal with PRS for Music, the collecting agency for writers, composers and publishers
Source: Financial Times - US homepage | 10 Mar 2009 | 2:04 am

U.S. autos task force meets UAW, GM, Chrysler in Detroit

DETROIT (Reuters) - Members of the Obama administration's autos task force met for the first time with the national leadership of the United Auto Workers on Monday as part of a visit to the Detroit area where they again met with executives of General Motors Corp and Chrysler.

Source: Reuters: Business News | 10 Mar 2009 | 2:04 am

Record container traffic, but vehicle slump hits Ports of Auckland profits

Ports of Auckland has announced a net profit after tax of $9.3m for the year to 31 December 2008, compared to $12.6m for the same period half last year. Improved performance from its container terminals was very pleasing, said...
Source: New Zealand Herald - Business | 10 Mar 2009 | 2:00 am

Company failures soar by 40pc

Failures of New Zealand companies are up over 40 per cent on the same time last year. Ministry of Economic Development figures show that in the seven months since July 2008 a total of 3487 companies have run aground - 3270 have...
Source: New Zealand Herald - Business | 10 Mar 2009 | 2:00 am

Business Briefs - Monday

The online retailer was upgraded to buy from neutral by Piper Jaffray, which said superior customer service will help Amazon.com AMZN take more...

Source: Investor's Business Daily: BUSINESS | 10 Mar 2009 | 1:08 am

IT Company Makes Small Area Networks For Midsize Businesses

Not a lot of firms can say 2008 was a better year for them than 2007, and that this year will be even better.

Source: Investor's Business Daily: BUSINESS | 10 Mar 2009 | 1:08 am

In Brief - Monday

Ford's (F) union workers approved wage freezes and health care cutbacks. Shares rose 2.4%.

Source: Investor's Business Daily: BUSINESS | 10 Mar 2009 | 1:08 am

Trends & Innovations - Monday

Use of public transit picking up

Source: Investor's Business Daily: BUSINESS | 10 Mar 2009 | 1:08 am

After The Close - Monday

AEROVIRONMENT (AVAV), a maker of unmanned aircraft, said Q3 EPS fell 25% to 21 cents, missing views by 7 cents. Sales rose 8% to $52 mil, below...

Source: Investor's Business Daily: BUSINESS | 10 Mar 2009 | 1:08 am

Dow Chemical agrees Rohm takeover

The two chemical groups agree takeover terms, avoiding a potentially messy and expensive legal battle, in a deal which will reduce Dow's debt
Source: Financial Times - US homepage | 10 Mar 2009 | 1:04 am

Blinded by ideology, Republicans fail to see why bailouts are right

Maybe John McCain would have been as wild as he is now if he'd won the presidential election. Or maybe he is just indulging himself in the luxuries of opposition to make reckless suggestions. But in leading a Republican charge to argue that President Obama should let big banks fail, he is putting sense behind ideology and his party's suddenly passionate loathing for the new President.
Source: Latest Business News from Times Online | 10 Mar 2009 | 12:00 am

Lost your job? If you want benefits, then sell the car

It is, on the face of it, merely a supremely ambiguous phrase of bureaucratic Japanese — but it is threatening to plunge the country's welfare system into chaos and create a national “fire sale” of everything from violins to motorbikes.
Source: Latest Business News from Times Online | 10 Mar 2009 | 12:00 am

FBI in search for Stanford 'victims'

Investigators are seeking to identify potential 'victims' who invested in a slew of companies associated with Sir Allen Stanford
Source: Financial Times - US homepage | 9 Mar 2009 | 11:14 pm

How the Dow Jones industrials fared Monday (AP)

AP - Investors fixated on the faltering economy Monday brushed off the type of merger news that normally starts rallies. Uneasiness about the economy eclipsed a bounce in troubled financial stocks as well as news of a merger between drugmakers Merck & Co. and Schering-Plough Corp. Stocks rose in the early going but turned lower in a now familiar pattern where short-lived bursts of optimism give way to concerns about the country's economic woes.

Source: Yahoo! News: Stock Markets News | 9 Mar 2009 | 10:36 pm

How the Dow Jones industrials fared Monday (AP)

Source: Yahoo! News: Business | 9 Mar 2009 | 10:36 pm

Lehman buy-out house reborn

A new private equity house was set to be born from the wreckage of Lehman Brothers, with investors in the failed US investment bank's buy-out business expected to vote for its recreation in a shrunken form
Source: Financial Times - US homepage | 9 Mar 2009 | 10:30 pm

Presented By: Your Online Broadband Fact Resource

		The Internet Innovation Alliance Broadband Fact Book places easy-to-locate broadband facts & information at your fingertips. Quickly find broadband facts and stats for your next presentation or proposal.
		www.BroadbandFactBook.com

Ads by Pheedo

Source: Dealbreaker | 9 Mar 2009 | 10:29 pm

Write-Offs: 03.09.09

$$$ Bernie Banned [Cityfile]

$$$ Top-exec pay train runs full steam ahead [Crain's]

$$$ Dropping hints to BAC employees? [Charlotte Observer]

$$$ Fall guy for your hedge fund available [craigslist]

Source: Dealbreaker | 9 Mar 2009 | 10:29 pm

Ford workers approve UAW contract changes

DETROIT -- Unionized workers at Ford Motor Co. have approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive.

Source: L.A. Times - Business | 9 Mar 2009 | 10:17 pm

Europe rejects extra stimulus appeal

European ministers said they had no plans to add to recent fiscal stimulus packages despite calls from the US for radical expansions in government action to boost ailing economies
Source: Financial Times - US homepage | 9 Mar 2009 | 9:58 pm

Hear: Delicious Cake Futures

Looking in the 617. Ben Snitkoff/Planet Money Facebook group

On today's Planet Money:

-- President Barack Obama has a plan for saving the economy and the environment at the same time. You just have to understand it first. Richard Harris takes us all to school.

-- When Joshua Bearman was a third grader, he got locked out of the lunchroom economy. His classmates piled their jazzed-up, sugarfied, food/not food snacks on the table and traded until the best junk won, while Joshua sat on the sidelines with the sardines and raisins his family sent. Then, one magical day, he dreamed up the delicious cake futures.

-- If you lost your job, and the people you called for help had just laid off 20 percent of their staffs, and a couple of hundred applications turned up nothing, what would you do? If you're intern architect Spencer Lepler, you dial back the job search, just a bit, and prep for that big licensing exam.

Bonus: A philosophical open question, after the jump.

Nick writes from KQED land:

In thinking about our woeful times, I stepped back a little and started wondering ... while shelter has been a fundamental need for homo sapiens since the stone age, how can it possibly be that our economic and financial system got tied around housing to the exclusion of so many other human activities and needs?

We are at a point where, in principal terms as many argue, housing is the single biggest factor wreaking all this havoc.

Is this whole business of getting shelter, paying for it, making money off it (or not), remodeling it, expanding it, equipping and furnishing it, etc the most central and fundamental essense of all human activity so as to make our economic and financial systems exclusively linked with it?

If there is indeed some rational explanation about the centrality of housing in human existence, and maybe some explanation for why we are having this crisis, how is it that other human needs such as food, breathable air, water, sleep, procreation, friendship/society, safety, curiosity for the cosmos or, say, a higher power, etc are NOT the factors that frame our drive for economic profit, prosperity, and growth?

Anyone got an answer?

Aside: Which reminds me of something my hobo brother said years ago. My spouse told him it might be time to settle down, to stop being homeless. My brother replied, "I'm not homeless, I'm home free." Like that.

Download the podcast; or subscribe. Intro music: Kevin Shields remixes Bow Wow Wow's' "I Want Candy." Find us: Twitter/ Facebook/ Flickr

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 9:46 pm

S&P to bottom at 600 points in October: Merrill
Related: After Write-Downs and $1.2 Billion Loss, KKR Itself May Postpone an IPO

Update: According to a spokesman for KKR, the Economist's report is "categorically false" and the chair was purchased neither for/by Henry or Marie.

Source: Dealbreaker | 9 Mar 2009 | 9:23 pm

Are We Going To Have To Start An ECB Portfolio Now Too?

The number of officials calling (or not quite calling) bottoms in markets is growing. Markets meanwhile, are studiously ignoring the trend.

The head of the European Central Bank and some other central bankers said Monday the world's economy is still slowing, but suggested a turning point could be near as massive fiscal stimulus packages, low interest rates and cheaper energy prices bolster prospects for growth.
"We're approaching a moment where we might have a pickup," said European Central Bank president Jean-Claude Trichet, in his most optimistic assessment to date of tentative signs of stabilization in some markets. He cited a modest rebound in corporate bond markets as one positive sign. Mr. Trichet spoke to reporters on behalf of participants in a meeting of central bankers from the world's leading economies at the Bank for International Settlements in Basel, Switzerland.

And while we are on that subject, since China seems to have gotten instant results out of their stimulus efforts, who put the cinder blocks in the United States' bookbag?

People's Bank of China Vice Governor Yi Gang said Monday the fiscal stimulus measures announced by China so far are appropriate and already seem to be working. "At this point, I think the current package of the fiscal stimulus is sound and it seems already effective," Mr. Yi told reporters in Switzerland. "So at this point, I think the current stimulus package is fine."

Sheesh.

Source: Dealbreaker | 9 Mar 2009 | 9:16 pm

Google, Cisco eyed as possible Dow candidates (Reuters)

Reuters - Google and Cisco are viewed as top contenders to enter the Dow Jones industrial average (.DJI) now that two constituents are trading below $2, making their status as blue chips tenuous.
Source: Yahoo! News: Stock Markets News | 9 Mar 2009 | 9:15 pm

Open Thread: Laid Off?

Seen in DUMBO, Brooklyn Joel Cook/ Planet Money Flickr pool

When he got laid off years ago, Mike Tharp, now a columnist at the Merced Sun-Star (h/t Romenesko), says his prescription for getting back on his feet was two-fold:

"Exercise and companionship."

On today's podcast, we'll hear from an intern architect who's taking his time to study up for the licensing exam. Me, I've had to go looking for new work a few times, each one a different adventure.

The first time, I called everyone in my Rolodex -- it was a real Rolodex, and I do mean everyone -- and thanked them for helping me in my job. Then I biked like a maniac all over the woods for a month. More lately, I've been prone to starting blogs and then riding my bike all over New York City, which is kind of like a jungle.

But yes, exercise and companionship, exercise and companionship.

You?

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 9:12 pm

The Obama Portfolio

I hate Monday's. But not as much as the First Analyst:

The Obama Portfolio (Since Inception): -3.83%

Fortunately, we are in this trade for the long-term.

Earlier: The Obama Portfolio

Source: Dealbreaker | 9 Mar 2009 | 9:11 pm

Forbes Says U.S. Fiscal Policy Mistakes Began With George Bush

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 8:13 pm

Know What This Is?

How is it that now we are somehow being asked to feel sorry for the one industry with massive growth in the entire economy? Of course, I speak of the professional advisers in the business of working bankruptcies and otherwise administering assets seized by the state?

Life isn't easy for Ralph Janvey, the court-appointed receiver now overseeing the financial empire of Texas billionaire Allen Stanford, accused by U.S. regulators of carrying out a massive Ponzi scheme.
Janvey, a straight-talking, Dallas-based lawyer and adjunct law professor at Southern Methodist University, has taken the helm of Stanford Financial Group, after a U.S. judge tapped him to serve as the receiver, with final say over Stanford's vast estate of offices, island properties, yachts and castles.

So far, he has been sued by angry investors and had to fire 1,000 Stanford employees on Friday.

Poor Mr. Janvey. Must be hard collecting all those fees.

Stanford receiver faces herculean task [Reuters]

Source: Dealbreaker | 9 Mar 2009 | 7:50 pm

Kerry Says Diplomacy Can Work With Iranian, Russian Relations

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 7:11 pm

World Bank: We're Shrinking

The World Bank serves up the bad news: The global economy is about to shrink for the first time since World War II. The BBC runs the numbers:

"By the middle of 2009, industrial output could be as much as 15% lower than 2008, while trade may record the biggest decline in 80 years, it said."

World Bank economists say the export-heavy economies of East Asia could take the biggest hit.

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 7:09 pm

Obviously Vikram Knows A Guy Who Can Get Them A Deal On Rooms

As previously mentioned, Citi, likely out of a desire to not be tarred and feathered for the second time this year regarding "inappropriate use of taxpayer money," canceled a weekend reward trip for top brokers. Instead, the bank distributed a bunch of gift cards in 1, 2 and 3,000 dollar denominations, which the Post reported totaled about $3.5 million. Bloomberg, however, is claiming it was more like $13 million.* Now, we personally don't really give a rats ass either way about these get-aways, but if the figure is closer to Bloomberg's estimate, would it really have been that much more to send them on the three-day vacay?

*Perhaps this includes cancellation fees or something, but the 'berg makes no mention of such charges, only that the $13 million went toward compensating the employees who got gypped on the trip.

Source: Dealbreaker | 9 Mar 2009 | 7:03 pm

Euro Not OK

From the U.K. Telegraph:"Overvalued euro set to plunge 'within months.' Key bit:

In recent days, futures traders in the US have significantly increased their bets that the euro will fall against the dollar. Data released by the Washington-based Commodity Futures Trading Commission on Friday showed that the "net short position" of trades against the euro by hedge funds and speculators almost doubled in the week to March 3 to 19,431 contracts from 10,081 contracts a week earlier.

What's going on?

Over the last few years, Western Europe loaned oogoodles of money to Eastern European countries, businesses and consumers. Now those loans are looking like very, very bad bets. Marc Chandler of the Brown Brothers Harriman currency desk writes about one example:

"[M]arkets remain concerned about European bank exposure to Eastern Europe with Latvia's Premier Dombrovskis warning the country may be bankrupt in three months if it does not make budget cuts required under the IMF to receive the next installment of its IMF loan."

With something like $1.5 trillion on the line, the situation has become known as the subprime crisis of Europe. The European Bank for Reconstruction and Development calls the crisis "manageable." Folks in other places are sounding less convinced, like the South Korean finance minister. The Tehran Times writes that the crisis threatens "the idea of one Europe."

The Tehran Times may contain a hint of gloating, but there is some grounding in reality. The common currency of the European Union means stronger economies like Germany's are forced to operate under the same European Central Bank policies as as weaker one like Greece's. As the recession deepens, universal fixes get harder to fashion. Mukund Multani writes at Seeking Alpha, "Considering how hard it's been for President Obama to get the House and the Senate to agree on a concrete stimulus, imagine how hard it would be for the European Commission to do the same in a fair manner for its 16 member nations."

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 6:49 pm

Obama’s Aviation Fee Increase is a Stupid Idea

zzboeing

Ready to pay more in airline fees, thanks to government sloth? The Economist reports on an upcoming increase in aviation fees:

…if the American government’s “Aviation Passenger Security Fee”, currently at $2.50 for each leg of travel, is already annoying you, the Obama administration has some bad news: it won’t be staying at $2.50 for long.

The Homeland Security portion of Obama’s proposed 2010 budget (PDF) includes a plan to raise the fees by an as-yet-undisclosed amount in 2012. The increase, the White House says, is needed because the current fee only funds about 36% of airport security costs.

But the Association of Corporate Travel Executives (ACTE) opposes the change, claiming that “airport security should be paid for from the general tax fund” and not by user fees. Basically, ACTE is asking that all taxpayers continue to subsidize the cost of providing airport security to some taxpayers. Why? Because when terrorists attack planes, they’re not really attacking the airline industry, they’re attacking all of us, says ACTE executive director Susan Gurley.

Gurley also claims that adding a new tax could inhibit economic recovery. But even if the fee triples so that it covers all airport security costs, it’s hard to see that as the main obstacle preventing a recovery in business travel—the overall economy is going to have to recover first, security fee or no security fee.

The article goes on to ask whether increased user fees or general taxes should fund airline security. How about an unspoken third option, to fix airport security? Years ago, one guy with a shoe bomb resulted in a requirement that people take shoes off before they fly. Then, someone tried to smuggle in a liquid bomb, and the same thing happened. Now, years later, millions of people have to undergo shoe- and liquid security rituals, whether they’re relevant or not.

The TSA’s system is reactionary, but not necessarily smart. A thorough revision of the security system could do wonders for cutting costs. For example, the coded alert system that airport blare over their PAs is completely irrelevant. Every time I travel, an orange alert is in place. Who cares? The system has become meaningless. Cutting out the constant warnings would, when seen in aggregate, save a small amount of electricity and manpower.

What about the liberal number of TSA employees stationed at every airport? When was the last time the TSA audited its staff, which was built up in the post-9-11 years? What about the efficacy of plainsclothes policeman (more common in Great Britain) vs. 2 TSA employees per citizen (I’m exaggerating here, but not by much)? Has anyone considered using the National Guard for airport security instead, now that military enrollment is up again? Finally, is the shoe and liquid thing relevant at every airport in the US, even for domestic flights?

A blind tax hike is a dumb solution to a problem that needs to be assessed, audited, and reorganized. The onus is on the government to do that, not the taxpayer, not the airlines. This was a Bush-era bloat problem that is ready to be revised. The Obama team needs to take a careful look at where to avoid taxes, and the nation’s airports are practically a giveaway place to start.

Source: Business Pundit | 9 Mar 2009 | 6:30 pm

Charlie Gasparino's Love Affair With Jimmy Cayne

Picture 856.png Last week we bemoaned the fact that it was William Cohan's--and not Charlie Gasparino's-- new book that would be the first to have Jimmy Cayne on record calling Treasury Secretary Geithner a gay clerk with a hard on, and assumed the CG was feeling equally down in the dumps. Lucky for us and you, Chaz picked himself up off the bathroom floor, wiped those tears, told himself "you're better than this," and gave us more than we could ever ask for. I don't even know where to start, because the whole thing goes back and forth in time, and, like most great love stories, is sort of rambling, so we'll just take the hits as they come.

Betrayal. Cayne apparently refers to CG as a "snake" in Cohan's book.

As we know today, Bear's implosion was merely a blip on the radar screen, a prelude to a much larger, much scarier story that is still unfolding, and may take years to fully comprehend. And yet, Bear, and its top executives, like former CEO Jimmy Cayne, still provide a bit of comic relief when they take their breaks from spending time at the country club--or in Cayne's case, between hands of his favorite obsession, playing bridge--to speak their minds.

Last week, I got a taste of what Cayne was thinking. He referred to me as a "snake" in a new book about the fall of Bear...

Confusion. How could Cayne have done that? After calling CG only a few weeks earlier and whispering sweet nothings through the phone? Had that meant nothing to the bastard CEO? CG had to find out.

So I reached out to Cayne again this week to hear from him personally if he actually made those remarks about me, because it certainly didn't sound like the man I received an impromptu phone call from a few weeks earlier. Whether his call was early damage control--because he knew the book was coming out--or simply a chance to do what he liked to do when he was one of the most powerful men on Wall Street, I couldn't say.

Source: Dealbreaker | 9 Mar 2009 | 6:30 pm

Aflac Cut to `Sell' at UBS

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 6:00 pm

Dunkelberg Says Job Growth Will Signal Recession Bottom

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 5:31 pm

The evolution of Barbie

Who knew that when she debuted 50 years ago Barbie would have such a huge impact on pop culture? Kai Ryssdal speaks with Robin Gerber, author of "Barbie and Ruth," about the iconic doll's origins.
Source: Marketplace | 9 Mar 2009 | 5:28 pm

We demand to see more transparency

President Obama has promised more transparency in government. But so far, it seems we're still in the dark. Commentator Dean Baker says it's time for insurer's like AIG to come clean or taxpayers should exercise their options.
Source: Marketplace | 9 Mar 2009 | 5:28 pm

Culture of debt driven by cars

There used to be a time when Americans frowned upon going into debt to buy their luxury goods. But historians say that changed nearly 100 years ago. Stephen Smith looks back on why our debt-driven society really hit the gas with General Motors.
Source: Marketplace | 9 Mar 2009 | 5:28 pm

What U.S. can learn from Japan

As the U.S. grapples with its economic problems, some are looking at Japan's "lost decade," when its real estate and stock markets burst, to see what we can learn. Monetary policy expert Adam Posen compares the two countries with Kai Ryssdal.
Source: Marketplace | 9 Mar 2009 | 5:28 pm

Spending push to fix crisis causes rift

President Obama is expected to push for a global increase in government spending at an upcoming summit of worldwide leaders in London. But some European nations disagree that this is the best way to approach the financial crisis. Stephen Beard reports.
Source: Marketplace | 9 Mar 2009 | 5:27 pm

Credit markets tightening up again

The cost of lending between banks is on the rise again. But as Jeremy Hobson reports, it isn't necessarily driven by fears over the financial system.
Source: Marketplace | 9 Mar 2009 | 5:27 pm

GOP senators: Let some sick banks fail

Republican Senators Richard Shelby and John McCain are urging President Obama to let some big banks fail instead of propping them up with federal funds. John Dimsdale reports on the growing rift over how to best save the banking industry.
Source: Marketplace | 9 Mar 2009 | 5:27 pm

Hintz Sees Another 10% to 12% Job Cuts in Financial Firms

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 4:47 pm

Mendez Sees Current Account Crisis in Eastern Europe

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 4:45 pm

5 Ways South by Southwest Can Help Your Business

zzsxsw1

South by Southwest (SXSW) is a unique event that combines music, film, and digital media into one massive, 4-day series of events. Each of the three South by Southwest event categories have their own conferences, festivals, and trade shows, so participants need to register for one of three themes.

This year, SXSW takes place in mid-March, and will probably see more than 10,000 attendees. In 2008, the event made the city more than $110 million in revenues. That’s a lot of people spending a lot of money–and looking for a lot of opportunities. There are many ways you can make that $400 wristband pay off.

But scale is only one of the things that makes South by Southwest a must-do for anyone with a business related to film, music, or the Internet. Gurus, conferences, tradeshows, talks, parties, and shows offer unbeatable opportunities to advance your network, company, and internal creativity. Here are 5 ways that attending South by Southwest can help your business:

1. Be Seen

Last year, South by Southwest (SXSW) saw more than 10,000 attendees from around the world. That many people in one place–most of whom have clearly defined interest niches–are a marketer’s dream. Setting up a trade booth at SXSW is a key way to make yourself visible in the industry, find customers, make new contacts, and scope the competition. SXSW organizers also offer marketing, sponsorship and advertising opportunities, which anyone with a budget should not pass up.

Hundreds of panel discussions also take place, enabling you to present your product or service to leaders in your industry. In the evenings, South by Southwest participants host an enormous number of concerts, networking events, and parties. It would be amazing if you don’t come out of SXSW with a promising number of new contacts and prospects.

2. Network

Working your social skills at SXSW can pay off handsomely. The sheer number of events, talks, concerts, and parties at South by Southwest means that making contacts is more than inevitable. Take a big stack of business cards and/or have your PDA ready for a healthy expansion of your network. People find business partners, clients, industry contacts, and new friends at breakneck speed here. You can cover every level of your businesses in one place.

3. Spur creativity

Not only does South by Southwest encourages, coalesces, and catalyzes cutting-edge ideas and concepts. When you cram 10,000 creative people into one happening city, great things can happen. Be inspired by industry leaders, discuss new services, products, and concepts with your peers, or get ideas from the items people display in the trade show. The energy and excitement of SXSW can rev your business out of a holding pattern and inspire something completely new. In times of recession, when motivation hits a lull, this kind of environment can save you.

4. Get to Know Your Industry Intimately

If you’re in the music, film, or generally-defined interactive online category (read: you have anything to do with the Internet), you will find unparalleled opportunities at South by Southwest. SXSW offers firsthand exposure to cutting-edge trends, innovations, experts, and competition. By the end of SXSW, you’ll have what amounts to an education on every aspect of you industry. You’ll be able to rattle off the who’s who, what’s what, and where’s it happening in your industry. The many panels, parties, and other networking opportunities at SXSW will ensure that you are personally with acquainted industry players, too. Your business can benefit greatly from this new information. For example, you can find areas to expand into. You can see where it’s time move your focus. You’ll become a smarter competitor.

5. Get on the Cutting Edge

Companies have a habit of unveiling their latest and greatest creations at South by Southwest. Twitter, for example, launched here in 2007. Everyone from startups to major players wow audiences with the latest products. Attending SXSW is witnessing digital evolution as it happens—you can’t get more cutting-edge than that. South by Southwest puts you ahead of the curve, which is exactly where you want to be as a business.

Dates for this year’s South by Southwest (SXSW), which takes place in Austin, TX:

SXSW Interactive: March 13-17, 2009
SXSW Film: March 13-21
SXSW Music: March 18-22

Source: Business Pundit | 9 Mar 2009 | 4:00 pm

Tax Tip of the Week: Mortgage Debt Forgiveness

foreclosure_loan_modification_thetruthaboutflickr

If your home was foreclosed in 2008, you should have received Form 1099-C from the mortgage holder. Yes, on top of the loss of your home and the situation that caused it, now you have to deal with income tax ramifications.

Mortgage Forgiveness Debt Relief Act of 2007

The good news is that since December of 2007, homeowners who lose their homes due to foreclosure do not owe income tax on the amount the bank forgave. This thanks to the Mortgage Forgiveness Debt Relief Act of 2007. In the past any difference between the amount you owed and the amount the bank sold the house for was considered income, and therefore taxed to you - the possibly out of work former homeowner.

So far the relief is temporary. If you lose your home after 2012, the old rules will apply. Let’s hope we’re all keeping our homes by then.

Eligibility for Non-Taxable Status of Mortgage Debt Forgiveness

You must meet following for mortgage debt forgiveness to be non-taxable:

The mortgage must have been for your principal residence. (Vacation, investment or other properties are not eligible.)
No more than $2,000,000 of forgiven debt can be excluded from taxable income. ($1 million for married filing separtely.)
If part of the forgiven debt was a home equity loan used for purposes other than to build, buy or substantially improve your primary residence, that portion is still taxable.
Short sales: If you were behind on payments and the lender agreed to let you sell the house for less than what was owed on the mortgage if all proceeds were turned over to the bank - you recieve the same favorable status.
Forgiveness in the form of partial mortgage reductions or loan modifications that enabled the homeowner to remain in the home and continue making payments also qualify for the relief.
You must claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year.

What’s the Catch?

The current mortgage forgiveness relief is a huge benefit to struggling taxpayers today, but there will be a price to pay eventually. If a homeowner takes advantage of debt cancellation and keeps their home, they are required to reduce the basis (original price of the home) by the amount forgiven when they sell the home. This will create a larger gain in the future, possibly resulting in an increased tax bill.

Form 1099-C

Form 1099-C shows the amount of debt forgiven and the fair market value of any property foreclosed. Examine the information carefully and notify the lender if any of the information is incorrect. Pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).

Image Credit: The Truth About, Flickr

Source: Business Pundit | 9 Mar 2009 | 3:56 pm

Hot Deal On Iceland

description

Iceland Air

Benet Wilson posted this indicator to the Planet Money Facebook group:

I am on the email blast list for Icelandair, even though they don't fly out of Baltimore anymore. Considering Iceland's contribution to the global economic meltdown -- which I learned about on Planet Money -- I found their latest blast most interesting. They are trying to spur travel to their bankrupt country by offering a "Stimulus Package."

For $679, you get air fare and a Stimulus Voucher good for various goods and services in Iceland, including: A special discounted stimulus dinner, 2 for 1 Laugar Spa admission, discount on skin care products at the famed Blue Lagoon and much more. You also get 2 nights in a hotel and a Scandinavian breakfast. I just love the irony!

Podcast:
Icelandic National Broadcasting's Bjorn Malmquist talks about protests outside Parliament.
Economist Satyajit Das says they're living your nightmares in Reykjavik.

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 3:48 pm

Tim Geithner Needs A Nap

We're starting to hear this all over, from people in direct contact with him and from the press: Treasury Secretary Tim Geithner is starting to fry. And really, what mortal in his position wouldn't?

The New York Times today notes that Treasury is having trouble hiring enough people fast enough. One hint we've been getting is that any number of candidates have been disqualified for personal tax trouble. The Times reports:

[A]lmost all the top posts beneath Mr. Geithner are still vacant. Though he has hired about 50 senior advisers -- about half the number he hopes to recruit -- the White House has become so worried about potential tax problems and other issues in the backgrounds of candidates that it has nominated only a handful of people.

Writing on Cafe Hayek, Russ Roberts takes pity:

All the aides in the world wouldn't make any difference. It's an impossible task.

Most us have seen what happens in a workplace that's understaffed. There are days when you have to say, hey, we're not getting to that. Many of us are now picking up work that used to be done by colleagues who've been laid off.

But Geithner's trying to save the world as we know it. The Times writes, "[T]here are signs that events are getting ahead of him":

Administration officials say they are postponing their plan to produce a detailed road map for overhauling the nation's financial regulatory system by April, in time for the Group of 20 meeting in London. Though officials say they will still develop basic principles in time for the meeting, the plan will not include much detail.

Treasury officials are also still scrambling to decide details of their plan to buy up as much as $1 trillion in toxic assets from the nation's banks, one month after being widely criticized for presenting a plan that lacked any specifics on how it would work.

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 3:23 pm

'Busting At The Seams' In Boulder

Derek from SurveyGizmo writes:

So I almost feel like I might jinx it by telling you this... but our company has not been noticeably hit by the recession. February was a record revenue month for us (in a month with only 28 days). We just signed a lease on a new office because we're busting at the seams. We had two new employees start last week and are planning to hire at least one more immediately, probably a few more this year.

We're not a giant company, so 2-3 jobs is obviously not going to do a lot for the economy, but we believe we can more than double our revenue in the 2009, perhaps even triple it. Also, 2008 was the best financial year I've had personally since 2000.

Also, we got a screaming deal on our office space and we had over 100 people apply for those two slots. In other words the recession is a great opportunity for us to attract fantastic talent, though I suppose that's cold comfort to the 98 people who didn't get the jobs.

Funny side note - our next door neighbor until very recently was Namaste Solar. When Obama came to Denver to sign the stimulus bill, the CEO of Namaste gave him a tour of some of the solar projects they've done in Denver. They moved out because they too grew too big for their space.

» E-Mail This » Add to Del.icio.us

Source: NPR Blogs: Planet Money | 9 Mar 2009 | 3:21 pm

Levitt Sees U.S. `Morphing' Toward Good Bank, Bad Bank Solution

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 2:56 pm

Kass Sees Economic Improvement, Stabilization in Early 2010

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 2:40 pm

When You Need Something, Paint it on Your Car

funny0273

Source: Business Pundit | 9 Mar 2009 | 2:38 pm

Hilliard Sees U.S. Economy Improving Mid-Year

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 1:34 pm

Bell Says Stocks `Cheap' Because of Investors' Fear to Buy

Source: Bloomberg - All Podcasts | 9 Mar 2009 | 1:33 pm

Financial Planners on the Couch (BusinessWeek Online)

BusinessWeek Online - Opened up your retirement savings plan lately? Forget the old quip about a 201(k). A 101(k) seems more apt. The value of your home is down. Your savings have shrunk. And for this you paid thousands to a financial planner?
Source: Yahoo! News: Business | 9 Mar 2009 | 12:08 pm

Merck, Schering Plough Merger Creates Another Pharma Giant

zzshering

Pharmaceutical companies Merck and Schering Plough are merging to create another pharmaceutical giant (a la Wyeth and Pfizer in late January). MarketWatch has the details:

Pharmaceutical giant Merck & Co., Inc on Monday said it will buy rival Schering-Plough for $41.1 billion in cash and shares to expand its presence in emerging markets and bolster its pipeline of potential new medicines. The combined company will be called Merck and led by Merck Chief Executive Richard Clark.

The two companies, which announced significant job cuts last fall, already are partners on the cholesterol drugs Zetia and Vytorin. But sales of the drugs fell more than 20% in the fourth quarter on concerns about their effectiveness.

Schering-Plough generates about 70% of its revenue outside the U.S., including more than $2 billion from emerging markets. The combined company is expected to draw more than 50% of its revenue from outside of the U.S.

The strategy is one of survival: Merge and slim down, or fail. Big pharma may become too big to fail, especially if a large portion of its business remains outside of the United States.

Source: Business Pundit | 9 Mar 2009 | 10:49 am

Disclaimer | About

Blogs : Humor pages | Norkay's Blog | Kids Stories | Indian Recipes | Database Tech Blog

Sundries : World Video Clips | Songs Clips | Indian Video Clips |