Screen Survivors

Opening Bell: 03.24.09 AIG's Bonus Unit Now in IRS's Sights (WSJ) ""Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business. The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses. The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case." Geithner Finds Government Strength In Oddest of Places (NYT) To the quote: "He said it was a "terrible, tragic thing" that the government did not have better tools, such as the power to take over major firms, when the credit crisis accelerated last fall. "Our system basically failed its most fundamental test," Mr. Geithner told the conference, which was sponsored by The Wall Street Journal. "It was too fragile."" I offer that the government's inability to take over major firms, regardless of the crisis at hand, is precisely what affords our system its strength. Stiglitz Critical Of Geithner's PPIP (Reuters) This is bound to be the academic topic of the year, so it makes sense that we'd have a Nobel-prize winning economist leading the pack. To point: Stiglitz is concerned for the American taxpayer, calling the plan "robbery" (graceful, Stigz) - apparently not a fan of the government propping up 90% of the cash for the recovery efforts. "The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said." Deutsche and Credit Suisse Of To Strong Start (Bloomberg) In what's quickly becoming "See, we're still okay" press releases, I'm sure you're all overcome with joy to learn DB and CS are still breathing, and really doing pretty well this quarter. Welcome Back To The 80's (Bloomberg) "Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market." "Smaller firms are emerging from the wreckage of the world's largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They're luring traders with a shot at $500,000 commissions for two days' work as banks that accepted federal bailouts retrench and slash bonuses. Source: Dealbreaker | 24 Mar 2009 | 1:15 pm About Great Depressions, David Brooks Isn’t Serious By John Tamny of RealClearMarkets In a recent New York Times column, David Brooks took the Republicans to task for a “totally misguided” approach to our economic problems that in his view amounts to “no.” While Brooks acknowledges that the various solutions offered up by the Democrats have their shortcomings, to him it is the Republicans who aren’t being serious. First up, he questions why “the Republicans have decided to demand a fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.” To that, it could be replied that maybe, at long last, the GOP has figured out that “fiscal stimulus” is a tragic contradiction in terms. Maybe the GOP is finally getting serious? One can hope. Rear more…. Source: 247 Wall Street | 24 Mar 2009 | 12:28 pm Fed's Evans: U.S. growth should resume this year PRAGUE (Reuters) - The U.S. economy should start growing by the end of this year and unemployment, expected to peak at around 9 percent, will begin to decline in 2010, Chicago Fed President Charles Evans said on Tuesday. Source: Reuters: Business News | 24 Mar 2009 | 12:23 pm European stocks mixed, Asia rises on US bank plan (AP) AP - European markets were mixed Tuesday, a day after surging on hopes that a U.S. plan to rid banks of festering debts at the heart of the financial crisis will revive growth. Asian stock markets continued their rally. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 12:23 pm Move over Memphis: Jacksons' blues revival When David Watkins visits Farish Street in Jackson, Miss., he looks past the dilapidated vine-covered buildings and sees the future. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 12:22 pm RPT-UPDATE 1-Canada finance minister says oil merger important OTTAWA, March 24 (Reuters) - Canadian Finance Minister Jim Flaherty said on Tuesday Suncor Energy's proposed takeover of Petro-Canada is an important deal for Canada and for the oil patch. Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 12:20 pm Bonus tax: On second thought ... Last week's angry-mob-with-pitchforks approach to bonuses paid by AIG is giving way to a more pragmatic approach this week as lawmakers and investors weigh the potential risks of the proposals before them. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 12:19 pm World's airlines seen losing billions this year (Reuters) Reuters - World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said. Source: Yahoo! News: Business | 24 Mar 2009 | 12:19 pm World's airlines seen losing billions this year GENEVA (Reuters) - World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said. Source: Reuters: Business News | 24 Mar 2009 | 12:19 pm Citigroup-Wells Fargo case moves to NY state court NEW YORK (Reuters) - A federal judge has transferred Citigroup Inc's $60 billion lawsuit against Wells Fargo & Co over the acquisition of Wachovia Corp back to the New York state court where it began, citing a lack of jurisdiction. Source: Reuters: Business News | 24 Mar 2009 | 12:18 pm CA-CANADA Summary (Reuters) Reuters - Toronto's main stock index surged more than 5 percent on Monday to its highest close in six weeks as a massive takeover of Petro-Canada and a U.S. plan to rid banks of toxic assets helped boost sentiment. Energy shares raced higher as the price of oil, a key Canadian commodity, hit a three-month high, while Suncor Energy Inc agreed to buy rival Petro-Canada for C$18.43 billion. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 12:17 pm Top AIG bosses 'to repay bonuses' Nine of the 10 executives paid top bonuses by US insurance giant AIG agree to return them, officials say. Source: BBC News | Business | World Edition | 24 Mar 2009 | 12:16 pm Citigroup-Wells Fargo case moves to NY state court NEW YORK, March 24 (Reuters) - A federal judge has transferred Citigroup Inc's $60 billion lawsuit against Wells Fargo & Co over the acquisition of Wachovia Corp back to the New York state court... Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 12:13 pm Oil retreats towards $53 after 3 percent surge (Reuters) Reuters - Oil edged down toward $53 on Tuesday, as investors took profits after a 3 percent rise in the previous session that was supported by a surge on global stock markets following a new U.S. banking rescue plan. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 12:13 pm Oil retreats towards $53 after 3 percent surge LONDON (Reuters) - Oil edged down toward $53 on Tuesday, as investors took profits after a 3 percent rise in the previous session that was supported by a surge on global stock markets following a new U.S. banking rescue plan. Source: Reuters: Business News | 24 Mar 2009 | 12:13 pm Asian stock markets extend rally Asian shares gain ground in Tuesday trading, taking heart from a US plan to deal with banks' toxic assets. Source: BBC News | Business | World Edition | 24 Mar 2009 | 12:13 pm UPDATE 1-Canada finance minister says oil merger important OTTAWA, March 24 (Reuters) - Canadian Finance Minister Jim Flaherty said on Tuesday Suncor Energy's proposed takeover of Petro-Canada is an important deal for Canada and for the oil patch. Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 12:11 pm Futures lower on profit taking and energy shares (Reuters) Reuters - Stock index futures pointed to a lower open on Tuesday the day after markets surged, as investors assessed a raft of recent moves to shore up the struggling economy, while lower oil prices weighed on energy shares. Source: Yahoo! News: Business | 24 Mar 2009 | 12:11 pm Futures lower on profit taking and energy shares (Reuters) Reuters - Stock index futures pointed to a lower open on Tuesday the day after markets surged, as investors assessed a raft of recent moves to shore up the struggling economy, while lower oil prices weighed on energy shares. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 12:11 pm Futures lower on profit taking and energy shares NEW YORK (Reuters) - Stock index futures pointed to a lower open on Tuesday the day after markets surged, as investors assessed a raft of recent moves to shore up the struggling economy, while lower oil prices weighed on energy shares. Source: Reuters: Business News | 24 Mar 2009 | 12:11 pm Asking for Student Loan Forgiveness (BusinessWeek Online) BusinessWeek Online - In just two short months, Robert Applebaum has become something of a spokesman for a generation of people burdened with student loan debt. Applebaum, a 35-year-old attorney in New York, started a Facebook group in January called "Cancel Student Loan Debt to Stimulate the Economy," fed up with news reports about bank executives spending millions to redecorate their offices and receiving hefty bonuses. "I wanted to rant, so instead of sending an e-mail to a couple of my friends, I decided to start a Facebook group," says Applebaum, who finished law school owing $80,000 in student loans. ... Source: Yahoo! News: Business | 24 Mar 2009 | 12:08 pm Abbey in snub to 7,000 solicitors Abbey has told 7,000 local solicitors it will no longer employ them when it lends mortgages to people buying a home. Source: BBC News | Business | World Edition | 24 Mar 2009 | 12:07 pm Housing costs dampen UK inflation Falling mortgage costs have pushed a key measure of inflation to its lowest level for 49 years, but other prices are still rising. Source: BBC News | Business | World Edition | 24 Mar 2009 | 12:05 pm Hospira cutting 10 percent of work force Hospira, which makes drug delivery systems and devices, says it will eliminate 10 percent of its work force as part of a cost-cutting restructuring plan. The reduction of about 1,450... Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:59 am Geithner plan: Will banks take the bait? Investors have embraced Tim Geithner's toxic asset plan. The question now is whether the banks will go along too. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 11:57 am It's Miller time in Sudan Read full story for latest details. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 11:55 am China's G20 plans Big reform drive shows renewed confidence Source: BBC News | Business | World Edition | 24 Mar 2009 | 11:54 am UPDATE 1-Russia raps Ukraine over EU gas investment pitch MOSCOW/KIEV, March 24 (Reuters) - Russia broke off talks with Ukraine on Tuesday after Kiev angered the Kremlin by asking European Union investors to help modernise its gas pipeline network which supplies... Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:54 am Stocks set to pull back U.S. stocks appeared set for a weak start Tuesday, as investors moved to the sidelines a day after pushing Wall Street to its best day since November. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 11:52 am UPDATE 2-Innovation Group gets possible offer at 15p/shr * Shares rise as much as 92 pct (Recasts, adds details, analysts' comments) Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:50 am Top Analyst Upgrades & Downgrades (BIDU, CERN, CLF, DE, DIET, LDK, MRVL, MCHP, NVO, YSI) These are the top pre-market analyst upgrades and downgrades we have seen early this Tuesday morning with about two hours until the market opens Baidu.com (NASDAQ: BIDU) Started as Buy at Deutsche Bank. Cerner (NASDAQ: CERN) Cut to Hold at Auriga. Cliffs Natural Resources (NYSE: CLF) Raised to Outperform at FBR. Deere (NYSE: DE) Started as Buy at Jefferies. eDiets (NASDAQ: DIET) Cut to Hold at Canaccord. LDK Solar (NYSE: LDK) Cut to EqualWeight at Morgan Stanley. Marvell Tech (NASDAQ: MRVL) Started as BUy at Deutsche Bank. Microchip Tech (NASDAQ: MCHP) Raised to Overweight at Thomas Weisel. Novo Nodisk (NYSE: NVO) Raised to Hold at Citigroup. U-Sture-It Trust (NYSE: YSI) Raised to Outperform at Baird. Jon C. Ogg March 24, 2009 Tagged: BIDU, CERN, CLF, DE, DIET, LDK, MCHP, MRVL, NVO, YSI Source: 247 Wall Street | 24 Mar 2009 | 11:49 am Pensions rise despite zero inflation Pensioners are celebrating that their state pension is rising at a time when prices on the high street remain flat. Source: Telegraph Finance | 24 Mar 2009 | 11:45 am Canada finance minister says Suncor deal important OTTAWA, March 24 (Reuters) - Canadian Finance Minister Jim Flaherty said on Tuesday Suncor Energy's proposed takeover of Petro-Canada is an important deal for Canada and for the oil industry. Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:45 am Canada finance minister says Suncor deal important OTTAWA, March 24 (Reuters) - Canadian Finance Minister Jim Flaherty said on Tuesday Suncor Energy's proposed takeover of Petro-Canada is an important deal for Canada and for the oil industry. Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:45 am Distributor Dawson loses third of its business to rivals Shares in Dawson Holdings the newspaper and magazine wholesaler tumbled 48pc as the company admitted it has lost two more large contracts worth £139m to rivals Source: Telegraph Finance | 24 Mar 2009 | 11:40 am Stock futures point lower a day after big gains Stocks pointed lower early Tuesday a day after stocks surged by the biggest amount since October. Some pullback was to be expected a day after the Dow Jones industrial average jumped 498 Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:39 am Stock futures point lower a day after big gains (AP) AP - Stocks pointed lower early Tuesday a day after stocks surged by the biggest amount since October. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 11:39 am Williams-Sonoma 4th-quarter profit tumbles (Reuters) Reuters - Retailer Williams-Sonoma Inc reported a sharply lower quarterly profit on Tuesday as the recession and slumping housing market curbed sales of its home goods and said it could post a loss for the current year. Source: Yahoo! News: Business | 24 Mar 2009 | 11:33 am Williams-Sonoma 4th-quarter profit tumbles NEW YORK (Reuters) - Retailer Williams-Sonoma Inc reported a sharply lower quarterly profit on Tuesday as the recession and slumping housing market curbed sales of its home goods and said it could post a loss for the current year. Source: Reuters: Business News | 24 Mar 2009 | 11:33 am Oil eases but stays above $53 Oil prices eased Tuesday but stayed above $53 a barrel on hopes that the U.S. government's move to purge ailing banks of up to $1 trillion of shaky assets could speed up economic recovery. Source: RSS feed - channel BNewsBusiness | 24 Mar 2009 | 11:33 am Paper gold: nice idea shame about the politics The world outgrew the gold standard decades ago. But a "paper gold" standard might be one way out of the global financial crisis. Zhou Xiaochuan governor of China's central bank has proposed shifting the world from its dependence on the US dollar to a new reserve currency managed by the International Monetary Fund. The idea is good - if only China meant it. Source: Telegraph Finance | 24 Mar 2009 | 11:27 am Virgin eyes 150Mb broadband speed Virgin Media says it will start offering 100 to 150Mbps broadband speeds up to two years before BT completes its network. Source: BBC News | Business | World Edition | 24 Mar 2009 | 11:23 am U.K. inflation rises unexpectedly Read full story for latest details. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 11:22 am Mortgage approvals rise for third consecutive month Number of mortgages approved in the UK rises for a third consecutive month as banks increase their lending. Source: Telegraph Finance | 24 Mar 2009 | 11:19 am IRS attacking AIG tax planning AIG unit The Internal Revenue Service is challenging some of the tax shelters arranged by the same AIG unit that got the company in trouble with credit insurance and stirred up a hornets nest in Congress over retention bonuses, according to a Wall Street Journal report. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 11:18 am Currencies: British pound rebounds on inflation surprise The British pound posts a sharp, across-the-board rebound Tuesday after February data show an unexpected acceleration in inflationary pressures. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 11:15 am Goldman may trim ICBC stake: report HONG KONG (Reuters) - Goldman Sachs Group Inc and China's ICBC have been in discussions about the New York bank reducing its stake in the world's largest financial institution, according to a report on Tuesday. Source: Reuters: Business News | 24 Mar 2009 | 11:12 am Geithner to map U.S. financial regulation reform WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner will face tough questions from lawmakers on Tuesday as he spells out the basics of the Obama administration's plans to reshape financial regulation at a high-profile congressional hearing. Source: Reuters: Business News | 24 Mar 2009 | 11:10 am Traders Give Pause After Treasury Rally (Market Update) News at a Glance Hitting the Hill: Bernanke and Geithner to address House. Not So Fast: Stock futures point to lower open after rally. Crude Slips: Oil takes a step back before the opening bell. Stepping Down: Several AIG financials execs leaving firm. The Lowdown The euphoria on Wall Street was fleeting. A day after the major indexes surgerd on the Treasury's plan to cleanse banks of as much as $1 trillion of their bad assets, stocks looked to open a bit lower, as traders awaited more information about the program. Shortly after 7 a.m., Dow, Nasdaq and S&P 500 futures were trading below fair value. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke will discuss the plan, as well as executive compensation, when they address the House Financial Services Committee later this morning. Geithner broke out the details of his plan to help banks shed their toxic holdings in a hybrid sale to the public backed by the government. Financials may also be influenced by the testimony of Sheila Bair, chairman of the Federal Deposit Insurance Corp, who is scheduled to testify at a Senate Banking Committee hearing later this morning. Bair is expected to discuss the new regulatory environment. Later tonight, President Obama will take his administration's plans for the economy to prime time. White House spokesman Robert Gibbs said the speech was intended to promote transparency with the American people. "They may or may not like all the decisions that he makes, Gibbs said, "but I think he believes it's important that they understand why he's making the decisions that he is." In energy, oil prices dipped before the open. By 6:52 a.m., cruded traded down 58 cents at $53.22 a barrel. World markets were mixed. In Asia, traders cheered the rally in the U.S. Japan's Nikkei and Hong Kong's Hang Seng each picked up more than 3.3%. In the U.K., the FTSE stood down 1.2% in midday trading. Corporate News AIG (AIG) said several senior executives from its financial products division have decided to step down. An AIG spokeswoman called the losses "manageable" and expected more, Reuters reported. Separately, AIG said 15 recipients of the 20 largest bonsus returned the cash to avoid scrutiny and a heavy tax. DuPont (DD), Caterpillar (CAT) and Lockheed Martin (LMT) are among the largest firms whose pensions will come up short this year, raising their costs, Bloomberg reported. "The call on their cash is going to be significantly higher, two or three times higher, than they had planned," Judy Schub, managing director of the Committee on Investments of Employee Benefit Assets, said. Goldman Sachs (GS) is considering acquiring the iShares unit of Barclays (BCS), Reuters , citing an anonymous source. The firms Hellman & Friedman, Bain Capital and TPG also showed interest. The Economy There are no substantial economic reports scheduled to be released today. 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 | 24 Mar 2009 | 11:09 am Bank 'mildly encouraged' by quantitative easing Mervyn King, the Bank of England Governor, said today that he was encouraged by the initial impact of the Bank’s “quantitative easing” strategy. Source: Latest Business News from Times Online | 24 Mar 2009 | 11:07 am Deflation: the winners and losers — The biggest losers are easily identified. About 180,000 people have annuities linked to the retail prices index, according to the Association of British Insurers, and many of the providers of these, including big names such as AXA, Prudential and Standard Life, will automatically cut the income received on them in the event of deflation. Other providers, such as Norwich Union and Legal & General, have stated that payments will not fall but merely remain unchanged until the retail prices index begins rising again Source: Latest Business News from Times Online | 24 Mar 2009 | 11:01 am Mortgage approvals rise third month in a row The number of mortgages approved for UK home purchases rose for a third successive month, spurring tentative hopes that the housing market is picking up. Source: Latest Business News from Times Online | 24 Mar 2009 | 10:59 am Indications: U.S. stock futures lower after Monday's rally U.S. stock futures point to a sluggish start Tuesday after the biggest one-day advance since November, as markets digest a plan by the U.S. Treasury to encourage private investors to snap up toxic assets from troubled banks. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 10:54 am Airlines 'to make bigger losses' Airlines will make losses of $4.7bn (£3.2bn) in 2009, far more than an initial forecast, the global industry body says. Source: BBC News | Business | World Edition | 24 Mar 2009 | 10:51 am Mortgage approvals signal change A rise in mortgage approvals by the major banks for the third month in a row brings some cheer to the housing market. Source: BBC News | Business | World Edition | 24 Mar 2009 | 10:44 am Switched on utility dividends Investing in an electric utility is a lot like buying the Electric Company in Monopoly. Neither has huge growth potential, but both offer steady payouts: a reliable source of income during a recession or the beginning of a long game. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 10:41 am Soft drink drought hits Ethiopia as economy loses its fizz Ethiopia's capital Addis Ababa runs out of Coca-Cola as the credit crunch takes the fizz out of the economy. Source: BBC News | Business | World Edition | 24 Mar 2009 | 10:36 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 | 24 Mar 2009 | 10:31 am Global rally stalls in London after shock inflation rise The global stock market rally stalled in London after an unexpected rise in inflation due to the weak pound. Source: Telegraph Finance | 24 Mar 2009 | 10:25 am Movers & Shakers: Tuesday's biggest gaining and declining stocks Among the companies whose shares are expected to see active trade in Tuesday's session are the major drugmakers as well as Credit Suisse, Goldman Sachs, McCormick, Newell Rubbermaid, Phillips Van-Heusen, Praxair, Schlumberger and Sonic. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 10:24 am Hedge Fund Withdrawals May Hit New Record If the economy is going to keep getting worse, why shouldn’t hedge funds, where managers can make millions of dollars a year, share in the suffering? It actually looks like they may. According tothe FT, hedge funds investors surveyed recently are expecting big withdrawals this year. “A survey of investors by Deutsche Bank found a third expect more than $200bn to be withdrawn, after a net $155bn was taken out last year.” To add insult to injury, the poll also found that investors expect 20% of existing hedge funds to close in 2009. That means fewer firms to take money from the Treasury to buy toxic bank assets. Douglas A. McIntyre Source: 247 Wall Street | 24 Mar 2009 | 10:20 am UK inflation jumps unexpectedly Inflation defied expectations to rise in February for the first time in five months, triggering another exchange of letters between the governor of the Bank of England and chancellor Alistair Darling Source: Financial Times - US homepage | 24 Mar 2009 | 10:20 am Car dealers face extinction New Norris Chevrolet in Westfield, N.J., is gone now. Along with hundreds of other small dealers across the country it was forced to shut down, swept under by mounting debts, dwindling car sales and industry consolidation. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 10:17 am Metro's underlying profit rises 5%; no guidance given Metro AG, Germany’s largest retailer, on Tuesday reports a 5% increase in fourth-quarter underlying profit, but says the environment is too uncertain to give investors reliable, detailed financial guidance for the year. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 10:15 am Traders Give Pause After Treasury Rally (Market Update) News at a Glance Hitting the Hill: Bernanke and Geithner to address House. Not So Fast: Stock futures point to lower open after rally. Crude Slips: Oil takes a step back before the opening bell. Stepping Down: Several AIG financials execs leaving firm. The Lowdown The euphoria on Wall Street has worn off. A day after the major indexes surgerd on the Treasury's plan to cleanse banks of as much as $1 trillion of their bad assets, stocks looked to open a bit lower, as traders awaited more information about the program. Shortly before 6 a.m., Dow, Nasdaq and S&P 500 futures were trading below fair value. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke will discuss the plan, as well as executive compensation, when they address the House Financial Services Committee later this morning. Geithner broke out the details of his plan to help banks shed their toxic holdings in a hybrid sale to the public backed by the government. Financials may also be influenced by the testimony of Sheila Bair, chairman of the Federal Deposit Insurance Corp, who is scheduled to testify at a Senate Banking Committee hearing later this morning. Bair is expected to discuss the new regulatory environment. Later tonight, President Obama will take his administration's plans for the economy to prime time. White House spokesman Robert Gibbs said the speech was intended to promote transparency with the American people. "They may or may not like all the decisions that he makes, Gibbs said, "but I think he believes it's important that they understand why he's making the decisions that he is." In energy, oil prices dipped before the open. By 5:47 a.m., cruded traded down 50 cents at $53.30 a barrel. World markets were mixed. In Asia, traders cheered the rally in the U.S. Japan's Nikkei and Hong Kong's Hang Seng each picked up more than 3.3%. In the U.K., the FTSE stood down 0.9% in midday trading. Corporate News AIG (AIG) said several senior executives from its financial products division have decided to step down. An AIG spokeswoman called the losses "manageable" and expected more, Reuters reported. Separately, AIG said 15 recipients of the 20 largest bonsus returned the cash to avoid scrutiny and a heavy tax. DuPont (DD), Caterpillar (CAT) and Lockheed Martin (LMT) are among the largest firms whose pensions will come up short this year, raising their costs, Bloomberg reported. "The call on their cash is going to be significantly higher, two or three times higher, than they had planned," Judy Schub, managing director of the Committee on Investments of Employee Benefit Assets, said. Goldman Sachs (GS) is considering acquiring the iShares unit of Barclays (BCS), Reuters , citing an anonymous source. The firms Hellman & Friedman, Bain Capital and TPG also showed interest. The Economy There are no substantial economic reports scheduled to be released today. 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 | 24 Mar 2009 | 10:14 am Geithner to map U.S. financial regulation reform (Reuters) Reuters - U.S. Treasury Secretary Timothy Geithner will face tough questions from lawmakers on Tuesday as he spells out the basics of the Obama administration's plans to reshape financial regulation at a high-profile congressional hearing. Source: Yahoo! News: Business | 24 Mar 2009 | 10:13 am Russia: Oil Prices Are Going Back Down Falling oil prices are particularly bad for Russia. A large part of the country’s GDP comes from exporting its vast supply of crude and gas. So, it is especially surprising that a senior Russian official is predicting that oil will fall again after advancing above $50 recently. According to the AP, the nation’s finance minister Alexei Kudrin referring to oil prices said, “This is most likely to be a temporary improvement.” Fortunately for Russia, he may be wrong. Although OPEC did not cut production at its last meeting, it said it would enforce production cuts already in place. That should keep the supply of crude stable. The signal from the global stock markets is that the recession may be bottoming. There are a number of reasons that the assumption may not be true, but, if it is, demand for oil could begin to rise again as early as this summer. Crude futures should begin to reflect that now. China, which is one of the largest oil consuming nations, says that its GDP will rise 8% this year. Data on its exports would seem to undermine that notion, but the communist central government is spending over $500 billion to increase the nation’s demand for goods and services. If China’s rapid economic growth does continue, its appetite for oil could actually pick up. Russia may do better than its finance minister thinks. Douglas A. McIntyre Source: 247 Wall Street | 24 Mar 2009 | 10:12 am UK staves off deflation as weak pound pushes up prices Britain staved off deflation in February after a shock rise in the inflation caused by the weak pound and rising fuel costs. Source: Telegraph Finance | 24 Mar 2009 | 10:10 am How to cut your energy bill The regulator is talking tough but you can start saving now using these five simple steps. Source: Telegraph Finance | 24 Mar 2009 | 10:08 am Metro posts 2008 ops profit of 2.2 bln euros (AFP) AFP - The German retailer Metro on Tuesday reported a 2008 operating profit of 2.2 billion euros (three billion dollars), but said it could not give a detailed forecast for this year. Source: Yahoo! News: Business | 24 Mar 2009 | 10:06 am Unhealthy habits cost you more at work More companies are adopting a carrot-and-stick approach to lowering their health care costs: reward healthy workers and penalize those who maintain unhealthy habits. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 9:59 am Recession Keeps Google (GOOG) Focused On Core Business Google (GOOG) has been buying modest-sized companies for several years. It tries to find firms that have software or products that allow it to diversify out of the firm’s core search business, which has been unusually successful. The biggest transactions the company has made so far are DoubleClick, the online advertising serving company and YouTube, the video sharing operation. Google has not made money on YouTube. probably because the quality of the user-created content is so poor. DoubleClick does not look like a terribly good deal because the recession has killed online display advertising. Now would seem like a perfect time for Google to be in the market for more acquisitions. Tech company valuations are unusually low. Some software firms with promising products are running out of money because venture capitalists are pulling out of all but their safest investments. Despite all the reasons for temptation, Google has cut back its appetite for M&A. According to Reuters, “The Internet giant has not announced an acquisition in six months, a significant slowdown considering its tally of more than 30 deals since 2005.” Google still has a staff of executives who look for new deals, but they may be idle for a long time. The market has sent Google a message over the last year. The search company in in too many businesses that do not make a dime. Those range from its small “Checkout” service which was supposed to compete with Ebay’s (EBAY) PayPal to Google Earth, a fun but costly product with lots of customers by no apparent revenue plan. If Google is out of the business of buying businesses, it stock just may begin to move back up. Douglas A. McIntyre Tagged: EBAY, GOOG Source: 247 Wall Street | 24 Mar 2009 | 9:57 am Europe Markets: Stocks in Europe turn mixed after bank plan rally Stocks in Europe turned mixed in late-morning trade on Tuesday, deflating the previous session's rally, as investors sold metals producers. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 9:54 am China suggests switch from dollar China's central bank calls for a new global reserve currency run by the International Monetary Fund to replace the US dollar. Source: BBC News | Business | World Edition | 24 Mar 2009 | 9:49 am Tokyo Stock Exchange shelves IPO plans for at least a year The parent of the Tokyo Stock Exchange has jettisoned plans to make an initial public offering and now won't pursue a listing until at least the fiscal year beginning April 1, 2010. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 9:49 am UK economy teeters on brink of deflation Read Mervyn King's letter to the Chancellor Source: Latest Business News from Times Online | 24 Mar 2009 | 9:47 am After Brief Respite, Airline Industry Is Heading Back Down Last summer, the airline industry looked like it was heading toward another rash of bankruptcies. Fuel costs were at record levels because of $147 oil. The economic slowdown was already reducing passenger loads. Then cutbacks in routes and employees coupled with oil moving back below $60 created the illusion that the global airline industry was out of the woods. Stocks in the companies moved up sharply. The big carriers had driven down costs enough to be fine. The situation was too good to be true. While the industry had taken out significant expenses, it could not keep up with the falling customer demand that accompanied the deepening recession. Now, it looks like 2009 could be much worse for airlines than 2008 was, and the specter for bankruptcies is returning. According to Reuters, “World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said.” That is almost double the association’s estimates in December. The dangerous effects of losses are already taking a toll on airline stocks. Shares of AMR (AMR) are back near a 52-week low at $3.18. That is down over 70% in three months. Shares in Continental (CAL) and Delta (DAL) are off by almost 45% during the same period. While none of the US carriers may ultimately file for Chapter 11, which has been a popular way to cut costs in the airline industry for decades, there may be more mergers in an attempt to chop operating expenses. AMR may not be an independent operation at the end of the year. Douglas A. McIntyre Tagged: AMR, CAL, DAL Source: 247 Wall Street | 24 Mar 2009 | 9:44 am Airline losses forecast to hit $4.7bn in 2009$ The outlook for airlines is worsening, says the International Air Transport Association (IATA) which is doubling its estimate of the industry's losses in 2009 to $4.7 billion ($£3.1 billion), due to rapidly deteriorating economic conditions. Source: Latest Business News from Times Online | 24 Mar 2009 | 9:40 am Outside the Box: Israel's Netanyahu is caught in the economic crossfire Israel's Benjamin Netanyahu, a force for economic conservatism, finds himself challenged to form and manage a government when the economic world is in turmoil and many of his potential political partners have their hands out, demanding budgetary excess in return for their votes in parliament. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 9:35 am Internships are not just for kids Looking for a job? Consider an internship instead. Source: Business and financial news - CNNMoney.com | 24 Mar 2009 | 9:33 am Falling Japan land prices stir deflation worries Japanese land prices could be set for a drawn-out bout of deflation, with recovery not expected for up to three years as the No. 2 global economy enters a prolonged slowdown, analysts say. Source: MarketWatch.com - Top Stories | 24 Mar 2009 | 9:30 am Another Important Vote Against The Geithner Plan Economist Joseph Stiglitz’s outspoken opposition to the Treasury’s plan to fund the purchase of toxic assets from banks may be only be one vote, but since he is a Nobel prize winner, it is an important one. According to Reuters, he said “the U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak.” The analysis may all be just guess work, but the guessing seems to be moving against the Administration. Douglas A. McIntyre Source: 247 Wall Street | 24 Mar 2009 | 9:28 am The Housing Mirage: Misleading Numbers The existing home sales data which was released to the market earlier was a “half empty, half full” set of data. The market seemed to take it as just full and left the empty part behind. Home resale rates rose 5.1% in February to an annual rate of 4.72 million, according to the National Association of Realtors. In the same breath, the organization said 45% of the activity was foreclosures or short sales.  Because of the huge discount that most buyers get when they buy homes in foreclosure, the average price of a house fell 15.5% to $165,400. The increase in the rate of home sales was viewed by many as the beginning of a bottom in the housing market. The slide of nearly three years has been blamed for a great deal of the collapse in the banking and credit systems. But the rise in sales does not represent a bottom at all. It is more likely that any movement of buyers into the market will cause desperate sellers to offer homes at lower and lower prices rather than hold onto houses that they cannot afford and may not make money on even if they could hold them for another decade. Most data that the government and national business associations will put out over the next several quarters is likely to appear two-edged, at least at first. Housing prices cannot go to zero, so, at some point, the rate at which home values are dropping will slow. Resale rates may go up, but buying homes which have been in foreclosure for months is an incorporeal piece of information. If buyers start to purchase homes on the normal economic basis of being a transaction between private buyer and private seller then the market will have something to celebrate. The rise in the dual nature of data is where the analyst’s ability to forecast gets more difficult. When unemployment, consumer confidence, GDP, manufacturing, and capital expenditures are all falling simultaneously, it is hard to find optimists, but they will grab even the slightest bit of ambiguous information and claim that the recovery is underway. In the next quarter, the rate at which people are losing their jobs may slow, but average wages will probably drop sharply at the same time. The effect of fewer people losing jobs while those who are working make less is no clear sign that the economic world is getting better. GDP numbers which are significantly influenced by dangerous trends in inventories like the Q4 2008 figure defy clear interpretation. Recently analysts covering the manufacturing sector said that so many factories are shut here and overseas that the businesses are eating through inventories. That is being interpreted as good news because once inventories move close to zero, factories will have to increase production to replace them. That analysis glosses over two possibilities. The first is that the economy is bad enough that inventories may not drop at expected rates. Low demand may cause them to decrease much more slowly. That could push back a renewal of manufacturing activity for months. It is also possible that some factories will simply be out of business and the sources of goods for replacing dwindling inventories will have gone away. The normal supply chain in some industries may be severely disrupted in a way that will take several quarters to repair. Retooling or replacing factories is unlikely to be a quick process. From the middle of last year until a month or so ago, the interpretation of almost all economic information was negative because the data was unidirectional. That is changing. There are sign posts which point in two directions. It is likely that neither road sign is entirely right. In many cases both are wrong and making predictions about how the recession is going actually becomes more difficult and not less. Douglas A. McIntyre Source: 247 Wall Street | 24 Mar 2009 | 9:11 am The Economy Now: Waiting For Godot There has been little definitive discussion of the actual benefits of the Treasury’s new program that will fund the purchase of toxic assets from banks using federal money, and then allowing private money managers to purchase and trade this paper.  There has only been speculation about the outcome, and that has been over a broad range.   Prominent economists, led by James Galbraith and Paul Krugman, have said that the plan may actually do more harm than good. In the Treasury’s corner, Pimco, the largest fixed income management firm in the US, endorsed the Administration’s plan. “This is perhaps the first win/win/win policy to be put on the table and it should be welcomed enthusiastically,” Bill Gross, PIMCO’s co-chief investment officer, told Reuters. The market moved up 7% mostly on the strength of the Treasury releasing the new program that some analysts believe could improve bank balance sheets. Over the last five trading days, the increase in stock prices is nearly 10%. The market run-up is working on the same dynamics as a hydrofoil. A small bit of news which may be good is lifting the larger market well above the  chop. The market knows next to nothing about the fundamentals that should drive money into equities at this point. The skepticism about the Treasury’s plan is enough so that it would be fair to guess that it has less than a 50/50 chance of succeeding. The toxic assets that may be bought from financial company balance sheets are only a part of the problem that banks face. Consumer, commercial real estate, and business loan defaults are almost certain to undermine money center results for the rest of this year. The market is also rallying ahead of two pieces of bad news. One is the unemployment number for March and the other is the GDP figure for the first quarter. If one or both of these is “better than expected” stocks may climb even higher. Over the last six months, these figures have usually been worse than analysts have forecast and there is not much in the way of anecdotal data to support anything other than the fact that figures will keep getting worse. The most important bellwether for economic activity may be the rate of contraction in manufacturing. In the US, those numbers are bad. In parts of Asia and Europe the figures are much worse. If the American consumer was showing any signs of life there should be an uptick in exports from large manufacturing countries like China. That is not happening. Corporate earnings were worse than expected in the fourth quarter of last year. With the end of the current quarter a week away, the largest American companies will begin the process of “pre-announcing” their numbers. Most public companies want to race out bad news quickly, so that they cannot be accused of sitting on material information that could be damaging to shareholders any longer than is necessary. Earnings for the first quarter of 2009 will be dismal. Securities analysts, with a multi-decade track record of being overly optimistic, are the very people whom investors rely on for forecasts.  Earnings will not only be bad, they will be worse than expected. The stock market was too low at the beginning of the month because it had all of the bad news of the next two years priced into it. That is, at least, what the current buyers are saying. All of the high unemployment and poor corporate numbers had been taken into account at the bottom. Under almost any set of circumstances, history would support this analysis. A recession lasts four quarters and then turns into a recovery. Unemployment lags by a quarter or two, but the jobs picture should begin to improve by the end of the year. But, that is a classic recession and the economy as it is moving now, may not follow a pattern that looks anything like what it has done in the past. It may not even share many traits with The Great Depression. This downturn is likely to be sui generis. One of the remarkable things about “Waiting for Godot” is that the main characters know very little about the man that they say they are waiting for. He never shows up.  We actually know almost nothing about this recession, since it doesn’t seem to resemble anything that the American economy has experienced before. Douglas A. McIntyre Source: 247 Wall Street | 24 Mar 2009 | 9:05 am IRS challenges AIG unit tax deals: report (Reuters) - The U.S. Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp, the unit of the giant insurer that has caused political outrage over $165 million in employee bonuses, the Wall Street Journal said. Source: Reuters: Business News | 24 Mar 2009 | 9:02 am IHT: The 'voluntary tax' Whatever the Tories decide on inheritance tax there are many simple ways to reduce your liability. Here are 10 of the best. Source: Telegraph Finance | 24 Mar 2009 | 9:01 am US stocks surge on toxic asset plan US stocks soared after Treasury Secretary Tim Geithner detailed his proposals for public-private partnerships to deal with toxic assets in the financial system and prominent investors vowed to take part in the programme Source: Financial Times - US homepage | 24 Mar 2009 | 8:58 am Skype tries to go up-market By Douglas McIntyre for Daily Finance Ebay (EBAY) has not had much luck making money on Skype since it bought the VoIP company that has tens of millions of customers around the world. Too many of the users take advantage of the free features of Skype and don’t upgrade to premium services. That may be because the free version of the online phone company works so well. Read more… Tagged: EBAY Source: 247 Wall Street | 24 Mar 2009 | 8:53 am London edges up as global rally continues London continued the global market rally triggered by the unveiling of a longawaited plan to deal with US toxic assets and stabilise the financial system. Source: Telegraph Finance | 24 Mar 2009 | 8:52 am Lloyd's warns of rise in lawsuits against business Insurers will be hit by multiple class action lawsuits as investors in the financial markets seek to recover their losses, warned Lloyd's of London today, as the world's biggest insurance market revealed that hurricanes and plunging shares had sliced its profits in half during 2008. Source: Latest Business News from Times Online | 24 Mar 2009 | 8:34 am Markets soar on stimulus plan despite WTO warning (AFP) AFP - Upbeat investors sent stock markets soaring Tuesday on hopes of a quick fix for the economic crisis, despite a warning that world trade is set for its biggest fall since World War II. Source: Yahoo! News: Stock Markets News | 24 Mar 2009 | 8:11 am Lloyd's of London profits halve as recession hits investment income Weak investment returns lower rates and hurricane losses hit the world's largest insurance market. Source: Telegraph Finance | 24 Mar 2009 | 8:05 am ANZ call centre jobs shifting from Aussie to Wellington SYDNEY - ANZ Banking Group plans to introduce customer call sharing between its call centres in Australia and New Zealand, resulting in the shift of 100 jobs to Wellington. The bank says no one will be made redundant in Australia... Source: New Zealand Herald - Business | 24 Mar 2009 | 7:33 am Australian stocks: Market closes marginally higher MELBOURNE - The Australian share market closed marginally higher on Tuesday following gains by the big miners and energy stocks. However, the rise was muted in comparison with Wall Street's near seven per cent surge on American... Source: New Zealand Herald - Business | 24 Mar 2009 | 7:07 am Assembly OKs 20-week extension of unemployment pay Tens of thousands of out-of-work Californians, slated to exhaust their unemployment benefits next month, could soon get an extra 20 weeks of help thanks to a compromise bill approved by the Assembly on... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am By 'optimizing' ads, can the Rubicon Project save this newspaper? The L.A. firm says its technology, which helps match ads to Web page content, could boost revenue by 60%. This could be the way to make money on online news. This promises to be the Silent Spring for big print media. Already this year we've lost the Rocky Mountain News and the Seattle Post-Intelligencer. Dozens of other papers have been driven to the brink by double-digit losses in circulation and print advertising revenue and an overburden of untenable corporate debt. My beloved L.A. Times, owned by the bankrupted Tribune Co., is bleeding reporters and editors from every orifice, despite the fact that the paper's readership -- online, at least -- is through the roof. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Average U.S. gas price climbs 5.2 cents to $1.962 a gallon ENERGY Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Average U.S. gas price climbs 5.2 cents to $1.962 a gallon ENERGY Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Bank rescue plan looks like best hope yet to create a viable market for toxic assets Yes, it has critics, but no one has yet come up with any other bank rescue plan that would be practical or politically acceptable. In these uncertain times, you take your certitude where you find it. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Obama's SBA lending plan not seen as cure-all Regulations may keep some borrowers and banks from taking part in the loan program. Business at Fresco Cafe North in Goleta is built on grilled chicken sandwiches, Gorgonzola-and-walnut salads and a $135,000 loan backed by the Small Business Administration. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Obama's SBA lending plan not seen as cure-all Regulations may keep some borrowers and banks from taking part in the loan program. Business at Fresco Cafe North... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am U.S. workers at AIG return $50 million in bonuses New York's attorney general wants more back. Most of the total $165 million in awards went to foreign employees. ... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Weekend box-office sales Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Unraveling the AIG mess American International Group Inc. executives who received much of the controversial retention bonuses have agreed to return the money, New York Atty. Gen. Andrew M. Cuomo said late Monday. Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Stocks jump almost 500 points on news of bank plan Treasury proposal to entice private investors to buy troubled bank assets sparks financial rally. The Dow marks its biggest one-day percentage gain since late October. Stocks staged their biggest rally in nearly five months Monday as investors embraced the government's plan to dispose of the toxic assets clogging the nation's banking system and as the beleaguered housing market showed signs of life. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Weekend box-office sales Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am A fabricator can make a prototype for your invention Dear Karen: You recently advised an inventor to build a prototype for testing purposes. Are there companies that do that sort of thing? Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Unraveling the AIG mess American International Group Inc. executives who received much of the controversial retention bonuses have agreed to return the money, New York Atty. Gen. Andrew M. Cuomo said late Monday. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Market rallies behind bank rescue plan The White House proposal to use public and private funds to buy up toxic assets sends stocks soaring. The Obama administration's long-awaited plan to cleanse banks of rotten investments tied to bad home loans scored a big win on Wall Street on Monday as investors bet that the government may have finally found a way to fix the nagging problem at the core of the financial crisis. Source: L.A. Times - Business | 24 Mar 2009 | 7:00 am Individuals may be able to invest in toxic assets Two major money management firms consider launching 'closed-end' funds under the new bank rescue plan. Wall Street... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Bank rescue plan looks like best hope yet to create a viable market for toxic assets Yes, it has critics, but no one has yet come up with any other bank rescue plan that would be practical or politically acceptable. ... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am By 'optimizing' ads, can the Rubicon Project save this newspaper? The L.A. firm says its technology, which helps match ads to Web page content, could boost revenue by 60%. This could be the way to make money on online news. ... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am Existing home sales rise 5.1% in February New tax credit helps lure first-time buyers. Median price falls again. Falling prices and first-time buyers bargain-hunting... Source: RSS feed - channel BNPaperBusiness | 24 Mar 2009 | 7:00 am IRS challenges AIG unit tax deals: report (Reuters) Reuters - The U.S. Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp, the unit of the giant insurer that has caused political outrage over $165 million in employee bonuses, the Wall Street Journal said. Source: Yahoo! News: Business | 24 Mar 2009 | 6:32 am NZ stocks: Shares climb 1.7pc Shares hit a five-week high today, joining a global equities surge after the US government unveiled measures to help put a floor under the recession. The Obama administration detailed a plan to purge toxic assets from bank balance... Source: New Zealand Herald - Business | 24 Mar 2009 | 6:09 am Currency: Dollar climbs above US 57c The New Zealand dollar continued stretching above US57c today for the first time in 10 weeks as investors deserted the US dollar in droves in favour of almost anything else. By 5pm, the kiwi was at US57.06c - up from US56.52c late... Source: New Zealand Herald - Business | 24 Mar 2009 | 5:30 am Easter strike threat from Air NZ flight attendants Easter holiday flight plans for thousands are threatened by looming strike action from Air NZ flight attendants. The Engineering, Printing and Manufacturing Union (EPMU) says 250 of its members, who are employed by the Air NZ... Source: New Zealand Herald - Business | 24 Mar 2009 | 4:31 am Dow jumps as White House moves on bad bank assets (AP) AP - The Obama administration aimed squarely at the crisis clogging the nation's credit system Monday with a plan to take over up to $1 trillion in sour mortgage securities with the help of private investors. Source: Yahoo! News: Business | 24 Mar 2009 | 4:05 am 5 Small Caps to Lead a Recovery (Screens) I’ve no idea whether small companies will lead America’s stock market recovery, just as I’ve no special insight into whether that recovery has already started. But now nonetheless seems a fine time to buy small-company stocks. Here’s why, with a few names to consider. Small-company stocks have led the way out of recent recessions. They beat large-company stocks over the three-year periods following economic potholes in 1981-82, 1990-91 and 2001. That’s noteworthy, but it’s not proof. After all, value stocks outperformed in past recessions. Before this downturn, most of us thought of that as a rule; stocks that are cheap relative to earnings have less to lose when earnings decline. But value stocks have done much worse than growth stocks during this downturn. Cheap stocks are usually attached to flawed businesses, and under severe enough conditions, it’s now apparent, those flaws can sink companies. Perhaps the small-company assumption will prove wrong, too, in coming months. So far this year, in fact, small-company stocks have fallen about seven percentage points more than large-company ones. Consider a longer view. In a recent note to clients, asset manager James O’Shaughnessy pointed out that stocks returned 3.9% a year after inflation over 40 years ended February. That’s their worst 40-year performance since they returned 3.8% a year through December 1941, a stretch that covered the stock panic of 1907, World War I, the Great Depression and the bombing of Pearl Harbor. After December 1941, stocks went on to beat inflation by 10% a year over the next five years, 11% a year over a decade and 13% a year over two decades. Small-company stocks returned twice as much over five and 10 years and a few percentage points more over 20. Again, it’s a promising sign, if not a promise, for small-company investors. Small companies have shallower financial resources than large ones, and they’re more susceptible to stock declines brought on by short-selling. Both might have played a part in their recent underperformance, but short-sellers might now be feeling less bold with stocks up 20% in two weeks, and a move detailed Monday by the Treasury Department to free banks to lend (albeit at a cost to dollar stability) is likely of greatest relief to small companies. Again, though, that’s speculation. All I’m truly confident about is that small-company stocks tend to beat large ones over long time periods, and that they’re fairly priced now. The small-company effect, as it’s known, was first documented in 1981 by researcher Rolf Banz and has been substantiated in hundreds of studies since. Over long time periods, small-company stocks tend to beat large ones by about two percentage points a year. So accepted is this phenomenon that researchers looking for other performance predictors usually mute the small-company effect by adjusting their results for company size. Investors ought to pay more for a performance edge, but right now small companies and large companies carry identical price/sales ratios of 0.6. The six companies listed below have stock market values between $200 million and $1 billion, grew their sales and profit in their most recent quarter and have manageable debt loads. Hittite Microwave (HITT) is down 16%, half as much as the broad market, since I recommended the stock in August 2006. The “fabless” chip maker — one that designs chips but doesn’t fabricate them — has maintained high profitability, and while its recent sales growth might be difficult to sustain, the company looks likely to take share from struggling, capital-intensive peers. Jos. A Bank (JOSB) sells its own brand of suits and casual dress clothes. I’ve recommended the stock several times starting six years ago at $10 and change. It’s $27 now, but it topped $40 three years ago. Bank is a rare example of a clothing chain whose sales are growing at the moment, and its shares at less than nine times earnings seem plenty cheap. Warnaco (WRC) was just barely large enough to make a September 2005 search for promising companies worth $1 billion or more. I singled out the underpants maker’s stock as looking likely to ride up. Instead, it has sagged 11%, but the broad market has dropped 34%. The company remains profitable and generates ample cash, which should allow it to pick up business as struggling textile firms close shop.
Company	Ticker	Industry	Share Price	Market Value ($mil.)	Forward P/E
Data as of March 23, 2009
Cal Dave International	DVR	oil & gas services	$6.78	640	9
Hittite Microwave	HITT	semiconductors	31.98	960	24
Jos A Bank Clothiers	JOSB	clothing stores	27.71	506	9
Middleby	MIDD	diversified machinery	31.05	575	10
Warnaco Group	WRC	clothing manufacturers	22.75	1040	9

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Fund Insider: Fear-Based Funds

Markets are moved by fear and greed, as the saying goes. And so are marketing departments. Gone are the days when fund companies could hype their chart-topping returns; for today’s shell-shocked investors, fund companies have started to promise “risk management” and “diversification”—in other words, safety. This happens after every bear market, says Lipper analyst Jeff Tjornehoj. “It’s as predictable as the sunrise.”

And now, rising in the east: new funds from Putnam and Van Kampen, signaling that the era of fear-based fund investing is back. Putnam’s four Absolute Return funds target specific three-year returns—one, three, five or seven percentage points over the Merrill Lynch U.S. T-Bill index, a common measure of inflation. It’s a strategy that’s been used by pension funds and endowments for years. It’s also fairly conservative, considering that T-bills almost never go negative but don’t offer the returns of the stock market over time. “They’re an anchor against the wind, diversification from the volatility of a typical fund,” says Putnam CEO Bob Reynolds.

Van Kampen’s new Global Tactical Asset Allocation fund also sounds the lullaby of diversification. By investing in U.S. and foreign stocks, bonds, currencies and commodities, the fund promises to react nimbly to volatile markets. That allows it to “operate within a risk-controlled framework,” says fund manager Francine Bovich.

Both companies say they didn’t launch their funds in response to the market crash—that would be nearly impossible, since it takes several months for a fund company to create and test a new fund and get Securities and Exchange Commission approval. But Putnam’s Reynolds acknowledges their timing couldn’t be better: “They’re perfect for people who can’t stand the volatility.”

Though the new offerings might appeal to the skittish, they have risks, too. They can, of course, lose money, points out Tjornehoj. And they aren’t cheap, with expense ratios of more than 1.65 percent. More important, he says, it’s too late to protect against the crash that happened last October—and the instinct to do so can actually encourage investors to be too conservative, precisely when stocks are poised to rally.

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Prepaid Cellphone Plans: Should You Switch? (Deal of the Day)

Want to cut your expenses? Take a cold hard look at your monthly cellphone bill. Chances are you're paying for minutes (or data time or texting) that you never even get close to using.

Prepaid phone plans are one way to control those costs. Long used by parents who wanted their children to have access to a phone in case of an emergency (but didn't want them ringing up sky-high bills chatting with their friends), these plans allow you to pay only for the minutes you use. Not only that, but unlike monthly plans, most stop you from going over whatever limits you set.

In fact, many cost-conscious customers are making the switch to prepaid plans, says Allen Hepner, a research scholar at the New Millennium Research Council (NMRC), a Washington, D.C.-based nonpartisan think tank focused on telecommunications. According to a March 2009 study by NMRC, in the last six months, 17% of contract-based cellphone users switched to prepaid cellphones.

These plans, however, aren’t right for everyone. Consumers who spend more than an hour a day talking on their cellphone may be better off with a contract-based plan. And those who are still locked into a contract with their current cellphone provider may find that the early-termination fees they'd have to pay to get out of the contract far outweigh any savings they'd reap with a prepaid plan.

Here are five things you should consider before signing up for a prepaid plan.

Compare plan providers

Prices for prepaid plans can vary greatly based on the service provider, the amount of minutes or the city you live in, so it pays to do some research.

Many of the big carriers offer prepaid plans, including T-Mobile and AT&T (T). But you shouldn't neglect lesser-known prepaid providers, including Tracfone, Cricket Communications and Jitterbug Wireless, says John Walls, a spokesman for CTIA, a nonprofit organization that represents wireless communications sectors. These companies tend to offer more pricing options and plans than the larger providers. Many also have partnerships with other local prepaid plan providers that offer extended coverage in what would otherwise be considered roaming areas.

For more on finding a cost-cutting plan compare cellphone plans at BillShrink.com and LetsTalk.com.

Know the difference between prepaid and pay-as-you-go

Most pay-as-you-go plans charge a set amount of money for each day you use the phone. If you only chat on the phone a few days a month then pay as you go might make sense. But otherwise, the charges can really add up, resulting in higher bills for less talk time.

Consider coverage areas

Make sure the plan offers coverage in the areas you're likely to make phone calls, especially if you travel often or live in a remote area. For example, T-Mobile’s prepaid coverage includes most of the East Coast, but it gets spotty in the west, particularly around Seattle, Portland, Ore., and Las Vegas.

In addition, find out if the cellphone handset is GSM or CDMA service. GSM prepaid phones (also known as Global System for Mobile Communications) work throughout the country and are ideal for people who regularly make calls to or from other states.

CDMA prepaid phones, on the other hand, are best for those who stay local. Plans for CDMA phones (and for the handsets themselves) tend to be cheaper, says Rob Enderle, principal analyst at the Enderle Group, a San Jose, Calif.-based technology research firm. However, go into roaming mode and these plans can get pricey fast. With Tracfone, you’ll pay the equivalent of two minutes non-roaming use for one minute of roaming.

Determine how many minutes you need

The average contract-based cellphone user pays $60 a month for roughly 200 talking minutes, says Hepner. “[But] a lot of people aren’t using all these minutes,” he says.

For example, AT&T’s cheapest individual contract-based plan starts at $40 per month for up to 450 minutes. A person who doesn’t use that many minutes can save $10 a month by signing up for a prepaid plan instead. AT&T's cheapest costs $30 per month and includes up to 200 minutes for local and long-distance calling within its U.S. coverage area, as well as voicemail and three-way calling.

Don't forget the extra costs

While prepaid plans are relatively cheap, there are fees and other costs you need to watch for. Checking voicemail often gobbles up one minute and receiving or sending texts often wipes out 30 cents.

Also, keep in mind that you'll be required to purchase a handset. While with most monthly contract plans, the handsets come free or at a fraction of the retail price, prepaid plan users often spend $20 to $160 for a phone.

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The Rest Of You Will Cough It Up Before Noon Tomorrow Or Risk Having Your Names, Addresses and License Plate Numbers Revealed In A Press Conference With The AG

New York Attorney General Andrew Cuomo said late Monday that 15 of the top 20 recipients of $165 million in retention bonuses from American International Group Inc.'s Financial Products unit have agreed to give back their bonuses -- amounting to an excess of $50 million in cash.

[...]

"I applaud all the AIG employees that are returning the bonuses," said Mr. Cuomo in a conference call. "They are doing the right thing."

He added that he sees no public interest in revealing the names of people who return their bonuses, and he acknowledged that returning the money is a difficult decision for many people in the unit who were not involved in creating the problematic transactions that helped topple AIG.

AIG Executives to Return $50 Million of Bonuses [WSJ]

Business Briefs - Monday

In Brief - Monday

After The Close - Monday

Trends & Innovations - Monday

Software Maker Helps Companies Thwart Computer Security Threats

How the Dow Jones industrials fared Monday (AP)

AP - Wall Street got the news it wanted on the economy's biggest problems — banks and housing — and celebrated by hurtling the Dow Jones industrials up nearly 500 points.

China calls for new reserve currency

Lord Myners suffers new blow with discovery of offshore holdings

Sem Logistics oil storage site for sale

Investors find flimsy reasons to be cheerful

Office for National Statistics says prices really are falling

Goldman working on iShares bid

Dealbreaker Afterdark: Oh, THAT $75 Million?

I thought you meant something else by "all assets."

A lawyer for the court-appointed trustee liquidating Bernard Madoff's firm confirmed Monday they've located another $75 million in Madoff assets - a figure that would put the total above $1 billion.

A lawyer for the court-appointed trustee also said Monday that French authorities are moving to seize Mr. Madoff's residence in France, to satisfy claims by Madoff's victims in France.

Trustee Finds More Madoff Assets [The Wall Street Journal]

US fears Pakistan's growing problems

Moody's strips GE of triple-A rating

Hear: A New Plan For Toxic Assets

This sign said 50% for only two days before 70% off sticker was pasted over it at lunch time. Alica Preston/Planet Money Facebook group

 

On today's Planet Money:

-- The Treasury Department unveiled the details of a public-private investment program to help banks get toxic assets off their books today. The plan calls for using $75 to $100 billion from the TARP, Troubled Assets Relief Program, along with funding from private investors, to buy as much as $500 billion worth of these assets. In another Planet Money Radio Dramatization, David Kestenbaum and Caitlin Kenney explain how it's expected to work.

-- The new program already has its critics, but Columbia Business School professor and former investment banker David Beim isn't one of them. Beim says he thinks it's a good plan for the country.

-- The success of the program has big implications for the Obama Administration and Treasury Secretary Timothy Geithner. U.S. policy analyst Sean West of Eurasia Group tells us how he thinks it will play out, politically.

Bonus: Working together in Park Slope, after the jump.

Download the podcast; or subscribe. Intro music: Eric B. & Rakim's"Paid In Full." Find us: Twitter/ Facebook/ Flickr

Seen in Park Slope, Brooklyn. Click to enlarge. Ari Joseph

 

Ari writes:

I came across this sign at a restaurant here in Park Slope. I thought it was a novel approach to the economy, and makes me wonder if we'll be seeing more of this.

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Fears of record hedge fund withdrawals

Cuomo set to recoup half AIG bonuses

India's Tata Motors unveils the world's cheapest car

Write-Offs: 03.23.09

$$$ Donnie Deutsch Wants to Accost Bonus-Takers In Front of Their Kids [Daily Intel]

$$$ CODEPINK Holds Overnight Vigil for a People's Bailout on Eve of Second AIG Hearing [CD]

$$$ Cuomo's Shifting Thinking on A.I.G. Bonuses [Dealbook]

Stifel, Nicolaus Buys UBS

's branches. As was rumored round these parts this morning. Full press release from Stifel Financial:

Stifel Financial Corp. (NYSE: SF) announced today that its principal operating subsidiary, Stifel, Nicolaus & Company, Incorporated, has entered into an exclusive agreement with UBS Financial Services Inc. ("UBS") to acquire up to 55 branches from the UBS Wealth Management Americas branch network.

The 55 offices are located in 24 states throughout the country, and employ an aggregate of approximately 320 Financial Advisors, who have approximately $15 billion in assets under management, including $215 million in Reg U and Reg T loans and $1.7 billion in money market and FDIC insured balances. In 2008, these branches generated estimated total revenue of approximately $116 million, including approximately $100 million in compensable Financial Advisor revenue. The transaction is structured as an asset purchase for cash at a premium over certain balance sheet items, subject to adjustment. The payments to UBS include:

Treasury & Toxic Assets

WHAT: The Treasury's plan to buy toxic assets from bank, help the banks and open up credit markets. The goal here is to lure investors into partnering with the government and buying up to $1 trillion in toxic assets.

THE PROBLEM: The banks have all these toxic assets they want to get rid. The banks don't want to sell those assets at fire sale prices. Fire sale prices are all that anyone is willing to pay at the moment. So the banks continue to face billion dollar losses and the toxic waste continues to mess up the flow of credit.

WHO: This plan would use the resources of the Treasury, the Federal Reserve and the FDIC (the agency that insures our bank deposits) to make this appeal to investors: help us take us buy these toxic assets and we'll meet you more than halfway. We will match your investment and then we will offer you a cheap loan. Then we will guarantee that loan.

The government hopes with these subsidies private investors will love buying up toxic assets.

SAY WHAT? I find examples helpful. Here's one from the Treasury:

Sample Investment Under the Legacy Securities Program
Step 1: Treasury will launch the application process for managers interested in the Legacy Securities Program.
Step 2: A fund manager submits a proposal and is pre-qualified to raise private capital to participate in joint investment programs with Treasury.
Step 3: The Government agrees to provide a one-for-one match for every dollar of private capital that the fund manager raises and to provide fund-level leverage for the proposed Public-Private Investment Fund.
Step 4: The fund manager commences the sales process for the investment fund and is able to raise $100 of private capital for the fund. Treasury provides $100 equity co-investment on a side-by-side basis with private capital and will provide a $100 loan to the Public-Private Investment Fund. Treasury will also consider requests from the fund manager for an additional loan of up to $100 to the fund.
Step 5: As a result, the fund manager has $300 (or, in some cases, up to $400) in total capital and commences a purchase program for targeted securities.
Step 6: The fund manager has full discretion in investment decisions, although it will predominately follow a long-term buy-and-hold strategy. The Public-Private Investment Fund, if the fund manager so determines, would also be eligible to take advantage of the expanded TALF program for legacy securities when it is

WHAT COULD GO WRONG: Well, the whole Private-Public Partnership won't get any partners:

--The banks won't sell for less than what they have on their books
-- Investors won't bite. They will be too worried that government will mess with their bonuses, their investments or just generally get in their way.

WHAT COULD GO RIGHT: Investors will partner and the plan will clear the junk off the books of the banks for a fair price. The credit markets start working again. The toxic assets turn out to be worth what they were sold for. The taxpayers make a little money or lose a little money, but don't suffer any big losses.

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U.S. market cops ramp up fraud training after Madoff (Reuters)

Reuters - Burned by their failure to uncover the biggest Ponzi scheme in history, U.S. securities regulators are ramping up training of staff on how to spot the warning signs of market swindles.

U.S. market cops ramp up fraud training after Madoff (Reuters)

Reuters - Burned by their failure to uncover the biggest Ponzi scheme in history, U.S. securities regulators are ramping up training of staff on how to spot the warning signs of market swindles.

US stocks skyrocket on toxic asset plan (AFP)

AFP - Wall Street shares skyrocketed Monday as the market cheered a plan to clean up toxic assets clogging the balance sheets of US banks in a bid to stabilize the recession-hit economy.

The Obama Portfolio: Killin' It

WOW! See what happens when you hold calls for bloggers?

The Obama Portfolio (Since Inception): +16.21%

Earlier: The Obama Portfolio

TSX hits 6-week high on Petro-Canada, U.S. bank plan (Reuters)

Eichengreen Sees Treasury `Overpaying' For Toxic Assets

It's Conference Call Day At The Treasury! (Live-Blog)

3:25-3:38: In its second conference call of the day, the Treasury has mastered the concept of hold music, and is killing us with the soft jazz. We prefer the coughing, wheezing, nose blower.

3:44: Just hangin'

3:45: Tina Chin, Director of White House office of public liason in the hizzous, joined by Mary Goodman, Sam Hanson, and Jeremy Stein. No T. Geith :(

Got a q? Shoot a line to: public@who.eop.gov.

Mary takes the mic.

3:47: We're faced by "4 challenges," which is a 100% increase in challenges since this morning.

Apparently "TALF" is "one of our catchy little phrases here at Treasury."

The challenges are: fall in housing prices, credit flow, bank capital strength or lack thereof, legacy assets.

3:52: Jeremy takes the mic.

So, with regard to these legacy assets, Jer asks the audience, "why do we care about these things?"

This is a very complicated case, Maude. You know, a lotta ins, a lotta outs, a lotta what-have-yous. And, uh, lotta strands to keep in my head, man. Lotta strands in old Duder's head.

Re: Assigning asset prices, Jeremy actually says this: "We think we are pretty clever here at the Treasury department, but we aren't that clever."

Goldman May Sell Hot Pieces of Assets?

"Goldman Sachs is considering selling part of its 4.9% stake in ICBC, a move that could raise more than $1 billion."-- WSJ

Cecala Says U.S. Mortgage Rates Could Reach 4.6%

Presented By:

More Fun With The Treasury

Please join Senior Treasury officials Mary Goodman, Sam Hanson, and Jeremy Stein for a call at 3:30pm EST today to discuss the latest piece of the financial stability plan. Call in details: Title: White House/Treasury Call Participant dial in: (800) 230-1085

Geithner On CNBC

Treasury Secretary Timothy Geithner won't be on Planet Money this afternoon, but he did make an appearance over on CNBC. Here's a bit of what he said:

BURNETT: And the question is, are things a lot worse than we think with the banks, that--or are they, need to take the training wheels off and stop freeloading off the taxpayer?

Sec. GEITHNER: I think you're going to see people start to raise equity again. I think they will.

BURNETT: Soon?

Sec. GEITHNER: Not sure how soon, but I think that'll happen. Again, by helping get these markets for real estate...(unintelligible)...loans going again, if you're helping provide financing to get the securities markets going again, you're going to make it more likely that these guys are able to clean up their balance sheets and raise private equity again. I--it'll come.

Watch video of the interview after the jump.

BURNETT: How quickly is this--I mean, it seems like it's contingent on this plan starting to work. Some investors I've spoke with have said we could start to have auctions as soon as right after Easter. Is that too aggressive of an expectation?

Sec. GEITHNER: We're moving as quickly as we can, and as soon as we have the terms designed in a way we think it'll work for the taxpayer, and soon as we get the operational infrastructure in place, we're moving. But I think the--and this is joint Treasury/Fed/FDIC program. We'll--we're going to move as quickly as we can.

Read the full transcript and watch the rest of the interview here.

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Major Indexes Soar Over 6% on Treasury Plan (Market Update)

News at a Glance

• Geithner Plan: Would allow purchase of $1 trln in bad assets.
• Broad Rally: Stocks jump on Treasury's plan, Dow up almost 500 points.
• Retail Woes: Consumer's purse strings to stay tight: survey.
• By Any Another Name: Rebranding begins with a sign at AIG.

The Lowdown

The Treasury's plan to facilitate the removal of up to $1 trillion in toxic assets from bank's holdings triggered a fresh wave of optimism on Wall Street.

Stocks began week sharply higher, as traders cheered the plan and held out hope that it would spur lending and grease the wheels of the economy. Each of the major indexes rose at least 6%. The Dow Jones Industrial Average climbed 497 points to 7775. The Nasdaq picked up 98 at 1555, and the S&P 500 climbed 54 to 822.

Most of the gains came in financials. Not 15 minutes into the trading day, Citigroup (C), JPMorgan Chase (JPM) and Bank of America (BAC) had each climbed more than 10% on the prospect of cleaner portfolios.

Under the Treasury's plan, a new organization called the Public-Private Investment Program would recruit investors to buy up banks' assets, matching their outlays dollar-for-dollar. Auctioning of the assets would be handled by the Federal Deposit Insurance Corp., which would also offer investors guarantees against further losses. Separately, the Federal Reserve would draw $200 billion from the $700 bailout fund already approved by Congress to back up to $1 trillion in loans to private investors looking to buy up the troubled assets.

Treasury Secretary Timothy Geithner disclosed the main pieces of the plan in an opinion piece published Monday in The Wall Street Journal. "We cannot solve this crisis without making it possible for investors to take risks," he wrote. "While this crisis was caused by banks taking too much risk, the danger now is that they will take too little."

The plan drew early criticism from economists, the Associated Press reported. Some investors and economists questioned whether the action would be sufficient to stimulate lending and whether it would ultimately leave banks in a better position.

The housing market looked a bit better, as well. The National Association of Realtors said the annual rate of existing home sales rose in February by more than economists were expecting.

The retail sector got some bad news. A new survey suggests that saving habits learned by consumers during the economic crisis are likely to remain with them after the recession has ended. Roughly three fourths of the 4,000 respondants said they had changed their shopping behavior since the onset of the economic downturn, according to the report published by the retail consultancy Retail Forward.

In energy, oil futures rose with the broader market. Crude traded up $1.79 at $53.86 a barrel.

World markets were mostly higher on the Treasury's plan. In Asia, Japan's Nikkei finished up 3.4%, while Hong Kong's Hang Seng picked up 4.8%. In Europe, the major indexes of London, Frankfurt and Paris carried gains of more than 2.0% each into afternoon trading.

Corporate News

• AIG (AIG) is looking to put some distance between itself and its new reputation. Workers removed the "AIG" sign from the firm's property-casualty office in Lower Manhattan in an effort to begin rebranding the unit, Reuters reported. A spokesman said that segment of the company plans to rename itself "AIU Holdings" to set itself apart from the ailing parts of the firm.
• Suncor Energy (SU) plans to acquire Petro-Canada (PCZ) for roughly $15 billion in stock, about a 30% premium. The deal would merge two of Canada's largest energy firms at a time when energy prices are fluctuating wildly as traders struggle to handicap demand.
• ING (ING) chief executive Jan Hommen asked his firm's top 1,200 managers to return their bonuses voluntarily as the firm remains in debt to the Dutch government, which poured $13.7 billion into ING in October, the Dutch newspaper De Volkskrant reported. "This is a moral appeal," Hommen said.

The Economy

• The annual rate of existing home sales rose in February to 4.79 million units per year, up from a revised January rate of 4.49 million units, the National Association of Realtors said. For February, economists expect the rate to have dipped to 4.45 million sales a year. WORKSHEET

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.

Major Indexes Soar Over 6% on Treasury Plan (Market Update)

News at a Glance

• Geithner Plan: Would allow purchase of $1 trln in bad assets.
• Broad Rally: Stocks jump on Treasury's plan, Dow up almost 500 points.
• Retail Woes: Consumer's purse strings to stay tight: survery.
• By Any Another Name: Rebranding begins with a sign at AIG.

The Lowdown

The Treasury's plan to facilitate the removal of up to $1 trillion in toxic assets from bank's holdings triggered a fresh wave of optimism on Wall Street.

Stocks began week sharply higher, as traders cheered the plan and held out hope that it would spur lending and grease the wheels of the economy. Each of the major indexes rose at least 6%. The Dow Jones Industrial Average climbed 497 points to 7775. The Nasdaq picked up 98 at 1555, and the S&P 500 climbed 54 to 822.

Most of the gains came in financials. Not 15 minutes into the trading day, Citigroup (C), JPMorgan Chase (JPM) and Bank of America (BAC) had each climbed more than 10% on the prospect of cleaner portfolios.

Under the Treasury's plan, a new organization called the Public-Private Investment Program would recruit investors to buy up banks' assets, matching their outlays dollar-for-dollar. Auctioning of the assets would be handled by the Federal Deposit Insurance Corp., which would also offer investors guarantees against further losses. Separately, the Federal Reserve would draw $200 billion from the $700 bailout fund already approved by Congress to back up to $1 trillion in loans to private investors looking to buy up the troubled assets.

Treasury Secretary Timothy Geithner disclosed the main pieces of the plan in an opinion piece published Monday in The Wall Street Journal. "We cannot solve this crisis without making it possible for investors to take risks," he wrote. "While this crisis was caused by banks taking too much risk, the danger now is that they will take too little."

The plan drew early criticism from economists, the Associated Press reported. Some investors and economists questioned whether the action would be sufficient to stimulate lending and whether it would ultimately leave banks in a better position.

The housing market looked a bit better, as well. The National Association of Realtors said the annual rate of existing home sales rose in February by more than economists were expecting.

The retail sector got some bad news. A new survey suggests that saving habits learned by consumers during the economic crisis are likely to remain with them after the recession has ended. Roughly three fourths of the 4,000 respondants said they had changed their shopping behavior since the onset of the economic downturn, according to the report published by the retail consultancy Retail Forward.

In energy, oil futures rose with the broader market. Crude traded up $1.79 at $53.86 a barrel.

World markets were mostly higher on the Treasury's plan. In Asia, Japan's Nikkei finished up 3.4%, while Hong Kong's Hang Seng picked up 4.8%. In Europe, the major indexes of London, Frankfurt and Paris carried gains of more than 2.0% each into afternoon trading.

Corporate News

• AIG (AIG) is looking to put some distance between itself and its new reputation. Workers removed the "AIG" sign from the firm's property-casualty office in Lower Manhattan in an effort to begin rebranding the unit, Reuters reported. A spokesman said that segment of the company plans to rename itself "AIU Holdings" to set itself apart from the ailing parts of the firm.
• Suncor Energy (SU) plans to acquire Petro-Canada (PCZ) for roughly $15 billion in stock, about a 30% premium. The deal would merge two of Canada's largest energy firms at a time when energy prices are fluctuating wildly as traders struggle to handicap demand.
• ING (ING) chief executive Jan Hommen asked his firm's top 1,200 managers to return their bonuses voluntarily as the firm remains in debt to the Dutch government, which poured $13.7 billion into ING in October, the Dutch newspaper De Volkskrant reported. "This is a moral appeal," Hommen said.

The Economy

• The annual rate of existing home sales rose in February to 4.79 million units per year, up from a revised January rate of 4.49 million units, the National Association of Realtors said. For February, economists expect the rate to have dipped to 4.45 million sales a year. WORKSHEET

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.

Major Indexes Soar Over 6% on Treasury Plan (Market Update)

News at a Glance

• Geithner Plan: Would allow purchase of $1 trln in bad assets.
• Broad Rally: Stocks jump on Treasury's plan, Dow up almost 500 points.
• Retail Woes: Consumer's purse strings to stay tight: survey.
• By Any Another Name: Rebranding begins with a sign at AIG.

The Lowdown

The Treasury's plan to facilitate the removal of up to $1 trillion in toxic assets from bank's holdings triggered a fresh wave of optimism on Wall Street.

Stocks began the week sharply higher, as traders cheered the plan and held out hope that it would spur lending and grease the wheels of the economy. Each of the major indexes rose at least 6%. The Dow Jones Industrial Average climbed 497 points to 7775. The Nasdaq picked up 98 at 1555, and the S&P 500 climbed 54 to 822.

Most of the gains came in financials. Not 15 minutes into the trading day, Citigroup (C), JPMorgan Chase (JPM) and Bank of America (BAC) had each climbed more than 10% on the prospect of cleaner portfolios.

Under the Treasury's plan, a new organization called the Public-Private Investment Program would recruit investors to buy up banks' assets, matching their outlays dollar-for-dollar. Auctioning of the assets would be handled by the Federal Deposit Insurance Corp., which would also offer investors guarantees against further losses. Separately, the Federal Reserve would draw $200 billion from the $700 bailout fund already approved by Congress to back up to $1 trillion in loans to private investors looking to buy up the troubled assets.

Treasury Secretary Timothy Geithner disclosed the main pieces of the plan in an opinion piece published Monday in The Wall Street Journal. "We cannot solve this crisis without making it possible for investors to take risks," he wrote. "While this crisis was caused by banks taking too much risk, the danger now is that they will take too little."

The plan drew early criticism from economists, the Associated Press reported. Some investors and economists questioned whether the action would be sufficient to stimulate lending and whether it would ultimately leave banks in a better position.

The housing market looked a bit better, as well. The National Association of Realtors said the annual rate of existing home sales rose in February by more than economists were expecting.

The retail sector got some bad news. A new survey suggests that saving habits learned by consumers during the economic crisis are likely to remain with them after the recession has ended. Roughly three fourths of the 4,000 respondants said they had changed their shopping behavior since the onset of the economic downturn, according to the report published by the retail consultancy Retail Forward.

In energy, oil futures rose with the broader market. Crude traded up $1.79 at $53.86 a barrel.

World markets were mostly higher on the Treasury's plan. In Asia, Japan's Nikkei finished up 3.4%, while Hong Kong's Hang Seng picked up 4.8%. In Europe, the major indexes of London, Frankfurt and Paris carried gains of more than 2.0% each into afternoon trading.

Corporate News

• AIG (AIG) is looking to put some distance between itself and its new reputation. Workers removed the "AIG" sign from the firm's property-casualty office in Lower Manhattan in an effort to begin rebranding the unit, Reuters reported. A spokesman said that segment of the company plans to rename itself "AIU Holdings" to set itself apart from the ailing parts of the firm.
• Suncor Energy (SU) plans to acquire Petro-Canada (PCZ) for roughly $15 billion in stock, about a 30% premium. The deal would merge two of Canada's largest energy firms at a time when energy prices are fluctuating wildly as traders struggle to handicap demand.
• ING (ING) chief executive Jan Hommen asked his firm's top 1,200 managers to return their bonuses voluntarily as the firm remains in debt to the Dutch government, which poured $13.7 billion into ING in October, the Dutch newspaper De Volkskrant reported. "This is a moral appeal," Hommen said.

The Economy

• The annual rate of existing home sales rose in February to 4.79 million units per year, up from a revised January rate of 4.49 million units, the National Association of Realtors said. For February, economists expect the rate to have dipped to 4.45 million sales a year. WORKSHEET

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.

Currie Says CVS Has Better Growth Prospect Than Walgreen

A Word Of Caution

Stocks are surging today after the Treasury Department's announcement of a new plan to get rid of toxic assets from the banks' balance sheets. But as an article in Bloomberg this morning noted -- stocks may be up, but the bond markets are still depressed.

The average spread between U.S. Treasuries and U.S. financial corporate bond yields was 8.55 percentage points at the end of last week. They reached a record high of 8.81 percent earlier this month (according to the Merrill Lynch U.S. Financial Corporates Index.) This spread is a good indicator of risk aversion, in normal times the spread between Treasuries and investment grade corporate bonds is less than one percent.

Bond investors are not as forgiving as their peers in the stock market. They're demanding a higher risk premium to hold onto banks' corporate debt. Banks still have tons of toxic assets on their balance sheets, and even with Geithner's plan, it is not clear if banks will be able to sell their toxic securities at a high enough price to ward off insolvency.

Meanwhile, economic fundamentals remain weak. Job losses continue to mount and home prices are declining, which could push even more homes into foreclosure. This was the main reason the assets on banks' balance sheets became toxic in the first place. Bloomberg reports:

Investors "are in a pretty big state of what I'll call denial, just hoping this stock-market rally will help them make back all their losses," said Diane Garnick, a New York-based investment strategist at Invesco Ltd., which oversees $357 billion. "Financials are still in trouble. There's a really good chance that bankruptcy is not out of the question."

Bond investors remain wary and are not jumping on the stock market's band wagon.

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Ford debt buy-back doubles on strong demand

Tata Motors looks to sell Nano in US

RBC's Ira Jersey Says Fed Wants to See Mortgage Rates at 4.5%

Levitt Says Much Persuasion Needed for New Treasury Plan

Brother, Can You Spare Some Bullion?

John Konrad says demand for gold is way up. Chana Joffe-Walt/NPR

 

I stopped by this coin shop in downtown Seattle the other day and met John Konrad. He sells stamps and collectibles but really, Konrad is in it for the love of money. "Real money," he tells me, not that fiat paper stuff you probably think of as money. He's talking about gold.

Konrad says he has never seen demand for gold like this before. He can't get his hands on enough. Customers want to stock up. In normal times at the Stamp and Coin Shop, it's a wait of a day or two for big order. Now it's weeks and Konrad is reluctantly turning business away.

Even young people, he exclaims (defined by Konrad as under 50 years-old), are coming in and asking for gold!

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Tax Tip of the Week: Consider the Home Office Deduction

A lot more of us are working from home these days, but does that mean you can (or should) take advantage of the home office deduction? Maybe. Read on to find out.

The Threshold to Claim the Home Office Deduction is High

You in fact may do a lot of business in your home office. I spend many hours a day in mine. But to qualify for the home office deduction, the IRS has set the bar high. Taxpayers must use part of the home for one of the following two reasons:

1. Exclusively and regularly as either: 
    - your principal place of business, (unless it is a separate structure not attached to your home - then it doesn’t have to be your principal place, but still used as part of it) OR
   - as a place to meet or deal with patients, clients or customers in the normal course of your business, OR
2. It is used n a regular basis for certain storage use, such as for or product samples, as rental property, or as a home daycare facility.

The IRS has a pretty clear cut definition of exclusive. It means ONLY, as in you ONLY use that room for business. If the room is used for any personal use, the deduction is not valid. It doesn’t have to be partitioned off, so it doesn’t necessarily have to be a separate room. It could be just a portion. In my case I’d have a pretty good argument that my desk area is used exclusively for my business.

You can generally deduct expenses prorated at same percentage that the office space is to the home. In my case it’s only about 1.5%, so to me it’s not worth holding onto the documentation and filing the extra form for a few hundred dollars of deduction. 

Taking the home office deduction may be worth it if you don’t mind keeping a lot of documentation. You may be able to deduct insurance, rent, insurance, repairs, utilities, security, and depreciation. But you’ll need to prove it. It comes down to weighing whether or not it’s worth it in your particular case.

And make sure you meet the exclusivity test before you even think about it! See your tax professional or read IRS Publication 587 to find our if you qualify.

Image Credit: randyr.net, Flickr

Latino workers find greener landscape

It's unethical not to give in recession

Taxing bonuses could slow economy

Plans to rein in banks may go too far

Geithner: Must take risks to fix crisis

How Geithner's bank plan would work

What Housing Crisis...

There was some good news for the battle-scarred housing market today. Sales of previously owned homes shot up over five percent in January, according to the National Association of Realtors. In a statement released this morning, Lawrence Yun chief economist for the NAR credited the jump to bargain hunting first time buyers:

Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February. Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.

The NAR says home prices have fallen sharply this year. The national median existing-home price for all housing was $165,400 in February, down 15.5 percent from a year ago. With prices continuing to fall, the outlook for home sales looks good.

There was also some bad news tucked away in this announcement. Housing inventory is rising again, and it could take almost 10 months to clear. New building projects remain unlikely for the rest of the year, bad news for the construction sector and home builders.

Housing sector data is worth keeping an eye on. The housing bust started this financial mess and a housing recovery will be the way to end it.

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10 Ways to Make Better CEOs

Good CEOs display a combination of characteristics that are hard to find. They need to be unselfish, popular with employees, good communicators, shrewd, good businesspeople, and above all, good leaders. Unfortunately, in recent years, we’ve had our share of selfish, unpopular, tight-lipped, or otherwise faulty CEOs.

Fortunately, the systemic components of the CEO issue can be fixed. Here are ten suggestions on how to make better CEOs:

1. Recruit Right

Don’t go for charisma, status, or existing rank. Go for who’s right for the company’s strategic direction, be it downsizing, fixing a dysfunctional company, or handling rapid growth.

This The Street article quotes Harvard Business School professor Rakesh Khurana as saying that:

…the singular pursuit of charismatic leaders has led many boards to consider only external candidates who have already achieved a high rank and status — even if they are wrong for the job. These charismatic personas, even when they boost the company’s fortunes as General Electric’s Jack Welch did, often destabilize the corporation.

The article goes on to say that people choose charismatic CEOs based on the assumption that one powerful individual can solve all the company’s problems. It’s an attractive ideal that often results in disaster.

Look for someone with a record of cultivating leadership and trust. Find someone who reflects the values of the company, but won’t necessarily become a media darling.

2. Set Realistic Term Limits

Some experts say that CEOs should be given a period of up to a decade to perform well as a CEO. In real life, however, CEOs sometimes find their heads on the chopping block if their actions don’t result in significant shareholder return after three. What’s the right length of time to keep a CEO?

The key is to find that term limit sweet spot where CEOs can both mature into their roles and offer desirable returns. In the 1980s, it wasn’t uncommon for big companies like AIG, Disney, and Viacom to be run by the same chiefs for 20 years or more. Nowadays, Internet technology and globalization have distributed company workforces and functions so extensively that charismatic leaders with long tenures are no longer necessary. Companies survive—and thrive—without them.

We give US presidents a maximum of 8 years on the job. Why not do the same for CEOs? That way, the organization, not the ruler, gets emphasized.

3. Strengthen the Board

Hold the Board of Directors to high standards. A strong board checks and balances the CEO. Directors should be able to help solve business problems. They should understand the business well.

For their part, CEOs need to communicate openly and frequently with the board. Sarbanes-Oxley holds directors liable for failures, so the pressure is on directors more than it used to be. The ideal CEO would update the board frequently and engage in communal problem-solving–and the board would capitulate with its helpful knowledge of the business.

4. Strengthen the Organization

A CEO operates within an organization. That organization as a whole should be stronger than the CEO, so that when the CEO leaves, the organization doesn’t collapse. The CEO should have a symbiotic relationship with the organization: The organization grows and cultivates the CEO, while the CEO builds and propels it forward.

Jack Welch is a famous example of someone who was developed by his organization into an excellent leader. GE had a culture in which managerial training and development were key. The Jack Welch that we know wasn’t born that way—he came out of the organization.

Any organization should have a series of systems, checks, and balances in place that allow it to perpetuate with different leaders.

5. Hold CEOs to Higher Learning Standards

Adaptability is the key to survival in any organization. And to adapt, people usually have to learn something new. A good leader is a good learner. But how can an organization ensure that the CEO is learning as much as s/he needs to in order to effectively grow and manage the company?

Simple: Hold CEOs to training standards. Teachers and doctors need to renew licensing requirements every few years. Why is this not the case for CEOs (without the license part)? All CEOs should attend a certain number of industry-specific trainings or workshops a year. They should review their findings with the board. If the board finds a potentially harmful weak spot in the CEO, s/he should attend a training to remedy it.

6. Hire from Within

Remaking an organization isn’t necessarily congruent with building success. Many companies recruit from the outside because they want to retool their strategies and cultures. The same can be accomplished with someone already on the inside, who is already familiar with the country and has cultivated ideas over time. Hiring from within isn’t always better, but at least considering it could yield surprising results.

7. Choose a CEO People Would Elect

A good CEO inspires people to be not only better workers, but better leaders. He makes employees feel like the company’s accomplishments and ideas are their own. Employees see a reflection of their own aspirations and efforts in a good CEO, are compelled to work hard, and inspired to learn new things.

Boards should keep this kind of ideal employee response in mind when selecting a CEO. A CEO should be a people person—for the employees in the company. A good manager is one thing; a good leader requires more. Ask whether employees—not just the board— would elect this person.

8. Require Community Involvement

Willie E. Gary, Chairman & CEO of cable company MBC, represents a grassroots campaign called Making Better Communities, which educates people on health, technology, finance, and education so that they feel empowered to improve their situation. Several years ago, Google founded Google.org, which invests in nonprofits and renewable energy. These companies aren’t only reaping profits, but putting money and power back into the community.

There’s a tradition of corporate giving in this country—many nonprofits have corporations as major funders—but there’s no requirement. Directors should require the CEO to be a visible part of a community organization, or to make visible donations. It will go a long way towards solidifying the company’s reputation, keeping community on the CEO’s mind, and giving back to people who need it.

9. Make CEOs Twitter or Blog

After Enron, WorldCom, AIG, and many other notorious corporate flops, people trust CEOs less than ever. When employees mobilize lack of trust in their bosses through the Internet, the CEO could take a major fall (Carly Fiorina comes to mind here). Unpopular CEOs lose director support and end up sabotaging their own careers.

How can a CEO insulate herself against the destructive effects of online mobilization? Be well-liked, for one. And use blogs or Twitter to take that popularity and transparency one step further. If directors required a CEO to keep a blog or tweet on a regular basis, the entire organization would have access to his or her input, from anywhere, at any time. Nobody would be left in the dark. Communication would remain open, and the CEO has a greater chance of remaining a trusted member of an organization, even when things to go awry.

10. Limit Compensation

President Barack Obama has already taken steps in this direction. The idea is not only to avert fraud, but to make the job attract people more interested in the leading an organization than furthering their own power, wealth, and prestige. This new kind of CEO would have to be more interested in leadership and influence than perks. Combining lower pay and compensation standards with term limits could attract a different breed of CEO.

FBR's Paul Miller Sees Uncertainty Over Toxic-Asset Plan

Empty Box

A sign of the times in Seattle. Photos by Tom O'Brien

 

Listener Tom O'Brien writes from Seattle about how the death of the Seattle Post-Intelligencer's print edition is changing the city's landscape:

Here is how other media are treating the unsurprising demise of one of our newspapers. Like most Seattleites my biggest question is what will become of the PI Globe, a Seattle landmark for the entirety of my life, and eerily similar to the globe on the roof of the Daily Planet, the paper Clark Kent works for.

The Seattle Times, historically the high brow alternative to the relatively yellow and working class journalism of the PI, ran an elegy.

Bonus: David Folkenflik reports on the Seattle Post-Intelligencer becoming a web only publication.

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The Buckle Rated `Outperform' In New Coverage at Cowen

Collender Calls Obama's Economic Forecast `Optimistic'

Will The New Plan Work?

Economist Brad DeLong from University of California at Berkeley has a helpful Q&A about the new Treasury plan up on his blog Grasping Reality with Both Hands. DeLong's take is that the plan is a good start, but that more work is needed. He writes:

...Our guess is that we would need to take $4 trillion out of the market and off the supply that private financial intermediaries must hold in order to move financial asset prices to where they need to be in order to unfreeze credit markets, and make it profitable for those businesses that should be hiring and expanding to actually hire and expand.

Q: Oh.

A: But all is not lost. This plan consumes $150 billion of second-tranche TARP money and leverages it to take $1 trillion in risky assets off the private sector's books. And the Federal Reserve is taking an additional $1 trillion of risky debt off the private sector's books and replacing it with cash through its program of quantitative easing. And there is the fiscal boost program. And there is a potential second-round stimulus in September. And there is still $200 billion more left in the TARP to be used in other ways.

Think of it this way: the Fed's and the Treasury's announcements in the past week are what we think will be half of what we need to do the job. And if it turns out that we are right, more programs and plans will be on the way.

The view from Paul Krugman isn't so rosy. Krugman writes:

Brad gives it the old college try. But he shies away, I think, from the central issue: the non-recourse loans financing 85 percent of the purchases.

Brad treats the prospect that assets purchased by public-private partnership will fall enough in value to wipe out the equity as unlikely. But it isn't: the whole point about toxic waste is that nobody knows what it's worth, so it's highly likely that it will turn out to be worth 15 percent less than the purchase price. You might say that we know that the stuff is undervalued; actually, I don't think we know that. And anyway, the whole point of the program is to push prices up to the point where we don't know that it's undervalued.

So default on those non-recourse loans is a substantial possibility, which means that there is a large implicit subsidy involved. That's why Christie Romer's claim that we're relying on the "expertise of the market" rings so hollow: we're giving investors a big subsidy, so this has nothing to do with letting markets work.

Over at the Baseline Scenario, they're still digging in, but so far James Kwak says: "As far as the plan itself, my first reaction is that the Legacy Securities Program actually doesn't do enough to attract private sector participation, since the leverage is only 50% or maybe 100% of the capital."

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Treasury Talks

I just got back from the Treasury Department's press briefing on the plan to establish a public-private partnership to buy toxic assets.

You can read the fact sheet on the plan, and Geithner's op-ed from today's Wall Street Journal.

But here are some quotes. Geithner sat at the end of a long table, reporters on either side and at least ten rows deep to the back of the room.

Geithner: "We are the United States of America, we are not Sweden" (Explaining that the financial crisis has many causes and no single fix.)

----
(Asked about the financial risks the government will be taking by financing the purchase of the toxic assets.)

Geithner: "There is no doubt the government is taking risk. You cannot solve a financial crisis without the government assuming risk. The only question is how best to do it. And what is the best way to do it?... I am very confident that this scheme dominates all the alternatives"

---

(Asked whether members of the public outside the beltway will understand the proposal and feel like they're getting a good deal.)
Geithner: I'm very confident you and your colleagues will do a good job. (laughter)

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Wardell Sees Oil Remaining Near $40 a Barrel

Missing Money? Search MissingMoney.com to See if the Government Has It

We’re all missing money these days. Now, the National Association of Unclaimed Property Administrators has unveiled MissingMoney.com, a website allowing people to reclaim funds they may never have received.

The premise is this: State governments around the nation have almost $33 billion in unclaimed checks, refunds, and other property sitting in their offices. MissingMoney.com allows you to find out whether any of that money belongs to you or your relatives. The Wall Street Journal’s Anna Prior explains:

Wishing for extra cash? You may be entitled to some of the nearly $33 billion in unclaimed property sitting in state governments’ coffers. These are sums that businesses were required to turn over to the states after no activity or contact with the owner after a period of a year or more.

You also can search for the names of deceased relatives who may have unclaimed property. If you can prove that you are the legal heir, you can claim those accounts. If a match pops up, you’ll need to fill out a claim form and submit it to the state’s claim office along with the proper documentation.

I tried searched for my name in the California database, then for my family’s name, but no luck. Just to test out the system, I searched for John Smith. California owes 20 pages of John Smiths money. So the database works. Try it out–and good luck!

Meyer Sees U.S. Housing Deals Enticing New Homeowners

A New Plan For Troubled Assets

The news this morning is of course dominated by the Treasury Department's new plan to buy troubled assets or as the government is now calling them "legacy assets." The plan calls for using $75 to $100 billion in TARP capital along with funds from private investors to purchase as much as $500 billion to $1 trillion worth of these loans and securities. The price for the assets will be set by private investors "competing with one another." The New York Times reports:

Simply hoping for banks to work legacy assets off over time risks prolonging a financial crisis, as in the case of the Japanese experience," the department said. "But if the government acts alone in directly purchasing legacy assets, taxpayers will take on all the risk of such purchases -- along with the additional risk that taxpayers will overpay if government employees are setting the price for those assets.

So far, two private investors have said they would be willing to take part in the program -- Bill Gross of PIMCO and Laurence Fink of Blackrock Inc. Planet Money's own David Kestenbaum is at the Treasury briefing this morning and will report back on the plan later today.

Bonus: More from the Treasury Department.

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How the Stock Market Really Works