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The Grass Is Always Greener? A reader wonders to our mailbag if this isn't the next scandal in the making: It's strange that more bankers haven't moved to Hong Kong or Singapore. They avoid paying taxes on their bonuses, and Associates to Managing Directors only report a third of their income to the IRS. Source: Dealbreaker | 1 Apr 2009 | 1:58 pm The Hotties Of G20 The Daily Beast has put together a list of "sizzling G20 wives," having the good sense to put Carla Bruni halfway down the thing, since, no offense ladies, she's a tough act to follow. Veronica Lario (former actress and Italian prime minister Silvio Berlusconi's woman) and Cristina Fernandez de Kirchner (President of Argentina, previously first lady to husband Nestor) seem to hold their own but for the most part, save for the Bruni...head of state wife hot? Discuss. Source: Dealbreaker | 1 Apr 2009 | 1:49 pm Unfounded Rumor Of The Morning, BlueMountain Edition So the word is that BlueMountain is negotiating with investors in its Equity fund and Credit Fund to prevent a suspension of redemptions. The investors who deferred when it restructured its credit fund last year have a chance to redeem at the end of June. Yesterday was the notice day for that. Essentially, they all want out in spite of good performance in 2009 so far (c.+6.8%). Good results no longer enough when your investors are FoFs on the brink of collapse themselves. Could be bye, bye for the firm i.e. effective runoff. At least they still have the correlation funds. Presented By: Inside Guantanamo: Sunday at 9P e/p Guantanamo Bay is one of the world's controversial prisons. This may be its final chapter. With unprecedented access, National Geographic has the story you haven't heard. Both sides, told from the inside, before its doors close forever. Click to learn more and go Inside Guantanamo >> natgeotv.com/guantanamo   Ads by Pheedo Source: Dealbreaker | 1 Apr 2009 | 1:26 pm RBS branch attacked in City of London Thousands of anti-G20 protesters surrounded the Bank of England as part of demonstrations ahead of the G20 summit. Many businesses in the heart of the Square Mile, London's financial district, were closed for the day Source: Financial Times - US homepage | 1 Apr 2009 | 1:10 pm G20 call for action amid protests US President Barack Obama stresses the "sense of urgency" needed to confront the global economic crisis, as protesters besiege the Bank of England. Source: BBC News | Business | World Edition | 1 Apr 2009 | 1:04 pm Wall Street set to fall on employment, GM worries (Reuters) Reuters - Wall Street was set for a lower open on Wednesday on news that struggling automaker General Motors could be headed for bankruptcy and data showing job losses in the U.S. private sector accelerated in March. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 12:57 pm Wall Street set to fall on employment, GM worries (Reuters) Reuters - Wall Street was set for a lower open on Wednesday on news that struggling automaker General Motors could be headed for bankruptcy and data showing job losses in the U.S. private sector accelerated in March. Source: Yahoo! News: Business | 1 Apr 2009 | 12:57 pm Opening Bell: 04.01.09 Nigeria Becomes Worlds Worst Stock Market (Bloomberg) "Nigeria's stock market, Africa's best performer during the past decade, posted the biggest declines worldwide in the first quarter as bad loans to speculators pushed bank valuations to an all-time low. The Nigerian Stock Exchange All Share Index fell 37 percent this year, the steepest quarterly decline in more than a decade and the worst of 89 benchmark indexes tracked by Bloomberg. Stocks in Africa's largest oil-producing nation reached a five- year low last week, even as a rebound in crude spurred gains in commodity-exporting countries from Russia and Norway to Brazil." Judge freezes assets of Madoff sons, executives (Reuters) Madoffs, Noels, Tremont Group, Maxam Capital. Mark To Market Rules Further Complicating Life For Geithner (WSJ) "A new accounting rule set to be approved this week will relax mark-to-market rules for banks sitting on billions of dollars in toxic assets, making it more attractive to keep the assets on their books. Yet those changes may undermine a larger U.S. Treasury plan to rid the banks of those same assets, bankers and accounting experts say. The Financial Accounting Standards Board is proposing significant changes to its mark-to-market rules, allowing banks to set their own values for certain hard-to-value troubled mortgages, corporate loans and consumer loans. The new proposal, called FAS 157-e, is scheduled for a vote this Thursday." RIM Opens Online Software Store For BlackBerry (Reuters) Will the apps be as rich as the iPhone's? "Research In Motion has launched an online store selling entertainment, games, news, and travel applications to its BlackBerry users." Mortimer To Leave Morgan Stanley (CNBC) "Patrick Mortimer, head of Morgan Stanley's U.S. prime brokerage business, resigned this week amid declining assets and profits of hedge fund clients that make up the division's client base, the Wall Street Journal said, citing people familiar with the matter." SEC Needs Your Help (FT) Shapiro's trying to find a way to leverage the normal-everyday-law-abiding citizens that work in finance to help with her fight against the evils of the world. My suggestion? Free blow. It's obvious that at the point where you could become the primary dealer for the street, not only would everyone be your friend (well, they'd be pretending, so not much different than now), but if they stopped helping you could put the squeeze on 'em. New GM Chief Bends To U.S. Pressure (WSJ) It was fairly obvious when President Obama pushed out Waggoner that they weren't looking for independent thinking, but I don't think anyone expected the new guy to be such a puppy. "Mr. Henderson, 50 years old, also praised what he called the Obama administration's strong voice of support for the company, saying it liberated GM to take restructuring action it had in the recent past thought impossible to pull off. "They think that I can lead this company inside or outside of bankruptcy court," he said. He said he expects the Obama administration's auto task force to play an active role in forcing unions and bondholders to make major concessions." Source: Dealbreaker | 1 Apr 2009 | 12:45 pm Europe gets car sales tonic amid GM, Chrysler woes PARIS/DETROIT (Reuters) - European car markets reported tentative shoots of recovery on Wednesday but Honda moved to further cut U.S. output as General Motors Corp faced a rising bankruptcy risk and Chrysler raced to secure its survival. Source: Reuters: Business News | 1 Apr 2009 | 12:44 pm AirMedia to Operate Mega-size LED Screens in Guangzhou Airport BEIJING, April 1 /PRNewswire-Asia-FirstCall/ -- AirMedia Group Inc. (Nasdaq: AMCN), operator of the largest digital media network in China dedicated to air travel... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:40 pm Before the Bell: General Motors, Boeing, Danaher in focus U.S. stock market futures slipped Wednesday amid conflicting reports on the likely future of General Motors and data showing another big drop in jobs. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:39 pm U.S. private sector axes 742,000 jobs in March (Reuters) Reuters - Job losses in the U.S. private sector accelerated in March, more than economists' expectations, according to a report by ADP Employer Services on Wednesday. Source: Yahoo! News: Business | 1 Apr 2009 | 12:38 pm U.S. private sector axes 742,000 jobs in March NEW YORK (Reuters) - Job losses in the U.S. private sector accelerated in March, more than economists' expectations, according to a report by ADP Employer Services on Wednesday. Source: Reuters: Business News | 1 Apr 2009 | 12:38 pm Pace of job cuts slows The steady barrage of layoff news that has rocked the economy may finally be slowing, according to a report released Wednesday by an outplacement firm. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 12:37 pm Goldman Sachs Raises Crude Price Targets Goldman Sachs Group, Inc. has raised its forecast for 2009 on the price of Brent (North Sea) crude oil by 12%, to $50.20/barrel. The company attributes the rise to OPEC production cuts, slowing production in non-OPEC countries, and lower demand, which have forced prices back up.  If you have watched our own count of weekly [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 12:36 pm U.S. plans to ease GM into bankruptcy: report (Reuters) Reuters - The Obama administration is seeking to ease General Motors Corp into a "controlled" bankruptcy by persuading some creditors to agree to a plan that would divide the company into two pieces, the New York Times reported on Wednesday. Source: Yahoo! News: Business | 1 Apr 2009 | 12:36 pm U.S. plans to ease GM into bankruptcy: report WASHINGTON (Reuters) - The Obama administration is seeking to ease General Motors Corp into a "controlled" bankruptcy by persuading some creditors to agree to a plan that would divide the company into two pieces, the New York Times reported on Wednesday. Source: Reuters: Business News | 1 Apr 2009 | 12:36 pm Wall Street set to begin 2nd quarter with a drop (AP) AP - After the Dow Jones industrials' worst first quarter in 70 years, Wall Street is preparing to start the second quarter with a decline. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 12:36 pm Obama plays down G20 splits LONDON (Reuters) - U.S. President Barack Obama denied rifts between the world's leading economies on the eve of a crisis summit and urged them on Wednesday to act together to find the fastest route out of global recession. Source: Reuters: Business News | 1 Apr 2009 | 12:36 pm Beazley Completes Acquisition of First State Management Group, Inc. LONDON, April 1 /PRNewswire-FirstCall/ -- Beazley Group plc (BEZ.L) has completed the acquisition of the entire share capital and all renewal rights of First State Management... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:35 pm Investors seek ouster of AIG compensation chief NEW YORK (Reuters) - A group of investors is seeking to oust an American International Group Inc director who leads a committee it said authorized bonuses to executives that brought the insurer to the brink of failure. Source: Reuters: Business News | 1 Apr 2009 | 12:33 pm Investors seek ouster of AIG compensation chief (Reuters) Reuters - A group of investors is seeking to oust an American International Group Inc director who leads a committee it said authorized bonuses to executives that brought the insurer to the brink of failure. Source: Yahoo! News: Business | 1 Apr 2009 | 12:33 pm Stocks set for a fall U.S. stocks were set to open lower Wednesday, pressured by concerns the government will force General Motors and Chrysler into bankruptcy, and faced with a slew of economic indicators concerning the job market, manufacturing and auto sales. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 12:32 pm Ex-Soviet bloc faces 'worst recession in 20 yrs' Former Soviet-bloc states are facing their worst recession since the collapse of European communism two decades ago, ratings agency Fitch warned Wednesday. "Fitch forecasts GDP growth to Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:31 pm Southampton Football Club owner in crisis as shares suspended Southampton Football Club's parent company is facing administration after trading in its shares was suspended this morning. Source: Telegraph Finance | 1 Apr 2009 | 12:31 pm MFA Financial, Inc. Announces First Quarter 2009 Dividend of $0.22 NEW YORK, April 1 /PRNewswire-FirstCall/ -- MFA Financial, Inc. (NYSE: MFA) announced today that its Board of Directors declared a quarterly dividend of $0.22 per share of common Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm Yukon-Nevada Gold Corp. reports 2008 year end results VANCOUVER, April 1 /PRNewswire-FirstCall/ - Yukon-Nevada Gold Corp. (Toronto Stock Exchange: YNG; Frankfurt Xetra Exchange: NG6) reports that for the year-ended December 31, 2008 Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm American Issues Project Launches Telephone Campaign Against Obama's Budget Proposal WASHINGTON, April 1 /PRNewswire-USNewswire/ -- American Issues Project is launching a telephone campaign against President Obama's budget proposal and the wasteful spending... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm Freddie Mac Will Not Issue a Reference REMIC(R) Security in April MCLEAN, Va., April 1 /PRNewswire-FirstCall/ -- Freddie Mac (NYSE: FRE) today announced it will not issue a Reference REMIC(R) security during the week of April 13, 2009. The... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm Photos: Zecco and GAIN Capital Launch Zecco Forex Foreign Exchange Trading Service BURLINGAME, Calif., and NEW YORK, April 1 /PRNewswire/ -- Zecco Holdings, Inc. ( href="http://www.zecco.com/">www.zecco.com ), an online investing site widely known for... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm Whitney Information Network, Inc. Reports Results for Year Ending December 31, 2008 CAPE CORAL, Fla., April 1, 2009 /PRNewswire-FirstCall/ -- Whitney Information Network, Inc. (Pink Sheets: RUSS), a provider of educational training seminars, conferences and... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm United Technologies Corp. First Quarter Earnings Advisory to Securities Analysts, Investors and News Media HARTFORD, Conn., April 1 /PRNewswire-FirstCall/ -- United Technologies Corp. (NYSE: UTX) will issue its first quarter 2009 earnings press release Tuesday, April 21, prior to the... Source: RSS feed - channel BNewsBusiness | 1 Apr 2009 | 12:30 pm Economic Report: Private-sector cuts 742,000 jobs in March, ADP says The U.S. labor market worsens again in March, as private-sector firms cut 742,000 jobs, signaling another terrible employment report on Friday, according to the ADP employment index. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:29 pm Stock futures extend losses after employment data NEW YORK (Reuters) - Stock futures extended declines on Wednesday after data showed private sector employment fell more than expected in March and news struggling automaker General Motors could be headed for bankruptcy. Source: Reuters: Business News | 1 Apr 2009 | 12:27 pm Car plant workers occupy factory Former workers at the UK arm of US car parts firm Visteon are occupying a factory in Enfield, north London, a union says. Source: BBC News | Business | World Edition | 1 Apr 2009 | 12:27 pm G20 disagreements 'vastly overstated,' Obama says Disputes over government spending and overhauling financial regulations have been overstated and won’t stand in the way of significant action by the Group of 20 to deal with the worst economic crisis since World War II, President Barack Obama says at a news conference. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:27 pm PPR, Caterpillar executives targeted by angry French workers Workers at PPR, angered over the French luxury retailer’s redundancy plans, trap CEO Francois-Henri Pinault in a taxi in central Paris late Tuesday until he is rescued by riot police. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:25 pm Indications: U.S. stock futures slip to start second quarter U.S. stock futures slip on Wednesday, as conflicting reports over the likelihood of General Motors going bankrupt and data showing overseas manufacturing weakness give meat to the bears on the eve of what could be a contentious meeting of world leaders. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:24 pm Currencies: Dollar holds ground as G20 looms The U.S. dollar was little changed versus most major currencies Wednesday as leaders of the world’s 20 most powerful economies prepared for a historic two-day meeting designed to come up with solutions to the deepest global economic slump since World War II. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:22 pm China's manufacturing down in March but off lows, data show The business environment for Chinese manufacturers continues to deteriorate at a quick pace, though the drop in March is less severe than in preceding months. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 12:03 pm Faster Isa transfers as banks join electronic scheme Lloyds Banking Group has become the latest savings provider to sign up to a new electronic Isa transfer process. Source: Telegraph Finance | 1 Apr 2009 | 11:59 am London Markets: London shares pressured at start of new quarter London shares fall on Wednesday, the first day of the second quarter, as banks decline and the commodity sector also sees selling. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 11:53 am Irish unemployment at fresh highs The rate of unemployment in the recession-struck Irish Republic hit 11% in February, the highest since 1996. Source: BBC News | Business | World Edition | 1 Apr 2009 | 11:50 am Top Analyst Upgrades (ARRS, ASH, FCS, GME, ONNN, RTN, RVBD, VOD) These are the top pre-market analyst upgrades or positive calls from Wall Street which we have seen early this Wednesday morning: Arris (ARRS) Started as Overweight at Thomas Weisel. Ashland (ASH) Raised to Overweight at JPMorgan. Fairchild Semi (FCS) Raised to Buy at UBS. GameStop (GME) Started as Buy at Needham. ON Semiconductor (ONNN) Raised to Buy at UBS. Raytheon (RTN) [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 11:49 am Top Analyst Downgrades (APOL, STD, BA, BRKR, CHU, CME, GR, PCP, STX) These are the top pre-market analyst downgrades or negative calls we have seen from Wall Street this Wednesday morning: Apollo Group (APOL) Cut to Neutral at Baird. Banco Santander (STD) Cut to Hold at Deutsche Bank. Boeing (BA) Cut to Market Perform at Wachovia. Bruker Corp. (BRKR) Cut to Neutral at UBS. China Unicom (CHU) Cut to Sell at Citigroup. CME [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 11:46 am G20 summit: City traders don scruffy trainers as protestors invade It's almost business as usual in the Square Mile once you get past the bad disguises writes City trader Angus Campbell. Source: Telegraph Finance | 1 Apr 2009 | 11:44 am Obama: G-20 must agree on bank rules U.S. President Barack Obama said Wednesday world leaders meeting at the G-20 summit "cannot afford half-measures" as they try to hammer out ways to address the global financial crisis. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 11:41 am Postman Pat owner Entertainment Rights sold out of administration to US private equity firm GTCR Entertainment Rights sold to Boomerang Media a rival children's rights agency. Source: Telegraph Finance | 1 Apr 2009 | 11:41 am Borders to cut 2009 costs by $120 million NEW YORK (Reuters) - Borders Group Inc plans to cut its expenses by $120 million in 2009, as it expects weak sales to persist through the year, the bookseller said on Wednesday in a regulatory filing. Source: Reuters: Business News | 1 Apr 2009 | 11:37 am European stocks drop ahead of G-20 meeting (AP) AP - European stock markets fell Wednesday despite earlier gains in Asia amid ongoing pessimism surrounding the Group of 20 summit of world leaders and concerns about the future of U.S. carmakers General Motors Corp. and Chrysler. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 11:33 am Economic Report: Layoffs nearly triple last year's mark Corporate layoff announcements slowed last month compared with February, but they were up 181% compared with March 2008, according to an unscientific monthly tally released Wednesday by outplacement firm Challenger Gray & Christmas. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 11:31 am Eversheds tells staff to stay home on protest fears Eversheds has told staff at its London headquarters to work from home today amid fears for their personal safety during anti-capitalist demonstrations in the City of London. Source: Latest Business News from Times Online | 1 Apr 2009 | 11:30 am U.S. mortgage applications climb, rates at fresh low NEW YORK (Reuters) - U.S. mortgage rates set fresh record lows last week, fostering demand for refinancing that drove home loan applications to the highest level since mid-January, data from the Mortgage Bankers Association showed on Wednesday. Source: Reuters: Business News | 1 Apr 2009 | 11:28 am Britons pay-off record £8bn mortgage debt Britons cut their mortgage debt by a record £8 billion in the last quarter of the year, new figures from the Bank of England showed today. Source: Latest Business News from Times Online | 1 Apr 2009 | 11:25 am China Oilfield Services 2009 net income up 39% on robust demand China Oilfield Services Ltd., the mainland’s biggest offshore driller, reports Wednesday its 2008 net income totaled 3.1 billion yuan ($453.53 million), an increase of 39% from 2.24 billion yuan in the prior year, as demand for oil exploration services remains robust. Source: MarketWatch.com - Top Stories | 1 Apr 2009 | 11:20 am Subprime lender Cattles faces £850m bad loan bill Cattles the subprime doorstep mortgage lender has been forced to acknowledge an extra £850m of bad loans following a review into its books after six directors were suspended this month. Source: Telegraph Finance | 1 Apr 2009 | 11:15 am U.S. mortgage applications climb, rates at fresh low (Reuters) Reuters - U.S. mortgage rates set fresh record lows last week, fostering demand for refinancing that drove home loan applications to the highest level since mid-January, data from the Mortgage Bankers Association showed on Wednesday. Source: Yahoo! News: Business | 1 Apr 2009 | 11:09 am Dream homes: 5 who are building - and where Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 11:07 am Why Twitter is for you: Early alerts on sales! Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 10:45 am Manufacturing decline eases on weak sterling The pace of decline in Britain's struggling manufacturing eased more quickly than expected last month, reinforcing hopes economic green shoots are appearing. Source: Latest Business News from Times Online | 1 Apr 2009 | 10:42 am Obama calls for unity at G20 The world's biggest nations must work together to tackle the economic downturn and forget their occasional differences on how to go about this, Barack Obama said on the eve of the G20 summit Source: Financial Times - US homepage | 1 Apr 2009 | 10:33 am Robert Peston Is the G20 summit a sticking plaster rather than a cure? Source: BBC News | Business | World Edition | 1 Apr 2009 | 10:26 am Workers stage Belfast sit-in after car company Visteon collapses Workers staging a sit-in at a car components factory are having talks with Gerry Adams, the Sinn Féin president, who is visiting the plant in his West Belfast constituency this morning. Source: Latest Business News from Times Online | 1 Apr 2009 | 10:21 am Internet Advertising: After First Quarter Disaster, Industry May Throw In The Towel On Q2 Internet display advertising had what may have been the worst quarter in its history. In the first 90 days of this year, by most measures, the cost-per-thousand that large websites charged advertisers dropped at least 25% . Any site that did not have significant traffic growth lost a quarter of its sales compared to the [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 10:19 am Greg Hutchings' Lupus breaches bank terms Lupus Capital, the comeback vehicle of enterpreneur Greg Hutchings, today admitted it had breached a loan facility and triggered a default on part of its £145 million of borrowings. Source: Latest Business News from Times Online | 1 Apr 2009 | 10:17 am GM Bankruptcy Threat Weighs on Futures (Market Update) News at a Glance Across the Pond: Obama, Brown call for global bank reform. Losses Ahead: Stock futures fall on auto concerns. No Deal: M&A industry battered during first quarter. BlackBerry Follows Apple: RIMM launches online app store. The Lowdown Even as the world's top finance ministers began gathering overseas for the G20 meeting, traders remained focused on the troubled U.S. auto sector, which does not bode well for the market. Stocks looked to open lower Wednesday, as talk of a potential bankruptcy filing in Detroit left traders bearish. Shortly before 7 a.m., Dow, Nasdaq and S&P 500 futures were trading below fair value. The mood turned sour after General Motors (GM) chief executive Frederick "Fritz" Henderson said he would take the firm to bankruptcy court if it was necessary to get the automaker's books in order. In finance, dealmaking suffered during the first quarter. Global M&A volume dropped to $553 billion, 21% below the year-ago period and 11% down from the fourth quarter, The Wall Street Journal reported, citing new data from the research firm Dealogic. U.S. volume was hyperinflated by two mega-mergers in the pharmaceutical industry. In regulation, President Obama met with British Prime Minister Gordon Brown to discuss new rules for banks. They said the G-20 must agree on common regulations for financial institutions to promote the economic recovery. World markets were mixed on the idea of more banking restrictions. In Asia, Japan's Nikkei picked up 3.0%, while Hong Kong's Hang Seng dropped 0.4%. In Europe, the U.K.'s FTSE stood down 0.9% in midday trading. In energy, crude prices fell before the open. By 6:57 a.m., oil traded down $1.52 at $48.14 a barrel. Corporate News AIG (AIG) director James Orr, the chairman of the board compensation committee, is the target of a shareholder campaign intended to shake up how the company handles executive pay, The Wall Street Journal reported. Investors are attempting to block Orr's reelection, blaming his negligence for the $165 million in bonuses approved while the firm was near critical condition. Honda (HMC) said it plans to make several cost cuts, including slashing its North American vehicle production by 62,000, closing factories for 13 days next month and cutting workers' pay, Reuters reported. Honda is coping with excess inventory at U.S. lots, and executives said the spillover would likely persist until the summer. Research In Motion (RIMM) is launching a new online store to sell applications for its BlackBerry smartphones, the firm said. In the mold of the Apple (AAPL) iPhone App Store, BlackBerry App World will allow users to download news, entertainment, gaming, social networking and business applications directly to their phones. RIM predicts roughly 1,000 applications will be added to the store by its partners this week. The Economy The March ADP Employment Report, which tracks private payrolls and is used (with varying degrees of success) to handicap the broader federal jobs report, is scheduled to be released at 8:15 a.m. In February, private payrolls fell by 697,000. For March, economists predict private payrolls will have shrunk by 663,000 jobs. The February report on construction spending is scheduled to be released at 10 a.m. Economists predict spending will have dipped 1.9% in February, compared to a 3.3% decrease in January. The March reading of the Institute for Supply Management's Purchasing Managers' Index for the manufacturing sector is scheduled to be released at 10 a.m. The ISM index stood at a reading of 35.8% in February. Economists predict the index will have inched up to a March reading of 36.0%. A reading of less than 50% indicates the sector is contracting. The February reading of the Pending Home Sales index is scheduled to be released at 10 a.m. by the National Association of Realtors. In January, the index fell 7.7%. For February, economists expect no change. The crude inventories report for last week is scheduled to be released at 10:30 a.m. by the Energy Department. In the prior week, inventories stood above the upper limit of the average range for this point in the year. 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 | 1 Apr 2009 | 10:08 am Someone more brazen than Madoff? In a year of fabulous frauds, the one that glitzy Manhattan attorney Marc Dreier has been charged with is in some ways the most fabulous of all. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 10:01 am Home prices: The end may be in sight Call it the Great Housing Paralysis of 2009. If you're hoping to buy your first home or invest in a second one, you're probably sidelined, unsure when to jump in. If you want to sell, you're thinking it may be better to wait. And even if you don't plan to either buy or sell anytime soon, watching one of your biggest assets tank is about as much fun as being chased by hornets. When will the pain stop? Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 10:01 am GE’s (GE) Clever Move: Announce A Global Trend To Help Sales About two years ago, GE (GE) began to talk about its “green” initiative and how important it was that businesses and governments begin to work on sustainable energy solutions to save the environment. Of course, GE’s infrastructure unit sells products and services that can assist those who want to be environmentally friendly. That makes the [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 10:00 am European stocks slide as investors eye G20 (AFP) AFP - European stocks tipped lower on Wednesday, despite earlier gains in Tokyo and overnight on Wall Street, as investors awaited a crucial G20 summit in London, dealers said. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 10:00 am Lender Cattles facing £700m hit UK sub-prime lender Cattles says it may have to set aside an extra £700m to cover bad loans after a review of its accounts. Source: BBC News | Business | World Edition | 1 Apr 2009 | 9:52 am Eurozone unemployment rises again Unemployment across the nations that share the euro rises again to its highest level in almost three years, official figures show. Source: BBC News | Business | World Edition | 1 Apr 2009 | 9:49 am China’s 8% Growth Dream Is Gone Earlier this year, China’s prime minister said the country’s GDP would be up 8% in 2009. He used the forum for making the prediction as an opportunity to press the advantage of his economic system over the faltering economies of the West. What a difference a month can make. New information on China’s manufacturing sector shows [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 9:48 am UBS hires ex-Credit Suisse exec to cut costs (Reuters) Reuters - UBS AG's new chief executive hired a former colleague from rival Credit Suisse on Wednesday to lead a cost-cutting drive at the loss-making Swiss bank. Source: Yahoo! News: Business | 1 Apr 2009 | 9:31 am UBS hires ex-Credit Suisse exec to cut costs ZURICH (Reuters) - UBS AG's new chief executive hired a former colleague from rival Credit Suisse on Wednesday to lead a cost-cutting drive at the loss-making Swiss bank. Source: Reuters: Business News | 1 Apr 2009 | 9:31 am Facebook Takes A Dive: Social Networks Never Had A Future The business of having online sites with content created by amateurs to be viewed by other amateurs never had a reasonable chance of making money. The fact that at one point Facebook had a $15 billion valuation, that Rupert Murdoch’s News Corp (NWS) bought MySpace, and that Google (GOOG) bought YouTube only proves the “greater [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 9:21 am As Google’s (GOOG) Growth Falters, Microsoft (MSFT) Has Chance To Regain Momentum Most of the recent news about Google (GOOG) has been bad. Online advertising posted a slow fourth quarter. That unexpectedly included both display ads and search marketing which has made Google one of the fastest growing large companies in America.  Several Wall St. analysts have commented that Google’s search revenue’s rate of increase flattened out [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 9:13 am Kuwait bourse suspends 36 stocks for late results (AFP) AFP - The Kuwait Stock Exchange suspended trading on Wednesday in the stocks of 36 companies, mostly investment firms, for failing to report in time their financial results for last year. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 9:08 am Russia pushing for higher crude prices By Douglas A. McIntyre for Daily Finance Russia is one of the largest oil producing nations in the world. The falling price of crude has clearly hurt its economy, but the country has seemed willing to let OPEC try to set the price of oil by controlling its member nations’ production levels. The cartel has failed [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 9:02 am Honda makes cuts in North America Honda announces cost-cutting measures in North America, including cutting bonuses and temporarily closing factories. Source: BBC News | Business | World Edition | 1 Apr 2009 | 8:40 am Chinese manufacturing shrinks as exports tumble Manufacturing in China shrank for an eighth successive month as China's economy faced tumbling demand abroad and a falloff in orders at home according to a leading tracking index. Source: Telegraph Finance | 1 Apr 2009 | 8:32 am London stocks fall in early trade (AFP) AFP - London stocks fell at the start of trading on Wednesday after recent big gains, as investors switched their focus to the upcoming G20 summit in the capital. Source: Yahoo! News: Stock Markets News | 1 Apr 2009 | 8:23 am Auto bankruptcy: What it means In Detroit, the unthinkable -- an automaker bankruptcy -- has become very thinkable. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 8:11 am 4 ways to make Skype on iPhone even better Four things that would make the app not only better, but nearly indispensable. Source: Business and financial news - CNNMoney.com | 1 Apr 2009 | 8:10 am Media Digest 4/1/2009 Reuters, WSJ, NYTimes, FT, Bloomberg According to Reuters, Obama demanded that the G-20 find solutions to the global financial crisis. Reuters reports that a bankruptcy for GM (GM) and Chrysler could be a long, drawn-out process. Reuters writes that activists want to push out the AIG (AIG) compensation chief. Reuters reports that the IMF sees the global economy shrinking 1% this year. Reuters reports [...] [[ This is a content summary only. Visit my website for full links, other content, and more! ]] Source: 24/7 Wall Street | 1 Apr 2009 | 8:02 am Honda to cut production and salaries in US Honda Motor is planning an unprecedented 13-day shutdown of its major North American car factories this summer in an effort to reduce a glut of unsold vehicles Source: Financial Times - US homepage | 1 Apr 2009 | 7:56 am The jobs crisis will get bigger and G20 leaders need to tackle it now Policymakers must address the acute social implications of our jobs crisis says David Blanchflower. Source: Telegraph Finance | 1 Apr 2009 | 7:38 am US UK fiscal deficits cast shadow over recovery The Organization for Economic Cooperation and Development's growth forecasts for the US Britain and Japan are much worse than those countries' own budget assumptions. Source: Telegraph Finance | 1 Apr 2009 | 7:32 am Fuel tax rise to raise household bills by £54 Britain's motorists will pay an extra 2.12p-a-litre for their petrol and diesel from today as the Government introduced an increase in fuel duty that will raise the annual tax bill of the average family by £54. Source: Latest Business News from Times Online | 1 Apr 2009 | 7:26 am Pistachio growers are shell shocked by FDA warning The agency has warned consumers to not eat the nuts because of potential salmonella contamination. Growers say it was an overreaction to the discovery of the disease in a small part of the crop. Supermarkets pulled pistachios and some pistachio-laden foods from their shelves Tuesday, moves resulting from this week's Food and Drug Administration warning to consumers not to eat the nuts because they could be tainted with salmonella. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Visa program for skilled workers under attack A requirement that bailout recipients hire Americans over H1-B visa holders could be extended to all U.S. companies. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Health nominee Sebelius reveals tax troubles Kansas Gov. Kathleen Sebelius, Obama's pick for Health and Human Services secretary, did not pay $7,040 in taxes between 2005 and 2007. She paid the back taxes and penalty after they were identified. Kansas Gov. Kathleen Sebelius, President Obama's choice to head the Department of Health and Human Services, did not pay $7,040 in income taxes that she and her husband owed between 2005 and 2007, the White House disclosed Tuesday in another tax-related embarrassment for the new administration. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am It's March gladness for investors A positive month sparks optimism, though blue-chip indexes post another down quarter. Wall Street's spring rally... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am AMC theater CEO is looking at the big picture Gerry Lopez says the movie theater chain must adapt to the public's changing tastes. That could mean espresso and sushi at the concession stand. "We're fixing that." Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am GM rolls out incentive program to quickly drive car sales The Total Confidence program will make as many as nine car payments of up to $500 each for car buyers in the event they are laid off within two years. A day after the president threw down the gauntlet for the American auto industry, General Motors Corp. began the work of selling cars anew. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Motorists are pulling for Big 3, but will they be willing to buy? U.S. auto industry's biggest hurdle is the perception -- fair or unfair -- that GM, Ford and Chrysler turn out inferior vehicles compared with their Asian and European brethren, David Lazarus writes. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Motorcycles are making shift to automatic transmission Honda aims to attract riders to its DN-01 by getting rid of the clutch and foot-shifting. But its $14,599 price tag won't help. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Microsoft to close digital encyclopedia Encarta Microsoft Corp.'s digital encyclopedia, Encarta, might have pushed its printed competitors off the shelves in some homes. Now Encarta itself has fallen victim to changes in technology, made all but obsolete... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am U.S. home prices show record drop in January The Standard & Poors/Case-Shiller index finds a 19% decline in the 20 metropolitan areas it tracks. The L.A.-Orange County area is 39% off its peak. U.S. home prices continued to fall at a record pace in January, according to a leading national index released Tuesday. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Consumer confidence holds steady in March The Conference Board's sentiment index remains at the lowest level since it began in 1967. Americans seem more... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Kaiser's vital signs defy ailing economy The HMO titan keeps growing. Many experts see it as a model for healthcare reform. First in a series of occasional stories on healthcare... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Motorists are pulling for Big 3, but will they be willing to buy? U.S. auto industry's biggest hurdle is the perception -- fair or unfair -- that GM, Ford and Chrysler turn out inferior vehicles compared with their Asian and European brethren, David Lazarus writes. So what'll it take to get drivers behind the wheel of an American car? Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am KTLA-TV Channel 5 expands news operations The station is adding more than eight hours of programming each week, including weekday newscasts at 4:30 a.m. and 1 p.m. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am It's March gladness for investors A positive month sparks optimism, though blue-chip indexes post another down quarter. Wall Street's spring rally resumed Tuesday to close out a winning March for stocks -- although the month's advance reversed just a small amount of the damage from the long bear market. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Motorcycles are making shift to automatic transmission Honda aims to attract riders to its DN-01 by getting rid of the clutch and foot-shifting. But its $14,599 price tag won't help. With few exceptions in modern motorbiking, the two-wheeled world has broken down something like this: Manual transmission equals motorcycle (and macho). Automatic transmission equals scooter (and sissy). Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am AMC theater CEO is looking at the big picture Gerry Lopez says the movie theater chain must adapt to the public's changing tastes. That could mean espresso and sushi at the concession stand. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Visa program for skilled workers under attack A requirement that bailout recipients hire Americans over H1-B visa holders could be extended to all U.S. companies. As U.S. employers start applying today for visas for foreign workers, the hiring of talent from other countries is facing heightened scrutiny and the threat of greater restrictions as domestic unemployment soars. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Kaiser's vital signs defy ailing economy The HMO titan keeps growing. Many experts see it as a model for healthcare reform. First in a series of occasional stories on healthcare reform. Source: L.A. Times - Business | 1 Apr 2009 | 7:00 am Health nominee Sebelius reveals tax troubles Kansas Gov. Kathleen Sebelius, Obama's pick for Health and Human Services secretary, did not pay $7,040 in taxes between 2005 and 2007. She paid the back taxes and penalty after they were identified. ... Source: RSS feed - channel BNPaperBusiness | 1 Apr 2009 | 7:00 am Fuel duty: How to cut the cost of motoring Fuel duty has increased with effect from today making motoring even more expensive. Source: Telegraph Finance | 1 Apr 2009 | 6:59 am Cattles in new warning on £850m charge Cattles, the embattled sub-prime lender, warned shareholders today it would have to write down up to £850 million because of defaulting borrowers in the wake of an external investigation into its accounting scandal. Source: Latest Business News from Times Online | 1 Apr 2009 | 6:58 am NZ stocks: Market down despite late rally The New Zealand sharemarket had a quiet start to the financial year today. A promising start saw the benchmark NZSX-50 index up 27.6 points soon after opening, following gains in United States equities and Reserve Bank Governor... Source: New Zealand Herald - Business | 1 Apr 2009 | 6:44 am Currency: Dollar drops back under US56c The New Zealand dollar wobbled against the United States greenback on car news today, but dropped more than a cent against the Uncle Sam when it couldn't avoid an unexpected Bollard. It was worth US55.74c at 5pm today, more than... Source: New Zealand Herald - Business | 1 Apr 2009 | 6:38 am Southampton FC owner suspends shares Southampton Football Club's listed parent company today suspended its shares as the cash-strapped company teetered on the brink of administration. Source: Latest Business News from Times Online | 1 Apr 2009 | 6:32 am China deal for Australian miner Australia's Oz Minerals agrees to sell most of its assets to China's Minmetals just days after a deal had been blocked. Source: BBC News | Business | World Edition | 1 Apr 2009 | 6:24 am G20 must commit to free trade Diageo chief says International trade is crucial to a sustainable recovery and G20 leaders must commit to clear and concrete actions to support it Diageo chief executive says. Source: Telegraph Finance | 1 Apr 2009 | 6:05 am Japan business confidence at record low Sentiment among big manufacturers falls at a record pace as slumping global demand halves exports and slashes production, hurting an economy already mired in recession Source: Financial Times - US homepage | 1 Apr 2009 | 5:32 am HP says pondering Google's Android SAN FRANCISCO (Reuters) - Hewlett-Packard Co is studying uses for Google Inc's Android operating system, but the world's top PC maker stopped short of saying it had decided to adopt the fledgling software in its products. Source: Reuters: Business News | 1 Apr 2009 | 5:32 am Ill winds France's largest port feels force of economic downturn Source: BBC News | Business | World Edition | 1 Apr 2009 | 4:09 am 5 Stocks Priced for a Takeover (Screens) “Winner’s curse” and “empire building” might sound like chapter titles of a Harry Potter knockoff, but they have nothing to do with wizardry. They’re terms researchers use to explain why, when one company buys another, it usually gets a bad deal. The winner’s curse is why you’re better off selling on eBay than buying; in auctions, winning bidders tend to overpay. The same goes for companies sought by more than one suitor, and the number of auction participants is inversely correlated with the subsequent returns. That is, frothy deals blow more of the buyer’s money. “Empire building” is something of a dig at managers. Even absent auctions, company takeovers tend to lose money, because companies, like individuals, often buy high. During a merger wave from 1998 to 2001, researchers calculate that companies squandered 12 cents in shareholder capital for each dollar they spent. Longer-term studies raise similar doubts about the financial rewards of takeovers, to the point where researchers theorize that managers buy other companies mostly because they want to run bigger operations. They build empires, but at a cost to their stock prices. Just like on eBay, as a shareholder involved in a takeover you’re usually better off as a seller than a buyer. The average acquisition in recent decades has commanded a stock premium of some 35%. Predicting which companies will one day attract bids isn’t easy. You might choose wrong. A deal might take years. It might not come with the price premium you’d hoped for. Fortunately, corporate suitors look for things that are pretty similar to what individual investors look for anyhow -- low purchase prices relative to potential profits. So investors can search for cheap stocks using the same measures buyout pros use, but view takeover potential as an aside rather than the main rationale for their decisions. The companies listed below have low “EV/Ebitda” ratios. EV stands for enterprise value, which is the cost to own all of a company’s shares and pay off its debt while applying its cash to the transaction. Ebitda is earnings before interest, taxes, depreciation and amortization. It’s a measure of underlying profit potential that ignores some accounting charges related to past transactions, as well as interest and tax payments, the size of which often change after a deal. In addition to having low EV/Ebitda ratios -- low takeover prices relative to their profit potential -- these companies generate ample free cash, which suitors would presumably be happy to lay claim to. Advance Auto Parts (AAP) made the list. You might presume all things auto-related are slumping at the moment, with car sales having recently fallen to nearly a three-decade low. But a dearth of new car purchases means more repairs for old ones, so car parts sellers are riding out and perhaps even benefitting from the economic slump. Advance Auto shares have gained 22% in a year, as the broad market has dropped 40%. Its sales and profits are expected to grow modestly this year and next, while broad-market profits have recently plunged. Shares cost less than 15 times earnings and come with a dividend, the size of which is unfortunately too pitiful to mention. Top priorities in a spending downturn include food and medicine, and perhaps a swipe of underarm deodorant, but not necessarily a spritz of name-brand perfume. Accordingly, sales for Inter Parfums (IPAR), which holds scent licenses for Burberry, Gap, Brooks Brothers, Bebe and more, are seen falling 14% this year. The stock price has been shattered over the past year, losing 62%. At that price, its formerly small dividend yield is almost respectable: 2.3%. Inter Parfums owes little and generates plentiful free cash, which means management, unlike that at most companies, hasn’t suddenly turned sour on stock repurchases now that prices are low. Last quarter the company retired close to a half-million shares. I’m guessing it’s getting a good deal. Shares fetch less than 9 times earnings. Have a look if you like at details on these and other companies on the table below.
Ticker	Company	Industry	Share Price	Market Value ($mil)	EV/Ebitda	Forward P/E
AAP	Advance Auto Parts	car parts	$41.64	3943	7.58	15
ANN	Ann Taylor Stores	clothing stores	5.00	286	0.86	n/a
BJ	BJ's Wholesale Club	discount stores	32.21	1894	5.64	14
IPAR	Inter Parfums	perfume	5.60	172	2.66	8
WG	Willbros Group	oil & gas services	9.80	384	2.03	8

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New Math for IRA Savings

Usually, the last thing anyone giving financial advice needs to do is to tell Americans to dodge taxes. Tax our tea unfairly and we’ll start a revolution. Give us a holiday from sales tax and we’ll buy all kinds of clothes and appliances we don’t need. Launch single-state muni-bond funds whose yields are exempt from income taxes in jurisdictions that don’t even have income taxes and we’ll plow our money into them.

Yet there’s a way to completely avoid paying taxes on retirement savings, and it’s perplexingly unpopular. With a Roth IRA, your retirement investments grow tax free. If you get a statement showing you have $200,000 in a Roth IRA, that amount—and not some lesser figure you have to guesstimate after trying to adjust for taxes—is what you’ve got, and you can spend it whenever and however you please. But just 19 percent of working Americans have Roth IRAs, even though 90 percent are eligible for them, according to Fidelity. And Roth IRAs hold only 4 percent of all IRA assets, according to the most recent Federal Reserve Survey of Consumer Finances.

This tax season happens to be a particularly good time to get your household’s savings into a Roth IRA. But before looking at why, let’s review how this type of account works and the possible stumbling blocks to using it effectively.

With traditional IRAs, you get a quick tax benefit: You can deduct the contributions you make in any year from your taxable income. Your investments are then sheltered from taxes as long as they remain in your IRA. But when you take a distribution from an IRA, it is subject to regular income taxes. Roth IRAs flip the timing of the tax break. Contributions are not deductible—but then they grow tax-free and will never be taxed again.

(A quick word about eligibility. Anyone who is not covered by a retirement plan at work or their own self-employed plan can deduct any IRA contributions up to $5,000, or $6,000 if you’re age 50 or older. If you are covered by another retirement plan, then contributions are only deductible if your modified adjusted gross income is less than $85,000 for married couples, though the amount you’re able to deduct starts getting reduced when your income hits $53,000. If your spouse is covered by a plan but you are not, your contributions are deductible if your joint income is less than $159,000. Anyone, however, can make a nondeductible contribution to an IRA.)

If all the other rules governing traditional IRAs and Roth IRAs were identical, there would be no reason to favor a Roth. Algebra says it shouldn’t matter whether taxes are applied to contributions or a compounded total. But there are three big reasons why a Roth can be better.

First, since creating Roth IRAs in 1997, Congress has never distinguished between the limits on making contributions to them and on making deductible contributions to traditional IRAs. In 2009, for instance, you can put a total of $5,000 into IRAs of both kinds ($6,000 if you’re 50 or older). And that equivalence means Roth IRAs give you more bang for your buck. To take a simple example, let’s say you put $5,000 into a Roth IRA this year and leave it untouched for 30 years. If it grows at 6 percent a year, you would end up with $28,717, tax free. To get that much from a traditional IRA in 30 years at 6 percent, you would have to invest $6,944 initially, let it grow and then pay income tax on the total (assuming you’re in the 28 percent federal bracket). But you can’t—you can invest only up to $5,000.

Now, with a traditional IRA, you do get an up-front deduction. In this case, that would be worth $1,400. But even if you invest your deduction in a taxable account for 30 years, the total will still fall short of the Roth IRA’s. It may seem paradoxical that after-tax dollars make for a better tax shield, but the combination of equal contribution limits and tax-free withdrawals gives the Roth an edge.

The second advantage to a Roth is easier to understand: no mandatory distributions. In contrast, you face stiff penalties if you don’t start drawing down a traditional IRA by age 70½.

Third, since you can accumulate large sums in Roth IRAs without having to worry about taking distributions, they make excellent vehicles for estate planning. You can pass a Roth IRA to your heirs and they will never have to pay taxes on the amounts they withdraw. They will have to make mandatory distributions according to IRS timetables but can stretch out drawdowns over their lifetimes, which makes Roth IRAs a particularly good asset to leave to grandchildren.

If this all sounds too good to be true, well, I actually don’t have a nasty surprise up my sleeve. Roth IRAs are terrific. And so are their workplace cousins, Roth 401(k)s. Roth vehicles should be significant components of retirement planning for anyone who’s eligible. (Individuals earning more than $120,000 and couples earning more than $176,000 in 2009 can’t contribute to a Roth, though contributions start getting phased out at $105,000 and $166,000, respectively.)

So why aren’t they? The very nature of Roth tax breaks is one important reason. For decades planners (and financial magazines) preaching the importance of making regular retirement investments have stressed the benefits of deductible contributions to IRAs and pretax contributions to 401(k)s. Then Roth IRAs came along, and suddenly, investors were supposed to ignore those up-front gains to get extra gratification later. That’s a serious adjustment to make—and it’s complicated by the often complex rules for investing in various types of accounts.

There’s also a legitimate tax-bracket concern about Roth IRAs. With traditional IRAs, you defer taxes until you cash out your savings, which is particularly damaging if you move into higher tax brackets over the course of your lifetime. But the opposite holds for a Roth, where you pay your taxes early: If you move into a lower tax bracket after retiring, the benefits of tax-free growth won’t be worth as much. So if you think there’s a chance you’ll have significantly lower annual income in retirement, it makes sense to diversify among traditional and Roth IRAs, to gain some tax advantage either way.

Finally, there had been serious legal limits on converting traditional investments to Roth IRAs, but these have been falling away—and here’s where we get back to why Roth IRAs are an especially good idea right now. There have always been income limits on who can contribute or convert to a Roth IRA. Currently, for example, if you make more than $100,000 a year (single or married), you cannot convert a traditional IRA into a Roth IRA. But next year that conversion cap will come off: In 2010 anyone can convert a traditional account into a Roth IRA. (Well, almost anyone. Just as married couples that file separately are essentially prohibited from contributing to a Roth IRA, they’re also not able to convert to a Roth.)

This is a fantastic opportunity. Whatever your income, if you have made deductible contributions to an IRA, you can pay taxes on the amount you convert, then never again. And if you have made nondeductible contributions, you will owe income taxes only on the growth in your investments—and, after conversion, never again. (You’ll owe income tax, not capital gains tax, on those earnings because that’s what you claimed the deduction against when you first made the contribution.) You will need enough cash on hand to pay those taxes—it’s better not take a distribution from your IRA to do so. But if you convert in 2010, you can take two years to pay Uncle Sam. (If you convert in 2011 or later, you’ll have to pay the same year.)

This break came from bad lawmaking, and it may well be bad policy. In 2006, Congress was looking for quick revenue and figured that allowing account holders to switch to Roth IRAs would generate $6.4 billion in conversion taxes over the next decade. Unfortunately, the long-term costs of permanently sheltering so many dollars from taxes will be huge—perhaps as much as $100 billion through 2049, according to the Tax Policy Center.

But as long as you can get your savings into a Roth IRA, you’d be crazy not to. Whether you watch your investments grow, spend your money or pass your assets to your heirs, a Roth IRA is the single best way to make your retirement less taxing.

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Hanging Onto Health Coverage in Tough Times (Deal of the Day)

Updated April 1, 2009.

As the recession tightens its grip, a growing number of Americans are finding themselves unemployed — and uninsured.

For each percentage-point increase in the unemployment rate (February's rate reached 8.1%), another 1.1 million people lose their health coverage, according to research by health policy nonprofit Kaiser Family Foundation. (Considering that the unemployment rate is up three percentage points since this time last year, that's a large pool of people hoping not to get sick.)

For those who don’t have access to a spouse’s health insurance plan, shopping around for independent coverage can cause some serious sticker shock — especially if you're accustomed to an employer shouldering the lion's share of your health premiums.

Navigating the complicated health-care landscape can also be daunting, but don't give up. “Definitely do not go without health insurance. People can rack up thousands of dollars in medical bills [without coverage]. It’s a risk not worth taking,” says Sally Greenberg, executive director of the National Consumers League, a consumer advocacy group.

Here's how the uninsured can regain coverage — and possibly cut some costs while they're at it.

Retain Coverage Through Cobra

If you work at a company with more than 20 employees and lose your job, then you can extend your health coverage through Cobra for up to 18 months.

The great thing about Cobra coverage is that your health plan will offer the same coverage and any pre-existing medical conditions will have no bearing on your ability to obtain coverage (like it would with a private health insurance plan). The biggest drawback: its prohibitive cost. Monthly premiums average $400 for single plans and $1,078 for family coverage, according to a 2007 study by eHealthInsurance, an online insurance marketplace. But the stimulus bill will help reduce those costs by providing a 65% subsidy for laid-off workers who pay for Cobra. Those eligible will pay just 35% of the premiums (that brings the consumer’s contribution down to an average $140 and $377 a month, respectively). The subsidy is available to workers who lose their jobs between Sept. 1, 2008, and Dec. 31, 2009, and is limited to nine months.

You can also take steps to lower your future financial burden if you think your job – or company – is on shaky ground. During your employer's open-enrollment period, you can shift to a lower-cost plan at work. That way, if you need Cobra coverage later on, your premiums will be lower. It’s still going to be expensive, but moving from a PPO to a less-pricey HMO now could end up saving you a chunk of change each month, says Sam Gibbs, spokesman for eHealthInsurance.

Note: To be eligible for Cobra, workers must have been enrolled in their employer's health plan when they worked and the plan must continue to be in effect for active employees. That means if your company declared bankruptcy and is liquidating its assets, it will likely terminate its health plans, thereby making Cobra unavailable.

Shop Around for Private Health Insurance

If you’ve exhausted your Cobra coverage or simply don't qualify for it, start shopping for an individual plan. Just keep in mind that private health-insurance policies can get pricey and may not always offer comprehensive coverage, says Jennifer Tolbert, principal policy analyst at Kaiser. “The premium you can afford, but it might come with a $2,000 deductible,” she says.

Coverage in the private market is usually based on health status. So a pre-existing condition like asthma or a family history of diabetes can be reason enough for an insurer to raise premiums. But if you’re relatively young and healthy, a low-premium, high-deductible plan might be right for you. Prospective buyers should consider the plan’s monthly premium (which are usually lower when the deductible is high) and the co-pay amount. Also, make sure any policy you're considering covers the services you use most (say, prescription drugs) or ones you expect to use in the near future (like maternity care), says Gibbs.

To compare features and costs of available health plans, check your state’s health insurance department’s web site, eHealthInsurance.com, or the web sites of big insurers like Aetna (AET) and UnitedHealth Group (UNH). (Read our story on help with cutting drug costs.)

Turn to Associations and Professional Groups

If you're a card-carrying member of organizations like your state’s bar association or a freelancer group, you may be in luck. Many professional and trade groups and even alumni associations offer group-based health plans at a discount. Under these plans, the health risk is spread across the group, so members’ premiums tend to be a little bit lower than if they bought a policy on their own. Just be prepared to pay more than you did for your employer-based insurance since you're paying the full premium, says Tolbert.

Negotiate With Medical Providers

Prices are not always set in stone. If you need to see an eye specialist or undergo a procedure that’s not covered by your plan, it’s possible to negotiate a lower price with your doctor or hospital, says Alan Sager, health policy professor at Boston University. You'll probably have the best luck by going to your nearest public hospital, which often have open-door policies and charge on a sliding scale based on need, says Sager. If negotiating a lower price doesn't work, ask if you can be put on a payment plan.

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.

The Pleasure of Plastic

IT IS UNCOMMON WHEN the chief executive of a company with a $50 billion market value and a globally ubiquitous brand feels compelled to explain to investors the rudiments of its business. Yet this is the position Joe Saunders, CEO of Visa, sometimes finds himself in. The first slide of an investor presentation given by the company last month states "What we are," which is the "largest payments-network company in the world." As for "what we are not," that includes "credit-card issuer, lender, exposed to consumer-credit risk."

Persistent misapprehensions about Visa's (V) business, a year after the company completed the largest-ever initial stock offering in the U.S., have created an opportunity for investors seeking a financially stable mega-cap growth stock as a core holding.

Visa brands debit and credit cards issued by banks, and earns fees on payments that move over its proprietary network. As such, it stands in the vanguard of a burgeoning secular trend: the use of plastic for everyday and big-ticket transactions.

U.S. payments via debit card, in which the money is drawn directly from a purchaser's bank account, grew at an 18% annual rate between 2002 and 2007, according to McKinsey. Even though that pace is expected to slow to about 9% through 2012, the public's increasing reliance on cards of both sorts could provide a powerful lift to Visa's earnings and shares, which trade around $55.50. Some fans think the stock could trade up to the $70s, even in a difficult economy.

Visa has about 75% of the U.S. debit-card market, compared with 25% for MasterCard International (MA), its principal global competitor. While the rivalry between them is spirited, they jointly compete against a bigger foe: cash and checks. In the U.S., cash is used in 57% of transactions, and most countries are even more cash-centered.

Plastic's long-running encroachment on cash and check usage could create an attractive tailwind for Visa and MasterCard for years to come. With pretax profit margins exceeding 40%, steady top-line growth easily translates for both into earnings-growth rates exceeding 15%.

Much excitement greeted the Visa IPO, which priced in March 2008 at $44 a share. The stock immediately traded into the mid-$60s, where it fetched more than 30 times forecast earnings, a rich multiple. By last May it had raced into the high-$80s, before losing nearly half its value as the market for almost everything consumer-tinged was hammered.

Visa has some sensitivity to consumer-spending activity, but even after the Sept. 11, 2001, terrorist attacks, when the consumer largely froze, revenue grew at a high-single-digit rate. In 2008's fourth quarter, when U.S. consumers snapped their wallets shut, San Francisco-based Visa posted double-digit top-line growth. A planned price increase will help boost revenue this year, while lapping last year's results, hurt by high gasoline prices, will lead to better comparisons.

Visa trades at 20 times 2009 forecasts of $2.70 a share for the fiscal year ending in September. The company posted a profit of $1.7 billion, or $2.25 a share, in fiscal 2008, on total revenue of $6.26 billion. The stock's multiple may appear rich relative to the Standard & Poor's 500, which trades at less than 14 times future earnings. Yet Visa's profit, based on its guidance and analysts' forecasts, will rise by almost 20%, a rare distinction in a growth-starved market.

MasterCard is more modestly valued at 16 times calendar 2009 forecasts, and is attractive as an investment as well. The valuation discount is due to Visa's greater exposure to debit, and the continued overhang of some merchant-pricing litigation involving MasterCard. Visa has cut a deal that shifts this liability to the issuing banks.

Also, MasterCard has been public since 2006, and is further along than Visa in transitioning to a profit-maximizing company from a member-bank-owned cooperative.

One potential model for Visa's shift is the path taken by futures exchanges such as CME (CME), which have transitioned from ownership by their largest customers to independence as trading networks, and have profited from volume growth. They also enjoy pricing power, good free cash flow and defensible margins. For Visa, margin expansion and conservative revenue expectations could produce $5 to $6 of earnings per share in five years, some money managers estimate.

Bill Sheedy, Visa's president for North America, notes the business "isn't very capital intensive. The main costs are marketing the brand and running the network."

Visa has the flexibility to modulate spending to protect or increase its margins. That means it has room to meet or outdo current earnings forecasts, and that its shares aren't as expensive as they appear. If the stock beats a path back toward $70, as expected, it would reinforce Visa's emerging status as a core blue-chip-like holding.

The Bottom Line:
Visa went public a year ago at $44 a share, shot up to the $80s and now trades at about $55. If the company meets or beats forecasts, as expected, the shares could head for $70.

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Home sellers now asking for boom-time prices: Real estate report

Japanese business confidence hits new low

Bear or bull in charge of Wall St this year?

Health nominee Sebelius reveals tax errors (Reuters)

Japan's business confidence drops

Fletcher Building looking to raise over $500m

Obama's health nominee reveals tax errors

How long to fix a mortgage? The pros and cons

NZ broadband dramatically improved, says new report

Trends & Innovations - Tuesday

After The Close - Tuesday

Schools Train Vets, High School Grads, The Jobless For Skilled Jobs

Business Briefs - Tuesday

In Brief - Tuesday

Finance advisers get together

Bollard concerned about higher long term rates

GE to pitch vision for world's healthcare

NZ Shares: Market starts well but soon eases

Ex-CBI chief Lord Jones to join union jobs protest

Shiller Says Failure of GM Would Shock Confidence

Wyplosz Sees G-20 Agreeing to Add More Money to IMF

Write-Offs: 03.31.09

$$$ Draw the blinds: another protest at AIG is planned for Friday. [IACenter]

$$$ Did anyone else think GM's pledge for 'deeper, harder, faster' restructuring was a reference to this? Just us? [Guardian]

$$$ The Grim Math At GM [WSJ]

$$$ Layoffs at RSM McGladrey: "45 people today in their NY office, including a bunch from their hedge fund group. Lots of Jews among the axed, right before Passover."

Keller Says U.S. Automakers' Financial Plans Not Creditable

Keller Says Bankruptcy `Most Likely Outcome' for GM

SEC to enlist help on fraud

Schulz Says Bankruptcy Risk Still High for GM, Chrysler

Aso lays bare G20 split on downturn

CA-CANADA Summary (Reuters)

CA-CANADA Summary (Reuters)

Washington begins Tehran outreach

Nobel Winners Lucas, Prescott Discuss Financial Crisis, Theory

India's economy 'more durable' than China

They Are What They Drive

With President Barack Obama showing the ailing U.S. auto industry some tough love Monday, POLITICO wondered -- what's ...

... in the driveways of White House aides? A lot of foreign cars, as it turns out.

Explore the depths of auto-psychoanalysis, after the jump.

Unfounded Rumor Of The Afternoon: Departures At Man Group/Investments?

Supposedly "the US head of institutional sales, head of risk for one of the engines and the head of structured finance and prime brokerage are all leaving, as well as one of the former CIOs."

Macy's records $5.1B charge to write down goodwill (AP)

Microsoft's "Lauren" unmasked

The Obama Portfolio

Some recovery.

The Obama Portfolio (Since Inception): +12.35%

Earlier: The Obama Portfolio

How the Dow Jones industrials fared Tuesday (AP)

AP - Wall Street ended a tumultuous March on a high note, managing its first winning month this year and its best monthly performance in nearly seven years. Stocks finished off their earlier highs on Tuesday but resumed a three-week rally that has brought the Dow Jones industrials up 16 percent since hitting new 12-year lows in early March. The Dow logged a 7.7 percent gain for the month — its biggest monthly advance since October 2002.

Let's Talk B-School: A Dealbreaker Reader Poll

So! A dear friend of Dealbreaker is one of the few b-school applicants to be granted admittance to Club 2 Year Vacay this year. Tuck and Stern have already been crossed off the list (too Hanover, too Nouriel), with Columbia and University of Chicago remaining. Here we have a dilemma, which you can probably guess. The lady in question can't decide. Difficult as it may be for Dealbreaker readers to form opinions, we figured we'd throw this one at you. Considering all factors (quality of student bodies, social life, chances of getting a job in New York post-grad, etc) please make a decision for her now. Begin. (Oh, and answers like "Columbia" or "Chicago" aren't helpful. You must elaborate.)

Presented By:

Pic: Keynesian Diner

Billions served Jessica Goldstein/NPR

 

Our colleague Jessica Goldstein sent in this photo of a Washington, D.C., diner trying to cash in on the stimulus thing. I don't think American City Diner is as powerful as the Fed, but the folks there are printing money...

 

Of course you have to give them dollars before they give you one of these, which by my calculation is worth about 10 cents -- ignoring default risk.

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Sensio Technologies Rated New `Speculative Buy' at Union

Listener: Life Eats Savings

Monday's podcast included an interview about how much money people should save. Kent Smetters, a professor at the Wharton business school, says the market knows -- and should tell the rest of us. To which listener Jeremy Ouellette responds:

I think that there's one major thing that Mr. Smetters overlooked in his analysis of why Americans don't save enough, namely the rate at which certain major expenses have risen over the past few years. This is largely based on the work done by Harvard Law professor Elizabeth Warren and her daughter Amelia Warren Tyagi. Their basic thesis is that it takes a lot more money to maintain a middle-class standard of living than it used to.

Namely, the cost of three big things has been rising a lot faster than inflation and wages over the past few years: health care, housing, and college education.

These are things that I think most families aren't willing to compromise on. Health care costs have been rising at rates much higher than inflation for a long time. Also, since people believe that public schools are getting worse, the cost of buying a house in a good school district is much higher then it used to be. Additionally, a college education is now a minimum (and really expensive!) requirement in order for your child to maintain a middle-class lifestyle.

I think that these three big expenses take a much bigger chunk out of a family's budget than they did in the past, and, when coupled with the negative wage growth we saw over the past few years, result in substantially reduced savings. This isn't to say that we are freed from the responsibility to live more within our means, or that there hasn't been a rise in unnecessary consumption over the past few years. While I think that Mr. Smetters is correct to say that the government needs to look at Social Security and Medicare reform. However, I think that if we really want to fix this problem, we also need to have policies that work on these big issues too. Just my two cents...

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China to launch exchange for smaller companies (AP)

The gadfly gets her day: Davis to ring NYSE bell (AP)

AP - Evelyn Y. Davis was raking CEOs over the coals before it was popular.

Tobacco users cough up more to smoke

Doctor reduces fees for laid-off workers

From 4-year to community college

On the investor wish list: More info

Tax havens come clean ahead of G-20

Private equity firms invest in bad assets

Companies tailor marketing to jobless

GM dealer wants uncertainty to end

Home Values Continue Fall

Click to enlarge S&P/Case-Shiller

 

The price of existing single-family houses continued to fall in January, according to the S&P/Case-Shiller Home Price Indices. They track home prices across 20 major U.S. metropolitan areas.

The index of the 10 biggest cities is down 30.2 percent from its mid-2006 peak; January prices were off 2.5 percent from December. The 20-city index is down 29.1 percent from its peak, and off 2.8 percent in January. Both indices have fallen every month since August 2006.

Bonus: Calculated Risk on house prices and stress testing banks

The two housing indices have fallen more than 19 percent in the last year alone.

David M. Blitzer, chair of the index committee at S&P, thinks home prices still have not hit bottom:

"There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the [20 metro areas] falling more than 20 percent in the last year."

The report from S&P/Case-Shiller shows that Phoenix, Las Vegas and San Francisco have experienced the largest drop in home prices over a year ago, each in excess of 30 percent. Dallas, Denver and Cleveland have weathered the storm the best.

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Benchmark's Atorino Sees More U.S. Newspapers Filing Chapter 11

Creepy Quiet Ports

Today I got this email from Peter Tirschwell, editor of the Journal of Commerce. Peter spends a lot of time at U.S. ports, but his latest visit to the ports of Los Angeles and Long Beach left him spooked. Spooked because it was quiet and calm. These ports handle 40 percent of all U.S. containers moving in international trade. Last February import volumes were down 43 percent from the same month last year. "43 percent!", Peter exclaims.

He writes:

The docks that make up port cargo terminals, where millions of steel containers full of freight are transferred, are normally a death-defying place to be. Even from the seeming safety of a vehicle, the pace of activity all around as yard-hustlers towing 40-foot boxes coming whipping around tall stacks of the containers and eight-story-tall cranes hoist the imposing-looking boxes directly over your head.

This time, the usual dull roar of lifting machinery moving many tons of steel and freight was nowhere to be heard - the work at the few ships on hand was barely audible. Dockworkers were scarce and there were few of the trucks that make an adventure out of driving anywhere from docks to the highway around the ports. Docks that were crammed with containers just a year ago had enough space to host a football game.

There were ships in the water and at dockside, but they were smaller and in eye-popping contrast to more robust times- virtually empty of containers. They sat with relative ease in the water, hardly burdened at all by goods on this leg of their voyage.

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10 Most Hilarious April Fool’s Pranks (by Companies)

Let me ask you a quick question: What demographic comes up with the best April Fool’s pranks? College students? Internet pranksters? Independently funded joke-lovers?

You might be surprised to find that companies–including media outlets–comes up with some of the most creative and believable pranks of all. Here’s a list of the 10 most hilarious April Fool’s pranks by companies (as derived from this fabulous Museum of Hoaxes list):

10. Tesco’s Whistling Carrots

In 2002, Tesco ran a fake newspaper ad announcing the ‘whistling carrot,’ a carrot genetically modified to contain airholes on each side that caused the carrot to whistle when it finished cooking.

9. Lebanon Circle Magik Co.’s Mummified Fairy

Lebanon Circle Magik Co., a studio specializing in sculptures and curios, posted a picture of what appeared to be a mummified fairy on its homepage in 2007. The site explained that the fairy had been found by pedestrian in rural Derbyshire, leading to an explosion of online speculation about whether the fairy was real. Even after owner Dan Baines revealed the hoax, people continued to believe the fairy mummy was real.

8. Signal-Disrupting Bras

In 1982, the Daily Mail—a frequent April Fool’s prankster—reported that 10,000 locally manufactured bras were interfering with radio and TV broadcasts through an extremely conductive copper underwire. The metal in the underwire was normally used in fire alarms; body heat and nylon made it produce signal-disrupting static electricity.

Quote: The chief engineer of British Telecom, upon reading the article, immediately ordered that all his female laboratory employees disclose what type of bra they were wearing.

7. Sports Illustrated’s Sidd Finch

Sports Illustrated took advantage of April Fool’s Day in 1985 by publishing an article about Sidd Finch, a new Mets’ recruit with a 168-mph pitch. Finch had purportedly learned the “art of the pitch” from a Tibetan master named Lama Milaraspa. Mets fans went wild–until they learned it was a hoax.

6. Richard Branson’s UFO

A mysterious flying saucer landed in a field near London on March 31, 1989. The police arrived to inspect the scene and were shocked to see a human-like figure in a silver suit step out. The “alien” was actually Virgin’s Richard Branson, who had built a hot air balloon to resemble a UFO. He had intended to land in Hyde Park on April Fool’s Day, but the wind forced him to abandon the mission a day before April Fool’s.

5. Taco Bell Renames the Liberty Bell

In 1996, Taco Bell announced that it was renaming the Liberty Bell to the Taco Liberty Bell. The phone lines at Philadelphia’s National Historic Park were clogged with citizen complaints at the unacceptable move. Taco Bell enjoyed the joke for a few hours, after which it revealed the claim as a fake.

4. Swedish Color TV

In 1962, Sweden’s only TV channel broadcast in the news that viewers could get their black-and-white TV sets to display in full color by pulling a nylon stocking over the front of their TVs. Thousands of people tried it—until the gag was revealed as an April Fool’s hoax. Color TV finally came to Sweden 8 years later.

3. Dick Smith’s “Iceberg”

Dick Smith Foods a brand name in Australia. In 1978, owner and millionaire Dick Smith contracted a barge to tow an iceberg from Antarctica into the Sydney Harbor. Smith said he would cut ice cubes from the iceberg and sell them for 10 cents a piece. The public eagerly followed the iceberg’s progress until rain washed off the shaving cream and firefighting foam that made up the exterior of the iceberg, which was really a combination of plastic and firefighting foam.

2. Burger King’s Left-Handed Whopper

Burger King ran a full-page ad in USA Today in 1998 unveiling the Left-Handed Whopper, a burger whose condiments were turned 180 degrees to benefit left-handed consumers. Burger King claimed that on the day of the joke, thousands of customers flocked to the chain to request the special Whoppers.

1. The BBC’s Flying Penguins

The BBC has a reputation for April Fool’s stunts, but last year’s (2008) was one of the best. The British news station announced that an Antarctica-based film crew had filmed Adelie penguins taking flight. The video clip became an Internet sensation (watch it to see why).

Shiller Says U.S. Housing Prices Back to Pre-Bubble Levels

Bloomberg's Copetas Discusses New Book, `Mona Lisa's Pajamas'

Fixing Geithner's Plan

Harvard professor Lucian Bebchuk is proposing a fix for Treasury Secretary Timothy Geithner's plan to deal with toxic assets. In today's Washington Post, Bebchuk argues that the government needs to do more to make private investors compete to take part in the program. He writes:

If the private side were to contribute only 8 percent of the capital, the government should seek to keep the highest fraction of the upside that would be consistent with inducing such participation. To this end, potential private managers would submit bids indicating the minimum share of the fund's upside that each manager would be willing to accept for an 8 percent investment, as well as the size of the fund that the manager would establish if accepted into the program. Treasury officials should then set the share of the upside going to the private side in each of the funds under the program at the lowest level consistent with establishing funds that collectively have the aggregate target capital.

Alternatively, assuming that the private side's share of the upside is fixed at 50 percent, the government should seek to get the largest possible contribution of private capital. Under this scenario, managers would submit bids indicating both the size of the fund each manager would establish and the maximum fraction of the fund's capital that the manager would commit to raising privately in return for 50 percent of the upside. Based on the bids, the government would set the fraction of capital provided by the private side at the highest level consistent with establishing funds that have the target amount of aggregate capital.

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Pistachio Recall Another Blow to American Food Safety

Image: ArtsNuts.com

Setton Farms, the second-largest producer of pistachios in the country (according to its website), is recalling roughly 1 million pounds of the nuts because they may be contaminated with salmonella. From CBS:

The recalls began last Friday when the Georgia Nut Company recalled its Kraft Back to Nature Nantucket Blend trail mix after some samples tested positive for salmonella. Setton Farms has started a separate recall of roasted pistachios, and grocery operator Kroger also has recalled some pistachio products.

Right now, the FDA is advising Americans not to eat pistachios but not to throw away their pistachios either. Basically, people should hold on to their pistachios until the FDA knows more about which products are affected.

California is also the second-largest producer of pistachios in the world.

Roasting should kill salmonella, so why are roasted pistachios being recalled? According to the AP,

…problems can occur if the roasting is not done correctly or if roasted nuts are re-contaminated. That can happen if mice, rats or birds get into the facility.

When it comes to nuts, it seems that buying American is a dangerous idea.

GM “Confidence” Another Messy Experiment

Image: Edmunds InsideLine

GM has total confidence in you–if you buy a car, then lose your job. Its new “Total Confidence” program hands car buyers up to $500/month if they get a pink slip after buying the car. The Wall Street Journal has more:

Ford said early Tuesday it will offer 0% financing through its finance arm and will cover payments for up to 12 months on any new Ford, Lincoln or Mercury vehicle if customers lose their jobs. The offer will run through June 1.

Just hours later, GM weighed in with its plan, which provides payment protection for the first 24 months of ownership. If a buyer loses his income, the company will make up to nine months’ worth of payments for up to $500 a month. GM will also help protect the retail value of a new vehicle at trade-in time for a customer’s next GM vehicle.

This system targets people who have a lot of faith in GM and Ford, but no faith in their job security. Could the target market be existing employees of those very companies? I have trouble believing that in an age where credit card companies cut people off, loans are difficult to procure, and 12.5+ million people are already unemployed, the move will make much of a difference.

Remember how GM shunted $1 billion worth of bailout funds to Latin America? From GM’s perspective, this was a smart business move. It’s just that lately, in this country, smart corporate moves seem to have no influence on the national economy.

When it comes to autos, the government is clueless as well. Recall the Chevy Volt tax break passed late last year. Now, the Obama task force has found that…

…the Chevy Volt, the electric-powered car that GM had touted as the flagship of its future, as too expensive compared with its gas-powered peers to be viable in the near term.

(Washington Post)

It sounds like the task force found that the Volt, due out in 2010, still won’t cut the butter a year from now. So what hope does GM have in the “near term”?

The GM Confidence Credit, like the automaker bailouts before it, is nothing but a desperate experiment. Chrysler and Fiat have a plan, but GM and Ford need a miracle to prosper in the US economy.

Hopefully, that miracle won’t involve the government.

'The Zone Of Sanity'

Click to enlarge. NewGeography

 

If you're living in the swath of America from Texas up through the Dakotas, maybe you're seeing the world the way New Geography's Joel Kotkin is. He writes:

[O]nce you get away from the coasts -- where unemployment is skyrocketing and economies collapsing -- you enter what may be best to call the zone of sanity.

The zone starts somewhere in Texas and goes through much of the Great Plains all the way to the Mexican border. It covers a vast region where unemployment is relatively low, foreclosures still rare and much of the economy centers on the production of basic goods like foodstuffs, specialized equipment and energy.

Kotkin pinpoints Kansas City as the new center of paradise, calling it a place where the housing bubble scarcely happened and social stability rules.

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Google “Cheat View” Catches Unfaithful Husband

Google Cheat View is an informal new use for Google Streetview. The Sun reports that a wife caught her husband cheating when she found his Range Rover parked at her friend’s house through Google Streetview. The husband had claimed he was away on business. When the wife found out that “business” really meant getting busy, she filed for divorce.

According to the article, this isn’t an isolated case. A man complained to Google when Streetview snapped him walking out of a sex shop. Another person was caught smoking in front of a No Smoking sign.

If Google introduces a technology, and it results in broken marriages, embarrassment, and lawsuits, is it Google’s responsibility to protect or redeem individuals? Or is it up to the individual to avoid improper use of the technology? What do you think?

Crisis of Confidence Continued

The New York-based Conference Board reported consumer confidence rose slightly in March to 26, from its all-time low of 25.3 in March. A year ago, the index was near 70.

The consumer confidence index measures Americans' take on the current economic situation and their expectations for the future. Those expectations make up 60 percent of the total index, with current conditions accounting for the other 40 percent. The Conference Board surveys 5,000 households every month.

Economist Ian Shepherdson with High Frequency Economics attributes the overall bump to a rise in the the expectations index -- it's up by 1.6 points. That, he says, "has to be seen in the context of the disastrous 6.4-point drop in February."

Economists with the Federal Reserve Bank of New York have studied whether consumer sentiment can influence or predict the direction of our economy. The short answer: yes.

In the FRBNY Economic Policy Review, June 1998, Jason Bram and Sydney Ludvigson write:

"Our empirical analysis suggests that consumer sentiment can help predict future movements in consumer spending...Measures of consumer attitudes available from the Conference Board have both economically and statistically significant explanatory power for several spending categories-- including total personal consumption expenditures; motor vehicles; services; and durables, excluding motor vehicles--even when the information contained in other economic indicators such as income, interest rates, and stock prices is known."

This "economically and statistically significant" data is gathered at the ground level in five simple questions. How would you answer them?

1. How would you rate present general business conditions in your area? [good/normal/bad]

2. What would you say about available jobs in your area right now? [plentiful/not so many/hard to get]

3. Six months from now, do you think business conditions in your area will be [better/same/worse]?

4. Six months from now, do you think there will be [more/same/fewer] jobs available in your area?

5. [What] would you guess your total family income to be six months from now? [higher/same/lower]

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G19? France Says It May Walk

World leaders are supposed to be sitting down for a one-day economic summit on Thursday in London, when the G20 meets to consider the global recession. Facing an enormous to-do list, they're also showing signs of a severe split in priorities.

The U.S. and the U.K. want a global stimulus package, with British Prime Minister Gordon Brown calling for a "global new deal." Other European Union members say they're doing enough to stimulate the economy already. They want strict new rules to regulate the financial system. Now French President Nicolas Sarkozy says he won't sign on to any agreement that lacks a strong global regulator.

It's hard to see how much could possibly get accomplished in a one-day meeting whose agenda ranges from fending off trade barriers to overhauling the financial system and dealing with climate change.

Simon Johnson previews the G20 with a look at its own communique. He finds it lacking in substance and writes, "[U]nder current dire circumstances, window dressing is not a good reason to hold a summit."

Meanwhile, the World Bank today released another gloomy outlook. The World Bank says the global economy will shrink this year for the first time since World War II, by 1.7 percent. A recovery 2010 will be sketchy, the bank says. For the poorest countries, the situation represents "nothing less than an emergency."

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