From The New York Times:
The nation’s top official for consumer product safety has asked Congress in recent days to reject legislation intended to strengthen the agency, which polices thousands of consumer goods, from toys to tools.
On the eve of an important Senate committee meeting to consider the legislation, Nancy A. Nord, the acting chairwoman of the Consumer Product Safety Commission, has asked lawmakers in two letters not to approve the bulk of legislation that would increase the agency’s authority, double its budget and sharply increase its dwindling staff.
Ms. Nord opposes provisions that would increase the maximum penalties for safety violations and make it easier for the government to make public reports of faulty products, protect industry whistle-blowers and prosecute executives of companies that willfully violate laws.
The measure is an effort to buttress an agency that has been under siege because of a raft of tainted and dangerous products manufactured both domestically and abroad. In the last two months alone, more than 13 million toys have been recalled after tests indicated lead levels that sometimes reached almost 200 times the safety limit.
Ms. Nord’s opposition to important elements of the legislation is consistent with the broadly deregulatory approach of the Bush administration over the last seven years. In a variety of areas, from antitrust to trucking and worker safety, officials appointed by President Bush have sought to reduce the role of regulation and government in the marketplace.
Tuesday, October 30, 2007
Monday, October 29, 2007
GAP LINKED TO CHILD LABOR IN INDIA
From USA Today:
The Indian children reportedly found making clothes for Gap Inc. should be reunited with their families and compensated by the government, activists said Monday amid a spreading scandal about the use of child labor by the international clothing chain.
The reported discovery of children as young as 10 sewing clothes for clothing retailer Gap Inc. in a New Delhi factory has renewed concerns about child labor in India, but government officials offered no comment Monday.
"The biggest responsibility here lies with the Indian government — they don't develop a way of monitoring" factories, said Bhuwan Ribhu, a lawyer who works with Bachpan Bachao Andolan, or the Save Childhood Movement.
"International companies hire subcontractors and then forget about it. There is no monitoring at all," Ribhu added. "Where the Gap is concerned, at least they've taken a good pro-active stand against the subcontractors."
Britain's Observer newspaper on Sunday reported that it had found children making clothes with Gap labels in a squalid factory in New Delhi. It quoted the children as saying they were from poor parts of India and had been sold to the sweatshop by their impoverished families. Some said they were not paid for their work.
Child labor remains a widespread problem in India, despite the country's economic boom and its growing wealth.
The government has repeatedly tried to ban the use of child workers — in 1986 outlawing them from working in dangerous industries, such as glassmaking, and last year banning them being employed as domestic servants or in restaurants.
But the prohibitions have had only a minimal impact and children's rights activists estimate that 13 million children are still working in India, with many being used in labor-intensive businesses like carpet-weaving and in dangerous industries, such as making fire crackers.
The Indian children reportedly found making clothes for Gap Inc. should be reunited with their families and compensated by the government, activists said Monday amid a spreading scandal about the use of child labor by the international clothing chain.
The reported discovery of children as young as 10 sewing clothes for clothing retailer Gap Inc. in a New Delhi factory has renewed concerns about child labor in India, but government officials offered no comment Monday.
"The biggest responsibility here lies with the Indian government — they don't develop a way of monitoring" factories, said Bhuwan Ribhu, a lawyer who works with Bachpan Bachao Andolan, or the Save Childhood Movement.
"International companies hire subcontractors and then forget about it. There is no monitoring at all," Ribhu added. "Where the Gap is concerned, at least they've taken a good pro-active stand against the subcontractors."
Britain's Observer newspaper on Sunday reported that it had found children making clothes with Gap labels in a squalid factory in New Delhi. It quoted the children as saying they were from poor parts of India and had been sold to the sweatshop by their impoverished families. Some said they were not paid for their work.
Child labor remains a widespread problem in India, despite the country's economic boom and its growing wealth.
The government has repeatedly tried to ban the use of child workers — in 1986 outlawing them from working in dangerous industries, such as glassmaking, and last year banning them being employed as domestic servants or in restaurants.
But the prohibitions have had only a minimal impact and children's rights activists estimate that 13 million children are still working in India, with many being used in labor-intensive businesses like carpet-weaving and in dangerous industries, such as making fire crackers.
FCC TO CHANGE RULES, ALLOW COMPETITION IN CABLE TV FOR APARTMENT DWELLERS
From The New York Times:
The Federal Communications Commission, hoping to reduce the rising costs of cable television, is preparing to strike down thousands of contracts this week that gave individual cable companies exclusive rights to provide service to an apartment building, the agency’s chairman says.
Commission officials and consumer groups said the new rule could significantly lower cable prices for millions of subscribers who live in apartment buildings and have had no choice in selecting a company for paid television. Government and private studies show that when a second cable company enters a market, prices can drop as much as 30 percent.
“Exclusive contracts have been one of the most significant barriers to competition,” Kevin J. Martin, chairman of the commission, said in an interview. Cable prices have risen “about 93 percent in the last 10 years,” he said. “This is a way to introduce additional competition, which will result in lower prices and greater innovation.”
The Federal Communications Commission, hoping to reduce the rising costs of cable television, is preparing to strike down thousands of contracts this week that gave individual cable companies exclusive rights to provide service to an apartment building, the agency’s chairman says.
Commission officials and consumer groups said the new rule could significantly lower cable prices for millions of subscribers who live in apartment buildings and have had no choice in selecting a company for paid television. Government and private studies show that when a second cable company enters a market, prices can drop as much as 30 percent.
“Exclusive contracts have been one of the most significant barriers to competition,” Kevin J. Martin, chairman of the commission, said in an interview. Cable prices have risen “about 93 percent in the last 10 years,” he said. “This is a way to introduce additional competition, which will result in lower prices and greater innovation.”
Sunday, October 28, 2007
UAW RATIFIES CHRYSLER DEAL
From USA Today:
UAW members have ratified the national labor agreement with Chrysler LLC, the union said in a statement [Saturday].
The announcement comes shortly after voting ended at Chrysler's Belvidere Assembly Plant in Illinois. Workers there voted to reject the agreement with 55% of voters against it, a person familiar with the results said.
Belvidere's Local 1268 was the final union local to vote but the defeat was apparently not enough to overcome the number of yes votes already logged.
According to a statement issued by the UAW, the contract passed overall with 56% in favor among production workers and 51% in favor among skilled trade workers.
In addition, 94% of office and clerical workers and 79% of engineering workers voted to approve the deal.
UAW members have ratified the national labor agreement with Chrysler LLC, the union said in a statement [Saturday].
The announcement comes shortly after voting ended at Chrysler's Belvidere Assembly Plant in Illinois. Workers there voted to reject the agreement with 55% of voters against it, a person familiar with the results said.
Belvidere's Local 1268 was the final union local to vote but the defeat was apparently not enough to overcome the number of yes votes already logged.
According to a statement issued by the UAW, the contract passed overall with 56% in favor among production workers and 51% in favor among skilled trade workers.
In addition, 94% of office and clerical workers and 79% of engineering workers voted to approve the deal.
Friday, October 26, 2007
INDEX FUND INVESTING: NOT EXCITING, BUT VERY EFFECTIVE
I get many questions from students regarding investing. I do not consider myself to be an expert in the sense that I am a guru who can pick the hot stock or outperform the market.
What I can do is give what I believe to be good advice for investing for retirement. Put your money in index mutual funds and let compound interest take care of setting you up for a fantastic retirement.
Many investment professionals push investors to buy actively managed funds instead of index funds? Why? Well, the fees associated with index funds are very low (typically about 80-90% less than actively managed funds) and many investment professionals steer clients to the investments that pay them the most (trust me, that isn't index funds).
Check out the article below for more information about index fund investing.
And, if you are interested in taking a class that should help you to make smart moves with your money and plan for a wonderful retirement, consider signing up for FIN205.920, Personal Finance and Investing, in the spring semester.
From The New York Times:
IS it worth the risk to try to outperform the market?
“I have yet to meet a retiree that couldn’t have met his or her retirement goals just with market returns — and this is over a 40-year career,” said Paul Merriman, the editor of FundAdvice.com and an investment adviser at Merriman Berkman Next in Seattle.
In his experience, most retired people regard an 8-to-12-percent compounded annual return as satisfactory for their needs. Any investor who simply bought and held a no-load mutual fund that replicated the Standard & Poor’s 500 stock index would have had an 11.2 percent compounded return from 1970 to 2006. So why keep trying to pick stocks and time a volatile market when you can own the market through low-cost index funds?
Index funds are not just for the little guy who can’t take the heat, either. Theodore R. Aronson, an institutional money manager at Aronson Johnson Ortiz in Philadelphia, is paid by his clients to beat various benchmarks like the S.& P. 500 or the Russell 1000 — not to match them. His family’s money, by contrast, goes into 11 Vanguard index funds allocated 80 percent to equities and 20 percent to bonds. “Statistically it is so hard to prove that active managers can outperform, and that any outperformance is due to skill and not luck,” Mr. Aronson said.
His one-year return from indexing as of Oct. 2 was 23.5 percent; his three-year annualized return is 18.8 percent.
What I can do is give what I believe to be good advice for investing for retirement. Put your money in index mutual funds and let compound interest take care of setting you up for a fantastic retirement.
Many investment professionals push investors to buy actively managed funds instead of index funds? Why? Well, the fees associated with index funds are very low (typically about 80-90% less than actively managed funds) and many investment professionals steer clients to the investments that pay them the most (trust me, that isn't index funds).
Check out the article below for more information about index fund investing.
And, if you are interested in taking a class that should help you to make smart moves with your money and plan for a wonderful retirement, consider signing up for FIN205.920, Personal Finance and Investing, in the spring semester.
From The New York Times:
IS it worth the risk to try to outperform the market?
“I have yet to meet a retiree that couldn’t have met his or her retirement goals just with market returns — and this is over a 40-year career,” said Paul Merriman, the editor of FundAdvice.com and an investment adviser at Merriman Berkman Next in Seattle.
In his experience, most retired people regard an 8-to-12-percent compounded annual return as satisfactory for their needs. Any investor who simply bought and held a no-load mutual fund that replicated the Standard & Poor’s 500 stock index would have had an 11.2 percent compounded return from 1970 to 2006. So why keep trying to pick stocks and time a volatile market when you can own the market through low-cost index funds?
Index funds are not just for the little guy who can’t take the heat, either. Theodore R. Aronson, an institutional money manager at Aronson Johnson Ortiz in Philadelphia, is paid by his clients to beat various benchmarks like the S.& P. 500 or the Russell 1000 — not to match them. His family’s money, by contrast, goes into 11 Vanguard index funds allocated 80 percent to equities and 20 percent to bonds. “Statistically it is so hard to prove that active managers can outperform, and that any outperformance is due to skill and not luck,” Mr. Aronson said.
His one-year return from indexing as of Oct. 2 was 23.5 percent; his three-year annualized return is 18.8 percent.
CONSUMER SENTIMENT AT 17-MONTH LOW
From USA Today:
Consumer sentiment fell more than expected in late October to its lowest in more than a year as concerns about the housing slump darkened the economic outlook, a survey released Friday showed.
The Reuters/University of Michigan Surveys of Consumers said its late October figure on consumer sentiment was 80.9, down from the month's preliminary reading of 82 and the final September reading of 83.4. It was the lowest reading since May 2006 when the index stood at 79.1.
Economists polled by Reuters had expected the final October figure to remain unchanged from early in the month at 82.
Consumer sentiment is often seen as a proxy for future spending, which accounts for two-thirds of the U.S. economy.
Consumer sentiment fell more than expected in late October to its lowest in more than a year as concerns about the housing slump darkened the economic outlook, a survey released Friday showed.
The Reuters/University of Michigan Surveys of Consumers said its late October figure on consumer sentiment was 80.9, down from the month's preliminary reading of 82 and the final September reading of 83.4. It was the lowest reading since May 2006 when the index stood at 79.1.
Economists polled by Reuters had expected the final October figure to remain unchanged from early in the month at 82.
Consumer sentiment is often seen as a proxy for future spending, which accounts for two-thirds of the U.S. economy.
Thursday, October 25, 2007
OIL CLOSES OVER $90
From The New York Times:
Oil prices shot past $90 a barrel today on what one analyst described as a “perfect storm” of economic news, ranging from tensions in the Middle East to growing anticipation of a Fed rate cut.
Crude oil futures jumped $3.36 to close at $90.46 a barrel, exceeding the highs reached last week, though still shy of the inflation-adjusted record price of $101.70 set in 1980.
Concerns over supply levels spurred the price increase after the Energy Department reported yesterday that crude oil stockpiles fell last week and investors learned that OPEC shipments from the Middle East were expected to slow. Fewer oil supplies and steady demand mean that oil prices will go up.
Military tensions between Turkey and Iraqi Kurds also contributed to the sudden spike, along with a decision by the United States to impose sanctions against oil-rich Iran. Prices were also pushed up by a weak dollar and expectations that the Federal Reserve will cut its benchmark interest rate next week, analysts said.
“It’s almost like a perfect storm,” said Fadel Gheit, managing director of oil and gas research at OppenheimerFunds.
Oil prices shot past $90 a barrel today on what one analyst described as a “perfect storm” of economic news, ranging from tensions in the Middle East to growing anticipation of a Fed rate cut.
Crude oil futures jumped $3.36 to close at $90.46 a barrel, exceeding the highs reached last week, though still shy of the inflation-adjusted record price of $101.70 set in 1980.
Concerns over supply levels spurred the price increase after the Energy Department reported yesterday that crude oil stockpiles fell last week and investors learned that OPEC shipments from the Middle East were expected to slow. Fewer oil supplies and steady demand mean that oil prices will go up.
Military tensions between Turkey and Iraqi Kurds also contributed to the sudden spike, along with a decision by the United States to impose sanctions against oil-rich Iran. Prices were also pushed up by a weak dollar and expectations that the Federal Reserve will cut its benchmark interest rate next week, analysts said.
“It’s almost like a perfect storm,” said Fadel Gheit, managing director of oil and gas research at OppenheimerFunds.
CHINESE ECONOMY POSTS 11.5% THIRD QUARTER GROWTH
From USA Today:
China's sizzling economy registered more double-digit growth in the third quarter, but the expansion slowed slightly amid efforts to avert overheating, the government said Thursday.
Economists said the peak of the latest boom may have passed.
The 11.5% annual growth rate in economic output for the July-September period kept China on track to surpass Germany as the world's third-largest economy by early 2008.
The figure, a decline from the 11.9% rate reported for the previous quarter, suggests China's expansion has peaked, economists said. They said growth is expected to slow further, but still stay above 10% next year.
Also in September, inflation eased slightly, with consumer prices up 6.2% over the same month last year, down from an 11-year high of 6.5% in August, the government said.
Authorities have blamed a recent spike in inflation on a shortage of food items, especially pork. They say it should ease as government efforts to encourage farmers to raise more pigs take effect.
China's sizzling economy registered more double-digit growth in the third quarter, but the expansion slowed slightly amid efforts to avert overheating, the government said Thursday.
Economists said the peak of the latest boom may have passed.
The 11.5% annual growth rate in economic output for the July-September period kept China on track to surpass Germany as the world's third-largest economy by early 2008.
The figure, a decline from the 11.9% rate reported for the previous quarter, suggests China's expansion has peaked, economists said. They said growth is expected to slow further, but still stay above 10% next year.
Also in September, inflation eased slightly, with consumer prices up 6.2% over the same month last year, down from an 11-year high of 6.5% in August, the government said.
Authorities have blamed a recent spike in inflation on a shortage of food items, especially pork. They say it should ease as government efforts to encourage farmers to raise more pigs take effect.
MICROSOFT EARNINGS UP 23%, STOCK RISES
From USA Today:
Microsoft registered a sharp rise in financial results Thursday, propelled by brisk sales of its Vista operating system, Office 2007 software suite and Halo 3 video game.
The software giant said earnings increased 23% in its fiscal first quarter, to $4.3 billion, or 45 cents a share. Revenue climbed 27% to $13.8 billion.
In the year-ago quarter, Microsoft earned $3.5 billion, or 35 cents a share. The results beat analyst forecasts of 39 cents per share on sales of $12.6 billion, according to a poll by Thomson Financial.
It was Microsoft's best first quarter since 1999, when Microsoft's Windows 98 operating system was launched in Japan and several European countries. The news sent Microsoft soaring 11%, to $35.53, in after-hours trading Thursday.
Microsoft registered a sharp rise in financial results Thursday, propelled by brisk sales of its Vista operating system, Office 2007 software suite and Halo 3 video game.
The software giant said earnings increased 23% in its fiscal first quarter, to $4.3 billion, or 45 cents a share. Revenue climbed 27% to $13.8 billion.
In the year-ago quarter, Microsoft earned $3.5 billion, or 35 cents a share. The results beat analyst forecasts of 39 cents per share on sales of $12.6 billion, according to a poll by Thomson Financial.
It was Microsoft's best first quarter since 1999, when Microsoft's Windows 98 operating system was launched in Japan and several European countries. The news sent Microsoft soaring 11%, to $35.53, in after-hours trading Thursday.
Wednesday, October 24, 2007
NEW INCOME TAX PROPOSAL UNLIKELY TO BE ADOPTED NOW
From The New York Times:
The House’s leading Democratic tax writer will propose a sweeping overhaul of the tax code on Thursday that would increase taxes on many people with incomes above $200,000 but cut them for most others.
The bill, to be introduced by Representative Charles B. Rangel of New York, chairman of the Ways and Means Committee, would also overhaul corporate taxes by eliminating many major tax breaks and lowering overall tax rates.
Mr. Rangel has acknowledged that he does not expect to enact such a bill this year, and President Bush would almost certainly veto legislation that raises taxes on the wealthy.
The plan is probably most important as a preview of what Democrats are likely to pursue after the 2008 elections, especially in rolling back a good part of Mr. Bush’s tax cuts for people at the top of the income ladder.
The House’s leading Democratic tax writer will propose a sweeping overhaul of the tax code on Thursday that would increase taxes on many people with incomes above $200,000 but cut them for most others.
The bill, to be introduced by Representative Charles B. Rangel of New York, chairman of the Ways and Means Committee, would also overhaul corporate taxes by eliminating many major tax breaks and lowering overall tax rates.
Mr. Rangel has acknowledged that he does not expect to enact such a bill this year, and President Bush would almost certainly veto legislation that raises taxes on the wealthy.
The plan is probably most important as a preview of what Democrats are likely to pursue after the 2008 elections, especially in rolling back a good part of Mr. Bush’s tax cuts for people at the top of the income ladder.
MICROSOFT BUYS PIECE OF FACEBOOK
From USA Today:
Microsoft said Wednesday it would pay $240 million for a small slice of Facebook in a deal that values the red-hot social networking website at $15 billion.
In selling a 1.6% stake to the software giant, Facebook rebuffed a competing offer from search-engine giant Google. Google had no comment.
Microsoft also will sell ads on Facebook outside the USA, extending a marketing relationship that began last year. The deal, announced after several weeks of negotiations, is considered a coup for Microsoft as it slugs it out with Google for online ad sales. Facebook, founded in 2004, has more than 47 million users.
The hefty price paid by Microsoft validates the gambit by Facebook CEO Mark Zuckerberg to spurn a $1 billion takeover bid from Yahoo last year. In 2005, News Corp., parent of Fox News, paid $580 million to acquire Facebook rival MySpace.
Microsoft covets the data Facebook collects about its members' tastes and preferences. Microsoft wants to sell ads based on those preferences, ads that appear when Facebook members use Windows Live services, Windows Mobile smartphones — even its Xbox Live online-gaming service, says online search expert Kevin Lee, chairman of Did-it.com.
Microsoft said Wednesday it would pay $240 million for a small slice of Facebook in a deal that values the red-hot social networking website at $15 billion.
In selling a 1.6% stake to the software giant, Facebook rebuffed a competing offer from search-engine giant Google. Google had no comment.
Microsoft also will sell ads on Facebook outside the USA, extending a marketing relationship that began last year. The deal, announced after several weeks of negotiations, is considered a coup for Microsoft as it slugs it out with Google for online ad sales. Facebook, founded in 2004, has more than 47 million users.
The hefty price paid by Microsoft validates the gambit by Facebook CEO Mark Zuckerberg to spurn a $1 billion takeover bid from Yahoo last year. In 2005, News Corp., parent of Fox News, paid $580 million to acquire Facebook rival MySpace.
Microsoft covets the data Facebook collects about its members' tastes and preferences. Microsoft wants to sell ads based on those preferences, ads that appear when Facebook members use Windows Live services, Windows Mobile smartphones — even its Xbox Live online-gaming service, says online search expert Kevin Lee, chairman of Did-it.com.
Tuesday, October 23, 2007
NEUMANN HOMES FILES FOR BANKRUPTCY
From the Chicago Sun-Times:
The crash in the Chicago area market for new homes has claimed its biggest casualty. Suburban builder Neumann Homes Inc. said Monday it will file for bankruptcy and has laid off most of its employees.
Warrenville-based Neumann, the Chicago area's ninth largest builder, blamed its predicament on a drop of more than 50 percent in annual sales within the Chicago and Denver markets. It also pointed to a decision in 2005 to invest in the Detroit market, a move it said cost the company more than $60 million.
Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold.
It also said the earnest money of customers whose new homes haven't started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts.
It also said it will work with lenders to ensure that homes will be completed if construction has started.
The crash in the Chicago area market for new homes has claimed its biggest casualty. Suburban builder Neumann Homes Inc. said Monday it will file for bankruptcy and has laid off most of its employees.
Warrenville-based Neumann, the Chicago area's ninth largest builder, blamed its predicament on a drop of more than 50 percent in annual sales within the Chicago and Denver markets. It also pointed to a decision in 2005 to invest in the Detroit market, a move it said cost the company more than $60 million.
Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold.
It also said the earnest money of customers whose new homes haven't started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts.
It also said it will work with lenders to ensure that homes will be completed if construction has started.
APPLE POST 67% EARNINGS GAIN FOR QUARTER
From The New York Times:
Apple reported earnings on Monday that leapt ahead of analysts’ already optimistic expectations on record sales of its Macintosh computers.
The numbers showed that the company was slowly climbing back into the league of the dominant personal computer makers, Hewlett-Packard and Dell.
Apple reported fourth-quarter profit of $904 million, or $1.01 a share, up from $542 million, or 62 cents, in the quarter a year ago, an increase of 67 percent. Analysts had predicted profit of 85 cents a share.
Sales rose to $6.22 billion, from $4.84 billion. Gross margin also surged, to 33.6 percent, from 29.2 percent a year ago.
Apple said it sold 2.16 million Macintosh computers worldwide in the quarter, an increase of 400,000 over the previous record. It does not break out domestic and foreign sales.
The market research firm Dataquest estimated last week that Apple sold 1.3 million computers in the United States, and IDC put the figure at 1.1 million. In the same period, Dell sold 5 million computers and H.P. sold 4.3 million in the United States, according to the IDC report.
Apple reported earnings on Monday that leapt ahead of analysts’ already optimistic expectations on record sales of its Macintosh computers.
The numbers showed that the company was slowly climbing back into the league of the dominant personal computer makers, Hewlett-Packard and Dell.
Apple reported fourth-quarter profit of $904 million, or $1.01 a share, up from $542 million, or 62 cents, in the quarter a year ago, an increase of 67 percent. Analysts had predicted profit of 85 cents a share.
Sales rose to $6.22 billion, from $4.84 billion. Gross margin also surged, to 33.6 percent, from 29.2 percent a year ago.
Apple said it sold 2.16 million Macintosh computers worldwide in the quarter, an increase of 400,000 over the previous record. It does not break out domestic and foreign sales.
The market research firm Dataquest estimated last week that Apple sold 1.3 million computers in the United States, and IDC put the figure at 1.1 million. In the same period, Dell sold 5 million computers and H.P. sold 4.3 million in the United States, according to the IDC report.
CALIFORNIA WILD FIRES DESTROY OVER 700 HOMES, FORCE 250,000 TO EVACUATE
From Reuters:
Wildfires burned unchecked on Tuesday in Southern California from Santa Barbara to the Mexican border, with hundreds of thousands of people forced to evacuate, at least 700 homes destroyed, and little hope for relief from the hot desert winds fanning the flames.
The National Weather Service said "strong and damaging winds" will continue near Los Angeles through mid-afternoon, and high wind warnings may be issued for some areas Tuesday night. In San Diego, the hot, dry winds fanning the flames were expected through Wednesday.
At least 13 fires, whipped by hot, gale-force Santa Ana winds have swept unchecked over the lower half of the state over the past two days, overwhelming fire crews and state emergency services. Some 200,000 acres were torched, one person killed and more than three dozen injured.
Gov. Arnold Schwarzenegger summoned aid from 1,500 National Guard troops, including 200 from the Mexican border, to help with firefighting, evacuations and crowd control.
Meanwhile, some 250,000 people who had been ordered to evacuate ahead of the flames spent the night out of their homes, about 10,000 of them at a San Diego area football stadium that had been converted to an emergency shelter.
Wildfires burned unchecked on Tuesday in Southern California from Santa Barbara to the Mexican border, with hundreds of thousands of people forced to evacuate, at least 700 homes destroyed, and little hope for relief from the hot desert winds fanning the flames.
The National Weather Service said "strong and damaging winds" will continue near Los Angeles through mid-afternoon, and high wind warnings may be issued for some areas Tuesday night. In San Diego, the hot, dry winds fanning the flames were expected through Wednesday.
At least 13 fires, whipped by hot, gale-force Santa Ana winds have swept unchecked over the lower half of the state over the past two days, overwhelming fire crews and state emergency services. Some 200,000 acres were torched, one person killed and more than three dozen injured.
Gov. Arnold Schwarzenegger summoned aid from 1,500 National Guard troops, including 200 from the Mexican border, to help with firefighting, evacuations and crowd control.
Meanwhile, some 250,000 people who had been ordered to evacuate ahead of the flames spent the night out of their homes, about 10,000 of them at a San Diego area football stadium that had been converted to an emergency shelter.
Saturday, October 20, 2007
WOMEN NARROW PAY GAP, BUT STILL LAG BEHIND MEN
From The New York Times:
When it comes to the advancement of women in the workplace, progress is almost never sudden. But often it is steady. And so it is with women’s wages.
In 1979, women working full time made only 63 percent as much pay as men, according to data compiled by the Bureau of Labor Statistics. Now working women make 81 percent as much as men.
Yes, that’s an improvement, but it still means that median weekly earnings were $600 for women last year, compared with $743 for men.
What is the reason for the disparity? Discrimination? Choices that women and men have made? That is not entirely clear.
What is clear is that wage differences vary by age group. Among workers aged 45 to 64, women made 73 percent as much as men. But in the 25-to-34 group, the number rises to 88 percent.
When it comes to the advancement of women in the workplace, progress is almost never sudden. But often it is steady. And so it is with women’s wages.
In 1979, women working full time made only 63 percent as much pay as men, according to data compiled by the Bureau of Labor Statistics. Now working women make 81 percent as much as men.
Yes, that’s an improvement, but it still means that median weekly earnings were $600 for women last year, compared with $743 for men.
What is the reason for the disparity? Discrimination? Choices that women and men have made? That is not entirely clear.
What is clear is that wage differences vary by age group. Among workers aged 45 to 64, women made 73 percent as much as men. But in the 25-to-34 group, the number rises to 88 percent.
Thursday, October 18, 2007
SEC INVESTIGATING COUNTRYWIDE FINANCIAL CEO FOR INSIDER TRADING
From USA Today:
The Securities and Exchange Commission is examining stock sales of the chief executive of Countrywide Financial, the nation's largest mortgage lender, a person familiar with the matter said Wednesday.
The informal SEC inquiry of stock sales by CEO Angelo R. Mozilo has been underway for a while, the person said, speaking on condition of anonymity because the probe has not been made public.
The inquiry was reported online Wednesday afternoon by The Wall Street Journal.
Mozilo sold some $130 million in Countrywide stock in the first half of the year through a prearranged 10b51 trading plan. These plans allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.
North Carolina's state treasurer last week asked the SEC to investigate Mozilo's stock sales. He raised questions about changes made to Mozilo's plan in the months before the company's stock plunged, allowing Mozilo to significantly increase his sales of Countrywide shares.
The Securities and Exchange Commission is examining stock sales of the chief executive of Countrywide Financial, the nation's largest mortgage lender, a person familiar with the matter said Wednesday.
The informal SEC inquiry of stock sales by CEO Angelo R. Mozilo has been underway for a while, the person said, speaking on condition of anonymity because the probe has not been made public.
The inquiry was reported online Wednesday afternoon by The Wall Street Journal.
Mozilo sold some $130 million in Countrywide stock in the first half of the year through a prearranged 10b51 trading plan. These plans allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.
North Carolina's state treasurer last week asked the SEC to investigate Mozilo's stock sales. He raised questions about changes made to Mozilo's plan in the months before the company's stock plunged, allowing Mozilo to significantly increase his sales of Countrywide shares.
Wednesday, October 17, 2007
CRUDE OIL SURGES AS TURKEY VOTES TO USE MILITARY FORCE AGAINST KURDS
From Bloomberg:
Crude oil rose to a record $89 a barrel in New York after Turkish lawmakers voted to allow the use of military force against Kurdish rebels in northern Iraq.
The assembly in Turkey's capital of Ankara backed the motion by 507 votes to 19, Parliament Speaker Koksal Toptan told lawmakers. An Energy Department report today showed that U.S. oil, gasoline and heating-oil supplies rose last week.
``The Turkish vote has scared traders,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The doomsday scenario is that things will spiral out of control and lead neighboring countries like Iran and Saudi Arabia to become involved. This isn't likely but it encourages people to be long oil.'' Longs are bets prices will rise.
Crude oil for November delivery rose 31 cents, or 0.4 percent, to $87.92 a barrel at 1:20 p.m. on the New York Mercantile Exchange. Futures reached $89, the highest since the contract was introduced in 1983. Prices are up 49 percent from a year ago. This is the seventh straight daily gain.
On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981, when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.
Crude oil rose to a record $89 a barrel in New York after Turkish lawmakers voted to allow the use of military force against Kurdish rebels in northern Iraq.
The assembly in Turkey's capital of Ankara backed the motion by 507 votes to 19, Parliament Speaker Koksal Toptan told lawmakers. An Energy Department report today showed that U.S. oil, gasoline and heating-oil supplies rose last week.
``The Turkish vote has scared traders,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The doomsday scenario is that things will spiral out of control and lead neighboring countries like Iran and Saudi Arabia to become involved. This isn't likely but it encourages people to be long oil.'' Longs are bets prices will rise.
Crude oil for November delivery rose 31 cents, or 0.4 percent, to $87.92 a barrel at 1:20 p.m. on the New York Mercantile Exchange. Futures reached $89, the highest since the contract was introduced in 1983. Prices are up 49 percent from a year ago. This is the seventh straight daily gain.
On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981, when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.
CONSUMER INFLATION UP 0.3% IN SEPTEMBER
From The New York Times:
Inflation stayed steady in September, indicating that the Federal Reserve has room to cut interest rates again, but most likely not this month.
Prices of consumer goods ticked up 0.3 percent in September, slightly faster than expectations and a reversal of a 0.1 percent decline in August. The core rate, a key gauge of inflation that excludes more volatile food and energy prices, held at 0.2 percent, where it has stood since June, the Labor Department said this morning.
Core inflation rose 2.1 percent since last September — the lowest year-over-year growth in 18 months — suggesting that pricing pressures have stayed in check. But the Fed, which keeps close tabs on inflation to determine its benchmark interest rates, prefers a rate between 1 percent and 2 percent. A bubbling-up of inflation, coupled with recent reports that point to a more resilient economy than analysts had expected, makes it more likely the Fed will keep rates unchanged when it issues its decision on Oct. 31.
Inflation stayed steady in September, indicating that the Federal Reserve has room to cut interest rates again, but most likely not this month.
Prices of consumer goods ticked up 0.3 percent in September, slightly faster than expectations and a reversal of a 0.1 percent decline in August. The core rate, a key gauge of inflation that excludes more volatile food and energy prices, held at 0.2 percent, where it has stood since June, the Labor Department said this morning.
Core inflation rose 2.1 percent since last September — the lowest year-over-year growth in 18 months — suggesting that pricing pressures have stayed in check. But the Fed, which keeps close tabs on inflation to determine its benchmark interest rates, prefers a rate between 1 percent and 2 percent. A bubbling-up of inflation, coupled with recent reports that point to a more resilient economy than analysts had expected, makes it more likely the Fed will keep rates unchanged when it issues its decision on Oct. 31.
APPLE TO RELEASE NEW OPERATING SYSTEM ON OCTOBER 26TH
From the San Jose Mercury News:
Leopard is ready to leap into the computing world.
Apple announced Tuesday that its newest operating system, one in a long line named after cats, will be released at 6 p.m. Oct. 26. That should please Macintosh enthusiasts, who have followed development of the delayed system through blogs and online discussion groups.
The new system will include 300 new features, including Stacks, which will allow users a new way to access files. They will spring up accordion-style from a redesigned, three-dimensional dock. Another highlight is Time Machine, a quick way to automatically backup everything on the Mac.
Boot Camp - software that lets users of Macs running on Intel chips to choose at start-up whether to run the Mac OS or Windows operating system - will be built into Leopard. Apple will also ship a complete set of Windows drivers with Leopard, so that Windows applications will be able to use the Web cameras and other hardware features built into the Macintosh computers. There's also a parental control content filter and the ability to limit the times children can use the computer.
Leopard is ready to leap into the computing world.
Apple announced Tuesday that its newest operating system, one in a long line named after cats, will be released at 6 p.m. Oct. 26. That should please Macintosh enthusiasts, who have followed development of the delayed system through blogs and online discussion groups.
The new system will include 300 new features, including Stacks, which will allow users a new way to access files. They will spring up accordion-style from a redesigned, three-dimensional dock. Another highlight is Time Machine, a quick way to automatically backup everything on the Mac.
Boot Camp - software that lets users of Macs running on Intel chips to choose at start-up whether to run the Mac OS or Windows operating system - will be built into Leopard. Apple will also ship a complete set of Windows drivers with Leopard, so that Windows applications will be able to use the Web cameras and other hardware features built into the Macintosh computers. There's also a parental control content filter and the ability to limit the times children can use the computer.
Saturday, October 13, 2007
CHINA TRYING TO COOL ECONOMY, FIGHT INFLATION
Many observers had wondered for years how China's economy could grow at 10+% per year and yet only encounter minimal inflation. Some suspected, and many still suspect, that the Chinese have simply underreported inflationary data. Others think that while China may have actually enjoyed low inflation in the past, that the country now will have to grapple with rapidly rising inflation. What is clear, is that China is now trying to slow the economy and fight inflation.
From USA Today:
China's central bank said Saturday it was boosting the amount of money that its banks must hold in reserve for the eighth time this year, reducing the amount available for lending in an effort to cool an investment boom.
The bank said in a statement on its website that it had raised the rate by half a percentage point to 13% to "strengthen liquidity management in the banking system and check the excessive credit growth."
The change takes effect Oct. 25, the People's Bank of China said.
The order, which had been expected by industry analysts, comes on top of repeated interest rate hikes and investment curbs imposed on real estate, auto manufacturing and other industries in an effort to cool a boom that Chinese leaders worry could ignite inflation or a financial crisis.
The rate rise also follows the recent release of government figures on inflation.
The inflation rate jumped 6.5% in August — its highest monthly rate in 11 years — propelled by a double-digit rise in food prices, including pork, the country's staple meat.
That follows a rise in consumer prices in July of 5.6% over the same month last year.
The central bank has already said it expects the inflation rate for the year to exceed the government's 3% target.
China announced on Friday that the trade surplus, a key source of domestic liquidity, remained high at US$23.91 billion in September.
The last reserve ratio hike took effect Sept. 25.
From USA Today:
China's central bank said Saturday it was boosting the amount of money that its banks must hold in reserve for the eighth time this year, reducing the amount available for lending in an effort to cool an investment boom.
The bank said in a statement on its website that it had raised the rate by half a percentage point to 13% to "strengthen liquidity management in the banking system and check the excessive credit growth."
The change takes effect Oct. 25, the People's Bank of China said.
The order, which had been expected by industry analysts, comes on top of repeated interest rate hikes and investment curbs imposed on real estate, auto manufacturing and other industries in an effort to cool a boom that Chinese leaders worry could ignite inflation or a financial crisis.
The rate rise also follows the recent release of government figures on inflation.
The inflation rate jumped 6.5% in August — its highest monthly rate in 11 years — propelled by a double-digit rise in food prices, including pork, the country's staple meat.
That follows a rise in consumer prices in July of 5.6% over the same month last year.
The central bank has already said it expects the inflation rate for the year to exceed the government's 3% target.
China announced on Friday that the trade surplus, a key source of domestic liquidity, remained high at US$23.91 billion in September.
The last reserve ratio hike took effect Sept. 25.
Friday, October 12, 2007
PRODUCER PRICE INDEX UP IN SEPTEMBER
From The New York Times:
The Producer Price Index, which measures wholesale prices paid by businesses, rose 1.1 percent in September after a 1.4 percent dip in August. The core rate of inflation, a less volatile gauge that excludes food and energy costs, rose 0.1 percent, a slight deceleration from the month before, the Labor Department said this morning.
Prices for raw materials, or so-called crude goods, continued to increase, with the core rate jumping 1.6 percent last month. Overall crude prices are up 11.4 percent from last September, compared with a 4.4 percent year-over-year increase in finished goods. These costs, located higher up the production pipeline, are typically passed on to consumers, signaling a likely increase in retail prices in the months ahead.
The Producer Price Index, which measures wholesale prices paid by businesses, rose 1.1 percent in September after a 1.4 percent dip in August. The core rate of inflation, a less volatile gauge that excludes food and energy costs, rose 0.1 percent, a slight deceleration from the month before, the Labor Department said this morning.
Prices for raw materials, or so-called crude goods, continued to increase, with the core rate jumping 1.6 percent last month. Overall crude prices are up 11.4 percent from last September, compared with a 4.4 percent year-over-year increase in finished goods. These costs, located higher up the production pipeline, are typically passed on to consumers, signaling a likely increase in retail prices in the months ahead.
Wednesday, October 10, 2007
CHRYSLER WORKERS GO ON STRIKE
From The New York Times:
The United Automobile Workers union walked off the job at Chrysler LLC plants nationwide this morning after the two sides failed to reach agreement on a new four-year contract by a union-set deadline.
Chrysler has about 48,000 workers in the United States. About 12,000 workers are exempt from the strike, however, while their plants are temporarily closed by Chrysler.
The strike is the second in two weeks by the union against a Detroit automaker. Workers at General Motors struck for two days before the union reached a tentative deal with G.M. on Sept. 26.
The United Automobile Workers union walked off the job at Chrysler LLC plants nationwide this morning after the two sides failed to reach agreement on a new four-year contract by a union-set deadline.
Chrysler has about 48,000 workers in the United States. About 12,000 workers are exempt from the strike, however, while their plants are temporarily closed by Chrysler.
The strike is the second in two weeks by the union against a Detroit automaker. Workers at General Motors struck for two days before the union reached a tentative deal with G.M. on Sept. 26.
DEAL BETWEEN SABMILLER AND MOLSON COORS COULD BE BLOCKED
Will the proposed Molson Coors/SABMiller deal decrease or increase competition? The answer to that question could determine whether the deal is allowed to go through.
From The New York Times:
Analysts and investors seem to be waving aside the possibility that the proposed merger of SABMiller and Molson Coors in the United States could run into trouble with regulators. But not that long ago, a similar deal seeking to combine the No. 2 and No. 3 players in a consolidated industry — sometimes called a 3-to-2 deal, because it reduces the industry leaders from three to two — was blocked on antitrust grounds.
That was H.J. Heinz’s attempt to buy the maker of Beech-Nut baby food, a $185 million transaction Heinz ended up abandoning.
Together, Heinz and Milnot, the parent of Beech-Nut at the time, would have controlled nearly 33 percent of the retail baby-food market; Gerber, the industry leader, controlled 65 percent. Compare that with the numbers in Tuesday’s proposed deal, in which a combined MillerCoors would have a 29 percent share of the U.S. beer market, and Anheuser-Busch would have 49 percent, according to analysts at Citigroup.
Many think that regulators won’t blink at the MillerCoors transaction. They have argued that the deal could be seen as increasing competition, rather than diminishing it, because it will create a stronger and more efficient rival to Anheuser-Busch, whose brands include Budweiser and Bud Light.
A similar argument was put forward in favor of the Heinz-Milnot transaction — and it did get some traction early on. A lower court initially approved the deal, only to have it overturned by an appeals panel in April 2001. At the time, Robert Pitofsky, the departing chairman of the F.T.C., now in private practice at Arnold & Porter, told The New York Times that the decision was one of the most important antitrust cases during his six years leading the agency.
From The New York Times:
Analysts and investors seem to be waving aside the possibility that the proposed merger of SABMiller and Molson Coors in the United States could run into trouble with regulators. But not that long ago, a similar deal seeking to combine the No. 2 and No. 3 players in a consolidated industry — sometimes called a 3-to-2 deal, because it reduces the industry leaders from three to two — was blocked on antitrust grounds.
That was H.J. Heinz’s attempt to buy the maker of Beech-Nut baby food, a $185 million transaction Heinz ended up abandoning.
Together, Heinz and Milnot, the parent of Beech-Nut at the time, would have controlled nearly 33 percent of the retail baby-food market; Gerber, the industry leader, controlled 65 percent. Compare that with the numbers in Tuesday’s proposed deal, in which a combined MillerCoors would have a 29 percent share of the U.S. beer market, and Anheuser-Busch would have 49 percent, according to analysts at Citigroup.
Many think that regulators won’t blink at the MillerCoors transaction. They have argued that the deal could be seen as increasing competition, rather than diminishing it, because it will create a stronger and more efficient rival to Anheuser-Busch, whose brands include Budweiser and Bud Light.
A similar argument was put forward in favor of the Heinz-Milnot transaction — and it did get some traction early on. A lower court initially approved the deal, only to have it overturned by an appeals panel in April 2001. At the time, Robert Pitofsky, the departing chairman of the F.T.C., now in private practice at Arnold & Porter, told The New York Times that the decision was one of the most important antitrust cases during his six years leading the agency.
Tuesday, October 09, 2007
MOLSON COORS & MILLER COMBINE U.S. OPERATIONS IN JOINT VENTURE
From AP via The New York Times:
Brewers Molson Coors Brewing Co. and SABMiller said Tuesday they will combine their U.S. operations in a joint venture.
The makers of Miller Lite, Original Coors and Coors Light said they will share ownership equally in the new venture which they said should help them compete more effectively.
The industry leader in the United States is Anheuser-Busch Cos., maker of Budweiser, Michelob and Bud Light.
The financial terms of the deal were not disclosed.
The new company will be called MillerCoors, the companies said. London-based SABMiller, which brews Miller Lite as well as a slew of European beers, and Molson Coors, the brewer of Coors Light and the craft beer Blue Moon, will each have a 50 percent voting interest in the venture and have five representatives on its board of directors.
Under the terms of the agreement, the companies said they will conduct all of their U.S. business exclusively through the venture.
The companies project MillerCoors will have combined annual beer sales of 69 million U.S. barrels with revenue of about $6.6 billion.
Brewers Molson Coors Brewing Co. and SABMiller said Tuesday they will combine their U.S. operations in a joint venture.
The makers of Miller Lite, Original Coors and Coors Light said they will share ownership equally in the new venture which they said should help them compete more effectively.
The industry leader in the United States is Anheuser-Busch Cos., maker of Budweiser, Michelob and Bud Light.
The financial terms of the deal were not disclosed.
The new company will be called MillerCoors, the companies said. London-based SABMiller, which brews Miller Lite as well as a slew of European beers, and Molson Coors, the brewer of Coors Light and the craft beer Blue Moon, will each have a 50 percent voting interest in the venture and have five representatives on its board of directors.
Under the terms of the agreement, the companies said they will conduct all of their U.S. business exclusively through the venture.
The companies project MillerCoors will have combined annual beer sales of 69 million U.S. barrels with revenue of about $6.6 billion.
Monday, October 08, 2007
UAW SETS WEDNESDAY STRIKE DEADLINE FOR CHRYSLER
From The New York Times:
The United Automobile Workers union has set an 11 a.m. Wednesday deadline in its bid to reach a new four-year contract with Chrysler, a Chrysler spokeswoman said this morning.
The deadline appeared to be an effort to keep the talks from dragging on for days as they did at General Motors last month, where the contract covering 73,000 workers expired on Sept. 14. After talking for nine days, the union walked out for two days before reaching a deal on Sept. 26.
People with direct knowledge of the negotiations said Sunday night that a deadline had been set, and the deadline was confirmed today by Michele Tinson, a Chrysler spokeswoman.
If the deadline passes without a deal, the union could strike the company, or it could extend its contract hour to hour, as it initially did at G.M., one person with direct knowledge of the talks said today. The U.A.W. could also set aside the talks with Chrysler and seek a deal first with the Ford Motor Company, said this person, who spoke on anonymity because the discussions are private.
The union and Chrysler officials intensified their talks on Friday and continued through the weekend. Discussions recessed late Sunday and resumed this morning.
The United Automobile Workers union has set an 11 a.m. Wednesday deadline in its bid to reach a new four-year contract with Chrysler, a Chrysler spokeswoman said this morning.
The deadline appeared to be an effort to keep the talks from dragging on for days as they did at General Motors last month, where the contract covering 73,000 workers expired on Sept. 14. After talking for nine days, the union walked out for two days before reaching a deal on Sept. 26.
People with direct knowledge of the negotiations said Sunday night that a deadline had been set, and the deadline was confirmed today by Michele Tinson, a Chrysler spokeswoman.
If the deadline passes without a deal, the union could strike the company, or it could extend its contract hour to hour, as it initially did at G.M., one person with direct knowledge of the talks said today. The U.A.W. could also set aside the talks with Chrysler and seek a deal first with the Ford Motor Company, said this person, who spoke on anonymity because the discussions are private.
The union and Chrysler officials intensified their talks on Friday and continued through the weekend. Discussions recessed late Sunday and resumed this morning.
Sunday, October 07, 2007
ATTITUDES TOWARD GLOBAL TRADE, FOREIGN COMPANIES, FREE MARKETS, AND MORE
Want to know how people around the world feel about issues such as global trade, free markets, and immigration? Check out the summary of results from the Pew Global Attitudes Project. If you are pressed for time, then just examine the charts and graphs. I think you will find some of the results surprising. The "Wealth and Religiosity" graph was particularly interesting to me and does a good job of illustrating different perspectives globally regarding religion, morality, values, and wealth. For that matter, one does not need to think globally about such issues to find different perspectives, as there is quite a split here in the United States.
Saturday, October 06, 2007
GM & UAW TO CREATE NATIONAL INSTITUTE FOR HEALTH CARE REFORM
From The New York Times:
For years, General Motors has said it supports the United Automobile Workers union in its push for change in the nation’s health care system. Now the U.A.W. has persuaded G.M. to put its money where its mouth is.
In a labor agreement reached last week between the company and the union, G.M. has agreed to spend up to $15 million over the next few years to create a National Institute for Health Care Reform.
The institute, run by G.M. and the U.A.W., would engage economists, analysts, academics and other experts, who would conduct studies on the current health care system as well as alternatives. It would look at ways to lower drug costs and would sponsor forums on health care changes.
A G.M. spokeswoman, Michelle Bunker, said the company had not specifically called for a single-payer health care plan, in which a government program would be created to offer health care benefits.
But she said G.M. “believes that all Americans should have access to insurance, and we are working with key players to make sure that everyone has high-quality care at low cost.”
Although G.M. is making the initial investment, Ford Motor and Chrysler also would make proportional contributions, if they agree to similar terms in their new contracts with the U.A.W., according to the contract language.
The U.A.W. has supported national health care for generations. It was a primary focus for Walter P. Reuther, one of the union’s founders. He began arguing in favor of universal health care after World War II, and was one of the forces behind the creation of Medicare for older Americans.
Mr. Reuther’s successor, Leonard Woodcock, urged American businesses in 1970 to support a national health care plan as a way to fight raging health care inflation.
In the absence of a national system, the union instead secured generous health care benefits for its members and retirees, which have since added up to a $55 billion liability for G.M. and a nearly $100 billion liability for the industry over all.
For years, General Motors has said it supports the United Automobile Workers union in its push for change in the nation’s health care system. Now the U.A.W. has persuaded G.M. to put its money where its mouth is.
In a labor agreement reached last week between the company and the union, G.M. has agreed to spend up to $15 million over the next few years to create a National Institute for Health Care Reform.
The institute, run by G.M. and the U.A.W., would engage economists, analysts, academics and other experts, who would conduct studies on the current health care system as well as alternatives. It would look at ways to lower drug costs and would sponsor forums on health care changes.
A G.M. spokeswoman, Michelle Bunker, said the company had not specifically called for a single-payer health care plan, in which a government program would be created to offer health care benefits.
But she said G.M. “believes that all Americans should have access to insurance, and we are working with key players to make sure that everyone has high-quality care at low cost.”
Although G.M. is making the initial investment, Ford Motor and Chrysler also would make proportional contributions, if they agree to similar terms in their new contracts with the U.A.W., according to the contract language.
The U.A.W. has supported national health care for generations. It was a primary focus for Walter P. Reuther, one of the union’s founders. He began arguing in favor of universal health care after World War II, and was one of the forces behind the creation of Medicare for older Americans.
Mr. Reuther’s successor, Leonard Woodcock, urged American businesses in 1970 to support a national health care plan as a way to fight raging health care inflation.
In the absence of a national system, the union instead secured generous health care benefits for its members and retirees, which have since added up to a $55 billion liability for G.M. and a nearly $100 billion liability for the industry over all.
Friday, October 05, 2007
JURY FINDS WOMAN GUILTY OF MUSIC PIRACY, CHARGES HER $9,250 PER SONG
From Wired:
Jammie Thomas, a single mother of two, was found liable Thursday for copyright infringement in the nation's first file-sharing case to go before a jury.
Twelve jurors here said the Minnesota woman must pay $9,250 for each of 24 shared songs that were the subject of the lawsuit, amounting to $222,000 in penalties.
They could have dinged her for up to $3.6 million in damages, or awarded as little as $18,000. She was found liable for infringing songs from bands such as Journey, Green Day, Aerosmith and others.
After the verdict was read, Thomas and her attorney left the courthouse without comment. The jurors also declined to talk to reporters.
The verdict, coming after two days of testimony and about five hours of deliberations, was a mixed victory for the RIAA, which has brought more than 20,000 lawsuits in the last four years as part of its zero-tolerance policy against pirating. The outcome is likely to embolden the RIAA, which began targeting individuals in lawsuits after concluding the legal system could not keep pace with the ever growing number of file-sharing sites and services.
"This is what can happen if you don't settle," RIAA attorney Richard Gabriel told reporters outside the courthouse. "I think we have sent a message we are willing to go to trial."
According to BigChampagne, an online measuring service, the number of peer-to-peer users unlawfully trading goods has nearly tripled since 2003, when the RIAA began legal onslaught targeting individuals.
At the time, BigChampagne says, there were about 3.8 million file sharers trading over the internet at a given moment. Now, the group has measured a record 9 million users trading at the same time. Roughly 70 percent of trading involves digital music, according to BigChampagne.
Jammie Thomas, a single mother of two, was found liable Thursday for copyright infringement in the nation's first file-sharing case to go before a jury.
Twelve jurors here said the Minnesota woman must pay $9,250 for each of 24 shared songs that were the subject of the lawsuit, amounting to $222,000 in penalties.
They could have dinged her for up to $3.6 million in damages, or awarded as little as $18,000. She was found liable for infringing songs from bands such as Journey, Green Day, Aerosmith and others.
After the verdict was read, Thomas and her attorney left the courthouse without comment. The jurors also declined to talk to reporters.
The verdict, coming after two days of testimony and about five hours of deliberations, was a mixed victory for the RIAA, which has brought more than 20,000 lawsuits in the last four years as part of its zero-tolerance policy against pirating. The outcome is likely to embolden the RIAA, which began targeting individuals in lawsuits after concluding the legal system could not keep pace with the ever growing number of file-sharing sites and services.
"This is what can happen if you don't settle," RIAA attorney Richard Gabriel told reporters outside the courthouse. "I think we have sent a message we are willing to go to trial."
According to BigChampagne, an online measuring service, the number of peer-to-peer users unlawfully trading goods has nearly tripled since 2003, when the RIAA began legal onslaught targeting individuals.
At the time, BigChampagne says, there were about 3.8 million file sharers trading over the internet at a given moment. Now, the group has measured a record 9 million users trading at the same time. Roughly 70 percent of trading involves digital music, according to BigChampagne.
MINIMIZING LIABILITY BY CHOOSING THE RIGHT FORM OF BUSINESS OWNERSHIP STRUCTURE
Yesterday I stumbled upon this column that describes the benefits of choosing the correct form of business ownership structure. Since we are covering this in class now, and it is certain to be a part of the upcoming midterm, I'm including a link. Check it out at businessweek.com.
SEPTEMBER JOBS REPORT MODESTLY POSITIVE DESPITE SMALL UNEMPLOYMENT RATE INCREASE
You can view the official release at the Bureau of Labor Statistics.
From USA Today:
Employers added 110,000 workers in September, fastest rate in four months, but the unemployment rate ticked up to the highest level in more than a year as companies didn't add enough jobs to absorb a steady stream of people coming into the labor force.
The numbers suggest that the job market, although it has lost some steam, is still relatively healthy.
"Slowdown in place — but no collapse nor recession," Wachovia chief economist John Silvia said in a note to clients.
The seasonally adjusted 110,000 workers that companies and the government added in September was the biggest increase since May, the Labor Department said. And in a big reversal, the department revised its estimate of job creation in August to a positive 89,000 after saying last month that employers cut workers for the first time in four years.
But despite the payroll gains, the unemployment rate rose to 4.7% in September from 4.6% in August, to the highest rate since August 2006. The increase came as the number of people entering the labor force jumped in September after dropping in August. While most of those people were hired, not everyone was able to find work.
From USA Today:
Employers added 110,000 workers in September, fastest rate in four months, but the unemployment rate ticked up to the highest level in more than a year as companies didn't add enough jobs to absorb a steady stream of people coming into the labor force.
The numbers suggest that the job market, although it has lost some steam, is still relatively healthy.
"Slowdown in place — but no collapse nor recession," Wachovia chief economist John Silvia said in a note to clients.
The seasonally adjusted 110,000 workers that companies and the government added in September was the biggest increase since May, the Labor Department said. And in a big reversal, the department revised its estimate of job creation in August to a positive 89,000 after saying last month that employers cut workers for the first time in four years.
But despite the payroll gains, the unemployment rate rose to 4.7% in September from 4.6% in August, to the highest rate since August 2006. The increase came as the number of people entering the labor force jumped in September after dropping in August. While most of those people were hired, not everyone was able to find work.
Thursday, October 04, 2007
ECB AND BANK OF ENGLAND HOLD INTEREST RATES
From The New York Times:
The European Central Bank held its benchmark interest rate steady at 4 percent on Thursday, resisting pressure for a cut in the face of a rising euro that some fear will hurt Europe's economies.
Markets will be paying close attention to what ECB President Jean-Claude Trichet says about how the central bank plans to ward off more disruption from U.S. subprime credit woes and the dollar, which has weakened since the U.S. Federal Reserve made a larger-than-expected rate cut.
In London, the Bank of England decided to leave its key interest rate unchanged at 5.75 percent, a move most analysts had predicted. Howard Archer, chief U.K. and European economist at Global Insight, said a move by the British bank to cut rates would have been premature.
"Indeed, a cutting of interest rates at this stage could have been seen as a panic move and risked damaging the bank's anti-inflation credibility," he said in a statement.
The European Central Bank held its benchmark interest rate steady at 4 percent on Thursday, resisting pressure for a cut in the face of a rising euro that some fear will hurt Europe's economies.
Markets will be paying close attention to what ECB President Jean-Claude Trichet says about how the central bank plans to ward off more disruption from U.S. subprime credit woes and the dollar, which has weakened since the U.S. Federal Reserve made a larger-than-expected rate cut.
In London, the Bank of England decided to leave its key interest rate unchanged at 5.75 percent, a move most analysts had predicted. Howard Archer, chief U.K. and European economist at Global Insight, said a move by the British bank to cut rates would have been premature.
"Indeed, a cutting of interest rates at this stage could have been seen as a panic move and risked damaging the bank's anti-inflation credibility," he said in a statement.
NORTH KOREA TAKES PROMISING FIRST STEPS TOWARD JOINING THE INTERNATIONAL COMMUNITY
From USA Today:
The South Korean president signed a commitment with North Korea Thursday to seek a formal end to the Korean War, ending a historic three-day summit during which he was snubbed by his host and upstaged by a nuclear agreement 600 miles away in Beijing.
South Korea never signed the cease fire that ended hostilities in the 1950-53 Korean War; so the two Koreas have remained technically at war ever since. In their declaration Thursday in the northern capital Pyongyang, South Korean President Roh Moo Hyun and North Korean dictator Kim Jong Il agreed to pursue a permanent peace. South Korea has said it will need to work with the other combatants in the Korean war — China and the United States — to reach a formal peace deal. President Bush has said there can be no permanent peace on the Korean peninsula until North Korea gives up nuclear arms.
In their 8-point agreement Thursday, the wealthy South and destitute North also promised to expand economic cooperation, open regular freight service along a recently restored rail link and create a joint fishing zone on their disputed sea frontier.
But the lofty pronouncements in Pyongyang were overshadowed by a nuclear deal late Wednesday in Beijing: In talks with five other countries, North Korea agreed to complete the disabling of its nuclear facilities at Yongbyon and reveal all its nuclear programs by the end of the year.
In return, the isolated Stalinist state will get the equivalent of one million tons of heavy fuel oil in energy, economic and humanitarian assistance, and the United States will work toward establishing normal diplomatic relations with North Korea and taking it off a blacklist of countries that sponsor terrorism.
The South Korean president signed a commitment with North Korea Thursday to seek a formal end to the Korean War, ending a historic three-day summit during which he was snubbed by his host and upstaged by a nuclear agreement 600 miles away in Beijing.
South Korea never signed the cease fire that ended hostilities in the 1950-53 Korean War; so the two Koreas have remained technically at war ever since. In their declaration Thursday in the northern capital Pyongyang, South Korean President Roh Moo Hyun and North Korean dictator Kim Jong Il agreed to pursue a permanent peace. South Korea has said it will need to work with the other combatants in the Korean war — China and the United States — to reach a formal peace deal. President Bush has said there can be no permanent peace on the Korean peninsula until North Korea gives up nuclear arms.
In their 8-point agreement Thursday, the wealthy South and destitute North also promised to expand economic cooperation, open regular freight service along a recently restored rail link and create a joint fishing zone on their disputed sea frontier.
But the lofty pronouncements in Pyongyang were overshadowed by a nuclear deal late Wednesday in Beijing: In talks with five other countries, North Korea agreed to complete the disabling of its nuclear facilities at Yongbyon and reveal all its nuclear programs by the end of the year.
In return, the isolated Stalinist state will get the equivalent of one million tons of heavy fuel oil in energy, economic and humanitarian assistance, and the United States will work toward establishing normal diplomatic relations with North Korea and taking it off a blacklist of countries that sponsor terrorism.
Wednesday, October 03, 2007
WAL-MART FORCED TO PAY ADDITIONAL $62 MILLION TO PENNSYLVANIA WORKERS
From USA Today:
Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.
About 125,000 people will receive $500 each in liquidated damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.
"By this statute the legislature created significant financial incentives for employers to pay workers all the money they've earned by their hard work," Philadelphia Common Pleas Judge Mark Bernstein wrote.
"The law in its majesty applies equally to highly paid executives and minimum wage clerks," he wrote.
A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.
Similar suits charging that Wal-Mart violated state wage laws are in play across the country.
A California trial ended with a $172 million verdict that Wal-Mart is appealing while the Bentonville, Ark.-based company settled a Colorado suit for $50 million.
A trial opened last week in Minnesota while suits are pending in New Jersey and several other states.
Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.
About 125,000 people will receive $500 each in liquidated damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.
"By this statute the legislature created significant financial incentives for employers to pay workers all the money they've earned by their hard work," Philadelphia Common Pleas Judge Mark Bernstein wrote.
"The law in its majesty applies equally to highly paid executives and minimum wage clerks," he wrote.
A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.
Similar suits charging that Wal-Mart violated state wage laws are in play across the country.
A California trial ended with a $172 million verdict that Wal-Mart is appealing while the Bentonville, Ark.-based company settled a Colorado suit for $50 million.
A trial opened last week in Minnesota while suits are pending in New Jersey and several other states.
MICROSOFT UPDATES ZUNE
From The New York Times:Microsoft has revamped its slow-selling Zune digital music players and created a MySpace-style social-networking site in its drive to compete with Apple’s market-leading iPod player.
In large part, the Microsoft moves announced Tuesday — the introduction of a smaller, sleeker version of the Zune player and the planned Zune Social Web site — reflect an attempt to build scale for a brand that so far has achieved only niche status. Microsoft said it had sold about 1.2 million units of the original device in the last year.
Many of the changes are stylistic. The company reworked the device’s navigation button and dropped one of its signature colors, brown, from the list of options. The Zune will be available in black, pink, green and red.
But one of the most striking changes had to do with Microsoft’s effort to enhance what had been perhaps the most talked-about feature on the original device: the ability to share music files and other media wirelessly with other Zune owners. Far too few people, however, purchased the player for such sharing to become commonplace, and the function held little appeal because it was crippled by usage rules negotiated with the music industry. Shared songs expired within a few days, even if the recipient did not play them. And a file acquired from one Zune user could not be shared with a third user.
Under the new rules, Microsoft said, shared songs would have no expiration date and it would be possible repeatedly to pass along songs sent from one device to another. But a shared file can be played only three times on each Zune.
A version with 80 gigabytes of storage, available only in black, will sell for $250. A version using flash memory with 8 gigabytes of storage will sell for $200, and the 4-gigabyte flash player will cost $150, the company said.
Saturday, September 29, 2007
U.S. ONLINE-ONLY BANK FAILS
From the Sunday Times of London:
NETBANK, a pioneering internet-based bank, has been shut down by US regulators in the biggest American banking collapse for 14 years.
The bank’s failure, revealed late on Friday night, comes as financial groups are still reeling from the fallout of America’s sub-prime mortgage crisis and recent freeze in credit markets.
NetBank is the largest US bank to fail since the savings-and-loans crisis in the early 1990s. The bank, based in Georgia and launched in the late 1990s, had $2.5 billion in assets and was seen as a leading inter-net-only savings bank. The Office of Thrift Supervision, which regulates American lenders, blamed the bank’s demise on thumping loan losses and poor underwriting standards.
NetBank’s problems were made worse by its decision to expand into sub-prime mortgages, leaving it exposed to the meltdown in the US housing market.
ING, the Dutch bank, is taking over NetBank’s customers and $1.5 billion in insured savings deposits. It paid just $15m for the savings book.
NETBANK, a pioneering internet-based bank, has been shut down by US regulators in the biggest American banking collapse for 14 years.
The bank’s failure, revealed late on Friday night, comes as financial groups are still reeling from the fallout of America’s sub-prime mortgage crisis and recent freeze in credit markets.
NetBank is the largest US bank to fail since the savings-and-loans crisis in the early 1990s. The bank, based in Georgia and launched in the late 1990s, had $2.5 billion in assets and was seen as a leading inter-net-only savings bank. The Office of Thrift Supervision, which regulates American lenders, blamed the bank’s demise on thumping loan losses and poor underwriting standards.
NetBank’s problems were made worse by its decision to expand into sub-prime mortgages, leaving it exposed to the meltdown in the US housing market.
ING, the Dutch bank, is taking over NetBank’s customers and $1.5 billion in insured savings deposits. It paid just $15m for the savings book.
iPHONE TURNS TO iBRICK AFTER SOFTWARE UPDATE
From The New York Times:
Since the iPhone hit the market in June, tech-savvy owners of the phone have been busy messing with its insides, figuring out how to add unauthorized software and even “unlock” it for use on networks other than AT&T’s.
But the Web was filled Friday with complaints from people who had installed the latest iPhone software update, only to see all the fun little programs they had been adding to their iPhones disappear — or, still worse, see their phones freeze up entirely.
Since Monday, Apple officials have been warning iPhone owners that using unlocking software could cause the phone to become “permanently inoperable when a future Apple-supplied iPhone software update is installed.” But in many cases those warnings went unheeded.
People who had unlocked their phones to use them with another carrier ran the greatest risk of, in techie terms, having them “bricked” — rendered about as useful as a brick. Most of those who committed the lesser transgression of installing programs not authorized by Apple simply had those programs wiped out.
People have created dozens of programs for the iPhone, ranging from the useless but entertaining (a virtual popcorn popper) to the decidedly practical (a screen-shot capture program).
But for anyone who upgrades the iPhone’s system software, a routine process that adds Apple’s latest fixes and improvements, those programs can no longer be used. The update has made the iPhone “almost impervious to any third-party hacks,” said Erica Sadun, a technical writer in Denver who has created more than a dozen programs for the iPhone, including the screen-shot program and a popular voice recorder.
Jennifer Bowcock, an Apple spokeswoman, said that when people went to update their software with their computer through iTunes, a warning appeared on the computer screen, making it clear that any unauthorized modifications to the iPhone software violated the agreement that people entered into when they bought the phone. “The inability to use your phone after making unauthorized modifications isn’t covered under the iPhone warranty” Ms. Bowcock said.
Since the iPhone hit the market in June, tech-savvy owners of the phone have been busy messing with its insides, figuring out how to add unauthorized software and even “unlock” it for use on networks other than AT&T’s.
But the Web was filled Friday with complaints from people who had installed the latest iPhone software update, only to see all the fun little programs they had been adding to their iPhones disappear — or, still worse, see their phones freeze up entirely.
Since Monday, Apple officials have been warning iPhone owners that using unlocking software could cause the phone to become “permanently inoperable when a future Apple-supplied iPhone software update is installed.” But in many cases those warnings went unheeded.
People who had unlocked their phones to use them with another carrier ran the greatest risk of, in techie terms, having them “bricked” — rendered about as useful as a brick. Most of those who committed the lesser transgression of installing programs not authorized by Apple simply had those programs wiped out.
People have created dozens of programs for the iPhone, ranging from the useless but entertaining (a virtual popcorn popper) to the decidedly practical (a screen-shot capture program).
But for anyone who upgrades the iPhone’s system software, a routine process that adds Apple’s latest fixes and improvements, those programs can no longer be used. The update has made the iPhone “almost impervious to any third-party hacks,” said Erica Sadun, a technical writer in Denver who has created more than a dozen programs for the iPhone, including the screen-shot program and a popular voice recorder.
Jennifer Bowcock, an Apple spokeswoman, said that when people went to update their software with their computer through iTunes, a warning appeared on the computer screen, making it clear that any unauthorized modifications to the iPhone software violated the agreement that people entered into when they bought the phone. “The inability to use your phone after making unauthorized modifications isn’t covered under the iPhone warranty” Ms. Bowcock said.
SOME POSITIVE ECONOMIC NEWS, FINALLY
Although surveys indicate that consumer confidence is falling, consumer spending was on the rise in August. And, while inflation is a concern, core PCE, an inflation figure favored by the Federal Reserve that excludes food and energy, came in at an acceptable 1.8% on an annual basis.
From The New York Times:
Americans made more purchases than expected in August and a crucial inflation indicator cooled, the Commerce Department said yesterday, two indications that the economy is still somewhat insulated from turmoil in the residential housing market.
Consumer spending rose a better-than-forecast 0.6 percent last month, the largest uptick since April, led by strong sales of durable goods. Income increased 0.3 percent, down from a 0.5 percent rise in July but in line with Wall Street forecasts. The rate of wage increases was also slightly down from July.
Consumers also caught a break on rising prices in August. A closely watched inflation gauge, the core personal consumption expenditure deflator, posted its smallest year-over-year gain since February 2004. The core deflator index, which excludes food and energy prices, rose 1.8 percent on an annual basis, continuing a downward trend that stretches back to February.
From The New York Times:
Americans made more purchases than expected in August and a crucial inflation indicator cooled, the Commerce Department said yesterday, two indications that the economy is still somewhat insulated from turmoil in the residential housing market.
Consumer spending rose a better-than-forecast 0.6 percent last month, the largest uptick since April, led by strong sales of durable goods. Income increased 0.3 percent, down from a 0.5 percent rise in July but in line with Wall Street forecasts. The rate of wage increases was also slightly down from July.
Consumers also caught a break on rising prices in August. A closely watched inflation gauge, the core personal consumption expenditure deflator, posted its smallest year-over-year gain since February 2004. The core deflator index, which excludes food and energy prices, rose 1.8 percent on an annual basis, continuing a downward trend that stretches back to February.
Thursday, September 27, 2007
DETAILS OF GM/UAW DEAL BEGIN TO EMERGE
From The New York Times:
For a generation, executives at the Detroit auto companies have complained that the huge cost of providing generous benefits for its unionized workers put them at a competitive disadvantage with surging foreign car companies like Toyota and Honda.
Now, with a new contract agreement with the United Automobile Workers reached before dawn yesterday, General Motors has taken a momentous step toward eliminating much of that burden, a step likely to be followed by Ford Motor and Chrysler.
The contract’s main feature — a health care trust called a voluntary employee benefit association, or VEBA — means that G.M. will no longer have to carry the debt it will owe for employee and retiree health care benefits on its books. Earlier this year, G.M.’s chief executive, Rick Wagoner, referred to those obligations as “very large and frankly formidable.”
That debt is estimated at $55 billion for the next 80 years. So G.M. will establish the trust with about 70 percent of that amount, making an upfront payment of cash, stock and other assets. The difference is expected to come from gains on investments by the trust.
In return, the union won guarantees that medical benefits for hourly workers and retirees and their families will remain in place for the next two years. G.M. will also invest money in its American plants, and will maintain its current union work force of 73,000, according to Ron Gettelfinger, the U.A.W. president.
For a generation, executives at the Detroit auto companies have complained that the huge cost of providing generous benefits for its unionized workers put them at a competitive disadvantage with surging foreign car companies like Toyota and Honda.
Now, with a new contract agreement with the United Automobile Workers reached before dawn yesterday, General Motors has taken a momentous step toward eliminating much of that burden, a step likely to be followed by Ford Motor and Chrysler.
The contract’s main feature — a health care trust called a voluntary employee benefit association, or VEBA — means that G.M. will no longer have to carry the debt it will owe for employee and retiree health care benefits on its books. Earlier this year, G.M.’s chief executive, Rick Wagoner, referred to those obligations as “very large and frankly formidable.”
That debt is estimated at $55 billion for the next 80 years. So G.M. will establish the trust with about 70 percent of that amount, making an upfront payment of cash, stock and other assets. The difference is expected to come from gains on investments by the trust.
In return, the union won guarantees that medical benefits for hourly workers and retirees and their families will remain in place for the next two years. G.M. will also invest money in its American plants, and will maintain its current union work force of 73,000, according to Ron Gettelfinger, the U.A.W. president.
Wednesday, September 26, 2007
GM & UAW REACH TENTATIVE AGREEMENT
From The New York Times:
The United Automobile Workers union and General Motors reached a landmark agreement early today, ending a two-day strike. The key provision of the new contract is a health care trust that would get G.M.’s massive liability off its books.
The deal was announced by the company and the union in separate statements. The U.A.W. had walked out on G.M. on Monday morning, but production will resume this afternoon.
G.M. said the tentative agreement was reached at 3:05 a.m. Eastern. The U.A.W. recessed the strike and said if the contract was not ratified, workers could return to picket lines. The agreement included a memorandum of understanding to establish an independent health care trust, as well as other changes to the national agreement.
G.M. said implementation of the trust would be subject to court approval, as well as a review by G.M.’s accounting for the trust by the Securities and Exchange Commission.
The memorandum apparently establishes the principle of the trust, and allows the two sides to complete its details later. Analysts had predicted the union and the company might have to take that step, because of the complexity of such a trust.
“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the G.M./U.A.W. relationship,” Rick Wagoner, G.M.’s chief executive, said in a statement.
The union’s president, Ron Gettelfinger, said the new contract “will absolutely protect their jobs and keep jobs from being reduced.” He said, while not offering specifics, that the number of jobs at G.M. would be “pretty much the same if not higher” when the contract concludes in 2011.
Later, Mr. Gettelfinger confirmed in a radio interview that there was a signing bonus for workers, but declined to state its size. He also declined comment on reports that the contract contained a two-tier wage program, with sharply lower rates for any new workers hired by G.M.
The United Automobile Workers union and General Motors reached a landmark agreement early today, ending a two-day strike. The key provision of the new contract is a health care trust that would get G.M.’s massive liability off its books.
The deal was announced by the company and the union in separate statements. The U.A.W. had walked out on G.M. on Monday morning, but production will resume this afternoon.
G.M. said the tentative agreement was reached at 3:05 a.m. Eastern. The U.A.W. recessed the strike and said if the contract was not ratified, workers could return to picket lines. The agreement included a memorandum of understanding to establish an independent health care trust, as well as other changes to the national agreement.
G.M. said implementation of the trust would be subject to court approval, as well as a review by G.M.’s accounting for the trust by the Securities and Exchange Commission.
The memorandum apparently establishes the principle of the trust, and allows the two sides to complete its details later. Analysts had predicted the union and the company might have to take that step, because of the complexity of such a trust.
“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the G.M./U.A.W. relationship,” Rick Wagoner, G.M.’s chief executive, said in a statement.
The union’s president, Ron Gettelfinger, said the new contract “will absolutely protect their jobs and keep jobs from being reduced.” He said, while not offering specifics, that the number of jobs at G.M. would be “pretty much the same if not higher” when the contract concludes in 2011.
Later, Mr. Gettelfinger confirmed in a radio interview that there was a signing bonus for workers, but declined to state its size. He also declined comment on reports that the contract contained a two-tier wage program, with sharply lower rates for any new workers hired by G.M.
Tuesday, September 25, 2007
EXISTING HOME SALES & CONSUMER CONFIDENCE DECLINE
From The New York Times:
Purchases of previously owned homes in August dropped 4.3 percent from July, sending sales to a five-year low, the National Association of Realtors said this morning. The annual sales rate fell to 5.50 million from 5.75 million in July. Existing home sales are down nearly 13 percent over the last 12 months.
The bad news in the housing sector was coupled with a discouraging report on consumer confidence from the Conference Board, whose index dropped to 99.8 in September from 105.6 in August, much more than forecast. The index is now at its lowest level in nearly two years. A weak job market and stagnant salary growth has caused anxiety among consumers, analysts said, suggesting potential declines in consumer spending and job creation over the coming months.
Purchases of previously owned homes in August dropped 4.3 percent from July, sending sales to a five-year low, the National Association of Realtors said this morning. The annual sales rate fell to 5.50 million from 5.75 million in July. Existing home sales are down nearly 13 percent over the last 12 months.
The bad news in the housing sector was coupled with a discouraging report on consumer confidence from the Conference Board, whose index dropped to 99.8 in September from 105.6 in August, much more than forecast. The index is now at its lowest level in nearly two years. A weak job market and stagnant salary growth has caused anxiety among consumers, analysts said, suggesting potential declines in consumer spending and job creation over the coming months.
Monday, September 24, 2007
GM UAW WORKERS GO ON STRIKE
From AP via MSNBC:
Thousands of United Auto Workers walked off the job at General Motors plants around the country Monday in the first nationwide strike against the U.S. auto industry since 1976.
UAW President Ron Gettelfinger said that job security was the top unresolved issue, adding that the talks did not stumble over a groundbreaking provision establishing a UAW-managed trust that will administer GM's retiree health care obligations. Gettelfinger complained about "one-sided negotiations."
Workers walked off the job and began picketing Monday outside GM plants after the late morning UAW strike deadline passed. The UAW has 73,000 members who work for GM at 82 U.S. facilities, including assembly and parts plants and warehouses.
General Motors Corp. had been pushing hard in the negotiations for the health care trust — known as a Voluntary Employees Beneficiary Association, or VEBA — so it could move $51 billion in unfunded retiree health costs off its books. GM has nearly 339,000 retirees and surviving spouses.
"This strike is not about the VEBA in any way shape or form," Gettelfinger said at an afternoon news conference in Detroit.
"The No. 1 issue here is job security," Gettelfinger later said, adding that the union also was fighting to preserve workers' benefits.
It remained to be seen what effect the strike would have on the automaker and consumers. The company has sufficient stocks of just about every product to withstand a short strike, according to Tom Libby, senior director of industry analysis for J.D. Power and Associates.
Thousands of United Auto Workers walked off the job at General Motors plants around the country Monday in the first nationwide strike against the U.S. auto industry since 1976.
UAW President Ron Gettelfinger said that job security was the top unresolved issue, adding that the talks did not stumble over a groundbreaking provision establishing a UAW-managed trust that will administer GM's retiree health care obligations. Gettelfinger complained about "one-sided negotiations."
Workers walked off the job and began picketing Monday outside GM plants after the late morning UAW strike deadline passed. The UAW has 73,000 members who work for GM at 82 U.S. facilities, including assembly and parts plants and warehouses.
General Motors Corp. had been pushing hard in the negotiations for the health care trust — known as a Voluntary Employees Beneficiary Association, or VEBA — so it could move $51 billion in unfunded retiree health costs off its books. GM has nearly 339,000 retirees and surviving spouses.
"This strike is not about the VEBA in any way shape or form," Gettelfinger said at an afternoon news conference in Detroit.
"The No. 1 issue here is job security," Gettelfinger later said, adding that the union also was fighting to preserve workers' benefits.
It remained to be seen what effect the strike would have on the automaker and consumers. The company has sufficient stocks of just about every product to withstand a short strike, according to Tom Libby, senior director of industry analysis for J.D. Power and Associates.
Sunday, September 23, 2007
SOME EUROPEANS FEAR POSSIBLE DOWNSIDE OF A STRONG EURO
From The New York Times:
Fears of an abrupt economic slowdown in Europe deepened on Friday, after the release of weaker-than-expected data and another record in the euro’s relentless rise against the dollar.
Europe’s stampeding currency prompted a warning from the plane maker Airbus that it might have to cut costs more deeply than expected to restore its troubled operations to financial health.
“If the euro remained durably at $1.45, that would mean we have to find 1 billion euros in additional savings,” Fabrice Brégier, the chief operating officer, said in an interview with a French radio station. The euro briefly traded at $1.41 on Friday morning before falling back slightly. It was at $1.4091 in late trading in New York.
Most European exporters have weathered the rally without complaint, having cut costs and hedged their exposure, either financially or by moving production to countries that do not use the euro.
But a noisy minority is starting to agitate, and political leaders, notably in France, have picked up their concerns, lobbying the European Central Bank to take steps to stem the euro’s appreciation.
“We hope the E.C.B., at its meeting in October, will examine the consequences and take appropriate action,” the French finance minister, Christine Lagarde, said during a visit to China on Friday.
Airbus is particularly vulnerable because it earns all its revenue in dollars and incurs about half of its operating costs in euros. That puts it at a big disadvantage to its American rival, Boeing.
Under its existing plan, Airbus plans to cut 2 billion euros ($2.8 billion) a year in costs by 2010, through the sale of several factories and the elimination of 10,000 jobs. In his radio interview, Mr. Brégier said the cost-cutting plan was predicated on a euro exchange rate of $1.35.
Fears of an abrupt economic slowdown in Europe deepened on Friday, after the release of weaker-than-expected data and another record in the euro’s relentless rise against the dollar.
Europe’s stampeding currency prompted a warning from the plane maker Airbus that it might have to cut costs more deeply than expected to restore its troubled operations to financial health.
“If the euro remained durably at $1.45, that would mean we have to find 1 billion euros in additional savings,” Fabrice Brégier, the chief operating officer, said in an interview with a French radio station. The euro briefly traded at $1.41 on Friday morning before falling back slightly. It was at $1.4091 in late trading in New York.
Most European exporters have weathered the rally without complaint, having cut costs and hedged their exposure, either financially or by moving production to countries that do not use the euro.
But a noisy minority is starting to agitate, and political leaders, notably in France, have picked up their concerns, lobbying the European Central Bank to take steps to stem the euro’s appreciation.
“We hope the E.C.B., at its meeting in October, will examine the consequences and take appropriate action,” the French finance minister, Christine Lagarde, said during a visit to China on Friday.
Airbus is particularly vulnerable because it earns all its revenue in dollars and incurs about half of its operating costs in euros. That puts it at a big disadvantage to its American rival, Boeing.
Under its existing plan, Airbus plans to cut 2 billion euros ($2.8 billion) a year in costs by 2010, through the sale of several factories and the elimination of 10,000 jobs. In his radio interview, Mr. Brégier said the cost-cutting plan was predicated on a euro exchange rate of $1.35.
Friday, September 21, 2007
INTEL IS THE EUROPEAN COMMISSION'S NEXT TARGET
In the wake of the ruling against Microsoft this week, Intel seems to be the next target for the E.U. in terms of anti-competitive behavior. Rival AMD has complained since 2000 that Intel has used questionable practices, seemingly legal in the United States, but perhaps illegal in the E.U. In July of this year the European Commission charged Intel with illegal use of sales tactics such as rebates and incentives to maintain or increase its market share in microprocessors.
From BusinessWeek:
The EC cases against Microsoft and Intel are based on different kinds of alleged market abuse and draw on separate legal precedents. But both reflect a widening gap in how the U.S. and Europe view the legality of hardball business tactics by dominant companies. While regulators in both regions look for signs of harm to consumers from monopoly behavior, Europe gives as much or more weight to the impact on competitors.
That distinction played a critical role in the Microsoft ruling. On the face of it, Microsoft's free inclusion of Media Player in Windows was a boon to consumers. But the EC was able to show that the software bundling harmed rivals such as Real Networks and Apple and reduced competition in the media player market—thus potentially hurting customers in the long run by leading to less choice in digital content formats. A similar argument held that by limiting the information it gave out about Windows networking standards, Microsoft had foreclosed competition in desktop and server operating systems, to the detriment of consumer choice.
The same kind of thinking is at the core of the commission's case against Intel. Prompted by complaints from rival chipmaker AMD dating back to 2000, the EC has charged Intel with illegal use of sales tactics such as rebates and incentives to maintain or increase its market share in microprocessors. Such programs are normally permissible but can cross the line into abuse when practiced by companies with monopoly market share.
Intel strongly denies any wrongdoing and says it has acted within the law with its market incentive programs. It also argues that the programs have led to lower chip prices for consumers.
That may not be enough of a defense in Europe—especially now that the commission's hand has been strengthened in the wake of the Microsoft defeat. "European authorities and courts put a higher duty on dominant firms to deal fairly with their competitors," says Philip Marsden, a senior research fellow at the British Institute of International & Comparative Law. "They want to foster gentlemanly competition, a premise that is foreign to American antitrust thinking."
From BusinessWeek:
The EC cases against Microsoft and Intel are based on different kinds of alleged market abuse and draw on separate legal precedents. But both reflect a widening gap in how the U.S. and Europe view the legality of hardball business tactics by dominant companies. While regulators in both regions look for signs of harm to consumers from monopoly behavior, Europe gives as much or more weight to the impact on competitors.
That distinction played a critical role in the Microsoft ruling. On the face of it, Microsoft's free inclusion of Media Player in Windows was a boon to consumers. But the EC was able to show that the software bundling harmed rivals such as Real Networks and Apple and reduced competition in the media player market—thus potentially hurting customers in the long run by leading to less choice in digital content formats. A similar argument held that by limiting the information it gave out about Windows networking standards, Microsoft had foreclosed competition in desktop and server operating systems, to the detriment of consumer choice.
The same kind of thinking is at the core of the commission's case against Intel. Prompted by complaints from rival chipmaker AMD dating back to 2000, the EC has charged Intel with illegal use of sales tactics such as rebates and incentives to maintain or increase its market share in microprocessors. Such programs are normally permissible but can cross the line into abuse when practiced by companies with monopoly market share.
Intel strongly denies any wrongdoing and says it has acted within the law with its market incentive programs. It also argues that the programs have led to lower chip prices for consumers.
That may not be enough of a defense in Europe—especially now that the commission's hand has been strengthened in the wake of the Microsoft defeat. "European authorities and courts put a higher duty on dominant firms to deal fairly with their competitors," says Philip Marsden, a senior research fellow at the British Institute of International & Comparative Law. "They want to foster gentlemanly competition, a premise that is foreign to American antitrust thinking."
INDEX OF LEADING ECONOMIC INDICATORS FALLS IN AUGUST
The Conference Board's Index of Leading Economic Indicators includes the following:
*Real money supply (M2)
*Index of consumer expectations
*Average weekly initial claims for unemployment insurance
*Stock prices
*Building permits
*Vendor performance
*Manufacturers' new orders for nondefense capital goods
*Interest rate spread
*Manufacturers' new orders for consumer goods and materials
*Average weekly manufacturing hours
It is considered a good indicator for economic performance for the next three to six months.
From The New York Times:
The index of leading economic indicators fell in August by the most in six months, reflecting lower consumer confidence and a rise in initial claims for unemployment insurance.
The indicators index, compiled by the Conference Board, declined 0.6 percent, more than forecast, after a 0.7 percent increase in July that was larger than initially reported, the group, based in New York, said yesterday. The index points to the direction of the economy over the next three to six months.
The data underlined concerns that the economy might be in danger of stalling as a real estate slump, tougher lending standards and a recently softer job market threaten consumer spending.
*Real money supply (M2)
*Index of consumer expectations
*Average weekly initial claims for unemployment insurance
*Stock prices
*Building permits
*Vendor performance
*Manufacturers' new orders for nondefense capital goods
*Interest rate spread
*Manufacturers' new orders for consumer goods and materials
*Average weekly manufacturing hours
It is considered a good indicator for economic performance for the next three to six months.
From The New York Times:
The index of leading economic indicators fell in August by the most in six months, reflecting lower consumer confidence and a rise in initial claims for unemployment insurance.
The indicators index, compiled by the Conference Board, declined 0.6 percent, more than forecast, after a 0.7 percent increase in July that was larger than initially reported, the group, based in New York, said yesterday. The index points to the direction of the economy over the next three to six months.
The data underlined concerns that the economy might be in danger of stalling as a real estate slump, tougher lending standards and a recently softer job market threaten consumer spending.
GATES TOPS FORBES 400 RICHEST AMERICANS
No surprise here. Bill Gates is the richest American with $59 billion and Warren Buffett is second with $52 billion.You can view the full rankings at Forbes.com.
This list includes only Americans. Interested in who is wealthier, Bill Gates or Mexican telephone mogul Carlos Slim Helú? As of August 31, 2007, they were even. Check out this article at Forbes.com for details.
Thursday, September 20, 2007
CANADIAN LOONIE EQUAL TO U.S. DOLLAR
From CNNMoney.com:The Canadian dollar reached parity with the U.S. dollar on Thursday for the first time since November 1976.
Known as the loonie because of the bird pictured on the one-dollar coin, the Canadian dollar has been gaining ground on its American counterpart since hitting an all-time low of 61.79 U.S. cents on Jan. 21, 2002.
This week the loonie rose sharply against its U.S. counterpart after the Federal Reserve announced a dramatic half-point cut in its benchmark interest rates. The Bank of Canada, meanwhile, has kept its equivalent rates stable.
As a result, the spread between U.S. and Canadian interest rates widened, making Canada a more attractive place for German, Japanese, American and other foreign investors to put their money.
"Canadians are getting a lot richer relative to Americans. The parity exchange rate is just one example of that," said Jeff Rubin, Chief Economist and Strategist at CIBC World Markets.
"It really reflects the rise of the resource economy in Canada and the rise of western Canada and the decline of the manufacturing sector and the manufacturing heartland of Canada in Ontario," Rubin said.
"The Canadian economy that once use to be the sleepy little resource backwater of the North American economy, is certainly turning the tables on its big brother in a hurry," Rubin said.
The high (Canadian) dollar will hurt Canadian manufacturers who sell goods in the U.S. Canadian Auto Workers economist Jim Stanford warned that the sector, largely based in Ontario, will lose hundreds of thousands more jobs if the dollar remains at current levels.
PRESIDENT'S FISCAL POLICY: NO TAX INCREASES
From the Los Angeles Times:
But he would not rate the risk of recession, saying, "You need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low."
Sidestepping the turmoil in the housing market and the credit problems associated with it, President Bush said today that the nation's economy was strong and would remain so if Congress steered clear of tax increases.
But he would not rate the risk of recession, saying, "You need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low."
Wednesday, September 19, 2007
HOUSING STARTS DROP 2.6% IN AUGUST
From USA Today:
Construction of new homes fell in August to the slowest pace in 12 years as troubles in the housing industry continued.
The Commerce Department reported Wednesday that construction of new homes fell 2.6% in August to a seasonally adjusted annual rate of 1.331 million units.
That was the lowest pace for housing starts since the June 1995 rate of 1.281 million units.
By region, the drop in housing starts was the worst in the Northeast, where they fell 38% in August, the sharpest drop since December 1990. Starts were off 18% in the West but rose 4.2% in the Midwest and 11.4% in the South.
Construction of new homes fell in August to the slowest pace in 12 years as troubles in the housing industry continued.
The Commerce Department reported Wednesday that construction of new homes fell 2.6% in August to a seasonally adjusted annual rate of 1.331 million units.
That was the lowest pace for housing starts since the June 1995 rate of 1.281 million units.
By region, the drop in housing starts was the worst in the Northeast, where they fell 38% in August, the sharpest drop since December 1990. Starts were off 18% in the West but rose 4.2% in the Midwest and 11.4% in the South.
FEDERAL DEBT CEILING TO BE HIT IF IT ISN'T RAISED
From USA Today:
Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.
He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.
The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.
The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.
Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.
He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.
The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.
The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.
CPI DROPS IN AUGUST
Check out the Bureau of Labor Statistics CPI Report here.
From USA Today:
Consumer prices in August fell for the first time in 10 months as another big drop in energy costs offset higher food prices.
The Labor Department reported Wednesday that its closely watched consumer price index dipped 0.1% last month, slightly better than the flat reading that had been expected. It was the first decline in consumer prices since a 0.4% fall in October.
Overall inflation through August is rising at an annual rate of 3.7%, up from a 2.5% increase for all of 2006.
n addition to higher food costs, consumers have also been hit by surging energy prices, which are up 12.7% at an annual rate this year, even with the declines in the past three months. Analysts are worried that further price increases are in the pipeline given the fact that oil prices have now surged to record levels above $80 a barrel.
Core inflation, which the Fed closely monitors, is better behaved this year, rising at an annual rate of 2.3% through August, down from an increase of 2.6% for all of 2006.
The price of medical care continued to surge, rising 0.5% in August. Medical costs are up 4.5% over the past year.
From USA Today:
Consumer prices in August fell for the first time in 10 months as another big drop in energy costs offset higher food prices.
The Labor Department reported Wednesday that its closely watched consumer price index dipped 0.1% last month, slightly better than the flat reading that had been expected. It was the first decline in consumer prices since a 0.4% fall in October.
Overall inflation through August is rising at an annual rate of 3.7%, up from a 2.5% increase for all of 2006.
n addition to higher food costs, consumers have also been hit by surging energy prices, which are up 12.7% at an annual rate this year, even with the declines in the past three months. Analysts are worried that further price increases are in the pipeline given the fact that oil prices have now surged to record levels above $80 a barrel.
Core inflation, which the Fed closely monitors, is better behaved this year, rising at an annual rate of 2.3% through August, down from an increase of 2.6% for all of 2006.
The price of medical care continued to surge, rising 0.5% in August. Medical costs are up 4.5% over the past year.
Tuesday, September 18, 2007
OIL TOPS $82 PER BARREL
You can check the current price by clicking here.
From USA Today:
Oil futures rose to records Tuesday after the Federal Reserve cut interest rates by a larger-than-expected half percentage point, raising market hopes that economic growth will accelerate and lift demand even as crude oil and gasoline inventories are tight.
A barrel of crude surged to a new trading high of $81.90 on the New York Mercantile Exchange in the moments immediately after the Fed's decision.
Investors had already priced a quarter-point cut in the benchmark federal funds rate into the market, said Brad Samples, a commodities analyst at Summit Energy Services in Louisville The half-point cut spurred even more buying.
Moreover, many analysts see a weaker dollar as a natural side effect of lower rates, and that could promote buying of oil contracts by foreign investors.
"Lower interest rates have the unintended consequence of raising oil prices if the dollar declines relative to other currencies," said Larry Chorn, chief economist at Platts, the energy research arm of McGraw-Hill, in a statement.
"Seen through a euro or yen prism, nominal (New York Mercantile Exchange crude) prices have yet to reach their 2006 highs," said Antoine Halff, head of energy research at Fimat USA, in a research note.
From USA Today:
Oil futures rose to records Tuesday after the Federal Reserve cut interest rates by a larger-than-expected half percentage point, raising market hopes that economic growth will accelerate and lift demand even as crude oil and gasoline inventories are tight.
A barrel of crude surged to a new trading high of $81.90 on the New York Mercantile Exchange in the moments immediately after the Fed's decision.
Investors had already priced a quarter-point cut in the benchmark federal funds rate into the market, said Brad Samples, a commodities analyst at Summit Energy Services in Louisville The half-point cut spurred even more buying.
Moreover, many analysts see a weaker dollar as a natural side effect of lower rates, and that could promote buying of oil contracts by foreign investors.
"Lower interest rates have the unintended consequence of raising oil prices if the dollar declines relative to other currencies," said Larry Chorn, chief economist at Platts, the energy research arm of McGraw-Hill, in a statement.
"Seen through a euro or yen prism, nominal (New York Mercantile Exchange crude) prices have yet to reach their 2006 highs," said Antoine Halff, head of energy research at Fimat USA, in a research note.
FED MAKES HALF-POINT CUT
From USA Today:
The Federal Reserve cut interest rates a half-percentage point Tuesday in a dramatic bid to shore up confidence in the economy and ease worries about a credit crunch in financial markets.
Fed Chairman Ben Bernanke and his colleagues unanimously voted to lower their target for short-term interest rates, which influences a wide variety of borrowing costs, to 4.75% from 5.25%. The cut was the first from the Fed in more than four years and followed 15 months of steady rates from the central bank.
In their post-meeting statement, Fed policymakers said the credit squeeze "has the potential" to sharpen the housing decline and harm the larger economy. They said turmoil in financial markets had "increased the uncertainty" about the economic outlook.
"Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time," they wrote.
The Fed on Tuesday also cut the discount rate, the rate it charges banks for direct loans, by a half-percentage point, in a move to facilitate lending. A month ago, the Fed, in a rare move, cut the discount rate, which usually moves in tandem with the Fed's main interest rate lever, to help ease the credit crunch.
Financial markets moved sharply higher in response to the Fed move Tuesday, with the Dow Jones industrials adding more than 100 points within minutes of the Fed announcement. They closed up more than 300.
The Federal Reserve cut interest rates a half-percentage point Tuesday in a dramatic bid to shore up confidence in the economy and ease worries about a credit crunch in financial markets.
Fed Chairman Ben Bernanke and his colleagues unanimously voted to lower their target for short-term interest rates, which influences a wide variety of borrowing costs, to 4.75% from 5.25%. The cut was the first from the Fed in more than four years and followed 15 months of steady rates from the central bank.
In their post-meeting statement, Fed policymakers said the credit squeeze "has the potential" to sharpen the housing decline and harm the larger economy. They said turmoil in financial markets had "increased the uncertainty" about the economic outlook.
"Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time," they wrote.
The Fed on Tuesday also cut the discount rate, the rate it charges banks for direct loans, by a half-percentage point, in a move to facilitate lending. A month ago, the Fed, in a rare move, cut the discount rate, which usually moves in tandem with the Fed's main interest rate lever, to help ease the credit crunch.
Financial markets moved sharply higher in response to the Fed move Tuesday, with the Dow Jones industrials adding more than 100 points within minutes of the Fed announcement. They closed up more than 300.
Monday, September 17, 2007
EUROPEAN COURT DENIES MICROSOFT APPEAL
From the International Herald Tribune:
The second-highest court in Europe on Monday rejected Microsoft's attempt to overturn a landmark European Commission antitrust ruling and record fine, bolstering smaller software makers and putting market leaders on notice that they cannot leverage dominance in one technology niche to squelch broader innovation, industry and legal experts said.
The European Court of First Instance, in a starkly worded summary, ordered Microsoft to obey a 2004 commission order to share confidential computer code with competitors. The court also upheld the record fine of €497.2 million, or $690 million, against the world's largest software maker.
Software and legal experts said the court's decision may signal problems for companies like Apple, Intel and Qualcomm, whose market dominance in online music downloads, computer chips and mobile phone technology is also being scrutinized by the commission. The ruling also could make it harder for Microsoft to continue "bundling" new features into its Windows software.
Microsoft's allies said the court's decision, which expressly forbids the company's policy of bundling new extras into its Windows operating system, will have a chilling effect on the strategies of many global software makers.
"This ruling is certainly going to introduce a lot of uncertainty," said Jonathan Zuck, president of the Association for Competitive Technology, a Washington-based group that supported Microsoft in its legal case in Europe. "What the court is basically saying is that if you develop a successful product and get too big, the European Commission is going to force you to give away your intellectual property."
When Microsoft wants to put handwriting and speech recognition features or stronger anti-virus and other security software into the Windows operating system, competitors can complain to European authorities, even though the European unbundling order in the media player case - compelling Microsoft to offer a version of Windows in Europe without the media player but with no difference in price - was a failure.
Microsoft has already been forced to pay nearly €1 billion in fines in the long-running legal case, which has pitted the software maker against the commission and a host of competitors, including International Business Machines and Novell.
After Sun filed the initial complaint in 1998, the commission later expanded its inquiry to include Microsoft's practice of bundling its Windows Media Player into the Windows operating system. After Microsoft began bundling its media player into Windows, it overtook the market leader, RealNetworks.
Microsoft has been repeatedly fined by the commission since the 2004 antitrust ruling for failing to adequately disclose server software coding.
During the course of the litigation, Kroes said in Brussels that Microsoft's share of the market in workgroup servers had risen to 80 percent from 40 percent and that Windows Media Player had come to dominate the market.
She highlighted the fact that Microsoft had 95 percent of the world market for desktop operating systems and said she would like to see that share decline.
"You can't draw a line and say exactly 50 percent is correct, but a significant drop in market share is what we would like to see," she said. "Microsoft cannot regulate the market by imposing its products and its services on people."
The second-highest court in Europe on Monday rejected Microsoft's attempt to overturn a landmark European Commission antitrust ruling and record fine, bolstering smaller software makers and putting market leaders on notice that they cannot leverage dominance in one technology niche to squelch broader innovation, industry and legal experts said.
The European Court of First Instance, in a starkly worded summary, ordered Microsoft to obey a 2004 commission order to share confidential computer code with competitors. The court also upheld the record fine of €497.2 million, or $690 million, against the world's largest software maker.
Software and legal experts said the court's decision may signal problems for companies like Apple, Intel and Qualcomm, whose market dominance in online music downloads, computer chips and mobile phone technology is also being scrutinized by the commission. The ruling also could make it harder for Microsoft to continue "bundling" new features into its Windows software.
Microsoft's allies said the court's decision, which expressly forbids the company's policy of bundling new extras into its Windows operating system, will have a chilling effect on the strategies of many global software makers.
"This ruling is certainly going to introduce a lot of uncertainty," said Jonathan Zuck, president of the Association for Competitive Technology, a Washington-based group that supported Microsoft in its legal case in Europe. "What the court is basically saying is that if you develop a successful product and get too big, the European Commission is going to force you to give away your intellectual property."
When Microsoft wants to put handwriting and speech recognition features or stronger anti-virus and other security software into the Windows operating system, competitors can complain to European authorities, even though the European unbundling order in the media player case - compelling Microsoft to offer a version of Windows in Europe without the media player but with no difference in price - was a failure.
Microsoft has already been forced to pay nearly €1 billion in fines in the long-running legal case, which has pitted the software maker against the commission and a host of competitors, including International Business Machines and Novell.
After Sun filed the initial complaint in 1998, the commission later expanded its inquiry to include Microsoft's practice of bundling its Windows Media Player into the Windows operating system. After Microsoft began bundling its media player into Windows, it overtook the market leader, RealNetworks.
Microsoft has been repeatedly fined by the commission since the 2004 antitrust ruling for failing to adequately disclose server software coding.
During the course of the litigation, Kroes said in Brussels that Microsoft's share of the market in workgroup servers had risen to 80 percent from 40 percent and that Windows Media Player had come to dominate the market.
She highlighted the fact that Microsoft had 95 percent of the world market for desktop operating systems and said she would like to see that share decline.
"You can't draw a line and say exactly 50 percent is correct, but a significant drop in market share is what we would like to see," she said. "Microsoft cannot regulate the market by imposing its products and its services on people."
Sunday, September 16, 2007
IS THE U.S. DOLLAR IN SERIOUS TROUBLE?
From the International Herald Tribune:
Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result.
But for longer than most economists would have been willing to predict a decade ago, the world has been a willing partner in American excess - until a new and home-grown financial crisis this summer rattled confidence in the country, the world's largest economy.
On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week.
"This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar," said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. "We could finally see the big kahuna hit."
So long as Americans buy more than they earn from exports - and they did, creating a current account deficit of $850 billion last year - the rest of the world financed the binge by bringing dollars into the United States for investment in stocks, bonds, real estate or other assets, thereby preserving demand for the dollar.
While most economists just a few months ago would have dismissed the prospect of a dollar collapse outright, they now are debating the possibility that something on par with the dollar debacle of the 1970s might just happen again.
When a currency collapses, the central bank can push up interest rates to attract needed investment, but strangle the economy in the process. Alternatively, it can let the currency fall and watch prices of imports - and eventually competing domestic goods - rise sharply.
Double-digit inflation resulted in the 1970s and only a global recession brought it to an end.
The European Central Bank put off an interest rate increase it had planned for September, but is still inclined to tighten credit at least one more time by the end of this year. By contrast, the U.S. Federal Reserve has hinted at a rate cut at its meeting next Tuesday - a step that would diminish the appeal of dollar-denominated assets, almost certainly sending the dollar lower.
Pressed to make an educated guess, most economists opt for calm, believing the dollar is unlikely to go into a tailspin even as they mark up the odds of one.
The major holders of dollars - notably the Chinese, with their $1.3 trillion in currency reserves - have little incentive to see the dollar weaken, and their support provides the dollar with a bulwark of strength. And since investors need to stay diversified, and U.S. markets are deep and liquid, abandoning the dollar wholesale is hardly a realistic option.
"Rather than a precipitous decline, we are probably be looking at a move steadily lower," said Simon Derrick, chief currency strategist at Bank of New York in London.
Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result.
But for longer than most economists would have been willing to predict a decade ago, the world has been a willing partner in American excess - until a new and home-grown financial crisis this summer rattled confidence in the country, the world's largest economy.
On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week.
"This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar," said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. "We could finally see the big kahuna hit."
So long as Americans buy more than they earn from exports - and they did, creating a current account deficit of $850 billion last year - the rest of the world financed the binge by bringing dollars into the United States for investment in stocks, bonds, real estate or other assets, thereby preserving demand for the dollar.
While most economists just a few months ago would have dismissed the prospect of a dollar collapse outright, they now are debating the possibility that something on par with the dollar debacle of the 1970s might just happen again.
When a currency collapses, the central bank can push up interest rates to attract needed investment, but strangle the economy in the process. Alternatively, it can let the currency fall and watch prices of imports - and eventually competing domestic goods - rise sharply.
Double-digit inflation resulted in the 1970s and only a global recession brought it to an end.
The European Central Bank put off an interest rate increase it had planned for September, but is still inclined to tighten credit at least one more time by the end of this year. By contrast, the U.S. Federal Reserve has hinted at a rate cut at its meeting next Tuesday - a step that would diminish the appeal of dollar-denominated assets, almost certainly sending the dollar lower.
Pressed to make an educated guess, most economists opt for calm, believing the dollar is unlikely to go into a tailspin even as they mark up the odds of one.
The major holders of dollars - notably the Chinese, with their $1.3 trillion in currency reserves - have little incentive to see the dollar weaken, and their support provides the dollar with a bulwark of strength. And since investors need to stay diversified, and U.S. markets are deep and liquid, abandoning the dollar wholesale is hardly a realistic option.
"Rather than a precipitous decline, we are probably be looking at a move steadily lower," said Simon Derrick, chief currency strategist at Bank of New York in London.
LIQUIDITY CONCERN CAUSES RUN ON BRITISH BANK
From the International Herald Tribune:
Hundreds of Northern Rock customers crowded into branches across Britain on Friday to pull out their savings after the mortgage-loan provider sought emergency funding from the Bank of England.
"It's scary," said Peter Pye, a 60-year-old retired university lecturer standing in a line of about 30 people outside the Moorgate branch in London's financial district. "I have my life's savings in Northern Rock."
Fears were sparked by the Bank of England's emergency loan to Northern Rock, Britain's eighth-largest listed bank, whose access to funds dried up as the cost of borrowing between banks rose in the broader credit crisis.
Deposit insurance from the Financial Services Compensation Scheme protects customers for up to £31,700 should a bank default.
In addition, the Bank of England said Northern Rock was solvent and only in need of short-term help. But many customers were not taking any chances.
Queues snaked through branches and spilled onto streets as tellers tried to soothe frazzled nerves. Some customers were satisfied by the lender's reassurances.
Northern Rock's Web site was also inundated, frustrating those who sought to withdraw funds. The bank had to restart the site "over a period of time" after unusually high usage froze the service, spokesman Don Hunter said.
"I've been trying to get my money out since 7 o'clock this morning and I'm failing," said customer Andrew Murphy." I appreciate that it's very unlikely to go bust but I don't want to take the risk with my savings."
"I don't think anything is going to happen because the Bank of England won't allow it to happen," said Paul Delamere, 46, waiting at Maddox Street to withdraw his money. Still, he was "more comfortable" with reducing his account.
Hundreds of Northern Rock customers crowded into branches across Britain on Friday to pull out their savings after the mortgage-loan provider sought emergency funding from the Bank of England.
"It's scary," said Peter Pye, a 60-year-old retired university lecturer standing in a line of about 30 people outside the Moorgate branch in London's financial district. "I have my life's savings in Northern Rock."
Fears were sparked by the Bank of England's emergency loan to Northern Rock, Britain's eighth-largest listed bank, whose access to funds dried up as the cost of borrowing between banks rose in the broader credit crisis.
Deposit insurance from the Financial Services Compensation Scheme protects customers for up to £31,700 should a bank default.
In addition, the Bank of England said Northern Rock was solvent and only in need of short-term help. But many customers were not taking any chances.
Queues snaked through branches and spilled onto streets as tellers tried to soothe frazzled nerves. Some customers were satisfied by the lender's reassurances.
Northern Rock's Web site was also inundated, frustrating those who sought to withdraw funds. The bank had to restart the site "over a period of time" after unusually high usage froze the service, spokesman Don Hunter said.
"I've been trying to get my money out since 7 o'clock this morning and I'm failing," said customer Andrew Murphy." I appreciate that it's very unlikely to go bust but I don't want to take the risk with my savings."
"I don't think anything is going to happen because the Bank of England won't allow it to happen," said Paul Delamere, 46, waiting at Maddox Street to withdraw his money. Still, he was "more comfortable" with reducing his account.
Saturday, September 15, 2007
GREENSPAN BOOK CRITICIZES BUSH AND REPUBLICANS FOR LACKING FISCAL DISCIPLINE
From The Wall Street Journal:
In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles.
In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.
Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."
Mr. Greenspan writes that when President Bush chose Dick Cheney as vice president and Paul O'Neill as treasury secretary -- both colleagues from the Gerald Ford administration, during which Mr. Greenspan was chairman of the Council of Economic Advisers -- he "indulged in a bit of fantasy" that this would be the government that would have resulted if Mr. Ford hadn't lost to Jimmy Carter in 1976. But Mr. Greenspan discovered that in the Bush White House, the "political operation was far more dominant" than in Mr. Ford's. "Little value was placed on rigorous economic policy debate or the weighing of long-term consequences," he writes.
From serving under so many presidents, Mr. Greenspan concludes that there's something abnormal about anyone willing to do what it takes to get the job. Mr. Ford, he writes, "was as close to normal as you get in a president, but he was never elected." The Watergate tapes, he says, show Richard Nixon as "an extremely smart man who is sadly paranoid, misanthropic and cynical." He recalls telling someone who had accused Nixon of anti-Semitism that he "wasn't exclusively anti-Semitic. He was anti-Semitic, anti-Italian, anti-Greek, anti-Slovak. I don't know anybody he was pro."
Ronald Reagan's ability to instantly tap one-liners and anecdotes in support of a particular policy represented an "odd form of intelligence." He describes Bill Clinton as "a fellow information hound" with "a consistent, disciplined focus on long-term economic growth" whose relationship with Monica Lewinsky "made me feel disappointed and sad."
Mr. Greenspan retired in early 2006 after 18 years as chairman of the Federal Reserve. He had served under six presidents as either Fed chairman or adviser. He now runs a private consulting company; his only formal public role is adviser to British Prime Minister Gordon Brown.
In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles.
In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.
Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."
Mr. Greenspan writes that when President Bush chose Dick Cheney as vice president and Paul O'Neill as treasury secretary -- both colleagues from the Gerald Ford administration, during which Mr. Greenspan was chairman of the Council of Economic Advisers -- he "indulged in a bit of fantasy" that this would be the government that would have resulted if Mr. Ford hadn't lost to Jimmy Carter in 1976. But Mr. Greenspan discovered that in the Bush White House, the "political operation was far more dominant" than in Mr. Ford's. "Little value was placed on rigorous economic policy debate or the weighing of long-term consequences," he writes.
From serving under so many presidents, Mr. Greenspan concludes that there's something abnormal about anyone willing to do what it takes to get the job. Mr. Ford, he writes, "was as close to normal as you get in a president, but he was never elected." The Watergate tapes, he says, show Richard Nixon as "an extremely smart man who is sadly paranoid, misanthropic and cynical." He recalls telling someone who had accused Nixon of anti-Semitism that he "wasn't exclusively anti-Semitic. He was anti-Semitic, anti-Italian, anti-Greek, anti-Slovak. I don't know anybody he was pro."
Ronald Reagan's ability to instantly tap one-liners and anecdotes in support of a particular policy represented an "odd form of intelligence." He describes Bill Clinton as "a fellow information hound" with "a consistent, disciplined focus on long-term economic growth" whose relationship with Monica Lewinsky "made me feel disappointed and sad."
Mr. Greenspan retired in early 2006 after 18 years as chairman of the Federal Reserve. He had served under six presidents as either Fed chairman or adviser. He now runs a private consulting company; his only formal public role is adviser to British Prime Minister Gordon Brown.
Wednesday, September 12, 2007
UCLA ANDERSON FORECAST PREDICTS ECONOMIC SLOWDOWN
From AP via MSNBC:
Ongoing weakness in the housing market will push the national economy to the brink of recession, but growth in other areas should put the country back on a slow road to recovery by 2009, according to an economic forecast released Wednesday.
The quarterly Anderson Forecast by the University of California at Los Angeles predicts growth in the gross domestic product of just over 1 percent for the fourth quarter of 2007 and first quarter of 2008.
Economic growth will remain “tepid” for the remainder of 2008 and return to 3 percent in 2009, said David Shulman, senior economist for the forecast.
Shulman lowered his forecast for housing starts to an annual rate of about 1 million to 1.1 million, down from a range of 1.2 million to 1.3 million.
That outlook is less optimistic than one presented Tuesday by the National Association of Realtors, which projected construction of new homes will fall to 1.4 million this year from 1.8 million last year.
Shulman also expects housing prices to plunge 10 percent to 15 percent before they start to recover, sometime in 2009.
Ongoing weakness in the housing market will push the national economy to the brink of recession, but growth in other areas should put the country back on a slow road to recovery by 2009, according to an economic forecast released Wednesday.
The quarterly Anderson Forecast by the University of California at Los Angeles predicts growth in the gross domestic product of just over 1 percent for the fourth quarter of 2007 and first quarter of 2008.
Economic growth will remain “tepid” for the remainder of 2008 and return to 3 percent in 2009, said David Shulman, senior economist for the forecast.
Shulman lowered his forecast for housing starts to an annual rate of about 1 million to 1.1 million, down from a range of 1.2 million to 1.3 million.
That outlook is less optimistic than one presented Tuesday by the National Association of Realtors, which projected construction of new homes will fall to 1.4 million this year from 1.8 million last year.
Shulman also expects housing prices to plunge 10 percent to 15 percent before they start to recover, sometime in 2009.
Tuesday, September 11, 2007
OPEC CONSIDERS PRODUCTION INCREASE AS OIL TOPS $77 PER BARREL
From Reuters:
OPEC was meeting on Tuesday to consider a modest rise in oil output proposed by Saudi Arabia and other Gulf Arab states in a gesture to consumers worried by the economic impact of $77 oil and rapidly diminishing stocks.
But the plan to add 500,000 barrels per day of oil had yet to convince all OPEC ministers and discussions were continuing, a delegate said. Venezuela, Algeria and Libya said ahead of the talks they were not in support of increasing supplies.
Industrialized consumer nations are forecasting their crude oil stocks will fall to the bottom of the five-year average range by January unless OPEC pumps more crude oil, and fast.
U.S. crude oil is above $77, close to its August 1 record high of $78.77 a barrel, following attacks on oil and natural gas pipelines in Mexico, the world's fifth largest crude exporter.
OPEC was meeting on Tuesday to consider a modest rise in oil output proposed by Saudi Arabia and other Gulf Arab states in a gesture to consumers worried by the economic impact of $77 oil and rapidly diminishing stocks.
But the plan to add 500,000 barrels per day of oil had yet to convince all OPEC ministers and discussions were continuing, a delegate said. Venezuela, Algeria and Libya said ahead of the talks they were not in support of increasing supplies.
Industrialized consumer nations are forecasting their crude oil stocks will fall to the bottom of the five-year average range by January unless OPEC pumps more crude oil, and fast.
U.S. crude oil is above $77, close to its August 1 record high of $78.77 a barrel, following attacks on oil and natural gas pipelines in Mexico, the world's fifth largest crude exporter.
Monday, September 10, 2007
BUSINESSES PROVIDE INCENTIVES FOR WORKERS TO REDUCE HEALTH RISKS
From AP via MSNBC:
First they tried nudging. Now companies are penalizing workers who have high health risks such as obesity and high blood pressure or cholesterol as insurance costs climb.
A small number of companies have linked health factors to what employees pay for benefits, but the practice is expected to grow now that some federal rules have been finalized, spelling out what’s allowed by law. Employee advocates worry that other anti-discrimination laws such as the Americans with Disabilities Act won’t cover the person who is 20 or 30 pounds overweight.
The businesses are deducting from employees’ paychecks, adding insurance surcharges or offering insurance discounts or rebates only to low-risk workers.
“Employers know they have to do something,” said Garry Mathiason, a senior partner at the national employment and labor law firm Littler Mendelson, based in Boston. “I believe that in just the next two years more employers will turn to penalties to change employee behavior.”
A 2003-2004 National Health and Nutrition Examination Survey showed about two-thirds of adults in the United States were overweight and almost one-third obese. A U.S. surgeon general’s report said health care costs of obesity totaled more than $117 billion in 2000.
First they tried nudging. Now companies are penalizing workers who have high health risks such as obesity and high blood pressure or cholesterol as insurance costs climb.
A small number of companies have linked health factors to what employees pay for benefits, but the practice is expected to grow now that some federal rules have been finalized, spelling out what’s allowed by law. Employee advocates worry that other anti-discrimination laws such as the Americans with Disabilities Act won’t cover the person who is 20 or 30 pounds overweight.
The businesses are deducting from employees’ paychecks, adding insurance surcharges or offering insurance discounts or rebates only to low-risk workers.
“Employers know they have to do something,” said Garry Mathiason, a senior partner at the national employment and labor law firm Littler Mendelson, based in Boston. “I believe that in just the next two years more employers will turn to penalties to change employee behavior.”
A 2003-2004 National Health and Nutrition Examination Survey showed about two-thirds of adults in the United States were overweight and almost one-third obese. A U.S. surgeon general’s report said health care costs of obesity totaled more than $117 billion in 2000.
FED EXPECTED TO LOWER INTEREST RATES
From USA Today:
The Federal Reserve will lower interest rates by half a percentage point by March in the face of sluggish economic growth, according to a survey of economists from the National Association of Business Economics released Monday.
The survey, reflecting the estimates of 46 economists, was taken Aug 2-23.
The economists forecast a 50-basis-point cut in the federal funds rate by the end of the first quarter of 2008, up from May's forecast of 25 basis points.
The Fed is scheduled to meet next on Sept. 18.
The Federal Reserve will lower interest rates by half a percentage point by March in the face of sluggish economic growth, according to a survey of economists from the National Association of Business Economics released Monday.
The survey, reflecting the estimates of 46 economists, was taken Aug 2-23.
The economists forecast a 50-basis-point cut in the federal funds rate by the end of the first quarter of 2008, up from May's forecast of 25 basis points.
The Fed is scheduled to meet next on Sept. 18.
Friday, September 07, 2007
33% OF ECONOMISTS POLLED PREDICT RECESSION WITHIN NEXT YEAR
From MSNBC:
Before the meltdown in the credit markets last month, the Blue Chip (a financial newsletter) consensus pegged the odds of recession in the next year at about one in four. That number recently jumped to one in three, according to Randell Moore, the newsletter’s editor.
The growing signs of economic strain have consumers feeling more pessimistic — especially since most no longer have rising equity in their home to help fund their shopping trips. Consumer confidence dropped sharply in August, based on a widely watched University of Michigan survey.
-----
You can view the University of Michigan survey here.
You can view the Conference Board survey here.
Before the meltdown in the credit markets last month, the Blue Chip (a financial newsletter) consensus pegged the odds of recession in the next year at about one in four. That number recently jumped to one in three, according to Randell Moore, the newsletter’s editor.
The growing signs of economic strain have consumers feeling more pessimistic — especially since most no longer have rising equity in their home to help fund their shopping trips. Consumer confidence dropped sharply in August, based on a widely watched University of Michigan survey.
-----
You can view the University of Michigan survey here.
You can view the Conference Board survey here.
RECORD FORECLOSURES REPORTED
Check out this chart that accompanies the story below for mortgage delinquency and foreclosure statistics for every state.
In Illinois there are 1.67 million mortgages listed with 5.09% past due and 1.05% more than 90 days so.
From USA Today:
With a warning that the worst is yet to come, the Mortgage Bankers Association said Thursday that lenders began foreclosure proceedings on a record number of homes this spring.
The turmoil in the mortgage market poses multiple threats, the MBA says. Foreclosures are likely to rise for at least another year. A bigger supply of homes in foreclosure would weaken prices in many areas. And people behind on loans will find it harder to refinance.
For all loan types, 5% of borrowers — nearly 2.5 million people — missed at least one payment last quarter. That's up from 4.4% in the same period last year.
The problems appear to be focused in seven states. Job losses in Michigan, Ohio and Indiana have depressed housing there. Those three states account for nearly 20% of the nation's homes in foreclosure.
And a rising number of defaults in four states — California, Nevada, Florida and Arizona — is largely why the U.S. delinquency rate is up. As home prices there fall, more people are in the upside-down position of owing more on their loans than their homes are worth.
California accounted for more than 17% of the subprime ARMs in the country and for more than 19% of the new foreclosures in the second quarter, the MBA says.
In Illinois there are 1.67 million mortgages listed with 5.09% past due and 1.05% more than 90 days so.
From USA Today:
With a warning that the worst is yet to come, the Mortgage Bankers Association said Thursday that lenders began foreclosure proceedings on a record number of homes this spring.
The turmoil in the mortgage market poses multiple threats, the MBA says. Foreclosures are likely to rise for at least another year. A bigger supply of homes in foreclosure would weaken prices in many areas. And people behind on loans will find it harder to refinance.
For all loan types, 5% of borrowers — nearly 2.5 million people — missed at least one payment last quarter. That's up from 4.4% in the same period last year.
The problems appear to be focused in seven states. Job losses in Michigan, Ohio and Indiana have depressed housing there. Those three states account for nearly 20% of the nation's homes in foreclosure.
And a rising number of defaults in four states — California, Nevada, Florida and Arizona — is largely why the U.S. delinquency rate is up. As home prices there fall, more people are in the upside-down position of owing more on their loans than their homes are worth.
California accounted for more than 17% of the subprime ARMs in the country and for more than 19% of the new foreclosures in the second quarter, the MBA says.
HORRIBLE EMPLOYMENT REPORT CAUSES CONCERN
The Bureau of Labor Statistics issued its August Employment Situation Report today. It provided plenty of bad news.
From USA Today:
Employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted, the government said Friday in a report certain to boost pressure on Federal Reserve policymakers to cut interest rates.
In addition to the August job losses, the Labor Department revised down its estimates for hiring in June and July by a total of 81,000. It said 68,000 jobs were added in July rather than 92,000 and 69,000 in June instead of 126,000.
Economists polled a week ago by Reuters had forecast 110,000 jobs would be created in August, but many analysts had scaled back their expectations since then amid increasing signs the job market was coming under strain.
The surprisingly bleak August jobs report was a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy. The last time the economy shed jobs was in August 2003, when 42,000 jobs were cut.
Job losses in August were concentrated in the goods-producing sector. A whopping 46,000 manufacturing jobs were cut, the most since an 86,000-job cut in July 2003. Construction businesses shed another 22,000 jobs, up from 14,000 that were lost in July.
Service industries added 60,000 jobs in August.
Those with jobs, however, did see modest wage gains.
Average hourly earnings rose to $17.50 in August, a 0.3% increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9%. Wage growth supports consumer spending, a major ingredient for a healthy economy.
From USA Today:
Employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted, the government said Friday in a report certain to boost pressure on Federal Reserve policymakers to cut interest rates.
In addition to the August job losses, the Labor Department revised down its estimates for hiring in June and July by a total of 81,000. It said 68,000 jobs were added in July rather than 92,000 and 69,000 in June instead of 126,000.
Economists polled a week ago by Reuters had forecast 110,000 jobs would be created in August, but many analysts had scaled back their expectations since then amid increasing signs the job market was coming under strain.
The surprisingly bleak August jobs report was a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy. The last time the economy shed jobs was in August 2003, when 42,000 jobs were cut.
Job losses in August were concentrated in the goods-producing sector. A whopping 46,000 manufacturing jobs were cut, the most since an 86,000-job cut in July 2003. Construction businesses shed another 22,000 jobs, up from 14,000 that were lost in July.
Service industries added 60,000 jobs in August.
Those with jobs, however, did see modest wage gains.
Average hourly earnings rose to $17.50 in August, a 0.3% increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9%. Wage growth supports consumer spending, a major ingredient for a healthy economy.
Wednesday, September 05, 2007
MATTEL RECALLS MORE LEAD-TAINTED CHINESE TOYS
From USA Today:
Mattel announced another recall of lead-tainted toys from China late Tuesday, its third such announcement in about a month.
The recall of nearly 800,000 Fisher-Price and parent company Mattel-brand products includes Barbie accessories, such as lead-tainted puppies and cats; GeoTrax trains; and toy bongo drums. All were sold within the last year.
Children can get lead poisoning from sucking on or swallowing toys or jewelry with lead. Lead can cause learning and behavior problems and even death.
Mattel announced another recall of lead-tainted toys from China late Tuesday, its third such announcement in about a month.
The recall of nearly 800,000 Fisher-Price and parent company Mattel-brand products includes Barbie accessories, such as lead-tainted puppies and cats; GeoTrax trains; and toy bongo drums. All were sold within the last year.
Children can get lead poisoning from sucking on or swallowing toys or jewelry with lead. Lead can cause learning and behavior problems and even death.
PENDING EXISTING HOME SALES LOWEST SINCE 2001
From USA Today:
Pending sales of existing homes, a leading indicator for the housing sector, fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.
The National Association of Realtors said its seasonally adjusted index of pending home sales for July fell 16.1% from a year ago and 12.2% from the prior month.
A home sale is listed as pending when the contract has been signed but the transaction has not closed. The sale usually closes within months of signing.
Some home purchases aren't closing because mortgage loans have been "falling through at the last moment," Lawrence Yun, the Realtors trade group's senior economist, said in a statement.
"Numbers like this should put to rest the belief that we've reached the bottom" in the housing market, said Joel Naroff, chief economist for Commerce Bancorp. "There's still a lot of pain that's ahead of us."
Pending sales of existing homes, a leading indicator for the housing sector, fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.
The National Association of Realtors said its seasonally adjusted index of pending home sales for July fell 16.1% from a year ago and 12.2% from the prior month.
A home sale is listed as pending when the contract has been signed but the transaction has not closed. The sale usually closes within months of signing.
Some home purchases aren't closing because mortgage loans have been "falling through at the last moment," Lawrence Yun, the Realtors trade group's senior economist, said in a statement.
"Numbers like this should put to rest the belief that we've reached the bottom" in the housing market, said Joel Naroff, chief economist for Commerce Bancorp. "There's still a lot of pain that's ahead of us."
Monday, September 03, 2007
WTO INVESTIGATING POSSIBLE VIOLATIONS BY CHINA
From USA Today:
The World Trade Organization opened a formal investigation Friday into allegations by the USA and Mexico that China is providing illegal subsidies for a range of industries, officials said.
The North American countries accuse Beijing of using WTO-prohibited tax breaks to encourage Chinese companies to boost exports, while imposing tax and tariff penalties to limit purchases of foreign products in China.
"China is providing numerous subsidies that appear to be prohibited under WTO rules," U.S. trade lawyer Juan Millan told the WTO's dispute body last month. "China offers tax refunds, reductions and exemptions that discriminate against imported products ... or that subsidize China's exports."
The U.S. trade deficit set a record for the fifth consecutive year in 2006 at $765.3 billion. The imbalance with China grew to $232.5 billion, the highest ever with a single country.
Beijing, meanwhile, blocked a separate probe of its rules for protecting intellectual property rights. But the move will probably only delay the creation of a panel until the next meeting of the WTO's dispute body in September, when Washington can bring up the issue again.
Under WTO rules, a second request for an investigative panel is automatically granted.
The World Trade Organization opened a formal investigation Friday into allegations by the USA and Mexico that China is providing illegal subsidies for a range of industries, officials said.
The North American countries accuse Beijing of using WTO-prohibited tax breaks to encourage Chinese companies to boost exports, while imposing tax and tariff penalties to limit purchases of foreign products in China.
"China is providing numerous subsidies that appear to be prohibited under WTO rules," U.S. trade lawyer Juan Millan told the WTO's dispute body last month. "China offers tax refunds, reductions and exemptions that discriminate against imported products ... or that subsidize China's exports."
The U.S. trade deficit set a record for the fifth consecutive year in 2006 at $765.3 billion. The imbalance with China grew to $232.5 billion, the highest ever with a single country.
Beijing, meanwhile, blocked a separate probe of its rules for protecting intellectual property rights. But the move will probably only delay the creation of a panel until the next meeting of the WTO's dispute body in September, when Washington can bring up the issue again.
Under WTO rules, a second request for an investigative panel is automatically granted.
Saturday, September 01, 2007
COURT DECISION GIVES MEXICAN TRUCKERS GREEN LIGHT TO DRIVE IN USA
From AP via Yahoo:
The Bush administration can go ahead with a pilot program to allow as many as 100 Mexican trucking companies to freely haul their cargo anywhere within the U.S. for the next year, a federal appeals court ruled Friday.
The 9th U.S. Circuit Court of Appeals denied a request made by the Teamsters union, the Sierra Club and the nonprofit Public Citizen to halt the program.
The appeals court ruled the groups have not satisfied the legal requirements to immediately stop what the government is calling a "demonstration project," but can continue to argue their case.
The trucking program is scheduled to begin Thursday.
Canadian trucking companies have full access to U.S. roads, but Mexican trucks can travel only about 20 miles inside the country at certain border crossings, such as ones in San Diego and El Paso, Texas.
The government says it has imposed rigorous safety protocols in the program, including drug and alcohol testing for drivers done by U.S. companies. In addition, law enforcement officials have stepped up nationwide enforcement of a law that's been on the books since the 1970s requiring interstate truck and bus drivers to have a basic understanding of written and spoken English.
The Federal Motor Carrier Safety Administration, the Department of Transportation agency charged with managing the program, said Friday that the court's decision is "welcome news for U.S. truck drivers anxious to compete south of the border and U.S. consumers eager to realize the savings of more efficient shipments with one of our largest trading partners."
However, the agency said it must still wait for final report by the inspector general and for Mexico to begin giving U.S. trucking companies reciprocal access before the program can begin.
The Bush administration can go ahead with a pilot program to allow as many as 100 Mexican trucking companies to freely haul their cargo anywhere within the U.S. for the next year, a federal appeals court ruled Friday.
The 9th U.S. Circuit Court of Appeals denied a request made by the Teamsters union, the Sierra Club and the nonprofit Public Citizen to halt the program.
The appeals court ruled the groups have not satisfied the legal requirements to immediately stop what the government is calling a "demonstration project," but can continue to argue their case.
The trucking program is scheduled to begin Thursday.
Canadian trucking companies have full access to U.S. roads, but Mexican trucks can travel only about 20 miles inside the country at certain border crossings, such as ones in San Diego and El Paso, Texas.
The government says it has imposed rigorous safety protocols in the program, including drug and alcohol testing for drivers done by U.S. companies. In addition, law enforcement officials have stepped up nationwide enforcement of a law that's been on the books since the 1970s requiring interstate truck and bus drivers to have a basic understanding of written and spoken English.
The Federal Motor Carrier Safety Administration, the Department of Transportation agency charged with managing the program, said Friday that the court's decision is "welcome news for U.S. truck drivers anxious to compete south of the border and U.S. consumers eager to realize the savings of more efficient shipments with one of our largest trading partners."
However, the agency said it must still wait for final report by the inspector general and for Mexico to begin giving U.S. trucking companies reciprocal access before the program can begin.
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