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Beijing Academy of Artificial Intelligence 853

2014-15/0557/en_head.json.gz/14425

FCA set to refer wealth firm to crime unit after 'egregious' failings Tim Steer: why Brewin Dolphin scores 100 out of 100 Pensions revolution: what it means to these seven wealth managers John Spiers: I want my active fund to be really active Rise of the super boutique: how will this new breed of firm fare? Editor's Picks, sponsored by Home News Investment Strategy▼ All I want for Christmas…eight wealth managers’ wish lists by Annabelle Williams on Dec 14, 2012 at 00:01 The prospect of opening presents and seeing whether Father Christmas has delivered is exciting for everyone, but St Nicholas could have his work cut out meeting discretionaries' expectations with anaemic global growth and volatile markets on the cards for 2013. Normalisation of monetary policy Marcus Brookes, head of multi-manager at Cazenove, would like to see a normalisation of monetary policy globally in 2013. He acknowledges this is by no means a small ask, however, and probably something that is more likely to be achieved by 2018. ‘A lot of the issues we are facing today are a result of quantitative easing and zero interest rate policy. If you have got a normalised monetary policy, it must mean the global economy is looking healthier, the financial system is fixed and you reprice money to the correct level,’ he said. He believes the ideal situation would be a return to interest rates around the 3%-4% mark and gilt yields back at 4%, with an adjustment in asset prices. UK back on sound footing Berry Asset Management’s chief investment officer Mark Robinson is hoping for new Bank of England governor Mark Carney to put Britain back on a sound footing in 2013. ‘There are a number of things that we would like to see fall into place during 2013, the most immediate being some give and take by both sides of the US political divide to break the current fiscal cliff stalemate, so that economic growth is not sent off the rails. ‘Similarly, seeing a soft economic landing in China and further initiatives to restore financial stability in the eurozone are also on our wish list for 2013. ‘But closer to home it could be Mark Carney’s arrival in June as the new governor of the Bank of England that could be an interesting turning point in how the UK is perceived on the international stage. His appointment has already been greeted with enthusiasm and we hope that this fresh blood will restore confidence within the banking sector and in the UK economy as a whole.’ Increased infrastructure investment Dart Capital’s Richard Whitehead is hoping for more government investment in infrastructure projects, which should boost employment and make the country more fit for doing business. ‘We think it would be good to see a pick-up in infrastructure projects by the government that have a clear connection with an increase in UK jobs,’ he said.‘Linked to this perhaps bringing in compulsory training or apprenticeships for job seekers aged up to 25 could lead to a corresponding reduction in welfare payments as long as these jobs were real opportunities. We need to see some real confidence emerging for the younger members of society in the UK.’ ‘We need to improve roads, rail, hospitals, bridges, tunnels, ports, to make this country more competitive. It takes as long to travel from Southampton to London now as it did in the era of steam trains.’ Action from EU leaders None of the action taken by EU leaders so far has address the regions real problems, argues Pau Morilla-Giner, partner and chief investment officer at London & Capital, and he would like to see politicians come up with some real answers in the new year. ‘I would like for European politicians to do what is right in the long term (not just what is politically less damaging in the short term) and to work towards solutions that address the structural nature of Europe’s issues,’ he said. ‘So far the solutions have focused on short term liquidity relief for struggling peripherals and funding support for struggling financial institutions. None of these policies addresses the structural solvency problem that affects Europe.’ I would like politicians to address the three key items that needs happening for the crisis to be truly over: firstly the collective pooling of liabilities (eurobonds), secondly a European deposit guarantee (banking union) and thirdly the European Central Bank as lender of last resort. Unfortunately, I suspect that none of my wishes will be answered, and so another volatile 2013 is expected, especially as we approach the single most defining event of the year – the German elections after the summer. Recovery in US and China Gavin Haynes, managing director of Whitechurch Securities, would like to see a global recovery led by China and the US. ‘For a successful year in 2013, the most important factor is that we see a continued recovery of the two largest global economies – the US and China,’ he said. ‘While the fiscal cliff in the US is providing nervousness, the recovery in the housing and jobs markets suggest the economy is on a firm footing and can achieve around 2% GDP growth in 2013. Although not spectacular, this compares favourably to the forecast for Europe and our own economy.’ With the new political regime likely to stimulate growth and a recent upturn in economic activity, a recovery scenario for China in 2013 could be realistic, he says. Coupled with an improving US, this could create attractive opportunities across markets. Market stability Renewed investor confidence and a modicum of market stability is top of Turcan Connell’s chief investment officer Haig Bathgate’s wish list. ‘I’m hoping for a resumption of confidence. If we have a bit more stability from the central banks and particularly markets, that might allow things to move forward, letting companies invest more and make decisions on a slightly longer term basis. ‘Stability will also give them confidence to recruit more people. This will also see an end to the risk-on/risk-off markets. How that’s going to happen I don’t know, but it is what I would like to see.’ Trends in equity markets James Calder, research director at City Asset Management, would like to see an end to unpredictable equity markets and a return to visible trends. ‘Everyone has become jaded since the 2008 financial crisis and there is always that worry with mass media hysteria that we are going to face another crisis, but that’s not going to happen. What we are looking for is benign markets and even markets that are gently trending up. That would be great. ‘Even markets that are trending down would be good, as long as we can see the trends as multi-asset investors we can exploit that.’ A return to normal markets David Norman, founder of TCF Investment is hoping for a year-long period of normalcy in markets when assets will do what they are supposed to do - but accepts that this is sadly unlikely. ‘Wouldn’t it be nice if the world just did what it was supposed to do? So if equities rise in value, dividends grow nicely and bonds are a good diversifier, it would be nice and it would be really boring,’ he said. ‘I don’t need the excitement of bonds being at record highs, I just want things to behave the way they are supposed to.’ ‘It would be nice if my pension fund went up 8-9% next year instead of up 3% one month, down 10% the next. I’m investing for the long run, can I just have a nice spell? The chances of this happening are none whatsoever though!’ More galleries Other stories in December 2012

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2014-15/0557/en_head.json.gz/14535

- China - Business - World - Sci-Edu - Culture/Life - Sports - Photos - Most Popular - FM Briefings Search - China in brief 2004 - Chinese history - Laws & regulations - Ethnic minorities Home >> Opinion Top statistician on China's economic figures after national census The People's Daily held an interview with Li Deshui, head of China's National Bureau of Statistics (NBS) on China's revised GDP (gross domestic product) of the year 2004 after the country's first nationwide economic survey. What do the changed economic aggregates tell us? Reporter: Perhaps what strikes people most in the findings of the economic census is the changes of China's GDP and its makeup. Particularly, with reference to the resources obtained through the economic survey, 2.3 trillion yuan has been added into China's GDP in 2004, an increase of 16.8 percent. This change has aroused great attention both at home and abroad. What is your comment on such a revision? Li Deshui: Economic survey cannot create GDP but only mirror the reality more accurately. As stipulated in the Statistics Law of the People's Republic of China, economic investigations should be based on periodic surveys. In essence, the statistics that indicate the level of socio-economic development has been improved instead that the economy and society have changed themselves. The great amount of manpower, capital and materials involved in the economic survey this time, the breadth and depth of the investigation itself are all unprecedented in China's history and incomparable for regular statistics. The measurement of the national economy in this way, based on the ample and authentic information acquired through the economic survey should certainly be more comprehensive, accurate and reliable than the regular. Are China's world rankings changed? Reporter: Based on the new findings, what differences will be made to China's economic rankings in the world? Li Deshui: According to relevant information from "World Economic Outlook" issued by the International Monetary Fund (IMF), by the average exchange rate of 8.277 yuan against one US dollar, China's 2004 GDP should be raised to 1.9317 trillion US dollars from the 1.6537 trillion US dollars. And its share in the world's total up from 3.8 percent to 4.4 percent. China's ranking accordingly rises from the original seventh place to the sixth, outracing Italy and following the United States, Japan, Germany, Britain and France. With the same IMF standards, Italy's 2004 GDP is 1.6801 trillion US dollars; France, 2.0463 trillion US dollars; Britain, 2.1330 trillion US dollars; Germany, 2.7547 trillion US dollars; Japan, 4.6712 trillion US dollars and the United States 11.7343 trillion US dollars. China's GDP, in terms of US dollars, had exceeded that of Italy as early as in 2000 and 2002, ranking the sixth place in the world. From 2003 to 2004, Italy again surpassed China due to the appreciation of euro against US dollar. Reporter: With the adjustment of GDP, how is China's per capita ranking changed? Li No big change. According to the IMF standard, last year after initial calculation, China's per capita GDP is 1, 276 US dollars, ranking the 112th place in the world. The figure, after adjustment, is 1,490 US dollars, at the 107th place, exceeding Vanuatu, Ukraine, Congo, Syria and Angola. If by another standard, which is set by the World Bank and based on the three-year average foreign exchange rate, China's 2004 capita GDP rises from the 132nd to 129th, only outdoing Egypt, Vanuatu and Turkmenistan. Neither method will change the fact that China per capita GDP is only one fifth of the world average. Despite a small growth in GDP, China is still the biggest developing country. People should bear in mind that there are still 100 million people leading a rather poor life and should see the economic growth is achieved at the cost of rather high consumption of energy and other resources. According to the revised figures, China only produced 4.4 percent of the world's total GDP in 2004, yet the crude oil it devoured accounted for 7.4 percent of the world's total; coal, 31 percent; iron ore, 30 percent; rolled steel, 27 percent; alumina, 25 percent, and cement, 40 percent. How to evaluate the authenticity of the statistics from the economic survey? Reporter: It was widely agreed that China's services industry were underestimated in the previous statistics. The economic survey made up with it but the revised part is still surprisingly big. Li: The under-coverage of the tertiary industry is a major problem found out in the economic survey, which is not surprising to anyone. As I mentioned at the annual sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) this year, apart from an incomplete statistical system, it should be admitted that the NBS has overlooked some aspects in this regard. The results of the survey has verified such estimations. We have discovered the reasons for the omission and the solution as well therefore we are confident in the future work. Reporter: Just like doubts in the past, there are people questioning the reliability of the statistics that result from the economic survey. Li: People should try to judge figures and statistical work objectively. Figures are a mirror of socio-economic development but not a simple calculation of "one plus one equals two." No country in the world can have 100-percent accurate statistics but they are always revising. In the past, our statistics basically indicated the overall trend of China's economy. However, we have shortcomings in our work and have been trying to improve the system. We are deeply aware of the defects of regular statistics and that is why we need economic census for accurate figures. The statistics obtained from the economic survey are definitely more accurate than the regular ones, but on a comparative basis. However, no other department can afford to spend so great efforts in such a large-scale economic survey so the figures from the concluded survey are the most authoritative and basically reliable. "Seeking truth and reflecting reality" is for all time the fundamental principle and sacred mission of statistical departments. All that we have done in the economic survey is a process of pursuit for such a goal. It must take some time for an old system to bow out and for a new one to be established and improved. It is a historical process. China is progressing step by step in its statistics system and gradually incorporating international practice. Now finally we see tangible progress. The system is capable of manifesting more truly and comprehensively the achievements China have made through reform and opening up, and the modernization drive, as well as its overall strength. It is a good thing. Background: China's first nationwide economic survey According to the NBS, the reference time for the census was Dec. 31, 2004, and the flow data covered the whole year of 2004. The economic census covered all legal person units, establishments and self-employed individuals who were engage in the secondary and tertiary industries within the territory of China. The survey lasted two years, mobilizing 13 million people with an input of nearly two billion yuan. The launch of the first economic census is the result of major adjustments in the nation's arrangement of census. According to the original plan, China should have conducted the second national survey on the tertiary industry in 2003. However, due to the SARS outbreak that year, the services sector was severely affected therefore a census as planned cannot give a true picture of China's tertiary industry. Based on the problems found in the original census system and the situation at that time, in July 2003, the NBS, the National Development and Reform Commission (NDRC) and the Ministry of Finance conducted research and reported to the State Council. As approved by the State Council, China decided to make major adjustments in the items and schedules of the survey. So the first national economic census was launched in the year of 2004 . Currently, the programs for national census include: population census, once per ten years in the years numbered with "0" in the end; agricultural census, once every ten years in those numbered with "6" in the end; an integrated census on the tertiary industry, industry and basic units, as well as the on construction industry, the first economic census due in 2004; economic census after the first one, twice every ten years, in those years numbered with "3" and "8" in the end. By People's Daily Online - Text Version - RSS Feeds - Top statistician on China's economic figures: services sector - China takes various measures to prevent miscalculation of economic statistics - Statistician: China remains world's largest developing country - Top statistician: survey result will not affect China's macro-economic policy Alibaba Directory Alibaba China Copyright by People's Daily Online, all rights reserved

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> Capitulation Bottom: Why I’m Fearful That A Crash Is Coming & Soon (XLF, FAS, FAZ, SKF, UYG, C, GS, WFC) Capitulation Bottom: Why I’m Fearful That A Crash Is Coming & Soon (XLF, FAS, FAZ, SKF, UYG, C, GS, WFC) January 17th, 2012 Shah Gilani: It seems that my Thursday edition of Wall Street Insights & Indictments was warmly received by the bullish crowd, many of whom reached out to me to thank me for my optimism. I’m sorry to burst your bubbles, but I am not a raging bull (but thank you for asking). In fact, I’m still bearish. There’s a big difference between being bullish and playing all stocks (and other asset classes) from the long (that means “buy”) side, and judiciously buying select momentum stocks with fat dividend yields, which is what I was recommending on Thursday. I was talking about taking the path of least resistance, which I identified as “upward,” based on equity activity through year-end and so far in 2012. You’ve heard the old adage “the trend is your friend.” Well, that’s what I was talking about. The trend has been up. I’m bearish because I’m afraid of a European meltdown and a “hard landing” in China. But there’s a huge danger in missing what could be the beginning of a real bull market. So, it makes sense to start putting on solid positions and even speculating here and there. But I am not all in – not yet. However, the time is coming. But, that is also the problem. I’m fearful that a crash is coming, and maybe soon. If we get one, and everything flushes out and we get a capitulation bottom amidst a global panic sell-off, then I’ll be all in, all the way, for the long-term. I’m talking about loading the boat up with stocks and commodities and enjoying a generational ride that will last for maybe 10 years, or more. What keeps me up at night now, however, is the echo of 2007. I call where we are now 2007.2. If we are facing 2007.2, then 2008.2 will follow with a vengeance. I’m guessing the breakdown could come in the first or second quarter of this year (although it could also take as long as 18 months to develop, which would only make it 10-times as bad when it does come). Think about what I’m about to lay out for you, and ask yourself, what if he’s right? In the spring of 2007, U.S. Treasury Secretary Henry Paulson, when addressing problems surfacing in the subprime mortgages arena said things “appear to be contained.” Fed Chairman Ben Bernanke said: “We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited.” Comforting words, right? Then, speaking to members of the Federal Reserve Bank of Chicago in May of 2007, Bernanke said, “Importantly, we see no serious broader spillover to banks or thrift institutions from the problems in the subprime market.” Even before two Bear Stearns hedge funds imploded in June of 2007, the Fed Chairman was touting the virtues of derivatives and the widespread sale of mortgage-backed securities when he stated, “The key thing to remember is that these losses are not just held by American banks, as the bad loans were in Japan (referring to Japan’s lost decade), but they are dispersed.” Then, on August 9, 2007, after one Bear fund was shut down and the other fund temporary propped by an injection of some $3.2 billion from Bear itself, and the seemingly contained fallout from subprime and AAA mortgages hitting “dispersed” banks in Europe, the European Central Bank’s (ECB) Website quietly announced that the ECB would provide as much funding as banks might wish to borrow at only 4%. What was happening was that European banks weren’t lending to each other. The commercial paper market was at a standstill, and there was no short-term funding facility open wide enough to finance their longer-term mortgage positions. And they couldn’t sell their positions because after the Bear funds imploded, there were no buyers for mortgage bonds, even the super-senior AAA tranches many European banks and all the big American banks were holding. Two hours later, 49 banks borrowed three-times what they were usually asking to borrow. And by the time trading closed in the United States on that same day, gold had spiked higher, as had safe-haven U.S. treasuries. Of course, the equity markets were doing their own thing and were rising that summer, nearing new all-time highs (which they would reach in September 2007). It took another year before we got our “Lehman moment.” But, boy did it hurt. Fast-Forward to Now…. We’re being told by the Fed that our banks are in good shape. We’re being told by bank CEOs that they are in good shape and their European exposure is limited. We’re being told that there won’t be any significant hit to our economy from events in Europe. We’re being told that there won’t be any significant spillover because European debts are dispersed and banks have derivatives hedges. These are all lies. Exactly like what happened in 2007, banks in Europe aren’t lending to each other. The commercial paper market over here is closed to them. That’s why the ECB announced it would effectively execute unlimited three-year term repos at 1%. And, by the way, they are taking just about anything for collateral, really. Did 49 banks step up like in 2007? No, in 2007.2 (meaning now) some 500 banks stepped up and took $620 billion (489 billion euros) the following day. And they’ve been adding to that. What’s happening to gold in 2007.2? After selling off as part of the initial risk-on grab for equities a couple of months ago, it’s rising again, and fairly quickly. What about safe-haven bonds? U.S. bonds have been rising rapidly in price as investors clamor for safety. The 10-year closed Friday at a 1.87% yield, only 20 basis points from its all-time low yield, which it saw in September as European woes were strangling global markets. How panicked is a lot of smart money? Yields on German and U.S. short-duration bills are less than zero. That means investors have bid up the price of these short-term safe government instruments that the premium they are paying is greater than their yield. Put another way, people are paying to place their money in safe government securities. Comforting, right? Talk about concentration build-up. First of all, most U.S. banks and most European banks are still sitting on tons of mortgage-backed securities that they can’t unload. And the U.S. housing market isn’t getting any better, nor is Spain’s, Ireland’s, or China’s. Sure, foreclosures are down lately. But that’s because of foreclosure moratoriums resulting from lawsuits. There are estimated to be 10 million homes for sale and over 11 million homeowners holding onto upside-down mortgages. What’s going to happen when banks get on with foreclosing and start dumping houses again? It’s about to happen. All that nonsense about dispersed risks – don’t believe it. There is no dispersion that matters because all the big banks in the U.S. and Europe and plenty of others hold the same asset mixes, the same duration mortgage pools, and the same sovereign debts. But in the place where things are smoldering and there’s kindling everywhere, European banks are buying more of their sovereign’s toxic debts to stave off a collapse of the prices of the debts already on their books. It amounts to a crazy leveraging up on the same bet that sovereign debts will pay off 100 cents on the dollar. And where are they getting the money to buy more of this crap? From the ECB, which is printing it against the backstop of the same countries who need banks to buy their constantly rolled-over debts. It’s musical chairs, and sooner or later the music is going to stop. Greece looks like it will be the first one standing, or in this case, falling down. Portugal could be next, or Spain, or Italy. Greece has more than $1.26 trillion (1 trillion euros) of public sector debt outstanding. Do you think that a real default isn’t going to crush a lot of banks? Wake up. And if you think that Greece defaulting (or even forcing a 50% haircut on private investors, that would be banks, folks) wouldn’t spill over into other countries and across the globe… wake up. Talks in Greece over private investors taking a 50% haircut – meaning they will only get 50 cents on the dollar on the 100 cents they lent out previously and the other 50% they are giving up will be replaced with longer-term bonds yielding less interest – aren’t going well. Most analysts and even central bankers believe the haircut needs to be closer to 75% than 50%. Comforting words to be spoken while negotiations are ongoing, right? Ah, then there’s that little downgrade thing that happened on Friday after European markets were closed. Just because the downgrade of the U.S. from AAA to AA+ didn’t cause our borrowing costs to rise doesn’t mean it isn’t going to happen in Euroland. It will happen. Downgrades will trigger new capital calls as margin requirements will increase to offset the lower quality of collateral, we’re talking about the same collateral folks, the same sovereign bonds. It’s an increasing pile, make that pyre, and it’s going to self-ignite. We have a big week ahead; we have Citigroup Inc. (NYSE:C), Goldman Sachs Group Inc. (NYSE:GS), and Bank of America (NYSE:BAC) reporting fourth-quarter numbers. We have housing starts (homebuilders are up 60% since their October lows) and new home sales. And Spain and Italy are auctioning off bonds on Thursday. Our markets have risen nicely. And on Friday, after selling off hard on the S&P downgrade news, they rallied back impressively. I tell you, it’s 2007.2. Stocks are going one way, and credit markets are signaling trouble ahead. Sovereign debt has replaced subprime as the powder keg. That makes the brewing storm infinitely more powerful than the subprime dust-up was. It’s a question of how long before we get the Lehman moment. We’ve survived, even thrived, on a series of “liquidity puts,” which is what I call all central banks’ stimulus and “free and easy” money thrown at banks to keep them afloat. In a politically charged 2012, that could change. Keep this in mind. If we’re facing 2007.2, then 2008.2 is coming right around the corner. It’s just a matter of time. That’s why I say play the equity market diligently; we could scrape higher for a while, as we did in 2007. But, when the fat lady sings, it’s going to be deafening. And everyone knows the opera isn’t over until the fat lady sings. Related: Financial Sector ETF (NYSEARCA:XLF), Direxion Daily Financial Bull 3X Shares ETF (NYSEARCA:FAS), ProShares UltraShort Financials ETF (NYSEARCA:SKF), Direxion Daily Financial Bear 3X Shares ETF (NYSEARCA:FAZ), ProShares Ultra Financials (NYSEARCA:UYG). Written By Shah Gilani From Money Morning Shah Gilani is the editor of the highly successful trading research service, The Capital Wave Forecast, and a contributing editor to both Money Morning and The Money Map Report. He is considered one of the world’s foremost experts on the credit crisis. His published open letters to the White House, Congress and U.S. Treasury secretaries have outlined detailed alternative policy options that have been lauded by academics and legislators. His experience and knowledge uniquely qualify him as an expert. Gilani ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When the OEX (options on the Standard & Poor’s 100) began trading on March 11, 1983, Gilani was working in the pit as a market maker, and along with other traders popularized what later became known as the VIX (volatility index). He left Chicago to run the futures and options division of the British banking giant Lloyds TSB. Gilani went on to originate and run a packaged fixed-income trading desk for Roosevelt & Cross Inc., an old line New York boutique bond firm, and established that company’s listed and OTC trading desks. Gilani started another hedge fund in 1999, which he ran until 2003, when he retired to develop land holdings with partners. NYSE:FAS, NYSE:FAZ, NYSE:SKF, NYSE:UYG,

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Kimberley Process: Agreement reached on Zimbabwe’s diamond exports IP/10/969Brussels, 19 July 2010Kimberley Process: Agreement reached on Zimbabwe’s diamond exportsThe European Union welcomes that an agreement has been reached within the Kimberley Process on a way forward. A work plan which allows Zimbabwe the possibility to make limited exports of rough diamonds from its Marange diamond field has been agreed at the meeting organised by the Chair of the Kimberley Process in St Petersburg on 14 and 15 July.The encounter, organised after the earlier meeting in June failed to produce results, gathered representatives from the Kimberley Process and Zimbabwe in the margins of a meeting of the World Diamond Council. Under the agreement reached, Zimbabwe could be authorised by the KP Monitor in the course of August 2010 to export a proportion of its diamonds mined in Marange, provided that it meets certain prior requirements, including the provision of an audit of its diamond stocks, and the receiving of a review mission. Zimbabwe will also allow for the KP Monitor to be assisted by a civil society representative to advise on Zimbabwe’s compliance with the agreed work plan. The EU urges Zimbabwe and all KP parties to spare no effort to ensure the good faith implementation of the agreement in full, so that it can pave the way to a lasting solution. The EU welcomes the recent judicial decision on the release on bail on of Farai Maguwu, a prominent Zimbabwean human rights activist, arrested in June and Zimbabwe’s restated commitment to the key role of civil society in the Kimberley Process. BackgroundThe Kimberley Process grew out of discussions in May 2000 in Kimberley, South Africa among interested governments, the international diamond industry and civil society, as a unique initiative to combat ‘conflict diamonds’ – rough diamonds used to finance devastating conflicts in some of Africa’s diamond-producing countries. In November 2002, an agreement was reached on the Kimberley Process Certification Scheme (KPCS): an innovative system imposing extensive requirements on all Participants to control all imports and exports of rough diamonds and to put in place rigorous internal controls over production and trade to ensure that conflict diamonds could not enter the legal diamond trade. In a few years, the Kimberley Process has helped to reduce the amount of conflict diamonds to a tiny fraction of world trade. The Kimberley Process is backed by the United Nations; and the General Assembly renewed its support most recently in December 2009.The Kimberley Process Certification Scheme now has 49 Participants (equalling 75 countries with the European Union counting as a single Participant), including all major diamond producing, trading and polishing centres, and counts on the active participation of civil society and industry groups. To ensure the effectiveness of the Kimberley Process, its requirements – including effective internal controls over diamond production and trade – must be applied in full by all Participants. The Kimberley Process has developed a number of tools to enable assessment of implementation and to address any issues which may arise. These tools include regular statistical reporting, annual reports and other compliance verification measures, such as review missions.In response to ‘indications of serious non-compliance’ since late 2008 in the Marange diamond mining area in Zimbabwe, the KP adopted in its Plenary meeting in November 2009 the Swakopmund Decision and Joint Work Plan providing for ambitious actions to bring diamond mining in Marange into compliance. The Tel Aviv Intersessional meeting reviewed its implementation and discussed plans for certification of certain diamonds mined in Marange, but could not reach consensus on the way ahead, despite real effort by the KP Chair. Therefore, the chair organised a follow-up meeting of key KP participants in St Petersburg, in the margins of the WDC annual meeting.The arrest in June 2010 of Farai Maguwu, director of CRD (an NGO in Zimbabwe), following his meeting with the KP’s appointed Monitor in Zimbabwe, was an issue of particular concern for some participants and observers in the Tel Aviv meeting. On 12 July, Mr Maguwu was released on bail by a Zimbabwean judge.For further details, please see: The EU & the Kimberley Process: http://ec.europa.eu/external_relations/blood_diamonds/index_en.htm Kimberley process: The EU urges further efforts to overcome the impasse regarding the implementation of the KP in Zimbabwe's Marange diamond fields IP/10/856 Reference information

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Archive for September, 2010 Analyst: GM plans to sell shares on Nov. 18 (AP) Thursday, September 2nd, 2010 | Finance News DETROIT – General Motors plans to start trading shares again on Nov. 18, timing that allows the company one more quarter of earnings to build its case to investors, a firm that researches initial public offerings said Thursday. Scott Sweet, the managing partner of IPO Boutique, said GM plans to price the shares on Nov. 17 and begin selling them the next day. He said the automaker wants to start a two-week a road show to drum up investor interest on Nov. 3, the day after the midterm congressional elections. It's unclear if the IPO dates have been finalized. Two people with knowledge of the process say the automaker's board hasn't approved a date for the IPO but is expected to meet next week to discuss the issue. GM is in a "quiet period" before an IPO, so no one is authorized to discuss the process publicly. The company filed paperwork for an initial public offering with federal regulators last month. GM spokeswoman Renee Rashid-Merem declined to comment Thursday on the timing of the IPO. Sweet said his information comes from multiple people on Wall Street but declined to name them. He says the company hasn't yet established a price for the shares, but hopes to raise $15 to $20 billion with the initial public offering. The timing could disappoint some Democrats who supported the government's $50 billion bailout of GM last year and wanted to point to a successful IPO before the elections. But one more quarter of earnings could help the automaker establish that it is healthy and capable of making sustained profits. GM earned $2.2 billion in the first half of 2010 despite depressed U.S. auto sales, but it lost $3.4 billion in the fourth quarter of last year. GM also hopes the U.S. auto market sees some modest improvement this fall. On Wednesday it said its U.S. sales fell 5 percent from July and 11 percent from last August, when they were boosted by the Cash for Clunkers program. Dan Akerson, who became GM's CEO on Wednesday, didn't mention the IPO in his first e-mail to employees Thursday. Akerson wished employees a happy Labor Day weekend and said he has already met with United Auto Workers President Bob King. Akerson said he is "from a union family" and believes "very deeply" in working together with the union. "There will always be more hard work ahead of us, but because of your dedication, I have great optimism for GM's future," Akerson said in the e-mail obtained by The Associated Press. Akerson took over from Ed Whitacre, who has resigned as CEO but will remain chairman of GM through the end of this year. Both men are former telecommunications executives appointed to GM's board by the federal government. Follow Yahoo! News on Twitter, become a fan on Facebook Bernanke takes blame for muddled message on Lehman (Reuters) Thursday, September 2nd, 2010 | Finance News WASHINGTON (Reuters) – U.S. Federal Reserve Chairman Ben Bernanke said he was partly to blame for leaving the wrong impression that the central bank could have saved Lehman Brothers from failure in 2008. Bernanke, testifying on Thursday before a congressional commission examining the causes of the worst financial crisis in 80 years, said he thought it "very likely" the investment bank was insolvent and lacked sufficient collateral to borrow enough from the central bank to avert collapse. But he said he kept that view to himself in congressional testimony given just days after Lehman's September 2008 bankruptcy because he was worried that such comments might have spooked already panicky financial markets. "I regret not being more straightforward there because clearly it has supported the mistaken impression that in fact we could have done something we could not have done," he said. The Financial Crisis Inquiry Commission wrapped up a two-day session on Thursday focusing on "too big to fail" firms whose disorderly collapse could destabilize the global economy. On Wednesday, commission Chairman Phil Angelides questioned whether politics had played a role in the decision not to bail out Lehman Brothers, citing emails showing U.S. officials fretting over how the media might portray a taxpayer-funded rescue of a Wall Street titan. Lehman's bankruptcy triggered widespread panic, hastening the worst global recession since World War Two. "It was with great reluctance and sadness I conceded that there was no other option" but to let Lehman fail, Bernanke said. "The only way we could have saved Lehman would have been by breaking the law and I'm not sure I'm willing to accept those consequences for the Federal Reserve and for our system of laws." The central bank serves as the lender of last resort for banks in financial difficulty, but it is required to lend against good collateral. Bernanke said it was the "unanimous opinion" of New York Fed lawyers and leadership that Lehman did not meet that requirement. The financial crisis, which began with failing U.S. home mortgages, led to the bankruptcy, bailout or government-brokered buyout of large financial firms, including Bear Stearns, Lehman Brothers, Wachovia and Washington Mutual. The costly bailouts have been hugely unpopular with voters, and many politicians are still paying the price with as November congressional elections near. The 10-member, congressionally-appointed commission is due to issue its report on the causes of financial crisis by December 15. BREAKING UP HARD TO DO Bernanke said a freshly minted financial reform law would help reduce the risk of future problems, provided regulators follow through on its implementation. He listed stricter capital and liquidity rules, a regime to wind down a failing firm in an orderly fashion, and requirements that most derivatives are to be settled in clearinghouses, as among the measures that will strengthen the financial system and help address the too-big-to-fail problem. Federal Deposit Insurance Corp Chairman Sheila Bair, who heads the agency that protects depositors in failed banks, said regulators play a vital role in ensuring the newly enacted reforms are successful. "If implementation is not properly carried out, the reforms could be ineffective in preventing future crises or containing financial market disruptions should they occur," she said. One of the new rules requires large financial companies to produce "living will" plans for how they could be safely dismantled if necessary. Bair said if those plans are not deemed credible, regulators can break them up. "The government would be authorized to break up the institution so that it no longer creates undue risk to the financial system," she said in written testimony. Breaking up banks that fail to produce credible resolution plans was a last resort that would only be taken if, over two years, firms ignore other entreaties to produce a credible plan. Before breaking up a firm, Bair said regulators could impose stricter requirements for capital, liquidity and leverage. TRANSATLANTIC TIFF? Bair also took aim at critics who say the struggling economy is reason to postpone new capital requirements, including those now being worked out as part of international negotiations known as Basel III. The aim is to establish global standards on how much and what type of capital banks must hold as a cushion against potential losses. The financial crisis exposed shortcomings in existing capital rules, and the United States has pushed hard for stricter requirements. However, many banks have argued that raising the requirement before the economic recovery is assured might constrain lending and choke off growth, and some officials -- particularly in Europe -- have called for a slower phase-in. Bair acknowledged that meeting the stricter requirements will not be easy for banks, but said this was "no excuse for repeating the mistakes of the past when it comes to responsible capital requirements." When asked during her testimony about which countries were pushing back against quick implementation of tougher Basel requirements, she said those discussions were "confidential." Commissioner Keith Hennessey, a former White House economic adviser, pressed her to at least specify which continent the pushback was coming from, alluding to media reports that some European officials had pushed for delaying implementation. "I wouldn't dispute the public reports, let's put it that way," she said. (Reporting by Mark Felsenthal and Dave Clarke; Writing by Emily Kaiser; Editing by Tim Dobbyn) Con man could get life under Calif. 3-strikes law (AP) Thursday, September 2nd, 2010 | Finance News LOS ANGELES – A man accused of bilking elderly South Los Angeles residents out of their homes in a foreclosure scam is facing a potential life sentence in a rare use of California's three-strikes law for a white-collar crime. Timothy Barnett is charged with 23 felonies, including identity theft, real estate fraud and theft from the elderly. He was arrested in April and has pleaded not guilty. A conviction would be the 47-year-old's third felony strike after two 1997 burglary convictions stemming from fraud schemes in which he met the victims at their homes. A judge, however, must decide whether to permit Barnett's prosecution under a third-strike sentencing enhancement. Los Angeles County prosecutors call him an incorrigible con man who deserves to face 25 years to life if he's convicted. "He has an almost magical ability to install confidence in people. He is a great menace to the community," Max Huntsman, who supervises the real estate fraud section of the county district attorney's office, told The Associated Press on Thursday. But critics are questioning whether it's a proper use of the law that voters passed in 1994. "I've never heard of such a case," said Stan Goldman, a Loyola Law School professor who is an outspoken opponent of the three-strikes law. "This law was intended to deal with serious and violent felons and lock them up forever," Goldman told the Los Angeles Times. "If this guy's guilty, he's a pretty despicable and dangerous character. But he hasn't killed anybody." There have been repeated calls to reform the three-strikes law, which permits someone convicted of two serious felonies to face a possible life sentence if convicted of a third felony of any type. In 2004, California voters rejected Proposition 66, which would have amended the law by requiring the third strike to be a violent or serious felony, among other things. Last month, a judge freed a man who spent 13 years in prison after trying to steal food from a Los Angeles church. Gregory Taylor, 47, was convicted of a third-strike of burglary and had two previous robbery convictions. In 1995, a Compton man and convicted robber named Jerry Dewayne Williams was sentenced to 25 years to life under the law after he snatched a slice of pizza from some children in Redondo Beach. The sentence was later reduced and he was freed in 1997. The U.S. Supreme Court twice decided that the three-strikes law doesn't violate constitutional bans on cruel and unusual punishment. Prosecutors contend Barnett tricked five people who thought they were refinancing delinquent mortgages into selling their homes to him for a fraction of their value. He remained jailed Thursday on $2.2 million bail pending a Sept. 10 pretrial hearing. Barnett, who had a $3.1 million home and three Mercedes-Benz cars, did nothing wrong, his attorney says. Through his Buena Park company, Barnett offered to buy the homes of delinquent owners, often gave them cash sums, leased back the property to them at much lower monthly rates and offered them the chance to buy back the property in two or three years, Winston Kevin McKesson said. "The real villains in this case are the alleged victims" who bought the homes, built up equity and then used it to live beyond their means, McKesson told the AP. The people accusing Barnett of fraud knowingly signed sales contracts and then reneged on the agreements, the attorney said. McKesson also said he didn't believe the three-strikes law was intended to cover his client's case. "No one's physical safety was at risk," he said. Huntsman said the allegations against Barnett warrant a potential life sentence. "I think what he does is so horrible that it's much worse than many strikes," Huntsman said. "A terrorist threat, an ADW (assault with a deadly weapon), a person hits somebody with a stick, might do less damage than what this man does. "He destroys lives. He targets elderly people whose wealth, accumulated over a lifetime of work, is their home." The district attorney's office has a policy of not automatically seeking third-strike sentencing enhancements if the alleged felony isn't serious or violent, because judges often reject the option, Huntsman said. However, the charges against Barnett include two counts of burglary, which under the law qualify as serious felonies. "When you enter somebody's home and commit crimes, that's a very dangerous situation that you're creating because people often get violent when defending their home," Huntsman said. McKesson said a judge had thrown out the burglary charges and the prosecution reinstated them. He said he intends to ask for dismissal of all charges at an upcoming hearing. Barnett spent nearly five years in state prison after his 1997 burglary convictions. The victims in the latest case were mostly older residents of South Los Angeles, prosecutors said. Eddie F. Baker Jr. said Barnett rang his doorbell in 2005 and said he had a plan to help the 72-year-old avoid foreclosure. "He was telling me that he was a member of the church and that he was a man of God and I was a man of God. So we kind of had a relationship. I trusted him," Baker testified at Barnett's preliminary hearing. "He told me he could help me get my life in order. I could pay all my bills and get my house back and get an A-1 credit rating," Baker said. Instead, Baker said he unwittingly had granted Barnett title to the home he had owned since 1969. Page 400 of 412« First«...102030...391392393394395396397398399400401402403404405406407408409410...»Last »

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Bridgewater comments Ray Dalio's 'All-Weather' fund goes cold By Stephen Gandel, senior editor January 9, 2014: 2:50 PM ET Bridgewater Associates has claimed that one of its key funds will do well in up and down markets. So how come it couldn't perform in 2013? Bridgewater's Ray Dalio FORTUNE -- The hedge fund that claims it will never have an off year just had one in 2013. Bridgewater Associates' All-Weather fund dropped 3.9% last year. This has come at a time when the sky for many investors has been quite clear. The stock market rose nearly 30% in 2013. It rained on the bond market. The Barclays Capital Aggregate Bond Index fell just over 2%. Still, All-Weather did worse. Of course, all hedge funds essentially claim that they will make money no matter what. That's what the "hedge" in their title is supposed to indicate. But Bridgewater Associates with the All-Weather fund has been explicit about it. Bridgewater, which is run by Ray Dalio, has pitched the fund aggressively to pension funds around the country. Dalio even made a video explaining why the fund will go up even if stocks or bonds go down. All-Weather has attracted $70 billion in assets. Bridgewater doesn't say how much of that is from pension funds, vs. other investors. MORE: Dalio: Stocks will disappoint The fund, which launched in 1996, is based on a concept that Dalio pioneered called risk parity. Others have launched similar funds. Essentially, Dalio thinks most investors get diversity wrong. They put some of their money in stocks and some of their money in bonds, perhaps 60-40, and call it day. Dalio says that's not how we should go about it. What investors really need to do, he argues, is diversify their risk. Bonds are traditionally much less risky than stocks. A 60-40, or even 50-50, split isn't going to do that. You need to hold a whole bunch of bonds, at least compared to how much money you put in stocks. In fact, the only way to get as much exposure to bonds, relative to stocks, as risk parity proscribes, is to borrow money against your portfolio and buy more bonds. What results is basically a leveraged bond portfolio. So it's not really that big of a surprise that the All-Weather fund would tumble in a year when bonds did poorly. Yet, decades of falling interest rates and rising bond prices have made the fund look invincible. Even including 2013's poor returns, All-Weather is up 12.4% over the past five years. With interest rates rising, and the expectation that they will continue to rise for a while, this appears to be the end of the run for All-Weather, along with the belief that the fund had the ability to perennially defy the market. At the New York Times' Dealbook conference in November, I asked Dalio whether he thought it was a good idea to continue to pitch All-Weather to pension funds at at time when interest rates are likely to continue to rise. In fact, Dalio predicted that himself. In response to my question, though, Dalio said Bridgewater had back-tested All-Weather and found that it would have done fine in, say, the late 1970s, and other periods of rising interest rates. But here's the flaw. In the 1970s, interest rates were much higher than they are now. So any money a fund would have lost on falling bond prices would have been more than offset by high interest rates. MORE: What bearish investors are missing about Facebook That's not going to happen now. Interest rates on 10-year U.S. Treasuries are around 3%. That's not nearly enough of a cushion for the damage a drop in prices will do to a bond portfolio, particularly a leveraged one. It's the second year in a row that Dalio, who has had a stellar track record, has put up disappointing returns. In 2012, Bridgewater's flagship Pure Alpha fund was up just 0.8%. The fund did better in 2013, up 5.25%, but it delivered far lower returns compared to those who simply put money into the market. The sunny days for the All-Weather fund, and Dalio in general, may be over. Posted in: Bond prices, bonds, Bridgewater, Hedge Funds, ray dalio Bridgewater founder to hedge funds: Be more than index funds Some harsh words of advice for the hedge fund industry from one of its own: it's not all about making money. Bridgewater Associates founder Ray Dalio told hedge fund industry leaders to stop being glorified index funds. His challenge to his peers was issued during the HFM 2010 US Performance Awards at the end of October, reports HFMWeek. Since Dalio did not attend, his co-chief investment officers delivered his message to MORE Katie Benner - Nov 4, 2010 9:13 AM ET Posted in: Bridgewater, Hedge Funds, Private Equity Most Popular

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Foreign Policy In Focus Dodd-Frank’s Cardin-Lugar Amendment Undermined by Weak SEC The Cardin-Lugar Amendment has the potential to reduce corruption in both resource-rich countries and powerful international corporations. By Hilary Matfess, September 7, 2012. Print Two years after becoming law, Section 1504 of the Dodd-Frank bill, also known as the Cardin-Lugar Amendment, will finally come into effect. The Amendment, hailed as a transformative step towards establishing transparency in developing countries by groups such as the State Department, Oxfam and Jubilee USA, requires that companies listed on the American stock exchange involved in extractive industries “disclose payments they make at the country and project level to the United States and foreign governments.” Over 1,000 companies involved in oil, gas, and mining will be covered under this bill, including an estimated 90% of internationally operating oil companies. Senator Ben Cardin (R-MD), for whom the Amendment is partially named, has billed it as a necessary step to end the abuse of power rampant in developing countries with significant oil, mineral, and natural gas deposits. Cardin has stated that the implementation of the Amendment will allow the European Union to adopt complementary measures. Given the positive response the Amendment received within the governmental and non-profit spheres and the gravity of the situation in many resource-rich developing countries, one wonders why the Securities and Exchange Commission issued the final rules for the implementation of the Cardin-Lugar Amendment 16 months behind schedule. Even more distressing is the fact that Oxfam felt compelled to file suit against the SEC after the Commission missed its original April 2011 deadlines for issuing rules. Unfortunately, the agency that is entrusted with the responsibility of reviewing the companies’ reports and investigating any discrepancies is the very agency that has delayed the implementation of the Cardin-Lugar Amendment. This failure raises the question of whether or not the SEC is capable of overseeing such crucial legislation. Questions about the agency’s competency have been rampant since the Bernie Madoff scandal was brought to light. Though Congress and the Project on Government Oversight have called for the SEC to implement reforms to reduce errors and outright corruption in the agency, there has yet to be significant, systematic reform in the agency. The Project on Government Oversight reported that two years after the Senate released a statement calling for reforms, the SEC had made no progress on 27 of the 52 reforms recommended by the Inspector General. It has become ever more obvious that the SEC is unable to fulfill its role as an adversarial regulator; unfortunately, this incompetency means that the importance of the Cardin-Lugar Amendment has been squandered on an agency that cannot fulfill its mandate. While the Cardin-Lugar Amendment has the potential to reduce corruption in both resource-rich countries and powerful international corporations, without an enthusiastic and competent regulatory body enforcing its tenets it will represent nothing more than the formalization of good intentions. Hilary Matfess is an Institute for Policy Studies intern and a Johns Hopkins University student. Issues: Labor, Trade, & FinanceRegions: North America, United StatesTags: cardin-lugar, dodd-frank, financial flows, sec About We sniff out issues hiding in the foreign-policy forest and haul them back to the laboratory for inspection. We examine the anterior, posterior, and underside of an issue, as well as its shadows.

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Money Magazine Ask the Expert by Walter Updegrave Getting in on the gold rush - the smart way The price of gold is past $700/oz. Will it go higher still? Is there a way for me to benefit? By Walter Updegrave, MONEY Magazine senior editor May 12, 2006: 11:01 AM EDT Sign up for the Ask the Expert e-mail newsletter NEW YORK (CNNMoney.com) - When the price of gold shot past $600 last month for the first time in 25 years, I figured I'd missed a big opportunity. Now it has risen past $700. Will it go higher still? Is there a way for me to benefit? - Anonymous, New York City More from Money Magazine Budgeting for a new home, and a disability Funny thing about gold. After it's experienced a huge run-up and is sitting at a price where you can't help but wonder whether there's much more upside left in the near future, people can't wait to join the gold rush. But when gold is selling at price where presumably it would have much farther to run - as recently as May, 2003 it was trading at just $350 an ounce - nowhere near as many people are clamoring to get into it as they are today. In fact, gold often drops completely off investors' radar screens. The glitter of gold Which brings me to what I think is one of the most interesting, and dangerous, aspects of gold as an investment: we're most eager to invest in when its emotional appeal is high but its return prospects are murky at best. And we're least enthusiastic when it might actually be a bargain. I won't kid you. I have no idea whether gold is going to continue its upward march, matching its January 1980 high of $850 an ounce and then going on to even higher ground. I think it's pretty clear, though, that what's driving it are the forces that have boosted gold prices in the past, namely, concerns about inflation (i.e., rising oil prices) and geopolitical jitters (i.e., nuclear standoff with Iran, war in Iraq and Hamas to name a few). So if you think that we might see a significant uptick in inflation and that various political hot spots around the world will continue to rattle investors' cages enough to maintain gold's allure as a haven in an uncertain world, then its prospects could be quite good. Some gold bugs also note that if you adjust gold's record price of $850 for inflation, it translates to more than $2,000 an ounce in today's dollars. To them, this suggests gold still has plenty of room to run (although I know of no rule that says gold's value has to keep pace with inflation). On the other hand, if you think that new Fed chairman "Big Ben" Bernanke will do all he can to keep inflation in check (and the Fed's latest 25 basis point rate hike as well as the Fed Open Market Committee's subsequent statement suggests to me Ben and the boys are on top the inflation situation) and you believe that, despite various political problems, the world really isn't about to implode, then you would have to figure that the gold's upside is limited. For a solid metal, gold is pretty volatile Whichever way you come down on those issues, there's one important thing you ought to keep in mind: gold is one of the most volatile investments around. As a practical matter, that means that big spikes in its price are often followed by drop offs that are just as steep, if not steeper. This sort of rollercoaster up-and-down ride has been gold's trademark for at least the last 30 years. As I see it, there are two ways to play gold. One is to try to time the ups and downs - that is, buy when prices are low and sell after gold has spiked. I think this is a dangerous game for most investors because they're likely to get into the game late and end up doing the opposite, buying high and then selling after gold declines. If you think you're up for this sort of strategy, I would suggest you ask yourself this question: Did you buy gold a year ago when it was selling for about $420 an ounce? If not, why do you think you know more about gold's prospects today than you did a year ago? I think most people, if they're being honest, will answer that they don't have any particular insight into gold. They're just caught in the euphoria of the rising price and don't want to miss out on a good thing. To me, that's not a reason to buy gold, or any other investment for that matter. Dip a toe in the water if you must But there's a second way to play gold that I think can make much more sense for most investors. And that is to invest a small portion of your portfolio - say, 5 percent or so - in gold as a long-term diversification strategy and inflation hedge. Each year, as part of your regular strategy of rebalancing your portfolio to restore your mix of assets back to its normal position, you would then sell gold if it's risen in price and therefore become a larger part of your holdings. Or you would buy more gold if it fell in price and became a smaller part of your holdings. In other words, the idea is to maintain that 5 percent or so exposure over time by buying more or taking profits along the way. This strategy has several benefits. First, it forces you to sell some, but not all, of your gold holdings, when the price is rising. And if forces you to buy some gold after the price has fallen. In other words, it prevents you from making an emotional decision to buy or sell based on the current price of gold and the euphoria or gloom related to that price. Another benefit of this diversification strategy is that you get to take advantage of another of gold's signature features: its low correlation with the stock market. Even though gold is more volatile than the stock market, it doesn't move in synch with stock prices. So by adding some gold to your portfolio, you can actually lower the volatility of your portfolio overall. That may sound like an investment version of alchemy, but it's true. As for the practical matter of how to buy gold, there are more options today than ever before. You can buy gold coins, gold bullion, gold bullion online, gold stocks, mutual funds that invest in gold and other precious metal stocks and gold exchange-traded funds (ETFs). The World Gold Council gives a nice explanation of these options. If for no other reason than convenience of buying and selling, not to mention keeping costs down, I would stick to either precious metals mutual funds, which invest in companies that mine and process gold and other precious metals, or gold ETFs, each share of which gives you ownership of a tenth of an ounce of gold held by the fund. For a list of precious metals funds as well as performance stats and other information, click here. As for gold ETFs, there are currently two available, the iShares Comex Gold Trust and streetTracks Gold. Frankly, though, I think the strategy you use to invest in gold is ultimately more important than the particular vehicle you use to buy it. Because if you screw that up, you're not likely to make money no matter how you're invested in gold. More recent Ask the Expert columns: On the path to early retirement Clearing up Roth IRA confusion SAVE | EMAIL | PRINT | | REPRINT More Ask the Expert Do I owe taxes on fantasy sports winnings? Should I take out a 401(k) loan to pay off debt? Follow the news that matters to you. Create your own alert to be notified on topics you're interested in. Or, visit Popular Alerts for suggestions.

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commentsAlly's mortgage unit files for bankruptcyBy Chris Isidore @CNNMoney May 14, 2012: 8:23 AM ETNEW YORK (CNNMoney) -- Ally Financial's ResCap mortgage unit filed for a prepackaged bankruptcy protection Monday, a move that the taxpayer-owned bank says will allow it to take another step to repay Treasury.The ResCap unit, which operates under the GMAC Mortgage brand, was once one of the nation's leading subprime lenders. Problems with those home loans for riskier borrowers and the sharp drop in the company's core auto finance business forced Treasury to give it a $15.8 billion bailout in 2009, as part of its efforts to rescue the troubled auto industry and housing market. The company, which started as the finance unit of automaker General Motors (GM, Fortune 500) under the GMAC name, changed its name to Ally following the bailout. Besides continuing its auto finance business, it now operates an online commercial bank.Ally also said it is looking at a possible sale or other strategic alternatives for its international business.The company said that it expects GMAC to continue to make and service mortgage loans while the bankruptcy process is completed. The portfolio of home loans it holds, now valued at less than half its original value, will be auctioned off as part of the bankruptcy process. GMAC said it will make a so-called "stalking horse" bid of $1.6 billion for those loans, but they are expected to draw a higher bid from investors.0:00 /4:30BofA's plan to move beyond mortgage mess"The action by ResCap will enable Ally to achieve a permanent solution to its legacy mortgage risks and put these issues behind us," said Ally Chief Executive Officer Michael A. Carpenter. "This action, along with pursuing alternatives for the international businesses, will allow Ally to focus 100 percent of its energies on further strengthening its already leading U.S. auto finance and direct banking franchises."Treasury currently owns about 74% of its outstanding stock, and Ally has paid about $5.5 billion of the bailout back to Treasury through dividends and loan repayments. The company's statement Monday said that upon successful completion of the bankruptcy auction and disposal of its international business, it should be able to have paid back about two-thirds of the government bailout. Most Popular Investors cheer India election's reform potential Search for Jobs Millions of job openings!

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Peerless Writer, Dauntless Man Alan Abelson is gone, but his legacy lives on at Barron's. Alan, we miss you already. Alan Abelson passed away last week at the age of 87, and his absence from this column over the past few months has been noticed by its legions of loyal readers. We fielded scores of inquiries from folks whose weekends invariably started by turning to Alan's column. They clearly missed the enlightenment and sheer enjoyment he provided. Until just a few days before Alan succumbed, he was planning to return to work. We recently spoke on the phone, chatting about—what else?—the market and Fred Hickey's latest newsletter. Alan was as cogent as ever. We planned a lunch when he was up and about. In Alan's voluminous vocabulary, the word "retirement" didn't exist. He wasn't the retiring type, in any sense of the word. While another prominent octogenarian, Warren Buffett, professes to "tap dance to work," for Alan working wasn't toil but a labor of love—a love of the subject matter and the craft. And it showed, right up until his final column on Feb. 11, in which he puckishly wondered if there was a link between the discovery of the remains of Richard III under a parking garage in England and the stock market's acting a bit sickly. Nobody else had such a literate wit and the ability to leaven the often-stolid subject of high finance. In fact, Alan did it first, and did it best. That he continued to do it to the end is the very definition of a life well-lived. Alan started his Up & Down Wall Street column during the Go-Go days of 1966, and he chronicled the devastating bear market of 1973-74, the bull market of the 1980s (interrupted, however briefly, by the Crash of October 1987), the Dot-Com Mania of the 1990s, and the bubble and bust that have so far defined this young century. From this voluminous body of work of such uniformly high quality, noting any column is to slight many estimable examples. But Alan did single out one that not only stands the test of time, but maybe improves with age. Unfortunately, it precedes the electronic archival of Barron's, so we can't provide a link to the story, only a taste. It is the tale from 1990, when Donald Trump directed his ire on a securities analyst with the brokerage firm of Janney Montgomery Scott, one Marvin Roffman, who had the temerity to say uncomplimentary things about Atlantic City and Trump's Taj Mahal casino hotel. Whereupon The Donald threatened a "major lawsuit" against Janney unless its analyst apologized or was sacked. ("Mr. Trump reserves minor lawsuits for children," Alan quipped.) And when Roffman retracted a letter of apology that he had signed under evident coercion, the brokerage firm took Trump's alternative option and canned him, which inspired Alan to write: "On the surface, this seems like an act of unsurpassed spinelessness. However, superficial impressions are often misleading. It is necessary in such delicate and complex cases to probe beneath the surface. And when one probes beneath the surface, we can assure you, the firing of Mr. Roffman seems like an act of unsurpassed spinelessness." Classic Abelson. Not only does it show the talent honed at the famed Writers' Workshop at the University of Iowa, it also evidences Alan's financial wisdom, as well. A year later, Trumps's Taj Mahal entered bankruptcy proceedings. Alan fought and won many legal battles during his tenure as Barron's managing editor and editor. Though the court fights came at a significant cost to Dow Jones & Co., our publisher, which is now owned by News Corp., Alan zealously defended his articles rather than backing down, which he would have considered a manifestation of "unsurpassed spinelessness." In the 1970s, Alan skewered a medical-equipment company, Technicare, in whose stock some dentist had invested a big chunk of his riches. So, of course, the good doctor sued when his stock tanked, alleging that Barron's had leaked its intention to publish a negative story about the company. The judge ruled that the "plaintiff and his counsel knowingly proceeded with litigation that lacked foundation," and because of that "bad faith," the plaintiff was forced to pay a portion of Dow Jones' legal fees. Helping to defend Alan, by the way, was a rising young lawyer named Rudolph Giuliani. Alan also took special delight in 1989 in describing the dismissal of a suit brought by a mob-connected chap who once ran a penny-stock operation. This fellow apparently was particularly peeved because Barron's ran a photo of him "that clearly indicated he was no stranger to a knife and fork," as Alan phrased it. And when BusinessWeek suggested in 1975 that Alan had leaked contents of his market-moving columns ahead of publication to a few investors, Alan responded with a libel suit. He dropped it in exchange for an admission from McGraw-Hill, then BusinessWeek's publisher, that it had no reason to believe he acted unethically or had leaked information purposely. All these battles subjected Alan to the torture of the tort system, with endless billable hours and depositions. It probably would have been cheaper to settle, but that wasn't Alan's way, not least because he was in the right. READERS SAW THE ALAN ABELSON whose incomparable insights and wit graced these pages for some 57 years, over 46 of them penning Up & Down Wall Street. He always was a newspaperman at heart, starting as a copy boy (an archaic term from the days of lead "hot" type and before political correctness) at the old New York Journal-American, moving up to stock-market columnist before arriving at Barron's in 1956. And over his illustrious career, Alan collected numerous plaudits, including a Lifetime Achievement Award for financial journalism from the Loeb Foundation and the Elliott V. Bell award from the New York Financial Writers' Association. He also was named one of the top 100 business journalists of the 20th century by the TJFR Group/MasterCard International Business News Luminaries Awards, along with Robert M. Bleiberg, his predecessor as Barron's editor, and the eponymous Clarence W. Barron. Alan became managing editor in 1965 and was editor from 1981 through 1993. It was during those years that he became mentor and supporter to numerous journalists, some of whom went on to fame and fortune elsewhere while others found their professional home here at Barron's. Having Alan as an editor was an education, especially when he would take your story apart, as would happen to young writers with regularity. By the 1980s, stories were written on computer terminals with monochrome screens and printed on dot-matrix printers. The wide margins left Alan plenty of room to edit or rewrite your story—which he did, in scrawl indecipherable to virtually everyone but the loyal typists who broke the code over the years. Your heart sank if there was more scribble than printing on your story, but you learned from those edits. Yet if you got back clean copy, you might get Alan's highest accolade—that it was "swell." The number of folks who got their professional start at Barron's during his tenure are too numerous to list, but Floyd Norris and Diana Henriques went on to prominence at the New York Times. Alan's long-time lieutenant, Kate Welling, made her WellingonWallSt newsletter in the model of Barron's, featuring the same kind of incisive interviews, while Grant's Interest Rate Observer by the original Current Yield columnist, Jim Grant, is must reading for fixed-income pros. Meanwhile, the Liscio Report is carried on by the associates of the late John Liscio, an iconoclastic kindred spirit of Alan's. And Alan's eye for writing talent inspired him to hire Joe Queenan, whose prolific work sometimes seems to be everywhere. Alan also was a supporter of others whose work would be published in Barron's. Ben Stein recounted in his American Spectator column how Alan published his story about the "leveraged looting" of Metromedia's stockholders when the company was taken private, and another highly critical article on junk-bond king Michael Milken and his firm, Drexel Burnham. "Alan stuck behind me like a stone wall. He and his colleague, the rock-solid Jim Meagher [who succeeded Alan as Barron's editor], never wavered." The Abelson influence continues with the investigative journalism of Bill Alpert, whom Alan hired in the 1980s. Bill recently collaborated with colleague Leslie Norton to investigate the slew of "reverse mergers" by Chinese companies. Their articles, on how these effectively gain the companies a U.S. stock listing without submitting to the usual disclosure requirements, won the pair a Best in Business Award from the Society of American Business Editors & Writers. Alan also started the Barron's Roundtable, that legendary salon of investment solons, which he continued to oversee in January. It was a gathering of Wall Street's best minds—and Alan knew them all—that brought to the public their best ideas, something investors weren't privy to in the days before cable television. Even before the first Roundtable was convened in the 1970s, Barron's featured in-depth Q&As with astute investors who might not (yet) have been bold-face names. So Alan would run interviews with a pretty good stock picker by the name of Mario Gabelli, to give but one example among many. Even today, with media dominated by blogs and tweets, we're still besieged by Wall Street luminaries who want to be part of the elite Roundtable Alan founded. I would be remiss not to mention the other Barron's editors groomed by Alan. He promoted my longtime colleague, Deputy Managing Editor Lauren Rublin, to Trader columnist in the 1980s, and he took special note of her work at a gala marking the 75th anniversary of Barron's inception. Alan also was extraordinarily kind to a middling bond writer whom he asked to fill in for him on occasion. It has always been a privilege, albeit a daunting one, to write this column when he took a well-deserved break. It will be even more so without him. E-mail: [email protected] Email

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hide Swiss bank UBS battles against culture of arrogance Wednesday, January 09, 2013 4:07 a.m. CST An employee walks past a logo of Swiss bank UBS in Zurich December 19, 2012. REUTERS/Michael Buholzer By Steve Slater and Katharina Bart LONDON/ZURICH (Reuters) - Switzerland's UBS has yet to purge itself fully of the culture of arrogance that put it at the centre of a global interest rate scandal, its investment banking chief said on Wednesday. The once-venerable Swiss bank was fined a record $1.5 billion last month for manipulating Libor interest rates, the latest in a string of scandals including a $2.3 billion rogue-trading loss and a damaging tax avoidance row with the United States. "We all got probably too arrogant, too self-convinced that things were correct the way they were - I think the industry has to change," Andrea Orcel told Britain's Parliamentary Commission on Banking Standards, set up after the Libor affair. "I am convinced that we (UBS) have made a lot of progress. I am also convinced that we still need to do more." British bank Barclays paid a fine of $453 million for its role in the interest rate manipulation and more banks are expected to make settlements this year. Orcel said that UBS had fired 18 of the 40 or so people deemed by Britain's Financial Services Authority to have been involved in the Libor rigging from 2006 to 2009. Libor, the London interbank offered rate, is used as a benchmark for pricing trillions of dollars of loans. Most of the remaining UBS staff implicated in the scandal, including Tom Hayes, a trader charged by U.S. prosecutors with conspiracy, wire fraud and antitrust violation, had already left the bank, Orcel said. Andrew Williams, UBS's global head of compliance, told the committee that U.S. bank Citigroup had headhunted Hayes from UBS before the Libor scandal broke, prompting laughter in the committee room. "What kind of reference did you give him?" Nigel Lawson, Britain's former finance minister, asked Williams. "I believe he would have just got the standard reference," Williams replied, adding that the bank's management was shocked by subsequent revelations about the manipulation of Libor. "Clearly, his (Hayes's) conduct was reprehensible and we are all disgusted by it," the head of compliance said, but added that U.S. charges brought against Hayes and another former UBS employee limited what could be said. Hayes, who is estimated to have made $236 million for UBS from 2007 to 2009 at the bank's Toyko office, no longer works for Citigroup. Reuters has been unable to contact the Briton. Orcel, who joined UBS in July, has been investment bank chief since November and is overseeing 10,000 job cuts and a retreat from fixed income. He blamed a decade-long expansion at UBS for creating an unwieldy organization with sometimes rotten corporate practices. "There are certainly elements of our cultures which are negative and which we need to root out and are in the process of rooting out," he said. Investigations by British, Swiss and U.S. regulators revealed interest rate manipulation on an "epic" scale. UBS brokers and managers conspired with brokers to rig the rates to make money and openly boasted about what they were doing. "Think of me when yur on yur yacht in Monaco," one broker told a UBS trader. LIBOR 'SHOCKER' Committee member Justin Welby, the incoming Archbishop of Canterbury, asked Orcel if he was the right man to turn around UBS's investment banking business. "I feel I have a high level of integrity," he replied. Orcel, deemed a "deal junkie" by one committee member, was previously at Merrill Lynch, where he was criticized for taking a $34 million pay package in 2008 after advising on the disastrous RBS-led takeover of ABN AMRO. The Italian admitted that with the benefit of hindsight he would have advised RBS against the 71 billion pound ($114 billion) deal, which eventually forced the bank into a state bailout when its capital reserves came up short during the credit crunch. Orcel told the committee that UBS is working at simplifying the investment banking business to make it less risky, but he admitted that scandals were always a risk. "I would love to tell you it won't happen again, but I can't tell you it won't happen again," he said. The committee, a cross-party panel of lawmakers headed by Conservative MP Andrew Tyrie, is switching its focus to standards and culture after spending most of the past three months assessing structural reform. Tyrie on Wednesday described the Libor rigging as "a shocker of enormous proportions". Former UBS chief executive Marcel Rohner will appear before the lawmakers on Thursday, flanked by Huw Jenkins, Jerker Johansson and Alex Wilmot-Sitwell, three former heads or co-heads of UBS's investment banking division. Thomson Reuters, parent company of Reuters, has been calculating and distributing Libor rates for Libor's sponsor, the British Bankers' Association, since 2005. ($1 = 0.6235 British pounds) (Additional reporting by Sophie Sassard; Editing by Carmel Crimmins and David Goodman)

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» Current Edition » News Stories News Stories WhiteWave’s IPO raises $391 million By Michael Davidson November 9, 2012 BROOMFIELD — WhiteWave Foods Co. raised $391 million in its initial public offering Oct. 26 as the organic dairy company completed its transition from a unit of Dean Foods Co. to an independent company.WhiteWave (NYSE: WWAV) is based in Broomfield and produces Horizon Organic milk, Silk soymilk, Land O’ Lakes dairy products and International Delight coffee creamers.WhiteWave’s offering went better than expected. The company priced its Class A common stock at $17 per share, but it opened at $19. It peaked at $19.17 before falling. WhiteWave was expected to price the stock between $14 and $16 per share. The company sold 23 million shares Oct. 26, well above the 20 million shares it initially expected to sell.After the offering, Dean Foods Co. continues to own 86.7 percent of the company’s stock and retains 98.5 percent of voting power. Dean Foods chief executive Gregg Engels is leaving the company to become WhiteWave’s CEO, although he remains chairman of Dean Foods.“This is an exciting day for everyone at WhiteWave, and I want to thank our employees for their hard work and dedication, which has helped us to reach this milestone, and for their continued commitment to changing the way the world eats for the better,” Engles said in a statement.“We are more committed than ever to providing consumers with nutritious, flavorful, convenient and responsibly produced food and beverage choices,” he said.J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are acting as joint book-running managers for the offering, according to a press release from WhiteWave.Steve Demos founded WhiteWave in Boulder in 1977. Dean Foods acquired the company in 2002. Flood: catastrophe, then compassion For Boulder County and much of the Front Range and adjacent urban corridor, the closing days of summer brought a rain of terror. MORE DigitalGlobe to move from Longmont to Westminster LONGMONT — DigitalGlobe Inc., a large employer in Longmont, said it will move its global headquarters in summer 2014 to an iconic MORE Longmont-Dillard's battle delays plan for mall An eminent-domain lawsuit by the city of Longmont against the Dillard's department store at Twin Peaks Mall started in May and continued MORE Boulder municipal-utility plan: Brighter or dimmer? The city of Boulder's push to break away from Xcel Energy Inc. and create a municipal electric utility heated up in August when the city council approved an ordinance allowing staff to file for condemnation of the Xcel assets needed for MORE Housing, revitalization fuel area building boom Superior finally approves ambitious Town Center plan Expanded facility boosts Ball's satellite work JOBS Act spurs new ventures via crowdfunding From financial low point, bank emerges a Mile High Area's craft breweries boom Longmont votes for high-speed 'net

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Home » Events Events Videos from Events Events Meet the Author - James Rickards Written by Erin S on 04/14/2014 James Rickards Thursday, April 17th at 7 p.m. James Rickards, author of The Death of Money, will be our featured speaker. The international monetary system has collapsed three times in the past hundred years, in 1914, 1939 and 1971. Each collapse was followed by a period of tumult: war, civil unrest, or significant damage to the stability of the global economy. Now James Rickards, the acclaimed author of Currency Wars, shows why another collapse is rapidly approaching – and why this time, nothing less than the institution of money itself is at risk. Advance Praise for The Death of Money "A terrifically interesting and useful book . . . fascinating.” — Kenneth W. Dam, Former Deputy Secretary of the Treasury and Adviser to three Presidents James Rickards is Senior Managing Director at Tangent Capital Partners LLC, a merchant bank based in New York City, and is Senior Managing Director for Market Intelligence at Omnis, Inc., a technical, professional and scientific consulting firm located in McLean, VA. Mr. Rickards is a seasoned counselor, investment banker and risk manager with over thirty years experience in capital markets including all aspects of portfolio management, risk management, product structure, financing, regulation and operations. Mr. Rickards’ market experience is focused in alternative investing and derivatives in global markets. He has also served as General Counsel at several alternative asset management companies and a stock exchange facility and is expert in fund governance and international fund structures. He lives in Darien. All author programs will feature a book signing and refreshments. Books will be available for purchase at each event. Additional parking for evening and weekend Library programs on Thorndal Circle (behind Nielsen’s). Meet the Author The Catherine Lindsey Actors/Playwrights Workshop Workshop your play. The Catherine Lindsey Actors/Playwrights Workshop is excited to announce that the Actors/Playwrights Workshop, now in its 22nd year, will present a series of workshops at Darien Library. Participants are invited to workshop their plays at the following session: Thursday, April 17th at 7 p.m. The workshops will allow the playwrights to refine their scripts before submitting them to the Catherine Lindsey Actors/Playwrights contest by April 30. Playwrights are not required to attend these sessions in order to have their play considered. Submit your play using this form. On Sunday, June 15 at 2 p.m., the Actors/Playwrights Workshop will present the first public-staged reading of selections from the plays in the Library’s Community Room. The Actors/Playwrights Workshop welcomes Actors’ Equity actors and non-Equity actors to participate, brings together local and regional playwrights and actors, and encourages a collaborative effort to create new plays and present a public-staged reading. Co-founded by the late Catherine Lindsey and her husband Robert, the workshop introduces original plays in progress to be developed in a workshop environment with the goal of the public-staged readings. Catherine Lindsey was a beloved friend of the Library and director of Darien Library Theater for over 25 years. The memorial workshops will offer actors and playwrights the opportunity to work together to create original theatrical works in a supportive and creative environment. The Actors/Playwrights Workshop welcomes all interested playwrights and actors, with or without experience, to join. The sessions offer actors and playwrights the opportunity to work together to create original theatrical works in a supportive and creative environment, culminating in the June 15th program, which will feature six staged performances. The musicals, monologues, short scenes from full-length and one-act plays to be performed will be chosen by the Darien Library Selection Committee. When writing your piece please keep in mind that the number of cast members is limited, only one play may be submitted per person, and plays must be 10-minutes long or less. Please limit your plays to 10-pages double-spaced, 12 point font. For more information, contact Workshop Director Robert Cusack at (203) 655-7699 or at [email protected]. Additional parking for evening and weekend Library programs on Thorndal Circle (behing Nielsen's). Events Friday Night Feature - 'Philomena' PHILOMENA will screen in our Community Room April 18th. Friday, April 18th at 6:30 p.m. and 8:30 p.m. - Philomena (2013) Starring Judi Dench and Steve Coogan; Rated PG-13; 98 minutes. Closed captioned for the hearing impaired. Judi Dench plays an elderly Irish woman who, as a teenager, gave birth while she was working at a convent. The Catholic Church had the child adopted, and now, decades later, Philomena is introduced to Martin Sixsmith, onetime government spokesperson who is now working as a freelance journalist. Martin agrees to help Philomena look for her son, and the trail takes them to the United States, and brings them face-to-face with some long-buried secrets. "An utterly charming combination of road trip, odd-couple comedy and heart-touching true story that will leave few dry-eyed, Philomena rests comfortably in the lap of the great Judi Dench." -- Moira MacDonald, Seattle Times For more information, please watch the film's trailer. Check out what else we're screening in April. Additional parking for evening and weekend Library programs available on Thorndal Circle (behind Nielsen's). Register for These Spring Tech Classes In April/May: LinkedIn, Word, and Excel Class registration is limited to Darien residents, those who work in Darien full-time, and Friends who have donated $300 or more. Register: Introduction to Microsoft Excel Tuesday, April 22nd, 2- 4 p.m. Excel is Microsoft’s powerful spreadsheet software. Join us for this beginner class and learn what a cell is, how to create a worksheet, and much more! Register: Intermediate Excel Thursday, April 24th, 2 - 4 p.m. Learn how to use sorting, filtering, and lists to make your data come alive. Register: LinkedIn Thursday, May 1st, 2-4 p.m. Learn about the social media craze and how to set up your own LinkedIn account. This workshop will explore finding and establishing connections, group memberships, and effectively using LinkedIn for your job search! Register: Introduction to Microsoft Word Tuesday, May 6th, 2 – 4 p.m. Use word processing software to your advantage to create professional, dynamic documents. Events Image courtesy Flickr user lestaylorphoto All classes are on Tuesday evenings, 6:30 - 7:30 p.m., in the Conference Room, with one exception noted below. Tuesday, April 22nd at 6:30 p.m. - Register: Book Clubs Join Blanche in exploring great resources for your book club. She'll walk you through different websites to help enhance your club's next discussion. Tuesday, April 29th at 6 :30 p.m. - Register: Finance and Investing (meets in the Technology Center) The Library is home to a wealth of information for first-time investors up through the most seasoned shareholders. Explore these resources to keep your fingers on the pulse of your own investments. Tuesday, May 6th at 6:30 p.m. - Register: Job Search Starting a job search can be overwhelming, especially with all of the different websites that are now available. Come learn about the Library's premium online resources available to help you search postings, zoom in on companies in an industry or region, and define your career goals with free asessments. Events Crafting Over Coffee image courtesy Flickr user chrissy.farnan Wednesday, April 23rd at 10 a.m. Join Jennifer St. Jean of Itty Bitty Bag and Leslie Rottner of Abbey Road Photography as they discuss the process of creating and selling handmade items. This is the perfect opportunity for seasoned crafters to join beginner and amateur crafters to network over coffee. Attendees are welcome to bring crafts they are working on or they can simply hang out and talk about handmade items. Meet your fellow makers! Events Meet Us On Main Street Wednesdays at 11 a.m. - Meet Us On Main Street "You Are What You Read" goes LIVE! Wednesdays at 11 a.m. After a holiday hiatus, we are back to tell you about the latest and greatest books, movies, apps, and articles that we are currently digging. Please join us for this weekly, informal discussion. There will be "oooohs." There will be "ahhhhs." There will be laughs. We hope to see you there. Events Friday Night Feature - 'Captain Phillips' We will screen CAPTAIN PHILLIPS in our Community Room April 25th. Friday, April 25th at 6:30 p.m. and 8:45 p.m. - Captain Phillips (2013) Starring Tom Hanks and Barkhad Abdi; Rated PG-13; 133 minutes. Closed captioned for the hearing impaired. A U.S. cargo-ship captain surrenders himself to Somali pirates so that his crew will be freed in this true story. "This is acting of the highest order in a movie that raises the bar on what a true-life action thriller can do." -- Peter Travers, Rolling Stone Poetry for Spring Written by JanetD on 04/07/2014 Wally Swist "O Wind, If Winter comes, can Spring be far behind?" -- Percy Bysshe Shelley As Shelley reminds us, April is here and spring has sprung, even though we're not quite in short sleeves yet. April is also National Poetry Month, when we get to celebrate the written word. On Sunday, April 27, Darien Library will present Poet's Voice, part of a series of readings in Fairfield County libraries, with a special program featuring poet Wally Swist. Author of over 20 books and chapbooks of original poetry, Wally Swist is also a bookseller, editor, and has written hundreds of published feature articles and reviews. He is a native New Englander who shares his journeys in the natural and spiritual worlds through poetry. Please join us at 2 PM on April 27 for his reading, followed by a wine and cheese reception. As reviewer Gary Metras noted, "To read a Wally Swist poem is to see a piece of the world in a special way." Events Meet the Author - Evie Wyld © Roelof Bakker Tuesday, April 29th at 12 noon Evie Wyld, author of All the Birds, Singing will be our featured speaker. A light lunch will be served. Please register for this event. Shortlisted for the 2013 Costa Award for Best Novel Jake Whyte is living on her own in an old farmhouse on a craggy British island, a place of ceaseless rains and battering winds. Her disobedient collie, Dog, and a flock of sheep are her sole companions, which is how she wanted it to be. But every few nights something—or someone—picks off one of the sheep and sounds a new deep pulse of terror. There are foxes in the woods, a strange boy and a strange man, rumors of an obscure, formidable beast. And there is also Jake's past—hidden thousands of miles away and years ago, held in the silences about her family and the scars that stripe her back—a past that threatens to break into the present. With exceptional artistry and empathy, All the Birds, Singing reveals an isolated life in all its struggles and stubborn hopes, unexpected beauty, and hard-won redemption. Evie Wyld grew up in Australia and London, where she currently resides. She received an M.A. in Creative and Life Writing at Goldsmiths, University of London. She is the recipient of the John Llewellyn Rhys Memorial Prize and a Betty Trask Award. Books will be available for purchase at this event. Meet the Author

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Companion Content for the E-Book Pay Less Tax on Your Investments In A Day For Canadians For Dummies Investment Deductions Insurance Investments Invest U.S. Market Investor Tax Websites Deduct Interest Tax U.S. Estate Tax Tax-Saving Strategies Tax Basics for Canadians Investing in U.S. Markets If you’re investing south of the border, the U.S. revenue agency will want to know what you’re up to. Read on to find out to deal with the IRS (Internal Revenue Service). Knowing that the U.S. revenue agency will have an interest in you You are probably quite familiar with paying taxes to — and dealing with — the Canada Revenue Agency (CRA). However, a number of individuals who live in Canada also have the pleasure of filing an income tax return with the U.S. Internal Revenue Service — better known as the IRS. Not to ruin the party, but if you die owning U.S. assets you can be subject to U.S. estate tax. Yikes! You must file an income tax return with the IRS when you fit into one of the following categories: You’re a U.S. citizen: U.S. citizens are required to file a U.S. income tax return (IRS form 1040), report their worldwide income on the return, and pay U.S. federal income tax no matter what country they live in. Credit: "Filing Taxes," © 2012 Phillip Taylor PT, used under a Creative Commons Attribution 2.0 Generic license: http://creativecommons.org/licenses/by/2.0/legalcode Canada’s income tax treaty with the U.S. and the Canadian and U.S. foreign tax credit mechanisms are designed to avoid having taxpayers taxed twice on the same income. So, reporting the same income on your Canadian and U.S. income tax returns (adjusted for the different currencies, of course) does not mean you’ll be subject to double tax. The CRA and IRS aren’t that unfair. You’re a “green card” holder — or the holder of a U.S. Permanent Resident Card These folks have the same U.S. tax filing rules as a U.S. citizen. (By the way, the card is no longer green.) You’re a Canadian resident considered by the U.S. to be a “resident alien” or “non-resident alien” Figuring out your residency status Determining whether you’re a resident or non-resident alien of the U.S. is not as straightforward as you might think! You’re considered a resident alien of the U.S. if you meet the “substantial presence test” because of frequent stays in the U.S. and cannot claim the “closer connection exception” regarding your ties to Canada. You may find you’re a resident alien if you’ve moved to the U.S. on a temporary basis for work. Resident aliens are taxed in the U.S. on their worldwide income and must file a U.S. income return (IRS form 1040) — just like a U.S. citizen. Substantial presence test This test is based on your physical presence in the U.S. over the last three years. You’re considered substantially present in the U.S. when you were present during the current and past two years for at least 183 days. To determine the total days you were in the U.S., get out your calculator and add up the following (including partial days): Each day this year counts as a full day Each day last year counts as one-third day Each day two years ago counts as one-sixth day If you were in the U.S. for fewer than 31 days this year you will not meet the substantial presence test. Closer connection exception If due to frequent vacationing in the U.S. you do meet the substantial presence test, then you’ll be considered resident and required to file a U.S. tax return that reports your worldwide income. However, you can avoid this tax filing if you’re able to claim you were more closely connected with Canada than with the U.S. because of your significant personal (home, family, assets, social, political, church, driver’s licence) and business ties to Canada. A closer connection exception is available if you, as the alien Were present in the U.S. for fewer than 183 days this year, Maintained a permanent place of residence in Canada throughout the year, and Complete and file IRS form 8840, “Closer Connection Exception Statement for Aliens,” with the IRS by the deadline (June 15). You’re considered a non-resident alien of the U.S. when you don’t meet the “substantial presence” test or you do meet the substantial presence test but can claim an exception due to having a closer connection to Canada. This includes a large number of Canadians, often referred to as “snowbirds,” who spend a great deal of time in the U.S. to avoid harsh Canadian winters. A non-resident alien must file a non-resident U.S. income tax return (IRS form 1040NR) when the individual Has U.S. employment income. Has a tax liability on U.S. source income including employment income, interest, dividends, and royalties. Is engaged in business that can produce income “connected” (the IRS’s word) with the U.S. For example, renting out your condo in Boca Raton, Florida or your vacation home in Tempe, Arizona. You may earn income from renting the property or you may have a capital gain on sale. Even though the Canada–U.S. tax treaty is designed to avoid you being taxed in both countries, the U.S. has the first right to tax rental income and capital gains regarding real estate located in the United States. A U.S. income tax return filing would be necessary and any U.S. tax paid would qualify for a foreign tax credit when completing your Canadian income tax return. If you are Canadian with U.S. portfolio investments such as mutual funds with U.S. exposure or U.S. stocks or bonds, you will probably notice that U.S. withholding taxes will be taken off your U.S. source investment income such as dividends or interest. If you don’t meet the above tests requiring you to file a U.S. tax return, your obligation to the U.S. ends there. Remember to claim the taxes withheld as a foreign tax credit on your Canadian tax return to ensure you are not double taxed. Filing U.S. tax returns on time Individuals are taxed based on a calendar year, just as in Canada. The key dates to remember are: April 15 (not April 30!): Due date for previous year’s income tax owing Due date for filing IRS form 1040 income tax return (U.S. citizens, green card holders living in the U.S., and resident aliens) Due date for filing form IRS 1040NR for non-resident aliens with income subject to withholding tax (i.e., employment income) June 15: Due date for filing IRS form 1040 income tax return for U.S. citizens living in Canada Due date for filing form IRS 1040NR for non-resident aliens with income not subject to withholding tax Due date for filing IRS form 8840 for the closer connection exception Don’t forget about state, county, and city taxes Own property in the U.S.? If you’re considered a resident alien, you may be required to file a state, county, or city tax return for the area in which you own property. For further information, go to the State and Local Government Website Directory.

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Is Questcor Still Undervalued? Ishtiaq Ahmed | It has been approximately a year since the Citron Research report about Questcor Pharmaceuticals (NASDAQ: QCOR ) came out, which caused the stock to lose more than half of its value. At the time, most of the industry experts were raising concerns and predicting that Questcor will be another bio-Pharma to go under soon. However, I have always believed that the stock will make a recovery as the drug offered by the company is too important to ignore. In my previous posts about Questcor, I have detailed why I felt the stock will make a recovery. Going forward, I see more growth opportunities for the company, which will support further price appreciation. What made the company come back to previous highs?There are three main reasons that have caused the stock to make the recovery, in my opinion. The first and the most important reason is the continued growth in prescriptions and vial shipments. When Aetna decided to stop coverage for Acthar, investors believed that the other insurers will follow Aetna and Acthar will lose insurance coverage. However, most of the insurers continued to cover Acthar, and Questcor was able to increase its prescriptions. The second reason is the change in the investor perception about the stock. There is a clear change in the mood of investors regarding Questcor. Investors realized that the market overacted to a piece of negative news about the stock, and it presented a buying opportunity. Since the fall year, the stock has been on an upward trend and currently trades at a level higher than a year ago. The underlying growth is solid for the company and based on the expected future growth, the stock is trading at a discount. However, it should be kept in mind that another regulatory action against the company can again bring down the stock price. At the moment, health care costs are a big concern, and Acthar costs about $28,000, which is not exactly a cheap medication. The third and probably most important reason for the comeback is the expansion opportunities for Acthar. The drug is extremely effective against certain conditions, which do not have conventional treatment. Acthar can be prescribed for a number of conditions, including kidney ailments; a rare seizure disorder that affects infants; and multiple sclerosis, which attacks the brain and spinal cord. An important thing to remember is that the company has not yet captured these markets completely. So, there is room for further growth in these areas. In addition, Questcor is active in adding more conditions to the label of the drug. Recently, the company started phase 2 trials for amyotrophic lateral sclerosis -- a progressive, degenerative disease that significantly alters one's quality of life. According to the ALS Association, the average life expectancy from the time of diagnosis for someone affected by this disorder is about two to five years. If the company is successful in adding this condition to the label; it will further enhance the portfolio of the company and provide future growth avenue. The company recently announced its second-quarter results, which substantiates the optimism about the future growth of the business. Its recent quarter earnings per share increased by 96% amounting to $1.35 compared to the same time last year. Furthermore, vial shipments have gone up by 50% compared to the same quarter last year. Other players working on orphan drugsThere are a number of companies working on orphan drug development -- the orphan drug act was passed in 1983 to encourage companies to develop drugs for rare diseases that affect less than 200,000 Americans. Under the act, companies are offered tax credit, seven years marketing exclusivity and special pricing to cover the development costs. Isis Pharmaceuticals (NASDAQ: ISIS ) recently received approval for its orphan drug, Kynamro -- a drug to decrease the inherited cholesterol disorder. The drug is expected to get $136 million in sales in its first year. However, almost all of the proceeds will come from GlaxoSmithKline and Biogen Idec due to the marketing rights for the potential drugs. The stock has more than doubled since the approval of the drug, and the future prospects of the company look good. Recently, Isis reported mid-stage data for its drug, ISIS-APOCIIIRx – the drug reduced bad cholesterol levels by 64% and increased good cholesterol levels by 52%. Sarepta Therapeutics (NASDAQ: SRPT ) is working on eteplirsen, a drug to treat Duchenne muscular dystrophy, a rare disease that causes progressive loss of muscle function in young boys. There is a real need for the cure in the market and the drug will be categorized as an orphan drug, if approved. The company will charge between $150,000 and $200,000 for the drug. Sarepta will prove to be an extremely attractive long-term investment as there is no therapy available for the disease. Once the drug is approved, the company will be able to market the drug exclusively for seven years. As a result, there will be massive growth in revenues for Sarepta. SummaryQuestcor is still undervalued, in my opinion. I expect the growth to continue over the next three to five years. As a result, the stock will be trading substantially higher than the current levels. The only concern for Questcor is another regulatory probe into the dealings of the company. If the company is able to deal with this risk then I do not see any other pitfall for Questcor in the near future. It's no secret that biotech stocks have been soaring recently, but the best investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today. Ishtiaq Ahmed has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Isis Pharmaceutica… CAPS Rating: QCOR Questcor Pharmaceu… CAPS Rating: SRPT Sarepta Therapeuti…

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Zillow continues acquisition spree, buys HotPads for $16M by John Cook on 11/26/2012 at 1:05 pm | 4 Comments Share this:Email Zillow continues to bolster its position in the online real estate sector, announcing today yet another acquisition. This time the deal happens to be in the consumer arena, with Zillow agreeing to pay $16 million in cash for San Francisco-based rental search site HotPads. It marks the sixth acquisition for Zillow in less than two years, and follows the company’s recent agreement to gobble up Mortech (which was announced earlier this month). HotPads, which raised $2.3 million in funding five years ago from Meakem Becker Venture Capital and others, attracted nearly 2.8 million unique visitors last month. (By comparison, Zillow now attracts about 36 million monthly unique visitors). Spencer Rascoff of Zillow at TechNW “This acquisition represents a significant step-change for Zillow Rentals, allowing us to dramatically increase the number of leads we send to landlords. HotPads has a younger, complementary and rental-focused audience. Now Zillow will become even more relevant to consumers at the beginning of their real estate life cycle,” said Zillow CEO Spencer Rascoff in a statement. “In addition, by acquiring an amazing engineering team, with a deep understanding of how people search for rentals and become tenants, we expect to accelerate our innovation and monetization of our rental marketplace.” HotPads employs 19 people, and it will continue to operate in San Francisco where Zillow has a growing presence. It will be combined with Zillow’s rental business, which has also been growing in recent months, including the launch of a new rental marketplace in October and the purchase of San Francisco-based RentJuice in June for $40 million. In an interview with GeekWire earlier this month, Rascoff said that they’ve evaluated more than 100 potential companies for acquisition in recent years. “The nice thing about this category is that it has essentially been bereft of an acquirer for the last 10 to 15 years,” he said. “Zillow benefits from a pretty greenfield opportunity here in terms of M&A.” The acquisition of HotPads comes as Zillow’s stock continues to slip. It has lost 30 percent of its value in the past three months, now trading at about $26 per share. That’s still above the $20 IPO price in July 2011. Zillow employed about 500 people at the end of September. Filed Under: Tech Tagged With: M&A, Real Estate, Zillow Realtor You can’t make money on Realtors. So you better make it up on Ads. Thomas R. Seems like they’re grasping at straws here, searching for a business model to justify their current market capitalization. At first, I was skeptical when Citron Research released their report on Zillow but after their most recent earnings and downgrades it’s hard to dismiss the report. I’m curious what management’s expected ROI is on all these acquisitions is. The RentJuice acquisition seemed way overpriced. $40 million for a company that had only two quarters left of runway left seems extreme. And growth seems to be slowing in terms of featured agent ads. Yes there are thousands of real estate agents nationwide but how many are willing to pay for ads and the number of ads you can show is somewhat finite. There also seems to be a growing trend of brokerages and MLS networks tightening control of their listing data which will impact the listing inventory of Zillow and Trulia (RedFin was not listed in the articles). Perhaps RedFin was right about their assertion that listings on Zillow are inaccurate and out of date: http://www.inman.com/news/2012/11/21/large-new-york-brokerage-pulls-out-zillow-and-trulia Will be interesting to see Zillow pivots in the next few months. They’ve burned through a lot of cash and the company need to start seeing some ROI on its acquisitions and build stronger relationships with brokerages. http://blog.findwell.com Kevin Lisota I’ve heard their pitch a bunch of times, and they are certainly not grasping for a business model. I know Spencer will read this, and he can speak more clearly about it than I can, but they are out to grow their marketplace of homes for sale and rentals while at the same time building out back-end tools for the professionals in real estate to manage their business and acquire new customers. I’m certain that they are not shooting for short-term ROI on most of these acquisitions, rather it is part of a long-term growth strategy. The trend you mention about brokerages tightening control of listings is more PR bluster than anything. In practice, I see the trend going in the opposite direction, as marketing of listings is following the online eyeballs. Zillow is making large investments in brokerage relationships, as evidenced by their recent hires and the Agent Advisory Board. (full disclosure, I’m on that Board) Thanks Kevin for the insight. If Zillow can monetize enterprise (tools) for brokerages and agents I think they will have a stronger business model. I can see Zillow easily powering the back-end for brokerages and individual agents with their infrastructure centered around listings. However as it stands now, most of the company’s revenue is derived from ads or lead generation. Getting agents and brokers to pay subscription for some sort of service (SaaS) would be huge. Shauna Swerland, Fuel Talent: Finding high caliber talent for top performing companies.See full list of member messages. Become a member for exclusive benefits. Wilson Sonsini Goodrich Rosati website wsgrwsgr.come-mail Gist website alltechtrusteecomcast.nete-mail For full listings, see the Service Provider Directoryin the GeekWire Startup Resources Center.

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HP Shareholders Meeting Marked By DissentShareholders raise heated questions about HP board's Autonomy investigating committee; narrowly fail to oust controversial board members.The oft-criticized HP board of directors staged an annual shareholder meeting Wednesday with a minimum of upheaval, although a special committee that has been appointed to investigate its Autonomy purchase came under fire. And two sitting board members only squeaked through in their bid for re-election. HP acquired Autonomy, a sophisticated business analytics system, in 2012 for $13.1 billion. But in a move soon afterward, CEO Meg Whitman was forced Nov. 20 to take an $8.8 million write-down on the purchase, in a move that shocked both HP investors and Wall Street. Whitman and other officials have said HP was misled on Autonomy's real value by suspect accounting. HP said the write-down was "linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy." Autonomy founder Mike Lynch denies any irregularities and has set up a website disputing HP's claims. During the Q&A part of the annual meeting, a representative of the Service Employees International Union (SEIU) raised a question about whether a committee had been appointed to investigate the purchase. Company officials acknowledged it had, consisting of Ralph Whitworth, an activist investor who joined the board in 2011; Gary Reiner, former CIO of GE; and former Wachovia CEO Kennedy Thompson, who was also a member of the committee that oversaw the Autonomy purchase. [ Want to know what Meg Whitman had to say about HP's future during the first-quarter earnings report? See HP CEO Dismisses Break-Up Talk. ] SEIU has substantial pension funds invested in HP, its representative said during the meeting, and any investigation of the purchase should be kept clear of board members who advised or participated in it. "Mr. Thompson's participation (on the committee) is a great conflict and will not benefit the company in the long run," said the speaker. The comment was noted, but the committee membership remained unchanged. "The independence of this committee is established ultimately by a court of law," Whitman advised the spokesman. Institutional Shareholder Services had opposed the re-election of board chairman Ray Lane, as well as McKesson CEO John Hammergren and Thompson. Glass Lewis & Co. recommended re-electing Lane, but encouraged investors to oust several directors, including Hammergren, Thompson, Rajiv Gupta and Internet pioneer Marc Andreessen. After the votes had been counted, all 11 board members received "the requisite 50% of the votes" to win re-election, it was reported at the end of the meeting. The report masked the fact that the votes for two board members, Hammergren and Thompson, had been unusually close, according to the Associated Press. Some institutional investors and stockholder rights groups felt the pair should take some of the responsibility for HP's missteps over the past year and had campaigned against them. They were re-elected with 54% and 55% of the vote, compared to the 81% each received last year. The two are the longest-serving members of the board and were members of committees with oversight of the Autonomy acquisition and an earlier deal to acquire EDS. They were also the most experienced parties present when the board botched its handling of a dispute with former CEO Mark Hurd and ended up accepting his resignation. Public confidence in the company plummeted as the board hastily replaced him with Leo Apotheker, who took the company on an 11-month downhill ride before being dismissed. Half of the company's market value disappeared in the process. Lane was opposed by Institutional Investors Services and Glass Lewis & Co., a shareholder advisory firm. He received 59% of the vote, a wider margin than Hammergren and Thompson, but still tight compared to the historic norm of 75-80% of the vote for a sitting director. By HP rules, if a director receives less than 50% of the vote, he or she must resign. Most of the board's proposals received wide majorities in the voting. But when a questioner asked if any soul-searching was going on within the board, activist investor and board member Whitworth responded: "I think you can expect to see some evolution of the board in the coming years, months maybe." It was a surprisingly contrite note, as other board members and CEO Meg Whitman maintained more of a stiff upper lip. Asked whether she thinks she could do her job better with a revamped board, Whitman responded: "I feel the board lineup we have right now is helping us turn around the company." A shareholder speaker then warned her that some board members might not be re-elected, and "the board should comment on that" if it happens. Whitman extended her endorsement to existing HP employees, saying, "HP people are remarkable people ... You see confidence in their step. They're saying, 'We're coming back, and we're coming back strong.'" Asked how she would restore the spirit of Hewlett and Packard, Whitman responded: "It's really a hard thing to kill founders' DNA in this company, and that's a good thing for HP."

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Regulatory: Navigating the “dual track” IPO/M&A process How to obtain maximum value by combining the two processes By Cathy Birkeland, Roderick Branch, Ryan MaiersonApril 10, 2013 As the global economy continues to show signs of improvement and markets chart all-time highs, the prospects for initial public offerings (IPOs) look promising and, in particular, the pipeline for IPOs in 2013 appears robust. As has been the trend for the past several years, many companies pursuing an IPO, particularly private equity-backed and venture-backed companies, are expected to run a “dual track” process by pursuing an IPO while simultaneously running a confidential, private auction to sell the company. The dual track approach is popular because it offers sellers a number of perceived advantages in their search for liquidity and maximum value. The possibility of an imminent IPO lends a sense of urgency to the sale process by creating a “now or never” dynamic for buyers, which can lead to higher sale premiums. A dual track process also allows sellers to preserve optionality as they evaluate the attractiveness of multiple exit (or partial exit) options while hedging against IPO market volatility (which can cause capital markets “windows” to close overnight) and overall deal uncertainty. The data appears to support the perceived advantages of running a dual track process. A July 2010 study published in the Journal of Business Venturing found that companies sold privately in the course of a dual track process realized a 22 to 26 percent premium over companies acquired without a concurrent IPO process. While a dual track process places increased burdens on management’s time and resources, and can further distract management from running the day-to-day operations of the business, a number of synergies between the two paths make the dual track process efficient. For example, for the IPO, the company will set up an electronic data room in which the underwriters and their respective counsel can conduct their due diligence review. The working group will pull together the company’s “story” and value proposition, along with detailed business and financial information about the company, which the company will disclose in a registration statement filed with the Securities and Exchange Commission (SEC). Company management will also prepare projections and management presentations. These items play an equally critical role in the M&A path. The first step in a typical dual track process involves filing the company’s IPO registration statement with the SEC. If the company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, it can file the registration statement confidentially to keep its financial and other disclosures from becoming publicly available. However, the company can issue a press release disclosing the filing, which will initiate the competitive process. During the SEC’s 30-day initial review period of the IPO registration statement, the company’s financial advisors will contact potential buyers for the M&A process and distribute a “teaser” with high-level information about the company. Next, the company will negotiate confidentiality agreements with interested buyers and provide a confidential information memorandum (CIM) with information and data largely derived from the IPO registration statement. While projections typically are not included in the IPO registration statement or provided to potential investors in the IPO road show, it is customary for the CIM to include projections. Projections prepared for the M&A path are typically more aggressive than the internal projections prepared for the IPO as sellers seek to maximize value in connection with a complete, rather than partial, exit of their investment. Potential buyers will conduct due diligence and provide initial indications of interest. Based on these indications, the company will select a limited number of buyers to proceed to the “second round” of the auction process, during which it will provide more detailed diligence and management presentations. Buyers will then submit final indications of interest, and the company will negotiate definitive documentation to sell the company with a small number of buyers. Throughout the time that the sale process is progressing, the company will continue to file amendments to its IPO registration statement in response to SEC comments, which further communicates the viability of the IPO path to potential buyers and creates the necessary “tension” that forms the desired competitive dynamic. Typically, the seller will seek to preserve all options until it has a clear view of the preferable path, with the culmination of the dual track process ending in the signing of definitive documentation to sell the company or commencing the road show and pricing the IPO. Companies should carefully consider which investors to contact in connection with the sale process, because potential buyers who are provided detailed written information about the company will be “boxed out” of purchasing the company’s stock in the IPO if the company sale process falls through. This is due to the fact that under federal securities law requirements, companies may not provide written materials to potential purchasers in an IPO until a prospectus complying with the requirements of the Securities Act of 1933 is available. Such a prospectus is commonly referred to as a “preliminary prospectus” or “red herring prospectus.” Using a non-compliant preliminary prospectus could be viewed as an illegal “offer” in violation of the Securities Act and potentially provide purchasers who were offered stock a right of rescission under the Securities Act. Most practitioners take the position that providing detailed written materials to prospective buyers in the M&A path is not problematic (and that such materials are not “offers” to buy securities in the IPO) under applicable securities laws so long as the materials relate solely to the company sale process and the recipients of the information will not be (and will not be permitted to be) purchasers of stock in the IPO. To address these concerns, best practice is not to send the IPO registration statement to potential buyers in the M&A process. Additionally, the confidentiality agreements executed with potential buyers commonly include “standstill” provisions prohibiting buyers from acquiring the target company’s stock. These provisions may also explicitly prohibit the potential buyer from purchasing stock in the IPO for a short period of time after the IPO. As discussed above, the CIM will typically include projections not included in the IPO registration statement. Most practitioners take the position that such projections do not constitute material information in connection with the IPO because they usually are based on numerous aspirational assumptions that cannot be validated and can quickly become stale. The risk that materials will be disseminated more broadly beyond the limited pool of potential buyers and be leaked to the public is a legitimate source of concern. If private information such as projections becomes publicly available, the SEC may require the company to include (and assume liability for) the information in the IPO registration statement. Accordingly, companies must take precautions to ensure confidentiality in the M&A process. Carefully orchestrating the timing of steps in both paths in the dual track process is critical so that one process does not get ahead of the other. For example, the company should delay filing an amendment to its registration statement that includes a price range for the stock to be sold in the IPO until such time as it has a good understanding of the likelihood of the M&A path as it will not want to “tip” its hand about the company’s valuation in the IPO and adversely affect the price a buyer may offer for the entire company in the sale process. A dual track process is time and resource intensive. It will require extensive coordination and cooperation among team members, including the seller, management, financial advisors and counsel. If run effectively, however, it can increase the odds that a seller will achieve the most favorable exit and obtain the maximum value available within the context of existing market conditions. Image credit: Tom Bachtell, IPO Land 2012 © tombachtell.com Page 1 of 2 Cathy Birkeland Cathy Birkeland is the Deputy Office Managing Partner in the Chicago office of Latham & Watkins. Ms. Birkeland’s practice focuses on capital markets, mergers and... Additional Contributors: Roderick Branch, Ryan Maierson Bio and more articles Judge in SAC Capital case wants answers to questions before sentencing CVS to pay $20 million for misleading investors, improper accounting Wall Street banks criticized for new investment firm contracts Microsoft-Nokia deal receives blessing from Chinese regulators Regulatory 2025 Securities 992 transformative leadership 500 Securities and Exchange Commission 337 mergers 46 m&a 28 acquisitions 18 ipo 8 Join the Conversation

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commentsAmerica's new financial values By Dan Kadlec @Money October 27, 2011: 10:33 AM ET (MONEY Magazine) -- After three years of belt-tightening, Tom Van De Water, 41, a customer information systems manager in Stratham, N.H., has finally loosened the family budget. This year he and his wife, Alyson, 41, celebrated their 10th anniversary in St. Lucia, and she bought him a pricey watch for his birthday. Are these signs of a return to the free-spending good old days, when the couple wouldn't have hesitated to buy the best stuff and top off one of their frequent dinners out with an expensive bottle of wine? Not by a long shot. Print Today the couple, who have three children (ages 8, 7 and 18 months), carefully plan outings. "We treat each time as special," Van De Water says. The family's SUV, a 2007 Honda Pilot, was purchased off a used-car lot, and their maple dining room set was a $900 bargain nabbed on Craigslist. "We're more thoughtful about how we spend," he says. "We're realigning our values." So are a lot of people. Since 2008, the worst economic downturn since the Great Depression has dramatically changed the way millions of families manage their money and their lives. Some actions were predictable, like cutting up credit cards, clipping coupons, and suddenly remembering that, yes, you really do need to save for a rainy day. What you were living through, after all, was a downpour of financial troubles. Now, more than three years after the collapse of financial institutions, stock prices, and home values combined to usher in a new age of austerity, enough time has passed to ask a critical question: Which of our new-found habits and values will really stick, lasting even after the economy rebounds -- and which won't? The Great Recession officially ended in June 2009. The recovery has been anemic at best -- in fact, 80% of Americans believe the country is still in recession, according to a recent Gallup poll -- and the threat of a double dip hangs over us like a swollen storm cloud. That alone suggests that at least some of the behavioral shifts will stay in place for some time. "Big periods of economic upheaval can define a generation," says Paul Flatters, managing partner of Trajectory Partnership, which monitors consumer behavior. "Not so much because of the depth of this recession, but because of its prolonged nature, it will have lasting impact." To help define the new normal, MONEY and our sister publication Time collaborated on a pair of wide-ranging surveys in late summer to explore Americans' changing financial values. The polls were a follow-up to surveys taken in the months immediately before and after the 2008 meltdown. In dozens of interviews, many families, like the Van De Waters, reported that they were relenting on knee-jerk resolutions made at the height of the crisis. After all, never ever eating out again is probably unrealistic, and there's a limit to how long you'll shop only sales, watch free TV, and read at the library. Still, a great many folks are also doubling down on big behavioral shifts like quality time with family and saving more for retirement -- two areas where the readings today are even higher than they were at the deepest point of the pullback. In the MONEY poll, one in five said they were financially better off now than they were a year ago. That isn't exactly a landslide of prosperity. It is, however, twice the rate of those who felt that way in the 2008 survey. Higher earners (households with an annual income of at least $75,000), not surprisingly, were even more likely to report improvement, and folks across the income spectrum have a higher degree of optimism about their personal finances in the coming 12 months than they did three years ago. Far more now have confidence they will hang on to their house, and fewer worry that they'll be forced to accept a pay cut. None of this is to minimize lingering pain. Median household earnings have fallen three years in a row, according to the Census Bureau, and the poverty rate is the highest it's been in nearly 20 years. 0:00 / 1:46 'I've given up thinking about money'In the Time poll, 83% feel Americans have less economic security than they did 10 years ago; more worry about whether they'd be able to find work if they lost their job; and greater numbers report dipping into college or retirement savings to make ends meet than was the case three years ago. Collective optimism has also been dinged. People who live through an economic shock have far less confidence in government for most of their life, according to a National Bureau of Economic Research (NBER) study. The MONEY survey confirms this skepticism: Only 34% were optimistic about the President's ability to restore growth, and 17% were optimistic about Congress. True, the survey was conducted shortly after the August debt ceiling battle, when many were especially fed up with government. Still, people overall are clearly more pessimistic about the economy now than three years ago --even as they are starting to feel better about their own finances. This split between cautious personal optimism and deep concern for the country is one of many profound shifts in financial attitudes over the past three years revealed in the MONEY and Time surveys. Here are other key findings that shed light on where Americans stand now and where they think they're headed when it comes to managing their money. Thrift is in vogueOver the past three years, a taste for designer labels -- so 2007 -- has morphed into a penchant for spotting deals. And living within your means has become cool again. Or at least you've noticed your friends and neighbors have swung around to your way of thinking. The new appreciation for bargains and budgets born during the 2008 financial crisis appears to have become even deeper in 2011. In the MONEY survey, nearly half the respondents said they felt guilty when they purchased a luxury product, and 85% spend more time looking for deals before they buy -- higher readings than in the earlier poll. And 83% were convinced they would remain frugal in the future. Two in three said their financial priorities have changed as well. How? Lots of folks are building an emergency fund (57%), putting less focus on material things (64%), and eating at home more often (80%). That attitude adjustment has put a big crimp in consumer spending, which has been flat for the past three years, according to the Bureau of Economic Analysis. "People now think two, three, four times before they spend," says Flatters. "Marketers have to convince them the purchase is not frivolous." Quiz: Has the economy changed your financial values? A preoccupation with value is likely to persist in part because the next set of consumers, young people, have felt the squeeze too. Dominant beliefs about how society and the economy work are formed from ages 18 to 25, the NBER study found. This age group has suffered the sharpest income drop -- median earnings of those ages 15 to 24 fell 9% last year -- and have been among the hardest hit by unemployment. As if that wasn't searing enough, many young people experienced the trauma of watching their parents lose their jobs and homes, take pay cuts or suffer big drops in home values and retirement accounts. These kinds of setbacks leave emotional scars, says James Burroughs, associate professor at the McIntire School of Commerce. "Students saw their parents get wiped out after working so hard," he says. "To them, it all seems like a futile exercise." So they are likely to place a lasting value on more moderate living with an emphasis on relationships and experiences. Says Burroughs: "They have a much greater awareness that money cannot buy happiness." Family time trumps stuff In the MONEY survey, 75% said spending time with family was more important than ever, up from 69% three years ago, suggesting many folks have tried it, liked it, and are determined to stick to it. And more than half said they'll continue to be more focused on relationships than material gain well into the future. Holly Rasmussen, 42, a business consultant and divorced mother of two children in Parker, Colo., is one of them. To save money after she was forced to take a pay cut during the recession, she got rid of her landline and home fax, downgraded her cable package, and dumped the gym membership. Her most rewarding shift, she says, has been quitting the restaurant habit, which has helped her overhaul her relationship with her kids, ages 13 and 11. 'How the economy changed us'"We have more time together because we're not sitting in a restaurant with people being ushered in and out," she says. "We're in our living room and it's just the three of us talking about our day. We know each other better." Rasmussen says the family now plan meals and cook together often. She figures her quality time with the kids has doubled. She's also teaching them to be smart about money. Like the 58% in the MONEY poll who are asking their offspring to be more careful about what they spend, Rasmussen now puts the children on a budget when they go shopping, giving them a limited amount to spend as they see fit. She says, "Almost instantly they went from wanting the best of the best to, 'Hey, look at these five shirts I can get on the sale rack.'" Investors are wary Despite the market's volatility over the past three years, investors aren't abandoning stocks, and most don't expect big price drops in the near future. That's particularly true among higher earners; just 16% of families earning $75,000 or more believe the market will be lower a year from now. Investors, however, aren't reverting to big bets on tech and other highfliers. Instead they're hunkering down, looking for ways to minimize losses down the road. Half of affluent families have focused on diversifying their assets over the past three years, the MONEY survey found. A telling 43% said they were more concerned with capital preservation than gains, and nearly 30% said this shift is permanent. That describes Richard Anklin's revamped strategy to a tee. Anklin, 64, and his wife, Sharon, 65, both retired, built a $1.3 million nest egg during 30-plus-year careers working at Ford by investing largely in stocks and sticking with them through the ups and downs of the market. Three reasons to love the slowdown Though their investment mix was aggressive for their age, they stayed the course through the recent downturn --their stocks lost 40% after the 2008 crash -- expecting their portfolio to bounce back, as it had so many times before. But three years later, their holdings are still down sharply. Worried by the duration of the downturn and their advancing years, the couple is now making major shifts in their portfolio. They're dialing back on stocks and have annuitized part of their savings to produce steady income -- smart moves since they're in retirement. As a result, though, their projected income from their investments has dropped by a third, and Richard is concerned about whether he and Sharon will be able to maintain their standard of living and help put four grandkids through college as he planned. "But I had to do it," Richard says. "I had to protect my principal." Austerity has eased up Debt played a big role in getting the country into this mess, and eliminating debt, on both a national and personal level, seems key to getting out of it. Washington may be stuck on figuring out the first part, but families are bent on cleaning up their own balance sheets. The credit bureau TransUnion reports that credit card debt this year has fallen to a near decade-long low, averaging $4,700 per borrower. In the MONEY poll, 62% said they are intent on paying down their credit cards -- a far greater number than in the 2009 survey. "People are putting their heads down and systematically paying off debt in ways I've not seen in 30 years," says Mark Cole, chief operating officer of CredAbility, a nonprofit credit counseling agency. Lately, though, there has been some backtracking. Even as they're paying off cards, people seem more willing to use them: In the MONEY survey, only 43% say they no longer carry a balance, down from 63% three years ago. What to do with $1,000 now Just-released Federal Reserve data also show a spike in charging by consumers during the second quarter, although credit card debt overall remains sharply lower than 2008's record levels. Saving rates show a similar pattern: Currently 5%, they're down from a post-crisis peak of 7.1% in May 2009 but still way better than the near-zero rate of pre-recession days. What's going on? Some experts believe consumers are finally finding a sustainable middle ground. After all, it's tough to live like a monk forever. Case in point: Karen Dhanie, 38, whose family cut way back on everything from groceries to vacations after she was laid off in 2009 from her job in regional sales with Citigroup. Now working for Home Depot in Orlando, Dhanie says she and her husband, Harry, 43, a manager at a national pharmacy chain, got fed up with a lesser cellphone plan and upgraded. She no longer drives out of her way to get a better price on everyday purchases. But, she says, "we still are very conscious about what we buy. We're not splurging like before. Our vacations are less luxurious. We plan ahead." Why new habits will last Cole thinks families like the Dhanies will stick with the program. Consumer willingness to spend and borrow, he says, is a function of job security and confidence in the economy, both abysmally low now and likely to stay low for a long while. He says shedding debt is like quitting cigarettes. Once you kick the habit, you get religion and strive not only to avoid future debt but also to pass this wisdom on to your kids. Robert Kaplan, a professor at the Harvard Business School, agrees, noting a rare double whammy: Both government and consumers are pulling in their horns. "This creates enormous economic headwinds," he says. Not everyone sees all the changes as lasting. Scott Hoyt, an economist at Moody's Analytics who has studied the recession's effect on consumers, believes people generally will continue to save more and borrow less, but that they'll start spending again once the economy get stronger. "Consumers make these changes cyclically," he says. He notes that restaurant spending perked up as the economy improved last year, only to fall off a cliff again when things got dicey this summer. What's clear: The longer tough conditions continue, the more folks accept it as normal, which in turn serves to cement their new values. "There's a huge shift of people who now say this is the way it's going to be forever -- or at least a long, long time," says Carl Van Horn, a professor of public policy at Rutgers. Tali Yahalom contributed to this article.Read the next part of this story: Timely moves for changing financial values First Published: October 27, 2011: 5:25 AM ET Related Articles'I've given up thinking about money' -- Video 'How the economy changed us' Quiz: Has the economy changed your financial values? Help! We need a makeover Readers' ChoiceYoung dad, $15,000 in credit card debt Carlos Rodriguez is trying to rid himself of $15,000 in credit card debt, while paying his mortgage and saving for his son's college education. Readers' Choice$400,000 portfolio, too many holdingsSusan Carson and Laura DeLallo make $225,000 and have half a million in retirement savings, but their sprawling portfolios is proving hard to manage. 6 years to retirement, too many expenses3 tuition bills, only $35,000 saved Mortgage & Savings Center

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Tags: swiss Swiss Bank UBS to Cut as Many as 10,000 Jobs Tuesday, 30 Oct 2012 08:48 AM Swiss banking giant UBS AG is to cut as many as 10,000 employees, or some 15 percent of its staff, to drastically shrink its ailing investment bank. The news of the layoffs came as Switzerland's biggest bank posted another big loss for the third quarter. It said Tuesday that the job cuts are part of a strategy to shore up profits. As a result, UBS said it needs to reduce its headcount to "around 54,000" by 2015, down from its current 64,000 employees in 57 countries. Some 7,500 jobs are to be cut mainly in London and the United States, where UBS has a prominent building and trading operations in Stamford, Conn., near New York City. The other 2,500 cuts are to be in Switzerland. Investors cheered the move and the stock was trading 5 percent higher Tuesday in Zurich at 13.80 Swiss francs. That's on top of the 7.3 percent rise on Monday amid speculation over the cuts. The announcement of the job cuts came as the Zurich-based bank posted a loss of 2.17 billion Swiss francs ($2.31 billion) in the third quarter, in contrast to last year' equivalent net profit of 1.02 billion Swiss francs. UBS blamed the loss on a 3.1 billion francs charge at the investment bank and an 863 million francs hit linked to an accounting rule on how banks must value their debt. Banks can post gains if the value of their debt falls, because it would theoretically become cheaper for the bank to repurchase that debt. But the rule also says that when a bank's debt increases, it must take a write-down because it would theoretically have to pay more to buy back its own debt on the open market. In what it called "a significant acceleration" in its transformation, the bank said it would sharpen its focus on the investment bank and appoint a new executive, Andrea Orcel, formerly of Bank of America Corp., to lead it. The current co-head of the investment bank, Carsten Kengeter, is stepping down from the group's executive board to unwind the non-core assets. UBS said it also plans to save 3.4 billion francs in additional costs through 2015, but that the reorganization will result in restructuring charges of 3.3 billion francs over the next three years including about a half-billion francs in the fourth quarter. UBS CEO Sergio Ermotti said the investment unit, which has been hit by a series of costly blunders in recent years, will "continue to be a significant global player in its core businesses." But tighter industry-wide requirements for banks to increase their capital cushion also have hurt profitability as banks have less cash to invest. "It can't get better than this point for us to act," he told reporters. Ermotti, who took over in November after the discovery of unauthorized trading last year, has been downsizing the investment bank to meet stricter capital requirements and shrinking profits due largely to Europe's sovereign debt crisis. Former UBS trader Kweku Adoboli has been facing trial in London this month on charges of committing fraud that cost the bank $2.3 billion. He has told the jury that the losses came after senior traders persuaded him to change from a bearish to a bullish point of view in July 2011. But the bank also has been under fire on other fronts. In 2008, it was forced to seek a bailout from the Swiss government when it was hard hit by the financial crisis and its fixed-income unit had more than $50 billion in losses. UBS is one of several global banks being investigated in the U.S. and other countries for alleged rigging of benchmark interest rates known as Libor, or London Interbank Offered Rate. In April, Ermotti said Switzerland's tax disputes with the United States and some European nations are "an economic war" putting 20,000 jobs at risk. Switzerland has been trying to shed its image as a tax haven, signing deals with the United States, Germany and Britain to provide greater assistance to foreign tax authorities seeking information on their citizens' accounts in the Alpine nation. But the tax agreements have drawn fire from Switzerland's nationalist People's Party, which won more than a quarter of the vote in last year's general election, with some lawmakers saying they will try to block the treaties through referendums. © Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Economy | Business As Housing Industry Builds Up, Other Sectors Follow Yuki Noguchi Home Depot is hiring 80,000 employees for its spring season. As the housing market picks up, other industry sectors — like gardening, construction and furniture — move upward, too. AFP/Getty Images, Jewel Samad When fortunes rise in the housing industry — as they currently are — it tends to lift sales for other businesses, too. Home construction, sales and prices are all improving. And according to many analysts, the market is gaining steam.For nearly two decades, Scott Gillis has owned his own moving company, Great Scott Moving in Hyattsville, Md. Moving high season is just around the corner, which means Gillis is hiring.“I’m doing it right now, I’m calling up all my old employees. Basically, I’m doing as much as possible ‘cause I’m anticipating we’re having a good summer,” Gillis says.That’s in contrast to several years ago, when Great Scott moved more people into rental apartments than houses — as its sales and staff plunged by a third. Gillis says things have improved. But they’re still very hard to predict.‘The Mood Is Much Better’“I think the mood is much better than it was five years ago. I think we are heading in a better way,” he says. “But nobody knows the forecast.”The federal spending cuts known as the sequester don’t help. And there are pockets of housing weakness. Still, overriding all that, he says, is a sense that things are fundamentally better and improving.“When you start seeing larger offices going to smaller offices, it’s an indicator that everybody’s cutting back. Now I see offices getting larger. And that’s usually a good indicator,” Gillis says.Part of what’s driving the urge to move is that people are spending again.“This housing market recovery is a tremendous boost to the economy,” says Lawrence Yun, a chief economist for the National Association of Realtors.A Powerful Economic BoostYun says residential construction, remodeling, moving, gardening and furniture buying add up to about 20 percent of the country’s gross domestic product — which is why the upward momentum in housing is such a powerful boost to the economy.But it’s not just that. Yun says by year end, U.S. homes will collectively be worth $3 trillion more than they were at the bottom of the market. “And that will provide a significant boost in consumer spending” — $100 billion in extra spending this year, to be exact, he says.Eric Belsky, Joint Center for Housing Studies director at Harvard University, says there’s an aphorism about collective psychology in real estate: When the housing market turns, it sounds a whistle that only dogs and homebuyers hear.“You kind of get the sense that that whistle’s been blown,” he says.Low Inventory, Higher PricesBelsky says a low inventory of homes and greater demand are driving prices up.“That’s creating a certain amount of momentum in the market, it’s making house prices turn around,” he says. “What it hasn’t been doing is getting as many people to put their homes on the market.”Comparisons to prior years aren’t always helpful, he says, because sales had been boosted by first-time homebuyer tax credits. This year is different.“This is happening because the market itself is kind of finding its own sea legs and moving up,” Belsky says. “And once that happens, that market turns, it tends to have momentum.”When asked if he’s subject to the psychology of housing, he says: “I think we all are. It’s nice to feel that house prices are beginning to move up. Have I been spending more? I don’t know.”‘Customers Are Coming In’Home improvement retailer Home Depot is hiring 80,000 people for its spring season. And Lowe’s plans to hire 9,000 extra workers this year — on top of 45,000 seasonal hires.“We are investing more labor, literally, in the aisle today, because we know that customers are coming in not just for a single maintenance item or a replacement item. They’re coming in to engage in projects, and that takes some face-to-face time,” says Greg Bridgeford, Lowe’s chief customer officer.He says housing isn’t just contributing to customers’ sense of economic well-being.“We’re seeing them engage emotionally in their homes again as they have more confidence financially,” Bridgeford says.It’s also starting to contribute to their happiness, he says. Copyright 2013 NPR. To see more, visit http://www.npr.org/. Auditor's Report Details Challenges Faced By Oregon Welfare Program As La. Coast Recedes, Battle Rages Over Who Should Pay

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Business Coast Wholesale Appliances Inc. Suspends December Dividend, Reduces Monthly Dividend Rate Effective January 2013 Print article © Marketwire 2012 2012-12-12 23:38:14 - VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 12/12/12 -- Coast Wholesale Appliances Inc. (TSX:CWA) (Coast or the company) today announced that it will not be declaring a cash dividend for the month of December 2012. In addition, the company announced that, beginning with the January 2013 dividend expected to be declared on or about January 16th, it will reduce the amount of its monthly cash dividend to $0.025 per share from the $0.035 per share declared through November 2012. The new dividend rate equates to $0.30 per share on an annualized basis. At recent Coast share trading prices, this represents a yield of approximately 8% per annum. "The Board has determined that it is prudent to reduce Coast's rate of shareholder dividends in light of ongoing financial performance and the company's current and future business needs," said Donald J.A. Smith, CA, MBA, a director of Coast and interim Chairman of the Board. "We have reviewed operating budgets for the coming year and are confident that the new dividend level is sustainable." Coast's monthly cash dividends are paid to shareholders on or about the fifth day of the month following declaration. The company's Board will continue to regularly review Coast's level of dividends relative to both its financial performance, and its current and anticipated future business needs. Coast is a leading independent supplier of major household appliances and accessories to developers and builders of multi-family and single-family housing, and to retail customers. Founded in 1978, Coast currently operates 16 stores, with 15 locations across the four western provinces and one store in the Greater Toronto Area. Forward-looking Statements This news release may include forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to, comments with respect to the payment and sustainability of Coast's dividends to shareholders, economic performance in Canada and Coast's sales expectations. These forward-looking statements reflect current expectations of Coast's management regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: sensitivity to general economic conditions; changes in consumer confidence in the economy; maintenance of profitability and management of changes to the company's business; competition; increases to interest rates; reliance on suppliers and their ability to supply product for sale on a timely basis; changes in consumer preferences; changes in the mix of product sales; fluctuations in fuel and commodity pricing; usage of extended warranty programs and the costs to deliver these services; changes to planning and supply chain processes; lack of long-term supplier agreements; reliance on key personnel; and foreign exchange rates as they relate to imported products. Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, Coast cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available to Coast. They speak only as of the date of this news release, and reflect current assumptions regarding future events and operating performance. These assumptions include, without limitation: slow economic growth well into 2013 in both Western Canada and the GTA, Coast's current markets; continued fluctuations in exchange rates with the Canadian dollar trading near par with the US dollar; continued low interest rates through 2013; continuing cautious credit markets for Coast's major builder customers to obtain financing; weak consumer confidence due to the slow economic recovery; and no significant change to total housing starts recorded in 2012 compared to 2011. These forward-looking statements are made as of the date of this news release and Coast assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law. Coast Wholesale Appliances Inc. Gordon Howie (604) 301-3400 [email protected] : www.coastwholesaleappliancesinc.com Press Information:Contact Person: Disclaimer: (c) 2014 Market Wire. All of the press releases contained herein are protected by copyright and other applicable laws, treaties and conventions. Information contained in the releases is furnished by Market Wire's, who warrant that they are solely responsible for the content, accuracy and originality of the information contained therein. All reproduction, other than for an individual user's personal reference, is prohibited without prior written permission.

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5 Huge Stocks to Trade for Gains in March - views Stock Quotes in this Article: AAP, AAPL, HBI, KBR, SPY By Jonas ElmerrajiSenior Contributor 03/07/13 - 10:49 AM EDT BALTIMORE (Stockpickr) -- With new all-time highs in the Dow Jones Industrial Average and the S&P 500 just 1.5% away from hitting new highs of its own, investors finally have some reason to celebrate stocks again. That’s because, strange though it may seem, nothing fuels a stock rally like new highs. Even though it may have felt like it in the last five years, new highs aren’t some sort of rarity. In fact, over the last five decades, big indexes have spent most of their time within grabbing distance of setting a new high water mark. If anything, new highs are normal for stock investors – and it’s about time Mr. Market started getting back to normal. >>5 Toxic Stocks That Are Poisoning Your Portfolio While we’re still a while away from the aggressive Dow 55,000 target I set back in October, the big index has already managed to climb close to 10% since then. Still, I’ll hold my celebrations until the S&P manages to push through to a new all-time high; it could very well happen this week. As the market moves, so do its constituent stocks. That’s why, today, we’re taking a technical look at the price setups forming in five of the biggest names on Wall Street. If you're new to technical analysis, here's the executive summary. >>5 Favorite Stocks From the Pros Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time. Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at the charts of five high-volume stocks to trade for gains. S&P 500 SPDR ETF With such a big onus on the broad market moving higher, it makes sense to look at the S&P 500 SPDR ETF (SPY), an exchange-traded fund that acts as a very good proxy for the broad market. A quick glimpse at SPY’s chart says just about everything you need to know about the big index right now: Things look stellar. The S&P has been in a multi-stage rally since the market bottomed in 2009. More important, that rally has been orderly, with rally legs separated by intermediate corrections that allow overbought momentum to bleed off. With SPY smack dab in the middle of its latest rally leg, we’re in a good position to see a new all-time high get set in stocks before the next correction comes around. For investors looking to broadly “buy stocks,” an ETF such as SPY is a good option. It provides a diversified basket of equities with a single trade. That said, I’d recommend waiting for a pullback to this rally leg’s support level before jumping in. Then, keep a tight stop at the 50-day moving average; if SPY breaks below that level, another corrective leg is likely. Hanesbrands I said earlier that “as the market goes, so do its constituent stocks.” The price action in Hanesbrands (HBI) is a perfect example of that. And you don’t have to be an expert technical analyst to figure out what’s going on in this stock. Hanesbrands has been trading higher within a trend channel, bounded by a resistance range to the upside and trend line support to the downside. That price channel gives traders a high probability range for HBI’s trading to remain within, a big advantage when trying to figure out what to do with this stock. The most important level to watch in HBI is trendline support; it’s a level where HBI has been able to catch a bid and reverse on its last seven drops, and it’s likely to remain an important downside barrier. When you’re looking to buy a stock within a trend channel, buying after a bounce off of support makes sense for two big reasons: It’s the spot where shares have the furthest to move up before they hit resistance, and it’s the spot where the risk is the least (because shares have the least room to move lower before you know you’re wrong). The 50-day moving average has been a good proxy for support over the course of the pattern; that’s where I’d recommend putting a protective stop on this trade. Apple (AAPL), on the other hand, couldn’t look more different. This tech sector behemoth has been getting shellacked since shares topped back in September, and now is certainly not the time to be a buyer, even if the broad market looks more bullish than ever. Apple is forming the exact opposite setup from HBI and the broad market. The Cupertino, Calif.-based firm is currently trading lower within a downtrending channel. Short-sellers should look to bet against AAPL on a bounce off of resistance in the near-term. I’ve said before that I’m a fan of Apple, just not a fan of its stock right now. In spite of the fundamental reasons to like AAPL, you can’t fight the tape on this trade. Apple is clearly still being sold off en masse, and it’s critical to wait for this stock to find meaningful support before jumping in. So far, shares are down more than 37% in the last six months, and they could be trading at an even bigger discount. That said, as this $400 billion firm’s massive cash position continues to become a bigger chunk of its market capitalization, buyers are going to start coming back out again. It’s just a matter of when. Advance Auto Parts (AAP) has seen some interesting price action of its own lately. But the most interesting part of AAP’s chart may be the price action that hasn’t happened yet. That’s because Advance is currently forming an ascending triangle pattern, a bullish setup that’s formed by a horizontal resistance level above shares (in this case at $81) and uptrending support below shares. Essentially, as AAP bounces in between those two technically important price levels, it’s getting squeezed closer and closer to a breakout above that $81 price ceiling. When the breakout happens, we’ve got a buy signal for this stock. Momentum adds some extra evidence for upside in AAP. While it’s shallow, 14-day RSI has been in an uptrend since shares spiked following third-quarter 2012 guidance at the end of October. Since momentum is a leading indicator of price, that’s a good sign for traders right now. Extra evidence aside, it’s critical to wait for the price breakout before becoming a buyer. Don’t be early on this trade. KBR We’re seeing the exact same ascending triangle setup in shares of engineering firm KBR (KBR). Like AAP, this stock is seeing a horizontal resistance level above shares at $32, and an uptrend on the lower end of shares’ range. The breakout above $32 is the buy signal in KBR. With any technical pattern, it’s critical to think in terms of buyers and sellers – not shapes. After all, triangles, head and shoulders patterns, and the like are a good way of describing what’s happening on a chart, but they’re not the reason why it’s tradable. Instead, that all comes down to the supply and demand caused by those buyers and sellers. The horizontal resistance level at $32 is a place where a glut of sellers has been willing to step in and put a ceiling in the stock. A breakout would mean that increasingly eager buyers have absorbed all of the excess supply of shares sitting at that level -- and without that barrier in place, shares could rally much higher than that. That’s why it makes sense to buy KBR on a push through $32. To see this week’s trades in action, check out this week’s Must-See Charts portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore. >>5 Stocks Insiders Are Snapping Up >>5 Hated Earnings Stocks Poised to Pop >>5 Rocket Stocks Worth Buying This Week Follow Stockpickr on Twitter and become a fan on Facebook. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Add Comment The Real Reason Mor...

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CPAs as CFOs: Why You Should Have a CPA in Your C-Suite Back CPAs as CFOs: Why You Should Have a CPA in Your C-Suite Published July 18, 2005 Today's complex global environment places new demands on leaders of organizations at both the board and executive levels to satisfy the dual expectations for successful performance and ethical governance. As a critical component of the executive team, the role of Chief Financial Officer (CFO) involves new demands as well. With heightened emphasis on financial reporting and internal control, the CFO's traditional responsibility for financial stewardship is more important than ever before. In addition, CFOs are increasingly involved in strategy execution and value creation activities. Their central location within the organization at the intersection of strategy, process and information places them in a unique position to coordinate strategic initiatives across the enterprise. CPAs are uniquely qualified to meet the challenges of the evolving role of the CFO: · CPAs are committed to a high level of professional competence, and are bound by the highest standards of integrity and ethical conduct. · CPAs value continuing education highly and continuously acquire new skills and knowledge to meet the changing demands of the workplace and their profession. · CPAs have a 100 year history and a deserved reputation for honesty and objectivity. · CPAs are committed to the public interest, which provides them with a perspective that is invaluable in developing trust. CPAs are trusted professionals with the expertise necessary to deliver value across the wide spectrum of responsibilities of the finance function in today’s business enterprises. Whether in the executive suite, on the audit committee, or in other roles in the boardroom, the skills and values of CPAs are essential to meeting the challenges of leadership and governance in this rapidly changing and complex world. View the white paper Acknowledgements CPAs practicing in business and industry account for over 40% of the AICPA’s membership, with more than 140,000 members. These CPAs serve publicly held, privately owned and not-for-profit organizations in a wide range of capacities. Many of them serve their companies in the critical role of Chief Financial Officer. This important membership group is represented in the AICPA by the Business and Industry Executive Committee (BIEC) and is supported by the AICPA’s New Finance Team. We would like to publicly thank all BIEC members, and the organizations in which they serve the accounting profession, for their ongoing commitment, dedication, and hard work. This important contribution further highlights the value of the CPA credential. We would also like to acknowledge BIEC Chair Stu Benton, and AICPA management staff John Morrow and Ken Witt for their leadership of this project; and colleagues Emanuela Limandri and Carrie Vaccaro for their invaluable assistance. 2004-2005 Business and Industry Executive Committee Stuart R. Benton Canton, MA Robert H. Henn Kansas City, Missouri Patricia Bowen Las Vegas, NV Isaac Kaufman Baltimore, Maryland Jeff Burnison Des Moines, IA Lisa Kelley Smyma, Tennessee Gary Cademartori New York, NY Kenneth A. Merchant Los Angeles, CA William James Centa Mayfield, Heights, OH Donna Mackenzie Celebration, Florida Patricia Cochran Rancho Cordova, California Kyle J. Pexton Salt Lake City, UT Nicole Franklin Floyd Bellevue, Washington Laurie Stanek St. Paul, MN AICPA Staff John Morrow Ken Witt Vice President Technical Manager

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Finance Jobs Outlook Where the Finance Jobs Are in 2012 By julie steinberg It's been a tough several months on the Street. After the financial crisis trampled everything in its path in 2008 and 2009, firms tentatively started rebuilding their teams in 2010 and continued hiring into 2011. Then August hit. The killer combination of a Greek debt crisis, U.S. debt downgrade and uncertain regulation roiled the markets, slowed the economy and forced Goldman Sachs, Morgan Stanley and their brethren to, one by one, announce layoffs. Jobs dried up like raisins in the sun.A few weeks into 2012 and we see no end in sight for the reduction plans of some firms. So far, the biggest shedders are HSBC and Bank of America, which each are cutting at least 30,000 jobs around the world. All of the big names, including Goldman Sachs, Morgan Stanley, Citigroup, UBS, Credit Suisse, JPMorgan, Deutsche Bank, Royal Bank of Scotland, Nomura and assorted regional banks are collectively cutting thousands of positions, too. Unsurprisingly (mainly because the banks warned employees not to get their hopes up), bonuses are down across the board this season. At J.P. Morgan, very few people saw increases in total compensation over last year, flat was considered good and even "top-rated" people saw pay cuts, a source tells us. Goldman's fixed income, currency and commodities division was hit hard, while Bank of America investment bankers are said to be getting 25% less this year than last. That's not so outrageous: Morgan Stanley's senior investment bankers and traders are receiving 20% to 30% less compensation for 2011 than the year before. So where's the good news? Some sectors that hired last year will continue to do so into 2012. Financial institutions are looking for talent in accounting, wealth management, and in emerging markets. Although Asia cooled off slightly at the end of last year, many banks still plan increases in their corporate finance and fund-raising groups. Then there are the firms that don't hog the spotlight. Houlihan Lokey, the Los Angeles-based investment bank with just 850 people, will add to its teams in the U.S., Europe and Asia this year, while Marsh & McLennan, eager to expand its reach, will hire for its risk and insurance businesses across the globe.Finally, don't forget about jobs spawned by Dodd-Frank, the financial regulation reform bill passed in July 2010 that created new agencies to oversee financial institutions and levy new rules on them. Even though the Securities and Exchange Commission and Commodity Futures Trading Commission don't have budgets to bring on masses of people, the Consumer Financial Protection Bureau expects to hire almost 500 people by September 2012. In addition, all those new regulations are prompting compliance hiring at private-equity firms, hedge funds and banks.It's unclear whether the changes Wall Street is undergoing are permanent. Some analysts claim that a shrunken Street will eventually become the new normal. Others, like Goldman Sachs Chief Financial Officer David Viniar, say the industry is facing a cyclical downturn, not a secular decline, and that things will be back to business as usual. No one knows when either scenario will play out. Even if the majority of jobs don't return, there are still some out there if you know where to look. In the FINS 2012 Finance Jobs Outlook, we'll give you advice on how to tailor your resume for every industry you might be interested in, from hedge funds to corporate banking. We'll show you the trends in accounting hiring and wealth management and point you to the opportunities in Asia. We'll also guide you toward smaller firms like Cantor Fitzgerald, which are gleefully scooping up Wall Street's displaced talent. Here's to 2012 and a year that's better than last. Write to Julie Steinberg at [email protected] Featured Employers Is your CV / resume as impressive as you are? A great CV / resume is the key to landing an interview. Learn more about FINS CV / Resume Service »

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Debt Reckoning: Destroying Myth Of Government Default Tue, Jan 22 2013 00:00:00 E Budget Policy: Even if we don't raise the debt ceiling, enough revenue will still come in to the Treasury to pay our interest, our bonds and essential services. The government will not shut down— only its ability to borrow. Like the fiscal cliff, the dangers of hitting the debt ceiling, while dire, are not necessarily fatal. It would, however, concentrate the minds of the American taxpayer wonderfully and force Washington to do what American families do every day around the kitchen table — take the paycheck and pay the bills in order of priority. Pay the gas company and the electricity provider and forget that big-screen TV. It may be time for Republicans to adapt the philosophy of former White House chief of staff Rahm Emanuel and not let the debt-ceiling crisis go to waste. It's time to destroy the myth that hitting the ceiling will cause the government to shut down and force the U.S. to default on its debt. It should force us to cut spending until we conjured up a sane fiscal policy. There has been much fear-mongering from President Obama on the issue, and no small amount of hypocrisy from the spender in chief. This is the president who once voted against raising the debt ceiling when George W. Bush was in charge and said the comparatively modest debt the Texas Republican ran up while fighting the war on terror in a post-9/11 world was "unpatriotic." In March 2006 when Obama was a U.S. senator, he had no problem voting against a stand-alone debt-limit extension. The final vote was close — 48 against the increase to 52 in favor of it. But back then, he was deeply upset about the then $248 billion deficit. Now he seeks an unlimited credit card — the power to raise the debt limit unilaterally any time he needs to. Just a few short years ago, Obama said "This rising debt is a hidden domestic enemy" and that "interest payments are a significant tax on all Americans — a debt tax that Washington doesn't want to talk about." Candidate Obama condemned Bush for adding $4 trillion to the national debt over eight years, calling it "irresponsible" as well as "unpatriotic." Hitting the debt ceiling will in effect be a de facto balanced budget amendment, forcing the government to prioritize its bills and pay out only what it takes in. But it will not force the U.S. to default on its debt or leave granny without her monthly Social Security check. As the Washington Examiner's Mark Tapscott notes, the facts, as reported by MarketWatch and the Bipartisan Policy Center, are that we could still meet our core obligations: • The federal government takes in about $200 billion in revenues each month. • Interest on the national debt is around $30 billion. • Social Security costs roughly $50 billion. • Medicare and Medicaid cost about $50 billion. • Active-duty military pay costs about $2.9 billion. • Veterans affairs programs cost about $2.9 billion. Calling the last debt battle in 2011 a "catastrophe" that led to the lowering of the nation's credit rating and stalled economic recovery, the president who has received six debt-ceiling increases as he added more debt than the first 42 presidents combined, recently told the nation's business leaders: "If the Congress in any way suggests they are going to tie negotiations to the debt ceiling and take us to the brink of default once again as part of a budget negotiation ... I will not play that game because we've got to break that habit before it starts." We are not on the brink of default, and the only game we should stop playing is the one of spending more than we take in. http://news.investors.com/ibd-editorials/011813-641261-debt-ceiling-will-not-force-default.htm Distribution days can signal market top.

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Economic Statecraft: How to Play It, and Win In a G-Zero world, as opposed to a G-7 or G-20 set-up, corporations need to pay more attention to governments, not economics, says Eurasia Group founder Ian Bremmer. What this means for Facebook, Coca-Cola, Apple, Siemens. Leslie P. Norton Correction: An editing error mistakenly described where Wal-Mart does business. The correct version is 'And if it weren't for a G-Zero world, Wal-Mart Stores (WMT) would be in Russia.' Companies once ranged the world, expecting that increasingly free and open markets would ensure rising revenue and profits. That no longer will be the case, at least in the world that Ian Bremmer, founder of New York-based Eurasia Group, a political-risk consultancy, described last week. The coming year's risks don't lie in Egypt or Iran, says Bremmer, but rather in a changed world directed by countries practicing "economic statecraft." Bremmer describes his theory at length in the recently published Every Nation for Itself: Winners and Losers in a G-Zero World. He recently explained to Barron's what the G-Zero world -- as opposed to the long-dominant G-7 or G-20 world -- might hold for investors in 2013. Barron's: What is G-Zero and why should we care? Bremmer: It is a world that is more difficult to navigate. The U.S. is no longer interested in or willing to provide the kind of leadership it has historically. It doesn't want to be the world's policeman or the lender of last resort or the driver of globalization. No one else is willing to do it, either. G-Zero replaces the U.S.-led flat world. It means a lot more volatility in the markets, since you'll have a lot of different standards, types of trade flows, gravitational centers. Enlarge Image "The one election that really matters is the one no one was talking about, which is Japan…This is absolutely a move to the right." Ken Schles for Barron's Companies need to hedge, to be able to pivot, so they don't end up underperforming. You see Japan's difficulties because of the conflict with China. In a flat world, in the absence of G-Zero, a Japanese exporter like Nissan goes where the economics are good and doesn't pay a lot of attention to governments. In a G-Zero world, politics matter more. Suddenly, the China-Japan conflict is enormously important, and exports to China fall off a cliff. Nissan used to sell 25% of its cars to China. Now half of that is gone. Likewise, Facebook (ticker: FB) thought it was in a flat world; it isn't. Facebook's goal is to sell to the seven billion people in the world, [with] a big connect to the first billion. But the world's largest Internet market, China, has no interest in Facebook. They want their own. That's not a flat world. Governments matter a lot more. G-Zero is an environment where you have many frenemies, as opposed to outright friends and enemies. That is difficult to navigate. How does the fiscal-cliff debate fit into this scenario? America is unwilling to focus on the international precisely because the domestic feels so profoundly problematic -- with heightened unemployment, the expanded gap between rich and poor, and the ineffective response to disasters starting with Katrina and going through the financial crisis and the BP disaster. With Congress having just an 18% approval rating, Americans don't want to deal with things like Syria. That shouldn't surprise us in the context of G-Zero. I happen to believe something will get done [to forestall the fiscal cliff], but it will be an incredibly limited deal, barely good enough, and it won't inspire anyone in terms of showing Democrats and Republicans working together. This is the U.S. today. We want a smaller footprint. We want to be reactive. Do the implications relate more to companies or macro markets? For some companies, G-Zero doesn't matter much. It doesn't matter if you are truly a global company with a powerful brand that no one can replicate, such as Coca-Cola KO +1.02% Coca-Cola Co. 04/15/14 Coke's Global Soda Volumes Dec... 04/15/14 Oatmeal Right From Your Coffee... 04/15/14 Morning MoneyBeat: Turnaround ... KO in (KO). But for some pharmaceutical companies, it matters, absolutely. Increasingly, in India or Thailand, you don't have effective patent protection, and they'll undersell you and give rights to other companies for the drugs you've developed. Energy, commodities, technology companies -- all compete with state-owned enterprises. Siemens SI +1.81% Siemens AG ADS 03/18/14 Caterpillar Files New Protest ... SI in ' (SI) technology was taken by companies they partnered with in China. And if it weren't for a G-Zero world, Wal-Mart Stores (WMT) would be in Russia. The emerging markets are two-thirds of the world's economic growth for the past five years and have very different attitudes toward rule of law and governments. To think how vastly different China's systems are from what the U.S. and our allied advanced industrial democracies prefer is important. Companies increasingly have to figure out which markets aren't strategic for them from a business and political perspective. Once, a Pizza Hut could sell pizza on every street corner. Now there are real competitors that aren't interested in its having market share. Companies need to recognize that and cut their losses. For some organizations, consolidation will be significant. In a G-Zero world, growth is more problematic; resilience is more important. A multinational like General Electric GE +1.16% General Electric Co. 04/16/14 RadioShack Mired in Talks With... 04/15/14 Glass Action: Google Glass Chr... GE in (GE) has more advantages in a G-Zero world because in a country like China, it can make all sorts of bets, understanding that some will be loss leaders. It will lose technology, and won't even be in that business in five to 10 years because the Chinese will take it. A one-trick pony like Apple (AAPL), that has one product that can potentially be replicated, might be in serious trouble. American companies aren't facing a precipice. But we aren't well set up with the U.S. government to make economic statecraft to help American companies deal [with G-Zero]. You could argue Japan, France, and Germany have better economic statecraft than we do, and the government plays a bigger role. Countries are starting to get it. The Canadians are proactively thinking, 'How much do we want China to be allowed to invest in us, and what does that do to our relationship with our buddy to the south?' The notion of U.S. energy independence is a significant theme that emerged in 2012. What does this mean geopolitically? Whether you think the U.S. is in decline depends completely on whether you're thinking top-down or bottom-up. Bottom-up, the U.S. has been in decline for decades -- I'm talking about [people in] the lower 50% of earnings, whose total net worth has not improved. Top-down, if you think about corporations developing extraordinary technologies, the U.S. is probably stronger than at any time before the financial crisis. From the top-down, the U.S. had 3.1% growth in the third quarter: The Europeans and Japanese wish they could touch that. Emerging markets do better, but are more unstable. The U.S. isn't unstable. Plus, the U.S. is the world's leading producer of food calories that will become more important over time. Not to mention, it's the world's most important military and cyber-security provider, which will matter much more to us and our allies over time. The U.S. role is still utterly essential. It's just that our willingness to provide global leadership will be low, because a lot of Americans don't think we can benefit, and many countries oppose U.S. values, standards, and preferences. So, the U.S. will become the world's largest producer of oil and exports. In G-Zero, increasingly, the U.S. will not be turning to the Middle East for energy. So, why exactly would the U.S. spend so much effort trying to ensure a peace deal between the Israelis and the Palestinians? Even Israel will find its relationship with the U.S. more problematic. It will still be an ally. But the willingness of the U.S. to focus on it will be lessened. It will also affect Japan and Britain, which are also special relationships. Last year, the scenarios of a European crisis, a Chinese meltdown, and a nuclear Iran didn't make your list of risks. What about this year? Frankly, what people thought were major risks for 2012, weren't. Someone at the Economist magazine ordered a lot of cover images of the euro zone imploding. I hope they're done. Fundamentally the European Union institutions are strong, vastly stronger than any other supranational institutions. The EU actually functions, and the European Central Bank functions. Time magazine in its eminent wisdom just awarded [President Barack] Obama Person of the Year. [German Chancellor Angela] Merkel should have been [angry]; she wasn't even runner-up. She got very strong approval ratings for sticking with the euro zone and building rule of law and making it work better. So, 2012 was a year of muddling through that was pretty effective for Europeans, even if [recovery wasn't] as fast as the markets wanted. You know the markets want a quick fix. Politics demands a stable fix, a sustainable fix. The problem worked its way into fruition over decades, and it's no surprise it takes years to fix it. What about Iran? I was deeply skeptical last year that there would be strikes on Iran. I still think the likelihood is near zero. What was the quote from The Princess Bride, that it "would be absolutely, totally, and in all other ways inconceivable"? There are many things that people thought were inconceivable that aren't. We say that living with North Korean nuclear weapons is unacceptable, but you know they've got them. It reminds me of the joke where the KGB knocks and says, 'Does Ivan Ivanovich live here?' The man opening the door says no. They go to other apartments. Finally, they ask at No. 7, 'What is your name, sir?' 'Ivan Ivanovich.' 'Do you live here?' 'Do you call this living?' So we can live with this stuff. I personally believe the likelihood of a strike against Iran is low, and it's important for the Israelis to make everyone believe they would attack, and we must pull them from the brink, because that makes us take it more seriously and makes sanctions tougher. If an Iran strike isn't in the cards, what potentially destabilizing events from the Middle East should we worry about? I feel good about Egypt. We don't like the country or government particularly, but Egypt is an important country, and people want them to succeed. President [Mohammed] Morsi is reasonably pragmatic, particularly in his willingness to work with the Egyptian military, where his bread is buttered. He also wants to work with the U.S., the International Monetary Fund, the Saudis, and where he will get more funding. There will be more demonstrations. But from a stability perspective, Egypt is on a reasonable path. Syria is a disaster that is getting worse. You have over 50,000 dead and over 500,000 refugees streaming across borders, destabilizing Iraq, Jordan, Turkey. There is the potential for nationalism to grow. For Iraq, the Kurds are the real issue. I don't believe Assad or the Syrian military are done. They are still operating all over the country. They are moving chemical weapons around. I don't think they are planning to strike; they want to show the international community that if you think you can take us out, we have lots of capacity, so don't think about it. There is deterrence going on here. For 2013, things will get worse; the opposition is getting military support, and, if possible, they will remove Assad. It isn't going to happen immediately, and 2013 will see an awful lot of fighting. Let's talk about Asia. At the beginning of 2012, people talked about the importance of political transitions, in the U.S., China, Russia, France. I thought none of them were going to matter. So looking back, how much did these elections matter? In the U.S., you had Obama and a divided Congress, which you have again. In Russia, you had Putin; now he is in a different position, same Putin. In China, you had nine guys in suits, and now you have seven. In France there actually is a difference -- the Socialists are in charge -- but the orientation to the euro zone is virtually identical. The one election that really matters is the one no one was talking about, which is Japan, where the Liberal Democrats won big, and the Japanese Restoration Party won big. This is absolutely a move to the right. It certainly matters for the Japanese economy. There will be more stimulus. They will reopen more nuclear plants, which they desperately need. The last time Shinzo Abe was prime minister, he went to China on his first trip. He ain't doing that this time around. He is going to the U.S. The Japan-China relationship is toxic. These are the third- and second-largest economies in the world. This matters. The Chinese believe they don't need Japan the way they used to; they don't need their money. The technology they can get from South Korea and Taiwan. What does that mean for Japan-China relations? They will focus on bilateral relations. They'll ultimately have better policy relationships and more influence. [The Japanese] were scrambling their fighters in response to the Chinese just a week going into the election in Japan. They have asked to revise their military relationship with the U.S. to reflect this China threat. They've spoken about strengthening the coast guard. You could very easily see much more in terms of military exercises, patrols, contested territory. There is military danger here, but it doesn't lead to war. But it could [lead] to much worse trade relations. Could it lead to more cyber attacks by China against Japan, more industrial espionage? Yes. It is difficult for the U.S. to prevent a sharp deterioration. What will be the biggest surprise from the new Chinese leadership? There will be no surprises. This group is incredibly consolidated. They went from nine to seven seats on the Politburo Standing Committee. Hu Jintao, the outgoing president, surrendered his military position sooner than expected so Xi Jinping, the incoming president, could have more control. Li Keqiang, the incoming prime minister, will handle the economy rather than Wang Qishan, the most senior and noted market reformer. Wang will lead the anticorruption agency. The Bo Xilai incident demonstrated that, in China, nails that stick up will be hammered down. The easiest way to prevent Bo Xilai is to limit the number of Bos. That implies consensus, an environment where we don't want to take risks, and they are worried about the U.S. and the global economy. The Chinese will be incremental on currency and the rest. They will not make dramatic moves toward fundamental reform. Across the board, these seven in charge are reformists: They want redistribution of income and the Chinese consumer to become more important. All these things are significant. This group will not dismantle state capitalism, or decisively move against state-owned enterprises, or suddenly open up the Chinese banking system. People have been saying for a long time that China is going to look much more like the U.S. Well, it will be roughly the size of the U.S., depending on whose numbers you look at, and they are still going to be poor. So, these guys are still going to be committed to an authoritarian political system and state capitalism. What are you writing now? Pieces about economic statecraft and how geopolitics are increasingly turning to geoeconomics. Having an effective economic statecraft is the biggest challenge for us in the future. Thanks, Ian. Comments? E-mail us at [email protected] Email

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Knight Capital's Chief Ponders His Options Jenny Strasburg Updated Oct. 25, 2012 12:01 a.m. ET More than two months after a rescue ensured Knight Capital Group Inc. had a future, the brokerage's chief executive is trying to figure out his own. Thomas Joyce, who also is chairman of Knight's board, had a message for fellow directors ahead of the firm's earnings announcement last week: Other companies were interested in discussing potential job openings with him, according to people close to the talks. He has had preliminary...

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Review & Outlook (Europe) Hollande's World Tax harmonization and green energy won't save Europe. May 21, 2013 3:45 p.m. ET marked his first year as France's President by declaring that the battle of the euro crisis was over—and the battle of the recession had begun. The culprit? "Austerity policies," he declared in a press conference last week, which are "threatening the very identity of Europe and the peoples' very confidence in their destiny." And then it got worse. Having spent his first year "defending our sovereignty, sorting out our economy, safeguarding our social model and putting right injustices," Mr. Hollande is now proposing a four-point program. The first plank is a new "economic government" for Europe, which would meet every month to "debate the main economic policy decisions" for euro-zone members. Under the auspices of yet another European president, this new unelected body would seek to harmonize taxes, "bring about convergence at the social level—top down—and embark on a plan to combat tax fraud." The second plank entails billions of euros to "support" and "train" jobless European youth. He would add initiatives to push older workers into retirement to make way for the next generation. Apparently in a stagnant economy, the only way the young can find a job is if someone else steps aside for them. Enlarge Image French President François Hollande Liewig Media Sports/Corbis As for energy policy, France sits on the second-largest shale-gas reserves in Europe, after Poland, but refuses to contemplate exploiting them. If Mr. Hollande wanted a real energy revolution, he need only look to the ground beneath his feet. Instead, he's looking for the mirage of a carbon-free future. Lastly, Mr. Hollande called for a "fiscal capacity for the euro area," an idea that he didn't elaborate, but which in any case seems dead in the water until Germany is satisfied that the other members of the euro zone, including France, have put their fiscal houses in order. Not everything in Mr. Hollande's speech was so fanciful or counterproductive. He called for administrative simplification in a country that, by his account, had tripled the size of its regulatory rulebook in the past decade. He promised to reduce the regulatory burden, albeit without removing anyone's "rights or protections." He hinted at moving toward the English common law idea that if government doesn't explicitly forbid something it is allowed—the opposite of the French model—but the proposal was full of caveats. And on pensions, the President whose first official act was to lower the retirement age did allow that "as we're living longer—sometimes much longer—we'll also have to work a bit longer." That principle would seem to contradict his pledge to push older workers into retirement so the young can get jobs, but at least he's admitting that an aging French work force can't spend as long in retirement as it does working and still pay for those pensions. Mr. Hollande said last week that his "duty is to get Europe out of the lethargy gripping it." It's the right goal, but these policies aren't remotely equal to the task.

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HomeNational PostNewsOpinionMarketsInvestingPersonal FinanceMortgages & Real EstateTechExecutiveEntrepreneurJobsSubscribe FP Comment Terence Corcoran: Occupiers aim for the big time Terence Corcoran | April 13, 2012 8:47 PM ETMore from Terence Corcoran | @terencecorcoran But their tax-the-rich schemes bump up against reality Members of the Occupy movement, having wintered in their cozy abodes with their iPhones and Internet hookups, are gearing up for a spring reboot. There are wild plans for a general strike in the United States and elsewhere on May 1 — May Day, fittingly, the traditional date through the last century for protests and mass demonstrations by anarchists, Marxists, unionists, socialists, Second Internationalists and revolutionaries, sometimes hellbent on repeating what Vladimir Lenin called “The great May strike of the workers” in 1905 that clearly showed “that Russia has once more entered the period of a rising revolutionary situation.” Now is not 1905 Russia, but there is clearly a vast army of activists, academics, street people, ideological troublemakers, journalists and politicians who believe they have hit on a neo-revolutionary moment in history. From U.S. President Barack Obama — who relaunched his Occupy-friendly, tax-the-rich Buffett Rule campaign on Tuesday — on down to parallel schemers around the world, including Canada’s New Democrat left and others, there’s a sense momentum is on their side. The Occupy movement, last seen as a fizzling and freezing incoherent street fight dispersed by the cold and an unsympathetic populace, is about to make a run for the big time of political influence. Certain to fuel the movement’s second coming, especially in America, is a new book — The Occupy Handbook — that is likely to become the public bible of the modern and fashionable political left. Edited by Janet Byrne, The Occupy Handbook is a compendium of essays, articles and short pieces by a roster of writers who, for the most part, are fellow travellers with the general idea that today’s global economy is a capitalist hellhole that pits the stinking rich 1% against the poverty-stricken and downtrodden 99%. The general incoherence of the original Occupy message — was it about Wall Street, the tax system, political corruption, cheap tuition or health care and food banks? — remains. But the assembly of star turns in The Occupy Handbook — Paul Krugman, Jeffrey Sachs, Nouriel Roubini, Michael Lewis, Scott Turow, John Cassidy, Paul Volcker — gives the impression that the Occupy Wall Street operation was founded on a set of cohesive underlying themes and consistencies. More than 50 writers contributed to the book, but only a few make token appearances to challenge key claims. This book is, in the end, a leftist-liberal production that aims to co-opt the Occupy movement and thrust it into the mainstream of U.S. politics — and the heart of the coming U.S. election campaign. The Occupy Handbook covers a lot of ground as it moves from one quasi-revolutionary proposal to another — on corporate behaviour, health care, the media, corruption — but the opening essay by editor Janet Byrne plays right into today’s headlines and the tax-the-rich campaign now being waged by President Obama and by certain politicians worldwide. On Tuesday, pushing his Buffett Rule — raise taxes on all Americans earning more than $1-million — President Obama played the Occupy game. “Right now, the share of our national income flowing to the top 1% has climbed to levels last seen in the 1920s. And yet those same people are also paying taxes at one of the lowest rates in 50 years.” These are, in fact, official talking points of the tax-the-rich movement and the many practitioners of the politics of envy and inequality. In Canada, Armine Yalnizyan, of the Canadian Centre for Policy Alternatives, reports that “incomes are as concentrated in the hands of the richest 1% today as they were in the Roaring ’20s.” As a result, she supports the Ontario New Democrats plan to raise the provincial tax rate on incomes of $500,000 or more. In her essay, Ms. Byrne applauds such tax proposals, but especially one in her book co-authored by Emmanuel Saez, the Berkeley economist who has for many years been promoting the existence of a massive income inequality crisis in the United States. Mr. Saez’s solution: Raise the current 35% marginal tax rate on the top 1% of Americans who earn $400,000 a year or more. “We favour a top tax rate near or in the range of 50% to 70%.” Ms Byrne said no other essay in her book “had the quiet power” of the Saez tax plan. It was, she says, “a turning point in the book’s composition” because it came with a simple message. “If the marginal tax rate on the income of the top 1% were doubled, from 35% to 70%, any resulting unhappiness experienced by the 1% would be socially unimportant.” What kind of moral and political concept is this? The “unhappiness” of the rich at seeing their taxes doubled is of no consequence because their particular unhappiness (perhaps as measured by Jeffrey Sachs as part of his United Nations-led Gross National Happiness campaign?), can be dismissed as being “socially” unimportant. It’s unfashionable these days to hark back to the likes of Stalin, but I imagine he felt much the same way about the thousands of unhappy people he dispatched to Siberia in post-revolution Russia. A few days ago, when Canadian businessman Jim Doak appeared in a CTV debate with Ms. Yalnizyan over tax-the-rich schemes, he said they amounted to “ethnic cleansing” of the rich. It seemed extreme when he said it, but in light of Ms. Byrne’s views, maybe it isn’t. Three writers, J. Bradford DeLong of Berkeley, Tyler Cowen of George Mason University and Veronique de Rugy of the Mercatus Center, are called in to offer counterpoints to the Saez tax plan and the Occupy theories in general. They point out that such taxes will not work as money raisers, that taxing the rich destroys incentives and punishes success, and will in any case do nothing to change the economic reality that some people produce more wealth than others. That’s not unfair. That’s just economic reality — the same reality that the world’s anarchists and revolutionaries have been trying to destroy since the first U.S. May Day more than a century ago. National Post [email protected] RelatedPush to tax top 1% stronger, but no less riskyInvest like the rich do Governments rip up renewable contracts Darkening clouds threaten Trans-Pacific Partnership deal Topics: FP Comment, equality, Occupy Wall Street Find a Story Stock Search Letters to the editor Do you have an opinion to share with other readers? Then send us a letter. Please include your address and daytime telephone number. We give preference to letters that refer to a particular article by headline, author and date. If your letter concerns articles in other sections of the National Post, including business articles that appear in the A section, please send your letter here. Copyright in letters and other materials sent to the publisher and accepted for publication remains with the author, but the publisher and its licensees may freely reproduce them in print, electronic and other forms. Ontario's Power Trip Nota Bene: Environmental OffenseOntario’s Power Trip: Province lost $1.2-billion this year exporting powerOntario’s Power Trip: Auditor General confirms $1-billion power plant boondoggleOntario’s Power Trip: Retirement deficit coming to your hydro billOntario’s Power Trip: McGuinty’s bigger debacle Our Partners

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Operational RiskRate RiskCredit RiskCompliance/RegulatoryCyberfraud/ID Theft How AML weaponry evolved after 9/11 Book Review: Former D.C. official Zarate offers insider’s AML history By John Byrne Comments: comments Treasury's War: The Unleashing Of A New Era Of Financial Warfare. By Juan Zarate. PublicAffairs. 512 pp. On the timeline of financial services evolution, the anti-money laundering discipline does not have a long history. It began in earnest around 1985, and evolved in more recent years beyond an anti-crime, anti-drug orientation to include, as well, an anti-terrorist financing element. The benefit of that short history, to those of us in the profession for all or much of that time, is that we know the leaders and may have even participated in some of the issues, in some fashion, that form the basis of today’s AML policy. As one of those fortunate to have been in the field from the beginning, I was very excited to learn of a book by Juan Zarate, a former Treasury official with whom I had the honor of working post 9/11. Zarate’s review of the events and debates following that critical time in Treasury’s war does not disappoint. I consider it a must-read for anyone who wants to know where we are, where we’ve been, and what challenges lie ahead. How 9/11 changed the challenge Treasury’s War contains several compelling story lines that intersect: major financial investigations, bureaucratic maneuvering, and foreign policy discussions. Early on, Zarate captures the interest of any student of AML with his first-person account of how the terrorist attacks of 9/11 set the course of the U.S. and global response for the next decade. Of course, some of us would have welcomed an overview of money laundering prevention pre 9/11. But, understandably, Zarate’s focus is how that day changed policy forever and he offers a brief mention of the use of sanctions and laws from the previous century. Zarate’s account also addresses the well-known interagency conflicts with Treasury and the FBI right after 9/11 as he describes two parallel task forces, headed by each, that “would clash repeatedly as law enforcement focused on terrorist financing investigations.” While some of us would have relished a behind-the-scenes accounts of infighting, Juan handles the issue like the professional he is, avoiding gossip, and concentrating instead on the bigger story—use of new tools to attack financial flows. Another part of the account which should resonate with anyone paying attention to the budget sequester, and other attempts to redirect crucial resources, is the coverage of the creation of the Department of Homeland Security (DHS). Here Zarate does take you on the inside to see how Treasury went from leading the U.S. efforts to combat terrorist financing (with FBI of course) to its battle to salvage a seat at the financial investigations/intelligence table with Zarate’s proposed (and finally created) “Executive Office of Terrorist Financing and Financial Crimes.” One senses a sincerity from Zarate to, not save turf, but to utilize a group of dedicated public servants to an important way to combat the illicit flows of funds. Zarate then covers how the office had to quickly show relevance and resurrect Treasury as a key player in AML and counter-terrorist financing. Even though you know the outcome, you find yourself rooting for their eventual success. Episodes that taught key lessons Readers less familiar with the BSA/AML world will learn what long-timers know, and will see confirmed in the book’s pages: This enforcement and compliance discipline represents a continual curve of learning and adjustment. For instance, Zarate takes the reader through what he calls, “The Mother of All Financial Investigations,” when the Treasury Department went after Saddam Hussein’s assets to return them to the Iraqi people. This chapter, appearing in the middle of the book, makes a strong case regarding how finding these assets helped “shape the way we [Treasury] waged financial warfare beyond the borders of Iraq.” If you are an AML professional, you will appreciate Zarate’s points in this section that Saddam and his minions used proxies, front companies, and a variety of bank accounts to move assets despite the existence of sanctions. In other words, the garden-variety techniques used by crooks everywhere. Also, as we follow current events regarding Syria, Zarate mentions that ten years ago, the U.S. suspected but could not prove that the Syrians used billions of dollars to pay Saddam’s generals and to tap other methods to evade sanctions. Zarate’s “Bad Banks” section describes the change in attitude among financial services leaders in late 2001 that resulted in a commitment of support and a spirit of cooperation. He covers the case of Riggs Bank—which was absorbed long ago, now, and which to me is the poster child of reputational risk—and other well-known facilitators of criminal monies. He also explains how the newly enacted USA PATRIOT Act and its Section 311 became a tremendous tool for pressuring policy change in jurisdictions allowing rogue bank activity. Treasury’s War delves into the important role that Treasury played with the instrumental Financial Action Task Force (FATF). His account of how Treasury officials and others they worked with were able to convince Russia and China to make changes so as to be accepted into FATF is both dramatic and a great example of the importance of countries being accepted into the AML community. Now, I would not go as far as to suggest those and other countries, previously blacklisted, are on a par with U.S. in terms of laws and regulations. But the changes are positive and serve a greater purpose. Annals of neverending financial war Juan Zarate left the Treasury for the White House in 2005 but not before assisting in the creation of the Office of Terrorism and Financial Intelligence, which he calls “a permanent address in the U.S. government for the execution of all-out financial welfare.” The second half of “Treasury’s War” reflects on the challenges with North Korea, Iran and the response to the Swift “scandal” uncovered by the media. Here Zarate shares accounts that show both the dedication of the Treasury staff and the pure emotions of being in constant engagement with foreign governments and within the U.S. government. A scene where a Treasury official breaks down is poignant, as is Zarate’s strong defense on having access to (but not control of) Swift data as a law enforcement tool. In his final chapter Zarate makes recommendations to strategic and tactical guidance on how to manage the response to future financial war. While not an economist, he makes the point that China and Russia represent challenges to U.S. prominence and that fact may impact use of sanctions or other attempts to stem the flow of illicit funds. He adds his voice to those warning AML professionals about new currencies and technologies and the fear of less transparency. Sanctions and the threat from the shadows Zarate ends by acknowledging the successful use of “financial or forced isolation” in the past can quickly turn as financial institutions stop doing business with certain bad actors and the possibility that “less credible or scrupulous financial actors will step in to fill the vacuum.” Treasury’s War offers some brief recommendations to address this challenge but it seems to me that much more needs to be discussed and debated. I have to note that Zarate makes a point I have been touting for years—“meetings with bank CEOs and compliance officers often became more important than meeting with government officials.” As a long-time member of the AML community, reading about friends and peers in the book gave Zarate’s account particular additional appeal to me. If you are new to this field, the coverage of those veterans will still hold your interest as the author gives them the accolades they deserve and the proper back-story so you understand their involvement. Of course, many others within the government and the private sector have played a huge role in the collaboration and cooperation that continues today. But that is a minor point—that book can still be written. In sum, though Juan Zarate doesn’t add to the history surrounding counterterrorist financing post 9/11, he is the first to clearly explain it. Treasury’s War is detailed, interesting, and sincere—the AML community especially will appreciate and learn from this story. If you'd like to review books for our online book column, or have recently read a book that you found helpful that we haven't already reviewed, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. Topics: Compliance, BSA/AML, Books for Bankers, Tweet John Byrne John Byrne is Executive Vice-President of the Association of Certified Anti-Money Laundering Specialists. ACAMS, with more than 17,000 members, develops anti-money laundering/sanctions/financial crime detection programs and certifies specialists in financial and non-financial businesses and government agencies. Byrne is a nationally known regulatory and legislative attorney with close to 30 years of experience in a vast array of financial services issues, with particular expertise in all aspects of regulatory oversight, policy and management, anti-money laundering (AML), privacy, and consumer compliance. He has written over 100 articles on AML; represented the banking industry in this area before Congress, state legislatures and international bodies such as the Financial Action Task Force (FATF); and appeared on CNN, Good Morning America, the Today Show, and many other media outlets. John has received a number of awards, including the Director's Medal for Exceptional Service from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) and the ABA's Distinguished Service Award for his career work in the compliance field. Byrne can be e-mailed at [email protected]. And don't miss John's updates on Twitter! You can find him at @jbacams2011. Click here to see his wefollow Twitter page. Related items Rethinking compliance compensation Innovation, transparency hallmark virtual currency regs Compliance challenges—why go it alone? UDAAP in the future, tense Cyberthreats much more than operational risk Latest from John Byrne “The Song Remains the Same” * Marijuana guidance mostly confuses “Set That Baggage Down”* “We Gotta Get Out Of This Place”* “Moving Ahead So Life Won’t Pass Me By” * More in this category: « Ocean to ocean in Yuma, Ariz.: a community bank grows amidst "criminals" When wrong end round is right » back to top Get ABA Banking Journal Newsletters Risk Management Blogs UNconventional WisdomCompliance challenges—why go it alone?Maybe teaming up is one a... Talking CreditAdvice to a young lender9 ways to start out right... Common Sense ComplianceUDAAP in the future, tenseIf you knew now what you’... Talking Credit3 ways to keep talent pool filledBuild—and retain—good len... Popular Risk Management Don’t let rate worries hide liquidity risks Playing 2014 ALCO on a 1980s machine? Joint Visa, MasterCard effort to focus on security Mortgages enjoy priority over plastic (again) Liquidity risk management rises in priority Risk Management Topics

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We Don't Need "Too Big To Fail" Institutions L. Randall Wray, Benzinga Jun. 16, 2011, 3:46 PM 547 L. Randall Wray L. Randall Wray is a professor of economics at the University of Missouri -- Kansas City Recent Posts The Levin Report Triggers Subpoena For Goldman Sachs Why Ireland Is At Risk Of Defaulting On Its Debt Chairman Bernanke, You've Got Some ‘Splaining to Do On... I've been traveling a lot in recent weeks and had the pleasure of meeting policymakers in a number of countries. Perhaps the most interesting of those meetings occurred in a small workshop attended by a couple of policymakers who had worked with Timothy Geithner to bail-out Wall Street. Let me just say that these were intelligent guys with their hearts in the right places. While they probably did not think they were doing “God's work” (as the Vampire Blood Sucking Squid put it), they certainly did think they were operating in the public interest. They shared a view that what we experienced back in 2008 was the mother of all liquidity crises. As one of them put it, the crisis boiled down to this: the world missed a payment, then all hell broke loose. To summarize this view, we had a highly leveraged and interdependent financial system that relied on extremely short-term borrowing (overnight) to finance positions in assets. A key link in the liquidity chain was the money market mutual fund, which essentially promised close substitutes for bank deposits, but without the government guarantee. MMMFs purchased very short term debt issued by the shadow banking system (held as assets). When it looked like forces would “break the buck” there was a massive run on the money markets which made it impossible for the MMMF's to continue to provide overnight funding to the shadow banks. This is a $3 trillion uninsured “deposit-like” market that the government had to guarantee dollar-for dollar. All told, the bailout of Wall Street amounted to more than $29 trillion (that is the “flow” number; the outstanding stock maxed at perhaps $8 trillion—still a very big number). That is what happens when the world “misses a payment”. While this is not the topic for this blog, just think about the possibilities if $8 trillion (leaving to the side $29 trillion) had been devoted to bailing out Main Street rather than Wall Street. We'd be fully employed, driving brand new SUVs, and making payments on our overpriced MacMansions. All that is too obvious to require any explication. Now, I think these guys are wrong. Dangerously so. What we actually had (and have) were massively insolvent Wall Street shadow banks, so their short term liabilities were trash. The run on MMMFs was not an irrational liquidity run, but rather a rational run on institutions that were holding garbage as assets. The federal government made that garbage as sweet smelling as roses, by intervening in the biggest bailout in human history, by several orders of magnitude. And it did not have to be that way. Let us instead deal with a “what if”. Suppose we had decided not to bailout the MMMFs and let the insolvent shadow banks go down. What if we had not handed bank charters to Goldman Sachs and Morgan Stanley (the last two investment banks standing)? What if we had simply closed down what my colleague Bill Black calls “systemically dangerous institutions”? What if we had let the market “work”—in its wisdom it wanted to close down the biggest financial institutions and to rid the world of shadow banking. What if we had let that happen? We know the view at the Treasury: from Rubin to Paulson to Geithner the view is that we'd have no economy at all. Forget about a financial system—we'd be back to bartering coconuts for fish. That was the claim made by Paulson when he went to Congress and demanded nearly a trillion dollars to bailout his Wall Street buds, with a gun to his head and threatening to pull the trigger. What if we had borrowed a line from Clint Eastwood: “go ahead, make my day”? Blow your own stupid head off. Here's a hypothesis. We'd be MUCH better off today. The banksters would all be gone—retired to their offshore islands with whatever riches they had been able to hide away. We'd still have, oh, about 4000 banks, mostly honest, mostly making loans to firms and households, and with reasonable compensation and no special power over Washington. This ain't just my hypothesis. In a very interesting (and to my mind, convincing) article, Robert G. Wilmers, chairman and chief executive officer of M&T Bank Corp. (MTB) made the case for me. Indeed, his piece is so good that I cannot possibly improve upon it. Let me provide a few key (and somewhat long) excerpts. The whole piece is here: Small Banks, Big Banks, Giant Differences: Robert G. Wilmers First, Mr. Wilmers rightly notes the long term transformation of banking away from lending and to trading: Community banks have given way to big banks and excessive industry concentration; profits are increasingly driven by risky trading; leverage is taking precedence over prudent lending; compensation is out of control. This toxic combination leads to continued taxpayer risk and threatens long-term U.S. prosperity. To understand the change, first consider history. Banking once was a community-based enterprise, relying on local knowledge to guide the process of gathering customer deposits and extending credit. Done well, this arrangement ensures that deposits are deployed into a diversified pool of investments, while providing depositors with liquidity and a return on their savings. Over the past generation, however, the financial services industry changed dramatically. In 1990, the six largest financial institutions accounted for 9 percent of all U.S. domestic deposits. As of Dec. 31, 2010, the six biggest banks accounted for 36 percent of deposits. Amazing analysis, from a banker. The big banks have virtually no interest in lending. They use deposits to finance their trading activity; and when the trades go bad they ask Uncle Sam to bail them out. Such concentration raises the concern that poor decisions at such outsized institutions can lead to systemic risk. But this risk is greatly magnified by the new way in which the major banks, those deemed too big to fail, are doing business today. The largest and most profitable bank holding companies have moved away from traditional lending and come to rely on speculative trading in all types of securities, derivatives, credit default swaps, mortgage-backed securities and other, even more complex and exotic financial instruments -- many of them associated with high leverage. Such trading now is the engine of income. In 2010, the six largest bank holding companies generated $56.1 billion in trading revenue, or 74 percent of their $75.7 billion in pretax income. Trading revenue at these institutions distinguishes them from traditional commercial banks, which aren't typically involved in such speculative endeavors. The Big Six institutions earned more than 93 percent of the trading revenue generated by all American banks during the past two years. To say these large institutions are the same species as traditional commercial banks is akin to describing dinosaurs as reptiles -- true but profoundly misleading. In reality these institutions are what my colleague Bill Black calls control frauds. Their sole purpose is to enrich top management with outsized bonuses. Trading is the preferred activity. First because they can screw the suckers. But more importantly, because trading profits can be whatever you want them to be. You buy my trash at outlandish prices, and I buy your trash at ridiculous prices. We book profits and pay ourselves bonuses. So long as regulators look the other way, there is quite simply no limit to how much we “earn”. Just ask Hank and Bob—whose rich rewards were due to trading activity. Consider that in 1929 compensation for employees in the financial-services industry was just 1.5 times that of the average nonfarm U.S. worker. By 2009 employees in the securities and investments sector, which includes investment banks, securities brokerages and commodities dealers, earned 3.4 times as much as an average U.S. worker. The average 2009 investment banking compensation at four of the top banks was at least six times that of an average American worker -- while employees in the traditional commercial bank sector earned just 1.2 times the average nonfarm employee. The chief executive officers at the top six bank holding companies were paid an average of $26 million in 2007, or 516 times the U.S. median household income. Indeed, those bank CEOs are paid 2.3 times the average total CEO compensation of the top Fortune 50 nonbank companies. The bailout of Wall Street was, by design, an effort to keep those bonuses flowing. Oh, who designed it? Well, Hank, Bob and future Goldman Sachs employee Timothy. And who guaranteed the bonuses? Uncle Sam. What is the consequence? Destruction of the real banks—those that still make loans. The major Wall Street banks operate under the taxpayer-backed umbrella of the Federal Deposit Insurance Corp. and, as we saw in 2008, the Treasury Department and the Federal Reserve. To pay for the cost of such protection, legislators and regulators have forced thousands of Main Street banks like the one I run to absorb a larger, more expensive set of regulatory costs, including higher capital and liquidity requirements. This threatens to deny small-business owners, entrepreneurs and innovators the credit they need and on which the economy relies. Such, I fear, are the bitter fruits of a financial services industry unmoored from its traditional role in the commercial economy and a regulatory regime that protects outsized compensation tied to trading. Regulators have failed to distinguish between trading activity and traditional banking, or to recognize that the activity of an institution, not its form, should be the proper focus of oversight. We know what happened to “reform”—it got captured by Dodd-Frank, legislation overseen by two of the most conflicted legislators the US has ever seen. Worse, President Obama has in recent days renewed his love affair with Wall Street, returning with open arms to rebuild bridges. After all, he wants at least $1 billion to conduct his next campaign. All that drives home the fact that true reform is impossible so long as these “too big to fail”, systemically dangerous institutions are kept on Washington's life support. Wilmers offers an unassailable agenda for policy makers: Main Street banks are heavily regulated -- and have been for generations -- to ensure their safety, soundness and transparency. A new generation of regulation must now be applied to what has become a virtual casino. All the players must be included -- Wall Street banks, investment banks and hedge funds. Complex derivatives and credit default swaps must be brought out of the shadows and into public clearinghouses, so that markets can know their magnitude and extent. Those financial institutions that engage in trading should live and die by the pursuit of their fortunes, rather than impose a burden on the whole economy. It's time to disentangle the trading of big financial institutions from their more traditional commercial banking operations and put an end to this unsafe business model. Unfortunately, I am not optimistic. First we will need another global financial collapse—probably one bigger than what we experienced in 2008—to make this policy politically feasible. Second, we must close all the big, systemically dangerous institutions. They control policy-making and they have an unfair advantage over community banks. The subsidy offered to Goldman alone (in the form of insured deposits plus an obvious backstop that will prevent Goldman from failing no matter how bad its trades go) is worth tens of billions of dollars. Community banks cannot compete with that. There is no hope so long as Goldman et al remain in business. Sometimes the best answer is “TINA”: there is no alternative. To shutting down the biggest banks. The next crisis—which could come any day now—will offer that opportunity. It would be foolish to waste another crisis. L. Randall Wray is a Professor of Economics, University of Missouri—Kansas City. A student of Hyman Minsky, his research focuses on monetary and fiscal policy as well as unemployment and job creation. He writes a weekly column for Benzinga every Tuesday. He also blogs at New Economic Perspectives, and is a BrainTruster at New Deal 2.0. He is a senior scholar at the Levy Economics Institute, and has been a visiting professor at the University of Rome (La Sapienza), UNAM (Mexico City), University of Paris (South), and the University of Bologna (Italy). BlackBerry Enters Healthcare via NantHealth - Analyst Blog FLIR Receives Defense Contracts - Analyst Blog TASER Wins London Police Contract - Analyst Blog Balanced View on Petrobras - Analyst Blog Moody's Affirms Trustmark's Ratings - Analyst Blog This post originally appeared at Benzinga. Copyright 2014. Here's why we'd be better off without them.

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Fraud by the NumbersThe U.S. government issues a count of executives busted for financial fraud in the last five years. Kate Plourd, CFO MagazineSeptember 1, 2007 This year marks not only the five-year anniversary of the Sarbanes-Oxley Act but the same milestone for the President's Corporate Fraud Task Force. Announced in July 2002, the task force is chaired by Deputy Attorney General Paul J. McNulty and includes senior Department of Justice officials and seven U.S. attorneys, along with heads of the departments of Treasury and Labor and of the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Energy Regulatory Commission, Federal Communications Commission, U.S. Postal Inspection Service, and the Department of Housing and Urban Development's Office of Federal Housing Enterprise Oversight. The group celebrated the occasion by issuing a scorecard of sorts that quantified the number of senior executives convicted (see "Busted" at the end of this article). While the group noted in a report that it "has compiled a strong record of combating corporate fraud and punishing those who violate the trust of employees and investors," its primary role is to coordinate the enforcement efforts of various federal departments. Several high-profile CFOs, including Enron's Andy Fastow and WorldCom's Scott Sullivan, were not on the list, because their cases were handled by a fraud team within the U.S. Attorney's office. The charges brought have included securities fraud, insider trading, market manipulation, false statements, stock-option backdating, conspiracy, money laundering, and violations of the Foreign Corrupt Practices Act. In addition to the convictions, the task force noted, more than $1 billion in forfeitures has been distributed to victims of corporate fraud. The task force cited the role that Sarbox played in facilitating convictions (or, more precisely, plea deals, which occurred in more than 75 percent of cases), although only three CFOs were convicted based on direct violations of Sarbox. New securities-fraud provisions from Title 18 of the U.S. Code, Section 1348, played a role in more than 50 cases. — Kate Plourd Among the 1,236 people convicted by the Task Force were: 214 CEOs & presidents 53* CFOs 23 Corporate counsels or attorneys 129 VPs * For a complete list of those convicted, click here.

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Industry Attorney Sees Credit Union Bank Buys Accelerating April 05, 2013 • Reprints Thursday’s announcement of the Baltimore-based $1.2 billion Municipal Employees Credit Union’s proposed acquisition of the $61 million Advance Bank in Baltimore is yet another sign that the trend of credit unions buying banks is gaining traction. Credit union attorney Michael Bell in Royal Oak, Mich., expects this trend will continue through this year and next, opening a strong opportunity for credit unions to grow. “This is going to keep happening and it’s going to accelerate,” Bell said this week, as more credit union executives become aware that they can purchase banks. He said some credit union executives are unaware they can buy banks, noting that in a recent presentation he made on this topic before 200 credit union executives, he estimated half were not aware they could purchase banks. Richard S. Garabedian, a Washington attorney who specializes in credit union charter conversions, also said in an interview with Credit Union Times last month that the trend of credit unions acquiring banks is apparently gaining steam. As proof, he pointed to recent transactions such as the $353 GFA Federal Credit Union acquisition of the $83 million Monadnock Community Bank in Peterborough, N.H, the $1.3 billion United Federal CU in Michigan purchase of Griffiths Savings Bank in Indiana, and the proposed $2 billion Landmark CU of New Berlin, Wis., acquisition of the $290 million Hartford Savings Bank in Hartford, Wis., which secured NCUA approval in March. In addition, the $410 million Self-Help Federal Credit Union in Durham, N.C., purchased the failed Second Federal Savings and Loan Association in Chicago in November. The bank, now named Second Federal Savings, officially became a division of Self-Help FCU on Feb. 1. Bell believes the pace of credit unions purchasing banks will pick up because NCUA is encouraging credit unions to pursue these transactions. “We now have a friendly regulator when it comes to this, and that is a big deal because these trends will ebb and flow,” said Bell, a former Credit Union Times Trailblazer 40 Below who is involved in the MECU transaction. He also was involved in the United FCU and the GFA FCU deals. What’s more, large banks, including super regional banks, are not looking for acquisitions, opening opportunities for credit unions to approach small banks that are still viable but want to get out from under the burdens of regulations and compliance that are making it increasingly more difficult for small financial institutions to compete, Bell said. Most importantly, Bell said, he believes small banks are most concerned about their legacy when looking to merge with another financial institution. “They don’t want to be the ones that shut down branches or lay off employees,” Bell said. “The credit union model is different in that they keep the branches open, hire most if not all of the employees and become even more involved in the community.” Show Comments

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Is UBS Charting the Right Course? Chris Neiger | This week, UBS (NYSE: UBS ) announced a plan to cut 10,000 jobs by 2015 on top of its third-quarter announcement of a net loss of $2.4 billion. Ouch. The bank is trying to shed an unprofitable fixed-income business and build capital, but it has a long and bumpy road ahead. Whatever you do, don't look backUBS is a little worse for wear at the moment. It's being investigated for manipulation of LIBOR (the interest banks charge when they lend to each other), and it's suspended one of its traders for possible connection to this scandal. In addition to the investigation, the bank had a $2.3 billion trading loss connected to one of its former traders. And if all of that weren't enough, last year, the bank cut its workforce by about 3,500. So, a quarterly loss in the billions, after a profitable previous quarter, and cutting 16% of its workforce isn't going to earn them any "bank of the year" awards. But UBS' restructuring plan was set into motion last year, and it's not stopping now. UBS has raised its battered sails and set a course for more capital. Not quite clear skies aheadThe banking industry as whole isn't doing so hot, so UBS isn't the only one that'll have to navigate through some tough times ahead. The U.S. government is investigating Deutsche Bank (NYSE: DB ) , JPMorgan Chase (NYSE: JMP ) and Bank of America (NYSE: BAC ) , as well as long list of others, for LIBOR manipulation. The sluggish U.S. economy and the European debt crisis sure haven't helped UBS' situation, and neither has their own shady goings-on. The one thing UBS has going for it is that it came forward to the government early on, to report possible LIBOR manipulation on its own part. Coming to the government first has given UBS a conditional immunity in the LIBOR investigation. Looking for the lighthouseIf there's one thing investors should be looking for, it's whether or not UBS can actually increase its revenues. So far, the UBS restructuring has crippled earnings. But if the Zurich-based bank can make the right adjustments, it plans to pay more than 50% of its earnings directly to shareholders in 2015. That's a few years away, but UBS is making unpopular moves to try to make this happen. Whether investors are willing to weather the storm as UBS changes course is yet to be seen. After the announced job cut plan, UBS shares were up 5%. But this bank is going to need a lot more than a 5% bump to calm most investors' fears that the stock may not be worth holding on to. In 2007, UBS was trading at more than $50 a share; it's dropped to around $15 now. The stock hasn't seen anything north of $20 for over four years, and analysts and investors are starting to lose hope that UBS can pull significant gains anytime soon. Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable stand out. In a sea of mismanaged and dangerous peers, it stands out as The Only Big Bank Built to Last. You can uncover the top pick that both we and Warren Buffett love today in our new report. It's free, so click here to access it now. Fool contributor Chris Neiger has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. CAPS Rating: DB Deutsche Bank AG (… CAPS Rating: JMP CAPS Rating: UBS UBS AG (USA)

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Help | Connect | Sign up|Log in DividendChannel I analyze dividend stocks. VeriFone Systems Moves Up In Market Cap Rank, Passing Apollo Group In the latest look at stocks ordered by largest market capitalization, Russell 3000 component VeriFone Systems Inc. (NYSE: PAY) was identified as having a larger market cap than the smaller end of the S&P 500, for example Apollo Group, Inc. (NASD: APOL), according to The Online Investor. Click here to find out the top S&P 500 components ordered by average analyst rating » Market capitalization is an important data point for investors to keep an eye on, for various reasons. The most basic reason is that it gives a true comparison of the value attributed by the stock market to a given company’s stock. Many beginning investors look at one stock trading at $10 and another trading at $20 and mistakenly think the latter company is worth twice as much — that of course is a completely meaningless comparison without knowing how many shares of each company exist. But comparing market capitalization (factoring in those share counts) creates a true “apples-to-apples” comparison of the value of two stocks. In the case of VeriFone Systems Inc. (NYSE: PAY), the market cap is now $2.39B, versus Apollo Group, Inc. (NASD: APOL) at $1.97B. Click here to find out The 20 Largest U.S. Companies By Market Capitalization » Below is a three month price history chart comparing the stock performance of PAY vs. APOL: Another reason market capitalization is important is where it places a company in terms of its size tier in relation to peers — much like the way a mid-size sedan is typically compared to other mid-size sedans (and not SUV’s). This can have a direct impact on which indices will include the stock, and which mutual funds and ETFs are willing to own the stock. For instance, a mutual fund that is focused solely on Large Cap stocks may for example only be interested in those companies sized $10 billion or larger. Another illustrative example is the S&P MidCap index which essentially takes the S&P 500 index and “tosses out” the biggest 100 companies so as to focus solely on the 400 smaller “up-and-comers” (which in the right environment can outperform their larger rivals). And ETFs that directly follow an index like the S&P 500 will only own the underlying component of that index, selling companies that lose their status as an S&P 500 company, and buying companies when they are added to the index. So a company’s market cap, especially in relation to other companies, carries great importance, and for this reason we at The Online Investor find value to putting together these looks at comparative market capitalization daily. Special Offer: Try OLI Premium and get reports on Splits, Buybacks, and M&A daily According to the ETF Finder at ETF Channel, PAY and APOL collectively make up 8.13% of the Vanguard Mid-Cap ETF (VO) which is higher by about 1.1% on the day Friday. See what other ETFs contain both PAY and APOL » See what other stocks are held by VO » At the closing bell, PAY is up about 2.4%, while APOL is trading flat on the day Friday. DividendChannel Contributor Group DividendChannel is aimed at retail investors and financial advisors trying to maximize the opportunities in yield and income. DividendChannel is a one-stop source for aggregated data on dividend stocks, including features such as a dividend stock screener, a live dividend feed, an ex-div calendar, and a dividend calculator. A stock look-up on the site will provide investors with information about a company’s dividend history. More from DividendChannel DividendChannel’s RSS Feed DividendChannel’s Profile

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search Apple's Been On a Tear - Without Government Assistance Diana Furchtgott-Roth PRINTER FRIENDLY Last week Apple rolled out its iPhone 5 to the eager anticipation of consumers, some of whom waited up all night for the bragging rights to own it first. Apple, whose share price of $691 makes it the world’s biggest corporation as measured by market value, has been on a tear-without government assistance. Last week also brought news that yet another government-funded electric vehicle maker is having difficulties. Smith Electric, which produces electric trucks in Kansas City, withdrew its initial public offering of stock. CEO Bryan Hansel said, "We were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders." In other words, financial markets didn’t esteem Smith Electric nearly as much as its founders would have liked. Smith Electric, which received a $32 million Energy Department grant in March 2010 under the stimulus bill, is short on cash and has lost $128 million since 2009. It planned to produce 620 trucks in 2012, but rolled out just 79 in the first 6 months of the year, it told the Securities and Exchange Commission. President Obama visited the company in July 2010, a year after it opened, and gave it-and the kind of industrial policy that has supported it-his personal endorsement. He said, "What you are proving here at Smith Electric is the promise of a brighter future... You are setting a model for what we should be doing all across America. Congratulations." No matter that of the 33 energy loan guarantees made under the Energy Department’s programs, 26, or almost 80 percent, have shown signs of trouble. "Trouble" ranges from missed production goals to bankruptcy filings. A report by the House Government Reform and Oversight Committee published in March reported that of the 27 loans issued under the Energy Department’s 1705 program, with commitments of $16 billion, 23 loans were judged by ratings agencies as "junk" because of their low credit quality. The remaining four were rated BBB, a low investment grade. Smith Electric might yet survive with private funds, but prospects look dim. It joins a list of many troubled companies that received government financial assistance. To hear some politicians speak, you might think that the only way an American company can employ Americans is with help from Washington. Reasonable but uninformed people might conclude that Apple’s enormous success comes from the largess of the federal government: subsidies here, tax breaks there, and winks and promise everywhere. Apple demonstrates otherwise. In remarks in Kansas City, the president mentioned Abound Solar, a solar panel company in Colorado "that’s going to create 2,000 construction jobs and 1,500 permanent jobs." Mr. Obama did not mention Apple, or any number of other successful American companies. Politicians rarely praise companies that create jobs without government subsidies. Abound Solar filed for bankruptcy in July 2012 citing aggressive pricing by Chinese competitors. Abound had received a $400 million loan guarantee, and spent about $70 million before the Department of Energy halted its credit line. The company suspended operations and dismissed its 125 employees. Both Republican and Democratic administrations have practiced green "industrial policy," a phrase for the government’s deciding which new industries or startups to support with federal money or loan guarantees or tax benefits. "Green," now in vogue, means renewable, non-carbon-based energy or energy conservation. The authority for the Energy Department to issue loan guarantees, the Energy Policy Act of 2005, was passed by a Republican House and Senate and signed into law by George W. Bush. It authorized the issue of $4 billion of loan guarantees, a ceiling Congress later lifted in 2009 to $47 billion, to encourage the development of new technologies. No Energy Department loan guarantees were issued by the Bush administration. The Department wanted to make a loan to Solyndra, a Fremont, California solar company, but career officials at the Office of Management and Budget did not approve it, on the grounds that the project was not financially sound. As most people now know, the Obama White House was less cautious, and therein likes a cautionary tale. The Obama Energy Department rushed loan guarantees to Solyndra, with influence from campaign contributor George Kaiser, according to emails made public by the House Energy and Commerce Committee, so that Vice President Biden could appear at the factory in September 2009. Solyndra declared bankruptcy in September 2011 after receiving $528 million in federal loans. It’s not just Solyndra and Abound Solar that have gone bankrupt. In August 2010, Beacon Power Corporation received a $43 million federal loan guarantee to build a $69 million, 20-megawatt flywheel energy storage plant in New York. After receiving $39 million of the loan, the company filed for bankruptcy in October 2011 and was subsequently bought by a private equity firm. Ener1, a rechargeable batteries maker for the transportation, utility grid and industrial electronics markets, declared bankruptcy on January 26, 2012 after spending $55 million of a $118.5 million Department of Energy grant. Evergreen Solar closed its doors and moved operations to China in January of 2011 after receiving $58 million in grants from the State of Massachusetts. It filed for bankruptcy in January 2012, citing lack of financing. Failures are not limited to American companies. In December 2011 the first publicly traded German solar company, Solon, declared bankruptcy, citing competition from low-cost Chinese imports. A myriad of other German solar companies followed suit, including Solar Millenium (December 2011), Odersun (March), and Inventux, Soltecture, and Sovello (May). Solarworld had to renegotiate terms of a $459 million loan in August, following announcements on June that it plans to layoff 10 percent of its workforce. Some Chinese solar companies are also in difficulties. China’s photovoltaic solar manufacturing industry is now facing a crisis caused by industrial overcapacity, according to Xianping Lang, professor of finance at the Chinese University of Hong Kong. The Chinese company LDK Solar, the world’s second largest polysilicon solar wafer producer, defaulted this summer on $95 million owed to suppliers. The local government of Xinyu City in Jiangxi Province bailed out the company to stop it from going bankrupt. If LDK were to collapse, according to reports in the China Business Journal, it would lead to a collapse of hundreds of photovoltaic related enterprises and destroy Xinyu City’s economic development plans. This week, many Americans are pondering which mobile phone to buy from manufacturers that don’t take government handouts. Few Americans are buying government-subsidized electric cars, solar panels, or wind turbines. It’s time for these government subsidies to end. Original Source: http://www.realclearmarkets.com/articles/2012/09/25/apples_been_on_a_tear_-_without_government_assistance_99899.html

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Submit Articles About Us Elliott Waves Election Oracle Market Oracle TV Politics & Social Portfolio Building Stock & Financial Markets Authors Archive Featured Analysis Best Analysis Archive 1.Ukraine Preface, the Emerging Dynamics Of Petro-Yuan Standard - Jim_Willie_CB 2. Speculations Reversed - Gold Price Stealth Rally 2014 - Peter_Schiff 3.Bubbleberg News Drivel Masquerading as Financial Reporting - David A. 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His is a blindness that he shares with very many other economists of this day and age. Their condition can be described as "a certain state of mind" that they share that prevents them from seeking out, seeing and saying what is before their eyes. And what is this state of mind? It is to defend the status quo and to stay within the comfortable bounds of conventional beliefs that support the system as it is. This spares them from confronting other institutions and their own. Because of this state of mind, Bernanke doesn’t see or speak of the common features between the latest banking/real estate fiasco and America’s Great Depression nor, for that matter, features common to most other of America’s economic collapses and depressions. These are fractional-reserve banking, bank financing of real estate and stock speculation, and financial fraud. By contrast, I point to Prof. Herbert D. Simpson in a 1933 article in The American Economic Review who emphasizes these very banking and real estate factors as bringing on the Great Depression. We now can see that they reappear in the recent past. (Note that my citing Simpson and other articles below means neither an endorsement of everything that the authors posit nor that our own bout of speculation follows the earlier episode precisely.) Simpson’s article is titled "Real Estate Speculation and the Depression". He relates that the 1920s was a period of "sensational real estate speculation". This is a fact that he takes as given, but he merely gives an example: "In Cook County, outside of Chicago, we had, in 1928, 151,000 improved lots and 335,000 vacant. On the basis of our Regional Plan Commission's estimates of future population increase, it will take until 1960 to absorb the vacant lots al-ready subdivided in 1928. In fact, on the basis of these computations, we shall still have 25,000 of these vacant lots for sale in the summer of 1960. In one township, Niles Township, we have a population of 9,000, and enough vacant lots for a population of 190,000." In support of Simpson, the Baker Library at Harvard writes of "The Forgotten Real Estate Boom of the 1920s", stating "The famous stock market bubble of 1925–1929 has been closely analyzed. Less well known, and far less well documented, is the nationwide real estate bubble that began around 1921 and deflated around 1926." Most accounts of the 1920s mention this boom, but it has not yet influenced the thought of most modern economists. They prefer other stories, such as that of Friedman and Schwartz, which blames the FED for not inflating. Actually, it did inflate, as Gary North explains. Even though real estate is a sector of economy-wide importance, today’s economists tend to ignore its functioning because of the relative lack of data. Real estate hardly rates an entry in a macroeconomics textbook. They have been also trained to put on blinders and ignore land, ever since neoclassical economics invalidly collapsed land as a factor into capital (see Mason Gaffney for a detailed account.) Furthermore, another part of their state of mind is to think only in terms of aggregate demand, a blanket under which the real estate market and real estate speculation lie submerged and hidden. For recent support for Simpson, there is the 2010 paper by William Goetzmann and Frank Newman titled "Securitization in the 1920's". The latter study backs up Simpson’s conclusion that there had been rampant real estate speculation. Goetzmann and Newman write "The present crisis is not the first time that the real estate securities market has expanded to the brink of collapse. The U.S. real estate securities market was remarkably complex through the first few decades of the twentieth century. Many parallels with the modern market can be observed. The early real estate development industry fed the first retail appetite for real estate securities. Consequently, easily obtainable financing via public capital markets corresponded with an urban construction boom...Ultimately, the size, scope and complexity of the 1920s real estate market undermined its merits, causing a crash not unlike the one underpinning our current financial crisis." The mention of an "urban construction boom" by this study is what Simpson mentions in his paper 79 years earlier: "Our latest speculative movement differs from all previous speculative eras in the United States in the fact that it has been distinctly an urban field of speculation, ..." Another recent article that compares the 1920s to the present is Eugene White’s "Lessons from the Great American Real Estate Boom and Bust of the 1920s": "Although long obscured by the Great Depression, the nationwide ‘bubble’ that appeared in the early 1920s and burst in 1926 was similar in magnitude to the recent real estate boom and bust. Fundamentals, including a post-war construction catch-up, low interest rates and a ‘Greenspan put,’ helped to ignite the boom in the twenties, but alternative monetary policies would have only dampened not eliminated it. Both booms were accompanied by securitization, a reduction in lending standards, and weaker supervision. Yet, the bust in the twenties, which drove up foreclosures, did not induce a collapse of the banking system. The elements absent in the 1920s were federal deposit insurance, the ‘Too Big To Fail’ doctrine, and federal policies to increase mortgages to higher risk homeowners. This comparison suggests that these factors combined to induce increased risk-taking that was crucial to the eruption of the recent and worst financial crisis since the Great Depression." White is correct that deposit insurance, too big to fail, and federal policies have made the present situation worse than the 1920s, other things equal. A pervasive 1920s real estate boom or bubble is consistent with the Austrian analysis in which the banking system produces fiduciary money, lowers interest rates, and flows it into assets of long duration whose values are particularly sensitive to interest rate fluctuations. Simpson’s analysis weaves several threads together into one fabric. The central thread is fractional-reserve banks that finance long-term assets with short-term deposits: "Now, when it is recalled that these were not mortgage banks, organized on principles of long-term financing, investing their own capital funds, and free from deposit liabilities, but that they ordinarily purported to be commercial banks, engaged in accumulating and carrying large deposits, and that their operations were financed largely through the funds of their depositors, it will be realized in what a highly over-extended position this segment of our banking system was placed." Today’s banks operate on the same principle of borrowing excessively short and lending excessively long. The modern system developed an additional layer known as the shadow banking system, but it too financed excessive amounts of long-term assets with excessive amounts of short-term liabilities. This has two dangers. One is that the long-term assets fall in value by more than the value of the short-term liabilities, which means the bank is insolvent. The other is that the bank cannot roll over its short-term debts, which happens when the lenders see that the bank is insolvent. Both of these happened in both booms: "...all the financial resources of existing banking and financial institutions were utilized to the full in financing this speculative movement. The insurance companies bought what were considered the choicer mortgages; conservative banks loaned freely on real estate mortgages; and less conservative banks and financial houses loaned on almost everything else that represented real estate in any form." "Eventually we reached a point where most of the city and outlying banks of the country were loaded with real estate loans or real estate liabilities of some sort. Not all of these loans were speculative; many of them were intrinsically sound and conservative. But a large, probably a major, portion of this loan structure depended for its solvency upon a continuation of the rate of absorption and turnover which had characterized the real estate market, and on a continued advance of real estate values. When the rate of absorption halted and the price movement stopped, one of the largest categories of bank collateral in the country went stale, and the banks found themselves loaded with frozen assets, which we have been trying ever since to thaw out." Deposit insurance paid for by banks looks as if it curtails the roll over problem, but it doesn’t. It works only in good times because the deposit insurance fund is too small to handle systemic problems. Worse yet, deposit guarantees allow and encourage banks to become larger and, with lax regulation, more overextended. The basic problem, which is holding excessive amounts of long-term assets that are financed by excessive amounts of short-term liabilities, metastasizes. This is shown by the recent problems and the unprecedented responses of the government. In the latest crisis, the federal government stepped in to guarantee money market funds, both retail and institution. It also began financing banks through the Troubled Asset Relief Program (TARP). The FDIC got involved in financing banks through the Temporary Liquidity Guarantee Program (TLGP). The FED did all sorts of financing including a Commercial Paper Funding Facility and special funding for some financial intermediaries like AIG and Bear Stearns. Simpson’s article views the banks and their real estate financing as a major cause of the subsequent depression: "We do not have all the facts and figures, and in the nature of things probably will never have them. But it would seem that we can safely say this much: that real estate, real estate securities, and real estate affiliations in some form have been the largest single factor in the failure of the 4,800 banks that have closed their doors during the past three years and in the ‘frozen’ condition of a large proportion of the banks whose doors are still open; and that as the facts of our banking history of the past three years come to light more and more, it becomes increasingly apparent that our banking collapse during the present depression has been largely a real estate collapse." A boom by definition involves an expansion. The expansion process is not what causes a boom, but it helps us to perceive the parallels between the 1920s and now to observe that the expansion process was similar in the past and present. In the real estate boom of the 1990s and 2000s, we saw not only the existing banks and institutions like Fannie Mae and Freddie Mac become more aggressive, we also saw new kinds of financial intermediaries spring up. New kinds of financing methods were also used to create mortgages, package them and distribute them to investors aggressively. These developments are not unlike those in the 1920s: "A particularly ominous development was the expansion of the banking system itself for the specific purpose of financing real estate promotion and development. Real estate interests dominated the policies of many banks, and thousands of new banks were organized and chartered for the specific purpose of providing the credit facilities for proposed real estate promotions. The greater proportion of these were state banks and trust companies, many of them located in the outlying sections of the larger cities or in suburban regions not fully occupied by older and more established banking institutions. In the extent to which their deposits and resources were devoted to the exploitation of real estate promotions being carried on by controlling or associated interests, these banks commonly stopped short of nothing but the criminal law and sometimes not short of that." Simpson alludes to illegality and fraud. These too were a serious part of the 1990s and 2000s (see here). Ben Bernanke in 1983 in The American Economic Review published "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression". This paper is not intended to examine the causes of the Great Depression and it does not do so. It’s about the depression’s propagation. Bernanke points out that "...the disruption of the financial sector by the banking and debt crises raised the real cost of intermediation between lenders and certain classes of borrowers." He means that the credit market slowed down to a crawl: "Fear of runs led to large withdrawals of deposits, precautionary increases in reserve-deposit ratios, and an increased desire by banks for very liquid or rediscountable assets. These factors, plus the actual failures, forced a contraction of the banking system's role in the intermediation of credit." Twenty-five years later, Bernanke was in a position in a new banking crisis to replace a new set of failed intermediaries with the Federal Reserve. In the intervening years, the non-Austrian economics profession had done nothing to focus on the causes of the banking failures and nothing to educate government officials about how to remedy those causes. Despite not having sought or found the causes of the depression, Bernanke was not reluctant to take the position that the "financial structure" lacked "self-correcting powers", or in other words that the free market had failed. He was far from reluctant to argue instead "...that the federally directed financial rehabilitation – which took strong measures against the problems of both creditors and debtors – was the only major New Deal program that successfully promoted economic recovery," and to argue that "the government’s actions set the financial system on its way back to health." On what basis could Bernanke know what a healthy bank looks like without analyzing what an unhealthy bank looks like and how it got that way, namely by excessively financing real estate loans with short-term deposits flowing through the banking system due to a generous Federal Reserve? On what basis could Bernanke blame banks for being reluctant to lend when (a) they were insolvent, and (b) business was poor due to such benighted federal policies as Hoover’s efforts to keep wages high, the Smoot-Hawley Tariff, and a bevy of major New Deal programs, some of which strengthened trade unions and held wages up? On what grounds could Bernanke blithely extol government for having "...made investments in the shares of thrift institutions, and substituted for recalcitrant private institutions in the provision of direct credit. In 1934, the government-sponsored Home Owners’ Loan Corporation made 71 percent of all mortgage loans extended." None of these government actions resolved the basic banking and money problems. All of them socialized finance. All of them led to new problems, including the establishment of Fannie Mae in 1938. In 1995, Bernanke published "The Macroeconomics of the Great Depression: A Comparative Approach" in The Journal of Money, Credit and Banking. He began by saying that "TO UNDERSTAND THE GREAT DEPRESSION is the Holy Grail of macroeconomics." As in his 1983 paper, however, Bernanke seals off the 1930s from the 1920s. He tells us that "finding an explanation for the worldwide economic collapse of the1930s remains a fascinating intellectual challenge," but apparently it’s not fascinating enough to examine the effects of the real estate and stock market booms of the 1920s, or entertain the Austrian theory of malinvestment, or reference Rothbard’s America's Great Depression, or examine the structure of banks, or think about the integration of the world economy via its banks and capital markets. What then is Bernanke’s understanding of the Great Depression? It is "...that monetary shocks played a major role in the Great Contraction, and that these shocks were transmitted around the world primarily through the workings of the gold standard..." By monetary shocks, he means that the money supply contracted. We already know that this happened when the banking system became insolvent. It raises several pertinent questions that Bernanke ignores. Did the money supply grow excessively in the 1920s before it contracted, and why did the banking system become insolvent? What did they invest in and how did they finance those investments such that they eventually became insolvent? Rothbard and Benjamin M. Anderson both show that money grew rapidly in the 1920s, and as explained above so did the banks’ investments in real estate. In Economics and the Public Welfare, Anderson writes "The purchase of approximately $500 million worth of government securities by the Federal Reserve banks...The total deposits of the member banks increased from $28,270,000,000 on March 31, 1924, to $32,457,000,000 on June 30, 1925, an increase of over $4 billion...This additional bank credit was not needed by commerce and it went preponderantly into securities: in part into direct bond purchases by the banks and in part into stock and bond collateral loans. It went also into real estate mortgages purchased by banks and in part into installment finance paper. This immense expansion of credit, added to the ordinary sources of capital, created the illusion of unlimited capital..." (pp. 127—28.) He also writes "There is no need whatever to be doctrinaire in objecting to the employment of bank credit for capital purposes, so long as the growth of this is kept proportionate to the growth of the industry of the country...But when in the period 1924—29 there came an extraordinary spurt of this kind of employment of bank funds, and when commercial loans began going down in the banks at the same time that the stock market loans and bank holdings of bonds were mounting rapidly, the careful observer grew alarmed. And when in addition there came a startling increase of several hundred percent in bank holdings of real estate mortgages, the thing seemed extremely ominous." (p. 135.) As for Bernanke’s statement about "the workings of the gold standard", there was no traditional gold standard in the 1920s and 1930s. There was a gold-exchange standard. If a standard is to be blamed, it is the latter, not the gold standard. Murray Rothbard has explained the inflationary workings of the gold-exchange standard. Another source is The Great Depression by Lionel Robbins. Both emphasize Great Britain’s futile attempt to peg the pound at its old gold parity. Bernanke doesn’t reference either Rothbard or Robbins. Bernanke doesn’t mention the key bank failure in 1931 that helped to propagate the depression: CREDIT-ANSTALT. The American money supply had been declining prior to this failure, and it accelerated its decline thereafter. This failure appears to have been a shock that cannot be ignored. Credit-Anstalt was the largest bank in Austria and owned about 60 percent of Austrian industry. It had grown in size due to a large but bad merger. The Austrian economy had had problems from at least 1924. Behind the scenes, a British and American consortium of banks had been secretly funneling funds to Credit-Anstalt. Its failure led to a run on the Austrian shilling. It appears that the gold-exchange standard had little or nothing to do with these events. There are several other seeds to the Great Depression, in my view. They include the Smoot-Hawley Tariff, Hoover’s high wage policies, and other of his policies that eventually became New Deal policies. I also believe that the depression became worldwide because the economy was worldwide, as it is today, and European countries had banking and other problems that trace back to World War I and its aftermath. On October 15, 2008, Bernanke said in a prepared speech: "As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets. The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market and allowing the normal business of extending credit to households and firms to resume." This is typical of Bernanke’s thought, which habitually stops short at asking why events occur. If he kept asking why, he might eventually get to the heart of the matter. Why has there been a loss of confidence? It didn’t just happen. What brought it about? Didn’t investors have good reason to question key banks and investment banks? Wasn’t there good reason why credit spreads had risen? Hadn’t housing prices started to drop? Those declines were real. They cannot be blamed on a loss of confidence. Why had housing prices declined? Was it perhaps because there had been a housing boom fueled by federal policies and readily available bank loans, and because prices had reached unsustainable levels? He doesn’t ask. Don’t ask, don’t tell. Bernanke has that "certain state of mind" by which he cuts inquiry short, never going beyond the superficial because to do so would being him onto ground that to him is dangerous. He might have to condemn fractional-reserve banking, or endemic fraud in the mortgage industry, or his own institution, or lax federal regulation. So instead, Bernanke blames the Panic of 2008 on a loss of confidence in banks and markets and tries to get us to believe that the remedy is a restoration of trust. That’s only one of his superficial explanations. The main one is the same one he thinks caused the Great Depression. He thinks that the central bank didn’t create enough money in the 1930s. The truth is almost the very opposite. Inflation of money in the 1920s worked its way through the banking system and into an unsustainable real estate boom and a stock market bubble. The problem was not too little money. It was too much. The world experienced a repetition of this high money growth between 2002 and 2008 (and before) as I have elsewhere shown. Another real estate bubble occurred. We are living in its aftermath. Bernanke’s additions of huge amounts of base money, which are his solutions, do not solve the basic problems which are the structure of banks and the structure of fiat money. Unfortunately, Bernanke’s blindness is not unique among today’s economists. Many of them believe the same thing. Several Federal Reserve presidents are prepared to inject even more base money into the American and world economy. There is no money supply reason for doing so, because the money supply has already soared in the last few years. There is no reason relative to the economy for doing so, because the soaring money supply has had negligible effects on economic growth and unemployment. These bankers seem to have gone Bernanke one better. He is blind, but they’ve taken complete leave of their senses. Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire. http://www.lewrockwell.com © 2012 Copyright Michael S. Rozeff - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. Only logged in users are allowed to post comments. Register/ Log in The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site. (c) 2005-2014 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. 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Mike & Friends Blog Matt Stoller is a fellow at the Roosevelt Institute September 29th, 2011 6:07 PM #OccupyWallStreet Is a Church of Dissent, Not a Protest By Matt Stoller Last weekend, I spent a few days with the protesters downtown near Wall Street, and it was an eye-opening experience. The people there want something, but it’s not a list of demands, and it is entirely overlooked by the media and most commentators on the protest. If all you read are news stories and twitter feeds about #OccupyWallStreet, the most trenchant imagery that will stick in your mind is that of police brutality, and the politics of Wall Street greed. The debate seems to be organized around whether the protest will be “successful” or not, how the protesters are stupid or a new American Tahrir Square, or rhetoric designed in a media sphere that maximizes attention. Glenn Greenwald suitably demolishes the sneering commentariat. But I think there’s something to add about what exactly this protest is, what it is doing, and most of all, what the people there “want”. They don’t have a formal list of demands. And it’s obvious that this isn’t just about Wall Street, nor is it really a battle of any sort. There are political signs there attacking Fox News, expressing anger about Troy Davis, supporting the Iranian revolution, urging the Federal Reserve be reigned in, and demanding rich people pay their taxes. There are personal signs about debt, war, and medical problems. And people are dressed in costume, carrying lightsabers, and some guys are driving around a truck with a “Top Secret Wikileaks” sign on the side. I asked if they were affiliated with the site, and one of them responded with “That’s what the Secret Service asked”. Most of all, people there are having fun. What these people are doing is building, for lack of a better word, a church of dissent. It’s not a march, though marches are spinning off of the campground. It’s not even a protest, really. It is a group of people, gathered together, to create a public space seeking meaning in their culture. They are asserting, together, to each other and to themselves, “we matter”. Meaning is a fundamental human need. The act of politicization, of building any movement, is based on individual, and then group self-confidence. As Daniel Ellsberg said, “courage is contagious”. I’m reminded of how Howard Dean campaign worker and current law professor Zephyr Teachout characterized the early antiwar blogosphere and then-radical campaign of Dean, as church-like in their community-building elements. That’s what #OccupyWallStreet reminded me of. Even the general assemblies, where people would speak, and others would respond, had a rhythmic quality to them, similar to churches or synagogues I’ve attended. You can tell this is a somewhat different animal than other politicized gatherings. No one knows what to expect. There are no explicit demands. It’s not very large. And yet, celebrities are heading to Zuccotti Park. Wall Street traders are sneering and angry. The people there are getting press, but aren’t dominated by it. People are there just to be there, because it feels meaningful. The camp is clean and well-organized, and it feels relevant and topical rather than a therapy space for frustrated radicals. Just a block away is the New York Fed, a large, scary, and imposing building with heavy iron doors, video cameras, and a police presence that scream “go away”. There are a lot of police, but unlike the portrayal in the press the relationship between the protesters and the police is fairly good. The arrests and macing you saw happened because protesters decided to march to Union Square without a permit, and many joined the march on the way. Police began arresting people to keep control of the streets, and that’s when the macings happened. I’m not downplaying what happened, but context is important for understanding why the camping in the park isn’t really problematic while the marching has seen conflict. Police and firefighters routinely come through the park to make sure there are no open flames and no tents, often to applause. There are hints of a more menacing presence; I was told by several organizers that men dressed in business suits accompanied with what looked like police have on several occasions ordered them to vacate the park, handing protesters official-looking orders that on closer inspection were not actually from any governmental authority. Lawyers at the protest made it clear these were to be ignored. The organizers themselves seem quite experienced. Adbusters didn’t have much to do with the protest organizing, in fact much of the energy came from people that did anti-budget cut campaigns against Mayor Bloomberg in New York City, as well as the May 12th protest march. The organizers have set up committees to handle most tasks, like media and sanitation. There’s a hotspot, and lots of computing and video equipment to record and broadcast. There are living space areas, and the camp site has had to contend with rain without the benefit of tents (which are illegal). The protesters make decisions in twice a day consensus-based “general assemblies”, where anyone is allowed to speak. No amplification is allowed, so the crowd has figured out a model to make sure everyone is heard. The speaker says half a sentence, and the crowd repeats it so it can be heard. This continues until the speaker is done. There are hand signals that allow others to express agreement and disagreement. I didn’t spend enough time to really get into the nuts and bolts of the organization, but it doesn’t seem very formal. There’s a deep fear of official spokespeople beginning to monopolize and misinterpret the non-hierarchical model of community protest. Of course, there’s not really that much to do; people are there to be there. The protesters are what you’d expect, a kind of hippie dippie group of students, anti-globalization activists, and antiwar movement actors. There are backrub circles, innumerable pizzas (“the food of revolutions”), but these people do not think of themselves as fringe in any sense. They believe themselves to represent all Americans who are frustrated by politics and finance. Whether or not this is true, what is happening is that there is a belief that their actions matter, that they themselves are moral beings who have dignity and power simply by the very act of self-expression. This is rare in radical activism, most of it is so infused with cynicism that self-marginalization, deadly irony, and mau mau’ing by professional liberals works to persuade protesters to believe themselves a sort of libertarian nihilists. Not so here. There are people wearing tape over their mouths, grandmothers for peace, signs about new death penalty icon Troy Davis, and signs with coherent messages about debt, the Fed, and various wars. Many of the organizers were inspired by Wisconsin and Egypt, by attacks on teachers, by corruption on Wall Street, by money in politics, and are just happy to be out in the streets after a long period of absence of formal protest. The level of knowledge among protesters on how Wall Street works is fairly high in terms of abstract conceptualizations, but they don’t actually have a lot of immediate connection to policy-making and financial practice. Furthermore, the space is fraught with the problem of consensus-based anti-leadership organizing. There are no spokespeople, and you can’t get on their media list (they don’t have one). The anti-leadership non-hierarchical consensus method is designed to avoid the way that leaders can be smeared and/or co-opted. It does not really scale, and this is a serious challenge going forward. But ultimately, the energy of just having a bunch of people in one place for a long period of time is very different, and much more interesting, than just a march. The protesters are creating a public space for the discussion of economic justice, just by showing up. Some told me they are planning teach-ins. At one point, one of the organizers suggested protesters do a mass drinking of Hope kool-aid, and mimic a die-off. I asked if they had anything planned for Sept. 29, when the Germany parliament will pass their bailout, and I was told that while they had nothing planned as of yet, someone from Citigroup had come by the night before and told them the German bailout was happening. Many of the angry establishment liberals are frustrated that this protest has no top-down messaging strategy (this tweet from Dave Roberts of Grist in which he calls the protests “horrific” and “designed to discredit leftie protest” is representative). But these people, who represent the rump of support for Obama, are not part of the conversation here. The conversation is global. And you can sort of tell that this protest really bothers the community on Wall Street, stirring up deep existential questions for the people that work there, many of whom know there is a spectacle going on in the streets below. I don’t think anyone knows where and how this ends, or if it does. I’ve been part of movements full of meaning just like this, movements that utterly failed based on structural weaknesses and the power of the status quo. They seemed full of life, zest, and ended up as yet another set of bloodless bureaucratic failed institutions. These protests may yet be another false start. I’m told, though, by those who were in successful civic uprisings around the world that they all had many, many false starts. But perhaps success and failure isn’t the right way to think about what’s going on in downtown New York, any more than thinking about a church as successful or failed based on its political objectives is the right way to think about how those in the pews satisfy their thirst for spiritual vigor. What these people have found in themselves, and created for each other, is meaning. And now, here are a few more pictures. You can reach Matt Stoller at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.

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Investment Objective: Seeks daily investment results that correspond to twice (200%) the daily performance of the NASDAQ-100�� Index. Inception Date: 12/1/1997 Seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the NASDAQ-100�� Index. The fund does not seek to achieve its stated investment objective over a period of time greater than one day. The Fund invests in equity securities and derivatives that ProFund Advisors believes, in combination, should have similar daily return characteristics as twice (200%) the daily return of the Index. Assets of the Fund not invested in equity securities or derivatives will typically be held in money market instruments. Equity Securities - The Fund invests in common stock issued by public companies. Derivatives - The Fund invests in financial instruments whose value is derived from the value of an underlying asset,interest rate or index. The Fund invests in derivatives as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. Derivatives principally include: Swap Agreements - Contracts entered into primarily with institutional investors for a specified period ranging from a day to more than one year. In a standard "swap" transaction,two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," e.g., the return on or change in value of a particular dollar amount invested in a ";basket" of securities representing a particular index. Futures Contracts - Contracts that pay a fixed price for an agreed-upon amount of securities, or the cash value of the securities, on an agreed-upon date. Money Market Instruments - The Fund invests in short term cash instruments that have terms to maturity of less than 397 days and exhibit high quality credit profiles. ProFund Advisors uses a mathematical approach to investing. Using this approach, ProFund Advisors determines the type, quantity and mix of investment positions that the Fund should hold to approximate the performance of its benchmark. The Fund may gain exposure to only a representative sample of the securities in the underlying Index, which is intended to have aggregate characteristics similar to those of the underlying Index. ProFund Advisors does not invest the assets of the Fund in securities or derivatives based on ProFund Advisors'view of the investment merit of a particular security, instrument, or company, nor does it conduct conventional stock research or analysis (other than in determining counterparty creditworthiness), or forecast stock market movement or trends, in managing the assets of the Fund. The Fund seeks to remain fully invested at all times in securities and/or derivatives that provide exposure to its underlying Index without regard to market conditions, trends or direction. At the close of the markets each trading day, the Fund will seek to position its portfolio so that its exposure to its benchmark is consistent with the Fund's investment objective. The impact of the Index's movements during the day will affect whether the Fund's portfolio needs to be re-positioned. For example, if the Index has risen on a given day, net assets of the Fund should rise, meaning that the Fund's exposure will need to be increased. Conversely, if the Index has fallen on a given day, net assets of the Fund should fall, meaning the Fund's exposure will need to be decreased. The Fund will concentrate its investment in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. As of the close of business on January 31, 2011, the Index was concentrated in the communications and the technology industry groups, which comprised approximately 27% and 47%, respectively, of the market capitalization of the Index. Please see Investment Objectives, Principal Investment Strategies, Related Risks and Disclosure of Portfolio Holdings in the Fund's There is no guarantee that the ProFund VP Ultra NASDAQ 100 will achieve its investment objective. Investment return and principal value will vary and shares may be worth more or less at redemption than at original purchase. An investment in the ProFund VP Ultra NASDAQ 100 entails certain risks, which are outlined in the Fund's Prospectus.

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Why Doesn’t Apple Get More Respect In the Stock Market? By Nancy Miller @nancefinanceMay 29, 20120 Share Getty Images Related Apple's Fate Could Be Very Similar To Microsoft's Seeking AlphaAbout Apple's incredible shrinking P/E ratio Fortune Email Let’s talk about that other technology stock, shall we? You remember. Apple. Apple has a problem. The opposite of Facebook’s problem. It’s undervalued and likely to stay that way. That’s pretty surprising given that, even after the death of its visionary leader Steve Jobs, Apple has continued on a path of unparalleled profitability. In the second quarter, earnings surged 94% to a record $11.6 billion — more than three times the annual revenues of Facebook last year and 11.6 times Facebook’s earnings. Yet the stock price simply does not reflect that success. Yes, Apple shares are up 40% this year, even after losing some ground since April. And it is the biggest stock by market capitalization — more than $530 billion. But by at least one measure Apple looks to be significantly under-appreciated by the stock market. Its price-to-earnings ratio for 2012 is just under 14, which means its stock price is 14 times greater than its earnings per share. For comparison, consider that the average P/E for all the stocks on the S&P 500 — the stinkers as well as the stars – is 16. Facebook’s P/E is about 100, depending on how much it earns this year. Amazon’s is about 176. (MORE: How Apples’ Steve Jobs and Book Publishers Cost Consumers Millions) So why is the anything-but-average Apple trading at a less-then-average price? The death of its visionary leader is, of course, one factor. “Obviously the problem with Apple is there is no more Steve Jobs,” says Todd Sullivan, general partner at Rand Strategic Partners and author of the ValuePlays blog. Until his death, Steve Jobs was the face of Apple and investors pretty much were investing in his vision. Apple won’t trade at a premium to the overall market until Apple releases a product that doesn’t have Jobs’s thumb prints on it — and that’s at least a year away, says Sullivan. Not surprisingly, however, some investors think the market is overly concerned about the Jobs factor. David Einhorn — whose Greenlight Capital, one of the most-watched hedge funds on the planet, owned 1.46 million shares of Apple as of last quarter – predicts that Apple will become a trillion-dollar company and hit twice its current valuation. (Einhorn, by the way, famously shorted Lehman Brothers in the run-up to the financial crisis — a move that wasn’t obvious at the time.) At a conference earlier this month, Einhorn argued that most people incorrectly think of Apple as a hardware company. Instead, he says, offerings like the iTunes and apps stores mean that Apple is more like a software company, and one that offers a uniquely sticky ecosystem into which customers get drawn and stay forever. It’s too much trouble to switch, says Einhorn, and that means that Apple is “worthy of a higher multiple.” (MORE: How Many iPads Can Apple Sell?) Other pros beg to differ. The respected mutual fund manager Jeffrey Gundlach says the company is basically a hardware company – so he worries about customer saturation. “I just wonder how many people will queue up around the block for an iPad 87,” the Wall Street Journal recently quoted him saying. There are also some technical reasons to doubt that Apple’s valuation will double. Rand’s Todd Sullivan says when a stock price reaches a certain absolute level — Apple currently trades around $560 — investors hesitate to push it up much higher. In his view, Apple is unlikely ever to trade higher than a P/E ratio of 20. So why does Amazon, now trading around $213, get so much more respect than Apple, at least when it comes to market multiples? The answer, in a word, is risk. “Amazon has probably billions of customers worldwide. Apple doesn’t. Amazon doesn’t have the same cost of selling its products, and Amazon doesn’t rely on the next product. Amazon relies on people needing things at the lowest cost,” says Sullivan. “If Amazon misprices Charmin toilet paper, they aren’t going out of business. If Apple messes up the pricing of iPhone 6, that would be huge.” (MORE: Six Ways to Reinvent the Post Office) Nancy Miller is the author of The Facebook IPO Primer. You can follow her on Twitter @nancefinance.

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CVSL And The Longaberger Company Sign Letter Of Intent For Longaberger To Join CVSL DALLAS and NEWARK, Ohio, Jan. 11, 2013 /PRNewswire/ -- Ohio-based The Longaberger Company and Computer Vision Systems Laboratories Corp. (stock symbol: CVSL) have signed a letter of intent (LOI) for CVSL to acquire a controlling voting interest in Longaberger. According to the LOI, Longaberger would become part of CVSL's strategy of growing in the direct selling channel. Longaberger's revenues last year exceeded $100 million. "This is great news for the Longaberger Company as we celebrate its 40th anniversary in 2013," said Tami Longaberger, President and CEO of The Longaberger Company. "From the day my father founded our company, it was a dream of his that someday we could give our sales force and employees and customers the opportunity to become owners in our company. That wasn't possible for us as a private company, but now that dream can come true," said Ms. Longaberger."This opportunity also will help us continue The Longaberger Company's momentum by giving us the prospect of access to more capital for growth, additional resources and access to new markets," she noted. "We've always been leaders in direct selling. I'm thrilled that now, yet again, our company is leading the way where others will follow. I know that Dad would be beaming with pride." As previously announced, Ms. Longaberger joined CVSL's board of directors on December 3. Under the terms of the LOI announced today, Ms. Longaberger has begun the process to convert her shares of The Longaberger Company stock into shares of CVSL stock, pursuant to a definitive agreement yet to be negotiated. This conversion would give CVSL a controlling voting interest in Longaberger and is subject to lender, shareholder, and regulatory approvals.CVSL's chairman is John Rochon, a long-time leader in the direct selling industry, former chairman of Mary Kay Inc. and former general partner of a group that at one time was the largest shareholder in Avon Products. Mr. Rochon is chairman of Dallas-based Richmont Holdings, Inc. In September, Mr. Rochon announced plans for CVSL to become a public company "docking station" for multiple direct selling companies. "I am excited to be part of this planned venture alongside John Rochon, who is such an innovative leader in direct selling," Ms. Longaberger added. "In today's world, the strongest companies form partnerships to become even stronger. This is the perfect partnership for us. We see great things ahead for CVSL. By participating in the CVSL growth strategy, the Longaberger business can gain new advantages and resources. This is another step forward for Longaberger during a time of major progress for us, such as our new made in America strategy, our improved career plan and our increased sales and recruiting results." "Longaberger is a true gem – a great American company with five generations of family heritage," said Mr. Rochon. "I admire and respect Tami Longaberger and the wonderful and unique family culture of her company. I'm very happy that she will be helping guide us in our strategy for global growth," added Mr. Rochon. "When the transaction closes, Longaberger will be the first direct seller to become part of CVSL and we look forward to additional companies joining us."Mr. Rochon emphasized that Longaberger will keep its own identity as part of CVSL. "Everything that makes Longaberger unique will continue, and Tami will continue to lead Longaberger."The Longaberger Company sells premium hand-crafted baskets made in Ohio and a line of products for the home, including pottery, as well as gourmet foods, through a nationwide network of independent sales representatives. In July, Ms. Longaberger announced at the company's national sales convention that Longaberger would transition to a fully American-made product line. The Direct Selling News named Ms. Longaberger in its October cover story as one of "the Most Influential Women in Direct Selling." Last year, the Longaberger Company was honored with a Stevie Award for Women in Business as "Best Overall Company of the Year."Cautionary Note Regarding Forward-Looking Statements:This press release contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy, and acquisitions strategy, and our plans and objectives for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," or "will" or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only expectations and involve known and unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors" in our Annual Report on Form 10-K for our fiscal year ended December 31, 2011 and in our Form 8-K filed on October 1, 2012 and those discussed in other documents we file with the Securities and Exchange Commission, which may cause our actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements to differ materially from expectations. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this press release to conform our statements to actual results or changed expectations.SOURCE Computer Vision Systems Laboratories Corp.

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CBCF Investment to Spur Black Banking by Byron ScottSpecial to the AFRO (l to r) B. Doyle Mitchell Jr. President of CEO Industrial Bank; Russell D. Kashian, Ph.D. Univ of Wisconsin; Michael A. Grant J.D. President of the National Bankers Association; Rep. Chaka Fattah Chair CBCF; A. Shuanise Washington Pres. CEO CBCF; Ronald Busby CEO U.S. Black Chambers. (AFRO Photo/Byron Scott) The Congressional Black Caucus Foundation announced Sept. 17 that it will invest $5 million dollars in what it is calling a major investment in African American banking institutions. The CBCF will purchase certificates of deposit at five Black banks in an effort at kickstarting lending to people of color, CBCF Chair and Rep. Chaka Fattah (D-Pa.) said. “The pillars of power have to be both political and economical,” Fattah said. “We are leaning forward to say we are going to make an investment and expect others to follow.” The financial institutions selected for the investment are City National Bank of Newark, Seaway Bank and Trust Company of Chicago, Mechanics and Farmers of Durham, N.C., Liberty Bank and Trust Company of New Orleans and Industrial Bank of Washington, D.C. Fattah said the CBCF will monitor the CDs. The effort, announced on the eve of the annual CBCF Legislative Conference, is being applauded by the National Bankers Association (NBA), the umbrella advocacy group for Black financial institutions. And it comes not a moment too soon, said Michael Grant, president of the National Bankers Association , “sending a message around the country to other national organizations… to other wealthy African Americans and to everyday consumers. “‘Look, it is time for us to start investing in ourselves if we want to build our institutions, support our schools make sure our young people have jobs. We are going to have to do it.’” The action comes at a time of declining fortunes for Black banks. Between 1888 and 1934, there were more than a 130 Black owned banks in the U.S. By the 1960s, said Grant, “We had 60 black banks. Now there are 30.” Grant characterized the decline as an unintended consequence of the death of segregation in the U.S. As institutions that were once off-limits were open to Blacks, African American institutions suffered. B. Doyle Mitchell, Jr., president and CEO of Industrial Bank. He spoke of working as a teenager in the bank that was founded 79 years ago by his grandfather. “I realized how much the bank did everyday to help people that looked like you and me,” Mitchell said. “…as I got older, I saw how we did that, through loans, through waiting on people that were opening accounts…just helping and caring.” Black banks are still relevant in the post-civil rights society, he said. “Black Banks are extremely relevant right now. Just take the church community. Most of the church loans from forever came from Black banks. When the Black churches grew large enough to build mega churches some of them started going to the larger banks, majority owned banks,” he said. With the near-collapse of the global economy in 2008, he said, “some of these [White] banks started to pull back because these churches were struggling to pay. So, where are these churches turning to? The Black banks.” Mitchell concurs and says more then 50 percent of their loans go to underserved communities. The $5 million CBCF investment could trigger an upward surge for Black banks, Grant said. “Five million dollars in five banks…the example is, multiply that by 50 national organizations,” he said. “Multiply that by 20 million African Americans, it’s leadership, they are stepping out there and they are saying we have confidence in these banks, we think feel as if they are safe and sound why you don’t?” CEO of U.S. Black Chambers Ronald Busby said “Today’s announcement is truly historic in that we are showing what we can do with our own dollars.”

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With Summers Out, Will Obama Turn To Yellen For Fed Post? Share Tweet E-mail Print By editor Federal Reserve Board Vice Chairman Janet Yellen is considered a top candidate to replace Ben Bernanke now that Lawrence Summers has withdrawn his name for contention for the Fed's top job. Robert Galbraith Financial markets rallied Monday, a day after Lawrence Summers took himself out of the running to be the next chairman of the Federal Reserve. Summers had been seen as a front-runner to replace Ben Bernanke, whose term expires in January. His exit improved the odds for his chief rival for the position — Fed Vice Chairman Janet Yellen — as well as those of Donald Kohn, the former vice chairman of the Fed board. The Wall Street Journal reports that stocks soared Monday because investors viewed Summers' withdrawal as a sign that the Fed will continue to keep interest rates low in a bid to stimulate the economy. Fed policymakers are scheduled to meet this week to decide whether to begin "tapering" their bond-buying policy known as quantitative easing. The Journal said: "Driving the rally are expectations that whoever succeeds Fed Chairman Ben Bernanke will continue the present course of monetary policy in the U.S. for the next few years and that any scaling back of the Fed's aggressive steps to stimulate the economy will be slow and gradual." In early afternoon trading, the Dow Jones industrial average was up more than 140 points, or nearly 1 percent, and the Standard & Poor's 500 index was up about 13.5 points, or 0.8 percent. Summers told President Obama in a letter that he wanted to avoid an acrimonious confirmation battle that wouldn't serve the interests of the Fed or the economy, NPR's Jim Zarroli reported on Morning Edition. "The odds against his nomination had been growing in recent days after at least three Democrats on the Senate Banking Committee said they would vote against him," Zarroli said. Now the focus turns to whether Obama will pick Yellen for the Fed post. As Zarroli reports, Summers has long been unpopular with women's groups because of comments he made as Harvard president about women's aptitude for science. But Terry O'Neill, president of the National Organization for Women, said the opposition to Summers goes beyond that. The White House had indicated Obama "would pass over the better-qualified woman for the less-qualified man who happened to be his friend," O'Neill said. "This is something that women have seen over and over and over and over again in our working lives and it makes us cross-eyed with frustration." The Washington Post's Ezra Klein says Yellen would be the most qualified Fed chairman in memory, with more than 9 years of experience at the Fed. "Ben Bernanke had three years on the Federal Reserve's Board of Governors when he was named chairman. Paul Volcker had four years leading the New York Federal Reserve before he got the call. Alan Greenspan had never worked at the Fed at all." Copyright 2013 NPR. To see more, visit http://www.npr.org/. KTEP

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Your Money > Banking The curse of the quarter A strange series of coincidences befalls the 50 State Quarters. May 27, 2003: 3:17 PM EDT By Gordon T. Anderson, CNN/Money Contributing Writer NEW YORK (CNN/Money) - Did the Old Man of the Mountain die of natural causes, or was a curse the culprit? The distinctive rock formation had been famous since Native Americans roamed the White Mountains. More recently, New Hampshire selected it for engraving as the state's contribution to the U.S. Mint's "50 State Quarters" program. When the rock's face crumbled to dust in early May, it was a blow for naturalists and numismatics alike. Age was cited as the official cause of the Old Man's demise. But conspiracy theorists take note: since the Mint inaugurated the coin series, a string of unfortunate events has befallen many of its subjects. Call it the Curse of the Quarter. Honoring states In 1997, the Treasury Department announced the State Quarters program, to honor various contributions of the 50 states. The states themselves get to pick the subject of their designs, which are then minted on the backs of quarters and released according to the order by which the individual state joined the Union. Subjects of depiction include history, tourist activities, and flora and fauna. Since Delaware's quarter came out on January 4, 1999, commemorative coins representing 22 states have been released, and three more are scheduled to roll out this year. Misfortune of some sort has afflicted 17 of the depicted designs. To be sure, many problems have been minor, even trivial. Still, when bad luck affects three out of every four, one wonders about the nature of coincidence. Here are some of the more unusual woes: Maryland. The quarter depicts the statehouse in Annapolis, America's oldest legislative building still in use as a capitol. Last summer, the historic wooden cupola was struck by lightning, starting a small fire, which had to be extinguished by automated sprinklers. New Jersey. Washington's crossing of the Delaware was a pivotal event, justly honored on the coin of the state where he landed. Was something more than meteorology involved when an annual re-enactment of the crossing was cancelled last December? The span is only about a mile wide, but severe wind, snow, and ice prevented the annual event from happening. Kentucky. The Bluegrass State takes its equine traditions seriously, so it chose a thoroughbred and the inscription, "My Old Kentucky Home." That theme song was heard at Churchill Downs again this year -- serenading Funny Cide, the first native New Yorker to win the Kentucky Derby. For proud locals, the fact that the horse is a gelding may have proved particularly emasculating. Rhode Island. America's Cup was lost two decades ago. Even so, Rhode Island's quarter celebrates open-sea ocean sailing, perhaps in anticipation of the Cup's return to its historic Newport home. The prize did change hands this year -- but it went to a boat from Switzerland, a landlocked country where sea-faring is literally impossible. Alabama. Helen Keller appears on Alabama's coin, released in March 2003. Barely a month later, a much-anticipated revival of "The Miracle Worker" was forced to close before it even made it to Broadway, the New York Post reported. North Carolina. The Wright brothers are depicted on the quarters of both North Carolina and Ohio. The aviation pioneers have had their wings clipped a bit in recent years. A growing body of evidence supports a claim -- still unsubstantiated -- that New Zealand farmer Richard Pearse may have beaten them to the air by nine months. A few states honor important local industries. Tennessee fiddles for its music scene, while sales of recorded country music fell for the sixth consecutive year. Georgia promotes the peach, whose 2002 harvest produced much smaller-than-average fruit, the Atlanta Journal reported. Vermont depicts maple syrup producers. Tapping yields were down as much as 33 percent this winter, according to the Burlington Free Press. Indiana's coin features the once-venerable Indy 500. The event's luster has fallen so far that this year, its TV broadcast attracted fewer viewers than another car race held the same day. Both New York and Louisiana pay homage to historic ties between France and the United States -- an international relationship that's grown somewhat less cordial recently. The Minuteman of Massachusetts suffered the indignity of a (failed) proposal to eliminate it as the state university's mascot. And a classic Chicago-style brawl erupted over funding and patronage issues related to the Lincoln Presidential Library in Springfield. Honest Abe is on the Illinois quarter. Even the sweet Carolina Wren, which adorns the South Carolina coin, has been affected. The bird's natural habitat is distinctly southern. Yet over the past few years, it has been spotted nesting in significant numbers in Indiana, Ohio, and Rhode Island. A small colony of Carolina Wrens was even reported to be living in Ontario. Perhaps they're less afraid of SARS than the Curse of the Quarter. More on BANKING •Six dirty secrets of home equity loans •The financial fee ripoff •Where to stash your cash

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Cliff Dwellers The stock market is bracing for a protracted fight over the fiscal cliff. Apple dives, bond yields dip. It looks like it's going to be a real cliff-dweller. As long-time (and thus long-suffering) New York Mets fans may recall, the Amazin's second manager, one Wes Westrum, outdid their illustrious original skipper -- The Old Perfesser, Casey Stengel -- with his own malapropism to describe long, drawn-out contests whose outcome was undecided until the very end. Those lovable losers of the early-to-mid '60s more often than not came out on the short end of those cliff-dwellers, just as the current crew of overpaid underachievers consistently has for the past few years. Financial markets, indeed the entire nation and the rest of the world, are facing a real cliff-dweller, cliff-hanger, or whatever you care to call it ahead of the year-end deadline when sharp tax increases and draconian spending reductions will hit the economy in the absence of congressional action and the president's signature. But with President Obama's re-election, plus the unchanged control of Congress, with Democrats increasing their majority in the Senate and Republicans holding onto the House of Representatives, the people's representatives can get back to doing the people's work to avoid the so-called fiscal cliff. So catastrophic would be a failure to do so that the lack of an agreement by midnight New Year's Eve simply is unthinkable, according to the conventional wisdom. So much so, in fact, that the folks on Bubblevision have inaugurated a campaign they've dubbed Rise Above, which purportedly means that Washington should somehow rise above partisan politics to reach some kind of deal on taxes and spending to avoid plunging over the fiscal cliff. One need not be too cynical to realize that what they really want to rise above is the 14,000 level on the Dow Jones Industrial Average -- and to bring their ratings back to where they were when the Dow peaked in October 2007. The stock market seemed to brace itself for a fight over the fiscal cliff by plunging more than 3% Wednesday and Thursday, in the wake of the election results, which, on the basis of history, should have come as no surprise. Rising equity prices ahead of Election Day typically favor the incumbent, as they reflect investors' expectations of better times ahead. Indeed, the markets' predictions were far better than those of many pollsters and the pundits. While it's not a flawless indicator, odds on Intrade.com, the online site where traders can buy contracts on the outcome of future events, showed Obama remaining around a two-to-one favorite -- even after his lackluster performance in the first debate with GOP challenger Mitt Romney. Moreover, rising consumer sentiment has augured well for incumbents; the Thomson Reuters/University of Michigan gauge was on the upswing even before the early-November reading came in at 84.9, well above the 83.0 consensus forecast from Dow Jones, in Friday's release. But whether that level of confidence is maintained as the cliff's edge is approached at year end is another matter. And despite the incontrovertible fact that going over it is entirely avoidable and would be hugely destructive, that doesn't mean it won't happen -- even with the chirpy exhortations to "rise above" politics. PRESIDENT OBAMA AND HOUSE SPEAKER John Boehner both made apparently conciliatory comments, but fundamental differences remain. In his first post-campaign statement, the president said Friday that he wouldn't accept any deal that didn't involve higher taxes on the wealthiest Americans while favoring extension of the Bush-era tax cuts for those not in the upper crust. Boehner left open the prospect of higher tax revenue, but not higher marginal tax rates, which, he argued, would hit small business hard and retard growth. On the surface, there would be room for compromise. Elimination or capping of deductions could yield more revenue without hiking tax rates -- a seeming distinction without difference, but not in the effects on economic incentives. Boosting marginal rates drives a wedge between what one makes and what one keeps, which makes one less likely to work, save, and invest. Reducing or capping deductions for things such as mortgage interest or state and local taxes would reduce the federal subsidy to live in a nice house in a high-tax state (for somebody like me, for instance). But that doesn't mean there will be compromise. In his Friday New York Times op-ed column, Paul Krugman argued against Obama making a deal. "Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process," Krugman wrote. What's the answer? "Just say no, and go over the cliff if necessary," added the Nobel laureate, who is highly influential among Democrats. Tea Party types, too, may be no more interested in finding a solution than in extending the ideological warfare past the elections. Even if pragmatic grownups -- and the president and the speaker fall into that category -- do prevail and bring about a compromise to avoid the fiscal cliff, the actions needed to start reducing the unsustainable budget deficit wouldn't be painless. Nancy Lazar, who along with Ed Hyman heads up International Strategy & Investment, writes that a deal next month for a one-year deferral of a big chunk of the cliff would still result in a $162 billion tax hike in 2013. Moreover, since it would hit Jan. 2, the brunt of it would be felt in the first quarter, during which ISI estimates that real (that is, inflation-adjusted) disposable personal income would plunge at a 3.8% annual rate. Without a deal, ISI estimates, heading over the cliff would slash real disposable income at a 10% annual rate in the first quarter; consumer spending would plummet at a 5% rate and plunge the economy back into recession. The fiscal cliff's tax hikes and spending cuts were designed to force the executive and legislative branches to come to grips with the unsustainable budget deficit. "Americans can be counted on to do the right thing -- after they have exhausted all other possibilities," Winston Churchill is quoted as saying. Washington demonstrated its talent in that regard in the debt-ceiling fiasco of the summer of 2011, which led to both the current conundrum and the downgrade of its former triple-A credit rating by Standard & Poor's -- and a 17% plunge in the S&P 500. Similarly, stocks plummeted nearly 800 points in late September 2008 when the House initially rejected the TARP bailout bill. It may take more days like Wednesday's 2.4% bloodletting in the stock market to avoid the fiscal cliff. Rather than being driven by politicians rising above partisanship, it is more likely that action in Washington will come only if markets sink further. In the meantime, we have to live as cliff-dwellers. THE DOW INDUSTRIALS SHED MORE than 2% last week, their biggest percentage drop since early June. Since its 52-week peak on Oct. 5, the Dow is off about 6%. Still, it's up 5% for 2012, not bad but nothing to get excited about given the gut-wrenching swings investors have had to deal with. That's far less than the swings in the world's biggest, most popular, and most intensely followed stock, Apple (ticker: AAPL), which has had its own private bear market. From the $700 level in September, Apple has fallen under $550, with some $150 billion in market capitalization evaporating before the fan boys' eyes. Seabreeze Partners' Doug Kass, who sold the high at $700, wrote Friday that he was buying after the slide, which put the stock at just 11 times next year's earnings. But tax-conscious investors may have been cashing in gains ahead of a likely rise in capital-gains levies from the current, appealingly low 15% top rate to 20% or higher without some fiscal-cliff fix (plus the 3.8% Medicare tax on investments for high-income individuals). The recent dip in stocks has been accompanied by a renewed decline in Treasury yields, which had backed up amid signs of stronger risk assets and better economic data. But the 10-year yield fell back to around 1.60% from 1.80% last month as equities traded lower. Tuesday's election results also mean no change in Federal Reserve policy anytime soon. Even if Ben Bernanke leaves as central-bank chairman when his term is up in January 2014, as he is rumored to want to do, Obama is likely to nominate somebody who is similarly inclined toward easy money. At such puny yields, Treasury securities aren't attractive for income but mainly as hedges against risk assets, which will be vulnerable as the fiscal cliff approaches. And Treasuries are richly priced already. What's cheap are options because volatility is low from having been tamped down by central bankers around the globe, who have declared their intention to do whatever is needed to prevent crises. That has put the CBOE's volatility index for options on the S&P 500, aka the VIX (for its ticker), at relatively subdued levels. The so-called fear gauge ended Friday at 18.61, and VIX futures are indicating continued quiescent levels below 20 for November and December, our options maven, Steve Sears, reports. All of which suggests insurance against a market storm is selling rather cheaply; you might want to buy some. Alan Abelson is off this week Comments? E-mail: [email protected] Email

金融

2014-15/0557/en_head.json.gz/19559

Hedge Funds and the Outlook for Apple, Gold and Bitcoin Will Apple and gold bounce back in 2014? Can Bitcoin continue its streak? And amid a weak 2013 for hedge funds, some stood out for their huge, market-beating returns. It's the first work day of the new year. And not surprisingly, the financial media show no signs of letting up on pieces that attempt to predict the movement of markets in 2014. But when you've read a couple of these pieces—with their strikingly similar bottom lines—you've read all of them. (This column has already reviewed a number of these pieces in recent weeks.) Instead, the focus today is on a few articles that look at specific investments of interest to many. Let's start with Apple (ticker: AAPL). A Business Insider article by senior writer Jay Yarow tells readers to get ready for a "seriously huge year" for the iPhone and iPad maker based on a number of conditions set in place during the past year. "There's one event that really stands out: The introduction of iOS 7," writes Yarow, referring to the operating system that now serves as the backbone for Apple's mobile devices. Business Insider Get Ready for a Big Year for Apple The article goes on to discuss a number of other developments that set up the company to succeed in the years ahead, including the hiring of a new retail czar from Burberry and several key corporate acquisitions that will help with mapping, search, and Apple TV. Yarow is also predicting that the company will launch a few new products this year, including a larger iPhone, an improved iPad, and a new operating system for Mac computers. Much of this widely reported news is no doubt baked into Apple's stock price. Thus, the main value of this piece is to remind us that there is real life to Apple since the death of Steve Jobs. Unfortunately, gold investors likely have less to feel good about than Apple. A piece by CNBC.com writer Ansuya Harjani makes the case that 2014 will be another down year for the precious metal. And a review of the evidence makes it hard to see the bear case for gold is wrong. Last year, gold suffered its biggest annual loss in 32 years, plunging 28% over the course of the year after the Fed signaled its efforts to rein in its liquidity campaign. Investors in the SPDR Gold Trust GLD +0.04% SPDR Gold Trust 02/28/14 This Week 02/14/14 Paulson & Co. Stands Pat on Go... 02/14/14 Warren Buffett's Berkshire Hat... GLD in (GLD), a popular exchange-traded fund pegged to the price of gold, felt the pain. CNBC.com The Case for Falling Gold Prices And with the Fed dedicated to curtailing easy money and even raising short-term rates for years to come, combined with a "benign global inflation outlook," it's hard to imagine, short of a surprise geopolitical crisis, how gold can rally. Goldman Sachs, for instance, predicts bullion is set to fall at least 15% this year. And the picture for gold-mining stocks is likely to be even bleaker since those companies tend to be a leveraged bet on the price of the metal. But at least no one is predicting the demise of gold as an alternative to dollar and the stock and bond markets. The same cannot be said for bitcoin. Writing for Bloomberg, Stephen Mihm, a history professor at the University of Georgia, writes that the much-discussed digital currency is a "high-tech dinosaur soon to be extinct." Mihm argues that bitcoin, rather than being a financial instrument of the future, "is a throwback to an earlier era, when private currencies circulated alongside government-sponsored money. Bloomberg Could Bitcoin End Up Like the Dinosaurs? "In fact," he writes, "if you strip away its technological trappings—the encryption, the peer-to-peer networks—bitcoin closely resembles these earlier private efforts. "This isn't a comforting historical parallel," Mihm adds. "The alternative currencies of the past are long gone, thanks to a decades-long campaign by governments aimed at monopolizing the money supply. The lesson of their rise and fall is one that bitcoin's boosters would be foolish not to heed." I'll close the column with a look at some of the hedge fund stars of the past year, courtesy of the Wall Street Journal. While hedge funds, on average, took it on the chin in a year when it was far better to mindlessly hold a market-based ETF, a few big smart-money guys made out well by betting heavily on trades that worked out. Among this year's winners were John Paulson, who famously made billions of dollars by shorting the housing market ahead of the 2008 financial crisis. This time around, Paulson's hedge-fund operation has benefited from its long positions on a variety of stocks. E-mail: [email protected] Email

金融

2014-15/0557/en_head.json.gz/19633

Business New Report Available: QAF Limited (Q01) - Financial and Strategic SWOT Analysis Review Print article 2014-01-08 08:55:23 - Fast Market Research recommends "QAF Limited (Q01) - Financial and Strategic SWOT Analysis Review" from GlobalData, now available QAF Limited (QAF) is a multi-industry food company. The company operates through its business segment, namely, Bakery, Primary Production, Trading and Logistics, and Investments and others. It manufactures and distributes bread, bakery, and confectionery products in Singapore, Malaysia, the Philippines and Australia. QAF produces and exports pig meat in Australia. The company holds feed mills in Australia through which it manufactures pelleted stock feed for a broad range of livestock. It imports and distributes a wide range of liquor and food products. The company also offers logistics operation, which include warehousing and distribution. 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2014-15/0557/en_head.json.gz/19666

PSEG Q3 2006 Earnings Call Transcript Nov. 1, 2006 2:31 PM ET | About: PEG by: SA Transcripts Public Service Enterprise Group Inc. (PEG) Q3 2006 Earnings Call November 1, 2006 11:00 am ET Executives Mort Plawner - IR Tom O'Flynn - CFO Ralph Izzo - CEO Analysts Paul Patterson – Glenrock Associates Ashar Khan - SAC Capital Management Analyst for Gerald Chung - Banc of America Securities Michael Goldenberg – Loomis Management David Frank – Piqua Capital Management Steven Huang - Citadel Investment Group Andrew Levy – Bear Wagner Specialists Presentation Operator Welcome to the Public Service Enterprise Group third quarter 2006 earnings conference call and webcast. (Operator Instructions) I would now like to turn the conference over to Mort Plawner. Please go ahead, sir. Mort Plawner Thank you and good morning. We appreciate your listening in today, either by telephone or over our website. I will be turning the call over to Tom O'Flynn, PSEG's CFO, for a review of our third quarter results. First, I need to make a few points. We issued our earnings release this morning. In case you have not seen it, a copy is posted on our website. We expect to file our 10-Q with the SEC later today, which will contain additional information. In today's webcast, Tom will discuss our future outlook and so I must refer you to our forward-looking disclaimer. Although we believe our forecasts are based on reasonable assumptions, we can give no assurance that they will be achieved. The results or events forecast in our statements today may differ materially from actual results or events. The last word on any of our businesses is contained in the various reports we file with the SEC. As a reminder, our guidance speaks as of the date it is issued. Any confirmation or update in guidance will only be done in a public manner, generally in the form of a press release or webcast such as this. PSEG may or may not confirm or update guidance with every press release. As a matter of policy, we will not comment on guidance during any one-on-one meeting or individual phone call. In the body of our earnings release we provided a table that reconciled net income to operating earnings. We've adopted this format to improve the readability of the release and to provide the required reconciliation between the GAAP term “net income” and the non-GAAP term “operating earnings”. The attachments to the press release provide a reconciliation for each of our major businesses. Operating earnings exclude the merger-related costs and the net impact of certain asset sales during the period presented. Operating earnings is our standard for comparing 2006 results to 2005 for all our businesses. We exclude such costs so that we can better compare our current period results with prior or future periods. Finally, Tom will take your questions at the conclusion of the prepared remarks. Please limit yourself to one question and one follow-up. Thank you, I will now turn the call over to Tom. Tom O'Flynn Thanks, Mort. Good morning, everyone. Thanks for joining us. I hope you've had a chance to review the release we put out this morning. On this call, I will briefly go over our results for the third quarter, and discuss some of the major issues. Briefly, operating earnings for PSEG were $372 million for the quarter, an increase of $93 million or $0.34 from the third quarter of last year. Can you just make sure the mic is on mute, please? We've got a little bit of speaker interference or listener interference. Operator, if you're still there? Operator Yes, sir. Tom O'Flynn Can you make sure all the phones are on mute with the exception of mine? Operator All lines are muted, sir. Tom O'Flynn As I said, the operating earnings for PSEG were $372 million for the quarter, an increase of $93 million, or $0.34 from the third quarter of last year. Third quarter results were strong for power and holdings and slightly off for utility. At Power, higher prices for generation output and strong operations boosted margins for the quarter. However, high depreciation and the absence of an NDT restructuring gain in the same quarter last year somewhat dampened the quarter over quarter impact. PSEG results reflect the delay of rate relief caused by merger-related issues. However, we are pleased that earlier this week we reached an agreement to settle the outstanding gas and electric cases, which will allow us the opportunity to earn a fair rate of return. I'll provide more details in a moment. For holdings, our two Texas plants provided a significant uplift in our earnings for the quarter, both in terms of cash earnings as well as mark-to-market gains. Our overall results continue to support our 2006 operating earnings guidance of $3.45 to $3.75 a share, as well as our guidance for 2007, which is $4.60 to $5 per share. Power reported operating earnings of $203 million or $0.81 per share for the quarter, $67 million or $0.26 per share above '05 results. ESEG reported operating earnings of $86 million, or $0.34 for the quarter, lower than last year's results of $115 million or $0.47 per share. Finally, holdings reported operating earnings of $101 million or $0.40 per share for the quarter, an increase of $53 million or $0.20 over last year. As I go through the three major businesses, I'll provide more insight into the changes from last year, using earnings per share as the measure. I should note that PSEG had on average about 8 million more shares outstanding for the quarter compared to last year, a result of our prior mandatory convertible security. Full quarter-to-quarter reconciliation of our operating company's results can be found on attachment 6 of the press release. Starting with PSEG Power, we continue to benefit from strong operations throughout our generation fleet, and in particular, continued improvements at our nuclear operations. During the critical summer months, our New Jersey units at Hope Creek and Salem ran at a capacity factor of nearly 100%, coupled with the strong performance at Peak’s Bottom, our nuclear operations added about $0.03 per share from the same quarter of last year. For the quarter, our nuclear operations have shown tremendous improvement. Our New Jersey units ran at a capacity factor of 95% versus 86% for the first nine months of 2005. Our five-unit fleet has a year-to-date capacity factor of 96%, a 6% improvement over last year's results of 90%. I'm also very pleased to report that Salem Unit 2 synched to the grid earlier this morning after a successful refueling outage completed in just under 21 days 10 hours, a record time for that site. Congratulations to Bill Levis, Tom Joyce and our entire team for continued good work. As you're aware, our Salem and Hope Creek units are currently run under nuclear operating services contracts with Exelon. PSEG has provided notice to Exelon that it is electing to continue the contract for two years, during which times the companies will move into a transition phase. At the same time, PSEG continues to consider a number of long-term alternatives and we expect to define our long-term strategy well before the two-year period is completed. Alternatives range from rebuilding our standalone nuclear capabilities to long-term Exelon operations that could also be accompanied by a swap in nuclear capacity. PSEG also retains the right to extend the transition phase of the contract for an additional year if it so elects. Power also saw large margin improvements as a result of higher contract prices and other market hedging activities. Given our strategy of contracting for a few years into the future, we generally see market prices impacting us on a lag basis. Higher realized prices from our forward sales contracts added $0.34 to Power's earnings for the quarter versus last year's results. One driver to this increase is the recognition of a full quarter of the 2006 BGS auction results. This auction cleared, as you know, at $102 per megawatt hour and replaced a three--year-old BGS contract that rolled off at $55 per megawatt hour. This added $0.17 per share to the third quarter results, including the seasonal effect of pricing. Year-to-date, our margins have improved by over $6 per megawatt hour versus the same period last year, an increase we expect to sustain through year end. The impact of Power's Linden generation station, which was placed in service in May of this year, resulted in a reduction of $0.06 over the third quarter of 2005. This impact predominantly reflects higher interest and depreciation costs. Also the third quarter of this year overcame the absence of nuclear decommissioning trust fund gains of $38 million that were recognized in the third quarter of last year. These prior-year gains were the result of fund restructuring and asset rebalancing. We continue to make constructive progress on an environmental resolution regarding our 600 megawatt Hudson coal-fired generation facility in Northern New Jersey. The company has been in negotiations with the EPA and the NJDEP on a proposed alternate pollution reduction plan. The plan would achieve similar emission reductions to those contemplated in a 2002 agreement and allow for the Hudson unit to continue operating on coal beyond the current December 2006 deadline. Such agreement would allow investments in pollution control facilities of approximately $400 million to $500 million to be made over the next several years. While these negotiations are ongoing, Power is hopeful that a settlement can be reached in the near future. In anticipation of such a settlement, Power has increased its environmental reserves in the third quarter by approximately $15 million or $0.06 per share to cover costs expected as a result of this potential agreement. Now turning to PSEG, for the quarter the utility was down $29 million or $0.13 per share compared to the third quarter of 2005. The absence of rate relief to offset the expiration of the excess depreciation credit was responsible for $0.04 of this decline. Weather, while above normal, was below last year's record-setting levels and resulted in a $0.03 reduction quarter over quarter. Third quarter 2006 was 9.6% above normal, while third quarter '05 was 29.8% above normal. Moderately lower usage further reduced earnings about $0.02 per share. Although PSEG was challenged during the quarter with six major summer storms with record heat that pushed electric demand to an all-time peak, it continues to perform in the top quartile in national peer panels for frequency of customer interruptions, average customer restoration time and a number of other variables. Also the quarter was affected by higher depreciation and amortization and increased O&M totaling $0.03 per share. On the regulatory front, we have reached a settlement agreement with the BPU staff and public advocate and other intervening parties on both the gas base rate case and electric distribution financial review. We caution these settlements are not final until acted upon by the BPU. We anticipate the approval and implementation of the new rates shortly. Our original gas petition was for $133 million. The settlement provides a $40 million increase in rates and a $39 million reduction in depreciation and amortization expenses resulting in $79 million of incremental margin. On the electric side, we sought to eliminate the $64 million rate credit authorized in August of 2003. The continuation of the rate credit has put pressure on PSEG's earnings this year. The settlement eliminates most of that rate credit which, with volume growth, represents additional revenues of $47 million. PSEG has agreed that these base rates would remain in effect until November of 2009. We also settled the BGSS filing that would lower residential gas bills by 6%, reflecting the lower commodity costs. Of course changes in the BGSS rates have no earnings impact to PSEG. Overall, we're pleased that we were able to lower gas residential bills by 4.4% and only increase electric bills by less than 1%. These settlements are fair, and give us the opportunity to earn an ROE of 10%, but more importantly, they reflect a regulatory climate in New Jersey that recognizes the importance of outstanding utility service to its customers while providing a fair return to investors. We're pleased that the BPU staff and the public advocate have been able to focus on these traditional issues so quickly after the demanding merger proceedings. Now finally onto Energy Holdings. As you recall, earlier this year Holdings was very successful in selling its interest in two coal-fired plants in Poland and its interest in RGE, a Brazilian electric company. These sales resulted in net proceeds of approximately $612 million, a net after-tax gain of approximately $51 million and improve the equity of Holdings by $240 million. These sales, coupled with operating cash flows, resulted in Holdings accumulating over $750 million of funds which it invested on a short-term basis with PSEG. In September, Holdings utilized these funds, returning $425 million of capital to PSEG and calling $300 million of debt for early retirement. Operating earnings for the third quarter of '06 were up sharply from the comparable period last year. The results were largely driven by our Texas generation business as the improvement in spark spreads in the Texas market continued into the third quarter. Our 2,000 megawatt plants have operated very well, able to benefit from high spark spreads available in the market. The margins achieved this year will be difficult to repeat in '07, as a result of projected lower spark spreads, planned maintenance outage and more normal weather. A recent drop in prices at the end of the third quarter led to a sizable unrealized gain for certain of our fixed price contracts that are required to be mark-to-market to earnings under the accounting rules. We have a number of contracts for delivery over the balance of the year, a portion for 2007 and one longer-term contract that runs through 2010. As prices declined at the end of the third quarter, these fixed price contracts became more valuable, leading to an unrealized gain. Holdings also reported continued lower interest expense for the quarter, driven by the redemption of debt in January and a short-term investment of cash in the asset sales for PSEG. The cost associated with the call of $300 million of notes in September totaled approximately $0.03 and were included in third quarter results. Also, Holdings had lower income taxes this quarter relative to last year, contributing approximately $0.09, largely driven by the absence of tax expenses incurred in the third quarter of 2005 in connection with the repatriation of funds under the Jobs Act. The balance of holdings businesses including resources leasing businesses, global South American distribution investments and domestic contracted generation plants, are meeting this year's expectations. That concludes my review of the business segments. I would now like to summarize the mark-to-markets earnings impact. We have experienced some meaningful mark-to-market impacts and have added schedule 11 to the earnings release which indicates that the third quarter impact to PSEG is $0.17, $0.05 and $0.12 for Power and Holdings respectively. As specified in this attachment, year-to-date PSEG has realized a benefit of $0.16 and we currently expect about one-third of that to reverse over the fourth quarter. Finally I would like to make some comments regarding our consolidated cash flow and liquidity. Through September, cash flow from operations has been very strong, generating more than $1.4 billion from operations. This represents more than $500 million of an increase versus the same period last year, which is largely driven by increased earnings at Power and reduced collateral requirements. In addition to meaningful excess cash from ops, the after-tax proceeds from the sales of assets at Holdings contributed an incremental $600 million of cash for 2006. Consistent with these factors, combined PSEG and Power have available liquidity of almost $3 billion. From a financing perspective, in April of this year we hit a maturity of $500 million at Power, and maturities totally $322 million earlier at PSEG. Through September, strong cash flow has allowed us not to refinance these maturities. From a balance sheet perspective, we have made significant improvements. At the end of 2005, our debt to capitalization as defined by our lenders was about 60%. As of September, this ratio had fallen to 53%, driven by strong earnings, collateral reductions and other equity improvements. That concludes my remarks. Just my last comment before we take questions is that we are looking forward to seeing everybody at the EI. I'm pleased to say that Ralph Izzo will be joining us for the duration of the conference and giving us his assessment of the company’s current position and prospects. As you know, Ralph has recently been promoted to President and COO of PSEG after serving as President of PSE&G for the past three years. Operator, and we can now open it up for questions. Question-and-Answer Session (Operator Instructions) Your first question comes from Paul Patterson – Glenrock Associates. Paul Patterson – Glenrock Associates Good morning, guys. The mark-to-market gains, how do we model that going forward? What is the expectation in the 2007 numbers for any mark-to-market adjustments? Do you expect any of those to reverse out? What is the expectation for that, since it was a big of a driver this quarter? Ralph Izzo It was a bit of a driver this quarter. It does move around, I think over the long run it is expected to be zero, to be honest. If you just go back, even in the first couple of quarters, the first quarter of this year it was down $0.07; the second quarter it was positive $0.06 so halfway through the year we are basically at zero. We were $0.17 up this year, the biggest part of that was Texas. It is one of the few contracts we mark-to-market. As I said, about one-third of that is based on quarter end forward prices we expect to reverse. Tom O'Flynn Just in terms of our contracts, really the majority of our activities are either hedge accounting, which is not mark-to-market, or get normal purchase and sale. That is for the majority of our contracts at Power and most of our contracts at Holdings. The one major exception we have is a long-term contract we’ve got for 250 megawatts for four-and-a-half more years at Texas. Ralph Izzo In the long run, Paul, I think it is going to move around quarter to quarter, but as we think about our business going forward, it is a net neutral. Paul Patterson – Glenrock Associates Weather versus normal, you had mentioned what it was versus the year-over-year, but what is it versus normal? Do you have a rough idea of the last nine months how much weather has contributed? Tom O'Flynn The last nine months were below normal by about $0.12. About two-thirds of that is gas. Paul Patterson – Glenrock Associates So about $0.12 a share is lower than what normal weather would have brought in? Tom O'Flynn Yes, and that is largely gas from January/February. Paul Patterson – Glenrock Associates Finally, when is the settlement effective? I know you probably mentioned it, but somehow I got distracted when you were talking about it. When does the settlement become effective after the BPU rules on it? Tom O'Flynn The settlement has to be reviewed by the BPU, we're hopeful that can be done in the near term. We are hopeful that upon it being approved, rates would be effective very shortly thereafter. We are obviously especially sensitive and optimistic that they will become effective before the winter heating season. Paul Patterson – Glenrock Associates Was this expected in your 2007 guidance? Was this anticipated or something similar to this? Tom O'Flynn We generally anticipated getting a fair resolution of this, though this is within the range of expectations. Paul Patterson – Glenrock Associates Thanks a lot. Operator Your next question comes from Ashar Khan - SAC Capital Management. Ashar Khan - SAC Capital Management Good morning, Tom. Could you just go back, you had mentioned reaching debt targets at September. I was going back to the call a month ago. At what point, based on your outlook for next year, do you start having excess cash or capital return to shareholders? Where does that happen in your forecast? Tom O'Flynn Sure, Ashar. Just to review our debt to cap is 53%; there are different ways to look at it, but the one we look at the most consistently is how our lenders define it. We expect to have continued improvements to that. In terms of when excess cash can be used to grow the business as opposed to retire debt, if that's what you're getting to, I think that's really an ’08 question. We still want to use cash fourth quarter in '07 to continue to improve our credit profile. And as you know, it's a mixture of cash flow coverage, cash flow to debt, as well as debt to cap. So as we look at the majority of those, I think it's realistically '08 before we would have cash flow that could be used for discretionary growth of the business. That's outside. We clearly feel comfortable we have the cash flow to run the business, including some CapEx and other fundamental business requirements, but in terms of cash for additional investments or share repurchase, things like that, in my mind that's an '08 question. Ashar Khan - SAC Capital Management Tom, can you just mention, I don't know if could you update us on what your hedging is for the next couple of years? Where you are? Tom O'Flynn It's pretty consistent, at least the ranges are still within where we are. We've shown this slide before. For 2006, we're at over 95% for the remaining couple of months. For '07 we're 85% to 95%, for ‘08 we're in the 65% to 80% range. '09 would be less than 50% is probably how I would characterize it right now. As we characterize those percentages, the denominator is really our base load nuke and coal. That's the majority of our margin, that's the easiest to project. As you know, looking forward your gas generation (a) it’s less profitable and (b) the volume is a little harder to measure because it’s based on regional prices, weather and all sorts of things. Ashar Khan - SAC Capital Management Just going to, I don't know if Ralph or you could address it, as earnings grow huge, the next couple of years, how do you look at the dividend in respect to earnings in terms of payout? If could you give some indication as to how you would look at it? Tom O'Flynn Ashar, this will be the last question and then we have to move on. I think in general, we’ve shown the dividend over the last couple of years, to grow through the dividend. Clearly our financial picture is better so as we assess the dividend in conjunction with our year end financial planning process, we will look to whether we have the ability to continue our growth and whether we can do better. But other than that, it's going to be hard for us to comment. Those are things that we do in conjunction with our year end financial and business planning process that culminates in our December board meeting. Next question, please. Operator Your next question comes from Gerald Chung - Banc of America Securities. Analyst for Gerald Chung - Banc of America Securities Can you give us an update on the supply contract you have in Connecticut? I think it's supposed to reprice in '07? Tom O'Flynn Yes. Our contract with the utility up in Connecticut does end at the end of this year. We would, if it was signed three years ago at this time, I think I've said before, it looked like a good contract then, but it is materially below market. So as we go forward in '07 we would expect materially better profitability out of our Connecticut unit, even for its 375 megawatt coal plant, New Haven is largely RMR, that's not going to change as much. We've done some forward hedging as you might expect, but we would expect to get prices running through our income statement in January more reflective of the market. Analyst for Gerald Chung - Banc of America Securities Okay. So, going forward, we should expect a bit of an upside from the current Connecticut contract? Tom O'Flynn Yes, only because we'd expect to be earning margins that are reflective of current market conditions as opposed to very old market conditions. Analyst for Gerald Chung - Banc of America Securities Okay. Just one more question. Holdings has been monetizing assets quite a bit. Going forward, how should we be thinking about Holdings as a part of PSEG? Is this something that you guys are continuing to fold completely in the long term? Or is this something that we should see as a part of PSEG in the long term? Tom O'Flynn I think we'll continue to look for opportunities to monetize assets. I think we've shown a couple this year that have been quite beneficial for debt holders and for PSEG equity holders. That's been out there for a while. I think as we look forward, as we’ve done before, we'll assess markets, assess the fit. But we'd likely continue to seek opportunities to monetize assets. No material change in the pace of those. That's one of the things we'll look at going forward. Analyst for Gerald Chung - Banc of America Securities Thanks. Operator Your next question comes from Michael Goldenberg – Loomis Management. Michael Goldenberg – Loomis Management Good morning, gentlemen. I think I missed a couple of things I just wanted to confirm. Did you say on the Hudson plant capital expenditures of $400 million to $500 million? Tom O'Flynn Yes, That would be the environmental CapEx that I think we had in our Q last quarter, and we'll have it again. Michael Goldenberg – Loomis Management Has that been updated? I'm just trying to understand if it's a view that hasn’t been changed or it has been updated and you still believe it's $400 million to $500 million. Tom O'Flynn We still believe it. It is consistent with the number that we'll have in our Q that we expect to file later today. It was in our Q -- at least the prior Q, maybe going back a year or so -- it might have been $50 million less. Michael Goldenberg – Loomis Management Should a settlement not be reached, you do not plan to shut the plant off on December 31st, right? Or in fact would PJM just not allow you to? Tom O'Flynn That's hard to forecast. I think as I said, we are hopeful of a constructive resolution. The fact that we took a reserve of $15 million, though being a negative this quarter would be consistent with us having a reasonable expectation of getting a constructive resolution. We have just for technical reasons, we did put PJM on notice that we do not have a final resolution and, therefore, that could cause an issue in January. But that was more of a technical filing. At this point, it's hard to get into other “what ifs”. Michael Goldenberg – Loomis Management My other question deals with the current rate settlement you've reached -- and congrats on doing that. I wanted to ask you, you mentioned there was a depreciation credit that will come into effect or shall I say non-cash adjustments that will not affect customers that should flow through the income statement. Could you outline them? Tom O'Flynn The major pieces, part of our increase on the gas side of 133 requested an increase in depreciation. I think it was about $50 million. What we ended up doing was getting an increase of $40 million that would flow through and impact customers' rates. We actually decreased the depreciation or extended the useful life of the plants. The depreciation rate is less than 2%, which would suggest a fairly long life, which is certainly consistent with how we use our gas facilities. Pipes in the ground last a long time. Michael Goldenberg – Loomis Management So besides the $87 million increase from increase in customer rates, how much of that is going to be additional benefit from change in the depreciation? Tom O'Flynn There's another $39 million of non-cash expense reduction, if you will. So the total impact to our EBIT would be the $87 million plus the $39 million. Michael Goldenberg – Loomis Management If can you comment in general about how the rate settlement compares to expectations. Can you talk about implied earned ROE or anything in that regard? Tom O'Flynn No, I think what I'd say is the gas, that was a full rate case so that does contemplate a 10% ROE with the capital structure we've got, 47.5%, 48% equity so it's very consistent with our expectations, with our balance sheet. The 10% I believe is what we got in our last cash rate case which was early '02. Those are reasonable numbers. The electric, we keep on calling it a distribution financial review, it was not a full rate case. So the prior ROE of 9.75% back from August of '03 is still part of that. We were able to get 47 of the 69, I think. Our sense is there is certainly reason that we could ask for more, but it seemed like a reasonable result consistent with our general expectation of having being treated fairly over the last 100 years. We are appreciative that after a very extensive, exhaustive merger proceeding, folks were able to diligently tackle this quite promptly. Michael Goldenberg – Loomis Management Just so I understand, if I'm not mistaken, following the merger break-up, you said you were expecting a 10% net income growth at PSE&G into '07? And correct me if I'm wrong on that number. Is that number expected now to be the same, higher or lower? Tom O'Flynn It's in that range. Michael Goldenberg – Loomis Management But 10% is the correct number? Tom O'Flynn Yes. It's generally in that range. We haven't updated specifically subsidiary guidance. We’ve obviously got '07 guidance, got a growth from '07 to '08. We may, probably more towards the end of the year, update specific subsidiary guidance. Michael Goldenberg – Loomis Management But the rate settlement doesn't change that? Tom O'Flynn Correct. It's consistent with our prior expectations. Michael Goldenberg – Loomis Management And you are expecting the new rates to be in effect January 1st? Tom O'Flynn I think as I said earlier, we would hope that the BPU would be able to look at this in the near future, it's not formally docketed but we would expect it to be looked at shortly and reviewed. If approved by the BPU, we would be hopeful that rates would go into effect quite promptly. Particularly, we would like them to go into effect for gas prior to the heating season, which as I was trick-or-treating last night in my shorts, it wasn't in effect last night. But we're hoping the heating season does start soon in New Jersey. Michael Goldenberg – Loomis Management Thank you very much for taking the time once again, thanks. Operator Your next question comes from David Frank – Piqua Capital Management. David Frank – Piqua Capital Management Good morning. Maybe I was a little confused before. The total mark-to-market for the quarter was $0.17 or was that for the nine months? Tom O'Flynn That is for the quarter. For the nine months it's $0.16. It's on the attachment to the press release. David Frank – Piqua Capital Management So the 148 has $0.17 of end-to-end gains in there. Tom O'Flynn Correct. David Frank – Piqua Capital Management Texas spark spreads, could you tell us what the realized spark spread was for you guys in the third quarter? The average? Tom O'Flynn I've got it year-to-date. Generally year-to-date it's in the 19, 20 range. David Frank – Piqua Capital Management And in the quarter, it was something significantly higher than that, I would imagine? Tom O'Flynn It was, because I'm thinking year-to-date in June it was 16, 17. So it did average up during the quarter. Expectations for the year, the average in the fall it will be in the 18 range and next year, I think the forwards are in the 14, 15 range, last I saw. David Frank – Piqua Capital Management Thank you. Operator Your next question comes from Steven Huang - Citadel Investment Group. Steven Huang - Citadel Investment Group I wanted to just follow up with your lease portfolio. Has there been any new developments in that regard with the IRS? Tom O'Flynn No, there have not been any developments. We will update the rolling exposure we have in our Q, but no, there have not been any meaningful developments. Steven Huang - Citadel Investment Group And it continues to be something that you can't easily unwind, right? If you wanted to, to help generate some cash proceeds? Tom O'Flynn I'd say in general, the leasing portfolio is one we expect to be in for a long period of time. Most of the time the leases do have tax recapture if there's sale or exits at an early time. That being said, there have been some leases we bought in the secondary market that are coming to the latter part of their lives and we have had some gains. But those are generally exceptions, rather than expectations. Just as examples we had the Seminole deal that we sold and had a nice gain at the end of '05. Prior, about a year-and-a-half ago, we did have a lease out in the Midwest with one of the generation companies, that they bought us out of. Steven Huang - Citadel Investment Group Tom, do you have any other leases that are close to the end where the counterparty may look to buy out the leases again? Tom O'Flynn Some pieces here and there, there is a lease out in the Northwest that we expect to file. It will be in our Q. We expect to buy out in the mid $20 million range, something like that. It's out about two years, 08/09. But nothing, certainly on the Seminole side. Steven Huang - Citadel Investment Group On your Connecticut plants, following up on a previous question, when you said that you are now looking to re-contract, does that mean you do not win the latest auction? Tom O'Flynn I'm not sure for confidentiality we're not allowed to comment on what we did and didn't win. I would say that there's no material contract that we won such that we would feel an obligation to report it, put it that way. There's obviously forward hedging that we do but nothing of a material size that we feel it was reasonable or meaningful to an investor to report a specific contract. Steven Huang - Citadel Investment Group Can you remind us again under the hypothetical situation of you guys looking to split your regulated and unregulated, would you need New Jersey BPU approval? Ralph Izzo We generally don't believe that we do. That being said, I want to be cautious to not be providing detailed legal opinions, but we generally provide that the current structure would allow for a separation. I think we've said that is something that we would think about over the longer term but certainly it is not on the near-term action list. Steven Huang - Citadel Investment Group Great, thank you. Tom O'Flynn The near-term action list is very much in the meat and potatoes – and Ralph will address this when he is out there for a couple days -- very much meat and potatoes, getting our feet on the ground, getting fair rate for PSE&G which we seem to be close to doing; getting the operations running well which certainly Salem with their return to ops is super; and other blocking and tackling. Steven Huang - Citadel Investment Group Tom, one last thing. In your analyst day coming up in December, what should we be expecting for that, other than segment details? Are you guys going to help us out with longer-term guidance? What are you guys thinking about? Tom O'Flynn We may touch on that a little bit at the EI. We'll hopefully give folks a good update. As I said, I'll be out there, Ralph will be out there for the duration for two-and-a-half days. I'm looking forward to showing him that there's not a lot of fun and games, not a lot of time at the gambling table at these things. So we hope to give people a detailed update. We want to circle shortly after that and just make sure that the December 4th date is the right time to have our investor conference. We just had a discussion over the last couple of days as to whether that may be too close to the EI such that it might be some of the same commentary, but we'll get back to you out there. Steven Huang - Citadel Investment Group Okay. So at EI, you will give us the longer-term drivers? Tom O'Flynn Yes. At EI, we'll speak to some of the longer-term drivers and then we want to come back and add a half-day investor conference that's currently scheduled for December. We just want to think about whether if we push that off until the first couple of months of '07, whether that wouldn't just allow us to have more time between EI and provide more depth to the story. We'll update you next week. Steven Huang - Citadel Investment Group Okay. Sounds good. Operator Your next question comes from Andrew Levy – Bear Wagner Specialists. Andrew Levy – Bear Wagner Specialists What do you mean no gambling? Tom O'Flynn I can't stay up that late. Andrew Levy – Bear Wagner Specialists Most of my questions have been asked. But just to understand, your comments from before, I guess after the conference call that you did after the merger ended, there was probably a little bit more emotion. So it sounds like on the conference call you seemed a little bit more hot and heavy back then about possibly taking a look at breaking yourselves up. But I guess for the time being, which is probably the wise thing, is just really get the house back in order, focus on the regulatory environment, get that back in order and go from there. Is that kind of where we're at? Ralph Izzo I think that’s right. I think it was a combination that we perhaps discussed it more and then I think some of the subsequent reports in the press may have picked it up as suggesting it might have been more imminent. Clearly it's something that we and other companies like ourselves need to assess. But I think it's something we would look at over a longer-term basis. Certainly not an imminent question. Andrew Levy – Bear Wagner Specialists Just real quick, you're not 100% sure whether you would need regulatory approval from the State of New Jersey, is that up in the air? Or is that something you're pretty certain that if you wanted to do some type of transaction a year or two down the line, it would be fairly easy to do, as far as the regulatory aspect of it? Ralph Izzo I'd stay with where we are, Andy. We don't expect that we would need it, but I'm not in a position of giving definitive legal opinions. We think that there's the route for us to do it if we go like that. Andrew Levy – Bear Wagner Specialists Great. Thanks. Tom O'Flynn And your rates are going down, Andy both at gas and only up a little on electric. I don’t want to see any customer letter. Andrew Levy – Bear Wagner Specialists I hear you. Have fun this weekend. Operator I have no further questions at this time. Tom O'Flynn Okay. Thanks very much. Thanks for joining. We look forward to seeing everybody, Ralph, I and the team look forward to seeing everybody and are certainly pleased with the quarter. Earnings up, we appear poised to have a settlement at PSE&G, which is really one of our key action items coming in. We continue to have a good ops story, congrats once again to Bill Levis, Tom Joyce and the Island team for a 20 day, 10 hour refueling. See you next week. Operator Ladies and gentlemen, that does conclude your conference call for today. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. Source: PSEG Q3 2006 Earnings Call Transcript All PEG Transcripts Public Service Enterprise Group Inc. released its FQ4 2013 Results in their Earnings Call on November 01, 2006. Do you feel more positive or less positive about Public Service Enterprise Group Inc. after ready these results?

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The Jewish Ethicist: Socially Responsible Investments All investments are not created equal. by Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem Q. Should my investment decision take into account how constructive a company's activities are? A. In recent years, the Socially Responsible Investment movement has moved beyond "negative screens," eliminating companies with undesirable policies. Now there is a corresponding interest in "positive screens," giving preference to companies with particular constructive policies, even over other companies who do not have objectionable activities. Of course "negative" and "positive" are judged by each fund based on its own objectives and values. What is negative for one fund may be positive for another. A number of past columns have dealt with the Jewish parallel to negative screens – companies that may be forbidden to invest in because particular kinds of investment may make the investor ethically culpable for the acts of a bad company. In this column, we will study if there is a parallel also to "positive screens." There is no question that Jewish tradition recognizes that business investment can be an agent for social good. The Talmud states that helping a needy person with a business investment is preferable to giving charity, and Maimonides writes that this is the highest form of charity. (1) But this law is not directly applicable to the SRI question, since in this case the benefit is not related to the particular line of business the needy person engages in, but only to the fact that he is in need of support. In general, we seldom find that the sages favored one kind of investment over another based on its social benefit. Usually they emphasized standard criteria such as safety or liquidity. Perhaps just as secular economics emphasizes the legitimacy of acting out of self-interest by relying on the "invisible hand" of the price system, the sages of the Talmud acknowledged the legitimacy of self-interest by relying on the invisible Hand of God's providence. However, there is one kind of business activity that we find the sages of the Talmud constantly encouraging and regulating: developing the land of Israel. In the time of the Talmudic sages, there was no Jewish sovereignty in the land of Israel, and the prosperity and security of Jewish residents was dependent on having a critical mass of Jewish settlement and agricultural development. As a result, the sages made many regulations intended to encourage landowners to buy and develop fields inside Israel instead of abroad. The renowned 18th-19th century authority Rabbi Moshe Sofer opined in a much-quoted passage that in fact all economic activity in the land of Israel has the status of a mitzvah, that is, fulfillment of a commandment. "Not only working the land [is the fulfillment of a commandment] but also studying all crafts, because of the settlement and honor of the land of Israel, so that no one should say that in all of the land of Israel there is no qualified shoemaker or builder and so on, and they would need to bring them from other lands."(2) So it follows directly that for Jews, investment in a business that operates in Israel is a "positive screen" – it promotes a business that has inherent added value because it promotes the development of the Jewish homeland. However, I think that at an ethical level we can learn from this that any economic activity that has special social value can be considered a preferred investment. In another place, the Chatam Sofer writes that outside of the land of Israel, the Jews have no particular obligation to engage in crafts, because there are plenty of qualified craftsmen already. Therefore, they should devote themselves as much as possible to Torah study. (3) The statement does seem to imply that each country should as a whole give due consideration to their national development. It is important to point out that on the whole the contribution a company makes to development is often closely related to its profitability, so the profit screen and the social screen need not diverge. But the basic principle is still established that an investment which contributes to the development of society is a preferred one from an ethical point of view. SOURCES: (1) Babylonian Talmud Shabbat 63a; Maimonides Code, Gifts to the Poor 10:7. (2) Torat Moshe (Torah commentary), parshat Shoftim d.h. mi ha-ish. (3) Chatam Sofer Novellae on the Talmud, Sukkah 36a. Send your queries about ethics in the workplace to [email protected] The Jewish Ethicist presents some general principles of Jewish law. For specific questions and direct application, please consult a qualified Rabbi. Published: Jewish Ethicist: Talmudic Investment Advice The Jewish Ethicist: Investing with Charity Dollars The Jewish Ethicist: Equality Quandary Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem Rabbi Dr. Asher Meir is Research Director at the Business Ethics Center of Jerusalem (www.besr.org). He studied at Harvard, received a PhD in Economics from MIT, and rabbinic ordination from the Israeli Chief Rabbinate. Prior to moving to Israel, he worked at the Council of Economic Advisers in the Reagan administration. Rabbi Dr. Meir is also a Senior Lecturer in Economics at the Jerusalem College of Technology and has published several articles on business, economics and Jewish law. He is the author of the two-volume, "Meaning in Mitzvot (Feldheim), and his Aish.com columns form the basis of the "Jewish Ethicist" book (ktav.com). Bunny Shuch, Importance of promoting development of the Jewish homeland I disagree with the statement that "... at an ethical level we can learn from this that any economic activity that has special social value can be considered a preferred investment." Our sages made it clear that investment in Israel is preferable. This is because the Jewish presence within Israel and the destiny of Israel is closely connected to the well being of the Jewish people everywhere. This attitude that Rabbi Meir expressed unfortunately is the thinking of many Jews today, who care more about the plight of other groups than they care about the existential threats against the state of Israel. Many Jewish philanthropists donate large amounts of money to the arts in the United States, which would be OK if the needs in Israel weren't so great. Development of a strong, secure Israel is more important to the Jewish people than aiding other groups. Once Israel is safe and secure, then we'll be able to help others more easily. In the meantime, following the advice of the Talmudic sages, Israel is my priority. More Articles by Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem: Animal Suffering: The Jewish View Animals and people are kindred spirits, but far from equals. The Jewish Ethicist: Giving Notice Do I have any duty to stay on until my boss finds someone else? The Jewish Ethicist: Sweet Revenge Is bearing a grudge ever justified?

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The Real State Of Nassau’s Finances Written by Howard Weitzman Thursday, 19 September 2013 00:00 Editor’s note: This is a response to Nassau County Comptroller George Maragos’s “County Financial Report Card,” published in The New Hyde Park Illustrated News, Sept. 11-17 edition. Howard Weitzman is running on the Democratic line against Maragos in the November election. George Maragos continues to mislead the public by falsely claiming that the county’s financial condition has improved on his watch. During Mr. Maragos’s tenure as Nassau County’s fiscal watchdog, the county has undergone three bond downgrades by the credit rating agencies, the county’s fiscal outlook has been lowered from “stable” to “negative,” and the county’s debt has reached a new all-time high. No amount of “cooking the books” and issuing misleading financial statements and press releases can hide this truth, a truth which can be easily verified by outside sources. As a Certified Public Accountant and former Nassau County Comptroller, I can see through the blatant attempts by Maragos to cook the books to produce the result he wants instead of the result that is truthful. The problem is that voters are disillusioned by the back-and-fourth of political campaigns where one side makes one claim and the other side counters with the opposite take. If voters don’t know who to believe, they should look at what independent, outside sources have to say about the county’s finances. If the county’s finances are so rosy, then why did the Nassau Interim Finance Authority (NIFA) have to impose tough oversight on the county’s finances? Ronald Stack, the chairman of NIFA remarked at a July 2013 meeting, “To the county officials who believe there is a surplus, would they please call me so I can hold an emergency meeting of the board so we can lift controls?” To date no one has called. On Sept. 4, 2013 The Wall Street Journal published an investigative piece that highlighted how a controversial judge’s order sought by the Republican county attorney allowed the county to hide outstanding liabilities to turn its 2012 $45 million budgetary deficit into a surplus on paper. When pressed, the county attorney acknowledged that he “knew it would affect the budget.” The editorial board of Newsday published a piece on June 12, 2013 with the headline, “Don’t buy Nassau’s financial window dressing.” In the editorial, Maragos was skewered when the editorial board stated, “…while the surplus is a fiction, the county’s financial woes are all too real. In the real world, and according to generally accepted accounting principles, the county had an $85-million deficit last year.” Even if you don’t trust the collective wisdom of the chairman of NIFA, The Wall Street Journal, and Newsday, take a moment to consider what George Marlin, the 2009 chairman of Conservatives for Ed Mangano and a NIFA Board member had to say. Marlin said, “The County Comptroller’s declaration that Nassau ended fiscal year 2012 with a “miraculous” surplus (as claimed by Maragos) was absurd. It was a mirage, not a miracle.” Marlin continued, “Let’s face it, the County has forfeited its credibility when it comes to fiscal matters” Maragos claims that the growing liability for property tax refunds has been addressed is totally unsupported. Just this week, on Sept. 8, 2013, Newsday reported that claims for refunds have reached an all-time high. The county policy of freezing home values in a declining housing market has made the problem worse. And granting 90 percent of the challenges have transferred the County’s liability to the backs of taxpayers. Politics can be a tough business where people levy accusations back and forth to gain electoral advantage. The sad truth is that our county is in deep financial distress and instead of seeking solutions, people like George Maragos distort the truth and refuse to even acknowledge that a problem exists. It is necessary to restore confidence in the county’s financial reports before we begin the task of repairing the county’s finances. Featured Advertisers

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Chevron's Clearly Your Best Big Oil Bet David Lee Smith | It's tough to analyze Chevron (NYSE: CVX ) , the second-largest of the U.S.-based major oil companies, behind only ExxonMobil (NYSE: XOM ) , and not emerge with the conviction that the company deserves to be a core holding in Foolish energy portfolios. Oh sure, Exxon and Netherlands-based Royal Dutch Shell (NYSE: RDS-B ) are hardly chopped liver, but Chevron boasts some special assets that, in my mind, make the company a standout in the group. For instance, its balance sheet is hardly short of cash, its per-barrel profitability is exemplary, its dividend is solid, and its natural gas concentration is overseas, where prices have fared far better than in the U.S. A year-over-year dip, but a major beatAs was the case with most of the rest of the industry, however, Chevron's net income for the second quarter slid to $7.21 billion, or $3.66 per share, compared with $7.73 billion, or $3.85 per share in 2011. Nevertheless, the latest per-share figure topped the consensus expectation of analysts who follow the company by a whopping $0.42. The company's top line came in at $60 billion, versus $67 billion for the comparable quarter a year ago. In the upstream sector, George Kirkland, the head of the company's exploration and production operations, noted that, thus far in reporting season, the company is nearly $7 per barrel ahead of its peers in per-barrel margins, which were about $26 per barrel in the quarter. At the same time, however, Chevron's oil-equivalent barrels of production averaged 2.63 million BOE a day for the first half of the year. That figure compares to 2.68 billion daily BOE to which management guided for the full year in January. The average price realization thus far in the year is $114 Brent per barrel. According to Kirkland, here are "four key drivers" that will affect Chevron's full-year production results: First, there has been a months-long shut-in at the Frade field offshore Brazil in the face of a pair of oil spills in the Chevron-operated project. Second, the company is about to embark on its initial six-week turnaround (maintenance stoppage) at the giant Tengiz field in Kazakhstan. Third, Chevron has experienced commissioning delays at the Angola LNG operation. Finally -- and positively -- are the startups of several projects vis-a-vis expectations. Where it's workingRegarding areas of conventional exploration and production for the year, the company will invest nearly $3 billion in the Gulf of Mexico. Indeed, in the recent lease sale, it appears that Chevron was high bidder for 15 blocks each in the deepwater and on the continental shelf. Furthermore, it has announced its fourth discovery in the Carnarvon Basin of Australia. Other test areas on the company's docket for the year include South America and West Africa. Highly unconventionalAs for unconventional plays, Chevron is pursuing projects in a number of areas, including the Permian Basin and the Marcellus shale of the U.S. It's also conducting unconventional exploration in the Duvernay of Canada, Poland, Argentina, and China. In addition, it's been awarded a tender in Ukraine that gives it the right to negotiate a production-sharing contract for 1,600 acres. The company has announced that it will proceed with the development of the Lianzi field, which straddles a unitized offshore zone between the Republic of Congo and the Republic of Angola. Development of the field, which is located about 65 miles offshore, is likely to involve an expenditure near $2.0 billion. At the same time, the company will spend another $500 million to increase its natural gas production in Bangladesh by 2014. Its hike downstreamDownstream, Chevron earned $1.88 billion, pushed along by the favorable combination of a 7% decline in Brent crude, which serves as the benchmark for two-thirds of the world. Profits from the sector included $200 million from the sale of a South Korean power business, along with other assets. Chevron is in the process of developing a pair of major Australian LNG projects, on which it serves as operator. The Wheatstone is well into the development stage, following a final decision on the project nearly a month ago. The larger Gorgon project is further along -- currently about 45%. On the latter, Kirkland said, "We are making good progress on our 2012 milestones." Chevron hardly will be hindered by a less-than-robust balance sheet going forward. The company finished the quarter with about $21.5 billion in cash and equivalents, along with marketable securities. When weighed against $10.2 billion in short- and long-term debt, its net cash position just might signal acquisition activity in the reasonably near term. CFO Pat Yarrington concluded management's formal remarks on the call with analysts by saying: An investment in Chevron offers many advantages: a very compelling growth story beginning mid-decade; hugely competitive cash and earnings margin; margins we believe will be supported in the future by the quality of investments we're making today; and the sustained growth pattern on dividends, which are yielding 3.3%. We believe we are well positioned for strong cash generation in the years to come, and with that cash generation, our capacity to increase dividends and maintain peer-leading total shareholder returns is enhanced. The Foolish bottom lineYarrington obviously believes Chevron is the most attractive investment among the world's major oil companies. I'm hard-pressed to disagree. And while I've suggested that a Foolish portfolio would benefit from the inclusion of such oil-field leaders as Schlumberger and National Oilwell Varco, I also believe they'd be inclined to flourish with inclusion of Chevron shares. At the very least, I urge Foolish investors to include Chevron in their versions of My Watchlist. Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Chevron and National Oilwell Varco. The Motley Fool owns shares of ExxonMobil and National Oilwell Varco. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. CAPS Rating: RDS-B

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Help | Connect | Sign up|Log in Tomio Geron, Contributor Will Sarbanes-Oxley Changes Help The IPO Market? Congress is poised this year to pass legislation that would change Sarbanes-Oxley, which could make it easier for private companies to go public. The potential legislation, which would enable companies with less than $1 billion in annual revenue to comply with certain SOX regulations after they have had their IPO, has rare bipartisan support in a divided Congress. Under terms of the bill, S1933, “emerging growth” companies would still need to eventually be fully compliant with Sarbanes-Oxley, but would have more time. Companies with less than $1 billion in revenue in its most recent fiscal year would have five years to comply with Section 404(b) of SOX. In other words, there would not be changes to the compliance requirements themselves, but the bill would ease the way for companies to become compliant. Mark Heesen, president of the National Venture Capital Association is optimistic the legislation will be passed this year, since it provides job creation. ”If you give (companies) a better ability to go public, maybe some will take the public route as opposed to getting acquired,” Heesen said. “Or maybe some will go public a little faster than they were anticipating. That will spur job creation.” The bill in the Senate and an identical bill in the House both had hearings last week. The House version sailed through the Financial Services Committee last week by a vote of 54-1 and is awaiting a full House vote. A vote on the ”Reopening American Capital Markets to Emerging Growth Companies Act of 2011″ is also expected in the Senate Committee on Banking, Housing, and Urban Affairs. The benefits of the bill for companies are both economic–they can save legal and accounting costs associated with Sarbanes-Oxley–but also logistical to delay the onset of those compliance issues, Heesen says. “They’re trying to do so many things simultaneously as they’re trying to go public,” Heesen said. “This gives them some breathing room to do what they really need to do.” Sarbanes-Oxley, passed in 2002 after the Enron and Worldcom scandals, has long been viewed by many venture capitalists and startups as a major headache due to the costs and regulations involved. Many venture investors have argued that SOX has made it more difficult for companies to go public, and hurt competition of U.S. exchanges seeking new companies compared to other exchanges overseas. The pending bill would also loosen the restrictions on the “quiet period” for companies that have filed their S-1 documents for an IPO and allow them to talk with potential institutional or accredited investors. Here’s the relevant passage. “…an emerging growth company or any person authorized to act on behalf of an emerging growth company may engage in oral or written communications with potential investors that are qualified institutional buyers or institutions that are accredited investors…” h/t Boston Business Journal Move up http://i.forbesimg.com t Facebook's IPO A Watershed Moment Tomio Geron Dara Albright It’s a step in the right direction but it won’t do anything to galvanize aftermarket support, the real crux of the problem. Read -http://nowstreetjournal.com/2012/02/21/cousin-cara-and-facebooks-ipo/ antonejohnson Great linked post. Thanks for sharing. Even repealing SOX completely wouldn’t get us anywhere near back to the thriving IPO market of the good old days. Totally agree that the lack of aftermarket support is the 800-lb. gorilla here. The cost and headaches associated with SOX compliance are wildly exaggerated for political reasons with respect to IPOs. For a private company that already has to go through the monumental undertaking of preparing comprehensive financial reports with full footnotes for the first time in its history, added 404 and the other SOX requirements to the mix would only make a difference at the margin for the shakiest of IPOs. 404 compliance in particular *can* be extremely expensive and time-consuming — for large, diverse companies with many operating units in foreign countries, joint ventures, partly owned subsidiaries, etc. The typical large corporation has all of these. The typical tech startup looking to go public (i.e, not Facebook) has none of them. I speak from experience, having helped a Nasdaq 100 multi-national company roll out compliance from scratch in 2002 when the law was first passed, and subsequently handled securities compliance at a small-cap public company with a relatively straightforward domestic business a couple years later. Although we still kvetched about it, the difference was night and day. SOX is flawed, no question, but it rightly imposes the heaviest burdens on the potential future Enrons and Worldcoms of the world. Loosening it a bit wouldn’t change anything about the weak conditions for appreciation over time after a company has gone public — as @Dara pointed out in her great comment and linked article, the lack of aftermarket support. Demand from the public markets drives everything. I'm director of content strategy at startup Exitround. I was previously a staff reporter at Forbes covering start-ups and venture capital. I'm interested in entrepreneurs who want to change the world, or have a point of view or compelling story. Email me at [email protected]. I was previously a reporter for Dow Jones VentureWire where my work also appeared in the Wall Street Journal. I've also written for Red Herring, the Long Beach Press-Telegram and other outlets. In a former life I was a web developer. Follow me on Twitter tomiogeron, or Facebook , or Google+. More from Tomio Geron Follow Tomio Geron on Twitter Follow Tomio Geron on Facebook Tomio Geron’s RSS Feed Tomio Geron’s Profile Tomio Geron’s Website

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Millbranch Properties Buys Germantown Office ComplexA Memphis-based company called Millbranch Properties LLC has paid $1.2 million for the multi-building office complex at 8590 Farmington Blvd. in Germantown. The company bought the 22,580-square-foot property Dec. 27 from the Edward S. Kaplan Irrevocable Insurance Trust, Dated Dec. 22, 1989. The trust had acquired the property in 2001 for $1 million. Built in 1979, the mixed-used office complex sits on 2.38 acres along the north side of Farmington Boulevard between Allenby Road and Cameron-Brown Park. The Shelby County Assessor of Property’s 2012 appraisal was $864,600. Millbranch Properties filed a $1.1 million deed of trust in conjunction with the purchase. Blair Graber signed the trust deed as manager of Millbranch Properties. Source: The Daily News Online & Chandler Reports – Daily News staff Memphis Area Association of Realtors Reports December SalesMemphis-area home sales for December increased 26.5 percent from a year ago, with 1,156 total sales recorded in the Memphis Area Association of Realtors MAARdata property records database. Average sales price year to date was up 2.2 percent at $128,774. Total home sales year to date were up 17.2 percent, and monthly sales volume increased 19.8 percent to $1.94 billion. Total sales decreased 2 percent from November. Inventory declined 4.8 percent, with 6,481 units listed for sale. The database includes records of all property transactions in Shelby, Fayette and Tipton counties. – Sarah Baker December Tax Collections Beat Projections by $25 MillionTennessee’s general fund revenue collections came in $25 million above expectations in December, bringing the total surplus through the first five months of the budget year to $84 million. December revenue collections reflect economic activity in November, which included shopping activity surrounding the Thanksgiving holiday. Finance Commissioner Mark Emkes said the results may reflect renewed consumer confidence, but said figures to be released next month will give a better picture of the Christmas season. The state collected about $12 million more than expected in December, a 5 percent growth rate. Corporate franchise and excise were nearly $13 million above the budgeted estimate. – The Associated Press New Federal Rules to Curb Risky Mortgages Federal regulators for the first time are laying out rules aimed at ensuring that mortgage borrowers can afford to repay the loans they take out. The rules being unveiled Thursday by the Consumer Financial Protection Bureau impose a range of obligations and restrictions on lenders, including bans on the risky “interest-only” and “no documentation” loans that helped inflate the housing bubble. Lenders will be required to verify and inspect borrowers’ financial records. The rules discourage them from saddling borrowers with total debt payments totaling more than 43 percent of the person’s annual income. That includes existing debts like credit cards and student loans. CFPB Director Richard Cordray, in remarks prepared for an event Thursday, called the rules “the true essence of ‘responsible lending.’” The rules, which take effect next year, aim to “make sure that people who work hard to buy their own home can be assured of not only greater consumer protections but also reasonable access to credit,” he said. Cordray noted that in years leading up to the 2008 financial crisis, consumers could easily obtain mortgages that they could not afford to repay. In contrast, in subsequent years banks tightened lending so much that few could qualify for a home loan. The new rules seek out a middle ground by protecting consumers from bad loans while giving banks the legal assurances they need to increase lending, he said. The mortgage-lending overhaul is a priority for the agency, which was created under the 2010 financial law known as the Dodd-Frank Act. The agency is charged with reducing the risk of a credit bubble by helping to ensure that borrowers are better informed and loans are more likely to be repaid. – The Associated Press Bronson Sporting Goods Adopts Green Ballast Lighting Tommy Bronson Sporting Goods, a local sporting goods provider for 86 years, has installed Green Ballast Inc.’s patented daylight harvesting fluorescent light ballasts in its new East Memphis location at 964 June Road. Cliff Hunter, owner of Tommy Bronson Sporting Goods, said in a statement that “proper lighting is a key aspect of merchandising.” Green Ballast, led by CEO J. Kevin Adams of CB Richard Ellis Memphis, is a developer and marketer of energy efficient electronic ballasts for fluorescent fixtures in the commercial lighting industry. Green Ballast’s ballasts measure and harvest available daylight to calculate and provide only the amount of needed electricity for proper lighting. In addition to Tommy Bronson, Green Ballast has added several clients to its portfolio in recent months, including commercial real estate developer Belz Enterprises and Scottsdale, Ariz.-based Real Estate Investment Trust Healthcare Trust of America Inc. – Sarah Baker Central Defense Security Distributes Coats Central Defense Security, a leading provider of business, retail and warehouse security, recently distributed 40 coats to underprivileged families served by Memphis community centers. The coats were collected from CDS employees, clients and the community during a coat drive in November. After the collection efforts, CDS had all of the coats professionally cleaned by Mercury Valet Dry Cleaners, which donated its services. CDS then worked with Whitehaven Community Center to identify recipients for each of the 40 coats. The coats were distributed Dec. 7 at the Whitehaven Community Center. – Andy Meek Federal Reserve Pays Government $88.9 Billion The Federal Reserve paid the federal government a record $88.9 billion in 2012. The central bank earned the money from the Treasury bonds and mortgage-backed securities it has purchased to drive interest rates lower and boost the economy. The Fed said Thursday that the 2012 payment was up 17.9 percent from 2011 when it paid the federal government $75.4 billion. It also surpassed the previous record payment of $79.3 billion made in 2010. The Fed began buying Treasury bonds and mortgage bonds during the last recession and has kept up the effort since the downturn ended in June 2009 in an effort to boost the sub-par recovery and lower high unemployment. It is currently purchasing $85 billion in bonds each month. Fed officials say the massive bond buying, known as quantitative easing, is needed until economic growth is stronger. But critics contend that the bond purchases could ultimately lead to higher inflation. All of the Fed’s purchases have pushed the central bank’s balance sheet to $2.92 trillion, more than three times the size of the Fed’s holdings before the financial crisis struck in the fall of 2008. The Fed is funded from interest earned on its portfolio of securities. After covering its expenses, the Fed makes a payment of the remaining amount to the Treasury Department. Before the Fed launched the first bond buying program in 2008, its annual payments had averaged below $30 billion for the previous three years. The 2012 payment to the Treasury was reduced by $387 million, which went to fund the operations of the Consumer Financial Protection Bureau and the Office of Financial Research, two new agencies created by the 2010 Dodd-Frank Act, which overhauled the government’s financial regulations. Republicans opposed having these agencies receive their operating funds from the Federal Reserve rather than going through the normal appropriations process in Congress. – The Associated Press

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Red flags, but also some optimism, in review of N.J. finances December 13. 2012 1:33PM By Jared Kaltwasser New Jersey's state budget got a thorough review this week, and the resulting report raises a number of red flags about the Garden State's finances. The report, produced by the State Budget Crisis Task Force, found several major trouble spots, chief among them runaway Medicaid and education costs and a massive unfunded pension liability.Still, the tone of this morning's panel discussion, held in Trenton, was optimistic, despite the adversity."I think, and this may sound Pollyannish, but I think there will be enough good people who will emerge in politics to resolve this problem in a consensual fashion," said Richard Ravitch, the former lieutenant governor of New York, and a co-chairman of the task force, along with Paul Volcker, the former Federal Reserve chairman and adviser to President Barack Obama.New Jersey is one of six states being studied by the foundation-funded task force. Rutgers Professor Richard F. Keevey prepared the New Jersey report. He presented the findings at the Trenton Marriott, joined by Ravitch, Volcker and moderator John Mooney, of NJ Spotlight.New Jersey spends more than one-third of its budget – $11.7 billion – on aid to school districts, a figure that's expected to increase rapidly in future years. The state also has a pension system under-funded by $84.8 billion, but the fiscal 2013 budget includes only $1.03 billion in pension fund contributions.The pension problem will be helped, Keevey said, by the pension and benefit reforms passed last year, which will boost the state's pension payments significantly in the coming years, and which also raised the retirement age for most public workers from 60 to 65. Asked if raising the retirement age further would help, Keevey said yes, but only minimally."The real saving action in the pension reform was the elimination of cost-of-living adjustments," he said. "So whether you're a current employee, a potential employee or a current retiree, you no longer get cost-of-living benefits. So that had a big impact on improving it, reduced the unfunded liability by 30 percent."Still, Keevey warned that promising to increase pension contributions and actually doing so are two different things."It's going to take yeoman-like effort to make sure that the dollars are put into the budget during the next six years," he said.The report also cited a shaky tax foundation in the state, where 64 percent of revenue comes from sales and income taxes, two categories that can be sharply affected by recessions.As dire as the current situation is, the report suggests more bad news down the road. The state has $33.7 billion in debt and needs infrastructure repairs to the tune of at least $133 billion, according to the report. Add in the likelihood that federal aid could drop as lawmakers in Washington consider reducing the national debt, and the report suggests the state has some difficult choices to make.Volcker said Hurricane Sandy will also affect the state's decisions, but he said it doesn't change the overall theme of the discussion, as "it all comes back to the same question of priorities both on the revenue and on the spending side."The report does suggest some answers, most involving long-term planning. The task force argues New Jersey should use multiyear budget forecasts to help make smarter fiscal decisions. In addition, 'the report recommends moves to control health care costs, reassess local governments' taxes and spending, and create a strategy to fund critical infrastructure improvements. Finally, the report says New Jersey needs to regularly fund its pension system.Ravitch said he hopes the report helps spark more public debate about the state budget and the policies that inform it."The thing that troubles me the most is that this is a subject matter that does not really engage the public," he said.

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Home » Money » Personal Finance » Investing Money Rep. Eric Cantor Will Profit in Stock Market if U.S. Goes into Default By Michael Allen, Wed, January 02, 2013 House Democrats have accused House Majority Leader Eric Cantor (R-VA) of a conflict of interest in the debt ceiling debate. Rep. Cantor has an investment in ProShares Trust Ultrashort 20+ Year Treasury ETF, a fund which has a short (a bet) against U.S. government bonds, reports Salon.com. If the U.S. debt ceiling is not raised and the United States defaults on its debts, then Rep. Cantor will profit from the ProShares trust fund. In response, House Democrats are circulating a resolution, which states that Rep. Cantor "stands to profit from U.S. treasury default, which thereby raises the appearance of a conflict of interest," and "may be sabotaging [debt ceiling] negotiations for his own personal gain." "Majority Leader Cantor has compromised the dignity and integrity of the Members of the House by raising the appearance of a conflict of interest in negotiations with the executive branch over raising the debt ceiling." Last year the Wall Street Journal reported that Rep. Cantor had between $1,000 and $15,000 invested in ProShares Trust. According to Rep. Cantor's latest financial disclosure statement, which covers the year 2010, he still has up to $15,000 in the same fund.Cantor spokesman Brad Dayspring claims that Rep. Cantor owns $3,327 in the ProShares trust, but his congressional pension is invested in the G Fund of government bonds and is valued at over $263,000. Dayspring said: "For the conspiracy theorists, they would have to believe that Eric would want to lose hundreds of thousands of dollars to make a few thousands in return. Putting aside the lunacy of it all, he would lose hundreds of thousands of dollars if he did what they suggest.""The insinuation is so outrageous that it shows a fundamental lack of understanding about how the markets work, how the U.S. economy works. Any member of Congress who would seriously identify themselves with this would reveal a complete inability to understand the United States economy and basic investing." Hot Gallery of the Day

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We are pleased to send you ParenteBeard's weekly audit and accounting e-alert. It is our intention to deliver you the most up-to-date, relevant and technical accounting and audit-related information to assist you in your business and personal needs. We hope you find this e-alert informative. SEC Staff Publishes Final Report on Work Plan for Global Accounting StandardsThe SEC Office of the Chief Accountant (OCA) has published its final staff report on the “Work Plan” related to global accounting standards. The SEC (Commission) directed its staff to develop and execute the “Work Plan” in February 2010, included in the Commission Statement in Support of Convergence and Global Accounting Standards. The purpose of the “Work Plan” is to consider specific areas and factors relevant to an SEC determination as to whether, when, and how the current financial reporting system for U.S. issuers should be transitioned to a system incorporating International Financial Reporting Standards (IFRS). The final staff report summarizes the observations and analyses of the staff regarding key areas identified for study in the “Work Plan” for global accounting standards. Significant observations identified by the OCA staff in its report include the following: Early on in the process, it became clear to the OCA staff that an outright declaration of IASB standards as authoritative was not supported by the vast majority of participants in the U.S. capital markets, and instead, the staff focused on the pros and cons of methods of incorporation. The IASB has made significant progress in developing a comprehensive set of accounting standards, but gaps still exist. The IFRS Interpretations Committee must do more to address issues related to maintaining IFRS standards on a timely basis to keep those standards up-to-date. In order to develop accounting standards that could be incorporated in multiple jurisdictions, the IASB needs to understand the intricacies of a number of distinct domestic reporting and regulatory systems. Accordingly, the IASB should rely more on national standard-setters. While certain financial statements reviewed by OCA generally appeared to comply with IFRS, global application of IFRS could be improved to narrow diversity. The overall design of the governance structure of the IFRS Foundation appears to strike a reasonable balance of providing oversight of the IASB while simultaneously recognizing and supporting the IASB’s independence. However, the OCA staff believes that it may be necessary to put in place mechanisms specifically to consider and to protect the U.S. capital markets (e.g., through the FASB endorsement process). The IASB's parent, the IFRS Foundation, needs to increase its funding and broaden the base from which its membership is gathered. Investor education on accounting issues and changes in the accounting standards is not uniform. The SEC is expected to use the staff’s final report to make a decision on whether to permit the use of IFRS for U.S. companies. The final report cautions that the SEC has not made any decision regarding the incorporation of IFRS. Specifically, the final report provides: The Commission believes it is important to make clear that publication of the Staff Report at this time does not imply -- and should not be construed to imply -- that the Commission has made any policy decision as to whether International Financial Reporting Standards should be incorporated into the financial reporting system for U.S. issuers, or how any such incorporation, if it were to occur, should be implemented. A copy of OCA’s final report is available here. SEC Staff Releases Updated Financial Reporting Manual The staff in the Division of Corporation Finance (Corp Fin) of the SEC has released its updated Financial Reporting Manual, reflecting changes through March 31, 2012. This manual represents informal guidance prepared for use by the Corp Fin staff. Corp Fin has made this publication available because readers may find the guidance therein useful in preparing filings with the SEC. Updates in this edition of the manual include the following areas (identified below in parentheses by section number in the manual): Age of Financial Statements - Basics (section 2045.15); Results of Operations (section 9220.8NOTE); Reverse Acquisitions and Reverse Recapitalizations: Form 8-K (section 12220.1b); and Forms 40-F and 6-K (section 16210.1). A copy of the updated Financial Reporting Manual is available here. SEC Staff Publishes Small Entity Compliance Guide on Compensation Committees The staff of the SEC has published a Small Entity Compliance Guide, Listing Standards for Compensation Committees and Disclosure Regarding Compensation Consultant Conflicts of Interest. This guide summarizes and explains a new rule and amendments to SEC proxy disclosure rules to implement Section 952 of the Dodd-Frank Act, which added Section 10C to the Securities and Exchange Act of 1934 (Exchange Act). Section 10C requires the SEC to adopt new disclosure rules concerning compensation consultant conflicts of interest. This guide discusses the requirements of the new rules regarding: (a) disclosure about conflicts of interests of compensation committees; and (b) listing requirements for compensation committees. A copy of the guide is available here. A copy of the SEC’s final rule, Listing Standards for Compensation Committees, implementing Section 10C of the Exchange Act, is available here. Paul A. Beswick Named Acting Chief Accountant SEC Chairman Mary Schapiro announced the appointment of Paul A. Beswick as the Acting Chief Accountant in the SEC's Office of the Chief Accountant (OCA). In his new role, Mr. Beswick will oversee accounting interpretations, international accounting matters, and professional practice issues. Mr. Beswick replaces James L. Kroeker, who left the SEC last Friday. Since joining the SEC in September 2007, Mr. Beswick has fulfilled a number of key roles in the OCA. Most recently, as Deputy Chief Accountant, he was responsible for the day-to-day operations of the office's accounting group, including resolution of accounting practice issues, rulemaking, and oversight of private sector standard-setting efforts. A copy of the news release on this matter is available from the SEC here. Our strategic partnership with CCH, a Wolters Kluwer business, has enabled us to craft our Audit & Accounting eAlert. The articles have been selected from CCH’s Accounting Research Manager Daily and/or Weekly Summary and we hope you find them valuable and relevant. Please feel free to contact ParenteBeard LLC at [email protected] if you have any questions related to these stories or ParenteBeard's services. ©2012 CCH. All Rights Reserved. If you want to discontinue receiving communications from ParenteBeard LLC, please place UNSUBSCRIBE in the subject field and reply. If you have trouble viewing this email, please click the following link or copy and paste into your web browser. http://www.parentebeard.com/email/2012/audit_accounting/audit_accounting_ealert_120720.htm ParenteBeard LLC | One Liberty Place | 1650 Market Street | Suite 4500 | Philadelphia, PA 19103

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Nasdaq Outage Explored: 7 Facts Aug 23, 2013 (07:08 AM EDT) Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=240160377 What caused Thursday's Nasdaq crash? Thankfully, the crash didn't involve an actual stock market plunge, but rather an apparent technical glitch in Nasdaq's systems that led to a three-hour outage. Of course, those facts may not have been evident given some conjecture-filled reports on the downtime, with one noting that it "had all the earmarks" of an online attack. In fact, officials have seen no signs suggesting that hackers added a U.S. stock exchange takedown feather to their cap. Here are seven facts to set the record straight: 1. Signs Point To Data Feed Failure In fact, early signs are that the outage was caused by a connectivity problem involving a data feed from Nasdaq rival NYSE Arca, which resulted in price quotes not being received. Nasdaq officials told The Wall Street Journal that IT staff should have been able to manage the problem and prevent trading having to come to a halt. Obviously that didn't happen. [ What was behind Google's recent outage? Read Google's Four Minute Blackout Examined. ] 2. Nasdaq Wasn't Hacked While Nasdaq is still investigating the outage, forget the notion that this particular incident involved the exchange being hacked, and dismiss the suggestion -- relayed photographically by numerous stories -- that the incident happened in New York City. "Nasdaq is neither in New York nor on the Internet," said Robert David Graham, CEO of Errata Security, in a blog post. Graham also sharply dismissed a USA Today "cybertruth" report -- "Nasdaq outage resembles hacker attacks" -- as an untruth for its suggestion that the outage "had all the earmarks" of a hack attack launched as part of the Operation Ababil distributed denial-of-service (DDoS) attacks that began disrupting U.S. banking websites in September 2012. "While the Nasdaq market is computerized, it's not really on the Internet. There's no way to DDoS it from the Internet," said Graham. "Sure, there's a path to the Internet; many of the ubiquitous Bloomberg terminals on the Internet can eventually cause trades to happen, but fundamentally the market has its own private network. Trades can continue in the face of any sort of DDoS attack." 3. Outages Are Not Unusual For Exchanges In the wake of the outage, Nasdaq promised to do better. "Our systems, and the industry's, have to get to a higher level of robustness," Robert Greifeld, chief executive of Nasdaq parent company Nasdaq OMX Group, told the Journal. Such outages are far from unknown. "This is not the first time that trading on an exchange has suffered a technological problem and probably not the last time. There were other examples, such as the Flash Crash in 2010, the Facebook IPO, while Goldman Sachs was hit by a bug and there was the Knight Capital case last year," said Arie Gozluklu, an assistant professor of finance at Britain's Warwick Business School, via email. "There is speculation this is down to the number of high-frequency traders, as algorithmic trading now makes up between 50% and 60% of trades in the U.S." The Facebook outage alone cost traders an estimated $500 million in losses. 4. Perfect Uptime Is Tough To Achieve While stock exchange downtime may be costly and inconvenient, are outages completely avoidable? In fact, even some of the biggest names in technology aren't immune. In the past week, for example, outages bedeviled Google, which suffered a four-minute outage last Friday. And Amazon.com on Monday suffered a 49-minute blackout in North America. 5. Hack Attacks Not The Leading Cause Of Outages Interestingly, not one of this week's outages has been ascribed to hackers. In fact, when it comes to downtime, external hackers take second billing to a host of more mundane concerns -- not just unhappy insiders, but also natural phenomenon, including snowstorms and heavy rainfall, or even the failure of a business partner's systems. 6. The Smart Money Usually Says Squirrel Some causes of outages are more mundane, but tough to prevent. For example, one of the more embarrassing Nasdaq outages occurred in 1994, when a kamikaze squirrel triggered 34 minutes of downtime. In fact, that was the second rodent strike in less than seven years. 7. Expect Investigations And Fines As Nasdaq continues to investigate the cause of Thursday's outage, what might happen next? Gozluklu believes the outage may lead to fines for Nasdaq -- which is a money-making institution -- and could put it at a competitive disadvantage against its largest competitor, the New York Stock Exchange. But then again, the crackdown may not stop with Nasdaq. "Trust in the exchange is very important and the U.S. Securities and Exchange Commission are likely to push for more stringent rules to stop these system failures," Gozluklu said. "There could be fines or penalties for technological problems, but it should also take into account other players in the game, not just the exchanges."

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Debt Debate for Dummies: Six Keys to Understanding the Issue The debate in Washington is over how to bring the situation into control, like a family cutting back spending or getting a raise to pay off its debts, or at least keep their debt at a manageable level. The difference over the next 10 years between what the government expects to pay out, $45.7 trillion, and what it expects to bring in, $39 trillion, is approximately $6.7 trillion. Lawmakers and the administration are working to cut about $4 trillion from that potential $6.7 trillion in borrowing. To accomplish this, the U.S. will likely have to cut its spending, raise taxes on much of the population, and cut back on the promises it makes to the elderly for Medicare and Social Security to bring the budget into balance. A family, to continue the analogy, might cut cable, spend less on groceries, look for a higher paying job and defer payments into their retirement account. What happens if the government defaults? This is a subject of some debate. Many Republicans have argued that if the government goes beyond Aug. 2 without raising the debt ceiling, Treasury will simply have to continue paying its creditors and stop funding other programs. But others argue that going past the Aug. 2 deadline would send a bad signal to global markets, put the U.S. credit rating in jeopardy, lead to higher interest rates, and kick off a worldwide recession. David Walker, the former Comptroller General of the U.S. who is now a cut-the-deficit evangelist, said Thursday that people who own bonds will get their money. But there will be a $4 billion daily gap that the Treasury Secretary must close. Federal workers and contractors might not get paid. Watch his interview with ABC. Others are less alarmist. Sen. Jeff Sessions, the top Republican on the Senate Budget Committee, vowed recently that the U.S. government, even after Aug. 2, will pay its bills to creditors. The question then becomes, however, What will it not pay and whether paying creditors but not government employees or businesses that work with the government might be considered a default? "Choices won't be about, Do we means-test retirement for the wealthiest, but do we make dramatic cuts in vital programs?" said Ryan McConaghy of the centrist Third Way. Read their paper, Dominoes of Default. Why not just raise taxes on the rich? Economists agree that there is no silver bullet to solve the problem of the debt. You can't just raise taxes and make it go away. According to McConaghy, if the government taxed every dollar that every American made over his or her first $250,000 in income, it still would not solve the problem. There is some indication that policymakers want to use this opportunity to simplify the tax code. Americans pay a high tax rate, but enjoy breaks for everything from having children to charitable donations to interest they pay on their mortgage. The tax rate could be lowered if those loopholes were removed. But more people making less money might have to pay taxes. The same works for companies. They benefit from loopholes for research and development, certain investments and more. Removing those loopholes is perhaps more likely, but it will not solve the problem of the debt. Add to this the unity of Republicans against any tax hikes. Former U.S. Comptroller General: Who's Going to Get Paid?Debt Limit: Pelosi Says Dems Won't Support Cuts to Social Security or Medicare BenefitsObama Meets With Congressional Leaders On DeficitBoehner: GOP Won't Raise Taxes, Still No DealDebt Limit Deadline Fast-ApproachingObama: Deficit Compromise Is in Sight Related Topics: Social Security, Congressional Budget Office, Debt Ceiling, Pay Taxes, Health Insurance, Medicare, Timothy Geithner, Baby Boomers, National Debt, Treasury Secretary

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Press Release - February 7, 2012: Department of Financial Services Launching Statewide Effort to Stem Mortgage Foreclosures Press Releases - 2014 Banking Division Press Archive Insurance Division Press Archive Department of Financial Services Launching Statewide Effort to Stem Mortgage Foreclosures Department Deploying Staff and Mobile Command Center to Foreclosure Hotspots Initiative to Begin in Islip in Suffolk County at 8 a.m., Thursday Media Availability at 10 a.m. Benjamin M. Lawsky, Superintendent of Financial Services, is launching a statewide effort to stem mortgage foreclosures by helping homeowners at risk of losing their homes. The initiative will begin Thursday in Suffolk County, which has the highest number of home foreclosures in New York State. “Governor Cuomo has directed the Department of Financial Services to use all of the resources at its disposal to assist homeowners already in foreclosure and those at risk of foreclosure,” Superintendent Lawsky said. “We will be sending staff and our Mobile Command Center to areas of the State where foreclosures are the biggest problem. Our message to homeowners is seek help as soon as you have a problem. The longer you wait, the harder it may be to save your home.” Homeowners will be able to get help from foreclosure counselors who will staff the Department’s Mobile Command Center from 8 a.m. through 7 p.m., Thursday. The command center will be located at the Pathmark supermarket at 101 Wicks Rd. in Brentwood, Town of Islip. Counselors will assess where homeowners are in the pre-foreclosure or foreclosure process and provide homeowners information about specific loan modifications available under federal law. They will also take complaints from homeowners who believe they were subjected to lender or mortgage servicer abuses so these cases can be investigated by the Department. Superintendent Lawsky, state Senator Lee M. Zeldin, Assemblyman Phil Ramos and other local officials will also be present to meet with homeowners. A media availability will take place at 10 a.m. The officials will then tour nearby neighborhoods hit hard by foreclosures. The mobile command center will be sent to other locations following its deployment to Islip. The command center is a 36-foot long van equipped with computers and communications systems and normally used to respond to natural disaster emergencies. “The Department wants to help people avoid losing their homes and focus attention on an enormous issue. Tens of thousands of homeowners in New York State are now either in foreclosure or at risk of going into foreclosure,” Superintendent Lawsky said. Governor Cuomo announced the formation of the foreclosure prevention unit within Department of Financial Services last month in his State of the State address. Since then, the Department has been pinpointing areas in the state with high rates of foreclosure or areas where high rates of foreclosure may emerge.

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Goodbye, good jobs October 22, 2012: 5:00 AM ET A bankruptcy auction for the mortgage company ResCap this week in Manhattan could decide the fate of hundreds of workers in Waterloo, Iowa and other U.S. cities (and perhaps as many in India). By Allan Sloan and Doris Burke ResCap is a unit of what was formerly known as GMAC Editor's note: This story has been updated as of 10/24/12 with the bankruptcy results. FORTUNE -- Waterloo, Iowa's sixth-largest city, is a blue collar community located off I-380, the "Avenue of the Saints" that runs from St. Louis to St. Paul. Go a few blocks from the Crossroads mall in west Waterloo, and you find something atypical: a big white collar employer, Residential Capital LLC. ResCap, as it's known, is a mortgage company located on a nicely landscaped 17-acre campus. Its 950 Iowa employees get wages averaging about $35,000 a year -- pretty good money for Waterloo -- along with health insurance, tuition assistance, and other benefits. Inside the complex, you run into people like Tracy Zobel, who radiate a Midwestern work ethic and aw-shucks charm. Zobel, 44, a mother of four married to a dairy farmer, has spent 18 years working her way up from part-time call center rep to vice president in charge of loss mitigation. She loves ResCap, loves her job, and loves the fact that she's the source of health insurance for her family. "Our culture is one of my most favorite aspects -- the friendships and just the way we work together," she says. "We work very hard and we enjoy what we do and each other. It's just a unique culture where you're doing the right thing for the right reasons." MORE: What happened when I tried to buy a union-made Ford If this all sounds almost too bucolic and wholesome to be true -- well, it may not be true much longer. Waterloo's future could be determined by an auction being held 1,059 miles away, at the Sheraton New York Hotel in midtown Manhattan, on Tuesday. At the auction, ResCap, a former high-flying General Motors (GM) subsidiary that tumbled into bankruptcy in May, will find out how much bidders are willing to pay for the rights to service the $365 billion of mortgages that it currently handles. (We'll explain "servicing" in a bit.) The auction's outcome will likely determine whether most of ResCap servicing employees will keep their jobs -- and whether the troubled mortgage borrowers that they work with will continue to deal primarily with American loan servicers, as they do now, or with servicers in the Indian cities of Bangalore and Mumbai. This auction reflects two of the biggest issues in the current political debate and presidential campaign: good U.S. jobs, and corporate America practicing extreme tax avoidance at a time of huge revenue shortfalls. Whatever happens at ResCap may also become a template for the mortgage servicing industry, which employs tens of thousands of U.S. workers, many of whose jobs are vulnerable to being outsourced unless Fannie Mae and Freddie Mac -- the "government sponsored enterprises" that are the biggest players in the mortgage biz -- adopt regulations forbidding or limiting it. MORE: Obama has a jobs plan. Why isn't he talking about it? But none of the social questions -- outsourcing of jobs, treatment of troubled customers, moving profits (totally legally) into tax havens -- will play a role in Tuesday's auction. It's all about bankruptcy law, which is concerned with creditors' rights and debtors' obligations, not with social issues. Wall Street concerns -- ResCap's debt is owned primarily by professional investors -- trump the Main Street concerns of employees, vendors, and borrowers. "What we call the 'highest and best' bid is what prevails in bankruptcy court," explains Stephen Lubben, a respected bankruptcy expert who teaches at Seton Hall University, "and 'highest and best' means what's best financially for creditors, not for any other party." So what's "servicing"-- and why are such jobs so vulnerable to outsourcing? Here's how it works: Servicers collect mortgage payments from borrowers, send checks to mortgage owners for the interest and principal repayments due them, and pay borrowers' real estate taxes and homeowner insurance. These days, servicers also spend lots of time and effort working with people unable (or unwilling) to make their mortgage payments. In return, they typically get an annual fee of about 3/8ths of 1% of the loan's unpaid balance -- $375 a year on a mortgage with a $100,000 balance -- and have the interest-free use of homeowners' monthly tax and insurance payments until it's time to pay those bills. It's a lucrative business if you're big and efficient enough -- and you can do it from anywhere in the world. Because of regulatory changes, banks -- traditionally the biggest players in the servicing biz -- are paring back their portfolios. This is leading to the rise of non-bank servicers, like the ones we're about to meet, who hold the fate of our friends in Iowa in their hands. The first two -- polar opposites -- are the known bidders for ResCap's servicing portfolio. The first is Ocwen Financial, which has bought servicing portfolios from the likes of Barclays (BCS), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), Lehman Brothers, and Bank of America (BAC). As best we can tell, Ocwen has moved virtually every American job in the portfolios it's bought to Bangalore and Mumbai. It would presumably do the same to the ResCap portfolio, absent any restrictions on moving the jobs. This is perfectly legal—and employing folks in India is much cheaper than hiring Americans in places like Waterloo. In addition to having cheap labor, Ocwen also has low taxes. It recently moved its servicing subsidiary's headquarters to a special Virgin Islands tax zone. Thus, it remained a U.S. company eligible to participate in federal programs -- but it gets 90% of its U.S. corporate taxes forgiven. We can't give you Ocwen's version of any of this -- even though we asked several times, Ocwen declined to speak to us about anything, or even to help us check our facts. The other known bidder for the ResCap rights is Nationstar Mortgage, controlled by the Fortress Investment Group (FIG). As a publicly-traded private equity house, Fortress is taxophobic in its own business -- but Nationstar is sending ever-larger checks to the Treasury, despite having tax-loss carryforwards on its books. That's because it can use only about $11 million of its almost $200 million of carryforwards in any given year. Nationstar proudly tells all and sundry that all its employees are in the U.S., and that it's a "high touch" servicer. "High touch" is marketingspeak for "trying to provide really good service." For example, Nationstar says it assigns an account officer to every troubled borrower, so that that the borrower is always dealing with the same person, rather than getting whoever happens to be free. The theory is that providing better and earlier service to borrowers, especially troubled borrowers, improves the performance of the loans being serviced. Nationstar is the "stalking horse bidder" in Tuesday's rights auction, which may spill over into Wednesday. This means that it will win the auction unless someone tops its $2.45 billion by at least the $20 million breakup fee Nationstar gets if another buyers prevails. Nationstar would keep ResCap servicing in the U.S., though it would probably cut some of the existing jobs. (A few months ago, Warren Buffett's Berkshire Hathaway made a pitch for the servicing business that forced Nationstar to improve its bid. However, Buffett doesn't seem likely to be a player Tuesday.) Ocwen has a less-than-wonderful relationship with Fannie Mae, which is the biggest player in the mortgage biz and would have to approve any transfer of servicing rights on its mortgages, which are the majority of ResCap's servicing pool. Hence a third company, the Green Tree subsidiary of Walter Investment Management, is hovering around the auction. Like Nationstar, Green Tree is a high touch servicer that hires people in the U.S., and has a good relationship with Fannie. Green Tree has apparently combined with Ocwen to bid jointly on the portfolio. If they have in fact combined, and prevail at the auction, it seems likely that a good number of ResCap servicing jobs -- but not all of them -- would be outsourced. (Green Tree and Fannie both declined comment.) Even though Fannie has never made formal announcements, people in the industry say that Fannie has sometimes insisted on servicers keeping a U.S. presence before allowing them to take over the rights to service Fannie mortgages. Fannie is said to be considering issuing rules restricting transfer of servicing of Fannie mortgages out of the country -- but so far, it hasn't done so. Meanwhile, folks in Waterloo wait and worry about the auction results. "When I started, I was 21, I was a kid," says Sharon Robinson, who in 28 years has risen from mail clerk to a top consumer-service post. "I wanted full time employment and benefits and I was just going to stay here until I found something better. And I haven't found something better; I've never even had a reason to look." After next week, however, that may no longer be the case. Update, 10/24/12: ResCap employees got bad news Wednesday, when Ocwen Financial won the bankruptcy-court auction for the right to service the bankrupt firm's $365 billion mortgage portfolio. The auction began Tuesday, but carried over to Wednesday morning. Ocwen, which has outsourced thousands of U.S. mortgage-servicing jobs to India after buying portfolios from the likes of Goldman Sachs, Bank of America, and JPMorgan Chase and is based in a special low-tax zone in the Virgin Islands, bid about $3 billion for the ResCap portfolio. This topped a somewhat lower bid by Nationstar Mortgage, a Texas-based "high touch" servicer that prides itself on having only U.S.-based employees. It's not clear if any of ResCap's 2,000 mortgage-servicing employees will keep their jobs, or what will happen to ResCap's 1,800 or so other employees. Ocwen didn't respond to an e-mail I sent asking about this. Walter Investment, a high touch servicer that associated itself with Ocwen's bid, didn't respond to an e-mail, either. It's possible that Walter will administer part of the ResCap portfolio and keep some jobs in the U.S., but at this point, there's no way to tell. The ResCap employees' best hope is that Fannie Mae, the government sponsored entity that is the biggest player in the mortgage business, will have both the will and the ability to impose job-outsourcing restrictions as a condition of approving the transfer of servicing rights on its mortgages, which are a large part of the ResCap portfolio. Nationstar, a publicly traded company controlled by the Fortress Investment Group, said it had dropped out of the bidding because the price had gotten too high to "represent a compelling investment for us." Nationstar stands to get a fee of about $20 million for having been the "stalking horse" bidder that had agreed to pay about $2.4 billion for the rights even if no one else bid for them. As I write this, Nationstar (NSM) stock is down 12% on the day, while Ocwen and Walter are each up about 6%.—Allan Sloan With Erika Fry in Waterloo

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EU's Barroso urges Europe to complete banking union By Claire Davenport STRASBOURG, France (Reuters) - European Commission President Jose Manuel Barroso declared on Wednesday that economic recovery was within sight after nearly four years of Europe's debt crisis and urged governments to move faster to complete a stalled banking union. In his last State of the Union speech before European Parliament elections next May, Barroso offered no new policy proposals but appealed to member states to redouble efforts to quell financial turmoil that has led to a drawn-out recession and soaring unemployment. "What we can and must do, first and foremost is delivering the banking union. It is the first and most urgent phase on the way to deepen our economic and monetary union," he told lawmakers in Strasbourg. His comments were an implicit challenge to Germany, the EU's leading power, which has worked to limit the scope of a single banking supervisor and slow the drive for a single bank resolution authority and fund, citing legal constraints and the wish to spare its taxpayers from liabilities. The goal of creating a single framework and backstop for around 6,000 euro zone banks, with mechanisms to wind down failed lenders and protect savers' deposits, is one of the EU's most ambitious and challenging projects. In debate after the speech, opponents criticized the Commission for not having done enough to tackle unemployment, the worst legacy of the crisis and an issue that could stir a big protest vote in next year's elections. "On unemployment, we can safely ask whether the Commission couldn't have come up with a more active policy, like more growth-stimulating measures," Martin Schulz, the Socialist president of the parliament and a possible contender to be the next Commission chief, told reporters. Efforts to implement the banking union plans have stalled in the run-up to German elections on September 22, and there are doubts about whether Berlin will add impetus to the project even after a new government is in place. Barroso will finish his second five-year term as Commission president in November next year and is not expected to be re-appointed, so there was a strong dose of legacy in his address. The centre-right former Portuguese premier launched a strong defence of Europe's crisis management ahead of pan-European elections that are expected to bring a surge in anti-EU votes, potentially shifting the balance of power in Brussels. It was governments' fiscal mismanagement and financial market excesses - not EU policies - that had caused the crisis, he said, decrying a tendency for successes to be "nationalized" and failures "Europeanized". He also urged leaders not to slacken in overhauling their economies carrying out the structural reforms needed to put the euro zone and wider EU on a more stable footing. The biggest risk was a lack of political commitment, he said. "The recovery is within sight. This should push us to keep up our efforts," Barroso said in an hour-long address that received lukewarm responses from opponents. "We owe it to our 26 million unemployed." ALL IN THE SAME BOAT In what might be perceived as another veiled criticism of Germany, Barroso said all 17 euro zone countries were in the same boat. While several - Greece, Portugal, Ireland and Cyprus among them - have required bailouts, that did not mean the rest had no work to do or couldn't help. "When you are in the same boat, one cannot say: 'your end of the boat is sinking'. We were in the same boat when things went well and we are in it together when things are difficult," he said. "There is a direct link between one country's loans and another country's banks, between one country's investments and another country's business, between one country's workers and another country's companies. This kind of interdependence means only European solutions can work." The greatest concern for Barroso and other top policymakers is that the appetite for reform is waning as pressure from financial markets tapers off and a recovery begins. A lot of the calm in markets over the past six months is due to the announcement last year by European Central Bank President Mario Draghi that he will do "whatever it takes" to defend the euro and ensure the monetary union holds together. But the ECB's commitment has to be backed by reforms by the euro zone, whether adjustments to the pension system in France, lowering labour costs in Spain and Italy, meeting reform targets in Greece and Portugal or spurring consumption in Germany. (Writing by Luke Baker and Robin Emmott; Editing by Paul Taylor)Europe NewsSingapore International News Market News Play Europe opens mixed after Yellen 01:40 Play Opportunity in stocks that didn't get 'Draghi … 00:55 Play Chocolate could become like Champagne: Pro 02:54 Copyright © 2013 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

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Branch/ATM Finder eBanking Login Finance Tools Our StoryTestimonials Search Testimonials Testimonials At Firstbank, they look at more than just numbers. They look at people. “My brothers, sisters and I are the fifth generation to be part of the family business. Our business is unique and doesn't fit into too many categories, but when we were ready to take the next step, Firstbank was there to help get it done. They know our business, our reputation, and our community. When we first inquired about a loan, we had a check in our hands the very next day. Turnaround times have been very impressive. As a community bank, the team at Firstbank has been great to work with.” — Bob Ebels, Ebels Family Center, Falmouth, Michigan When we walk in, we know we'll get the best personal service possible. Tim and Jenny, and their children, Sophie and Max, are all part of the Firstbank family. “It's nice to be with a bank that has a local presence. When you call, you talk to the same people you see every day.” Sophie and Max have had savings accounts with Firstbank for five years. "We feel it's good to save a little, give a little and spend a little. We try to instill that in our children. They enjoy going to the bank because the tellers are always happy to see them.” — The Reaume Family, Cadillac, Michigan I am part of a bank that cares about my community. “I'm proud to be a part of Keystone Community Bank because it reflects my personal values – keeping the best interests of the community in mind.” — Jack Hopkins, Keystone Board of Directors I am part of a bank that is connected to my community. "One of the great qualities about Keystone Community Bank is that all of the decisions are being made around the board room table in Kalamazoo. Like all of the Directors of Keystone, I'm a resident of Kalamazoo County and I'm interested in seeing this area flourish." — Michelle Eldridge, Keystone Board of Directors These icons indicate a link to third-party content. By clicking on these links, you will leave Firstbank Corporation's website. You will access third-party content (a website or service) that is not owned or controlled by Firstbank Corporation. When you visit the third-party website or use the third-party service, you will no longer be protected by Firstbank Corporation's privacy policy or security practices. © 2011 Firstbank Identity Theft Information

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The Financial Crisis in Retrospect: What Have We Learned? Global FocusNorth America Twitter In the five years since Lehman Brothers collapsed, setting off the financial crisis and Great Recession, there has been plenty of time for I-told-you-sos, finger pointing and blame dodging. But if one steps back to look at the forest instead of the trees, a few questions arise: Have any big lessons been learned? Have regulators, lawmakers and executives figured out how to prevent this kind of mess in the future? The verdict is mixed, according to a number of economists. The banking system, for example, has been strengthened with tougher capital and liquidity requirements. But the underlying cause of the recent financial crisis, like many before it, remains a threat: the ever-present potential for a real estate bubble. “Financial crises are … an inherent part of having a developed financial system, and it’s hard to believe that we can completely avoid them,” says Wharton finance professor Itay Goldstein, adding: “At the end of the day, the financial system is fragile.” Mark Zandi, chief economist at Moody’s Analytics, believes the government’s tougher capital requirements – essentially, requiring more cash on hand for emergencies — have indeed made banks safer, while other new rules help ensure that loans are made only to borrowers likely to repay. But, he adds: “I don’t think we’re there yet. I think regulators still need to address too-big-to-fail issues.” The too-big-to-fail dilemma, where the government feels it must bail out a financial institution so it won’t drag others down, is more challenging today because the top firms are bigger than they were five years ago. “If anything, the turkey is even fatter than before, in the form of the large banks,” says Kent Smetters, professor of business economics and public policy at Wharton. He feels little has been done to prevent another crisis. “Large banks are impossible to seriously risk-manage.” “Financial crises are … an inherent part of having a developed financial system, and it’s hard to believe that we can completely avoid them.” Also unimpressed by recent remedies is Wharton finance professor Krista Schwarz. “Some measures to prevent future crises have been implemented as part of Dodd-Frank,” she says, referring to the massive 2010 reform act. “But the overall response seems weak.” The crisis, she says, revealed – once again – “the enormous conflicts of interest within the financial system,” where executives can get rich taking risks with other people’s money, even if that means endangering their own firms. It also, she says, underscored the need for “hard caps” on leverage, or borrowing by financial institutions to place risky bets, and it showed that regulators should act to head off asset bubbles before they get too large. But Schwarz is not convinced that regulators, lawmakers and other players have taken these lessons to heart. Sponsored Content: Real Estate: An Incomplete Market One particular asset bubble – housing – was at the core of the recent crisis. But look into the heart of just about any financial crisis and the same thing is apparent — a burst real estate bubble, says Wharton real estate professor Susan M. Wachter. She ticks off a long list, including the U.S. savings and loan crisis of the 1980s and 1990s, the “lost decades” crisis in Japan, the “Asian contagion” of the late 1990s and a Mexican crisis around the same time. “There have been many others,” she says. “It’s not because people in real estate are particularly dumb; it’s because real estate is an incomplete market…. You can’t short-sale the real estate that you own or the securities that back it up.” An investor who believes stocks will lose value can, of course, sell his or her shares. But in addition to avoiding a loss, he can make money on the price decline by selling borrowed shares in hopes of replacing them with ones bought for less. In addition to these short sales, investors can profit on declines with “put” options and other derivatives based on individual stocks, market sectors or the market as a whole. These opportunities allow people with negative views on the stock market to play a strong role in setting prices, often putting a break on excessive enthusiasm. But because there is no comparable system in real estate – you can’t short-sale your home or buy a put option on it – pessimists can only retreat to the sidelines, leaving optimists to continue bidding prices higher, according to Wachter. There have been some attempts in recent years to create securities that would permit profiting on a real estate decline, but none has so far been able to establish a sizeable, liquid market, she says, although she is hopeful that some current efforts will bear fruit. Profit incentives, of course, also play a role in real estate bubbles. Lenders want to lend, and as long as real estate prices are rising, it looks like homes provide good collateral. But because the pessimists have little role, the optimists can continue driving prices up and arguing that property values are high enough to justify big loans, Wachter notes. In the recent crisis, lenders also engaged in a “race to the bottom,” making ever-riskier loans in their fight for market share. When real estate values started to fall, the house of cards collapsed. Federal regulators and lenders have toughened lending standards in the wake of the crisis, banning products like “liar loans” that did not require applicants to show proof of income. But bubbles, Wachter observes, do not require bizarre loans – they have occurred in countries that did not have the kinds of toxic mortgage products that triggered the U.S. crisis. “I still think that, unfortunately, there is just not wide recognition that real estate asset markets are fundamentally different from other asset markets.” The underlying forces that cause real estate bubbles are still with us, she concludes, and because real estate is a huge market, it can bring down the entire economy when things go bad. “I still think that, unfortunately, there is not wide recognition that real estate asset markets are fundamentally different from other asset markets.” Classic Bank Run Though the recent crisis involved a lot of newfangled products like credit default swaps and synthetic collateralized debt obligations, it was, at its heart, not very different from a classic bank run, Goldstein notes. Instead of long lines of depositors trying to withdraw their savings, this one was manifest in withdrawals from mutual funds, credit freezes and tumbling derivatives values – all arising from a lack of trust, just like the bank runs of the old days. Players suddenly worried they wouldn’t get paid money they were owed, so they pulled back. While the U.S. has had its share of financial and economic troubles since the Depression, a catastrophe on the scale of the Depression-era bank runs had long seemed to be a thing of the past due to safeguards like federal deposit insurance, which guarantees bank savings, Goldstein says. The potential for a bank collapse, therefore, received little attention in recent decades at the same time that investment banks, as opposed to the old-fashioned commercial banks, became larger players. “A lot of the finance profession basically looked at how to make money in the stock market, at what explains patterns of risk and returns and things like that,” Goldstein says. “To a large extent, there was not enough attention paid to the topics of financial fragility and financial crisis. But things were building up under the surface.” Gradually, he adds, regulations were relaxed, and the banks were allowed to take on more and more risk, the key to making outsized profits. The constant pressure to take more risk continues to build so long as nothing goes wrong. The process is prodded along by moral hazard – a term that refers to increased risk-taking — spurred by the belief that someone, such as the government, is standing by with a bailout. Worried about moral hazard, regulators allowed Lehman Brothers to go under five years ago, but were then horrified by the crisis that followed and scrambled for remedies. Today, critics say efforts like the Troubled Asset Relief Program, government spending to spur economic growth and Federal Reserve efforts to keep interest rates low were ill conceived, slowing the recovery. Defenders say such measures — even though they were flawed because of the rush to apply them — prevented a second Great Depression. “We know what the government did, and we know what happened, but we don’t know what would have happened if the government had done something different,” Goldstein says. “By and large, I think the response was adequate.” But as the big banks grow bigger, it’s unclear just what will happen if one bank gets into enough trouble to go under. New regulations require each bank to have a “living will” detailing steps for shutting down in a crisis, but regulators are still likely to fear the consequences of letting a big financial institution collapse, Goldstein notes. That can encourage the banks to take on more risk. Indeed, there have been numerous cases of big banks taking unwise risks in the years since the crisis. Just this week, the “London Whale” trading scandal led to $920 million in fines for JPMorgan Chase. As part of the settlement, the firm admitted wrongdoing, citing “poor internal controls,” according to The Wall Street Journal. “My guess is that the decision to let Lehman Brothers fail probably would not have been taken if people knew what the consequences would be,” Goldstein says. “I think one thing we perhaps learned is that there can be very, very severe implications for letting such a huge financial institution fail, because [these institutions] are so interconnected.” "The Financial Crisis in Retrospect: What Have We Learned?." [18 September, 2013]. Web. [17 April, 2014] <http://knowledge.wharton.upenn.edu/article/financial-crisis-retrospect-learned/> The Financial Crisis in Retrospect: What Have We Learned?. (2013, September 18). Retrieved from http://knowledge.wharton.upenn.edu/article/financial-crisis-retrospect-learned/ Chicago "The Financial Crisis in Retrospect: What Have We Learned?" Knowledge@Wharton, [September 18, 2013]. Accessed [April 17, 2014]. [http://knowledge.wharton.upenn.edu/article/financial-crisis-retrospect-learned/] For Educational/Business use:

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Hausa Portuguese Africa More Last Updated: Wednesday, 9 March 2005, 13:55 GMT Chinese cash targets Sierra Leone By Kashif Anwar Lumley Beach was highly sought after before the civil war A stretch of land at a large-scale tourist resort outside Freetown in Sierra Leone is set to become the scene of the largest ever direct foreign investment in the country - and the money is coming from China. A Chinese company, Henan Guoji, is proposing to invest $200m in Lumley Beach - one of the most beautiful beaches in West Africa - in a project which could see the construction of hotels, conference centres, sports facilities, a casino and nightclub, and a promenade. "The Chinese have seen an opportunity," Cecil Williams, the director of Sierra Leone's National Tourist Board, told the BBC World Service. "The Chinese are moving very fast in Africa... regardless of whether it is stable or not, they are taking a risk. "You have to take a risk in Africa if you want to succeed." As in many places, China's rapid growth and economic expansion mean it is heading into a great number of markets worldwide. Africa - and even Sierra Leone, the poorest country in the world according to the UN - is no exception. Councillor Rachid Davis said the project would benefit the whole country. They not only showed interest in investment in Sierra Leone after the war, but they did during the war and before Sierra Leone President Ahmad Tejan Kabbah "This is the biggest fish we have caught in our net. We will use every opportunity to make it a success for the nation," he said. Councillor Davis said he believed that the investment would provide a huge number of jobs. This positive outlook is generally shared by the people in the Lumley Beach area. High, long-term unemployment means the prospect of jobs is generally received warmly. However, some have been told they must move to make way for the development. "If it happens, I will be out on the street - nowhere to sleep, nowhere to rest," one resident said Post-war reconstruction in Sierra Leone has been swift. While the Lumley Beach project is still at an early stage, another project, this time funded by a Chinese state-owned company, is already up and running - the complete restoration Sierra Leone's largest hotel, the Bintumani. During the war, the hotel was forcefully occupied by rebels. It was then stripped and looted, with every removable item taken and sold - including the windows and doors. But the Beijing Urban Construction Group bought the hotel and restored it, spending $10m on refurbishment. "The Chinese and Sierra Leone governments have a very good relationship," said Mr Wong, the Chinese manager of the hotel. "We wanted to further the friendship, so that was one reason why our company came here and investment." He also stressed the opportunities in Africa, and said that the approach of China was "high-risk is high-profit." "We will make money here," he added. Commercial motivation China's interest in Africa is not entirely new. During the Cold War, when African countries were often used as proxy states in the battle between East and West, China paid for stadiums, dams, and most famously the Tanzam railway between Zambia and Tanzania. The Bintumani hotel is run by Chinese management What is new is that China's motivation is now commercial rather than ideological. "During the past few years, China's economy developed so fast - as people have seen - and as well as this development, the Chinese government is encouraging companies to go outside to invest," Henan Guoji's deputy manager Chu Mingren said. Sierra Leone's President Ahmad Tejan Kabbah said that he saw China as a "key partner". "They not only showed interest in investment in Sierra Leone after the war, but they did during the war and before," he said. "This we appreciate very much." He also pointed out that Sierra Leone's backing of China's admission into the United Nations in 1971 had been a key moment in the countries' relationship. "I think the Chinese are aware of this - so they're just being grateful to us for what we did." 'Economic disaster' But he added that he also believed China was looking for places for its "surplus population" to go. "The size of their country is limited - it cannot be expanded," he said. "There is no more room... that is one of the reasons why they are looking outside for some expansion. That's my judgement of the situation." There are fears China will distort Sierra Leone's labour market And others have warned of different pitfalls in the Chinese investment. One is that China might bring its own workers into the country, rather than using domestic labour - as it has already done in Algeria and Sudan. Sam King, a Freetown businessman, said this would be an "economic disaster." "If you have to import labour in the face of poverty and unemployment... it is not going to help the country," he said. "It will have a negative impact on the people." And he also said he believed there were less benign motives behind China's investment in so many parts of the world. "I believe it is a strategy to make their presence felt," he added. "They now consider they are building themselves as a world power... I believe it is both strategic and economic," he said. China's World The impact the new China is having around the globe KEY NEWS STORIES Chinese quake activist sentenced China warns Obama over Dalai Lama China hits back at US-Taiwan sale China joins Somalia piracy drive Google 'may end China operations' China 'intensifies' media curbs 60 years of propaganda and culture in Communist China Trekking 1,000km in China for e-mail Mystery of missing lawyer Gao Zhisheng Your stories: Being gay in China Voices: Where will China be 60 yrs on? Life in one of China's last communes How China is ruled Key people and events

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hide Analysis: Accounting risk clouds big U.S. business bets in China Sunday, February 10, 2013 11:28 a.m. CST CAT machines are seen on a lot at Milton CAT in North Reading, Massachusetts January 23, 2013. REUTERS/Jessica Rinaldi By Dena Aubin and Lawrence White NEW YORK/HONG KONG (Reuters) - Tales of shady business practices abound in China - fake revenues, phony invoices, sham factories - but until recently, the problem seemed confined mostly to Chinese companies. Concern is growing about risks to U.S.-based multinationals in a country where American audit regulators are locked out by the Chinese government and bribery and fraud are routine. Questions about transparency and integrity weigh heavily on China, the world's second-largest economy, as it assumes greater economic leadership and responsibility. These doubts test its ability to adhere to international standards. Stories of business deception - confirmed by corporate sleuths, former business executives, court filings and experts on accounting in China - are commonplace. There was the Chinese company that billed itself as a high-tech television screen manufacturer, but had a factory that turned out to be a man selling fireworks from a shack. Or there was the Chinese biodiesel plant that sat idle for months, then sprang to life one day - when investors showed up for a tour - only to fall silent again. Last month, there was the scandal at a Chinese unit of Caterpillar Inc , the world's largest construction equipment manufacturer, based in Peoria, Illinois. On January 18, Caterpillar disclosed "deliberate, multi-year, coordinated accounting misconduct" at the Siwei unit of ERA Mining Machinery. Caterpillar said it would write off most of the $654 million it had paid to acquire ERA only months earlier. Caterpillar's Siwei stumble was not the first for a U.S. multinational in China, but the scope of the problem stood out. Caterpillar has provided few details, but it has disclosed inventory discrepancies, inflated profits and improperly recorded costs and revenue at Siwei. Caterpillar declined further comment. Part of Caterpillar's problem may have been inadequate due diligence work prior to the ERA acquisition. Companies often try to keep fees down for this type of work, but in China that may be asking for trouble, says Paul Gillis, an accounting professor at Peking University in Beijing. Acquiring firms typically do some of their own due diligence while also relying on deal advisers, legal experts and auditors. Due to the risks in China, efforts should be beefed up to uncover fraud, Gillis said. "When you start cutting corners on audits ... you're enabling those who commit fraud." Of course, it is not as if the United States has not had its own share of egregious accounting frauds over the years. In 2001-2002, a series of major scandals involving the likes of Enron, WorldCom and Tyco shook the U.S. economy. Legislation followed that strengthened oversight of auditing and accountability of companies' top officers. That has not stopped U.S. accounting fraud, but it has made it easier to identify and deter some of the most egregious behavior. In China, where large U.S. corporations are making some very big bets, a new frontier of accounting risk is opening up. Lured by an economy growing much more quickly than the United States, U.S. companies have directly invested $54 billion in Chinese businesses, factories and property, most of it in the past decade, according to U.S. Department of Commerce data. Despite a cooling off of China's growth last year, demand from its massive consumer class is still lifting revenues at companies that range from coffee seller Starbucks Corp to casino operator Wynn Resorts . The Caterpillar experience and the growing catalog of smaller instances of deception and abuse have some experts wondering if U.S. companies' Chinese results can be trusted. Though China is shifting to a market economy, much business is still done on a handshake, China experts say. State secret laws hinder investigations by outsiders. Audits done in China of U.S. corporate units there cannot be inspected by U.S. regulators because the Chinese government refuses to allow them. A former executive at a large, U.S.-based multinational active in China recalled the firm's auditor being fired for trying to correct improper accounting at a joint venture in China. Managers there were trying to book sales early, sometimes for unassembled products, to avoid a coming tax increase, said the executive, who asked not to be named. He said he had the auditor reinstated and the accounting changed. Dealings with a Chinese joint venture did not end well for California-based RAE Systems Inc, which makes chemical detection monitors. It had to pay nearly $3 million to the U.S. government to settle complaints in 2010 that it did too little to stop bribery at a Chinese joint venture. 'RED FERRARI' TEST Despite well-known risks in China, auditors there often are not inquisitive enough or alert to possible fraud, some experts say. Auditors in China may pore tirelessly over documents and yet "fail to spot the red Ferrari parked on the doorstep and fail to ask who it belongs to, how it was paid for," said Peter Humphrey, founder of ChinaWhys, a Shanghai-based anti-fraud consultancy that has investigated white-collar crime and fraud at scores of multinational firms in China. China experts said it is difficult to do business there without encountering demands for gifts or kickbacks. Transparency International, a corruption watchdog, surveyed business executives who said Chinese firms in 2011 were second only to Russian companies in being most likely to pay bribes abroad. But six U.S. companies, including technology group IBM and drugmaker Pfizer Inc , were charged by the U.S. Securities and Exchange Commission over the past two years for improper payments or gifts in China. Retailer Wal-Mart Stores has said it is investigating allegations of bribery in China, among other countries, and cosmetics group Avon Products Inc is dealing with probes of possible bribery in China. There have been plenty of other red flags. For example, U.S. regulators have deregistered dozens of Chinese companies listed on U.S. exchanges after fraud probes, and some major U.S. investors have been caught flat-footed. Billionaire hedge fund manager John Paulson suffered big losses after a disastrous bet on Chinese forestry company Sino Forest. Sino Forest was rocked by allegations in 2011 that it falsified its timber assets and later filed for bankruptcy. Chinese software company Longtop Financial Technologies was accused of seizing audit documents when its auditor, Shanghai-based Deloitte Touche Tohmatsu, tried to double-check cash amounts at the company's bank. Longtop admitted cash had been faked. It was deregistered by the SEC. The U.S. Public Company Accounting Oversight Board, which is responsible for regulating auditors of U.S.-listed companies, has been trying to get access to China to inspect audits there. But China has resisted because of sovereignty concerns. Being unable to inspect in China "continues to create a gaping hole in investor protection," James Doty, chairman of the Washington, D.C.-based PCAOB, said in a statement. The PCAOB recently reached deals with France and Finland to inspect in those countries, adding to its growing list of cooperation agreements with 16 nations. The SEC has hit a wall trying to get documents out of China to investigate fraud. In December the commission began legal proceedings against the Chinese affiliates of five of the world's biggest audit firms - Deloitte , Ernst & Young , KPMG BDO and PricewaterhouseCoopers - over their refusal to turn over audit papers for fear of violating state secrets laws. Meanwhile, investment in China continues. Over the past five years, U.S. companies and investment groups have announced or completed about $25 billion of whole or partial acquisitions in China, according to Thomson Reuters data. (Additional reporting by Lisa Baertlein in Los Angeles, Ernest Scheyder in New York, Clare Baldwin in Hong Kong; Editing by Kevin Drawbaugh and Dan Grebler)

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Foundations Plan to Shrink Grants The number and size of foundation grants will likely decrease this year, and grants for upstart organizations will be hard to come by, according to a study by the Foundation Center.The report Foundations Address the Impact of the Economic Crisis states that close to two-thirds of foundations expect to reduce the number and/or the size of grants they award in 2009.Organizations in need of capital support will also be particularly hard hit, with over one-third of foundation respondents (37 percent) reporting that they will reduce the amount of capital support they provide.In addition, the new survey reports that over half of respondents are reacting to the economic crisis by engaging in more non-grantmaking activities. Fully two-thirds of these funders plan to seek out more collaborations and partnerships in 2009.Establishing a grants budget following a year when overall foundation assets dropped an estimated 21.9 percent posed unique challenges for grantmakers, notes the report. Yet based on responses to the latest survey, the Foundation Center estimates that giving in 2009 will decline by a far lower percentage—from the high single digits to the low double digits—than did assets in the prior year.Other key findings from the new advisory include: Foundations will draw upon various resources to fund their 2009 giving — close to two out of five respondents expect to draw at least in part on their endowments to fund grants. About 14 percent of respondents either have made or plan to make exceptional grants or launch special initiatives in response to the economic crisis, largely by reallocating existing grants budgets. Nearly one-third of respondents made operational changes as a result of the 2000-02 economic downturn that they believe better prepared them to face the current downturn, such as changes in investment strategies or reducing operating expenses. About the Survey In January 2009, the Foundation Center mailed its annual "Foundation Giving Forecast Survey" to approximately 5,000 large and mid-size U.S. independent, corporate, and community foundations. The survey included questions on foundations' giving and assets in 2008, the outlook for giving in 2009 and 2010, and how foundations are responding to the economic downturn. A total of 1,243 foundations provided usable responses. The report can be downloaded at no charge from the Gain Knowledge area of the Center's web site, www.foundationcenter.org. * * * * *Leadership Gap Widens as Baby Boomers Retire Roughly a third of U.S. nonprofit organizations are looking to fill senior manager positions as of January, creating a steeper deficit in sector leadership than originally predicted.A newly released Bridgespan Group survey of U.S. nonprofit executive directors (found at www.bridgespan.org) shows that a leadership deficit forecast in 2006 may have widened last year. Meanwhile, in 2009, despite tightening budgets, nonprofits already foresee a need to fill 24,000 vacant or new roles in areas like finance and fundraising amid increasing management complexity and baby boomer retirements. The study also shows that bridging the leadership gap will call for recruiting beyond the sector. Seventy-three percent of the survey’s 433 respondents affirmed they value private sector skills. Yet, despite a tide of corporate layoffs in the managerial ranks, 60 percent also believe they will face a scarcity of qualified candidates.Key findings of the survey:Top barriers to finding suitable leaders included compensation and difficulty finding executives with specialized skills, as well as competition for the same in-sector talent pool and lack of resources to find or cultivate new leaders. Projected vacancies are largely the result of retirement, since much of the existing leadership is comprised of boomers.Vacancies also stem from new roles being created due to an increase in organizational complexity based on growth in prior years.The need is especially acute in human services and arts organizations. The most important attributes recruiters are seeking not only include relevant experience but also “cultural fit” or shared passion for the mission (68% on average cite fit as a very important asset. That number climbs to 82 percent in the education field). Job boards surpassed external networking for first place as a way to reach candidates, with 49 percent of organizations using job boards versus 44 percent using external networking to identify their candidates.American Express commissioned Bridgespan to conduct the survey in order to determine the nature and dimensions of the evolving nonprofit leadership deficit, the training and development needs within the sector, and to look at how managerial skills from the business sector can boost leadership capacity among nonprofits. Respondents reported that actual senior job openings in 2008 were running at 77,000, or 43 percent above a leadership gap forecast in Bridgespan’s 2006 study “The Nonprofit Sector’s Leadership Deficit.”* * * * * Facebook Yields Scant Returns with Donation Program Aside from a few standouts, the Causes application on the social networking website Facebook has shown little success for charities as a fundraising tool, as many of the organizations using it have received no donations through the site.An April 22 article in The Washington Post points to the fact that for the 179,000 total Causes profiles created on Facebook, the median gift is just $25 and “only a tiny fraction have brought in even $1,000.” Fewer than 50 groups have raised $10,000 and just two have raised $100,000 or more, the Post reports.The article says that Causes “has been largely ineffective in its first two years, trailing direct mail, fundraising events and other more traditional methods of soliciting contributions.”It goes on to say that despite the high hopes of nonprofits that they could replicate the online fundraising success of Barack Obama in his campaign for the presidency, nonprofits have found online fundraising to be less fruitful due to the greater level of outreach needed to gain visibility.But not everyone agrees that Facebook’s Causes application is a failure. Some point to the non-monetary benefits of the application as well as the newness of fundraising on social networking websites.Building a Following Just as ValuableA widely followed social networking expert Allison Fine notes in a blog article that Facebook has value beyond the amount of dollars per donor raised. “Causes enables a lot of people to ‘support a cause.’ In old thinking that meant only one thing: give us money,” Fine writes. “But in connected thinking, it means that each one of us can be more than an ATM for our causes. Causes on Facebook enables us to tell our own world—distinct from the world—about the issues, campaigns and organizations that they are passionate about. We can bring our networks of friends, our ingenuity, our passion, our time, our expertise to support causes. It enables lots and lots of people to learn about causes and to share them with their friends easily, quickly and inexpensively.“Using dollars raised as a critical measure of success has allowed others to hammer Causes without much cause,” she continues. “Remember that the overwhelming number of Facebook users are still under 25 years old. This is very young for donors, and it is unreasonable to expect them to give the number and size gifts of their parents and grandparents.”“The bottom line here is that Causes isn’t just about raising money, it’s also about raising friends and awareness, and in the long run turning loose social ties into stronger ones for a cause may be more important than one-time donations of $10 and $20 dollars right now,” Fine writes. Allison Fine’s blog, A. Fine Blog (http://afine2.wordpress.com/) covers topics of social media and social change. What do you think about the value of Causes or other social networking tools? Has your organization had success with a particular technique? Is it worth the effort at this point or are you building for the future? Let us know your thoughts at [email protected]. Please write “Facebook” in the email subject line.* * * * *Ohio Fundraiser Frisch Named 2009 CCS Outstanding Fundraising Professional Kenneth C. Frisch, ACFRE, director of development for Hospice of Northwest Ohio in Perrysburg, is the recipient of the 2009 Community Counselling Service (CCS) Award for Outstanding Fundraising Professional presented by AFP. The award is presented to the fundraiser who has practiced his or her profession in an exemplary manner for at least 15 years. He or she must have demonstrated effective, creative and stimulating leadership and practiced and promoted ethical fundraising. Frisch receive the honor on March 30, 2009 at AFP’s 46th International Conference on Fundraising in New Orleans.“I am truly humbled by the honor,” said Frisch. “I would not have had any success without the support and guidance of colleagues, the enthusiastic commitment of volunteers and the generosity of numerous philanthropists, so I will be accepting this award on behalf of each of them.” Frisch did not start his career in fundraising, but was a teacher at Tippecanoe High School in Tipp City, Ohio. However, the school had no money for the arts, so he began raising funds for the school and the community, including founding a community theatre. Finding a life calling, he gained fundraising experience through a fellowship with the National Endowment for the Arts and positions at the Ohio University School of Theater and the Southeastern Ohio Voluntary Education Cooperative. However, it was during his time at Ohio University and Bowling Green State University (22 years) that he blossomed into a premier fundraiser, leading million-dollar campaigns, overseeing the creation and expansion of development programs and managing hundreds of volunteers. Hospice of Northwest Ohio hired Frisch in 2003 to raise the final $6.4 million of a $9 million capital campaign. Upon doing so successfully, he was hired to create the organization’s first comprehensive fundraising plan, including the introduction of employee giving programs and a planned giving initiative, as well as increasing board member involvement in development activities. He now raises $2 million annually to support hospice patient and family care, education and community outreach."All of us at CCS are honored to recognize Mr. Frisch for his outstanding work in the field," said Robert Kissane, president of CCS. "Ken is not just an outstanding fundraiser, but a true professional who is dedicated to advancing philanthropy and fundraising through his service to the field and to his colleagues. The organizations that have worked with him are lucky indeed, and we salute him for his great work."Frisch is just one of just 84 fundraisers in the world to have earned the Advanced Certified Fundraising Executive (ACFRE) credential, and served on the committee that recently revised the ACFRE written exam. He is also just one of 125 fundraisers in the world to be certified as a Master Teacher through AFP’s Faculty Training Academy. He routinely serves as a speaker and trainer at numerous fundraising and philanthropy conferences across North America and is actively involved with many charities as a volunteer and donor. “Ken is an outstanding example of someone who not only works in philanthropy, but lives philanthropy,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “It is not just a job for him, but a calling. Of course he is exemplary at raising funds, but even more importantly, he guides and inspires others and gives back to his profession. AFP is proud to honor Ken and his extraordinary dedication to ethical and effective fundraising.”Check out the photo gallery from conference by visiting the AFP homepage, www.afpnet.org. The 47th International Conference on Fundraising will be held in Baltimore, Md., and will feature celebrations of AFP’s 50th Anniversary! More information to come soon.* * * * * AFP Awards Materials Now Available—Nominations Due July 15 Nomination forms for AFP’s Awards for Philanthropy and other honors are now available on the AFP website and are due on July 15. The nomination booklet can be downloaded from the electronic version of this eWire article or can be found at www.afpnet.org under National Philanthropy Day and AFP Awards.The only exception is the Campbell & Company Awards for Excellence in Fundraising, nominations for which are due on Sept. 15. Nominators should be aware that several changes have been made to the criteria and nomination process for the Awards for Philanthropy. Supporting materials for most awards are no longer accepted, and nominations MUST address the criteria in the indicated format. These changes were made because of the increasing number of entries and to ensure fairness and consistency as judges reviewed the nominations.AFP Awards for PhilanthropyAFP offers a number of different awards for exemplary work in philanthropy and fundraising. These include AFP’s Awards for Philanthropy, which include the following categories:Paschal Murray Award for Outstanding Philanthropist Freeman Philanthropic Services Award for Outstanding Corporation (CCS) Award for Outstanding Fundraising Professional Changing Our World/Simms Awards for Outstanding Youth in Philanthropy, Ages 5-17 and Ages 18-23 Award for Outstanding Foundation Award for Outstanding Volunteer Fundraiser Nominations for the Awards for Philanthropy are due on July 15 and must be submitted electronically. No supporting documentation is allowed, only the answers to the questions and criteria that are found on the nomination form.Other HonorsAFP also offers other awards for outstanding fundraising achievements, service to AFP and chapter efforts in diversity:The Barbara Marion Award for Outstanding Leadership to AFP recognizes an AFP member who demonstrates outstanding leadership and service to the association and/or its related entities, such as the AFP Foundation for Philanthropy. The Charles R. Stephens Excellence in Diversity Chapter Award recognizes the year's most outstanding demonstration by an AFP chapter of leadership, creativity, and initiative in building diversity in membership or programming. One award is presented in each chapter size category.The Campbell & Company Awards for Excellence in Fundraising are presented to nonprofit organizations' development departments or fundraising programs that have developed an innovative initiative, program or project design, or technique that has increased their donor base, increased the amount of funds raised, and improved their fundraising return on investment. One award will be given in each of two categories based on organizational size. Unlike the other honors, nominations for the Campbell & Company Awards for Excellence in Fundraising are due Sept. 15, and supporting materials are allowed. More information can be found on the nomination form.More information about these awards and the Awards for Philanthropy can be found on the AFP website, www.afpnet.org, under National Philanthropy Day and AFP Awards. Research Prize and Chapter Ten Star AwardThe AFP Awards Committee oversees all of these awards programs except for the Skystone Ryan Prize for Research on Fundraising and Philanthropy and the AFP Chapter Ten Star Award.More information about the Skystone Ryan Prize for Research on Fundraising and Philanthropy can be found at www.afpnet.org under Research and Statistics.For information on the Chapter Ten Star Award, members should log into the "Member Gateway" section of the AFP website.Questions about the AFP awards program can be directed to NaTanya Lott at [email protected]. * * * * * AFP, The Globe and Mail Create 'A Time to Give' AFP is continuing its partnership with Canadian newspaper The Globe and Mail through a special June 27 philanthropy supplement titled “A Time to Give.” Members are encouraged to advertize in this premier report because it will be a tremendous opportunity to reach a wide cross-section of donors and constituents. Special advertizing discounts are available. The deadline for reserving space is May 20. This special national report will investigate how charities are addressing the current global economic crisis and why charitable contributions are needed now more than ever. Other topics will include the best ways donors can support a charity in the current climate, ethics and public trust, innovative programs and services being offered and planned giving, bequest and endowments. The Globe and Mail reaches 1.3 million daily readers and is a favorite publication of Canadian senior executives, read by 71 percent of all executives and 76 percent of presidents, CEOs and chairpersons.“In these economically challenging times, this type of national supplement focusing on philanthropy is more important than ever,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “Charities can’t afford to pull back on their marketing and advertizing efforts, and we believe our partnership with The Globe and Mail is an extraordinary value and opportunity for members to show all of Canada how they’re helping to improve the world. I encourage members to participate in this special report.”The supplement will include a limited number of one-eighth, quarter-, half- and full-page advertizing positions. The Globe and Mail will also reprint additional copies of the report and provide an online PDF version of the supplement. The special section also will appear online at www.globeandmail.com for seven days and thereafter will be archived for 90 days.The attached sell sheet has additional information about the supplement. Interested members can contact Richard Deacon, “A Time to Give” project manager, at (604) 631-6636 or [email protected]. * * * * *Seats Still Available for Boston College Spring Seminar! Early Bird Registration Extended to May 11Wealth and Giving in the Current Economic Crisis: Strategies for Fundraising and Financial Professionals—June 9 and 10 in Boston, Mass.Hear from experts at the noted investment firm Barclays Wealth in London, learn how to how to deal with and succeed in the challenging present economic climate and explore groundbreaking research and strategies to assure critical funding for your organization. Check out the amazing lineup of presenters and register today! (Go to www.afpnet.org and click on Education and Career Development. Then click on Executive Institutes.)* * * * *DON'T MISS TWO GREAT WEBCONFERENCES TO BETTER YOUR FUNDRAISING(To register go to www.afpnet.org and click on Education and Career Development—AFP Web/Audioconferences)Special Ethics Program - Presented by Paulette Maehara, CFRE, CAEIn good times and bad, with stellar ethics, you will always have solid footing. AFP's president and CEO Paulette Maehara will explore how organizations can take a holistic look at ethics, identify how organizations can use ethics to reach out to the public to generate support and discuss current pressing ethical issues such as donor control and percentage-based compensation. Don’t miss Weaving Ethics Into Your Organization's Fundraising on Wednesday, May 6 at 1 p.m. EDT.Giving Circles – Presented by Angela Eikenberry and Jessica BearmanGiving circles are emerging in popularity among groups of donors across the United States and elsewhere as community-based funding vehicles. This presentation will provide information on the giving circle landscape, based on several studies of giving circles, with special attention given to their impact on donor-members and nonprofit funding recipients. Register today for Giving Circles and Fundraising in the New Philanthropy Environment presented on Wednesday, May 20, at 1 p.m. EDT. eNewsletters Advancing Philanthropy Related AFP Resources AFP eWire April 13, 2009: Print Version AFP eWire May 5, 2009: Print Version AFP eWire May 12, 2009: Print Version

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Alchemia CFO Takes Over as CEO 2/19/2013 7:21:34 AM BRISBANE, AUSTRALIA--(Marketwire - February 18, 2013) - Brisbane drug discovery and development company Alchemia Limited (ASX: ACL) announced that Charles Walker has been appointed to the position of Chief Executive Officer. Charles (Charlie) Walker BSC (Hons) Pharmacology, MBA has accepted the position effective immediately. Mr Walker, who has been Alchemia's Chief Financial Officer for the last two years, brings 20 years' international life science industry experience to the role. ACL Chairman Dr Mel Bridges said: "The Board is delighted to have secured the services of a talented and experienced life sciences executive to lead the Company through what promises to be a critical development period. Charlie's financial, technical and operational background and proven leadership skills will support the delivery of key milestones, while maintaining a sharp focus on delivering shareholder value." Mr Walker originally trained as a pharmacologist in the UK before embarking on a career in the pharmaceutical industry. He subsequently spent more than a decade in corporate finance advising international technology companies, executing more than 40 successful corporate transactions including IPOs, M&A agreements and fundraisings. He also co-founded a successful life sciences investment banking firm in the UK which was sold to Nomura International plc in 2005 realising significant returns for investors. Dr Bridges will resume his role as non executive chairman. Mr Walker commented: "Alchemia is a fast growing, late stage drug development company with a bright, international future. The next 12 months will be transformative both in terms of clinical and corporate development and I am looking forward to building on the strong foundations already established, and continuing to work to unlock value for shareholders." About Alchemia Limited - www.alchemia.com.au Alchemia is a drug development company with late stage oncology product pipeline (Phase II and III), and an FDA approved drug (Fondaparinux). Fondaparinux (a generic version of GlaxoSmithKline's Arixtra®) is an injectable anticoagulant approved in the US for the prevention and treatment of deep vein thrombosis (DVT) after knee or hip surgery. The ANDA for generic fondaparinux was approved by the US FDA in July 2011 and launched in the US by marketing partner Dr Reddy's Laboratories. Alchemia received its first profits from sales of fondaparinux in August 2011. Alchemia's pipeline of oncology products is built on the proprietary platform technology: HyACT® (targeted cancer delivery), which is used to selectively target cancer drugs to tumours. The primary objective of the HyACT® technology is to develop a new generation of anti-cancer drugs which demonstrate better efficacy. The Company has recently announced the final recruitment for its most advance cancer drug -- HA-Irinotecan which is in Phase III for the treatment of metastatic colorectal cancer. In addition, Alchemia has a platform technology, VAST®, discovery drug discovery platform, which is based on Alchemia's chemistry expertise. VAST is run on a business model designed to limit use of cash expenditure through the use of partnerships and government grants. The company has projects running with academic institutions and evaluation underway with big pharma partners. For further information:Dr Mel BridgesChairmanAlchemia LimitedMobile/Cell: +61 4 1305 1600Charles WalkerChief Executive OfficerAlchemia Limited Tel: +61 7 3340 0200Media enquiries, Australia:Emma Power or Rudi MichelsonMonsoon Communications +613 9620 [email protected] Relations USA:Laura FormanBlueprint Life Science Group +1 415 375 3340 Ext. [email protected] Read at • Alchemia Pty. Limited • Biotech/Pharma - Personnel (World)

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Defining The Future Of Freddie Mac Brendan Sheehan, NACD Directorship Jun. 14, 2011, 3:48 PM 1,950 Brendan Sheehan Brendan Sheehan is Editorial Director at NACD Directorship, and is a leading expert in public company governance and compliance. Recent Posts Understanding The Negotiating Power Of Boards Beyond Disclosure Americans Waste $16 Billion-Dollars-Worth Of Loyalty Points From... The Federal Home Loan Mortgage Corp. has helped millions of Americans buy and build homes over the past 40 years but on September 7, 2008, it took on what may be its biggest and most important construction project—re-creating a portfolio devastated by the mortgage crisis and, in the process, rebuilding its tattered reputation. Managing through the turmoil that engulfed the corporate world in 2008 and navigating the rapidly changing governance environment was—and remains—a complicated task. The first priority of the company’s new owners—the U.S. government—was finding leadership. It turned first to John Koskinen, a corporate reorganization specialist who had turned around several companies in his career, making him chairman of the board. CEO Charles “Ed” Haldeman joined the mortgage giant the following year. Together, the pair has identified a path from government life support to recovery. Haldeman’s approach focuses heavily on people, understanding that a talented and ethical workforce is vital in achieving governance and performance goals. Since taking the helm, Haldeman has seen Freddie Mac bring home a slew of diversity and workplace awards, a fact he believes is a significant factor in the company’s recent success. Political turmoil and uncertainty continue to exacerbate management’s task, but the board remains focused on fulfilling its obligation to U.S. taxpayers. Managing through the uncertainty while improving governance standards and boosting profitability is made more complicated by having the government as the majority shareholder. The board and management not only must work together, but they must answer to the company’s conservator and primary regulator—the Federal Housing Finance Agency— plus Congress, the U.S. Treasury Department and the Department of Housing and Urban Development. In an interview with NACD Directorship's Brendan Sheehan, Haldeman and Koskinen shared their experiences on working in this unique environment, improving governance and managing in crisis. Can you talk a little about managing through the economic crisis and the emerging recovery? What’s been your strategy for managing the board and the company during this period?John Koskinen: The government took over on a weekend in September 2008, and I was asked to then put the board together. Our challenge was to find intelligent and capable people who would sign up for the board of a company in an interesting situation. Our goal was to get people who were knowledgeable about various aspects of Freddie Mac’s business—mortgages, housing, urban development— and people who understood the unique challenge and opportunity the company faced. Freddie Mac and Fannie Mae were effectively the first companies to be impacted in that short crisis period, followed by Merrill Lynch being bought by Bank of America, Lehman Brothers folding, AIG getting government assistance—all of which happened in about 10 days. It was a volatile period. What was the main concern of the regulator when it first stepped in?Koskinen: I think the most significant challenge the regulator, the FHFA, was concerned about that weekend, in the middle of chaos and crisis, was how to create as stable a working environment for people as possible and to let people know that even with everything swirling around them there was a future. In the meantime, the important thing was to pay attention to the critical mission of the company to support the nation’s housing market. This continued to be the primary concern, I believe, for the two and a half years since then. How well did that message resonate with the employees at the time, and did you have any challenges retaining and attracting talent?Koskinen: We were concerned then— and continue to be—about employee retention. It was a problem during the crisis to some extent, although the economy was collapsing, so there weren’t as many options and alternatives for people then as we knew there would be as the economy recovered. Throughout it all the goal has been to give people a sense of perspective about where the company fits vis-à-vis the major problems in the economy. Did this also apply to the CEO position?Koskinen: We faced unique challenges and had a new CEO who decided after six months that all of the government involvement and oversight and the complicated relationships were not what he had signed on for, and he departed. So I became the interim CEO for six months while we searched for a replacement. We understood that the new CEO would have to see the situation and the government involvement as an interesting and exciting challenge rather than a burden. We were delighted and fortunate to find Ed, and it didn’t take too much convincing to have him join us. It was important to demonstrate that we could find an extremely qualified, experienced executive who was excited about coming here. Ed, what was your initial focus when joining the company in 2009?Haldeman: To John’s point about government involvement, this would not be the right place for a CEO who is an old-school autocratic person who makes a decision and then wants to get right on and implement it. The situation calls for a CEO who is accustomed to the notion of building consensus and realizes there is a gauntlet of approvals that one has to go through. I came in with my eyes open and accustomed to working with a board in a partnership way and knowing that my job is to suggest a course of action, but then the board has to agree to it and then we have to go to our regulator and get them to agree with it, and sometimes we even have to go to Treasury and get them to agree too. To your other point about how we managed through this adversity, the whole focus has been to try to get the employees to focus on the present, as distinct from the past or the future. Back then, and now, there were a huge amount of distractions. The political environment is such that there’s a lot of interest in the past. Many politicians spend their time trying to figure out the past, what went wrong, and how can we fix it. There could be a tendency for management and employees and maybe the board to spend a lot of time being defensive and trying to explain the past. Similarly, the future is quite interesting. There are a lot of people who want to spend a lot of time thinking about what the best business model is going forward, for Freddie Mac. The Treasury put out a position paper on February 11 that talks about the future. I think our challenge at the company has been to not let those distractions take us away from the focus on the present and the important mission of the present. Remaining in the present is important, but a board must look to the future. What does the short term hold for Freddie?Koskinen: From the start, it seemed clear to me that the greater risk to the economy, not just to the company, was that out of swirling debate, finger pointing and an attempt to figure out who to blame for the economic downturn, you got a knee-jerk reaction to “fixing” the government-sponsored entities that would be to the detriment of the housing market, the mortgage market and the economy. Having spent a lot of time in Washington, it seemed to me that our best strategy, and the best contribution we could make to the public good, would be to never have an answer to the question of “What should the future look like?” This is kind of counterintuitive, because the natural inclination of anybody with an interest in these subjects is to try to figure out what the right answer is, to the business model, to the structure, to the political equation. But the problem with having an answer is your views on any other options are automatically discounted. What we have of great value here is a tremendous amount of experience and data from the past 40 years on how the housing and mortgage markets work. A minimum threshold of success would be to provide data and information to people so that whatever structure the Congress ultimately choses, the system would actually be able to be managed. It’s a complicated business, and it’s pretty easy to get it wrong. Will the current political wrangling over the budget have an impact on the way Freddie Mac does business?Koskinen: So we have spent a lot of time and it’s worked reasonably successfully, at the board level and at the management level, being open, trying to become the honest broker of information and analysis. We have spent a lot of time with the Administration and are beginning to have conversations with people on the Hill analyzing the implications of various options. I think there’s a growing comfort level on the part of decision makers that we don’t have an axe to grind. That if they want to talk about totally privatizing the market, we can tell them what that looks like. If they want to get rid of retained portfolios, if they want to get rid of the government guarantee, for securities, we’ll give you our best judgment based on 40 years of experience as to what the market would look like, what the business would look like, what the housing industry would look like. So we continue to have a dialogue of our own every once in a while at the board level, “Is it time for us to say, in the middle of the political dialogue, here’s what we really think you ought to do?” But in a lot of ways, as I’ve said to the board, we’re kind of at half time. The game is now being played up on the Hill, but there’s a ways to go. There are a lot of options being bounced around Congress but it’s probably unlikely that any final conclusion will be reached before the Presidential election, which means that over the next year and a half or two, we’re going to have the continued challenge of managing in a time of uncertainty in terms of what the future brings. It sounds like what you’re talking about is basic risk management. How would you describe your risk management processes at Freddie Mac? Have you created a specific risk committee like many other companies have done?Koskinen: In the last two and a half years, everyone has become much more sensitive to risk. There is a debate in boardrooms about how best to address risk—at the audit committee, forming a risk committee or as a full-board responsibility. To some extent, the answer depends on the nature of your business and the nature of the risk you face. We’ve decided that it’s a full-board responsibility because risk is inherent across our business. Our setup is that we have a business and risk committee, and we have an audit committee, and the way it’s turned out is all of the board members are on one or the other. In addition to regular two-day board and committee meetings, we hold a joint meeting of the audit and business and risk committee, which is, in effect, a meeting of the whole board. But we treat it as a joint meeting of audit and business and risk, to continually remind everyone that the risks include things you would normally think of in the audit committee; things you would normally consider in the business and risk area, and they cross over and overlap in a lot of ways. Ed’s made a significant number of changes as to how the company analyzes and manages against those risks at the management level. Haldeman: Our structure right now has a chief risk officer and a chief credit officer, both of whom report directly to me. Actually, it was my predecessor who split them out as direct reports, and I like that model. I’m not sure you have to have that in all financial companies, but I think it highlights that we have this one risk—being credit—that is ever present, and then we have a number of other risks under the chief risk officer that would include market risk and operational risk. We also have a credit oversight team within our risk function, so in a sense we have credit there as well in an oversight capacity. Part of the answer to managing risk is the structure, but it’s also cultural and how much stature the chief risk officer has in the company. There are some companies where the risk job is kind of a check-the-box job, a necessary evil to go through. We’ve tried hard here for the culture to feel different and to have risk officers be a real part of the team, part of the process. We’ve tried to embed the senior risk people in transactions and processes, so that any concerns can be raised early on and mitigated as we’re going through the process. With the government—and, by extension, taxpayers—being your major shareholder, what is your approach to investor relations?Haldeman: I think of the taxpayer as having a stake in the company, and as such they are a constituency to which we owe a fair amount of openness. We have many constituencies to whom we owe some responsibility, but the taxpayer probably takes precedence. That influences us in lots of different ways. A lot of judgments we are making have to do with what we can do to reduce the draw from the Treasury and make sure the taxpayer is getting a good deal. Koskinen: We’re an interesting hybrid of sorts. We’re in a private-sector business, with the government as a major shareholder. But ultimately, as the regulator continues to remind everyone, including the Congress and us, it’s a conservatorship, so by definition, we’re trying to conserve and protect the assets for the shareholders and the taxpayers. It is an unusual business model. What is the main focus of the board, and how is the company doing lately?Koskinen: One challenge with communications is that there is a misunderstanding of the situation, which can make it hard to tell the company story. There’s some concern on occasion on the Hill that we’re doing things that are non-productive or spending taxpayer funds in a way that would be different if they had a say in it. The real measure of our success is how much of a draw do we take from the government, which is really about how profitable we are. In other words, what the net equity in the company is. So when you get done with it all we are focused on making money, within the context of conservatorship and or mission. What is often ignored when people assess our performance is that, because we were one of the first out of the box in terms of getting government support, we ended up with a 10 percent dividend against the government’s preferred stock. Most other companies that followed us saw the dividend reduced to five percent because they realized that 10 percent makes it very difficult to pay off the obligation. The government has not dropped our rate to five percent. However, for the past few quarters the amount of our draw has been less than the amount of our dividend. If you look forward, barring another major downturn in the next couple of years, it’s possible that with virtually all of the draw we have, we will be able to pay the dividend. There will be some quarters where we make enough money and have enough equity to pay the dividend without any draw at all. We’ve moved from fairly significant draws in 2008, 2009, and the first quarter of 2010, to more modest draws since then, so I think that by the end of this year the discussion on the Hill is going to be more focused on whether the model of the government giving Freddie money [through the draw] just for them to give it back, makes sense. Haldeman: So, to put numbers on John’s point, in the second half of 2010, we paid a preferred dividend to the federal government of $3.2 billion—that’s half of the $6.4 billion annual payment. In order to do that in the third quarter we had a draw of $100 million, and then in the fourth quarter, $500 million, so that for the two quarters combined, our draw was only $600 million compared to that $3.2 billion check that we wrote for dividends. In the first quarter of 2011 we actually had no draw despite paying another $1.6 billion in preferred dividends to the Treasury. How do you deal with media relations, especially the reputational risk of things being written about you, at the board level?Koskinen: Ultimately, managing media relations is a responsibility of the management, but with the working relationship that the board has with management, there have been numerous discussions. We’re constrained by the conservatorship about how much we can do: We certainly are not allowed to do any lobbying or presentations on our behalf with the Congress. But we’re also working with the regulator to make sure we’re within their comfort zones in terms of what outside media relations we’re doing. The discussion at the board level has been, almost from the start, how to appropriately communicate information that will give people the correct picture of what’s actually happening here. And so we have some discussion and debate back and forth among various members of the board. The board has, over the past couple years, seen us get to the point where the facts begin to explain themselves, and we could, in our disclosures and conversations, focus on what we are really achieving. That story is that, recently, we are not drawing as much money and the company is starting to do better. The board does not define media policy, but it does consider the question: “How do we get the message out?” So what is your feeling about the portrayal of Freddie Mac in the media, and how do you think the public views the company?Haldeman: I would say our board has been equally as frustrated as management on our seeming inability to get an accurate portrayal of the company in the public’s mind. We would both like to be more aggressive in getting the message out but sometimes are constrained by our regulator with regard to not advocating, not lobbying, not advertising. You know, we wish the story we just told you about our draw over the past nine months could get out there, but the way journalists write that is, “Freddie has another draw, Freddie goes to the Treasury again,” right? That is simply not a realistic reflection of what is actually happening. On the compensation front, the journalists are right that I get paid a lot of money. There’s no denying that $5 or $6 million is a lot of money. The context one would put around that, I think, would be that if we take a look at our top-15 highest-paid executives here, compensation is down about 35 or 40 percent from peak levels, and at the same level almost precisely, that it was 10-12 years ago. I think another contextual point we would make is that last year, that is, 2010, we reduced our overall G&A [general and administrative expenses] spending by about $88 million, so we took five percent of the cost out in one year. We further reduced G&A spending by another 10 percent in the first quarter of 2011. This indicates that we do focus a lot on doing the right thing for the taxpayer and trying to keep our expenses down. Speaking of the regulator, how much influence does it have on setting compensation, and for that matter, on board-level decisions?Koskinen: When I started, one of the questions was what would be the delegation of authority to the board from the regulator, who as conservator basically had total authority. We had a very good but somewhat lengthy discussion for a couple of months, and ultimately, with a handful of exceptions, compensation being one of them, the board was delegated authority and therefore the management had authority over the normal, run-of-the-mill issues. A significant percentage of what we do, 80 or 90 percent of it, is run as if it were a normal corporation. The compensation committee and the board approved our compensation program, and the regulators had the final say. So all of these figures, all of these programs, short-term and long-term compensation, were approved by the regulator and by the Treasury and by Ken Feinberg, special master for executive compensation under the Troubled Asset Relief Program, when he was there. What is the day-to-day level of interaction between the regulator and yourselves? Do you talk to them on a weekly basis, daily basis?Haldeman: I visit with the director [of FHFA] weekly and he’s totally available by phone if we need to talk something over. But I think you should have a sense that the regulator is very connected throughout all levels of the company, and there are many, many people from the regulator here today and every day. I would suspect that there could be 20 to 50 people from the regulator here today in various functional areas of the company. There are some finance people, accounting people and lawyers who supervise us closely. If you work to develop a cooperative relationship, it turns out that that can work. It can take a little longer sometimes to get decisions made, but I think the board meets with the FHFA director twice a year, once in his capacity as regulator and once in his capacity as conservator. I think the board feels that there is a workable relationship; I don’t think that we have anybody that thinks that it’s dysfunctional or a major problem. What does the future hold for Freddie Mac?Koskinen: I think one of the ways to conclude the discussion is that when we started out, it was a very positive signal for the members of the management team and the employees that there was going to be a board, because they wanted the company to continue to function as much as it could, even under conservatorship, as if it were a corporation, not a government agency. The board was seen as a real board, with real authority: We wouldn’t have been able to sign up the people we have if it didn’t have that authority. The employees derive great comfort and satisfaction from the fact that, on a day-in and day-out basis, the company really runs like a normal corporation— there’s a board, there’s a chairman, there’s a CEO. The other side of that coin, to Ed’s point, is that it’s clear that we haven’t been turned into a government agency. The company still is really being run as a competitive private-sector enterprise. It’s just that the major shareholder happens to be the federal government and the American public. More from NACD Directorship: A Call for the Most Influential Say-on-Pay: Don’t Take Favorable Voting at Face Value This post originally appeared at NACD Directorship. Copyright 2014. From government life support to an uncertain future, new leadership at Freddie Mac tries to stay focused on the here and now.

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With Crucial Details Missing, Will EU Deal Euphoria Last? Patrick Allen Friday, 29 Jun 2012 | 6:59 AM ETCNBC.com After a long night of negotiation, EU leaders announced an agreement aimed at easing the two-year old debt crisis shortly before dawn in Brussels. The agreement will make it possible for the European Financial Stability Facility (EFSF) and its successor the European Stability Mechanism (ESM) to lend directly to euro zone banks and, via the European Central Bank (ECB) , buy euro zone bonds in the primary and secondary markets.The conditions of any support remain unclear, with the European Commission talking about “very strict conditions” but Italian Prime Minister Mario Monti saying any support would not require those accepting it to accept similar bailout terms to those offered to Greece and Portugal."In order to ensure an efficient management, the EFSF and ESM will buy and sell in the bond market” with the support of the ECB because the central bank has the "knowledge of market conditions and an operational capability that the bailout funds don't have,” Monti said in Brussels.A 20 billion euro ($25.1 billion) growth fund was also agreed, but analysts were quick to point out that many questions remained unanswered.“The 120 billion growth pact, based on better use of structural funds and on additional capital for the EIB (European Investment Bank) is not a surprise, nor is it likely to be seen as critical,” said Jens Larson, chief European economist at RBC in London.“But the agreement to waive seniority on EFSF/ESM loans to recapitalize Spanish banksis critical, addressing a current key market concern,” said Larson in a research note published after the deal was struck.Larson saw progress towards a banking unionbut noted the establishment of a single supervisory mechanism, with the full support of the ECB, will only be considered by the end of the year by EU leaders.“After the establishment of such a supervisor, the ESFS/ESM will be able to provide support to banks directly, without going via national governments balance sheet. That suggests that Spain’s public finances may eventually be freed of some of the burden associated with recapitalizing its financial system, and the statement also makes clear that a new deal for Ireland might be in the making,” said Larson.“We would interpret this agreement as undoubtedly good for banks and potentially good for Tier 2 sovereigns. In keeping with established summit tradition, some crucial details seem to be missing from the brief statement,” said Larson. He also questioned where the money would come from following comments from Monti indicating the ECB would act as an “agent” for the EFSF and ESM.Charles Diebel, head of market strategy at Lloyds Banking Group said the progress on directly supporting the banking sector should be seen as a positive and “help in weakening the linkage between banks and sovereign." "This is further aided by the removal of subordination issue. This removes one of the key accelerators in the recent spike in yields in Spain and Italy," he said.“The ability to access EU funds is also significant in that it will allow support without being put into a bailout program as long as countries are meeting their EU agreed targets,” said Diebel in a research note following the agreement.“These are all positive steps but equally remain subject to numerous risks in terms of implementation and likewise we as yet to not have a clear outline on how peripheral bond markets will benefit from direct support in the near term,” said Diebel.

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From the September 4, 2013 issue of Credit Union Times Magazine • Subscribe! Positive Nature of Credit Unions Fuels Fearing’s Passion: T40B By Myriam Di Giovanni September 04, 2013 • Reprints The view of the credit union landscape from CUNA Mutual Group Senior Communication Specialist Holly Fearing’s perspective is awe-inspiring. “What I enjoy most is getting people to understand that being passionate is about the way things should be,” said the latest Trailblazers 40 Below honoree. “We are capable of making a better place for all to live in. Why wouldn’t we be able to inspire others to join in our quest to move the world in a better direction?” She admitted that view may seem Pollyannaish, but said it energizes her every day. “I’m heartened to see the industry is not opposed to trying new things, and I think sometimes just asking the right question can open the floodgates to being more effective in showing how credit unions are different,” she said. From the start, Fearing said she knew she wanted to be a writer. Ironically, time spent in the marketing department of a bank pushed her to find her niche with credit unions. “One day we were discussing creating a campaign to increase the frequency of overdraft protection fees by 25%, and I knew that this was so not what I wanted to do with my life,” she said. Fearing joined CUNA Mutual as a copy writer in May 2007, advancing to the position of corporate communications and public relations specialist one year later. She was promoted again to her current position in Feb. 2011. “The financial background did help me join CUNA Mutual in the editorial department,” she said. “I had no clue about credit unions but once I learned, what an epiphany. Once you know what you love to do, you hold onto it and try to create more of it in the world. Turns out I wanted to be a part of credit unions all along. I just didn’t know it.” She added that ultimately, the credit union cooperative structure resonated and aligned with her passion to be a part of something that makes a positive impact on people and local communities. She’s become such a champion of cooperatives and credit unions, she joked that she simply wears down the opposition. “It’s like a win by war of attrition. I’m always thinking how can a good idea be taken 10 stories higher,” said Fearing, who attributes her tenacity to her runner’s mentality of outlasting others. “When people voice their frustrations over big banks or big business, the cooperative model is the answer we should shout to the world.” Ninety-six million members is a huge stage to shout out the value of the cooperative model, she said. The more people who are aware of what cooperatives are and the value they offer, the more potential to expand the entire cooperative movement including credit unions, she added. With the industry only claiming a 6% share of all financial assets, Fearing said it’s time to stop viewing other credit unions as competitors. “Working together, credit unions can capture those consumers like me, who didn’t like the way banks were running my money,” she said. “If collectively you pick up 100, 1,000 or a million in your city or state it adds up. Every credit union should be working together to gain members. It’s illogical to me to see other credit unions as competition.” She also believes credit unions should support other cooperatives as well. “If you collaborate with a grocery or housing cooperative that’s multiple windows to an overlapping field of membership,” she said. “So if someone new to a city joins a grocery cooperative at checkout they can say thanks for joining, and you may want to join a credit union or other businesses like us. Think how many new referrals generated from just a single like-minded business.” Fearing said it’s crazy there aren’t already similar cross-marketing cooperative programs popping up across the country. “The cooperative business model is not without its flaws, but I think if we’re smart about it and tell the story in the right way, consumers will recognize this is what they’ve wanted but never knew they needed,” she said. As someone who questions everything and sees innovation as a combination of inspiration filtered through a lens of perspective that reveals how things can work together in a new way, Fearing said her hopes for the credit union industry include rethinking what can be done. “Let’s question the system. What’s to stop a credit union from going to every bank in town asking them to send those customers or businesses they’re not able to help your way and say here is a stack of my business cards,” she said. “Credit unions should rethink everything, even viewing their oversight in regulation as an inhibitor or boundary to doing something. Credit unions don’t need to see their boundaries as permanent.” She added that in many ways it’s easier to get changes made on a local city government level. In Madison, cooperatives have the support of the mayor and that human element has helped in implementing changes. Credit unions are often timid about educating members on the value of cooperatives for fear of bugging them, she said. “Look at Apple. We didn’t know we needed an iPod, iPhone or iPad until they showed us why,” Fearing said. She also suggested credit unions sit down with Occupy Money founders to learn why they formed a financial cooperative that is essentially a credit union. “What’s not jiving with the more extreme purveyors of financial alternatives? If they don’t like the way things are being done, credit unions need to know why,” she said. Given the competition for consumers’ attention, Fearing said she believes credit unions can tap into that brain space by sharing messages that resonate on an emotional level. “Our differentiator can’t be just service and rates,” she said. “People aren’t very logical, so if we can capture the hearts and minds in a way they haven’t experienced before, they can connect, remember and share as loyal members.” Show Comments

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Home > Business > Business Breaking NewsPrint Email Font ResizeAP IMPACT: China overtaking US as global traderBy JOE McDONALD and YOUKYUNG LEE AP Business WritersPosted: 12/02/2012 10:51:48 PM MSTSEOUL, South Korea—Shin Cheol-soo no longer sees his future in the United States. The South Korean businessman supplied components to American automakers for a decade. But this year, he uprooted his family from Detroit and moved home to focus on selling to the new economic superpower: China. In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S. ——— EDITOR'S NOTE—This is the first installment in "China's Reach," a project that will analyze China's influence with its trading partners over three decades, and explore how that is changing business, politics and daily life. Keep up with AP's reporting on China's Reach, and join the conversation about it, using the hashtag (hash)APChinaReach on Twitter. ——— In the most abrupt global shift of its kind since World War II, the trend is changing the way people live and do business from Africa to Arizona, as farmers plant more soybeans to sell to China and students sign up to learn Mandarin. The findings show how fast China has ascended to challenge America's century-old status as the globe's dominant trader, a change that is gradually translating into political influence. They highlight how pervasive China's impact has been, spreading from neighboring Asia to Africa and now emerging in Latin America, the traditional U.S. backyard. Despite China's now-slowing economy, its share of world output and trade is expected to keep rising, with growth forecast at up to 8 percent a year over the next decade, far above U.S. and European levels. This growth could strengthen the hand of a new generation of just-named Chinese leaders, even as it fuels strain with other nations. Last year, Shin's ENA Industry Co. made half his sales of rubber and plastic parts to U.S. factories. But his plans call for China, which overtook the United States as the biggest auto market in 2009, to rise fivefold to 30 percent of his total by 2015. He and his children are studying Mandarin. "The United States is a tiger with no power," Shin said in his office, where three walls are lined with books, many about China. "Nobody can deny that China is the one now rising." ——— Trade is a bit like football—the balance of exports and imports, like the game score, is a neat snapshot of a jumble of moves that make up the economy, and both sides are apt to accuse each other of cheating from time to time. Also, the U.S. and China are both rivals and partners who can't have a match without each other, and a strong performance from both is good for the entire league. Trade may get less publicity than military affairs or diplomacy, yet it is commerce that generates jobs and raises living standards. Trade can also translate into political power. As shopkeepers say, the customer is always right: Governments listen to countries that buy their goods, and the threat to stop buying is one of the most potent diplomatic weapons. China has been slow to flex its political muscle on a large scale but is starting to push back in disputes over trade, exchange rates and climate change. "When a German chancellor or French president goes to China, right at the top of the list, he's trying to sell Airbuses and other products and is being sensitive to China's political concerns, like on human rights," said C. Fred Bergsten, a former U.S. Treasury Department official who heads the Peterson Institute for International Economics in Washington. The United States is still the world's biggest importer, but China is gaining. It was a bigger market than the United States for 77 countries in 2011, up from 20 in 2000, according to the AP analysis. The AP is using International Monetary Fund data to measure the importance of trade with China for some 180 countries and track how it changes over time. The analysis divides a nation's trade with China by its gross domestic product. The story that emerges is of China's breakneck rise, rather than of a U.S. decline. In 2002, trade with China was 3 percent of a country's GDP on average, compared with 8.7 percent with the U.S. But China caught up, and surged ahead in 2008. Last year, trade with China averaged 12.4 percent of GDP for other countries, higher than that with America at any time in the last 30 years. Of course, not all trade is equal. China's trade is mostly low-end goods and commodities, while the U.S. competes at the upper end of the market. Also, even though Chinese companies invest abroad and employ thousands of foreign workers, they lag behind American industry in building global alliances and in innovation, which is still rewarded in the marketplace. China's competitive edge remains low labor and other costs, while the U.S. is the world's center for innovation in autos, aerospace, computers, medicine, munitions, finance and pharmaceuticals. The Chinese have yet to build a car that will pass U.S. or European emission standards. And the United States still does more trade overall—but just barely. If the trend continues, China will push past the U.S. this year, a remarkable feat for a country so poor 30 years ago that the average person had never talked on a telephone. "The center of gravity of the world economy has moved to the east," said Mauricio Cardenas, the finance minister in Colombia. Like most of Latin America, his country is still more closely tied to the U.S., but its trade with China has risen from virtually nothing to 2.5 percent of GDP, a more than tenfold increase since 2001. "I would say that there is nothing comparable in the last 50 years." In one sense, China's growing presence in trade is just restoring the Middle Kingdom to its historic dominance. China was the biggest economy for centuries until about 1800, when the Industrial Revolution propelled first Europe and then the U.S. into the lead. China began its return to the global stage in the 1990s as a manufacturer of low-priced goods, from T-shirts to toys. Factories in other countries slashed costs to meet the "China price" or were pushed out of the market. As the new millennium dawned, the U.S. remained by far the world's dominant trader, rivaled collectively by Europe but no single nation. However, from 2000 to 2008, China's imports grew 403 percent and exports 474 percent, driven in part by its entrance into the World Trade Organization and its move to higher-value production. China's imports of oil and raw materials for its factories propelled resource booms in parts of Asia, Africa and Latin America. China's demand for steel for manufacturing and construction grew so fast that its mills now consume half the world's output of iron ore. Zambia, a major copper producer, switched to the China column in 2000. Australia, a coal and iron ore exporter, followed in 2005. Chile, another copper supplier, moved in 2009. Meanwhile, exports surged as Apple, Samsung, Nokia and other electronics giants shifted final assembly to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China's column in 2003, followed by Malaysia in 2007. In the U.S., Vermont-based manufacturer SBE Inc. started exporting capacitors—energy-storage devices used in computers, hybrid cars and wind turbines—in 2006. The company now gets 15 to 20 percent of its revenue from China, and has hired 10 employees there. As China grew richer, its people spent more. Chinese ate more pork, fried chicken and hamburgers, rapidly sending up the demand for soybeans to make cooking oil and feed for pigs and cows. Some cattle ranchers in Latin America turned grazing land into fields of soy, a crop few in their region consume. Soybean exports helped push Brazil into the China column in 2010, and put China neck and neck with the U.S. as Argentina's top trading partner. In the Brazilian state of Mato Grosso, some 10,000 miles (17,000 kilometers) from Beijing, farmer Agenor Vicente Pelissa and his family raise cattle and soy on 54,300 acres, a farm twice the size of Manhattan. Half their 21,000-ton annual soybean harvest goes to China. "We've invested more in technology and in better machines and equipment to meet this rising demand," Pelissa said. "If it hadn't been for China, we would not have not modernized our operations, at least not as quickly as we did." Even in the U.S., better known for manufacturing, farmers are rushing to sell to China. The United States is the largest exporter of soybeans to China, followed by Brazil and Argentina. China's purchases of American soybeans have risen from almost nothing 20 years ago to a quarter of the crop: 24 million tons worth $12.1 billion, America's largest export to China. The boom is having a profound effect on farming communities, said Grant Kimberley, whose family farm near Des Moines, Iowa, now grows 4,000 acres of soybeans, up from 3,500 eight years ago. "It's provided more revenue for these farmers than they've ever seen in their lives," said Kimberley, who is also director of market development at the Iowa Soybean Association. He said he sees more young people returning to the farm. "People can see there's an opportunity to make nice livings for their families." ——— It was the 2008 global crisis that showed the resilience of China's exporters. The recession set everyone back, but China less so than the U.S. or other major traders such as Germany. China does a bigger share of its trade with developing countries that suffered less and rebounded faster, while the United States sells to rich economies that are struggling. Chinese companies have boosted exports by 7 percent this year despite anemic global demand. During the recession, Shin, the South Korean auto parts manufacturer, saw his sales fall 50 percent. He shut one of three production lines, and banks stopped lending him money. But China's auto market was powering ahead. So Shin hired an employee in China, and is now making plans for his first factory there. On a business trip to Germany, clients told him their Chinese factories would be larger than those at home. Parents like Shin, who work at companies doing business with China, in turn fed enrollment growth at schools such as Teacher Ching, a Chinese-language kindergarten in Seoul. Nancy Ching, the daughter of immigrants from Taiwan, opened the school with 15 students in 2004, the year after South Korea first moved from the U.S. column to the China column. Today she has 60. "Mothers who send their kids here believe our children's generation is the China generation," she said in Chinese-accented Korean. "In the future, without learning Chinese, one won't be able to get a job." China resumed its upward trajectory in the last two years. Even with key Western markets in a slump, exports are up 58 percent since 2009. Imports are up an even sharper 73 percent. Rising incomes have driven demand for wine and other luxury goods, making China a lifeline for European and American vineyards when the global crisis battered traditional markets. The Chinese have "helped Bordeaux a lot these past three years," said Florence Cathiard, owner of Chateau Smith Haut Lafitte in the Pessac-Leognan area of France's southwest, home of high-end Bordeaux wine. France's wine exports to China first surged in 2009, and by last year, China had surpassed the U.S. as a customer by volume. Americans still spend more, because they buy more expensive wines. But China is developing a taste for grand cru wine, the "great growths" that are considered exceptional and command higher prices. Cathiard acknowledged that she was initially wary of China as a reliable market for her high-end wines. But the turning point for her came around 2008, when she was blown away by the number of people showing up for a master class by her chateau at a wine expo in Hong Kong. China now accounts for 25 percent of Cathiard's sales, making it her largest market. The owners of Chateau Haut-Bailly, also in Pessac-Leognan, first traveled to China to test the waters in 2000, and it was too early. "At the time, they didn't know what a cork or a corkscrew was," said Veronique Sanders, the chateau's general manager. Chinese sophistication has since advanced rapidly, she said. "The difference with other emerging markets we've gone into in the past is the size of the country, which means it has an absolutely incredible potential." ——— The next step in China's trade evolution is to move beyond exporting TVs and lawn furniture to selling services and investing abroad. The investment trend started with state-owned companies that bought stakes in foreign mines and oil fields. Smaller and private Chinese companies followed, acquiring foreign enterprises to gain a bigger foothold in overseas markets, more access to resources and better technology for their own development. China is now pushing into construction and engineering, where U.S. and European companies have long dominated. In Algeria, Chinese state-owned companies pushed aside established French and German rivals to win contracts to build a $12 billion cross-country highway and the $1.3 billion Great Mosque of Algeria. The Chinese have also built highways, dams and other projects in developing countries and are starting to win contracts in the U.S. and Europe. On a new 50-kilometer (30-mile) highway leading north of Nairobi, the capital of Kenya, dark asphalt stretches across six to eight lanes. The $300 million road was built by three Chinese companies and financed by the African Development Bank and the Export-Import Bank of China. It has cut a trip that took several hours 18 months ago to 10 minutes, said Joseph Makori, a professional driver. "When we see the people from America, they say, 'We want to assist Kenya'," said Makori as he looked for work at an interchange about 10 kilometers from downtown. "But I don't see it. China comes and I see one thing: the road." Chinese companies are starting to win government contracts in Kenya, which has ports that offer access to landlocked Uganda, South Sudan and Rwanda. Governments in Africa are keen to work with China because it does not tie development to human rights or democracy, said Stephen Mutoro, secretary general of the Consumer Federation of Kenya. "China appears to have a long-term plan based on increasing its commercial interests where governance issues are given a back burner," Mutoro said. The experience of Congo might foreshadow a more complex approach that Beijing envisages for other African nations. In 2008, the two governments signed a $9 billion deal for Chinese companies to build 177 hospitals and health centers, two hydroelectric dams and thousands of miles of railways and roads. In exchange, Congo was to provide 10.6 million tons of copper and 600,000 tons of cobalt. The deal has since been scaled back to $6 billion under pressure from the International Monetary Fund, which felt Congo was taking on too much debt. China's outbound investment totaled $67.6 billion last year—just one-sixth of America's nearly $400 billion—but it could reach $2 trillion by 2020, according to a forecast by Rhodium Group, a research firm in New York City. As a result, Chinese companies are using a new export—jobs. Employees at Volvo Cars worried after Chinese automaker Geely Holdings bought the money-losing Swedish brand from Ford Motor Co. in 2010. But two years later, instead of moving jobs to China, Geely has expanded Volvo's European workforce of 19,500 to about 21,500. Majority-owned U.S. affiliates of Chinese companies support about 27,000 American jobs, up from fewer than 10,000 five years ago, according to Rhodium. In Goodyear, Arizona, Stacey Rassas was laid off in May 2010 after a 16-year career in quality control for aerospace and aluminum manufacturers. By late autumn, she and her husband were worried they might lose their house. She finally landed a job that December at a new factory that makes solar panels for one of the world's biggest solar manufacturers. "It was the best day ever," she said. Her new employer? Suntech Power Holdings Co., a Chinese company. ——— McDonald reported from Beijing. AP Business Writers Sarah DiLorenzo in Paris and Jonathan Fahey and Scott Mayerowitz in New York and AP writers Michelle Faul in Johannesburg; Louise Nordstrom in Stockholm; Luis Andres Henao in Santiago, Chile; Cesar Garcia in Bogota, Colombia; Paul Schemm in Algiers, Algeria; Stan Lehman in Sao Paulo; Troy Thibodeaux in New Orleans; and Jason Straziuso and Tom Odula in Nairobi, Kenya; and AP interactive producer Pailin Wedel in Bangkok contributed.Print Email Font ResizeReturn to Top Like this article? 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Progress and Prospects: A Simple Framework and Review of the IMF Programs of Brazil, Indonesia, Republic of Korea, and Thailand by Catherine L. Mann, Peterson Institute for International Economics Testimony before the Subcommittee on International Trade and FinanceUnited States SenateWashington, DC Thank you for the invitation to come before this Subcommittee to review the progress that Brazil, Indonesia, Republic of Korea, and Thailand have made in implementing their IMF programs and the overall effect of each country's program on its current and future economic prospects. The invitation asks me to address, in particular, eleven areas of reform. In my testimony today, I will start by very briefly distinguishing among the four countries the proximate cause for the economic crisis that engendered the IMF program. I will then present a simple framework for grouping and reviewing the eleven areas of reform. Each country's progress and prospects will be assessed within this framework. Finally, I will briefly comment on the role of international private capital flows in triggering the crises. Proximate cause of each country's economic crisis The four countries to be reviewed today all face an economic crisis triggered by a rapid and sustained outflow of private capital. The countries differ in terms of what mainly precipitated the outflow of private capital. Yet, underpinning the proximate cause are three factors that are present in each country to a greater or lesser degree: Macroeconomic imbalances in the domestic or external accounts, including: Fiscal deficit, current account deficit, build-up of short-term obligations, combined with an unsustainable exchange rate regime. Brazil and Thailand evidence these kinds of imbalances. Microeconomic or structural rigidities in the conduct and performance of the marketplace, including: Weak financial institutions and systems, compounded by insufficient oversight; lack of true competition among firms, compounded by non-transparent accounting and insufficient corporate mobility through entry and exit; and inflexible labor markets, compounded by culture of job stasis and little support for job losers. Korea, Thailand, and Indonesia evidence these kinds of problems. Electoral cycle, compounded in some cases by political uncertainty and social unrest. All of the countries to some degree evidence this issue, since all were in the midst of an election period. Clearly Indonesia is the country with the greatest on-going problems. The ultimate objective of a robust market system operating in a sustainable macroeconomic environment requires progress on all three fronts. But the focus of domestic policy response and the main thrust of the IMF program will differ somewhat depending on the proximate cause of the economic crisis. Simple Framework for Analysis In its invitation, the Subcommittee emphasized eleven areas of particular interest, which are principally microeconomic and structural in nature. I will emphasize these in my framework for analysis, but it is important to acknowledge that macroeconomic imbalances and misalignments have been a key ingredient in some of the crises. Moreover, there are key links between some structural reforms and macroeconomic policies. Finally, there are two tenors, or time-dimensions, to policy reforms which is a particularly important distinction when reviewing progress and prospects. The eleven areas of interest can be combined into three groups, with some overlap, particularly in the area of transparency: Financial sector reform, such as resolving the bad debts of domestic financial institutions, elimination of government-directed credits, and strengthening of prudential standards; Corporate sector reform, such as reform to bankruptcy law, trade and investment liberalization, restructuring, deregulation, and privatization, and elimination of show-case projects; Labor market reforms, including deregulation and, though not explicitly mentioned by the Subcommittee, creation or reform of the social safety net. Macroeconomic reforms, not specifically mentioned by the Subcommittee, but including fiscal federalism, taxes vs. expenditures policies, conduct of monetary policy and exchange rate regime. The two tenors or time-dimensions to policy reforms are emergency policies that respond to the short-term consequences of the crisis and institutional or market-oriented policies that are designed to increase the robustness of economic systems to avoid future crises. The two policy sets are related, but not the same. In particular, the government's role is different. In the short-term, the emergency responses are often government-directed, whereas in the longer-term, legislation should be designed to release the initiative and enhance the flexibility of a robust private sector. Many of the policies of greatest interest to the Subcommittee represent reforms to the operation of the marketplace. For example, weak banking systems and their current load of bad debts are the focal point for emergency financial sector reforms in the three Asian countries in the group. Government-directed approaches to resolving the bad debts of domestic institutions "wipe the slate clean", and thus respond to the immediate consequences of the crisis. Similarly, privatizing firms, forcibly restructuring corporations, and shuttering show-case projects represent short-run, government-directed responses that make the corporate sector appear to be populated by more private firms, even if they do not act that way. For longer-term robustness of the private sector, legislation must set the stage for improved performance in the marketplace; it cannot create by fiat private actors. For example, deregulation, trade and investment liberalization, and competition policy which facilitates entry and exit (where bankruptcy law plays a key role), encourage a more robust private corporate sector that can withstand and absorb shocks. In addition, appropriate government programs that enhance labor market flexibility relieve corporations and the financial sector from being the main purveyors of the social safety net. Similarly, the withdrawal of government credit guidance and the development of prudential regulation and oversight remove roadblocks preventing the development of a financial sector that can discipline and direct corporate investment. But, to truly encourage a financial sector that allocates credit according to risk and return may require an activist liberalization of investment in the financial sector to include foreign participants that bring with them the technical knowledge and best practice to "do better banking." Macroeconomic reforms, particularly to the fiscal accounts, are a backdrop to these sectoral measures. In some cases, sectoral reforms, particularly the emergency measures, can influence the macroeconomic balances. For example, recapitalizing the banking system may involve fiscal expenditure via government bonds. Creating a social safety net to increase labor market flexibility may entail fiscal outlays. On the other hand, privatization receipts can make the fiscal accounts appear stronger than they really are. Monetary and exchange rate policies will affect the success of sectoral reforms, both in the short- and long-term. Failure to control money growth will lead to inflation, doom the financial sector, and make corporate restructuring more difficult. Private sector actors or foreign investors will focus on evading or profiting from inflation instead of from their core business activity. Similarly, maintaining a fixed exchange rate in the face of inflation or structural change will encourage both domestic and foreign investors to arbitrage the "one-way bet," with the collapse of the exchange rate (at minimum) a certain outcome. Progress and Prospects The framework discussed above offers a two dimensional approach to analyzing the progress and prospects for reforms. Along one dimension are the sectors in need of reform: fiscal, financial, corporate, and labor markets. Along the second dimension are the two tenors of reform: short-term or emergency reform, which will be mostly government-directed; and long-term legislative or institutional reforms that develop and enhance market conduct and performance. While progress on the first is a prerequisite for near-term stability, achievement of the second set of reforms is crucial to avoiding a recurrence of the proximate causes of the crises. Brazil: Fiscal imbalances and fiscal federalism are key problems; progress is good The proximate cause for the economic crisis in Brazil was macroeconomic imbalances, particularly in the fiscal system but also in the external accounts, compounded by a "structured" exchange rate regime (that is, a crawling peg within a band). Electoral issues played a role as well. Political tensions between the newly re-elected President Fernando Henrique Cardoso and the thwarted presidential hopeful Itamar Franco (who is the former President and newly elected governor of Minas Gerais) contributed to the economic brinksmanship in the early part of this year between the Congress and the President. Perhaps to emphasize to Congress the need pass key legislative reforms in the fiscal area, President Cardoso allowed the Real float, sacrificing the centerpiece of his economic plan. What progress has Brazil made to improve fiscal balances in the short-term and to put in place policies to stabilize the fiscal system in the long-term? The current focus remains on emergency revenue raising measures. However, institutional reforms and policies of a longer-term nature that balance federal and state fiscal responsibilities are on the table. More important, the various political parties finally appear to realize that such reforms are necessary for the sustained macroeconomic health of the country. With respect to the structural issues, Brazil is far ahead of the other countries considered today. Deregulation, trade liberalization, and the withdrawal of government ownership over the 1990s have increased the robustness of corporate and financial sectors. Brazil has weathered its current difficulties relatively well on account of these on-going structural reforms. Details: The fiscal measures of an emergency nature focus on raising taxes rather than rationalizing expenditures. Examples are the increase in the tax on financial transactions (CPMF), extending the tax on corporate turnover (COFINS) (a part of which will be creditable against corporate income tax), raising the social security tax to the highest-paid retired civil servants as well as extending this tax to other civil retirees. Of a longer-term nature, Brazil's fiscal system has inherent weaknesses that have persisted through many r

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PRESS RELEASE / ANNOUNCEMENTS Monday, September 17, 2012 Rhodes Awarded Certified Fundraising Executive Designation Source: CFRE International CFRE International has named Kendra Rhodes as a Certified Fund Raising Executive (CFRE). Rhodes, Associate Director for Development at the Santa Barbara Trust for Historic Preservation joins more than 5,300 professionals around the world who hold the CFRE designation. Individuals granted the CFRE credential have met a series of standards set by CFRE International that include tenure in the profession, education, demonstrated fundraising achievement and a commitment to service to nonprofit organizations. They have also passed a rigorous written examination testing the knowledge, skills and abilities required of a fundraising executive, and they have agreed to uphold Accountability Standards and the Donor Bill of Rights developed by the Association of Fundraising Professionals. The CFRE credential was created to indentify for the public and employers those individuals who possess the knowledge, skills and commitment to perform fundraising duties in an effective and ethical manner. To become a CFRE, practitioners must meet established eligibility requirements and pass an examination, then recertify every three years as a demonstration of mastery and currency. Achievement of the CFRE credential demonstrates a high level of commitment to the community and the fundraising profession as a whole. Prior to joining the Santa Barbara Trust for Historic Preservation in 2008, Rhodes worked for The College of William & Mary in Williamsburg, Virginia as Assistant Director of Development for Arts & Sciences where she was liaison for the Graduate Advisory Board; earlier she also worked for The Colonial Williamsburg Foundation. Her background includes experience at Yale University’s Office of Development as a Reunion Gift Officer working with major and principal gift prospects as well as fundraising for regional theatres. Rhodes has a BA in English from California State University, Chico, and a MA in Organizational Management from Antioch University, Santa Barbara, California. CFRE International congratulates Kendra Rhodes for achieving the CFRE designation. About CFRE International CFRE International is an independent organization dedicated to the certification of fundraising executives by setting standards in philanthropic practice. Governed by a volunteer Board of Directors and led by a small professional staff, CFRE International consistently meets the highest standards for certification excellence and itself is accredited by the National Commission of Certifying Agencies. As the premier global credential for career fundraisers, the Certified Fund Raising Executive (CFRE) designation is endorsed and supported by the world’s leading professional and philanthropic associations CFRE International exists to uphold the public trust through voluntary certification of fundraising professionals. Through the CFRE credential, CFRE International supports and encourages fundraising professionals to aspire to the highest standards of professional competence and ethical practice in serving the philanthropic sector. About Santa Barbara Trust for Historic Preservation (SBTHP) The Santa Barbara Trust for Historic Preservation (SBTHP) works to protect, preserve, restore, reconstruct, and interpret historic sites in Santa Barbara County. Founded in 1963 by Dr. Pearl Chase and other concerned community leaders, SBTHP operates El Presidio de Santa Bárbara State Historic Park—Santa Barbara’s 18th century birthplace—under a unique agreement with California State Parks and recently purchased the neighboring building that housed Jimmy’s Oriental Gardens, providing an opportunity to interpret the history of Santa Barbara’s Asian American community in the Presidio Neighborhood. SBTHP owns and operates Casa de la Guerra, the 1820s home of Presidio Comandante José de la Guerra and his family—the restored home is now a museum featuring original furnishings and rotating exhibits. Recently, SBTHP signed an agreement with State Parks to manage and develop the Santa Inés Mission Mills, located near the town of Solvang, as a future California State Park. SBTHP was awarded the 2011 Trustees’ Emeritus Award for Excellence in the Stewardship of Historic Sites by the National Trust for Historic Preservation. With the help of continuing education programs and exhibits, SBTHP strives to encourage community involvement and foster an appreciation for Santa Barbara County’s distinct history. Learn more on our website.

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Marriott International Third Quarter Earnings By Investopedia Staff Filed Under: Earnings Recap, Equity Tickers in this Article: MAR Marriott International (NYSE:MAR) announced its results for the most recent quarter on October 3, 2012. Marriott International operates and franchises hotels and related lodging facilities throughout the world. A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: 12 Things You Need To Know About Financial Statements The Numbers: Marriott International managed to beat EPS estimates, though the company's revenues failed to top expectations. The company reported 44 cents per share versus the 40 cents per share estimate and revenues of $2.73 billion versus the $2.84 billion estimate. Last quarter marks the third in a row in which the company has seen falling revenue on a year-over-year basis. Marriott International reported net income of $143 million during the third quarter. Management Quote: Arne M. Sorenson, president and chief executive officer of Marriott International, said, "We were pleased with our third quarter performance. Pricing power continued to improve in the quarter as hotel occupancy levels approached prior peaks. Group revenue at comparable Marriott Hotels and Resorts in North America rose eight percent in the third quarter with room rates up three percent. Transient REVPAR rose six percent with strong last-minute retail demand and reduced discounting."Looking Ahead: Next quarter's results are expected to be more favorable for the company. Over the past 60 days, the average estimate for the fourth quarter has reached 57 cents per share, up from 55 cents. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. Over the past three months, the average estimate for the fiscal year has climbed from $1.64 per to share to $1.70. by Investopedia Staff Investopedia.com believes that individuals can excel at managing their financial affairs. As such, we strive to provide free educational content and tools to empower individual investors, including thousands of original and objective articles and tutorials on a wide variety of financial topics. More From Investopedia Staff.. America Launches Its First Bitcoin ATMs : Q&A With Liberty Teller Co-Founder What Is A Pyramid Scheme? The Five Biggest Stock Market Myths Please enable JavaScript to view the comments powered by Disqus. Oil and Some Oil Stocks Starting to Run The Weakest Financial Links Trading the Channel Bounce Time to Think About Utility Stocks? Hottest Energy Sector Stocks Trading Center

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Construction spending dips 0.3 percent By MARTIN CRUTSINGER AP Economics Writer WASHINGTON (AP) — Spending on U.S. construction projects fell in November from October because a steep drop in volatile federal projects offset another gain in home building.Construction spending dipped 0.3 percent in November, the Commerce Department said Wednesday. It was the first decline since March and followed a 0.7 percent increase in October, which was revised lower.Total spending declined to a seasonally adjusted annual rate of $866 billion. That is 16.1 percent above a 12-year low hit in February 2011. Even with the gain, the level of spending remained only about half of what's considered healthy.The November figures were dragged lower by a 5.5 percent decline in spending on federal government projects. Federal spending fluctuates sharply from month to month. In October, it rose 9.7 percent.Spending on residential construction, however, has steadily increased over the past eight months and rose 0.4 percent in November.Paul Ashworth, chief U.S. economist for Capital Economics, said the decline in construction spending was "nothing too much to worry about.""This is a volatile series month to month," Ashworth said. "The recent surge in housing starts suggests that residential construction spending will expand at a fairly rapid pace this year, particularly when Hurricane Sandy rebuilding is added in."Spending on commercial projects dropped 0.7 percent. Spending on office buildings, hotels and shopping centers declined. Overall government spending dipped 0.4 percent.A separate report last month showed that builders broke ground on fewer homes in November after starting work at the fastest pace in more than four years in October. Housing starts are on track for their best year in four years.Strength in home building has been one of the bright spots for the economy this year. But overall construction is still being offset by weakness in commercial real estate and tight state and local government budgets.Sales of new homes rose 4.4 percent in November to the highest annual pace in two and a half years. New-home sales are more than 15 percent higher than a year ago.From July through September, residential construction grew at an annual rate of 13.5 percent. Housing construction is on track to contribute to economic growth this year, the first time that has happened in the five years since the housing bubble burst.Though new homes represent only a fraction of the housing market, they have an out-size impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.Builders are increasingly confident that the housing recovery will endure. A measure of their confidence rose in November to the highest level in 6 1/2 years.

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The New Push for a Global Currency By Llewellyn H. Rockwell, Jr. August 5, 2010 You surely didn’t think that the governing elites would let this economic crisis pass without pushing some cockamamie scheme for control. Well, here is the cloud no bigger than a man’s hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us. The IMF study that calls for this is by Reza Moghadam of the Strategy, Policy, and Review Department, “in collaboration with the Finance, Legal, Monetary and Capital Markets, Research and Statistics Departments, and consultation with the Area Departments.” In other words, this paper shouldn’t be ignored. It’s a long-term plan, but the plan has the unmistakable stamp of Keynes: “A global currency, bancor, issued by a global central bank would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy…. The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present.” The term bancor comes from Keynes directly. He proposed this idea following World War II, but it was rejected mostly for nationalistic reasons. Instead we got a monetary system based on the dollar, which was in turn tied to gold. In other words, we got a phony gold standard that was destined to collapse as gold reserve imbalances became unsustainable, as they did by the late 1960s. What replaced it is our global paper money system of floating exchange rates. But the elites never give in, never give up. The proposal for a global currency and global central bank is again making the rounds. What problem is being addressed? What is so desperately wrong with the world that the IMF is floating the idea of a world currency? In a word, the problem is hoarding. The IMF is really annoyed that “in recent years, international reserve accumulation has accelerated rapidly, reaching 13 percent of global GDP in 2009 — a threefold increase over ten years.” You see, monetary policy isn’t supposed to work this way. In their ideal world, the central bank releases reserves and these reserves are lent out, leading to a boom in consumption and investment and thereby global happiness forever (never mind the hyperinflation that goes along with it). But there is a problem. The current system is nationally based and so the economic conditions of one country turn out to have an influence on the borrowing and lending markets. Without borrowers and lenders, the money gets stuck in the system. This is a short history of the last two years. By now, if the Fed had its way, we would be awash in money. Instead the reserves are stuck in the banking system. It’s like the whole of the population of the United States has suddenly been consumed by the moral advice: neither a borrower nor a lender be. And why? Well, there are two reasons. Borrowers are just a bit nervous right now about the long term. They are watching balance sheets day by day, consumed with a weird sense of reality that had gone out the window during the boom times. Meanwhile, the bankers are just a bit risk averse, happier to keep the reserves in the vault than toss them to the winds of fate. They have the bank examiners breathing down their necks right now, and lending doesn’t pay well, not with interest rates being suppressed down to the zero level. Under these conditions, yes, hoarding seems like a pretty good idea. What’s more, we should be very grateful indeed for this retrenchment. The idea of plunging back into another bubble seems rather shortsighted. The IMF has a problem with this practice, though it doesn’t dwell on it. The problem is that this practice of maintaining high reserves is putting a damper on consumption and investment, prolonging the recession. The simple-minded solution coming from the high-minded eggheads at the IMF is to find some system, any system, that would push the money from the vaults into the hands of the spending public. The rationale for the global currency and global central bank is that the reserves could always find a market in a globalized system, and would not therefore be so tied to the exigencies of a nationally based banking and monetary system. An academic paper can wax eloquent for hundreds of pages about the advantages of a global system. It will lead to more stability, efficiency, and less politicization of money and credit. And truly, there is a point here: a real gold standard is always tending towards a global currency system. Different national currencies are merely different names for the same thing. But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we’ve never seen. There would be no escape from political control at that point. Every proposal of a drastic solution such as this always comes with a warning of some equally drastic consequence of failing to adopt the proposal. In this case, the IMF actually raises questions about the survivability of the dollar itself. “There has been a long-running debate speculating on whether the dollar could collapse,” says the paper. It raises the worry that if a run on the dollar materializes, central banks could attempt to race each other to dump it permanently. But, the paper points out, many people wonder whether “good alternatives to the dollar exist.” And for this reason, it might be a good idea to cobble together such an alternative sooner rather than later. There is probably more truth in that statement than most people want to grant. But the right alternative is not yet another and more global experiment in paper money inflation. God forbid. If we want an alternative to the dollar, there is one that could appear before our eyes if only we would let it happen. Private currencies traders the world over could, on their own, give rise to a new currency rooted in gold and traded by means of digital media. On many occasions over the last 20 years, such a system nearly came to be. But guess what? The government cracked down and stopped it. The governing elites have decided that there will be no currency reform unless it comes from the marble palaces of the monetary elites. Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books. The Best of Lew Rockwell Previous article by Llewellyn H. Rockwell, Jr.: Down With the Rich previous articlenext article

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Solid Q3 Sends Google to Stratosphere Google ascended to new heights on Friday, following a better-than-expected earnings report for the third quarter, but it's really the long view that matters most, said financial analyst Trip Chowdhry. "Google is Google because Larry Page and the rest of the leaders have instilled a vision that invests in big, bold and long-term projects. This isn't a company that manages quarter to quarter." Investors sent Google's shares soaring past the US$1,000 mark Friday following its stellar third-quarter earnings report. Google reported $14.89 billion in revenue, a 12 percent increase compared with the same time a year ago, beating Wall Street expectations. It posted net income of $2.97 billion, up from the $2.18 billion a year earlier. Google-owned sites accounted for 68 percent of the company's total segment revenues, bringing in $9.39 billion, a 22 percent increase from Q3 2012. Google shares rose more than 8 percent in after-hours trading on Thursday and continued to soar on Friday. Shares hit an all-time high of $1,015, beating the previous $928 high set in July, and closed the day at $1,011. Challenges Ahead Google's earnings report also highlighted some challenges, though. Motorola Mobility revenue continued to drop, with the mobile phone business losing $248 million during the quarter, compared with the $192 million it lost a year earlier. Motorola Mobility introduced the Moto X in August -- its first smartphone launch since being taken over by Google. The device received generally favorable reviews, but between the cost of marketing and the difficulty of competing in the competitive smartphone market, the Moto X has yet to help out Google's bottom line. Google also acknowledged challenges with mobile advertising. The number of paid clicks rose 26 percent over last year, but since mobile ads sell for cheaper rates than desktop ads, the price per click fell by 8 percent from a year ago and 4 percent from the previous quarter. Google is making moves to counteract those losses, though. It is launching Google Enhanced Campaigns, a feature that allows advertisers to buy ads for multiple devices -- including both mobile and desktop -- through one system. Those efforts, combined with the strength of Google's core businesses, were enough to send shares to an all-time high, said Trip Chowdhry, senior analyst at Global Equities Research. "Google showed with this recent report that its search and Google-owned sites are very strong, and the stock is obviously reflecting that," he told the E-Commerce Times. "Many companies in the industry are having trouble generating revenue from mobile ads, and Google is doing something about that, which for now is a good sign." Future Prospects Eager investors should be warned that they might not be able to ride that high forever, said Brian Wieser, analyst at Pivotal Research Group. "While most investors will look at Google more positively following this quarter, over time issues such as margin erosion, competition and capital intensity will eventually impact the stock," he told the E-Commerce Times. "We have to note both Google's durable strengths and the costs required to sustain them." Those costs -- such as investments in long-term projects like Google Glass, initiatives to improve Internet accessibility worldwide, efforts to build hardware products or autonomous cars -- are the kinds of costs that have brought Google the success it enjoys today, said Chowdhry. That makes it difficult to predict what the next quarter will bring, he said, but over the long term, the stock is a solid investment. "Google is Google because Larry Page and the rest of the leaders have instilled a vision that invests in big, bold and long-term projects," Chowdhry noted. "This isn't a company that manages quarter to quarter, so it's tough to take one solid quarter too seriously -- but it certainly seems that Google is one of the companies in this industry that has the recipe to succeed in the long run."

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Commission talks debt refinancing by Feb 05, 2013 | 2558 views | 0 | 8 | | Keith Davis Members of the Walker County Commission spent more than an hour Monday morning hearing from representatives from various financial companies interested in refinancing the county’s debt.Terry Hogan of Joe Jolly and Company, Melanie Kammerer of Gardnyr-Michael Capital, Matt Adams of Raymond James/Morgan Keegan and Chris Williams of Sterne-Agee each gave proposals to commissioners. The four had originally been scheduled to address commissioners at a work session in January, but snowy weather forced that meeting to be cancelled.Commissioners are considering refinancing the county’s debt for a variety of reasons.“We’re not just refinancing to be refinancing,” District 1 Commissioner Keith Davis said. “We are going to be able to save the county some money, but we are also going to be able to improve our financial situation by doing this.”Davis said debt from a bond issue taken out by former commission members in 2002 is a major concern for current commissioners. If not refinanced, a $1.7 million payment will be due on that debt in 2018.“They borrowed $9 million and promised to pay back $27 million. That just doesn’t make a lot of sense,” he said. “The payment on that $27 will be due in a few years, and refinancing now will help us to be better able to take care of that payment in the future. The debt is there, so we can’t get rid of it, but we can put the county in a better place to pay that debt.”Each of the presenters during Monday’s meeting said the county could save $2.5 to $3 million by refinancing now. Davis said he expects commissioners will hold a work session before its next meeting on Feb. 18 to discuss the refinancing further.“We need to act now if we are going to do this, because projections show that interest rates could go up a lot in May,” he said.During the financial presentations, Davis said the county could borrow money from its gas tax fund to help obtain a large amount of funds for resurfacing area roads, through the state’s ATRIP program.“We could borrow $2 million to get $10 million,” Davis said.Commission Chairman Billy Luster said the ATRIP funding would be beneficial to the county.“This is going to be a one-time opportunity,” he said. “It is an 80/20 match, so we have a chance to be able to get some funds to work on our roads. That’s something that we hope we can do.”The deadline for entering projects for the next round of ATRIP funding will be May.David Knight, director of the Walker County Economic and Industrial Development Authority, also spoke to commissioners Monday about the county’s unemployment rate, which has dropped to 6.7 percent.“Unemployment in Walker County is on a downward trend right now,” Knight said.Davis said the county’s financial security and unemployment rate go hand-in-hand.“We all campaigned on handling this debt and brining jobs to Walker County,” he said. “Those two things are connected. We have to be financially sound to be able to offer incentives for companies to come here. We want to see that unemployment number down around 4.”In other action from the meeting, the commission:•Approved a budget revision request for the revenue commission’s appraisal budget.•Approved an annual agreement with the East Walker Chamber of Commerce.•Accepted a homeland security grant for $2,035 to purchase an AED machine. Commission gets ball rolling on correcting issues at county jail Luster: Jail woes caused by ‘vacuum of leadership’ Hitting the ground running

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Arena Profile: Yves Smith Yves Smith has written the popular and trenchant financial blog "Naked Capitalism" since 2006 Yves has spent more than 25 years in the financial services industry and currently heads Aurora Advisors, a New York-based management consulting firm specializing in corporate finance advisory and financial services. Prior experience includes Goldman Sachs (in corporate finance), McKinsey & Co., and Sumitomo Bank (as head of mergers and acquisitions). Yves has written for publications in the United States and Australia, including The New York Times, The Christian Science Monitor, Slate, The Conference Board Review, Institutional Investor, The Daily Deal and the Australian Financial Review.[Yves is a graduate of Harvard College and Harvard Business School. Yves Smith's Recent Discussions Everyone claims to be “outraged” by AIG’s bad behavior but helpless to do anything. Won’t this make it tougher to get public support for any banking bailout? At noon: Join us for a live discussion with Tom Ricks, author of "The Gamble" and "Fiasco." As for the bonuses, the idea that they couldn't be clawed back is a canard. As offensive as the bonuses are, they are rounding error relative to the amount given to AIG on more and more favorable terms to the company. Far more serious is that AIG is still engaging in activities that ought to be halted. For instance, AIG lost nearly half a billion (far more than the bonuses) in the fourth quarter in its AIG United Guaranty unit. What does United Guaranty do? When Fannie and Freddie makes a conforming mortgage, the borrower is normally required to make a down payment of 20%. However, an alternative is for the borrower to obtain insurance on the loan in excess of 80% from an "approved" insurer. AIG is still "approved" for these so-called enhanced mortgages, even though Fannie and Freddie are showing losses on these mortgages in excess of the guaranteed portion. This whole scam should be shut down. As for the bonuses, the idea that they couldn't be clawed back is a canard. Treasury should have filed lawsuits against the senior executives in charge at the time of the bailout (and perhaps those in earlier periods as well) for accounting fraud or at least made clear they were prepared to file charges. That would have given the government considerable leverage in demanding that bonuses not be paid because they were the result of accounting control fraud See more The President's address to Congress: how did he do? And how about Jindal? I'm struck by the gap between the stirring rhetoric and the lack of new initiatives or detail on the banking front. The only new element was a promise to implement regulatory reforms, with nary a mention of when proposals might be forthcoming or who would spearhead the effort. A semi-new element was the affirmation that the auto industry is a national priority and would not simply survive but become an area of American leadership. By contrast, the Wall Street Journal described yesterday how the Treasury was exploring bankruptcy as an option for GM and Chrysler. That move may just have been high stakes poker, but it certainly looks inconsistent with what the President said tonight. Fundamentally, I'm troubled by the emphasis on getting lending started again as the remedy to the financial crisis. The core problem is that consumers are already up to their eyeballs in debt. The lesson of past financial crises, is that not only do banks need to be recapitalized, but bad debts need to be restructured or written off. Trying to have overextended borrowers take on more debt is a flawed approach. See more Obama's inaugural address warned of sacrifices and "unpleasant decisions" ahead, but did not offer detail. What specific sacrifices--who gives up what--are needed over the next couple years to meet the nation's problems? Americans will have a lower standard of living. Every country that has suffered a financial crisis of this magnitude, even ones regarded as managing the situation well, like Sweden in the early 1990s, have had a permanent decline in their economic standing. Most economists looking at our situation expect the US to have both a considerably higher tax burden for a very long time and a weaker currency. One unpleasant decision is recapitalizing the banking system. The financial industry has grown to an unsustainable size. It needs to shrink, but it also needs new equity, and until banks are cleaned up, private investors will not throw good money after bad. The most successful models, which actually showed a profit to taxpayers, involved wiping out shareholders of dud banks, nationalizing them, spinning off and liquidating the bad assets, and selling the banks back to the public after conditions had stabilized. But we are doing a half-baked version of this approach, instead trying to avoid losses to bank shareholders and bondholders by propping up a bloated financial services industry in place. This approach is proving to costly and ineffective, and will also lead to resistance to sounder approaches that still involve taxpayer outlay. See more Bailout breakdown. Markets tumbling. What's the political fallout? Who gets the blame, or credit? Is it Herbert Hoover time, as Cheney reportedly said? The bailout nail-biter is a nasty confluence of backlash against the Administration's scare-mongering to push through the passage of the TARP, a South versus North divide, auto industry insularity, with class warfare thrown in. Remember, despite closed-door threats that Armageddon would result if the TARP failed, the markets were a nightmare after its passage. The Southern states, whose massive subsidies to the foreign transplants get insufficient mention in this debate, seem to overlook the fact that if any of the Big Three fail, it will take out a lot of auto parts manufacturers on whom foreign suppliers depend, threatening their survival. Banks. Automakers. Governors. Who's next? With all the cries of dire consequence, how do we decide when to say no? The seemingly unending spate of bailouts results in a significant degree from two issues. First, they've been way too generous. More than a century ago, Walter Bagehot set forth the widely-accepted prescription for central bankers in times of stress: lend freely against good collateral, at penalty rates. The notion is not to put the central bank at risk, and to discourage institutions from expecting a rescue from their reckless behavior. Except for AIG version 1.0, the loans and equity infusions have been so generous as to amount to subsidies, with no meaningful demands or controls placed on management. Second, the authorities have been unwilling to do triage. The underlying reason we are in this mess is that financial firms made way too many dodgy loans in the boom years. The financial services industry expanded well beyond a sustainable level. Yet in contradiction to the model for a successful response to a banking crisis (Sweden in the early 1990s) there has been no effort to do triage, no notion of how to rationalize and shrink the industry (which by contrast, we are demanding of Detroit). It's been reactive, ad hoc, and far too user friendly. See more Is Obama a 'snob'? Posted onOct. 20, 2010 Whom should Dems cut loose? Handcuffs: Miller time, Alaska-style? Open Mike, Oct. 16-17 President Obama like John McCain, circa 2008? Who wins in a Reid-Angle face-off? Will ‘whore’ flap be

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You are Here:Home > About SBA > SBA Locations > Headquarters Offices > Office of Small Business Development Centers > Leadership About SBASkip to page contentSBA LocationsHeadquarters OfficesOffice of Small Business Development CentersAbout UsLeadershipResourcesRegional OfficesLocal OfficesDisaster Offices Office of Small Business Development Centers Leadership Biographies Carroll A. Thomas Associate Administrator Ms. Carroll A. Thomas was appointed Associate Administrator for the U.S. Small Business Administration’s (SBA) Office of Small Business Development Centers (SBDCs) in November 2012. With more than 30 years of entrepreneurial and small business development experience, her accomplished public/private sector career demonstrate her leadership expertise as a catalyst for creating innovative partnerships and advocating economic development by supporting dynamic small business ecosystems. Ms. Thomas is responsible for program and policy development, implementation and oversight of the $113 million grants program that funds the Small Business Development Centers located in every state plus the District of Columbia, Guam, Puerto Rico, American Samoa and the U.S. Virgin Islands in more than 900 service locations. As the major outreach arm of the SBA, the SBDCs under Ms. Thomas ’ leadership and through the professional small business experts provide business counseling and training to start-up ventures and existing businesses. Small business owners receive helpful assistance in business planning, management, financial and marketing areas customized for small businesses enabling the creation of new firms and ensuring the viability of existing firms that help create jobs. Prior to her appointment as Associate Administrator, Ms. Thomas championed and supported assistance to help small manufacturers compete. As Program Manager for Supplier Scouting and as Partnership Catalyst at the Department of Commerce, National Institute of Standards and Technology Manufacturing Extension Partnership program she implemented pilots to support Buy America procurement provisions by matching U.S. manufacturers with opportunities from publically-funded projects and co-founded the Interagency Network of Enterprise Assistance Providers. Earlier in her career, Ms. Thomas was a small business retail franchise owner; negotiated product deals with over 23,000 U.S. inventors and small manufacturers for electronic retailer QVC and managed marketing efforts for the National Gallery of Art’s vast reproduction portfolio. Ms. Thomas is a graduate of Leadership Washington and a former Regional Director of the Fashion Group International of Greater Washington, DC. She holds a Bachelor of Science degree from Drexel University and a Master of Business Administration from Johns Hopkins University. Washington Office Center 409 3rd Street, S.W. Suite 6400 Washington, DC See map: Google Maps TTY/TTD: 800-877-8339 In Partnership with Business USA

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Search: About Treasurer /STO STO Home PMIA/LAIF Home PMIA Contact Information LAIF Contact Information Time Deposit Contact Information PMIB Meeting Agendas and Minutes LIAB Meeting Agendas and Minutes Investment Protection Standards Sign Up to Receive LAIF Information Save the Date - 2014 LAIF Conference PMIA/LAIF Investment Program Information Home ->> PMIA-LAIF ->> Program Description The Local Agency Investment Fund (LAIF), is a voluntary program created by statute; began in 1977 as an investment alternative for California's local governments and special districts and it continues today under Treasurer Bill Lockyer's administration. The enabling legislation for the LAIF is Section 16429.1 et seq. of the California Government Code. This program offers local agencies the opportunity to participate in a major portfolio, which invests hundreds of millions of dollars, using the investment expertise of the State Treasurer's Office investment staff at no additional cost to the taxpayer. This in-house management team is comprised of civil servants who have each worked for the State Treasurer's Office for an average of 20 years. The LAIF is part of the Pooled Money Investment Account (PMIA). The PMIA began in 1955 and oversight is provided by the Pooled Money Investment Board (PMIB) and an in-house Investment Committee. The PMIB members are the State Treasurer, Director of Finance, and State Controller. The Local Investment Advisory Board (LIAB) provides oversight for LAIF. The Board consists of five members as designated by statute. The State Treasurer, as Chairman, or his designated representative appoints two members qualified by training and experience in the field of investment or finance, and two members who are treasurers, finance or fiscal officers or business managers employed by any county, city or local district or municipal corporation of this state. The term of each appointment is two years or at the pleasure of the appointing authority. All securities are purchased under the authority of Government Code Section 16430 and 16480.4. The State Treasurer's Office takes delivery of all securities purchased on a delivery versus payment basis using a third party custodian. All investments are purchased at market and a market valuation is conducted monthly. Additionally, the PMIA has Policies, Goals and Objectives for the portfolio to make certain that our goals of Safety, Liquidity and Yield are not jeopardized and that prudent management prevails. These policies are formulated by Investment Division staff and reviewed by both the PMIB and the LIAB on an annual basis. The State Treasurer's Office is audited by the Bureau of State Audits on an annual basis and the resulting opinion is posted to the State Treasurer's Office website following its publication. The Bureau of State Audits also has a continuing audit process throughout the year. All investments and LAIF claims are audited on a daily basis by the State Controller's Office as well as an in-house audit process involving three separate divisions. Under Federal Law, the State of California cannot declare bankruptcy, thereby allowing the Government Code Section 16429.3 to stand. This Section states that "moneys placed with the Treasurer for deposit in the LAIF by cities, counties, special districts, nonprofit corporations, or qualified quasi-governmental agencies shall not be subject to either of the following: (a) transfer or loan pursuant to Sections 16310, 16312, or 16313, or (b) impoundment or seizure by any state official or state agency." During the 2002 legislative session, California Government Code Section 16429.4 was added to the LAIF's enabling legislation. This Section states that "the right of a city, county, city and county, special district, nonprofit corporation, or qualified quasi-governmental agency to withdraw its deposited moneys from the LAIF, upon demand, may not be altered, impaired, or denied in any way, by any state official or state agency based upon the state's failure to adopt a State Budget by July 1 of each new fiscal year." The LAIF has grown from 293 participants and $468 million in 1977 to 2,564 participants and $20.1 billion at the end of March 2014. STO Home | Unclaimed Property | En Español | Contacts Comments | Privacy Statement | Accessibility Statement | Site Map | Download Adobe Reader © 2014 California State Treasurer's Office

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Resource Center Current & Past Issues eNewsletters This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article. SEC Whistleblower Awards Have Little Effect on Internal Tips Most companies have seen no change in volume on hotlines, IIA survey shows. By Susan Kelly December 4, 2012 • Reprints The Securities and Exchange Commission’s awards for corporate whistleblowers haven’t had much impact on the tips that companies receive via their internal hotlines, according to a recent survey by the Institute of Internal Auditors. In August 2011, the SEC started a program, mandated by Dodd-Frank, which awards whistleblowers from 10% to 30% of any financial recovery the agency makes as the result of information the whistleblower provided. Companies fretted that the prospect of an award might cause employees to bypass internal procedures for reporting fraud and other problems and instead head straight to the SEC. But 84% of the IIA’s respondents say they’ve seen no change in the number of tips or complaints received by their hotlines since the SEC award program took effect in August 2011, with 11% saying volume has increased and 5% citing a decrease. When the SEC kicked off its awards, “there was a lot of concern that there was going to be some sort of chaos out there because people might be lured by the attractiveness of the reward money from the SEC and that was going to cause people to go around corporate processes to investigate allegations of fraud,” says IIA CEO Richard Chambers. “The survey results would indicate that at least so far, that’s not proving to be true.” The IIA’s survey of 545 chief audit executives and internal audit directors found 78% say they have little or no concern that employees will bypass internal reporting processes to take their complaints directly to the SEC, with 20% citing “some concern” and just 2% saying they were concerned or highly concerned. The levels were a little higher for executives from Fortune 500 companies, where 41% cited some concern and 1% said they were concerned to highly concerned. Luis Ramos, CEO of The Network, which provides governance, risk and compliance solutions, including hotlines, agrees that the SEC’s award program isn’t stopping employees from reporting problems internally. “We continue to see very active use of internal hotlines,” he says. “We’re getting a comparable, if not higher, level of reports through our whistleblower lines, and we’re seeing employees prefer that method rather than going outside the existing compliance programs.” Ramos notes that in response to the SEC awards, companies made a push to ensure that their employees were aware of internal reporting processes. “Many of these companies really redoubled their efforts to communicate about their existing programs and made these programs much more visible to their employees,” he says. Companies also took steps to educate employees about anti-retaliatory policies concerning whistleblowers, he says, and they

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Resource Center Current & Past Issues eNewsletters This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article. A Bitcoin for Your Thoughts What corporate treasurers need to know, and do, about the birth and growth of virtual currencies. By Joram Borenstein November 5, 2013 • Reprints Bitcoin seems to be everywhere these days. What was once an esoteric topic discussed only by mathematicians, cryptographers, end-of-the-world doomsday predictors, and the occasional conspiracy theorist has grabbed front-page headlines around the world and become a leading topic presented at financial services industry events. Regulators, journalists, bankers, consultants, and venture capitalists have poured time, money, and energy into understanding what a bitcoin is and trying to determine how the virtual currency fits into the global payments landscape. The bitcoin payment mechanism emerged in 2008 under extremely mysterious circumstances. The term “bitcoin” was supposedly coined by someone named Satoshi Nakamoto, who wrote a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” As of this writing, no known individual, organization, agency, or government has ever maintained that it created the bitcoin infrastructure or technology platform. Various theories have been floated, and a few mainstream publications—including The New York Times and Fast Company—have launched serious investigations, but so far no one really knows how bitcoin payments got their start. The bitcoin currency is entirely digital. Although publications sometimes use photo montages of gold-embossed coins to accompany articles about bitcoins, these are purely mock-ups. Bitcoins do not exist in the physical world; the best way to think of a bitcoin is as a long sequence of data. Individuals who want to make bitcoin-denominated purchases can buy the currency through one of several exchanges, including Bitstamp; Kraken; CampBX; and Mt. Gox, which is the most prominent and popular. Bitcoins’ value fluctuates vis-à-vis the U.S. dollar and other traditional currencies. Users can track exchange rates at sites such as bitcoinexchangerate.org and preev.com. Through most of 2013, the price of a bitcoin has hovered in the $100 to $140 range, but it fluctuated from a low of US$20 in January to around US$220 in April, and it's back up to just over US$240 today. Owners of bitcoins transact using an open-source, peer-to-peer file-sharing technology that is similar in many ways to the music-sharing Napster technology from the late 1990s. Each bitcoin transaction utilizes cryptography—the mathematical science that goes into keeping communications secure from unwanted third parties—to protect the identity of its owners while ensuring the transaction’s integrity. Each transaction is time-stamped and is permanently recorded in a public ledger called the “blockchain.” A secondary market for bitcoins is beginning to appear, but it does not yet represent a strong and viable platform for speculation. For people who are technologically challenged, two options for bitcoin investments are the SecondMarket Bitcoin Investment Trust and the Winklevoss Bitcoin Trust—launched this summer by the famous Winklevoss twins, who were involved in the lawsuit against Mark Zuckerberg enshrined in the 2010 film “The Social Network.” These vehicles enable investors to put money into bitcoins without actually directly trading in the currency, in much the same way that an investor might elect to fund a REIT mutual fund rather than buy a piece of real estate directly. Bitcoins Gain Purchase in the Public Eye Payments experts tend to think that bitcoin-denominated payments appeal primarily to three groups of people. First are people who believe the virtual currency is a good mechanism for speculation, and that the bitcoin will soon be a highly valuable commodity. Second are people who inherently distrust authority. These individuals find the notion of anonymity appealing and consider bitcoin transactions to be less traceable than deals made in traditional currencies, since bitcoin has no central bank or central banker. Finally, the bitcoin platform appeals to criminals who are trying to cover their tracks—money launderers, terrorists, and the like. In theory, they can avoid scrutiny by any government if they use bitcoin payments to move funds, compensate employees, and initiate other types of transactions. ZDNet has referred to the bitcoin platform as “the world’s largest floating black market.” In early 2012, the mainstream media and investors began paying a great deal of attention to the potential inherent in bitcoin-based businesses. Venture capital funds in California started funding startups that manage, trade, track, and process bitcoin-denominated payments. With names like Coinbase, Vaurum, Coinsetter, Tradehill, CoinLab, BitInstant, Gliph, Alydian, BitPay, and TruCoin, these various startups remain at the vanguard of the emerging payments mechanism. At the same time that funding began flowing into the community of bitcoin-related startups, the platform was involved in a number of very public incidents that demonstrated its ability to capture the attention of the mainstream media and the public. Several high-profile renegades began accepting donations from their supporters via bitcoin exchanges. Julian Assange’s WikiLeaks organization has reportedly received nearly $500,000 in bitcoin donations since the late-2010 blockage of donations to WikiLeaks by Bank of America, Visa, MasterCard, PayPal, and Western Union. More recently, the legal fund for Edward Snowden, the alleged U.S. National Security Agency (NSA) leaker, supposedly received $13,000 in bitcoin-based contributions within the first two weeks of its launch. Then, in September 2013, the U.S. FBI shut down the drug market website called “Silk Road.” In doing so, the agency sp

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Black Wednesday For the air travel crisis, see Black Wednesday (air travel). For the healthcare term, see July effect. In politics and economics, Black Wednesday refers to 16 September 1992 when the British Conservative government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM) after they were unable to keep it above its agreed lower limit. George Soros, the most high profile of the currency market investors, made over 1 billion GBP[1] profit by short selling sterling. In 1997 the UK Treasury estimated the cost of Black Wednesday at £3.4 billion,[citation needed] with other sources giving estimates as high as £27 billion. In 2005 documents released under the Freedom of Information Act revealed that the actual cost may only have been £3.3 billion.[2] The trading losses in August and September were estimated at £800 million, but the main loss to taxpayers arose because the devaluation could have made them a profit. The papers show that if the government had maintained $24 billion foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4 billion profit on sterling's devaluation.[3][need quotation to verify] Newspapers also revealed that the Treasury spent £27 billion of reserves in propping up the pound. 1 Prelude 2 The currency traders act 5 Footnotes When the ERM was set up in 1979, the United Kingdom declined to join. This was a controversial decision, as the Chancellor of the Exchequer, Geoffrey Howe, was staunchly pro-European. His successor Nigel Lawson, a believer in a fixed exchange rate, admired the low inflationary record of West Germany. He attributed it to the strength of the Deutsche Mark and the management of the Bundesbank. Thus, although the UK had not joined the ERM, from early 1987 to March 1988 the Treasury followed a semi-official policy of 'shadowing' the Deutsche Mark.[4] Matters came to a head in a clash between Lawson and Margaret Thatcher's economic adviser Alan Walters, when Walters claimed that the Exchange Rate Mechanism was "half baked". This led to Lawson resigning as chancellor to be replaced by his old protégé John Major, who, with Douglas Hurd, the then Foreign Secretary, convinced the Cabinet to sign Britain up to the ERM in October 1990, effectively guaranteeing that the British Government would follow an economic[5] and monetary policy that would prevent the exchange rate between the pound and other member currencies from fluctuating by more than 6%. The pound entered the mechanism at DM 2.95 to the pound. Hence, if the exchange rate ever neared the bottom of its permitted range, DM 2.778, the government would be obliged to intervene. With UK inflation at three times the rate of Germany's, interest rates at 15% and the "Lawson Boom" about to bust, the conditions for joining the ERM were not favorable at that time. From the beginning of the 1990s, high German interest rates, set by the Bundesbank to counteract inflationary effects related to excess expenditure on German reunification, caused significant stress across the whole of the ERM. The UK and Italy had additional difficulties with their double deficits, while the UK was also hurt by the rapid depreciation of the US Dollar – a currency in which many British exports were priced – that summer. Issues of national prestige and the commitment to a doctrine that the fixing of exchange rates within the ERM was a pathway to a single European currency inhibited the adjustment of exchange rates. In the wake of the rejection of the Maastricht Treaty by the Danish electorate in a referendum in the spring of 1992, and announcement that there would be a referendum in France as well, those ERM currencies that were trading close to the bottom of their ERM bands came under pressure from foreign exchange traders. The currency traders act[edit] The UK government attempted to prop up the sinking pound to avoid withdrawal from the monetary system the country had joined two years previously. Major raised interest rates to 10 percent and authorised the spending of billions of pounds worth of foreign currency reserves to buy up the sterling being sold on the currency markets but the measures failed to prevent the pound falling below its minimum level in the ERM. The Treasury took the decision to defend Sterling's position, believing that to devalue would be to promote inflation.[6] On 16 September the British government announced a rise in the base interest rate from an already high 10 to 12 percent in order to tempt speculators to buy pounds. Despite this and a promise later the same day to raise base rates again to 15 percent, dealers kept selling pounds, convinced that the government would not stick with its promise. By 7:00 that evening, Norman Lamont, then Chancellor, announced Britain would leave the ERM and rates would remain at the new level of 12 percent (however, on the next day interest rate was back on 10%). It was later revealed that the decision to withdraw had been agreed at an emergency meeting during the day between Norman Lamont, Prime Minister John Major, Foreign Secretary Douglas Hurd, President of the Board of Trade Michael Heseltine and Home Secretary Kenneth Clarke (the latter three all being strong pro-Europeans as well as senior Cabinet Ministers), and that the interest rate hike to 15 percent had only been a temporary measure to prevent a rout in the pound that afternoon. Other ERM countries such as Italy, whose currencies had breached their bands during the day, returned to the system with broadened bands or with adjusted central parities. Even in this relaxed form, ERM-I proved vulnerable, and ten months later the rules were relaxed further to the point of imposing very little constraint on the domestic monetary policies of member states. The effect of the high German interest rates, and high British interest rates, had arguably put Britain into recession as large numbers of businesses failed and the housing market crashed. Some commentators, following Norman Tebbit, took to referring to ERM as an "Eternal Recession Mechanism"[7] after the UK fell into recession during the early 1990s. Whilst many people in the UK recall 'Black Wednesday' as a national disaster, some conservatives claim that the forced ejection from the ERM was a "Golden Wednesday"[8] or "White Wednesday",[9] the day that paved the way for an economic revival, with the Conservatives handing Tony Blair's New Labour a much stronger economy in 1997 than had existed in 1992[10]as the new economic policy swiftly devised in the aftermath of Black Wednesday led to re-establishment of economic growth with falling unemployment and inflation (the latter having already begun falling before Black Wednesday).[11] The economic performance after 1992 did little to repair the reputation of the Conservatives. Instead, the government's image had been damaged to the extent that the electorate were more inclined to believe opposition arguments of the time – that the economic recovery ought to be credited to external factors, as opposed to good government policies. The Conservatives had recently won the 1992 general election, and the Gallup poll for September showed a 2.5% Conservative lead. By the October poll, following Black Wednesday, their share of the intended vote in the poll had plunged from 43% to 29%,[12] while Labour jumped into a lead which they held almost continuously (except for several brief periods such as during the 2000 Fuel Protests) for the next 14 years, during which time they won three consecutive general elections under the leadership of Tony Blair (who became party leader in 1994 following the death of his predecessor John Smith). 1990s portal

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Krispy Kreme Forays into Singapore By Zacks Equity Research October 8, 2012 3:24 PM In order to ramp up its overseas presence, Krispy Kreme Doughnut Inc. (KKD) recently forged a deal with Star360 Group to set up 15 Krispy Kreme franchise locations in Singapore over the next five years. The financial terms of the deal were not disclosed. Star360 group boasts superior local market knowledge and has a proven track record of venturing into the premium retail industry within the Southeast Asian market. The group operates retail outlets in Singapore, Malaysia, Indonesia, Hong Kong, Philippines, Thailand, Taiwan and Japan. Possessing strong know-how of local food habits, the franchisee is hopeful that its collaboration with a global brand like Krispy Kreme would help spread its Glazed doughnuts and freshly brewed coffee successfully across Singapore. According to Star360 group, coffee and doughnuts is a flourishing category in Singapore and the population has a sweet tooth. The latest deal affirms Winston-Salem, North Carolina based Krispy Kreme’s plan to make Singapore one the prime markets for international expansion, considering its emergent economy. According to a global market research company, Euromonitor, Singapore recorded gross domestic product (GDP) growth of 5% in 2011 on the top of a robust GDP growth of 14% in 2010, leading to higher consumer confidence. Increasing disposable income has enabled Singaporeans to spend big on branded food items. It is being witnessed that the young population as well as the emigrant population in Singapore are more inclined towards western fast-food chains. We believe that Krispy Kreme seeks to fully capitalize on this trend. According to Krispy management, the company’s overseas expansion is expected to be more in 2013 than in 2012. Encouraged by international growth over the last six years, the company anticipates having 900 overseas stores within 2017. Furthermore, a sluggish macroeconomic environment acts as another short-term deterrent. According to the Monetary Authority of Singapore, GDP growth is expected to be slow to 1–3% in 2012. However, the market is not free from competition. Apart from some western players currently serving the market, steep competition will likely come from some of the domestic brands — The Donut Factory and Mad Over Donuts. Krispy Kreme which competes with the likes of Papa John International Inc. (PZZA) currently carries a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating. We maintain our long-term “Outperform” recommendation on the stock. Read the Full Research Report on KKD Read the Full Research Report on PZZA Zacks Investment Research More From Zacks.com Read the analyst report on KKD,PZZAFinanceInvestment & Company InformationKrispy KremeSingapore KKD17.62-0.73% PZZA48.46+1.02% Krispy Kreme Doughnuts, Inc. Krispy Kreme weakness creates buying opportunity, says Roth Capital [video] Krispy Kreme CEO: Enthused about long-term beverage picture Papa John&apos;s International …

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Tax Shelters: Exotic or Just Plain Illegal? Law and Public Policy North America Twitter They were unusual tax shelters that went by incomprehensible names like BLIPS, OPIS, BOSS and FLIP — and they boomeranged on the companies that sold them. In February, German bank HVB Group agreed to pay $29.6 million in fines to avoid indictment for defrauding the Internal Revenue Service with abusive tax shelters that gave rich clients phony losses to reduce taxes. The settlement was part of a broadening investigation into exotic shelters that wealthy individuals used to escape about $2.5 billion in taxes from the mid-1990s through 2003, according to the government. Indeed, the IRS recently announced that a string of law firms, banks and accounting firms will be fined billions of dollars for failing to admit their role in promoting these improper investments. Last fall, KPMG LLP, the accounting firm that created and marketed many of the shelters, agreed to pay $465 million to avoid indictment. In addition, 17 former KPMG employees and two other individuals have been charged with criminal offenses for plotting to defraud the IRS and are scheduled for trial in September. KPMG has been sued for hundreds of millions by clients who got into trouble for using the shelters. Yet despite government efforts, there is no silver bullet that can stop promoters from cooking up new shelters, says William C. Tyson, professor of legal studies and business ethics at Wharton. Whenever a new regulation is imposed, “people just start looking for new ways to get around the tax law. Before 1986, these shelters were rampant. There are not nearly as many of them now because the law has closed up so many of the loopholes. It’s just that there is still some room to squeak through…. People are really creative.” If it’s difficult for regulators and tax experts to tell what constitutes an abusive shelter, it’s virtually impossible for a taxpayer to know if he’s buying into a strategy that could come back to haunt him later. “This is an area that is difficult to define with precision,” notes Stuart E. Lucas, CEO of Integrated Wealth Management LLC and author of the Wharton School Publishing book, Wealth: Grow It, Protect It, Spend It, and Share It. “I guess I come down on the side of using a smell-test rule. I think the intent of the tax law is fairly clear, and if you are doing things that fulfill the intent of the tax law, then you can feel reasonably safe.” But he suggests that even legitimate tax-reduction strategies can backfire if they involve paying big ongoing fees or leave the taxpayer with his hands tied when conditions change years down the road. It’s especially hazardous, he says, to take on a fixed, long-term obligation, like a debt to be repaid, and plan to pay it with an asset that can lose value in the meantime. The Miracle Workers Yet despite all the recent news, the U.S. is not in a heyday of abusive tax shelters. They were probably more prevalent in the 1970s, 1980s and 1990s. But the IRS, Congress and other regulators are focused on the issue because a loss of tax revenue is especially serious when the federal government is running budget deficits, and because promoters have been standardizing shelters to expand their market. “There is money involved…. From a business point of view, why shouldn’t [lawyers, accountants and bankers] try to make money? That’s their point of view,” says Edward B. Kostin, an adjunct faculty member in Wharton’s accounting department. U.S. tax laws are extremely complex and offer many legitimate ways to reduce taxes. Ordinary taxpayers, for example, can deduct mortgage interest payments and home office expenses, and they can use losses on one investment to offset profits on others, reducing taxes. Businesses can deduct expenses, claim depreciation on buildings and equipment, book their profits in low-tax foreign countries…. The list goes on and on. Typically, according to Lucas, as a person gets wealthier, a larger share of his or her net worth and annual income comes from investments rather than wages. Investments provide all sorts of options in navigating the tax shoals. While ordinary income is taxed at rates as high as 35%, the long-term capital gains tax rate is only 15%. The lower rate also applies to dividends, while the higher one applies to interest. Municipal bonds are tax free. Capital gains tax can be postponed until an investment is sold. Trusts and gift giving offer additional layers of tax-minimizing possibilities. “The U.S. government really acts as a silent partner to any investor,” Lucas says. “It sets the rules, but then the investor has to decide how to implement them. By managing your taxes carefully, you can significantly impact your wealth.” The term “tax shelter” generally means a product or strategy that strings together various elements of the tax code for an especially useful benefit, and many tax shelters are considered acceptable. The line between proper and improper shelters is so unclear that the IRS uses terms like “abusive” to characterize unacceptable shelters rather than calling them “illegal.” But in a 2005 study, the Senate Permanent Subcommittee on Investigations described abusive shelters as “transactions in which a significant purpose is the avoidance or evasion of federal, state or local tax in a manner not intended by the law.” Shelters that are considered proper in one period may not be permitted in another, says Tyson, who also holds a secondary appointment at the University of Pennsylvania Law School. He recalls helping clients set up legal tax shelters in the 1970s and early 1980s. “I would say the tax shelters started into their prime in the 1970s.” Back then, investors could claim accelerated depreciation on assets such as real estate, writing off part of an asset’s value each year as if it were a vehicle or piece of machinery gradually wearing out. Also, taxpayers were allowed to apply losses from passive investments, like limited partnerships, to offset large amounts of ordinary income from other sources. Using depreciation, investors could claim losses on investments that actually produced profits. “This is what I used to call a miracle,” Tyson says. Some of his shelters, he adds, were limited partnerships that invested in assets like apartment complexes. Rental income would be more than offset by operating expenses, interest on the loan and depreciation, creating a loss the partners could use to eliminate tax on tens of thousands of dollars in other income. After five years, the complex would be sold at a profit. In those days, well-heeled investors hungered for tax shelters because tax rates were considerably higher than they are today. In 1979, for instance the top income tax rate was 70% and the top capital gains rate was 35%. Today they are 35% and 15%, respectively. “Individuals were motivated to do various kinds of transactions in agriculture, oil and gas, and real estate, to reduce their tax levels and to convert ordinary income to long-term capital gains,” Kostin says. But the Tax Reform Act of 1986 made depreciation schedules less generous and barred the use of losses on passive investments to shelter other income, Tyson adds. “These passive-loss rules have gone a long way to curb abusive tax shelters.” However, clever accountants, lawyers and bankers kept looking for new ways to help clients avoid taxes, and the demand grew as investors faced big potential tax bills from the stock-market boom of the 1990s. Misleading Loan Accounting The Senate investigation found that KPMG had in 1997 established a Tax Innovation Center which turned tax shelters into a major business by creating generic products that could be marketed to more people. Previously, shelters typically were tailor-made for individuals or groups of investors. “By 2003, dubious tax shelter sales were no longer the province of shady, fly-by-night companies with limited resources,” the subcommittee found. “They had become big business, assigned to talented professionals at the top of their fields and able to draw upon the vast resources and reputation of the country’s largest accounting firms, law firms, investment advisory firms, and banks.” In addition to BLIPS — Bond Linked Issue Premium Structures — the subcommittee found that KPMG and accounting firms PicewaterhouseCoopers and Ernst & Young developed products called the Foreign Leveraged Investment Program, the Offshore Portfolio Investment Strategy, the Bond and Option Sales Strategy and the Contingent Deferred Swap, among others. “Each of these products generated hundreds of millions of dollars in phony paper losses for taxpayers, using a series of complex, orchestrated transactions, structured finance, and investments with little or no profit potential,” the subcommittee found. BLIPS, for example, were created in 1998 to replace an earlier product called OPIS that the IRS labeled abusive. Internal KPMG emails found by the subcommittee show the firm felt tremendous pressure to get the product to market even though the company’s own experts had serious doubts about the BLIPS’ appropriateness. Marketing began in 1999 and BLIPS were sold to 186 individuals before they were discontinued a year later when the IRS labeled them potentially abusive. The IRS found that BLIPS allowed clients to use misleading loan accounting to create an artificially high purchase price when they bought into certain partnerships. When they later cashed out of the partnership for a lower price, the inflated purchase price allowed them to report a tax-reducing loss. In fact, they had not suffered a real loss. As a rule of thumb, says Tyson, “investors should be wary when there is a paper loss that doesn’t reflect an economic loss.” An investor who made money on a transaction and claims a loss could well run into trouble. Adds Kostin: “If it’s just cosmetic and not economic, then it looks like it’s definitely not appropriate — not ethical and probably not legal.” Congress, he notes, is wrestling with efforts to tighten loopholes further by permitting only those shelters that involve “economic substance.” But it’s having such a hard time defining that term that he doesn’t think the effort will succeed. How much economic value should a transaction have before a tax loss is permissible? Would a dollar’s worth be enough, or should the threshold be higher? “It’s a gray area,” Kostin says. “We don’t know the answer.” "Tax Shelters: Exotic or Just Plain Illegal?." [08 March, 2006]. Web. [17 April, 2014] <http://knowledge.wharton.upenn.edu/article/tax-shelters-exotic-or-just-plain-illegal/> Tax Shelters: Exotic or Just Plain Illegal?. (2006, March 08). Retrieved from http://knowledge.wharton.upenn.edu/article/tax-shelters-exotic-or-just-plain-illegal/ Chicago "Tax Shelters: Exotic or Just Plain Illegal?" Knowledge@Wharton, [March 08, 2006]. Accessed [April 17, 2014]. [http://knowledge.wharton.upenn.edu/article/tax-shelters-exotic-or-just-plain-illegal/] For Educational/Business use: Finance High-frequency Trading: Profiting from News Technological advances are changing the playing field for investors, allowing for high-frequency trading that can skirt the spirit or letter of the law. But they also allow for practices that

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comments Ex-commodities firm chief sentenced to 50 years By Chris Isidore @CNNMoneyInvest January 31, 2013: 3:29 PM ET Russell Wasendorf Sr., the former CEO of commodities trading firm Peregrine Financial, was sentenced to 50 years for stealing clients' funds. NEW YORK (CNNMoney) Russell Wasendorf Sr., the former CEO of Peregrine Financial Group who admitted to stealing clients' funds, was sentenced to 50 years in prison Thursday. The sentence, imposed in a Cedar Rapids, Iowa, courtroom, was the maximum he was facing for his crimes. Wasendorf pleaded guilty in September to embezzling $215.5 million from more than 13,000 customers of the commodities futures firm over the course of 20 years. He prepared false documents that inflated the value of his firm. "The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors," said Acting U.S. Attorney for the Northern District of Iowa Sean Berry. Authorities said Wasendorf had admitted to the fraud in a note found following a July 2012 suicide attempt. The police found him about a mile and a half from his Cedar Falls, Iowa, headquarters in his Chevrolet Cavalier with a hose running from the tailpipe into the car. The firm, which operated PFGBest and had offices in Cedar Rapids and Chicago, filed for bankruptcy right after his suicide attempt. "I have committed fraud," read the note, which was written to his wife and eventually led federal authorities to charge him with the crimes. "For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man." He said in the note that he had been the only one involved in the scheme. His son, Russell Wasendorf Jr., was also a executive at the firm. Wasendorf was represented in court by the federal public defender's office, which asked for a reduced sentence at Thursday's hearing. He has been in federal custody since the time of his arrest. A month from his 65th birthday, Wasendorf's sentence essentially represents a life term. First Published: January 31, 2013: 3:29 PM ET Join the Conversation Most Popular

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About Harlan Green About the banner photos Back to Your Money: Popular Freakonomics The Fickle Private Sector Posted by Harlan Green on Saturday, November 14th 2009 Popular Economics Weekly Why is this recession so deep and long lasting? Because its underlying cause was magnified by a fickle private business sector that ran for the exits at the first sign of trouble. That is, private businesses seem to have little tolerance for uncertainty these days and so are quick to cut jobs and investment spending when it threatens their bottom line profits. And with a weak regulatory environment and meager social safety net, it has become easier for businesses to lay off workers. The result is the sudden loss of consumer demand for their goods and services, which exacerbates the normal up and down business cycle and results in a recession at least once every decade. That is why government support is necessary to shorten the recovery periods. Without that aid, consumers would have very little spending power and businesses no one to sell their products and services to, until the private sector decides it is safe to expand again. Government and the Federal Reserve have basically done a good job in shortening the length of recessions. The average recession length since WWII is 10 months, vs. 18 months before WWII. So when this recession began brewing in 2007—not only did businesses begin to slash their workforce, but banks and investors began to hoard their assets. The result is more than 7 million jobs have been eliminated in less than 2 years, banks are holding $800 billion in excess reserves beyond capital requirements, and investors are hoarding more than $9.6 trillion in so-called MZM accounts—Money at Zero Maturity— such as money market and bank deposits. Such was the panicked reaction of private sector business to collapsing credit markets that the Federal Reserve was not able to halt the downturn when they lowered interest rates, the usual result of such actions. In fact, banks stopped lending altogether, causing what is called a liquidity trap. This is when the money in the economy is no longer circulated by companies or consumers, but sits unused. The result has been a freeze in business activity, which is leading to a deflationary spiral, the most dangerous kind of recession. That is when not only prices drop, but incomes also. This recession began December 2007, according to the National Bureau of Economic Research, causing 4 quarters of negative GDP growth, and probably ended sometime in July-August 2009. So it lasted at least 20 months, far above the average post-WWII duration. One would think it is self-evident that when the private sector becomes risk-averse it is government’s job to step into the breach by substituting government spending for the lack of private investment. But such New Deal thinking only came into vogue during the Great Depression. It was Roosevelt’s first Labor Secretary, Francis Perkins, also the first female cabinet member in history, who was the prime mover of much of the New Deal, including social security, unemployment insurance, and many of the depression-era public employment projects such as the WPA that employed millions, paying small, subsistence wages. She did this long before economists began to think of such aid, and even before Lord John Maynard Keynes formulated his economic theories in 1935 that justified such support during dire times. The seriousness of the current Great Recession has warranted similar government aid. Only this time it is being done with both direct and indirect government stimulus spending. The Treasury is disbursing most of the $787 billion ARRA and $300 billion in TARP funds, while the Federal Reserve is purchasing upwards of $2 trillion in various asset-backed securities to support the record low interest rates. The result to date is maybe 1 million jobs saved or created, a real estate market slowly gaining in strength, and an economy growing for the first time in a year. The Fed has said they won’t even begin to raise rates until the job market recovers. That means the unemployment rate has to decline back to the 6-7 percent range from today’s 10.2 percent rate. It could take years, given the hiring reluctance of private employers. The Federal Reserve in particular has learned the lessons of the Great Depression, which was prolonged because credit was tightened too soon. Fed Chairman Ben Bernanke is in fact a student of the Great Depression. The government is almost the only source of economic activity at present, but a real recovery will happen only when private business dares to venture back into the marketplace. Harlan Green © 2009 Leo Cecchini on 15/11/2009 in 09:59 Harlan Why are so many economists such as Paul Krugman (see my blog of Nov 3) surprised that the private sector is not following the Feds lead in spending to revive the economy? You have done such a good job of chastizing American consumers for their profligate spending, that you blame for the recession, that they got the message and are saving, instead of spending. I, however, as a hedonistic spendthrift, have been beating the drum to consume more. But don’t fret, as I put it in one blog, I am confident that the American consumer will sooner or later “shuck beans and rice and return to cavier and lobster.” « More Signs of Economic Recovery A Merrier Christmas? » About Your Money: Popular Freakonomics It is very difficult to cull from the financial news media what really happens behind the scenes on Wall St. and in Washington. Much of it has been masked from the public view, especially over the past 20 years. This has led to an abysmal ignorance of matters economic, which has enabled much of the financial excesses of late. I intend to pull back the veil of mystery in order to explain and analyze the meaning of the many changes to our economic system in this decade. Much of Popular Freakonomics is culled from my weekly syndicated columns – Popular Economics Weekly and The Mortgage Corner – that I have been writing for ten years. Enjoy, and feel free to comment. — Harlan Green, Turkey V Keynesian Economics (68) Neo-classical Economics (4) Macro Economics (182) Weekly Financial News (390) Mortgage News (138)

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E-mail Print Comments Share Tweet Google+ Economy Will Improving Economy Bring Surge Of Job Seekers? By Scott Neuman View Slideshow People waited in line to get into a job fair in Independence, Ohio, in November. Tony Dejak After William Johnson was laid off from his graphic design job in 2007, he was forced to move in with his elderly parents in Racine, Wis. Courtesy of William Johnson William Johnson, a graphic designer by trade, recalls with much bitterness the long, grinding job hunt that followed his 2007 pink slip in Milwaukee. "There were some people I emailed or called 10 or 15 times," he says. "After a few years of that, not hearing back from people ... slowly but surely I just sort of gave up." Johnson, 44, is one of about five million jobless Americans who have stopped looking for work and are therefore no longer counted in the Department of Labor's monthly unemployment rate, which stands at 8.3 percent. If that number included those discouraged workers, it would be closer to 10 percent. And if it counted the millions of people working part-time because they can't find anything full-time, it would be more than 15 percent. As the U.S. labor market slowly improves and the economy gains traction, many frustrated job-seekers will dust themselves off and start submitting resumes again. How Many And How Fast? In fact, there are signs it's already happening. Manpower, the country's largest employment-services firm, says it has seen a 20 percent to 30 percent increase in inquiries from job seekers in just the past few weeks. "We're seeing people whose unemployment insurance has run out who are taking a more serious look at their prospects again," says Sunny Ackerman, vice president and general manager for major markets at Manpower. But nobody seems to know exactly how many people will come off the sidelines or how rapidly they will move. If it happens quickly, it could drive the unemployment rate back up, because people who had dropped off the Labor Department's radar would suddenly be counted again. Heidi Shierholz, an economist at the nonpartisan Economic Policy Institute, doesn't think workers will flood the market "until job prospects improve significantly" – and at the current rate of job growth, that could take years. "We don't have some historical perspective to compare this to and go, 'Ok, we know from experience that when the unemployment rate gets to X, or the number of jobs gets to whatever, that's when people will start coming back,' " she says. The Role Of Demographics Regardless of how many people re-enter the fray, any influx of job-seekers likely won't significantly increase the unemployment rate. That's partly due to demographics, according to a recent study by Wells Fargo Securities. It said there's a natural attrition at work — baby bombers are retiring, moving out of the job pool and leaving a bit of room for others. Economists also say many older people who lost jobs late in their careers are finding it hard to get rehired and may never come back. And many younger and middle-aged people, frustrated with their prospects, are hoping that more education may give them new, marketable skills. "A lot of these people have opted out of the labor market by going back to school or staying in school," says Nigel Gault, chief U.S. economist for IHS Global Insight. That's where Johnson's path led him. Things got so tight financially that he was forced to move in with his elderly parents in Racine, Wis., where he became the primary caregiver for his ailing mother. "I began to think, 'The heck with resuming a job search in graphic design, I'll see what I can do in health care,' " Johnson says. He's planning to cash in part of his retirement savings and go back to school to become a certified nursing assistant. The two-year program will likely keep him out of the job market for some time. 'I'd Take Anything' Younger, less educated job-seekers have had it particularly tough since the downturn that began in late 2007. But even those who are middle-aged and hold advanced degrees have had difficulty. Mindy Martin of Olympia, Wash., has a master's degree in counseling and lost her job three years ago. "I'd take anything, really, that would offset the cost of child care and make it worth me being out of the home," says the 38-year-old mother of two young children. Jobs in her field that once were advertised at starting salaries of about $32,000 a year are now being offered at minimum wage, Martin says. In the meantime, she says the family has been scraping by on her husband's job, which is steady but not well-paying. They are current on their house payments but have racked up about $15,000 in credit card debt in the months since her unemployment insurance ran out. Martin says she still looks at the job listings a few times a week, though she finds the whole process demoralizing. "I am an optimistic person, so I like to imagine in five years that I will be doing something that will both pay the bills and is satisfying work for me," she says. "But my track record is not very good. I just don't know." Slowly But Surely? Azhar Iqbal, a co-author of the Wells Fargo report, says he is cautiously optimistic about the future for discouraged workers. The job market, he says, is slowly getting better. "Once people have really grasped that, they will say 'Ok' and get back in the market," Iqbal says.Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/. View the discussion thread.

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As the Dow breaks 15,000, is it too late to buy? Saturday, May 4 at 7:02 AM NEW YORK (AP) — Are stocks worth buying now? With the Dow Jones industrial average breaking through 15,000, it's natural to worry that stocks have gone up too far. But higher priced stocks aren't necessarily overpriced. They may still be a good deal if corporate earnings are rising fast, and you think that trend is likely to continue. A solid April jobs report on Friday is a sign the economy is strengthening. That could lead to higher profits. What's more, many of the traditional threats to bull markets — rising inflation and interest rates, a possible recession — don't seem likely soon. That said, stocks are no bargain. Buy them only if you're willing to ride the inevitable ups and downs and hold on for a while. A look at some forces that could push stocks higher in the coming months: — HIGHER EARNINGS: Stock investors cheered when employers added 165,000 jobs in April and unemployment fell to a four-year low. More people working means more money flowing into the economy. That could help companies extend a remarkable streak of ever-higher profits. Companies in the Standard and Poor's 500 index posted a record $102.83 earnings per share last year, or 17 percent higher than in 2007, when stocks were last near this level before the financial crisis. How do stock prices compare with those earnings? To answer that, experts look at what's called price-earnings ratios, or P/Es. Low P/Es signal that stocks are cheap relative to a company's earnings; high ones signal they are expensive. P/Es are calculated by dividing the price of each share by annual earnings per share. So a $100 stock of a company that earns $10 per share trades at 10 times. The lower the P/E, the cheaper the stock. There are various P/Es. Some use past earnings and other future earnings. They give a mixed picture, but together suggest that stocks are reasonably priced. If you look at earnings from the past year, the S&P 500 is trading at 15.6. That is slightly lower, or cheaper, than the 17.2 average for this P/E since World War II, according to S&P Capital IQ. Using forecast earnings for the next 12 months, you get a P/E of 14.2, the same as the average over ten years, according to FactSet, a provider of financial data. Another measure shows stocks are somewhat expensive, however. Some investors think you should look at annual earnings averaged over 10 years instead of just one year. This eliminates any surge or fall due to changes in the business cycle. Dividing stock prices by a 10-year average of earnings yields a P/E of 23 times. That is higher, or more expensive, than the average 18.3 since WWII. A word of warning: You shouldn't invest just by looking at P/Es. They are more guide than gospel. There have been long periods when stocks traded at lower or higher P/Es than the averages. — ECONOMIC EXPANSION: With Friday's job report, the odds for continued expansion got better. The economy has created an average of 208,000 jobs a month from November through April, above the 138,000 average for the previous six months. The report follows news that the pace of economic growth picked up in the first three months of this year, home prices rose at the fastest pace in nearly seven years and automakers had their highest sales for April since the recession. Tally it up, and financial analysts see earnings for the S&P 500 rising 12 percent in the last three months of the year, a big jump from an estimated 4.8 percent gain in the first three months. There's plenty of reason for caution, though. For starters, analysts tend to overestimate earnings several quarters in the future, and may be doing that again. Early last year, they expected a 13-percent jump in earnings in the last three months of the year. They got four percent instead. And some experts believe Wall Street is underestimating how much the sweeping federal spending cuts that kicked in March 1 are going to slow the economy as government workers are furloughed and contractors lose business. If they're right, that could erode earnings. Investors also have to keep on eye overseas. Half of revenues at big U.S. companies are abroad and some key economies are slowing or contracting. This can hit stocks hard, as General Electric shows. Last month, when GE reported a 17 percent fall in revenue from Europe, its stock dropped four percent in a day. Many European countries are mired in recession, and the outlook has only gotten worse. Unemployment in the eurozone just rose to an all-time high of 12.1 percent. China has put investors on edge, too. On April 15, news that it grew more slowly than expected in the first three month of this year helped push the Dow down 266 points, the biggest drop for the year. Nervous yet? One thing to keep in mind is that big, sustained drops in stocks — ones that end bull markets — are most often caused by U.S. recessions, and that doesn't appear likely soon. Four of the past five bull markets ended as investors dumped stocks before the start of a recession. They sold stocks two months before the start of the Great Recession in December 2007 and a year before the March 2001 recession. The U.S. economy has grown between 1-2.5 percent in the past three years. That's pitiful compared with the long-term average of 3 percent. Still, it's growth. — LOW INTEREST RATES: If recessions cause stocks to plummet, what causes recessions? In most cases it's the Federal Reserve raising short-term interest rates because it fears high inflation from an overheated economy. Fed hikes were the trigger for three of the past four recessions. But today, the greater fear is too little inflation, not too much. The Fed's preferred measure of inflation rose only 1 percent in the year through March. The Fed's target is 2 percent. What's more, the Fed has said it would keep key short-term rates nearly zero until unemployment falls to at least 6.5 percent. It is 7.5 percent now.

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Novo Growth Equity Expands Team, and Will Invest Up to $200M Per Year Industry veterans Scott A. Beardsley and Michael Shalmi join the team as senior partners June 25, 2009 04:00 AM Eastern Daylight Time COPENHAGEN & BAGSVAERD, Denmark--(BUSINESS WIRE)--Novo Growth Equity, an investment activity of Novo A/S, announced today that it has expanded its leadership team in Copenhagen. Industry veterans Scott Beardsley and Michael Shalmi have joined the team as senior partners. Christina Sylvester-Hvid also joined as a principal. Ulrik Spork continues to lead the Novo Growth Equity effort at Novo A/S as managing partner. Novo Growth Equity expects to make its first investment within the next six months. With the creation of Novo Growth Equity, Novo has significantly increased its commitment to be a long-term investment partner for successful later stage life science companies. Novo Growth Equity’s mandate is to provide substantial capital to enable the most promising global life sciences companies to realize their full potential. “We saw an overwhelming need in the market for growth stage capital for promising life science companies in Europe and the U.S.,” says Ulrik Spork, managing partner of Novo Growth Equity. “As part of Novo A/S, we have the capability to provide significant capital, be active and independent investors, and provide our expertise to companies as ‘venture catalysts.’ I am thrilled that Scott, Michael and Christina are joining me in this effort.” Scott Beardsley joins Novo Growth Equity from JP Morgan in San Francisco, where he most recently was a managing director, and led the firm’s West Coast biopharmaceuticals effort. He brings 17 years of investment banking experience to the team, including more than a decade focused exclusively on life sciences. Prior to JP Morgan, Scott led Piper Jaffray’s U.S. biopharmaceutical investment banking practice, and was an investment banker in Montgomery Securities’ healthcare group. Michael Shalmi, M.D., joins Novo Growth Equity from Novo Nordisk, where he has spent 15 years in various international management positions with global responsibility, most recently as corporate vice president of Global Development, Clinical Operations Management at Novo Nordisk headquarters. Over the course of his long career with Novo Nordisk, he also held a variety of other roles with global and local (Europe and U.S.) responsibility. Michael brings to the Novo A/S team a broad knowledge of the health care business environment, including both R&D and marketing and sales. Christina Sylvester-Hvid, PhD joins Novo Growth Equity from Wiborg Biotech Consulting, where she was a partner, and helped numerous companies execute on scientific due diligence and assess clinical and commercial potential of product opportunities. Novo Growth Equity will invest up to $200 million (USD) annually into promising later stage and commercially viable life science companies. The new growth equity initiative supplements Novo’s existing seed and venture capital activity, which has been investing about $100 million (USD) annually into more than 50 early and mid stage life sciences companies since 2000. With a total of up to $300 million (USD) annually, Novo A/S’s investment pace is comparable to a traditional fund in excess of $1 billion (USD). About Novo A/S Novo A/S is the holding and investment company of the Novo Group, and is wholly owned by the Novo Nordisk Foundation. Novo A/S was formed in 1999 to actively manage the assets of the foundation

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Jobs Obama campaign returning donations from L.A. man Posted: Wed 6:40 PM, Apr 25, 2012 / Article WASHINGTON (AP) -- The Obama campaign is returning donations from a Los Angeles hedge fund manager who is accused by the government of operating a Ponzi scheme. Shervin Neman donated the maximum $35,800 to the Obama campaign and $30,800 to the Democratic National Committee. The Obama campaign says it will be refunding the contributions and have placed the funds in escrow until a trusteeship or other appropriate place is established for the returned funds. The Securities and Exchange Commission accused Neman of operating a $7.54 million Ponzi scheme earlier this month that targeted members of the Persian-Jewish community in Los Angeles. The SEC alleges that Neman promised investors large returns from a purported hedge fund that invested in foreclosed residential properties but served instead as a Ponzi scheme.

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Tags: Royal Sources: Royal Bank of Scotland Near Rate-Rigging Settlement Friday, 24 Aug 2012 02:19 PM Royal Bank of Scotland is expected to agree a settlement in the next two months with U.S. and U.K. authorities investigating its role in an interest-rate rigging scandal, according to industry sources, regulatory officials and lawyers familiar with the case. The part-nationalized bank, which is 82 percent-owned by the government, is working towards a settlement early in the fourth quarter, two of the sources said. Lawyers said it is likely to be the next bank to settle among all of those being pursued by regulators, with the government keen to protect the value of its stake by removing uncertainties over the issue. "They are state-owned, they are under more pressure than most to deal with this," said one London-based lawyer connected to Libor cases. RBS declined to comment. "We will stand up and take any punishment that comes our way," Chief Executive Stephen Hester previously told reporters in a briefing following the bank's half-year results on August 3. More than a dozen banks are under investigation by regulators in the United States, Europe and Asia for suspected rigging of London interbank offered rate, or Libor, and other similar rates which are used to price trillions of dollars worth of financial products. Reuters reported in July that RBS and Switzerland's UBS were two of the banks that had played a central role in the manipulation of rates. Barclays was the first to settle over the issue, paying record fines totaling 290 million pounds ($461 million) in June following investigations by U.S. and U.K. authorities. Three of the bank's leaders, including Chief Executive Bob Diamond, subsequently resigned. John Mann, a British lawmaker who sits on parliament's finance committee, reckons RBS could be subject to a worse punishment than Barclays. "That's what I'm hearing. The suggestions being made are that RBS was more chaotic than Barclays, the whole way they were operating and, therefore, whatever was being done, RBS was doing it more crudely," he told Reuters on Friday. Barclays executives said in July that fines handed out to other banks would "put in perspective" its own punishment, according to an internal memo seen by Reuters. POSSIBLE BREACHES The revelation of the extent of RBS's involvement could pile more pressure on Chief Executive Stephen Hester. The bank is also facing punishment over possible breaches of sanctions on Iran and Hester agreed to forego his bonus for the second year running following a computer systems failure in June which caused massive disruption to millions of customers. Shares in RBS were trading down 2.8 percent at 221.5 pence by 1430 GMT, compared with a 1.3 percent decline in Europe's bank sector. The U.K. taxpayer is sitting on a loss of 25 billion pounds on its investments in the bank in 2008 and 2009. Mann called on British finance minister George Osborne to confirm whether or not he had been briefed on the extent of RBS's involvement in Libor fixing. The Treasury had no comment on Mann's remarks. RBS confirmed earlier in August it had dismissed staff in relation to the Libor scandal but gave no indication as to whether it might settle soon with investigators. The bank said it was co-operating with governments and regulators in the United States, Britain and Japan and with competition authorities in Europe, the United States and Canada. Other Libor settlements are expected to take more time. Many institutions are trying to evaluate the scale of their involvement compared with others, and whether the rate-rigging was an endemic problem or only concerned a small number of individuals, according to sources at two of the banks. "By now you know if you have a Barclays-size problem or not, and you're trying to figure out how to deal with that," said one person familiar with the settlement negotiations. The other source said: "This is going to run and run," adding that the bulk of negotiations over Libor settlements was likely to last well into 2013 and even beyond. A group settlement is one option banks had looked at. But this would mean lumping together banks which offended to different degrees, and those that did not have an endemic problem across the firm are unlikely to want to do so, the sources said. RBS and UBS traders are a focus of the global investigation because of their alleged involvement in seeking to influence yen-denominated rates. A former RBS trader based in Singapore alleged this month in a wrongful-dismissal lawsuit that the bank's internal procedure in London seemed to be that "anyone can change Libor.

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economic opportunity, prosperity, and security for all New Hampshire residents State Economy Strengthening New Hampshire’s Minimum Wage Extending Medicaid Home » State Budget » Currently Reading: The Senate’s FY 2012-2013 Budget Proposal Senate FY 2012-13 Budget Proposal On Wednesday, June 1, the New Hampshire Senate approved its versions of the state’s two budget bills – HB 1 and HB 2 – for the coming fiscal year 2012–2013 biennium. The Senate should soon begin meeting with the House of Representatives in a committee of conference to reconcile the budgetary differences between the two chambers before fiscal year 2012 begins on July 1. For the most part, the Senate followed the path laid by the House in its version of the budget, imposing substantial spending reductions across a wide array of vital public services. In broad terms, the budget supported by the Senate would lower General and Education Fund expenditures from their anticipated level of $4.7 billion during the current FY 2010-11 biennium to $4.45 billion over the course of FY 2012-13, a decline of roughly $240 million or approximately 5 percent. More narrowly, like the House, the Senate would cut General Fund payments for uncompensated care by $115 million over the next two years, reduce local aid by over $100 million, and drop state support for public universities and community colleges by roughly $140 million. Still, important differences between the Senate and the House do exist and will need to be resolved through the committee of conference. Overall, after accounting for so-called “back of the budget” changes and other adjustments, General and Education Fund expenditures for FY12-13 are close to $70 million higher in the Senate’s version of the budget than in the one passed by the House. Most notably, the Senate would reduce spending within the Department of Health and Human Services by nearly $50 million less than the House would do, preserving some funds for programs for people with disabilities and for services for adults and children with severe mental illnesses. In addition, the Senate anticipates some $33 million less in savings from changes to medical and pension benefits for state retirees than the House does. The Senate was able to achieve a relatively higher level of expenditure for the FY 2012-2013 biennium for two principal reasons. First, the Senate projects that General and Education Fund tax collections, prior to any legislative changes, will amount to $4.46 billion over the next two years; this figure, in turn, is about $40 million – or 0.9 percent – higher than the sum on which the House version of the budget was initially based. Second, the Senate assumed that any budget deficit emerging in fiscal year 2011 (due to lower than anticipated revenue collections) will be addressed in FY11, while the House carried forward a $50 million deficit from the current fiscal year into the FY 2012-2013 biennium. Consequently, the Senate had a larger set of resources to devote to meeting pressing needs in the upcoming biennium. Ultimately, should a FY 2011 deficit emerge and should it be addressed before the close of the fiscal year, the revenue and spending levels approved by the Senate for the General and Education Funds for FY12-13 would result in a $32.6 million deposit into the Revenue Stabilization – or “Rainy Day” – Fund at the close of the biennium. Under the same set of circumstances, the revenue and spending levels approved by the House for the General and Education Funds for FY12-13 would lead to a deposit of $64.3 million. Whatever consensus the Senate and House may be able to reach during their committee of conference, given the depth and breadth of spending cuts their respective budgets would force, they should be able to agree that deposits of this magnitude into the Stabilization Fund are too large. While the current state of the economy does warrant some caution in crafting a budget for the next two years, saving for a rainy day makes little sense when it is already pouring outside. The remainder of this Budget Brief examines the Senate’s spending proposals and revenue estimates in greater detail. Major Expenditure Proposals Under the version of the budget approved by the Senate, General Fund appropriations for general government – a category of spending that includes funding for the legislative branch, the Governor’s office, and several executive branch agencies – would total $509.2 million during FY12-13. This figure is significantly below the amount the state is expected to spend in this category during the current FY10-11 biennium, in large measure because, like the Governor, the Senate would eliminate the state’s contribution to the New Hampshire Retirement System. That contribution will total $97.5 million for FY10-11 and was scheduled to rise to at least $125 million for FY12-13. Other legislation now in a separate conference committee – SB 3 – could make major changes to New Hampshire’s public employee retirement system and offset the loss of at least a portion of such funds; however, as negotiations between the House and the Senate over such legislation are not yet complete, the ultimate impact of this budget on cities’ and towns’ pension responsibilities remains unclear. The Senate’s General Fund appropriation for general government is, as well, somewhat smaller than the level approved by the House for the upcoming biennium. This is due, in part, again, to differences over public employee pension contributions, but also because the Senate would reduce appropriations for the Department of Administrative Services by another $5 million over the biennium. Still, in response to concerns about its potential impact on state revenue collections, the Senate did seek to undo a major portion of a “back of the budget” cut to the Department of Revenue Administration proposed by the House, shrinking that cut from $5.2 million to $2.1 million. Administration of Justice & Public Protection The Senate budget includes an initial General Fund appropriation of $473 million for the administration of justice and public protection for the FY12-13 biennium. While this would appear to be higher than the level approved by the House or recommended by the Governor – and even to represent some growth over actual and authorized expenditures for FY10-11 – it is mitigated by a pair of “back of the budget” cuts. More specifically, while the Senate would provide $160.7 million in General Funds to the judicial branch over the course of FY12-13 and $217.4 million to the Department of Corrections, it would reduce these sums by $21.2 million and $13 million respectively via provisions found elsewhere in HB1. What’s more, the Senate’s appropriation reflects an accounting change that shifts $6.4 million in Highway Funds into the General Fund to help support expenditures within the Department of Safety. Nevertheless, the Senate did restore some $1.4 million in General Funds for the Civil Legal Services Fund over the FY12-13 biennium, a program that the House had eliminated entirely. Resource Protection & Development General Fund appropriations for resource protection and development would total $57.9 million for FY12-13 if the Senate’s version of the budget were to become law, with the bulk of those funds flowing to the Department of Resources and Economic Development ($26.5 million) and the Department of Environmental Services ($31.0 million). The Senate budget contains few major changes, relative to the House’s proposed budget, within this expenditure category. For instance, where the House had eliminated General Fund support for the Fish & Game Department, the Senate would, over the biennium, provide the Department with the $100,000 in General Funds recommended by the Governor. In addition, the Senate would, relative to the House, increase spending within the Department of Environmental Services by $1.2 million during FY12-13, thus permitting the restoration of staff for pollution control and shellfish protection programs. Like the Governor and the House before it, the Senate would appropriate approximately $1.9 million in General Funds for transportation for FY 12-13 or about half a million dollars less than what the state will likely spend in the current two-year budget cycle. Still, the Senate did make some changes to the House’s version of the budget – outside of the General Fund — related to transportation. For instance, it provided an additional $7.6 million for debt service not contemplated in either the Governor or the House’s budget. In addition, the Senate appears to have mitigated several “back of the budget” cuts to the Highway Fund found in the House’s budget; all told, the House would have reduced Highway Fund expenditures by roughly $45 million via legislative language in HB 1, while the Senate would reduce such expenditures by around $27.5 million through that approach. The Senate budget makes no reductions to health and social services above and beyond those adopted in the House budget; rather, the Senate budget increases spending for this category by approximately $50 million relative to the House budget. The Senate budget appropriates $1.36 billion in General Funds for health and social services in FY12-13, representing a drop of $154 million – or 10 percent – from the Governor’s FY12-13 budget recommendation and a difference of $204 million from initial FY10-11 General Fund appropriations. While the Senate budget preserves some funding for programs serving children, seniors, and people with mental illnesses and restores, in its entirety, funding for programs serving people with disabilities that had been cut in the House budget, the remaining reductions to health and human services included in the Senate’s budget are substantial. These proposals may help to close the state’s immediate budget gap but will have costly outcomes across the state. Additional health care costs, employment barriers for working families, and burdens on already strained community services such as police and fire departments and schools are all likely to grow if the Senate budget becomes law. Below are just some of the reductions to health and human services spending approved by the Senate. I. Changes to Services that Help to Manage Health Care Costs A. Reduction of Mental Health and Substance Abuse Services The Senate budget would provide $3.2 million in General Funds for substance abuse services, an amount that is $3 million lower than the sum proposed by the Governor. As a result, it would eliminate prevention services for approximately 12,000 people (most of them youth) and reduce treatment services for another 800 people. People who are struggling with substance abuse likely will have increased contacts with law enforcement and hospital emergency departments without prevention and treatment services. While the Senate budget restores $18.1 million for mental health services that had been eliminated by the House’s budget, it reduces the Governor’s FY12-13 recommended level of General Fund appropriations for mental health services for adults and children by $6.9 million. The Senate’s approved funding level puts at risk mental health services for more than 700 adults and 600 children. Consequently, many patients will likely have increased contact with law enforcement and hospital emergency departments, thus shifting the cost of aiding these individuals from the state budget to local governments and organizations. Additional amendments in HB2 – the so-called “trailer bill” - appear to authorize providers to place adults and children seeking mental health services on a waitlist. Again, the absence of mental health services will mean many patients’ needs will be pushed onto other, already strained systems of care, including local governments. B. Reduction in New Hampshire Healthy Kids Funding The Senate’s budget maintains the Governor’s and House’s FY 12-13 General Fund reduction of $6.6 million to the New Hampshire Kids (NHHK) program. Additionally, under the Senate budget, the General Fund appropriations for staff for NHHK will be eliminated when the program’s enrollees are transitioned into the state’s new Medicaid Managed Care program, which is scheduled to begin July 1, 2012. New Hampshire Healthy Kids administers the state’s Children’s Health Insurance Program, also known as Healthy Kids Silver. Healthy Kids Silver provides subsidized health insurance to approximately 8,600 children with family incomes between 185 and 300 percent of the federal poverty level (FPL). Families pay a small, monthly premium per child depending on their incomes. Enrollees are provided care by Harvard Pilgrim Health Care, which helps to coordinate care (and thereby manage costs) for its enrollees through primary care providers. New Hampshire Healthy Kids also administers a health insurance buy-in program for approximately 875 children with family incomes between 300 and 400 percent of FPL by providing them with non-subsidized, lower-priced insurance premiums. Buy-in program enrollees pay full premiums and have the same network and benefits as Healthy Kids Silver enrollees. The Governor, House and Senate budget proposals all contemplate policy changes for NHHK. Under the Governor’s budget, Healthy Kids Silver enrollees were to be converted into Medicaid members and transitioned into the Medicaid fee-for-service system as of July 1, 2011. Under the House and Senate budgets, Healthy Kids Silver enrollees will still be converted into Medicaid members, but will be transitioned into the state’s new Medicaid Managed Care program, which is currently being developed and has a target implementation date of July 1, 2012. Children with incomes between 185 and 300 percent of FPL would continue to receive health insurance coverage and continue paying the same monthly premiums, but their care will be managed by a managed care vendor yet to be selected. DHHS officials have noted that the buy-in program will be discontinued because it will not be feasible to convert buy-in enrollees into Medicaid enrollees or to continue to provide the current benefit and premium schedule to the fewer than 900 children that would remain after the transition. The Department of Health and Human Services’ analysis of the Governor’s original proposal suggested that the difference between lower Medicaid reimbursement rates and the New Hampshire Healthy Kids per member per month fee would yield most of the $6.6 million projected savings. However, questions have been raised as to whether those savings could be achieved without significant attrition among Healthy Kids Silver enrollees. With respect to the House and Senate budget plans, questions have also been raised as to how reliably a brand new managed care system will find efficiencies and savings since New Hampshire Healthy Kids is already a mature managed care program. Finally, it still seems likely that more than 800 buy-in children, most of whom have significant ongoing medical needs, will lose insurance coverage due to this change. C. Restoration in Developmental Disabilities Funding The Senate budget restores $19.9 million in funding cuts for services for people with developmental disabilities made in the House budget and restores $6 million in funding for the developmental disabilities wait list that had been eliminated by the Governor’s and House’s FY12-13 budget recommendations. The House budget reduced the Governor’s FY12-13 General Fund budget recommendation for Waiver Day Services by $7.7 million. The Senate budget restores $5.8 million of this funding. Day Services enable nearly 400 adults with developmental disabilities to remain at home with their families and allow those family members to maintain their employment. Day Services provide assistance with basic living and safety skills at home and in the community, as well as vocational and volunteering opportunities for developmentally disabled people. Reductions in funding for day services could result in families being forced to leave the workforce in order to care for their adult child at home or to make the difficult choice to seek more expensive care, such as costly out-of-home placements or twenty-four hour/residential support. These reductions may have created real barriers to employment for disabled adults and their family members and may increase demands for more expensive, institutional care for which the state would be responsible. The House budget also reduced the Governor’s FY12-13 General Fund budget recommendation for Family Support Services for families with developmentally disabled members by $7.8 million; the Senate budget restores this funding as well. These services enable 3,000 families to be the primary caregiver for family members with developmental disabilities, through assistance with home modifications and respite care. Without these supports for families, there likely would be an increase in demand for other developmental services provided by the state. There could also be an increase in more expensive, institutional, long-term care for which the state may be responsible, if families find themselves unable to remain the primary caregiver for their disabled family members. The House budget reduced funding, relative to the Governor’s recommendations, for case management and independent living supports for people with developmental disabilities by $6.3 million. Under the Senate budget, all of these funding cuts were restored. Targeted case management assists more than 1200 children and adults with housing, medical, and vocational supports. Additionally, this funding restoration will provide the continuation of community support services to more than 250 people, enabling them to develop and maintain independent living skills. Without these supports, it is likely that many would require more formal and costly residential supports. The Governor’s FY 12-13 budget proposal also eliminated approximately $17.3 million in General Funds used to reduce the amount of time individuals must be placed on a waitlist to receive services from the Bureau of Developmental Services. The Senate budget appropriates $6 million for waitlist funding. Waitlist funding over the last two biennia has reduced the number of days individuals must wait to receive services, including programs designed to allow their parents or family members to continue to work, from as many as 228 days to as few as 17; as of December 2010, the average time spent on the wait list was 32 days. While the partial restoration of this funding will be helpful, without full funding, the average amount of time on the waitlist will almost certainly increase for the 477 people that are expected to fall onto that list in FY12-13. D. Limiting Uncompensated Care Funds The Senate and the House budgets both reduce the Governor’s FY12-13 General Fund appropriation of $166 million for uncompensated care funding by $115 million, effectively reducing total funds allocated for this purpose by $231 million. Under its budget, the House held harmless 13 of New Hampshire’s 28 hospitals, known as critical access hospitals (CAH), from such cuts by requiring that the uncompensated care funds remaining in the budget be used to pay the 100 percent of their uncompensated care costs before those funds could be used for any other purpose. Under the Senate budget, critical access hospitals might be protected from this funding reduction, if specific conditions, outlined in HB2 language described below, are first met. Typically, to provide hospitals with some financial relief for uncompensated care (UCC) – that is, losses related to care for the uninsured and for Medicaid members – New Hampshire participates in a federal matching program called the Disproportionate Share Hospital program (DSH). Through DSH, a state receives one dollar in federal funds for every non-federal dollar contributed toward hospitals’ uncompensated care costs. Traditionally, New Hampshire had placed all of the revenue generated by the Medicaid Enhancement Tax into the Uncompensated Care Fund (UCF), directing at least 50 percent of it towards uncompensated care reimbursement for hospitals and directing the remainder into the General Fund as unrestricted revenue. Accordingly, over the last 10 years, the New Hampshire budget has provided approximately $150 to $250 million non-federal dollars for uncompensated care every biennium and has successfully drawn down an additional $150 to $250 million in federal aid that, together, are paid to the state’s hospitals.[i] While DSH enabled New Hampshire to reimburse every hospital for some portion of its uncompensated costs in FY 11, the state was not able, even with federal matching funds, to fully compensate all New Hampshire hospitals, in the aggregate, for their total uncompensated care losses.[ii] The Senate budget amends the state statute that controls the Uncompensated Care Fund. This amendment functions in two ways: First, it eliminates the requirement that at least 50 percent of uncompensated care funding go towards uncompensated care reimbursement. Second, it permits uncompensated care fund distributions to be made through either Medicaid provider rate adjustments or DSH payments so long as those expenditures are prioritized in the following order: supporting Medicaid provider reimbursement rates as budgeted; making uncompensated care payments to the state’s 13 critical access hospitals (CAH); supporting the Uncompensated Care Fund’s General Fund contribution; and permitting non-critical access hospitals to each receive a uniform percentage of their uncompensated care costs. In addition, the Senate budget charges the Commissioner of DHHS with presenting a plan to the Joint Fiscal Committee describing how uncompensated care funding will be distributed for FY 13 no later than July 1, 2012. Critical access hospitals are rural, acute care hospitals with 25 or fewer beds and are frequently not only the sole source of health care in some regions of the state, but also a major regional employer. For these reasons, the House budget reimbursed only the CAH hospitals for their uncompensated care costs. Under the Senate budget, critical access hospitals will receive reimbursement for their uncompensated care costs only if there are funds remaining after Medicaid provider payments are funded; the percentage of their uncompensated costs to be covered will be determined by the amount of funds available. The remaining fifteen institutions will not receive any reimbursement for their uncompensated care losses under the Senate budget unless the following conditions have all been met: Medicaid provider payments are funded; CAH uncompensated care payments are funded; the Uncompensated Care Fund contribution to the General Fund is made; revenues exceed budgeted projections; and payments from any such excess are authorized by the Joint Fiscal Committee, Governor and Executive Council. Uncompensated care may represent as much as 2.5 percent to 14.9 percent of the general revenue a hospital expects to collect – from patients and other payers – for services provided.[iii] Without uncompensated care funding, hospitals will cover these deficits by charging other patient populations – mostly the privately insured – more than the actual cost of their care. In 2009, a year in which all New Hampshire hospitals received some uncompensated care reimbursement, private insurance payments were $800 million above expenses.[iv] In other words, cost-shifting occurs even when some reimbursement for uncompensated care is provided. The absence of uncompensated care funding for most of the hospitals in the state will likely push health insurance premiums even higher. II. Changes to Services That Help Manage Employment Barriers A. Reduction of Support for Childcare Services Like the House, the Senate budget reduces the Governor’s FY12-13 budget recommendation for childcare services by an additional $10.2 million. This reduction will create the need for a waitlist for childcare services in FY 12 for up to 4,000 children, erecting a significant obstacle to remaining employed for families who are working and are on the path to becoming self-sufficient. In the absence of affordable childcare, some families may experience a loss of employment and, in turn, would be forced to seek financial assistance from the state or local cities or towns. B. Repeal of the Unemployed Parents Program The Senate further followed the House’s lead by reducing appropriation for the unemployed parents program by $4.5 million and repealing the statutory language authorizing the program as a whole. This program provides employment training services and financial assistance to families in which one parent is unemployed or underemployed; these changes will affect approximately 500 families who are struggling to enter the workforce or to keep a job. III. Changes to Existing Community Services and Infrastructure A. Freezing Services for Seniors Although the Senate budget restores $1.15 million in funding for Service Link, an online service that connects seniors with senior specific services, the Senate budget reduces General Fund appropriations for additional senior services by $2.3 million, affecting more than 1,600 seniors, including those with dementia and those who live in congregate housing. Such reductions could make it more likely that more seniors are placed in residential long-term care services, such as nursing homes, rather than remaining with their families in or in their communities. Of note, nursing homes are largely financed by Medicaid in New Hampshire. New Hampshire’s Department of Health and Human Services reports that the annual cost per patient for intermediate care facility nursing home services was $30,573 in FY 2010.[v] Thus, if only ten percent of the seniors affected by these reductions obtain Medicaid financed intermediate nursing home care, the General Fund share of these costs will be approximately $2.4 million per year, erasing the savings generated by the Senate’s proposed cuts in one fiscal year and increasing the state’s General Fund obligations thereafter. B. Reduction to the CHINS Program The Senate’s budget provides $4.2 million in General Funds for the Child in Need of Services (CHINS) program. In contrast, the House would have eliminated the program outright, which the Governor would have appropriated $7.2 million for over the next two years. The budget adopted by the Senate also amends the controlling CHINS statute to limit the CHINS program to only those children who first receive the approval of the Department of Health and Human Services. Policymakers have estimated that the funding level proposed by the Senate for CHINS was sufficient to continue to care for 50 of the children with the most intensive needs in the CHINS service system. To put this in context, approximately 400 children are in the CHINS system at any given time and typically 1,000 children are in the CHINS system every twelve months. CHINS provides a court ordered process through which youth can be ordered to receive – and are provided – treatment, care, guidance counseling and rehabilitation to help them overcome difficulties that if untreated, could lead to being charged with violations of the law as a minor. This limitation on CHINS will put more pressure on families, local law enforcement, and schools to maintain a safe setting for all young people in the community. The version of the budget approved by the Senate would provide, from the General and Education Funds, approximately the same level of support for education over the coming biennium as the version approved by the House. More specifically, the Senate would directly appropriate $324.2 million in General Funds and $1.912 billion in Education Funds for this purpose in FY12-13, an aggregate level of appropriation that is roughly $225,000 less than that proposed by the House. As a result, the Senate largely leaves intact two of the more notable cuts contained in the House budget. Like the House, the Senate would make major reductions in General Fund support not only for New Hampshire’s community college system but also for the state’s university system. In the case of the former, the Senate would drop General Fund support from an anticipated amount of $81.5 million for FY10-11 to $52.1 million, a decline of $29.3 million or 36 percent. In the case of the latter, the Senate would impose a reduction of some $114.5 million – from an anticipated level of $197 million in the current biennium to $82.5 million in the upcoming one. The Senate did, however, restore, though a combination of appropriations and bonding, some of the kindergarten construction aid that had been eliminated by the House; it also appropriated $600,000 per year in General Funds for dropout prevention, another area that had been zeroed out by the House. Revenue Projections and Proposals As the figure at right indicates, the Senate’s revenue projections for the next two fiscal years are somewhat higher than those used by the House, but are significantly lower than the estimates put forward by the Governor and reflect comparatively slow growth from current levels. All told, the Senate anticipates that General and Education Fund revenue will amount to $4.46 billion over the FY12-13 biennium, after accounting for a partial diversion of meals and rooms tax revenue to cover interest costs associated with the bonding of school building aid. More specifically, the Senate estimates that General and Education Fund revenue will total $2.18 billion in FY 2011, grow approximately 1.2 percent to $2.20 billion in FY12, and then climb another 2.7 percent to reach $2.26 billion in FY 2013. Consequently, the Senate expects that the General and Education Funds will collect $40 million more in revenue over the next two years than the House did when it created its budget in March – and that they will accumulate some $66 million more than the revised estimates the House approved in May. These differences arise, in large measure, because the Senate predicts that revenue will grow more robustly in FY 2012 than the House foresees – again, by about 1.2 percent to the House’s roughly 0.6 percent – and much more quickly in FY 2013 – by about 2.7 percent in comparison to the House’s 1.5 to 1.6 percent mark. Still, the Senate’s revenue projections, if they come to pass, would represent an aggregate growth rate of just 0.7 percent between the current and upcoming biennia; actual General and Education Fund collections for FY 2010 equaled $2.25 billion, while at the current year-to-date trend, FY 11 collections would reach $2.18 billion – or $4.44 billion for the current biennium as a whole. What’s more, as the figure below reveals, the Senate’s assumptions would leave General and Education Fund revenue well below the levels that have obtained over the past decade or so. In fact, if the Senate’s estimates are realized, General and Education Fund revenue, after adjusting for inflation, will be lower in FY 2013 than it was in FY 2000, when the Education Fund was created. More specifically, in constant FY 2011 dollars, FY 2013 revenue is expected to total $2.20 billion; in FY 2000, it was $2.27 billion. The figure at left also helps to illustrate the role that sharp declines in revenue – due to the recent national recession and the ongoing recovery from it – have played in creating the fiscal situation New Hampshire now faces. More specifically, in FY 2008, the year in which the recession began, General and Education Fund revenue was $2.42 billion in inflation-adjusted dollars. Consequently, had revenue simply held steady in real terms since that time, FY 2012-2013 General and Education Fund revenue would total $4.84 billion – or roughly $445 million in constant dollars more than the Senate expects. Of note, the Senate’s version of the budget reflects two changes in tax policy that will further reduce revenue in the years ahead. First, the Senate budget includes a change in the business profits tax (BPT) that will allow companies to deduct more of the losses they incur in determining the tax they owe. Under current law, should a company incur a loss in a given year, it may deduct, within the ten years following that loss, up to $1 million of that loss from its taxable income; a provision of the Senate budget would raise the limit on this so-called “net operating loss (NOL) carry forward” to $10 million. While the provision is written so that it does not take effect until after the FY12-13 biennium and while the Department of Revenue Administration (DRA) has not been able to produce an estimate of the revenue loss associated with the change, its impact could ultimately be substantial, as the annual revenue loss from New Hampshire’s existing NOL has exceeded $12 million each year since 2005. Second, the budget approved by the Senate accounts for, but does not explicitly contain, another proposed change to the BPT. Legislation (SB 125) has been adopted in both chambers that would modify provisions of the BPT relating to the compensation certain businesses (such as limited liability companies or partnerships) are allowed to deduct in determining the taxes they owe. DRA’s latest fiscal note for the legislation indicates that, as amended by the House, it could result in a revenue loss of as much as $5 million per year. However, the Senate’s version of the budget assumes that the revenue loss would only be $2 million per year. Finally, it is worth contrasting the contingencies the Senate and the House have included in their respective versions of the budget to guide state fiscal policy should revenue collections exceed projected levels. The House budget includes legislative language expressing the intent of that body to support four specific measures — HB 37, HB 154, HB 213, and HB 166 – to provide “tax and fee relief” if revenue estimates prove to be too pessimistic; these four measures, if enacted into law, would reduce revenue over the course of FY12-13 by $97 million.[vi] The Senate budget contains no such language; rather, it includes a provision that would allow the Department of Health and Human Services, with the approval of the Governor, the Executive Council, and the Joint Legislative Fiscal Committee, to make additional uncompensated care payments to hospitals across the state in the event that budget surpluses should emerge. [i] Based on Department of Administrative Services, New Hampshire Comprehensive Annual Financial Report for year ending June 30 2009, p. 111. [ii] Based on “DHHS Projections 12-13 012111.xls DHHS FAV ALT NO TRANS,” Uncompensated Care Funding History of 2011 presented to Division III of the House Finance Committee by the Department of Health and Human Services, March 10, 2011. [iii] HB2, as approved by the House, appears to restrict the remaining $115 million General Fund dollars to Medicaid provider payments. [iv] Norton, S., et al. “Health System Cost-Shifting in New Hampshire,” New Hampshire Center for Public Policy Studies, February 2010, p. 1. [v] Department of Health and Human Services, Office of Medicaid Budget and Policy, “New Hampshire Medicaid Annual Report, SFY 2010,” April 20, 2011 Appendix 4a, p.13. [vi] Respectively, these bills would reestablish the monthly exemption to the communications services tax; increase a threshold amount for taxation under the business enterprise tax; reduce the business profits tax rate from 8.5 to 8.0 percent by 2012; and reduce the meals and rooms tax rate from 9 to 8 percent. Senate FY 2012-13 Budget Proposal SEARCH NHFPI Connect with NHFPI Common Cents Blog Court Rulings Focus New Attention on MET and Its Role in State Finances On April 8, the Hillsborough County Superior Court, in response to a lawsuit brought by three New Hampshire hospitals, declared the state’s Medicaid Enhancement Tax (MET) to be unconstitutional. The ruling comes on the heels of a similar decision handed down in February by the Rockingham County Superior Court in a case involving two rehabilitation hospitals operating in the Granite State. While the Attorney General’s office announced that it will likely appeal this most recent ruling – just as it did with the earlier decision – the situation is likely to prompt policymakers to consider possible responses. NHFPI Policy Conference NHFPI • 64 North Main Street • 3rd Floor • Concord, NH 03301 • 603.856.8337 (phone) • 603.715.5123 (fax) Copyright 2014 NHFPI - All Rights Reserved • Website Developed by FirstTracks Marketing Group

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Home > Publications and Other Resources > Annual Report > Fiscal Policy and Monetary Policy: Restoring the Boundaries Fiscal Policy and Monetary Policy: Restoring the Boundaries by Charles I. Plosser, President and Chief Executive Officer, Federal Reserve Bank of Philadelphia The policy choices made during and after the global recession that started in 2007 have created daunting fiscal challenges for our country and many others around the world. These fiscal challenges also have profound implications for monetary policy. Although the interplay between monetary and fiscal policy is not a new topic, in this year’s annual report essay, I would like to share some thoughts about the appropriate relationship between the two, and why it is important to restore the bright boundaries between fiscal and monetary policy.1 Fiscal Imbalances During the past several years, we have witnessed the ongoing saga of governments, both in Europe and in the U.S., struggling with large deficits and soaring public debt. For the most part, these challenges are self-inflicted. They are the result of governments choosing fiscal policies that they knew would be unsustainable in the long run. Financial market participants remain skeptical about whether the political process can come to grips with the problems. So far, this skepticism appears to be wholly justified. Neither the European nor the American political process has developed credible and sustainable plans to finance public spending. Instead, politicians continue to engage in protracted debates over who will bear the burden of the substantial adjustments needed to put fiscal policies back on a sustainable path. In my view, these prolonged debates impede economic growth, in part, due to the uncertainty they impose on consumers and businesses. Moreover, the longer the delay in developing credible plans, the more costly it becomes for the respective economies. Given the magnitude of the fiscal shortfalls, the way in which the political process restores fiscal discipline will have profound implications for years to come. Will there be higher taxes on investments by the private sector that risk reducing productive capacity and output in the future? Will there be higher taxes on labor that discourage work effort or hiring? Will there be cutbacks in government expenditures on defense or basic research that might force significant resource reallocations and affect a wide array of industry sectors? Will there be cutbacks on entitlements that could affect health care, social insurance, and other aspects of our safety net? Or will a viable fiscal plan combine various types of tax increases and spending cuts? These are important questions that involve hard choices and trade-offs between efficiency and equity. Yet, until fiscal authorities choose a path, uncertainty encourages firms to defer hiring and investment decisions and complicates the financial planning of individuals and businesses. The longer it takes to reach a resolution on a credible, sustainable plan to reduce future deficits and limit the ratio of public debt to gross domestic product, or GDP, the more damage is done to the economy in the near term. Some observers say cyclical factors and the magnitude of the recent global recession caused the current fiscal crisis. It is certainly true that the policy choices made by governments to deal with the financial crisis and ensuing recession have caused a significant deterioration in fiscal balances and debt levels in many countries. However, the underlying trends that are at the root of unsustainable fiscal deficits in many countries, including the U.S., have been in place and known for some time. In the U.S., for example, the major long-run drivers of the structural deficit at the federal level are entitlements such as health care and Social Security.2 Thus, even after cyclical effects play out, many countries will continue to have large structural budget deficits. In this sense, the financial crisis and recession have simply exacerbated the underlying problems and perhaps moved up the day of reckoning. In some cases, such as Greece, that day has come. In light of these realities, market participants have begun to question the solvency of governments and their ability to honor their sovereign debt obligations in the absence of deep structural reforms. In Europe, the doubts have greatly complicated the political problems as various countries debate the question of “who pays” for the anticipated bad debts of individual countries. Here, too, the protracted nature of the political debate creates uncertainty, which undermines economic growth and exacerbates the crisis. The Interaction of Monetary Policy and Fiscal Policy So what does this have to do with monetary policy? Well, it turns out, a great deal. It is widely understood that governments can finance expenditures through taxation, debt — that is, future taxes — or printing money. In this sense, monetary and fiscal policy are intertwined through the government budget constraint. Nevertheless, there are good reasons to prefer an arrangement that provides a fair degree of separation between the functions and responsibilities of central banks and those of the fiscal authorities. For example, in a world of fiat currency, central banks are generally assigned the responsibility for establishing and maintaining the value or purchasing power of the nation’s monetary unit of account. Yet, that task can be undermined or completely subverted if fiscal authorities independently set their budgets in a manner that ultimately requires the central bank to finance government expenditures with significant amounts of seigniorage in lieu of tax revenues or debt.3 The ability of the central bank to maintain price stability can also be undermined when the central bank itself ventures into the realm of fiscal policy. Imagine a situation in which public debt levels are high and rising. Now stretch your mind even more and imagine that fiscal policymakers are reluctant to make the hard choices of cutting expenditures or increasing taxes. Of course, neither of these assumptions requires much imagination. Indeed, history and our daily newspapers provide numerous examples. Unless governments are constrained institutionally or constitutionally, they often resort to the printing press to try to escape their budget problems. Yet, we all understand that this option is a recipe for creating substantial inflation.4 Indeed, history shows that it is often a path toward hyperinflation.5 Awareness of these long-term consequences of excessive money creation is the reason that over the past 60 years, country after country has moved to establish and maintain independent central banks. Without the protections afforded by independence, the temptation of governments to exploit the printing press in the absence of fiscal discipline is just too great. Thus, it is simply good governance and wise economic policy to maintain a healthy separation between those responsible for tax and spending policy and those responsible for money creation. But it is equally important that independent central banks be constrained from using their own authority to engage in activities that enter the realm of fiscal policy or distort private markets.6 There are several ways to place limits on central banks so that the boundaries between monetary and fiscal policy remain clear:7 First, the central bank can be given a narrow mandate, such as price stability. In fact, this has been a prominent trend during the last 25 years. Many major central banks now have price stability as their sole or primary mandate. Second, the central bank can be restricted as to the type of assets it can hold on its balance sheet. This limits its ability to engage in credit policies or resource allocations that rightfully belong under the purview of the fiscal authorities or the private marketplace. Third, the central bank can conduct its monetary policy in a more systematic or rule-like manner, which limits the scope for discretionary actions that might violate the boundaries between monetary and fiscal policy. Examples include Milton Friedman’s suggestion to have money growth rise at a constant rate, or rules suggested by John Taylor that relate changes in a central bank’s policy rate to the deviation of inflation from its target and output from its potential level. Such approaches to systematic policy can be a commitment device that limits discretionary behavior and thus helps to solve time-consistency problems. The Breakdown of the Accepted Boundaries Unfortunately, over the past few years, the combination of a financial crisis and sustained fiscal imbalances has led to a substantial breakdown in the institutional framework and the accepted barriers between monetary and fiscal policy. The pressure has come from both sides. Governments are pushing central banks to exceed their monetary boundaries and central banks are stepping into areas not previously viewed as acceptable for an independent central bank. Let me offer some examples to illustrate these pressures. First, despite the well-known benefits of maintaining stable prices, there have been calls in many countries to abandon this commitment and create higher inflation to devalue outstanding nominal government and private debt. Such an inflation tax would transfer wealth from those who have lent money, in good faith, to the borrowers. I am deeply skeptical of such a strategy. In my view, inflation is a blunt and inappropriate instrument for assigning winners and losers from profligate fiscal policy or excessive borrowing by private individuals and firms. Forced redistributions of this kind, if undertaken at all, should be done through the political process and by the fiscal authorities, not through the backdoor by the central bank by way of inflationist policies. As a monetary policymaker, I do not want to be complicit in such a strategy. Moreover, history has shown that once inflation is unleashed, it is not always easy to bring it back down, especially if the central bank loses the public’s confidence and damages the credibility of its commitment to price stability. Thus, proposals to use inflation to fix the debt overhang problem are nothing more than a call for debt monetization to solve a problem that is fundamentally fiscal in nature. Pressure on central banks is also showing up through other channels. In some circles, it has become fashionable to invoke lender-of-last-resort arguments as a reason for central banks to lend to “insolvent” organizations, either failing businesses or, in some cases, failing governments. Such arguments go beyond the well-accepted principles established by Walter Bagehot, who wrote in his 1873 classic Lombard Street that central bankers could limit systemic risk in a banking crisis by “lending freely at a penalty rate against good collateral.” Such a call to widen the lender-of-last-resort role is a perversion of one of central banking’s core concepts. It is a fig leaf to conceal the process of monetizing the sovereign debt of those countries that are insolvent due to their inability to manage their fiscal affairs. Monetary policy should not be used to solve a fiscal crisis. Unfortunately, from my perspective, breaching the boundaries is not confined to the fiscal authorities asking central banks to do their heavy lifting. The Fed and other central banks have also undertaken actions that have blurred the distinction between monetary policy, credit policy, and fiscal policy. These steps were undertaken with the sincere belief that they were absolutely necessary to address the challenges posed by the financial crisis. For example, early in the financial crisis the Fed established credit facilities to support particular asset classes, such as commercial paper and asset-backed securities. Then it began purchasing housing agency mortgage-backed securities (MBS) and agency debt to increase the availability and reduce the cost of credit in the housing sector. In September 2012, the Fed began a new round of MBS purchases, buying $40 billion in agency MBS per month, in part to support mortgage markets. The Fed is currently also purchasing $45 billion per month of longer-term Treasury securities. When the Fed engages in targeted credit programs that seek to alter the allocation of credit across markets, I believe it is engaging in fiscal policy and has breached the traditional boundaries established between the fiscal authorities and the central bank. Indeed, some of these actions have generated pointed criticisms of the Fed. I view the breakdown of the traditional institutional arrangements as dangerous and fraught with longer-term risks. While it is popular to view such blurring of the boundaries as appropriate “cooperation” or “coordination” between the monetary and fiscal authorities, the boundaries were established for good reasons and we ignore them at our own peril. I believe that central banks need to think hard about how and when they exercise this important role. We need to have a well-articulated and systematic approach to such actions. Otherwise, our actions will exacerbate moral hazard and encourage excessive risk-taking, thus sowing the seeds for the next crisis. Restoring the Boundaries Once a central bank ventures into fiscal policy, it is likely to find itself under increasing pressure from the private sector, financial markets, or the government to use its balance sheet to substitute for other fiscal decisions. Such actions by a central bank can create their own form of moral hazard, as markets and governments come to see central banks as instruments of fiscal policy, thus undermining incentives for fiscal discipline. This pressure can threaten the central bank’s independence in conducting monetary policy and thereby undermine monetary policy’s effectiveness in achieving its mandate. I have long argued for a bright line between monetary policy and fiscal policy, for the independence of the central bank, and for the central bank to have clear and transparent objectives. I have also stressed the importance of a systematic approach to monetary policy that serves to limit discretionary actions by the central bank. Furthermore, I have proposed a new accord between the Treasury and the central bank that would severely limit, if not eliminate, the central bank’s ability to lend to private individuals and firms outside of the discount window mechanisms.8 I have noted that decisions to grant subsidies to particular market segments should rest with the fiscal authorities — in the U.S., this means Congress and the Treasury Department — and not with the central bank. Thus, the new accord would limit the Fed to an all-Treasuries portfolio, except for those assets held as collateral for traditional discount window operations. Should the fiscal authority ask the central bank to engage in lending outside of its normal operations, the fiscal authority should exchange government securities for the nongovernment assets that would accumulate on the central bank’s balance sheet as a result. This type of swap would ensure that the full authority and responsibility for fiscal matters remained with the Treasury and Congress and the Fed’s balance sheet remained essentially all Treasuries. Congress has mandated the goals of monetary policy to promote price stability, maximum employment, and moderate long-term interest rates. Asking monetary policy to take on ever more fiscal responsibilities undermines the discipline of the fiscal authorities and the independence of the central bank. Central banks and monetary policy are not and cannot be real solutions to the unsustainable fiscal paths many countries currently face. The only real answer rests with the fiscal authorities’ ability to develop credible commitments to sustainable fiscal paths. It is a difficult and painful task to be sure, but a monetary solution is a bridge to nowhere at best, and the road to perdition at worst — a world of rising and costly inflation and a weakening of fiscal discipline. 1 This essay is based on a speech by the author, Plosser (2012). The views expressed here are the author’s and not necessarily those of the Federal Reserve Board or the Federal Open Market Committee. 2 In other countries and jurisdictions, such as those at the state and local levels, pension and entitlement commitments also account for a significant source of the growth in commitments and thus are central to the fiscal problems. 3 See Sargent and Wallace (1981). 4 Inflation, of course, is also a tax. It is a hidden tax on holding nominal assets, and when it is unanticipated, it can have significant consequences that redistribute wealth from creditors to debtors. The near-term effects of money creation often appear to be positive, while the undesirable consequences become apparent only over time. While money creation results in lower nominal interest rates and perhaps a modest boost to real activity in the short run, over time, it results in higher inflation and higher nominal interest rates and ultimately requires painful efforts to restore price stability. 5 Some notable examples include Germany, Hungary, and Austria after World War I, and Hungary and Greece after World War II. More recently, countries from South and Central America have had episodes of hyperinflation, including Argentina, Bolivia, Brazil, Peru, Mexico, and Nicaragua. Zimbabwe is the most recent example, with a period of hyperinflation that ended with currency reform in 2008. 6 See Plosser (2010) for further discussion on the risks of unconstrained policy tools and the necessity of commitment devices. 7 Sargent (2010) has a thoughtful and insightful discussion on these and related issues. 8 See Plosser (2009) and Plosser (2010). Plosser, Charles I. “Fiscal Policy and Monetary Policy: Restoring the Boundaries,” speech presented at U.S. Monetary Policy Forum, The Initiative on Global Markets, University of Chicago Booth School of Business, New York City, February 24, 2012. Plosser, Charles I. “Credible Commitments and Monetary Policy After the Crisis,” speech presented at the Swiss National Bank Monetary Policy Conference, Zurich, Switzerland, September 24, 2010. Plosser, Charles I. “Ensuring Sound Monetary Policy in the Aftermath of Crisis,” speech presented at the U.S. Monetary Policy Forum: The Initiative on Global Markets, New York City, February 27, 2009. Sargent, Thomas. “Where to Draw Lines: Stability versus Efficiency,” New York University Working Paper (September 6, 2010). Sargent, Thomas, and Neil Wallace. “Some Unpleasant Monetarist Arithmetic,” Federal Reserve Bank of Minneapolis Quarterly Review, 5 (Fall 1981), pp. 1—17. First Vice President's Message 2012 Bank Highlights Fiscal Policy and Monetary Policy: Restoring the Boundaries The Making of The Federal Reserve and You: A Fresh Approach to Economic Education Economic Advisory Council Community Depository Institutions Advisory Council Management and Policy Committee Statement of Auditor Independence and Financial Statements (3.84 MB, 46 pages) Complete 2012 Annual Report (6.86 MB, 76 pages) Annual Report Main Page

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on Industrial Policy Comes Out of the Cold Global Health & Development Economics Justin Yifu Lin Justin Yifu Lin, a former chief economist and senior vice president at the World Bank, is Professor and Honorary Dean of the National School of Development, Peking University, and the founding director of the China Center for Economic Research. He is the author, most recently, of The Quest for… read more DEC 1, 2010 0 Industrial Policy Comes Out of the Cold WASHINGTON, DC – One of the best-kept economic secrets was strongly reconfirmed in 2010: most countries, intentionally or not, pursue an industrial policy in one form or other. This is true not only of China, Singapore, France, and Brazil – countries usually associated with such policies – but also for the United Kingdom, Germany, Chile, and the United States, whose industrial policies are often less explicit.Given that industrial policy broadly refers to any government decision, regulation, or law that encourages ongoing activity or investment in an industry, this should come as no surprise. After all, economic development and sustained growth are the result of continual industrial and technological change, a process that requires collaboration between the public and private sectors. Historical evidence shows that in countries that successfully transformed from an agrarian to a modern economy – including those in Western Europe, North America, and, more recently, in East Asia – governments coordinated key investments by private firms that helped to launch new industries, and often provided incentives to pioneering firms.Even before the recent global financial crisis and subsequent recession, governments around the world provided support to the private sector through direct subsidies, tax credits, or loans from development banks in order to bolster growth and support job creation. Policy discussions at many high-level summits sought to strengthen other features of industrial policy, including public financing of airports, highways, ports, electricity grids, telecommunications, and other infrastructure, improvements in institutional effectiveness, an emphasis on education and skills, and a clearer legal framework. The global crisis has led to a rethinking of governments’ economic role. The challenge for industrial policy is greater, because it should assist the design of efficient, government-sponsored programs in which the public and private sectors coordinate their efforts to develop new technologies and industries.But history also tells us that while governments in almost all developing countries have attempted to play that facilitating role at some point, most have failed. The economic history of the former Soviet Union, Latin America, Africa, and Asia has been marked by inefficient public investment and misguided government interventions that have resulted in many “white elephants.”These pervasive failures appear to be due mostly to governments’ inability to align their efforts with their country’s resource base and level of development. Indeed, governments’ propensity to target overly ambitious industries that were misaligned with available resources and skills helps to explain why their attempts to “pick winners” often resulted in “picking losers.” By contrast, governments in many successful developing countries have focused on strengthening industries that have done well in countries with comparable factor endowments.Thus, the lesson from economic history and development is straightforward: government support aimed at upgrading and diversifying industry must be anchored in the requisite endowments. That way, once constraints on new industries are removed, private firms in those industries quickly become competitive domestically and internationally. The question then becomes how to identify competitive industries and how to formulate and implement policies to facilitate their development.In developed countries, most industries are advanced, which suggests that upgrading requires innovation. Support for basic research, and patents to protect successful innovation, may help. For developing countries, Célestin Monga and I have recently developed an approach – called the growth identification and facilitation framework – that can help developing-country governments increase the probability of success in supporting new industries.This framework suggests that policymakers identify tradable industriesthat have performed well ingrowing countrieswith similar resources and skills, and with a per capita income about double their own. If domesticprivate firms in these sectors are already present, policymakers should identify and remove constraints on those firms’ technological upgrading or on entry by other firms. In industries where no domestic firms are present, policymakers should aim to attract foreign direct investment from the countries being emulated or organize programs for incubating new firms.The government should also pay attention to the development by private enterprises of new and competitive products, and support the scaling up of successful private-sector innovations in new industries. In countries with a poor business environment, special economic zones or industrial parks can facilitate firm entry, foreign direct investment, and the formation of industrial clusters. Finally, the government might help pioneering firms in the new industries by offering tax incentives for a limited period, co-financing investments, or providing access to land or foreign exchange.Our approach provides policymakers in developing countries with a framework to tackle the daunting coordination challenges inherent in the creation of new, competitive industries. It also has the potential to nurture a business environment conducive to private-sector growth, job creation, and poverty reduction.As economies around the world struggle to maintain or restore growth in 2011, industrial policy is likely to be under a brighter spotlight than ever before. Given the right framework, there is no reason for it to remain in the shadows. Avanti Dilettanti! The Euro at Mid-Crisis

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Barbaricum Honored Among Ranks of SmartCEO’s 2014 Future50 Companies Washington D.C.-Based Service-Disabled Veteran-Owned Small Business Named to 2014 Future 50 Fast-Growth Companies in the Region Washington, DC (PRWEB) January 12, 2014 Barbaricum, a Washington, D.C.- based Service-Disabled, Veteran-Owned Small Business, received the coveted Future50 Award from SmartCEO. This award recognizes Barbaricum as one of the fastest growing, mid-sized companies in the Washington, DC area. “Barbaricum is honored to be recognized by SmartCEO for the work we provide our clients in the U.S. government,” said Brandon Bloodworth, managing partner at Barbaricum. “The award is a true testament to the innovative solutions the company provides to our clients and the dedication and the hard work each and every one of our employees put in on a daily basis. We’re excited to close out last year with this award and are optimistic for our sixth consecutive growth year.” The SmartCEO award, which was accepted by Barbaricum partners Brandon Bloodworth, Scott Feldmayer and Christopher Harvin at a black tie event held in Tyson’s Corner, Virginia, solidifies Barbaricum among the prestigious ranks of leading U.S. government contractors, CEOs, highly regarded mentors, and well-respected leaders whose experiences benefit not only their own organization, but their surrounding communities as well. These companies are the leaders in economic growth for their regions. Bloodworth continued, “It is also important to congratulate all of our friends and colleagues in the industry that were also honored tonight by SmartCEO for their hard work and dedication.” Acknowledgement from SmartCEO comes at a time of significant growth for Barbaricum. The company, its employees and its leadership have demonstrated a commitment to providing innovative solutions to their clients, retaining a world-class workforce and providing mentorship across the government services industry. Other honorees this year include, Bank of Georgetown, CRI, DRT Strategies, INC, Human Solutions, INC., iDiscovery Solutions, INC, Lunarline, Inc., SMRC, Tech 2000, NGP VAN, Meridian Imaging Solutions, and Washington Group Solutions. They were joined by more than 550 executives, friends and family who also attended the black-tie event to celebrate the winners and their achievements. About Barbaricum Founded in 2008 and Headquartered in the nation's capital, Barbaricum is a Service-Disabled Veteran-Owned Small Business dedicated to advancing national security interests by providing strategic communications, analysis and energy counsel for senior leaders in our nation's public sector. Barbaricum was ranked among INC Magazine's 500 Fastest Growing Companies of 2013, and is comprised of accomplished professionals drawn from successful careers in industry and government. The company is proud of its people and has made it a priority to attract and retain the very best talent. Together, the company has evolved into a high energy, hands on, consulting practice that delivers innovative strategies and technologies to achieve the objectives of its customers. The company’s growth has been fueled almost exclusively by repeat business and long-term partnerships and learning arrangements with discerning clients. About SmartCEO Future50 Awards The Future50 Awards program is the largest and most highly anticipated SmartCEO awards program of the year. This program recognizes 50 fast-growth, mid-sized companies in the region, five large Blue Chip companies and five small Emerging Growth companies. These companies represent the future of the region’s economy and embody the entrepreneurial spirit critical for leadership and success. The winners, chosen based on a three-year average of employee and revenue growth, are listed alphabetically, not ranked. The winners are profiled in the January/February issue of SmartCEO magazine and celebrated at an awards reception in January. Christopher Harvin Barbaricum +1 202.393.0873 Whitney Aronoff Barbaricum202.393.0873 Barbaricum Honored Among Ranks of SmartCEO’s 2014 Future50 Companies Washington D.C.-Based Service-Disabled Veteran-Owned Small Business Named to 2014 Future 50 Fast-Growth Companies in the Region

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City income tax collection down 4% in Toledo BY IGNAZIO MESSINA BLADE STAFF WRITER The city of Toledo’s 2013 first-quarter income tax collection was down nearly 4 percent over the same period for 2012, but Bell administration officials on Thursday said the drop was an anomaly that will be corrected later in the year.“There is no need for panic at this point in time,” Deputy Mayor Steve Herwat told Toledo City Council's finance committee.The city collected more than $24.2 million from its income tax from Jan. 1 through March 31. That is down $955,760 — or 3.79 percent — compared to the first three months of 2012.Broken down by category, withholding collections were down for the month of March compared to March, 2012, by about 3.3 percent.Clarence Coleman, Toledo’s commissioner of taxation, said collections from the top 75 employers in the city remained flat over last year.“Considering there hasn’t been a payment due yet for our smaller employers who pay quarterly, the March differences can probably be attributed mostly to timing and we expect this shortfall to be reversed as we process the first quarter payments that are due at the end of April,” said a statement from City Fi

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Resource Center Current & Past Issues eNewsletters This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article. U.S. Default Poses Minimal Risk to Money Funds, Fitch Says Rating agency says funds have cut their holdings of the Treasuries that would be most immediately affected. By Christopher Condon, Bloomberg October 10, 2013 • Reprints Money-market mutual funds can cope with a short-term default in U.S. Treasuries as long as it doesn’t trigger the kind of investor run that followed the collapse of Lehman Brothers Holdings Inc. in 2008, according to Fitch Ratings. The funds have reduced their holdings of Treasuries that would be most immediately affected by the failure of the U.S. to extend its borrowing capacity, and have high levels of short-term liquidity, the ratings company said today in a report and in an interview. Fund managers wouldn’t be forced to sell Treasuries in the event of a default and would be free to continue buying non-defaulted Treasuries, said Roger Merritt, managing director of fund and asset management at Fitch. “Mark-to-market declines on U.S. government exposures are probably manageable assuming any default is short-lived and absent significant redemption activity,” according to the report, which Merritt wrote with two colleagues. Money-market funds give millions of households, companies and other institutions a safe parking spot for cash and channel $2.5 trillion to issuers of short-term debt including the U.S. government, financial institutions and companies. A run on funds that hold corporate debt after the collapse of Lehman Brothers in September 2008 helped freeze global credit markets. U.S. money funds held about $475 billion in Treasury securities as of Aug. 31, and an additional $156 billion in repurchase agreements collateralized by Treasuries, according to research firm Crane Data LLC in Westborough, Massachusetts. Crane Data estimates that about $74 billion in Treasuries held by money funds matures from Oct. 24 to Nov. 15. Assets in U.S. money funds declined by $9.4 billion, or about 0.4 percent, in the seven days through yesterday as clients pulled money, according to data compiled by research firm iMoneyNet, also based in Westborough. Institutional funds that focus almost exclusively on debt backed by the U.S. government dropped $14.4 billion, or 2 percent of assets. Money-fund assets can be influenced not only by market conditions but also by corporate deadlines, such as those for making payroll or paying taxes. ‘Simple’ Lesson Republican lawmakers in Washington have refused to approve new funding for the U.S. government, triggering a partial shutdown of operations since Oct. 1. They have also vowed not to approve an increase in the government’s debt limit unless President Barack Obama and his Democratic Party agree to change the Patient Protection and Affordable Care Act of 2010, known as Obamacare. Treasury Secretary Jacob J. Lew has said “extraordinary measures” to avoid breaching the debt limit will be exhausted no later than Oct. 17. Paul Schott Stevens, president of the Investment Company Institute, a Washington-based trade group representing mutual fund companies, urged Congress to resolve the standoff before a default in the text of testimony he plans to deliver tomorrow to the Senate Banking Committee. “Once Treasury has exercised the option to delay payments, investors will learn a lesson that cannot and will not be unlearned -- even after all missed or delayed payments have been made good,” Ste

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