February 2010

Buffett Sides With Insurance Rivals, Picking Cooperation Over Competition

February 25, 2010

By Andrew Frye and Oliver Suess Feb. 26 (Bloomberg) — Warren Buffett , who cut back sales of protection to insurers because prices were too low, is betting on a rate increase by investing in the only two firms to write more reinsurance than his Berkshire Hathaway Inc. Buffett has more than $4.5 billion invested in Munich Re and Swiss Reinsurance Co. , choosing to put Berkshire’s cash in two companies that account for more than a third of the global market instead of using the money to compete against them. Had Buffett, as Berkshire’s chairman and chief executive officer, directed a part of that capital to his own underwriters, he could have pushed down the price of coverage, analysts said. “This is a move to increase that exposure without disrupting the pricing,” said Craig Fehr of Edward Jones & Co., who has a “hold” rating on Omaha, Nebraska-based Berkshire’s stock. “It’s likely a reflection of the fact there aren’t an abundance of opportunities to write new business.” Buffett’s biggest takeovers in the last decade have boosted Berkshire’s energy and freight businesses, reducing his company’s reliance on insurance. Two years ago, he warned of an industry slump after underwriting results slipped from a record. “That party is over,” Buffett wrote in his 2007 letter to investors, and Berkshire’s underwriting profits have since slipped about 60 percent. The 2009 letter is scheduled to be released tomorrow with fourth-quarter results. Meyer Shields , an analyst with Stifel Nicolaus & Co., expects Berkshire to post net income of $1,354 a share, compared with $76 in the year-earlier period, according to Bloomberg data . Berkshire stock has risen 23 percent since the end of 2008 as Buffett purchased railroad Burlington Northern Santa Fe for about $27 billion in his largest takeover. Appetite for Risk Berkshire, which sells protection through General Re and Berkshire Hathaway Reinsurance Group, scaled back on the coverage of large risks to conserve capital in the first half of last year. The company said in August it had recovered its appetite for new business, while adding it would wait to increase sales until prices improved. The price for catastrophe reinsurance fell for the third time in four years when insurers renegotiated their annual contracts on Jan. 1, according to Guy Carpenter & Co., a unit of brokerage Marsh & McLennan Cos . Prices typically fall when the economy declines, as companies have less to insure. Rates also slide when an increase in industry capital gives carriers the capacity to sell more protection than the market needs. Reinsurer capital rose in 2009 as stock and bond market rallies boosted investments and the quietest Atlantic storm season in more than a decade reduced claims costs. In 2008, catastrophes including Hurricanes Ike and Gustav cost property insurers $52.5 billion worldwide, according to a Swiss Re study . ‘Global Easing’ “We’ve seen a global easing of rates in the reinsurance market,” said Bryon Ehrhart , CEO of Aon Benfield Analytics, the reinsurance arm of Aon Corp. , the world’s largest insurance broker. “There’s never been more capital in the reinsurance business than there is now.” Selling another $1 billion of coverage through General Re in today’s market would be “quite difficult” for Buffett, Ehrhart said. Still, he doubted that the amount Buffett put into Munich Re would be enough to influence prices if directed to Berkshire’s underwriters instead. Buffett didn’t respond to a request for comment left with an assistant. Buffett’s strategy of spreading Berkshire’s capital across the top three reinsurers contrasts with his usual approach of investing in single companies that stand out in their respective industries. Buffett has said he likes to invest in companies, like Coca-Cola Co. and American Express Co. , where he sees lasting competitive advantages, or what he calls “moats,” that may help firms outperform rivals. Buffett’s Brand Loyalty “For his large investments, he seems to be pretty loyal to that one company in that industry that he invests in,” said David Kass , a professor at the University of Maryland’s Robert H. Smith School of Business. “He has a large stake in Coca- Cola, of course, and doesn’t as far as I know own any shares in PepsiCo. He has a large stake in American Express, and as far as I know has no investment in Visa or MasterCard.” Buffett’s diversification in reinsurance came as he narrowed his focus in railroads. Berkshire took stakes in three of the biggest U.S. haulers of freight before announcing last year the takeover of Burlington Northern and selling holdings in the other two. A buyout of one of Berkshire’s reinsurance rivals is less likely, analysts said, because clients would probably resist. Valuing Diversity “There’s no way they could do something strategic, given their own position,” said Tim Dawson , a Geneva-based analyst at Helvea SA. In a merger among top reinsurers, “the loss of business would be quite substantial. If you’re an insurance company, you want to diversify your reinsurance coverage” to reduce the impact of one carrier being unable to meet its obligations after a major disaster, he said. Berkshire’s profits from underwriting dropped to $665 million in the first nine months of 2009, compared with $1.72 billion two years earlier. Underwriting profit is the amount of premium left after a carrier pays claims and expenses. Insurers also record income by collecting dividends and bond coupons on investments they make with policyholder funds before the money is needed to pay claims. Reinsurers, which served as “bankers of last resort” for insurers when capital was scarce in the 1990s, may again find greater demand amid European regulatory changes, according to Duncan Russell , Michael Huttner and other analysts at JPMorgan Chase & Co. The reform, known as Solvency II, will increase capital standards in coming years, pushing carriers to share more risks with reinsurers, the analysts said in a January report. Flotation Device Buffett built Berkshire into a $190 billion company by investing premiums from insurance units into businesses ranging from ice cream and underwear to energy production. Berkshire’s accumulated premium, or “float,” totaled about $62 billion at the end of September. Berkshire’s Swiss Re holdings, dating from a 3 percent stake disclosed in January 2008, have been accompanied by risk- sharing deals that helped increase Berkshire’s float. Buffett’s firm has assumed 20 percent of Swiss Re’s property-casualty business for five years, and last month Berkshire bought a block of life reinsurance from its rival. Swiss Re also got an injection of 3 billion Swiss francs ($2.78 billion) from Berkshire in 2009. The securities he purchased in the private deal pay Berkshire a 12 percent coupon, and may hand Buffett’s firm more than 20 percent of Swiss Re’s common stock if the reinsurer doesn’t make a full repayment by 2012. Buffett Welcome “The clear first priority is to redeem Berkshire,” said CEO Stefan Lippe on a conference call Feb. 18 about his use of the firm’s cash. “My next share buyback is Berkshire.” Berkshire’s 5.1 percent stake in Munich Re, disclosed this year in multiple steps, came without any risk-sharing deals and therefore won’t boost the amount that Buffett has available to invest. Johanna Weber , a spokeswoman for Munich Re, said this week the company “welcomes any investor.” Berkshire makes about 360 million Swiss francs a year from the interest it collects from its Swiss Re coupons and will get an annual dividend of more than 57 million euros ($77 million) from Munich Re this year, based on the 5.75-euro per-share dividend the company announced on Feb. 2. The stake in Munich Re, which is based in the German city of the same name, is valued at about 1.1 billion euros. To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net ; Oliver Suess in Munich at osuess@bloomberg.net .

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Toyota Claimed `Win’ in U.S. Response to Sienna Injuries, Documents Show

February 25, 2010

By Jeff Green and Alan Ohnsman Feb. 26 (Bloomberg) — Toyota Motor Corp. in 2008 succeeded in blocking a formal recall of Sienna minivans linked by U.S. regulators to 98 injuries caused by collapsing liftgates, according to company and U.S. documents. Instead of issuing a recall under the U.S. Safety Act, Toyota sent letters to owners of 196,222 Sienna vans offering to replace struts on the liftgates as part of a “safety improvement campaign” without acknowledging a defect. The National Highway Traffic Administration accepted the response and stopped pressing for a costlier recall, agency documents show. The Sienna case was among the “wins” cited by the automaker’s Washington office in a memo obtained by a congressional panel investigating the recalls of 8 million Toyota vehicles worldwide for defects that could cause unintended acceleration. The claimed wins saved Toyota $255 million, including $100 million previously reported for less extensive responses to the acceleration issue, according to the memo. Toyota executives this week underwent two days of congressional hearings during which lawmakers said there was a pattern at the company of failing to respond promptly and adequately to reported safety problems. “Toyota’s own internal documents indicate that a premium was placed on delaying or closing NHTSA investigations, delaying new safety rules and blocking the discovery of safety defects,” Representative Edolphus Towns , a New York Democrat and chairman of the House Committee on Oversight and Government Reform, said at a hearing of the panel two days ago. Prius, Tacoma Yoshimi Inaba , Toyota’s North American president, testified at the hearing that the Washington office’s memo was presented to him when he assumed his current position last July. The presentation also cited Toyota’s success in limiting responses to reports of defective Prius headlights and of two separate defects in Tacoma pickups, one involving rust and the other unexpected acceleration. NHTSA opened an investigation of the Tacoma on Feb. 16 as part of a broader probe of vehicles that may have sudden acceleration defects and haven’t been recalled. Jim Wiseman , Toyota’s vice president for North American corporate communications, said the Washington briefing materials “didn’t represent the views of the company.” Wiseman said he wasn’t aware of any pending recalls or defect issues. “But the effort going forward is to pursue maximum openness,” he said. “We want to get everything out in the open.” Olivia Alair , a spokeswoman for the Transportation Department, which oversees NHTSA, disputed the contention that Toyota had succeeded in the Sienna matter. Struts Replaced “In a letter to the agency, Toyota agreed to replace the struts free of charge to the consumer to address the problem,” Alair said. “It is unclear why this safety recall was touted as a ‘win’ for the manufacturer.” As in at least four unrelated cases in which Toyota warded off U.S. recalls involving unintended acceleration allegations, a former NHTSA employee hired by the company took part in negotiations with the agency over handling the reported Sienna problems. “Although Toyota is willing to identify this campaign as a safety recall in the owner communication about the campaign, Toyota has not determined that the condition described above is a ‘safety-related defect’ within the meaning of the federal vehicle safety laws,” Toyota Vice President Christopher Tinto , the former NHTSA employee, wrote in a May 30, 2008 letter to the agency. NHTSA agreed to the lesser classification in a June 25, 2008, report that cited the Toyota letters to owners. Agencies’ Resources “Based on these actions, the agency had decided to close the investigation,” the report said. “While Toyota has not made a decision that the recalled vehicles contain a safety- related defect, in view of the recall, further use of the agencies’ resources does not appear to be warranted.” Toyota’s letter was sent to owners of Siennas for model years 2004 to 2006. As of September 2009, the last time Toyota submitted an update to NHTSA, 98,582 vehicles, or about half of the total affected, had been inspected and repaired. Among those injured were a 50-year-old resident of Illinois who suffered a cervical sprain and nerve damage requiring more than $50,000 in medical bills; a 68-year-old Utah man who incurred an injury to his rotator cuff and damage to his knee; and a 51-year-old California resident who had a concussion while standing under his liftgate, according to NHTSA reports . Striking Owner’s Head The first injury filing came on April 10, 2006, when NHTSA reported a “2004 Toyota Sienna liftgate closing automatically and striking the owner’s head,” according to a search of complaints in the agency’s database. The agency eventually tallied 410 complaints with 98 injuries and an additional 12,452 warranty repairs conducted by Toyota prior to the safety campaign, according to a June 2008 report. In a January 2008 letter to Toyota, the agency said the liftgates might fall with the strength of 140 to 300 pounds if gas leaked from the struts, which NHTSA said were showing “a steady increase in failures.” NHTSA at that time asked Toyota to initiate a safety recall , saying it had identified 70 injuries. Toyota initially rejected the request because it had already agreed to an extended warranty on the parts. The six- year warranty notice didn’t warn of a risk of injury, according to a copy submitted to NHTSA by Toyota. The automaker also disputed the injury reports in the NHTSA letter as not being as serious as initially reported. Fix ‘Exacerbated’ Toyota’s attempts to change the design of the liftgate strut started as early as December 2003, for 2004 model-year vehicles, according to NHTSA documents. The first three fixes were “mixed,” as the first fix “exacerbated” the problem, the agency said. The final change, in December 2006, was deemed successful and included in minivans starting in model year 2007. The NHTSA database shows at least two reports of injuries to owners of 2007 Sienna minivans that were also made since then because of hatch failures. The owner of a 2010 Sienna minivan also complained to NHTSA on Nov. 15 that his liftgate has hit him and his family members on their heads and shoulders by closing unexpectedly. To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Japan Consumer Prices Fall 1.3%, Adding to Pressure to Tackle Deflation

February 25, 2010

By Mayumi Otsuma (Corrects number of months prices fell in first paragraph.) Feb. 26 (Bloomberg) — Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery. Prices excluding fresh food slid 1.3 percent from a year earlier, the same pace as December, the statistics bureau said today in Tokyo. The figure matched the median estimate of 29 economists surveyed by Bloomberg News. Bank of Japan Deputy Governor Hirohide Yamaguchi said this week that prices may not be improving as quickly as he had expected. Finance Minister Naoto Kan has urged the central bank to do more to beat deflation as the government’s ability to spur the economy is constrained by the world’s largest debt . “Prices won’t stop falling until the recovery spreads to households,” Hiroshi Watanabe , a senior economist at Daiwa Institute of Research, said before the report was published. “Japan’s deflation will continue through fiscal 2012,” beyond the BOJ’s projections, he said. The yen traded at 89.27 per dollar at 8:36 a.m. in Tokyo from 89.22 before the report. 　 Unemployment and falling wages are discouraging spending by households and prompting companies to make discounts. Daiei Inc. this month cut prices of clothing and household goods as much as 30 percent, including women’s suits and desks for children, to spur sales before Japan’s school year starts in April. Costlier Oil Price declines have eased since peaking at 2.4 percent last August, largely because of costlier crude oil. Excluding energy and food, prices slumped 1.2 percent in January from a year earlier, matching the previous month’s decline as the sharpest since records began in 1971. Yamaguchi said this week that the moderation of price declines “seems to have been somewhat slower” given improvements in the economy. He said the central bank is “always prepared to implement appropriate measures at an appropriate timing.” Kan repeated this week that he wants the central bank to work with the government to beat deflation and “do what it can.” The bank unveiled a 10 trillion yen ($112 billion) lending program for commercial banks in December after the yen surged to a 14-year high against the dollar and politicians including Kan urged action. BOJ Action “It’s highly probable that the BOJ will act to ease monetary policy further should financial markets turn volatile suddenly,” said Kenro Kawano , a debt strategist at Credit Suisse Group AG in Tokyo. Bank of Japan policy makers forecast last month that core prices will decline 0.5 percent in the year ending March 2011 and 0.2 percent in the following 12 months. They haven’t made forecasts beyond then. Exports and production, which have fueled Japan’s rebound, are “bound to slow down” and the economy’s momentum will temporarily decrease, Yamaguchi said on Feb. 24. Tokyo core consumer prices dropped 1.8 percent in February from a year earlier, today’s report showed. Figures for the capital city are released a month earlier than nationwide data, making them a harbinger of price trends. “Downward pressure on prices will persist” as supply continues to outstrip demand, said Yoshiki Shinke , a senior economist at Daiichi Life Research Institute in Tokyo. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Japan Consumer Prices Fall 1.3%, Adding to Pressure to Tackle Deflation

February 25, 2010

By Mayumi Otsuma (Corrects number of months prices fell in first paragraph.) Feb. 26 (Bloomberg) — Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery. Prices excluding fresh food slid 1.3 percent from a year earlier, the same pace as December, the statistics bureau said today in Tokyo. The figure matched the median estimate of 29 economists surveyed by Bloomberg News. Bank of Japan Deputy Governor Hirohide Yamaguchi said this week that prices may not be improving as quickly as he had expected. Finance Minister Naoto Kan has urged the central bank to do more to beat deflation as the government’s ability to spur the economy is constrained by the world’s largest debt . “Prices won’t stop falling until the recovery spreads to households,” Hiroshi Watanabe , a senior economist at Daiwa Institute of Research, said before the report was published. “Japan’s deflation will continue through fiscal 2012,” beyond the BOJ’s projections, he said. The yen traded at 89.27 per dollar at 8:36 a.m. in Tokyo from 89.22 before the report. 　 Unemployment and falling wages are discouraging spending by households and prompting companies to make discounts. Daiei Inc. this month cut prices of clothing and household goods as much as 30 percent, including women’s suits and desks for children, to spur sales before Japan’s school year starts in April. Costlier Oil Price declines have eased since peaking at 2.4 percent last August, largely because of costlier crude oil. Excluding energy and food, prices slumped 1.2 percent in January from a year earlier, matching the previous month’s decline as the sharpest since records began in 1971. Yamaguchi said this week that the moderation of price declines “seems to have been somewhat slower” given improvements in the economy. He said the central bank is “always prepared to implement appropriate measures at an appropriate timing.” Kan repeated this week that he wants the central bank to work with the government to beat deflation and “do what it can.” The bank unveiled a 10 trillion yen ($112 billion) lending program for commercial banks in December after the yen surged to a 14-year high against the dollar and politicians including Kan urged action. BOJ Action “It’s highly probable that the BOJ will act to ease monetary policy further should financial markets turn volatile suddenly,” said Kenro Kawano , a debt strategist at Credit Suisse Group AG in Tokyo. Bank of Japan policy makers forecast last month that core prices will decline 0.5 percent in the year ending March 2011 and 0.2 percent in the following 12 months. They haven’t made forecasts beyond then. Exports and production, which have fueled Japan’s rebound, are “bound to slow down” and the economy’s momentum will temporarily decrease, Yamaguchi said on Feb. 24. Tokyo core consumer prices dropped 1.8 percent in February from a year earlier, today’s report showed. Figures for the capital city are released a month earlier than nationwide data, making them a harbinger of price trends. “Downward pressure on prices will persist” as supply continues to outstrip demand, said Yoshiki Shinke , a senior economist at Daiichi Life Research Institute in Tokyo. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Japan Consumer Prices Fall 1.3%, Adding to Pressure to Tackle Deflation

February 25, 2010

By Mayumi Otsuma (Corrects number of months prices fell in first paragraph.) Feb. 26 (Bloomberg) — Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery. Prices excluding fresh food slid 1.3 percent from a year earlier, the same pace as December, the statistics bureau said today in Tokyo. The figure matched the median estimate of 29 economists surveyed by Bloomberg News. Bank of Japan Deputy Governor Hirohide Yamaguchi said this week that prices may not be improving as quickly as he had expected. Finance Minister Naoto Kan has urged the central bank to do more to beat deflation as the government’s ability to spur the economy is constrained by the world’s largest debt . “Prices won’t stop falling until the recovery spreads to households,” Hiroshi Watanabe , a senior economist at Daiwa Institute of Research, said before the report was published. “Japan’s deflation will continue through fiscal 2012,” beyond the BOJ’s projections, he said. The yen traded at 89.27 per dollar at 8:36 a.m. in Tokyo from 89.22 before the report. 　 Unemployment and falling wages are discouraging spending by households and prompting companies to make discounts. Daiei Inc. this month cut prices of clothing and household goods as much as 30 percent, including women’s suits and desks for children, to spur sales before Japan’s school year starts in April. Costlier Oil Price declines have eased since peaking at 2.4 percent last August, largely because of costlier crude oil. Excluding energy and food, prices slumped 1.2 percent in January from a year earlier, matching the previous month’s decline as the sharpest since records began in 1971. Yamaguchi said this week that the moderation of price declines “seems to have been somewhat slower” given improvements in the economy. He said the central bank is “always prepared to implement appropriate measures at an appropriate timing.” Kan repeated this week that he wants the central bank to work with the government to beat deflation and “do what it can.” The bank unveiled a 10 trillion yen ($112 billion) lending program for commercial banks in December after the yen surged to a 14-year high against the dollar and politicians including Kan urged action. BOJ Action “It’s highly probable that the BOJ will act to ease monetary policy further should financial markets turn volatile suddenly,” said Kenro Kawano , a debt strategist at Credit Suisse Group AG in Tokyo. Bank of Japan policy makers forecast last month that core prices will decline 0.5 percent in the year ending March 2011 and 0.2 percent in the following 12 months. They haven’t made forecasts beyond then. Exports and production, which have fueled Japan’s rebound, are “bound to slow down” and the economy’s momentum will temporarily decrease, Yamaguchi said on Feb. 24. Tokyo core consumer prices dropped 1.8 percent in February from a year earlier, today’s report showed. Figures for the capital city are released a month earlier than nationwide data, making them a harbinger of price trends. “Downward pressure on prices will persist” as supply continues to outstrip demand, said Yoshiki Shinke , a senior economist at Daiichi Life Research Institute in Tokyo. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Japan Consumer Prices Fall 1.3%, Adding to Pressure to Tackle Deflation

February 25, 2010

By Mayumi Otsuma (Corrects number of months prices fell in first paragraph.) Feb. 26 (Bloomberg) — Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery. Prices excluding fresh food slid 1.3 percent from a year earlier, the same pace as December, the statistics bureau said today in Tokyo. The figure matched the median estimate of 29 economists surveyed by Bloomberg News. Bank of Japan Deputy Governor Hirohide Yamaguchi said this week that prices may not be improving as quickly as he had expected. Finance Minister Naoto Kan has urged the central bank to do more to beat deflation as the government’s ability to spur the economy is constrained by the world’s largest debt . “Prices won’t stop falling until the recovery spreads to households,” Hiroshi Watanabe , a senior economist at Daiwa Institute of Research, said before the report was published. “Japan’s deflation will continue through fiscal 2012,” beyond the BOJ’s projections, he said. The yen traded at 89.27 per dollar at 8:36 a.m. in Tokyo from 89.22 before the report. 　 Unemployment and falling wages are discouraging spending by households and prompting companies to make discounts. Daiei Inc. this month cut prices of clothing and household goods as much as 30 percent, including women’s suits and desks for children, to spur sales before Japan’s school year starts in April. Costlier Oil Price declines have eased since peaking at 2.4 percent last August, largely because of costlier crude oil. Excluding energy and food, prices slumped 1.2 percent in January from a year earlier, matching the previous month’s decline as the sharpest since records began in 1971. Yamaguchi said this week that the moderation of price declines “seems to have been somewhat slower” given improvements in the economy. He said the central bank is “always prepared to implement appropriate measures at an appropriate timing.” Kan repeated this week that he wants the central bank to work with the government to beat deflation and “do what it can.” The bank unveiled a 10 trillion yen ($112 billion) lending program for commercial banks in December after the yen surged to a 14-year high against the dollar and politicians including Kan urged action. BOJ Action “It’s highly probable that the BOJ will act to ease monetary policy further should financial markets turn volatile suddenly,” said Kenro Kawano , a debt strategist at Credit Suisse Group AG in Tokyo. Bank of Japan policy makers forecast last month that core prices will decline 0.5 percent in the year ending March 2011 and 0.2 percent in the following 12 months. They haven’t made forecasts beyond then. Exports and production, which have fueled Japan’s rebound, are “bound to slow down” and the economy’s momentum will temporarily decrease, Yamaguchi said on Feb. 24. Tokyo core consumer prices dropped 1.8 percent in February from a year earlier, today’s report showed. Figures for the capital city are released a month earlier than nationwide data, making them a harbinger of price trends. “Downward pressure on prices will persist” as supply continues to outstrip demand, said Yoshiki Shinke , a senior economist at Daiichi Life Research Institute in Tokyo. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Yen Declines Versus Dollar, Euro Amid Speculation Importers Sold Currency

February 25, 2010

By Yoshiaki Nohara and Ben Levisohn Feb. 26 (Bloomberg) — The yen traded near a one-year high against the euro as Greece’s deficit concerns and signs of a slow economic recovery in the U.S. boosted demand for Japan’s currency as a refuge. The dollar was close to a three-week low against the yen after the number of Americans filing first-time jobless claims unexpectedly rose and before a report that economists said will show U.S. companies grew at a slower pace this month. The yen rose against higher-yielding currencies yesterday as stocks fell and Standard & Poor’s and Moody’s Investors Service said Greece faces further downgrades. “Risk aversion is going to continue to rise in global markets surrounding the Greece situation and you’ve also had a pretty poor round of U.S. data over this week,” said Jonathan Cavenagh , a currency strategist at Westpac Banking Corp. in Sydney. “Yen crosses will continue to weaken.” The yen traded at 120.76 per euro as of 8:07 a.m. in Tokyo from 120.69 in New York yesterday, when it climbed to 119.66, the strongest since Feb. 24, 2009. Japan’s currency was at 89.16 per dollar from 89.07 yesterday when it reached 88.80, the highest since Feb. 4. The euro was at $1.3545 from $1.3548. It fell to $1.3444 on Feb. 19, the lowest since May 18. Europe’s currency has fallen 2.3 percent versus the dollar this month heading for a third monthly loss, its longest stretch since November 2008. Jobless Claims The dollar fell yesterday after the Labor Dapartment said initial jobless claims rose by 22,000 to 496,000 in the week ended Feb. 20. The Institute for Supply Management-Chicago Inc. is forecast to report today that its business barometer fell to 59.7 this month from 61.5 in January, according to a Bloomberg survey. Readings greater than 50 signal expansion. The euro has dropped 3.5 percent against the yen this month on concern sovereign debt problems in countries such as Greece would hamper the region’s recovery. The MSCI World Index fell 0.8 percent yesterday. A further downgrade of Greece of one to two levels is possible within a month, S&P analysts led by Marko Mrsnik in London said in a statement on Feb. 24. Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in Tokyo yesterday Greece faces a downgrade of “a couple of notches” within a few months. S&P, Moody’s and Fitch downgraded Greece’s credit rating in December as its deficit approached 13 percent of gross domestic product. Germany has denied there are concrete plans to aid Greece, and former European Central Bank Chief Economist Otmar Issing said Feb. 24 that granting assistance would “open the flood gates” for other euro-area nations with soaring deficits. — Editors: Nicholas Reynolds , Ron Harui To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net .

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Yen Declines Versus Dollar, Euro Amid Speculation Importers Sold Currency

February 25, 2010

By Yoshiaki Nohara and Ben Levisohn Feb. 26 (Bloomberg) — The yen traded near a one-year high against the euro as Greece’s deficit concerns and signs of a slow economic recovery in the U.S. boosted demand for Japan’s currency as a refuge. The dollar was close to a three-week low against the yen after the number of Americans filing first-time jobless claims unexpectedly rose and before a report that economists said will show U.S. companies grew at a slower pace this month. The yen rose against higher-yielding currencies yesterday as stocks fell and Standard & Poor’s and Moody’s Investors Service said Greece faces further downgrades. “Risk aversion is going to continue to rise in global markets surrounding the Greece situation and you’ve also had a pretty poor round of U.S. data over this week,” said Jonathan Cavenagh , a currency strategist at Westpac Banking Corp. in Sydney. “Yen crosses will continue to weaken.” The yen traded at 120.76 per euro as of 8:07 a.m. in Tokyo from 120.69 in New York yesterday, when it climbed to 119.66, the strongest since Feb. 24, 2009. Japan’s currency was at 89.16 per dollar from 89.07 yesterday when it reached 88.80, the highest since Feb. 4. The euro was at $1.3545 from $1.3548. It fell to $1.3444 on Feb. 19, the lowest since May 18. Europe’s currency has fallen 2.3 percent versus the dollar this month heading for a third monthly loss, its longest stretch since November 2008. Jobless Claims The dollar fell yesterday after the Labor Dapartment said initial jobless claims rose by 22,000 to 496,000 in the week ended Feb. 20. The Institute for Supply Management-Chicago Inc. is forecast to report today that its business barometer fell to 59.7 this month from 61.5 in January, according to a Bloomberg survey. Readings greater than 50 signal expansion. The euro has dropped 3.5 percent against the yen this month on concern sovereign debt problems in countries such as Greece would hamper the region’s recovery. The MSCI World Index fell 0.8 percent yesterday. A further downgrade of Greece of one to two levels is possible within a month, S&P analysts led by Marko Mrsnik in London said in a statement on Feb. 24. Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in Tokyo yesterday Greece faces a downgrade of “a couple of notches” within a few months. S&P, Moody’s and Fitch downgraded Greece’s credit rating in December as its deficit approached 13 percent of gross domestic product. Germany has denied there are concrete plans to aid Greece, and former European Central Bank Chief Economist Otmar Issing said Feb. 24 that granting assistance would “open the flood gates” for other euro-area nations with soaring deficits. — Editors: Nicholas Reynolds , Ron Harui To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net .

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Yen Declines Versus Dollar, Euro Amid Speculation Importers Sold Currency

February 25, 2010

By Yoshiaki Nohara and Ben Levisohn Feb. 26 (Bloomberg) — The yen traded near a one-year high against the euro as Greece’s deficit concerns and signs of a slow economic recovery in the U.S. boosted demand for Japan’s currency as a refuge. The dollar was close to a three-week low against the yen after the number of Americans filing first-time jobless claims unexpectedly rose and before a report that economists said will show U.S. companies grew at a slower pace this month. The yen rose against higher-yielding currencies yesterday as stocks fell and Standard & Poor’s and Moody’s Investors Service said Greece faces further downgrades. “Risk aversion is going to continue to rise in global markets surrounding the Greece situation and you’ve also had a pretty poor round of U.S. data over this week,” said Jonathan Cavenagh , a currency strategist at Westpac Banking Corp. in Sydney. “Yen crosses will continue to weaken.” The yen traded at 120.76 per euro as of 8:07 a.m. in Tokyo from 120.69 in New York yesterday, when it climbed to 119.66, the strongest since Feb. 24, 2009. Japan’s currency was at 89.16 per dollar from 89.07 yesterday when it reached 88.80, the highest since Feb. 4. The euro was at $1.3545 from $1.3548. It fell to $1.3444 on Feb. 19, the lowest since May 18. Europe’s currency has fallen 2.3 percent versus the dollar this month heading for a third monthly loss, its longest stretch since November 2008. Jobless Claims The dollar fell yesterday after the Labor Dapartment said initial jobless claims rose by 22,000 to 496,000 in the week ended Feb. 20. The Institute for Supply Management-Chicago Inc. is forecast to report today that its business barometer fell to 59.7 this month from 61.5 in January, according to a Bloomberg survey. Readings greater than 50 signal expansion. The euro has dropped 3.5 percent against the yen this month on concern sovereign debt problems in countries such as Greece would hamper the region’s recovery. The MSCI World Index fell 0.8 percent yesterday. A further downgrade of Greece of one to two levels is possible within a month, S&P analysts led by Marko Mrsnik in London said in a statement on Feb. 24. Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in Tokyo yesterday Greece faces a downgrade of “a couple of notches” within a few months. S&P, Moody’s and Fitch downgraded Greece’s credit rating in December as its deficit approached 13 percent of gross domestic product. Germany has denied there are concrete plans to aid Greece, and former European Central Bank Chief Economist Otmar Issing said Feb. 24 that granting assistance would “open the flood gates” for other euro-area nations with soaring deficits. — Editors: Nicholas Reynolds , Ron Harui To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net .

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Yen Declines Versus Dollar, Euro Amid Speculation Importers Sold Currency

February 25, 2010

By Yoshiaki Nohara and Ben Levisohn Feb. 26 (Bloomberg) — The yen traded near a one-year high against the euro as Greece’s deficit concerns and signs of a slow economic recovery in the U.S. boosted demand for Japan’s currency as a refuge. The dollar was close to a three-week low against the yen after the number of Americans filing first-time jobless claims unexpectedly rose and before a report that economists said will show U.S. companies grew at a slower pace this month. The yen rose against higher-yielding currencies yesterday as stocks fell and Standard & Poor’s and Moody’s Investors Service said Greece faces further downgrades. “Risk aversion is going to continue to rise in global markets surrounding the Greece situation and you’ve also had a pretty poor round of U.S. data over this week,” said Jonathan Cavenagh , a currency strategist at Westpac Banking Corp. in Sydney. “Yen crosses will continue to weaken.” The yen traded at 120.76 per euro as of 8:07 a.m. in Tokyo from 120.69 in New York yesterday, when it climbed to 119.66, the strongest since Feb. 24, 2009. Japan’s currency was at 89.16 per dollar from 89.07 yesterday when it reached 88.80, the highest since Feb. 4. The euro was at $1.3545 from $1.3548. It fell to $1.3444 on Feb. 19, the lowest since May 18. Europe’s currency has fallen 2.3 percent versus the dollar this month heading for a third monthly loss, its longest stretch since November 2008. Jobless Claims The dollar fell yesterday after the Labor Dapartment said initial jobless claims rose by 22,000 to 496,000 in the week ended Feb. 20. The Institute for Supply Management-Chicago Inc. is forecast to report today that its business barometer fell to 59.7 this month from 61.5 in January, according to a Bloomberg survey. Readings greater than 50 signal expansion. The euro has dropped 3.5 percent against the yen this month on concern sovereign debt problems in countries such as Greece would hamper the region’s recovery. The MSCI World Index fell 0.8 percent yesterday. A further downgrade of Greece of one to two levels is possible within a month, S&P analysts led by Marko Mrsnik in London said in a statement on Feb. 24. Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in Tokyo yesterday Greece faces a downgrade of “a couple of notches” within a few months. S&P, Moody’s and Fitch downgraded Greece’s credit rating in December as its deficit approached 13 percent of gross domestic product. Germany has denied there are concrete plans to aid Greece, and former European Central Bank Chief Economist Otmar Issing said Feb. 24 that granting assistance would “open the flood gates” for other euro-area nations with soaring deficits. — Editors: Nicholas Reynolds , Ron Harui To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net .

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Progressive Washington Post Readers Assail Obama On New Consumer Agency

February 25, 2010

A news article suggesting that the Obama administration is comprising on a proposed new agency dedicated to protecting consumers of financial products outraged some Washington Post readers . The newspaper reported Thursday that the administration is open to the possibility that the proposed Consumer Financial Protection Agency be housed within the Treasury Department as opposed to being a stand-alone entity, which is what the administration has long called for. The Huffington Post reported Feb. 9 that Senate Banking Committee Chairman Christopher Dodd (D-Conn.) was likely to propose this arrangement in his updated financial reform bill, and that consumer groups were actually not too alarmed. Regardless of whether it’s housed within Treasury or exists as a separate agency, it can still be vested with sufficient independence and power to meet the principles of an independent agency , supporters say. The Obama administration stressed Thursday that it is still committed to an independent consumer agency. The House of Representatives passed a bill in December calling for a new, stand-alone agency. But news of another Obama “compromise” infuriated some Washington Post commenters. “It’s the strongest anti-Obama string from the left I have seen in almost three years of reviewing comments,” wrote Doug Feaver, who runs the comments blog for the paper. “Several readers compare this with Obama’s abandonment of the so-called public option in the health care reform debate and ask themselves why they voted for him.” Feaver highlighted a few of the comments : dolph924 said, “So what else is new — the wimpy professor is once again letting the GOP and the DINOs [Democrats In Name Only] push him around.” mimosa1 said, “Yet another great promise bites the dust from the comic economic team from the Obama team. Dems are just the weakest, lamest little weasels, they are [R]epublican enablers … that’s their only role in our ungovernable govt…” farhorizons wrote, “Of course he’s going to bend. Why are we not surprised… Obama is a true believer in the “Anything is better than nothing” creed. Sometimes it’s necessary to fight for something one believes in, but Obama doesn’t seem to believe in anything enough to fight for it. Except, of course, his election.” Feaver closed with a comment from bodgerslick, whose views Feaver wrote “are a pretty good summary of what the majority in this comment string had to say”: “So much for real financial reform. Obama concedes again. What won’t this President accept half a loaf of? Can he not pass any legislation he finds necessary without it being diluted to the point of little effectiveness. The longer this goes on the more of a failed Presidency everyone sees.”

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Radius Files Notice of Intention to Make a Proposal to Creditors

February 25, 2010

CALGARY, ALBERTA–(Marketwire – Feb. 25, 2010) -

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Mike Stark: Chris Dodd on "Jingle Mail"

February 25, 2010

Late last year, Morgan Stanley, in essence, defaulted on a 10-digit mortgage debt they were carrying. They looked at a tanking commercial real estate market and realized they’d never get the return they assumed when they ran the numbers before borrowing the money to purchase the buildings. They made a business decision, mailed the keys to their creditors, and walked away from the deal when it soured for them. Soon afterward, in New York City, Tishman Speyer Properties and BlackRock Realty returned one of the country’s largest apartment complexes to its creditors under similar circumstances. They had purchased the property for $5.4 billion; today it’s worth only about $1.8 billion. In both these cases, contracts were signed. One could say that both Morgan Stanley and Tishman Speyer Properties/BlackRock Realty took out real estate loans (or mortgages) and promised to pay them back. When they mailed their creditors the keys and walked away from their promise to pay, one could say they broke their word, right? Well… In a word: No. You see, the contract they signed provided for exactly what happened. The money they borrowed was secured by the properties. If they failed to pay, the creditors got to keep everything they had paid to that point, and they got the buildings. In these cases, you can be pretty sure that the borrowers were “under water”; they owed more on the properties than they could possibly hope for in an open market sale (added to the equity, if any, they already had in the properties). After all, if their equity plus the sale price exceeded what they owed, they’d be better off selling and keeping the difference. Why do I bring all of this up? Well, because right now, hundreds of thousands of home-owners are under water. In late 2006 they bought a house for, say, $250K with nothing down. They have an exotic mortgage – let’s say they bought the house with a “balloon mortgage” and their payments were pretty low for the first three years, but have doubled in the last month or so. Let’s say they bought their home in Las Vegas or Arizona – markets that have been hit especially hard by the real estate bust. And let’s say a home identical to theirs, right next door, was sold yesterday in a foreclosure sale for $130K. Why in the world should these homeowners pay that mortgage? After all, their debt was secured by the property, just like the commercial cases cited above. In most cases, they’d be fulfilling the terms of their contract by mailing in the keys and walking away from the house. In fact, by doing this, they’d save almost enough money to purchase the next house that sells in a foreclosure sale – perhaps even the one they’re in! A word of caution: none of this is legal advice. Talk to a lawyer, accountant and financial advisor before considering this route. In some places (but not most), mortgage-holders are allowed to seize property above and beyond the real estate that secured the loan. The point I’m making here is that we only hear about “moral obligations to pay debts” in the context of consumer conditioning. Such nonsense doesn’t apply to big business. The John Galts on Wall Street don’t constrain themselves with morality considerations; they look at the numbers with lizard-eyes and make the decision that ensures the number at the bottom of the page is as big as it can be. An ugly truth is that corporate law establishes a fiduciary responsibility – corporate decisions must be based on the what will return the largest profit to shareholders. If that means welshing on a debt, then welsh they must. I personally believe it is time for consumers to understand that they have a similar responsibility to themselves and their families. If faced with a choice of enriching a bunch of lizard-eyed bankers or putting their kids through college, I hope more Americans do what is best for them and their family in the long run. I asked Chairman of the Senate Banking Committee Chris Dodd about this earlier this evening (I mistook JP Morgan for Morgan Stanley, please forgive the error). As Chairman of the Banking Committee, he was careful about what he said, but what he said was sensible: talk to counsel and determine what is best for you. Dodd’s response may very well send shock waves through the banking community. Wall Street’s biggest fear is that the cultural norm of “pay your mortgage (and other debts)” falters. But, as I said, bankers and other businesses walk away from sour deals all the time. If it makes sense for you, you should learn a lesson from the “Masters of the Universe” and do the same. Just be careful and, at a minimum, consult a lawyer that can walk you through the costs and benefits first.

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Top Treasury Official Backs Off Promise To Stem Foreclosure Crisis, Signature Initiative May Fall Short

February 25, 2010

A top Treasury Department official indicated Thursday that the Obama administration’s signature foreclosure-prevention initiative may not deliver on its promise to help three to four million troubled homeowners permanently reduce their monthly payments. Under questioning by a Congressional panel , Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, would not repeat previous assurances about the Home Affordable Modification Program. Through January, only about 116,000 homeowners have received permanent modifications, resulting in average monthly savings of more than $500. The program was launched last year. Wall Street analysts, mortgage experts and homeowner advocates have criticized the program for its slow progress. Treasury and White House officials have, in the past, repeatedly stressed that the plan would eventually meet its goal of helping three to four million borrowers by 2012. Caldwell put that to rest Thursday, declining to answer a direct question about whether the administration would meet that goal. Separately, Republicans on the House Oversight and Government Reform Committee put out a report stating that: “HAMP has failed”; “HAMP may actually hurt more homeowners than it helps”; And “Treasury is trying to hide the failure of HAMP.” READ the exchange between Rep. Jim Jordan (R-Ohio) and Caldwell and the House committee’s report BELOW: Jordan: In your testimony, you say in one year HAMP has made ‘significant progress.’ The numbers we have, as of the end of last month, Jan. 31, 2010, HAMP had achieved just over 116,000 permanent mortgage modifications. Again, the stated goal being three to four million. So I guess my question is, is that really significant progress? Caldwell: Ranking Member Jordan, I think it’s important as we step back and look at the program goals, the program was set out to provide an opportunity for three to four million homeowners to have a chance at a mortgage modification from program inception, which was a year ago, through the end of 2012. In its first year we had one million homeowners in trial modifications, and in those trial modifications they’re realizing close to 40 percent reduction in their monthly payment. Jordan: Let me ask you this: Do you expect by 2012 to have three to four million homeowners in a permanent status? A trial’s one thing, but that’s your term — ‘trial modification’ — so a ‘trial’ is not there. It’s ‘trial’. So, do you expect it to get to the goal, the stated goal right from the outset, three to four million, do you expect to get to that number in two years, based on the fact that only 116,000 are there today, after one year? Caldwell: Well, again, just to re-clarify the goal, first let me just say we have never seen a mortgage crisis of this proportion, so it’s too soon one year into the program to talk about what will happen two years out. But the program is designed to offer three to four million homeowners… Jordan: Ms. Caldwell… Caldwell: …an opportunity for a mortgage modification — not a permanent modification — an opportunity. And one year in we have one million homeowners saving $500 a month in the modification. Jordan: I’m sure you’re working hard. I just question this whole idea that the big federal government can do these kind of things. They come out with a promise: ‘We’re gonna do a stimulus plan — it’s gonna keep unemployment at eight percent. We’re gonna do a home modification program — we’re gonna help three or four million people and we’ve done 116,000 in one year. But we’re gonna get to four million — we promise, promise, promise — by 2012. I mean, do you, yes or no, do you think by 2012, two years from today, you will have three to four million people in a permanent modification plan? Caldwell: Of the sake we’re one year into a mortgage modification program that is at a scale that has never been done in history, it’s really too soon to predict what will happen in 2012. It should be noted that if the goal is to offer three to four million trial modifications, the Obama administration is at least 25 percent of the way towards reaching its goal. If the original goal was three to four million permanent modifications, the administration is less than five percent there. House Committee Report on HAMP

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Obama May Ban All Foreclosures Without Review by Loan-Modification Program

February 25, 2010

By Dawn Kopecki Feb. 25 (Bloomberg) — The Obama administration may expand efforts to ease the housing crisis by banning all foreclosure s on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program . The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan. “It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.” She confirmed the authenticity of the document, which hasn’t been made public. At present, lenders can initiate foreclosure proceedings on any loan that hasn’t been submitted for HAMP eligibility. Under current HAMP rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification. The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan. ‘Improved Protections’ The Treasury Department will soon release guidance “which will include a set of improved protections for borrowers” in HAMP, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said today in testimony prepared for a House Oversight and Government Reform subcommittee. She didn’t provide details. The proposal goes further than rules adopted amid the crisis by federally controlled mortgage-finance companies Freddie Mac and Fannie Mae, which require lenders to review borrowers for a federal loan modification before a foreclosed property can be sold. Foreclosure proceedings can still be initiated without a review, said Freddie Mac spokesman Doug Duvall . Fannie Mae spokeswoman Amy Bonitatibus said it adopted the same policy last March. About 89 percent of outstanding residential mortgage loans are covered by the voluntary HAMP program. About 2.82 million U.S. homeowners lost properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc., an Irvine, California data company, said last month. Seven Million Obama’s foreclosure prevention initiative, announced in February 2009 to help as many as 4 million Americans avert foreclosure, has modified 116,297 loans through steps such as lowering interest rates or lengthening repayment terms. More than 830,000 borrowers received trial repayment plans through January, according to Treasury data. “Foreclosure processes differ among states, and the process is often confusing to homeowners already facing distress,” Caldwell said in her prepared testimony. “Treasury has been reviewing guidelines around outreach and the foreclosure process as part of its continual assessment of program effectiveness and transparency.” Foreclosures may reach as many as 7 million mortgages , and an additional 5 million are at risk of default because borrowers owe more than the property is worth, Laurie Goodman , senior managing director at Amherst Securities Group LP in New York, said in a Feb. 17 interview. Republican Criticism “This is a problem of mammoth proportions,” Goodman said. “You can’t throw 12 million people out of their homes, so you need a successful modification program. My fear is that this isn’t it, but I’m highly confident that the administration will continue to iterate until they succeed.” The Treasury proposal would require all borrowers who are 60 or more days delinquent on their mortgage to be sought out for participation in HAMP. Mortgage companies would need to try to contact the borrower at least four times by phone and twice by certified mail over 30 or more days before going to foreclosure. Under current Treasury policy, foreclosure proceedings are only halted when a borrower receives a permanent modification plan. House Republicans criticized HAMP as a failure today, saying in a report that it is prolonging the economic crisis and harming homeowners. “By every empirical measure, HAMP has failed,” according to the 18-page report released by Republicans on the House Oversight and Government Reform Committee. “In its current form, HAMP both hurts homeowners who might otherwise spend their trial-period mortgage payments on rent and also distorts the housing market, delaying any recovery.” To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net ;

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Gov. Jennifer M. Granholm: A Clean Energy Triple Play

February 25, 2010

Last May, I first posted here about how Michigan would lead the green industrial revolution . Some folks scoffed at that idea. They said I was too optimistic. They said Michigan would never lead in a green economy. We’re working to prove them wrong. Today, I was in Midland, Michigan, as the Dow Chemical Company announced over $1 billion in clean-energy expansions – which, combined with nine other projects announced today, will create over 17,000 new jobs . In three separate ventures, Dow will help create the future of wind, solar, and advanced-battery technology in Michigan’s Great Lakes Bay Region – a triple play for our nation’s clean-energy future. First, Dow announced it is moving forward on a truly game-changing product: It will build a $600 million full-scale production facility for its DOW™ POWERHOUSE™ Solar Shingle in Midland. These shingles have the potential to transform the way consumers get power by turning a typical home roof into a true powerhouse in every sense of the word. What makes the product revolutionary is its easy installation – no different from an ordinary shingle. That’s why it was one of TIME magazine’s “50 Best Inventions of 2009″ . It’s a win for Michigan, for consumers, and ultimately, for our planet. Dow is also a key player in Michigan’s bid to be the advanced-battery capital of the world. Its Dow Kokam joint venture is investing $342 million to build a large-scale manufacturing site to help power the hybrid and electric vehicles of the future. Since we passed the first-in-the-nation advanced-battery credits, Michigan has seen more advanced-battery activity than any other state, meaning up to 40,000 great new jobs by 2020. Last, but certainly not least, Dow has been designated a Center of Energy Excellence, a program we instituted in 2008 to help make Michigan the North American center of the clean energy industry. As Michigan’s seventh Center of Energy Excellence, Dow will partner with the Oak Ridge National Laboratory to help tackle a major challenge for the wind-energy sector: making strong, light carbon fiber materials available for applications like wind turbine blades. This is a great opportunity for Dow to find a solution that can be used throughout the wind-energy industry. The DOW™ POWERHOUSE™ announcement is the latest in a series of solar wins for Michigan . Hemlock Semiconductor, the world’s leading producer of polycrystalline silicon (the critical component of solar panels), has invested $2.5 billion in the Great Lakes Bay Region over the years , spurring other development. Also headquartered in Midland is the world’s leader in silicon product research, Dow Corning, where crucial research into the solar products of the future is conducted. Other companies are following Dow Corning and Hemlock Semiconductor’s lead. In Midland, Evergreen Solar opened a new solar plant last year, and is ramping up production of its new “string ribbon solar wafer” technology. Last October, Suniva announced it would invest $250 million in a new solar manufacturing facility in Saginaw County . And just in December, GlobalWatt decided to locate its newest solar plant in Saginaw — choosing Michigan over a competing site in Texas, largely because so many solar businesses are already in the area. But, that’s not all. Since targeting clean energy as a major sector to help diversify and grow Michigan’s economy in 2006, we’ve made great strides. In fact, just since I posted here last May, we’ve made progress toward turning the green industrial revolution into a reality in Michigan: • In June, General Electric announced its new advanced technology and training center outside Detroit , where new renewable-energy products will be researched and developed… meaning thousands of great, green jobs for Michigan. • In July, I issued an executive directive to reduce Michigan’s greenhouse gas emissions by 20 percent by 2020 and 80 percent by 2050 , because going green isn’t just good for the environment – it’s good business. • In August, Vice President Biden announced over $1.35 billion in Department of Energy grants funded by the Recovery Act for Michigan advanced-battery manufacturers – the largest share of any state in the nation. • In September, I traveled to Japan and met with key executives considering clean-energy projects in Michigan. My previous investment missions to Austria, Belgium, Germany, Israel, Japan, Jordan and Sweden have resulted in more than 10,800 jobs created and retained. • In October, Michigan State University restructured its MSU Extension, maintaining its traditional focus on agriculture while expanding its role in renewable-energy projects. After all, now is the time to “Go Green!” • In November, Michigan was proud to host the American Wind Energy Association’s Small and Community Wind Conference and Exhibition in Detroit , with over 112 exhibitors from around the world. • In December, General Motors announced it would invest $336 million in its Detroit Hamtramck Assembly plant to begin building the Chevy Volt later this year. GM has invested $700 million in the eight facilities across the state involved in Volt production. • Last month, as the world’s gaze shifted to the future of the American auto industry at the North American International Auto Show in Detroit, Ford announced an investment of $450 million in expanding electric vehicle initiatives in Michigan … including moving battery assembly work from Mexico to Michigan. We’re becoming the hub for advanced-battery technology. Our solar-energy industry is rapidly progressing. This year, we will aggressively pursue companies in the wind-energy sector to give Michigan the competitive advantage that is so successful for our battery and solar sectors. We will continue to focus on leading the way to a clean-energy future here in Michigan. We are building the new Michigan economy, piece-by-piece, town-by-town, in communities across the state. Just click here to see some more examples. And so, as I wrote last May: “Watch – Michigan will lead a green industrial revolution. I invite you to watch us, encourage us, and join us. And the doubters? I encourage them to just try and keep up.”

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Jon Corzine To CNBC?

February 25, 2010

Jon Corzine, the former Goldman Sachs chief and Senator who was ousted from the NJ governor’s office in November’s election, may soon be a regular face on CNBC. NJ.com reports that, according to Corzine confidantes, the ex-governor “has arranged to be a regular guest host and commentator on the financial-news network CNBC, among other national outlets.” Corzine, who will reportedly be a guest host on CNBC’s morning program, has made several TV appearances since leaving politics in January. NJ.com points out that Corzine “has been a regular” on CNBC for years and that he is “very close” with Jim Cramer. The network declined to comment but an official did tell NJ.com, “We like having Jon Corzine on air. Our viewers really like his insight.” Corzine doled out a little PR advice to his former bank Wednesday, telling Bloomberg TV that Goldman Sachs should “speak a little less” and “do a lot to serve your clients and your shareholders.”

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American Italian Pasta Company Announces Results of Its 2010 Annual Stockholder Meeting

February 25, 2010

KANSAS CITY, MO–(Marketwire – February 25, 2010) –  American Italian Pasta Company ( NASDAQ : AIPC ), the largest producer of dry pasta in North America, announces results from its 2010 Annual Stockholder Meeting held today in Kansas City, MO.

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Summit: Steve Forbes – The Forbes Family Office

February 25, 2010

Eisner LLP hosts a summit on the family office, featuring special guest speaker Steve Forbes

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John P. McNamara Joins IMG as Vice President Business Development in Chicago

February 25, 2010

NEW YORK, NY–(Marketwire – February 25, 2010) – IMG, the global sports, entertainment and media company, announced today that John P. McNamara joined the company as Vice President of Business Development. He will be based in the company’s Chicago, IL office and will report to Tom Worcester, Senior Vice President Business Development.

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EON Reality Welcomes Prashant Gupta as a New Project Manager in Singapore

February 25, 2010

IRVINE, CA–(Marketwire – February 25, 2010) – EON Reality, Inc., the world’s leading interactive 3D software provider, today announced that Prashant Gupta has joined the EON Reality Singapore office as Project Manager. Prashant will be in charge of technical R&D programs and projects for EON Reality in Singapore as well as play a key role in team collaboration with the EON product line.

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Health-Insurance Subsidy for Fired U.S. Workers May End After Senate Vote

February 25, 2010
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Bernanke Seeks to Defuse Calls for Audits With Offer of More Transparency

February 25, 2010
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Obama Tells Summit Health-Care Costs Are Among `Biggest Drags’ on Economy

February 25, 2010
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U.S. Durable Orders Ex-Aircraft Drop as Business-Equipment Demand Weakens

February 25, 2010
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Greece Credit-Default Swaps `Cabal’ May Be Just Sideshow: Chart of the Day

February 25, 2010

By Shannon D. Harrington Feb. 25 (Bloomberg) — The credit-default swaps traders being blamed by German and French leaders for fueling fears of sovereign debt crises would be doing so with less than 1 percent of the governments’ outstanding debt being wagered. The CHART OF THE DAY shows the net notional value of credit swaps on 10 European countries including Greece, Spain, Italy and Portugal, as reported by the Depository Trust & Clearing Corp. The $108 billion figure, which is the maximum amount on the line if all of the countries were to default, is 0.98 percent of the $11 trillion in outstanding debt of those countries. In Greece, where the heaviest complaints about credit-swaps trading have been leveled, bets of $9 billion compare with $267 billion of debt. “It’s very easy to point the fingers at this sort of murky cabal of CDS traders, but in this case, it’s hard to argue with the fundamentals,” said Tim Backshall , chief strategist at Credit Derivatives Research LLC in Walnut Creek, California. “To move the government bond market 40 basis points on the back of less than $10 billion notional exposure to Greece in the CDS market seems a bit of a stretch.” European leaders have said trading in the contracts fuels speculation that can distort perceptions and have warned hedge funds about trying to profit from the problems on the continent. German Chancellor Angela Merkel’s government is considering ways to “tighten up rules” in the market. French Finance Minister Christine Lagarde said Feb. 17 “we should examine the suitability” of credit swaps. It’s not the first time regulators have blamed traders of the contracts for exacerbating market declines. After the collapse of Lehman Brothers Holdings Inc. in 2008, New York Attorney General Andrew Cuomo opened an investigation into whether traders were manipulating the market to spread rumors about financial companies and drive down stock prices. Unlike in corporate bond markets, where the amount of swaps is closer to the debt of companies, trading in government bonds has led the decline, Backshall said. “If anybody’s really been watching the bond spreads, they’ve been the canary in the coal mine here,” he said. To contact the reporter on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net

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U.S. Home Prices Fell 1.2% in Fourth Quarter, Smallest Loss in Two Years

February 25, 2010

By Kathleen M. Howley Feb. 25 (Bloomberg) — U.S. home prices fell 1.2 percent in the fourth quarter from a year earlier, the smallest loss in two years, as a federal tax credit for homebuyers boosted demand. Prices were down 0.1 percent from the third quarter, the Federal Housing Finance Agency said today in a report . The year- over-year drop was the smallest since a 1.1 percent decline in 2007’s fourth quarter, the Washington-based agency said. Government stimulus programs including the homebuyer tax credit and a Federal Reserve program to buy mortgage-backed bonds lifted the real estate market in the closing months of 2009. A sustained recovery in housing faces hurdles that include mounting foreclosures and a weak labor market, said Thomas Lawler , a former economist with Fannie Mae who now is an independent housing consultant in Leesburg, Virginia. “The government programs have helped to stabilize housing, but the market is still unbelievably fragile,” Lawler said in an interview. “Nobody knows what’s going to happen to all those properties in the foreclosure process.” Prices in December slipped 1.5 percent from a year earlier. They rose 0.7 percent in the region that includes California, and 0.3 percent in the area of the country that includes Texas. Prices in New York, New Jersey and Pennsylvania fell 0.4 percent, while New England states had a 1 percent decline. Credit Extension Sales of existing homes jumped 14 percent in the fourth quarter to an annual rate of 6.03 million from 5.29 million in the previous three months, the National Association of Realtors said in a Feb. 11 report. The inventory of homes on the market dropped to 3.29 million in December, the lowest level in more than three years, according to the Chicago-based trade group. President Barack Obama in early November extended the tax credit beyond its original Nov. 30 deadline. The new version keeps the $8,000 first-time homebuyer benefit and makes a smaller credit available to some move-up buyers. To qualify, buyers must have a signed contract on a property by the end of April and purchase it before July 1. The Fed began buying $1.25 trillion of bonds backed by home loans last year in an effort to drive down fixed mortgage rates. The rate dropped to an all-time low of 4.71 percent during the first week of December, according to McLean, Virginia-based Freddie Mac. The program ends next month. The U.S. economy grew at a 5.7 percent annual pace in the fourth quarter, the fastest in six years. Industrial production rose 0.9 percent in January as factories churned out more consumer goods and equipment, according to Fed data. The increase followed a 0.7 percent gain the prior month. ‘Quite Weak’ The jobless rate fell to 9.7 percent in January after reaching a 26-year high of 10.1 percent in October, according to the Bureau of Labor Statistics. It probably will average 9.8 percent in 2010, according to the median estimate of 66 economists surveyed by Bloomberg. That would be the highest yearly rate in government records dating to 1948. “The job market remains quite weak,” Federal Reserve Chairman Ben Bernanke said in Congressional testimony yesterday. More than 40 percent of the unemployed have been out of work for more than six months, double the year-earlier share, he said. Today’s report from the FHFA measures values using repeat data on individual properties without providing specific prices. The U.S. median home price was $172,900 in the fourth quarter, according to the National Association of Realtors. To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .

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Madoff Operations Director Bonventre Arrested by FBI Agents in Manhattan

February 25, 2010

By David Glovin, David Scheer and Patricia Hurtado Feb. 25 (Bloomberg) — Daniel Bonventre , the ex-director of operations for Bernard L. Madoff, helped hide the diversion of $750 million from Madoff’s investors to his brokerage, the U.S. said in new criminal and civil complaints that claim even the legitimate trading business was propped up by fraud. Bonventre today became the sixth person charged in the largest ever U.S. Ponzi scheme. Prosecutors and U.S. regulators said he was a key aide to Frank DiPascali , the Madoff lieutenant who is helping the government unravel a fraud that cost investors as much as $65 billion. “As Bernard Madoff’s director of operations, Daniel Bonventre allegedly authored the fraudulent books that for years effectively hid the doomed state of an investment firm founded in fraud,” U.S. Attorney Preet Bharara in New York said in a statement. Bonventre’s arrest this morning by the Federal Bureau of Investigation follows charges against Madoff, DiPascali, Madoff accountant David G. Friehling , and two computer operators. Bonventre, who faces up to 77 years in prison, is scheduled to appear today in Manhattan federal court. He lived in Queens, New York, while working at Manhattan-based Bernard L. Madoff Investment Securities LLC. Andrew Frisch, a lawyer for Bonventre, declined to comment. ‘Coordinated Effort’ “A fraud of this magnitude requires a coordinated effort,” George S. Canellos , director of the Securities and Exchange Commission’s New York office, said in a statement. “Bonventre played an essential part by creating bogus financial records to give BMIS the appearance of legitimacy, when in fact the firm lost money and could not have survived without the fraud.” Bonventre worked for Madoff from 1968 to 2008. He faces charges of conspiracy, securities fraud, falsifying books, making false filings with U.S. regulators and filing false tax returns, prosecutors said. In his guilty plea on March 12, Bernard Madoff said that the market-making and proprietary trading side of his firm was “legitimate.” Peter Madoff was its chief compliance officer, while Madoff’s sons, Andrew and Mark Madoff , were co-directors of trading. They have not been accused of criminal wrongdoing. John Wing, a lawyer for Peter Madoff, and a spokesman for Andrew and Mark Madoff didn’t immediately return calls. Liability Bonventre directed that entries be made in the firm’s general ledger that hid the scope of the investment advisory business and understated liabilities by billions of dollars, authorities said. From 1997 to 2008, more than $750 million in investor money was used to fund the market-making and proprietary trading operations, and records supervised by Bonventre didn’t reflect the firm’s liability to its investors, they said. Bonventre is also accused of using $154 million from investor accounts as collateral for $145 million in loans from an unidentified bank to Madoff Securities, enabling Madoff to hide a severe liquidity crisis from November 2005 to June 2006, prosecutors said. “During this same period, Bonventre monitored lines of credit, which BLMIS drew down by more than $340 million and used to meet” investor withdrawals, Bharara said. Bonventre is accused of creating phony records to hide the source of payments to investors and of misleading the SEC. He backdated purported trades in his own account to pocket more than $1.8 million and lied to the Internal Revenue Service, prosecutors said. London Affiliate In its complaint, the SEC said the market-making and proprietary trading operations didn’t directly draw on investor funds. Instead, firm employees used three types of multi-step transactions to shift money from investor accounts to the firm’s operating accounts, in most recent years pumping funds through a London affiliate, the SEC said. Bonventre worked on one of those strategies from 1998 to 2005, and he improperly booked incoming money from all three as trading revenue and commissions, the SEC said. He knew, or was reckless in disregarding, that the money actually originated from investor accounts, the agency said. The injections allowed the firm to report fiscal year profits every year between 2001 and 2008, and helped it weather the liquidity crisis, the agency said. If not for the $750 million, Madoff’s brokerage would have broken federal capital requirements, requiring the firm to halt operations. DiPascali Information The regulator didn’t accuse anyone else in the market- making and trading businesses of wrongdoing. “At least portions” of those divisions “appear to have been legitimate, although unprofitable,” the SEC said. Information from DiPascali was used to bring the charges against Bonventre, as it had been in earlier cases against Madoff computer operators Jerome O’Hara and George Perez , prosecutors say. In court documents made public last week, prosecutors said DiPascali’s assistance has been “extraordinary.” Madoff, 71, is serving a 150-year prison term after pleading guilty last year to the largest Ponzi scheme. New York- based Madoff Investment Securities is being liquidated by the Securities Investor Protection Corp. The case is U.S. v. Bonventre, 10-mag-385, U.S. District Court, Southern District of New York (Manhattan). To contact the reporters on this story: Patricia Hurtado in New York at phurtado@bloomberg.net ; David Glovin in New York at dglovin@bloomberg.net ; David Scheer in New York at dscheer@bloomberg.net .

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House’s Frank Says He Won’t Push to Regulate Credit-Card Swipe Fees in ’10

February 25, 2010

By Peter Eichenbaum and Alison Vekshin Feb. 25 (Bloomberg) — U.S. Representative Barney Frank , chairman of the House Financial Services Committee, said he won’t seek to regulate in 2010 the interchange fees that are charged to merchants with each swipe of a credit card. “It is not on our agenda this year,” Frank, a Massachusetts Democrat, said yesterday at the Credit Union National Association’s Governmental Affairs Conference in Washington. Merchants including Wal-Mart Stores Inc. and Target Corp. have asked Congress to reduce the fees, which generated an estimated $48 billion in 2008, according to the National Retail Federation. Payment networks Visa Inc. and MasterCard Inc. , which set the rates, and banks that collect the fees have said the system helps merchants by guaranteeing payment and simplifying record-keeping. U.S. consumers may not save money and might pay higher credit-card costs if lawmakers forced the networks to cut interchange fees, the Government Accountability Office said in a Nov. 19 report ordered by Congress. Frank’s panel has jurisdiction for legislation on banking, securities and consumer issues. “Merchants would benefit from lower interchange fees,” the report said. “Consumers would also benefit if merchants reduced prices for goods and services, but identifying such savings would be difficult. Consumers also might face higher card-use costs if issuers raised other fees or interest rates to compensate.” Banks use the interchange revenue to pay for rewards programs and to cover the cost of cardholder defaults. The fees average about 2 percent in the U.S. — the highest in the world, according to Representative Peter Welch , a Vermont Democrat who’s sponsoring a bill that would prohibit the payment networks from setting higher interchange for premium cards. To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

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U.S. Durables Orders Fall, Jobless Claims Rise in Sign Recovery `Nascent’

February 25, 2010

By Bob Willis and Timothy R. Homan Feb. 25 (Bloomberg) — Companies scaled back orders for equipment in January and filings for jobless benefits rose, the latest figures in a series of reports this week that show the U.S. economy is recovering in fits and starts. Orders for durable goods excluding transportation unexpectedly fell 0.6 percent, the most since August, while a measure of bookings for business equipment showed its biggest decrease in nine months, the Commerce Department in Washington said. The Labor Department said new claims for unemployment insurance rose to a three-month high. Factories may be taking a pause to gauge demand after boosting production in the second half of 2009 to replenish inventories. Reports earlier this week showed weaker consumer sentiment and home sales, underscoring Federal Reserve Chairman Ben S. Bernanke ’s view that the recovery is “nascent” and still requires interest rates near zero. “There’s no reason to think this is the start of a double- dip — some back and fill is standard operating procedure in recoveries,” Chris Low, chief economist at FTN Financial in New York, said in an e-mail to clients. “Rising jobless claims, weaker orders and falling consumer confidence suggest the economy is retrenching in the first half of the first quarter.” Stocks fell and Treasury securities rose after the reports and as Moody’s Investors Service said it may downgrade Greek debt. The Standard & Poor’s 500 Index dropped 1.5 percent to 1,089.09 at 11:26 a.m. in New York. The 10-year Treasury note rose, pushing down the yield five basis points to 3.64 percent. Economists’ Forecasts Economists forecast orders for durable goods excluding transportation equipment, which tends to be volatile month to month, would rise 1 percent, according to the median of 42 economists surveyed by Bloomberg News. In December, they increased 2 percent. Bookings for all goods meant to last several years rose 3 percent, more than anticipated and reflecting a jump in commercial aircraft. They were forecast to rise 1.5 percent, according to the survey. The number of Americans filing first-time claims for jobless benefits rose 22,000 in the week ended Feb. 20 to 496,000, Labor Department figures in Washington showed. Economists forecast claims would fall to 460,000, according the median in a Bloomberg survey. Winter storms in parts of the U.S. in recent weeks have made claims volatile. A Labor Department spokesman said today that part of the reason for the increase in claims was a backlog of applications in mid-Atlantic states and New England, where blizzards hit earlier this month. The Commerce Department’s report showed orders for non- defense capital goods excluding aircraft, a proxy for future business spending, fell 2.9 percent last month, the biggest drop since April 2009. Shipments of such goods, which are used in calculating gross domestic product, declined 1.5 percent in January after a 2.4 percent gain in December. Equipment and Software Spending on equipment and software rose at a 13.3 percent annual pace in the fourth quarter, the fastest since 2006, the Commerce Department said in a report on gross domestic product. The gain, along with efforts to stabilize inventories, helped the economy grow at a 5.7 percent pace in the fourth quarter. Orders for machinery slumped 9.7 percent in January, the most in a year, while demand increased for primary metals, communications equipment and computers, today’s report showed. The larger-than-expected increase in total durable goods orders reflected a 126 percent jump in demand for commercial aircraft. Boeing Co . said it received orders for 59 aircraft two months ago, up from nine in November and an increase that wasn’t captured in the Commerce Department’s durables data for December. The world’s second-biggest airplane maker said it received 10 orders in January. Orders for motor vehicles and parts dropped 2.2 percent in January after a 5.5 percent gain. Inventories of durable goods were unchanged in January after a 0.2 percent decrease, today’s report showed. More Exports Manufacturers have been benefiting from rising exports as global demand recovers after the worst slump since World War II. A 10 percent drop in the value of the dollar from a four-year high on March 3, 2009 is making American goods more competitive. Exports have risen for eight consecutive months since reaching a three-year low in April. “Private final demand does seem to be growing at a moderate pace,” Bernanke told lawmakers yesterday. The Fed chairman, who continues his semiannual testimony today, said slack labor markets and low inflation would allow the Fed to keep the benchmark lending rate low “for an extended period.” Some manufacturers are beginning to bring back workers or hire. Caterpillar Inc., the world’s largest maker of bulldozers and excavators, is recalling about 100 laid-off technicians at an Indiana plant because of increased demand and may be hiring more, Bridget Young , a Caterpillar spokeswoman, said Feb. 18. “Caterpillar may be recalling or hiring employees in business units at various facilities this year based on demand fluctuation,” Young said. An absence of job growth is limiting optimism even as the economy expands. The Conference Board reported Feb. 23 that consumer confidence fell to a 10-month low in February, while a measure of current conditions slumped to the lowest level in 27 years. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net ; Timothy R. Homan in Washington at thoman1@bloomberg.net

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Coca-Cola Buys Coca-Cola Enterprises’ North America Unit for $12.3 Billion

February 25, 2010

By Chris Burritt and Duane D. Stanford Feb. 25 (Bloomberg) — Coca-Cola Co. , the world’s biggest soda maker, agreed to buy the North American operations of bottler Coca-Cola Enterprises Inc. in a deal valued at $12.3 billion, more than six months after PepsiCo Inc. moved to bring its bottlers in-house to cut costs. The bottler’s investors will get $10 and one share in a new bottling company for each share they hold, Atlanta-based Coca- Cola said today in a statement. Coca-Cola will also assume $8.88 billion of the bottler’s debt . Coca-Cola Enterprises agreed to buy Coca-Cola’s bottling operations in Norway and Sweden and will have the right to buy Coca-Cola’s stake in its German bottling operations. Coca-Cola said the takeover may result in savings and additional revenue opportunities of $350 million over four years. As soft-drink volume sales in the U.S. market have declined since 2005, Coca-Cola Chief Executive Officer Muhtar Kent has introduced new packaging and pricing in North America to draw customers in addition to cutting supply-chain costs. “Ownership and scale together is a powerful combination,” Sarah Henry , an analyst at MFC Global Investment Management in Berwyn, Pennsylvania, said today by telephone. She helps manage PepsiCo shares and doesn’t manage Coca-Cola or Coca-Cola Enterprises shares. “North America is a mature market that’s been in a state of decline.” MFC manages $287 billion in assets. Coca-Cola Enterprises, also based in Atlanta, climbed $5.82, or 30 percent, to $25 at 9:39 a.m. in New York Stock Exchange composite trading. The company had a market value of $9.4 billion as of yesterday’s close. Coca-Cola fell $1.86 to $53.30, while PepsiCo declined 20 cents to $61.88. Capital-Intensive Coca-Cola and PepsiCo sell beverage concentrate and syrup to licensed bottlers, which add water and other ingredients, put the mixture in bottles and cans, and sell it. In 1999, PepsiCo followed Coca-Cola’s lead by spinning off its capital-intensive bottling operations to create Pepsi Bottling Group Inc. Bottling “is not nearly as good as the syrup business, because you are taking on a lot of fixed assets in the process,” Donald Yacktman , founder of Yacktman Asset Management Co., said in a Bloomberg Television interview today. “They are taking on a business with lower inherent returns for more control and cost savings.” Yacktman’s Austin, Texas-based firm manages $3.2 billion in assets, including Coca-Cola and PepsiCo shares . Coca-Cola currently owns about 34 percent of Coca-Cola Enterprises, a stake it values at $3.4 billion. The transaction should close in the fourth quarter of 2010, according to the statement. Coca-Cola said the takeover will give it direct control over about 90 percent of North American volume. $400 Million Annually PepsiCo, the second-largest soft-drink maker, agreed in August to take control of its two biggest bottlers for about $7.8 billion. Those purchases may allow PepsiCo to garner about $400 million annually from cost savings and improved revenue opportunities, the company said this month. North American volume at Coca-Cola Enterprises declined 5 percent last year, while net pricing per case increased 6.5 percent, the company said in a Feb. 10 earnings report. Allen & Co. and Goldman, Sachs & Co. advised Coca-Cola. Skadden, Arps, Slate, Meagher & Flom LLP provided its legal counsel and Cleary Gottlieb Steen & Hamilton LLP and Wilson Sonsini Goodrich & Rosati were antitrust advisers. Coca-Cola Enterprises was advised by Credit Suisse and Lazard. Law firm Cahill Gordon & Reindel also advised. Greenhill & Co. and law firm McKenna Long & Aldridge LLP advised the transaction committee. To contact the reporters on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net ; Chris Burritt in Greensboro, North Carolina, at 1348 or cburritt@bloomberg.net .

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Stocks, Copper, Oil Slide on Greek Debt Risk, Reports on U.S. Jobs, Orders

February 25, 2010

By Nick Baker Feb. 25 (Bloomberg) — Stocks and commodities fell and the euro weakened as Moody’s Investors Service said it may cut Greece’s rating and U.S. employment and durable-goods orders missed forecasts. German two-year yields fell to a record low. The Standard & Poor’s 500 Index dropped 1.4 percent at 11:13 a.m. in New York for the biggest loss in three weeks. The MSCI World Index of shares in 23 developed nations slumped 1.5 percent. Copper and oil retreated in New York. The euro weakened against the yen, which strengthened against the 16 most-traded currencies. The yield premium on Greek 10-year bonds versus German debt widened to the most since Feb. 8. The warning from Moody’s, a day after S&P’s statement that it may downgrade Greek debt, rattled investors who drove the euro down more than 8 percent against the yen in 2010 on concern Greece’s fiscal woes may spread through Europe. Federal Reserve Chairman Ben S. Bernanke testifies to Congress today after saying yesterday that the U.S. economy is in a “nascent” recovery and requires low interest rates to stoke demand. “Signs of discomfort with sovereign debt are surfacing, with investors putting upward pressure on interest rates in developed nations in Europe,” Tony Crescenzi , a strategist and fund manager at Pacific Investment Management Co. in Newport Beach, California, wrote in a research note. Default Risk The cost of insuring against default on Greek government debt rose for a fourth day on concern ratings downgrades will cut the nation’s access to European Central Bank funding. Credit-default swaps on Greece jumped 10 basis points to 394, the highest in more than two weeks, according to CMA DataVision prices at 2:45 p.m. in London. The premium that investors demand to hold Greek 10-year bonds over German debt widened 14 basis points to 353 basis points, quadruple the average over the past five years. Greece has to repay more than 20 billion euros ($27 billion) of maturing bonds and bills by the end of May, according to data compiled by Bloomberg. A Moody’s downgrade may make it harder for the nation’s banks to fund themselves by making Greek government debt ineligible as collateral for European Central Bank loans. The U.S. Labor Department said initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, the highest level in three months. Economists forecast a decline to 460,000, according to the median estimate in a Bloomberg survey. In a separate report, the Commerce Department said orders for U.S. durable goods excluding transportation equipment fell 0.6 percent in January, the most since August and compared with the median economist projection for a 1 percent increase. Caterpillar, UPS General Electric Co., Caterpillar Inc. and United Parcel Service Inc. led declines in U.S. industrial companies, while Alcoa Inc. and Exxon Mobil Corp. retreated with commodity prices. Coca-Cola Co., the world’s largest soda maker, lost 3.4 percent after agreeing to buy Coca-Cola Enterprises Inc.’s North American bottling division. GameStop Corp. lost 8 percent after its chief financial officer quit to join Wal-Mart Stores Inc. Europe’s Dow Jones Stoxx 600 Index fell 1.6 percent. Tenaris SA led declines in basic-resource shares, losing 11 percent in Italy. British American Tobacco Plc, Europe’s second- largest cigarette maker, dropped 2.4 percent after reporting net income that missed forecasts. Copper futures slipped 1.6 percent in New York, while crude oil slumped 2.5 percent. One-Year High The yen climbed to a one-year high against the euro as concern Greece’s credit ratings may be downgraded spurred investors to unwind positions in riskier assets. The yen appreciated 1.7 percent to 120.11 per euro from 122.03 yen yesterday. It touched 119.76, the first time the currency has fallen below the 120 yen level since Feb. 24, 2009. Turkish stocks fell, heading for the biggest weekly loss since November 2008, after talks between the army and government today failed to ease political tensions over an alleged coup plot. The main ISE National 100 index lost 1.9 percent after gaining 2 percent earlier. The lira lost 1 percent. Investors are betting political turmoil will weaken Turkey’s lira more than any other currency as the arrest about 50 army officers over an alleged coup plot raises tension between the government and the military. One-month put options that grant the right to sell the lira against the dollar have surged to a 3.4 percentage-point premium over equivalent call options to buy the currency. The gap, known as the risk-reversal rate, widened from 2.25 percentage points a week ago and is the highest of 48 currencies on Bloomberg. To contact the reporter on this story: Nick Baker at nbaker7@bloomberg.net .

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Charles Vista LLC Hires Director of Operations

February 25, 2010

Thomas Riccoboni Appointed Director of Operations

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Atossa Genetics, Inc. Appoints Edward Sauter, M.D., Ph.D., to Its Scientific Advisory Board

February 25, 2010

SEATTLE, WA–(Marketwire – February 25, 2010) –  Atossa Genetics, Inc., a privately-held healthcare company focused on the development and marketing of novel cellular and molecular diagnostic risk assessment products for breast cancer, including the FDA approved Mammary Aspirate Specimen Cytology Test (MASCT) System, announced today that Edward Sauter, M.D., Ph.D., associate dean for research at the University of North Dakota School of Medicine and Health, has joined Atossa’s Scientific Advisory Board.

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Suing Wall Street Banks Never Looked So Shady: Jonathan Weil

February 25, 2010
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First Solar’s Ahearn, Financed by Wal-Mart Fortune, Sells 40% of Holding

February 25, 2010
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Turkish President Gul Calls for Resolution of Army Row Over Alleged Plot

February 25, 2010

By Steve Bryant Feb. 25 (Bloomberg) — A Turkish court ruled that eight more army officers should be jailed pending charges of plotting a coup, in a case that has heightened tension between the Islamist-rooted government and the armed forces. The eight current and retired officers were remanded in custody by the Istanbul court last night, joining another 12 charged the previous day, the state-run Anatolian news agency said. Police detained about 50 officers in nationwide raids this week. President Abdullah Gul is hosting a meeting between top general Ilker Basbug and Prime Minister Recep Tayyip Erdogan in Ankara at 11 a.m. in a bid to ease tensions. Turkish stocks gained after falling the most in two weeks yesterday as the investigation widened divisions between Erdogan and the army, which has ousted four governments since 1960 and sees itself as the defender of Turkey’s secular rules. The prime minister, whose Justice and Development Party has roots in political Islam, says Turkey must reduce army influence in politics to qualify for European Union membership. Gul’s call for a meeting suggests he wants to “soothe the ongoing tension,” Inan Demir , chief economist for Finansbank AS in Istanbul, wrote in an e-mailed report. The meeting may “serve to ease the acute phase of the ongoing political conflict and provide the markets with a much-needed respite.” The main ISE National 100 index gained 1.1 percent at 10:20 a.m. after dropping 3.4 percent yesterday. Yields on two-year Turkish bonds fell 3 basis points after rising 7 points to 9.01 percent yesterday, the highest since Feb. 2. Ibrahim Firtina and Ozden Ornek , former heads of the Air Force and Navy, appeared before the Istanbul court today, the NTV news channel reported. ‘Uncharted Territory’ “Turkey is clearly in uncharted territory now and it is very difficult to predict how this crisis could evolve,” Wolfango Piccoli , analyst for Eurasia Group in London, said in an e-mailed report yesterday. “If the court decides to formally charge Firtina and Ornek and order them to be jailed pending trial, the crisis could further escalate.” Erdogan, who turns 56 tomorrow, has chipped away at the military’s powers since coming to power. He ended army control over the National Security Council in 2003 and that same year ignored the generals’ objections to a United Nations plan for the reunification of Cyprus. Opposition parties yesterday called for early elections to resolve the crisis. Erdogan called an election in 2007 after the army criticized his choice of Abdullah Gul as president because of his Islamist past. Justice won with 47 percent of the vote, the biggest share any Turkish party had drawn in almost 40 years, and promoted Gul to the presidency. Declining Support The party’s vote declined to 39 percent in local polls in March 2009. The next election is due by July 2011. Deputy Prime Minister Bulent Arinc said on Feb. 22 that the government intends to serve its full term. This week’s arrests are the latest in a two-year investigation that has seen scores of ex-officers, journalists and academics jailed and put on trial on charges of planning a coup. They follow a report in the Taraf newspaper on Jan. 21 that army officers drafted a plan in 2003 to stage bombings to undermine confidence in Erdogan’s government. Basbug said on Jan. 25 the allegations were part of a campaign of psychological warfare designed to undermine public trust in the forces. He said the army is committed to democracy and that coups are “a thing of the past.” To contact the reporters on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net ;

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Jobless Claims in U.S. Unexpectedly Increased 22,000 Last Week to 496,000

February 25, 2010

By Timothy R. Homan Feb. 25 (Bloomberg) — The number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week, a sign that the economic recovery will be uneven as the labor market struggles to rebound. Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, the highest level in three months, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and the four- week moving average of weekly claims jumped close to a three- month high. Companies are waiting to see sustained sales before adding to payrolls, even as manufacturers help the country emerge from the worst recession since the 1930s. An unemployment rate that’s forecast to average 9.8 percent this year may restrain the housing market and gains in consumer spending, which accounts for about 70 percent of the U.S. economy. “There are signs of recovery, but there are still companies that need to cut costs,” said Jonathan Basile, an economist at Credit Suisse in New York, who forecast claims would rise to 500,000. “Once the money comes in on a sustained basis they can plan better, and part of that planning includes hiring.” Economists forecast weekly claims would fall to 460,000, from a previously estimated 473,000 for the week ended Feb. 13, according to the median of 43 projections in a Bloomberg News survey. Estimates ranged from 425,000 to 500,000. Snowstorms Harsh winter weather in parts of the U.S. in recent weeks has made weekly claims volatile. Initial claims have averaged almost 100,000 fewer per week this year than the average of 573,200 for all of last year. A Labor Department spokesman today said part of the reason for the increase in weekly claims was the processing of a backlog of applications in mid-Atlantic states and New England, where snowstorms hit earlier this month. The four-week moving average of claims, a less volatile measure than the weekly figure, increased to 473,750 last week, the highest level since late-November, from 467,750 the prior week, the report showed. Continuing claims rose 6,000 to 4.62 million in the week ended Feb. 13. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Extended Benefits Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments decreased by about 318,000 to 5.5 million in the week ended Feb. 6. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Feb. 13, today’s report showed. Nine states and territories had an increase in claims for that same week, while 44 had a decrease. In testimony before lawmakers in Washington yesterday, Federal Reserve Chairman Ben S. Bernanke cited “tentative” signs of stabilization in labor markets, such as lower job losses, a rise in manufacturing employment and stronger demand for temporary help. The unemployment rate in the U.S. dropped to 9.7 percent in January, while payrolls declined by 20,000, Labor Department figures showed Feb. 5. Manufacturers last month added to payrolls for the first time in three years, and that may provide a boost to the rest of the labor market in coming months. Staff Reductions Some companies continue to cut staff. PepsiCo Inc., the world’s largest snack maker, said it will close a Gatorade plant in Pryor, Oklahoma, that employs 109 workers. “Based on economic conditions we determined we could not keep the plant open,” Pat Burke, a regional spokesman for the Purchase, New York-based company, said in an e-mailed statement Feb. 18. Other businesses are recalling laid-off workers. Caterpillar Inc., the world’s largest maker of bulldozers and excavators, is bringing back 100 technicians at an Indiana plant to meet increased demand. “Caterpillar may be recalling or hiring employees in business units at various facilities this year based on demand fluctuation,” Bridget Young, a spokeswoman for the Peoria, Illinois-based company, said in a Feb. 18 e-mail. Caterpillar previously laid off about 500 workers at the plant in Lafayette. For Related News and Information: News on the U.S. labor market: TNI US LABOR Stories on the U.S. economy: NI USECO Stories on U.S. consumers: TNI US CONS Labor market indexes LRIN

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U.S. Durable-Goods Orders Rise More Than Estimated on Airplane Purchases

February 25, 2010

By Bob Willis Feb. 25 (Bloomberg) — Orders for U.S. durable goods rose more than forecast in January, boosted by a surge in bookings for commercial aircraft that masked a decline in demand for some business equipment. Bookings for goods meant to last several years jumped 3 percent last month after a revised 1.9 percent increase, figures from the Commerce Department showed today in Washington. Durable goods orders excluding transportation equipment unexpectedly fell 0.6 percent, the biggest drop since August. Factories may be taking a pause to gauge demand after boosting production in the second half of 2009 as companies replenished inventories. Restrained consumer spending and home sales underscore Federal Reserve Chairman Ben S. Bernanke’s comments yesterday that the recovery is “nascent” and still requires interest rates near zero. “Capital spending is probably still increasing but not at the robust pace we saw in the fourth quarter,” Michael Feroli , an economist at JPMorgan Chase & Co. in New York, said before the report. “It looks like in the first half the recovery is slowing from the pace we saw in the fourth quarter.” Economists forecast orders for all durable goods would rise 1.5 percent, according to the median forecast of 72 economists surveyed by Bloomberg News. Estimates in the Bloomberg survey ranged from a decline of 0.5 percent to a gain of 5 percent. Excluding demand for transportation equipment, which includes commercial aircraft and tends to be volatile month to month, orders were forecast to increase 1 percent. In the prior two months, those orders rose 2 percent. Boeing Orders The larger-than-expected increase in total durable goods orders reflected a 126 percent jump in demand for commercial aircraft. Boeing Co . said it received orders for 59 aircraft two months ago, up from nine in November and an increase that wasn’t captured in the Commerce Department’s durables data for December. The world’s second-biggest airplane maker said it received 10 orders in January. Orders for motor vehicles and parts dropped 2.2 percent in January after a 5.5 percent gain. Shipments of non-defense capital goods excluding aircraft, which are used in calculating gross domestic product, declined 1.5 percent in January after a 2.4 percent gain in December. Bookings for such goods, a proxy for future business spending, fell 2.9 percent last month. Orders for machinery slumped 9.7 percent in January, while demand increased for primary metals, communications equipment and computers. Fourth-Quarter Investment Purchases of equipment and software added 0.8 percentage point to fourth-quarter economic growth, according to Commerce Department figures released Jan. 29. Today’s figures suggest the pace of such investment may not be sustained in the current quarter. Spending on equipment and software rose at a 13.3 percent annual pace in the fourth quarter, the fastest since 2006, the Commerce Department said in the report on gross domestic product. Efforts to stabilize inventories accounted for 3.4 percentage points of the fourth quarter’s 5.7 percent pace of economic growth. Inventories of durable goods were unchanged in January after a 0.2 percent decrease, today’s report showed. Manufacturing, which accounts for 12 percent of the economy, expanded in January at the fastest pace since August 2004, according to the Institute for Supply Management’s factory index released Feb. 1. Global Demand Sales at manufacturers, wholesalers and retailers increased in the seven months through December, the Commerce Department reported Feb. 12. The rise left businesses with 1.26 months’ supply of goods on hand, the fewest since June 2008. Manufacturers are also benefiting from rising exports as global demand recovers after the worst slump since World War II. A 10 percent drop in the value of the dollar from a four-year high on March 3, 2009 is making American goods more competitive. Exports have risen for eight consecutive months since reaching a three-year low in April. “Private final demand does seem to be growing at a moderate pace,” Bernanke told lawmakers yesterday. The Fed chairman, who continues his semiannual testimony today, said slack labor markets and low inflation would allow the Fed to keep the benchmark lending rate low “for an extended period.” Some manufacturers are beginning to bring back workers or hire. Caterpillar , the world’s largest maker of bulldozers and excavators, is recalling about 100 laid-off technicians at an Indiana plant because of increased demand and may be hiring more, Bridget Young, a Caterpillar spokeswoman, said Feb. 18. Recalling Workers “Caterpillar may be recalling or hiring employees in business units at various facilities this year based on demand fluctuation,” Young said. Factories added 11,000 workers to payrolls in January, the first increase in three years and the most since April 2006, the Labor Department said on Feb. 5. Overall, payrolls declined by 20,000, and the unemployment rate fell to 9.7 percent. An absence of job growth is limiting optimism even as the economy expands. The Conference Board reported Feb. 23 that consumer confidence fell to a 10-month low in February, while a measure of current conditions slumped to the lowest level in 27 years. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Coca-Cola Agrees to Buy Coca-Cola Enterprises’ North America Bottling Unit

February 25, 2010

By Andrew Dunn Feb. 25 (Bloomberg) — Coca-Cola Co. , the world’s biggest soda maker, agreed to buy the North American operations of bottler Coca-Cola Enterprises Inc. , more than six months after PepsiCo Inc. moved to bring its bottlers in-house to cut costs. The bottler’s investors will get $10 and one share in a new bottling company for each share they hold, Atlanta-based Coca- Cola said today in a statement. Coca-Cola will also assume $8.88 billion of the bottler’s debt . Coca-Cola Enterprises agreed to buy Coca-Cola’s bottling operations in Norway and Sweden and will have the right to buy Coca-Cola’s stake in its German bottling operations. Coca-Cola said the takeover may save $350 million over four years. As soft-drink volume sales in the U.S. market have declined since 2005, Coca-Cola Chief Executive Officer Muhtar Kent has introduced new packaging and pricing for Coca-Cola in North America to draw customers in addition to cutting supply- chain costs. “Coca-Cola will streamline the North American operations, but eventually will look to sell,” Kaumil Gajrawala , an analyst at UBS Securities LLC in New York, wrote in a note yesterday after reports that a transaction was being discussed. Coca-Cola Enterprises, based in Atlanta, rose $5.82 to $25 at 8:22 a.m. New York time, before the start of regular U.S. trading. As of yesterday’s close on the New York Stock Exchange, the company had a market value of $9.4 billion. Coca-Cola rose 33 cents to $55.16 in New York yesterday. The stock rose 26 percent last year, while PepsiCo advanced 11 percent. Capital-Intensive Coca-Cola and PepsiCo sell beverage concentrate and syrup to licensed bottlers, which add water and other ingredients, put the mixture in bottles and cans, and sell it. In 1999, PepsiCo followed Coca-Cola’s lead by spinning off its capital-intensive bottling operations to create Pepsi Bottling Group Inc. Coca-Cola currently owns about 34 percent of Coca-Cola Enterprises, a stake it values at $3.4 billion. The transaction should close in the fourth quarter of 2010, according to the statement. Coca-Cola said the takeover will give it direct control over about 90 percent of North American volume. PepsiCo, the second-largest soft-drink maker, agreed in August to take control of its two biggest bottlers for about $7.8 billion. Those purchases may allow PepsiCo to garner about $400 million annually from cost savings and improved revenue opportunities, the company said this month. North American volume at Coca-Cola Enterprises declined 5 percent last year, while net pricing per case increased 6.5 percent, the company said in a Feb. 10 earnings report. To contact the reporter on this story: Andrew Dunn in New York at adunn8@bloomberg.net

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Future US Appoints Kate Byrne as Vice President of the Technology and Living Group

February 25, 2010

SOUTH SAN FRANCISCO, CA–(Marketwire – February 25, 2010) – Future US, the special-interest media company, today announced the appointment of Kate Byrne (formerly Kate Rodler) as Vice President of the Technology and Living Group. In her role as Vice President, Byrne will lead the continued growth, reader engagement and publishing innovations for the print and online outlets associated with Maximum PC, Mac | Life, Pregnancy and Mom magazines. 

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Virtual Instruments Introduces Bo Barker, VP Services

February 25, 2010

Former EMC Global Services Director Takes the Services Reins at Virtual Instruments

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Zurvita, Inc. Taps Leaders in Network Marketing to Drive Growth in Multi-Billion Dollar Markets

February 25, 2010

Marketing Veterans Aligning Their Expertise to Take Zurvita to the Next Level

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PrivateMarkets appoints new sales director

February 25, 2010

PrivateMarkets appoints new sales director

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MII announces Kapok West Mineral Resource doubles to 2.50Mt

February 25, 2010

MII announces Kapok West Mineral Resource doubles to 2.50Mt

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LGM confirms extensions in Matala Central Zone at Luiri Hill

February 25, 2010

LGM confirms extensions in Matala Central Zone at Luiri Hill

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LGM confirms extensions in Matala Central Zone at Luiri Hill

February 25, 2010

LGM confirms extensions in Matala Central Zone at Luiri Hill

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Euro Zone’s confidence halts its advance in February

February 25, 2010

Euro Zone’s confidence halts its advance in February

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Euro Zone’s confidence halts its advance in February

February 25, 2010

Euro Zone’s confidence halts its advance in February

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MAE completes $2.8m placement

February 25, 2010

MAE completes $2.8m placement

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