Slim Overtakes Gates, Buffett to Top Forbes List of World’s Richest People

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Goldman Sachs Internal Hedge Fund Head Flamand Said to Leave to Start Firm

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Treasury Yield Curve Near Record Before $13 Billion Bond Sale

March 11, 2010
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Naked Swaps Crackdown in Europe Rings Hollow Without Washington

March 11, 2010
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Greeks Strike Over Budget Cuts, Bonds, Stocks Decline

March 11, 2010
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House Republicans Eschew Election-Year Earmarks in Bid to Outdo Democrats

March 11, 2010

By Brian Faler March 11 (Bloomberg) — House Republicans announced they will not request any so-called earmarks in an election-year attempt to outdo Democrats in clamping down on the practice of adding money for pet projects to legislation. Republicans agreed to a moratorium in a closed-door meeting today, said Representative Jerry Lewis of California, the top Republican on the Appropriations Committee. Yesterday, House Democrats said they wouldn’t fund earmarks for defense contractors, energy firms and other companies. Critics say earmarks for companies amount to no-bid contracts for groups that contribute to lawmakers’ re-election campaigns. Both parties are attempting to turn what has been bipartisan support for the earmarking process into a partisan issue they can take to voters, who polls show are concerned about rising federal spending and deficits. Republican leaders issued a joint statement yesterday urging their colleagues to give up projects they called “a symbol of broken Washington.” Lewis, a prominent defender of the earmarking practice, told reporters earlier today he was supporting the moratorium because “you guys paint the picture one way — we’ve got to be responsive.” To contact the reporter on this story: Brian Faler  in Washington at   or bfaler@bloomberg.net .

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Airline-Loss Estimate Cut 50% to $2.8 Billion as Industry Sees Travel Gain

March 11, 2010

By Steven Rothwell March 11 (Bloomberg) — Airlines worldwide will lose a collective $2.8 billion in 2010, half the previous forecast, as emerging markets lead a rebound in traffic, the International Air Transport Association said. The loss estimate was cut from $5.6 billion after a “much stronger recovery in demand” at the end of 2009 that continued into the first months of this year, the Geneva, Switzerland- based association said in a statement today. Losses last year probably amounted to $9.4 billion rather than the $11 billion previously estimated, IATA said. Traffic will increase about 5.6 percent in 2010, with the recovery in western markets lagging behind growth in emerging economies. “We are seeing a definite two-speed industry,” IATA Chief Executive Officer Giovanni Bisignani said on a conference call. “Asia and Latin America are driving the recovery. The weakest international markets are the North Atlantic and intra-Europe, which have continuously contracted since mid-2008.” Earnings are picking up after the industry reined in capacity, allowing airlines to lift average fares and boost revenue as demand increases, Bisignani said. Yields — a measure of ticket prices — should gain 2 percent this year following a 14 percent decline in 2009, he said. Investor Optimism Investors in the U.S. industry, which includes Delta Air Lines Inc. and AMR Corp.’s American Airlines , the world’s largest carriers, are betting that the worst is past. The Bloomberg U.S. Airlines Index rose 18 percent this year through yesterday, compared with gains of 7.1 percent and 1 percent for gauges of Asia-Pacific and European carriers. By region, European carriers probably will suffer the biggest loss, at $2.2 billion, followed by North American airlines at $1.8 billion on concern that job losses will be a drag on consumer spending, IATA said. Asia-Pacific carriers are projected to post a $900 million profit as China drives growth, reversing a $2.7 billion loss in 2009. Latin American operators may earn $800 million, matching last year’s performance, according to the trade group. IATA said airlines’ cuts in seating capacity helped them fly fuller planes, with the average load factor on international flights reaching 75.9 percent in January. Revenue Shortfall Global industry revenue is likely to be $552 billion this year, $43 billion more than in 2009, Bisignani said. That’s still $42 billion less than the peak in 2008. “We can be optimistic, but with due caution,” he said. “Important risks remain. Oil is a wild-card, over-capacity is still a danger, and costs must be kept under control throughout the value chain and with labor.” IATA raised its forecast for the average price of oil this year to $79 a barrel from $75 and now estimates fuel will make up 26 percent of operating costs, versus 24 percent in 2009. There remains a danger that crude prices will outpace economic growth, making it tough for airlines to pass the cost to passengers in the form of surcharges, Bisignani said. A surge in fuel prices two years ago began a crisis that deepened as demand for travel tumbled in the credit crisis and global recession, resulting in the collapse of 34 airlines since 2008. The industry has lost $50 billion in the past 10 years, with last year’s drop in passenger demand the worst since World War II, IATA said on Jan. 27. The slump pushed carriers including British Airways Plc and Singapore Airlines Ltd. into losses and forced Japan Airlines Corp. to file for bankruptcy. Cargo demand is expected to increase 12 percent worldwide, IATA said, better than the 7 percent previously forecast. Asian air-freight markets are particularly strong, with shipments originating there experiencing a capacity shortage. Lufthansa Outlook Deutsche Lufthansa AG, Europe’s second-biggest airline, said today that operating profit should increase this year following a 112 million-euro ($153 million) net loss in 2009. “No one can say how long it will take for us to make up for the current losses,” CEO Wolfgang Mayrhuber said in a statement. “A solid balance sheet, efficient capacity adjustments and the reduction of costs are, and will remain, the decisive factors for success.” Like European rival British Airways, the German carrier faces a possible strike as it seeks to restrain costs. With the rebound fragile, walkouts would likely hurt earnings, IATA said. “It’s certainly not the time for strikes,” Bisignani said. “The recovery will depend on everybody sharing the burden. We are moving in the right direction, but let’s remember the situation is still in the red.” To contact the reporter on this story: Steven Rothwell in London at srothwell@bloomberg.net

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CBOE Files to Raise $300 Million in IPO as Exchange Swaps Seats for Shares

March 11, 2010

By Whitney Kisling March 11 (Bloomberg) — The Chicago Board Options Exchange, the last major member-owned U.S. bourse, filed to sell up to $300 million in stock in an initial public offering. CBOE Holdings Inc. said in a filing with the Securities and Exchange Commission that it would issue 55.8 million Class A shares to members and 12.25 million Class B shares to former members of the Chicago Board of Trade who helped create the exchange in 1973. The Chicago-based company will pay a special dividend of $1.67 for each share of Class A and Class B common stock outstanding, the filing showed. CBOE directors approved a plan in December to change the structure and swap seats for shares. The vote followed a November agreement by the CBOE to pay $4.17 million to settle appeals in a three-year-old lawsuit related to its ownership. “This is a culmination of many months of work,” William Brodsky , chief executive officer of the CBOE, said at a conference in Boca Raton, Florida, sponsored by the Futures Industry Association, a trade group based in Washington. The offering would come after eight U.S. companies delayed or postponed IPOs this year and the 13 that completed deals cut their offerings by 26 percent on average, data compiled by Bloomberg show. The Chicago Board of Trade was acquired by the Chicago Mercantile Exchange in 2007, creating CME Group Inc., the world’s largest futures exchange. Board of Trade members’ ownership rights were written into the CBOE’s incorporation documents after CBOT members created it in 1973. To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .

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China Will Seek to Limit Inflation Rate to 5%, Morgan Stanley’s Roach Says

March 11, 2010

By Bob Willis and Thomas Keene March 11 (Bloomberg) — China won’t allow its inflation rate to exceed 5 percent, said Stephen Roach, chairman of Morgan Stanley Asia Ltd., after a report today showed the country’s consumer prices rose at the fastest pace in 16 months. “They certainly don’t want inflation to go anything in excess of, I’d say, 4.5 to 5 percent, they will lean against that, they will lean against property bubbles,” Roach said today in a Bloomberg Radio interview. “They are very focused on economic and financial stability.” It’s hard to get a “clean read” on market-based inflation in China, he said, because most utility prices are regulated. “They are now moving back up to a positive inflation rate, in a 3 to 4 percent zone, after going through deflation in the crisis,” Roach said. Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said today in Beijing. The increase was more than the 2.5 rate forecast by economists and adds to the case for the government to pare back stimulus measures after production jumped 20.7 percent in the first two months of 2010, the most in more than five years. Roach said he didn’t expect any “dramatic” policy announcements in coming weeks. In the period between Premier Wen Jiabao’s annual speech to the National People’s Congress this month and the launch of the 12th Five-Year Plan early next year, China is likely to focus on “traditional, counter-cyclical stabilization policies,” he said. Such policies would probably focus on bank reserve requirements, “maybe a small currency adjustment” ahead of the U.S. Treasury’s biannual foreign-exchange report next month, and “possibly an interest rate hike or two.” Excessive Lending Another element of China’s policies would be the ongoing “clamp-down on excessive lending” for property speculation, he said. China’s 12th Five-Year Plan, which is being drafted in government agencies and ministries, is likely to be a “watershed event,” said Roach. “It’s going to shift the model to more of a pro- consumption model” from communist China’s dependence on exports and investment, he said. “The export and investment dynamic has pretty much outlived its useful purpose, especially in this post-crisis period where consumers in the West are going to be struggling for a number of years.” Roach also said the International Monetary Fund, rather than the European Union, is best placed to enforce the economic adjustments that Greece must take to overcome its budget crisis. “Long-term financing for Greece needs to come from within, and the IMF is the best institution to force that type of adjustment,” he said. “It sends a horrible signal to the rest of Europe, that they condone bad behavior,” should the European Union lead a rescue for Greece. To contact the reporter on this story: Robert Willis in Washington at bwillis@bloomberg.net

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Household Wealth in U.S. Increases at a Slower Pace as Home Values Decline

March 11, 2010

By Timothy R. Homan March 11 (Bloomberg) — Household wealth in the U.S. grew in the fourth quarter at a slower pace, limited by a drop in home values that indicates the recovery in consumer spending will take time to gain speed. Net worth for households and non-profit groups rose by $700 billion to $54.2 trillion, marking a third consecutive gain, according to the Federal Reserve’s Flow of Funds report issued today in Washington. Wealth increased by $2.78 trillion in the third quarter. American consumers cut borrowing at a record pace last year, the figures showed, in a bid to repair the damage from overextended balance sheets and the loss of wealth during the recession. The need to replenish savings combined with the loss of 8.4 million jobs means spending, the biggest part of the economy, will be restrained. “We’re probably feeling a little bit of a hangover from the decline in real-estate markets,” Guy LeBas , chief fixed- income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “It’s hard to justify higher spending if you don’t have income coming in the door.” The Standard & Poor’s 500 Index increased 5.5 percent in the last three months of 2009, compared with a 15 percent gain the previous quarter. Household real-estate holdings fell in value by $109.8 billion in the last three months of 2009, the first decrease in three quarters, according to the Fed’s report. Stocks Fall The S&P 500 decreased 0.3 percent to 1,142.52 at 12:18 p.m. in New York, depressed by concern that faster inflation in China will lead to higher interest rates that will slow the global recovery. Since the recession began in December 2007, Americans have been constrained by periods of falling home and stock prices, tight credit and rising unemployment. While stocks have gained and home prices began stabilizing last year, borrowing standards have tightened and unemployment remains near a 26- year high. The jobless rate , which has not increased since October, held at 9.7 percent last month, according to a March 5 report from the Labor Department. The rate reached 10.1 percent in October, the highest level since 1982. Owners’ equity as a share of their total real-estate holdings increased to 38.1 percent last quarter from 37.6 percent in the third quarter, today’s Fed report showed. Less Borrowing Consumer debt dropped at a 1.2 percent annual pace in the fourth quarter, a seventh consecutive decline. For all of 2009, borrowing decreased 1.7 percent, the first decline since records began in 1952. Mortgage borrowing declined at a 0.8 percent pace from October through December, while other forms of consumer credit fell at a 5.8 percent rate, the Fed’s report showed. Total borrowing by consumers, businesses and government agencies increased at an annual rate of 1.6 percent last quarter, led by a 13 percent advance by the federal government. Borrowing by businesses decreased at a 3.2 percent rate. Borrowing by the federal government reflected, in part, spending linked to President Barack Obama ’s stimulus plan. State and local government borrowing climbed at a 4.7 percent pace. The economy grew at a 5.9 percent rate in the last three months of 2009, the fastest pace in six years. Economists surveyed by Bloomberg News this month forecast the expansion will slow to a 2.8 percent pace in the first quarter of 2010. To contact the report on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Goldman Sachs Internal Hedge Fund Head Flamand Said Leaving to Start Firm

March 11, 2010

By Tom Cahill March 11 (Bloomberg) — Pierre-Henri Flamand , the head of Goldman Sachs Group Inc. ’s largest internal hedge fund, is retiring from the world’s most profitable securities firm to start a hedge fund, according to three people with knowledge of his plans. Flamand, 39, has worked at Goldman Sachs for 15 years and has run Goldman Sachs Principal Strategies from London since 2007. He didn’t respond to calls or e-mails seeking comment. A Goldman Sachs executive in London confirmed the departure and said the company supports Flamand’s plan. Flamand is setting up his own fund as Wall Street pay and proprietary trading come under increased scrutiny from lawmakers. Goldman Sachs Investment Partners, founded by a former principal strategies team, was transformed into a hedge fund managing $7 billion in 2008 and became part of Goldman’s asset management unit. “Goldman Sachs is the best money-making machine in the world but compensation is subject to public policy — if you go private it’s your own business,” said Jerome Lussan , chief executive officer of Laven Partners LLP, a London-based hedge fund consultancy. “You could have been the best prop trader in the world and you would have been paid less last year than you might have expected.” Goldman Sachs Principal Strategies rebounded from losses in 2008 to fuel the firm’s 7 percent gain in equity revenues to $9.89 billion in 2009, according to its annual report. The business seeks to profit from discrepancies in relative values of financial instruments, convertible bonds and “various types of volatility trading,” according to the report. “Results in principal strategies were positive compared with losses in 2008,” Goldman said in its 10-K filing with the U.S. Securities and Exchange Commission. That helped make up for a reduction in revenue in the rest of Goldman Sachs’s equities business last year, according to the filing. Before 2007, Flamand was head of Goldman Sachs Principal Strategies in Europe from 2002. While his background at Goldman will help lure investors, he’ll face a more challenging fund- raising environment than his fellow Goldman Sachs veterans who set up their own firms, said Lussan. Former Goldman Sachs partner Eric Mindich founded Eton Park Capital Management LP with $3 billion in 2004. “There’s so much less appetite today, if he gets a billion to start today it’ll be a massive launch,” said Lussan. “The world has a lot less means than it used to.” To contact the reporter on this story: Tom Cahill in London at tcahill@bloomberg.net

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Most U.S. Stocks Fall on China Inflation; Banks, Technology Companies Gain

March 11, 2010

By Rita Nazareth March 11 (Bloomberg) — Most U.S. stocks fell as higher- than-estimated inflation in China spurred speculation the nation will be forced to raise interest rates while technology companies and banks rallied. Deere & Co., AK Steel Holding Corp. and Caterpillar Inc. fell more than 0.8 percent on concern that demand from China will slow, curbing the global economic recovery. Google Inc. and International Business Machines Corp. advanced more than 1 percent. Citigroup Inc. climbed following a Financial Times report that Chief Executive Officer Vikram Pandit will say the bailed-out bank may earn $20 billion within a few years. More than three companies fell for every two that rose on U.S. stock exchanges. The Standard & Poor’s 500 Index lost 0.2 percent to 1,143.78 at 12:07 p.m. in New York. The Dow Jones Industrial Average slumped 8.31 points, or 0.1 percent, to 10,559.02. “It will be slower going into risk assets,” said Dan Greenhaus , chief economic strategist at Miller Tabak & Co. in New York. “People are concerned about whether or not globally there’s a little bit of a moderation in the pace of gains that we’ve seen economically speaking..” The S&P 500 surged 69 percent through yesterday during the past year, recovering most of its losses from the decline between Jan. 19 and Feb. 8. The three-week retreat was driven by concern some European countries will fail to pay back debt and speculation the Fed will need to rein in emergency stimulus measures as the economy improves. 16-Month High China’s inflation reached a 16-month high, industrial output climbed and new loans exceeded forecasts, putting pressure on the government to cool economic growth. Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Production rose 20.7 percent in the first two months of 2010, the most in more than five years. Premier Wen Jiabao aims to hold full-year inflation around 3 percent after banks flooded the financial system with money to drive a rebound from the global recession. Gross domestic product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including the yuan’s peg to the dollar, must end “sooner or later.” ‘Too Far, Too Fast’ “Obviously, inflation is a concern on a global basis,” said Tom Wirth , senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “That fear gets translated into stock prices. China has led us out of the global recession. If they raise rates too far, too fast, that’s going to slow the world down. I don’t think it’s a problem right now, but there’s always an overreaction from investors.” U.S. stocks extended losses today after the nation’s trade deficit unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. The S&P 500 then rebounded as technology stocks and banks rallied. The trade gap decreased 6.6 percent to $37.3 billion from a revised $39.9 billion in December as Americans imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. Exports decreased 0.3 percent, the first decline since April, on fewer shipments of commercial aircraft and autos. To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net .

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Dodd to Unveil Own Financial Rules Overhaul Measure

March 11, 2010

By Alison Vekshin March 11 (Bloomberg) — Senate Banking Committee Chairman Christopher Dodd said he will release his financial overhaul legislation next week while talks on an agreement continue. Dodd, a Connecticut Democrat who has been seeking a bipartisan compromise with Republican Bob Corker since last month, will release his proposal March 15 and hold a committee meeting to consider changes in two weeks, according to statement released today. “I have been fortunate to have a strong partner in Senator Corker and my new proposal will reflect his input and the good work done by many of our colleagues,” Dodd said. “Our talks will continue and it is still our hope to come to agreement on a strong bill all of the Senate can be proud to support very soon.” To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net .

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Biggest Rally in 76 Years Not Dead Yet as Seers See More to Come for Obama

March 11, 2010
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Trade Deficit in U.S. Unexpectedly Narrows Imports of Oil, Autos Decline

March 11, 2010
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Jobless Claims in U.S. Decreased in Sign End to Payroll Reductions Nears

March 11, 2010
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BofA Chief Moynihan `Comfortable’ Lender Can Absorb Home-Equity Lossses

March 11, 2010
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Ambani, Li Gain as Asia Billionaires Set Pace for Global Rich, Forbes Says

March 11, 2010
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Quake Shakes Chilean President Pineras Plan to Spur Economy

March 11, 2010
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Greeks Strike Over Budget Cuts, Bonds, Stocks Decline (Update1)

March 11, 2010
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China Inflation Quickens as Industrial Output Climbs (Update1)

March 11, 2010

By Bloomberg News March 11 (Bloomberg) — China’s inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures. Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Seasonal factors stemming from a weeklong holiday may have boosted prices. Production rose 20.7 percent in the first two months of 2010, the most in more than five years. Premier Wen Jiabao aims to hold full-year inflation around 3 percent after banks flooded the financial system with money to drive a rebound from the global recession. Gross domestic product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including the yuan’s peg to the dollar, must end “sooner or later.” “Inflation may top the 3 percent policy target by April, which is bound to trigger further monetary tightening,” said Dariusz Kowalczyk , chief investment strategist at SJS Markets Ltd. in Hong Kong. He sees benchmark interest rates increasing as early as this month. South Korea, Australia Stocks across the region dropped, a reflection of the sensitivity of economic expansions from Australia to South Korea to any possible tightening and slowdown in China, the world’s fastest-growing major economy. The MSCI Asia Pacific Index later rebounded on speculation that Japan’s economy is recovering. Australia’s S&P/ASX 200 Index closed down 0.1 percent and the Kospi index fell 0.3 percent. The Shanghai Composite Index swung between gains and losses before closing 0.1 percent higher. Non-deliverable yuan forwards rose for a sixth day, climbing 0.1 percent to 6.6338 per dollar, indicating that traders expect the currency to rise 2.9 percent within 12 months. Banks extended 700 billion yuan ($103 billion) of new loans in February, central bank data showed today. That compared with 1.39 trillion yuan in the previous month and 1.07 trillion yuan a year earlier. The median estimate was 600 billion yuan. M2 , a measure of money supply, rose 25.5 percent, compared with a 26 percent gain in January. The government targets 17 percent M2 growth for this year. Retail Sales Retail sales rose 17.9 percent in the first two months from a year earlier, and urban fixed- asset investment gained 26.6 percent. Retail sales grew 22.1 percent in February, the bureau said. Economists often look at January and February numbers together to eliminate distortions caused by a one-week Lunar New Year holiday. China’s 2010 data is also boosted by comparisons with year-ago levels depressed by the financial crisis. Statistics bureau spokesman Sheng Laiyun told reporters that a low base last year boosted the output number and the government doesn’t see signs of economic overheating. Inflation may slow in March on improved weather after snow and storms pushed up food costs at the start of the year, he said. Food prices rose 6.2 percent in February from a year earlier. His comments contrasted with some economists’ concern after trade data yesterday showed exports rebounding faster than economists forecast and a property-market report said prices climbed in February by the most in almost two years. ‘Decisive’ Tightening “More decisive policy tightening measures than those implemented so far are needed to prevent the economy from overheating,” said Song Yu and Helen Qiao , Hong Kong-based economists with Goldman Sachs Group Inc. The government may increase interest rates and bank reserve requirements and control investment approvals and funding, they said. Barclays Capital increased today its projection for China’s inflation rate this year to 3.5 percent from a previous estimate of 3 percent. Commodity costs, reforms of China’s energy and resource pricing, and the effects of last year’s expansion of credit may add inflation pressures this year, China’s top planning agency told lawmakers last week. Baoshan Iron & Steel Co. and spirits manufacturer Kweichow Moutai Co. are among companies to have pushed up prices. Producer-price inflation climbed to 5.4 percent in February from 4.3 percent in January, the statistics bureau said today. Benchmark Rates The central bank hasn’t raised benchmark interest rates since December 2007, before the financial crisis deepened. The one-year lending rate is at 5.31 percent and deposit rate is at 2.25 percent. China has also effectively pegged the yuan at about 6.83 per dollar since July 2008 to help exporters. The central bank has twice raised lenders’ reserve requirements this year. Deputy Governor Su Ning said this week that those moves were to prevent monetary conditions becoming “excessively loose” as the government continues to implement what it describes as a “moderately loose” stance. Policy makers are targeting lending of 7.5 trillion yuan, 22 percent less than last year’s actual figure, and pledging to crack down on property speculation. The government has tightened second-home mortgages and banks have reduced discounts on home- loan rates. — Li Yanping , Kevin Hamlin , Zhang Dingmin . Editors: Paul Panckhurst , Chris Anstey . To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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Red-Coral Rescue Plans Endanger Italian Jewelry Makers of Torre del Greco

March 11, 2010

March 11 (Bloomberg) — The people of Torre del Greco, 10 miles south of Naples, have lived off the red corals found in the Mediterranean Sea for more than two millennia. A proposal to list the species as endangered may push the seaside town’s $217 million-a-year coral industry into extinction. The U.S., the largest consumer of corals for use in decoration and jewelry, is proposing that all 31 species of red and pink coral be added to the Convention on International Trade in Endangered Species, or CITES, treaty at a meeting in Doha, Qatar, starting March 13. The European Union, of which Italy is a member, backed the plan yesterday while asking for an 18-month delay in implementation. “We’ve survived world wars, economic crises and anything God and Mount Vesuvius have thrown at us, but this will kill us,” said Antonino de Simone, whose family has been fashioning brooches, rings and necklaces out of coral since 1830. He fears he’ll have to let go of his 25 employees and close shop. The added paperwork and damage to Torre del Greco’s image resulting from a CITES listing will cost $135 million in three years, says industry group Assocoral. Former high-end clients such as Tiffany & Co. and Bulgari SpA no longer want the town’s coral jewelry, and a campaign to end the use of the sea animal in fashion goods led by the environmental group Seaweb has gained support of designers Paloma Picasso and Kimberly McDonald. Torre del Greco was once a favored beach destination of Italian movie stars. Now tourists gravitate further down the Amalfi coast, leaving coral as the mainstay of the economy. The industry employs 5,000 people in a region suffering from chronic unemployment. Risk of Collapse The U.S. proposal would allow trade in the corals only if nations issue an export certificate showing they were sustainably harvested, said Andy Bruckner, the National Oceanic and Atmospheric Administration ecologist who drafted the plan. “If we let them keep going the way that they are, the industry is going to collapse,” Bruckner said. “If we can come up with a sustainable way to harvest it, we can have this industry continue into the future forever. That’s what the whole goal is. It’s really not to shut them down.” Producers in Torre del Greco pride themselves on protecting their local reefs, though about two-thirds of the coral used to make their jewelry is imported from Pacific stocks. A destructive form of trawling that involves dragging weighted nets along the seabed is still in use there even though it’s been banned in the Mediterranean since 1994. ‘It’s Crazy’ Michele Palomba, a coral fisherman for 30 years like his father before him, is today one of the 100 licensed locals who between May and September dive 80 meters (262 feet) with scuba gear to collect the coral. At such depths, one can stay under for no more than four minutes. “It’s crazy to me how they can say we have decimated our supplies, it’s simply not true,” Palomba said. “No one knows and loves and respects our sea more than us. This is our livelihood; why would we destroy it?” Unlike the Pacific variety, the coral in the Mediterranean is small and doesn’t grow in shallow waters, Palomba says. He and his colleagues handpick branches from healthy colonies, he said. Not everyone agrees the methods are sustainable. Waters shallower than 90 meters in the Mediterranean used to contain older corals that stood 50 centimeters (20 inches) tall, said Georgios Tsounis, a marine biologist at the Institute of Marine Sciences in Barcelona, whose research is cited by Seaweb. Now “they’ve basically gone” and those found in unprotected waters average about 4 centimeters and rarely exceed 10 centimeters, he said. Transformation “Once the fishery grew to industrial levels, it transformed virtually all known coral communities from a forest- like structure into a grassland-type structure,” Tsounis said. “Although harvesting does not seem to threaten the corals with extinction, it does impact their ecological function of serving as fish nurseries and helping preserve biodiversity.” It’s a fight the locals feel they cannot win. “We are up against the might of the U.S., misinformed environmentalists and big companies: We are doomed,” said Mauro Ascione, 45, one of eight siblings running the oldest coral- jewelry maker in Torre del Greco. “Our father wanted a big family to grow our business. Instead, we’ll attend its funeral.” For Related News and Information: Top Italian news stories: TOP IT Top Environment stories: GREEN Most-read environment stories: {MNI ENVIRONMENT )

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Solar Prospectors Chase `Gold Mine’ Deals in Chinese, Israeli Subsidies

March 11, 2010

By Jeremy van Loon and Todd White

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Obama Trade Goal Fights His Clean-Energy Plan at U.S. Export-Import Bank

March 11, 2010

By Mark Drajem March 11 (Bloomberg) — President Barack Obama ’s goals of boosting U.S. exports and combating climate change are colliding as the U.S. Export-Import Bank expands financing for oil, gas, mining and power-plant projects. Bank-supported ventures approved in the year ended Sept. 30 will emit an estimated 17.9 million metric tons of carbon annually, more than triple the previous year and the most since the lender started releasing data in 2001, according to its annual reports . Among companies aided were General Electric Co. and Petroleos Mexicanos, Mexico’s state-owned oil business. “Ex-Im is on a fossil-fuel binge,” said Doug Norlen , policy director at PacificEnvironment, an environmental advocacy group in San Francisco. The Washington-based Export-Import Bank works to boost U.S. sales overseas by providing government-backed loans or guarantees to exporters. Obama, who has made doubling U.S. exports over the next five years a top goal of his administration, will address the bank’s annual conference in the capital today. Jeffrey Immelt , chief executive officer of Fairfield, Connecticut-based GE, is also scheduled to appear. Obama is set to announce he will name the chief executive officer of Boeing Co., James McNerney , and Xerox Corp.’s Ursula Burns to lead an Export Council of private-sector advisers on trade, a White House official said in a statement released on condition of anonymity. Export Cabinet Obama will sign an executive order today creating an Export Promotion Cabinet that will include officials from the departments of State, Treasury, Commerce and Agriculture, the official said. Obama is pushing for a global agreement to curtail carbon emissions blamed for climate change. In September he persuaded nations in the Group of 20 to pledge an end of subsidies to oil, gas and coal. Stopping aid for fossil fuels will mark “an historic effort” to increase energy security and combat climate change, Obama said when the announcement was made. Financing Grew As private credit dried up with the recession, the Export- Import Bank’s financing grew 50 percent to $21 billion in the last fiscal year. More lending means more projects, such as power plants, that generate carbon emissions, said James Mahoney , the bank’s vice president for engineering and the environment. “Our primary purpose is to create and sustain jobs through exports,” John McAdams , the bank’s senior vice president, said in an interview. The largest project yet approved by the lender, $3 billion in financing announced in December for a liquefied natural-gas plant and pipeline sponsored by Exxon Mobil Corp. and its partners in Papua New Guinea, will generate 3.1 million tons of emissions each year, according to company projections. In addition, the bank is considering funding for an aluminum smelter in the United Arab Emirates and has pledged $1 billion to Ecopetrol SA , Colombia’s state oil producer. The bank also may provide $5 billion in financing for U.S. suppliers of Brazil’s oil producer, Petroleo Brasileiro SA. Solar, Wind Energy The Export-Import Bank says it increased lending for solar, wind and other clean-energy technology exports to $101 million in the year ended Sept. 30, more than three times the year before. It plans to release specifics today of a plan to “restrict support for high-carbon intensity projects,” and provide “fast-track” approval for renewable-energy deals, according to a draft of the scheduled announcement. The bank says it has already taken steps, such as disclosing emissions in its annual report and requiring environmental assessments before approvals, to deal with the effects of development. “We are very sensitive to these projects and the concerns over emissions,” McAdams said. “The projects we have approved represent that sensitivity.” Exporters such as Caterpillar Inc. , GE and Halliburton Co. have relied on the government support to sell bulldozers, electric turbines and oil-field drilling equipment. Undermining Export Goal Restricting the bank in the name of clean energy “would completely undermine the president’s goal of doubling exports,” Bill Lane , Washington director for Peoria, Illinois-based Caterpillar, said in an interview. “Ex-Im Bank is the bank of last resort, so you would be ceding important export markets to our foreign competitors,” said Lane, whose company is the world’s largest maker of bulldozers and excavators. Environmental advocates such as Norlen say the Obama administration should swear off oil and gas projects. Another government lender, the Overseas Private Investment Corp., pledged to cut emissions from its projects by 20 percent over the next decade. The Export-Import Bank hasn’t set a similar goal, and none is specified in the draft of its new environmental procedures. ‘Makes a Mockery’ The bank’s new policy is a disappointment because it would allow an increase in spending on coal and other technologies harmful to the environment, said Steve Kretzmann, who runs Washington-based Oil Change International , which seeks to curb government aid to fossil-fuel companies. “It makes a mockery of the Obama administration’s supposed commitment to phase out fossil-fuel subsidies,” Kretzmann said in an interview. The project in Papua New Guinea led by Irving, Texas-based Exxon has become a particular point of contention. The pipeline’s construction will destroy pristine tropical forests, PacificEnvironment’s Norlen said in a submission to the lender in September. Exxon “is the most profitable corporation on the planet,” Kretzmann said. “This is the last place that taxpayer support should be going.” The bank says the gas produced will replace coal and other dirtier fuels, resulting in a benefit to the environment. “The project itself represents a reduction in greenhouse emissions,” McAdams said. To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net .

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Greece Paralyzed by Strikes as Unions Protest Against Plan to Cut Deficit

March 11, 2010

By Maria Petrakis and Natalie Weeks March 11 (Bloomberg) — Greece’s hospitals, airports and schools were shut today as unions stage the second general strike this year to protest Prime Minister George Papandreou ’s latest budget cuts to curb the European Union’s biggest deficit. An air-traffic controllers’ walkout forced the cancellation of flights, including 479 from Athens International Airport , the country’s largest. Bus and subway drivers, doctors, power workers, journalists and teachers are also protesting 4.8 billion euros ($6.5 billion) of wage cuts and tax increases. “The measures taken so far are unjust, demanding sacrifices from workers that aren’t being demanded from the employers, businessmen and bankers that created this crisis,” said Stathis Anestis, spokesman for the GSEE union, which represents 2 million workers in the private sector. The government’s latest budget cuts, the third package of measures this year, has triggered a new wave of protests in Greece, while being praised by EU officials and rewarded by investors. The risk premium investors demand to buy Greece debt over comparable German bonds has narrowed from an 11-year high on Jan. 28 and Greece was able to sell 5 billion euros of bonds to finance a day after announcing the package. Storming Parliament The Athens benchmark general index has gained 6 percent since the measures were announced on March 3, outperforming other western European benchmarks. Greek workers are anything but supportive. On March 5, striking workers shut down transport and tried to storm parliament as lawmakers passed the new budget cuts that Finance Minister George Papaconstantinou said will show EU allies and investors that Greece is making good on its deficit pledges. “The main risk is not that adjustment in Greece is not feasible, but that Greek society will refuse to shoulder the inevitable near-term economic pain,” Deutsche Bank analysts including Thomas Mayer , wrote in a research note. The tax increases and wage cuts are likely to be a further drag on growth this year, complicating the government’s efforts to reduce the deficit as percent of gross domestic product. Deutsche Bank forecasts a contraction of 4 percent in 2010, twice last year’s pace. The Finance Ministry yesterday said the forecast for a 0.3 percent contraction included in the January deficit-reduction plan, is too optimistic and now sees the economy shrinking at least 0.8 percent this year. Greece will announce final fourth-quarter GDP today after a preliminary report on Feb. 12 showed the economy contracted 2.6 percent in the three months through December from a year earlier. EU Pressure Investors and EU officials have ratcheted up pressure on Greece to do more to ensure it meets its deficit target of 8.7 percent of gross domestic product this year, from 12.7 percent in 2009, as the country sinks deeper into recession. Concerns about Greece’s ability to tame the budget gap prompted speculation that the country would need a bailout and could be forced to abandon the single currency. The euro has declined almost 5 percent this year as Greece’s financial woes raised questions about the strength of monetary union. Eurobank and National Bank of Greece SA may report their lowest quarterly profit in at least five years as loan losses mount during the economic slump. Eurobank, the country’s second- largest lender, may say today that fourth-quarter net income fell to 3.7 million euros, according to the average of six analysts surveyed by Bloomberg. Popularity Sliding Papandreou’s approval rating slipped more than 10 percentage points over the last two months as he unveiled the raft of budget measures, a poll showed on March 9. He still commands the support of a majority of Greeks, with 52 percent having a positive opinion of him, according to the survey by GPO pollsters for Mega Television. Almost 60 percent of those surveyed disapproved of the latest budget cuts and more than 65 percent said the measures were “unfair.” In a Kapa Research poll for To Vima newspaper on March 7, which also showed Papandreou with majority support, 86.9 percent said the measures would provoke social unrest. His socialist Pasok Party enjoys a 10-seat majority in parliament and was able to pass the latest budget measures in the legislature on March 5, two days after announcing the plan. “The protests, unrest and violence all this time are instigated by those who are attempting to preserve for their own benefit all the ills that resulted in the Greek people being beggars to international markets,” Dimitris Daskalopoulos , head of the Athens-based Federation of Greek industries, said in a speech yesterday. “Who are they calling on us to protest against and demand from? Is it maybe against ourselves?” To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net ;

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Detroit Sells $250 Million of Its Debt Without Recent Disclosure Filings

March 11, 2010

By Darrell Preston March 11 (Bloomberg) — Detroit, the largest U.S. city whose debt is rated below investment grade, will ask investors today to buy $250 million of its debt without having filed annual financial reports on time for five years. The city, which warned investors in its preliminary official statement of the possibility of filing for Chapter 9 bankruptcy protection, is providing a June 30, 2008, financial statement, its most recent, to investors. A fiscal 2009 report is expected to be complete by May 31, said city spokesman Dan Lijana, in an e-mail. “This issue is not for the faint of heart,” said Richard Ciccarone, chief research officer of Oak Brook, Illinois-based McDonnell Investment Management, which oversees $6.8 billion of municipal debt. “It certainly raises eyebrows.” Detroit will provide backing by payments of state aid from sales taxes to the general obligation issue, which enabled the issue to maintain investment grade. Michigan’s state treasurer can pay the aid directly to the trustee for the bonds, bypassing the city to ensure the debt is serviced, according to offering documents. The treasurer also agreed not to withhold payments when the city is late filing financial statements, as it has in the past. The municipality is selling the same week that state and local governments are scheduled to bring more than $11 billion of long-term securities to market. The largest deals include $2 billion from California and $696 million from the District of Columbia. Goldman Sachs Detroit is selling $250 million of bonds through investment banks led by Goldman Sachs Group Inc. to help cover budget deficits expected to total $280 million this year. The deal will probably appeal to investors seeking high-yield municipal debt, predicted Ciccarone, precluding the city from a market with tax- exempt yields near three-month lows . The city lost its investment-grade ratings as automobile makers in Michigan began cutting jobs and the tax revenue declined, which led to an expanding budget gap covered by short- term borrowing. The new bonds will spread repayment of the deficit debt across a longer period. Detroit general obligations maturing in 2024 traded yesterday at a yield of 7.56 percent, according to Municipal Securities Rulemaking Board data. That compares with yields of 3.36 percent to 3.5 percent for top-rated 14-year municipal debt yesterday, according to Municipal Market Advisors Inc. State Revenue Detroit will benefit in pricing from the state revenue added to its general obligation backing, said Ciccarone. Moody’s Investors Service, which rates the city’s general obligation debt Ba3, its third-highest rating below investment grade, assigned an A1 rating to today’s issue because of the legal structure that protects state payments to bondholders. Standard & Poor’s, which carries a BB rating on the city’s general obligation debt, assigned an AA- rating to the new issue. Michigan has previously withheld payments because the city has been late filing financial statements, according to the offering documents. Detroit disclosed that it expects state aid to be withheld for February and April this year because its 2009 financial statement is late. Money for bondholders isn’t expected to be withheld, according to the bond documents. Detroit also disclosed there’s no precedent for how its state aid payments would be handled in the event of a Chapter 9 bankruptcy filing because there’s never been a local instance. “The lack of precedent in Michigan makes the risks associated with such a filing difficult to assess,” the preliminary offering statement said. Financial Crisis While the city is still in a financial crisis, “insolvency isn’t on the horizon or on the agenda,” said Mayor Dave Bing , in a prepared statement provided by Lijana. A request to make finance officials available for comment was declined by Lijana. The delay in financial statements occurred under previous mayors and Bing plans to submit on time the 2010 audit, the first full budget cycle under his administration, Lijana said. Following are descriptions of pending sales of municipal debt in the U.S.: FLORIDA’S CITIZENS PROPERTY INSURANCE CORP. , the state’s largest real estate insurer, plans to sell $2 billion in tax- exempt senior bonds next week. Proceeds from the debt, secured by pledged revenue deposited to the insurer’s high-risk account, will provide financing to pay claims during the 2010 hurricane season. Underwriters led by JPMorgan Chase & Co. will market the securities. They are rated A+ by S&P and A2 by Moody’s. (Added March 9) ORLANDO-ORANGE COUNTY EXPRESSWAY AUTHORITY , which operates 100 miles (161 kilometers) of toll roads in the region, plans to sell $350 million of tax-exempt revenue bonds next week. Proceeds from the sale will help finance the authority’s capital program. JPMorgan Chase & Co. will underwrite the securities, rated A1 by Moody’s and A by S&P. (Added March 9) CALIFORNIA , the lowest-rated U.S. state, intends to raise as much as $5 billion from investors this month with its first debt sales since November, according to Treasurer Bill Lockyer . JPMorgan Chase & Co. and Morgan Stanley were selected to manage a tax-exempt deal of as much as $2 billion today, and Citigroup Inc. and Bank of America Merrill Lynch will handle a taxable offering later in the month, according to the state treasurer’s Web site. California is rated A- by S&P, Baa1 by Moody’s and BBB by Fitch. (Updated March 11) MASSACHUSETTS , the second most-indebted state per capita after Connecticut, plans to sell $538.9 million of floating-rate general obligations as early as this week. The date of the sale will be determined by market conditions, according to the state treasurer’s Web site. Proceeds will help refinance outstanding variable-rate demand bonds supported by an agreement from Citibank that expires later this month, according to Moody’s. Underwriters led by Morgan Stanley will market the issue. The state’s general obligations are rated Aa2 by Moody’s, while Fitch and S&P rate them AA, the third-highest of 10 investment grades. (Updated March 9) UNIVERSITY OF TEXAS , with nine academic locations and six health institutions, plans to sell $373.3 million of fixed-rate revenue bonds next week. Proceeds from the sale of the tax exempts will be used to refinance outstanding debt. It sold $331.4 million of tax-exempt securities last week with yields ranging from 0.66 percent on securities maturing in 2012 to 3.5 percent on securities due in 2024. The sale will be marketed by RBC Capital Markets, a unit of Royal Bank of Canada. The securities are rated AAA by S&P and Fitch and Aaa by Moody’s. (Added March 11) ILLINOIS, the second-lowest rated U.S. state after California, will take bids today from banks seeking to underwrite $300 million of Build America Bonds and $56 million of non-subsidized taxable notes. The deal will finance school construction, according to John Sinsheimer , the state’s director of capital markets. Illinois, which last sold Build America securities in a $1 billion deal on Jan. 28, is rated A2 by Moody’s, A+ by S&P and A by Fitch. A statutory requirement calls for 25 percent of all state debt to be bid competitively, Sinsheimer said. Banks led by William Blair & Co. will negotiate the sale of an additional $700 million in Build America securities in mid-March, he said. (Updated March 11) To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net .

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Detroit Sells $250 Million of Its Debt Without Recent Disclosure Filings

March 11, 2010

By Darrell Preston March 11 (Bloomberg) — Detroit, the largest U.S. city whose debt is rated below investment grade, will ask investors today to buy $250 million of its debt without having filed annual financial reports on time for five years. The city, which warned investors in its preliminary official statement of the possibility of filing for Chapter 9 bankruptcy protection, is providing a June 30, 2008, financial statement, its most recent, to investors. A fiscal 2009 report is expected to be complete by May 31, said city spokesman Dan Lijana, in an e-mail. “This issue is not for the faint of heart,” said Richard Ciccarone, chief research officer of Oak Brook, Illinois-based McDonnell Investment Management, which oversees $6.8 billion of municipal debt. “It certainly raises eyebrows.” Detroit will provide backing by payments of state aid from sales taxes to the general obligation issue, which enabled the issue to maintain investment grade. Michigan’s state treasurer can pay the aid directly to the trustee for the bonds, bypassing the city to ensure the debt is serviced, according to offering documents. The treasurer also agreed not to withhold payments when the city is late filing financial statements, as it has in the past. The municipality is selling the same week that state and local governments are scheduled to bring more than $11 billion of long-term securities to market. The largest deals include $2 billion from California and $696 million from the District of Columbia. Goldman Sachs Detroit is selling $250 million of bonds through investment banks led by Goldman Sachs Group Inc. to help cover budget deficits expected to total $280 million this year. The deal will probably appeal to investors seeking high-yield municipal debt, predicted Ciccarone, precluding the city from a market with tax- exempt yields near three-month lows . The city lost its investment-grade ratings as automobile makers in Michigan began cutting jobs and the tax revenue declined, which led to an expanding budget gap covered by short- term borrowing. The new bonds will spread repayment of the deficit debt across a longer period. Detroit general obligations maturing in 2024 traded yesterday at a yield of 7.56 percent, according to Municipal Securities Rulemaking Board data. That compares with yields of 3.36 percent to 3.5 percent for top-rated 14-year municipal debt yesterday, according to Municipal Market Advisors Inc. State Revenue Detroit will benefit in pricing from the state revenue added to its general obligation backing, said Ciccarone. Moody’s Investors Service, which rates the city’s general obligation debt Ba3, its third-highest rating below investment grade, assigned an A1 rating to today’s issue because of the legal structure that protects state payments to bondholders. Standard & Poor’s, which carries a BB rating on the city’s general obligation debt, assigned an AA- rating to the new issue. Michigan has previously withheld payments because the city has been late filing financial statements, according to the offering documents. Detroit disclosed that it expects state aid to be withheld for February and April this year because its 2009 financial statement is late. Money for bondholders isn’t expected to be withheld, according to the bond documents. Detroit also disclosed there’s no precedent for how its state aid payments would be handled in the event of a Chapter 9 bankruptcy filing because there’s never been a local instance. “The lack of precedent in Michigan makes the risks associated with such a filing difficult to assess,” the preliminary offering statement said. Financial Crisis While the city is still in a financial crisis, “insolvency isn’t on the horizon or on the agenda,” said Mayor Dave Bing , in a prepared statement provided by Lijana. A request to make finance officials available for comment was declined by Lijana. The delay in financial statements occurred under previous mayors and Bing plans to submit on time the 2010 audit, the first full budget cycle under his administration, Lijana said. Following are descriptions of pending sales of municipal debt in the U.S.: FLORIDA’S CITIZENS PROPERTY INSURANCE CORP. , the state’s largest real estate insurer, plans to sell $2 billion in tax- exempt senior bonds next week. Proceeds from the debt, secured by pledged revenue deposited to the insurer’s high-risk account, will provide financing to pay claims during the 2010 hurricane season. Underwriters led by JPMorgan Chase & Co. will market the securities. They are rated A+ by S&P and A2 by Moody’s. (Added March 9) ORLANDO-ORANGE COUNTY EXPRESSWAY AUTHORITY , which operates 100 miles (161 kilometers) of toll roads in the region, plans to sell $350 million of tax-exempt revenue bonds next week. Proceeds from the sale will help finance the authority’s capital program. JPMorgan Chase & Co. will underwrite the securities, rated A1 by Moody’s and A by S&P. (Added March 9) CALIFORNIA , the lowest-rated U.S. state, intends to raise as much as $5 billion from investors this month with its first debt sales since November, according to Treasurer Bill Lockyer . JPMorgan Chase & Co. and Morgan Stanley were selected to manage a tax-exempt deal of as much as $2 billion today, and Citigroup Inc. and Bank of America Merrill Lynch will handle a taxable offering later in the month, according to the state treasurer’s Web site. California is rated A- by S&P, Baa1 by Moody’s and BBB by Fitch. (Updated March 11) MASSACHUSETTS , the second most-indebted state per capita after Connecticut, plans to sell $538.9 million of floating-rate general obligations as early as this week. The date of the sale will be determined by market conditions, according to the state treasurer’s Web site. Proceeds will help refinance outstanding variable-rate demand bonds supported by an agreement from Citibank that expires later this month, according to Moody’s. Underwriters led by Morgan Stanley will market the issue. The state’s general obligations are rated Aa2 by Moody’s, while Fitch and S&P rate them AA, the third-highest of 10 investment grades. (Updated March 9) UNIVERSITY OF TEXAS , with nine academic locations and six health institutions, plans to sell $373.3 million of fixed-rate revenue bonds next week. Proceeds from the sale of the tax exempts will be used to refinance outstanding debt. It sold $331.4 million of tax-exempt securities last week with yields ranging from 0.66 percent on securities maturing in 2012 to 3.5 percent on securities due in 2024. The sale will be marketed by RBC Capital Markets, a unit of Royal Bank of Canada. The securities are rated AAA by S&P and Fitch and Aaa by Moody’s. (Added March 11) ILLINOIS, the second-lowest rated U.S. state after California, will take bids today from banks seeking to underwrite $300 million of Build America Bonds and $56 million of non-subsidized taxable notes. The deal will finance school construction, according to John Sinsheimer , the state’s director of capital markets. Illinois, which last sold Build America securities in a $1 billion deal on Jan. 28, is rated A2 by Moody’s, A+ by S&P and A by Fitch. A statutory requirement calls for 25 percent of all state debt to be bid competitively, Sinsheimer said. Banks led by William Blair & Co. will negotiate the sale of an additional $700 million in Build America securities in mid-March, he said. (Updated March 11) To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net .

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Foreclosures in U.S. Rise at Slowest Pace in Four Years on Obama Efforts

March 11, 2010

By Dan Levy March 11 (Bloomberg) — U.S. foreclosure filings rose at the slowest pace in four years in February as the government sought to reduce record bank seizures, RealtyTrac Inc. said. A total of 308,524 properties received a notice of default, auction or seizure last month, or one in 418 households, the Irvine, California-based seller of default data said today in a statement. Filings rose 6 percent from a year earlier, the smallest increase since RealtyTrac began tracking annual changes in January 2006. They declined 2 percent from January. The Obama administration’s main effort to keep people in their homes resulted in more than 830,000 trial loan modifications for delinquent borrowers through January, according to the Treasury Department. Still, filings were up for the 50th straight month in February on an annual basis and topped 300,000 for the 12th consecutive month, RealtyTrac said. “This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity,” RealtyTrac Chief Executive Officer James J. Saccacio said in a statement. About 116,000 mortgages have been permanently modified under the government’s program, compared with as many as 4 million targeted by December 2012. New data will be released March 15, Meg Reilly , a Treasury spokeswoman, said in an e-mail. Bank Repossessions Bank seizures are increasing the number of homes for sale. Lenders took back 78,683 properties last month, up 6 percent from February 2009 and down 15 percent from a peak in December, RealtyTrac said. More than 2 million empty homes were on the market in the fourth quarter, according to the Census Bureau. “Government programs are helping to keep more supply from coming out,” Brian Bethune , chief financial economist at IHS Global Insight in Lexington, Massachusetts, said in an interview. “We’ve got a disjointed market where most of the housing supply is coming from foreclosures rather than building new homes.” Bethune predicted a “high” rate of foreclosures for at least the next 12 months. RealtyTrac expects record bank seizures this year, said Rick Sharga, executive vice president for marketing. Default notices totaled 106,208 in February, down 3 percent from a year earlier and up 3 percent from January, RealtyTrac said. Defaults peaked at more than 142,000 in April. Scheduled auctions totaled 123,633 last month, up 16 percent from February 2009 and down 1 percent from January. The peak was more than 144,000 in August. Nevada, California Nevada had the highest foreclosure rate for the 38th straight month in February, with one in 102 households receiving a filing. Arizona and Florida tied for second at one in 163 households. California ranked fourth at one in 195 households, followed by Michigan at one in 226. Utah, Idaho, Illinois, Georgia and Maryland rounded out the 10 highest foreclosure rates. The most filings were in California , with 68,562, down 15 percent from a year earlier. Florida was second with 54,032, up 16 percent, and Michigan was third at 20,028, a 59 percent rise. Illinois had the fourth-highest total filings with 17,312, Arizona had 16,718 and Texas had 12,638. The six states accounted for 61 percent of the U.S. total, RealtyTrac said. Georgia, Ohio, Nevada and Maryland rounded out the top 10. New York Area Filings rose 14 percent from a year earlier to 3,750 in New Jersey. They climbed 3.3 percent to 2,294 in Connecticut, and dropped 20 percent to 3,237 in New York. Las Vegas had the highest foreclosure rate for cities with a population of more than 200,000. One in 90 households there got a filing. Cape Coral-Fort Myers, Florida, was second at one in 92. Six metro areas in California or Arizona had decreases in filings from January, with Phoenix showing the biggest drop at almost 18 percent. Port St. Lucie, Florida, showed a 66 percent increase, said RealtyTrac, which sells default data collected from more than 2,200 counties representing 90 percent of the U.S. population. To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net .

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Foreclosures in U.S. Rise at Slowest Pace in Four Years on Obama Efforts

March 11, 2010

By Dan Levy March 11 (Bloomberg) — U.S. foreclosure filings rose at the slowest pace in four years in February as the government sought to reduce record bank seizures, RealtyTrac Inc. said. A total of 308,524 properties received a notice of default, auction or seizure last month, or one in 418 households, the Irvine, California-based seller of default data said today in a statement. Filings rose 6 percent from a year earlier, the smallest increase since RealtyTrac began tracking annual changes in January 2006. They declined 2 percent from January. The Obama administration’s main effort to keep people in their homes resulted in more than 830,000 trial loan modifications for delinquent borrowers through January, according to the Treasury Department. Still, filings were up for the 50th straight month in February on an annual basis and topped 300,000 for the 12th consecutive month, RealtyTrac said. “This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity,” RealtyTrac Chief Executive Officer James J. Saccacio said in a statement. About 116,000 mortgages have been permanently modified under the government’s program, compared with as many as 4 million targeted by December 2012. New data will be released March 15, Meg Reilly , a Treasury spokeswoman, said in an e-mail. Bank Repossessions Bank seizures are increasing the number of homes for sale. Lenders took back 78,683 properties last month, up 6 percent from February 2009 and down 15 percent from a peak in December, RealtyTrac said. More than 2 million empty homes were on the market in the fourth quarter, according to the Census Bureau. “Government programs are helping to keep more supply from coming out,” Brian Bethune , chief financial economist at IHS Global Insight in Lexington, Massachusetts, said in an interview. “We’ve got a disjointed market where most of the housing supply is coming from foreclosures rather than building new homes.” Bethune predicted a “high” rate of foreclosures for at least the next 12 months. RealtyTrac expects record bank seizures this year, said Rick Sharga, executive vice president for marketing. Default notices totaled 106,208 in February, down 3 percent from a year earlier and up 3 percent from January, RealtyTrac said. Defaults peaked at more than 142,000 in April. Scheduled auctions totaled 123,633 last month, up 16 percent from February 2009 and down 1 percent from January. The peak was more than 144,000 in August. Nevada, California Nevada had the highest foreclosure rate for the 38th straight month in February, with one in 102 households receiving a filing. Arizona and Florida tied for second at one in 163 households. California ranked fourth at one in 195 households, followed by Michigan at one in 226. Utah, Idaho, Illinois, Georgia and Maryland rounded out the 10 highest foreclosure rates. The most filings were in California , with 68,562, down 15 percent from a year earlier. Florida was second with 54,032, up 16 percent, and Michigan was third at 20,028, a 59 percent rise. Illinois had the fourth-highest total filings with 17,312, Arizona had 16,718 and Texas had 12,638. The six states accounted for 61 percent of the U.S. total, RealtyTrac said. Georgia, Ohio, Nevada and Maryland rounded out the top 10. New York Area Filings rose 14 percent from a year earlier to 3,750 in New Jersey. They climbed 3.3 percent to 2,294 in Connecticut, and dropped 20 percent to 3,237 in New York. Las Vegas had the highest foreclosure rate for cities with a population of more than 200,000. One in 90 households there got a filing. Cape Coral-Fort Myers, Florida, was second at one in 92. Six metro areas in California or Arizona had decreases in filings from January, with Phoenix showing the biggest drop at almost 18 percent. Port St. Lucie, Florida, showed a 66 percent increase, said RealtyTrac, which sells default data collected from more than 2,200 counties representing 90 percent of the U.S. population. To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net .

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Treasury Yield Curve Near Record Before Bond Sale; U.S. Stock Futures Drop

March 11, 2010

By Cordell Eddings and Lukanyo Mnyanda March 11 (Bloomberg) — The difference in yields between 2- and 30-year Treasuries was near the highest on record as the U.S. prepares to sell $13 billion of bonds amid signs the global recovery is gaining momentum. U.S. stock-index futures fell, indicating the Standard & Poor’s 500 Index may snap two days of gains. The dollar declined and the yen gained against most major currencies on concern China will seek to damp economic growth after inflation accelerated to a 16-month high. Investors are seeking higher interest rates on long-term U.S. government debt government as President Barack Obama borrows record amounts to sustain the recovery. Yields show investors added to bets on inflation for an eighth day, the longest run in almost a year. “With the auction and data there is a little bit of uncertainty,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “We had strong Chinese data over night that has pushed us lower. We’ve also seen some setup for the auction. We’ve sold off a lot.” The 30-year bond yield rose 1 basis point, or 0.01 percentage point, to 4.71 percent at 8:36 a.m. in New York, according to data compiled by Bloomberg. The 4.625 percent security due February 2040 declined 7/32, or $2.19 per $1,000 face amount, to 98 22/32. Yield Curve Thirty-year bonds yield 3.78 percentage points more than two-year notes. The gap reached 3.85 percentage points on Feb. 17, the most since at least 1980, according to data compiled by Bloomberg. “We have so much supply in the long end of the curve that this could make it a more difficult auction,” said Niels From , chief analyst at Nordea Bank AB in Copenhagen. “We could see yields going higher.” The 30-year security will probably yield 4.75 percent by the end of June, compared with 1.1 percent for the two-year note, according to From. Similar-maturity German bunds will yield 4 percent and 1.2 percent, respectively, From said. Obama has increased U.S. marketable debt to an unprecedented $7.41 trillion to fund a budget deficit the government predicts will swell to a record $1.6 trillion in the fiscal year ending Sept. 30. Jobless Claims Today’s auction of 30-year debt follows a sale of $21 billion of 10-year debt yesterday. The Treasury auctioned a record-tying $40 billion of three-year notes on March 9. Initial claims for U.S. jobless benefits fell by 6,000 to 462,000 last week, the Commerce Department said. Separate data showed the U.S. trade deficit unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. S&P 500 futures expiring in March fell 0.3 percent to 1,142.50. Dow Jones Industrial Average futures lost 0.2 percent to 10,545 and Nasdaq-100 Index futures decreased 0.4 percent to 1,911.50. China’s consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said in Beijing, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Production rose 20.7 percent in the first two months of 2010, the most in more than five years. The dollar fell 0.1 percent t 90.44 yen from 90.52 yesterday. The U.S. currency weakened to $1.3675 per euro, compared with $1.3657. The euro traded at 123.68 yen, from 123.62 yesterday. Inflation Expectations The difference between yields on 10-year notes and Treasury Inflation Protected Securities, or TIPS, a gauge of expectations for gains in consumer prices known as the breakeven rate, widened to 2.26 percentage points today, from 2.18 points a week ago. The average over the past five years is 2.16 percentage points. Germany’s 10-year breakeven rate is 1.83 percentage points. Ten-year Treasuries yielded 58 basis points more than similar-maturity bunds today, up from 38 basis points on Jan. 21. Treasuries have made investors 1.4 percent this year, trailing a 2.1 percent return on German securities, according to indexes compiled by Bank of America Corp.’s Merrill Lynch unit. The 30-year bonds scheduled for sale today yielded 4.72 percent in pre-auction trading. At the most recent auction of the securities on Feb. 11, investors bid for 2.36 times the amount offered, versus an average of 2.48 for the past 10 sales. Indirect bidders, the group that includes foreign central banks, bought 29 percent, versus an average of 42 percent at the previous 10 sales. The 10-year yield, a benchmark for everything from mortgage rates to student loans, has climbed 82 basis points in the past 12 months to 3.73 percent as evidence accumulates that the global economy is recovering from the recession. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net ; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Treasury Yield Curve Near Record Before Bond Sale; U.S. Stock Futures Drop

March 11, 2010

By Cordell Eddings and Lukanyo Mnyanda March 11 (Bloomberg) — The difference in yields between 2- and 30-year Treasuries was near the highest on record as the U.S. prepares to sell $13 billion of bonds amid signs the global recovery is gaining momentum. U.S. stock-index futures fell, indicating the Standard & Poor’s 500 Index may snap two days of gains. The dollar declined and the yen gained against most major currencies on concern China will seek to damp economic growth after inflation accelerated to a 16-month high. Investors are seeking higher interest rates on long-term U.S. government debt government as President Barack Obama borrows record amounts to sustain the recovery. Yields show investors added to bets on inflation for an eighth day, the longest run in almost a year. “With the auction and data there is a little bit of uncertainty,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “We had strong Chinese data over night that has pushed us lower. We’ve also seen some setup for the auction. We’ve sold off a lot.” The 30-year bond yield rose 1 basis point, or 0.01 percentage point, to 4.71 percent at 8:36 a.m. in New York, according to data compiled by Bloomberg. The 4.625 percent security due February 2040 declined 7/32, or $2.19 per $1,000 face amount, to 98 22/32. Yield Curve Thirty-year bonds yield 3.78 percentage points more than two-year notes. The gap reached 3.85 percentage points on Feb. 17, the most since at least 1980, according to data compiled by Bloomberg. “We have so much supply in the long end of the curve that this could make it a more difficult auction,” said Niels From , chief analyst at Nordea Bank AB in Copenhagen. “We could see yields going higher.” The 30-year security will probably yield 4.75 percent by the end of June, compared with 1.1 percent for the two-year note, according to From. Similar-maturity German bunds will yield 4 percent and 1.2 percent, respectively, From said. Obama has increased U.S. marketable debt to an unprecedented $7.41 trillion to fund a budget deficit the government predicts will swell to a record $1.6 trillion in the fiscal year ending Sept. 30. Jobless Claims Today’s auction of 30-year debt follows a sale of $21 billion of 10-year debt yesterday. The Treasury auctioned a record-tying $40 billion of three-year notes on March 9. Initial claims for U.S. jobless benefits fell by 6,000 to 462,000 last week, the Commerce Department said. Separate data showed the U.S. trade deficit unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. S&P 500 futures expiring in March fell 0.3 percent to 1,142.50. Dow Jones Industrial Average futures lost 0.2 percent to 10,545 and Nasdaq-100 Index futures decreased 0.4 percent to 1,911.50. China’s consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said in Beijing, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Production rose 20.7 percent in the first two months of 2010, the most in more than five years. The dollar fell 0.1 percent t 90.44 yen from 90.52 yesterday. The U.S. currency weakened to $1.3675 per euro, compared with $1.3657. The euro traded at 123.68 yen, from 123.62 yesterday. Inflation Expectations The difference between yields on 10-year notes and Treasury Inflation Protected Securities, or TIPS, a gauge of expectations for gains in consumer prices known as the breakeven rate, widened to 2.26 percentage points today, from 2.18 points a week ago. The average over the past five years is 2.16 percentage points. Germany’s 10-year breakeven rate is 1.83 percentage points. Ten-year Treasuries yielded 58 basis points more than similar-maturity bunds today, up from 38 basis points on Jan. 21. Treasuries have made investors 1.4 percent this year, trailing a 2.1 percent return on German securities, according to indexes compiled by Bank of America Corp.’s Merrill Lynch unit. The 30-year bonds scheduled for sale today yielded 4.72 percent in pre-auction trading. At the most recent auction of the securities on Feb. 11, investors bid for 2.36 times the amount offered, versus an average of 2.48 for the past 10 sales. Indirect bidders, the group that includes foreign central banks, bought 29 percent, versus an average of 42 percent at the previous 10 sales. The 10-year yield, a benchmark for everything from mortgage rates to student loans, has climbed 82 basis points in the past 12 months to 3.73 percent as evidence accumulates that the global economy is recovering from the recession. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net ; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Trade Deficit in U.S. Unexpectedly Shrinks as Oil, Automobile Imports Drop

March 11, 2010

By Shobhana Chandra March 11 (Bloomberg) — The trade deficit in the U.S. unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. The gap decreased 6.6 percent to $37.3 billion from a revised $39.9 billion in December as Americans imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. Exports decreased 0.3 percent, the first decline since April, on fewer shipments of commercial aircraft and autos. Imports may rebound in coming months as oil prices climb, consumer spending improves and a growing economy prompts companies to replenish depleted inventories. By the same token, the recovery in global growth and a weaker dollar is projected to lift overseas sales at manufacturers including Cisco Systems Inc. , signaling factories will keep leading the U.S. expansion. “We are starting to see a gradual recovery in global trade,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected the gap would narrow. “Consumers and businesses are dipping their toes back into spending here and abroad.” Fewer Americans filed first-time claims for jobless benefits last week, a report from the Labor Department also showed. Initial applications dropped by 6,000 to 462,000 in the week ended March 6. The number of people receiving unemployment insurance increased, while those getting extended benefits fell. Stocks, Dollar Stock-index futures extended earlier losses and the dollar fell after the reports. The contract on the Standard & Poor’s 500 Index decreased 0.3 percent to 1,141.8 at 8:56 a.m. in New York. The dollar bought 90.53 yen, erasing earlier gains and little changed from late yesterday. The trade gap was projected to widen to $41 billion, from an initially reported $40.2 billion in December, according to the median forecast in a Bloomberg News survey of 73 economists. Projections ranged from deficits of $37 billion to $44 billion. Exports decreased by $500 million to $142.7 billion. Auto demand from abroad fell by $544 million, while shipments of commercial aircraft declined by $474 million. Fewer Planes Sales of American-made planes may have rebounded last month. Boeing Co. delivered 23 aircraft for overseas buyers in January, down from 38 the prior month, according to figures from the Chicago-based company. Foreign deliveries climbed to 28 in February. American-made goods have become more attractive for overseas buyers following a decline in the dollar last year. It has fallen about 11 percent against a trade-weighted basket of currencies from the U.S.’s biggest trading partners from a five- year high reached on March 9, 2009. “Rising exports will be an important driver for manufacturing,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. San Jose, California-based Cisco , the biggest maker of networking equipment, said it sees “underlying strength” in the economy and that customers are saying they need to spend more on technology. “We see very positive spending trends across all of our business segments” and across the world, Ned Hooper, who is in charge of Cisco’s consumer unit and mergers and acquisitions, said on March 3 at a conference in San Francisco. Imports Fall Imports fell 1.7 percent to $180 billion from $183.1 billion in December. The U.S. imported 245 million barrels of crude oil in January, the fewest since February 1999. The decrease swamped an increase in oil prices. Purchases of foreign-made automobiles and parts dropped by $1.48 billion, led by decreases in purchases of German and Japanese cars. After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $41 billion from $43.8 billion. The January figure was in line with the fourth-quarter average, indicating trade so far is not influencing growth estimates. The economy, emerging from the worst recession since the 1930s, expanded at a 5.9 percent annual pace in the fourth quarter, the most since 2003. Exports accounted for 2.32 percentage points of growth, the biggest contribution in 13 years. Focus on Exports President Barack Obama has said the U.S. needs to shift its growth toward expanding exports and investment rather than consumption as in the past. He plans to increase government- backed export financing for small businesses by 50 percent, to $6 billion a year. Stronger overseas sales were one reason Parker Hannifin Corp., the world’s largest manufacturer of hydraulic equipment, raised its 2010 earnings estimate in January. “We’re coming off the bottom,” Donald E. Washkewicz, chairman and chief executive officer of the Cleveland-based company, told analysts. “Asia is extremely strong.” The International Monetary Fund, in a January report, projected that emerging-market and developing economies will expand 6 percent as a group this year, compared with 2.1 percent for developed nations. Today’s report showed the trade gap with China was little changed at $18.3 billion from $18.1 billion in the prior month. China, the world’s biggest exporter, this week reported its trade surplus shrank to the lowest level in a year in February as exports surged 46 percent from a year earlier, while imports rose 45 percent. The nation has prevented any rise in the yuan against the dollar since July 2008 to aid exporters. To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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Trade Deficit in U.S. Unexpectedly Shrinks as Oil, Automobile Imports Drop

March 11, 2010

By Shobhana Chandra March 11 (Bloomberg) — The trade deficit in the U.S. unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. The gap decreased 6.6 percent to $37.3 billion from a revised $39.9 billion in December as Americans imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. Exports decreased 0.3 percent, the first decline since April, on fewer shipments of commercial aircraft and autos. Imports may rebound in coming months as oil prices climb, consumer spending improves and a growing economy prompts companies to replenish depleted inventories. By the same token, the recovery in global growth and a weaker dollar is projected to lift overseas sales at manufacturers including Cisco Systems Inc. , signaling factories will keep leading the U.S. expansion. “We are starting to see a gradual recovery in global trade,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected the gap would narrow. “Consumers and businesses are dipping their toes back into spending here and abroad.” Fewer Americans filed first-time claims for jobless benefits last week, a report from the Labor Department also showed. Initial applications dropped by 6,000 to 462,000 in the week ended March 6. The number of people receiving unemployment insurance increased, while those getting extended benefits fell. Stocks, Dollar Stock-index futures extended earlier losses and the dollar fell after the reports. The contract on the Standard & Poor’s 500 Index decreased 0.3 percent to 1,141.8 at 8:56 a.m. in New York. The dollar bought 90.53 yen, erasing earlier gains and little changed from late yesterday. The trade gap was projected to widen to $41 billion, from an initially reported $40.2 billion in December, according to the median forecast in a Bloomberg News survey of 73 economists. Projections ranged from deficits of $37 billion to $44 billion. Exports decreased by $500 million to $142.7 billion. Auto demand from abroad fell by $544 million, while shipments of commercial aircraft declined by $474 million. Fewer Planes Sales of American-made planes may have rebounded last month. Boeing Co. delivered 23 aircraft for overseas buyers in January, down from 38 the prior month, according to figures from the Chicago-based company. Foreign deliveries climbed to 28 in February. American-made goods have become more attractive for overseas buyers following a decline in the dollar last year. It has fallen about 11 percent against a trade-weighted basket of currencies from the U.S.’s biggest trading partners from a five- year high reached on March 9, 2009. “Rising exports will be an important driver for manufacturing,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. San Jose, California-based Cisco , the biggest maker of networking equipment, said it sees “underlying strength” in the economy and that customers are saying they need to spend more on technology. “We see very positive spending trends across all of our business segments” and across the world, Ned Hooper, who is in charge of Cisco’s consumer unit and mergers and acquisitions, said on March 3 at a conference in San Francisco. Imports Fall Imports fell 1.7 percent to $180 billion from $183.1 billion in December. The U.S. imported 245 million barrels of crude oil in January, the fewest since February 1999. The decrease swamped an increase in oil prices. Purchases of foreign-made automobiles and parts dropped by $1.48 billion, led by decreases in purchases of German and Japanese cars. After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $41 billion from $43.8 billion. The January figure was in line with the fourth-quarter average, indicating trade so far is not influencing growth estimates. The economy, emerging from the worst recession since the 1930s, expanded at a 5.9 percent annual pace in the fourth quarter, the most since 2003. Exports accounted for 2.32 percentage points of growth, the biggest contribution in 13 years. Focus on Exports President Barack Obama has said the U.S. needs to shift its growth toward expanding exports and investment rather than consumption as in the past. He plans to increase government- backed export financing for small businesses by 50 percent, to $6 billion a year. Stronger overseas sales were one reason Parker Hannifin Corp., the world’s largest manufacturer of hydraulic equipment, raised its 2010 earnings estimate in January. “We’re coming off the bottom,” Donald E. Washkewicz, chairman and chief executive officer of the Cleveland-based company, told analysts. “Asia is extremely strong.” The International Monetary Fund, in a January report, projected that emerging-market and developing economies will expand 6 percent as a group this year, compared with 2.1 percent for developed nations. Today’s report showed the trade gap with China was little changed at $18.3 billion from $18.1 billion in the prior month. China, the world’s biggest exporter, this week reported its trade surplus shrank to the lowest level in a year in February as exports surged 46 percent from a year earlier, while imports rose 45 percent. The nation has prevented any rise in the yuan against the dollar since July 2008 to aid exporters. To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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Telx Appoints Brad Hokamp as Chief Marketing Officer

March 11, 2010

Former Savvis Senior VP Joins Interconnection Leader to Drive Colocation and Next-Generation Interconnection Solutions and Marketing

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Telx Appoints Brad Hokamp as Chief Marketing Officer

March 11, 2010

Former Savvis Senior VP Joins Interconnection Leader to Drive Colocation and Next-Generation Interconnection Solutions and Marketing

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Thomas Weisel Partners Group Hires Senior Telecom and Media Investment Banking Calling Officers

March 11, 2010

SAN FRANCISCO, CA–(Marketwire – March 11, 2010) –  Thomas Weisel Partners Group, Inc. ( NASDAQ : TWPG ), a global growth-focused investment bank, announced the addition of two professionals in its Investment Banking group. Aaron Hill has joined the firm as a Managing Director and Head of Telecom Investment Banking and Keith Sipes has joined the firm as a Director in Investment Banking focused on media.

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Thomas Weisel Partners Group Hires Senior Telecom and Media Investment Banking Calling Officers

March 11, 2010

SAN FRANCISCO, CA–(Marketwire – March 11, 2010) –  Thomas Weisel Partners Group, Inc. ( NASDAQ : TWPG ), a global growth-focused investment bank, announced the addition of two professionals in its Investment Banking group. Aaron Hill has joined the firm as a Managing Director and Head of Telecom Investment Banking and Keith Sipes has joined the firm as a Director in Investment Banking focused on media.

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Kansas City School Board Closes Almost Half Of City’s Schools In Face Of Bankruptcy

March 11, 2010

KANSAS CITY, Mo. — Facing potential bankruptcy, the board that governs the once flush-with-cash Kansas City school district is taking the unusual and contentious step of shuttering almost half its schools. Administrators say the closures are necessary to keep the district from plowing through what little is left of the $2 billion it received as part of a groundbreaking desegregation case. The Kansas City school board narrowly approved the plan to close 29 out of 61 schools Wednesday night at a meeting packed with angry parents. The schools will close at the end of the school year. Although other districts nationwide are considering closures as the recession ravages their budgets, Kansas City’s plan is striking. In rapidly shrinking Detroit, 29 schools closed before classes began this fall, but that still left the district with 172 schools. Most other districts are closing just one or two schools. Emotional board member Duane Kelly told the crowd of more than 200 people Wednesday night, “This is the most painful vote I have ever cast” in 10 years on the board. Some chanted for the removal of the superintendent, while one woman asked the crowd, “Is anyone else ready to homeschool their children?” Kansas City Councilwoman Sharon Sanders Brooks said the closure plan had prompted some housing developers to consider backing out of projects. “The urban core has suffered white flight post-the 1954 U.S. Supreme Court decision Brown v. the Board of Education, blockbusting by the real estate industry, redlining by banks and other financial institutions, retail and grocery store abandonment,” Brooks said to applause from the standing-room-only crowd. “And now the public education system is aiding and abetting in the economic demise of our school district,” she said. “It is shameful and sinful.” Under the approved plan, teachers at six other low-performing schools will be required to reapply for their jobs, and the district will try to sell its downtown central office. It also is expected to cut about 700 of the district’s 3,000 jobs, including about 285 teachers. District officials face dozens of issues as they begin the massive job of downsizing the district – reworking school bus routes, figuring out what to do with vacant buildings and slashing its payroll. Superintendent John Covington has spent the past month making the case to sometimes angry groups of parents and students that the closures are necessary. Once the district had enough desegregation money to build such amenities as an Olympic-sized swimming pool. But the effort to use upscale facilities and programs to lure in students from the suburbs never worked quite as planned. Covington has stressed that the district’s buildings are only half-full as its population has plummeted amid political squabbling and chronically abysmal test scores. The district’s enrollment of fewer than 18,000 students is about half of what the schools had a decade ago and just a quarter of its peak in the late 1960s. Many students have left for publicly funded charter schools, private and parochial schools and the suburbs. The school district also isn’t the only one serving students in Kansas City; several smaller ones operate in the city’s boundaries. Covington has blamed previous administrations for failing to close schools as the enrollment – and the money that comes with it – shrank. Past school closure plans were either scaled back or scrapped entirely. Administrators warned that without the cuts, the district would have been in the red by 2011. “None of us liked voting for this,” board member and former desegregation attorney Arthur Benson said, “but it was necessary.”

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Kansas City School Board Closes Almost Half Of City’s Schools In Face Of Bankruptcy

March 11, 2010

KANSAS CITY, Mo. — Facing potential bankruptcy, the board that governs the once flush-with-cash Kansas City school district is taking the unusual and contentious step of shuttering almost half its schools. Administrators say the closures are necessary to keep the district from plowing through what little is left of the $2 billion it received as part of a groundbreaking desegregation case. The Kansas City school board narrowly approved the plan to close 29 out of 61 schools Wednesday night at a meeting packed with angry parents. The schools will close at the end of the school year. Although other districts nationwide are considering closures as the recession ravages their budgets, Kansas City’s plan is striking. In rapidly shrinking Detroit, 29 schools closed before classes began this fall, but that still left the district with 172 schools. Most other districts are closing just one or two schools. Emotional board member Duane Kelly told the crowd of more than 200 people Wednesday night, “This is the most painful vote I have ever cast” in 10 years on the board. Some chanted for the removal of the superintendent, while one woman asked the crowd, “Is anyone else ready to homeschool their children?” Kansas City Councilwoman Sharon Sanders Brooks said the closure plan had prompted some housing developers to consider backing out of projects. “The urban core has suffered white flight post-the 1954 U.S. Supreme Court decision Brown v. the Board of Education, blockbusting by the real estate industry, redlining by banks and other financial institutions, retail and grocery store abandonment,” Brooks said to applause from the standing-room-only crowd. “And now the public education system is aiding and abetting in the economic demise of our school district,” she said. “It is shameful and sinful.” Under the approved plan, teachers at six other low-performing schools will be required to reapply for their jobs, and the district will try to sell its downtown central office. It also is expected to cut about 700 of the district’s 3,000 jobs, including about 285 teachers. District officials face dozens of issues as they begin the massive job of downsizing the district – reworking school bus routes, figuring out what to do with vacant buildings and slashing its payroll. Superintendent John Covington has spent the past month making the case to sometimes angry groups of parents and students that the closures are necessary. Once the district had enough desegregation money to build such amenities as an Olympic-sized swimming pool. But the effort to use upscale facilities and programs to lure in students from the suburbs never worked quite as planned. Covington has stressed that the district’s buildings are only half-full as its population has plummeted amid political squabbling and chronically abysmal test scores. The district’s enrollment of fewer than 18,000 students is about half of what the schools had a decade ago and just a quarter of its peak in the late 1960s. Many students have left for publicly funded charter schools, private and parochial schools and the suburbs. The school district also isn’t the only one serving students in Kansas City; several smaller ones operate in the city’s boundaries. Covington has blamed previous administrations for failing to close schools as the enrollment – and the money that comes with it – shrank. Past school closure plans were either scaled back or scrapped entirely. Administrators warned that without the cuts, the district would have been in the red by 2011. “None of us liked voting for this,” board member and former desegregation attorney Arthur Benson said, “but it was necessary.”

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Simon Johnson: The Speech For Which We Have Been Waiting

March 11, 2010

For nearly two years now we have waited for a speech. We need a simple speech and a direct speech – most of all a political speech – about what exactly happened to our financial system, and therefore to our economy, and what we must do to make sure it can never happen again. President George W. Bush apparently did not consider giving such a speech, and Secretary Paulson could never talk in this way. President Obama seemed, at some moments, close to making things clear – when he talked on Wall Street in September and, most notably, when he launched the Volcker Rules in January. But President Obama has always come up short on the prescriptive part – i.e., what we need to do – and his implementation people still move as if there were lead weights in their shoes. Without a definitive speech, there is no political reference point, there is no convergence in the debate, and there is not even any clarity regarding what we should be arguing about. Without the right kind of speech, there are just many lobbyists working the corridors and a lot of backroom deals that most people do not understand – by design. Thursday, hopefully, we should finally get the speech. Not – sadly – from the White House, not from anyone in the executive branch, and not even from within the Senate Banking Committee (although Senators Merkley and Levin took a big step today), but rather on the floor of the Senate. On Thursday, Senator Ted Kaufman (D., DE) is due to deliver a strong blow to the overly powerful and unproductively mighty within our financial sector. He will say, according to what is now on his website, 1. Excessive deregulation allowed big finance to get out of control from the 1980s – but particularly during and after the 1990s. This led directly to the economic catastrophe in 2007-08. 2. We need to modernize and apply the same general principles that were behind the Glass-Steagall, i.e., separating “boring” but essential commercial banking (running payments, offering deposits-with-insurance, etc) from “risky” other forms of financial activity 3. We need size caps on the biggest banks in our financial system, preferably as a percent of GDP. 4. We should tighten capital requirements substantially. 5. And we must regulate derivatives more tightly – on this issue, he likes at least some of the steps being pushed by Gary Gensler at the CFTC. To be sure, a speech is not legislation. And, as yet, this is just one senator’s point of view. But because the administration so completely lost the narrative regarding what happened and why, there is now a free, open, and fair competition to explain what we need to do. The lobbyists will still prevail on this round. But a big debate around the nature of our financial system is exactly what we need. People who want to defend finance as-is now need come out of the woodwork. Senator Kaufman has set a very high standard. If you wish to oppose this agenda, speak clearly and in public about why we should not pursue exactly what the senator proposes. If opponents of reform do not come out and argue the merits of their case, people will reasonably and increasingly infer that Senator Kaufman and his allies are right on all the substance. Reform is blocked by a perverse combination of bankrupt ideology and deep-pocketed corporate interests. The only way to break through is to bring a lot of sunshine into the true affairs of finance – including by speeches like the one we will hear Thursday.

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Simon Johnson: The Speech For Which We Have Been Waiting

March 11, 2010

For nearly two years now we have waited for a speech. We need a simple speech and a direct speech – most of all a political speech – about what exactly happened to our financial system, and therefore to our economy, and what we must do to make sure it can never happen again. President George W. Bush apparently did not consider giving such a speech, and Secretary Paulson could never talk in this way. President Obama seemed, at some moments, close to making things clear – when he talked on Wall Street in September and, most notably, when he launched the Volcker Rules in January. But President Obama has always come up short on the prescriptive part – i.e., what we need to do – and his implementation people still move as if there were lead weights in their shoes. Without a definitive speech, there is no political reference point, there is no convergence in the debate, and there is not even any clarity regarding what we should be arguing about. Without the right kind of speech, there are just many lobbyists working the corridors and a lot of backroom deals that most people do not understand – by design. Thursday, hopefully, we should finally get the speech. Not – sadly – from the White House, not from anyone in the executive branch, and not even from within the Senate Banking Committee (although Senators Merkley and Levin took a big step today), but rather on the floor of the Senate. On Thursday, Senator Ted Kaufman (D., DE) is due to deliver a strong blow to the overly powerful and unproductively mighty within our financial sector. He will say, according to what is now on his website, 1. Excessive deregulation allowed big finance to get out of control from the 1980s – but particularly during and after the 1990s. This led directly to the economic catastrophe in 2007-08. 2. We need to modernize and apply the same general principles that were behind the Glass-Steagall, i.e., separating “boring” but essential commercial banking (running payments, offering deposits-with-insurance, etc) from “risky” other forms of financial activity 3. We need size caps on the biggest banks in our financial system, preferably as a percent of GDP. 4. We should tighten capital requirements substantially. 5. And we must regulate derivatives more tightly – on this issue, he likes at least some of the steps being pushed by Gary Gensler at the CFTC. To be sure, a speech is not legislation. And, as yet, this is just one senator’s point of view. But because the administration so completely lost the narrative regarding what happened and why, there is now a free, open, and fair competition to explain what we need to do. The lobbyists will still prevail on this round. But a big debate around the nature of our financial system is exactly what we need. People who want to defend finance as-is now need come out of the woodwork. Senator Kaufman has set a very high standard. If you wish to oppose this agenda, speak clearly and in public about why we should not pursue exactly what the senator proposes. If opponents of reform do not come out and argue the merits of their case, people will reasonably and increasingly infer that Senator Kaufman and his allies are right on all the substance. Reform is blocked by a perverse combination of bankrupt ideology and deep-pocketed corporate interests. The only way to break through is to bring a lot of sunshine into the true affairs of finance – including by speeches like the one we will hear Thursday.

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12 Industries That Will Be Adding Jobs Very Soon (PHOTOS)

March 11, 2010

Are we nearing a rebound in hiring? If the anecdotal evidence is any indication, we certainly are. According to Manpower’s quarterly Employment Outlook Survey, hiring in almost every sector is about to get better. The staffing company’s assessment, which surveys employers in thirteen industries, found that twelve of the thirteen have net positive employment outlooks for the second quarter of this year. Even in the lone sector with a net negative outlook — government — 10 percent of employers said they expected to hire more people next quarter. Here’s Manpower : Of the more than 18,000 employers surveyed across the nation, 16% anticipate an increase in staff levels during Quarter 2 2010, while 8% expect a decrease in payrolls, resulting in a Net Employment Outlook of +8%. When seasonally adjusted, the Net Employment Outlook becomes +5%… Keep in mind that Manpower’s survey examines expectations only, and does not measure companies that are actually hiring now .But some industries are undoubtedly ramping up for growth. Check out the industries with the most promising employment outlooks below:

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Herve Falciani, HSBC Employee, Allegedly Stole Data On 24,000 Swiss Accounts

March 11, 2010

GENEVA — Information on 24,000 HSBC customers with Swiss accounts has been stolen, the British bank said Thursday, potentially exposing large numbers of international clients to prosecution by tax authorities in their home countries. A former IT employee of Swiss subsidiary HSBC Private Bank (Suisse) SA, identified by French authorities as Herve Falciani, stole the information between late 2006 and early 2007, the bank said. The accounts, held by individuals worldwide, were all opened before October 2006 and some 9,000 have since been closed. “We deeply regret this situation and unreservedly apologize to our clients for this threat to their privacy,” said Alexandre Zeller, chief executive of the Swiss subsidiary. The bank said it has contacted the affected customers and doesn’t believe the stolen data has or will allow any unauthorized person to access the affected accounts. The stolen information only affects accounts in Switzerland with the exception of its former subsidiary HSBC Guyerzeller Bank, it said. However, the theft could leave some of those account holders exposed to prosecution by tax authorities. In recent cases of data theft from banks in Switzerland and Liechtenstein, the information was offered to foreign governments seeking to track down nationals who avoided paying their taxes by hiding money in Swiss accounts. The French government said last year it had obtained a list of 3,000 French HSBC clients compiled from “numerous sources” including the former HSBC employee – identified by prosecutors in the French city of Aix-en-Provence as Falciani. France later agreed to return the files to Switzerland, who in turn handed “copies of a significant portion of the data” back to the bank on March 3, HSBC said. “Based on the facts it would appear that the French authorities have copies and the Swiss authorities have copies,” HSBC spokesman Jezz Farr said. The bank said French authorities had informed their Swiss counterparts that the data they still hold would “not be used inappropriately.” It remained unclear whether that means France will not use the data to prosecute tax evaders. Farr said the theft affected customers worldwide. “The accounts were held in Switzerland but the client base is international,” he said. HSBC PLC said offering private banking services for rich customers remains “a core business” of the group, which has about 100,000 private banking clients. Shares in HSBC were down 0.05 percent at 7.01 pounds ($10.54) on the London exchange.

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Trustwave Appoints New Channel Manager for Brazil

March 11, 2010

Continues Growth in Latin America

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Trustwave Appoints New Channel Manager for Brazil

March 11, 2010

Continues Growth in Latin America

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Viewing recovery with paranoid optimism

March 11, 2010

Viewing recovery with paranoid optimism

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UK’s Xcite Energy finalises terms of BP24.9m placing

March 11, 2010

UK’s Xcite Energy finalises terms of BP24.9m placing

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US budget deficit hits $221b last month

March 11, 2010

US budget deficit hits $221b last month

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German exports drop 6.3% in January

March 11, 2010

German exports drop 6.3% in January

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Another strike in Greece led from austerity measures

March 11, 2010

Another strike in Greece led from austerity measures

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