holiday

WATCH: Postal Worker Caught With Truckloads Of Stolen Mail

by The Huffington Post on January 25, 2012

Huffington Post…

On top of a financial crisis of devastating proportions, it looks like the U.S. Postal Service has yet another problem on its hands: an employee that’s hoarding stolen mail. Karen Samford, a 72-year-old postal worker in Texas, has been suspended from her job after admitting she stole and kept literally truckloads of bulk mail over the last decade, MyFoxHouston reports ( h/t The Consumerist ). Her boss reportedly became concerned with the excess mail in her office and asked if she had stashed any elsewhere, to which she admitted to renting entire storage units to hold the junk mail. “This is a hoarding problem,” she told MyFoxHouston. “People can have mental issues… it doesn’t make them insane. It makes them stupid.” Read the entire MyFoxHouston report here. Hoarding has been an especially popular topic of late, in part due to the success of TLC’s Hoarding: Buried Alive , a show profiling those who suffer through the practice. This week, for example, firefighters in Arizona struggled to extinguish a house fire after finding thousands of beer cans and ceiling-high stacks of newspapers upon entering the home. The owner said he was just “holding on to” the trash. But Samford’s episode is only the latest public relations disaster for the struggling agency. USPS also made headlines just last week after a security camera caught on tape a postal worker throwing a package over a fence . And it’s not just USPS that’s guilty of some bad deliveries. A similar event transpired last month when a FedEx employee delivered a package in much the same manner . USPS has bigger problems than bad deliveries anyway. The independent government agency is facing the possibility of default due to a monstrous budget shortfall, even as it desperately seeks ways to reduce costs and raise revenues — including cuts and raising the price of stamps . Last month USPS announced it would delay the closure of some 3,700 local post offices and hundreds of mail processing centers to allow Congress time to pass legislation that would stave off default. The closures are currently estimated to result in $6.5 billion worth in savings and some 100,000 layoffs. If USPS does reduce services, many small business owners fear the increased expenses of relying on more expensive private companies like FedEx will weigh on them, The Huffington Post reports .

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WATCH: Postal Worker Caught With Truckloads Of Stolen Mail

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How The Italian Mafia Is Winning Big In The Euro Crisis

by Reuters on January 10, 2012

Huffington Post…

* Extortionate lending a “national emergency” * Organised crime has annual turnover of 140 bln euros By James Mackenzie ROME, Jan 10 (Reuters) – Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday. Extortionate lending by criminal groups had become a “national emergency”, said the report by anti-crime group SOS Impresa. Organised crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added. “With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business. Organised crime groups like the Sicilian Cosa Nostra, the Naples Camorra or the Calabrian ‘Ndrangheta have long had a stranglehold on the Italian economy, generating profits equivalent to about 7 percent of national output. Extortionate lending had become an increasingly sophisticated and lucrative source of income, alongside drug trafficking, arms smuggling, prostitution, gambling and racketeering, the report said. “The classic neighbourhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals,” the report said. It estimated about 200,000 businesses were tied to extortionate lenders and tens of thousands of jobs had been lost as a result. EXTORTION WITH A CLEAN FACE Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said. “This is extortion with a clean face,” it added. “Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly.” Small businesses, who have struggled to get hold of credit during the economic slowdown, may have been increasingly tempted to turn to the mafia, said the report. Typical victims of extortionate lending were middle-aged shopkeepers and small businessmen who would struggle to find a new job and who were ready to try anything to avoid bankruptcy, it added. “They are usually people in traditional retail sectors like food, greengrocers, clothes or shoe shops, florists or furniture shops. These are the categories which, more than any other, are paying the price of the (economic) crisis,” it said. According to a separate report this week from small business association CNA, 56 percent of companies had seen banks tighten their lending requirements in the past three months.

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How The Italian Mafia Is Winning Big In The Euro Crisis

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Retailers Seduced Shoppers With Deals In December, In Spite Of Economy

January 5, 2012

Shoppers didn’t hold back this holiday season — at certain stores, that is. According to data released Thursday, luxury and mid-range retailers seduced customers in December, while discounters like Target missed sales estimates. The 3.4 percent increase in same-store sales reported by Thomson Reuters was better than expected — an optimistic sign in an ailing economy. Still, it’s unclear how often people will shop in the upcoming year, a factor that will depend more on whether they find jobs than on how much retailers innovate or drop prices. “Consumers were feeling better about loosening up purses this holiday season,” said Jharonne Martis, director of research for Thomson Reuters. In particular, big wins in the apparel and teen apparel sectors indicated that shoppers were willing to spend not only on necessities, but on discretionary items like new clothes and shoes, Martis said. Same-store sales, which measure changes in sales at stores open at least one year, are released at the start of each month by 25 of the largest U.S. retailers. Same-store sales of at least 3 percent indicate a healthy U.S. consumer, according to Martis. Nordstrom and Macy’s were among the biggest winners with 8.7 and 6.2 percent sales increases, respectively. Saks and Dillard’s also did well, with 5.8 and 4.0 percent increases. TJX Companies, owner of T.J. Maxx and Marshalls, saw its same-store sales increase by 8 percent. In overall apparel sales, Martis said this was able to counter the miss by Gap Inc., which saw sales decline by 4 percent in December. Victoria’s Secret, part of Limited Brands, also saw one of the largest successes with an 11 percent increase. Not that such successes came easily. It was a “very aggressive, promotional holiday environment,” as Amie Preston, chief investor relations officer of Limited Brands, said on the company’s December sales call. Other retailers, like TJX Companies, made similar comments about the importance of value to this round of holiday shoppers. Successful stores had no choice but to drop prices, extend hours and aggressively advertise to get people in the door — all of which made profits difficult. “It was one of the most promotional seasons we’ve seen in a long time, and very event driven,” said Ken Perkins, president of Retail Metrics, a retail research and consulting firm. “This puts a lot of pressure on margins.” Data showed that consumers held out from hitting stores until the very best deals were offered, or until the last minute before Christmas. According to ShopperTrak, which monitors retail foot traffic, sales jumped 37.8 percent in the last week before Christmas, a much larger increase in that period than in 2010 . Oddly, some of the big discount stores known for consistently low prices weren’t able to attract this year’s shoppers. Target missed estimates by 1.5 percent and Fred’s and Kohl’s actually saw same-store sales decline by 0.4 and 0.1 percent in December, respectively. But this doesn’t necessarily mean that people weren’t looking for discounts. Rather, more kinds of retailers are now competing for the same price-conscious shopper. In addition to traditionally mid-range department stores like Macy’s offering more deals, a growing crop of dollar stores have prices that can beat even those at Walmart. “Discounters, big names like Target and Walmart have lost a lot of market share to dollar stores,” said Martis of Target’s disappointing sales. Walmart, which doesn’t announce monthly results, will release holiday sales data in February with its latest earnings. On Tuesday, Dollar General announced that it will be opening 625 new stores in 2012. On Thursday evening, Family Dollar will announce its latest earnings, which are expected to include strong same-store sales of between 4 and 6 percent . Meanwhile, a struggling Sears Roebuck, once America’s most prominent middle-class retailer, announced last week that it will be closing 100 to 120 of its Sears and Kmart stores. Unfortunately for the economy, healthy December sales numbers don’t necessarily indicate a fertile retail landscape for 2012. With few big shopping holidays or sale days like Christmas or Black Friday in the near future, there’s a potential for retail sales to be soft, according to Perkins. Without the continued addition of jobs, the divide between retail winners and losers — as well as between luxury and middle class spending — is likely to become even sharper than it was in December. “I have deep concerns about the erosion of the middle class and their ability to spend so much,” Perkins said. “Much of the economy ultimately rests on their shoulders.”

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Swiss Bankers Charged With Hiding U.S. Taxpayer Accounts From The IRS

January 3, 2012

Three Swiss bankers were charged Tuesday with hiding more than $1.2 billion in U.S. taxpayer accounts from the IRS, by Preet Bharar, the Manhattan U.S. Attorney. Michael Berlinka, Urs Frei And Roger Keller allegedly conspired with some U.S. taxpayers and others to hide Swiss bank accounts and the income generated from them while working as client advisers for a Swiss bank, according to a press release from Bharar’s office. The three worked on dozens of undeclared bank accounts in 2008 and 2009 in an effort to scoop up business lost by UBS and another Swiss bank following reports that UBS was helping U.S. account holders evade taxes, according to the press release. The case has been assigned to Judge Jed Rakoff, according to the release. The three bankers allegedly helped U.S. clients open using sham corporation names in other countries as well as used code names and numbers on undeclared accounts to minimize references to the clients’ actual names, according to the press release. In addition, they allegedly made sure that any mail related to the accounts wasn’t sent to clients at their U.S. addresses and communicated using their personal email accounts to avoid detection, among other allegations, according to the release. The charges come as tensions between Switzerland and the U.S. are rising over Swiss bank secrecy — a result of a Swiss law that prevents Swiss bankers from revealing client information, according to Reuters. S wiss banks hold an estimated $2 trillion in offshore wealth and the U.S. Justice Department is investigating 11 Swiss banks suspected of helping wealthy Americans evade through Swiss accounts.

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Morty Lefkoe: Are Limiting Beliefs Sabotaging Your Organization?

December 29, 2011

There are hidden saboteurs in almost every organization that are inhibiting innovation, creating inefficiency, and ultimately reducing profits. These deadly saboteurs are in plain sight, but are not seen. What are they? Beliefs about what can’t be done, what must be done, and what each employee believes he/she should be doing. In an earlier post I explained how you can help employees eliminate the most common limiting belief in organizations, “We can’t…” In this post I will describe two actual case histories that will make perfectly clear how other types of beliefs in an organization are the biggest single roadblock to success… and why eliminating them can be the single most important thing you can do to insure your company’s success. The Lands’ End Story For years the people at Lands’ End had tried and failed to reduce the time it took to move new products from conception to catalog. Before I began working with them it had taken 14 months. The Gap and Limited at that time were going from idea to store in six months. The people at Lands’ End were vastly inefficient by comparison and they knew it. The executives and the managers in each department tried to make the departments more efficient — they tried to speed up design, purchasing, inventory, quality control and catalog. But nothing they did resulted in any significant improvement in the time it took to bring a new product idea to market. They needed some sort of real breakthrough. As a result of the work I did with them over 700 people began to examine their operating beliefs, including beliefs about their jobs, what they had to do and what they could not do. They discovered that everyone in the company had the common belief: “We have to have different departments, each of which is responsible for a different function.” But it is true! When this belief was first identified most people’s reaction was, “But this is true. How can you operate without different departments? Every company is organized into different departments for different functions.” Despite the fact that the need for different functional departments seemed obvious, most employees were aware that many different problems resulted from the existence of different functional departments. For example, the bonus awarded to employees was based largely on the results of their department. But sometimes focusing on having one’s own department be as successful as possible was detrimental to other departments. Here’s an example. The inventory department’s effectiveness was measured, in part, by its ability to reduce inventory costs. So it tended to keep the minimum amount of product on hand. Customer service, on the other hand, was measured by surveys that measured the level of customer satisfaction. So this department wanted plenty of inventory of each item, each color, each size, etc., so that customers would always be able to get what they wanted. Many other conflicts existed between other departments. I’m sure you can name a number of similar conflicts in your own organization. Once this belief was identified and eliminated (in other words, when they realized it wasn’t necessarily the truth), we put together a team of management and non-management employees to come up with an innovative structure that didn’t require functional departments, something that would have been impossible as long as the belief existed. This team suggested that Lands’ End get rid of the functional departments and replace them with “product teams” that had representatives from the old functional departments (such as design, purchasing, catalog, inventory, customer service, and design. Another possibility Management loved the idea and decided to put it into action. Each team — such as the men’s accessory team, the luggage team, and the bathing suit team — was responsible for coming up with ideas for new products, contracting with vendors, being responsible for inventory and quality control, etc. No time was wasted in interactions between departments because they no longer existed. People were no longer trying to get a bonus by reaching their department’s targets, because there were no departments. As a result of this change — which resulted from eliminating a fundamental belief about the way the company had to operate — the new time from conception of a new product to having it on hand, ready to sell, and presented in a catalog was reduced from 14 months to 6 months. Mike Smith, a former CEO of Lands’ End, said: The Lefkoe Institute broadened our thinking by getting us to question some of our long-held beliefs. That enabled us to develop new solutions we couldn’t have even imagined before. LI’s techniques peel away old ways of thinking and open the mind to realizing that almost anything is possible. The point isn’t that I did it. The point is that Lands’ End was open to identifying limiting beliefs it did not know it had, to eliminating them, and then to creating innovative ways of operating that would have been impossible with the old beliefs. Kondex reduces “Cycle Time” from 33 days to 24 hours Here’s another case history you should be able to identify with. Kondex, a small manufacturing firm in Wisconsin, had been trying for many years to reduce “cycle time,” the number of days it took to run an order through the shop. At one point it took 33 days. The managers worked hard to solve the problem but after several years of trying they were only able to reduce cycle time by 58 percent, to 19 days. When they hired us I discovered that managers rarely asked employees for ideas or solutions and when employees did offer solutions they were often ignored. I knew this had to change if Kondex wanted to dramatically reduce the time it took to fulfill an order. I also knew that just explaining why managers should listen to employees wouldn’t work nor would training them how to listen better. Kondex’s destructive belief So we helped managers uncover an unstated belief that ran through the entire company: “It’s management’s job to make all improvements, not the worker’s.” This belief kept management from requesting ideas from workers and from using the ideas workers volunteered. This belief was also held by most of the workers and it kept most of them from making suggestions. After this belief was eliminated, both managers and workers eliminate this belief managers started listening to workers and workers started to volunteer lots of ideas. That year Kondex reduced cycle time by another 50 percent to 9 days. And almost every idea came from non-management employees. During the next two years cycle time was reduced to less than two days. And when customers submitted orders through Kondex’s computer system it took less than 24 hours. Jim Wessing, the president of Kondex at the time, told us: People have changed how they look at the world, both here at Kondex and at home. Changing people’s beliefs has led to people seeing a lot more possibilities. We no longer measure how many reported changes and improvements associates make, but they occur daily here at Kondex. As you know we measured innovations at one time and achieved one hundred in a couple of weeks from less than 100 employees. Now they happen so fast that many of them are shared at our weekly meetings, and many are just implemented without anyone even thinking about them. Find the destructive beliefs in your organization What unexamined beliefs are preventing your organization from achieving breakthrough results? Finding them and getting rid of them is the single most important thing you can do to dramatically improve your organization’s bottom line. For more information about Morty Lefkoe and how his method for eliminating beliefs can improve business success, please go to http://lefkoe.com. Copyright © 2011 Morty Lefkoe

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MF Global Fallout Fueling Calls For Reforms In One Trading Sector

December 27, 2011

CHICAGO (Reuters) – Agricultural bankers and other players in the world’s grain markets say fallout from the collapse of giant broker MF Global is changing cash grain trading and fueling calls for alternatives and reforms. Trading changes include more “back to back” transactions and more direct contracting by farmers to end users, eliminating middlemen like MF Global, merchandisers say. Bankers and traders also say anger with lack of oversight by the Chicago Mercantile Exchange’s clearing house regarding MF Global’s supposedly secure customer accounts is rampant, spurring calls for more regulation of a traditionally close-knit, clubby and “self-regulating” industry. Proposals have included the idea of setting up a separate “insurance fund” to hold the so-called “segregated” accounts that futures commission merchants (FCM’s) now hold and account for with the exchange clearinghouse, which is supposed to “mark to market” every trade every day to assure adequate capital. Up to $1.2 billion in such segregated customer funds are still missing eight weeks after MF Global collapsed into bankruptcy after a revelation it had made a $6 billion bet on European sovereign debt that went sour. “I don’t think people are satisfied with CME’s response. What the banks thought was rock solid isn’t as rock solid any more,” said Lance Holden, senior vice president with Wells Fargo Bank, the largest private lender to agribusiness that had customers who lost funds with MF Global. CME Group chief operating officer Bryan Durkin told a packed meeting of the National Grain and Feed Association this month, echoing earlier testimony by CME executives to Congress, that MF Global was the culprit, not CME’s clearing house. “This was the failure of a firm. A firm that broke the rules, not the failure of any clearing house. At CME, we met our obligations,” Durkin told the gathering of 700 farm bankers, grain traders, brokers and farmers in Chicago. “We believe all customers affected should have their full balances and property returned by MF Global. Until then, we will not consider the process complete,” Durkin said. CME, looking to line up with its futures-trading customers and the banks like Wells Fargo who finance them, has pledged at least $550 million to the court trustee now sorting out the MF Global mess to help make good customers who were victimized. But CME will need to do more, grain traders said. “We want to get the confidence back and restore confidence with the lenders too,” said Diana Klemme, vice president of Grain Services Corp in Atlanta, which advises grain buyers and sellers on marketing and risk strategies. “In the end the loss of even a dime by users of the system will have a chilling impact,” said Jeff Hainline, president of Advance Trading, an Illinois brokerage with many farmer and farm cooperative clients. VOTING WITH THEIR FEET As the CME’s regulator, the Commodity Futures Trading Commission, as well as Congress and the bankruptcy court try to sort out accountability for the missing funds, many farmers and grain traders have backed off using CME’s grain futures, the world pricing and risk-management benchmark for decades. “We are watching closely how these events play out to figure out what do we need to ask more of from a counter-party risk standpoint,” said Sam Miller, senior vice president of agricultural banking at M&I Bank in Appleton, Wisconsin, who had customers who lost money with MF Global. Miller said he’s seeing more interest among bank customers to sell commodities directly to end-users but they are looking at all their choices — over-the-counter privately negotiated deals, options markets, and back-to-back deals where purchases and sales are done simultaneously. “We do see more contracts between a seller and somebody who is actually going to use the product,” Miller said. “There are some real concerns about figuring out just what happened and how we make sure the situation never repeats,” said NGFA Treasurer and director of marketing Todd Kemp. “Of course, the number one issue among customers right now is return of supposedly segregated funds to customers.” Kemp said NGFA members, which include more than 1,000 firms who buy and sell grain, will find it hard to market grain without the CME. But confidence has been deeply shaken in the CME and the FCM’s who hold customer funds, he said. “Our task in that respect is to re-establish confidence and examine changes that might help ensure safety of customer funds in the future,” he said. “Some have suggested that we might look at changes in which entity holds customer funds. “Instead of the FCM, should the clearinghouse or exchange, or maybe some independent third party, hold the funds? Should we look at extending some form of insurance to commodity accounts?” Kemp said. “Our Risk Management Committee will begin those discussions soon.” Oversight and accountability must be addressed, he added. “NGFA historically has not been an organization that believes in more government regulation. However, it’s clear that in some way customer protections need to be improved,” Kemp said. Even bankers may seek more regulation — of brokers. “Futures trading is supposed to be riskless from the transaction side. If you’ve got outside risk, people may use different types of products,” said Holden of Wells Fargo. Grain elevators, farmers and others using futures markets to hedge price risk often borrow 90 percent or more of the value of their crops or livestock to finance futures trades. The government-linked Farm Credit System (FCS), for example, lent some $6 billion to make sure grain elevators could make margin calls when grain prices plummeted in 2008. So grain traders are closely watching the stance of CoBank, the Denver-based FCS bank with $62 billion in assets and one of the biggest lenders to U.S. grain elevators. “CoBank has not changed its credit policies in light of the events at MF Global.” Lori O’Flaherty, chief credit officer for CoBank, told Reuters in an interview. “But the failure of this institution highlights the need for close monitoring of counterparty risk, both by banks and their customers, during these volatile economic times.” Bankers said CME will also remain squarely in the grain industry’s sights, as an institution that must re-earn trust. “CME — all of the exchanges have been focused on contracts, more growth, all these hedge funds, private equity funds that are getting into these markets. They are focused on that instead of their base business,” Holden said. “That something like missing segregated funds could happen — that’s a big miss.” (Editing by Peter Bohan, Leslie Gevirtz) Copyright 2011 Thomson Reuters. Click for Restrictions .

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As Demand For Rentals Rises, 2012 Will Be ‘The Year Of The Landlord’

December 27, 2011

(MARGARET CHADBOURN, Reuters) – Brian Keith is busier than ever as the architecture firm he works for rushes to wrap up work on a 300-unit apartment complex in Dallas. The project is one of dozens the firm, JHP Architecture, has on its hands — a surge of business driven by a rise in demand in the United States for rental properties. The increased demand has forced JHP to expand, and it expects to keep hiring at least through the first quarter. “We’re seeing overall work come back and there’s a backlog of contracts to go through,” said Keith, director of urban design and planning at JHP. “There’s strong interest in multi-family units and plenty of pent-up demand.” With U.S. unemployment at a lofty 8.6 percent, home foreclosures rising and property prices under pressure, more and more Americans have given up the dream of owning, opting instead to rent, a shift that is remaking the face of the U.S. housing industry. The percentage of Americans who own their home dropped from a peak of 69.2 percent in late 2004 to a 13-year low of 65.9 percent in the second quarter. It edged up to 66.3 percent in the third quarter of this year. On the flip side, the percentage of rental properties that are empty fell to 9.8 percent in the third quarter from 10.3 percent a year earlier. In a recent report, Oliver Chang, an analyst at Morgan Stanley, dubbed 2012 “The Year of the Landlord.” “Rents are rising, vacancies are falling, household formations are growing and rental supply is limited,” the Morgan Stanley report stated. “We believe the demand for rental properties will continue to grow.” Groundbreaking for new housing jumped 9.3 percent in November to the highest level in 19 months, fueling optimism that the battered housing market was regaining its footing. The gains, however, were almost solely in multifamily housing. Groundbreaking for structures with five or more units shot up more than 30 percent from October to now stand at nearly double the year-ago level. Prices reflect the shift in demand. Rental costs are up 2.4 percent over the last year, compared with an increase of just 0.6 percent in 2010. Steve Blitz, senior economist at ITG Investment Research, says the lure of higher returns is spurring the development of apartment buildings. He argued the next “boom” in residential construction has already started. “The reason rents were rising is that through the past 15 years there has been an under-building of rental properties because typical renters were increasingly able to garner cheap financing to buy a house,” he wrote in a research note. While the rise in demand is great news for builders and developers, it remains unclear what the pick-up in homebuilding will mean for the economy as a whole. “Residential construction will be a plus to GDP in 2012, but house price declines will be a negative. So net, net housing will be neutral or a small drag on the economy,” said Mark Zandi, chief economist at Moody’s Analytics. At its peak at the end of 2005, homebuilding accounted for about 6.2 percent of overall economic activity. Now, it is only about 2.4 percent. U.S. housing starts in April 2009 hit their lowest level on records dating to January 1959. While multifamily starts have given them a lift, 2011 may be the weakest year ever for construction of single-family homes. “Business is slightly down from last year,” said Bill Zach, a third-generation homebuilder. His family business, the Zach Building Co. in the Milwaukee, Wisconsin, area, is mainly focused on single-family units. To Zach, that his firm is still in business when so many of his competitors have gone bust represents some success. “It used to be my competition was every guy that owned a pick-up truck and called himself a builder. Hundreds of them,” Zach said. “That’s no longer the case, those guys are dropping by the wayside.” But there are signs of a turn and signals that the housing market may be close to finding a bottom. The Architecture Billings Index, a gauge of future construction, picked up last month, breaking above the 50 level to signal growth in billings. And the stock of homebuilders, as measured by a Dow Jones index, has shot up more than 30 percent since early October. “Residential construction is finally beginning to rise from its post-recession lows,” said Joseph Lavorgna, chief U.S. economist for Deutsche Bank. “The true test for starts and (building) permits, as well as most of the sales metrics, will come during the spring buying season.” (Reporting by Margaret Chadbourn; Editing by Tim Ahmann and Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Major Museums And Organizations Collect Materials Produced By Occupy Movement

December 24, 2011

By CRISTIAN SALAZAR AND RANDY HERSCHAFT, The Associated Press NEW YORK (AP) — Occupy Wall Street may still be working to shake the notion it represents a passing outburst of rage, but some establishment institutions have already decided the movement’s artifacts are worthy of historic preservation. ( CLICK HERE FOR LATEST UPDATES ) More than a half-dozen major museums and organizations from the Smithsonian Institution to the New-York Historical Society have been avidly collecting materials produced by the Occupy movement. Staffers have been sent to occupied parks to rummage for buttons, signs, posters and documents. Websites and tweets have been archived for digital eternity. And museums have approached individual protesters directly to obtain posters and other ephemera. The Museum of the City of New York is planning an exhibition on Occupy for next month. “Occupy is sexy,” said Ben Alexander, who is head of special collections and archives at Queens College in New York, which has been collecting Occupy materials. “It sounds hip. A lot of people want to be associated with it.” To keep established institutions from shaping the movement’s short history, protesters have formed their own archive group, stashing away hundreds of cardboard signs, posters, fliers, buttons, periodicals, documents and banners in temporary storage while they seek a permanent home for the materials. “We want to make sure we collect it from our perspective so that it can be represented as best as possible,” said Amy Roberts, a library and information studies graduate student at Queens College who helped create the archives working group. The archives group has been approached by institutions seeking to borrow or acquire Occupy materials. Roberts said they were discussing donating the entire collection to the Tamiment Library and Robert F. Wagner Labor Archives at New York University. Tamiment declined to comment. A handful of protesters began camping out in September in a lower Manhattan plaza called Zuccotti Park, outraged at Wall Street excess and income inequality; they were soon joined by others who set up tents and promised to occupy “all day, all night.” Similar camps sprouted in dozens of cities nationwide and around the world. Many were forcibly cleared. Much of the frenzied collection by institutions began in the early weeks of the protests. In part, they were seeking to collect and preserve as insurance against the possibility history might be lost – not an unusual stance by archivists. What appears to be different is the level of interest from mainstream institutions across a wide geographic spectrum and the new digital-only ventures that have sprung up to preserve the movement’s online history. The lavish attention poured on the liberal-leaning movement has not gone unnoticed by conservatives. Judicial Watch, a conservative watchdog group, blogged sarcastically under its “Corruption Chronicles” about the choice by the Smithsonian to document Occupy. “It looks like it’s taxpayer-funded hoarding, as opposed to rigorous historical collecting,” said Tom Fitton, president of the organization. The Smithsonian said its American history collection also now includes materials related to the massive tea party rally against health care reform in March 2010 and materials from the American Conservative Union’s Washington, D.C., conference in February. The Roy Rosenzweig Center for History and New Media at George Mason University launched OccupyArchive.org in mid-October on a hunch that it could become historically important. So far, it has about 2,500 items in its online database, including compressed files of entire Occupy websites from around the country and hundreds of images scraped from photo-sharing site Flickr. “This kind of social movement is probably more interesting to me, to be honest about it. And also so much of it is happening digitally. On webpages. On Twitter,” said Sheila Brennan, the associate director of public projects. “I guess I didn’t see as much of that with the tea party.” Curators and those in charge of collections at institutions said it was not too soon to think about preserving elements of the Occupy movement. “We like to collect things as they are happening before the artifacts go away,” said Esther Brumberg, senior curator of collections for the Museum of Jewish Heritage in lower Manhattan. Brumberg said the museum had approached “Occupy Judaism” co-organizer Daniel Sieradski about a poster he had done for a Yom Kippur prayer service for protesters at Zuccotti Park that drew hundreds of people. The poster shows the silhouetted fiddler image from the Jewish musical “Fiddler on the Roof” astride the Wall Street bull. Sieradski said it made sense that his poster should end up in the museum’s permanent collection. “What I think is great is that they are actually looking to build their collection around contemporary American Jewish history and maybe broaden what their offerings are to the public so that they can tell a more complete story,” he said. While there are no immediate plans to use the poster in an exhibition, Brumberg called it “just one of a number of instances of Jewish activism” that they are interested in and are trying to collect. The Smithsonian’s National Museum of American History gave a similar explanation for sending staff to Zuccotti Square during the encampment, where they were spotted picking up materials. The museum said it was part of its tradition of documenting how Americans participate in a democracy. It declined to allow staff to be interviewed. “Historians like to take the long view and see how things play out,” said spokeswoman Valeska Hilbig in an email, adding that staff wouldn’t feel “comfortable” discussing the protests until some time had passed. Staff at the Robert W. Woodruff Library at Emory University set up a system to download and archive tweets about Occupy. So far, they have harvested more than 5 million tweets from more than 600,000 unique Twitter users. Ultimately the database will be made available to scholars, said Stewart Varner, the digital scholarship coordinator at the library. The New York Public Library has added Occupy periodicals to its collection and is considering obtaining some protest ephemera. And the Internet Archive, a massive online library of free digital books, audio and texts, has opened a mostly user-generated collection about the movement. As of Friday, the Occupy collection included more than 2,000 items, while its “Tea Party Movement” collection had fewer than 50. Unlike other institutions focused only on collecting, the Museum of the City of New York is planning a photography exhibition on Occupy at its South Street Seaport Museum offshoot when it reopens in January. Chief curator Sarah Henry said the museum will also include materials on the movement in a new gallery opening in the spring that focuses on social activism in New York City. The New-York Historical Society has collected between 300 and 400 items from the movement, said Jean Ashton, the library director. Ashton recognized the contradiction inherent in an establishment institution collecting Occupy materials. “There are probably people in Occupy Wall Street who the last thing they want is to have their materials in a library or museum somewhere,” she said. Roberts, the OWS member who is on the archives working group, said it was good that such institutions want to document the movement. However, she said they would prefer the institutions collaborate with the participants. “We know more about the movement and the stories behind the materials that have been collected,” she said. ____ Follow Cristian Salazar at twitter.com/crsalazarAP and Randy Herschaft at twitter.com/HerschaftAP

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ECB Official Hints At More Help If Economy Worsens

December 24, 2011

MILAN (Reuters) – European Central Bank Governing Council Member Ignazio Visco said in a newspaper interview on Saturday that the bank will be attentive to the economic cycle when setting monetary policy, suggesting rates could fall more if the euro zone economy worsens. The ECB has cut interest rates for two months in a row and this month unveiled a raft of measures to support Europe’s cash-starved banks to counter a forecast recession brought on by widespread austerity measures. “Monetary policy will be attentive to the (economic) cycle. It is thus that we defend monetary stability in the medium-term,” the governor of the Bank of Italy, said in the interview in Italian business daily Il Sole 24 Ore. Visco also said the upward trend in Italian bond yields has been stopped and turned around, even if financial markets remain very volatile. On Friday, the yield on the 10-year Italian government bond rose above 7 percent, the highest since December 16, and the spread over the equivalent German Bund was more than 500 basis points on worries about the euro zone in 2012. “All the same the trend for higher yields is stopped and turned around, and today we are well below the highs registered in the last few months,” Visco said in the interview in Italian business daily Il Sole 24 Ore. “Certainly there is a lot of volatility, but we know that confidence on the markets is lost quickly and regained only slowly and with a constant and continuous commitment,” said Visco, who is also governor of the Bank of Italy. Visco said that the Italian government’s 33 billion euro ($43 billion) austerity package, approved definitively by the Senate on Thursday, was “indispensable,” but he added that structural measures to boost growth and create jobs and wealth should be accelerated. “It is with policies that sustain growth in a credible way that it will be possible to convince the rest of the world that – as our analyses clearly confirm – our public debt is sustainable,” he said. In an interview on Friday, Standard & Poor’s top executives said the first quarter of 2012 will be a test for Italy because of the huge amount of sovereign debt it has to refinance. The record-high yields Italy has paid at recent sales have led to concerns the euro zone’s third-largest economy may have trouble refinancing the more than 150 billion euros of debt coming due between February and April next year. The spread between the 10-year Italian bond and the equivalent Bund can fall if the growth capacity of national economies is judged favourably, on prospects for political integration in the euro zone, and international cooperation, he said. BANK FUNDING, CAPITAL Asked about growth and the problem of the economic cycle, Visco said: “This is the reason for which, with the last decisions of the governing board, we have made monetary policy still more accommodating than it was already before.” He added that the ECB does not only respond to short-term inflation trends when setting policy. A year of complete stagnation awaits the euro zone economy in 2012, according to a recent Reuters poll of economists, who said a recession has already started that will last until the second quarter of next year. European banks gobbled up nearly 490 billion euros in three-year cut-price loans from the ECB on Wednesday, easing immediate fears of a credit crunch but leaving unresolved how much will flow to needy euro zone economies. More than a dozen Italian banks, including top lenders UniCredit and Intesa Sanpaolo , tapped 116 billion euros ($143.5 billion) of the three-year loans – about a quarter of the total. “Bank liquidity is suffering strong pressure because of the difficulty in renewing wholesale funding, which is determined by the strong increase in sovereign risks in the euro zone,” Visco said in the paper. Visco said the European Banking Authority’s demand for higher capital buffers, which has come under fire in Italy, is a one-off exercise and is not aimed at deleveraging or reducing lending to the economy. “I understand that (raising capital on the market) is not easy, but we are not talking about extraordinary figures,” he said, adding that other options include cutting dividends and bonuses, and selling non-strategic assets. (Writing by Nigel Tutt and Philip Pullella) Copyright 2011 Thomson Reuters. Click for Restrictions .

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‘Extreme Couponing’ Masters Face-Off

December 23, 2011

Some of TLC’s most ferocious savers from ” Extreme Couponing ” will be put to the test in “Extreme Couponing All-Stars,” a new reality competition series debuting Tues., Dec. 27 at 10 p.m. EST. In the new seven-part series, 12 “Extreme Couponing” veterans go head-to-head. Each episode will feature two couponers as they race around a store trying to get $500 worth of items in 30 minutes. The catch? Nothing can be full price. The couponers will donate their entire haul to a local food bank and the winner will be determined by whoever has the highest percentage of savings. “Saving money can be like a sport these days — taking careful planning and unwavering commitment. The cast of ‘Extreme Couponing’ are very serious about being the best shoppers, and this will be a fun way to see who has what it takes to save the most,” Amy Winter, GM of TLC, said in a statement. In this exclusive sneak peek, Michelle, described as a “buck-hunting super-saver,” takes on Chris. The two have very different shopping methods: Michelle plays quick and dirty and Chris plans meticulously. It’s sort of like “Super Market Sweep” on crack.

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Dr. Leslie Gaines-Ross: 2012 Reputation Checklist

December 23, 2011

The new year presents many challenges and opportunities for reputation-observers. If a fortune cookie that could actually tell the future were handed to me this coming New Year’s Eve, I’d expect it to reveal the following: 1. Reputation’s inflection point is here. Reputation will always continue to matter but for reasons that are less financially-based than in the past. As Geoff Colvin, Fortune ‘s senior editor said, “Previous major scandals were mostly financial; the numbers were lies. Not this time. The damage so far derives entirely from behavior….” How companies behave, act and respond will impact reputations this year more than quarterly numbers. The kind of company behavior that will matter most will, of course, be how leaders manage crises. It will matter even more than the actual crisis itself. Just think about BP’s Gulf of Mexico oil spill or News Corp.’s phone hacking scandal. 2. Reputation whisperers will outshout traditional channels. Reputations will increasingly be established through customer reviews online, not just through family and friends. These reputation-makers will quietly pass along positive and negative reviews about products and services that will make and break reputations with increasingly greater impact. 3. Reputation blackmail will rear its ugly head. We will hear more in the coming year about threats to reveal private e-mails unless people disclose corporate secrets such as confidential information or network security codes. Reputations of the vulnerable will increasingly become the bargaining chips of the malcontents. 4. Reputation defense goes to the movies. Increasingly, both companies and activists will turn to video, documentaries and even movies to further their goals. Companies will increasingly hire well-known film makers to educate their employees about either corporate culture or a reputation-changing incident in their history. Activists too will increasingly take to the silver screen, video-sharing or social media sites in an attempt to promote change. 5. Forget internal versus external. Reputation goes holistic. Many Fortune 500 companies hire different professionals to handle either internal or external communications. The distinction between the two is practically artificial. What is said internally to employees is now instantly external. What is said externally to the public is now instantly internal. 6. Reputation fixers will be in great demand . Companies as well as individuals are increasingly hiring firms to help cleanse damaged or dinged reputations. The surge in online reputation firms and the number of firms with online defense in their names mounts daily. Even the medical profession has joined the trend. Reputation.com, for example, services medical professionals who want to know what their patients might be saying online about them and their bedside manner. 7. Reputation rankings are not letting up . With the race for reputation red hot and the crush of information tiring us all out, people need fewer choices. Top 10 lists made our lives simpler. They served as filters that let the so-called best product or most reputable company rise to the top. But being among the top 10 is no longer good enough. In the coming year, being among the top three is where companies must be if they want to get on customers’ consideration lists. 8. Social contributes to reputation. In our recent research, we learned that nearly one third of a company’s reputation is attributable to the quality of its online presence. Perception that a company is interested in communicating and engaging online adds a favorable dimension to how people perceive reputation. Lack of online presence sends a signal that a company’s preference is to be anti-social. Business will turn increasingly and impressively social, for sure. 9. Brand and reputation will continue to merge. Companies will increasingly realize that their corporate or enterprise reputations provide credible assurance to consumers that their products are desirable and safe to purchase. As consumers find it easier to learn about a product’s lineage, the parent brand or family name will be more critical in the purchase-decision process. 10. Face to Face becomes the precious commodity. As the entire world increasingly interacts online, face to face communications, particularly among CEOs and top executives, will build relationships like never before. Going out of one’s way to meet one-on-one will evidence the importance of discussion. It will become the gold standard in building reputations. The more that CEOs engage in person with employees, customers, legislators, investors and top tier media, the more credibility that they will be able to accumulate and the more that they will be able to minimize reputation loss when setbacks inevitably occur. 11. CEOs will be more social. Expect to see more CEOs use video for their websites and corporate YouTube channels. They might not be on Twitter or Facebook, but an increasing number of CEOs will adopt video to humanize their reputations. They will recognize that being social, like the rest of humanity, is a reputation plus. 12. Inoculate or evaporate. Leaders must and will increasingly employ all the resources they have at their disposal to inoculate themselves against crisis or issues that shatter their reputations. They must admit mistakes, build allies, listen to detractors, create great cultures and protect themselves from reputation antagonists that lurk in the shadows. Building a great reputation is not for the faint-hearted.

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Sports Franchises With The Biggest Box Office Comebacks In 2011

December 23, 2011

Despite a losing economy, four sports teams have come up big winners in the ticket-resale market. The popular ticket site StubHub on Friday put together a list of professional sports franchises that made the biggest comebacks in 2011. The secondary or scalpers’ market is often a better indicator of demand than tickets purchased from the original source. The tickets’ printed value never changes, but the actual value can fluctuate wildly depending on winning streaks and the emergence of individual stars. “Face value is not necessarily relevant when it comes to comebacks and trades,” StubHub spokeswoman Joellen Ferrer said. Without further ado, the four organizations that went from not to hot in sales beyond the box office: Denver Broncos Since you-know-who took over at quarterback, the volume of Broncos tickets sold on StubHub has soared 900 percent over last year at the same time. Tim Tebow may have had a greater effect on football ticket activity than any player since StubHub began five and a half years ago, Ferrer said. Before Denver’s recent winning six-game streak, about 3,000 tickets were changing hands per home game. Now it’s up to 5,000. That should be enough for team executives to take a cue from their religious star and thank the Almighty. Los Angeles Clippers No, you haven’t had too much egg nog. The Clippers . Adding star guard Chris Paul to play with acrobatic Blake Griffin has made the once-pathetic franchise the toast of Los Angeles . The Clippers have already sold 17,000 tickets on StubHub, 40 percent more than L.A.’s other team, the perennial favorite Lakers. Clipper sales are up 250 percent overall, putting the team second in the NBA in StubHub ticket transactions. On Dec. 15 of last year, 250 Clippers tickets moved on the site. This past Dec. 15? More than 4,500. Clippers resale prices have been historically lower than the Lakers’, but the gap is shrinking faster than Kobe Bryant’s Q rating. New York Knicks The Knicks traded for high-scoring Carmelo Anthony last February, and have experienced a 300 percent jump in privately sold tickets since then. The lockout and shortened season didn’t seem to stop their momentum. They currently lead the NBA in resold tickets. San Francisco 49ers 49ers tickets are the new San Francisco treat . Fans and scalpers have already purchased twice as many 49ers tickets after the original point of purchase than last year — and the season isn’t over. Sales are up 300 percent, thanks to the team’s 10-3 record. If there was a Resale Super Bowl for comeback teams, the 49ers would be playing Denver for all the marbles.

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Key Company Reverses Course In Online Piracy Fight

December 23, 2011

The largest Internet domain registrar and web hosting company Go Daddy has abandoned its support for the proposed Stop Online Piracy Act (SOPA), according to a statement released by the company Friday. “Fighting online piracy is of the utmost importance, which is why Go Daddy has been working to help craft revisions to this legislation — but we can clearly do better,” said Warren Adelman, Go Daddy’s newly appointed CEO. “It’s very important that all internet stakeholders work together on this. Getting it right is worth the wait. Go Daddy will support it when and if the internet community supports it.” Go Daddy had been one of two major tech companies to support the legislation . “If you’re Nike, and you make tennis shoes and there’s a company in some other country that can manufacture those for 10 cents on the dollar and sell them as if they were real Nikes, you have a big problem,” said Christine Jones, general counsel for Go Daddy, earlier this month. The Huffington Post’s Zach Carter reported on the bill’s implications: SOPA would imbue the federal government with broad powers to shut down whole web domains on the basis that it believes them to be associated with piracy — without a trial or even a traditional hearing. It would provide Hollywood with powerful new legal tools to stifle transactions with websites whose existence worries the movie industry. The bill’s supporters, which also include major record labels, trial lawyers and pharmaceutical giants, call SOPA a robust effort to curb piracy of American goods online. Opponents, however, have castigated it as an unparalleled attack on free speech online. Civil liberties advocates say SOPA would give the U.S. government the same censorship tools used in China. Those in the technology sector warn that the bill creates enormous new barriers to entry for web startups, threatening innovation and job creation. Farther afield, librarians say that under the letter of the proposed anti-piracy law, they could be jailed for simply doing their jobs. In a November interview with HuffPost, Jones had endorsed the legislation, saying everyone in the internet ecosystem needs to do their part to fight illegal downloading. At the time however, Jones did express some reservations about the use of Domain Name System (DNS) blocking — the tool the government would use to shut down websites — as a technique that could create significant technical problems for the functioning of the internet. She also expressed reservations about the bill’s “private right of action,” which allows movie studios and other companies to seek site takedowns outside of court. DNS blocking by the government and a private right of action for companies that believe their content is being infringed are the main features of the bill. Nevertheless, Jones wrote several blog posts for the Go Daddy website explaining and defending the bill. The company says those blog posts have now been removed. Leah Kauffman, the singer-songwriter who had a 2007 viral sensation with “I got a Crush … on Obama” released a new song attacking SOPA called “Firewall (Don’t Let Our Government Ruin The Internets).” A coalition of Silicon Valley leaders, including Google co-founder Sergey Brin, Craigslist founder Craig Newmark and Huffington Post CEO Arianna Huffington, have signed an open letter to Washington opposing the bill. The House Judiciary Committee confirmed Tuesday that work on the legislation would be delayed until Congress returns from its winter recess.

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President Obama Fires New Shot At GOP In Tax Cut Fight

December 22, 2011

WASHINGTON — The White House has launched an online campaign that enlists regular Americans to pressure House Republicans into passing an extension of the 2 percent payroll tax cut before the cut expires on New Year’s day. Democratic campaign organizations have started similar efforts , but an online campaign by the White House — with it’s millions-strong list of online supporters — is likely to yield the most potent results. Since an extension of the tax break that passed the Senate last week only last for two months — in the hopes of giving time to negotiate a longer deal == some Republicans have belittled the cut as providing very little money for middle class families, perhaps only $160. But the White House argued in a Thursday statement: “If Congress fails to extend the payroll tax cut, the typical family making $50,000 a year will have about $40 less to spend or save with each paycheck.” And to lean on the House GOP to get them to vote on the Senate bill — which passed Saturday, 89 to 10 — the White House is asking people to go online and tell members of Congress what 40 bucks means to them coming out of the holiday season. “Tell us what $40 per paycheck would mean for you and your family. What would you have to give up? We’ll highlight your stories publicly so that they’re part of the debate here in Washington,” the site reads. President Barack Obama plans to highlight some of those stories in an event Thursday afternoon, when he is expected to again appeal to the House leaders on the issue. He tweeted about the campaign Wednesday night. The House rejected the Senate bill earlier this week in a complicated procedural maneuver that called for appointing members to negotiate a new, year-long deal with the Senate in a conference committee. But the House leaders could take it up again as a more straight-forward yes-or-no vote that even many Republicans believe would pass.

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Raymond J. Learsy: For an Effective U.S. Policy, Embargo Iran’s Oil to Halt Its Nuclear Ambitions

December 22, 2011

The prospect the of messianic fanatic mullahs acquiring nuclear weapons will present an existential danger to entire swaths of the world and put millions of lives at risk. Clearly the Obama administration understands this and has chosen to act at this juncture in the most effective manner short of a military or surgical air strike, with all its potential ramifications to the stability of the Middle East, not to speak of the world itself. The policy that will have maximum impact on the Iranian regime is to cut off the billions of oil revenues, their instrument of power and moral corruption, enabling the brutal dominance over an otherwise cowered populace that would otherwise celebrate the departure of the mullahs and their ilk from their seats of draconian power. The greatest impact can be realized by crippling Iran’s oil revenues through a worldwide and effective embargo on its oil exports, Iran’s main source of income, reaping more than $73 billion in 2010 alone and covering more than 50% of its national budget. Combining such an embargo along with extensive sanctions — both those already in place, and those about to be instituted such as blacklisting Iran’s National Bank and all banks or institutions who transact with it — would render a crippling blow to the ability of the Iranian regime to keep their largely restive populace under their tyrannical control. In its most wide ranging effort to date the Obama administration is sending State Department officials and interlocutors to visit and meet with officials from various countries including Saudi Arabia in order to assure the availability of additional oil supplies to cover any shortfall in world markets from an effective Iranian embargo. This in spite of, or because of, reports coming out of OPEC’s meeting earlier this month that Iran’s oil minister Rostam Ghasaemi reported that Saudi Arabia and Iran had “reached a deal that the Saudis wouldn’t raise their oil production to make up for Iran’s market share in case U.S. and Europe sanction Iran’s oil.” The Administrations objectives were clearly highlighted by the State Department’s spokesoperson Victoria Nuland’s comments earlier this week, “encouraging all our partners to do what they can to wean themselves from Iranian Oil”, such as discussions with Japanese officialdom urging Japan to reduce it reliance on Iranian oil, now covering some 10% of their oil import needs. Most significantly is the prospective cooperation of France and Britain toward cutting off all Iranian oil imports together with the 27 European Union Countries. Such an embargo covering some 450,000 barrels/day, or near 25 percent of Iran’s daily loadings, would have enormous financial and symbolic impact on the Iranian regime. Yet there is one oily fly in this ointment. And that is the perceived and misguided wisdom that any interruption in the flow of Iranian oil would cause enormous damage to the world’s economy. It is a singular canard propagated in large measure by Iran itself . It is a misnomer effectively exploited by crude oil traders and too oft manipulators, together with a compliant press, making this perception an important driver of oil prices, while giving the Iranians ever higher returns for their oil exports and delivering enormous profits to the oil speculators. Yesterday alone when it became generally known that a meeting was being held in Rome between the U.S., EU nations and their Asia-Pacific allies, vowing to bring increased pressure on Iran to abandon its nuclear program, the speculators had a field day. The price of oil quoted on the New York Mercantile Exchange surged by 3.4 percent or $3.19 per barrel, and in the one way momentum of these events, another near $1.50 the following day. Other than the oil traders, the oil producers and ironically Iran itself, no one benefits by these pricing distortions, and worse they place the economic recovery at great risk. Yet to countervene the speculators and to put at ease the ‘built in’ anxieties elicited whenever there is even the vaguest concern about oil supplies, the U.S. has in its arsenal a mighty weapon. It is the 750 million barrels that the government has in its Strategic Petroleum Reserve. It is an instrument that can calm these excitable markets if used effectively. All that needs be done is for the government to announce a policy that any unusual price movements due to Iranian oil embargo policies will be met with a release from the Strategic Petroleum Reserve. Just the broadcast of such a policy will have an enormous becalming effect on the markets. It will take away from the oil traders the surety of a one way bet of ever higher prices. It will deny the Iranians greater income for what they are able to export. Most importantly, it may very well achieve the Administration and much of the world’s shared objective of either bringing the Iranian nuclear program to an end or even achieving a change in regime. And this without a major economic disruption or a spike in oil prices. Can one think of a better strategic function for our Strategic Petroleum Reserve?

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U.S. Economy Grew Less Than Estimated Last Quarter As Healthcare Spending Plunged

December 22, 2011

WASHINGTON (Reuters) – Economic growth was slower than previously estimated in the third quarter on a sharp drop in healthcare spending, but stronger business investment and a fall in inventories pointed to a pickup in output in the current period. Gross domestic product grew at a 1.8 percent annual rate in the third quarter, the Commerce Department said in its final estimate on Thursday, down from the previously estimated 2 percent. Economists had expected growth to be unrevised at 2 percent. Though spending on healthcare dropped by $2.2 billion, spending on durable goods was stronger than previously estimated, indicating household appetite to consume remains healthy. Healthcare spending had previously been reported to have increased at a $19.7 billion rate. Healthcare spending subtracted about 0.1 percentage point from the GDP change in the final revision, whereas the previous estimate had it adding 0.61 percentage point to growth. Even as much of the rest of the world is slowing down and a mild recession is forecast in Europe next year, the U.S. economy remains resilient. The labor market is improving, households continue to spend, home building is picking up and factory output is expanding, putting the economy on course for at least a 3 percent growth pace in the fourth quarter. That would be the fastest pace in 18 months. Despite the downward revision, last quarter’s growth is still a step-up from the April-June period’s 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year. A jump in gasoline prices had weighed on consumer spending earlier in the year, and supply disruptions from Japan’s big earthquake and tsunami in March had curbed auto production. The government revised consumer spending to a 1.7 percent growth rate from 2.3 percent because of adjustments to healthcare services, in particular nonprofit hospitals. Spending on durable goods was, however, revised up to a 5.7 percent pace from 5.5 percent. Business inventories dropped $2.0 billion, which sliced off 1.35 percentage points from GDP growth. Inventories had previously been estimated to have declined $8.5 billion. The drag from inventories was offset by strong business spending, which increased at a 15.7 percent rate, instead of 14.8 percent. Excluding inventories, the economy grew at a still brisk 3.2 percent rate, revised down from 3.6 percent pace. Final sales increased at a 1.6 percent pace in the second quarter. The Department also said after-tax corporate profits increased at a 2.7 percent rate, revised down from 3.0 percent. After tax profits increased at a 4.3 rate in the second quarter. Export growth was stronger than previously estimated, rising at a 4.7 percent rate instead of 4.3 percent. Imports increased at a much faster 1.2 percent rate rather than 0.5 percent. Trade contributed 0.43 percentage point to GDP growth. Elsewhere, residential construction grew at a 1.3 percent rate instead of 1.6 percent. Government spending fell at an unrevised 0.1 percent. The GDP report also showed some inflation pressures in the economy. A price index for personal spending rose at an unrevised 2.3 percent rate in the third quarter. That compared to a 3.3 percent rate in the second quarter. A core inflation measure, which strips out food and energy costs, rose at a 2.1 percent rate rather than 2.0 percent. The measure — closely watched by the Federal Reserve — grew at a 2.3 percent rate in the prior three months (Reporting By Lucia Mutikani; Editing by Andrea Ricci) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Jobless Claims Drop To Lowest Level In More Than Three Years

December 22, 2011

WASHINGTON – New claims for unemployment benefits dropped last week to its lowest in more than 3-1/2 years, suggesting the labor market recovery was gaining speed. Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said. That was the lowest level since April 2008. The economy has shown signs it is gaining steam as the year ends, although the recovery still could be derailed by any big flare up in Europe’s debt crisis. The economy also faces risks from the fight in Congress over extending special unemployment benefits and a payroll tax cut. The prior week’s claims data was revised up to 368,000 from the previously reported 366,000. Economists polled by Reuters had forecast claims rising to 375,000 last week. The level of unemployment claims has fallen in recent weeks, and analysts say fewer layoffs means employers are probably more likely to hire. Economists at Goldman Sachs said earlier in the week that weekly claims below 435,000 pointed to net monthly gains in jobs. Their research was based on figures available through October. In November, the jobless rate dropped to a 2-1/2 year low of 8.6 percent. The Federal Reserve last week acknowledged an improvement in the jobs market, but said unemployment remained high and left the door open for further measures to help the economy. A Labor Department official said claims were not estimated for any states, and that there was nothing unusual in the data. The four-week moving average of claims, considered a better measure of labor market trends than the headline number, fell 8,000 to 380,250 — the lowest since June 2008. The number of people still receiving benefits under regular state programs after an initial week of aid fell 79,000 to 3.546 million in the week ended December 10. Economists had forecast so-called continuing claims holding steady at 3.6 million. As of Dec 3, a total of 7.150 million people were claiming unemployment benefits under all programs, down 299,738 from the prior week. (Reporting by Jason Lange; Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Tom Coburn Singles Out D.C. Pancake Restaurant As Government Waste

December 21, 2011

WASHINGTON — Sen. Tom Coburn (R-Okla.) released his annual “Wastebook” this week and singled out a District of Columbia IHOP restaurant as an example of government waste. According to The Hill : Among the projects listed as wasteful in Coburn’s book are $113,227 for a video game preservation center in New York, $10 million for a remake of “Sesame Street” for Pakistan, $765,828 to subsidize a “pancakes for yuppies” program in Washington, D.C., and $764,825 to study how college students use mobile devices for social networking. Coburn’s report cites a Washington Examiner opinion column by David Freddoso on pancake situation involving Columbia Heights’ IHOP restaurant, which opened to great fanfare in the closing weeks of then-Mayor Adrian Fenty’s administration. Coburn’s report contends: The new IHOP is not located in an — underserved community but a popular Washington D.C. neighborhood. The neighborhood is Columbia Heights, which has become a local shopping hot spot for some and — one of Washington’s more desirable neighborhoods. Other businesses in the area include Target, Bed Bath and Beyond, Best Buy, and Starbucks. IHOP set up shop in a massive Columbia Heights shopping center, part of a major mixed-use redevelopment of a once-vibrant commercial corridor that had been fairly barren even years after a Green Line Metrorail station opened. Last year, Lydia DePillis in Washington City Paper profiled the newly opened IHOP restaurant . The D.C. government set aside $46.9 million in tax increment financing for the massive DCUSA shopping complex and the developer reserved 15,000 square feet for small, local and minority-owned businesses in the building. The IHOP franchise owner is Tyoka Jackson, whose family-owned investment company signed a three-restaurant deal with IHOP. According to DePillis: In some ways, the Jacksons’ IHOP enterprise is a small business. They’ve put in the $1 million for construction, made hiring decisions, and will be the ones to lose their shirts if the place fails. But the Jacksons have a few advantages an independent business could never claim. They get expert business consulting courtesy of the mothership, pooled television advertising, and supplies from a nationwide sourcing cooperative shared with corporate sister Applebees. After the Wastebook report was released, City Paper followed up with Coburn’s office. The senator’s spokesman wrote in reply : “If the D.C. government wants to invest more in IHOP they are certainly welcome to do so. We don’t believe this should be a priority of the federal government when we’re running a $15 trillion debt and our entitlement programs are on the brink of insolvency.”

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Cities With The Most Money To Spend On Christmas Gifts

December 21, 2011

Looking for an expensive Christmas gift? Track down family and friends living in the Washington, D.C. metro area. D.C. tops the list of cities with the most money to spend on Christmas gifts, according to an index developed by Richard Florida and the Martin Property Institute, cited by The Atlantic . The top 20 list also includes New York, San Francisco and other large metro areas. The cities in Florida’s list may be where shoppers are spending the most on gifts, but consumers everywhere are likely to spend more on Christmas presents this year. The National Retail Federation upped its holiday sales forecast earlier this week to a 3.8 percent boost or a record-breaking total of $469 billion. In response to the demand, some stores are offering extended hours to give consumers ample time to shop. Toys ‘R Us is staying open for 112 hours straight in the lead up to Christmas, CNNMoney reports and 14 Macy’s stores will stay open from Wednesday to Saturday — or 83 hours straight, — according to the Chicago Tribune . And if Black Friday is any indication, the extended hours may help boost retailers. After stores like Target, Best Buy, Macy’s and Walmart opened earlier on Black Friday — or even on Thanksgiving day — sales on the largest shopping day of the year were up 9.1 percent, according to the NRF . But some weren’t happy with the earlier openings. Workers at Target and Best Buy started petitions aimed at convincing their employers not to open at midnight on Black Friday because it would limit the amount of time they could spend with family on Thanksgiving day. These are the cities with the most money to spend on Christmas shopping, according to Richard Florida and the Martin Property Institute:

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GRAPHIC: The Last Days To Ship In Time For Christmas

December 15, 2011

The holiday season can be a stressful time, especially when it comes to making sure grandma’s gift gets in the mail on time. And while Cyber Monday may have broken records for single-day online shopping purchases, expect the usual last-minute mayhem so closely associated with carols and Santa. But now, thanks to this infographic from visual.ly , even the most chronic procrastinator has no excuse for not getting his or her orders to that far-off relative in a timely manner, as the shipping times are shown for a number of popular shippers and online retailers, making sure there won’t be any sad faces come Christmas morning (okay, maybe still a few). Indeed, the holiday time is a heavy-volume shipping period for companies like UPS and FedEx. During the week of Christmas, UPS delivers 300 packages per second, the Washington Post reports . This year it looks like things might be a little less last minute, however, with more than a third of consumers said to have finished their holiday shopping before December 5th . by visually via

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MF Global’s Collapse Puts Self-Regulation In Harsh Light

December 14, 2011

WASHINGTON (Philip Shishkin) – Two weeks after MF Global’s collapse, officials from the Commodity Futures Trading Commission briefed Senate staff on the brokerage firm’s final days. When asked about reports that the brokerage firm had written checks that bounced when customers tried to cash them, the regulators had an admission that surprised the room: they didn’t know about the bad checks. “This seemed like something they should be aware of,” a Senate staffer present at the meeting recalled. A CFTC spokesman declined to comment. Customers still have no explanation of what happened to MF Global and some $1 billion missing from its customer accounts more than a month after the firm’s failure. And regulators struggling to solve the mystery are now forced to play catch-up. That’s in part because over the past decade, as trading volume soared, federal regulators eased direct oversight of the industry and handed more regulatory powers to the major exchanges. Now, this self-policing arrangement is prompting concerns about the regulators’ and the exchanges’ ability to detect and deter suspicious conduct in the rapidly expanding marketplace. A look at the recent history of self-regulation shows the government repeatedly raised concerns about the resources the major exchanges dedicate to market oversight, while the federal agency also experienced staff cutbacks and retreated from hands-on policing. Both the federal regulators and the exchange where MF Global operated, the CME Group, maintain they did all they could in the run-up to MF Global’s collapse. But calls are growing for a better system of auditing and enforcement to prevent similar crises in the future. “I think we’ve gone too far in allowing the exchanges to be so self-regulatory that it’s obfuscated the need for the cop to be on the beat all the time,” says Bart Chilton, a Democratic commissioner on the CFTC. Even the industry itself is acknowledging that there will need to be some changes. While defending the self-regulatory system, Dan Roth, president of the National Futures Association, said “we should be able to identify certain frailties of the current structure that will need to be addressed.” THE FUTURES POLICE Self-regulation is the hallmark of the U.S. futures industry. Proponents argue that by placing oversight in the hands of the people who really understand the industry, the system benefits everyone. Critics point to the recent transformation of the exchange business, away from a non-profit cooperative model, as a reason the exchanges’ commercial interests are overshadowing their market-oversight role. Though it dates back to the middle of the 19th century, the self-regulatory nature of trading futures got a boost in 2000 with the passage of the Commodity Futures Modernization Act. The main thrust of the bill, signed into law by Bill Clinton in the waning days of his presidency, was to exempt the rapidly growing market for certain types of financial and energy derivatives and swaps from federal futures regulation. The law was lobbied heavily by the financial industry, which argued that too many rules were hindering financial innovation and economic growth. But it became an easy target after the 2008 financial crisis, in which these types of complex financial products played a role. So lawmakers passed the Dodd-Frank financial-reform law, which pulled the swaps back under the federal regulatory umbrella and instructed the CFTC to write new rules to govern them. Another, less-discussed, purpose of the 2000 deregulation effort was to limit the prescriptive powers of the CFTC and to give more freedom to the exchanges to set their own rules. The goal was “to provide regulatory relief to futures and options exchanges,” James Newsome, who was the agency’s chairman in 2001, said at the time. The overall U.S. futures and options industry grew nearly five-fold between 2000 and 2010 when 7.12 billion futures and options contracts were traded, according to Futures Industry Association. Just as futures trading was exploding in volume, the federal agency was taking a step back from direct oversight of the markets both because of the 2000 deregulation and because of agency understaffing. For instance, when the CFTC in 2003 went after a futures trader allegedly operating a foreign currency boiler room, a court told the agency it had no jurisdiction. Even in areas where the federal agency retained jurisdiction, direct oversight of the markets rested with the futures exchanges themselves. And those exchanges began ripping up their century-old business models and consolidating rapidly. Ever since a group of brokers formed the Chicago Board of Trade in 1848, the exchange industry was organized into nonprofit cooperatives of brokers setting their own rules. Technological and competitive pressures began building on the exchanges that forced more change. In 2000, the Chicago Mercantile Exchange shed its old cooperative structure and soon went public. It later bought the Chicago Board of Trade. And then the newly formed CME Group Inc. acquired the owner of New York’s mercantile and commodities exchanges. That made CME Group a dominant U.S. exchange, and one of the largest in the world. OVERSIGHT STAFF CUTS FLAGGED As CME Group grew, federal regulators were relying on the exchange operator to be their eyes and ears on the ground. But in several recent assessments, the CFTC said that CME failed to adequately staff its oversight arm, while some of its fines lacked the necessary bite to scare repeat offenders. Combined with the rapid growth in trading volume and complexity of financial products, these staff cuts “could impair the effectiveness of an exchange’s compliance program and impede enforcement,” federal regulators warned in a 2010 audit of the company. The flurry of mergers that swept the world of commodity exchanges was partly to blame for the alleged shortfalls, the regulators said. “Prudence suggests that when exchanges merge, they should avoid substantial reductions in their combined compliance staff,” federal regulators said in the 2010 audit, urging the company to add employees. In a follow-up audit a year later, the regulators criticized CME Group for the same alleged staffing shortfalls and noted the issue is “of particular concern because of the substantial share of the entire U.S. futures and options marketplace accounted for by the CME Group exchanges.” A CME official said that merger synergies “didn’t reveal themselves quite as quickly” but noted that CME’s exchanges have always conducted effective internal oversight. Since those audits, CME says it increased its market oversight staff to about 150 employees and has been increasingly relying on technology to keep tabs on the market amid large growth in the trading volume. FINES A SLAP ON THE WRIST In their recent audits, federal regulators also said that fine amounts for some types of trading-related violations “may be low enough that traders could view them as merely a cost of doing business.” The regulators urged the CME Group to have a fine schedule that would penalize repeat offenders with progressively higher fines. The issue has prompted federal regulators to step in with their own penalties in cases where they thought the CME was merely slapping traders on the wrist. Consider the track record of Edward Sarvey and David Sklena, two longtime Chicago Board of Trade brokers who traded U.S. government debt. By 2004, Sarvey had already drawn five penalties for trading violations, with exchange fines ranging from $100 to $25,000 and short bans from the trading floor. Sklena had been sanctioned twice, according to records from the National Futures Association. In 2004, the two traders engaged in what amounted to insider trading on futures pegged to five-year Treasury notes, according to court documents. The trades netted Sarvey $357,000, while Sklena earned $1.65 million in a single morning. Their customers lost about $2 million, court documents say. In 2007, the Chicago exchange fined Sarvey and Sklena $125,000 and $175,000 respectively, and banned them from trading for about two months. But federal regulators deemed the penalties insufficient and brought their own civil case against the pair in 2008. That complaint morphed into a federal criminal indictment. Sklena was found guilty of fraud last year and sentenced to five years in prison. Sarvey died before the trial. His former lawyer, John Legutki, says he is “surprised and saddened” by the escalation of the case from “relatively minor” exchange penalties to a full-blown criminal prosecution. “This all weighed on him very heavily,” he says of Sarvey. The case also weighed on federal futures regulators who say it is indicative of soft exchange penalties that fail to deter unscrupulous brokers. “It is not an isolated case,” a CFTC official told Reuters. The agency declined to provide numbers on how many times it intervened to correct what it thought were insufficient exchange sanctions. A CME official said that it was the exchange that first caught Sarvey and Sklena, and that the subsequent federal case was built on “all the good work that the exchange did.” He said that “maybe with some exceptions, (federal regulators) find the fines and the penalties that we issue are appropriate.” CME also says that the number of enforcement actions brought by its subsidiary exchanges grew from 83 in 2000 to 132 so far in 2011. During his congressional testimony on MF Global’s collapse on December 8, CME Group’s executive chairman Terrence Duffy said one way to deter future abuses would be to have “stricter penalties.” Duffy said the exchange had conducted its audits and spot checks of MF Global “at the highest professional level” and that the alleged misappropriation of customer funds by the firm was “disguised from all regulators.” In a common refrain, many market participants have accused CME Group of not doing enough to supervise large brokerages whose business and trading volume are key to the company’s bottom line. “I’ve had more than one person say to me that all CME wants is volume, volume, volume, and they don’t necessarily care about the integrity of the marketplace,” says Jerod Leman, an account executive at Wellington Commodities, a Carmel, Ind.-based broker that works with farmers who lost money in the MF Global collapse. In 2010, CME reported that its average daily trading volume grew to 12.2 million contracts, up 19 percent from the year before. “DON’T FIX WHAT AIN’T BROKE” This is not new territory for commodity exchanges. A prominent farmer advocate in 1932 complained that the members of the Chicago Board of Trade “have set up a little government of their own, in which trials are held like a secret lodge,” according to Jerry Markham’s 2001 book “The Financial History of The United States.” Since those days, the futures business has grown to include hedge funds and other investors, large and small, trading at high volume and using increasingly esoteric financial products, which makes oversight more challenging. For its part, CME argues it has an obvious self-interest in policing its trading floors because if traders lose faith in the integrity of the exchange, CME Group will lose business. In a 2006 hearing on the matter, CME’s chief executive Craig Donohue dismissed assertions of a conflict between the company’s profit-making and regulatory missions as “conjecture” and said “don’t fix what ain’t broke.” Ted Butler, a veteran silver trader, has been pushing Comex, the New York metals exchange owned by CME Group, to investigate allegations of price manipulation on the silver futures market by a handful of large brokerages. But, he says, the exchange hasn’t shown much interest. “It is a continuing mystery how the conflicted CME could be responsible for any regulatory oversight given their inherent clear conflict of interest,” Butler, who himself had drawn a CFTC sanction in the 1980s, wrote in a recent newsletter. The federal agency is conducting its own investigation into the silver market, having found no evidence of wrongdoing in an earlier probe. A CME official declined to comment, citing the ongoing federal inquiry, with which the exchange is cooperating. CME SIDING WITH BUSINESS In a rapidly growing futures industry, CME Group often has to wade into policy debates between federal regulators and the businesses they oversee. In several of those debates, CME sided with the firms in opposing disclosure rules and trading curbs that could cut into those firms’, and the CME’s, bottom line. The CME, for instance, opposed registration requirements for high-frequency traders. CFTC officials hoped the registration would force the traders, some based overseas, to disclose more about themselves and their trading software, and allow regulators to step in quickly in case of trouble that was seen in the so-called “flash crash” of 2010. Because of the sheer volume and the number of transactions, high-frequency traders provide an attractive business to the exchange. CME Group balked at efforts to saddle them with additional requirements. A CME official says there’s no uniform definition of what constitutes high-frequency trading, and that CME’s internal systems already provide the exchange with “incredibly granular information that allows us to look at trading activity.” Last year, for instance, CME Group fined a high-frequency trader called Infinium Capital Management $850,000 for glitches in its algorithm that unleashed rapid-fire trading orders and caused a brief spike in oil prices. UNDERFUNDING OVERSIGHT Over the past decade, the federal agency has tried to address potential conflicts of interest within the exchanges by insisting they appoint independent directors to their boards and increase the funding and independence of their regulatory oversight committees. “There was a concern about underfunding the regulatory function of the exchange,” recalls Sharon Brown-Hruska who served as a CFTC commissioner between 2002 and 2006. Major exchanges going public only heightened concerns about self-regulation, she says. CME Group, and other exchange operators, resisted what they saw as the federal agency’s unwarranted meddling. But the CFTC prevailed and decreed the exchange boards should be more than one-third independent and that regulatory oversight committees should be properly funded. Ever since the passage of the Dodd-Frank law, the CFTC has been consumed with writing new rules to prevent future abuses in the derivatives industry. As a result, the resources the agency can devote to enforcing the existing rules may have suffered. “Unfortunately, in response to the financial crisis, the CFTC has been off on a series of tangents, proposing one regulation after another,” Senator Pat Roberts, a Republican, said at a recent hearing. “Meanwhile, back at the ranch for the first time ever, we have a major problem. The agency says it is being asked to effectively walk and chew gum at the same time, in an era when Congress is in no mood to increase the size of the federal government. CFTC now has about 700 employees, a 10% increase since the 1990s. In the same time period, the futures market has grown five-fold, CFTC Chairman Gary Gensler said in recent congressional testimony. Two weeks after MF Global’s bankruptcy, Congress denied the Obama administration’s request for a CFTC budget increase despite the agency’s insistence that it needs more money to do its job. “The CFTC just doesn’t have the staffing and the resources to audit the brokerages,” says a former senior agency official. That means the CFTC will likely continue to rely on the exchanges to police themselves, although the agency may choose to take a closer look at the markets in some cases. Shortly after the MF Global bankruptcy, for instance, federal regulators said they would conduct a review of the major futures brokerages to make sure their customer accounts are intact. (Reporting by Philip Shishkin; Editing by Tim Dobbyn) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Good To Know: Holiday Hours For Your Favorite Stores

December 14, 2011

When it comes to store hours, a little heads’ up can save you time. Flickr photo by Jay Reed Need to do some last minute shopping? We all do during the holidays! To make sure you get to the store with plenty of time to spare, read through the list below for the special holiday hours of our favorite retail stores. Some hours may vary at different locations, so click on the store name to be taken to their store locator to be sure. Michaels Dec 18-22: 9am-9pm Dec 23: 8am-12am Dec 24: 8am-6pm Dec 25: Closed Dec 26: 7am-9pm Dec 27-30: 9am-9pm Dec 31: 9am-6pm Macy’s Dec 21-24: 12am-12pm (14 select locations) Dec 21-24: 8am – 2am (27 select locations) Costco Dec 24: 9am-5pm Dec 25: Closed Dec 31: 9am-6pm Jan 1: Closed Marshalls Dec 19-23: 8am-11pm Dec 24: 8am-6pm Kmart Dec 11-23: 6am-12am Dec 24: 6am-10pm Dec 25: Closed IKEA Dec 24: 9am-6pm Dec 25: Closed Dec 31: 10am-8pm Dillard’s Dec 18: 11am-9pm Dec 19-23: 9am-10pm Dec 24: 8am-6pm Dec 25: Closed Dec 26: 9am-9pm Dec 27-30: 10am-9pm Dec 31: 10am-6pm Whole Foods Dec 24: 7am-6pm Dec 25: Closed Dec 31: 8am-9pm Jan 1: 10am-10pm Target Dec 11-23: 8am-11pm or 8am-12pm Dec 24: 7am-9pm Dec 25: Closed Dec 26: 7am-11pm Dec 31: 8am-10pm Walmart Dec 24: 6pm close Dec 25: Closed Dec 26: 6am open (24hr stores), otherwise regular hours Dec 31: Normal hours Jan 1: Normal hours For other stores, check your local address below: Toys-R-Us Kohl’s Bloomingdale’s Nordstrom Nordstrom Rack Sears JCPenney

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How Stores Dazzle Shoppers Into Spending More

December 14, 2011

Going head-to-head with online retailers in a squeezed economy, stores like Walmart and Best Buy have focused on low prices and minimal frills. But there is another option: dazzle customers into spending more. In December, Macy’s flagship store in New York City transforms into a Christmas theme park. Glittering signage, jazzy piano soundtracks, pine tree fragrances and an army of elves at “Santaland” make it impossible to forget the time of year. “Believe,” the store’s bags remind shoppers. If the latest retail numbers are any indication, this year’s shoppers are a hard sell. Online or non-store retail sales increased 1.5 percent in November, while overall sales ticked up just 0.2 percent, the smallest jump during that period since 2008, the nadir of the recession, according to U.S. census data released Tuesday . While luxury retailers have always tried to wow clients with unique store experiences, now even middle-brow retailers have to work to get customers in the door. On a recent Saturday at the Short Hills Mall in New Jersey, Ann Taylor — known for outfitting middle-aged middle managers — offered complimentary champagne to shoppers. High-end jeweler Bulgari also offered bubbly. “The New Ann Taylor,” as its ads proclaim, also put DJs in 225 of its LOFT stores and 25 of its Ann Taylor stores for holiday sales events. “We look at [the holidays] as our peak season,” said Devon Stein, the director of Events for Scratch, the company that books DJs for Ann Taylor events. “[Having a DJ] brings traffic into stores and puts shoppers and employees in a good mood.” Even if shoppers don’t admit it — or know it consciously — they seem ready to pay for comfortable experiences. Department stores did a bit better than other types of retailers in November. Meanwhile, BestBuy, which barely decorates for the holidays and focused on high-profile Black Friday discounts in November, saw its same-store sales decline that month. In 2008, retailers slashed their marketing budgets, aiming to stay competitive by cutting costs. While budgets have not recovered overall, “smart retailers are spending, just as they expect their customers to spend,” said Donna Sturgess, president of Buyology, Inc., a New York-based branding firm. “In the past several years, stores have begun to turn their attention not just to merchandise but to the whole environment,” she said. SENSORY SPENDING Macy’s has worked hard to maintain its pre-recession image. In 2008, CEO Terry Lundgren told NPR’s Marketplace that despite the economy, the department store did not want to be known only for low prices and sales. “Shoppers are attracted to stores for their merchandise, but also for excitement and enjoyment of the experience. It’s been called the ‘theater of retail’ because the customer wants to be entertained, appreciated, or even surprised while she’s shopping,” said Holly Thomas, Macy’s vice president of media relations and cause marketing. With the most foot traffic of the whole year, the holidays are a time when stores can creatively sell in ways that sterile web graphics cannot. Macy’s works with DMX, a multi-sensory branding company, to create the holiday-themed sounds and smells — including pumpkin pie and pine cone scents that it disseminates in its stores. Branding experts maintain that these extra touches are good for business. “Smell enhances the customers’ moods and keeps them in stores longer,” said Jaime Kane, scent project manager at DMX. Shoppers interviewed at Macy’s flagship location expressed a more mixed view. Kimberley and Tim Kleczka of Villanova, Pa., come to tour New York City department stores every year to see the window displays. “Macy’s is classy,” said Kimberley Kleczka. “Color is important, so are smells.” Tim Kleczka added that he enjoys the live piano in Nordstrom, a feature that the company is retiring this year. But the Kleczkas insist that they don’t make any impulse buys on the trips just because a store is nice. “We know what we’re looking for and buy it where we want,” Kimberley said. Another couple, Jim Micallef and Kathy Soloway of Bayonne, N.J., also come to the Macy’s flagship store just to check out the scene. “You find what you want here, then you buy it on Amazon,” Micallef said matter-of-factly. On Dec. 10, one of the busiest retail shopping days, Amazon offered a cutthroat deal to shoppers like Micallef : 5 percent off any item whose barcode they scanned in a store using Amazon’s “price checker” app. Micallef, meanwhile, said he doesn’t even bother to check prices at Macy’s. “Everyone buys on the Internet now,” he said. “Even my kids make their lists on WhatIWantForXmas.com !” Still, the fact that the Macy’s flagship remains a tourist destination can’t hurt business — more traffic means more spending, even if shoppers set out with more frugal intentions. In November, Macy’s saw same-store sales increase 4.8 percent, beating many of its competitors. On Nov. 1, it announced a $400 million renovation of its flagship store. “Macy’s does Christmas well,” said Donna Sturgess. “The arches of red, the people bustling. Then the music hits you. It feels like Christmas. It feels like there’s no economic downturn.”

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OECD: Europe Must Act To Stop Youth Jobs Crisis

December 13, 2011

PARIS (Anna Maria Jakubek) – Europe must invest in jobs for young people despite the reigning climate of austerity or risk long-term consequences for growth and competitiveness, an international panel of employment experts said on Tuesday. With youth jobless rates across the European Union averaging an alarmingly high 20 percent, governments need to fight the trend by stimulating growth, creating jobs and training youths, said the researchers from the Organisation for Economic Co-operation and Development (OECD). Jobless rates among young people vary widely across the 27-member bloc, rising as high as 45 percent in Spain in the second quarter versus 7 percent in the Netherlands. Some countries, including the Netherlands and Germany, have kept youth unemployment low thanks in part to apprenticeship and mentoring programs which the OECD said should not count as spending items in national budgets. “It’s an investment for the present, an investment for the future, so I think that while we are thinking about where to cut, we have to bear this in mind,” said Stefano Scarpetta, deputy director of the OECD’s employment division, speaking at a two-day conference at the Paris-based body. Not only do governments need to increase benefits for the unemployed, but they should also help to reintegrate jobless youths into the labor market by helping them look for jobs and training them to work in new sectors, the panel said. “This should not be just passive income support and then the young person stays at home waiting for a job to come,” Scarpetta said. High jobless rates have dogged Europe for decades. But youth unemployment has emerged as a particular concern during the European debt crisis as companies in countries with high labor costs eschewed making new hires. While overall EU unemployment hit 9.8 percent at the end of October 2011, the rate for youths has risen at a much faster pace, to 22 percent in October 2011 from 16 percent in 2007, according to the European Commission. The struggle to find jobs was not confined to the unskilled and poorly educated, the panel said. “People with higher education are just not getting jobs, and we can’t allow that sort of waste of the investment in education skills to start to evaporate away in terms of hopelessness, frustration,” said John Evans, general secretary of the OECD advisory on union issues. Copyright 2011 Thomson Reuters. Click for Restrictions .

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U.S. Financial Sector By Far The Worst Performer In S&P 500 This Year

December 12, 2011

(Angela Moon and Ryan Vlastelica) – Even experienced Wall Street contrarians are eyeing the beaten-down U.S. financial sector warily. The sector is down 20 percent this year, by far the worst performer in the S&P 500. The weakness has been so pervasive that the S&P, which is down 1.8 percent in 2011, would be up 3.3 percent on the year if financials were excluded, according to Standard & Poor’s Equity Research. Most market participants agree these stocks are set for a rebound over the long term. They still appear too risky for short-term traders. Arguably, this is when intrepid bargain hunters who buy into investor fear would be snapping up the beaten-down sector. But the problems dogging banks all year – from the debt crisis in Europe to the bleak outlook for profits – do not appear to be abating. “Our job is to buy low and sell high. With financials, I’m still questioning, ‘What is low?’” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York. The aversion to financials is great. Assets in bank-focused funds have dropped by 40 percent in the last six months, and the group is the only one of 10 S&P sectors trading at less than the value of the assets on their books. Market participants cite various reasons for financials to decline further, including regulations, weakness in the housing sector and fears linked to Europe’s escalating debt crisis. “Valuations are attractive, but there has to be a catalyst to move prices higher and I just don’t see that,” said Peter Coleman, director of research at JMP Securities in San Francisco. VALUATIONS In the last six months through the week ended December 7, the assets under management (AUM) in the U.S. financial/banking funds sector have dropped a net $8 billion, or nearly 40 percent, according to Thomson Reuters’ Lipper U.S. Fund Flows database. Assets in the sector hit a peak in February 2011 of nearly $23 billion in AUM. Since then, it’s been mostly outflows. Investors have remained skittish due to the worries about Europe. The predominant investing strategy this year has been to trade on macro events, specifically the euro zone debt crisis. Whenever the outlook for Europe worsens, the banks are punished, particularly brokerages such as Morgan Stanley and Jefferies & Co, on fears of exposure to Europe. It has contributed to high volatility in the sector. “The things that made these stocks cheap are still around. It’s still a risky business and you have no idea how bad business can get until they really get bad,” said Manley. That’s contributed to making banks more undervalued than any other sector based on anticipated growth. By StarMine’s current estimates, the financials are priced at 57 percent of their intrinsic value, compared with 72 percent for the S&P. Intrinsic value is where StarMine believes a stock should trade based on likely growth over the next decade. “If you have a three to five year timeline you’ll look back at today’s prices and wish you bought in, but I don’t see anything to move them higher over the next 12 months and I just can’t ignore the headwinds,” said Coleman. This is the reason the market capitalization of the bank sector is less than the value of the assets on their books. The combined market cap of the sector is $1.68 trillion, compared with book value of $1.95 trillion, according to StarMine. OPTIONS AND DOOM Even the options market does not suggest optimism for the future. Last week open interest on the Select Sector Financial SPDR fund , which tracks the S&P financial sector, reached its highest since the financial crisis. Put options outpaced call options by a ratio of 1.7, according to Interactive Brokers. Normally, the ratio is between 1 to 1.2. When Bank of America shares fell to a fresh two-year low of $5.03 last week, instead of betting on a rebound, option traders moved to hedge themselves against more declines. “There’s a group of high-quality banks that have bottomed, but Bank of America isn’t one of them,” said Marty Mosby, large-cap bank analyst at Guggenheim Partners in Memphis, Tennessee. Mosby listed Wells Fargo, US Bancorp and Bank of New York Mellon among those where “we haven’t yet reached an inflection point where their strong fundamentals will drag prices up in a risk-averse market.” Among individual names, the put-to-call open interest ratio on Goldman Sachs was 1.11 while Citigroup’s ratio was 0.62. “I think what you would find looking at trades on specific names is that there are traders positioning for a range of scenarios from recovery to disaster,” said Caitlin Duffy, Equity Options Analyst at Interactive Brokers. Even some of those speak positively about the banks are staying cautious. BNY Mellon’s wealth management core portfolio recently moved to a slight “overweight” position on the group due to the bad news already priced into the sector. “As a group, banks are fairly valued, however it’s understandable that we’re going to be cautious about moving to a large overweight at this time,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York. “This could turn out to be an outstanding entry point, but it depends on your risk appetite… there could be more risk than potential reward.” (Reporting by Angela Moon and Ryan Vlastelica; Additional Reporting by Dan Bases; Editing by Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Dennis M. Kelleher: Obama’s Shameful Dodge on 60 Minutes

December 12, 2011

As he has regularly done in the past with other media outlets, President Obama artfully dodged a straightforward question about lack of criminal prosecutions from Steve Kroft on 60 Minutes last night. The question was about how one of the things bothering people was the fact that no one on Wall Street has been criminally prosecuted for the financial catastrophe that has caused so much damage to our country. What he was really asking — what everyone in the country is asking — is why has there been no accountability of those on Wall Street who got rich before, during and after the meltdown they caused while the rest of the country got stuck with the bill, including historically high unemployment, foreclosures, deficits, etc. Rather than even attempting to answer that question, the president started by saying he can’t get into specific cases, which he wasn’t asked about. He then gave his standard line, “I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, some of the least ethical behavior on Wall Street, wasn’t illegal. That’s exactly why we had to change the laws.” Okay, even if that highly questionable assertion is true, he is nonetheless conceding that at least some of that behavior was illegal and therefore the question remains why he and his team refuse to prosecute Wall Street. (Evidence of those crimes was the subject of a 60 Minutes piece the prior week.) The easy answer of some is because that’s where they are doing a lot of fundraising (a bipartisan activity, I should note). While that no doubt plays a role, the more complete answer is also more complex, but no less satisfying. The president and his team decided early on that recapitalizing the financial industry in general and Wall Street in particular was the highest priority for the country. Their view was that, if they didn’t’ do that, a Second Great Depression was highly likely. They all truly believed that as went Wall Street, so goes Main Street. (This view was helped along by all the former Wall Streeters occupying the highest levels of the administration and on whom the president relied most heavily for advice on this matter.) This view is, of course, right to some extent. If the financial industry was allowed to collapse in the fall of 2008, then Main Street would suffer gravely: everything from paychecks to credit cards to the simplest of loans for everyone from individuals to small business to the big companies at the heart of our economy could have ground to a halt. Moreover, they were blindly obsessed with people’s confidence in the banking system (as Ron Suskind spelled out so well in his book, Confidence Men ). They worried that anything that was done other than helping the banks would erode confidence in the banks, which would cause the crisis to deepen and potentially cause a downward spiral. Unfortunately, this view resulted in an administration policy of protecting the banks from even the slightest criticism, never mind actual action. So, there was no financial crimes task force formed to investigate potential crimes and there was no serious consideration given to taking other actions against the biggest banks and the titans of Wall Street. Indeed, this view even stymied efforts to seriously investigate the financial crisis so that informed reforms could be implemented. (Remember, that the Financial Crisis Inquiry Commission was created very late, was given limited powers, and was structured to report only after the reform law passed.) Indefensibly, this policy of “see no evil, hear no evil, and speak no evil” of Wall Street was followed even when the administration basically handed Wall Street the keys to the treasury and US taxpayers’ pockets. In fairness, this wasn’t just an Obama administration policy. It was certainly also the policy of the Bush administration, but many thought that the November 2008 election would usher in new policies that would hold people accountable. This approach of uncritically coddling Wall Street and ignoring its role in the financial crisis was the subject of an unprecedented meeting in the White House in the spring of 2009. A number of Democratic senators demanded a meeting with the president personally to tell him directly and clearly that he was getting bad advice from his Wall Street-biased group of senior advisors and that he must take strong action against Wall Street wrong-doing. It appears that the President responded with more artful dodges along the lines of “What would you have me do? Let the banks fail? That would be devastating for the economy and the country.” Well, of course, no one was advocating — then or now — letting the banks fail and ushering in another Depression. However, there was a very strong view — then and now — that the financial industry could be saved and wrongdoing could still be punished. This view is nicely captured by the phrase that “you can save the banks, but you don’t have to save every banker.” Unfortunately, as the president revealed again last night on 60 Minutes , those bankers have nothing to fear from this administration (except the occasional criticism not backed up by any action). The policy of “hold no bank or banker accountable” appears to be firmly in place. That is bad news not only for the country, but also for the president. It’s one of the key reasons the American people are so mad and justifiably so: this foolish policy means that the rules that apply to everyone else, don’t apply to the rich, powerful and politically well-connected banks and bankers on Wall Street. And, even worse, it means that those very same banks that only exist today because the US government with taxpayer money saved them in the fall on 2008 are now using their massive profits to fight regulatory reform that is desperately needed if we are to avoid another financial collapse.

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Jerry Jasinowski: Ruminations From Rubenstein

December 12, 2011

From time to time, I find it helpful to seek insight on how the economy is doing from people who are actually on the firing line — business executives actively engaged in navigating today’s turbulent economic waters. One such is David Rubenstein, founder of the Carlyle Group, a private equity firm that owns 240 companies across the industrial and service sectors. During a breakfast at the Washington Economic Club last week, Rubenstein offered his perspective from both the micro perspective of the performance of his companies, and also macro judgments. Rubenstein is not sanguine about the European situation where high sovereign debt levels, banking liquidity issues and structural problems are already bringing on a recession that will have repercussions here. He expects the stronger countries to find a way to save the euro, but some nations may drop out and the euro will fall significantly in 2012. He is more optimistic about the U.S. economy now growing at about 2 percent and likely to continue at that level through 2012. Most firms are performing well and inflation remains muted, but growth is not nearly enough to make much headway against unemployment. The biggest problem is political gridlock in Washington that makes it impossible to address our fundamental economic issues and begin reducing the $15 trillion debt that is not sustainable. Rubenstein is even more optimistic about the economic outlook for China and other Asian nations. Though he recognizes China has excess residential capacity and inflation is running about 6.5 percent, he suggested that any country that can grow at more than 10 percent a year for a decade can engineer a soft landing. As for our ever volatile markets here at home, Rubenstein acknowledged there is less correlation today between equity markets and economic fundamentals than in the past, and that the markets seem more driven by macro headlines than the real world of consumers and capital investment. Interestingly, he mentioned David Swenson’s focus on the absolute return concept which emphasizes asset allocation, and suggested that intelligent investors should consider hedge funds and other alternative asset mechanisms. Overall, Rubenstein was bleak about the political leadership here and in Europe, and does not expect much policy leadership between now and next year’s election, at least not on the big picture items. He does foresee more modest action on a continuing budget resolution, extension of unemployment benefits, renewal of the payroll tax cut and perhaps some modest Medicare reforms. Such is the perspective of one of our nation’s most successful investors, as well as an experienced government policy maker. Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.

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Markets Still Wary After EU Deal

December 12, 2011

A European summit deal to strengthen budget discipline in the euro zone failed to restore financial market confidence on Monday, forcing the European Central Bank to step in again gingerly. The euro fell, stocks slid and borrowing costs for Italy and Spain rose as investors weighed the outcome of last week’s summit that split the European Union, with Britain blocking treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union. Friday’s initial market rally petered out in less than 24 trading hours due to legal uncertainty surrounding the new pact and the absence of an unlimited financial backstop for the single currency. French President Nicolas Sarkozy said the legal basis of a new accord to enforce debt and deficit rules in the 17-nation euro area with quasi-automatic sanctions and intrusive powers to reject national budgets would be worked out before Christmas. “In the next fortnight, we will put together the legal content of our agreement. The aim is to have a treaty by March,” Sarkozy told newspaper Le Monde in an interview. “You have to understand this is the birth of a different Europe — the Europe of the euro zone, in which the watchwords will be the convergence of economies, budget rules and fiscal policy. A Europe where we are going to work together on reforms enabling all our countries to be more competitive without renouncing our social model,” he said. Traders said the ECB intervened to buy short-term Italian debt after yields on Italian and Spanish debt spiked. But ECB sources told Reuters last week that purchases would remain limited with a maximum ceiling of 20 billion euros a week. There is no prospect of a “big bazooka” to shock the markets. Despite the central bank dabbling, Italian 5-year bond yields shot up above 7 percent, widely seen as a danger level while 10-year yields spiked above 6.8 percent and Spanish 10-year yields topped 6 percent. Investors’ appetite for short-term paper drove Italian one-year borrowing costs down just below 6 percent at an auction but yields remain uncomfortably high. “Let’s not raise expectations too high, there will be more summits,” credit ratings agency Standard & Poor’s chief European economist Jean-Michel Six said. “Time is running out and action is needed on both sides of the equation, on the fiscal and monetary side,” he told a business conference in Tel Aviv. S&P has put 14 euro zone governments on watch for a possible rating downgrade in the coming weeks, arguing that the deepening debt crisis and looming recession will increase their potential liabilities and reduce their ability to cope with them. If some of the euro zone’s ‘AAA’-rated members are downgraded, it would call into question the solidity of the euro zone’s rescue fund, which would likely suffer a similar fate. “There is probably yet another shock required before everyone in Europe reads from the same page, for instance a major German bank experiencing difficulties in the market,” Six said. “Then there would be a recognition that everyone is on the same boat and even German institutions can be affected by this contagion.” Interbank lending rates in the euro zone fell to their lowest level since May after the ECB threw cash-starved banks a lifeline last week by offering unlimited three-year liquidity to counter a credit crunch. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Euro zone crisis graphics r.reuters.com/hyb65p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ POLITICAL FALLOUT Political aftershocks from Friday’s historic rift between Britain and the rest of the 27-nation bloc continued to shake Europe on Monday with Prime Minister David Cameron facing tension in his coalition and doubts in the business community. Cameron was assured of a hero’s welcome from Eurosceptics in his Conservative party in parliament but faced a backlash from his Liberal Democrat coalition allies when he explains a veto that has cast Britain adrift from its continental partners. LibDem Deputy Prime Minister Nick Clegg said on Sunday he was “bitterly disappointed” with an outcome that would diminish Britain’s global influence and was bad for jobs and business. In business, the chief executive of the world’s largest advertising group, Martin Sorrell of London-based WPP, told Reuters that Britain’s interests would be better serviced “inside the EU tent” than on the sidelines. In Brussels, officials were groping for a strong legal basis for the planned fiscal compact, with Britain arguing that the euro zone cannot use the EU treaty institutions — the European Commission and the European Court of Justice. European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters most of the practical measures to strengthen budget enforcement could be implemented immediately under a set of rules known as the “six-pack” agreed in October. Euro zone finance ministers may hold an extra meeting before the end of the year to try to nail down details of the agreement before their winter break, diplomats said. The euro area faces the next potential crunch point in mid-January when Italy, which has a debt mountain of 1.9 billion euros or 120 percent of its annual output, has to start issuing tends of billions of euros in bonds towards a 2012 total of 340 billion euros needed to roll over maturing debt. Michael Leister, rate strategist with German bank WestLB in Duesseldorf, said the summit outcome had done little to restore confidence in the absence of stronger central bank action. “The question is will this help to stabilize sentiment? I don’t believe so, given that those comments from (ECB President Mario) Draghi ruling out a bazooka during the ECB conference are still weighing on spreads,” he said. (Additional reporting by Alexandra Za in Milan, Keith Weir and Sudip Kar-Gupta in London,; Writing by Paul Taylor, editing by Mike Peacock) Copyright 2011 Thomson Reuters. Click for Restrictions .

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ECB’s Stark: More IMF Involvement In Europe ‘Would Be Act Of Desperation’

December 12, 2011

Higher involvement by the International Monetary Fund (IMF) in the euro zone’s efforts to stem its debt crisis would be an act of desperation, outgoing European Central Bank chief economist Juergen Stark said, calling for a quantum leap by the currency bloc. “It would be an act of desperation,” he was quoted as saying by Sueddeutsche Zeitung due for publication on Monday. Stark said he envisaged an informal panel of experts to check on member states’ budgets. “That would be the nucleus for a future European finance ministry,” he said. (Reporting by Annika Breidthardt) Copyright 2011 Thomson Reuters. Click for Restrictions .

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U.S. Worried About IMF Loans To Europe

December 10, 2011

WASHINGTON (Lesley Wroughton) – The prospect of European heavyweights like Italy or Spain turning to the IMF for rescue loans is worrying the United States and other nations that fear they could suffer losses on funds they have extended to the IMF. The International Monetary Fund cannot be expected to step in as a substitute for a stronger commitment by Europe which needs to assume the brunt of any losses on emergency loans, a senior US official said on Friday. Despite the International Monetary Fund’s stable record – no borrower has ever defaulted on an IMF loan and no country has ever lost money lending to the IMF – there are concerns about the IMF’s growing exposure to the euro zone. That exposure could take a quantum leap if Italy and Spain need bailouts, a level of assistance that would almost certainly dwarf the loans already approved for Greece, Ireland and Portugal in deals engineered with the European Union. Emerging markets, which are contemplating lending more money to the IMF — which couples monetary assistance with tough conditions that seek to ensure a country does not default — have also raised concerns in the IMF about the risks to the fund’s capital, officials from emerging nations told Reuters. A crucial European Union summit ended on Friday with a historic agreement to draft a new treaty for deeper integration in the euro zone in an effort to rein in a debt crisis that started in Greece two years ago and has continued to spread. Worries about the IMF’s risk are also brewing among congressional lawmakers. Four U.S. lawmakers who met with IMF chief Christine Lagarde this week expressed unease over the risk the fund would take on with a bigger role in Europe. A request for a big IMF loan for Italy or Spain would put the United States, which holds veto power over most IMF lending decisions, in an uncomfortable spot. The American public is still stung by the U.S. government’s big bailouts for banks during the 2007-09 financial crisis and fears that mounting U.S. debts imperil the nation’s future. With President Barack Obama facing a tough battle for re-election in November, the White House is not keen to appear as Europe’s savior, and the administration’s message to Europe has consistently been: Put more of your own money on the line. Indeed, Republican lawmakers are seeking to yank a $108 billion loan the United States approved for the IMF in 2009, a move that would undercut Washington’s ability to influence the conditions attached to IMF loans. “If the United States wants to help Europe find a way out of its current debt crisis, we must be a strong, world economic leader, not merely the lender of last resort,” Republican Senator Jim DeMint wrote in The Wall Street Journal on Friday. “Members of the Obama administration must focus all of their efforts on strengthening the U.S. economy and balancing our budget, rather than on continuing to borrow from China to pay for Europe’s out-of-control debts,” he added. DeMint said he would seek to force another vote to stop U.S. Treasury Secretary Timothy Geithner from supporting more European bailouts. The Senate voted 55-44 in June against a proposal by DeMint to repeal IMF loan authority. Domenico Lombardi, a former IMF board official now at the Brookings Institution in Washington, said even if the U.S. Congress rescinded the loan, it would not prevent the IMF from lending to Europe. He said the international community has a stake in ensuring the euro zone crisis does not spread further. PREFERRED CREDITOR The IMF enjoys an understanding among its members that borrowing nations will always pay the IMF back ahead of private creditors. However, the scale of borrowing troubled euro zone countries might need raises the specter that one of the nation’s could default on an IMF loan. The IMF has about $380 billion available for lending, a figure outstripped by Italy and Spain’s debt refinancing needs. Italy needs to roll over 340 billion euros (290.5 billion pounds) in debt next year, while Spain needs to refinance 120 billion euros. “The problem with some of these countries now is you’re getting to a point where (debt) is large enough that defaulting on the IMF is attractive enough if you want to reduce your debt,” said Raghuram Rajan, a former IMF chief economist now at the University of Chicago’s Booth School. “I’m not saying the euro area will act at cross purposes with the fund. But when it comes to writing down the debt, will the euro area respect the (preferred) status of the IMF?” European leaders agreed at a summit on Friday to provide 150 billion euros in bilateral loans to the IMF to tackle the crisis, with another 50 billion euros coming from non-European countries. National central banks in the euro zone would pump the capital into the IMF. The funds would not count as a contribution toward Europe’s IMF quotas, which determine its voting power in the fund. WHOSE MONEY IS THIS ANYWAY? There are two ways of channeling the money to the IMF, either through the fund’s general resources or a so-called IMF-administered account. Any lending from the IMF’s general resources would spread the risk across the entire IMF membership. In an administered account, the countries contributing would take the losses in the case of default. Thus far, Europe has indicated it is legally easier for its funds to be part of general resources. When it comes to additional resources to battle the euro zone debt crisis, the United States prefers the second option, which would put most of the risk on Europe and none on the United States. The Obama administration has argued for months that Europe needs to put more capital on the line. “The key point is that official funding must also bear losses if necessary,” Rajan wrote in a recent column. “Consequently, if support is channeled through the IMF, the fund will need a guarantee from the euro zone that it will be indemnified in case of a (debt) restructuring.” Mario Blejer, a former Argentine central bank governor, argues that Europe should take care of its own and bear the full risk of any default. “The IMF’s seniority is an unwritten principle, sustained in a delicate equilibrium, and high-volume lending is testing the limit,” Blejer and Eduardo Levy Yeyati, a senior fellow at the Brookings Institution, wrote recently. “From this perspective, the proposal to use the IMF as a conduit for ECB resources — thereby circumventing restrictions imposed by European Union’s treaties — while providing the ECB with preferred-creditor status, would exacerbate the Fund’s exposure to risky borrowers,” Blejer and Yeyati said. “This arrangement could be seen as an unwarranted abuse of Fund seniority that, in addition, unfairly frees the ECB from the need to impose its own conditionality on one of its members.” ($1 = 0.7482 euros) (Editing by Tim Ahmann, Leslie Adler and Andrew Hay) Copyright 2011 Thomson Reuters. 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Taco Bell: We’ll ‘Reinvent The Taco’ With Doritos

December 8, 2011

Some things are perfect: sunshine, rainbows, koala bears, King Lear , fish tacos eaten on the beach in Malibu. These are things that, like the wheel, no one would want to reinvent. But what about Taco Bell tacos? Given that they’ve been accused of being filled with a faux-ground meat mixture , they hardly seem as perfect as rainbows. So why not reinvent them? Probably can’t make them any worse, right? If only. As it turns out, Taco Bell had the capability to make its tacos much, much worse. Parent company Yum Brands just had to team up with fellow food giant PepsiCo for an answer, in the form of taco shells made of nacho cheese-flavored Doritos. The tacos debuted at the beginning of 2011 in selected markets in the San Joaquin Valley in California, and proved enough a success that Yum Brands has decided to bring the product to Taco Bells around the country. Representative from the company told Nation’s Restaurant News that the Doritos Locos Tacos would “reinvent the taco,” and help separate Taco Bell from its competitors. The fillings on the Dorito-clad tacos are said to be spiced more mildly than those in traditional tacos, to help compensate for the extra flavor in the shell. At this point, it’s unclear how the bright orange cheese powder on the exterior of the new tacos will affect Taco Bell’s sodium reduction initiative , but we can’t imagine it’s helping. Maybe Taco Bell shouldn’t have reinvented its wheel after all. Here’s an ad for the tacos that’s been aired in California test markets:

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Online Shopping Sales Continue To Surge

December 5, 2011

NEW YORK — U.S. shoppers are still spending heavily online after a record-busting “Cyber Monday,” research firm comScore Inc. said Sunday. The firm, which tracks Web use, found shoppers spent nearly $6 billion online on Monday through Friday last week, a record. On Cyber Monday itself, sales reached $1.25 billion, the biggest online shopping day in history. Online sales on Tuesday and Wednesday also broke $1 billion. Cyber Monday sales topped $1 billion for the first time last year. ComScore says online sales are up 15 percent to $18.7 billion in November and the first two days of December, compared with the same period last year. The holiday shopping season can make up to 40 percent of retailers’ annual revenue. This year’s holiday shopping has risen with help from discounting and promotions. Free shipping also appears to be a big draw, applying to 63 percent of sales, up from 52 percent a year ago. “Consumers have come to expect free shipping during the holiday promotion periods, and retailers, in turn, have realized that they must offer this incentive,” said comScore chairman Gian Fulgoni in a statement. Online shopping accounts for between 8 and 10 percent of overall holiday spending, by various estimates. ComScore’s spending figures exclude travel, auctions and large corporate purchases. Spending on items including clothing, general merchandise, toys and electronics and in department stores, rose 4.7 percent to $125 billion in the Oct. 30 to Nov. 26 period, according to MasterCard Advisor’s SpendingPulse. That includes online buying and spending in physical stores.

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This Is The Future Of Spotify

December 1, 2011

Spotify announced a new look and a bunch of new apps for its desktop music player at a classy event in New York City on Wednesday, and the early returns look great. The new Spotify integrates with several music recommendation engines , album review sites and social sharing platforms with the aim of making listening to music on Spotify a more substantial and rich experience. Below, we’ve collected screenshots of nine new features and apps from the updated Spotify player ( available now in beta and coming soon to your desktop). Here’s what you can expect in your Spotify future:

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Citigroup Settlement Tossed: Judge Tells SEC To Get It Together

November 28, 2011

In a potentially precedent setting ruling on Monday, a federal judge in New York tossed out a settlement between the Securities and Exchange Commission and Citigroup, effectively telling the SEC — which is responsible for protecting investors and maintaining fair, orderly markets — that it isn’t going far enough in holding financial institutions accountable for their wrongdoings. The SEC accused Citigroup of selling investors mortgage-backed bonds that the bank knew would lose value. Citi netted roughly $160 million in profits from the sale of these bonds while investors lost more than $700 million. Under the proposed settlement with the SEC, the bank would have had to pay $285 million in penalties and fees, but would not have had to admit to any wrongdoing, according to the court decision. The lack of admission was the main reason Jed S. Rakoff, a Clinton-appointed U.S. district judge, said he decided to throw out the settlement. An admission of guilt or innocence is a matter of significant public interest, he said. “The court, and the public, need some knowledge of what the underlying facts are,” wrote Rakoff. “For otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is prevented from ever knowing the truth in a matter of obvious importance.” In wording that sounds like it was written for those Occupy Wall Street protesters decrying the nation’s big banks and their outsized influenced, Rakoff wrote: “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. … The SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not.” The ruling “is precedent setting,” said a prominent securities lawyer who has represented investors in class-actions suits against financial institutions and is familiar with the decision. The SEC often settles with large financial institutions without requiring an admission of guilt. And it’s extremely rare for a judge to throw out a settlement — though Judge Rakoff did once previously, in 2009, when he ruled that Bank of America and Merrill Lynch had “effectively lied to their shareholders” when the two firms paid out $3.6 billion in executive bonuses shortly before the bank acquired Merrill and after the bank had accepted billions of dollars in federal bailout funds. “The way the SEC has always proceeded is a slap on the wrist and a cost of doing business, and all these big banks know it,” the securities lawyer said. “If they get in trouble with the SEC, they know they can buy their way out of it without admitting anything. Ninety-nine out of 100 judges go along with it because it is the machine that greases the wheels.” The stakes are high for Citi. If they admit wrongdoing, that would likely be used against them in many more suits. The bank’s potential exposure is enormous. Both the SEC and Citigroup said Monday that they disagree with the ruling. Robert Khuzami, the director of the SEC’s Division of Enforcement, said in a settlement “reasonably reflects the scope of relief that would be obtained after a successful trial,” according to the Wall Street Journal . Rakoff has in the past upheld SEC settlements that avoided an admission of guilt, including the well-publicized 2010 settlement between the SEC and Goldman Sachs in which the investment bank was accused of failing to disclose another hedge fund’s involvement in its operations, a “similar but arguably less egregious” situation, in Rakoff’s words, than the one Citigroup is accused of by the SEC. Rakoff has ordered both parties to prepare to go to court in July 2012. Though an appeal is possible, it appears unlikely, the securities lawyer said.

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Secret Fed Loans Gave Banks Billions

November 28, 2011

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

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Cash-Strapped Americans Largely Swallow Price Hikes During Holidays

November 27, 2011

NEW YORK — The way Americans are chomping Big Macs, lacing up pricey sneakers and gulping peppermint mochas in this economy, you’d think they’re taking advantage of big holiday discounts. The truth is they’re paying more. McDonald’s, Nike, Starbucks and other companies initially worried that customers would run the other way when they started raising prices to offset their higher costs for ingredients, fuel and packaging. But so far, cash-strapped Americans largely have swallowed the price spikes. And they’re continuing to do so during this holiday shopping season. On a recent weekday, five full floors of shoppers in a Nike store in New York didn’t seem to mind paying more for their favorite kicks, including the almost $200 sneakers named for NBA star LeBron James. At a McDonald’s across town, people munched on Big Macs and fries that cost a dime or two more than last year. Customers also piled into a Starbucks down the street, where cappuccinos and many other specialty drinks now top $5. Timothy and Katrin Sullivan, a San Diego couple, estimate that together they spend about $100 a month on skinny caramel macchiatos and pumpkin spice lattes at Starbucks, where prices on some drinks have risen in some regions this year. As parents of five children, they worry about the economy and have cut back on travel and ball games, but so far their morning cup of joe has survived the chopping block despite the rising price. “It’s cheaper than therapy,” says Katrin Sullivan, 39. The prices Americans pay for food, travel and other things have steadily risen this year, according to government data. Prices went up 3.5 percent in October compared with the same month a year ago. At the same time, every month for the past year except one, spending grew 2 percent or more compared with the same month a year ago. That’s given retailers some cautious optimism as they try to gauge just how much more consumers are willing to pay. Pete Bensen, McDonald’s chief financial officer told analysts during the company’s earnings call that the question boils down to this: “Is the consumer in a place that we’re comfortable we can continue to add price increases?” Companies of all stripes have been asking that question a lot. In the past year, they’ve been paying more for materials like beef, corn and fuel that they use to make, package and transport their goods. A combination of poor crop yields in some parts of the world, unrest in the Middle East and greater demand from countries like Brazil and China have sent those costs up. Many costs have come down after spiking in the spring. A pound of coffee, for example, is trading at about $2.30, down from $3 in the spring. But that’s up from $2 a year ago. As a result, Starbucks Corp. this year raised the price of the packaged coffee in its stores by 17 percent. The company declines to say whether prices on brewed drinks have risen or fallen overall in the past year, since those price decisions vary by region. But generally, the Seattle chain says the prices of specialty drinks like lattes and macchiatos are more likely to have risen this year than simpler drinks. The price of a 16-ounce grande cappuccino at Starbucks costs about $4.25, up about 23 percent from $3.45 a year ago, research firm Technomic estimates. Meanwhile, a bagel went up from $1 a year ago to $1.25. That hasn’t stopped Starbucks customers from getting their coffee fix, though. Store traffic rose 6 percent in the most recent fiscal year, which ended in October. Revenue at stores open at least a year – an indicator of a retailer’s health – rose 8 percent. “We think we are in a very good spot right now,” Jeff Hansberry, who runs Starbucks’ consumer products division, said in a call with analysts this month. At Nike Inc., sales rose almost 18 percent in the three-month period through August, even though it raised prices on certain styles this year. Nike hasn’t detailed the price increases, but according to research firm SportsOneSource Group, the suggested price of a pair of this year’s version of LeBron James’ sneakers is about $170, up from about $160 last year. Nike said it expects to raise prices more broadly in the spring. “We have not seen any big price resistance at all,” Charles Denson, president of the Nike Brand, said in a call with analysts. Likewise, traffic and sales grew after McDonald’s raised prices an average of 1 percent in March and another 1.4 percent in May. In the third quarter, guest count increased 2.6 percent. Revenue at stores open at least a year rose 5 percent. (The revenue figure is a snapshot of money spent on food at both company-owned and franchised restaurants. It does not reflect corporate revenue.) McDonald’s won’t give details on which items it raised prices on, but Technomic estimates that a Big Mac costs an average of $3.39, up from $3.19 a year ago. A large order of fries is about $1.89, up from $1.79. And the company signaled that there may be more increases to come. “We will continue to evaluate additional price increases,” said Bensen, McDonald’s CFO, during a call last month. “As we look into 2012, we expect commodity cost increases in the U.S. to be similar to this year’s.” Even if the costs for some raw materials decline, companies are still expected to continue to raise prices during this holiday shopping season. That’s because costs for materials are uncertain, so companies will try to raise prices whenever they think customers will tolerate them. Still, they have to tread lightly or risk losing customers. To be sure, families have trimmed their budgets as the economy plummets. But Americans continue to spend for myriad reasons, even though prices have risen on everything from Coca-Cola soda to Huggies diapers to Ben & Jerry’s ice cream. Some are stomaching the higher prices only on products they need. Others who’ve cut back on bigger frills are willing to splurge on brands they trust or things they see as small indulgences. Still others are apathetic to the increases because “everybody’s doing it.” The weak economy has forced Kenya Leach, a New York actress, to cut back on eating out and trips to the movies and to reconsider her plans to return to school for an anthropology degree. Still, she keeps buying beauty products from Origins, which sells $35 moisturizer and $25 face wash, even though she’s noticed those prices edge up by about a dollar per product, by her calculations. Estee Lauder, the high-end cosmetics company that owns Origins, did not detail its price increases. But CEO Fabrizio Freda said recently during an analyst call that customers have been “resilient” as the company has raised prices and rolled out more expensive products. Leach, for one, figures it’s OK to spend a little more on Origins products because she is cutting out so many other things. “Treating yourself sends off those happy pheromones,” says Leach, 25. “When I get really crabby and upset, I’ll buy a new lipstick and I’ll feel 10 times better.”

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Germany, France Exploring Radical Ways To Secure Eurozone Integration

November 27, 2011

BRUSSELS (Luke Baker and Julien Toyer) – Germany and France are exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries, aware that getting broad backing for the necessary treaty changes may not be possible, EU officials say. Germany’s original plan was to try to secure agreement among all 27 EU countries for a limited change to the Lisbon Treaty by the end of 2012, making it possible to impose much tighter budget controls over the 17 euro zone countries — a way of shoring up the region’s defenses against the debt crisis. But in meetings with EU leaders in recent weeks, it has become clear to both German Chancellor Angela Merkel and French President Nicolas Sarkozy that it may not be possible to get all 27 countries on board, EU sources say. Even if that were possible, it could take a year or more to finally secure the changes while market attacks on Italy, Spain and now France suggest bold measures are needed within weeks. As a result, senior French and German civil servants have been exploring other ways of achieving the goal, either via an agreement among just the euro zone countries, or a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say. No firm decisions have yet been reached. Reuters exclusively reported on November 9 that French and German officials were discussing plans for a radical overhaul of the European Union to establish a more fiscally integrated and possibly smaller euro zone. “The Germans have made up their minds. They want treaty change and they are doing everything they can to push for it as rapidly as possible,” one senior EU official involved in the negotiations told Reuters. “Senior German officials are on the phone at all hours of the day to every European capital.” While Germany and France are convinced that moving toward fiscal union – which could pave the way for jointly issued euro zone bonds and may provide more leeway for the European Central Bank to act forcefully – is the only way to get on top of the debt crisis, some other euro zone countries are unable or unwilling to move so rapidly toward that goal. Not only Greece, Ireland and Portugal, which are receiving EU/IMF aid, but also Italy and Spain and some east European countries such as Slovakia, would either find it difficult under current economic conditions to meet the budget constraints Germany wants, or simply do not agree with the aim. Consequently, the French and German negotiators are exploring at least two models for more rapid integration among a limited number of euro zone countries, with the possibility of folding that agreement into the EU treaty at a later stage. TWO MODELS One is based on the Pruem Convention of 2005, also known as Schengen III, a treaty signed among 7 countries outside the EU treaty but which was open to any member state to join and was later acceded to by 5 more EU states plus Norway. Another option would be to have a purely Franco-German mini-agreement along the lines of the Elysee treaty of 1963 that other euro zone countries could also sign up to, officials say. “The options are being actively discussed as we speak and things are moving very, very quickly,” a European Commission official briefed on the discussions told Reuters. One source said the aim was to have the outline of an agreement set out before December 9, when EU leaders will meet for their final summit of the year in Brussels. Herman Van Rompuy, the president of the European Council, which represents EU member states, is supposed to deliver a preliminary report on treaty change at the summit. He has held extensive talks with EU leaders in recent weeks to gauge the feasibility of bringing about rapid treaty changes. Sarkozy, who has made two speeches in the past two weeks highlighting the need for more rapid fiscal integration in the euro zone, and has acknowledged that it may be inevitable that a ‘two-speed Europe’ emerges, is due to make another keynote address on December 1 which could provide a platform for laying out in more detail the ideas that he and Merkel are developing. A senior German government official denied there were any secret Franco-German negotiations, but emphasized that both countries saw the need for treaty change as pressing and were exploring how to achieve that in the best way possible. “Germany and France are continuing to focus on proposals for a limited treaty change that can be presented at the EU summit in December,” the official said, emphasizing that there was a need to act quickly to get changes in place. Germany’s Welt am Sonntag newspaper reported on Sunday that Merkel and Sarkozy were working on a new Stability Pact, setting out national debt limits, that could be signed up to by a number of euro zone countries and which would allow the ECB to act more decisively in the crisis. “If the politicians can agree to a comprehensive step, the ECB will jump in and help,” the paper quoted a central banker as saying. The ECB has bought the bonds of euro zone strugglers in intermittent fashion when they have reached crisis point. Economists say it has to act much more radically to turn the market tide but the central bank, and Germany, has opposed any such move. Commitments to binding fiscal rules by euro zone governments may be the cover it needs to change tack. “It would be a real disaster if this strategy which is in fact no strategy, this muddling through, were to continue for some months,” Peter Bofinger, one of the five “wise men” who formally advise the German government on the economy, told Irish state broadcaster RTE. “If this bond run is not stopped it will really endanger the stability of the European and even the global financial system. Bold action by the ECB is definitely needed.” Reuters reported a similar possibility on Friday, with euro zone officials saying that if much tighter fiscal integration could be achieved among euro zone states, it would give the ECB more room to maneuver and buy sovereign bonds. BARGAINING PLOY? While EU officials are clear about the determination of France and Germany to push for more rapid euro zone integration, some caution that the idea of doing so with fewer than 17 countries via a sideline agreement may be more about applying pressure on the remainder to act. By threatening that some countries could be left behind if they don’t sign up to deeper integration, it may be impossible for a country to say no, fearing that doing so could leave it even more exposed to market pressures. “Some of this is just part of the posturing you hear — it’s pressure from Germany to go for treaty change as quickly as possible,” the official involved in the negotiations said. “To some extent you have to see these ideas as part of the bargaining chips that are being put on the table.” The risk for Merkel and Sarkozy is that if they do ultimately decide to push for a sideline agreement involving only 8-10 euro zone states, it would send a clear signal to the markets that the euro zone is split and that some countries are not seen as full members of the currency union. That could either mean that some countries in the euro zone are left with fewer voting rights, even if they still use the euro, or it could mean that some countries decide, ultimately, that they would be better off without the euro — a camp that officials say Greece, the crucible of the debt crisis, could fall into. Copyright 2011 Thomson Reuters. Click for Restrictions .

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Exhausted Target Worker Drives Into Canal After All-Night Shift

November 26, 2011

A 36-year-old Target employee drove her car into a 20-foot deep canal after working the night shift on Black Friday. Florida police said the woman lost control of her vehicle due to exhaustion, reports Miami New Times . The woman is unable to swim, but managed to call police from her cell phone and explain the situation as she and the car began to sink, notes NBC Miami . Palm Beach County sheriff’s deputy Frank Mayo dove into the canal to save the unidentified woman, reports The Palm Beach Post . “Our thoughts are with the team member and her family for a speedy recovery,” Jessica Carlson, a Target spokeswoman told the Palm Beach Post . The car accident comes after a slew of retailers, including Target, made the decision to open at 12 a.m. on November 25 to accomodate Black Friday shoppers. This required employees to arrive at 11 p.m. on Thanksgiving to prepare the store for an influx of shoppers. Target said the decision to open earlier on Black Friday was popular with both employees and customers. But at least one Target employee wasn’t enthusiastic. Anthony Hardwick started up a petition on Change.org asking for reasonable working hours over Thanksgiving, reports The New York Times . Though Target never changed its opening hours, the petition went viral and received over 100,000 comments from across the country.

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Online Sales Leap On Black Friday

November 26, 2011

LOS ANGELES — Online shoppers didn’t wait around until Cyber Monday to start their holiday shopping. According to IBM Corp. research unit Coremetrics, U.S. consumers spent 20 percent more online on Black Friday, the day after Thanksgiving, this year than last, while online sales jumped 39 percent on Thanksgiving Day. Coremetrics measures sales data from more than 500 online retailers, including half of the top 50. It doesn’t reveal its partners or specific dollar figures. Both Coremetrics and e-commerce payment site PayPal, a united of eBay Inc., said shopping by mobile phone is increasingly substantially this year. PayPal said it saw five times more mobile payments worldwide this Thanksgiving, compared with last year. And Coremetrics said about 17 percent of Black Friday visitors to retail websites came via mobile devices, up from about 5 percent a year ago. There were sporadic reports of shoppers having trouble with crowded websites. Some visitors to Walmart.com reported problems paying for their merchandise at checkout, according to posts on GottaDeal.com and other websites. Toys R Us Inc. spokeswoman Kathleen Waugh said Friday that the toy retailer’s site experienced “some slowness” when it unveiled some online deals at 9 p.m. Eastern time Thursday. She said the company’s online sales are up “extensively” from a year ago. Online sales typically account for about one-tenth of total sales in November, one of the biggest shopping periods of the year, said John Squire, an executive with IBM’s e-commerce marketing unit. That share looks to rise this year. IBM’s Coremetrics predicts online sales will grow about 15 percent this year, compared with growth of a few percentage points for brick-and-mortar stores. Some retailers save their online deals for the first business day of the week following Thanksgiving, now known as Cyber Monday. And Squire predicted that Cyber Monday’s online sales will exceed the total reached on Black Friday by early afternoon. Squire said its partners’ websites hadn’t had major glitches Thursday or Friday. “People keep spending money online, so that’s a great indicator that the sites are running,” he said.

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European Bank Using Emergency Facilities To Tackle ‘Very Dramatic’ Problem

November 24, 2011

BRUSSELS (Ben Deighton) – Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as “very dramatic.” The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as “national central banks in France, in Spain, in Italy,” where Dexia has units. One analyst said the fact Dexia was tapping national central banks’ liquidity via the European Central Bank network showed how bad the situation had become for the lender. “The emergency window of the ECB … is very expensive, so it shows that the liquidity situation is very dramatic,” the analyst said, speaking on condition of anonymity. “At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign,” the analyst said. Dexia and the central banks of France and Belgium both declined to comment. The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg. Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days. ($1 = 0.7490 euros) (Additional reporting by Dan Flynn in Paris; Editing by Luke Baker and Will Waterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Thanksgiving Kicks Off Anxious Holiday Season For Retailers

November 24, 2011

(Phil Wahba) – The holiday shopping season starts in earnest on Thursday, with retailers anxious to see if U.S. consumers are willing to spend despite an endless stream of scary headlines about the fragile economy and their own precarious finances. However, in the eyes of retailers, the shopping period has been churning along for some time as retailers like Wal-Mart Stores Inc and Toys R Us started early by offering layaway programs, and others offering major deals to lure shoppers. These incentives have increased the stakes for retailers, and when Americans are done with their turkey dinners on Thursday, many will be getting a jump-start on ‘Black Friday’, the biggest shopping day of the year, and one that sets the tone for the entire season. “If Thursday and Friday are not very good, chances are it will not pick up going up to Christmas,” said Keith Jelinek, a director at consulting firm AlixPartners’s retail practice. WalMart, Gap Inc’s Old Navy and Sears Holdings’ K-Mart are again open on Thanksgiving Day to get a headstart, while Toys R Us opens Thursday evening. But to narrow the gap in store hours, discounter Target Corp, electronics chain Best Buy and department store chains Macy’s Inc and Kohl’s Corp will open doors at midnight on Thursday. Retailers themselves concede the pressure is on. “At the end of the day, we are trying to respond to what our customers want to do, and they are telling us that’s when they want to shop,” Mike Vitelli, president, Americas and enterprise executive vice president, Best Buy, told Reuters. Others, like J.C. Penney Co Inc are taking their chances and opting to open early Friday morning as they did last year. The National Retail Federation expects sales in November and December to be up 2.8 percent over last year. So retailers see little margin for error in their fight for sales. The battle will also be waged online, where comScore expects sales to be up 15 percent this year. Wal-Mart starts its Black Friday ‘doorbuster’ deals on Thursday at 10 p.m. at its stores. Amazon.com Inc, not to be outdone, will offer its deals online at 9 p.m. But Wal-Mart is also offering 30 percent more deals on Thanksgiving. The knock-down-drag-out fight comes as the rebound in sales cooled in October, when many top chains like Macy’s and Saks reported disappointing sales and shoppers were hit with a steady stream of bad news about the economy. It will be a tougher fight for chains that have struggled of late, like Gap, Penney and electronics giant Best Buy. PriceGrabber.com, a price comparison website, found that searches for electronics in recent days were flat with last year, helped only by a surge in interest in new tablets like Amazon’s Kindle Fire and Barnes & Noble Inc’sNook. The NRF expects 152 million people to hit stores this weekend, up 10.1 percent from last year. But that will be fueled by bargain hunting, with the real test coming after the weekend, as retailers see if shoppers are only willing to hit stores when there are juicer deals on the table. Last year, after a strong Black Friday weekend, shoppers sat on their hands until closer to Christmas – waiting for stores to hand out bigger bargains. “I think as time goes on, you’re going to see a leveling and a softness in the numbers,” said Al Ferrara, director of BDO USA’s national retail practice. (Reporting by Phil Wahba in New York, additional reporting by Dhanya Skariachan; Editing by Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Nearly Half Of All Households Lack Basic Economic Security

November 22, 2011

There are certain basic costs that every household runs up — food costs, medical expenses, utility bills. And almost half of all Americans are in danger of not being able to afford these things . A recent study from the nonprofit Wider Opportunties for Women finds that 45 percent of all Americans — men, women and children — live in households that lack economic security, defined as the ability to pay for basic needs like food, transportation and medical care, while setting aside a modest amount of money for emergency and retirement savings. The WOW report is only the latest indication that for a vast number of people in the U.S., the poor health of the economy is not a distant or abstract concern, but a problem that affects day-to-day decisions about how money can be spent. Thirty-nine percent of all adults in the country, and 55 percent of all children, live in households that lack economic security, the report finds. The problem is worse for women than for men — 74 percent of single mothers are economically insecure, compared with just 49 percent of single fathers — and worse for people of color than for whites, with just 20 percent of white two-worker households below the economic security line, versus 29 percent for blacks and 43 percent for Hispanics. These discrepancies across racial and gender lines are likely related to various wage gaps that put white people, especially white men, at an earnings advantage. In 2010, black men earned only 74.5 percent of a typical white man’s wage , and women earned 78 cents for every dollar earned by men . The unemployment crisis is also hitting men and women differently, with the vast majority of jobs created in the past two years going to male workers . In terms of race, the unemployment rate for blacks nationwide is twice that of whites , and the Hispanic rate is almost half again as high as that of whites. Workers nationwide are also suffering from stagnant wages that, for fully half of the country’s workforce, clock in at less than $27,000 . People’s ability to afford food was recently found to be near a three-year low , and their ability to cover the basic costs of living is currently worse than at any time since the start of 2008 . All of this is taking place against a backdrop of rising economic inequality, as the country’s highest earners continue to draw bigger and bigger paychecks and wealth becomes ever more concentrated among the wealthy.

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U.S. To Explore New Keystone Pipeline Route

November 10, 2011

Federal officials postponed a crucial permitting decision for the proposed Keystone XL oil pipeline Thursday afternoon, issuing plans to consider a new route for the pipeline. The project was proposed by Calgary-based TransCanada to link a vast oil patch in Alberta to refineries in Texas. The additional analysis would not likely be concluded until the early months of 2013. The Obama administration also said it would weigh the impacts of the pipeline on the global climate in making a final decision of whether the pipeline is in the national interest. The delay pushes a decision on the contentious project well beyond the 2012 presidential election in November, allowing President Obama to avoid a politically fractious determination in the midst of his reelection bid. “Since 2008, the Department has been conducting a transparent, thorough and rigorous review of TransCanada’s application for the proposed Keystone XL Pipeline project,” said the State Department in a prepared statement. “As a result of this process, particularly given the concentration of concerns regarding the environmental sensitivities of the current proposed route through the Sand Hills area of Nebraska, the Department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska.” President Obama, in a statement issued by the White House, said he supported the decision to further examine the project. “Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood,” Obama said. “The final decision should be guided by an open, transparent process that is informed by the best available science and the voices of the American people.” Russ Girling, TransCanada’s president and chief executive officer said in an emailed statement that he remained confident that the pipeline would ultimately be approved. “This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed.” But Girling also said today’s announcement could have negative ramifications, especially for oil shoppers and American refiners. “Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end,” said Girling. “If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma — how to get their crude oil to the Gulf Coast. “If Keystone XL dies,” Girling added, “Americans will still wake up the next morning and continue to import 10 million barrels of oil from repressive nations, without the benefit of thousands of jobs and long-term energy security. That would be a tragedy.” The Toronto Star was reporting on Thursday afternoon that the Obama administration had officially notified Canadian officials, who had been ardent supporters of the pipeline, that the decision had been delayed. “While disappointed with the delay, we remain hopeful the project will be decided on its merits and eventually approved,” a spokesman for Canadian Prime Minister Stephen Harper was quoted as saying. “Our government will continue to promote Canada, and the oil sands, as a stable, secure, and ethical source of energy for the world.” Environmental groups had fought an increasingly pitched battle to block the proposed pipeline, which would allow oil producers working in Alberta’s tar sands — a vast, gooey deposit of sand, rock and oil — to access the global oil market by delivering heavy crude to refiners on the Gulf Coast. Critics opposed the project on a number of grounds, including the substantial environmental and climate impacts of the tar sands compared to more conventional sources of oil. They also objected to the proposed route of the pipeline, which would pass through ecologically sensitive areas of the American heartland. The governor of Nebraska had even taken the unusual step of calling a special session of the state legislature to consider new bills that could potentially force a rerouting of the pipeline around that state’s Sandhills region, which sits atop the vast Ogalalla aquifer, a primary source of drinking and agricultural water for much of the American breadbasket. The State Department, meanwhile, had come under intense scrutiny for its handling of the environmental assessment of the project — including what many critics suggested was a cursory examination of alternative routes. The Environmental Protection Agency had panned earlier drafts of that assessment, and environmental groups, citing emails obtained by the group Friends of the Earth , suggested that State staffers had been unduly influenced by TransCanada and oil and gas interests. The move to postpone the decision was welcomed by environmental advocates, particularly those who say the pipeline would animate further development of a singularly polluting and greenhouse gas-intensive oil deposit in Canada. Bill McKibben, the environmental activist who has led two major demonstrations against the Keystone XL pipeline in Washington, D.C., including one in August that resulted in more than 1,000 arrests, called the project “a done deal that came spectacularly undone.” “It’s because people stood up, raised their voices and spoke loudly,” he told The Huffington Post, “and this time, the President responded. TransCanada thought it had already written the script on where it was going to put this pipeline.” Elsewhere, news of a delay in decision making on the pipeline was more cooly received, with some environmental groups calling it a cynical move that ducks their underlying assertion that the pipeline should be rejected outright. “The truth is, the Keystone XL pipeline shouldn’t be built in the Sandhills or anywhere else,” said Noah Greenwald, the endangered species director at the Center for Biological Diversity, in a prepared statement . Greenwald’s group had earlier filed a lawsuit challenging pre-permit construction along the pipeline route in Nebraska. “Tar sands oil is the dirtiest oil on the planet — it pollutes our air, water and land. Global warming demands we move to a clean-energy future now, not after it’s too late. But rather than make the tough choice to reject this pipeline, President Obama has punted.” “The tar sands pipeline project would be a disaster for global warming, the environment and the American economy,” said Sen. Bernie Sanders, the Vermont independent who recently spearheaded a call for the State Department’s inspector general to investigate the agency’s handling of the pipeline permitting decision. The I.G.’s office agreed last week to review the process for potential conflicts of interest. “Clearly, no final decision should be made until that review is completed and the findings are made public,” he added in a prepared statement. “I strongly believe that the more the American people learn about this project, the more they will understand that it would be disastrous for our environment and for our economy. They will want the president to keep his promise that the United States will lead the world in combating global warming by rejecting this pipeline.” Proponents of the project, meanwhile, argued that the pipeline represented thousands of American jobs and the potential to draw oil from a secure and friendly source — although those claims have been shown to be somewhat exaggerated . Republicans in Congress, who had expressed strong support for the pipeline project, slammed the decision as politically motivated. “More than 20,000 new American jobs have just been sacrificed in the name of political expediency,” House Speaker John Boehner (R-Ohio) said in a statement posted to his website. “The current project has already been deemed environmentally sound, and calling for a new route is nothing but a thinly-veiled attempt to avoid upsetting the president’s political base before the election.” U.S. Chamber of Commerce president and CEO Thomas J. Donohue echoed Boehner’s disappointment, saying in a statement, “I would like to express our strong disappointment with today’s news that the Administration intends to further delay a decision on the Keystone XL Pipeline. In spite of extensive and positive studies from the State Department, this is clearly a political decision and everyone knows it. Unfortunately, it will immediately cost more than 20,000 Americans an opportunity to get a job working on the pipeline and hundreds of thousands more jobs in the future.” Earlier in the week, TransCanada spokesman James Millar told The Huffington Post that the company had already invested about $1.7 billion in project development costs on the $7 billion Keystone XL pipeline. The company has also signed contracts, Millar said, to move some 975,000 barrels of oil per day on the Keystone system — which includes an existing leg that links the tar sands to Midwestern refineries. That portion of the system, which went into operation in June of last year, experienced more than a dozen leaks in its first year of operation, energizing opponents of the expansion project to the Gulf Coast. Millar said the contracts with oil shippers entail “a promise made by TransCanada to deliver contracted volumes by a certain date” and that there would be “significant penalties” to the company if those dates are missed. “These costs relate to materials that take time to purchase and construct, commitments to power companies, easements payments, regulatory costs, maintaining staff and equipment, financing costs to borrow funds and taxes,” Millar said. “Each day the project is delayed will cost TransCanada $1 million. If delays extend beyond the end of 2011, these costs will increase.” Just what TransCanada might do now is an open question. Some observers have speculated that the company has a legitimate legal case to bring — either against the state of Nebraska or even the State Department — given the substantial amount of money it has already sunk into the project, including purchases of miles of steel pipeline and lease deals brokered with landowners up and down the pipeline’s path. In a phone call with reporters, Kerri-Ann Jones, the assistant secretary in the State Department’s Bureau of Oceans and International Environmental and Scientific Affairs, which is overseeing the permitting process, emphasized that the agency was only looking at new routes to avoid the sensitive Sandhills of Nebraska, and that such routes had not previously been considered as part of earlier environmental reviews. The route through five other states is not under review. She also said that her agency would be carefully weighing the wide range of job estimates associated with Keystone XL’s approval. “We’re trying to conduct the analysis that gets us to a number that we know is accurate,” she said. Environmental groups, meanwhile, were promising to continue the fight. Erich Pica, the president of Friends of the Earth, said in an emailed statement, “Make no mistake: this fight is not over. Ultimately, this dangerous pipeline must not be built. As long as TransCanada and its army of oil lobbyists seek approval, we will challenge them at every turn. And we will continue to hold President Obama accountable to his campaign promises to curb lobbyist influence and provide bold leadership on climate change. Given the International Energy Agency’s warning this week that unless we change course climate change will become irreversible within five years, bold leadership is needed more urgently than ever. President Obama can no longer afford to dither, and we can no longer afford to let him do so.”

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TV Retailers Plan To Be ‘Aggressive’ With Promotions On Black Friday

November 6, 2011

NEW YORK (Reuters) – It may not be a blood bath, but it will definitely be a dogfight. The television aisles of top U.S. retailers are poised for a hard-fought contest this holiday season as chains take little chances with budget-conscious shoppers. Unlike last year when some such as Best Buy held the line on discounts and promoted only high-end TVs, many retailers told Reuters this past week that they plan to do whatever it takes to get the customer through the door. For the consumer, expect to see price cuts of up to 40 percent from a year ago on big-screen TVs, plus free shipping deals and even a 36-month financing option, in the run-up to ”Black Friday” on Nov. 25, the unofficial start of the holiday selling season. “As we look at the holiday season, we are going to play offense,” Hhgregg Inc Chief Executive Officer Dennis May told Reuters in an interview last week. “We are going to be very promotional. We are going to be aggressive.” U.S. shoppers have held off on buying televisions and other nonessential items in the anemic economy. But the TV market is also a victim of a lackluster product cycle. Early last week, Japanese manufacturer Sony Corp warned investors that its TV division is headed for its eighth consecutive annual loss, while rival Panasonic Corp forecast its biggest annual net loss in a decade. “My outlook is not any different from Panasonic and Sony,” Anthony Chukumba, an analyst with BB&T Capital Markets said. ”We have a lull right now in terms of TV demand; part of it is macro-driven, part of it is product cycle-driven. There is just not a lot of innovation out there. “And a couple of things that may in fact just have been counted on to drive incremental demand like 3-D and Internet-connected smart TVs are just not working.” Against this backdrop, global demand for televisions is expected to fall about 1 percent in the fourth quarter, according to Paul Gagnon, director of North American TV research for consulting firm Display Search. This will fuel the intense fight for shoppers as they look for the biggest bang for their buck during the holiday season. “It is starting even earlier than usual. You are seeing sharp promotions. You are seeing Wal-Mart out there with a TV this weekend and Amazon.com with special deals. It is upping the overall intensity,” Bernstein analyst Colin McGranahan said. “It is going to be a dogfight. Everyone’s going to be fighting because demand is not great,” McGranahan said. Best Buy has already said it would offer free shipping on online orders from Nov. 1 through Dec. 27. On TVs costing more than $899, the world’s largest consumer electronics chain is offering 36-month financing, a 60-day price guarantee and a promise to even pick up the TV from the customer’s house if the model was not what he or she really wanted. “Given economic realities, consumers are definitely more discerning this holiday season, definitely looking for the best value for their money,” Mike Mohan, senior vice president and general manager of Home Theater at Best Buy, said. FOCUS IS ON BIGGER SCREENS Industry watchers expect retailers to focus less on promoting special features like 3-D technology, which can be difficult for the average consumer to understand. “Today’s TVs have so many capabilities such as Smart TV, Internet and 3-D technology and there are also a lot of confusing terms such as screen refresh rate and HDMI Inputs. Consumers can become overwhelmed and have difficulty understanding what television will meet their needs,” Jim Hilson, BJ’s Wholesale vice president of merchandising said. Instead, they expect the focus to be on screen size, stressing the increased affordability of big screens. “In the U.S. which is one of the more mature markets around the world for TVs, one that has already largely gone through the flat-panel TV transition, mostly what people are out there doing right now is updating the size,” Gagnon said. Hhgregg said it is carrying more giant TVs with 60-inch and above screens, and reducing its inventory of 32- and 40-inch TVs this holiday season. “I can get a 60-inch TV for what I used to pay for a 40-inch TV,” Hhgregg CEO May said. “The screen size the consumer has always wanted has become affordable to them now.” Due to their focus on larger sizes, retailers including Best Buy, BJ’s, Sam’s Club and Hhgregg told Reuters that they will not be reducing their shelf space for televisions despite the uncertainty in demand. “To some degree, the 42 (inch) is the new 32. The 55 is the new 42,” said Jason Shaw, vice president of merchandising for electronics at Wal-Mart’s Sam’s Club warehouse store operation. ”They are getting more for their money than they have ever gotten before.” (Reporting by Dhanya Skariachan in New York, editing by Bernard Orr and Maureen Bavdek) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Apple Slams iPhone Rumors

October 19, 2011

By Poornima Gupta and Edwin Chan SAN FRANCISCO (Reuters) – Apple Inc stunned Wall Street by reporting results that missed expectations for the first time in years, blaming rumors of the new iPhone for hurting demand in the September quarter. Shares of Apple fell 7 percent in extended trading on Tuesday, wiping some $27 billion off the value of the world’s largest technology company. It was Apple’s first quarterly earnings under Chief Executive Tim Cook, who took over from Steve Jobs in August at a critical juncture for the company. Apple is battling Google Inc in the mobile arena, as well as other challengers such as Samsung and Amazon.com Inc. “Investors are going to start to speculate that there is change under way now that Jobs is gone, and that there’s trouble ahead. We don’t share that point,” said Channing Smith, co-manager at Capital Advisors Growth Fund, which holds Apple shares. “The iPhone is where the weakness was and it’s an explainable one. The strong demand for the iPhone 4S set up strong demand for the holiday season.” Apple said it sold 17.07 million iPhones in its fiscal fourth quarter ended September 24 — well short of the roughly 20 million forecast by analysts. The iPhone is Apple’s flagship product, yielding some 40 percent of annual sales. Revenue rose 39 percent to $28.27 billion, lower than the average analyst estimate of $29.69 billion, according to Thomson Reuters I/B/E/S. It was the first time Apple missed revenue expectations since the fiscal fourth quarter of 2008. Net profit was $6.62 billion, or $7.05 a share. That fell shy of expectations for earnings of $7.39 per share. The last time Apple missed EPS estimates was in the first quarter of 2001, according to Thomson Reuters I/B/E/S. “Expectations for this company were red-hot, that is why we downgraded it,” said BGC Partners analyst Colin Gillis, who lowered his rating on the shares days before. “The reality is their business is not an annuity. They have to sell their quarter’s worth of revenue every 90 days.” “They had a big upgrade cycle with the iPhone, the numbers came in weak. They need to set records every time they report to keep up the momentum.” Apple executives said consumers had postponed purchase decisions until the crucial holiday quarter because of speculation that a new phone was on the way. Apple unveiled the iPhone 4S in early October, and it hit stores last Friday. Apple — which typically offers projections so conservative they are disregarded — on Tuesday forecast December quarter revenue and earnings above Wall Street’s estimates. “There’s no question this was a transition quarter ahead of the 4S,” said WP Stewart portfolio manager Michael Walker. “With the early pace of iPhone 4S sales, my guess is that disappointment is relatively short-lived.” “I’m not going to call Q3 a throwaway quarter for iPhones, but it was definitely a transition.” A PERIOD OF TRANSITION Cook started his first earnings conference call as CEO by honoring Jobs, who died on October 5 after a years-long battle against pancreatic cancer. He said he was “very confident” of posting record iPhone sales in the current quarter. The company moved 4 million iPhone 4S units — more than double its predecessor — in its first three days, despite lukewarm reviews. Another area for optimism for Apple was iPads. The company moved 11.12 million units during the quarter despite attempts by various manufacturers, including Samsung, to capture a slice of the tablet market. Now Amazon.com has also entered the fray with its Kindle Fire tablet. Acknowledging the competition, Cook said it was “reasonable to say” none of Apple’s rivals have gained any traction, and he expected the tablet market to be bigger than personal computer in the long term. Cook also told analysts that Greater China — mainland China, Hong Kong and Taiwan — was becoming an all-important region for Apple as it has “quickly become No. 2 on our list of top revenue countries very, very quickly.” Revenue from the region increased four-fold to $4.5 billion during the quarter. The new CEO fielded questions on Apple’s cash pile of over $81 billion, saying the money provided flexibility for acquisitions and investing in the supply chain. “That said, I’m not religious about holding cash or not holding it,” he added. “It’s a topic for the board on an ongoing basis.” Apple’s Mac sales saw a large spike during the September quarter but it failed to lift earnings. Apple sold 4.89 million Macs, up 27 percent from a year ago. Gross margin came to 40.3 percent — a tad higher than Wall Street’s forecast of 39.74 percent. International sales accounted for 63 percent of the quarter’s revenue. “We expected iPhone sales to decline in the September quarter from the June quarter as a result of the announcements we made … in June, where we said we would launch iOS 5 and iCloud in fall,” Peter Oppenheimer, Chief Financial Officer, said in an interview with Reuters. “That basically created the rumor of the day across the September quarter, especially at the end.” Apple said it expected December quarter earnings of $9.30 a share on revenue of about $37 billion. Wall Street is projecting $9.01 for the period, but it was unclear if that was comparable. “What is interesting is the guidance is less conservative than usual for their next quarter. It’s a timing issue, where it looks like the business that people thought would be in the September quarter is occurring in the December quarter,” said Sterne Agee analyst Shaw Wu. Apple shares fell to $394.78 in after-hours trading, after closing at $422.24 on the Nasdaq. (Additional reporting by Edwin Chan in Los Angeles, Liana Baker and Jennifer Saba in New York; Editing by Gary Hill, Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions

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Analysis: Wary retailers play safe with holiday hiring

September 16, 2011

By Dhanya Skariachan NEW YORK (Reuters) – People looking for a temporary retail job this holiday season will have better luck at dollar stores and discounters than at department stores and middle market apparel chains, as the anemic U.S. economy keeps other retailers cautious. Discounter Target Corp , which hired more than 92,000 seasonal workers last year, and home shopping channel QVC Inc are among the few that plan to hire more temporary workers. “The biggest area (of hiring) will be in the discounters, who will have new shoppers in their stores who are moving down from the middle market. The upper end seems to be fairly stable, but it is the middle end of the spectrum that I think will be very minimalist in their hiring,” said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas. Chains including J.C. Penney , Kohl’s , GameStop , Toys R Us and Crate & Barrel told Reuters they plan to hire roughly the same number of seasonal workers as last year. “They are being very conservative because they just don’t know what to expect,” Elizabeth Moughan, senior manager of retail and hospitality marketing at Kronos, said. “There was a little bit of false optimism for a while.” But that was earlier this year, before fear of the slowing U.S. economy took hold. Consumer spending accounts for almost 70 percent of the economy. “If you had asked me 4-5 months ago, I think they were much more optimistic,” Challenger said, referring to retailers. “We have now had consecutive quarters where the GDP has been revised downwards.” A quarter of the retailers surveyed by the Hay Group said they were hiring fewer seasonal workers this year, while more than two-thirds see seasonal hiring at the same level as last year. Only 10 percent plan to hire more. The survey included responses from chains including Charlotte Russe, Coldwater Creek , DSW , Macy’s , Michael’s Stores and Pier 1 . For a graphic on holiday hiring, click http://r.reuters.com/nex73s More than a quarter of Americans surveyed by America’s Research Group said they planned to spend less this holiday season. In addition to hard-to-please shoppers, retailers face rising costs of cotton and other raw materials, forcing them to find other ways to save money. “They are … looking to sell a lot more product with less promotion and probably with less inventory, which means less product in the store, which means you need less people to help push the product through the store,” Craig Rowley, vice president of Hay Group’s retail practice, said. A bigger push to sell online is another reason why retailers are seeking fewer temporary workers in stores during the biggest selling season of the year, retail experts said. “E-commerce is rocking and rolling, and more and more customers are willing to go online to do their shopping, and more and more retailers are creating a very effective ecommerce strategy,” Rowley said. “That is taking some of the sales out of the stores.” Nineteen percent of chains said they will hire fewer seasonal staffers in stores this year due to the increase in their online sales, Hay Group said. This decline may be offset by the 19 percent that say they will hire more seasonal workers in distribution centers to support the uptick in online orders. LAST MINUTE HIRING Many chains will delay holiday hiring because they can afford to do it. “Retailers will have the luxury of being very choosy about who they hire because there will be many who want those jobs,” Challenger said. “Many retailers wait until they see people in their stores.” “In the past, people would double their staff levels for holiday shopping. We are just not seeing them do that,” said Becca Dernberger, vice-president of Manpower’s Northeast Division. “There is a wait and see approach.” Merchants agreed. “Over the last two years, we have hired seasonal workers a bit later than in previous years,” Melissa Childers, manager of corporate recruitment at Crate & Barrel, said. Merchants have also becoming better at finding other ways to get work done. “Retailers manage not just the headcount but the hours that they use,” Daniel Butler with the National Retail Federation said, adding that many chains now have “floater staff.” “From time to time, they are not on their regular staff, they don’t show up on the regular schedules but they come and work holidays and big promotions and help cover vacations, kind of on an on-call basis,” Butler said. (Reporting by Dhanya Skariachan, Phil Wahba, Liana Baker in New York and Jessica Wohl in Chicago; Editing by Richard Chang)

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Rich Nadworny: Has Ben & Jerry’s Lost Its Way?

September 9, 2011

Ben & Jerry’s launched a new ice cream this week, ” Shweddy Balls ,” in honor of Alec Baldwin’s old Saturday Night Live skit. In an instant, Twitter was abuzz. Shweddy Balls and Ben & Jerry’s both zoomed to the top of the trending list. Mashable wrote about it , as did a number of other media outlets. However, the new ice creams looks like another indicator that the great Ben & Jerry’s brand has lost their way. The brand has always gone its own way. From the idea of putting lots of things in ice cream to committing itself to social justice, Ben & Jerry’s has always stood out. It’s done so by taking stands that are true to Ben Cohen and Jerry Greenfield’s philosophy, but it’s always used a large dose of humor and word play. Once it launched Cherry Garcia, it also embraced an alternative, hippy style that was also true to the Vermont brand. It followed that with flavors like Phish Food, but also Chubby Hubby, One Sweet Whirled, Karamel Sutra and Half Baked, to name a few. Clever names, names that made you stop, think and laugh. This year, however, we’re seeing names like ” Clusterfluff ” and “Shweddy Balls.” To which I can only respond “WTF?” I wonder if Ben & Jerry’s is losing market share to younger college audiences and 20 somethings. Clearly, that’s where the brand is headed, with names like these. They’re certainly not targeting the people who buy Chubby Hubby. If so, that’s a major shift for the brand. What competition are they afraid of? Maybe they’ve just run out of creativity. For the past few years, it seems like half the flavors at the scoop shop have chocolate in their names. There’s also been a lot of focus on celebrity co-branding with Colbert and Jimmy Fallon. And now Alec Baldwin. Clearly, though, Shweddy Balls and Clusterfluff show that Ben & Jerry’s have crossed an invisible brand line. Branding “expert” Allen Adamson from the venerable agency Landor Associates explains what’s happening in an AP article: ‘You don’t get noticed today without taking some risks. If you do something that offends no one, you won’t get noticed,’ he said.” In one sentence, Landor redefined branding as offending someone. That’s not the Ben & Jerry’s brand. They’ve never been offensive. They’ve stood for what they believe, yes, even when it hasn’t been popular. They’ve been true to who they are, but always done so with a twinkle in their eye. But, offensive, never. I admit, as a Vermonter, I’m overly sensitive to our Vermont brands. Maybe it’s because we don’t have so many. In the last year, we’ve seen our beloved Magic Hat forced to sell to a beer distributor and watched the exodus of key people who made the brand what it is today. I remember going to the original Ben & Jerry’s in the old gas station across from the park and listening to Don Rose (the tallest guy in our shul, no less) playing the piano. I saw first hand as they expanded to Europe. I still follow what Cohen and Greenfield do to support sustainability and local businesses. And I’ve always enjoyed eating and laughing at the crazy flavors, even Sweet Potato Pie. But Shweddy Balls or Clusterfluff? No thanks. I’m sure they’ll be successful from a marketing standpoint, but from a brand standpoint they are way off. It’s certainly not anything I’d bring home to the kids. As a final nail in the coffin, there’s a quote from the AP article “The company’s not worried about offending people with the name,spokesman Sean Greenwood said. ‘We’re the caring company,’ Greenwood said Thursday.” If you have to say it, it’s not true.

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Black Communities Struggle With Mass Joblessness

July 8, 2011

Friday morning Robert Drain got up, got dressed, turned on his computer, and then flipped on the television, tuning it to CNN. The news was awful: Once again, the unemployment rate was climbing. For Drain, 62, the news about the labor market carried special resonance: looking for a job has become his job. Moreover, he lives in a predominantly African American community in Nashville known as Bordeaux. Though much of the United States continues to suffer the strains of a jobless rate that reached 9.2 percent in June, African Americans have long confronted unemployment reaching to near-Depression levels — 16.2 percent last month. Bordeaux has long been the sort of community that African Americans have associated with middle class comforts, a neighborhood in which, in previous generations, black business owners, doctors and academics purchased and built homes — long before anyone ever heard the term sub-prime mortgage. But today in Bordeaux, while there are a number of comfortable retirees, there are also a lot of people just like Drain: people looking for work. In this community, Friday’s disappointing jobs report appeared to change little if anything, merely affirming an unmistakeable reality: a chronic shortage of jobs. “My friends, my neighbors, I’d say most of us are unemployed, deeply under-employed or expecting to be fired,” Drain said, “and by that I do mean laid off, any day. That’s our reality.” In Bordeaux, plenty of streets have mid-sized cars parked in driveways. Meticulously trimmed yards convey the impression that much is ordinary. Still, it’s not hard to spot a roadside sign planted by someone who claims their business can stop a pending foreclosure. The community also makes up the majority of a city council district where 394 households have requested $156,416 in utility assistance. That’s more than any other area of the city, according to local government data. All but one of the programs is reserved for people who have experienced an involuntary change in income, such as a job loss. Local officials are worried because the federal community services block grant program – which funds the utility, mortgage and rental assistance programs – is facing a 50 percent cut, depending on the outcome of budget talks. Back in Bordeaux, the lines to use public computers at the community library are long. There are a lot of people using them to look for jobs. Not too far away, at the C.E. McGruder Community Resource Center, demand for job search services is also intense. And, since the recession began, the number of men applying for food stamp benefits has come to nearly match the number of women. “Traditionally, we’ve had a lot of single moms who come in looking for that sort of help,” said Tracye Henderson, director of the center. While Henderson was out running errands on Friday, she was approached by a man. The man, in his 40s, had brought a relative into the center a year or so ago. Now, he was wondering if the community center still helped people apply for food stamps. He too had just lost his job. While signs of struggle aren’t hard to find in and around Bordeaux, many of the businesses that operated in a nearby historically black business district before the recession are still there, said Sharon Hurt, executive director of the Jefferson Street United Merchants Partnership. Today on Jefferson, most of the businesses are hanging on because they are accustomed to operating on shoe-string budgets or they are run by long-time business people who know how to handle an economic rough patch, Hurt said. Smith Funeral Home is still there, and the owner is leasing several of his nearby properties to other businesses. Nationwide Insurance has a storefront along with Dollar General, and at least two local attorney groups. The Garden Brunch Cafe has found its footing by opening its doors to weekend customers and staying closed much of the week. It isn’t easy for the businesses to thrive because too many of the homes nearby are vacant, Hurt said. However, Hurt’s organization has been able to place about 200 people in jobs, helping to build the city’s new and massive convention center. And, it has received federal funding that will allow the organization to rehab and sell about 40 area homes. The jobs and the homes should together do a lot for the community, she said. In 2008, the day after Obama was elected president, a parade formed on Jefferson Street. There is a trio of historically-black colleges located there. But it wasn’t just college students who came to Jefferson Street to celebrate the election of the nation’s first black president. There was music, there were convertible convoys, there were people with noisemakers and a lot to say about what was possible. There were people talking about their hopes for their children’s futures. “Yes, I do remain optimistic, in spite of it all because I know what is possible and because I believe in God,” Hurt said. “I know that miracles can happen and I know how many people are committed to making this community work.” Hurt isn’t alone. A Pew Center poll released in late June found that 15 percent of African Americans are expecting their financial situation to improve “a lot” over the next year, while just 5 percent of white Americans said the same. Another 48 percent of white Americans said their economic situation would improve “some,” compared to 54 percent of blacks. On Friday, Drain was in Hurt’s office hoping she might know someone who works for a company where he has just applied for a job. Hurt didn’t have an inside connection. Before the downturn, Drain worked as a teacher, then ran a thriving construction business and even helped a friend flip a series of homes. He can remember when the real estate agents attached to those flips used to stop by and harass him about wrapping up construction. The agents were always sure that they were on the verge of making a sale. By the spring of 2008, Drain’s bank told him it could no longer lend him most of the costs associated with his next project. This time, the bank said it could only give him 40 percent of the cost of the project, enough to get started but not finish. A few months later, when Drain drove by one of his earlier flips and saw that it was still on the market, he knew he was in trouble. After a year of looking for work and spending some time living in an Atlanta homeless shelter, Drain found a job managing a construction crew in Nashville, doing mostly stimulus-funded work. Drain and his crew worked retrofitting homes with energy saving widows, heating and cooling systems and rehabbing the houses of low-income owners who could not afford critical repairs. When Drain worked in other sections of Nashville, he heard terrible stories from homeowners who lost jobs. But in North Nashville, closer to home, Drain heard story after story about people who lost jobs and then developed serious health problems. “I think when you are already living with high blood pressure or have been told you are darn near diabetic, being out of a job can just put you over the top,” Drain said. “Stress isn’t any body’s friend.” Then, in March, Drain’s own layoff notice came.

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Walmart Supreme Court Ruling Being Used By Wall Street

July 8, 2011

WILMINGTON (Tom Hals) – The U.S. Supreme Court’s dismissal of a massive sex-bias case against Wal-Mart Stores Inc may have handed Wall Street a new weapon in its battle against angry investors who lost billions on securitized home loans. At first glance, last month’s ruling in the Wal-Mart case may seem far removed from lawsuits over complex mortgage investments blamed for helping to trigger the global financial crisis in 2008. But attorneys are seizing on the Supreme Court decision as they fight to prevent pension fund investors from banding together as a class to pursue claims they were misled about bonds built from flimsy mortgages. In the Wal-Mart case, the Supreme Court on June 20 found that 1 million current and former female employees from 3,400 of the retailer’s stores had too little in common to form a class. The court’s language about issues of a “common question” could, according to attorneys arguing for the banks, also bar mortgage bond investors from suing en masse. Lawyers defending a unit of Washington Mutual argue that the “commonality” that was missing among the female Wal-Mart workers is also missing among investors in securitized mortgages, even when they invested in the same pool of loans. They made the argument in court papers filed on June 22 arguing against certifying a class of investor plaintiffs suing Washington Mutual. The case is pending in U.S. District Court in Seattle. If successful, the defense tactic could prevent investors in mortgage-backed securities from pooling their resources and bringing a case as a group. That could make it more difficult for them to pursue cases against big issuers of mortgage bonds, such as Bank of America and JPMorgan Chase & Co. The Washington Mutual legal team referred questions to JPMorgan, which bought the bank in 2008. JPMorgan did not immediately return a call for comment on Friday. CLASS SYSTEM The Wal-Mart case was closely watched and the ruling is expected to make it tougher to bring class-action cases, which are often used in drug and product liability lawsuits and have led to mammoth settlements with consumers or shareholders. The Supreme Court decision steers courts away from certifying broad classes of plaintiffs while leaving the door open to breaking out sub-classes later, said James Cox, a professor at Duke University Law School. In the mortgage market, banks securitized home loans by collecting large pools of mortgages and placing them with a trust. The trust then issued bonds cut into “tranches,” each carrying a different credit rating. The higher-rated tranches were paid first from the money flowing from homeowners. Courts already have denied class status to investors who sued on behalf of all others who bought bonds issued by different trusts that were set up by a particular bank or mortgage company, such as Countrywide Financial. The Supreme Court’s Wal-Mart decision may help narrow the class scope further, separating tranches within a particular loan pool trust. In their court papers, Washington Mutual lawyers cite the Wal-Mart decision for their argument that each tranche of the mortgage-backed security needs to be analyzed separately to determine which loans back which tranche, and whether those loans were properly written. “Even if plaintiffs seek to ask the same question across all loan groups and all securities, unless they can be assured of getting the same answer, no class can be certified,” the court filing says. The Wal-Mart ruling is the first case cited in Washington Mutual’s argument. The company’s lawyers also cite the decision to make their point that each tranche must be evaluated separately, not lumped together merely because they have common legal claims, according to the court papers. Thomas Hatch, an attorney who has brought mortgage-backed securities cases but is not involved in the Washington Mutual lawsuit, said courts are right to narrow classes to a single trust, but he disagreed with cutting to the tranche level. “The defendants are wrong in claiming you have to be in the same tranche to be in the same class,” said Hatch, because those various slices of the bond rely on the same offering document. “It isn’t tranche specific, it is trust specific.” The Seattle federal court will take up the Washington Mutual class certification issue on July 27. The case is In re Washington Mutual Mortgage Backed Securities Litigation; U.S. District Court, Western District of Washington, No. 09-00037 (Editing by Martha Graybow, Gary Hill) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Iran Condemns Decision By Consumer Nations To Tap Oil Reserves

June 25, 2011

TEHRAN – Iran condemned on Saturday a decision by oil consumer nations to release strategic crude stocks as politically motivated interference in the market that would not have a sustained impact on prices. “The measure by the International Energy Agency in consuming their oil stockpile is meddling in the natural oil market trend and the drop in oil prices will not be sustainable,” Iran’s OPEC governor Mohammad Ali Khatibi was quoted as saying by the Oil Ministry website SHANA. The 28-member IEA said on Thursday it would release 60 million barrels a day over an initial 30 days to fill the gap created by the disruption to Libya’s output. Earlier this month, OPEC failed to reach consensus to increase production, which consumer countries wanted and leading exporter Saudi Arabia had pushed for, but which other producers, including Iran, opposed. After the OPEC meeting, Saudi Arabia said it would unilaterally increase output to meet the needs of the market. Iran said the move was politically motivated as Saudi Arabia was under western pressure. “After the United States and Europe failed to raise the organization’s output in the recent OPEC meeting, they used their utmost efforts to lower the global oil price. The consumption of stocks by the IEA to compensate for the oil shortage will push down prices in an artificial way,” Khatibi said. Khatibi reiterated Iran’s hawkish position about the current situation of the market. “The international oil market is not facing any shortage and supply and demand are balanced and any measure to increase output is a political act and maneuver,” said Khatibi. “The Americans’ meddling in the oil market and the consequent drop in its price is an attempt to influence the outcome of the presidential election next year ,” Khatibi said. (Reporting by Hashem Kalantari; Writing by Ramin Mostafavi; Editing by Sugita Katyal and Toby Chopra) Copyright 2011 Thomson Reuters. Click for Restrictions .

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