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Apartment Inv. and Manag. Company completes a series of large …

by on May 23, 2011

Apartment Investment and Management Company, AIV has completed a series of financing transactions over the last six months that repaid 19 non-recourse property loans scheduled to mature between 2012 and 2016 with …

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Apartment Inv. and Manag. Company completes a series of large …

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10 Fastest Growing U.S. Industries

by The Huffington Post on May 18, 2011

Huffington Post…

Over the course of the recession, major companies have failed, entire industries have withered. But at least a few have not only survived, but grown. IBISWorld’s recently released report, ” Top 10 Fastest Growing Industries ,” delves deeper into the trends discussed in last month’s report on dying industries . Except this time, their focusing on the good instead of the bad. Dying telecommunications and newspaper industries have made way for other companies based around internet and technology. No one’s revenue growth comes even close to that of voice over Internet protocol (VoIP) providers, like Skype, as the entire industry’s revenue grew by 194 percent in the las tyear. That could help explain Microsoft’s surprising decision to purchase the company for $8.5 billion earlier this month. Growing environmental concerns have helped companies focusing on alternative energy, specifically wind power, which has grown 16.9 percent over the last decade. And if there’s any industry that’s benefited from the collective tightening of corporations, it’s third-party administrators and insurance claims adjusters, both of which help clients increase efficiency and cut costs. Below are the the top ten fastest growing industries in the U.S. based on percentage increase in revenue:

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10 Fastest Growing U.S. Industries

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Healthcare Costs Double In Less Than A Decade

May 16, 2011

U.S. healthcare is so expensive that records are broken even when cost increases slow. According to a new report by Milliman , a global consulting and actuarial firm, the total cost of healthcare for the average family of four, if covered by a preferred provider organization, is now a now a record $19,393. That might be only 7.3 percent higher than last year’s average cost of $18.074, which is the smallest year-over-year increase in almost a decade. But it’s also the highest year-over-year increase in total dollars spent per family at $1,319. Trends over the last decade more completely illustrate the toll taken on the average American by rising healthcare costs. “In 2002, American families had healthcare costs of $9,235, and those costs have now doubled in fewer than nine years,” said Lorraine Mayne, Milliman principal and consulting actuary, in a press release. “As costs continue to grow — and even as the cost trend decelerates — the total cost of care for American families constitutes a larger and larger portion of the household budget.” Of that $1,319 increase, employers were paid for 48.6 percent of the increase, while the additional 51.6 percent was the responsibility of employees. That’s only slightly different from trends of the last five years. Over that period, employers have absorbed $3,023 in additional healthcare costs, employees themselves absorbing only slightly less, at $2,988. Take away costs paid by employers, and the employee’s share of costs has still doubled. In 2010, the average employee paid $8,008 for his family’s healthcare, up from $3,634 in 2002.

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Andrew Ruben: The Socially Conscious Business: How to Balance Profit and Mission?

May 2, 2011

Blue State Coffee has just reached a milestone: we’ve now given away over $250,000 to local non-profit organizations selected by our customers. When we started the business five years ago, we never imagined that we would come this far. We’ve learned a number of lessons along the way, and I provide them here to help aspiring entrepreneurs learn from our experience. Starting a business is hard; starting a socially conscious business is harder. Because a socially conscious company incorporates its values into its business practices, it is never just about profit. But profit necessarily comes first: if a socially conscious business isn’t viable, it can’t do any good for anyone. How, then, does the business balance its dual obligations to profit and to mission? First, don’t neglect the nuts and bolts. Although it can be tempting for socially conscious entrepreneurs to devote all of their time to the marketing element, it is equally important to devote time to the numbers — projecting revenues, anticipating costs, and writing a rock-solid business plan. Make sure to consider the most important question: how will this business make money? The answer cannot be passing on the cost of the social commitment to consumers: as Green Works has learned, many customers will not pay a premium for environmental sustainable cleaning products. Socially conscious businesses, therefore, must be more efficient than most. Second, define whom and how the business will help. No business can solve all problems for all people: the charitable component must be targeted. Existing businesses can provide a model for yours: Working Assets and Blue State Coffee donate a percentage of sales to non-profits voted on by customers; Tom’s Shoes and Two Degrees donate one pair of shoes or one nutritional pack, respectively, for each customer purchase; Give Something Back and Stonyfield Farm donate a fixed percentage of after-tax profits. Limiting the business’ social mission will allow you to anticipate the cost of your commitments throughout the year. To that end, I recommend that new businesses donate a percentage of sales, not profits, since start-ups often don’t have profits in their first few years. Third, profit and mission can be aligned. Cause-based marketing — communicating your mission to a base of customers who care — can differentiate your business from its competitors and drive sales above what they otherwise would be. Certain certifications — the Certified B Corporation and 1% for the Planet , for example — can lend legitimacy to your business as socially conscious. Even if you forgo formal certifications, make sure your customers know about your charitable commitments. This isn’t bragging; it’s demonstrating that business can be a force for good. Along with helping other people, you’ll discover that running a socially conscious business can be enormously rewarding, personally. The most gratifying moments over the last few years were not meeting sales projections, but handing donations to thankful leaders of non-profit organizations. Those moments alone have made all of the work, and all of the mistakes, meaningful.

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World Bank, I.M.F. Unsure Of Solution To Middle East Inequality

April 15, 2011

WASHINGTON — The World Bank once hailed Tunisia’s economic reforms, noting the country’s increasing prosperity over the last decade. Officials now describe the country as a cautionary tale. By focusing primarily on the country’s growth, the World Bank and other international bodies failed to notice widening inequalities. Now, in the wake of a revolution still shaking the region, the World Bank says Tunisia can serve as a model for a revised approach

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Wall Street’s Next Thundering Herd

April 10, 2011

The next thundering herd on Wall Street may be the ranks of low-cost portfolio managers such as MarketRiders and Folio Investing, which cater to self-directed investors like Cohen. Sites that sell prepackaged portfolios have attracted more than $3 billion in assets over the last three years as more investors leave their full-service brokers.

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Max Fraad Wolff: Suffer the Young

April 8, 2011

Two years into the official recovery, some things about the great recession are well known. Many other vital facts and contours are only beginning to emerge. A very distressing, on-going feature of the downturn is the disproportional havoc it is wreaking on the young. You have heard the last few years called a mancession. The disproportionate impact on male workers from declines in construction and manufacturing are well known. Less well known is that this recession continues to debilitate younger Americans disproportionally. America’s future continues to struggle. People under 35 years old are not getting the new jobs we create. Employment, home ownership, and wage increases are bypassing younger Americans. As state and local budgets are cut, education and services for the young are contracting especially sharply. Teachers and education workers are being let go. Head Start, supplemental nutrition programs and educational grants are being cut. Thus, we are likely to see younger Americans risk falling behind past generations and competitors in other nations. Real solutions will require us to get serious about the economic conditions of young people and stop simply evoking concern as an applause line. Home ownership among young Americans has contracted by a jaw dropping 10% over the last few years. The US Census tells us that home ownership rates among those under 35 have fallen from 43% in 2005 to 39% at the end of 2010. These rates continue to fall as this goes to press. Tighter credit standards, weak labor markets and rising down payment requirements all contribute. Younger households continue to be hard hit by foreclosure. Fewer young people can afford homes and losses of homes continue. Young families and couples have are missing the earnings, savings and credit scores required to form households and buy homes. This is also a contributor to the continued weakness in housing markets. Figure 1. Source US Census Housing Vacancies and Home Ownership (CPS/HPS) The younger you are in America the more likely you are to be poor. This has long been true, but has become pronounced across the great recession. In the years 2008 and 2009 we saw large increases in poverty nationally and particularly for the young. In 2008 14million Americans under 18, 19%, lived in poverty. By the close of 2009 we had 15.5million Americans under 18 living in poverty, 21%. Since the recession began, people under 18 years old have poverty rates 45% higher than the general US population. 6.3% lived of all Americans lived on less than 50% of the US poverty income level in 2009. 10.4% of Americans 18-24 lived on less than half of US poverty income in 2009. Poverty and severe poverty are concentrated among younger Americans. There is little doubt that youth centric poverty increase is continuing. We will have to wait for government data to update these statistics. We already know to be alarmed as we see federal, state and local officials targeting the young for massive cuts during rounds of budget balancing. Figure 2 US Census Annual Social and Economic Supplement (ASEC) 2010 Younger workers earn less, get less valuable benefits and tend to have fewer job protections. 25-34 year old Americans earned 80cents on the dollar for 55-64 year olds in 2009. Younger workers are paid lower wages at or above the same rate that we are used to seeing displayed for women workers, as against male workers. Clearly there are experience and productivity issues across age lines. There also seems to be a growing problem of poverty and limited upward mobility among younger Americans. Younger people have experienced higher unemployment rates over the last decade. This has become more pronounced during the recent recession. People need to be and should be working during their prime productive years, 24-35. Figure 3. BLS Data for Unadjusted Unemployment Rate. All Values for March 2001-2011 Across the last decade and particularly across the last few years, we are seeing labor force participation rates increasing for older workers and falling for younger workers. This is unusual and has received very little attention. Some of these shifts are explained by people going back to school during weak labor market periods. This does not explain the entire change or the longer term trend. Figure 4 below looks at the falling labor force participation rate among 20-35 year olds and rising labor force participation among those over 55. We are seeing higher unemployment and lower labor market participation among the young who are the poorest group by age. Needless to say, this is a disturbing trend and requires significant attention. Figure 4. BLS Data Unadjusted Labor Force Participation Rates by Age Increasingly difficult conditions for younger Americans should be of paramount concern. This is especially true as we enter into an election super-cycle defined by budget cut proposals. Younger Americans tend to receive less focus and more than their fair share of cuts. Lower voter registration and turn out, as well as less organization among younger people contributes to suggestions that the young shoulder too much of the burden from cutting. This is bad for America and terrible for our future. Over the last few months we have seen this as many thousands of local teachers and education workers are dismissed each month. 32,000 local education workers and 5000 state education workers have been dismissed since February 2011. Younger teachers are the most likely to be let go and our youth is left in under staffed class rooms attended by teachers struggling under political attack, declining conditions and benefits. I don’t think the realities sketched in the charts and observations above are consistent with staying competitive in the global economy. Amid loud calls to save our children and grandchildren from excessive debt– a worthy goal — we seem to be saving them from the ravages of education, employment, health care, affluence and opportunity. This is no way to win the future.

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U.S.’s Ten Most Endangered Industries

April 2, 2011

The recession has caused the failure of some formidable companies, Lehman Brothers and Circuit City among them. Not only individual businesses have suffered, however. The economic woes of the last decade have preyed upon entire industries. In a new report entitled “Dying Industries,” by Toon Von Beeck, research firm IBISWorld identifies 10 U.S. industries that have experienced severe, possibly irreversible drop-offs over the past decade, today remaining stuck in the decline phase of their business cycle. All mentioned industries — having already experienced significant decreases in revenue over the last decade — can be expected to experience further declines through 2016. The reasons for the suffering vary by industry, but IBISWorld attributes a significant amount of industry strife to three primary factors: new technology, foreign competition and industry stagnation. With the country still reeling from a housing crisis , manufactured home dealers may be in the most trouble, the report finds. Over 50 percent of manufactured home dealers closed their doors over the past decade, and revenue numbers for those still open are terrible: down 73.7 percent with a further 62 percent decline expected by 2016. And while the decline of some high-profile industries, like the newspaper and record businesses, have been well-documented for years, who knew that rental formal wear could soon be passé ? The apparel industry has suffered tremendously from foreign competition, with revenues down 77.1 percent since 2000. Photofinishers have largely been supplanted by digital camera as well. But maybe some can take solace in the fact that there likely won’t be a sequel forthcoming to 2002′s One Hour Photo . The slidshow below uses data compiled in the report “10 Dying Industries” by IBISWorld . Ranking is based on percentage decrease in revenue from 2000 to 2010:

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AIG ‘Highly Disappointed’ It Can’t Repurchase All Toxic Assets

March 31, 2011

WASHINGTON — The Federal Reserve Bank of New York has turned down an offer by American International Group to repurchase dodgy mortgage bonds that the Fed had taken off the insurance company’s hands during the financial crisis. AIG had offered $15.7 billion for the bonds. The Fed thinks it can do better by having companies competitively bid on the mortgage bonds over time. The economy and financial conditions have improved since the crisis. The Fed says there is a “high level” of interest in the bonds by investors. The government had bailed out AIG in 2008, extending lifelines worth $182 billion. At the time, the Fed also took over a portfolio of soured mortgage bonds that AIG had held. The company is repaying the government by selling some of its businesses. American International Group Inc., based in New York, said the Fed’s decision could hurt taxpayers. “We are highly disappointed in the Fed’s decision, which may prevent AIG from delivering on its goal that U.S. taxpayers earn a profit on their investment in AIG,” a statement issued by the company said. “That the Fed, which has been such a constructive partner over the last two years, would hurt the very company in which U.S. taxpayers own a 92% stake is very difficult to understand.”

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Dean Baker: The Deficit Hawks Target Nurses and Firefighters

March 29, 2011

Many people might think that the country’s problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest one percent of the population has increased its share of national income by almost 10 percentage points (Excel spreadsheet). This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years. To put this in context, the size of this upward redistribution to the richest one percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest one percent of the population. And this upward redistribution was brought about by deliberate policy. We pursued a trade and high dollar policy that was intended to put downward pressure on the wages of manufacturing workers. The Federal Reserve Board deliberately kept unemployment higher than necessary in order to weaken workers bargaining power. We extended patent monopolies to allow drug companies to jack up prices, raking in hundreds of billions a year. And, we gave the Wall Street banks the benefit of “too big to fail” status so they can borrow with a government subsidy. These policies and others fueled this enormous upward redistribution. But the deficit hawks don’t want us talking about any of these things. The deficit hawks insist that we have to cut Social Security and Medicare benefits now! They are busy hyperventilating over the enormous deficits, the result of the economic collapse, which was in turn the result of their economic mismanagement. (Wait, we are not supposed to talk about that.) And the deficit hawks have clear ideas on how they want to deal with the costs of Social Security and Medicare over coming decades. And, it does not involve taking money from the tiny group of wealthy people who have profited enormously at the expense of the middle class over the last three decades? Nor are the deficit hawks interested in reining in the drug companies, the insurance companies or the doctors. The bloated prices and exorbitant pay of these actors is the main reason that U.S. health care costs are so wildly out of line with health care costs in other wealthy countries. But deficit hawks don’t get paid to go after rich people or the health care industry. Deficit hawks get paid to go after the benefits of middle-income people. This is why we were treated to a Washington Post column by finance industry executive Robert Pozen telling liberals that they should support his plan for raising the retirement age and cutting Social Security benefits for higher-income earners. When Pozen talks about cutting benefits for higher-income earners he is not thinking of people like Peter Peterson or Robert Rubin. He has his gun sights on people earning $40,000 to $80,000 a year. In other words, Pozen wants to cut benefits for workers like schoolteachers, firefighters and nurses. These are workers that definitely enjoy somewhat higher pay and a higher standard of living than most of the workforce, but only in Washington deficit hawks’ circles are these people living lavish lifestyles that need to be cut back. These workers are quite explicitly the target of the Washington deficit hawk gang. The deficit hawk crew will even shed some crocodile tears for the poor who earn near the minimum wage and live near the poverty level. They would raise their benefits if not for those greedy plumbers and mechanics who insist on getting the Social Security benefits that they paid for. In the next few weeks we will be treated to an endless parade of budget experts who will be yapping about “entitlements” and insisting that middle-income workers are living too lavishly. While all these experts have really impressive credentials it is important to remember that these credentials did not prevent this highly paid crew from overlooking the largest asset bubble in the history of the world. If this group had paid a tenth as much attention to the housing bubble as they are now paying to the deficit projections, we would not be sitting around with 25 million who are unemployed, under-employed or out of the workforce altogether. The deficit hawks are very good when it comes to whining about the deficit and demanding sacrifices from middle-class workers. They just aren’t very good when it comes to understanding the economy.

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Detroit’s Population Drops To Lowest Level In 100 Years

March 22, 2011

Detroit’s population dropped 25 percent over the last decade to its lowest level in a century, according to U.S. Census figures released on Tuesday. The city’s population fell to 713,777 last year from 951,270 in 2000 when the last census was taken as the region suffered from a struggling automotive industry, plant closures and job losses. In the same period, the state of Michigan’s population dropped 0.6 percent to 9.88 million. Detroit’s 2010 population compares to 1.85 million people living in the “Motor City” in 1950 and was the lowest total since the 1910 Census showed a population of 285,704. “The census figures clearly show how crucial it is to reinvent Michigan,” Michigan Gov. Rick Snyder said in a statement. “It is time for all of us to realign our expectations so that they reflect today’s realities. We cannot cling to the old ways of doing business. “We cannot successfully transition to the ‘New Michigan’ if young, talented workers leave our state,” he added. “By the same token, Michigan will not succeed if Detroit and other major cities don’t succeed.” (Reporting by Ben Klayman. Editing by Peter Bohan) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Dominique Strauss-Kahn: Latin America: Making the Good Times Better

February 25, 2011

Latin America has enjoyed tremendous economic dynamism and a rising quality of life in recent years. But, faced with new challenges, the question is: how best to sustain this progress? As I travel through the region next week–visiting Panama, Uruguay, and Brazil–I’m looking forward to hearing the views of government officials, parliamentarians, and university students on the key challenges facing their countries today. Here are three questions that I look forward to discussing during my trip. First, as the region enjoys a time of abundance– una época de vacas gordas –can there be too much of a good thing? Latin America’s economies are growing rapidly, buoyed by good access to external financing and high commodity prices. But potentially worrying signs of overheating are popping up–rising inflation, rapidly growing credit, and booming stock markets. We all know how this story can end if policymakers don’t act early enough to prevent boom from turning into bust. Guiding their economies to a soft landing may be the most important near-term challenge facing policymakers in Latin America today. Withdrawing the macroeconomic stimulus adopted during the global crisis should be the first step–and some countries are already doing so. Countries should probably begin with fiscal policy, to reduce the burden on monetary policy. In some cases, however, rising inflationary pressure calls for action now on both the fiscal and the monetary fronts. Exchange rate flexibility is also important. In the current setting, appreciation can help temper capital inflows, by making foreign investors think twice about future exchange rate risk. To protect financial stability, prudential measures may need to be tightened. Finally, while capital controls may be useful temporarily in some cases, they should not be considered a substitute for macro or prudential measures. Second, are countries equipped to handle future times of lean– la época de vacas flacas ? With the global financial crisis only just receding in the rear-view mirror, it may seem premature to think about possible future shocks. But the global economy remains exposed to downside risks, and it is always good to be prepared for a possible change in the economic weather. Latin America’s experience during the crisis–bouncing back from it much better than most other regions–shows the benefit of building policy buffers and reducing vulnerabilities in times of plenty. Over the last decade, countries across the region have strengthened their policy frameworks, lowered public debt, increased foreign reserve buffers, allowed greater exchange rate flexibility, and improved financial supervision and regulation. These all played a role in the region’s success. What about the road ahead? Let me mention two areas where countries in Latin America–and indeed around the world–would do well to focus their efforts. First, fiscal space. One of the most important lessons of the global financial crisis is that economies with healthier public finances had more room to offset the impact of the crisis, and to protect the most vulnerable. Going forward, countries should rebuild fiscal space–and in fact go even farther, where needed, to bring debts down to safe levels. Panama is one of the Latin American countries already working in this direction. Second, financial stability. We also learned from the crisis how quickly seemingly isolated financial problems can engulf the entire financial system, affect the broader economy, and spread across national boundaries. We need better tools to monitor risks both within and across institutions. Regulators and supervisors should be empowered to take early preventive action. Indeed, a number of countries in Latin America–including Brazil–are already strengthening macroprudential financial regulations. Finally, how best to share these times of plenty–across society, and with future generations? Como compartir–y prolongar–la época de las vacas gordas? The region has undergone a dramatic transformation over the past decade, lifting tens of millions of people out of poverty. In Uruguay, for example, the poverty rate has fallen by a remarkable 10 percentage points since 2004. Today, the challenge for the region is to embark on the next stage of its transformation–reforms are needed to sustain strong growth for generations to come, and allow the fruits of growth to be shared across all members of society. Reforms that boost productivity–such as revitalizing infrastructure and improving education and training–are clearly essential. Improving the business climate and strengthening governance are also important for a pro-growth strategy. But growth for growth’s sake is not enough. The region remains profoundly unequal, with about a third of its people living in poverty. Leaders across the region are rightly committed to tackling this problem. And making the social safety net more effective is an important part of the strategy. Here, innovative conditional cash transfer programs–for example, Brazil’s bolsa familia program–are playing an important role, and are in fact being emulated around the world. Raising social spending and improving the quality of service delivery–in education, health, and public infrastructure–are also key priorities. Latin America has come a long way over the last decade. But the region’s transformation is not yet complete. Leaders across the region should capitalize on today’s favorable conditions, transforming their countries to the next level, and ensuring that the benefits of growth are more widely shared. From iMFdirect blog

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Dominique Strauss-Kahn: Latin America: Making the Good Times Better

February 25, 2011

Latin America has enjoyed tremendous economic dynamism and a rising quality of life in recent years. But, faced with new challenges, the question is: how best to sustain this progress? As I travel through the region next week–visiting Panama, Uruguay, and Brazil–I’m looking forward to hearing the views of government officials, parliamentarians, and university students on the key challenges facing their countries today. Here are three questions that I look forward to discussing during my trip. First, as the region enjoys a time of abundance– una época de vacas gordas –can there be too much of a good thing? Latin America’s economies are growing rapidly, buoyed by good access to external financing and high commodity prices. But potentially worrying signs of overheating are popping up–rising inflation, rapidly growing credit, and booming stock markets. We all know how this story can end if policymakers don’t act early enough to prevent boom from turning into bust. Guiding their economies to a soft landing may be the most important near-term challenge facing policymakers in Latin America today. Withdrawing the macroeconomic stimulus adopted during the global crisis should be the first step–and some countries are already doing so. Countries should probably begin with fiscal policy, to reduce the burden on monetary policy. In some cases, however, rising inflationary pressure calls for action now on both the fiscal and the monetary fronts. Exchange rate flexibility is also important. In the current setting, appreciation can help temper capital inflows, by making foreign investors think twice about future exchange rate risk. To protect financial stability, prudential measures may need to be tightened. Finally, while capital controls may be useful temporarily in some cases, they should not be considered a substitute for macro or prudential measures. Second, are countries equipped to handle future times of lean– la época de vacas flacas ? With the global financial crisis only just receding in the rear-view mirror, it may seem premature to think about possible future shocks. But the global economy remains exposed to downside risks, and it is always good to be prepared for a possible change in the economic weather. Latin America’s experience during the crisis–bouncing back from it much better than most other regions–shows the benefit of building policy buffers and reducing vulnerabilities in times of plenty. Over the last decade, countries across the region have strengthened their policy frameworks, lowered public debt, increased foreign reserve buffers, allowed greater exchange rate flexibility, and improved financial supervision and regulation. These all played a role in the region’s success. What about the road ahead? Let me mention two areas where countries in Latin America–and indeed around the world–would do well to focus their efforts. First, fiscal space. One of the most important lessons of the global financial crisis is that economies with healthier public finances had more room to offset the impact of the crisis, and to protect the most vulnerable. Going forward, countries should rebuild fiscal space–and in fact go even farther, where needed, to bring debts down to safe levels. Panama is one of the Latin American countries already working in this direction. Second, financial stability. We also learned from the crisis how quickly seemingly isolated financial problems can engulf the entire financial system, affect the broader economy, and spread across national boundaries. We need better tools to monitor risks both within and across institutions. Regulators and supervisors should be empowered to take early preventive action. Indeed, a number of countries in Latin America–including Brazil–are already strengthening macroprudential financial regulations. Finally, how best to share these times of plenty–across society, and with future generations? Como compartir–y prolongar–la época de las vacas gordas? The region has undergone a dramatic transformation over the past decade, lifting tens of millions of people out of poverty. In Uruguay, for example, the poverty rate has fallen by a remarkable 10 percentage points since 2004. Today, the challenge for the region is to embark on the next stage of its transformation–reforms are needed to sustain strong growth for generations to come, and allow the fruits of growth to be shared across all members of society. Reforms that boost productivity–such as revitalizing infrastructure and improving education and training–are clearly essential. Improving the business climate and strengthening governance are also important for a pro-growth strategy. But growth for growth’s sake is not enough. The region remains profoundly unequal, with about a third of its people living in poverty. Leaders across the region are rightly committed to tackling this problem. And making the social safety net more effective is an important part of the strategy. Here, innovative conditional cash transfer programs–for example, Brazil’s bolsa familia program–are playing an important role, and are in fact being emulated around the world. Raising social spending and improving the quality of service delivery–in education, health, and public infrastructure–are also key priorities. Latin America has come a long way over the last decade. But the region’s transformation is not yet complete. Leaders across the region should capitalize on today’s favorable conditions, transforming their countries to the next level, and ensuring that the benefits of growth are more widely shared. From iMFdirect blog

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Pamela Rosenau: Winter of Content?

February 2, 2011

Although we are in the middle of winter, I am already seeing signs of the first thaw… in equity markets that is. I believe that we are headed for a melt-up in the US stock market through 2011. The ‘Winter of Discontent’ in England in 1978-79 was characterized by widespread strikes over the government’s attempt to curb inflation via pay freezes. Today the US is experiencing the opposite inflation scenario. Fed Chairman Bernanke is charging full steam ahead with quantitative easing policies because of the belief that inflation is “below optimal levels.” Could this lead to the ‘Winter of Content’ for US equity investors? A loose monetary policy environment is always a good backdrop for a rally in equities. But even though we have already seen major moves up, I think there is more to come. The market has been very fickle over the last year, which has led to under-performance by professional managers across the board. About 75% of managers underperformed their benchmarks in 2010, with close to 90% of core managers under-performing. Even some of the top dogs have been struggling, with the Wall Street Journal pointing out that there are more than a dozen mutual funds that have been in the top 20% of their Morningstar category over the last 5-10 years that were in the bottom 10% of peers for 2010. This means that a lot of people are going to be chasing alpha this year. Considering how under-invested the typical retail or high net worth individual is, I think there is the potential for the market to extend 2010′s rally in 2011. In 1999 and 2000, investors poured over $400bn into domestic equity mutual funds. In contrast, in 2009 and 2010, we saw over $100bn of domestic equity outflows. How exactly does that translate into an overbought market today? Data from Swiss private banks has confirmed that investors are still sitting on record high cash levels. Even if the typical investor is showing up late to the equity party, isn’t it likely that they are going to bring enough booze (ie investable cash) to keep things going for another while? There are some attractive fundamentals in the US to support a continued move higher. The S&P is trading at 15x earnings vs a historic average multiple of around 16.4x. People say that a low growth environment is not conducive to multiple expansion. However, GDP growth and stock returns are typically not correlated. Equity performance depends more on earnings growth, which is a function of margins and the cost of/return on capital. In the current low inflation/high unemployment environment employees have lost their negotiating power, so corporates will benefit from stable labor costs. (Incidentally, this is not the case in emerging markets where the combination of rising inflation and labor shortages means costs are likely to be on the rise, making investing in those markets less attractive than investing domestically). One sector that looks poised to generate earnings upside and impressive market returns is energy. While people seem to be underweight domestic equities in general, this is even more apparent in energy. The short interest (number of people who are betting on prices going down) is at a one-year-high. The sector currently comprises about 12% of the total S&P market cap, whereas it has reached almost 30% at its peak. At the same time, fundamentals look positive. We are seeing signs of increasing demand for energy, evidenced by the oil market recently moving into “backwardation” — where current oil contracts are priced higher than future ones. This means that current demand is outstripping current supply to such an extent that people are willing to pay a premium to secure the oil now. Take note of this structure, because I think it could translate into the equity market as a whole. As money comes off the sidelines, people are going to start paying up for exposure. Rosenau/Paul is a team of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC & HighTower Advisors, LLC, a registered investment adviser with the SEC. All securities are offered through HighTower Securities, LLC and advisory services are offered through HighTower Advisors, LLC. This document was created for informational purposes only; the opinions expressed are solely those of the author, and do not represent those of HighTower Advisors, LLC or any of its affiliates. In preparing these materials, we have relied upon and assumed without independent verifications, the accuracy and completeness of all information available from public and internal sources. HighTower shall not in any way be liable for claims and make no expressed or implied representations or warranties as to their accuracy or completeness or for statements or errors contained in or omissions from them. This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee that the investment process described herein will be profitable. Investors may lose all of their investments. Past performance is not indicative of current or future performance and is not a guarantee. Carefully consider investment objectives, risk factors and charges and expenses before investing.

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Real Estate Predictions For Renters In 2011

December 28, 2010

For generations now, our national values have placed an emphasis on home ownership. Renters were the people who were rootless or just not being quite ready to “settle down.” As home ownership has become less of a financial asset and more of a liability over the last few years, there has been a shift in the very fabric of what renting means in our society.

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Health-Care, Senior Housing Investors Stepping Up Sales Activity

November 18, 2010

Health care and senior housing real estate companies have raised hundreds of millions of dollars in equity over the last couple of years, and sales activity tracked by CoStar Group over the last 30 days suggests that companies are beginning to put that…

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The Most Profitable Industries For The Next Three Years

October 8, 2010

With the financial crisis, the Great Recession and the global economic slowdown wreaking havoc on every sector over the last two years, it’s hard to imagine any industry that escaped unscathed. However, IBISWorld Research has uncovered five industries that have managed to remain extremely profitable during 2010 — and these industries are their picks to be the most profitable for the next three years as well. Not surprisingly, four of the five industries with the fattest profit margins are connected to the mining of natural resources, such as crude oil and precious metals like gold. Companies in these industries have an opportunity to flourish as these areas grow. And investors who take their cues from these industries may be able to boost the profit margins of their portfolios as well.

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HuffPost TV: Arianna Discusses ‘Third World Ameria’ With Maria Bartiromo On C-Span’s ‘After Words’ (VIDEO)

September 12, 2010

Arianna appeared on C-Span’s “After Words” program this weekend to discuss her latest book “Third World America” with Maria Bartiromo. Arianna spoke about her motivations for writing the book, the current dismal state of America’s political and economic system, and what we can do to turn it around. “Over the last few years, I’ve begun to see something happening,” she said, “which is that the country which was about the American Dream was actually now becoming the country of downward mobility for millions of people in the middle class who felt they could no longer give themselves or their children the better life that was associated with America. So I really wrote it as a warning and also to show all the ways we can turn it around.” WATCH:

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Grim Housing Choice: Help Today’s Owners Or Future Ones

September 5, 2010

The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid. Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

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Banks’ Self-Dealing, Fake Demand Made Financial Crisis Much Worse

August 26, 2010

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses: They created fake demand.

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Newmark Knight Frank, Cassidy Turley Expand Regional Presence

August 10, 2010

Two of the largest commercial real estate brokerages in their respective regions have merged with national partners over the last week as the industry continues its march toward consolidation by large full-service companies with national and international…

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Max Fraad Wolff: We Are Here: The State of the Economy

August 3, 2010

Amid the oil leaks, athlete/celebrity/politician scandals and partisan recrimination it is easy to lose sight of the pillars that support everyday economic life. Five central pillars of our economic existence are jobs, wages, benefits, credit and housing. This article and graphs just check in to see what condition our condition is in. It is hard to assess where you need to be going if you can’t tell where you are. Consumer spending accounts for about 70% of US economic activity, GDP. American consumer spending represents about 13% of world GDP. What condition the US consumer is in turns out to be very economically important. If that leaves you cold, you might find added interest in the fact that these numbers serve as the best predictors of the electoral success/failure in November. Hostility to immigrants, government and each other tends to ebb and flow with economic fortune. Opportunity and prosperity are social ties that bind in good times and get frayed under tough economic conditions. I last wrote to you in a similar vein 2 years ago. I don’t think I was wrong then? The above graph from the Bureau of Labor Statistics (BLS) details what you know. We are missing about 8.5 million jobs. Over 8 million jobs we had in late 2007 are no longer with us. Over the last two and half years our population has increased by 5 million people. We are missing almost one job for every man, woman and child in the state of New Jersey. Job losses are not evenly spread across regions, professions, genders, ages or ethnic backgrounds. About 6% of the folks who were working in 2007 have lost their jobs. With job losses we expect and have gotten losses in health insurance, pension coverage, tax payment and civic engagement. In 2009, US Government tax revenues were $463 billion, 18%, less than revenues in 2007. We have seen average hours worked and average hourly earnings decline. The below graph, also from the BLS, details the decline in average hourly earnings (AHE) and compares it to the CPI-U measure of price changes in urban areas. Average hourly earnings (AHE) are up less than the increase in prices (CPI-U). This tells us that we are able to afford less with our salaries. To this we must add that we have lost hours, jobs and benefits and that these losses are not reflected in raw job loss numbers. The average duration of those presently unemployed is 32 weeks. This suggests loss of skills, hope, erosion of savings and severe distress in millions of households. Whatever the GDP number are telling us, many families, communities and towns are depressed. Prices may be flat, but wages are flat. Jobs, hours and raises are hard to find. Benefits A third of the average American’s compensation comes in the form of benefits. We earn an average of $29 for full time work and $9 of this comes from benefits. Most famously this includes health insurance and retirement assistance. Benefits include sick days, paid leave, breaks, work conditions and other perks. 13% of the total compensation given to Americans comes from health and retirement benefits. We will concentrate on health insurance and retirement assistance. 86% of Federal, state and local employees have health and retirement benefits and 60% of private sector employees have health and retirement benefits. The vast reduction in state and local employment going on will lower the population with full benefits. 20% of Americans receive no health benefits and no retirement benefits. 15% of Americans receive either health or retirement benefits but not both sets of benefits. You will be shocked to learn that part time workers and those with the lowest salaries are far more likely to have neither medical nor retirement benefits. 68% of workers earning in the bottom 25% by income are missing health insurance, retirement benefits or both. Millions have seen benefits cut or reduced over the last few years. The newest data suggests that large and medium businesses reduced health and pension benefits by several percentage points over the last 2 years- in addition to millions of people leaving employment. Rising co-pays for medical treatment and erosion of coverage are reductions in pay. Likewise, declining options and reduced matching into 401k plans are reductions in compensation. Benefits are under pressure and have been for several years. Credit Consumer credit has been the first, last and intermediate option for millions of American households since the early 1990s. People have used credit cards, mortgage loans, refinancing, pay day lending, and friends/family to borrow. This was done as access to greater amounts of credit and historically low interest rates became substitutes for savings and social assistance programs. We saw vast, and vastly excessive, reliance on credit in each downturn since 1991. This pattern has broken and is presently running in reverse. The below graph illustrates the sharp recent decline in consumer credit. We have seen non-housing credit available to American households fall further and longer than ever before over the last few years. Mortgage borrowing has followed a similar pattern and is presently $250 billion below where it was in 2008. Less credit is available to American consumers and they are taking advantage of less of the reduced credit available. Yesteryear’s coping strategy- increasing consumer debt- has become a limiting factor. Credit is not going to be the crutch on which we hobble forward during this difficult economic period. Millions of households are struggling to repay old loans and the net stream of new loans has been negative for 2 years. Banks are worried about lending and have balance sheets bloated with deposits that they are not interested in lending. Low rates, loads of bank cash and few loans define the world of American housing. Housing Residential real estate remains the slow emergency of the US economy. I wish I could tell you that a lot has changed since 2007. As the first time home buyer’s credit abates, housing has shown clear signs of weakness. Over 18 million US residences are vacant. An inventory of unsold homes sits on the market that could satisfy all present housing demand for 10 months. We have built a huge shadow inventory of houses off the market that will be added if/when home prices rise. Foreclosure actions and delinquencies remain high. Realty Trac reported that more than 1.5 million residential properties received foreclosure and delinquency notices in the first 6 months of 2010. Foreclosure rates were up in 75% of urban areas over the first 6 months of 2010. Of late, banks are selling more houses than new home builders and this tells us clearly that the market remains defined by serious problems. All of this suggests that the tough times for housing and American households are not nearly over. The below Federal Housing Finance Agency graph clearly displays the recent trend in US home prices. Leading mortgage servicers and industry experts continue to report over 7 million mortgages are either delinquent, in default or in the foreclosure process. More than 9% of US mortgages are not current as this goes to press. Federal and private programs to assist those in or near default remain limited in scope and success. Recent reports on the success rates of government efforts suggest that slow progress is being made. Private modifications continue to fail more often than they succeed. A fraction of those in need are enrolling in assistance programs. These programs are slowly improving. We have learned that principle reductions and programs that address issues with credit card and auto loans as well as mortgage debt have higher success rates than programs that lower interest rates and extend loan durations. The bottom 75% of US households are experiencing real and long lasting economic distress. The numbers above do not capture people’s pain, plans changed, dreams deferred. The artistic community does a far better job of speaking to the individual, community and personal damage that a violent business cycle creates. A sense of what is going on must include an understanding of the economic landscape. To understand where to go, you have to know where you are. To make sense of the intensity of feeling on immigration, government, Wall Street, politicians, state workers, and taxes we must know the landscape of debate. That is what this article tries to do. It tries to provide us with a handy arrow that says- economically- we are here. Its important to check in and see what condition our condition is in. Endnotes Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020. P.126 Program Perspectives, Bureau of Labor Statistics July 2010. Volume 2, Issue 4. EBRI Data Book. The Employee Benefit Research Institute. April 2010. Chapter 4. Realty Trac. 15 July 2010. http://www.realtytrac.com/contentmanagement/pressrelease.aspx?channelid=9&itemid=9555 29 July 2010. Bloomberg. http://www.bloomberg.com/news/2010-07-29/foreclosure-filings-rise-in-75-of-u-s-cities-as-joblessness-hurts-owners.html Federal Housing Finance Agency News Release June 22, 2010. Figure 2. Housing Wire (Housingwire.com) July 06, 2010 and June 01, 2010.

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Credit Cards Transfer Money From Poor To Rich Households: Study

July 28, 2010

Credit cards do more than drain money from your wallet — they may actually create an “implicit money transfer” from the poor to the rich, according to a new study from the Boston Federal Reserve. The study, titled “Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations” , suggests that, as card use becomes more frequent, merchants have raised their prices to compensate for card-processing charges. (Hat tip to the WSJ ) As a result, the study suggests, the poor — who usually lack access to reward-paying credit cards — end up paying more for everyday goods. Over the last two decades, the paper notes, the percentage of households using credit cards has remained stable at around 75 percent. But total card-spending has jumped from nine percent to 15 percent. The increased use of cards drives up fees paid by merchants, who raise prices to cover the costs of the cards. As card-using households make more and more purchases with credit cards and jump to take advantage of card rewards programs, “cash-using” households bear the brunt of higher prices without any of the benefits of cards. Here’s more from authors Scott Schuh, Oz Shy and Joana Stavins: On average, each cash-using household pays $151 to card-using households and each card-using household receives $1,482 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general. The authors suggest a few approaches policy makers could take to mitigate the damage caused by credit cards, including allowing merchants to adjust prices based on whether a purchase is made by cash or credit, a practice that is currently against the law. Read the study below: Credit Cards –

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Ruth Madoff A Redhead?

July 19, 2010

Bernie Madoff may have been caught red-handed, but Ruth Madoff has been caught red-haired. The wife of the famous Ponzi-schemer was spotted at Midtown’s Le Pain Quotidian with a new red ‘do, and she didn’t have too much to say about it — or about anything else, for that matter. “Oh my god,” Madoff uttered, as ABC News advanced towards her. When asked if she had any words regarding her husband’s victims, she said nothing. Madoff may not have anything to say, but there is something to be said here. While her change in hair color might appear to be nothing more than an innocent style choice, last year’s reports of Ruth’s hair colorist dropping her suggest she’s not a ginger by her own volition. Ruth was famous for her “Soft Baby Blonde” locks. She visited the Pierre Michel salon for foils every six weeks. The recommended time between colorings is somewhere between three to four months. Needless to say, Ruth was committed to her hair color. But then the Pierre Michel Salon heard about her husband’s Ponzi scheme, and explicitly banned Ruth from ever entering again. The New York Times reported last June: As for her salon, Pierre Michel, Mrs. Madoff had dropped in every six weeks over the last 10 years. One morning in March, she was told that she could no longer enjoy her routine of sitting with a glass of Poland Spring water while Giselle, a colorist often cited in Vogue and Allure, wielded the foils. Pierre Ouaknine, an owner of the salon, broke the news, according to Kelly Brady, a spokeswoman for the salon. Can Ruth pull off being a ginger, or should she look elsewhere for her token “Soft Baby Blonde” color?

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Starbucks’ Howard Schultz Shares How Volunteer Service Saved The Company

July 16, 2010

When Howard Schultz returned to the CEO seat of Starbucks in 2008, he was on a mission to save the company from a downward spiral caused by the economic recession and poor strategic decisions. In an interview for the Harvard Business Review, Schultz shared, I decided–against the advice of many people at the time, because it had a high cost attached to it–to take 10,000 store managers to New Orleans. I knew that if I could remind people of our character and values, we could make a difference. Schultz decided that leading Starbucks employees to volunteering was the best way to reinvigorate a return to values among the company’s managers. He kicked off the New Orleans conference with service projects throughout the city’s distressed communities. Our efforts represent the single largest block of community support in the history of New Orleans, contributing more than 54,000 volunteer hours and investing more than $1 million in local projects like painting, landscaping, and building playgrounds. Schultz credits the volunteering trip with the successful improvement of the company over the last two years. He feels the trip reminded each manager to focus on ensuring the satisfaction of in If we hadn’t had New Orleans, we wouldn’t have turned things around. It was real, it was truthful, and it was about leadership.

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Census Jobs Ending, Up To 700,000 Temp Workers To Flood Job Market

July 12, 2010

When the Census Bureau hired upward of 700,000 Americans over the last two years — most in the last six months — it landed more experienced workers with more sophisticated skills than any time in recent memory. This was the unintended upside of the nastiest recession of the last 70 years. Now, its decennial work largely done, the Census Bureau is shedding hundreds of thousands of workers — about 225,000 in just the last few weeks, enough to account for a jot or two in the unemployment rate, say federal economists. Most of those remaining will be gone by August; a few will last into September.

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Want To Stop Car Thieves? Paint Your Car Yellow

July 5, 2010

If you’re looking to keep your car out of the hands of thieves, try getting a paint job. A new study based on automobile data from the Netherlands suggests cars painted in bright, unusual colors are far less likely to be stolen. (Hat tip to Paul Kedrosky .) At Vox Ben Vollard notes that in the Netherlands students have taken to painting their bicycles pink or yellow, which makes it all that much easier to spot thieves. Applying this idea to cars, Vollard finds that car color has a significant impact on rates of theft. Thieves, it turns out, do a quick economic analysis of the resale value before jacking a vehicle. Black, silver, grey and blue are the favorites; yellow, pink and red are the least likely to be stolen. Here’s more from Vollard: The three most common colours – black, blue, and silver/grey – are stolen more frequently than the uncommon colours. Pink is the perfect deterrent: none of the 109 pink cars (aged up to three years) have been stolen over the last few years. Noticeable is the rate of theft for black cars, which is higher than the rate for the most popular colour, silver/grey. There may well be something else than colour that makes black cars relatively attractive to car thieves. Black is more popular for luxury makes. However, if we exclude the three luxury makes Audi, BMW and Mercedes-Benz, we find the same pattern – albeit at a slightly lower overall rate of theft (right bars in Figure 2). It could be that the most expensive models (independent of make) are more likely to be black, but that is not clear and not easy to test. And, Vollard suggests , you might want to think twice before you buy an ear-shattering car alarm: “If the aversion to driving a car in an offbeat colour is not too high – or if someone actually enjoys it – then buying deterrence through an uncommon car colour may be at least as good a deal as buying deterrence through an expensive car security device.” Check out the full study here .

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11 Cities That Are Beating The Recession (PHOTOS)

June 16, 2010

This recession has been particularly brutal on American cities. Nearly one in five Americans are unemployed — or can’t find enough work — housing prices have fallen 17% since 2007, our $13 trillion debt is out of control, and experts are now preparing for the possibility of a double-dip recession. But at a local level, some cities are recovering much faster than others. The Brookings Institute has released its l atest quarterly MetroMonitor report , tracking the economic recovery of America’s 100 largest metro areas. The ranking considered the changes in four economic indicators over the last three years: employment, unemployment, gross metropolitan product (like a city’s GDP), and housing prices. The ranking suggests that Southern cities, many of them in Texas, have shown the most economic resilience since the downturn began. The weakest-performing areas were clustered in California and Florida. READ the full Brookings Institute report here , and check out the 11 MOST resilient cities here.

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Data Center Development Flying High Again In New Era of Cloud Computing

June 9, 2010

Companies may have slashed many business expenses over the last few years — planned expansions, employee headcounts, benefits and travel budgets, among others — but the need for speed and power in computing networks and communication, and a corresponding…

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Digital Realty Buys Rockwell/365 Main Portfolio For $725M

June 3, 2010

Digital Realty Trust Inc. (NYSE: DLR), the San Francisco-based developer and operator of data centers, has unleashed a powerful jolt of new acquisitions and development projects over the last few weeks. And DLR’s latest announcement is a big one — a…

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Gretchen Morgenson: 3,000 Pages Of Financial Reform Still Not Enough

May 29, 2010

For decades, until Congress did away with it 11 years ago, a [34-page] Depression-era law known as Glass-Steagall ably protected bank customers, individual investors and the financial system as a whole from the kind of outright destruction we’ve witnessed over the last few years. … The two bills that the Senate and the House are currently chewing over as part of what may be a momentous financial reordering weigh in at a whopping 3,000 pages, combined. Yet despite all that verbiage, there are flaws in both bills that would let Wall Street continue devising financial black boxes that have the potential to go nuclear. And even if the best of both bills becomes law, investors, taxpayers and the economy will remain vulnerable to banking crises.

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Sovereign Funds Show Reignited Interest in Shopping for U.S. Property

May 18, 2010

Sovereign wealth funds (SWFs) have grown at a remarkable pace over the last decade, quadrupling from an estimated $1 trillion in assets under management in 2000 to $4 trillion today, and expected to hit $6 trillion within two years. So it shouldn’t come…

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Larry Summers Defends Record On Derivatives During Clinton Administration

May 16, 2010

Last month, Bill Clinton told ABC News that his former Treasury Secretaries, Robert Rubin and Larry Summers, gave him wrong advice on derivatives, and that he was wrong to take it. Though Clinton quickly walked back the remark , it continues to reverberate around Washington. Today, on CNN, Fareed Zakaria asked Summers about Clinton’s comment and whether he’d changed his mind about derivatives. Summers responded by saying that, like Keynes, “when conditions change, I change my views,” and he defended his record during the Clinton administration: Credit default swaps were in their infancy in the 1990s. There was no large market in them, and yet we see how much damage they did. It’s a very different kind of need that’s been pointed out and why we’ve worked so hard to strengthen derivatives regulation. To take just one example, we’ve seen what damage can be done by leveraging. In the 90s, as secretary of the Treasury, I warned about the dangers of the leverage associated with Fannie Mae and Freddie Mac. Those dangers have become more pervasive over the last 10 years. So I think there has always been a case, and one I have always tried to make, for regulation, but that case has certainly gotten stronger, given what has happened.

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Singapore’s Lee Says China Should Let Yuan Gain, End `Angst’ Caused by Peg

April 15, 2010

By Shamim Adam April 16 (Bloomberg) — China should allow its currency to strengthen to prevent its economy from overheating, Singapore Prime Minster Lee Hsien Loong said in an interview. China’s peg to the U.S. dollar has caused “a lot of angst” even as it helped boost the nation’s exports “temporarily,” Lee, 58, said in an interview with the Charlie Rose television show on the PBS network. “They shifted to a more conservative position over the last two years, and fixed to the U.S. dollar. But after a while, it causes overheating in the economy,” Lee said in the Washington interview. “In this situation, I think they really should revert to where they were before the crisis and allow the yuan to go up gently again.” Asia’s second-largest economy grew at the fastest pace in almost three years last quarter and property prices had a record increase in values in March, prompting the government yesterday to announce measures to cool the real-estate market. Economists surveyed by Bloomberg News predict China may allow the yuan to appreciate by June 30 to curb inflation while avoiding a one- time jump in value that might endanger export jobs. Non-deliverable yuan forwards were little changed at 6.6182 per dollar as of 10:30 a.m. in Hong Kong today, suggesting the currency will gain about 3 percent in the next 12 months. China said yesterday its economy expanded 11.9 percent last quarter from a year earlier. To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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David Brooks Presents Genuinely Weird Income Statistic

April 7, 2010

So, Joel Kotkin wrote a book called “The Next Hundred Million: America in 2050″, and David Brooks read it, and got so optimistic that today he has a column beseeching his readers that if we can just hang on for 40 years or so, everything is going to work out OK. So, let’s turn those frowns upside down! I have no interest in harshing anyone’s buzz about the exciting world of the future, but this part of Brooks’s take on the here and now has got a lot of people doing the same thing as Brad DeLong, which is making their “WTF Face” as hard as they can . The relevant statistic Brooks cites? Over the last 10 years, 60 percent of Americans made more than $100,000 in at least one of those years, and 40 percent had incomes that high for at least three. I think I’m going to have to ask Brooks to show his work because that statistic seems to me to be a) not at all part and parcel with what we call “reality,” and b) even if true, a pretty misleading basis for suggesting some sort of positive sum “dynamism.” Do I have this right? In the past decade, a lot of people briefly made a lot of money and a smaller group of people sustained a high level of income for a paltry three-year period. That suggests chaos and upheaval, not “dynamism.” Well, according to the 2006 American Community Survey, here’s what the income picture looked like : If only 8.5% of “full-time, year-round workers with earnings” were making over $100,000/year in 2006, then that must have been a real down year for all of you Americans who were making the tall scrilla in the past ten years. Luckily, it’s been nothing but good times for America financially since then! [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Washington Mutual Files Reorganization, Supported by Creditors, JPMorgan

March 27, 2010

By Dawn McCarty March 27 (Bloomberg) — Washington Mutual Inc., the former parent of the biggest bank to fail, filed a bankruptcy reorganization plan and disclosure statement supported by creditors and JPMorgan Chase & Co. Washington Mutual , or WaMu, will establish a liquidating trust that will distribute funds in excess of about $7 billion, including $4 billion of previously disputed assets on deposit with JPMorgan , according to court documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. “The proposed plan will provide substantial recoveries for the company’s creditors and reflects Washington Mutual Inc.’s diligent efforts over the last 18 months to maximize the value of the bankruptcy estate,” WaMu said yesterday in a statement. The money is being held by New York-based JPMorgan, which bought Seattle-based Washington Mutual’s bank for $1.9 billion in September 2008 after it was shut by federal regulators. WaMu no longer has any banking operations and is liquidating itself under bankruptcy court supervision. The plan implements and incorporates terms of a global settlement accord reached among WaMu, JPMorgan and the Federal Deposit Insurance Corp., according to the statement. A May 19 hearing has been requested for approval of the disclosure statement with a confirmation plan by July 20. March 12 Agreement “The FDIC has not agreed to all of the provisions contained in the draft settlement agreement,” WaMu said in the statement. “However, discussions are ongoing among the parties and they are hopeful that such agreement will be obtained in the near future.” The agreement was announced March 12 in U.S. Bankruptcy Court in Wilmington. Shareholders had estimated in court papers that the company may collect $20 billion from deposits, tax refunds and lawsuits. WaMu, JPMorgan and the FDIC will also share two tax refunds expected to be worth between $5.4 billion and $5.8 billion. WaMu estimated its share to be in the range of $1.8 billion and $2 billion, according to court papers. “Preferred and common equity securities previously issued by WaMu will be cancelled,” WaMu said in the statement. The bankruptcy case is In re Washington Mutual Inc., 08- 12229, U.S. Bankruptcy Court, District of Delaware (Wilmington). The dispute over the cash is Washington Mutual Inc. v. JPMorgan Chase Bank NA, 09-50934, U.S. Bankruptcy Court, District of Delaware (Wilmington). To contact the reporter on this story: Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net .

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Top Fed Official Warns Jobs Will Be Scarce As ‘Paradigm Shift’ Slows Hiring

February 22, 2010

A top Federal Reserve official warned Monday that even as the economy starts to grow again, employers are likely to continue squeezing more productivity out of workers rather than start hiring new ones, thereby prolonging the economic crisis for the millions of unemployed. In remarks at the University of San Diego, Federal Reserve Bank of San Francisco President Janet Yellen said that rather than experiencing a “V-shaped recovery,” the economy will continue to be sluggish and won’t be operating at its full potential until 2013. As reasons, she cited consumer anxiety due to the high unemployment rate; a housing sector that “could weaken again”; “very nervous and exceedingly cost-conscious” businesses; and a commercial real estate market that won’t contribute to growth “for some time.” For workers, though, her prognosis was particularly dire: the labor market will be slow to recover because businesses have learned that they can cut workers yet maintain output. “There is an alternative explanation regarding the events of last year, though, that bodes poorly for rapid employment gains going forward,” she said in her prepared remarks. “According to this view, last year’s large increase in productivity is here to stay. In that case, we won’t see a quick drop in unemployment and may be in for a jobless recovery akin to those in the early 1990s and early 2000s. This is closer to my view and broadly consistent with my forecast,” she said. She continued: According to this perspective, the recession has forced businesses to reexamine just about everything they do with an eye toward restraining costs and boosting efficiency. Strapped by tight credit and plummeting sales, businesses have overhauled the way they manage supply chains, inventory, production practices, and staffing. Stores don’t order merchandise unless they think they can sell it right away. Manufacturers and builders don’t produce unless they have buyers lined up. My business contacts describe this as a paradigm shift and they believe it’s permanent. This process of implementing new efficiency gains may have only begun and we may be in store for further efficiency improvements and high productivity growth for some time. If so, the rate of job creation will be frustratingly slow. Over the last three quarters worker productivity jumped an average of 6.8 percent, the highest three-quarter average in more than 40 years. Meanwhile, the economy has shed 8.4 million jobs since December 2007. The six-percent drop in payrolls is the largest decline since the end of World War II, Yellen said.

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Brookfield Fund Picks Up Nearly 3 Mil-Sq.-Ft. Portfolio From JPMorgan

February 14, 2010

A group of funds sponsored by Brookfield Asset Management has acquired a 16-property, 2.9-million-square-foot office portfolio from JPMorgan Chase. Brookfield has now acquired more than 100 properties totaling about 12 million square feet over the last…

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Simon Johnson: Geithner Not Paying Enough Attention To World Economy

February 6, 2010

In an interview that will air Sunday on ABC, Treasury Secretary Tim Geithner says, “”We have much, much lower risk of [a double-dip recession] today than at any time over the last 12 months or so … We are in an economy that was growing at the rate of almost 6 percent of GDP in the fourth quarter of last year. The most rapid rate in six years. So we are beginning the process of healing.” The timing of this statement is remarkable because, while the US is finally showing some signs of recovery, the global economy is bracing for another major shock – this time coming from the European Union.

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Dan Dorfman: A Dozen Stocks To Shun In 2010

January 14, 2010

With the stock market off to a rousing start this year, many investors who swore off equities forever during the 2008 debacle are starting to come back big time. If you believe the bullish economic case, that’s fine. But given all the unknowns and uncertainties, you’ve got to be deaf, dumb or blind to own the stock of a risky, problem-ridden company–which many investors appear to be doing–that could bloody you. It’s almost equivalent to having sex with someone who is diseased. In this respect, meet Wall Street’s dirty dozen, 12 companies, mostly household names and primarily components of the S&P 500 Index, that one research outfit says you should absolutely shun in the year ahead. That’s the conclusion of a team of analysts at Casey Research in Stowe, Vt., a subscription-oriented investment and economic consulting service, based on a recently completed analysis. The rationale for their bleak outlook on the stocks on which they’re flashing an S.O.S. for the year ahead chiefly centers on the following: Many are saddled with questionable, fundamentally weak businesses and significant debt, in some cases more debt than they can pay off. The shares of the companies are sporting ludicrous valuations based on dubious assumptions of their growth. A number of the dirty dozen could well go bankrupt over the next one to three years. As a group, these stocks, Casey reckons, should be highly volatile, underperform the market and are ripe for significant declines. Interestingly, most of these stocks are up 100% to 300% in the past 12 months, and some close to 400%. “While many of the dirty dozen will survive, they will not thrive,” says Alex Daley, a participant in the analysis and senior editor of the firm’s technology division. The dozen are Carnival Cruise Lines; MGM Grand; Abercrombie & Fitch; Blockbuster; Salesforce.com; Palm; Comcast, which is acquiring control of NBC; Ford; Genworth Financial; Range Resources; RedHat, and Tenet Healthcare. Zeroing in on the three whose shares he rates the riskiest, Daley kicks off with Carnival Cruise Lines, whose passenger counts fell 10.9% in its most recent fiscal year, with total revenues sliding more than $1.5 billion from $14.6 billion to $13.1 billion and passenger revenues falling more than $1 billion. Despite the weak demand, the company is launching six new cruise ships this year, most bound for Europe, one of the weakest economic regions around. On top of this, another 13 ships are due by May of 2012 (up from the current 93 ships), but with falling sales, there’s a question as to whether the demand will be there to fill them up. Meanwhile, balance sheet worries abound. The company has burned through $1.05 billion of cash over the last 12 months and has less than a third of the current assets it needs to pay off long-term debt. Las Vegas’ biggest casino operator, MGM Grand, which lost $6.06 a share over the last 12 months and has been behind in its debt over the last four quarters, is another one of Casey’s riskiest stocks. Add to that, observes Daley, a 9% increase in available rooms across the city last year despite at least a 10% drop in visitors, and you can see why the company had to lower its room rates some 22% to keep people coming. Adding to MGM Grand’s woes, its 4,500-room joint venture with Dubai World, shows all signs of crumbling (a $200 million writeoff from the project has already been taken). Video store king Blockbuster rounds out Daley’s third member of his worst trio. Technology is stacked against them and Blockbuster’s market is disappearing, Daley says. Rivals like Netflix, iTunes and Cable on Demand, he points out, are stealing Blockbuster’s business, while its expensive retail stores are being destroyed by the Post office (through which you can get DVDs delivered by the mail). In addition, the company’s revenues over the past 12 months are down 17.5%, while, on an earnings per-share basis, it lost money from 2004 through 2008, and almost certainly did so again in 2009. With the shares of Ford surging 392% last year, the view of a number of market pros is that the troubled automaker is largely out of the woods. To the company’s credit, it has been diligent about cutting costs. Further, over the last quarter, it has generated more than $1.75 billion in free cash flow. Likewise, it has managed to push out most of its debt through restructuring, which allowed them to remain solvent in 2009 and probably 2010, as well. On the other hand, notes Daley, stricter fuel economy standards are pushing up production costs, foreign competitors do not have the same union obligations and the auto business is highly cyclical–all of which could, he says, could spell a tough couple of years ahead for Ford and make it hard to get behind a stock that is already up nearly 400% in the past year. Owning control of NBC–a proposed $30 billion transaction by Comcast–may impress some investors. But Casey takes a dim view of the deal, calling it a desperate move by Comcast to control more content and use it to make their video service still viable for the next few years–practices which may run afoul of government objection. Daley argues they’re overpaying for a business that has limited growth prospects. He also notes that Vertizon’s FIOS is snapping up huge chunks of Comcast’s most profitable customers wherever they compete. Summing up his view of Comcast, Daley cites a sorry blending of cost pressures, limited grkwth and declining margins, alh of which add up to bad news for investors. Daley notes some of the dirty dozen are doing well, but are highly vulnerable because of astronomical stock valuations. In particular, he points to RedHat, which as trading at more than 70 times earnings, and Salesforce.com at 117 times earnings. In Hollywood’s successful 1967 war film, The Dirty Dozen, a group of jailed American GIs was formed to kill top Nazi officials. The plan succeeded, but in the process, a number of the GIs died. Alas, Casey is suggesting a similar fate may befall Wall Street’s dirty dozen. What do you think? E-mail me at Dandordan@aol.com

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T-Mobile USA’s Neville Ray Re-Elected as 3G Americas’ Chairperson

January 14, 2010

BELLEVUE, WA–(Marketwire – January 14, 2010) – 3G Americas, a wireless industry trade association representing the GSM family of technologies including LTE, today announced the re-election of Neville Ray, senior vice president of Engineering and Operations for T-Mobile USA, as Chairperson of the 3G Americas Board of Governors for 2010. “Neville has provided invaluable leadership to 3G Americas members over the last year,” said Chris Pearson, president of 3G Americas. “In 2009, the Americas region saw tremendous growth in GSM and HSPA subscribers, and also in the deployment and evolution of enhanced mobile broadband networks in Canada and the United States. Our organization will continue to support the positive growth throughout the region under the vision of Neville and the 3G Americas Board of Governors.”

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Marc Faber Says Dollar May Rise Another 5%-10% Versus Euro in `Near Term’

December 28, 2009

By Deirdre Bolton and Ye Xie Dec. 28 (Bloomberg) — The dollar may appreciate 5 to 10 percent against the euro in the “near term,” according to Marc Faber , publisher of the “ Gloom Boom & Doom ” newsletter. U.S. equities and the dollar may keep rallying together, reversing a relationship that existed from March to November, Faber said in an interview on Bloomberg Television. “Sentiment on the U.S. dollar was really extremely negative over the last three months,” Hong Kong-based Faber said. “The other currencies are not much better. The dollar will appreciate against the euro by another 5 to 10 percent, and later on we’ll have to see, but that would be a near-term target.” The dollar has gained 4.2 percent to $1.4405 per euro this month, and was poised to end a five-month losing streak, on signs the U.S. economic recovery is gaining momentum. Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber. The Standard & Poor’s 500 Index “could go up 200 percent if it prints enough,” Faber said. “The worst investment, in the long run, will be U.S. Treasuries, and cash which has no return at present. This is the one reason that I am moderately positive about equities is that this money goes into leverage plays.” To contact the reporters on this story: Deirdre Bolton in New York at dbolton@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net

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Flurry of New Lodging IPOs Greeted Warily By Wall Street (CoStar Group)

December 9, 2009

Lodging real estate companies have raced to launch initial public offerings over the last two months, hoping to tap a strengthening stock market for capital with plans to snap up distressed hotel assets at deep discounts. Sharp declines in business travel…

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Flurry of New Lodging IPOs Greeted Warily By Wall Street

December 8, 2009

Lodging real estate companies have raced to launch initial public offerings over the last two months, hoping to tap a strengthening stock market for capital with plans to snap up distressed hotel assets at deep discounts. Sharp declines in business travel…

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Realty IPOs in the pipeline may remain just pipedream

November 28, 2009

in Dubai, the desert state which over the last few years had gotten used to showcasing its grand real estate properties like Burj Dubai and The Palm to the world’s billionaires, could be a warning sign for all real estate investors. Afterall the

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Realty IPOs in pipeline may remain just pipedream

November 27, 2009

in Dubai, the desert state which over the last few years had gotten used to showcasing its grand real estate properties like Burj Dubai and The Palm to the worlds billionaires, could be a warning sign for all real estate investors. Afterall the current

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Warren Buffet Tells Columbia Business Students: "The Financial Panic Is Over" (VIDEO)

November 13, 2009

Warren Buffett and Bill Gates spoke to a group of Columbia students on Thursday for a CNBC town hall and question-and-answer session. The business giants discussed topics ranging from capitalism and the state of the economy to Goldman Sachs, Apple, and Google, and they were decidedly positive in their outlooks. When asked whether at any point over the last year they’d doubted capitalism and the American “way of life,” both expressed confidence in the system. “This country works,” Buffett told the audience. “We have two hundred years of proof, and it’s going to continue to work.” Gates said the United States is still a great place for innovation and science, and he said that while he expected that “we’re going to tune our system of capitalism,” overall the structure of the American free market system is strong: “There are definitely some lessons, but the fundamentals of the system, a marketplace driven system where we invest in education, in a great infrastructure for the long term, that’s continued.” Buffett conceded that the “economy was sputtering, still is sputtering some,” but he indicated that there is great opportunity for growth within the country, and counseled investors to look inward before going overseas. He also addressed the challenge of regulatory reform: “Going forward, it’s a very tricky thing to figure out how to present excessive leverage, how to prevent off balance sheet arrangements from getting in trouble, or for just having people at the top of major institutions that run risks that they shouldn’t be running. We’re wrestling with that right now.” The students applauded and clapped in unanimity after each of Buffett’s punch lines- all variations on: “Right now, I would pay $100,000 for 10 percent of the future earnings of any of you. So, if anyone wants to see me after this is over …” WATCH: Get HuffPost Business On Facebook and Twitter !

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Saudi Arabia ‘has a shortage of residential property’

November 4, 2009

04 Nov 2009 There is a shortage of residential property in the Saudi Arabian market, it has been claimed. Official figures show that over the last five years, the property sector has grown by an av…

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