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Scott Bittle: Fiscal Follies: The Debt Ceiling and the 48 Percent Solution

by on May 27, 2011

Huffington Post…

With the debate over the nation’s debt ceiling continuing to rage, research conducted by our organization, Public Agenda , shows a real chasm between Washington and the rest of the country. Two-thirds of Washington leaders say we need to raise the debt limit , while surveys of the public show that most Americans continue to oppose it. But there is a crucial detail in the public opinion polls that is not getting the attention it deserves. When the Washington Post and Pew Research Center surveyed Americans about raising the debt ceiling, nearly half of Americans (48 percent) admitted that they didn’t have a good understanding of what would happen if the government didn’t raise the debt limit. When that many citizens freely acknowledge that they don’t have a solid grasp of the risks to the country if the debt ceiling deal-making goes south, that’s a wake-up call for leadership. Real leadership, that is, that’s focused on the best interests of the country as opposed an obsession with elections and politics. There are times when elected officials should follow public opinion and pay careful attention to the public’s concerns and priorities. And there are times when elected officials need to lead — they need to be stewards for the country’s future. When public understanding is limited, when people don’t grasp the consequences of a major governmental decision, the time for genuine leadership has come. Technically, the United States passed the $14.3 trillion debt limit earlier in May, and now the federal government can’t borrow any more money until Congress raises the limit. Thanks to some clever accounting at the Treasury, the government can keep going until Aug 2, but at that point, the government wouldn’t have enough money to cover its bills. Douglas Holtz-Eakin, a former director of the Congressional Budget Office, has a low-tech, but riveting 60-second version of what it would really mean up on YouTube. The country would have money coming in. After all, we’ll all still have taxes withheld from every paycheck. But what’s coming in would only cover about 60 percent of our expenses, which wouldn’t be enough to cover even what most Americans consider a very “small government.” We have to at least pay the interest on the debt, otherwise we’ll risk unleashing an unpredictable, perhaps uncontrollable meltdown in the international bond markets. (We may not be safe from financial disruptions even if we pay the interest.) Once we’ve done that, there’s simply not enough money to go around. We wouldn’t have enough money to cover all the bills for Social Security, Medicare and Medicaid, although surely we’d use what is left of the country’s revenues to pay a good chunk of each one. The real problem comes later; after paying for interest and entitlement spending, there won’t be any money left for anything else. As Holtz-Eakin puts it, “no money for the troops, no money for procurement or transportation of materials.” And the Defense Department is just the first casualty. There would be no federal money for public schools, college loans, highways, the Centers for Disease Control or just about anything else most of us expect from government. The truth is that most Americans just don’t realize what not raising the debt ceiling really means. Former President Bill Clinton may have hit on something when asked why polls showed opposition to raising the ceiling at the Fiscal Summit sponsored by the Peterson Foundation this week. “Because they’ve never lived through it,” he said. “No one knows what will happen.” It is true that another common element of leadership is to use a deadline and potential crisis to force a balky group of people to sit down and get a solid deal done. One reason why the debate in Congress is stalled is because many political leaders see the debt ceiling as an opportunity to force change in the federal budget — change that surely has to come. If we actually get sensible, practical change as a result, then we can give our leaders credit for doing their job. If they get an attack of bipartisanship and willingness to compromise, we might even be able to give them credit for a job well done. But if elected officials in Washington allow the United States to slide into a potential economic disaster by blindly following what they think the polls are telling them, then history will heap on them the censure and condemnation they will so richly deserve. Indeed, the American people themselves may take a different view once the results of the decision become evident. If they think that voters are going to reward them for putting the entire country through the wringer, they’re likely to be very disappointed.

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Scott Bittle: Fiscal Follies: The Debt Ceiling and the 48 Percent Solution

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Calling All Petroleum Engineers: Your College Major Is More Important Than Degree Itself

by on May 24, 2011

Huffington Post…

With student indebtedness rising and a dearth of decent-paying jobs for recent graduates, many are asking whether a college degree is still worth the sticker price. According to a new report , a college degree is well worth it in terms of lifetime earnings. But, the study’s authors noted, not all degrees are worth the same amount: A student’s chosen major has critical, far-reaching consequences. “The core finding here is that going to college and getting a degree is important, but what you major in can be three or four times more important.” said Anthony P. Carnevale, who co-authored the study and directs Georgetown University’s Center on Education and the Workforce. “The difference in earnings is more than 300 percent.” Utilizing previously unreported data from the U.S. Census Bureau’s 2009 American Community Survey, the study authors sampled 3 million college graduates between 25 and 64 who had reported their undergraduate major and subsequent salary to arrive at their findings. “There’s this tendency in this country to say, ‘I’m going to college. I made it,’” said Carnevale. “Well, yes, you’ve made it to a point. But the most important decision to come is what to major in.” Titled “ What’s It Worth? The Economic Value of College Majors ,” the study indicates that the earnings disparity between different college majors is substantial. In terms of yearly earnings, petroleum engineers reported making $120,000, while college counselors and psychologists earned an average of $29,000. Over the course of a lifetime, this translated into petroleum engineers making $5 million, while counselors and psychologists earned approximately $2 million. Of the 171 majors included in the report, engineering, computer science and business reported the highest salaries. Lower earnings were reported in fields such as education, social work and counseling — though they all made about 75 to 85 percent more than individuals with only a high school degree. The study also found a significant earnings gap by gender, race and ethnicity. “In the case of African Americans, in not one of the 171 majors were they making as much or more than white people,” said Carnevale. “For women, in only three of the included majors — physiology, computer science and pharmacology — did they out-earn their male counterparts.” While the ultimate value of college may well be worth it for degree-holders, the majority of Americans now bristle at the increasing cost . Last week, the Pew Research Center released a survey that asked whether or not college was worth it . Of the more than 2,000 people surveyed, 57 percent claim that higher education fails to provide adequate value in return for increasingly high costs. Further, 75 percent said that college is too costly for the average citizen to afford. Despite its high cost, Carnevale still believes a college degree is unequivocally worth it. “A college degree is still the threshold requirement for access to the middle and upper middle class,” said Carnevale. “But access to the upper class now depends on your major.” Both Carnevale and his colleague, Carl Van Horn, a professor of public policy at Rutgers University, caution current college students with giving the choice of major careful consideration. Specifically, he advises students to be better informed about the future weight of the decision they’re about to make. “Rather than following the whimsy of what their friends are doing or what their parents want them to do, they need to understand the choice they’re making,” said Van Horn, who also directs Rutgers’ John J. Heldrich Center for Workforce Development. “Pre-school teachers don’t make $150,000, investment bankers do. The choice of major is especially critical now when the labor market is so very competitive.”

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Calling All Petroleum Engineers: Your College Major Is More Important Than Degree Itself

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Andrew Sum: Is Rising Structural Unemployment a Problem?

October 1, 2010

In recent months, a number of national economic analysts have referred to the persistence of high unemployment rates as the “new normal,” and some, including Narayana Kocherlakota, a regional Federal Reserve Bank President, have blamed rising structural unemployment as a source of the problem. This supposed rise in structural unemployment results from a mismatch between the skills required for available job openings and skills of unemployed workers. Yet very little substantive evidence has been offered in support of this hypothesis. The total number of job vacancies in the U.S. has been increasing modestly, in recent months, rising above 3 million in July. This still represents a vacancy rate of only slightly above 2% versus the massively greater number of unemployed, underemployed, and mal-employed workers (over 40 million). Knowledge of where those job vacancies are, their occupational/skill requirements, their durations, and reasons for remaining unfilled are critical to a proper interpretation of what is going on in the labor market. Unfortunately, available national job vacancy data do not provide any substantial answers to these important policy questions. However, several states including Florida, Massachusetts, and Minnesota do collect detailed information on existing vacancies. In the most recent vacancy surveys, between 32 and 45 percent of job vacancies in five states providing such data were part-time. In these states, there were approximately 8 unemployed workers seeking full-time jobs for every full-time job opening. Another issue that is critical to the validity of the mismatch hypothesis is evidence on the occupational characteristics of available job openings and their education/experience requirements. Skill mismatches imply the existence of a large pool of vacancies in high skill occupations (engineers, scientists, doctors, systems analysts, high level managers) with either above average formal educational requirements or long training durations that can lead to lags in producing a new set of qualified entrants. The available evidence from five states (Florida, Kansas, Massachusetts, Minnesota, Washington) on the educational requirements of job vacancies indicates that only 36% of the available job vacancies require the applicants to possess an Associate’s or higher degree. Applying this ratio nationally would yield just about 1 million job vacancies requiring an Associate’s or higher degree in June of this year. At that time there were 5.2 million unemployed U.S. workers with some years of college or an Associate’s or higher academic degree. When we add in mal-employed college graduates working in jobs that do not require a college degree, there were 17 million unemployed or mal-employed college graduates for these 1 million job vacancies. If skill mismatches were a serious problem in U.S. labor markets, then one would expect to find that many job openings were remaining vacant for a fairly long period of time. However, data on the durations of existing job vacancies available from three states reveal that the overwhelming share of job vacancies are very short-term in duration. Between 80 and 90 percent of the job vacancies in these three states were open for two months or less, with the vast majority of them (70%) open for less than 30 days. There are very few job vacancies that were open for more than two months (15%). The six month definition of long-term is that used by labor economists and the BLS in defining long-term unemployment. If we compare the estimated number of long-term unemployed in the U.S. in recent months (6.5 million) with the estimated number of long-term job vacancies, the ratio is 43-1. There is another approach to measuring whether labor markets are providing adequate job opportunities and experiencing serious mismatch problems. Ask the public. Repeatedly, over the first six months of this year, national public opinion polls have found an extraordinarily high degree of pessimism about the performance of the national economy and the state of U.S. or local labor markets. In a June 2010 ABC poll, 88% of the respondents rated the overall state of the U.S. economy as “not so good/poor”. Only 12% classified the economy as being in an excellent or good situation. Despite the official view announced in September by the National Bureau of Economic Research that the national recession ended sometime in June 2009, a May 2010 NBC /Wall Street Journal poll found that 76% of the public believed that the nation was still in a recession a year later. A March 2010 Pew Research Center poll on the public’s perception of job opportunities in their local home area revealed that 85% reported that “jobs are difficult to find” while only 10% though that there were plenty of jobs available. The 85% response was the highest since the national recession started at the outset of 2008. In a 2010 Pew Research Center poll, 28% of adults claimed that they had their hours reduced during the recession, 11% said they were forced to switch to a part-time job, and 23% reported a pay cut. All of these findings combined do not reveal anything close to a labor market experiencing a mismatch problem. Today, there are five official unemployed persons per every job vacancy in the nation, about 8 full-time unemployed per full-time vacancy, 10 unemployed or underemployed persons per every job vacancy, and 14 unemployed, underemployed, and mal-employed persons per job vacancy. The current degree of surplus is also likely the worst in the entire post-World War II era. In his classic 1944 text, Full Employment in A Free Society , the late William Beveridge of Great Britain noted that full employment of labor existed when “there were more available jobs than men. Jobs should wait not men.” How far removed we are from that situation today. To be worried about structural unemployment or labor mismatches with the massive degree of labor surplus currently prevailing in U.S. labor markets is not only intellectually dishonest but detracts from the more immediate need for active and comprehensive job creation efforts across the country to put the unemployed and underemployed back to work. The only labor shortage that exists today is “Honest Abes” in national economic reporting. Andrew Sum a Professor Economics and the Director of the Center for Labor Market Studies at Northeastern University.

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Andrew Sum: Is Rising Structural Unemployment a Problem?

October 1, 2010

In recent months, a number of national economic analysts have referred to the persistence of high unemployment rates as the “new normal,” and some, including Narayana Kocherlakota, a regional Federal Reserve Bank President, have blamed rising structural unemployment as a source of the problem. This supposed rise in structural unemployment results from a mismatch between the skills required for available job openings and skills of unemployed workers. Yet very little substantive evidence has been offered in support of this hypothesis. The total number of job vacancies in the U.S. has been increasing modestly, in recent months, rising above 3 million in July. This still represents a vacancy rate of only slightly above 2% versus the massively greater number of unemployed, underemployed, and mal-employed workers (over 40 million). Knowledge of where those job vacancies are, their occupational/skill requirements, their durations, and reasons for remaining unfilled are critical to a proper interpretation of what is going on in the labor market. Unfortunately, available national job vacancy data do not provide any substantial answers to these important policy questions. However, several states including Florida, Massachusetts, and Minnesota do collect detailed information on existing vacancies. In the most recent vacancy surveys, between 32 and 45 percent of job vacancies in five states providing such data were part-time. In these states, there were approximately 8 unemployed workers seeking full-time jobs for every full-time job opening. Another issue that is critical to the validity of the mismatch hypothesis is evidence on the occupational characteristics of available job openings and their education/experience requirements. Skill mismatches imply the existence of a large pool of vacancies in high skill occupations (engineers, scientists, doctors, systems analysts, high level managers) with either above average formal educational requirements or long training durations that can lead to lags in producing a new set of qualified entrants. The available evidence from five states (Florida, Kansas, Massachusetts, Minnesota, Washington) on the educational requirements of job vacancies indicates that only 36% of the available job vacancies require the applicants to possess an Associate’s or higher degree. Applying this ratio nationally would yield just about 1 million job vacancies requiring an Associate’s or higher degree in June of this year. At that time there were 5.2 million unemployed U.S. workers with some years of college or an Associate’s or higher academic degree. When we add in mal-employed college graduates working in jobs that do not require a college degree, there were 17 million unemployed or mal-employed college graduates for these 1 million job vacancies. If skill mismatches were a serious problem in U.S. labor markets, then one would expect to find that many job openings were remaining vacant for a fairly long period of time. However, data on the durations of existing job vacancies available from three states reveal that the overwhelming share of job vacancies are very short-term in duration. Between 80 and 90 percent of the job vacancies in these three states were open for two months or less, with the vast majority of them (70%) open for less than 30 days. There are very few job vacancies that were open for more than two months (15%). The six month definition of long-term is that used by labor economists and the BLS in defining long-term unemployment. If we compare the estimated number of long-term unemployed in the U.S. in recent months (6.5 million) with the estimated number of long-term job vacancies, the ratio is 43-1. There is another approach to measuring whether labor markets are providing adequate job opportunities and experiencing serious mismatch problems. Ask the public. Repeatedly, over the first six months of this year, national public opinion polls have found an extraordinarily high degree of pessimism about the performance of the national economy and the state of U.S. or local labor markets. In a June 2010 ABC poll, 88% of the respondents rated the overall state of the U.S. economy as “not so good/poor”. Only 12% classified the economy as being in an excellent or good situation. Despite the official view announced in September by the National Bureau of Economic Research that the national recession ended sometime in June 2009, a May 2010 NBC /Wall Street Journal poll found that 76% of the public believed that the nation was still in a recession a year later. A March 2010 Pew Research Center poll on the public’s perception of job opportunities in their local home area revealed that 85% reported that “jobs are difficult to find” while only 10% though that there were plenty of jobs available. The 85% response was the highest since the national recession started at the outset of 2008. In a 2010 Pew Research Center poll, 28% of adults claimed that they had their hours reduced during the recession, 11% said they were forced to switch to a part-time job, and 23% reported a pay cut. All of these findings combined do not reveal anything close to a labor market experiencing a mismatch problem. Today, there are five official unemployed persons per every job vacancy in the nation, about 8 full-time unemployed per full-time vacancy, 10 unemployed or underemployed persons per every job vacancy, and 14 unemployed, underemployed, and mal-employed persons per job vacancy. The current degree of surplus is also likely the worst in the entire post-World War II era. In his classic 1944 text, Full Employment in A Free Society , the late William Beveridge of Great Britain noted that full employment of labor existed when “there were more available jobs than men. Jobs should wait not men.” How far removed we are from that situation today. To be worried about structural unemployment or labor mismatches with the massive degree of labor surplus currently prevailing in U.S. labor markets is not only intellectually dishonest but detracts from the more immediate need for active and comprehensive job creation efforts across the country to put the unemployed and underemployed back to work. The only labor shortage that exists today is “Honest Abes” in national economic reporting. Andrew Sum a Professor Economics and the Director of the Center for Labor Market Studies at Northeastern University.

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Foreclosures Hit Record High in August

September 16, 2010

August saw more Americans lose their homes to foreclosure than any other month on record, RealtyTrac reported today. Banks repossessed a total of 95,364 properties in August, a 25 percent increase from the same period in 2009 and a 2 percent increase over this May’s previous record. Foreclosure filings of all types, including default notices, scheduled auctions and bank repossessions (the three major stages of the foreclosure process), increased to 338,836 in the month, a 4 percent jump from July. At the same time, though, the number of default notices that lenders issued to homeowners to initiate the foreclosure process actually went down. The August total of 96,469 was a 1 percent decline from July and a 30 percent drop from August of last year. It’s significantly lower than the April 2009 peak of 142,064 default notices issued. That the numbers of repossessed homes and default notices (respectively the last and first stages of the process) are converging demonstrates that banks are trying to mitigate the flow of new homes to the market. As Bloomberg reported Wednesday, the glut of housing inventory means home prices could decline for at least three years. Indeed, the number of properties with delinquent loans (30 or more days past due) that aren’t yet in foreclosure is currently 4,947,000, or 9.22 percent of all mortgage-financed homes, according to data from Lender Processing Services . The total number of foreclosed properties on the market, LPS says, is 2,038,000. It’s a bleak picture, but glimmers of hope emerge. The majority of Americans (at least, the majority of a 3,399-person sample) think the market has bottomed out, according to a survey released today by Fannie Mae . 47 percent of those surveyed said prices will remain flat for the next year and 31 percent predicted prices will rise. Even in such trying times, the majority of a 2,967-person sample of Americans say it’s “unacceptable” for homeowners to willingly walk away from a mortgage, according to a new survey from Pew Research Center . A whopping 59 percent of respondents condemn homeowners who choose to stop payments on “underwater” mortgages. According to the RealtyTrac data, Nevada and Florida led the nation in rates of foreclosure filings (including default notices, scheduled auctions, and repossessions) in August, despite year-over-year decreases in activity in both those states. One in every 84 Nevada homes received some form of foreclosure filing, compared to one in every 155 homes in Florida. Arizona, California and Idaho were right behind Nevada and Florida in the foreclosure rankings.

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Video: Charles Nenner Sees Dow Falling to 5000 in Two Years

August 25, 2010

Aug. 25 (Bloomberg) — Charles Nenner, founder of the Charles Nenner Research Center, talks about cycle forecasting and his forecast for the Dow Jones Industrial Average. He speaks on Bloomberg Television’s “On The Move” with Francine Lacqua.

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401K Plans: What Do They REALLY Cost?

July 14, 2010

Boston College’s Center for Retirement Research Center has a study out this month about the cost of 401(k) plans, and they have found another flaw in the nation’s defacto retirement savings system: It is overpriced. So not only do 401(k) plans not meet the needs of the average American, they aren’t cost effective either. I wrote about the problem with 401(k) plans in a cover story for TIME last year.

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Deborah Frett: Fact or Fiction: Is Gen Y Lazy?

April 22, 2010

Calling Gen Y (born 1978-1994) lazy is en vogue . The Washington Post’s April 3rd article is among the latest to call into question this generation’s work ethic . The article highlights new data from the Pew Research Center that confirms current suspicions: Gen Y is different. Is this really a surprise? Unlike the Silent Generation, Boomers and Gen X, Pew found that Gen Y is the only generational cohort that doesn’t cite “work ethic” as a defining characteristic. The top three responses elicited by the open-ended question were: technology use, music/pop culture and liberal/tolerant. Further, Gen Y believes that older employees have a better work ethic and therefore they aren’t interested in asserting moral superiority. As the head of a research organization, I could critique Pew’s methodology or call the analysis problematic (see Erica Williams’ discussion on the use of “work ethic” ). As an employer of Gen Y women, I could testify about the hard-work and dedication of my younger staff members. And, of course, insert an overused stereotype about their techie tendencies (after all they did convince me to buy an iPhone). I’m going to put my professional and personal concerns on hold for now. My concern is less about the data or conclusions many researchers have been asserting, and more about the issues they are raising. What we learn about Gen Y is determined by the questions we ask. And we’re asking the wrong questions. Gen Y workers don’t define themselves by their work ethic. So, what? It’s an interesting piece of data. But, that’s all it is. What we really need is data that can lead to action. To be competitive in the future, employers need information that leads to strategies for attracting and retaining Gen Y talent. The current literature on Gen Y, seems preoccupied with the extent to which Gen Y is or isn’t lazy. But this distracts from larger research questions. We need a new framework for understanding Gen Y. We don’t have to stop discussing generational differences, but we do need to probe deeper to understand the factors that create those differences. How does Gen Y understand work? What is their definition of work ethic? How does their understanding of work affect how and when Gen Y produce results? How can employers collaborate with Gen Y to redefine the workplace? These are the types of questions Business and Professional Women’s (BPW) Foundation is exploring. Through our Young Careerist Research Project we’re asking Gen Y women about their views of work and the workplace and will then share that knowledge with employers looking to recruit and retain these young women. Employers are beginning to recognize that utilizing the talents of Gen Y will increase their talent pool and will also improve their bottom line. BPW Foundation’s primary research will give voice to a distinct group of working women who are vital to developing tomorrow’s diverse and skilled workforce. Over the next 20 years, talent will be the most important corporate resource. If we are going to succeed, we can’t afford to ignore Gen Y’s demands for new rules of engagement. BPW Foundation is looking for Gen Y women and employers to partner with us in our research. If you would like to redefine the workplace for today, and in the future, email to foundation@bpwfoundation.org .

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China Said to Halt Import Permits for Argentina Soybean Oil as Rift Grows

April 11, 2010

By Bloomberg News April 11 (Bloomberg) — China stopped giving import permits for soybean oil from Argentina as a trade rift between the two nations widens, four executives familiar with the matter said. The Ministry of Commerce’s computer system for processing permit applications isn’t functioning and the ministry didn’t say when it would be operational, said the people, who declined to be named because they’re not authorized to speak publicly. China is the world’s biggest soybean oil buyer. The central government assumed full control for Argentine soybean oil imports from the provinces from April 1. The move was in response to Argentina’s anti-dumping investigations on Chinese goods ranging from steel pipes to textiles, according to a Chinese state-backed trade group. An Argentine delegation visiting Beijing this week failed to reach agreement on the matter as China’s government said the import issues are related to oil quality, the people said. China is likely to maintain its curbs in the near term, the executives said. The government isn’t restricting Argentine soybean oil imports and the decision to centralize import permit management is to further monitor Argentine oil, a press official at the commerce ministry, who asked not to be named, said in a telephone interview yesterday. A separate official at the ministry denied the government had stopped accepting import permit applications, in an interview in Beijing today. He said to his knowledge the online system is still working and China’s general position on Argentine soy hasn’t changed, while declining to be identified. The Argentine embassy was closed and unable to be contacted by phone. Cargo Canceled The move comes as domestic rapeseed crops are about to be harvested and imports of soybeans are projected to reach a record, so the China vegetable oil market is well supplied, the executives said. China and Argentina may be able to resolve the dispute, Cheng Guoqiang , deputy head of the State Council’s Development & Research Center, said at a conference today in Beijing. A state-owned company canceled one Argentine cargo this week, weighing about 10,000 tons, one of the executives said. Two were redirected to other countries because buyers were concerned they would be rejected on arriving in China, he said. Two shipments are expected to arrive in China this month after they departed Argentina before the announcement on March 31, and traders are waiting to see how those cargoes are handled by the authorities, the people said. Traders will have to rework contracts that have already been signed with Argentine suppliers, one executive said. Argentina is China’s biggest supplier of soybean oil and China is the Latin American nation’s biggest buyer. The government of Argentina collected $600 million in export taxes on the cooking oil sold to China, two of the people said. — William Bi , with assistance from Li Yanping . Editors: Tom Kohn , Garfield Reynolds . To contact the Bloomberg News staff on this story: William Bi in Beijing at wbi@bloomberg.net

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Honda to Recall 437,763 Vehicles Globally to Fix Air Bags After Injuries

February 10, 2010

By Alan Ohnsman and Tetsuya Komatsu Feb. 10 (Bloomberg) — Honda Motor Co ., Japan’s second- largest automaker, will recall 437,763 vehicles globally to repair air bags that can deploy with too much pressure, adding to previous U.S. recalls for the same defect. The expansion covers 378,758 vehicles in the U.S., Honda said in a statement late yesterday. The Tokyo-based carmaker will recall about 4,000 cars and minivans in Japan, it said in a filing to the nation’s Transport Ministry today. The recall expansion heightens safety scrutiny of Japan’s largest automakers. Honda’s biggest competitor, Toyota Motor Corp. , is working to reassure customers after recalling more than 8 million vehicles worldwide to fix problems linked to unintended acceleration and brake failures. “Because of the Toyota recalls, Honda’s action is getting a lot of attention, but it’s not fundamentally a big deal,” said Mamoru Kato , an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “Recalls are kind of an everyday thing.” Honda fell 0.2 percent to 3,055 yen as of the 11 a.m. trading break in Tokyo. The company knows of one death and 12 incidents related to the air-bag defect, John Mendel , Honda’s U.S. executive vice president, said in a conference call. “The air bag produces excessive internal pressure, and there’s a risk of some metal shards coming through. That could cause injury.” Takata Corp. U.S. vehicles to be repaired include some 2001 and 2002 Accord and Civic cars, Odyssey minivans, CR-V sport-utility vehicles and 2002 Acura TL cars. An initial U.S. recall in November 2008 included 4,600 Accords and Civics, and another 440,000 of those cars and some Acura TLs were added in July. In Japan, Honda is recalling Inspire and Saber cars and Lagreat minivans, the carmaker said in today’s filing. Mendel said some vehicles in Canada and other markets would also be affected by the action, without elaborating. The air bags were made by Tokyo-based Takata Corp. , according to Honda. Takata shares fell 1.6 percent to 1,890 yen. Honda’s U.S. operations are based in Torrance, California. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Nicotine Skin Patch Helps More Quitters Resist Cigarettes When Worn Longer

February 1, 2010

By Ellen Gibson Feb. 1 (Bloomberg) — Cigarette smokers trying to quit who wear a nicotine patch for six months, rather than the standard two, may stay away from smoking longer, U.S. scientists said. Researchers at the University of Pennsylvania School of Medicine found that 32 percent of smokers who wore the patch for 24 weeks were smoke-free, compared with 20 percent of those who used it for 8 weeks, according to a report in tomorrow’s Annals of Internal Medicine . Participants used GlaxoSmithKline Plc ’s Nicoderm CQ. Novartis AG makes a competing product. Smoking cigarettes increases the risk for lung cancer, heart attack, stroke and high blood pressure, according to the National Institutes of Health , and adults who smoke die 14 years earlier on average than nonsmokers. Those who puff may become addicted to nicotine, and quitters often undergo withdrawal and have cravings that persist long term. “Nicotine addiction is not an acute condition that can be treated in a couple of months,” said study author Robert Schnoll , an associate professor of psychology at Penn, in a Jan. 29 phone interview. “It’s a chronic condition that needs extended therapy and we hope this research will encourage doctors to keep their patients on the patch longer.” Glaxo’s NicoDerm CQ and Novartis’s Habitrol are patches that supply the body and brain with a steady stream of nicotine absorbed through the skin. Current guidelines recommend using the patches for 8 weeks, the study’s authors said. The nicotine helps to prevent withdrawal symptoms in people who stop smoking, according to the Bethesda, Maryland-based NIH. Study Design The study was conducted at Penn’s Transdisciplinary Tobacco Use Research Center in Philadelphia in people who smoked at least half a pack a day. About half of the 568 participants received active nicotine patches for 24 weeks. The rest had eight weeks of nicotine replacement followed by 16 weeks of placebo patches. All were given behavioral counseling. At the end of six months, 89 people in the treatment group were smoke-free for seven days, compared with 58 people in the placebo group, the researchers said. At the one-year mark there was no difference between the two groups, with both having a quit rate of about 14 percent. That statistic reinforces the idea that nicotine dependence should be treated more like opioid addiction, Schnoll said, where users are sometimes given methadone, a detoxification medication, for years. No Cold Turkey The American Lung Association in Washington doesn’t recommend that smokers quit “cold turkey,” without the aid of a prescription or over-the-counter treatment, said Norman Edelman , the organization’s chief medical officer, in a Jan. 29 phone interview. Nicotine supplements also come in the form of gum, lozenges, nasal sprays, and inhalers, according to the NIH. Other treatment options are Chantix, a drug from New York-based Pfizer Inc. that works on the brain’s nicotine receptors, and Glaxo’s Zyban, which is available in generic form under the name buproprion. The two main barriers to keeping patients on the nicotine patch longer are side effects and costs, Schnoll said. Common side effects of the patch include skin redness, headache, nausea, and sleep problems. The researchers found no significant difference in the intensity of side effects between the treatment and placebo groups after the eighth week, according to the report. Safer Than Smoking “We don’t know, longer term, what effect keeping people on the patch would have,” said Schnoll. “But nicotine replacement therapy is definitely safer than tobacco use.” The additional cost per quitter was about $2,482 for the 24-week treatment regimen, the research paper said. Only 8.6 percent of health insurers cover the full cost of the patches, and only 33 states subsidize them for Medicaid patients, the study’s authors said. “If you do the arithmetic,” said the lung association’s Edelman, “you’ll find that if you live in New York City and you smoke a pack a day, you’re already spending about $300 a month.” The study was funded by a grant from the National Cancer Institute and the National Institute on Drug Abuse. The study’s senior author, Caryn Lerman , has served as a consultant for GlaxoSmithKline. To contact the reporters on this story: Ellen Gibson in New York at egibson9@bloomberg.net ;

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Christine Whelan: Pew Report: Thank Your Wives, You Lucky Bastards

January 20, 2010

In a report on the ” new economics of marriage ” released yesterday, the good folks at the Pew Research Center have a much-needed message for college-educated married men: Say thank you to your wives, you lucky bastards. In the last four decades, “the economic gains associated with marriage have been greater for men than for women,” write coauthors Richard Fry and D’Vera Cohn. Why? Because college-educated married men are increasingly likely to be married to the highest-income, highest-educated wives. That translates to more household income, a boost that men didn’t expect to receive from marriage two generations ago. And here everyone thought that the feminist revolution had been all about the ladies. Among the highlights of the report: • Education Matters: The share of men with a college-educated wife has risen, while the share of women with a college-educated husband has fallen, the Pew authors report. Again, the guys have it good: In 2007, 71% of college educated husbands had a college-educated wife – up dramatically from 1970 where only 37% did. But the opposite trend is effect for women: Because more women than men are graduating from college ( estimates for 2010 are that nearly 142 women will graduate from college for every 100 men) it’s more likely that a woman will marry a man with less education than it was four decades ago. • Educated Wives Are More Likely to Work for Pay: On average, college-educated wives contribute about 36% of the income for married-couple households. And the more education a woman has, the more likely she is to earn as much or more than her husband, so the rise in women’s education–and the fact that the majority of married women combine paid work with motherhood–has been quite a boon for the men they marry. • Wives Who Earn More Have (A Bit) More Power: Pew asked respondents who had the final say on financial matters–the wife, the husband or were decisions shared? These are always loaded questions–and complicated because in many couples the who “earns more” varies from year to year–but the survey found that breadwinner wives are more likely to call the financial shots. Among couples where the wife outearns her husband, 46% said financial decisions are made mostly by the woman, while 33% said the decisions were shared. Or, another way to look at it, is that even when the wife earns more than the husband, he still calls the shots nearly a quarter of the time. So, guys, this boils down to some practical advice: Find a college-educated young lady and do your best to get her to marry you. Then be very, very nice to her because she’s not only brightening your world, she’s making it quite a bit richer, too.

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Morphine for Combat Injured Halved Rate of Post-Traumatic Stress Disorder

January 13, 2010

By Alexandra Thomas Jan. 13 (Bloomberg) — Giving morphine to troops injured in fighting in Iraq lowered their risk of post-traumatic stress disorder by half, a study found. The study, published today in the New England Journal of Medicine , identified 696 U.S. Navy and Marine Corps personnel who suffered a major combat injury from 2004 to 2006. Seventy- six percent of those who didn’t develop the disorder had received morphine, compared with about 60 percent of those who hadn’t, the researchers found. As many as one in five veterans of the Iraq war have experienced post-traumatic stress disorder, or PTSD, after a serious injury during combat, according to the U.S. Veterans Affairs Department . A reliable way to prevent PTSD would significantly change military emergency medicine, said the researchers from the Naval Health Research Center in San Diego. “Such findings suggest a potential for prophylactic use of rapid pain reduction among injured, traumatic persons in both military and civilian acute care settings,” wrote Matthew Friedman from Dartmouth Medical School in Hanover, New Hampshire, in an editorial accompanying the study. Friedman likened the morphine treatment to “a morning-after pill.” PTSD is an anxiety disorder that some people get after living through a dangerous or painful event, according to the National Institutes of Health, a U.S. agency. Gunshots, Grenades The military personnel in the study included those injured by improvised explosive devices, gunshots, mortars and grenades. The results showed 147 of the 243 with PTSD had received morphine compared with 346 of 453 without PTSD who had gotten morphine. The stress disorder develops after the brain encodes memories during a traumatic event, researchers said in the study. The results suggested morphine and related opiates, may reduce or prevent the disorder by blocking this process when given soon, usually within one hour, after injury. If people who suffer only minor injuries don’t need morphine for physical pain, the drug could protect them from later developing PTSD, according to the editorial. Even if it’s unlikely morphine will be given to everyone undergoing a trauma, drugs like propranolol and clonidine may have the same effect. To contact the reporter on this story: Alexandra Thomas in Washington at athomas48@bloomberg.net .

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China May Overheat With 16% GDP Growth in 2010, Government Researchers Say

January 10, 2010

By Bloomberg News Jan. 11 (Bloomberg) — China’s economy may grow as much as 16 percent this year with accelerating inflation and the risk of a property bubble unless policy makers reduce stimulus measures, government researchers said today. “If the government continues with the same strength of macro-economic stimulus as in 2009, there will be notable economic overheating in 2010,” Yao Zhizhong and He Fan , economists with the Chinese Academy of Social Sciences, said in an article published in the official China Securities Journal. Local media reported today that new lending surged last week. A stronger-than-estimated trade rebound in December may give policy makers more room to pare stimulus measures after record lending in 2009. The central bank last week guided three- month bill yields higher for the first time since August and may lift the benchmark one-year lending rate to 5.85 percent by year-end from 5.31 percent, economists forecast. China’s exports grew 17.7 percent last month from a year earlier, the first increase in more than a year, and imports rose to a record, customs data showed yesterday. Gains were boosted by a low base for comparison in 2008. “The export rebound will add significant momentum to China’s growth, contributing about 7.5 percentage points to growth in gross domestic product ,” Yao and He said. China’s banks lent 600 billion yuan ($87.9 billion) in the first working week of January because of pent-up demand from the end of 2009, Economic Information Daily, a newspaper affiliated to the state-run Xinhua News Agency, reported on its Web site today without citing a source. Daily Lending Banks loaned about 100 billion yuan a day last week, the official China Securities Journal reported separately today. The publication said Ba Shusong , deputy head of the finance institute under the State Council Development and Research Center, gave the number at a conference. Ba didn’t specify the source of his information. That would compare with 294.8 billion yuan for all of November. December data may be released this week. Chinese lending is usually biggest at the start of each year. The economy will expand 11.6 percent this year with “moderate” stimulus, Yao and He said. A complete withdrawal of measures to aid growth would see a dip to 7.7 percent, they said. The world’s third-biggest economy expanded 8.5 percent last year, according to the median forecast in a Bloomberg News survey of economists. To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net

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Water on Moon Found in `Significant’ Amounts After NASA Probe Hits Surface

November 13, 2009

By Ryan Flinn Nov. 13 (Bloomberg) — NASA found a “significant amount” of water in a crater near the moon’s south pole, the agency said today in unveiling the results of an experiment that slammed a rocket into the lunar surface. “Yes, we found water,” said Anthony Colaprete , a project scientist for the so-called Lcross mission, during a televised news conference today at NASA’s Ames Research Center in Moffett Field, California. “We found a significant amount,” enough to fill about a dozen 2-gallon (7.6-liter) buckets, he said. Lcross , which stands for Lunar CRater Observation and Sensing Satellite, crashed into the moon’s surface Oct. 9. The Northrop Grumman Corp. built the $79 million craft, comprised of a rocket and a followup probe, which plunged into a permanently darkened crater near the moon’s south pole. In last month’s mission, the probe flew through a dust plume kicked up by the first impact, to observe the cloud’s contents and transmit data to Earth. Ice on the moon could supply future explorers with drinking water or air for breathing and rocket fuel, once broken down into hydrogen and oxygen, according to the National Aeronautics and Space Administration. The water could have come from a comet or from the solar wind, Greg Delory, a senior fellow at the Space Sciences Laboratory and Center for Integrative Planetary Sciences at the University of California, Berkeley, said at the press conference. To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net .

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Consumer Confidence in U.S. Unexpectedly Fell in October on Job Concerns

October 27, 2009

By Courtney Schlisserman and Shobhana Chandra Oct. 27 (Bloomberg) — Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment. The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low. The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid. “As long as you have increasing unemployment, consumer confidence will remain mired in the muck,” said Joseph Brusuelas , an economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast a drop in sentiment. “We think we are going to have another rough patch in the housing market” after a government tax credit expires, he said. The S&P/Case-Shiller home-price index covering 20 metropolitan areas climbed 1 percent from the prior month, seasonally adjusted, after a 1.2 percent increase in July, the group said today in New York. Smaller Decline From a year earlier, the gauge fell 11.3 percent, less than the 11.9 percent decline forecast by the median estimate in a Bloomberg survey of 33 economists. The index fell 13.3 percent in July from a year earlier. Year-over-year records began in 2001. Most stocks fell for a third straight day. The Standard & Poor’s 500 Index dropped 0.3 percent to close at 1,063.41. Faltering consumer confidence is weighing on sales at retailers including Limited Brands Inc. The owner of the Victoria’s Secret chain yesterday said sales at stores open at least a year will decline by a percentage in the low- to mid- single digits. It had previously forecast sales would be little changed. J.C. Penney Co. Chief Executive Officer Myron Ullman told analysts Oct. 23 that the company is “starting to see some stabilization and some modest improvement in traffic,” although consumers are “still under enormous pressure.” Fewer Jobs The share of consumers who said jobs are plentiful dropped to 3.4 percent from 3.6 percent, according to today’s report from the Conference Board. The proportion of people who said jobs are hard to get increased to 49.6 percent, the highest level since May 1983, from 47 percent. The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 11.2 percent. The share expecting more jobs fell to 16.3 percent from 18 percent. Buying plans for automobiles, homes and major appliances within the next six months all decreased this month, today’s report showed. Government reports have shown that while companies are slowing the pace of firing they are reluctant to hire. The U.S. has lost 7.2 million jobs since the recession began in December 2007. Unemployment will top 10 percent in the first quarter of next year, according to a Bloomberg survey this month. ‘Quite Pessimistic’ Consumers “remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” Lynn Franco , director of the Conference Board Consumer Research Center, said in a statement. Consumer spending probably increased at a 3.1 percent pace in the third quarter, according to the median projection of economists ahead of the gross domestic product report due in two days. Demand will ease to a 1 percent growth rate the final three months this year, according to median forecasts in Bloomberg’s monthly survey. Regional Fed bank directors sought to leave borrowing costs unchanged last month, citing weak economic conditions and “strained” financial markets, according to minutes of their meetings on the discount rate released Oct. 20. “Household spending remained damped, constrained in part by job losses and consumer caution,” the minutes said of the directors’ views. Fed policy makers next meet Nov. 3-4. At their last meeting, in September, the Federal Open Market Committee repeated its vow to keep its benchmark rate low for an “extended period.” Tax Credit Home sales are getting a boost from an $8,000 tax credit for first-time home buyers and mortgage rates that have been held near historic lows by the Fed’s program to buy $1.2 trillion of mortgage-backed securities. “The good news about this is it really looks like a bottom,” Karl Case , an economics professor at Wellesley College and co-creator of the S&P/Case-Shiller index, said today in an interview on Bloomberg Radio. “The two risks are employment is terrible and the pipeline is still full of foreclosures. That has to be cleared out eventually for this to really turn up and produce a recovery.” Sales may cool after the tax credit expires. Lawmakers are debating an extension of the credit, which is currently set to lapse on Nov. 30. To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

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Are Young People Financially Illiterate? (QUIZ)

October 7, 2009

According to a new study from the University of Michigan Retirement Research Center, young people are ill-equipped to deal with the financial burdens present for most adults. From student loans and credit cards to investments and 401(k)s, recent college graduates are lost in a sea of business information. The study showed that less than a third of people between ages 23 and 28 could define interest rates, inflation and risk diversification. The National Council on Economic Education has been attempting to reverse this trend for years, though the results are not immediately visible. HuffPost Impact thinks that if America is to avoid reliving our current financial crisis, it behooves all of us to have a basic knowledge of markets and finances. To this end, we’ve put together a quick quiz (partially adapted from a quiz by the U.S. Securities and Exchange Commission ) to test your knowledge of modern economics and the business world. See how you do! (but don’t be too hard on yourself):

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Suntory May Buy Blackstone’s Orangina as Asahi Breweries Refrains From Bid

September 10, 2009

By Junko Hayshi and Fergus Maguire Sept. 11 (Bloomberg) — Suntory Holdings Ltd. may buy European drinkmaker Orangina Schweppes from Blackstone Group LP and Lion Capital Holdings Inc. after the Japanese brewer’s rival Asahi Breweries Ltd. said it wasn’t bidding. Tokyo-based Asahi isn’t considering Orangina, spokesman Tetsuya Kusada said by telephone today, denying a Financial Times report. Suntory is likely to secure Orangina and a 2.6 billion euros ($3.8 billion) agreement may be announced today, the FT said, without citing anyone. Suntory, Blackstone and Lion confirmed they were in talks yesterday. “The Japanese market is shrinking and beverage makers need to tap overseas markets for growth so the move make sense,” Tomonobu Tsunoyama , an analyst at Tokai Tokyo Research Center Co., said by telephone today. “The European drinks market is so far dominated by local players.” Buying the European drinks business previously owned by Cadbury Schweppes Plc would give Suntory the Oasis, Schweppes and other brands that have sales of about 1 billion euros in the region. Suntory, which is also in talks to merge with Japan’s biggest brewer Kirin Holdings Co., is expanding abroad as the country’s beer sales fall and the yen gains. Beer shipments by Japanese brewers fell 6 percent to 42.7 million cases last month, the lowest shipment level for August since records began in 1992. The Japanese currency has gained 17 percent against the dollar in the past year. The global soft drinks market grew 11 percent to $416.3 billion last year, according to Euromonitor International. Coca- Cola Co. had the biggest market share with Suntory ranked sixth, Kirin eighth and Orangina 15th. Spanish Chemist Orangina is an orange-flavored carbonated soft drink containing fruit pulp. The brand was founded in 1936 by a Spanish chemist and was later bought by French liquor maker Pernod Ricard SA. Pernod sold Orangina to Cadbury in 2001, and the drinkmaker was consequently acquired by Blackstone and Lion Capital for 1.85 billion euros in 2006. Suntory’s Europe sales fell 29 percent to 9.2 billion yen ($100 million) in 2008, accounting for 0.6 percent of total revenue of 1.5 trillion yen. The closely held company, based in Osaka, western Japan, makes Malt’s and Super Magnum Dry beers as well as Suntory Yamazaki Single Malt Whisky, and distributes for Carlsberg A/S in Japan. It also makes food and is the Japanese partner of Haagen Dazs ice cream. First-half net income for Suntory fell 28 percent to 8.16 billion yen on higher raw material costs and the yen’s gains. To contact the reporter on this story: Fergus Maguire at fmaguire@bloomberg.net

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Obama Backs Tax on Insurers, Mandate for Individuals in Health-Care Speech

September 9, 2009

By Julianna Goldman and Edwin Chen Sept. 9 (Bloomberg) — President Barack Obama endorsed taxing insurers on high-value medical plans and requiring individuals to get health insurance in a speech intended to push Congress toward passage of legislation revamping the U.S. health-care system. The president, in the text of his remarks, said he continues to support creating a government-run health-insurance program for small businesses and people without coverage that would be part of a broader exchange for the insurance market. He added that there are other “constructive ideas worth exploring,” indicating flexibility on what has become one of the biggest points of friction in the congressional debate. The U.S. health-care system is at a “breaking point” after years of fruitless debate, he said tonight, warning that without progress more families and businesses will be bankrupt “and more will die as a result.” “Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge,” Obama said in his address. “And out of this blizzard of charges and counter- charges, confusion has reigned.” Obama’s speech follows weeks of images of voters shouting at lawmakers about health care at town-hall meetings across the U.S. It also comes as public approval for his handling of the issue dropped to 42 percent in July from 51 percent in April, according to polls by the Pew Research Center for the People and the Press. Final Push The address begins the next, and what his advisers have described as final, phase of his push to overhaul the medical- care system. Before the speech, White House aides said Obama would bring “clarity” to the health-care debate and describe what he would like in the legislation. Obama said he will insist that the legislation not add to the federal budget deficit, projected to be $1.5 trillion next year. Part of it will be paid for by reducing “waste and inefficiency” in the government’s Medicare and Medicaid programs. To raise revenue, Obama endorsed imposing a fee on insurance companies, which he said would benefit by getting millions of new customers. “This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money,” he said. “This modest change could help hold down the cost of health care for all of us in the long-run.” In a bid to appeal to Republicans, Obama said he would test out “a range of ideas” to bring down the cost of medical malpractice insurance. He said he would adopt an idea from the administration of former President George W. Bush to set up demonstration projects in states to test ways of cut malpractice claims and keep more of them out of courts. To contact the reporters on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net ; Edwin Chen in Washington at echen32@bloomberg.net .

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U.S. Congress’s Approval Rating Declines to 24-Year Low, Pew Poll Finds

September 2, 2009

By Jonathan D. Salant Sept. 2 (Bloomberg) — Congress’s approval rating has fallen to its lowest level in more than two decades, according to a Pew poll that also shows Democrats fare better than Republicans among U.S. adults. Thirty-seven percent of those questioned gave Congress a favorable rating, the lowest in the poll’s 24-year history and a 13-point decline since April. Fifty-two percent rated Congress unfavorably. The poll of 2,003 adults was conducted Aug. 20-27 by the Pew Research Center for the People and the Press and the Pew Forum on Religion and Public Life of Congress. The survey had a margin of error of 2.5 percentage points. Congress returns to Washington next week to resume work on a proposed overhaul of health care that President Barack Obama has listed as a top priority. The lawmakers also are confronting legislation to curb the emissions blamed for global warming. The Pew poll showed that respondents, by a margin of 46-27 percent, say Democrats would do a better job than Republicans of overhauling health care. Forty-five percent said they have confidence in Democratic congressional leaders compared with 40 percent for Republicans. Fifty-five percent said they had confidence in Obama’s ability to handle health care. The respondents also favored Democrats over Republicans on other issues, saying they had more confidence in the majority party as follows: 42-32 percent on the economy, 47-25 percent on energy and 44-31 percent on foreign policy. Honest Government The poll found Americans believe Democrats care more about people like them by a 51-27 percent margin and regard Democrats as more honest and ethical by 42-26 percent. Even so, Democratic support slipped to 45 percent when the poll asked which party’s candidate the respondent would vote for in next year’s election or which way the respondent was leaning. Fifty-two percent picked the Democratic candidate in a poll preceding the 2006 elections when the party captured both houses of Congress. The comparable figures for Republicans were 44 percent in the next election, up from 40 percent four years earlier. Among those who described themselves as independent voters, the generic Republican candidate was supported over the Democrat 43-38 percent. In a poll preceding the 2006 midterm elections, Democrats held an 11 percentage point edge among independents. To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net .

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China `Tweaking’ Lending Policy to Cut `Froth,’ Maintain Growth, RBS Says

August 26, 2009

By Bloomberg News Aug. 27 (Bloomberg) — China’s banking regulators are “tweaking” lending policies to remove “froth” from the system while growth remains the top priority for policymakers, according to Royal Bank of Scotland Group Plc. The goal is to manage risk exposure among banks and asset quality by checking lending from going into A-shares traded on the mainland and properties, Wendy Liu , Hong Kong-based head of China research at RBS ABN Amro, said in a report dated yesterday. “The current tweaking seems aimed at reducing froth, rather than slowing growth,” Liu said. China plans to tighten capital requirements for banks, threatening to curb the record lending that’s fueled a rally in the stock market this year, three people familiar with the matter said last week. Chinese banks handed out a record $1.1 trillion of new loans in the first half to support the nation’s 4 trillion yuan economic stimulus package. The benchmark Shanghai Composite Index was the best- performing major market from Jan. 1 to Aug. 4, when it reached this year’s high. It has dropped 15 percent since then on concern the government will curb lending. The banking regulator sent draft rule changes to banks on Aug. 19 that would require lenders to deduct all existing holdings of subordinated and hybrid debt sold by other lenders from supplementary capital, said the people, who have seen the document and declined to be named as the matter is private. This may cut lending by as much as 700 billion yuan ($102 billion), China International Capital Corp. said Aug. 24. Loans, Stocks Wei Jianing, a deputy director at the Development and Research Center under the State Council, estimated about 1.16 trillion yuan of loans were invested in stocks in the first five months of this year, China Business News reported on June 29. Premier Wen Jiabao said in comments published this week that the government will maintain its fiscal and monetary policies as the economic recovery isn’t stable and faces many “uncertainties.” Authorities can’t be “blindly” optimistic as a “decline in external demand may continue for a longer time” and excess capacity may restrain industrial growth, Wen was quoted as saying on the State Council’s Web site Aug. 24. The top policy priority for the government in 2009 and 2010 remains growth given possible weak U.S. consumer spending next year, RBS’s Liu said. Real estate and commodities will benefit “significantly” from a continuation of China’s pro-growth policy, she said, adding that policymakers have “far greater tolerance” for asset-price appreciation over the medium term than before. China’s stock market may resume its rally in the fourth quarter as investors gain “better clarity on earnings and policy priority,” she added. To contact the Bloomberg News staff for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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Approval of Obama, Democrats Drops Amid Partisan Fighting, Pew Poll Finds

August 19, 2009

By Juliann Neher Aug. 19 (Bloomberg) — Barack Obama ’s approval rating declined as a growing number of Americans said the Democratic president and Republican leaders aren’t working together on important issues. In a poll from the Pew Research Center for the People and the Press, 63 percent of Americans said they thought the two sides weren’t working together. While 29 percent of respondents said Republicans are most to blame for the lack of cooperation, 17 percent cited Obama, up from 7 percent in February, Pew said. Obama’s job-approval rating fell 3 percentage points, to 51 percent from 54 percent in July, within the survey’s error margin of plus-or-minus 2.5 percentage points. His rating stood at 61 percent in June. Independents were almost evenly divided, with 45 percent saying they approved of Obama’s performance and 43 percent who disapproved. In June, independents approved of Obama’s job performance by almost a 2-to-1 margin. Approval ratings for the Democratic Party also fell, with 49 percent of Americans saying they viewed the party favorably. That’s down 10 percentage points from April, Washington-based Pew reported. Democrats had a 62 percent favorable rating just before Obama’s inauguration in January. The 40 percent approval rating for the Republican Party has held steady all year. On the economy, 90 percent of respondents rated economic conditions as poor or “only fair,” almost unchanged from a Pew poll in June. Pew’s poll of 2,010 adults nationwide from Aug. 11-17 was conducted by Princeton Survey Research Associates International. To contact the reporter on this story: Juliann Neher in Washington at jneher@bloomberg.net

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Approval of Obama, Democrats Drops Amid Partisan Fighting, Pew Poll Finds

August 19, 2009

By Juliann Neher Aug. 19 (Bloomberg) — Barack Obama ’s approval rating declined as a growing number of Americans said the Democratic president and Republican leaders aren’t working together on important issues. In a poll from the Pew Research Center for the People and the Press, 63 percent of Americans said they thought the two sides weren’t working together. While 29 percent of respondents said Republicans are most to blame for the lack of cooperation, 17 percent cited Obama, up from 7 percent in February, Pew said. Obama’s job-approval rating fell 3 percentage points, to 51 percent from 54 percent in July, within the survey’s error margin of plus-or-minus 2.5 percentage points. His rating stood at 61 percent in June. Independents were almost evenly divided, with 45 percent saying they approved of Obama’s performance and 43 percent who disapproved. In June, independents approved of Obama’s job performance by almost a 2-to-1 margin. Approval ratings for the Democratic Party also fell, with 49 percent of Americans saying they viewed the party favorably. That’s down 10 percentage points from April, Washington-based Pew reported. Democrats had a 62 percent favorable rating just before Obama’s inauguration in January. The 40 percent approval rating for the Republican Party has held steady all year. On the economy, 90 percent of respondents rated economic conditions as poor or “only fair,” almost unchanged from a Pew poll in June. Pew’s poll of 2,010 adults nationwide from Aug. 11-17 was conducted by Princeton Survey Research Associates International. To contact the reporter on this story: Juliann Neher in Washington at jneher@bloomberg.net

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Approval of Obama, Democrats Drops Amid Partisan Fighting, Pew Poll Finds

August 19, 2009

By Juliann Neher Aug. 19 (Bloomberg) — Barack Obama ’s approval rating declined as a growing number of Americans said the Democratic president and Republican leaders aren’t working together on important issues. In a poll from the Pew Research Center for the People and the Press, 63 percent of Americans said they thought the two sides weren’t working together. While 29 percent of respondents said Republicans are most to blame for the lack of cooperation, 17 percent cited Obama, up from 7 percent in February, Pew said. Obama’s job-approval rating fell 3 percentage points, to 51 percent from 54 percent in July, within the survey’s error margin of plus-or-minus 2.5 percentage points. His rating stood at 61 percent in June. Independents were almost evenly divided, with 45 percent saying they approved of Obama’s performance and 43 percent who disapproved. In June, independents approved of Obama’s job performance by almost a 2-to-1 margin. Approval ratings for the Democratic Party also fell, with 49 percent of Americans saying they viewed the party favorably. That’s down 10 percentage points from April, Washington-based Pew reported. Democrats had a 62 percent favorable rating just before Obama’s inauguration in January. The 40 percent approval rating for the Republican Party has held steady all year. On the economy, 90 percent of respondents rated economic conditions as poor or “only fair,” almost unchanged from a Pew poll in June. Pew’s poll of 2,010 adults nationwide from Aug. 11-17 was conducted by Princeton Survey Research Associates International. To contact the reporter on this story: Juliann Neher in Washington at jneher@bloomberg.net

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Honda, Nissan Earnings Beat Estimates as Governments Offer Aid to Buyers

July 29, 2009

By Makiko Kitamura and Kiyori Ueno July 29 (Bloomberg) — Honda Motor Co. and Nissan Motor Co., Japan’s second- and third-largest carmakers, posted earnings that beat estimates as costs fell and governments offered drivers incentives to buy new autos. Honda raised its forecast after net income in the first quarter dropped 96 percent to 7.5 billion yen ($79 million) compared with a 40 billion yen loss forecast by analysts

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Honda Raises Full-Year Earnings Forecast on Government Stimulus Measures

July 29, 2009

By Makiko Kitamura July 29 (Bloomberg) — Honda Motor Co. , Japan’s second- biggest carmaker, raised its full-year profit forecast as government stimulus measures in its largest markets boost demand for fuel-efficient vehicles. Tokyo-based Honda expects net income of 55 billion yen ($584 million) in the year ending March, compared with an earlier forecast of 40 billion yen, it said in a statement today

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