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Ann Pettifor: Happy Anniversary, Mr. Keynes

by on February 10, 2011

This post was originally published on bloomberg.com and is co-authored by Victoria Chick. Never has a book on economics been so anticipated. John Maynard Keynes’s The General Theory of Employment, Interest and Money was published 75 years ago today. Back then, there were queues outside the Economists’ Bookshop in Houghton Street, London. Opening hours had to be extended to deal with the rush of those eager for an alternative to policies that had ruined the global economy. The impact on the field of economics wasn’t unlike that on the scientific community when Charles Darwin published On the Origin of Species in 1859. Just as with Darwin’s book, Keynes’s shook the foundations of economic orthodoxy and had profound effects on his profession. The main thrust of Keynes’s work was also met with outright denial from his peers, including close colleagues, who reduced his theory to what one described as “diagrams and bits of algebra.” Above all, they denied the centrality of his theory of the rate of interest. This “bastard Keynesianism,” as British economist Joan Robinson called it, subverted and continues to block the Keynesian revolution both in vision and in method. Monetarists were concerned with the quantity of money. Keynes’s overwhelming concern was with the rate of interest on money. He argued that monetary policy should always support the private and public economy, stimulate it, and prevent recession. Safe and Risky The centerpiece of his policy prescription was to sustain low rates of interest across the spectrum of loans: short- and long-term, real, safe and risky. Countering determined efforts to undermine these policy goals, Keynes used his position at the Treasury and the Bank of England, and his influence with U.S. President Franklin D. Roosevelt, to make this vision a reality. Interest rates were forced down from 1932; the bank rate was set at 2 percent until 1951. To achieve this goal, which he argued was essential to sustained investment, growth and full employment, Keynes rejected the liberal-finance model based on deregulated international-capital flows. Instead he constructed a managed- finance model relying on domestic credit and restricted flows of international capital. From the end of the World War II until the 1970s, finance was managed, and low rates of interest prevailed. But with the celebrated move to free markets, this approach to finance was also rejected. ‘Golden Age’ For the 30 years since 1980, policy has supported liberalized, deregulated credit creation and capital flows. Since the Golden Age of 1950 until 1973, the borrowing costs for U.S. and U.K. businesses, adjusted for inflation, have doubled to about 6 percent, according to data assembled by Geoff Tily, author of the 2010 book Keynes Betrayed . Under liberalization, high rates of interest have been accompanied by the unsustainable growth of credit. This led to a series of excessive expansions and debt inflations and then severe contractions and debt deflations, beginning on the periphery of the global economy before spreading to Japan and South East Asia. The contrast between the Golden Age and the Age of Liberal Finance has at root this upward shift in the rate of interest. In the U.K., unemployment averaged about 2.5 percent in the Golden Age and close to 8 percent afterwards. Economic growth in the U.K. and the U.S. averaged 0.5 percent higher per year during the Golden Age than in the liberal-finance era, according to their respective National Accounts authorities. Economists Stray The global economy was finally ruined in 2007-09 as the financial system in the U.S. and Europe imploded under the weight of accumulated private debt. Subprime borrowers were the first to buckle under the weight of “dear money” — costly, unpayable debts. The widespread belief that it was low interest rates that caused the credit crisis is indicative of how far economists have strayed from Keynes’s theory and analysis. Equally, the idea that interest rates are now substantially lower, stems from a focus on policy rates while the high, real rates paid by consumers and businesses are ignored. To reduce real rates of interest for both industry and consumers requires the full embrace of Keynes’s approach to the global system: a coordinated effort to reverse financial liberalization. Only with finance restrained can there be prospects for public and private-sector expansion. Keynes’s General Theory — not the “Keynesian” theory of textbooks and conventional wisdom — offers the same way out of today’s crisis as it did in the 1930s. But the economics profession must begin a reappraisal of his central contribution to monetary theory. And just as with On the Origin of Species , society must reconsider conventional wisdom and reconcile itself to the extent and scope of Keynes’s vision. Victoria Chick is emeritus professor of economics at University College London and a co-founder of Prime — Policy Research in Macroeconomics. . Ann Pettifor is a director of Prime and co-author of The Economic Consequences of Mr. Osborne. To contact the writers of this column: Victoria Chick at v.chick@ucl.ac.uk Ann Pettifor at georgia@advocacyinternational.co.uk.

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Ann Pettifor: Happy Anniversary, Mr. Keynes

Julian Block: Bad Debt Deductions for Worthless Loans to Spouses

by on February 1, 2011

These being the times they are, you may be tapped for a loan by a relative or friend who is unable to come up with the down payment for a home or who wants to start a business or keep it afloat. And what if the loan goes sour, as so often happens? The tax rules on deductions for bad debts can be more bad news for you. So before staking someone, it’s a good idea to know how the Internal Revenue Service looks on worthless loans. The IRS says you can deduct a worthless loan if there is no likelihood of recovery in the future. But you can’t take a deduction for an outright gift. That’s why the agency looks closely at bad debt deductions where the lender and borrower are related and why it may insist on proof that the “loan” wasn’t really a gift. Unpaid Loans and Marriage. The law presumes that loans from one spouse to another don’t create valid debts. To get around that snag, Carolyn Marlett claimed that her marriage to husband Charles was a “relationship maintained for financial convenience only.” Hence, her co-signing of a joint income tax refund was a loan to Charles, as were her other “advances” to him. However, Carolyn couldn’t convince the United States Tax Court that the advances were valid debts. In a 1976 decision, the court noted that she never asked Charles to sign notes or bothered to set an interest rate or repayment schedule. But the Tax Court isn’t completely inflexible on this issue. It ruled that June M. Rogers could deduct loans made to her husband, who declared bankruptcy after their divorce. The loans weren’t gifts; he used the money in an unsuccessful business venture and signed promissory notes for repayment. Can an Unreturned Engagement Ring be a Deductible Bad Debt? The Tax Court ruled in favor of the government in 1982 in a case involving Jack Wolfson. Jack was a Dallas salesman whose territory included Houston, where he met and ultimately became engaged to Yvonne Gibbs. To seal their engagement, he gave her a diamond ring. But just a week later, she broke things off and sold the ring (a decision triggered by Jack’s refusal to honor his promise to reimburse her for the cost of housing her poodle in a kennel during her visits with him in Dallas). Jack sued Yvonne for the ring’s cost and won a default judgment of $1,000, which he made no attempt to collect. Instead, the spurned lover took a bad debt deduction for $1,000. The IRS invoked two arguments to justify its disallowance of the deduction. First, Jack didn’t offer any proof he tried to collect. Therefore, the debt wasn’t worthless at the end of the year in issue, a requisite for the write-off of a bad debt. Second, simply giving an engagement ring doesn’t create a debt. Approving a bad debt deduction for that act alone “would, in essence, open the doors of litigation to allow every rejected lover to come into the Tax Court and ask it to allow him a deduction” for an unreturned ring. The IRS urged the court not to assume “part of the cost of the romance” of Jack with Yvonne. The judge deemed it unnecessary to rule on the second argument, as he agreed with the first one. Jack offered no evidence of Yvonne’s insolvency or other inability to pay during the year in question. Hence, he failed to prove the debt’s worthlessness during that year. **** Julian Block is an attorney and author based in Larchmont, N.Y. He has been cited as “a leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal) and “an authority on tax planning” (Financial Planning Magazine). His latest books are: “Julian Block’s Tax Tips for Marriage and Divorce: Savvy Ways for Couples to Trim Their Taxes;” “Julian Block’s Home Seller’s Guide to Tax Savings: A Tax Guide for Buyers, Sellers, Foreclosures, Short Sales, and More;” “Julian Block’s Easy Tax Guide for Writers, Photographers, and Other freelancers; ” and “Julian Block’s Tax Deductible Travel and Moving Expenses: How to Take Advantage of Every Tax Break the Law Allows.” His Web site is julianblocktaxexpert.com.

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Julian Block: Bad Debt Deductions for Worthless Loans to Spouses

Linda Tarr-Whelan: Women Call for Obama to Act on Women’s Leadership

August 27, 2010

Yesterday marked Women’s Equality Day, the commemoration of women’s suffrage achieved in 1920. What better time to take stock of what’s left to do? We need a national conversation led by the White House to explore how women decision-makers can help achieve better economic performance and a more prosperous future for all. The administration of Barack Obama has already taken the first step by appointing talented women — including Mary Schapiro, who holds the top job at the Securities and Exchange Commission; Elizabeth Warren, who chairs the Congressional Oversight Panel; and Sheila Bair, who heads the Federal Deposit Insurance Corp. — to help dig us out of the financial mess. Having a few females at the top is wonderful, but until we have at least 30 percent of senior women in leadership, we will be ignoring a strong dynamic that is working well elsewhere. Today, a growing body of research that shows positive outcomes from having balanced leadership has been ignored. Other countries are addressing the fundamental issue of leadership in ways that have yet to gain much traction in the U.S. We can certainly do better. Tapping the full range of talent that includes the skills, experience and leadership of women as well as men is hardly a radical idea. As the Economist magazine famously wrote in 2006, “Forget China, India and the Internet: Economic growth is driven by women.” An increasing number of reports show that having at least 30 percent of women in corporate and governmental leadership roles improves decision-making, opens up institutions and removes barriers to full participation. Performance Driver The U.S. has much to gain from a new leadership model. Economic growth and stock prices can only benefit. New York-based consulting firm McKinsey & Co. has released a series of reports since 2007 making the case that gender diversity at the top is a corporate performance driver. Yet, they note that three-quarters of 1,500 biggest companies have no women on their management boards. Further, there are only 28 female chief executive officers in 1,000 largest companies. Goldman Sachs, the most profitable securities firm on Wall Street, recommends investing in countries where the gender gap is closing and where the “laws and social norms that have discriminated against women are shifting.” Its studies show gross-domestic-product growth accelerates when women hold positions of power. Goldman has created the 10,000 Women Initiative, a $100 million, five-year program to provide an advanced business education for women. Costly Failures Failing to address challenges that keep women out of leadership is costly. New York-based research group Catalyst Inc. has shown that firms with three or more women on management boards boosted their return on equity by 112 percent, compared with those with fewer women. Recently, French President Nicolas Sarkozy joined a fast- moving trend in Europe to achieve 30 percent to 40 percent women on corporate boards. The French are following the lead of Norway, Spain and the Netherlands, which have already moved to accomplish these goals. The World Bank and the United Nations’ Global Compact policy initiative have also recognized women’s advancement as essential to economic growth. Michel Ferrary, a professor of management at the Skema Business School in Sophia Antipolis, France, studied the effects of balanced leadership in France during the financial crisis of 2007-08. “The more women there were in a company’s management, the less the share price fell in 2008,” he said . Investment Concept Similar results have been published by Pepperdine University in Malibu, California, and in the U.K., India and Australia. Gender equality, as an investment concept, has been taken up by mutual funds such as Pax World Investments, which recently started a Global Women’s Equality Fund betting that companies with more diverse leadership will perform better than others. A recent study by the National Council for Research on Women, based on data from Hedge Fund Research Inc., showed women hedge-fund managers outperformed their male counterparts. Our country has nothing to lose and much to gain by addressing the lack of women in top leadership. But it won’t just happen. The U.S., a country that aspires to be a world leader, ranks a pathetic 31st out of 134 countries in eliminating the disparities between women and men in the World Economic Forum’s Global Gender Gap Report. On the 90th anniversary of women’s suffrage, President Obama should consider convening a White House Roundtable to find ways to increase the number of women decision-makers in the economy. Then we can celebrate women’s equality in America. This piece was originally

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BP CEO Tony Hayward May Be Forced Out Over Handling Of Oil Spill

June 4, 2010

NEW YORK (AP)– So far, BP’s Tony Hayward has failed in his efforts to stop people from losing faith — or money — in his company. But he can’t stop trying. BP’s inability to contain the worst oil spill in U.S. history has focused attention on Hayward’s words and deeds over the past six weeks — and the scrutiny has not yielded a flattering image. The British oil giant’s board of directors supports Hayward, a spokesman said. Nevertheless, a series of misstatements by Hayward since the April 20 explosion that killed 11 people hasn’t helped his case with the general public — and investors have been fleeing BP’s stock. BP’s shares have plunged almost 40 percent since the rig explosion on April 20, erasing nearly $70 billion in value. Also, the Justice Department announced this week it is investigating the spill. Criminal charges against BP could lead to big changes at the company. “There’s an awful lot of pressure mounting up,” said Chris Skrebowski, director of Peak Oil Consulting and consulting editor at Petroleum Review. The spill has cost the company more than $1 billion to date. Wall Street analysts say the final bill could be 10 to 20 times that amount, when fines, lawsuits and years of cleanup are taken into account. A huge toll — but not enough to sink the company, which earned more than $16 billion last year. On Friday, Hayward will hold a conference call with worried investors. Aside from the disaster’s cost, they’ll want to hear what Hayward has to say about the company’s upcoming dividend payment. Some lawmakers have said it’s not right for the company to hand out billions to shareholders at a time when the complete cost of the oil spill is unknown. Analysts expect Hayward to be asked Friday about a possible management shake-up, but they do not anticipate Hayward to be forced to mount a defense of his own conduct. It would be surprising if Hayward were ousted while the company is still trying to plug the well, analysts said, because any executive that took over would run into the same difficulties he now faces. Afterward, all bets are off. “He’ll be given the benefit of the doubt, but not for very long,” Skrebowski said. An estimated 500,000 to 1 million gallons of crude has been spewing into the Gulf daily. Three weeks into the spill, Hayward told reporters that the amount of oil was relatively small given the Gulf of Mexico’s size. The U.S. government now estimates that anywhere between 21 million and 46 million gallons of oil has spewed into the Gulf, easily dwarfing the 11 million from the Exxon Valdez. Last weekend, Hayward angered Gulf residents when he said to reporters, “I’d like my life back.” The spill threatens the livelihoods of thousands in the Gulf, including fisherman and those tied to the tourism industry, not to mention the 11 men killed in the rig explosion. Hayward later apologized. These gaffes have diluted BP’s attempts to say the right things. Early on it committed to paying all “reasonable” costs of the cleanup. It ran ads in major newspapers this week, apologizing for the spill and pledging to clean up the mess. On Thursday, Hayward took a conciliatory tone, acknowledging that the company had not been prepared for a blowout on the sea floor. “We did not have the tools you would want in your toolkit,” he told the Financial Times. He also promised that BP would clean up every drop of oil and “restore the shoreline to its original state.” Hayward landed BP’s top job three years ago, promising to focus on safety after a series of accidents, including the 2005 Texas City refinery explosion that killed 15 people. Previously, he was head of the company’s exploration and production division. Hayward joined BP in 1982 as a rig geologist and moved through a range of positions at the company, including president of BP’s operations in Venezuela and group treasurer. With oil still gushing in the Gulf, Hayward must walk a delicate line Friday. If he reassures shareholders about the dividend, he risks angering the public for enriching investors with money that could be used for the cleanup. If the dividend is cut or suspended, he’ll disappoint investors who have received more than $10 billion in each of the last two years. BP has a generous annual dividend yield of 8.9 percent, compared with 2.8 percent for Exxon Mobil and 6.5 percent for Royal Dutch Shell. Some investors aren’t waiting around. “We’ve been asking, ‘Do we really want to be involved with BP?’” said Jon Jensen, executive director of the Park Foundation in Ithaca, N.Y. Last week the foundation answered, “No.” It sold all 110,600 of its shares, concerned that BP is facing potential liabilities in the tens of billions of dollars. Oppenheimer & Co. analyst Fadel Gheit pointed out there are layers of management between the rig operator and Hayward, and numerous BP officials could get pink slips if the company is found to have skirted federal safety guidelines. But if Hayward is found to have pushed exploration crews for faster results, he’d receive the blame. “If there is any link between the management system and the accident, then his job might be in jeopardy,” Gheit said. ___ Associated Press Writers Jane Wardell and Ashley Heher contributed to this story.

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Lloyd Chapman: SBA Sued for Refusing to Release Information on Public Relations Contracts

April 6, 2010

On Tuesday, April 6, the American Small Business League (ASBL) filed suit against the Small Business Administration (SBA) under the Freedom of Information Act (FOIA). The SBA is refusing to release detailed information on four public relations contracts. ( http://www.asbl.com/documents/20100406_FOIA4_complaint.pdf ) The ASBL suspects the SBA has spent American tax dollars to hire consultants to help them obscure the SBA’s role in diverting billions of dollars a month in federal small business contracts to Fortune 500 firms and other large businesses around the world. In one case, the SBA paid $30,000 for a one-day meeting with APCO Worldwide Inc, a multinational communications firm specializing in crisis management. The SBA is refusing to release the complete details on that contract. In another example, the SBA paid $16,500 to the White House Writers Group. The SBA is refusing to release all of the details on that contract. The SBA is also refusing to release any information whatsoever on two additional contracts for public relations consulting services. The most recent information released by the Obama Administration found large recipients of federal small business contracts such as Lockheed Martin, Boeing, Raytheon, Northrop Grumman, Dell Computers, British Aerospace (BAE), Rolls-Royce, French giant Thales Communications, Ssangyong Corporation headquartered in South Korea and the Italian firm Finmeccanica SpA. Since 2002, the SBA has claimed that the diversion of federal small business contracts to large corporations was the result of “miscoding.” In May of 2007, the SBA even went as far as to claim that it was a “myth” that large corporations received federal small business contracts. ( http://www.asbl.com/documents/sbamythvfact.pdf ) In SBA Report 5-15, the agency’s Office of Inspector General referred to the diversion of federal small business contracts to corporate giants as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” ( http://www.asbl.com/documents/05-15.pdf ) Another report, from the SBA’s own Office of Inspector General found that the SBA itself had reported contracts to large businesses as small business awards, including Dutch conglomerate Buhrmann NV with more than 26,000 employees worldwide. ( http://www.sba.gov/IG/05-14.pdf ) On March 12, 2010, the Obama Administration removed 10 years of historical data from the Federal Procurement Data System – Next Generation (FPDS-NG), which has been used by the GAO and inspector generals from a variety of federal agencies to uncover fraud and abuse in federal small business contracting programs. The ASBL has filed for an injunction to force the Obama Administration to restore the data.

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Census Jobs Boost Employment Numbers

April 3, 2010

WASHINGTON — As census workers gear up to count us, they are counting themselves lucky to be employed. This once-a-decade temporary work force is giving a timely boost to the battered job market. Census workers accounted for nearly a third of the jobs added in March, when hiring occurred at the fastest pace in three years. Over the next two months, another 600,000 to 700,000 census jobs will be added, putting $10 to $25 an hour into the pockets of some desperate job seekers. Although these jobs will only last through mid-July, economists say they will provide a fortuitous stream of income to families and act as an employment bridge until summer, when more private employers are expected to ramp up hiring. The census hiring also comes in a year when President Barack Obama’s economic stimulus package will peter out. The nonpartisan Congressional Budget Office estimates that stimulus spending added more than 1 million jobs last year. “It comes at a good time because you’re transitioning from an economy that’s slowly recovering to sustainable growth,” said John Canally, an economist at Boston-based LPL Financial. “This is a good patchwork until then.” Still, the census paychecks won’t have a meaningful impact on the overall economy. The government has set aside $7.8 billion to conduct the census. That pales compared with last year’s stimulus package of $862 billion. Yet the impact of these jobs cannot be overstated for people who were out of work. “Census to the rescue,” said 24-year-old Cierra Edwards of Toledo, Ohio. “I was so far behind. Rent started stacking up, bills, diapers.” She hopes her job as office operations supervisor will last at least through the summer and make it easier to land another job. Michael Housewright, whose disc jockey business in the Detroit area all but dried up as people spent less on weddings and corporate parties, said the census work came at “exactly the right time.” Housewright, 42, is hoping to land another government job, perhaps in homeland security, once his census job ends by early July. A single mother of three living in Dacula, Ga., Ivonne Chavez, 35, said her temporary census job “basically came and saved me.” She was hired last June to promote the 2010 census, a year after losing her accounting job. Her original contract was set to end later this month but has been extended through May. She’s hoping it will get extended again. The nation added 162,000 jobs in March, 48,000 of which were census jobs, the Labor Department reported Friday. The unemployment rate remained stuck at 9.7 percent for the third month in a row, largely because more people entered the work force. The big boost in census jobs anticipated in April and May could reduce the unemployment rate slightly. But these jobs are mostly part-time, and last six to eight weeks, so the unemployment rate is unlikely to bounce back in June without equivalent hiring from the private sector. Economists do not expect the jobless rate to drop to something more normal – in the range of 5.5 percent to 6 percent – until the middle of this decade. With 15 million Americans out of work, census officials say they are receiving an unusually high level of interest from highly qualified individuals. “We’ve got people on staff from doctors to lawyers to people who are fresh out of college,” said Leslie Benjamin, a census recruiter in Washington, D.C. “The quality of the people we’re hiring this decade is unprecedented,” said Robert Groves, the director of the U.S. Census Bureau. “We’re actually finishing our operations faster because they’re so good. We are … the beneficiaries of this horrible recession.” ___ AP Writers John Seewer in Toledo, David Runk in Detroit, Kate Brumback in Atlanta, and Tom Ritchie, Kelly Daschle and Hope Yen in Washington, D.C. contributed to this report.

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Mexican Billionaire Salinas May Combine Wireless Carrier Iusacell, Azteca

March 23, 2010

By Crayton Harrison March 23 (Bloomberg) — Ricardo Salinas , Mexico’s second- richest person, said he may reshape his money-losing wireless business by uniting it with his television operations to compete with Grupo Televisa SA. Salinas may seek a partnership or a combination of his carrier, Grupo Iusacell SA, with broadcaster TV Azteca SA , he said in an interview last week. Televisa, Mexico’s largest national broadcaster, is entering the wireless industry there in an alliance with NII Holdings Inc. Azteca’s soap operas and soccer broadcasts may help Iusacell lure customers, Salinas said. The carrier has posted three straight annual losses as clients defect to America Movil SAB and Telefonica SA, which serve more than 90 percent of Mexican subscribers. “We’ve done a bad job of managing” Iusacell, Salinas, 54, said in Phoenix after he spoke to a conference of the Society of American Business Editors and Writers . “We’ve managed to let go of our opportunities, and I think the situation there is definitely self-inflicted.” Iusacell, whose investors voted in December to delist its shares from public trading, fell 1 peso to 48 pesos on March 19. The shares, which weren’t trading today, had dropped 7.4 percent this year. Salinas controlled 84 percent of Mexico City-based Iusacell at the end of 2008, according to its most recent annual report. TV Azteca was unchanged at 7.21 pesos at 9:35 a.m. New York time in Mexico City trading. It had gained 1.6 percent this year before today. Televisa’s Investment Iusacell had 11.7 billion pesos ($930 million) of debt at the end of last year. The company is still negotiating with creditors after suspending payments a year ago on U.S.- denominated debt, Salinas said. “He has to solve their debt problems and later focus on the competition,” said Manuel Jimenez , an analyst at Ixe Grupo Financiero in Mexico City, who recommends buying TV Azteca shares. “To compete in this market, they have to do a lot of promotions, a lot of marketing, a lot of subsidies in the handsets, because the rest of the competitors are doing this.” Televisa agreed last month to pay $1.44 billion for a 30 percent stake in the Mexican unit of Reston, Virginia-based NII , the country’s fourth-largest wireless carrier. The companies said they would develop ways users can get Mexico City-based Televisa’s content on wireless devices. Combining Iusacell with Azteca is “a good idea,” Salinas said. In response to a question on whether he would pursue such a merger, he said, “We shall see.” Teaming Up America Movil is controlled by Carlos Slim , named the world’s richest man this month by Forbes magazine. Salinas was in 63rd place , making him the second-richest Mexican. America Movil had 71 percent of Mexican subscribers at the end of the first quarter, followed by Madrid-based Telefonica’s 21 percent, according to Bloomberg data. Iusacell had 4.3 percent, enough for third place. That compared with about 7 percent three years ago. Owning both TV and mobile companies makes sense since more carriers are looking to offer content to customers over their phones, Salinas said. Verizon Wireless, the biggest U.S. mobile- phone company, signed a deal this month to carry U.S. National Football League games on its wireless phones. Salinas combined one of Iusacell’s predecessors, Unefon, with TV Azteca in 1999 after failing to find funding for a new wireless company in Mexico. That caused “screams and squeals” from investors who didn’t think a broadcaster should be in the mobile-phone business, he said. The two split in 2003. Problem With Pioneering “Now 10 years later, they’re trying to do exactly what I did before and they’re getting applause for being 10 years late,” he said of Televisa ’s NII Holdings plan. “That’s the problem with pioneering — sometimes you go ahead of the curve.” A decade ago, investors sent the shares down more than 5 percent the day TV Azteca teamed up with Unefon, after Salinas had spent months looking for an outside partner for the phone company. At the time, analysts said they didn’t want TV Azteca’s cash used to fund a new wireless company. “If he tries to do it again, I don’t know how the investor market will react to that — I think not well,” Jimenez said. To contact the reporter on this story: Crayton Harrison in Phoenix at tharrison5@bloomberg.net

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Amy Sohn: Why I Joined Actors Federal Credit Union

January 18, 2010

I am a member of a food coop and a coop building and this week I decided to move all my money to a credit union, which is a kind of cooperative too. I first heard about my credit union, Actors Federal Credit Union (which I am eligible to join as a member of the Writers Guild of America) five years ago. My husband and I had a baby on the way and decided we needed a car. I wasn’t sure how to go about getting a car loan and my stepfather-in-law suggested looking into credit unions, which have good rates on loans. I found out about Actors Federal, liked the rates, joined immediately, and was approved for the loan. When I paid off my loan a few years later I kept a savings account but continued to do all my banking at two big banks, Chase and Citibank. This year I became furious about the way big banks have screwed America by abandoning their consumers’ trust, taking bailout money, and continuing to act only with regard for their own interest and bottom line — all by utilizing the deposits ordinary Americans keep with them. So I pulled my money out and moved it all to my credit union. Then I got my husband to do the same. I’m working on my little brother. If you don’t understand what a credit union is, my CU does a good job of explaining it on their web site: Credit Union members pool their money for the benefit of all. Money deposited in members’ Savings (Share) Accounts is used for loans to other members. Interest received on those loans is used to pay dividends on savings . . . Unlike commercial financial institutions, your Credit Union cares about and serves only one group — our group — the Entertainment Community. This often means a better deal than commercial institutions offer, like lower rates, more cost-effective services, and overall better service. Here are some of the things I love about my credit union. Their mortgage rates beat any rates quoted to me by my mortgage broker. They offer car loans, instrument loans, education loans, even plastic surgery loans (it’s for actors, after all) — and credit cards with fair terms, one even designed to help people who need to improve their credit. The minimum balance to have an account is $100. All of the fees, for stopped checks, overdraft, etc., are lower than you’d pay at a bank. Even the checkbooks are about a third less than what I paid at Chase. When I call up my CU, I get a real person on the phone, who is courteous, knowledgeable and helpful. They have an extensive network of ATMs, soon to be getting larger, and I can deposit checks by mail. I enter information from my check online, and then my CU credits me part of the deposit immediately, before they’ve even seen the check. They have an investment consultant who sold me my life insurance. They offer HELOCs at prime for life. They have online banking, telephone banking, an online-only account with a 2.0% APY, and so on. According to the Credit Union National Association, credit unions pay members higher average dividends on regular savings, share draft checking, money market accounts, certificate accounts, and IRAs. The average credit union saves an individual $100 a year and families $200 – but the number goes up the more services you utilize. And as I’ve discovered, there is almost no limit to what a credit union can help you with. Actors FCU was founded in 1962 when actors were having difficulty getting credit. A member of Actors Equity Association, the theater actors union, had been denied credit at a department store because he was an actor. Distressed, he brought the issue up at an AEA meeting. He asked if anyone wanted to start a credit union for actors and Conrad Bain raised his hand — yeah, Willis and Arnold’s dad Mr. Drummond on Diff’rent Strokes . Who knew? Credit unions often have a liberal policy toward new membership. For example mine is open to members, employees, and immediate family members of people in several dozen arts organizations based in NYC. To see if you’re eligible click here . And if Bill Maher is reading this I hope he joins the AFTRA SAG Federal Credit Union in Los Angeles. If you’re a union member, ask your union if there is an associated CU. If not, ask your boss if your company sponsors a union or is part of a group that has access to one. See if anyone in your immediate family belongs to a CU or is eligible to join one through work. See if your community has its own CU; certain community credit unions are open to anyone in certain neighborhoods. Call the Credit Union National Association at (800) 358-5710. You’ll get the name and telephone number of a person at the credit union league in your state who can help you find a credit union to join. Or check the online database of credit unions here . When I went into Chase to close my account, the banker didn’t even ask why I was going or make any attempt to keep me, not that it would have worked. But his indifference was part of the problem. The fact that no one at my CU would be indifferent about my departure is part of the reason I love it. This is the beginning of a beautiful relationship.

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Rockies’ Jim Tracy, Angels’ Mike Scioscia Win MLB Manager of Year Awards

November 18, 2009

By Erik Matuszewski Nov. 18 (Bloomberg) — Mike Scioscia of the Los Angeles Angels was voted American League Manager of the Year for the second time, while Colorado’s Jim Tracy earned National League honors for turning around a team with a losing record. Scioscia beat out Ron Gardenhire of the Minnesota Twins and Joe Girardi of the New York Yankees in balloting by the Baseball Writers Association of America. He was listed first on 15 of the 28 ballots cast by two writers from each of the AL cities. Tracy received 29 of the 32 first-place votes in the NL to finish ahead of Tony La Russa of the St. Louis Cardinals and Joe Torre of the Los Angeles Dodgers. Scioscia, 50, captured the AL award after the Angels overcame a series of injuries and the death of pitcher Nick Adenhart in an April 9 car accident to win the AL West Division title for the third straight year. The Angels finished Major League Baseball’s regular season with a 97-65 record, the second-best in the majors, to make the postseason for the sixth time in Scioscia’s 10-year tenure. Los Angeles used 14 starting pitchers because of injuries to John Lackey , Joe Saunders , Ervin Santana and Kelvim Escobar , while Torii Hunter and Vladimir Guerrero also spent time on the disabled list. Angels in Playoffs The Angels swept the Boston Red Sox in the opening round of the playoffs before losing to the eventual World Series champion Yankees in the AL Championship Series. Voting for the awards was conducted before the playoffs. Scioscia, who also was honored as the AL’s top manager in 2002, had 106 points. Gardenhire finished second in the voting for a record fifth time, receiving six first-place votes and 72 points. Gardenhire’s Twins won 17 of their final 21 games to win the AL Central title. Girardi, who won the NL award with the Florida Marlins in 2006, received four first-place votes and 34 points after leading the Yankees to a major league-best 103-59 record and their record 27th World Series title. Tracy, 53, helped the Rockies turn around a losing season and set a franchise record with 92 wins after replacing Clint Hurdle on May 29. The Rockies were in last place in the NL West Division with an 18-28 record when Hurdle was fired and Tracy was promoted from bench coach. Colorado went 72-42 the rest of the way to earn the NL’s wild-card playoff berth. In-Season Hire Tracy is just the second manager to win the award after being hired during the season, following Jack McKeon of the Marlins in 2003. Tracy receives the award two years after he was fired by the Pittsburgh Pirates following 94 losses in 2007 and 95 the previous season. He also spent five years as manager of the Los Angeles Dodgers from 2001 through 2005 and compiled a 427-383 record. Don Baylor was the only previous Rockies manager to win the NL award, in 1995. La Russa, a four-time winner, received two first-place votes. Torre, a two-time manager of the year in the AL with the Yankees, got one first-place vote. Selected members of the writers’ association vote for their top three choices and managers get five points for first-place votes, three points for second and one point for third. The BBWAA is scheduled to announce the winner of the NL Cy Young Award tomorrow. Zack Greinke of the Kansas City Royals won the AL award as his league’s top pitcher yesterday. To contact the reporter on this story: Erik Matuszewski in New York at matuszewski@bloomberg.net

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Porsche Family Watches, Damien Hirst Cabinet on Sale for Charity: Art Buzz

November 17, 2009

By Thomas Mulier and Scott Reyburn Nov. 17 (Bloomberg) — Christie’s International raised 19 million Swiss francs ($19 million) in the biggest watch auction this year, including a collection of 10 Patek Philippe watches for almost double the low estimate. Nine of the top 10 lots were Patek Philippe, and one was Rolex, in the auction that took place yesterday in Geneva, the London-based auctioneer said in an e-mailed statement today. The entire sale was expected to raise 10 million francs to 15 million francs, Christie’s had estimated. The most expensive timepiece was a Patek Philippe 18-carat gold watch with a calendar that adjusts for leap years, sold for 2.4 million francs to a Swiss museum, Christie’s said. The collection of Pateks sold for 5.8 million francs, beating the 3 million franc to 4 million franc estimate. Watch auctions have been successful even as Swiss watchmakers suffer from the worst recession since the Great Depression. Rare pieces continue to attract more demand than newly made watches, as Swiss watch exports have dropped 26 percent in the first nine months of this year in value. A Sotheby’s auction of timepieces in the same Swiss city on Nov. 15 raised 5.1 million francs, within the auctioneer’s estimated range of 4.15 million francs to 5.71 million francs. Porsche Watches The family that controls Porsche SE , the maker of the 911 sports car, is selling watches from its private collection at a charity auction in London next month. Ferdinand Alexander Porsche and his sons have entered 49 watches into a sale to be held by Bonhams on Dec. 2. The group, which includes examples by Eterna , Porsche Design, Rolex, Panerai, Jaeger LeCoultre, Breitling and Omega, is expected to fetch 100,000 pounds. Proceeds will be donated to the oncology research department of the Robert Bosch Hospital, Stuttgart, Germany, said Bonhams. “We’ve already had a lot of responses from car collectors,” Paul Maudsley, head of Bonhams’ watch department, said in an interview. “Anyone who likes watches, likes cars, and anyone who likes cars, likes watches,” said Maudsley, who himself owns a Porsche. Hirst Charity Artworks designed by Damien Hirst , Marc Jacobs and Annie Leibovitz are set to raise as much as 225,000 pounds ($379,000) today for the Red Cross campaign to fight malnutrition in Niger. The three designs, offered with their original drawings, will be auctioned for Louis Vuitton at a private dinner for 100 guests hosted by Sotheby’s in London. Other designs being sold in the same auction were created by musician and composer Gustavo Santaolalla , chef Ferran Adria and Patrick-Louis Vuitton, head of the brand’s Special Orders. LVMH Moet Hennessy Louis Vuitton SA , the world’s largest maker of luxury goods, said the items had been crafted at Vuitton’s first workshop at Asnieres, France, to celebrate the 150th anniversary of the Red Cross. Hirst came up with a portable butterfly-decorated cabinet containing drawers for surgical instruments. The black leather case is expected to fetch up to 80,000 pounds, said Sotheby’s. Fashion designer Jacobs contributed a monogrammed leather and brass traveling home for his bull terriers, Daisy and Alfred, complete with a signed personalized dog cushion. This is valued at 25,000 pounds to 35,000 pounds, while Leibovitz’s design for a photographer’s backpack has an estimate of 15,000 pounds to 20,000 pounds. Art Fund A new art investment vehicle, combining a fund of funds with direct purchases of artworks, aims to achieve an annual growth rate of 15 percent. Emotional Assets Management & Research LLP will close its offering to investors on April 30, 2010, Bernard Duffy, managing director of the Guernsey-based company, said in an interview. Sixty percent of the assets of the five-year vehicle will be allocated to a fund of funds; 40 percent to direct holdings of artworks from a basket of 15 collecting categories including paintings, photography, stamps, coins, diamonds and musical instruments. EAF will charge a management fee of 1 percent on the fund of funds, plus a 10 percent performance fee. The direct holdings will levy management and performance fees of 2 percent and 15 percent respectively. The fund is advised by London-based dealer James Hyman , a trader in modern and contemporary art and photography, and Rabih Hage , a specialist in design. The minimum commitment for investors is 100,000 pounds. Asset Flight “The outlook for paper assets isn’t that good,” said Irish-born Duffy, a former head of the North American Equity desk at County Natwest. “The flight to tangible assets will take everyone by surprise over the next couple of years.” The fund was aiming for an initial capitalization of 50 million pounds to 75 million pounds, said Duffy. Price declines of up to 50 percent for some categories of art and other regularly auctioned assets during the financial crisis have made wealthy individuals reluctant to invest in structured funds in the U.S. and Europe. The London-based Fine Art Fund began taking commitments in 2004 and has $100 million under management. Castlestone Management’s Collection of Modern Art has $28 million under management. “I’m not aware of much else beyond $10 million,” said Philip Hoffman , chief executive of the Fine Art Fund. “It’s a pretty lonely existence out there.”. Christie’s International this year abandoned plans to set up an art-investment fund with a projected value of $250 million to $350 million, according to people involved with the project. The U.K.’s British Rail Pension Fund provides one of the few documented histories of a large-scale art investment project. Beginning in 1974, the transport company used 2.5 percent of its total pension fund to amass 2,500 artworks, which were sold at Sotheby’s from 1987 to 1999. The fund made an annual return of 11.3 percent from 1974 to 1999, The Economist said in 2003. To contact the writers on the story: Thomas Mulier in Geneva at tmulier@bloomberg.net ; Scott Reyburn in London at sreyburn@hotmail.com .

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`Man of Steal’ Rickey Henderson, Rice Enshrined in Baseball’s Hall of Fame

July 26, 2009

By Erik Matuszewski July 26 (Bloomberg) — Rickey Henderson joined baseball’s Hall of Fame today in his first year of eligibility, while Jim Rice was enshrined in Cooperstown, New York, in his 15th and final year on the ballot. Henderson, 50, holds Major League Baseball career records for stolen bases (1,406), runs scored (2,295) and home runs to start a game (81), part of a resume that may rank him as the best leadoff hitter in history

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