Finance Blog number 1

The leaders of the Group of Eight global economic powers pledged Saturday to continue working together as the world "begins a fragile recovery from the greatest economic crisis in generations."

In a statement concluding the two-day summit in Muskoka, Canada, the leaders said they were committed to open trade and that they would "resist protectionist pressures."

In addition to the United States, the summit included Canada, France, Germany, Italy, Japan, Russia and the United Kingdom.

The summit immediately preceded a gathering in Toronto of the G-20, which includes the leaders of other important economies, most notably China.

In the run-up to the meetings, President Obama had stressed the need to keep economic stimulus measures in place to prevent a global slowdown. But European nations have been moving toward more conservative fiscal policies as the region grapples with an ongoing debt crisis.

In a letter to G-20 leaders sent earlier this week, the president wrote that safeguarding and strengthening the economic recovery should be "our highest priority in Toronto."

"In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avert a slowdown in economic activity," he wrote.

Meanwhile, European nations have been cutting back on public spending and raising taxes to cope with massive budget deficits.

Since Obama issued his call to focus on growth, German Chancellor Angela Merkel called budget cuts "urgently necessary," and European Central Bank President Jean-Claude Trichet said stronger public finances are part of a "policy which we would call confidence-building."

Last week, the United Kingdom unveiled one of its harshest budgets in decades payday loans.

In a statement Saturday, U.S. Treasury Secretary Tim Geithner acknowledged the differences, while again stressing the need for pro-growth policies: "We all need to act to strengthen the prospects for growth. This will require different strategies in different countries. We are coming out of the crisis at different speeds." Geithner added, "We need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis." (See ‘The great spending debate’)

Also expected to be discussed at the G-20 meeting will be China’s currency, the yuan. China moved last week to begin letting it trade freely against the U.S. dollar, but the move may have been too little to head off debate. Since 2008, China has pegged its currency to the dollar, and many think it is artificially cheap, making it harder for U.S. companies to compete.

The yuan has risen only slightly against the dollar in the past week.

Still, Geithner praised China’s move: "China is acting to allow its exchange rate to appreciate in response to market forces. This is an important step toward helping China better meet its own challenges and providing a more level playing field for all its trading partners."

Separately, President Obama met with the president of South Korea. Obama hopes to complete a free trade agreement with South Korea later this year, according to a senior White House official.

The plan is to double U.S. exports over the next five years, he said. The United States already exports $50 billion worth of goods and services to South Korea, which is the world’s 14th largest economy. 

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The iPhone 4 has arrived, but for some people the wait continues as Apple sprints to keep up with fierce demand for its latest gadget.

From Tokyo to St. Louis, some stores started selling out of Apple Inc.’s newest iPhone just hours after it went on sale Thursday. Some anticipated the demand and made sure they were in line early to get one.

Malinda Hagenhoff, of Jefferson City, stayed in her car in a parking lot overnight Wednesday to be among the first in line at West County Center in Des Peres on Thursday morning.

"I’m kind of a techy person who loves techy stuff," said Hagenhoff, who already owns an iPhone but wanted the newest model.
She was No. 30 in line when mall opened at 6 a.m., but that put her ahead of 120 others to await the Apple Store’s 7 a.m. opening.

As the line stretched farther and farther into the mall, other fanatics sought different sources.

Tyler Woods, 20, of south St. Louis, traveled with two friends to a Walmart store in Arnold.

"This has to be some kind of miracle," Woods said when he arrived in line at the Walmart store at 8:45 a.m. and was told he would get one of the 24 iPhones the store had in stock.

Similar stories were told around the globe. Thousands lined up outside stores in Tokyo, Berlin, New York and elsewhere. Some said they waited 11 hours to get through the lines.

Going into Thursday, concern was raised about limited supplies after more than 600,000 people rushed to pre-order iPhones on the first day they were available, prompting Apple and its U.S. carrier, AT&T Inc., to halt orders for shipment by Thursday’s launch. On Apple’s website, new orders weren’t promised for delivery until July 14.

Apple spokeswoman Natalie Harrison said demand was "off the charts," and that the company was working hard to get phones into customers’ hands as quickly as possible.

Some stores sold out within hours. Brian Marshall, an analyst for Gleacher & Co., said certain Apple stores likely had enough iPhones to last into today before selling out. A new shipment could be in stores as early as Saturday, he said, but more likely won’t arrive until early next week.

Apple is having a hard time getting enough of the new custom parts for the iPhone 4, such as its new higher-resolution screen, Marshall said.

Apple has said the white iPhone it plans to produce has been more challenging than expected and won’t be available until late July. Only black models went on sale Thursday.

The Associated Press and Robert Cohen, Kim Bell and Matthew Franck of the Post-Dispatch contributed to this report.

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St. Louis Brewery, maker of Schlafly craft beer, is for sale. But company founders Tom Schlafly and Dan Kopman say they are in no rush to sell their stakes, and they would strongly prefer a local ownership group that includes current brewery workers.

The main reason for the "for sale" sign outside St. Louis’ largest craft brewer is succession planning, they said. Schlafly, 61, who owns nearly 80 percent of the company, has no family interested in running the business. Kopman, 48, who holds about 20 percent, also does not see his school-age children becoming involved with the brewery.

"At some point, the brewery is going to move to additional ownership," Schlafly said Monday.

And they wanted to begin thinking about that now. So earlier this month they asked the brewery’s senior staff to look for ways they could buy the company.

"We’re exploring this on the basis that we want our employees to have a long-term stake in the company," Kopman said.

St. Louis Brewery joins a generation of craft brewers now confronting questions about what future ownership will look like. Anchor Brewing Co. in San Francisco, which is considered the brand that launched the microbrew movement, was sold earlier this year to Bay-area entrepreneurs. Rogue Ales in Portland, Ore., is being handed down from the founder-father to son.

St. Louis Brewing, founded in 1991, sells its beer under the Schlafly name and operates two brew pubs, in downtown St. Louis and Maplewood. It posted nearly $12 million in sales last year and ranked No. 41 among the nation’s largest craft brewers, according to the Brewers Association.

James Ottolini, head of brewing operations, is one of the longtime workers whom Schlafly and Kopman hope will lead the buyout effort. Ottolini, who holds a freshly minted Washington University MBA, said he was excited by the opportunity.

"Our efforts will be to put together an investment group" that includes outside investors and workers, Ottolini said.

Schlafly, an attorney not involved in the day-to-day operations, said he hoped to retain a small, unspecified stake in the company. Kopman said he might not sell any of his share. In any case, he planned to stay on as chief operating officer "for the foreseeable future."

They sounded reluctant to sell to venture capital firms seeking outsized returns or to take the company public, with heavy compliance costs and focus on making quarterly numbers.

The most likely scenario, Kopman said, is local investors and some form of employee-stock ownership plan buying a majority stake.

"We don’t want to see what we’ve helped build diminished," Kopman said.

Schlafly said he was motivated to seek a buyer, in part, because the growing company faces a looming decision on building a new brewery, "and I don’t have the appetite for the debt that it would involve."

The brewery could roughly fetch $5 million to $18 million, based on revenue and estimated margins, said Tom Lee, senior vice president with Mercer Capital in Memphis, Tenn.

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AOL said Thursday that it sold Bebo, the struggling social networking site, to Criterion Capital Partners, a private equity fund, for a fraction of what AOL paid for the site two years ago.

Terms were not disclosed, but reports pegged its value at $10 million or less. AOL paid $850 million for it.

AOL once had high hopes that Bebo would help it to regain momentum, especially with younger audiences and advertisers, and to catch other fast-growing Internet franchises. At the time, it was popular in Britain.

When it bought Bebo, the chief executive of AOL at the time, Randy Falco, called it a "game-changing acquisition" that would turn AOL into "a social media powerhouse." AOL also had hopes Bebo would help AOL’s instant messaging service bring in revenue. But Bebo was eclipsed by Facebook, which now has 500 million members around the world.

At the time of the deal, AOL was owned by Time Warner. Now, AOL is independent, and its new management team, led by Tim Armstrong, the chief executive, is struggling to engineer a turnaround.

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New York state legislators have avoided a government shutdown—for now—by enacting another emergency spending plan for the state.

The state has funded bare-bones operations through a series of the one-week plans, which are necessary because the full budget is now 76 days past due. For weeks, negotiations have produced few results.

Legislators passed the 11th straight emergency spending plan on June 14, allotting money needed to keep the lights on through June 20.

The bill’s fate was never in doubt in the Assembly, where Democrats enjoy a wide 107-42 margin. But three Republicans, including two Capital Region legislators, were critical in ensuring the bill passed the Senate.

Rejection of any earlier spending bills would also have led to a government shutdown. But this time, the odds of a shutdown were larger than ever, since at least one Democrat voted against the bill, and others threatened to do so.

Government would have shut down had the bill failed. It would have meant the closure of state agencies, parks and construction projects. State workers, vendors and unemployment benefits would not have been paid, or received IOUs.

A bipartisan vote was necessary because Sen. Ruben Diaz Sr. (D-Bronx) voted against the bill, protesting the cuts it made to welfare and public assistance.

Democrats have just a 32-30 margin in the Senate, and at least 32 votes are needed to pass a bill.

Republican Sens. Hugh Farley (Niskayuna), Roy McDonald (Saratoga) and Charles Fuschillo Jr. (Long Island) voted in favor of the bill.

The final Senate tally was 34-27.

Farley and McDonald faced particular pressure, since thousands of state workers live in their districts.

“Fear was used as a weapon today,” McDonald said on the Senate floor payday loans for bad credit.

Farley said he could not vote to shut down state government, at least this time.

“It enables this dreadful, dreadful budget process to keep going on. It lets this dysfunctional process continue,” Farley said in an interview. “But you can’t shut down state government. That would be a calamity.”

Still, Farley said he likely would not vote for future emergency spending plans if they included new or higher levels of taxes, fees or borrowing.

Sen. John Sampson (D-Brooklyn), the top Democrat in the Senate, thanked the three Republicans for their “courage and leadership.”

By law, Gov. David Paterson authors the emergency spending plans, which court cases have established as all-or-nothing votes for legislators.

This time, Paterson forced legislators to lock in full fiscal year spending on public assistance and welfare programs, including $3.5 billion for the Office of Temporary and Disability Assistance, a slight decrease from the 2009-10 fiscal year.

The state is saving $327 million by cutting support of some welfare-related programs, while also budgeting increased attrition and revenue from audits. There are no tax increases in the bill.

Last week, Paterson used the emergency spending plan to force legislators to establish almost all of the state’s Medicaid budget for the fiscal year, totaling more than $50 billion of spending. Medicaid and school aid, which legislators have not yet voted on, together make up more than half of the state’s annual budget.

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Pennsylvania has received a dozen AmeriCorps grants totaling $9 million, which will create up to 2,200 community service positions in the state, the Department of Labor & Industry said Friday.

PennSERVE: The Governor’s Office of Citizen Service will distribute seven state grants totaling more than $5.3 million, which will create more than 1,700 positions. Five national grants totaling more than $3.9 million will also be awarded to multistate programs operating in the state, with the support of PennSERVE, which will create up to 480 additional AmeriCorps positions, the department said.

“These grants create thousands of opportunities for individuals to make a difference in their communities through citizen service,” Labor & Industry Secretary Sandi Vito said. “From tutoring and mentoring, to renovating residences and community cleanup, the work carried out by these organizations will have an immediate and positive effect on our neighborhoods and residents.”

Grants funded through PennSERVE have been awarded to the following, which serve counties in the local area:

• Jumpstart for Young Children Inc. (Allegheny and Philadelphia counties), $320,453 grant, will create 174 positions, AmeriCorps members serve in preschool settings, including Head Start, faith-and community-based centers to engage students in learning activities

• Trustees of the University of Pennsylvania, $50,722 grant, will create 287 positions, college students will serve as AmeriCorps members at nonprofit organizations to support local education and other human needs that target various beneficiaries throughout the state, including Chester, Delaware, Montgomery and Philadelphia counties.

• City Year Inc., $2,415,000 grant, will create 210 positions, AmeriCorps members provide in-school tutoring and after-school services in Greater Philadelphia area schools.

• Teach For America, $802,497 grant, will create 330 positions, AmeriCorps members will provide classroom instruction and enrichment activities focused on overcoming the achievement gap for schools through education and volunteer generation in under resourced communities in Philadelphia County cash till payday advance.

National direct-funded grants have been awarded to the following, which serve counties in the local area:

• HOPE Worldwide, $298,101 grant, will create 94 positions, AmeriCorps members provide direct service and perform capacity-building activities in three primary programmatic areas that focus on academic enrichment, environmental stewardship and community rebuilding in Delaware County.

• Health Federation of Philadelphia, $1,198,486 grant, will create 94 positions, the National Health Corps promotes health careers and health education in Pennsylvania, Illinois and Florida. Members assist uninsured individuals with accessing health care, resources and assist with enrolling the uninsured in insurance and/or drug prescription programs.

• Philadelphia AIDS Consortium, $374,070 grant, will create 60 positions, AmeriCorps members will provide health education and support services and mobilize volunteers for programs that target low-income minorities living with, and affected by, HIV in Pennsylvania, New Jersey, Delaware and California.

• Temple University of the Commonwealth System of Higher Education (Philadelphia), $247,619 grant, will create 90 positions, AmeriCorps program addresses health literacy needs of elders, elderly immigrants and refugees through service learning, civic engagement and tutoring. Project assists elderly immigrants and refuges in communication with health-care providers. Members support the target population’s access to health services and strengthen immigrant-serving organizations’ ability to address the needs of this growing population.

AmeriCorps was able to add 500 people to its ranks in Pennsylvania last year through the help of funding from the American Recovery and Reinvestment Act.

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Wal-Mart Stores Inc. said Friday it plans to create 500,000 jobs throughout the world in the next five years, saying there is tremendous opportunity for growth globally.

"We need to recruit the best talent and identify the best talent in our ranks," CEO Mike Duke told analysts and investors at the company’s annual shareholder meeting in Fayetteville, Ark. It was not immediately clear how many of the jobs would be created in the United States.

Wal-Mart (WMT, Fortune 500) also announced a new program to repurchase $15 billion of its shares, which replaces a $15 billion repurchase plan announced a year ago. The company said $10.3 billion in stock had been purchased as a result of the prior program.

Hosted this year by Jamie Foxx, Wal-Mart’s annual meeting was again a star-studded fanfare. Movie stars and musicians such as Mariah Carey, Mary J. Blige, recent "American Idol" winner Lee DeWyze, and Enrique Iglesias entertained shareholders who traveled far and wide for the annual part-pep rally, part-concert.

Duke said growth would not come easily, highlighting such challenges in the next 20 years as higher energy costs, nimble and innovative competitors, and technology.

The CEO also commented on Wal-Mart’s low-price strategy, saying a "new era of price transparency," brought on by the advent of mobile technologies, would make it more difficult to maintain its leadership position.

Wal-Mart officials called their international business strong, with Duke saying "It’s becoming an even bigger and more important part of our company." He added that more than 60% of the company’s new square footage last quarter was in Wal-Mart’s international unit.

Sales from the company’s international division exceeded $100 billion or about 25% of its $405 billion in total revenue. 

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The city of Scottsdale will hold funeral services June 8 for City Councilman Tony Nelssen, who died May 26 after a battle with cancer.

The services will be start at 9 a.m. Tuesday at the WestWorld center in North Scottsdale.

The city is reminding those attending the services that temperatures could reach 110 degrees, so they should dress appropriately. The event is being held outdoors.

Nelssen, 59, had served on the council since last June.

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One in five licensed drivers — some 38 million Americans — lack the knowledge necessary to pass a written driving test, and even more are distracted while driving, according to a survey released Thursday.

The annual GMAC Insurance National Drivers test polled 5,202 licensed drivers from 50 states and the District of Columbia with a 20-question test derived from state department of motor vehicles exams. A passing grade was 70% or better. The survey also asked additional questions about distracting habits such as texting while driving.

Overall scores dropped from a year ago. Licensed drivers posted an average score of 76.2% versus 76.6% in 2009.

"It’s discouraging to see that overall average test scores are lower than last year," said Wade Bontrager, senior vice president of GMAC Insurance, in a prepared statement.

Nearly three out of four couldn’t identify safe following distances and some 85% incorrectly responded to questions about what to do when approaching a steady yellow light. This signals that licensed drivers lack knowledge of fundamental road rules, GMAC Insurance said.

Test performance varied widely by region. Drivers in the Midwest scored 77.5% on average, the highest among all regions, and had the lowest failure rates at 11.9%. Conversely, the Northeast scored the worst with an average score of 74.9% and had the highest failure rate of 25.1%.

Drivers in Kansas topped the nation with an 82.3% average score, while New Yorkers were last on the list with a score of 70% faxless payday advance.

Even more alarming is that Americans are increasingly multi-tasking while behind the wheel, the study found. About 25% of those surveyed admitted to driving while talking on a cell phone, eating, or adjusting their radios or iPods.

While only 5% of drivers said they texted while driving, Bontrager said that the "surprisingly low" number is still higher than it ought to be, adding that drivers may not have responded honestly to this question.

"The really sad thing is that you see [texting while driving] more and more in young drivers," said Bontrager. "They are not only the least experienced, but also need to pay the most attention to the road."

According to Bontrager, historic data supports that women tend to have fewer accidents than men, but the survey found that they were more likely to engage in distracting activities while driving than their male counterparts. And women also scored nearly four percentage points lower on the overall test than men, who averaged a score of 78.1%.

Although complete knowledge of the rules of the road won’t shield drivers from all accidents, being informed helps to ensure that they are more prepared to deal with unexpected events, Bontrager said.

"An informed driver is a safer driver, period," he said.  

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