Finance Blog number 1

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Labor unions on Wednesday ramped up the pressure on Republican lawmakers to approve a Senate plan that would extend jobless benefits for millions of unemployed Americans.

Congress is deadlocked over how to provide the relief after Republicans in the House of Representatives on Tuesday scuttled a short-term measure that had been approved in the Senate with overwhelming Republican and Democratic support.

Most House Republicans voted against the Senate bill, which would extend by two months long-term jobless benefits and a payroll tax cut for 160 million Americans.

“We’ll be hitting them in the media in their home districts,” said labor union umbrella group AFL-CIO spokeswoman Amaya Tune. “We’ll continue to look at what ways we can shame Republicans for this horrible vote,” she said.

Republicans refused to approve the Senate bill, saying they wanted to work on a full-year extension — a plan Democrats support but have failed to broker because the sides disagree on how to cover the costs.

If Congress fails to extend jobless benefits, nearly 700,000 people would lose them by the second week of January and nearly 2.2 million would be cut off by mid-February, according to the Labor Department. Some 13 million Americans are unemployed, of whom nearly 6 million have been without a job for more than a year cash advance loans.

The AFL-CIO, the largest U.S. labor group, and other advocacy groups such as Working America, the Philadelphia Unemployment Project and the National Employment Law Project are gearing up to push Republicans to vote on the two-month deal.

“We are going to challenge those representatives to get back to work and put these fixes in,” said Mark MacKenzie, president of the AFL-CIO’s New Hampshire office.

The National Employment Law Project is mobilizing thousands of its constituents from unemployed Americans to community advocates to call Republican lawmakers.

“This is pressure on leadership first and foremost but really it is on everybody. Get back here and pass the bill,” said Judy Conti, the federal advocacy coordinator for the project.

Other labor organizers are planning a protest outside Republican House Speaker John Boehner’s office in Ohio later this week.

It was unclear how lawmakers would resolve their differences before the December 31 deadline. Democrats have refused to start negotiating a full-year extension until Republicans pass the Senate’s short-term measure. Republicans have proposed cutting long term benefits from 99 weeks to 59.

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Everyone dreams of striking it rich _ and what they would do with such a windfall. A new house? A fancy car? Maybe designer clothes selected by a personal shopper.

For some in Silicon Valley, those wishes may soon come true.

As restrictions on selling stock are lifted at a handful of sizzling startups, early investors and employees are preparing for big payouts.

What they do with their riches is anyone’s guess, but luxury retailers and wealth managers say they’re expecting a bump in business and have been preparing for this new crop of Internet millionaires.

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A late rally pushed the Dow Jones industrial average back above 12,000 Monday as investors responded to the latest twists in Europe’s efforts to control its debt crisis.

U.S. indexes were down for much of the day on worries that Italy could become the next country to run into trouble. Stocks turned higher after 2 p.m. Eastern on news that Greece would receive the latest installment of emergency aid as long as the country’s two main parties commit to implementing economic reforms agreed to by the country’s previous government.

Investors again reacted to whatever was the latest headline out of Europe. The region’s problems have been offsetting optimism about strong corporate earnings in the U.S. and signs of improvement in the economy.

“Every day it seems like it’s the butting of heads between whatever the latest rumor is out of Europe with good economic data and corporate earnings,” said Karyn Cavanaugh, a market strategist with ING Investment Management. “It’s overshadowing the fact that earnings are on track to be the best year ever.”

The Dow rose 85.15 points, or 0.7 percent, to close at 12,068.39. The Dow closed near its highest point of the day and had been down as many as 102 points shortly after midday. Hewlett-Packard Co. rose 3.4 percent, the most of the 30 stocks in the Dow.

The Standard & Poor’s 500 index rose 7.89, or 0.6 percent, to 1,261.12. Last week the S&P had its first down week since September. The Nasdaq rose 9.10, or 0.3 percent, to 2,695.25.

Worries that Italy could become the next victim of Europe’s debt crisis kept investors uneasy.

Italy’s borrowing rates spiked Monday to the highest level since the country adopted the euro. Unlike Greece, Portugal or Ireland _ all of which received financial lifelines _ Italy has too much debt to be rescued by its European neighbors. Prime Minister Silvio Berlusconi has rejected suggestions that he resign to make way for more cost-cutting.

In Greece, the two main political parties agreed over the weekend to share power in a new government after George Papandreou said he would step aside as prime minister. European finance officials agreed to release the next slice of bailout money to Greece as long as leaders of the parties agree in writing to carry out austerity measures required by international lenders.

The payment has been delayed by two months and is needed to avoid a potentially disastrous default on the country’s debt, which would roil financial markets and cause losses for European banks.

The worries over Europe’s debt problems lifted the prices of assets seen as safe havens. The yield on the 10-year Treasury note fell to 2.01 percent from 2.04 percent late Friday. Bond yields fall when their prices rise, reflecting an increase in demand. Gold rose 2 percent.

In corporate news:

_ Amgen Inc. rose 5.9 percent to $58.43, the most in the S&P 500 index, after the biotech drugmaker said it would buy back up to $5 billion of its stock.

_ Dish Network Corp. rose 5 percent to $24.66 after the satellite TV provider announced a special $2 per share dividend and a 30 percent increase in net income.

_ Home Depot Inc. rose 2.6 percent to $37.34 after getting upgraded by analysts.

Rising stocks slightly outnumbered falling ones on the New York Stock Exchange. Volume was lighter than average at 3.4 billion shares.

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The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring-and-summer peak buying season failed to entice new buyers.

The National Association of Realtors says its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired cash advance no fax.

Contract signings are usually a reliable indicator of where the housing market is headed. There’s typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts.

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World stock markets jumped Monday, buoyed by resilient economic indicators from Asia’s two biggest economies and hopes of progress in resolving Europe’s debt crisis.

Oil prices rose above $88 a barrel. The dollar fell against the euro but rose against the yen.

European shares advanced in early trading. Britain’s FTSE 100 gained 0.4 percent to 5,512.34 and Germany’s DAX added 0.9 percent to 6,021.92. France’s CAC-40 rose 0.5 percent to 3,188.44. Wall Street was headed for another day of gains, with the Dow Jones industrial average 0.3 percent higher at 11,795 and S&P 500 futures gaining 0.3 percent to 1,238.30

Asian shares posted solid gains earlier in the day as economic data from Japan and China showed a measure of strength.

Japan’s Nikkei 225 index added 1.9 percent to close at 8,843.98 after the government said exports grew for a second straight month in September. The country’s trade suffered a five-month decline in the wake of the March 11 earthquake and tsunami that devastated northeast Japan.

Mainland Chinese shares rose after HSBC said its preliminary China Manufacturing Purchasing Managers Index, which measures industrial production, rose to 51.1 in October from 49.9 in September. A result above 50 indicates expansion but the preliminary indicator is often subject to substantial revision.

The Shanghai Composite Index was 2.3 percent higher at 2,370.33 and the smaller Shenzhen Composite Index climbed 1.9 percent to 977.03.

Hong Kong’s Hang Seng soared 4.1 percent to 18,771.82 and South Korea’s Kospi shot up 3.3 percent to 1,898.32. Benchmarks in Singapore, Taiwan, Australia, India, Indonesia and the Philippines were also higher.

In Europe, leaders are to meet Wednesday to hammer out a concrete resolution to the region’s debt problems, including ways to fortify the euro 440 billion ($600 billion) bailout fund to help prevent larger economies that use the euro common currency, such as Italy, from being dragged into the crisis.

Weeks of intensive discussions by European leaders have so far failed to produce a decisive outcome.

“Markets will remain nervous ahead of Wednesday’s EU summit, hoping that officials can settle their differences and emerge with a concrete solution credit report. In this respect, the risk of disappointment is high,” Credit Agricole CIB said in a research note.

South Korean constructions shares rose on expectations that the death of Libyan leader Moammar Gadhafi would lead to the resumption of construction projects in the North African country, Yonhap News Agency reported. Daewoo surged 5.5 percent. Hyundai Heavy Industries jumped 7.3 percent.

Chinese banking shares soared ahead of earnings reports to be released this week, analysts said. Hong Kong-listed Agricultural Bank of China jumped 8.5 percent, and Industrial and Commercial Bank of China, the world’s largest bank by market value, gained 5.5 percent.

Linus Yip, strategist at First Shanghai Securities in Hong Kong, said speculative investors appeared to be scooping up what were thought to be bargain-priced Hong Kong stocks.

“Today, there is some bargain-hunting for sectors like the Chinese insurance sector and Hong Kong property,” he said. Hong Kong-listed Ping An Insurance gained 6.9 percent. China Overseas Land & Investment Ltd. was up 9.3 percent.

In the U.S. on Friday, enthusiasm for stocks was on the upswing amid some positive third-quarter earnings reports from U.S. companies, which come despite a weak economy. Among S&P 500 companies reporting so far, seven out of ten have posted higher profits than expected.

The Dow Jones industrial average jumped 267.01 points, or 2.3 percent, to 11,808.79. The Dow is now up 2 percent from where it started 2011. Before Friday’s surge, it was down for the year. The Dow has risen for four weeks straight, the first time that has happened since January.

In currencies, the euro rose to $1.3889 from $1.3864 Friday in New York. The dollar rose to 76.22 yen from 76.12 yen.

Benchmark crude for December delivery was up 96 cents at $88.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.33 to settle at $87.40 in New York on Friday.

Brent crude was up 74 cents at $110.30 a barrel on the ICE Futures Exchange in London.

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ST. LOUIS

Want to create jobs? Just create a tax credit for businesses.

For decades, that’s how many governors and state lawmakers have approached economic development. But with budget deficits collectively in the billions of dollars and unemployment rates still uncomfortably high, some state officials have begun to rethink whether the jobs promised from tax credits are worth the drain on state funds that could go to public schools and services.

Perhaps nowhere is the tax credit tension more evident than in Missouri, where lawmakers have convened a special session to consider scaling back several existing tax credits in order to finance new tax incentives targeting a variety of business interests _ from Chinese cargo planes to computer data centers, high-tech companies and even the organizers of major sporting events.

Democratic Gov. Jay Nixon and Republican legislative leaders tout it as one of the most far-reaching job-creation packages being considered among states. But it faces opposition from some lawmakers who see it as the latest give-away of taxpayer dollars to big businesses at the expense of school children, the disabled and elderly.

The battle in Missouri and several other states mirrors that in Washington, where President Barack Obama and Republican congressional leaders are expected to clash in coming weeks over the right mixture of tax breaks and spending to stimulate the economy without plunging the nation deeper into long-term debt. The outcome figures to play prominently in the 2012 elections as incumbents seeks to assuage voter concerns about both the economy and government spending.

“There is a tension between just about everybody,” said Sen. Chuck Purgason, a Republican who has wavered on whether to back the Missouri plan. “You’ve got core Republican principles that government doesn’t create jobs _ the private sector creates meaningful jobs _ and what you need is broad-based tax reform.”

For others, he said, “their idea is for government to take money and incentivize aspects of trying to stimulate the economy.”

Tax credits have been popular among many politicians because they directly reduce the taxes that a business must pay, unlike a tax deduction which only reduces the income that can be taxed. Some states also allow tax credit vouchers to be sold, which allows the recipient to generate upfront cash for a project.

As lawmakers consider an overhaul of Missouri’s tax incentives, a task force in Oklahoma is reviewing whether the state’s estimated $5 billion of annual tax cuts, exemptions, and deductions _ many of them intended to attract jobs _ truly are serving the public good.

“We know that while government cannot create prosperity, it can and should help create conditions that encourage it,” said Rep. David Dank, an Oklahoma Republican who is leading the task force. He said the review is “a sincere effort to determine what works, what doesn’t, and what reforms we should make.”

In New Mexico, Republican Gov. Susana Martinez ordered agencies last month to prepare an annual analysis of whether tax credits are costing the state revenue and creating jobs.

Some states have continued to create business tax credits this year under the belief that the lost revenue will be replaced as companies hire workers, who in turn pay individual income and sales taxes.

In Wisconsin, for example, the Republican governor and Legislature enacted a new income tax credit for manufacturers that eventually could cost the state $128 million a year _ a move that Democratic Rep. Tamara Grigsby decried as “shameful” and “nauseating” after cuts to public education and other areas.

Connecticut’s Democratic governor and Legislature also expanded tax credits, offering incentives to the first five businesses that agree to create 200 jobs and invest $25 million in the state. A new Idaho law will offer businesses tax credits worth between 2 percent and 6 percent of a new employee’s annual wage.

Yet after decades of adding tax incentives, Oregon lawmakers this year abolished about a dozen tax credits and reduced several others to save the state more than $125 million over the next four years. Hawaii lawmakers decided against enacting a new incentive sought for filmmakers. Louisiana Gov. Bobby Jindal signed into law several expanded tax breaks but vetoed several others passed by lawmakers.

In Missouri, the value of annual tax credit redemptions increased more than fivefold from 1998 to the 2010 budget years, prompting increased criticism. Among the tax breaks on the chopping block are ones for developers who build low-income housing or renovate historic buildings _ two of Missouri’s mostly costly tax credits.

Missouri officials say the savings are essential to afford new incentives for businesses, such as the $360 million of proposed tax credits intended to transform the St. Louis airport into a hub for Chinese cargo planes and other international trade. Other new incentives seek to lure large computer data centers used by the likes of Google or Amazon and high-tech companies with a scientific emphasis.

“We’re trying to move the state forward on jobs when a lot of other people around the country are kind of frozen,” said Missouri Gov. Jay Nixon.

But some Missouri lawmakers doubt the proposed business incentives will be any less of a drain on the state budget, which has seen funding slashed for public colleges and universities, student scholarships and busing for elementary and secondary schools. Republican state Sen. Jason Crowell has threatened to filibuster the proposal. He’s particularly peeved that Missouri would subsidize the importation of China-made products, which compete with American-made goods.

Missouri’s proposed business tax breaks also have drawn opposition from some tea party participants and a free-market think tank financed by one of the state’s most active political contributors.

Tax credits are “an attempt to place a bet really _ for whatever reason, we think this industry or this company is going to be more successful,” said Audrey Spalding, a policy analyst at the St. Louis-based Show-Me Institute. “Nothing miraculous happens to a lawmaker when they’re elected to state office that gives them the ability to figure that out.”

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A marked slowdown in European economic growth is overshadowing a meeting Tuesday between the leaders of Germany and France aimed at getting the eurozone’s 17 countries to work closer together to dig Europe out of its debt crisis.

The meeting between Angela Merkel and Nicolas Sarkozy in Paris comes after a week of turmoil in financial markets, largely blamed on Europe’s sprawling government debts and worries that European leaders aren’t doing enough to address them. It also comes a day after the European Central Bank revealed that it splashed out more money than ever trying to appease the markets.

Europe’s sagging growth prospects make it even harder for governments to shrink their debts. Economic growth in the 17 countries that use the euro sagged to a lackluster quarterly rate of 0.2 percent in the second quarter, as a previously robust expansion in Germany almost ground to a halt, according to EU figures Tuesday.

“The longer the sovereign debt market remains stressed, the greater will be the damage to the wider economy,” said Lloyd Barton, senior economic advisor to Ernst & Young. “A further deterioration in financial conditions could severely damage the outlook for the whole of the eurozone.”

The downbeat growth news weighed on markets, and provided yet more evidence that the global economy is slowing down sharply, following disappointing second-quarter growth figures from the United States.

Financial markets have been hugely volatile of late, partly over fears that Italy and Spain, the eurozone’s third and fourth largest economies, may find it too expensive to service their debts. Those concerns triggered last week’s intervention in the bond markets from the ECB, which has increasingly stepped in as Europe scrambles.

France and Germany, which together account for almost half of the eurozone’s economic output, are taking the lead in pushing for reforms. But, speculation that the two leaders would consider proposals for the eurozone to issue jointly guaranteed government debt appear to have been dashed, with officials for both sides indicating that would not be on the agenda.

Germany has remained firm in its stance that other EU countries must exert more fiscal discipline.

The discussions will center on “measures for better agreement of financial policies,” Merkel’s spokesman Steffen Seibert said.

Officials for both Merkel and Sarkozy said Monday that jointly guaranteed eurobonds would not be on the agenda.

Analysts forecast that Tuesday’s meeting could set the stage for future political decisions about the euro and European integration, but no immediate breakthroughs.

“Don’t expect any game-changers from today’s meeting,” said Neil MacKinnon, global macro strategist at VTB Capital. “The eurozone debt and banking crisis has yet to be properly resolved, and the future viability of monetary union is a choice between moving towards fully fledged fiscal union or considering the possibility of a break-up in monetary union.”

European growth prospects are a growing concern too. Until now Germany’s economy, Europe’s biggest, had been growing strongly despite Europe’s government debt crisis.

The eurozone’s growth rate was well short of the 0.8 percent recorded in the first quarter, and was largely due to an abrupt slowdown in Germany. Germany’s economy has helped support the eurozone through the government debt crisis. Its world-renowned companies have tapped export markets all around the world, particularly in faster-growing emerging countries.

The chief of the International Monetary Fund urged rich-country governments not to squeeze their budgets so far that they stifle growth.

“For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans,” Lagarde wrote in the Financial Times. “At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects.”

France was caught in the market crossfire last week, with investors worrying about the financial health of the country’s banks in particular and whether it would be the next country after the U.S. to lose its triple-A credit rating.

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