Finance Blog number 1

The more than 1,000 hourly employees at the General Motors plant in Wentzville are voting today on a local contract.

Voting began at 4 a.m. and will run until 7 p.m., said Tom Brune, communications coordinator for United Auto Workers Local 2250. The local contract covers work rules, transfers and job classifications.

Last week, Local 2250 employees voted overwhelmingly to approve a national four-year contract with GM. Local 2250 represents the 1,196 hourly workers at the Wentzville plant. As part of the new contract, GM is proposing investing $380 million in the Wentzville facility and adding 1,850 jobs.

Some of those new jobs will be added in the coming weeks. GM spokesman Greg Martin said Wentzville employees were told today that a second shift at the plant for full-size van production will be added in early 2012, adding about 400 jobs easy payday loans. The plant currently produces GMC Savana and Chevrolet Express vans.

“We’ll start bringing them on as soon as we can,” Martin said. Workers for the second shift will start to receive training within the next month, he said.

GM has not yet offered details about the addition of a mid-size pickup slated for Wentzville, which union officials announced as part of the national contract last month. Analysts have speculated that GM will begin producing the next generation Colorado pickup in Wentzville. Colorados are currently produced at a plant in Shreveport, La., which is slated to close.

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Talk to people involved in economic development in Missouri, and it won’t be long before you hear this lament: “Texas can write checks to companies to get them to move there.”

So can Georgia and Mississippi, Arkansas, Virginia, Florida and other states.

If a bill moving through the Legislature becomes law, Missouri, too, will be able to write those kind of checks.

Actually, not checks literally

Educated at an exclusive school in a picturesque patch of English countryside, Ghana-born trader Kweku Adoboli was known to neighbors as a polite and well dressed young man who mixed grueling hours in London’s financial district with a lavish social life in the capital’s nightspots.

But even the 31-year-old Adoboli, who was charged Friday with fraud and false accounting, appeared to foresee his work hard, play hard lifestyle unraveling. “Need a miracle,” he posted on his Facebook page, just hours before his arrest early on Thursday.

Analysts and regulators were left questioning why Swiss banking giant UBS and its monitoring systems had failed to spot Adoboli’s alleged fraud, which will cost about $2 billion in losses.

“Nobody blames the tiger for stalking its prey, but you do blame the zookeeper for leaving the tiger’s cage open,” said Stephen Brown, professor of finance at New York University’s Stern School of Business.

Between 1992 and 1998, Adoboli was a boarder at Ackworth School, founded in the late 18th Century by Quakers, the religious organization which asks followers to develop a personal approach to religion.

Also known as the Religious Society of Friends, the Quaker faith stresses the importance of honesty and, according to the school’s website, students are asked to observe periods of “reflective silence before meals,” and attend regular worship meetings.

According to Vida Yeboah, a member of staff at the United Nations office in Ghana’s capital Accra, John Adoboli, Kweku’s father, had worked at the U.N. and was know by colleagues as a gentle, humble man.

The Times of London reported that Adoboli’s father’s worked in Ghana, Israel, Syria and Iraq _ sending his son away to England to be educated.

At Adoboli’s $31,500-a-year school, set in rolling countryside close to the town of Pontefract, about 180 miles (290 kilometers) north of London, Adoboli would have been taught the value of a peaceful, simple lifestyle.

Despite the childhood schooling in prudence, Adoboli lived in an expensive loft apartment in a trendy corner of east London _ close to the capital’s financial district _ and discussed on his Facebook profile a fondness for fine dining.

Philip Octave, Adoboli’s former landlord, said he left the 4,000 pounds ($6,300) per month apartment four months ago. “He was a very nice guy, very polite. He would speak to anybody. I haven’t got a bad word to say about him,” Octave said.

“He was very well spoken and dressed very smartly. He was a very quiet chap, actually,” he added.

According to his social media profiles, Adoboli embraced his bustling and ethnically diverse area of east London _ once downtrodden, but now home to well-paid traders and bankers working at nearby financial firms poor credit personal loans.

A favorite local nightspot was The Boundary, a swank rooftop bar and restaurant with views across London’s banking district, known for its $1,200 magnums of champagne and pricey menu of seafood and traditional British game.

Adoboli also listed interests including expensive wine, photography and the gritty U.S. crime drama “The Wire” on Internet profiles, and disclosed he had been dating a nurse for at least a year. The banker said he enjoyed traveling to France, the U.S. and returning to Ghana to visit his parents.

After he graduated from the University of Nottingham in 2003 with a degree in e-commerce and digital business, Adoboli won a job with UBS as trainee investment adviser in 2006 _ rising through the company to join its equities desk.

The trader’s LinkedIn profile confirmed he worked on a desk known as Delta One and worked with exchange-traded funds _ which track different types of stocks or commodities, such as precious metals. Adoboli and colleagues performed similar work to Jerome Kerviel, who gambled away $6.7 billion at French bank Societe Generale.

Brown said that banks have shown a tendency to fail to spot cases where ambitious and intelligent employees run into difficulty.

“These top banks hire the best and brightest ambitious young people and when they outperform everyone else the bankers want to believe in their brilliance so they look the other way,” said Brown. “That’s exactly what happened at UBS.”

Brown drew parallels with the case of Nick Leeson, the Singapore-based trader who brought down British bank Barings in 1995 after he made around $1.4 billion of losses in unauthorized trades. Law firm Kingsley Napley, which represented Leeson, confirmed on Friday that it had been hired to represent Adoboli.

Kimberly Krawiec, a law professor at Duke University, in Durham, N.C., agreed that the culture inside UBS would need scrutiny following Adoboli’s arrest.

“In the Kerviel case all the blame went to the rogue trader and Societe Generale got away with a slap on the wrist,” Krawiec said. “That was a disappointing outcome because you have to accept there are broader forces at work when traders take on positions that are large enough to threaten large institutions and markets.”

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The world’s car makers sought to look past economic worries in Europe and the United States at the Frankfurt auto show on Tuesday, with many betting on cleaner, smaller, high-mileage vehicles aimed at evolving consumer tastes.

The industry, which suffered through the recession caused by the 2007-2009 financial crisis, has been riding the global recovery but now is looking at shakier prospects amid Europe’s debt crisis and worries about the U.S. economy.

Some executives want a firmer response from Europe on its government debt woes. Fiat and Chrysler CEO Sergio Marchionne urged German Chancellor Angela Merkel, who opens the show to the public Thursday, to step up efforts to solve the crisis.

“I think she needs to be part of a permanent solution to this problem,” Marchione told The Associated Press on the sidelines of a Fiat presentation, referring to the leader of the European Union’s economic engine. “She needs to force a fundamental change in the system.”

Fears of possible government debt defaults, starting from bailed-out Greece, are threatening to engulf Fiat’s key market of Italy and are sapping consumer confidence: auto sales there are forecast at around 1.8 million this year, the lowest level since 1983.

Still, this year’s 64th International Motor Show is more cheerful than its 2009 predecessor, which took place during the recession. Organizers say 1,007 exhibitors have signed up _ up from 781 last time, and German car makers including BMW, Daimler, Volkswagen and Porsche have put up strong recent profits _ thanks in part to rising sales in fast-growing emerging markets.

The confidence of the home carmakers showed in a lavish display of Daimler’s Mercedes-Benz and Smart lines, with CEO Dieter Zetsche speaking in front of a giant screen flashing high-resolution video graphics and accompanied by a thunderous sound system. Zetsche said that no matter the “turbulence on the Frankfurt stock exhange” in recent days, “all lights are green” at the company.

VW luxury brand Audi is splashing out for its own test track that winds in and out of the exhibit building.

“People are talking too much about crisis,” said Rupert Stadler, Audi’s chief executive who predicts, for example, double-digit growth for its U.S. sales this year pay day advance. “It’s always possible to complain.”

Journalists and industry executives were getting a sneak peak on Tuesday and Wednesday of the show at Frankfurt Messe exhibition center. It runs from its open to the public Thursday through Sept. 25.

Lighter material, electric-powered engines and tiny, fuel efficient cars styled for city driving are among innovations on display: iconic luxury brand Rolls-Royce presented its electric experimental car, the 102EX, while sports car standout Aston-Martin rolled out its pint-sized Cygnet “commuter” car.

Fiat has a new, slightly longer version of its Panda small car, a mainstay that has sold 6 million since 1980, while Toyota has a new take on its familiar Prius, offering a plug-in hybrid version and a Prius+ seven-seater. Daimler AG’s Smart brand has an electric version of its tiny two-seater.

Ford Motor Co. is unveiling the Evos, a concept car that won’t make it into production but which shows design elements that will appear on Ford’s regular models soon. Those could include the car’s slender, LED headlights.

VW has its new subcompact up, which is only 3.54 meters long and has a new fuel-efficient three-cylinder engine. BMW’s small electric i3 saves weight with high-tech carbon reinforced plastic, or CRP.

“The use of CRP has allowed us to solve the contradiction that electric vehicles _ BEVs _ will have to be distinctly heavier because of the weight of the battery,” said BMW’s development chief, Klaus Draeger, “because CRP is a lightweight yet strong and rigid material.”

As usual, the show isn’t all about small and frugal. At the Porsche stand, journalists and other onlookers pawed the new version of the classic 911 Carrera sports car. The gleaming dark blue display model was quickly covered with fingerprints from people climbing in and out or leaning on it to have their snapshot taken.

A new 911 is priced in Germany at euro88,037 _ including tax _ for the Carrera, euro102,436 for the Carrera S with the bigger engine. U.S. prices start at $82,100 and $96,400.

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Online:

http://www.iaa.de/en/visitors/

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Asia-Pacific markets rebounded in early trading Wednesday, as traders looked past some bleak U.S. jobs data and Europe’s debt crisis to scoop up bargains following a steep selloff of equities.

Japan’s Nikkei 225 index, which on Tuesday fell to its lowest level since April 2009, rose 1.4 percent to 8,714.59. A slightly lower yen helped Japan’s powerhouse export sector recover from the beating it took earlier this week.

Mazda Motor Corp. jumped 3.4 percent, and Sony Corp. gained 2.8 percent. Toyota Motor Corp. rose 2.3 percent.

Markets received further good news when the Australian government said the economy expanded 1.2 percent in the quarter through June, rebounding from a 0.9 percent contraction in the previous three months. Australia’s S&P ASX 200 index gained 1.9 percent at 4,153. New Zealand’s NZX 50 was 0.7 percent higher at 3,294.42.

South Korea’s Kospi clawed back the prior day’s losses to rise 2.4 percent at 1,809.35, with blue chip high-tech stocks among those leading the way. Hynix Semiconductor, the world’s second-largest memory chip maker, soared 7.4 percent. LG Electronics Inc., which ranks No. 2 globally in flat screen televisions, was 5.8 percent higher.

Softening gold prices, which recently have hit all-time highs, caused gold-related shares to decline. Newcrest Mining Ltd., Australia’s top gold miner, lost 1 percent.

A wave of negative sentiment slammed global stock markets last Friday, when a government report said the U instant payday loan.S. economy failed to add any new jobs in August. It was the worst reading on jobs since September 2010.

But signs of growth in the U.S. service sector helped tame concerns about another U.S. recession. The Institute for Supply Management said Tuesday that the service sector grew more than analysts had expected in August.

Growth in that part of the economy, which employs nearly 90 percent of America’s work force, fell the three previous months.

The Dow Jones industrial average fell 0.9 percent to 11,139.30. The Standard and Poor’s 500 index dropped 0.7 percent to 1,165.24. The Nasdaq composite fell 0.2 percent to 2,473.83.

Separately on Tuesday, the Swiss franc dropped sharply after the country’s central bank pegged it against the euro in an attempt to rein in the export-sapping appreciation of the currency.

The franc has been hugely in demand in recent weeks due to its widely perceived status as a safe haven during times of market volatility.

The dollar strengthened to 77.38 yen from 77.67 yen in late trading Tuesday in New York. The euro rose to $1.4027 from $1.3991. It was the first time the euro has fallen below $1.40 since July 13.

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The government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.

The lawsuits were filed by the Federal Housing Finance Agency. It oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the mortgage-backed securities sold to Fannie and Freddie by the firms named in the lawsuits: $196 billion.

The government didn’t say how much it is seeking in damages. It said it wants to have the securities sales canceled and wants to be compensated for lost principal, interest payments as well as for attorney fees.

The government action is a big blow to the banks, many of which have seen their stock prices fall to levels not seen since the financial crisis in 2008 and 2009. Until now, the stocks have been undermined mostly by unrelated worries about the U.S. and European economies.

It is particularly damaging to Bank of America, which bought Countrywide Financial Corp. in 2008 and Merrill Lynch in 2009. All three are being separately sued by the government for mortgage-backed security sales totaling $57.5 billion.

After Bank of America, JPMorgan Chase was listed in the lawsuits with the second-highest total at $33 billion. Royal Bank of Scotland followed at $30.4 billion.

Bank of America has already paid $12.7 billion this year to settle similar claims. Last month insurer American International Group Inc. sued the bank for more than $10 billion for allegedly selling it faulty mortgage investments.

In a statement Friday, Bank of America rejected the claims in the government’s lawsuits.

Fannie and Freddie invested heavily in the mortgage-backed securities even after their regulator said they didn’t have the needed risk-management capabilities, the bank said. “Despite this, (Fannie and Freddie) are now seeking to hold other market participants responsible for their losses,” it said.

Bank stocks fell sharply on Friday as news of the government’s lawsuits emerged. Bank of America tumbled 8.3 percent, JP Morgan Chase fell 4.6 percent, Citigroup lost 5.3 percent, Goldman shed off 4.5 percent and Morgan Stanley’s ended down 5.7 percent.

Residential mortgage-backed securities bundled pools of mortgages into complex investments. They collapsed after the real-estate bust and helped fuel the financial crisis in late 2008.

The FHFA said the mortgage-backed securities were sold to Fannie and Freddie based on documents that “contained misstatements and omissions of material facts concerning the quality of the underlying mortgage loans, the creditworthiness of the borrowers, and the practices used to originate such loans.”

The FHFA filed a similar lawsuit in July against Swiss bank UBS AG, seeking to recoup more than $900 million in losses from mortgage-backed securities.

Also sued Friday were are Ally Financial Inc., formerly known GMAC LLC, Deutsche Bank AG, First Horizon National Corp., General Electric Co., HSBC North America Holdings Inc., Morgan Stanley, Nomura Holding America Inc., and Societe Generale.

JPMorgan, Goldman, Citigroup and Morgan Stanley declined to comment on the lawsuits. Ally Financial said in a statement said the government’s “claims are meritless, and the company intends to defend its position aggressively.” A spokeswoman for First Horizon said the bank intends to “vigorously defend” itself.

Ken Thomas, a Miami-based banking consultant and economist, said he expects the banks to settle soon with the government.

“This will be nothing but a distraction to them and the quicker you settle something like this the better,” he said.

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Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies and judges are blocking banks from foreclosing on houses. The findings by various county registers of deeds have also hindered a settlement between the 50 state’s attorneys general investigating big banks and other lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and others to temporarily halt foreclosures nationwide in the fall of 2010.

Widespread robo-signing that stretches back a decade or more could create problems for homeowners. Regulators have so far not asked lenders to clean up the potentially millions of suspect documents filed in the past decade or earlier. That troubles some banking experts, including Sheila Bair, who until early July was chairwoman of the Federal Deposit Insurance Corp.

“We do not yet really know the full extent of the problem,” Bair said in written remarks to the Senate Banking Committee. She and others have called for a comprehensive study.

If documents with robo-signed signatures are challenged in court, judges could question the ownership of the properties, says Katherine Porter, a professor at the University of California-Irvine School of Law. The consequences extend to homeowners in good standing when they try to sell.

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What to do?

The stock market has proved again that it’s capable of making vicious attacks on your money. But just when you think all is lost, the market also can transform into its gentler self.

The past few weeks have been enough to make you crazy, especially if you are among the great majority of people who don’t follow the stock market day in and day out and imagine, incorrectly, that someone actually knows what’s going to happen.

Let’s start there. If you have been following the news, you know that there is talk again of a possible recession, and there are worries that debt problems in Europe could cause problems in banks pay day loans.

Notable economist Martin Feldstein said there is a 2-1 chance of a recession within the next 12 months. Goldman Sachs says there’s only a 1-in-3 chance. So don’t trust anyone who claims they know. Crystal balls are foggy. But here’s what you can do to insulate yourself from trouble and still build the future you want:

Protect the money you will need soon

Ontario

Asian stock markets fell Monday after U.S. political leaders failed to reach a deal to raise Washington’s debt limit that is crucial to avoiding an impending default.

Oil prices fell below $99 a barrel amid investor concern that the lack of a debt agreement could damage the world’s biggest economy and reduce demand for crude.

Japan’s Nikkei 225 was off 0.8 percent at 10,053.2 points and China’s Shanghai Composite Index slid 2.1 percent to 2,711.37. Hong Kong’s Hang Seng Index lost 0.8 percent to 22,268.28.

Elsewhere, South Korea’s Kospi lost 0.8 percent to 2,152.74 and Australia’s S&P/ASX 200 dropped 1.4 percent to 4,538.50.

“The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the U.S.,” said Ben Potter, market strategist for IG Markets, in a report.

U.S. leaders had hoped to strike a deal Sunday to reassure investors. President Barack Obama has insisted on raising revenues, mainly through letting tax cuts for wealthier Americans expire, but Republicans want more spending cuts and have rejected higher taxes.

A default would mean the U.S. government could not pay all its bills starting next month, including interest and principal on Treasury bonds. That would cause shockwaves through the global economy and financial markets.

Many analysts expect U.S. leaders to reach a last-minute deal to raise the government’s $14.3 trillion borrowing limit before an Aug. 2 deadline. But markets are watching anxiously for what tax or spending changes might be part of the settlement.

In China, market heavyweight PetroChina Ltd., Asia’s biggest oil and gas producer, and the country’s biggest commercial lender, Industrial & Commercial Bank of China Ltd., both were off 0.8 percent.

Chinese railway shares fell after this weekend’s deadly bullet train crash in southeastern China. China South Locomotive and Rolling Stock Corp. declined 8.6 percent and China Railway Group was off 7 percent.

The dollar was little changed at 78.45 yen, up slightly from Friday’s 78.43. The euro also was largely unchanged at $1.4366.

Benchmark oil for September delivery was down $1 to $98.87 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 74 cents to settle at $99.87 on Friday.

In London, Brent crude slid 97 cents to $117.70 per barrel on the ICE Futures exchange.

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