President Barack Obama, offering an election-year prescription to spur the economy, said the wealthiest Americans should pay more taxes in the name of fairness, to bring down the deficit and ensure those trying to make ends meet don
The U.S. bond market is neutralizing budget deficits as an election-year campaign weapon.
Interest payments will cost the government 3.1 percent of gross domestic product this year, according to Office of Management and Budget and International Monetary Fund data compiled by Bloomberg. That
U.S. stock futures are falling Thursday as the European debt crisis again becomes the key driver of market sentiment.
Stock markets in London, Germany and France have all declined. The euro has dropped to a 15-month low against the dollar.
The concern in the markets has centered on the state of Europe’s banks following UniCredit’s announcement Wednesday that it was selling new shares at a large 69 percent discount to Tuesday’s closing price.
Banks are an integral part of the debt crisis because they hold government bonds. A default or steep fall in the value of government bonds could inflict heavy losses on banks and choke off credit to the European economy. That’s why regulatory authorities want Europe’s banks to raise their buffers by euro115 billion (149 billion) over the next few months. The worry in the markets is that banks will have to offer sharp discounts to raise the funds.
U.S. economic reports have the potential to shift sentiment. Key releases later Thursday include the Institute for Supply Management’s monthly survey of the services sector as well as indicators on the pace of hiring in the private sector.
The latter may affect market expectations for Friday’s closely-watched nonfarm payrolls data for December. The figures often set the market’s tone for a week or two after their release. The expectation is that the U No teletrak payday loan.S. economy generated around 150,000 jobs during December.
Positive economic news propelled U.S. stocks to a big rally on Tuesday. Those gains held Wednesday as automakers reported strong sales in December.
Less than two hours before trading opens in New York, futures on the Dow Jones industrial average are down 55 points to 12,301. Futures for the broader S&P 500 index have fallen 7 points to 1,266.
European stocks fell, though most indexes remained higher for the year so far. Germany’s DAX was down 0.7 percent at 6,066 while the CAC-40 fell 1 percent to 3,163. The FTSE 100 index of leading British shares was 0.7 percent lower at 5,629.
Earlier in Asia, Japan’s Nikkei 225 index fell 0.8 percent to close at 8,488.71. South Korea’s Kospi index lost 0.1 percent at 1,863.74, while Hong Kong’s Hang Seng Index rose 0.5 percent to 18,813.41. Benchmarks in Singapore and Taiwan were also higher.
Mainland China’s benchmark Shanghai Composite Index lost 1 percent to 2,148.45, its lowest level in almost three years. The Shenzhen Composite Index lost 3.5 percent to 813.99. More than 100 companies plunged to the daily limit of 10 percent.
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.
The chief of the International Monetary Fund said Saturday that Italy’s financial reform is key to reducing the impact of the eurozone crisis, and that no country is immune to the consequences if the efforts fall short.
After meeting in Tokyo with top Japanese financial officials, including Finance Minister Jun Azumi, IMF chief Christine Lagarde said Italy must restore political stability and implement financial reforms to provide “clarity and credibility” and restore confidence.
Italy needs “steady, solid and sustained implementation of measures,” she said at a news conference.
The eurozone financial crisis, set off two years ago by Greece’s overwhelming debt, has now engulfed Italy, which has the third-largest economy among the 17 nations that share the euro currency. The crisis has toppled Prime Minister Silvio Berlusconi, who says he will step down once reforms are passed to help Italy control its own staggering debt payday advance.
Lagarde expressed concerns about the possible consequences outside the eurozone, particularly in Asia. She urged Japan to use caution against the impact of the eurozone crisis.
“I insisted with Minister Azumi that no country can be immune under the present circumstances, no matter how developed or how emerging or how far away it is,” Lagarde said. “Japan is no more immune than other countries.”
A major exporter, Japan “would be exposed if some of its large clients are in serious difficulty,” she said.
Europe has bailed out Greece, Portugal and Ireland.
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.
The French government says French President Nicolas Sarkozy and German Chancellor Angela Merkel will speak by phone later Monday to discuss an upcoming EU summit amid signs they disagree on parts of a new crisis plan.
Government spokeswoman Valerie Pecresse says that at the weekly cabinet meeting Wednesday Sarkozy emphasized that the Oct. 23 summit in Brussels “is a crucial moment, for Europe and for France.”
That view appears to clash with Germany’s recent downplaying of the summit’s importance Business Card Holders.
Earlier this week, German finance chief Wolfgang Schaeuble dampened expectations by saying that Sunday’s summit wouldn’t produce a comprehensive solution to the eurozone debt crisis that threatens to cause another global recession.
KV Pharmaceutical Co. has filed a lawsuit against its former board chairman and chief executive, Marc Hermelin, hoping to avoid paying him about $36.9 million in retirement benefits, plus legal expenses.
The lawsuit, filed Oct. 7 in circuit court in St. Louis County, accuses Hermelin of breaching his fiduciary obligations to the Bridgeton-based company through his alleged misconduct in shipping oversize painkillers to pharmacies.
The suit asks the court to grant a declaratory judgment that KV Pharmaceutical has no legal duty to pay tens of millions of dollars in retirement and termination fees to Hermelin, nor to reimburse him for his considerable legal expenses associated with his tenure at the drug company.
KV also seeks a court order that Hermelin repay the company all the executive compensation he received during the time of his “knowing and intentional breach of his fiduciary obligations to KV,” as well as repay the company for “other things of value by which he was enriched as a result of the wrongs he committed.”
Finally, it asks that Hermelin be ordered to pay the highest allowable financial interest on the amount of damages sustained by KV “as a result of his culpable conduct.”
Hermelin, who is living in Israel, could not be reached for comment. An attorney for KV Pharmaceutical declined to comment.
By 2008, KV was considered one of the most successful publicly traded companies based in the St. Louis area, posting nearly $600 million in revenue and employing 1,700 people. But in December of that year the pharmaceutical company’s board of directors removed Hermelin as chairman of the board and also ended his tenure as chief executive after the board’s internal investigation concluded that he had not acted in good faith.
According to the company’s lawsuit, Hermelin was terminated “for cause” because of misconduct involving “his willful failure to perform his duties in the best interests of KV.”
Hermelin’s employment agreement called for retirement and termination payments to Hermelin, but not if the board concluded that he had intentionally acted against KV’s economic interests and caused significant adverse effects for the company.
Food and Drug Administration regulators shut down the pharmaceutical business of KV and its wholly owned subsidiary, Ethex Corp., in 2009 after pharmacists discovered that the company was shipping oversized morphine pills. KV’s stock price tumbled, and the company laid off about three-quarters of its employees.
In early 2010, Ethex pleaded guilty to two felony counts of criminal fraud for failing to report to the FDA that it was distributing medicines of the wrong size and shape that could be harmful to patients payday loan lenders. Ethex, which was ordered to pay $27.6 million in fines and restitution, has been dissolved.
“Hermelin knew that many of his actions were improper, and that they risked severe sanctions against KV - sanctions so severe that they could end KV’s ability to do business,” the suit alleges. “He acted solely to protect his own interests and bonus, which was, by contract, calculated as a percent of KV profit, so taking appropriate action would be costly to him.”
KV’s lawsuit describes Hermelin’s alleged misconduct as including “failure to take appropriate actions with respect to the FDA, multiple attempts to impede the work of those investigating matters at KV’s facilities, and multiple efforts to conceal critical information with respect to KV’s production facilities and processes from internal audit and quality personnel and KV’s own board and its committees.”
KV’s suit also alleges that the company has been held captive by Hermelin. According to the lawsuit, Hermelin and his family controlled the majority of the voting power of KV stock, but only about one quarter of the economic interest. Public shareholders owned the remainder.
A consent decree between Ethex and the FDA in March 2009 barred KV Pharmaceutical from permitting Hermelin to have any role in the decision-making, management or operation of the company. Nonetheless, the suit alleges, Hermelin in June 2010 “caused the re-election of himself to the board.”
In November 2010, at the demand of federal regulators, Hermelin resigned from KV’s board. Shortly after, the Office of Inspector General of the federal Department of Health and Human Services banned Hermelin from participating in any business involving Medicare, Medicaid and all other federal health care programs for 20 years.
In March, Hermelin pleaded guilty in federal court in St. Louis to two criminal misdemeanor counts of mislabeling drugs. Hermelin was initially sentenced to 30 days in St. Louis County jail, but he was released by a federal judge after serving only about half that time. Under a plea agreement, Hermelin also agreed to pay a $1 million criminal penalty and to forfeit an additional $900,000 in ill-gotten gains.
Hermelin claims that he was not fired by KV, but instead resigned. Hermelin has demanded that he be paid retirement benefits and reimbursed for his legal expenses in connection with the criminal proceedings against him, governmental investigations, and other lawsuits. KV contends that it owes him nothing.
Moneyville is on your side. We help you save money at a time when living costs are rising, interest rates are falling and stress levels are going through the roof.
Readers love our intense focus on personal finance issues and tips on taming everyday costs. They often send stories about how much they saved following our advice.
Rick Romain, for example, saw my Moneyville blog post about getting a basic wireless phone without signing a contract from companies such as SpeakOut Wireless and Petro-Canada Mobility.
“You said buyers should wait for specials. Well, I waited and got a discount on a Nokia flip phone (reduced to $40), with voicemail, texting and camera. If not for you, I wouldn’t have known about this option for those who use a cellphone rarely and for emergencies.”
I always get great feedback from readers when I talk about fighting back against corporate arrogance or indifference. My blog posts about reducing your data roaming charges when you travel drew a huge response.
I also sent a steady stream of traffic to Canada’s two credit bureaus, Equifax and Transunion, when trying to help readers fix errors on their credit reports that led to their being denied a loan.
Rochelle Shalmoni moved back to Canada after 14 years abroad. When her wireless phone service was cut off because of suspected fraud, she had to contact the credit bureaus to straighten things out.
“I spent two days talking to customer service reps and no one could help,” she said.
A few days later, she sent thanks for connecting her to the right people at Equifax and Transunion to get her phones working again.
My fellow bloggers — Marc Saltzman, Krystal Yee, Sheryl Smolkin and the two Moms on Money (Madhavi Acharya-Tom Yew and Peggy Mackenzie) — get an equally strong response to their work.
In his Bucks ’n’ Bytes blog, Saltzman fuses technology with personal finance and turns geek speak into street speak.
In a popular post, he highlighted seven tech bargains found at a dollar store, such as a scientific calculator for $2. Then, he found seven more bargains, such as his wife’s $1 book light, still going after more than two years.
He told readers how to dry out a wet cellphone. (Don’t use a hair dryer.) And in a controversial blog post, he told us about free software that lets you archive YouTube videos to watch offline.
In her 20-Something & Change blog, Krystal Yee focuses on finance issues for young people — such as the right time to buy a home.
“There’s a lot of pressure for my people my age to get into the housing market, even if they aren’t ready,” Yee says.
“There’s a perception that once you become a homeowner, you’re somehow on the right path to financial independence, and that’s simply not true.”
She wrote about the four lies we tell ourselves when thinking of buying a home we can’t afford. (My favourite: It’s better to buy than rent and pay somebody else’s mortgage.)
Yee bought her first home this year and detailed every expense she faced in the first three months, adding up to $10,000. Luckily, she was prepared and had no surprises.
Sheryl Smolkin writes about employment issues in her Eye on Benefits blog, using her legal knowledge and research skills to give meaty advice.
Can the boss cancel your vacation? Can you sue an employer who cuts your pay? And how do you get a fair settlement if you’re fired?
One of Smolkin’s attention-getting blog posts was about a court awarding $25,000 in severance to an employee fired for cause (persistent lateness and making defective aircraft parts).
In their Moms on Money blog, Acharya-Tom Yew and Mackenzie talk about stretching money in busy households with young children and teens.
Beat The Fees, a Moneyville series about customers being nickel-and-dimed on miscellaneous extra charges, “struck a nerve with readers,” says Acharya-Tom Yew.
She helped an older couple recoup some of the fees paid to their bank, though they’d been eligible for seniors’ discounts for years.
Mackenzie gave 10 simple ways to live frugally, followed by 10 more tips from readers. When you take lunch to work, do you put the baggies into the washing machine before reusing them?
Her post about paying $1,900 for three “free” airline tickets with Air Miles was a hit. Many people agreed the fees to transfer points from her in-laws were too high.
You can miss out on big savings — and entertaining writing — if you don’t read the Moneyville blogs. So, get started.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.
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