Finance Blog number 1

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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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 tentative thumbs-up.

That was the assessment Thursday night from economists who offered mainly positive reviews of President Barack Obama’s $450 billion plan to stimulate job creation.

Some predicted it would put hundreds of thousands of people back to work next year, mainly because a Social Security tax cut for workers would be deepened and extended to small businesses.

“Payroll tax cuts are very powerful,” said Allen Sinai, chief economist of Decision Economics. “They provide a boost to direct income and, in turn, spending, which is important to growth.”

Mark Zandi, chief economist at Moody’s Analytics, estimated that the president’s plan would boost economic growth by 2 percentage points, add 2 million jobs and reduce unemployment by a full percentage point next year compared with existing law.

The heart of Obama’s plan is an expansion of the Social Security tax cut, which took effect this year and is scheduled to expire by year’s end. The tax cut now applies only to workers; it reduces their Social Security tax from 6.2 percent to 4.2 percent. Employers still pay the 6.2 percent rate.

Obama would renew the tax cut for a year and deepen it: He would drop workers’ Social Security tax to 3.1 percent.

Under his bigger tax cut, an extra $1,550 would go to taxpayers earning $50,000 a year. The Social Security tax is imposed on the first $106,800 of taxable income. That means the maximum savings would be about $3,300 for an individual and $6,600 for a couple.

Obama would also halve Social Security taxes for businesses whose payrolls are $5 million or less. The White House says that would include 98 percent of U.S. businesses.

Zandi calls this a “creative” way to help small companies, which have struggled more than larger ones to recover from the Great Recession of 2007-2009. During recoveries, small businesses normally drive job creation.

“Something like this is much needed” for an economy grappling with 9.1 percent unemployment, Zandi said. “The economy is on the edge of recession.”

Susan Wachter, a finance professor at the University of Pennsylvania’s Wharton School, figures that the Social Security tax cuts alone would add 1 percentage point to economic growth and create 1 million jobs next year.

The president’s plan also takes a shot at long-term unemployment: Companies would get a $4,000 tax break for hiring people who have been unemployed for more than six months. As of August, the government says, 43 percent of unemployed Americans have been out of work for six months or more.

The plan would also extend emergency unemployment benefits; ramp up spending on public works projects; and provide aid to keep state and local governments from laying off teachers. Obama would pay for his program with future budget cuts.

Consumer spending accounts for about 70 percent of the economy.

Some economists cautioned, though, that some factors might blunt the impact of Obama’s enlarged Social Security tax cut. For one thing, the tax cut would deliver only a temporary boost. It would expire at the end of 2012. Most economists foresee unemployment remaining high well after next year.

And Michael Mandel, chief economic strategist for the Progressive Policy Institute, suggested that the link between consumer spending and job creation is weaker in an economy like America’s that’s highly open to foreign goods.

“If the payroll tax cut encourages consumers to buy more (imported) clothing, that’s likely to create more jobs overseas than in the U.S.,” Mandel said.

In addition, Paul Ashworth, chief U.S. economist at Capital Economics, said many taxpayers might save the extra money from the tax cut rather than spend it.

“In an environment where economic confidence has been almost completely destroyed, there is a risk that both households and small businesses will save a greater proportion of any windfall, particularly if they know the reduction is only temporary,” Ashworth said.

The White House plan would also extend emergency unemployment benefits for another year. Economists note that unemployment checks put money in the hands of people who are most likely to spend it immediately.

That spending tends to boost demand for goods and services and give companies more reason to hire. The forecasting firm Macroeconomic Advisers has estimated that an additional year of emergency unemployment benefits would support 200,000 jobs in 2012.

Obama also wants $30 billion to modernize schools, $50 billion for road and bridge projects and a bank that would finance more public works projects.

The president’s plan will likely face resistance in Congress. Republicans have opposed further spending and have pushed to reduce the budget and shrink the government.

Still, the Wharton School’s Wachter called Obama’s plan a serious proposal that should be politically acceptable “across the board.”

Menzie Chinn, an economist at the University of Wisconsin, would favor an even bigger jobs package for an economy that grew at an annual rate of just 0.7 percent in the first six months of the year and created zero net jobs in August.

He said he fears that Obama’s plan merely makes up for the expiration of the president’s earlier $862 billion economic stimulus plan.

Even so, Chinn said, the measures Obama proposed Thursday night “might prevent the economy from dropping below stall speed” _ at which point it would be vulnerable to another recession.

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World stock markets took a beating on Monday after a report showed U.S. companies stopped hiring in August, reviving fears that the world’s largest economy is heading back into recession.

The lack of hiring in the U.S. last month surprised economists, who were expecting about 93,000 jobs to be added. Previously reported hiring figures for June and July were revised lower. The unemployment rate held steady at 9.1 percent _ it has been above 9 percent in all but two months since May 2009.

The jobs crisis has led President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring.

Traders waited for signs that the U.S. Federal Reserve might take action at its September meeting to support the economy _ perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.

“Right now the possibility has increased,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “I think they have to do something. The markets are expecting QE3.”

Amid the uncertainty, traders pulled out of any risky investments _ such as stocks, particularly financial ones, the euro and emerging market currencies _ to pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold.

European shares slumped in early trading. Britain’s FTSE 100 dropped 2.2 percent to 5,176.06. Germany’s DAX fell 3.2 percent to 5,361.60, and France’s CAC-40 tumbled 3.6 percent to 3,036.17.

Markets in the U.S. were closed for the Labor Day holiday.

Renewed jitters over the eurozone debt crisis increased tensions in Europe.

An international debt inspectors’ review of Greece’s finances was interrupted on Friday amid disagreements over the country’s deficit figures. The review will be resumed in about 10 days and must be completed in order for the country to receive its bailout loans at the end of the month.

Signs that the Italian government’s commitment to its austerity program is wavering have also shaken investors. Prime Minister Silvio Berlusconi’s government has backtracked on some deficit-cutting measures, prompting EU economic officials to urge it to stick to its promised plan.

The economic indicators, meanwhile, were mostly downbeat. Although retail sales in the eurozone rose unexpectedly in July, a survey of the services sector showed a slowdown across the continent for the fifth consecutive month.

The purchasing managers’ index for the eurozone showed the services sector was still growing _ unlike the manufacturing sector _ but only barely. That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week.

“Indeed, the latest data and surveys suggest that the ECB’s eventual next move could actually be to trim interest rates, although it is likely to need sustained eurozone economic weakness and possibly even GDP contraction to get the ECB to perform a U-turn on interest rates,” said Howard Archer, economist at IHS Global Insight.

In Asia, indexes closed sharply lower. Japan’s Nikkei 225 stock average sank 1.9 percent to close at 8,784.46, with sentiment also undermined by the persistent strength of the yen, which hurts exporters.

Australia’s S&P/ASX 200 fell 2.4 percent to 4,141.9, and South Korea’s Kospi slid 4.4 percent to 1,785.83. Hong Kong’s Hang Seng slid 3 percent to 19,616.4. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also were down.

Mainland Chinese investors worried about the economic outlook dumped shares, dragging Shanghai’s benchmark Composite Index down 2 percent to 2,478.74, its lowest close in 13 months. The Shenzhen Composite Index lost 2.4 percent to 1,097.07.

Investors seeking a relatively stable store of value during times of economic turbulence in financial markets have been scooping up gold, sending its price up 50 percent over the past year.

In currencies, the euro weakened to $1.4142 from $1.4187 in New York late Friday. The dollar was roughly flat at 76.82 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.

Benchmark oil for October delivery was down $1.37 to $85.08 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.

In London, Brent crude for October delivery was down $1.20 at $111.13 on the ICE Futures exchange.

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Irene is gone, and East Coast airports are reopening. But it will take at least several days to get hundreds of thousands of travelers stranded by the storm to their final destinations.

Behind the scenes, ground crews worked through the night to get planes ready, air traffic controllers prepared for a deluge of landings and takeoffs and extra pilots were called into action.

Airports in New York, Boston and Philadelphia bustled Monday after being closed for part or all of the weekend. The week before Labor Day is always a busy one for airlines, so they struggled to cram travelers stranded by Irene onto already-packed planes.

To make matters worse, more than 1,600 flight were cancelled Monday, adding to the nearly 12,000 grounded this weekend, according to flight tracking service FlightAware. The service estimates that 650,000 passengers have been stuck on the ground since Irene hit, but some experts think it’s a million or more.

Delays of mass transit are slowing airlines’ efforts to get stranded passengers back in the air.

Some passengers opted for other means of travel.

Joseph McCann, 22, of Northern Ireland, was waiting with a friend at 30th Street Station in Philadelphia to catch a bus to New York no faxing pay day loans.

The pair, who had been visiting California, flew into Philadelphia on Monday morning and were supposed to catch a connecting plane to Newark, N.J., but the flight was canceled. Friends suggested the bus.

McCann will arrive in New York about five hours later than originally scheduled, but said it could have been worse.

“I’d say we were lucky in comparison,” McCann said.

The storm is expected to cost U.S. airlines $200 million in revenue _ between lost flying and ticket-change fee waivers. Airline officials estimate it will take about two days to get every plane and crew member back in place.

“The next couple of days are going to be trying,” said Mike Flores, a US Airways flight attendant and union president. “Once we get to work we’re going to be dealing with a lot people who have been up for 24 hours, camped out in airports.”

_____

AP Airlines Writer Scott Mayerowitz in New York and AP Writer Kathy Matheson in Philadelphia contributed to this report.

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Like all greedy vultures, I’m looking to prey on the fear and misfortune of others. With stocks riding a yo-yo, jobs scarce and worries about a new recession, there’s a lot of fear and misfortune around.

So, I asked some fellow carrion-pickers to suggest a few investment morsels to chew on in these scary times. Their answers ranged from high-dividend stocks to master limited partnerships to certain technology stocks and, surprisingly, beaten-down banks.

This just might be the moment to swoop in on the St. Louis housing market. Some sellers are anxious, others are desperate, and mortgage rates are skimpy. More important, a local economist who specializes in housing thinks prices are about at bottom around here. More on that at the bottom of this column.

First, you have to decide if you have the stomach to do anything with your money but sit on it.

We’re in the midst of ocean-spanning angst. At home, we worry over a possible new recession. Manufacturing, a main driver of the recovery so far, has apparently stopped growing, and confidence is in a deep funk.

Then again, consumers are spending moderately after a disturbing pause in May. Slipping food and gasoline prices are giving people a little lift. Employers are still hiring, although modestly.

In all, most economists see mopey, disappointing growth for the rest of the year, but no recession.

We can still wring our hands over Europe, where the sovereign debt mess simmers on. The danger is that it could boil over into a full-blown financial panic.

Because of all that, stocks are on a roller coaster.

“It seems silly when one day a company goes up 10 percent and the next day it goes down 10 percent,” says Ken Crawford, portfolio manager at Argent Capital in Clayton. That silliness prompts Argent to sit on the sidelines until reason returns.

Others argue that the stock market has already priced in a recession. Stocks are off 13 percent from their high of July. That makes them look cheap.

“Stocks are very attractively priced these days at 12 times operating earnings. That’s something we have not seen in 20 years,” says Joe Williams, chief investment strategist at Commerce Bank.

Stocks would still be cheap even if earnings estimates for next year are lowered, as they probably will be. They’re now at only 10 times next year’s expected profits. The historical average for trailing earnings is about 16.

Williams and Joe Terril sing the same tune: a love song for dividends.

“Over the next couple of years, you’ll see more and more investors looking around for income. The time to buy is now,” says Terril, who manages $430 million at Terril & Co. in Sunset Hills.

The Fed says it expects to keep short-term interest rates stable into 2013, which eases part of the risk for investors.

Williams likes giant companies with high dividends and a tendency to raise them, such as oil company Conoco, drugmaker Pfizer and goods company Procter & Gamble. All yield 3 or 4 percent, along with AT&T, which yields nearly 6 percent.

Terril likes master limited partnerships, which own pipelines and other energy infrastructure. He likes Kinder Morgan, yielding 6.8 percent, and Sunoco Logistics yielding 5.8 percent.

Terril is buying Bank of America and Citigroup preferred stock, yielding over 7.5 percent. Terril was buying Bank of America before Warren Buffett agreed to pump $5 billion of his company’s cash into the bank on Thursday. Other investors had spent the week running away from the nation’s biggest bank, worried over its mortgage woes and the chance it will have to scrounge up more capital.

But the bank is dubbed “too big to fail,” meaning that the government can’t let it go broke for fear of sparking a panic. “I don’t think it will fail at all,” says Terril.

Terril is also picking up a couple of tech stocks: Agilent, the testing equipment firm, and Coherent, which makes laser-based components.

Consumer confidence is in the pits - the lowest in 31 years, according to the University of Michigan’s survey. That might actually be positive for stocks. Stocks have gained an average of 26 percent in the year after confidence hits bottom, according to J.P. Morgan.

At J.P. Morgan in Clayton, managing director Hans Fredrikson thinks junk bonds are a buy again. They’ve been beaten down for weeks. Intermediate-term junk will yield 6 to 8 percent.

Now on to that new feeding ground for vultures, housing. The rate on 30-year mortgages averaged 4.15 percent last week, the lowest rate since at least 1971, according to Freddie Mac.

But housing prices in St. Louis have been falling since 2008.

In June, single-family homes sold for 8.6 percent cheaper than a year earlier, according to the tracking service CoreLogic.

Now there are signs that the slump may be over, says Bill Rogers, economist at the University of Missouri-St. Louis. Rogers says his own index of St. Louis County home prices has shown a leveling off in recent months. “We’re about at the bottom,” he says, while acknowledging that he might be mistaken.

If this is the bottom, it’s a really good time to buy a house.

Remember the biggest lesson learned over the past four years: A house is a place to live, not an investment. Don’t expect rising home values anytime in the future, says Rogers. St. Louis won’t have the population growth needed to drive up prices swiftly.

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The Suburban Journals on Wednesday announced the layoff of 20 staffers, the elimination of some print editions and a shift in emphasis to online coverage.

The Journals, along with the Post-Dispatch, are owned by Lee Enterprises, which could face bankruptcy unless it can refinance about $1 billion in debt by an April deadline.

The Journals will discontinue publication of full Sunday Journals in St. Charles County and Illinois after Aug. 28. The Wednesday editions in North St. Louis County and Monroe, St. Clair and Jefferson counties will also be discontinued after the Sept. 7 issue.

The Journals will continue to publish six Wednesday print editions in western and eastern St. Charles County, West and South St. Louis County, Collinsville and Granite City.

In addition, both news and sports stories will be updated more frequently online at stltoday.com/neighborhoods and stlhighschoolsports.com, said Publisher Dave Bundy in a written statement.

“Focusing more on digital news delivery in some areas frees us from the weekly print cycle and allows us to continue providing the best community coverage available to the Greater St. Louis area,” according to Bundy’s statement. “Our print Journals, digital coverage and niche products provide a full array of ways to serve readers and advertisers, and we can use the medium or combination that works best for the message.”

The announcement comes on the heels of a layoff of 23 workers at the Post-Dispatch in June. Those cuts included production, technology and marketing employees, but no journalists. This month, however, the company announced that it would seek to cut up to 10 newsroom employees through a voluntary severance offer. 

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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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The outer bands of Tropical Storm Gert are approaching Bermuda with the storm’s center expected to pass just east of the wealthy British archipelago.

A tropical storm warning is in effect for Bermuda and people there have been installing storm shutters and hauling boats onto beaches in preparation.

Gert’s maximum sustained winds early Monday are near 45 mph (75 kph) with some strengthening forecast during the next day or so.

The U no fax payday loans.S. National Hurricane Center in Miami says large swells generated by Gert are approaching Bermuda and are likely to cause life-threatening surfs and rip current conditions.

The storm is centered about 130 miles (210 kilometers) southeast of Bermuda and moving north-northwest near 12 mph (19 kph).

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It doesn’t matter how many weeks of vacation you have, it never seems like enough. By the time you book off a summer week, March break, plus time for your childrens’ soccer tournament and parent-teacher interviews, you’ve run out of paid time off. But employees of the Toronto-based Social Media Group don’t have that problem. In October, 2010, CEO Maggie Fox did away with tracking vacation days and introduced an unlimited paid vacation policy for her 20 employees.

The company helps organizations develop strategies around the effective use of social media tools like Facebook, Twitter and Linked in. Clients include Fortune 500 organizations like 3M, Ford, CNN, Thomson Reuters and a top global bank. Fox says, “We’re playing with the “big boys” and our incredible team has to deliver their A+ game – Every. Single. Day. What shouldn’t an employee be able to taking an afternoon off to play with her kids?”

The “golden rule” is that each employee is responsible for his own mental health, his colleagues and his clients. Time off has to be cleared with supervisors, but it’s an informal process. “Obviously if you said I want to take six weeks off starting tomorrow, it would not be feasible. But if you gave us a couple of months notice and a plan for structuring your work, it is not impossible.” The company doesn’t keep formal statistics, but Fox believes people are taking more time off overall, and she says that’s a good thing. “It’s not so much that people are saying let me take a week or a month four times a year. But they are taking more long weekends in addition to scheduled family vacations.” The only negative she can think of is that often when offers are extended to new employees, they don’t believe her. She explains that the starting point is the minimum vacation required by law, and that’s what staff are paid  if they leave the company with unused time off. But while they are working for the company, the unlimited paid vacation policy applies. Fox agrees that unlimited vacation would be impossible in a manufacturing company or where essential services are provided, but she says the size of her organization isn’t really a factor. Netflix in the U.S. introduced open-ended vacations for over 500 salaried employees in 2004 and IBM Canada has eliminated tracking of vacation days (except in their Quebec manufacturing plant). IBM Guidelines say employees get a three week vacation to start but there is no policing and employees are empowered to take vacation whenever they want. While unlimited vacation appears to be the ultimate perk, a 2010 Expedia Survey reveals that almost half of Canadian employees do not fully take advantage of the number of vacation days they have now. Top reasons cited are they do not schedule a vacation long enough in advance, they are too busy to get away, or their significant other can’t get away. Do people at the Social Media Group abuse the program? Not at all, says Fox. “We work hard and play hard. I hire people who do great work. If I hire someone who takes advantage of the program, it’s my problem, because I’ve made a bad decision.” Also see: Top civil servants lose their perks  and 13 things to know about your benefits plan .

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