Finance & Business World

Consumers’ confidence in August dropped almost 15 points to the lowest level since April 2009 as worries about the economy fueled the wildest stock market swings since the financial meltdown in 2008.

At a time when Americans growing increasing worried about a weak job market, higher costs for food and clothing and recent stock market turmoil, the falling confidence numbers raise concerns about their willingness to spend and jumpstart the economy. That particularly important since consumer spending accounts for 70 percent of U.S. economic activity.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.

The Conference Board said Tuesday that its Consumer Confidence Index plummeted to 44.5, down from a revised 59.2 in July. The number was the lowest level since April 2009 when the reading was 40.8. It also is far below the 53.3 that analysts had expected. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

A number of factors contributed to the index’s decline. The Conference Board Index _ based on a random survey of consumers sent to 5,000 households from Aug. 1 to Aug. 18 _ captured the wildest week on Wall Street since the financial crisis in 2008.

Four days into the survey period, on Aug. 5, S&P downgraded the U.S. federal debt and concern revived about the health of European banks. On the news, The Dow Jones industrial average had four consecutive days of 400-point swings for the first time in its 115-year history during the week that ended Aug. 12.

Besides, market debt talks and market fluctuations, Americans are still plagued by old economic worries. The nation’s unemployment rate is stuck at 9 percent. Home values remain weak. And shoppers also are facing rising costs for everything from food to clothing as retailers pass along their higher costs for labor and materials.

As a result, one gauge of the index that measures how shoppers feel about the economy dropped to 33.3 from 35.7. Another measure that assesses shoppers’ outlook over the next six months fell to 51.9, down from 74.9 last month.

Consumers’ views on jobs, in particular, also have become more pessimistic. Those claiming that jobs are “hard to get” increased to 49.1 percent from 44.8 percent, while those stating jobs are “plentiful” declined to 4.7 percent from 5.1 percent.

Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes dropped to 14.3 percent from 15.9 percent.

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Rising costs have prompted an Alaska company to close six weekly newspapers that serve rural and largely Alaska Native communities, putting nearly 40 people out of work.

Calista Corp., an Anchorage-based Alaska Native corporation which has owned the Alaska Newspaper Inc. chain for 19 years, announced Friday the increasing costs of fuel, paper and print technology led to the board’s decision to shutter the chain and liquidate.

“As a responsibility to our 12,000 shareholders, we had to take a hard look at the subsidiary and make a tough decision,” Calista President and CEO Andrew Guy said in a statement.

The weeklies in the chain include the Arctic Sounder, the Bristol Bay Times, the Cordova Times, the Dutch Harbor Fisherman, the Seward Phoenix Log and the award-winning Tundra Drums, which the Alaska Press Association voted the state’s best weekly newspaper this year. The last issues will be sometime in August.

The papers covered an area spanning 1,500 miles with only one paper, that in Seward, on the state’s road system.

“It is a sad day not just for the journalists who are losing their jobs, but for the readers who are losing their watchdogs, their storytellers, their advocates who helped them to better understand their communities,” said Julia O’Malley, president of the Alaska Press Club.

The papers continued the tradition of Native publishing that began in 1961 with Howard Rock’s Tundra Times, according to its website.

Villages then didn’t have phones or television, and the Times served as a link to the outside world while also helping unite them around the issue of Alaska Native land claims, the website says.

Calista Corp. has owned the chain since 1992, and in recent years was able to absorb many writers who were laid off at the state’s larger newspapers.

Rod Boyce, the managing editor at the Fairbanks Daily News-Miner, once worked for the chain, and said the closure will be felt.

“Any time you lose newspapers, it’s tough, and in a state as geographically large as this one, the loss of those newspapers is tremendous,” he said.

And with diminished resources at larger papers, it’s difficult for them to fill the void for those communities, he said.

Calista’s CEO said the chain leaves behind an impressive legacy.

“We’re very appreciative of the superb staff and extraordinary talent that have worked so hard to report on rural Alaska. We genuinely hope the communities affected by this will find a new media voice to tell their stories,” Guy said.

Also closing are ANI’s quarterly magazine First Alaskans and Camai Printing, an Anchorage printing house.

In all, 35 full-time and 3 part-time jobs will be eliminated, said Thom Leonard, a Calista spokesman.

Calista Corp. said it would offer unemployment assistance counseling, severance packages and referral letters. Current employees will also have preferential status for openings within the corporation, if they are qualified for the job.

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Bank of America reported a loss of $9.1billion during the second quarter partly due to the $8.5 billion settlement with investors who claimed the bank had sold them poor-quality mortgage backed bonds. That settlement was announced in June.

The reported loss available to common shareholders was 90 cents per share.

Excluding charges related to investor settlements, Bank of America Corp. earned $3.7 billion, or 33 cents per share payday loan lenders. That compares with net income of $3.1 billion, or 27 cents a share in the same quarter last year.

Analysts surveyed by FactSet had forecast Bank of America would report a loss of 85 cents per share.

Bank of America shares were up 23 cents in pre-market trading to $9.95

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June was another good month on the foreclosure front, but the horizon still looks pretty dark.

The number of homes either set for auction or repossessed by banks in metro St. Louis fell 22 percent from last June, the fifth-straight month of year-over-year decline. Foreclosures so far in 2011 are 19 percent behind last year’s pace. That’s according to new figures out today from data firm RealtyTrac.

Much of the improvement, industry-watchers say, is due at least as much to banks slowing down the foreclosure process as to any improvement in the fundamentals of the housing market online pay day loans. It now takes, on average, 318 days from the initial notice of default until a house is repossessed, RealtyTrac said, up from 277 days a year ago.

While that’s providing some short-term relief, it may also serve to prolong the broader housing slump, said James Saccacio, RealtyTrac’s chief executive officer.

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Britain’s phone hacking scandal intensified Wednesday as the scope of tabloid intrusion into private voice mails became clearer: Murder victims. Terror victims. Film stars. Sports figures. Politicians. The royal family’s entourage.

Almost no one, it seems, was safe from a tabloid determined to beat its rivals, whatever it takes.

The focal point is the News of the World _ now facing a spreading advertising boycott _ and the top executives of its parent companies: Rebekah Brooks, chief executive of News International, and her boss, media potentate Rupert Murdoch.

In his first comment since the latest details emerged, Murdoch said in a statement Wednesday that Brooks would continue to lead his British newspaper operation despite calls for her resignation.

The scandal, which has already touched the office of Prime Minister David Cameron, widened as the Metropolitan Police confirmed they were investigating evidence from News International that the tabloid made illegal payments to police officers in its quest for information.

The list of potential victims also grew. Revelations emerged Wednesday that the phones of relatives of people killed in the July 7, 2005, terrorist attacks on London’s transit system, as well as those tied to two more slain schoolgirls, may also have been targeted.

The true extent of the hacking is not yet clear _ and may not be known for months as inquiries unfold.

Graham Foulkes, whose 22-year-old son David died in the 2005 terrorist attacks, was told by police that he was on a list of potential hacking victims.

“I just felt stunned and horrified,” Foulkes told The Associated Press. “I find it hard to believe someone could be so wicked and so evil, and that someone could work for an organization that even today is trying to defend what they see as normal practices.”

Foulkes, who plans to mourn his son on Thursday’s sixth anniversary of the attack, said an independent investigation is needed because the police were compromised by accepting payoffs from the tabloid.

“The police are now implicated,” he said. “The prime minister must have an independent inquiry and all concerned should be prosecuted.”

Foulkes also demanded the resignation of Brooks, the former News of the World editor who is now chief executive of News International, the U.K. newspaper division of Murdoch’s News Corp. media empire. News Corp. owns a swath of newspapers, including News of the World, the Sun, and the Wall Street Journal.

“She’s gotta go,” Foulkes said. “She cannot say, oops, sorry, we’ve been caught out. Of course she’s responsible for the ethos and practices of her department. Her position is untenable.”

Brooks, one of the most powerful women in British journalism, maintains she did not know about the phone hacking. She said she will continue to direct the company.

Foulkes also challenged Murdoch _ a global media titan with newspaper, television, movie and book publishing interests in the United States, Britain, Australia and elsewhere _ to meet with him to discuss the intrusion into his privacy.

“I doubt he’s brave enough to face me,” he said.

In Parliament, lawmakers held an emergency debate to call for the prosecution of those responsible for hacking into the phone of Milly Dowler, the 13-year-old murder victim whose case touched off the scandal, and others.

The Dowler case touched a raw national nerve because the paper is accused of hampering the police investigation by deleting some of Milly’s phone messages, which gave her parents and police false hope that she was still alive after she disappeared in 2002.

Cameron called for inquiries into the News of the World’s behavior as well as into the failure of the original police inquiry to uncover the extent of the hacking. Potential victims have cited the tabloid’s payoffs to police as the reason the allegations did not surface earlier.

“We are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims, having their phones hacked into,” Cameron said.

“It is absolutely disgusting, what has taken place, and I think everyone in this House and indeed this country will be revolted by what they have heard.”

British media reported that the parents of two other schoolgirls, Holly Wells and Jessica Chapman, who were murdered in a sensational 2002 case, had been informed by police that they were investigating whether the News of the World hacked their telephones.

Many Britons were horrified.

“It’s heartless and inconsiderate that they’d do it to victims and family of murder victims,” said Danny Wright, 25, of Liverpool.

He said it was wrong to hack into celebrities’ phones but far worse to target victims’ families “because of what they’ve been through.”

Bob Satchwell, executive director of the Society of Editors, said the Dowler case was crucial.

“That’s why the case has gotten so big,” he said. “If celebrities or politicians have their phones intercepted, that’s one thing, but the idea that they were doing this while a little girl was missing and a police inquiry was going on makes it a really gross intrusion.”

Satchwell said it has become politically sensitive not only because Cameron’s communications chief Andy Coulson was forced to resign because of his earlier stewardship of the tabloid, but because lawmakers opposed to Murdoch’s growing media power in Britain want to slow his takeover of other properties.

He said the hacking of Milly’s phone was revealed just as government regulators are preparing to decide whether Murdoch can take full control of British Sky Broadcasting.

“You have to ask yourself why that happened right now,” he said, cautioning that the public has yet to see clear evidence of illegal phone hacking except for two News of the World employees _ reporter Clive Goodman and investigator Glenn Mulcaire _ who have already served time in jail.

When police arrested Mulcaire, they seized 11,000 pages of notes, including the phone numbers of many suspected hacking victims. But in most cases the police have not yet made clear who was actually hacked.

Actor Hugh Grant said Wednesday that he had been asked to testify at a police inquiry into the hacking allegations. The actor has often claimed he believes his phone was hacked by News of the World.

The scandal has its roots in the tabloid’s efforts to scoop its competitors with news about the royal family. Representatives of the royals complained to police in late 2005 that some of their voice mails had been hacked into.

The police inquiry focused on Goodman and Mulcaire, who were jailed in 2007 for the hacking. Executives said at the time that they were the only employees involved, but that has been undermined by a series of arrests at the newspaper earlier this year and by the company’s willingness to settle with other victims.

The tabloid’s parent company, News International, has insisted it is working closely with police and has a zero-tolerance policy for any wrongdoing or sketchy tactics.

Virgin Holidays canceled several ads due to run in the Sunday newspaper this week. Car makers Ford UK and Vauxhall and Halifax bank also said they have suspended advertising.

Mumsnet _ a popular online community for mothers _ removed ads from Murdoch broadcaster Sky after its members complained about the tabloid hacking.

Phone-hacking featured prominently on the home pages Wednesday of the Wall Street Journal, another Murdoch publication, and the paper mentioned its ties to the scandal-ridden tabloid in the fifth-to-last paragraph of a lengthy piece. The Journal’s article made no mention of Murdoch himself.

Murdoch’s other properties _ tabloids among them _ did not distance themselves from the story _ phone-hacking revelations were front and center on the Sun’s website and Sky news replaced its featured stories home page box with a “breaking news” banner and multiple hacking-related stories. The Sun noted, however, that rival tabloids “have also been accused of dodgy and illegal activities while pursuing stories.”

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AP writers Robert Barr, Danica Kirka, Meera Selva, David Stringer and Cassandra Vinograd contributed to this report.

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Portugal’s financial plight deepened Wednesday, with borrowing rates jumping higher and stocks slumping after its bonds were downgraded to junk status. Spain and Italy were dragged into the downturn, adding new momentum to Europe’s sovereign debt crisis.

Portugal’s hopes of slowly emerging from its debt crisis were knocked by ratings agency Moody’s, which downgraded Portugal’s debt four notches Tuesday and said the country will likely follow Greece in needing a second rescue package.

Portugal took a euro78 billion ($112 billion) bailout from its European partners and the International Monetary Fund earlier this year after jittery investors began charging it unsustainably steep returns on loans.

After the abrupt worsening of Portugal’s financial situation, neighboring Spain immediately suffered a knock-down effect, with Madrid’s main stock index down 1.5 percent in midday trading while its bond yields rose. Spain, a much bigger country, up until now has so far managed to dodge major fallout from the continent’s fiscal woes.

In Italy, stocks were down 2 percent Wednesday on concerns that current spending cuts were not enough to resolve the country’s high debt level.

“The increasing risk is Italy gets caught up further in the contagion, and the bond market vigilantes dictate a more abrupt pace for its adjustment,” said Alan Ruskin, an analyst at Deutsche Bank.

The Moody’s downgrade triggered new outrage in Portugal, where austerity measures over the past year have included tax hikes, pay freezes and welfare cuts.

Fernando Faria de Oliveira, the head of Portugal’s largest bank Caixa Geral de Depositos, which is state-owned, described the downgrade as “immoral and insulting.” Antonio Sousa, head of the Portuguese Bank Association, said it was “incomprehensible.”

Even Barclays Capital Research said the severity of the downgrade was surprising, adding it “seems more like a reaction to the Greek situation.”

Still, the tensions created by the Moody’s report were reflected in a Portuguese bond sale. Although the country managed to raise euro848 million ($1.2 billion) from markets, investors demanded a high return.

The Portuguese debt agency said the yield in the sale of 3-month Treasury bills was 4.926 percent. That was up from 4.863 percent on the same bills in mid-June and not far from the record 4.967 percent on June 1.

The yield on Portuguese 10-year bonds rose to 12.2 percent, while the Lisbon stock exchange fell 2.4 percent with banks leading the decline.

Unicredit economist Tullia Bucco said the threat of possible private sector burden-sharing in Portugal, currently being discussed for Greece, increased the chances of it being shut out of the market beyond 2013, when it hopes to resume bond issues.

Amadeu Altafaj Tardio, a spokesman for the EU’s Monetary Affairs Commissioner Olli Rehn, also hit out at the Moody’s downgrade, saying “the timing of Moody’s decision is not only questionable but also based on absolutely hypothetical scenarios which are not in line at all with the economic program.”

“This is an unfortunate episode and it raises once more the issue of the appropriateness of behavior of rating agencies and of their clairvoyance,” Tardio said in Brussels.

Portugal faces a daunting task in reducing its debt load _ it is in a recession, with its economy expected to contract 4 percent through next year, and unemployment stands at a record 12.4 percent.

A center-right coalition government that took office last month has promised to abide by debt targets and economic reforms demanded in return for the bailout. It has already introduced new austerity measures, including a one-off supplemental tax on personal income this year, and said it would accelerate a privatization program.

The grim economic prospects will likely make it harder for Portugal to settle its debts, propelling it into a downward spiral, and fuel investor worries about the 17-nation eurozone’s fiscal health, especially as Greece struggles to restore market confidence.

The government debt agency said last week it wants to raise up to euro6.5 billion in Treasury bill auctions over the next three months.

In Spain, the difference between the yield on the 10-year government bonds on the secondary market and the benchmark German equivalent, edged up to 262 basis points Wednesday after closing at 247 Tuesday. The jump was significant, but remained far below the 300-point high reached last week amid fears of contagion from the Greek debt crisis.

Spain’s Treasury will test market confidence in the country’s ability to handle its debt with three- and five-year bond auctions on Thursday.

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Ciaran Giles in Madrid, Gabriele Steinhauser in Brussels contributed to this report.

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More than two-thirds of Canadian business owners and leaders will be in a position to retire over the next decade yet just half of companies are prepared for the Boomer-led exodus, a study shows.

The current climate of economic uncertainty isn

Ed Fast, Canada

BELLEVILLE

The euro erased its gain versus the dollar and fell below $1.43 for the first time in more than two weeks as Standard & Poor’s reduction in Greece’s credit rating renewed concern the region’s debt crisis is worsening.

The 17-nation currency rose earlier as a report showed exports in Germany, Europe’s largest economy, jumped in March, bolstering the case for higher interest rates in the euro region. The pound depreciated after the Confederation of British Industry lowered its economic growth predictions and a report showed house prices unexpectedly fell.

“The S&P downgrade is just rubbing salt in a wound and confirmed everyone’s suspicions that Greece is essentially in a quasi default state,” said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. “You are still seeing some relatively good data out of the euro zone, so we are living in a bifurcated world.”

The euro decreased 0.2 percent to $1.4290 at 10:13 a.m. in New York, compared with $1.4316 on May 6, after touching $1.4273, the lowest level since April 19. The currency earlier rose 0.9 percent to $1.4442. The euro traded at 115.33 yen, compared with 115.44, after earlier rising 0.9 percent to 116.48. The dollar fetched 80.71 yen, compared with 80.63.

Futures traders increased their bets that the euro will gain against the U.S. dollar as of May 3, figures from the Washington-based Commodity Futures Trading Commission show. Net longs increased to 99,516 last week, the most since 2007, compared with 68,279 a week earlier.

Greece’s Rating

Greece’s credit rating was cut to B from BB- by S&P, which said further reductions are possible, with private investors at risk if maturities are extended on the nation’s emergency-aid package. Another rating cut would make Greece the lowest-rated country in Europe as today’s move left it even with Belarus after the fourth reduction by S&P since April 2010.

“It raises the stakes just that little bit more, in view of the ongoing debate on how Greece is going to deal with its ongoing problems,” said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “It’s another short-term headwind for the euro to take onboard. International investors sitting on the outside looking in probably regard it as another reason to fight shy of the euro.”

Officials in Athens spent the weekend denying speculation that Greece was headed out of the euro or into default after a gathering of finance ministers and a Spiegel magazine report that Greece was considering a return to the drachma.

Aid for Greece

Luxembourg Prime Minister Jean-Claude Juncker told reporters after the meeting that a new aid package for Greece was in the works. The extra money may require Greece to provide collateral or expand a plan to sell 50 billion euros of state assets, said a person with direct knowledge of the situation. Greece may also win easier repayment terms and deficit conditions on the original bailout.

Europe’s currency has risen 2.9 percent this year, according to Bloomberg Correlation-Weighted Currency Indexes, a measure of the currencies of 10 developed nations. The yen has weakened 4.6 percent, while the dollar is down 5.1 percent.

The euro rose earlier versus the dollar as a government report showed that Germany’s exports jumped 7.3 percent in March from a month earlier. The median forecast of 10 economists in a Bloomberg News survey was for a 1.1 percent increase.

Norway’s krone rallied 0.7 percent to 5.4966 versus the dollar in the best performance among the most-traded currencies as crude rose after its biggest weekly drop since 2008. The Canadian dollar erased its gain, trading at 96.64 cents versus the U.S. currency after appreciating 0.6 percent on the rebound in crude oil.

Rebound in Crude

Crude for June delivery rose 2.1 percent to $99.20 a barrel in electronic trading on the New York Mercantile Exchange. Norway is the world’s seventh-largest exporter of crude oil, while Canada is the biggest exporter of crude oil to the U.S.

The pound weakened versus the euro as the Confederation of British Industry, the U.K.’s biggest employers’ group, said U.K. gross domestic product will rise by 1.7 percent in 2011, compared with a February estimate of 1.8 percent. U.K. house prices fell the most in seven months in April, a report from Halifax, the mortgage unit of Lloyds Banking Group Plc, showed.

Sterling declined 0.2 percent to 87.63 pence per euro and slid 0.3 percent to $1.6369.

IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, was little changed at 74.901 after decreasing 0.5 percent to 74.436. The gauge rose to 74.925 on May 6, the highest level since April 20.

Payrolls in the U.S. grew by 244,000 last month in the seventh monthly gain after increasing by a revised 221,000 in the prior month, the Labor Department reported May 6.

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