Finance & Business World

Man doth not live by financial capital alone but also by human capital. And, of course, Warren Buffett had a lot to say about that, too, when he took Phil DeMuth and me to dinner a couple of weeks ago in bitterly cold, snowy Omaha.

"It’s vital to be able to communicate well," he said. "Just being able to communicate with others on the job adds at least 50% to your value." Apt words indeed from the man whose annual report (I would guess) is read by more people than all of the other annual reports in the world combined, and whose words have probably saved more lives than any book except the Bible.

"It’s also incredibly important to get along with people," Buffett also said. He talked at length about his early days working with Ben Graham’s firm and how he made it a point to not only work very hard but to get along well with everyone he worked with, and still makes it a point. He spoke highly of an old standard, Dale Carnegie’s "How To Win Friends and Influence People" — a book that still teaches me and one that I consult almost every day.

I asked him about the problems of having a significant part of the labor force that has little intellectual aptitude and learns very little in schools. "For some of them," he said, "there will be better and better tools, tools that allow even people with modest skills to do useful work."

But when I pressed him about the segment of the population that does not really care to learn at all, such as members of violent gangs or others who just refused to learn, he sighed and said that the government would have to come up with some make-work projects for them, projects that paid a modest wage and allowed such people to have some feeling of self-esteem. (I wonder whether they would rather do those jobs than what they are doing….)

But what about people who refused to learn how to do work that is a way to convert human capital into financial capital, i instant payday loans completely online.e., people who refuse to learn to do value investing? He threw up his hands. "I learned it right away when Ben Graham said it," he said. "It was like a vaccination that just took right away. Some people can get the same shot and it doesn’t take at all. Some do get it right away." (I am paraphrasing.)

He was kind enough to sign a copy of his famous article, "The Superinvestors of Graham-and-Doddsville," about value investing compared with other forms of investment, "To Ben Stein, who understood this a long time ago," and I only wish it were true.

In my case, the vaccination only works sporadically. (Buffett has also famously said that in any card game there’s always one sucker and if you don’t know who it is, it’s probably you. I do know who it is, and it’s definitely usually little me…except when it isn’t.)

The overall vibe I get from Warren Buffett, besides his astonishing kindness, mind-boggling intelligence, and perfect, self-deprecating humor, is a reminiscence of something once said by a childhood neighbor who knew Ted Williams. The great baseball player, said my neighbor, had vision so good he could see the stitches on a fastball zooming towards him. No matter how much he might try to explain to you how to do it, if you did not have the natural talent to do it, you couldn’t do it.

But what if you could have made a wager on how many home runs Williams would hit? Or what if, for a few dollars, you could have gotten a share of Ted Williams endorsements? That’s what astute people could have done with Buffett, and it was a rare opportunity.

In the meantime, value investing starts at home, with building up your own value as an earner, enough so that you can some day be a Superinvestor of your ownville. 

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Bakers Footwear Group Inc., a St. Louis-based women’s footwear retailer, announced Friday that it no longer meets the minimum stockholders’ equity requirement needed to remain listed on the Nasdaq Capital Market.

For the quarter ended Oct. 31, Bakers reported a shareholders’ deficit of $3.5 million. The retailer said it intends to submit to Nasdaq by Dec. 29 a plan explaining how it will turn the deficit into equity and reach the minimum requirement of $2 poor credit personal loans.5 million this quarter. If the plan isn’t accepted by Nasdaq or if the plan fails, the company faces delisting from the stock exchange.

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The U.S. Defense Department is moving the Boeing EA-18G Growler to full production, Boeing said Monday.

Boeing’s EA-18G program, which is based in St. Louis, will now begin building 22 aircraft per year for U.S. Navy, the Pentagon said.

The news represents a $386 million modification to a previously awarded contract, according to the Pentagon.

The EA-18G is derived from the F/A-18F aircraft and includes electronic attack capabilities.

Work will be performed in Baltimore (46.5 percent); Bethpage, N.Y. (22.7 percent); St. Louis (13.5 percent); Melbourne, Fla. (5.5 percent); Fort Wayne, Ind. (3.7 percent); Thousand Oaks, Calif. (3.7 percent); Wallingford, Conn. (2.6 percent); Nashua, N.H. (1.1 percent); and Westminster, Colo. (0.7 percent), and is expected to be completed in December 2012.

Chicago-based Boeing Co. (NYSE: BA) is prime contractor on the Growler. The team also includes Northrop Grumman, Raytheon and General Electric Aircraft Engines.

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California, Delaware, South Carolina and Florida registered record rates of unemployment in October as weakness in the labor market stretches from coast to coast and limits the economic recovery.

Joblessness rose in 29 U.S. states last month compared with 22 in September, the Labor Department said today in Washington. Michigan had the highest jobless rate at 15.1 percent, followed by Nevada at 13 percent and Rhode Island at 12.9 percent.

The national rate last month reached a 26-year high of 10.2 percent, weighing on consumer spending that accounts for about 70 percent of the economy. Federal Reserve Chairman Ben S. Bernanke said Nov. 17 that joblessness “likely will decline only slowly,” a reason policy makers will keep interest rates near zero to ensure growth is sustained.

“We’ve had a surprisingly sharp jump in the jobless rate,” said Richard DeKaser, president of Woodley Park Research in Washington. “Businesses have truly been doing an extraordinary job of wringing out productivity from the labor force.”

Stocks fell for a third day, with the Standard & Poor’s 500 Index declining 0.3 percent to 1,091.38 at 4:03 p.m. in New York. Dell Inc., the third-largest maker of personal computers, dropped 10 percent after reporting a 54 percent drop in profit.

Declines in 13 States

The unemployment rate fell in 13 states, including Massachusetts, where it declined to 8.9 percent from 9.3 percent; New Hampshire, with a drop to 6.8 percent from 7.2 percent; and West Virginia, which fell to 8.5 percent from 8.9 percent.

The number of states with at least 10 percent unemployment held at 14 last month, the Labor Department’s report showed. The states reporting a record jobless rate were California at 12.5 percent, South Carolina at 12.1 percent, Florida at 11.2 percent and Delaware at 8.7 percent. The District of Columbia also set a high with an 11.9 percent rate.

“Virtually every sector aside from the health-care sector is losing jobs,” said Sean Snaith, University of Central Florida economist in Orlando. “Housing has been central to Florida’s economic story throughout the entire cycle. Unfortunately, it has spread well beyond the sectors directly involved in the housing market.”

President Barack Obama on Nov. 6 signed into law a plan to extend jobless benefits, expand a tax credit for first-time homebuyers and provide tax refunds to money-losing companies. The measure gives jobless people as many as 20 additional weeks of unemployment assistance.

The president has also announced plans to convene a jobs summit at the White House next month.

State Payrolls

Payrolls declined last month in 21 states, today’s report showed. New York showed the biggest drop, with a loss of 15,300. Florida had 8,500 job losses, followed by Georgia with 7,500 and Virginia with 7,100.

“When you apply for a job, because there are so many other people looking for jobs, you have to be the absolute perfect candidate and lucky, or be someone’s brother-in-law, to get a job,” said Mary Kough of Tellico Plains, Tennessee. “In this economy there are very few jobs for which to even apply.”

Kough has been looking for work for four months, applying for as many as 25 positions. She’s been interviewed once. The 47-year-old said she has about 20 years of experience, including jobs as a customer service manager, supervisor and purchasing agent. Tennessee’s unemployment rate held at 10.5 percent in October, the Labor Department’s report showed.

Taking Comfort

“I try not to get discouraged,” Kough said. “I know that you will get a certain percentage of what you apply for, and since there are less jobs to apply for, I know it will just take a little longer. I take comfort in knowing that. I have faith.”

Applied Materials Inc. is among companies still planning to cut jobs. The world’s biggest maker of chip equipment, based in Santa Clara, California, said Nov. 11 it plans to eliminate as many as 1,500 positions within 18 months.

Over the last year, California showed the biggest loss of jobs, with payrolls falling by 687,700 workers, today’s report showed.

Nationally, payrolls fell by 190,000 in October, the Labor Department said Nov. 6. The U.S. has lost 7.3 million jobs since the start of the recession in December 2007, the most of any downturn since the Great Depression.

Other measures corroborate that while firms are firing fewer workers, it is harder for the unemployed to find work. The number of people getting extended payments jumped in the week ended Oct. 31 even as the number of Americans filing first-time claims for unemployment benefits held at a 10-month low last week, according to government data released yesterday.

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Donald Trump’s personal jet is the latest victim of his famous "You’re fired!" line. The real estate mogul’s plane is for sale — and not because he’s been hit by the recession.

Trump is upgrading to a larger plane, and "Mr. Trump simply doesn’t need two [planes]," said George Sorial, managing director of international development and assistant general counsel at Trump Organization.

The current jet, a 1968 Boeing 727 originally operated by American Airlines, is completely kitted out. It has "all the amenities that you would expect," said Sorial, including gold-plated seatbelt buckles and sinks in the plane’s three bathrooms.

In addition the plane, which seats 24, has a master bedroom, ladies bidet, and "abundant storage for fine china and crystal," according to the seller’s Web site.

The jet, which is equipped with up-to-date avionics, had a facelift earlier this year with a fresh paint job and a custom logo: the tycoon’s last name spelled out in all caps. It’s reported that the letters are in 23 carat gold leaf and stretch 30-feet across and 4-feet high.

Todd Rome, president and founder of air charter broker Blue Star Jets, estimates the jet is worth between $4 and $8 million, but notes that it will be expensive to fly and maintain because of its old age online cash advance lenders.

"The problem with that plane is that the direct operation costs are so high," Rome said. "It has three engines, so it would cost about $10,000 an hour to fly." Rome added that a newer and more fuel-efficient plane of equal size would cost between $10 and $12 million to buy and $2,500 an hour to fly.

"There has to be a specific person who wants that plane — someone who wants it because it belonged to Donald Trump," Rome said.

Trump uses the plane, which has logged 41,833 hours and completed 29,664 landings, to fly to Mar-A-Lago in Palm Beach, Fla., weekly in the winter, to his projects around the world, including in Las Vegas and Chicago, and overseas to Scotland.

Sorial said Trump will continue to use the jet until it is sold and the new one is delivered, but "obviously we want things sooner rather than later." 

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Costco Wholesale Corp reported a 5 percent increase in October same-store sales, helped by a weak U.S. dollar that helped push up international sales.

Analysts on average were expecting a rise of 4.7 percent in same-store sales, including the impact of fuel prices and foreign exchange, according to Thomson Reuters data.

Same-store sales at U.S. locations rose 2 percent, while international division sales surged 17 percent, the company said.

October net sales rose 7 percent to $5 payday loan with savings account.68 billion.

Excluding the impact of gasoline prices and foreign exchange, the company said U.S. comparable sales rose 3 percent, while on a local currency basis international same-store sales rose 7 percent.

(Reporting by Sakthi Prasad in Bangalore; Editing by Mike Miller)

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U.S. Senate Banking Committee Chairman Christopher Dodd plans to propose legislation that would merge four bank agencies into one super-regulator, The New York Times reported on Saturday.

Dodd’s approach, meant as a starting point for the Senate’s response to the financial crisis, differs sharply from that envisioned by President Barack Obama, especially in lessening the oversight role of the Federal Reserve, the paper said.

The Democratic senator told the Times in an interview on Friday he wanted to restore consumers’ confidence in the nation’s banking system, while not hampering business.

“We clearly need to put in place an architecture that restores confidence and makes people feel that when they engage in financial activities, from making a bank deposit to buying insurance or investing in stock, that they can have confidence in the system,” the newspaper quoted Dodd as saying

“On the other side of this, I don’t want to strangle business,” he added payday loan lenders.

The Times said the Obama administration had considered, then rejected, the idea of combining the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation and the Comptroller of the Currency into one “superagency.”

The Obama administration wants to put the Fed in charge of overseeing large, interconnected firms and systemic risk in the economy. Bank oversight would be streamlined under the Obama plan with a new national bank supervisor, merging the Comptroller of the Currency and the Office of Thrift Supervision.

(Writing by Chris Michaud; Editing by Peter Cooney)

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Finance ministers from Europe’s largest economies said they are ready to hand the International Monetary Fund more money than they previously pledged to assist poorer countries through the global financial crisis.

Four days before a meeting in London of the Group of 20 nations, the governments of Germany, the U.K. and France said the 27 European Union nations should provide about $75 billion more on top of the $100 billion they’ve already committed. The G-20 said in April it would triple the Washington-based lender’s resources to $750 billion.

“Europe should set an example and do more to meet the target,” U.K. Chancellor of the Exchequer Alistair Darling said today in a column published in the Guardian. The IMF needs cash “to support those emerging markets and low-income countries most affected by the crisis,” he said.

The 186-member IMF has sought extra backing from its shareholders after the banking crisis and subsequent global recession forced it to mount financial rescues from Hungary to Pakistan. European finance officials meet in Brussels on Sept. 2 to discuss their agenda for the subsequent conference of G-20 finance ministers and central bankers.

The U.K., which already promised $15 billion, is ready to provide up to $11 billion more, he said. Germany is ready to contribute 25.03 billion euros ($35.7 billion) and France is willing to give 18.45 billion euros, according to a letter to EU counterparts from Germany’s Peer Steinbrueck and France’s Christine Lagarde.

Below Quota

The letter urged emerging markets such as India and Saudi Arabia to say how much they will provide. “Europe should not wait for these pledges and should announce rapidly the amount of its own contributions,” the two finance ministers said. “We call on our EU partners to join us.”

Europe’s current commitment is “quite a bit under” its so-called allocation of “quotas,” which determine a country’s voting rights, John Lipsky, the IMF’s No. 2 official, told Bloomberg Radio today. ‘If the EU wished to participate in a manner consistent with their current quotas, it would imply a need to increase that commitment.”

The European call for added aid follows the lender’s Aug. 28 announcement that it had pumped about $250 billion into foreign-exchange reserves worldwide, acting on another effort by the G-20 to boost global liquidity. Lipsky said today that economic data are “turning positive” and that the fund expects the world economy to expand next year.

‘First Signs’

The G-20 finance officials will meet before a summit of leaders in Pittsburgh on Sept. 24-25 amid the “first signs” that their economies are emerging from recessions, Darling said. Its governments “will step up their efforts to secure the economic recovery and repair the world’s financial system.”

The group is concerned that credit supply may tighten further, a German official told reporters on condition of anonymity. Steinbrueck wants to use this week’s talks to discuss how governments will roll back their budget deficits and improve the regulation of global finance, his aide said.

Darling said G-20 governments should not allow “any letup in the reform of the financial sector,” pressing each country to return their banks to a sound-footing, restore confidence in the financial industry and go further to ensure pay and bonuses are restrained. He demanded nations cooperate in ensuring new financial rules are evenly applied.

“Neither the economy nor the banking system can flourish efficiently without international cooperation,” Darling said. “In this global world our markets are interdependent, and without strong international financial regulation one country’s financial system can be played off against another.”

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Bank of Japan Governor Masaaki Shirakawa said any recovery in the world’s second-largest economy is likely to be weak because there’s no guarantee that demand will gain momentum once global stimulus programs fade.

“Even if we have a recovery, I don’t think its strength will be impressive,” Shirakawa told reporters in Tokyo today after his board kept the key interest rate at 0.1 percent. “I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”

The Bank of Japan said it remains concerned about “downside risks to economic activity and prices” even as the country’s deepest postwar recession abates. While exports and production are improving, spending by companies and consumers remains sluggish and the outlook is “attended by a significant level of uncertainty,” the central bank said.

“The decision to keep the current rate reflects how careful and conservative the central bank remains about the economic recovery,” said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. “The bank won’t likely raise the rate at least until late 2010.”

The yen rose to 96.79 per dollar at 6 p.m. in Tokyo from 97.15 yesterday after reports showed Chinese industrial output grew less than expected and exports fell, spurring demand for the relative safety of Japan’s currency. The yield on 10-year government bonds fell one basis point to 1.445 percent.

No New Steps

Shirakawa and his colleagues refrained from unveiling new measures a month after they extended credit-easing programs until the end of 2009. The central bank’s rate decision was expected by all 22 economists surveyed by Bloomberg News.

The policy board said the economy has “stopped worsening,” leaving its view unchanged from a month ago. Investment by companies is “declining sharply” and household consumption “remains generally weak amid the worsening employment and income situation,” it said in a statement.

The government also left its monthly economic assessment unchanged today, saying it’s “picking up recently,” yet conditions are still “difficult.” Prime Minister Taro Aso’s ruling Liberal Democratic Party trails the opposition Democratic Party of Japan in polls ahead of an Aug. 30 election.

Aso’s 25 trillion yen ($262 billion) in stimulus measures helped consumer confidence climb for a seventh month in July, a Cabinet Office report showed today no fax payday loans. More than $2 trillion in government spending worldwide have helped to ease the worst global recession since the Great Depression.

Return to Growth

Japan’s economy probably expanded 3.9 percent in the three months ended June 30 after contracting for four quarters, analysts predict a report will show next week.

Even so, growth may not be sustained because companies still have spare capacity and employees.

“These excesses will continue to weigh on consumer spending and capital investment,” said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. Japan’s jobless rate climbed to a six-year high of 5.4 percent in June.

Shirakawa said that while consumer prices are falling at a faster pace, that’s unlikely to snowball.

“We don’t see a risk of a deflationary spiral now, however price declines have accelerated in recent months, and that warrants close and careful monitoring,” he said.

Deflation Forecasts

Policy makers may forecast later this year that deflation will extend into 2011, and economists say that will force them to prolong their policy of keeping rates near zero. Consumer prices excluding fresh food slid a record 1.7 percent in June.

Shirakawa said prices are falling worldwide because of a dearth of demand and excess supply in the wake of the global economic crisis. It will take “considerable time” before price drops moderate, he said.

China’s exports slumped 23 percent in July from a year earlier and factory output grew a less-than-expected 10.8 percent, government reports showed. Elsewhere in Asia, the Bank of Korea left its benchmark rate at a record low of 2 percent on signs of a recovery. Singapore’s economy expanded at an annual 20.7 percent pace last quarter, revised figures showed.

Japan’s key rate will stay unchanged at least through 2010, according to 12 of 16 economists surveyed by Bloomberg News. The Bank of Japan last lowered the rate in December and has since begun purchasing corporate debt and providing unlimited loans backed by collateral to lenders. The central bank last month extended the credit programs by three months to Dec. 31.

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Just as banks from JPMorgan Chase & Co. to Deutsche Bank Securities Inc. rushed to raise their forecasts for U.S. growth in coming quarters, Nobel laureate Edmund Phelps warned the economy is in for a “long slog.”

The divergence emerged after the Commerce Department said July 31 the economy has now contracted the most since the 1940s. Benchmark revisions to the department’s National Income and Product Accounts also showed consumer spending has tumbled 2 percent since the end of 2007, a magnitude unseen since the 1980 slump that ushered President Jimmy Carter out of office.

The deeper decline sets the stage for a faster recovery in the second half of the year, said Bruce Kasman at JPMorgan and Joseph LaVorgna at Deutsche Bank. It’s what comes later that worries Phelps and others, including Mark Gertler, the New York University economist who was a research partner of Ben S. Bernanke before he became Federal Reserve chairman.

“I’m not convinced that there’s going to be another wave of innovation in the offing” to propel growth, leaving the economy facing a “long slog,” said Phelps, a professor at Columbia University in New York. Gertler said “financial headwinds” will restrain growth by limiting credit to households and companies.

Phelps foresees real, or inflation-adjusted, gains in gross domestic product of 2.5 percent in the years following the current slump. That’s weaker than the average expansion rate during any postwar decade except the current one, in which growth has been pulled down by two recessions. Growth averaged better than 3 percent in the 1990s, 1980s and 1970s, and exceeded 4 percent in the 1960s.

Jobs Outlook

“Employment is going to be on the weak side” for several years, added Phelps, who won the 2006 Nobel economics prize for his theories on the interplay between inflation expectations and joblessness.

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said last week that corporate profits will be depressed because GDP, unadjusted for inflation, will grow at a 3 percent pace in coming years, compared with a 5 percent to 7 percent average the past 15 years. He cited “massive overcapacity” — from retail shopping outlets to automobile production volume — as a legacy of the downturn.

Some analysts countered that the recession, caused by a bust in homebuilding and a credit crunch that has seen financial institutions lose or write down $1.5 trillion so far, hasn’t hurt the economy’s underlying potential.

‘Robust’ Recovery

“Nothing here changes our view that the economy is set to recover in a pretty robust way,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, who previously researched consumer spending at the Fed in Washington. Maki’s colleague Tim Bond, head of global asset allocation in London, said in a report last week the “prevailing consensus forecast of a very weak recovery is at odds with history.”

Maki said U unique business cards.S. GDP will increase 3.4 percent in the fourth quarter of 2010 from 2009. Deutsche Bank, on the same basis, predicts 3.2 percent growth next year.

Gary Becker, another Nobel laureate in economics, counted himself among those “a little more optimistic” about the outlook. Demand from China, Brazil and other emerging markets will help aid U.S. growth, and credit flows are poised to recover because of the Fed’s actions, he said. Hundreds of billions of dollars in so-called excess reserves that banks have on deposit at the Fed give lenders fuel to extend lending.

Becker’s Worry

“If the economy picks up as I expect it will” there will be “a big inflationary potential,” said Becker, who won the Nobel economics prize in 1992 for applying economic principles beyond markets. “We will see considerable inflation,” he warned, and said he’s skeptical whether the central bank will be able to address the threat adequately, given likely “political pressure” to hold off.

Kasman, chief economist at JPMorgan in New York, raised his estimate for the expansion in the current quarter to 3 percent — the best performance in two years, and up from a prior estimate of 2.5 percent. LaVorgna, chief U.S. economist at Deutsche Bank in New York, lifted his average growth forecast for the second half of 2009 to 2.25 percent from 0.5 percent.

Some economy-watchers warned that weaker growth is poised to undermine the nation’s long-term fiscal health.

“It is worrisome how we can finance the deficit without having inflation,” said Allan Meltzer, a Fed historian and economics professor at Carnegie Mellon University in Pittsburgh.

Budget Deficit

Bernanke, in congressional testimony last month, urged Congress and the Obama administration to lay out a plan that would bring the budget deficit down to a “sustainable” level of 2 percent to 3 percent of GDP.

The International Monetary Fund predicted last week that the U.S. will fall short of that goal for at least five years, forecasting a ratio of 4.7 percent of GDP in 2014.

Another threat to the U.S. outlook is that the slump is in danger of returning next year, according to some economy- watchers.

Former Fed Chairman Alan Greenspan, speaking on ABC’s “This Week” program yesterday, warned that a “double dip” — or return to contraction — is a risk because house prices have yet to stabilize. A further decline of 10 percent in home values may trigger another wave of mortgage foreclosures, he said.

Treasury Secretary Timothy Geithner, also speaking on ABC, said the threat of a double dip is “something we’re very focused on.” The Obama administration is committed to maintain its stimulus and credit-providing programs “until we’re very confident we have a strong, private sector-led recovery in place.”

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