03/13/2010 (8:24 am)

You knew it was coming: 3D TV

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Want to be the first one on your block with a 3-D television? It will cost you about $3,000.

Samsung and Panasonic will start selling 3-D TVs in U.S. stores this week, inaugurating what manufacturers hope is the era of 3-D viewing in the living room. But because the sets require glasses, and there is for now little to watch in the enhanced format, it will take at least a few years for the technology to become mainstream, if it happens at all.

Samsung Electronics Co. announced Tuesday that for $3,000, buyers get a 46-inch set, two pairs of glasses and a 3-D Blu-ray player. Panasonic Corp. will start selling sets Wednesday.

The sales debut comes as moviegoers have shown considerable enthusiasm for the latest wave of 3-D titles in the theater totally free credit score.

Although it’s clear that 3-D sets for the home will appeal to technology and home-theater enthusiasts, it remains to be seen whether other consumers will be enticed to spend at least $500 above the price of a comparably sized standard TV and Blu-ray player.

TV makers hope so, because sets with the last big technological improvement — high definition — have come way down in price, below $500.

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02/23/2010 (4:39 pm)

U.K. Manufacturers’ Credit Constraints ‘Calm Down,’ EEF Says

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U.K. manufacturers said credit constraints eased in the past two months as the cost of financing their debt stabilized further, according to the Engineering Employers Federation.

The proportion of British companies reporting an increase in the cost of new borrowing dropped to 40 percent from 47 percent in the previous quarter, the EEF said in a report today. The lobby group based its findings on a survey of 328 companies taken between Jan. 28 and Feb. 17.

“Evidence that credit constraints have started to calm down will help build some confidence across the sector,” Lee Hopley, chief economist at the EEF, said in an e-mailed statement. “The key question is whether the banks will be there for manufacturers as a return to growth generates greater demand for finance.”

The EEF forecast last year that the economy, which expanded 0.1 percent in the fourth quarter, will grow 0.9 percent in 2010. Prime Minister Gordon Brown is counting on the credit squeeze to ease further, aiding the recovery in time for an election which he must call by June.

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02/06/2010 (2:30 pm)

Prime Minister Defends Spain’s Deficit to U.S. Business Leaders

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Spanish Prime Minister Jose Luis Rodriguez Zapatero defended his country’s budget deficit and urged more U.S. investment in Spain during a meeting with U.S. business leaders, as investor concerns caused stocks to plummet in Spain.

Zapatero told a closed-door gathering at the U.S. Chamber of Commerce in Washington yesterday that Spain’s deficit was a consequence of stimulus spending that has peaked, and will be reduced through an aggressive austerity plan, according to an aide to the Spanish leader who briefed reporters and asked not to be identified.

Zapatero told the U.S. executives that his government will reduce spending by 50 billion euros ($68.7 billion) by 2013, the aide said. Spain, with a budget shortfall equivalent to 11.5 percent of gross domestic product, must bring its deficit down to 3 percent of GDP by 2013 to conform to European Union rules, the prime minister noted.

Spain’s benchmark IBEX 35 Index fell 5.9 percent yesterday day to 10,241.7, the steepest decline since Nov. 6, 2008. Stocks also fell in neighboring Portugal on concerns that the two nations will face difficulties like Greece has experienced in shrinking deficits.

Rating Agencies

Zapatero defended Spain’s debt as reasonable, according to the aide who attended the meeting. The prime minister said he was confident rating agencies would maintain a positive assessment of his economy.

Standard & Poor’s cut its rating on Spanish debt to AA+ from AAA in January 2009, and changed the nation’s outlook to “negative” from stable last December. S&P said Spain will experience a “more pronounced and persistent deterioration” in its budget and a “more prolonged period of economic weakness” than expected a year ago.

Speaking later yesterday to the Atlantic Council, a Washington-based public-policy group, Zapatero stressed that Spain’s debt-to-GDP ratio is 20 points lower than the average among EU countries.

Zapatero told U.S. executives in the private meeting that labor reforms would be announced today in Madrid that would reduce public spending, and said Spain is looking to the U.S., the biggest investor in Spain’s economy, to maintain confidence, his aide said.

Senior Executives

Zapatero was joined at the meeting by senior executives from Spanish bank BBVA SA, construction giants Acciona SA and Ferrovial SA, and Iberdrola SA, Spain’s biggest power company, according to the Spanish Embassy and Zapatero’s aides.

In his speech to the Atlantic Council, Zapatero said the Spanish financial system is “strong and solid,” and the country’s banks “have proven to be resilient.”

Spain has shown “its ability to grow and its ability to handle its public resources well,” the prime minister said.

“We know the reforms we need to make and I am certain Spanish society will be with us,” he added.

Zapatero recently announced tax increases and a rise in the retirement age as part of the package to cut Spain’s deficit.

Zapatero in his speech also underscored Spain’s commitment to the NATO-led security effort to stabilize Afghanistan, noting that his country had “heeded the call” of President Barack Obama and would be adding 500 new Spanish soldiers. Spain has lost 90 soldiers in Afghanistan, the fourth-largest number of casualties among the NATO nations.

“It’s a very difficult mission,” he said, adding, “we know what’s at stake in Afghanistan.”

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01/18/2010 (5:13 am)

Obama to propose bank tax to recoup bailout

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President Obama will propose a new tax on financial institutions Thursday to ensure that taxpayers who bailed out banks get paid back, according to a senior administration official.

The White House wants to raise as much as $120 billion through a new tax on banks to cover losses in the federal bailout program.

The law that created the $700 billion Troubled Asset Relief Program empowered the president to ask Congress to recoup money if bailouts were not paid back in full.

TARP dictates that the Office of Management and Budget consider such action five years after TARP went into effect in October 2008 to prevent the federal bailout from adding to the deficit.

When the TARP bill was hastily debated, the provision was key to winning enough support from wary lawmakers to push the bill through Congress.

This new proposal to tax banks has been under discussion since August, a senior administration official said Tuesday.

The federal bailout program has always been a controversial topic, but news of executive bonuses now being awarded for banks’ stellar performance in 2009 is throwing new fuel on populist anger.

Congress would still have to approve any proposed new tax.

Robert Gibbs, the White House press secretary, would not discuss on Monday how a possible bank fee would fit into Obama’s fiscal year 2011. But Gibbs said it is the president’s "goal" to ensure the "money that taxpayers put up will be paid back in full."

While most of the big banks have started paying back their TARP investments, the government still has a lot of money on the line and is likely to for years to come.

Last month, the Treasury estimated that the net cost of TARP to taxpayers would be $41.4 billion.

For example, Treasury Secretary Tim Geithner said last month that the bailouts of the automakers and insurer American International Group (AIG, Fortune 500) would not be paid back in full short term personal loans.

"There is a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM and Chrysler," Geithner told an oversight panel.

Yet, the financial industry tax under discussion could impact the entire financial industry, a prospect the banking industry opposes.

Although few details are available about the proposed fee, the administration official suggested banks would be required to pay, even if the losses were incurred by GM and Chrysler.

"Imposing new taxes on top of the increased regulatory costs will weaken the industry, just when the industry is helping lead the economic recovery," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, a bank lobbying group.

And it’s still unclear what, if anything, can be done to prevent the fee from being passed to bank account holders.

U.S. Chamber of Commerce President Thomas Donohue said Tuesday he expected any new fee imposed would be passed on to consumers.

"If you don’t pass it on to the consumer, than you’re going to have smaller profits, and then if you have smaller profits, your stock goes down," Donohue said.

The total revenue collected from the tax would be no higher than $120 billion, since that is the highest conservative estimate of the cost of TARP, the senior administration official said. However, the Treasury Department expects the total loss number to shrink over the course of future years.

- CNN White House Correspondent Dan Lothian contributed to this report. 

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01/08/2010 (11:48 pm)

U.S.-type deal on cable fees not likely here, observers say

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The groundbreaking deal that will see Time Warner Cable Inc. pay News Corp. for over-the-air television programming illustrates the differences between the broadcasting models in Canada and the United States, observers say.

Time Warner and News Corp. agreed on a distribution deal Jan. 1, though details were not disclosed. Other broadcasters, such as CBS Corp., have also said they may seek payment for programming that is currently free.

News Corp. demanded to be paid for the rights to shows on Fox Networks, home of The Simpsons and American Idol as well as sports programming such as college and NFL football games.

If other networks seek similar terms, cable operators may have to fork out as much as $5 billion (U.S.) a year and would likely pass the cost on to subscribers, said Craig Moffet, an analyst at Sanford C. Bernstein in New York.

"The broadcast networks are really struggling to find a viable business mode," Moffett said. "They’re looking at the cable networks that make money both on advertising and the money that the cable operators pay them and saying, `We need a dual revenue stream to survive, too.’"

These battles are playing out just as the television industry is coping with the wrenching changes brought on by new competition from the Internet.

In Canada, the Canadian Radio-television and Telecommunications Commission has embarked on a sweeping review of the cable and satellite television industry business

11/20/2009 (1:52 pm)

Daw: Recovery not enough to rescue pensions

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The health of most pension plans continues to improve as stock markets recover, but it will be a long time before plan members in private industry can rest easy.

The blow of last year’s investment losses is forcing more employers to question their ability to continue paying the same level or type of pension benefits in future.

Meanwhile, pensioners at companies other than Nortel Networks Corp., AbitibiBowater Inc. and others in bankruptcy protection could see their payouts reduced.

Canada’s main stock market has produced a promising investment return of about 30 per cent so far this year. But other major markets have not done nearly as well when translated into our dollars.

A return above 55 per cent on Canadian stocks would have been required to offset last year’s losses, combined with the effect of a half percentage point decline in the interest rates used to estimate the cost of purchasing life annuities when a pension plan is wound up.

"Obviously what is happening on the growth in pension assets side is good news," says Doug Chandler of Watson Wyatt Worldwide. "But the cost is going up to either pay a lump sum (to a departing employee) or buy annuities (if a plan is wound up)."

Even Ontario teachers, who have taxpayers to cover half the cost of their enviable pensions, have been warned not to count on returns to stabilize their plan.

Watson Wyatt estimates a typical mature pension plan could only have paid about 81 per cent of benefits earned to date if the plan had been shut down in October.

The potential 19 per cent shortfall was a big improvement from 40 per cent in February. But it was still far below the 5 per cent shortfall in late 2007.

Rowena McDougall, a spokesperson for the Financial Services Commission of Ontario, says 113 plans of 421 pension plans for non-executive staff sought extra time to bring their plans up to full funding, based on actuarial reports filed since Sept. 30 of last year. Other companies could come forward.

Most are only seeking to defer special payments for a year, or to consolidate new and old special payment schedules over the same five-year period, she said.

Only 16 are seeking the 10-year payment schedule that Ontario Finance Minister Dwight Duncan granted, on the condition the company get the consent of plan members and pensioners.

Jim Leech, president of the Ontario Teachers’ Pension Plan Board, predicts last year’s investment losses and the dim prospects for investment returns could result in changes to either teachers’ contributions or benefits.

Only those already retired or near retirement would be protected under pension law . Teachers and the province will have another two years to negotiate a solution to a funding shortfall. They have already agreed that, if necessary, half of inflation protection on benefits earned starting next year would be made contingent on future investment returns.

"The teachers’ plan still must absorb $19.5 billion in losses (a blend of gains and losses recorded over the five years ending in 2008)," notes the fall of 2009 Pensionwise report to teachers.

"Even if financial markets improved, investment returns aren’t expected to cover the annual cost of paying pensions as well as the 2008 investment losses that must be recognized in the future."

The Teacher’s plan takes in about $2 billion less per year than it pays to a growing, and increasingly long-lived group of pensioners. Other plans are also under stress.

Tom Levy, a veteran actuary and senior vice-president of The Segal Co., says pension plans that serve large groups of employees may have to cut future benefits, and even pensions of retirees.

"It is certainly being discussed," he says, even if Duncan and other provincial finance ministers agree to extend a three-year moratorium on requiring multi-employer plans to set aside enough money to pay pensions on the small chance that all or most employers contributing to a plan were to disappear.

Such multi-employer plans are common in the construction trades, many supermarkets, food factories and natural resource industries. Their retirees are not protected from benefit reductions under pension law.

"(Plan trustees) are looking at everything from lowering future accruals of benefits to taking away early retirement subsidies, to, in some cases, reducing accrued benefits and deducting from pensioners," he said. "Obviously that is not something you want to do, but it is not out of the question."

Wayne Hanley, president of the United Food and Commercial Workers, wrote to members recently to say employers have not responded favourably to a second request to make special extra payments to what is the largest but also one of the worst-funded multi-employer plans in the country.

"UFCW Canada is extremely disappointed that employers feel little or no obligation to ensure your pension is properly funded," he wrote Oct. 30.

jdaw@thestar.ca

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11/09/2009 (8:30 pm)

G20 leaves door open for fresh pressure on dollar

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The U.S. dollar may come under renewed pressure from emerging market currencies and the euro after a meeting of the world’s top finance officials failed to take concrete action on rebalancing global money flows.

Finance ministers and central bank governors of the Group of 20 major countries, meeting in Scotland at the weekend, launched a “framework” in which they will discuss how to reduce trade and savings imbalances between nations.

But their communique talked only in general terms about rebalancing economies, and implied they might not agree on specific policies for individual countries to adopt before the end of next year at the earliest.

The result may be a continuation of heavy fund flows into emerging markets, boosting currencies there. And central banks intervening to slow currency appreciation may keep investing much of the money they obtain in the euro, pushing up that currency too.

“We’re probably looking at fresh dollar weakness in the short term” in the wake of the G20 meeting, said Kenneth Broux, senior markets economist at Lloyds TSB.

CHINA, BRAZIL

At the center of the currency issue is China’s reluctance to permit appreciation of its tightly controlled yuan, which it has kept flat against the dollar since mid-2008.

That has prompted additional fund flows into emerging market currencies that do trade freely, such as the Brazilian real, which has soared over 30 percent this year. Last month, Brazil slapped a 2 percent tax on foreign investments in fixed income and stocks in an effort to slow the real’s rise.

Last week, Brazilian officials said they would discuss this problem at the G20 meeting. But the G20 communique made no reference to the issue, and Brazil appeared to get little sympathy from a senior official of the International Monetary Fund, which is a key player in the global rebalancing campaign.

Youssef Boutros-Ghali, who chairs the International Monetary and Financial Committee, the IMF’s policy steering committee, told Reuters that Brazil’s tax was unlikely to work and that “we should not be fixated on currencies.

Officials from several countries, including Brazil, Japan and Indonesia, urged China on the sidelines of the meeting to let the yuan move more flexibly.

But as a group, the G20 did not press China on the sensitive issue, G20 sources said. British finance minister Alistair Darling told reporters: “We didn’t discuss the renminbi. I think that’s a question for China rather than us.”

In fact, China appeared in a combative mood. Finance Minister Xie Xuren and central bank governor Zhou Xiaochuan, speaking to the official Xinhua news agency after the meeting, made no mention of the yuan and instead warned developed countries to focus on the quality of their own policies.

Xie said countries with global reserve currencies should work to maintain the currencies’ value, to avoid destabilizing the global economy — implying it was up to Washington, not Beijing, to resolve the issue of the weak dollar.

The silence on the yuan in Scotland suggested countries accepted the G20 was not a forum in which to press China. The other main global economic forum, the Group of Seven nations, last met in October; it did mention the yuan, but only in the softest terms, “welcoming China’s continued commitment” to free up the yuan without referring to a timetable. 

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10/30/2009 (10:53 am)

One step closer to more jobless benefits

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The Senate on Tuesday finally began considering a bill to extend unemployment benefits by up to 20 weeks.

The legislation would lengthen benefits in all states by 14 weeks. Plus, those that live in states with unemployment greater than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

The extension has been stalled in the Senate as Democratic and Republican leaders try to reach a compromise over several amendments, including extending the $8,000 homebuyer tax credit beyond Nov. 30.

A final vote may not happen until early next week.

The move comes more than a month after the House passed legislation that extends benefits by 13 weeks in high-unemployment states. If the Senate passes its bill, the two must then be reconciled.

Lawmakers have twice lengthened the time people can receive checks to as much as 79 weeks, depending on the state. The average weekly benefit ranges from $197 in Mississippi to $427 in Massachusetts.

Unemployment last month hit a 26-year high of 9 low fee payday advance.8%. Experts expect the rate to top 10%, and are divided over when companies will start hiring again.

Act soon

Pressure is mounting on lawmakers to act soon. Some 7,000 people a day are running out of benefits, according to the National Employment Law Project. Some 1.3 million will exhaust their benefits by year’s end unless an extension is passed.

The White House weighed in on the issue Tuesday, saying that helping unemployed workers also boosts the economy.

"The administration supports providing additional weeks of unemployment benefits to Americans who are suffering from long-term joblessness due to the economic downturn," the White House said in a policy statement. "Millions of Americans want employment but cannot find it, and the administration is committed to supporting these Americans as they look for work and struggle to raise their families and pay their bills." 

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10/12/2009 (5:11 pm)

More air travel misery on the way

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If you think flying is a miserable experience now, just wait until 2010.

Air travel has been declining since 2008 as a result of the recession. But it is expected to pick up next year, resulting in more headaches for travelers, according to a study released Thursday.

The study from the Brookings Institution, a nonprofit public policy organization based in Washington, said the downturn in travel has a "silver lining of freeing up airport capacity and improved on-time arrival rates. But these silver linings will disappear…in 2010."

The result: More delays.

This adds to the current hardship of traveling, considering that in every year since 2000, at least 15% of flights have been delayed at least 15 minutes, the study said.

Part of the problem is the "antiquated" air traffic control system, and the difficulties in establishing the more advanced Next Generation Air Transportation System, or NextGen, which is still three to nine years away from implementation, according to Brookings.

"Once reason that policymakers can feel confident that such performance will continue to suffer is the reality that the same antiquated air traffic control system will be in place to manage our every-busier skies," the study said.

High-speed rail could free the skies

Air passenger travel in 2008 and 2009 has suffered its most significant declines since the terrorist attacks of Sept. 11, 2001, and the recession is to blame, reported Brookings.

Air travel in the United States experienced its first annualized drop in September 2008 since the World Trade Center and Pentagon attacks of 2001, and these declines continued through March 2009, according to the most recent data from Brookings.

This is in stark contrast to the gains that occurred between 1990 and 2008, when U saving account payday loan.S. airports increased passenger and flight levels by 60%, the institute said.

Brookings offered several solutions to alleviate air travel congestion when it picks up again, including increased investment in rail corridors. This would help free up the skies, the study said, noting that half of all flights are between cities that are less than 500 miles apart.

The challenge for high-speed rail travel is that it must be able to compete with air travel. The study noted that "at distances of less than 400 miles high-speed rail can meet or beat air travel times, while the capability wanes up to and past 500 miles."

As part of his stimulus plan, President Obama is pledging $13 billion into an ambitious high-speed rail project.

David Castelveter, spokesman for the Air Transport Association, the airline industry group, said that cutting capacity is not the problem, because it occurs on the "least popular routes." Also, he said the airline industry is reluctant to end short-range flights.

"We can continue to serve the small communities we serve today, and not eliminate it, as these studies suggest," he said.

Castelveter said the air traffic control system must be modernized. A change from radar to digital satellite technology would reduce the spacing between flights and relieve congestion, he said.

"Whether it’s next year, or [the next] two years, the economy will ultimately recover and the industry will attempt to grow," Castelveter said. "Our great concern is the fact that this government has yet to move forward aggressively with modernization of the air traffic control system."  

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09/22/2009 (7:15 am)

U.S. Economy Will Add Jobs by End of 2009, Maki Says

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The U.S. economy will add jobs by the end of this year, said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York.

The unemployment rate will “peak slightly below 10 percent,” Maki said today in an interview on Bloomberg Radio. “We don’t think there’s a lot left to go.” In August, the rate reached a quarter-century high of 9.7 percent.

After losing jobs every month since December 2007, “payroll growth turns positive” within three months, Maki said. September, however, will show another net loss in non- farm payrolls, he said.

After expanding at a 3.5 percent annual rate this quarter, the economy will grow at a 4 percent pace in the fourth quarter and at a 5 percent rate at the start of 2010, Maki wrote in a research report issued Sept. 17. Maki previously forecast a 3 percent growth rate at the start of 2010.

The rebound in the economy is being driven by housing and consumer spending, Maki said today.

“Housing has turned in a durable way in our view” and “consumer spending is actually coming in stronger than we expected,” he said allstate insurance company. In housing, “affordability has improved so dramatically” and “housing prices have fallen faster than incomes.”

Obama Stimulus

The Obama administration’s $787 billion economic stimulus plan and the “cash-for-clunkers” auto rebate program “are not the only sources of support,” Maki said. Additionally, “wage, salary and income growth turned positive in July,” he said.

In a report issued today, the Conference Board said the index of leading indicators rose for the fifth consecutive month, led by the stock market, consumer confidence and housing.

The LEI, a gauge of the economic outlook over the next three to six months, advanced 0.6 percent in August, according to the New York-based private research group. That marked the longest string of increases since 2004.

(In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.)

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