Finance & Business World

Whiteside County, Ill instant payday loan.

The back-to-school season got off to a strong start as discounts and high temperatures in July drove shoppers to air-conditioned malls.

But merchants worry that momentum won’t continue through the remainder of the second-biggest shopping period of the year as the weather cools and the deals dry up.

Despite a flow of bad economic news that kept consumer confidence shaky, a number of retailers reported July revenue on Thursday that beat Wall Street estimates, including discounter Target, department store Macy’s and luxury chain Saks payday loan lenders. The International Council of Shopping Centers’ preliminary tally of retailers’ revenue at stores open at least a year

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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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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The Federal Aviation Administration is pursuing a penalty of more than $1 million against Boeing Co. because it says the airplane manufacturer didn’t follow its own instructions for installing oxygen systems on the 777.

The instruction turned out to be unnecessary and Boeing deleted it, a Boeing spokeswoman said.

The FAA said on Monday that it found the problems when it inspected nine new planes between April and October 2010. Hoses for the passenger oxygen system were installed at a sharper angle than allowed, the FAA said.

The system feeds the masks that allow passengers to get oxygen if the cabin loses pressure in flight.

Boeing spokeswoman Alana Broadbent said the hose would have had a 2 degree bend if installed according to instructions. Because the instructions were unclear, some were bent as much as 10 degrees, she said.

However, Boeing tested the hoses and found no problem even when they were bent as much as 10 degrees and put under double the pressure they needed to withstand. So, instead of requiring a 2-degree angle, Boeing deleted the instruction because it’s not possible to install the part at more than a 10 degree angle anyway, she said.

She said other 777s in the factory were inspected. Because there was no safety problem with the hoses, 777s that had been made previously were not reinspected, she said. For the same reason, Boeing did not issue a service bulletin, which advises airplane operators to inspect or fix problems discovered after a plane has entered service.

The FAA said it can charge $25,000 for each mistake, and it counts as a new mistake every time the misinstalled part passed inspection. There were 46 such inspections, which would have totaled $1.15 million if FAA sought the maximum penalty for each one. The FAA offered to compromise with Boeing for $1.05 million.

The FAA said Boeing had failed to correct a known problem in installing the system.

“There is no excuse for waiting to take action when it comes to safety,” said Transportation Secretary Ray LaHood.

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Referendums that would block the return of nuclear power to Italy and revoke a law mandating the privatization of the water supply appear headed for the 51 percent turnout necessary to validate the vote.

Turnout Sunday night when the polls closed was 41 percent. Voting was continuing Monday.

Passage of the referendums would be a blow to Premier Silvio Berlusconi, who has pushed to reintroduce nuclear energy and privatize tap water. A final referendum would revoke legislation that provides Berlusconi with a partial legal shield from prosecution guaranteed payday loan.

Analysts expected the Japan nuclear meltdown, following the March 11 quake and tsunami, to motivate voters. Italy’s nuclear power plants were shut down by a 1987 referendum after the Chernobyl disaster.

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Ivory Coast’s president has formally requested that the International Criminal Court investigate crimes committed during the five-month postelectoral crisis, which ended with the former president’s arrest last month.

In a letter published on the ICC website late Wednesday, President Alassane Ouattara said that his country’s judicial system isn’t capable of investigating all the crimes committed since last November’s presidential election.

More than 1,000 civilians were killed in the interim, first by security forces loyal to former president Laurent Gbagbo and later by rebel forces fighting to install Ouattara.

Human rights groups allege that both sides are guilty of crimes including kidnapping, rape and summary execution.

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DENVER

Federal Reserve Bank of Richmond President Jeffrey Lacker said policy makers were too slow to withdraw monetary stimulus last decade and should tighten credit this time before inflation picks up too much.

“Four years of 3 percent inflation may not have been the worst of all possible outcomes, but I do not consider it a success,” Lacker said today in a speech in Baltimore, referring to the period from 2004 to 2007. “I hope we do better this time.”

Lacker is among a minority of Fed policy makers who have indicated they may favor a move this year to start reversing record monetary stimulus, while Chairman Ben S. Bernanke’s top lieutenants support keeping near-zero interest rates in place to help reduce unemployment. Lacker dissented four times in 2006 in favor of higher rates.

Fed officials must validate expectations of businesses that inflation will remain low “by conducting monetary policy in such a way that inflation does not accelerate,” Lacker said in the text of remarks at the University of Baltimore. “I believe we need to heed the lesson of the last recovery that inflation is capable of rising even if the level of economic activity has not returned to its pre-recession trend.”

Fed officials are starting to debate what steps to take after completing $600 billion of Treasury purchases through June, a program dubbed QE2 for the second round of quantitative easing. Policy makers were divided at their last meeting on March 15, with a “few” officials saying tighter credit may be warranted this year, while a “few others noted that exceptional policy accommodation could be appropriate beyond 2011.”

FOMC Decisions

Lacker, 55, doesn’t vote this year on decisions by the policy-setting Federal Open Market Committee, which next meets April 26-27 in Washington. He has been president of the Richmond Fed since 2004, giving him the third-longest tenure among the Fed’s 12 regional bank chiefs. He first voted on interest-rate decisions in 2006.

The Fed last began to increase interest rates in June 2004, starting a series of quarter-percentage-point rises from 1 percent that ended two years later at 5.25 percent. While “many forecasters expected inflation to diminish” because of high unemployment and low inflation excluding food and fuel costs, the opposite occurred, Lacker said.

“With hindsight, I think it is fair to say that policy makers overestimated the extent to which high unemployment would keep inflation from accelerating, and as a result, waited too long withdraw monetary stimulus,” Lacker said.

Housing Bubble

Chairman Ben S. Bernanke, who served as a Fed governor from 2002 to 2005, has defended the central bank’s interest-rate policy from last decade, though more against the criticism that it fueled the U.S. housing bubble.

The U.S. government tomorrow is scheduled to report the March change in the consumer price index. Excluding food and fuel, prices probably rose 1.2 percent from a year earlier, based on the median estimate in a Bloomberg News survey, after a 1.1 percent rise in February. Including all items, prices may have climbed 2.6 percent over 12 months, compared with 2.1 percent in the year through February, according to the survey.

Higher gasoline prices may restrain growth in consumer spending, he said. “At this juncture, futures markets are pricing in modest declines in petroleum products,” Lacker said. “If the markets are right, the effect of energy prices on consumer spending should only be temporary.”

‘Moderate’ Pace

The Fed said in its Beige Book report yesterday that the economy expanded at a “moderate” pace across much of the U.S. in February and March, led by manufacturing, with labor markets showing improvements in most regions.

The U.S. economy is “firmly in recovery mode, and the fundamentals for future growth are strong,” Lacker said. The pickup in consumer spending is “solidly grounded in improving fundamentals,” and business expansion “should make a significant contribution to growth this year,” he said.

Economists forecast the U.S. economy will expand at a 2.9 percent annual pace this year, according to the median estimate of 74 analysts in a Bloomberg News survey conducted from April 1 to April 7. That compares with a 3 percent median projection in March.

The FOMC said at its last session March 15 that the economy is on a “firmer footing” and unanimously affirmed plans to buy the Treasuries through June. Bernanke will hold his first press conference following the FOMC’s statement on April 27.

Bigger Than Forecast

The economy added a greater-than-forecast 216,000 jobs in March, and the unemployment rate fell to the lowest level in more than two years, marking a drop of a full percentage point over four months. A Labor Department report yesterday showed job openings increased in February by the most since December 2004, a sign companies are turning more optimistic about hiring.

Lacker was the fifth policy maker giving public remarks today. Fed Governor Elizabeth Duke said in Washington that the central bank is “absolutely committed” to price stability and will “do our job” to control inflation.

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said in Helena, Montana, that core inflation “is very low right now” and he doesn’t see many signs of price pressures.

Also, Fed Governor Daniel Tarullo said in Washington that he sees no need to either terminate the central bank’s program of large-scale asset purchases before it’s scheduled to end in June or to increase its size.

Federal Reserve Bank of Philadelphia President Charles Plosser, in a New York speech, restated his call for the central bank to adopt a formal inflation goal, saying it would be “particularly useful when we begin to unwind the extraordinary accommodation measures that we took to mitigate the crisis.”

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The Bank of Korea should raise its benchmark interest rate to “at least” 4 percent this year to rein in inflation and household debt, an adviser to the nation’s central bank and finance ministry said.

“Household debt needs to be handled while it’s still manageable,” Kim Tae Joon, president of Korea Institute of Finance, South Korea’s largest private financial think tank, said in an interview in Seoul yesterday. “We also have room to allow the won to strengthen further to curb inflation.”

The central bank projected yesterday consumer prices will rise 3.9 percent this year, close to the 4 percent upper limit it is targeting through 2012. South Korea’s campaign to rein in inflation is part of efforts across the region, where countries from Thailand to India are tackling with higher costs.

“The interest rate should be raised to 4 percent at least,” from the current 3 percent, he said. “Major exporters will survive even if the currency appreciates to 900 per dollar.” The won traded at 1,087.93 at the 3 p.m. close in Seoul yesterday.

BOK Governor Kim Choong Soo said this week he will take monetary policy action “neither too slowly nor too fast.” The central bank projected growth will slow to 4.5 percent this year from 6.2 percent in 2010. Accelerating inflation spurred by economic growth and higher oil and food prices prompted the central bank to raise interest rates from a record-low 2 percent since mid-2010.

Higher Rates ‘Do Good’

“Higher interest rates will do good to the entire economy as it will help stabilize prices, which in turn boosts real income,” Kim said.

Kim, who advises the central bank governor and finance minister Yoon Jeung Hyun on policy, said that officials should tackle household debt by boosting borrowing costs and providing rescue measures for lower-income defaulters after an extended period of record-low interest rates encouraged many people to borrow beyond their means.

With the property market at risk of peaking out, if not slumping, swelling debt could threaten the nation’s sustainable growth, Kim said.

“The real-estate market won’t likely repeat the boom seen in the past decade and South Korea’s aging population could cause a drop in housing prices,” he said.

Record Debt

South Korea’s household debt including credit purchases climbed to a record 795.4 trillion won ($730 billion) at the end of 2010, the central bank said on Feb. 21. Banks’ lending to households increased to record 434.1 trillion won in March led by gains in mortgage lending, which accounts for 67 percent of total banks’ lending to households, the central bank said on April 11.

Financial Supervisory Service Governor Kwon Hyouk Se warned about a “heightened sense of concern” about the high levels of household debt on April 12. The FSS, together with government regulator Financial Services Commission, formed a taskforce to draw a general plan to contain household debt, the FSC said on March 9.

The ratio of household debt to disposable income was 1.43 times in South Korea in 2009, higher than 1.26 in the U.S., 1.12 in Japan and 1.23 in average for the members of Organization for Economic Cooperation and Development, according to the commission.

“We may fall into a vicious cycle if household debt is left unchecked,” he said. “A heavy debt burden at a time when borrowing costs are rising can limit people’s spending, which in turn slows the economy and income growth, resulting in a higher debt ratio.”

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