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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BAGHDAD–A consortium led by Russia's private oil giant Lukoil on Tuesday signed an initial deal with Iraq to develop one of its biggest oilfields, an agreement key to the war-ravaged nation's efforts to boost the output of a resource crucial to its postwar reconstruction efforts.

Lukoil had partnered with Norway's Statoil ASA to bid to develop the 12.88 billion barrel West Qurna Phase 2 field, the crown jewel of the 15 fields offered during Iraq's second postwar oil licensing round held earlier this month.

Under the 20-year deal which is slated to be presented Thursday to Iraq's Cabinet, the companies plan to produce 1.8 million barrels per day in 13 years and will be paid $1.15 (U.S.) per barrel of crude they produce from the southern field.

Lukoil's vice president of strategy and business development, Dmitry A. Timoshenko, hailed the signing as an important step forward in its work with the Iraqi government.

"Now we are waiting for the other legal procedures to be completed," Timoshenko said. "We hope that these procedures will be concluded soon so that we can start our work as soon as possible.''

For Iraq, the deal marks a crucial step forward in the country's sofar faltering bid to raise oil output.

Although it sits atop the world's third largest proven reserves of conventional crude oil, Iraq produces about 2.5 million barrels per day, of which about 1.9 million barrels a day are exported.

Decades of neglect of the fields have been compounded by the effects of the fighting and sabotage in the wake of the 2003 U.S.-led war to oust Saddam. That violence has meant that Iraq has been unable to even reach its pre-war output levels of oil. Crude oil sales account for roughly 90 per cent of the government's budget.

The oil auction held earlier this month was crucial for Iraq, during which seven deals were awarded. At the first round of bidding in June, only one deals was signed on the spot.

At that auction, six oil and two gas fields were offered, but interest was only on the safest and cheapest fields to develop, with companies shrinking away from fields in restive regions where violence is a key concern as U.S. troops prepare to withdraw from Iraq. Two other deals were subsequently struck.

The second auction saw more deals done – a total of seven. But most of the interest was again focused on fields in the relatively calm and stable Shiite heartland in the south and the U.S. supermajors like Exxon Mobil failed to even bid, let alone win, any of the fields.

Oil Minister Hussain al-Shahristani ambitiously projected that with these fields, along with others Iraq will develop independently, output could climb to 12 million barrels per day within six years. Analysts say those expectations will fall far short of the reality.

Senior Deputy Oil Minister Abdul-Karim Elaibi said all the deals awarded during the second auction will be submitted to the Cabinet on Thursday for approval.

The deal was a coup for Lukoil, which had been granted the rights to develop the field in 1997 by Saddam Hussein only to see the dictator rescind the $3.7 billion contract five years later.

Lukoil had been trying to revive the deal since 2003 after Moscow wrote off most of Iraq's $12.9 billion in debts. Iraqi officials, however, eager to make sure that the reopening of the country's oil sector to the world was as transparent as possible, shrugged off the Russian calls and insisted on putting the field up for bids.

Lukoil and Statoil beat out three other consortiums led by Britain's BP PLC, France's Total SA and Malaysia's state-run Petronas to nab the rights to develop the mammoth field. Although discovered in August 1973, it has been only partially developed, with a total of 13 wells drilled, so far.

The field lies next to the West Qurna Phase 1 field, which has 8.6 billion-barrel and was part of three deals awarded in Iraq's first bidding round.

A consortium grouping U.S. and European oil giants Exxon Mobil and Royal Dutch Shell PLC won the rights to develop West Qurna Phase 1 field for $1.9 per barrel produced and signed an initial deal. It also still waiting the Cabinet's final approval.

Four other deals emerging from the second auction were initialed last week. Those included fields won by consortiums led by European giant Royal Dutch Shell PLC, Petronas, China's CNPC and Russia's Gazprom.

The last two deals – with Angola's Sonangol – will be initialed Wednesday.

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Don’t close the coffin on Saab just yet.

Spyker, a Dutch maker of exotic cars, said Sunday that it had made a new offer to General Motors for the Swedish car brand.

GM announced on Friday that it would let the brand die after it had failed to reach a deal with potential buyers, including Spyker and Swedish carmaker Koenigsegg.

Early Sunday, Spyker Chief Executive Victor Muller said the company had submitted a proposal that addresses the issues that had hung up a deal.

"Despite our collective 11th-hour set-back, we are returning to the table with a renewed offer, that addresses every known issue brought to light during the initial negotiations and that has the full backing of the Saab management," Muller said in a statement.

"Our efforts are based on our passion for saving an iconic brand that we would be honored to shepherd, and the jobs and livelihoods of thousands of loyal Saab employees, suppliers and dealers around the world," he added.

Some 3,400 employees globally would be directly affected by Saab’s closure, according to GM spokesman Chris Pruess.

In a statement on Sunday, GM said it had "received inquires from several parties" following Friday’s announcement. The company added that it would "evaluate each inquiry."

Spyker’s offer is set to expire Monday at 5 p.m. ET.

Saab has never been a big-selling car brand, but the recent global recession and news of the brand’s possible demise have driven sales down to crisis levels. Saab’s U.S. sales have fallen by more than half so far this year.

Sweden’s other major automaker, Volvo, is currently owned by Ford (F, Fortune 500), which is in the process of selling it to the Chinese automaker Geely.

What went wrong

GM previously said that the potential deals with both Spyker and Koenigsegg fell through because of unspecified issues that arose during negotiations.

As of Friday, GM was still planning to sell some Saab 9-3 and 9-5 technologies to the Chinese automaker Beijing Automotive Industry Holdings Co. Ltd. That deal was announced last week.

GM has owned a major stake in the Swedish automaker since 1989 and took full ownership in 2000; Saab has been making cars since 1949. GM will now begin winding down Saab production, but warranties will continue to be honored, and spare parts will still be available, the company said.

In the past two decades, GM has made every effort to turn Saab into a profitable car brand, Smith said. But recent global economic problems were simply too much for the still-weak automaker to survive.

As part of its government-sponsored bankruptcy restructuring, GM planned to sell of or wind down four of the eight brands it recently operated.

Pontiac is being wound down; a deal to sell the Saturn brand to Penske Automotive fell through in September; and a deal to sell the Hummer SUV brand to Chinese heavy equipment maker Sichuan Tengzhong is awaiting government approvals.

GM’s remaining brands are Chevrolet, Buick, GMC and Cadillac. 

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The Toronto stock market surged to its highest close of the year Tuesday as worries about Dubai's credit problems receded while a trio of American economic reports reinforced the impression a rebound is underway.

The S&P/TSX composite index jumped 260.12 points to 11,707.32 – its highest close since October 2008 – led by rising commodity stocks as a weaker U.S. dollar helped boost oil and metals.

The gain left the TSX up 30.25 per cent year to date.

Markets were sent reeling late last week after Dubai World said it wanted to postpone payments on its approximately US$60 billion of debt for at least six months. But investors felt better about the Dubai issue after the Persian Gulf emirate's government-owned conglomerate, Dubai World, said that it had begun "constructive" discussions with its creditors over US$26 billion of its debt.

"It does seem contained," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"The most important thing is that there is no contagion effect and what I mean by that is that investors don't say: 'What else is out there; is it going to be a domino effect?' And so far, it doesn't look that way."

A weaker U.S. currency pushed the Canadian dollar up 0.81 cents to 95.54 cents US.

The move up also came amid a comment from a senior Russian central bank official that the country will buy Canadian dollars in the next few months in a bid to diversify its currency reserves. Russia had previously mentioned plans to buy Canadian and Australian dollars in the near term, but had not specified when that would happen.

The TSX energy sector was 2.17 per cent higher as positive economic data from China and U.S. dollar weakness sent the January crude contract on the New York Mercantile Exchange up $1.09 to US$78.37 a barrel. A Chinese industry group released a survey showing manufacturing activity expanded in November for a ninth straight month. EnCana Corp. (TSX: ECA) gained $1.06 to C$57.63 while Suncor Inc. (TSX: SU) climbed $1.30 to $39.20.

The December bullion contract on the Nymex climbed $18 to a record high close of US$1,199.10 an ounce, taking the gold sector up 5.28 per cent. Goldcorp Inc. (TSX: G) advanced $2.83 to C$46.90.

Shares in Barrick Gold Corp. (TSX: ABX) climbed $3.34 to $48.20 after the company said it had eliminated all of its gold hedges ahead of schedule. The hedges had limited Barrick's ability to take advantage of rising gold prices, although they also were designed to protect the company from lower prices.

The base metals sector ran up 2.6 per cent as the December copper contract added 5.5 cents to US$3.20 a pound. Teck Resources (TSX: TCK.B) was up 52 cents to C$37.01 while Equinox Minerals (TSX: EQN) was up 30 cents at $4.20.

Richard Ross, global technical strategist at Auerbach Grayson in New York, said the drop in the U.S. dollar and the jump in riskier assets like commodities signals investors aren't willing to give up on the market's surge even if they have concerns it might be overdone.

"It speaks to that sort of bullish undercurrent," he said. “Whether it's misplaced optimism, that's another question."

The industrials sector, up 1.83 per cent, also lifted the TSX, with Bombardier Inc. (TSX: BBD.B) ahead 12 cents to $4.60.

Shares in Canadian Pacific Railway (TSX: CP) rose 93 cents to $51.90 after Canada's second-largest railway company said it's making a $500-million voluntary payment to its pension plan.

The financials sector advanced 1.29 per cent ahead of earnings reports from most of the big banks later in the week. National Bank (TSX: NA), TD Bank (TSX: TD), CIBC (TSX: CM) report on Thursday while Royal Bank (TSX: RY) issues earnings on Friday. TD Bank (TSX: TD) advanced 92 cents to $67.38 and Bank of Montreal (TSX: BMO) moved up 77 cents to $54.52.

The TSX Venture Exchange moved ahead 35.43 points to 1,450.49.

New York indexes also made solid gains with the Dow Jones industrials up 126.74 points to 10,471.58 after the Institute for Supply Management said its manufacturing index came in at 53.6 in November after a 55.7 reading in October. A reading above 50 indicates growth but the showing was below the 55 level that economists had expected.

"We are not overly concerned with the monthly drop, as there has been a lot of positive momentum in this indicator recently, which indicates the manufacturing sector is trying to catch its breath rather than what runners like to call hitting the wall," said Ian Pollick, economics strategist at TD Securities.

"Additionally, it would be a mistake not to recognize that the absolute level of the index continues to sit above the 50-threshold."

The Nasdaq composite index rose 31.21 points to 2,175.81 while the S&P 500 index climbed 13.23 points to 1,108.86.

Other data showed that number of homebuyers who signed contracts to buy previously occupied homes rose 3.7 per cent from September to October. The National Association of Realtors' adjusted index of sales agreements hit 114.1. Economists surveyed by Thomson Reuters expected the index would fall to 109.5.

And construction spending posted a tiny increase in October, the first advance in six months.

In other corporate news, Agnico-Eagle Mines Ltd. (TSX: AEM) said Monday that drilling results support the company's position that there is considerable exploration upside at its Kittila project in Finland and Pinos Altos project in Mexico. Its shares rose $2.86 to $68.66.

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The United Arab Emirates’ central bank set up an emergency facility on Sunday to support bank liquidity in the first policy response to Dubai’s debt woes that threatened to paralyze lending and derail economic recovery.

Dubai rocked the financial world on November 25 when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to a standstill on billions of dollars of debt as a first step to restructuring.

As a result, banks face heavy losses and the risk that fearful depositors could rush to remove cash from the system, and threatening interbank lending with the second largest Arab economy still facing a downturn this year.

“It might support the market a little bit but I don’t think it is enough,” said Shawkut Raslan, head of brokerage at Prime Emirates brokerage.

“I think some foreigners will take their money of the country and others will be afraid to put their money into these markets.” The central bank policy move came late on Sunday as Dubai’s Supreme Fiscal Committee gathered to prepare a statement before market open on Monday in an attempt to reassure investors.

The central bank said the banking system was more sound and liquid than a year ago, when the global crisis ended the oil and real estate fueled boom in Arab Gulf, the world’s top oil producing region.

The monetary authority said on Saturday it was closely watching events stemming from the Dubai debt crisis to ensure there is no negative impact on the UAE economy.

Before the Dubai debt crisis, the UAE economy was seen falling by 1.1 percent this year before returning to a 2.9 percent growth in 2010, a Reuters poll of analysts showed earlier this month.

PREVENTIVE MOVE

Analysts said the central bank’s move was a preventive measure to avoid a possible capital flight and a run on deposits when markets reopen on Monday after a four-day holiday break.

“It is important because the main concern is that there might be some panic behavior by depositors in Dubai and by bankers who want to take deposits out of the banking system,” said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.

Senior bankers in Abu Dhabi, Dubai’s oil-rich cousin in the UAE federation, told Reuters on Friday Abu Dhabi banks have built up an exposure to Dubai-based companies worth at least 30 percent of their loan books.

In reaction to Dubai’s debt problems, Fitch Ratings has said it downgraded Dubai Bank, Tamweel and Bahrain’s TAIB Bank.

“It (the facility) would cover the immediate concerns related to deposits in the UAE banks,” said Ghanem Nuseibeh, senior analyst at Political Capital consultancy.

“It doesn’t mean that lending would necessarily ease. It is no guarantee for depositors. We still don’t know the extent of the UAE banks’ exposure to Dubai’s problems,” he said. 

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WASHINGTON — Toyota plans to replace the gas pedals on 4 million vehicles in the United States because the pedals can get stuck in the floor mats and cause sudden acceleration.

The massive recall is the largest in the U.S. for Toyota Motor Corp. The Japanese automaker earlier told owners to remove the driver’s side floor mats to keep the gas pedal from becoming jammed.

A deadly crash in California brought attention to the problem. Investigators of the accident, in which four died, determined that a rubber all-weather floor mat found in the wreckage was slightly longer than the mat that belonged in the vehicle, and it could have snared or covered the gas pedal.

The government has attributed at least five deaths and two injuries to floor mat-related acceleration in the Toyota vehicles. Regulators have received reports of more than 100 other incidents.

Dealers will offer to shorten the gas pedals by three-fourths of an inch beginning in January as a stopgap measure while the company develops replacement pedals. New pedals will be installed by dealers on a rolling basis beginning in April, and some vehicles will get a brake override system as a precaution.

The recall involves 3.8 million vehicles, including the 2007-10 Camry, 2005-10 Avalon, 2004-09 Prius, 2005-10 Tacoma, 2007-10 Tundra, 2007-10 Lexus ES350 and 2006-10 Lexus IS250/350. Owners of the ES350, the Camry and the Avalon will get first notification because the cars are believed to be at most risk.

For more information, owners can contact Toyota at 1-800-331-4331 or the National Highway Traffic Safety Administration hot line at 1-888-327-4236.

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German business confidence probably increased to a 14-month high in November, suggesting the economic recovery may gather pace next year.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 92.5 from 91.9 in October, according to the median of 37 forecasts in a Bloomberg News survey of economists. That would be the highest reading since September last year. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

Economic growth accelerated in the third quarter as export orders rose and companies increased production and investment. The manufacturing industry expanded for a second month in November and the country’s benchmark DAX share index has advanced 19 percent this year. Unemployment, the euro’s strength and the expiry of government stimulus measures may still damp growth in 2010.

“New orders are strong, the inventory cycle is turning around and the manufacturing sector has just left recession, which means there’s a lot of room for improvement in the economy,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Germany should continue leading the euro-zone economies for quite some time.”

The government last month raised its economic outlook, forecasting growth of about 1.2 percent in 2010 after a 5 percent contraction this year.

GDP Breakdown

Gross domestic product rose 0.7 percent in the third quarter from the second quarter, preliminary figures showed on Nov. 13. The Federal Statistics Office in Wiesbaden will release a detailed breakdown at 8 a.m. today.

Germany’s Beiersdorf AG, the maker of Nivea products, on Nov. 3 raised margin forecasts after reporting third-quarter profit that beat analysts’ estimates, saying its tape-making Tesa unit is seeing a “trend reversal in its industrial business.”

Ifo’s gauge of the current situation will increase to 88 from 87.3 while an index of executives’ expectations will advance to 97.3 from 96.8, according to the survey of economists.

Chancellor Angela Merkel’s government is spending about 85 billion euros ($127 billion) on measures to stimulate growth, including infrastructure projects and a 2,500-euro payment for people who junk an old car and buy a new one. The so-called cash-for-clunkers fund ran dry in September.

‘Propped Up’

“Growth so far has been propped up by stimulus,” said Costa Brunner, an economist at Natixis in Frankfurt. “There’s not a self-supporting recovery and the stimulus will run out. We see a W-shaped recovery, and a recession in the second half of 2010 isn’t out of the question.”

German investor confidence declined more than economists forecast in November on concern that the economic upswing isn’t sustainable.

Exports, the motor of German economic expansion this decade, have so far weathered the euro’s 20 percent appreciation against the dollar since mid-February.

“Exports will continue to steam ahead on the recovery in world trade and the pick-up in the global economy,” said Aline Schuiling, an economist at Fortis Bank Nederland in Amsterdam. “Ifo will continue, slowly, to move ahead.”

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The dollar’s edge as the world’s leading reserve currency will be chipped away only slowly, and it is likely to remain dominant for many years, a Reuters poll of foreign exchange strategists showed.

The dollar makes up an estimated 63 percent of central banks’ global exchange reserves at present. The ratio has been falling gradually from above 70 percent in 1999, when the euro was introduced.

The Reuters poll of 34 strategists shows them giving a median forecast for the dollar to make up 60 percent of reserves five years from now, 55 percent in ten years, and 48 percent after 20 years.

That is in line with a Reuters poll in April which saw the dollar making up around 55 percent of reserves in 2020.

Some central banks have been putting a larger fraction of incoming reserves into currencies other than the dollar partly because of concern about the dollar’s long-term stability. China has suggested that the dollar eventually be replaced as the main currency for global reserves.

But the unmatched depth and liquidity of U.S. financial markets means the shift away from the dollar will remain very slow, strategists in the poll said.

“It will take decades for another capital market to be built as deep as is currently available in the U.S. Accordingly, this is a slow trend that will play out over many years,” said Camilla Sutton at Scotia Capital.

YUAN

The survey also suggested that despite China’s growing economic power, the yuan is still a long way from becoming a major reserve currency.

Of 35 strategists who discussed the yuan, 15 said the yuan would not reach this status for five to ten years, while 13 said it would take more than ten years.

Two predicted the yuan would become a reserve currency in just two years, while five estimated between two and five years.

Central banks appear unlikely to embrace the yuan unless China eases capital controls and makes its currency more freely tradable.

“China still has to deliver another revaluation of about 2 to 3 percent and extend the period of yuan-based payments with its trading partners before easing FX controls,” said Ashraf Laidi at CMC Markets.

(Polling by Bangalore Polling Unit; Editing by Victoria Main)

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The Obama administration’s pay czar is imposing tough cuts on 175 big earners — but many on Wall Street are still on track for a banner payday.

Kenneth Feinberg, appointed the Treasury’s special master for compensation in June, has ultimate say over compensation for the top paid employees at the 7 most bailed-out companies: AIG (AIG, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), General Motors, Chrysler, GMAC and Chrysler Financial.

In a policy announced Thursday, Feinberg demanded salary cuts of up to 90%, and total reductions — including stock and options — of 50%.

But Feinberg’s ruling does not impact other financial firms that are on track to pay out record bonuses, like Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).

Revenue projections for those firms keep rising, and analysts say bonuses will be back on track for another record year following a one-year dive in 2008. Goldman Sachs said last week that it set aside $16.7 billion for salaries, employee stock options and bonuses, which works out to about $526,814 per employee.

"The whole bailout situation has raised a lot of questions about fairness," said Eleanor Bloxham, chief executive of The Value Alliance and Corporate Governance Alliance. "It’s important to have similar rules for everyone, especially as we get into the broader issue of oversight."

Bloxham said compensation is a concern at every financial institution. Executives who are paid in large dollar amounts regardless of company performance could be inclined to make riskier bets.

The more than 600 companies that have received capital investments from the $700 billion bailout are subject to executive compensation curbs, including limits on perks and golden parachutes.

No bailout, no pay regulation … yet. Companies like Goldman and JPMorgan, which have paid the government back the billions of dollars in bailout funds they received from taxpayers, are no longer under the scrutiny of Treasury.

For those companies and others that never received TARP funds, lawmakers are examining other ways of regulating executive pay. A "Say on Pay" bill that would give shareholders the ability to issue a non-binding statement on executive compensation passed a House vote in August and is likely to land on President Obama’s desk in the coming months.

Financial firms have largely agreed executive compensation needs to be more closely aligned with performance, but almost all have said that they can handle the issue themselves.

"From my view, I’m a capitalist, I think it should be left to us," John Mack, chief executive of Morgan Stanley, told CNNMoney last week.

Others argue regulators need to have an even heavier hand in companies’ executive compensation decisions, especially since the government has played an important role in the success of those companies.

Even financial firms that have paid their TARP loans back are still benefiting from the bailout, as many of their counterparties are are able to do business with them thanks in large part to taxpayers’ capital investments.

"From a TARP perspective they paid their money back," bailout overseer Neil Barofsky told CNN on Wednesday. "I think there’s a frustration that they’re the beneficiaries of other government programs that have let these companies rely on cheap profits."

In a report released Wednesday, Barofsky said that market behavior and performance has been positively impacted by the massive infusions of government capital. As a result, banks are getting healthier, financial stocks are soaring, and bonuses are expected to hit a record in 2009.

Bloxham, for one, believes the government should have a role in restricting wildly out-of-whack pay packages. She suggests the SEC and the Fed should draft enforceable guidelines for executive compensation at companies that ensure businesses are not engaging in practices that could bring the whole financial system down.

Why only seven. The official reason is that the Treasury Department gave Feinberg the power to regulate pay at any of the companies that have received "extraordinary assistance" beyond the more than 600 firms that have gotten capital investments from taxpayers.

To be sure, those companies are a good start. AIG is probably the most reviled company in the world. Bank of America is under investigation for lying to its shareholders about bonuses. Once mighty Citigroup is in the process of splitting its business in two. And the automakers went through very public bankruptcies.

Some experts believe that the government is trying to make an example of these seven firms, hoping that others will fall in line.

"The government is trying to use these guys as examples for what other companies should do," said Ken Raskin head the executive compensation practice at White & Case. "Every layman has heard about these companies and most want to see government action on them."

"But to do the same for another 100 companies would be, perhaps, an insurmountable task," he added.

Raskin believes that Feinberg’s authority should end with the seven top banks, as the government would otherwise be perceived as overstepping its bounds, especially for companies that are not TARP recipients.  

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Nobel laureate Paul Krugman said China is devaluing its currency and undermining the global economic recovery by “stealing” jobs that otherwise would have gone to nations that aren’t growing as quickly.

By pursuing a weak-currency policy, China is siphoning demand away from other nations including poor countries, Krugman wrote in an article titled “The Chinese Disconnect” in the New York Times.

“In normal times, I’d be among the first to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” the Princeton University professor said.

U.S. officials have been “extremely cautious” about confronting China on the issue, an approach that “makes little sense,” he said.

While the dollar has fallen 14 percent against the euro and 7 percent versus the yen since mid-March, China’s authorities have kept their currency little changed.

The U.S. economy would benefit if China began selling its “dollar hoard,” which Krugman says is currently worth about $2.1 trillion, because it would make American exports more competitive.

“With the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated,” Krugman said. “Something must be done about China’s currency.”

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