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Talk of $100 Oil Returns as Options Jump Most in 3 Months: Energy Markets
Grant Smith and Mark Shenk, On Monday November 29, 2010, 5:25 am EST
Oil’s return to $100 has become the biggest bet in the crude options market.
The price of options to buy December 2011 futures at $100 a barrel jumped 14 percent on Nov. 24, the largest one-day gain in three months, according to data compiled by Bloomberg. So-called open interest for the contract has risen 51 percent this year to 45,424 lots, the highest for any crude option on the New York Mercantile Exchange.
The increase in trading of $100 options shows some investors anticipate oil will rise at least 19 percent to levels last reached in 2008. While crude is up 6.3 percent this year as the economy recovers, Morgan Stanley said Nov. 1 that prices will reach $100 next year as spare production capacity shrinks. At the same time, BNP Paribas SA said Nov. 18 further price gains “will be difficult” as the Federal Reserve seeks to revive the U.S. economy through an extended stimulus program and Europe struggles to contain its sovereign debt crisis.
“The tug-of-war in oil prices continues as the short-term debt market concerns obscure improving oil-market fundamentals,” Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York, said in a Nov. 26 report.
Oil futures snapped two weeks of declines on the Nymex last week, rising 2.8 percent. The front-month January contract gained 0.8 percent today to $84.43 a barrel at 10:14 a.m. London time. December 2011 futures traded at $87.38. Options contracts that give investors the right to buy December 2011 futures at $100 a barrel rose to $5.55 on Nov. 24, from $4.87 the day before, the largest increase since Aug. 27, Bloomberg data show. They have averaged $6.38 this year and ended last week at $5.46.
‘Focal Point’
“There are definitely risks to the downside but you still have other risks out there to the upside,” said Jeff Currie, London-based head of commodities research at Goldman Sachs Group Inc., which correctly predicted last year that oil would reach $85 by the end of 2009 and now sees it trading at $100 in 12 months. “U.S. economic data has surprised to the upside. This shifts the focal point back toward the U.S.”
While oil has climbed this year, it has lagged behind the 59 percent increase in the Standard & Poor’s GSCI Index of 24 commodities. A gain to $100 would also trail the record $147.27 a barrel reached on July 11, 2008.
Oil futures have dropped 3.9 percent since Nov. 11 after China said it will raise bank reserve requirements to stem lending and Ireland headed toward talks on a European Union-led bailout. Crude had surged 6.6 percent in the five-days ending Nov. 5, the week the Fed announced it would purchase an extra $600 billion of bonds in a second round of so-called quantitative easing.
‘Sugar Rush’
With the “sugar rush” from quantitative easing over, “another leg up in prices will be difficult,” Harry Tchilinguirian, BNP Paribas’s head of commodity markets strategy in London, said in a Nov. 18 note.
Hedge funds cut bets on rising oil the week before last, reducing so-called net long positions by 15 percent, the most in almost three months, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report released Nov. 19. Bets on gains in oil prices climbed to the highest level in at least four years in the week before the Fed’s announcement.
Americans increased spending for a fifth month in October, with household purchases rising 0.4 percent, the Commerce Department said Nov. 24. The number of people filing unemployment claims fell to 407,000, the lowest level in more than two years in the week ended Nov. 20, the Labor Department reported the same day.
Banking on China
Even if the U.S. recovery falters, investors are banking on China sustaining crude prices. The world’s fastest-growing oil user will consume 9.6 million barrels a day in 2011, second only to the 19.1 million barrels a day to be used in the U.S., according to the Paris-based International Energy Agency. China’s oil demand will rise 4.2 percent next year while that of the U.S. will decline 0.2 percent, the IEA said.
“Global oil demand is set to hit a new record in 2011,” said Francisco Blanch, New York-based head of commodities at Bank of America Merrill Lynch. “The underlying economic picture is still positive. We are still looking for economic growth because of quantitative easing and accelerating growth in emerging markets.”
Most members of the Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil, have said they’re comfortable with prices between $70 and $90 a barrel. Libya views $100 as acceptable. OPEC Secretary-General Abdalla El-Badri said prices at $100 wouldn’t necessarily damage the global recovery or prompt it to increase production unless accompanied by a supply disruption.
OPEC Action
“If there is a physical shortage, I think OPEC will act,” El-Badri said in a Nov. 24 interview in London. OPEC meets next in the Ecuadorean capital Quito, on Dec. 11.
Senior analysts at the IEA, founded by consuming countries in 1974 in response to the Arab oil embargo, also expect oil prices to grind higher in time.
“In terms oil markets, I believe the age of cheap oil is over,” IEA Chief Economist Fatih Birol said at a conference in Budapest on Nov. 26. “There may be zigzags in the future according to the economy, this and that, but the general trend is we will see higher oil prices.”
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
Foreclosure "robo-signing" scandal impact: Sales dry up
Big banks are having trouble restarting the foreclosure process after this fall's "robo-signing" scandal, and the once booming market for foreclosed homes has been hit hard as a result.
According to ForeclosureRadar, the number of properties coming to auction in hard-hit western states -- Arizona, California and Nevada -- has dropped more than 30%.
In San Diego, according to broker Scott Cheng of Cheng Realty, who puts investors together with foreclosed properties, the number of auctions scheduled has fallen from 500 a day, to 300. "That part of my business has dried up," Cheng said. "A lot of my investors have stopped looking."
Cheng used to be able to find about three or four suitable homes a month for investors looking for a bargain. Now, he hasn't done one of these deals since August.
"The ones who are really upset are the investors, who buy on the courthouse steps," said Kevin Berman, a broker with Bankers Realty Services in Fort Lauderdale, Fla. "There used to be sometimes 700 sales a day. Now there are like, seven."
In September, several banks -- including Ally, Bank of America, and JPMorgan Chase -- acknowledged problems with their foreclosure procedures. Employees had been signing as many as several hundred documents a day in which they sometimes attested to facts that they had no personal knowledge of, calling into question the legitimacy of the foreclosures. (See "I was a Robo-signer")
The banks initiated foreclosure moratoriums, promised a full review of all cases, and to resume foreclosures quickly. But the review process has been slow-going.
Investors had been doing brisk business, buying distressed properties on the cheap, sprucing them up and flipping them. But now they are being far more cautious.
"Their concern is that homeowners will be more aggressive in fighting foreclosures even after the auction sale," said Sean O'Toole, CEO of ForeclosureRadar.
For vulture investors, speed is essential -- they do not want to tie up investments for months while attorneys argue.
They are also worried about being able to unload the property. Berman represented one investor who had purchased at auction, fixed the home up and went to contract with a buyer, who then backed out of the $240,000 deal. "His attorney told him he could find out the foreclosure wasn't done right," said Berman.
Pressure on the market for distressed properties could last if delinquent borrowers are less likely to give up on their homes, according to Duane LeGate, CEO of Georgia-based House Buyer Network.
Troubled borrowers go to LeGate for help selling their homes in short sales, in which they sell for less than the price of their mortgage. LeGate says his business dropped more than 30% the week after news of the robo-signing scandal broke, and has stayed down since. His theory: homeowners think the bank will have a tough time kicking them out in this environment, and that they can live for free for a while. He says he's got two friends who intend to do just that.
"After that, they'll just take their medicine," said LeGate. In the meantime, they can pay off other debts and build up nest-eggs.
O'Toole believes the legal issues involved in robo-signing will ultimately be settled in favor of the banks.
"The fear that has been created in based more in hype than in law," he said.
Whether the hype is to blame or not, the last thing the weak housing market needed was to shake the confidence of already nervous consumers.
The week ahead for markets
Blake Ellis, staff reporter, On Sunday November 28, 2010, 8:14 am EST
Black Friday, the first major shopping day of the holiday retail period, has come and gone.
Now stock investors searching for clues about consumer spending will look closely at how the big stores fared.
The holiday period accounts for about 35% of an average retailer's revenue, and 10% of holiday buying takes place on Black Friday alone, said Chip Brian, founder or SmarTrend. Last year, the major indexes gained an average of 5% from Nov. 1 to Dec. 1.
Of course, domestic consumer spending isn't the only factor driving the markets.
Fears that the debt problems of the hardest hit European economies will spread throughout the euro zone have taken the spotlight in recent weeks. Greece and Ireland have accepted bailouts, and investors are worried that Portugal and Spain may be next.
In fact, concern about Europe overshadowed the flurry of Black Friday shoppers hitting the stores: Stocks ended sharply lower after a rollercoaster week.
But barring any new developments overseas, investors are likely to turn their attention back to the United States this week, which will bring a full plate of new economic data.
And they will "take cues" from Black Friday, said Matt Kaufler, equity market strategist and portfolio manager at Federated Clover Investment Advisors.
"If there's a strong showing from the retail community getting out of the gates for the holiday shopping season, that will only reinforce the data we've seen that has shown consumer spending ticking up, unemployment ticking down and consumer confidence remaining at a higher level," Kaufler said.
Along with retail performance, investors will be looking closely for improvement in jobs. Several key readings are due out in the coming week, culminating in the government's widely-anticipated monthly employment report on Friday.
Tuesday: The November reading of Chicago PMI, a regional manufacturing index, is due shortly after the start of trading. Economists expect that it fell to 59.8 from 60.6 in October. Any index reading over 50 indicates expansion.
The Case-Shiller index of September home prices in 20 major metropolitan areas is also due after the opening bell. Analysts forecast a 1% rise after the previous month's 1.7% gain.
At 10 a.m. ET, the Conference Board will release a reading on consumer confidence for November. The index is expected to have ticked up to 52 from 50.2 in October.
Wednesday: The Institute for Supply Management's manufacturing index for November will be released in the morning and is expected to have edged down to 56.4 from 56.9 in October. Any number above 50 indicates growth in the sector.
Construction spending is forecast to have ticked down 0.5% in October, following a rise of 0.5% in September.
A report from payroll services firm ADP is expected to show that employers in the private sector added 58,000 workers in November after boosting payrolls by 43,000 in the previous month.
Separately, outplacement firm Challenger, Gray & Christmas issues its report on planned job cuts in November.
In the afternoon, the Federal Reserve will release its Beige Book report on economic conditions across the central bank's 12 districts.
Meanwhile, the U.S. government's weekly crude oil inventories report and readings on mortgage applications, unit labor costs and third-quarter business productivity are also on tap. Auto and truck sales are due throughout the day.
Thursday: The government's weekly jobless claims report comes out before the start of trading, with 423,000 Americans expected to file new claims for unemployment, after 407,000 were filed in the previous week.
After the bell, the National Association of Realtors releases its pending home sales index, a measure of sales contracts for existing homes. The index is expected to be unchanged in October after slipping 1.8% in September.
Friday: The week's most closely-watched reading on employment is due Friday. Employers are expected to have added 130,000 jobs in November after adding 151,000 jobs in October. The unemployment rate is expected to remain unchanged at 9.6%.
Factory orders are due from the Commerce Department after the start of trading. Orders are forecast to have declined 1.2% in October after increasing 2.1% in September.
The ISM services sector index for November is expected to have edged up slightly to 54.5 from 54.3 in October.
Irish to Pay 5.8% for Bailout as Taxes, Senior Debt Protected
Dara Doyle and Joe Brennan, On Monday November 29, 2010, 3:24 am EST
Ireland will pay an average 5.8 percent for international bailout loans as part of an agreement that protected the senior bondholders of Irish banks and preserved the country’s low corporate tax policy.
The state was granted funds amounting to 67.5 billion euros ($90 billion) with an average duration of 7 1/2 years by the European Union and International Monetary Fund, the government said yesterday. The average interest compares with a rate of around 5 percent charged to Greece for three-year loans earlier this year. Subordinated bank bond holders may have to accept “big haircuts,” Finance Minister Brian Lenihan said.
“I don’t believe there were any other real options,” Cowen told reporters in Dublin yesterday after the agreement was announced, adding that leaving the euro or defaulting on bank bonds were unrealistic. “We are not an irresponsible country.”
The deal came after the country’s crumbling banking system threatened to bankrupt the state, sending the yield on Ireland’s 10-year government bond to a 9.2 percent on Nov. 26 and sparking concerns about contagion through the rest of the euro region.
“The interest rate paid is not burdensome and effectively removes Ireland from needing to issue debt for the next 2 years,” said Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London. “Clearly it is always about confidence and this should be enough to restore a degree of confidence in Ireland and in particular Irish sovereign debt.”
Bond Pledge
The Irish yield premium over benchmark 10-year German bonds fell 9 basis points 637 basis points today. It reached a record 656 basis points on Nov. 26, almost triple the spread just four months ago. Spain’s yield spread slipped 3 basis to 241 basis points and Portugal’s declined by 6 to 419.
Cowen told reporters there wasn’t “political or institutional” support in Europe for forcing losses on senior bondholders, which were guaranteed by the state two years ago. Bonds of the country’s banks have tumbled on concern that Ireland would be forced to renege on that pledge.
Cowen also clung to the country’s 12.5 percent corporate tax rate, which has attracted companies including Google Inc. and Intel Corp. and criticism from some other European countries.
Own Bailout
Under the terms of the agreement, Ireland’s banks will get as much as 35 billion euros of aid and the rest of the bailout fund will help the country finance itself. Ireland will provide 17.5 billion euros from its own reserves.
When the government stepped out of the bond market in October, it had a 20 billion euro cash pile to see the state through to the middle of 2011. In addition, the country controls a 24 billion euro pension reserve fund, set up in 2001 to pay for Irish pensions from 2025. Ten billion euros had already been pledged to the banks.
“The market will be concerned to see Ireland being a major contributor to its own bailout,” said Austin Hughes, chief economist with Dublin-based KBC Bank Ireland. “I don’t think we can fold up our tents and start thinking about Christmas after this.”
Irish opposition politicians slammed the deal as they prepare for an election early next year.
“The interest rate of 5.8 percent is far too high and verges on the unaffordable,” said Michael Noonan, finance spokesman for Fine Gael, the largest opposition party. “The government was cleaned out in the negotiations.”
Deficit Target
Much of the program borrows from the government’s own four- year plan, published on Nov. 24, which proposed 15 billion euros worth of spending cuts and tax increases to narrow the deficit to 3 percent of gross domestic product by 2014.
Cowen said yesterday the state had won an extra year to reach that target if needed. The shortfall will be 12 percent of GDP this year, or 32 percent including a banking rescue.
Ireland will freeze state pensions and raise the retirement age to as high as 68 by 2028. The government will also cut tax breaks for pensions and cut 10 percent for the pay of new government workers.
Irish banks will get an immediate 8 billion euros to bolster capital, and will raise a further 2 billion euros by shedding assets, the central bank said. Lenders will be able to draw on a further 25 billion euros depending on how they fare in a round of stress tests in the first half of next year.
To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
Online bargain-hunting spreads beyond Cyber Monday
On Monday November 29, 2010, 3:11 am EST
By Alexandria Sage
SAN FRANCISCO (Reuters) - Early discounts may have taken some of the shine off Cyber Monday but the key online holiday shopping day is still expected to attract bargain hunters who may not have had their fill over the weekend.
Cyber Monday -- a term coined five years ago for the day many people return to work after Thanksgiving and make online gift purchases on their computers -- remains a prime shopping day online. But its novelty has now been partially eclipsed by e-commerce promotions earlier in the season, including on Thanksgiving itself.
Retailers from BestBuy.com to Walmart.com and Staples.com have even opted to offer Cyber Monday deals one day early, on newly coined "Cyber Sunday."
The key is versatility, online experts say, as well as making sure shoppers heading to the Web always find something to inspire them to click on a sale.
John Thompson, senior vice president and general manager of BestBuy.com, said Cyber Monday remains a "really viable marketing concept," but smart retailers must offer choice.
"There's demand out there, but you have consumers spending their time differently," he said. "If you don't have one group that shops early, you'll have those who say 'I'll enjoy my Thanksgiving and those same deals or as-good deals will be there Cyber Monday.'"
Marketing firms say tactics have changed in luring consumers to buy online. Whereas in prior years a full email inbox of online deals awaited those back at work on Monday, the offers now increasingly come on Black Friday if not before.
Disneystore.com, for one, had a "record sales day" on Thanksgiving, according to Jim Fielding, president of Disney Stores.
U.S. online sales were up 33 percent on Thanksgiving this year, according to web analytics firm IBM Coremetrics.
Just as many promotions are sent via email on Black Friday, the day after Thanksgiving, as on Cyber Monday, according to Responsys. And half of retailers planned to send email on Cyber Sunday as well as on Thanksgiving, the interactive marketing firm found.
PayPal, the online payments unit of eBay, said its first holiday spike in payment volume came on November 15. On Black Friday, total payment volume, or the total value of goods sold, rose 27 percent versus last year.
Online deals will continue throughout the holiday season. Amazon.com, the largest online retailer, said its Black Friday deals would last all week, while Target.com and eBay have set up daily deals through December.
BEST DEAL?
Despite the e-commerce selling season that now extends before and after Cyber Monday, the Monday after Thanksgiving is still a prime focus of retailers.
Nine out of ten retailers planned to offer a promotion for Cyber Monday, Shop.org and BIGresearch found in a survey. That was more than the nearly three-quarters of respondents in 2007.
"Retailers have built it into the consumers mind: 'Here's the day you'll get the best deal,'" said IBM Coremetrics' Chief Strategy Officer John Squire.
Although some experts say the top online sales comes later in the season -- analytics firm Comscore, for one, found 2009's heaviest spending day fell on Dec 13 -- Squire said Cyber Monday was the best-performing day, with a 30 percent jump in U.S. online sales.
"You will see a similar type of gain on Cyber Monday (this year)," said Squire. "The big treat is what happens on Cyber Sunday for those retailers who give those deals."
Bullishness in advance of Monday was evident as Amazon shares closed at an all-time high last Wednesday leading into the Thanksgiving weekend, accompanied by options trading at over twice the average daily level.
On Tuesday, comScore raised its forecast for U.S. online holiday spending for the second time, saying it now expects an 11 percent rise over the 2009 holiday.
The new spending outlook should bring total holiday e-commerce spending to $32.4 billion, comScore said.
Online sales, while still growing, make up a mere 7 percent of the overall U.S. retail pie, according to comScore.
(Reporting by Alexandria Sage; editing by Todd Eastham)
Shoe Carnival Inc. (SCVL): Zacks Rank Buy
Bill Wilton, On Monday November 29, 2010, 1:00 am EST
Shoe Carnival (NasdaqGS: SCVL - News) has been an investor's dream the past few months, reporting record third-quarter results. Estimates are pushing higher and bumped its Zacks Rank to a #2 (Buy).
Even though shares are pressuring the 52-week high, the stock is still a great value as well.
Company Description
Shoe Carnival has 311 stores selling footwear throughout the Midwest, South and Southeast. The company targets cost conscious shoppers of all ages.
Sales Continue to Improve
On Nov 18 Shoe Carnival announced record-setting results that included a 6.7% increase in sales, to $204 million. Same-store sales increased 7.2%.
Net income for the quarter jumped 21% to $9.1 million. Earnings per share came in a nickel ahead of expectations, at 70 cents. Shoe Carnival has now surprised in 6 of the last 7 quarters, meeting expectations in the second quarter of 2010.
Consensus Up
The Zacks Consensus estimate for this year is up 12 cents on the news, t0 $2.05. Next year's forecasts grew 7 cents on average, to $2.21. If Shoe Carnival can meet these expectations the growth rates will be 71% this year and another 8% next year.
Good Value Too
Much like their stores, shares are offering a good value. SCVL is trading at just 13 times forward estimates and with a PEG of only 0.9. Shoe Carnival's price to sales is only 0.50, well ahead of the industry average.
The Chart
Shoe Carnival has been on fire the past few months and is now pressuring the 52-week high. If the turn out for Black Friday is encouraging the stock could climb even further.
Read the June 15th Feature Here
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
Last Week's Aggressive Growth Zacks Rank Buy Stocks
Orbotech (NasdaqGS: ORBK - News) is having a fantastic year so far. Shares of this Zacks #1 Rank (Strong Buy) jumped on the most recent earnings surprise and estimates continue to improve.
Read Full Article.
Genomic Health, Inc (NasdaqGM: GHDX - News) shares are doing great after a bullish quarterly report. Analyst estimates are on the rise, pushing GHDX to a Zacks #1 Rank (Strong Buy).
There is always a worry that shares will drop right back down after a sharp increase, but it looks like investors are happy with shares at this higher level.
Read Full Article.
Amtech Systems (NasdaqGM: ASYS - News) recently posted record quarterly results. The company is getting flooded with new orders and thanks to excellent management; it is able to meet the demand.
Shares are trading with attractive valuations and this Zacks #1 Rank (Strong Buy) stocks up well against its peers.
Hanger Orthopedic Group, Inc. (HGR): Zacks Rank Buy
Tracey Ryniec, On Monday November 29, 2010, 1:00 am EST
Patient care centers are the wave of the future for the health care industry as the population ages. Hanger Orthopedic Group, Inc. (NYSE: HGR - News) is expanding by acquisition even as its own revenue grew 7.5% in the quarter ending Sep 30.
Hanger Acquiring ACP
On Oct 18, Hanger announced it was acquiring Accelerated Care Plus ('ACP') for $155 million in cash. ACP has no debt.
ACP is a sub-acute and long-term care rehabilitation provider and has contracts to service more than 4,000 of the 15,000 skilled nursing facilities ('SNF') nationwide, including with 22 out of the 25 largest national providers.
The acquisition will compliment Hanger's business line as a provider of orthotic and prosthetic patient care centers. It currently has 675 patient care centers in 45 states and D.C..
The deal is expected to close by the end of the year. Hanger expects it to be accretive to its 2011 financial results.
Earnings Expected to Grow By Double Digits in 2011
On Oct 27, Hanger reported quarterly results which surprised on the Zacks Consensus by 2 cents. Earnings per share were 37 cents compared to the consensus of 35 cents. Hanger had announced preliminary results on Oct 18 which were also 37 cents.
It was the third beat in four quarters for Hanger.
Revenue rose $14.5 million to $206.8 million. The quarter was boosted by a 4.1% increase in same-center sales in the patient care segment and a 10.5% gain in sales from the distribution segment.
Analysts are bullish on Hanger's outlook. Earnings are expected to grow by 16.5% in 2010 and 16.2% in 2011.
In the last 30 days, the 2011 Zacks Consensus has risen by 5 cents to $1.52 per share.
Still a Value Stock
Hanger continues to hold onto the designation of a value stock, but just barely. It is now trading at 14.7x forward estimates, which is just under the 15x cut-off I use to measure value.
Shares are nearing a 5-year high.
Given its strong growth outlook, however, it also trades with an attractive PEG ratio of 0.98.
Hanger is a Zacks #2 Rank (buy) stock.
Read the Mar 30, 2010 article.
Update to Previous Value Zacks Rank Buy Stocks
This holiday season is already looking like a winner for the strong retail brands like Perry Ellis International (NasdaqGS: PERY - News). Perry Ellis recently surprised on estimates for the 4th quarter in a row, blowing past the Zacks Consensus by 45.7%. It also raised guidance for the full year. Read the full article.
Is it finally time to buy the dry bulk shippers? DryShips Inc. (NasdaqGS: DRYS - News) has surprised on estimates 3 out of the last 4 quarters but investors don't seem to care as shares have been mired in a narrow trading range. Read the full article.
How hot has the chemical sector been in the last year? Quaker Chemical Corporation's (NYSE: KWR - News) earnings in the first 9 months have already surpassed the full year earnings for every other year in its history. To top it off, the stock still isn't very expensive, trading with a price-to-sales ratio of just 0.8. Read the full article.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
Irish bailout gets lukewarm market response
Irish bailout gets lukewarm market response; euro down again despite euro67.5 billion bailout
Pan Pylas, AP Business Writer, On Monday November 29, 2010, 6:00 am
LONDON (AP) -- The euro67.5 billion bailout of Ireland has done little to assuage investor concerns that Europe has finally got a grip on its debt crisis, with European stocks trading mostly lower Monday and the euro hitting a fresh two-month low.
The FTSE 100 index of leading British shares was down 3.25 points, or 0.1 percent, at 5,685.45, while Germany's DAX fell 28.98 points, or 0.4 percent, at 6,820. The CAC-40 index in France was 17.11 points, or 0.5 percent, lower at 3,711.54.
Wall Street was poised to open higher -- Dow futures were up 31 points, or 0.3 percent, at 11,061, while the broader Standard & Poor's 500 futures rose 3.9 points, or 0.3 percent, to 1,187.30.
The focus in the markets, at least in Europe, remains on the debt crisis, which led to Ireland being bailed out Sunday by its partners in the European Union and the International Monetary Fund.
The EU's finance ministers agreed in an emergency meeting in Brussels to give Ireland a euro67.5 billion ($89.4 billion) bailout to help it survive its massive banking crisis, and sketched out new rules for future emergencies to restore faith in the euro currency.
Ireland, which became the second eurozone country after Greece to be rescued, will use a large chunk of the money -- euro10 billion immediately -- to shore up the financial positions of its banks. More is available for the banks and day-to-day government spending, if required.
EU policymakers will be hoping that the latest rescue will help contain the crisis and prevent it from spreading. Portugal and Spain are thought to be the two countries most at risk from this contagion. A Spanish bond auction on Thursday will be closely monitored for a gauge of investor sentiment following the Irish bailout.
So far, the response, in Europe's markets in particular, has been muted.
"The Irish bailout deal may have had the potential to remove one potential headache from the global economic agenda, but markets are now worrying about which eurozone economy will tumble next," said Chris Weston, research analyst at IG Markets.
These uncertainties are clearly evident in the performance of the euro, which was trading 0.6 percent lower on the day at $1.3208. Earlier, it had fallen to a low of $1.3183, its lowest level since Sept. 20.
Meanwhile, in the bond markets the reaction has been subdued, with the yield on Spanish 10-year bonds unchanged at 5.19 percent, and Portugal's modestly lower at 6.93 percent.
A key concern is that the political situation in Ireland remains extremely fluid.
Elections are due to be held in early 2011, and all indications are the opposition will win and could seek a renegotiation of the bailout. Before the election, the embattled Irish government will have to pass a budget for 2011, and that's not going to be easy to push through with its majority cut to two.
"There are still uncertainties as regards a successful implementation of the budget plan," said Neil MacKinnon, global macro strategist at VTB Capital.
In addition to grappling with developments in Europe's debt crisis, investors have a number of key economic releases to digest, not least Friday's closely watched U.S. nonfarm payrolls report for November. Before then, the monthly surveys into the U.S.'s manufacturing and services sectors from the Institute for Supply Management have the potential to move markets.
In addition, there are interest rate decisions from the European Central Bank and the Bank of England on Thursday. Neither is expected to change borrowing costs, but investors will be particularly interested in what the ECB President Jean-Claude Trichet says in his media briefing Thursday about Europe's continuing debt problems.
Earlier Monday in Asia, Japan's Nikkei 225 stock average added 0.9 percent to close at 10,125.99, buoyed by a stronger dollar, as the yen retained a fairly soft tone against the dollar to the relief of the country's major exporters.
By midmorning London time, the dollar was up another 0.1 percent at 84.07 yen.
Meanwhile, South Korea's Kospi fell 0.3 percent to 1,895.54 amid ongoing tensions between the country and North Korea following last week's exchange of artillery.
Australia's S&P/ASX200 index rose 0.4 percent, to 4,618.5, and Hong Kong's Hang Seng index climbed 1.3 percent to 23,166.22.
Chinese shares were mixed as cautious investors watched for fresh moves to tighten monetary policy and counter inflation. The benchmark Shanghai Composite Index gave up 0.2 percent to 2,866.36. The Shenzhen Composite Index of China's smaller, second exchange gained 0.5 percent to 1,339.31.
Benchmark oil for January delivery was up 60 cents to $84.36 a barrel in electronic trading on the New York Mercantile Exchange.
Associated Press writer Pamela Sampson in Bangkok contributed to this report.
Bottled water firm closing namesake Fiji business
PITA LIGAIULA - AP - 49 mins ago
SUVA, Fiji (AP) — Fiji Water on Monday closed its operations in the South Pacific country that gives the popular bottled drink its name, saying it was being singled out by the military appointed government for a massive tax increase.
A company statement announcing the decision did not say whether the company was shutting down permanently in Fiji, where an acquifer deep underground has been the source of one of the world's most popular bottled water brands.
The company, owned by California entrepreneurs Lynda and Stewart Resnick, said it was closing its facility in Fiji, canceling orders from suppliers and putting on hold several construction contracts in the country.
But the company wanted to keep operating in Fiji and was willing to hold discussions with the government about that, said the statement, issued from the company's headquarters in Los Angeles.
In the statement, Fiji Water president John Cochran said Fiji's government announced last week that it was imposing a new tax rate of 15 cents per liter on companies extracting more than 3.5 million liters (920,000 gallons) of water a month — up from the current one-third of one percent rate. Fiji Water is the only company extracting that much water.
"This new tax is untenable and as a consequence, Fiji Water is left with no choice but to close our facility in Fiji," the company, which sells its bottled water in more than 40 countries, said.
The tax rise comes amid a deep downturn in Fiji's economy that is blamed on political instability following a coup in 2006 by armed forces chief Commodore Frank Bainimarama — Fiji's fourth coup since 1987. Key trading partners have imposed various sanctions on the government, including European Union restrictions on the vital sugar industry.
Bainimarama's government has also taken a hard line with foreign companies. Rupert Murdoch's News Ltd. in September sold its controlling stake in Fiji's main daily newspaper after the government imposed strict new foreign ownership limits on media companies.
Bainimarama did not immediately comment on Fiji Water's statement.
Cochran said Fiji Water was the only company that would be affected by the tax increase.
The government's action "sends a clear and unmistakable message to businesses operating in Fiji or looking to invest there: the country is increasingly unstable, and is becoming a very risky place in which to invest," Cochran's statement said.
He said Fiji Water remained "willing to work through this issue with the Fiji Government, as it would be our preference to keep operating in Fiji."
Fiji Water is a well known brand of bottled water, sold in several dozen countries including the United States where it is one of the top 10 bottled waters.
The Resnick's Roll International Corp. bought Fiji Water in 2004 for an undisclosed sum from Canadian billionaire David Gilmour, a resort owner who founded the water company in 1996. The company has sought to stay clear of Fiji's volatile politics, but recently became embroiled in a dispute between Bainimarama and his deputy.
Earlier this month, Fiji Water executive David Roth was deported from Fiji to the United States for what the government said was acting "in a manner prejudicial to good governance and public order."
The deportation caused Acting Prime Minister Ratu Epeli Ganilau, who was also Minister for Defense, Immigration and National Security, to resign. Ganilau, a highly regarded official and traditional chief, had refused to issue the removal order against Roth.
Bainimarama issued the deportation order from China, saying it was based on reliable information verified and confirmed by relevant authorities.
"It is unfortunate that David Roth saw it fit to engage in activities outside of his work permit conditions," Bainimarama said in a statement at the time, without giving details.
Bainimarama said the decision to deport Roth would not affect the government's positive attitude toward overseas investors but that Fiji would not tolerate foreigners interfering in its domestic affairs.
Fiji Water's Director of Operations Anna Morris said at the time the company had no comment on the deportation.
Fiji Water trades on its product's purity. The company says its water comes from an artesian spring deep underground in Fiji and that the water never comes into contact with the air before it is bottled, making it clear of pollutants.
The water comes from the remote Yaqara Valley on Fiji's main island of Viti Levu, where the company also has its bottling plant.
Cochran said Fiji Water currently pays millions of dollars in duties and income tax, as well as substantial royalties and trust fund payments to Fijian villages near the company's facility. He said hundreds of Fijians would lose their jobs because of Monday's decision.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Irish bailout gets lukewarm market response
PAN PYLAS - AP - 28 mins ago
FILE - In this Nov. 3, 2010 file photo, specialist Jennifer Klesaris works at her post on the floor of the New York Stock Exchange.(AP Photo/Richard Drew, file)
LONDON (AP) — The euro67.5 billion ($89.4 billion) bailout of Ireland has done little to assuage investor concerns that Europe has finally got a grip on its debt crisis, with European stocks trading mostly lower Monday and the euro hitting a fresh two-month low.
The FTSE 100 index of leading British shares was down 3.25 points, or 0.1 percent, at 5,685.45, while Germany's DAX fell 28.98 points, or 0.4 percent, at 6,820. The CAC-40 index in France was 17.11 points, or 0.5 percent, lower at 3,711.54.
Wall Street was poised to open higher — Dow futures were up 31 points, or 0.3 percent, at 11,061, while the broader Standard & Poor's 500 futures rose 3.9 points, or 0.3 percent, to 1,187.30.
The focus in the markets, at least in Europe, remains on the debt crisis, which led to Ireland being bailed out Sunday by its partners in the European Union and the International Monetary Fund.
The EU's finance ministers agreed in an emergency meeting in Brussels to give Ireland a euro67.5 billion bailout to help it survive its massive banking crisis, and sketched out new rules for future emergencies to restore faith in the euro currency.
Ireland, which became the second eurozone country after Greece to be rescued, will use a large chunk of the money — euro10 billion immediately — to shore up the financial positions of its banks. More is available for the banks and day-to-day government spending, if required.
EU policymakers will be hoping that the latest rescue will help contain the crisis and prevent it from spreading. Portugal and Spain are thought to be the two countries most at risk from this contagion. A Spanish bond auction on Thursday will be closely monitored for a gauge of investor sentiment following the Irish bailout.
So far, the response, in Europe's markets in particular, has been muted.
"The Irish bailout deal may have had the potential to remove one potential headache from the global economic agenda, but markets are now worrying about which eurozone economy will tumble next," said Chris Weston, research analyst at IG Markets.
These uncertainties are clearly evident in the performance of the euro, which was trading 0.6 percent lower on the day at $1.3208. Earlier, it had fallen to a low of $1.3183, its lowest level since Sept. 20.
Meanwhile, in the bond markets the reaction has been subdued, with the yield on Spanish 10-year bonds unchanged at 5.19 percent, and Portugal's modestly lower at 6.93 percent.
A key concern is that the political situation in Ireland remains extremely fluid.
Elections are due to be held in early 2011, and all indications are the opposition will win and could seek a renegotiation of the bailout. Before the election, the embattled Irish government will have to pass a budget for 2011, and that's not going to be easy to push through with its majority cut to two.
"There are still uncertainties as regards a successful implementation of the budget plan," said Neil MacKinnon, global macro strategist at VTB Capital.
In addition to grappling with developments in Europe's debt crisis, investors have a number of key economic releases to digest, not least Friday's closely watched U.S. nonfarm payrolls report for November. Before then, the monthly surveys into the U.S.'s manufacturing and services sectors from the Institute for Supply Management have the potential to move markets.
In addition, there are interest rate decisions from the European Central Bank and the Bank of England on Thursday. Neither is expected to change borrowing costs, but investors will be particularly interested in what the ECB President Jean-Claude Trichet says in his media briefing Thursday about Europe's continuing debt problems.
Earlier Monday in Asia, Japan's Nikkei 225 stock average added 0.9 percent to close at 10,125.99, buoyed by a stronger dollar, as the yen retained a fairly soft tone against the dollar to the relief of the country's major exporters.
By midmorning London time, the dollar was up another 0.1 percent at 84.07 yen.
Meanwhile, South Korea's Kospi fell 0.3 percent to 1,895.54 amid ongoing tensions between the country and North Korea following last week's exchange of artillery.
Australia's S&P/ASX200 index rose 0.4 percent, to 4,618.5, and Hong Kong's Hang Seng index climbed 1.3 percent to 23,166.22.
Chinese shares were mixed as cautious investors watched for fresh moves to tighten monetary policy and counter inflation. The benchmark Shanghai Composite Index gave up 0.2 percent to 2,866.36. The Shenzhen Composite Index of China's smaller, second exchange gained 0.5 percent to 1,339.31.
Benchmark oil for January delivery was up 60 cents to $84.36 a barrel in electronic trading on the New York Mercantile Exchange.
____
Associated Press writer Pamela Sampson in Bangkok contributed to this report.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
WikiLeaks says was denial-of-service attack victim
The Associated Press - AP - Sun Nov 28, 7:01PM CST
The online website WikiLeaks on Sunday blamed the temporary outage of its site on a denial-of-service attack by unknown hackers trying to prevent its release of hundreds of thousands of classified U.S. State Department documents.
WikiLeaks said on Twitter early Sunday that its website was "under a mass distributed denial of service attack" but promised that Spain's El Pais, France's Le Monde, Germany's Der Spiegel, Britain's Guardian newspaper and The New York Times "will publish many US embassy cables tonight, even if WikiLeaks goes down." WikiLeaks had given the media outlets prior access to the diplomatic cables to publish in conjunction with their Sunday release on its site.
There was no reason to doubt WikiLeaks' claim; the website was inaccessible for much of Sunday, though several hundred cables were posted on its site by late afternoon. The cables, many of them classified, offer candid, sometimes unflattering assessments of foreign leaders, ranging from U.S. allies such as Germany and Italy to other nations like Libya, Iran and Afghanistan.
In a typical denial-of-service attack, remote computers commandeered by rogue programs bombard a website with so many data packets that it becomes overwhelmed and unavailable to visitors. Pinpointing the culprits is impossible because the Internet's structure does not allow for the tracing back of the data packets used in such attacks, computer security expert Bruce Schneier told The Associated Press on Sunday.
Hackers have used denial-of-service attacks over the years to target corporate and government websites.
Last month political bloggers in Vietnam said they were victimized by cyberattacks designed to block their websites to stifle government dissent. Other targets have included U.S. and South Korean government websites in 2009 and computer networks in Estonia, which were crippled for nearly three weeks in 2007 by what were believed to be Russian hackers.
In the weeks leading up to the 2008 war between Russia and Georgia, Georgian government and corporate websites were hit with denial-of-service attacks. The Kremlin denied involvement.
James Lewis, a cybersecurity expert and a senior fellow at the Center for Strategic and International Studies, said it's unlikely the U.S. or some other government would use denial-of-service attacks against WikiLeaks.
His best guess is it's "a bunch of geeks who've decided they're annoyed with WikiLeaks."
"Denial of service is usually the amateur's approach," he told the AP on Sunday. "Usually it's the hacker community ..."
Lewis said he's never heard of the U.S. trying to attack a website like this.
"Usually they're more interested in exploiting, that is getting into WikiLeaks to figure out what's going on. Or they're interested in doing some kind of damage, and denial of service really doesn't do any damage."
Such an attack would only stall WikiLeaks, not prevent the information from being released.
Schneier also said he seriously doubts any U.S. government agency would be involved in such an attack because it amounts to a mere "nuisance" and could not stop Wikileaks from releasing the diplomatic cables. He notes that there are many ways to distribute information online.
An encrypted file that was made available online using BitTorrent file-sharing technology in late July is believed to hold the cables. All Wikileaks would need to do to unlock the file is distribute the key.
___
AP Technology Writer Frank Bajak contributed to this report from Bogota, Colombia. AP Business Writer Chris Kahn contributed from New York.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
EU agrees on new rules for future bailouts
GABRIELE STEINHAUSER - AP - Sun Nov 28, 5:58PM CST
President of the European Central Bank Jean Claude Trichet speaks during a media conference after a meeting of EU finance ministers at the EU Council building in Brussels on Sunday, Nov. 28, 2010....
BRUSSELS (AP) — European finance ministers agreed Sunday to create a permanent mechanism to solve future debt crises in the 16 countries that use the euro in an attempt to calm fears over the stability of the currency bloc.
The plan falls short of demands from Germany, which had insisted that private creditors — rather than taxpayers — should shoulder the costs of any future government bailouts.
The new European Stability Mechanism, which will be launched in mid-2013, could force investors such as banks or hedge funds to take losses if a country runs out of money — but only after other eurozone nations have unanimously agreed that the country is indeed insolvent.
If a country is deemed to merely face a crisis of liquidity — that is, it can't access funds quickly enough to repay its debts — it will get emergency loans similar to those signed off on Sunday for Ireland.
There is no agreement yet on how much money nations will pay into the new mechanism, but EU Monetary Affairs Chief Olli Rehn said it would be closely modeled on the current €440 billion ($582 billion) financial backstop for the eurozone.
"The recent events have demonstrated that financial distress in one member state can rapidly threaten the stability of the EU as a whole," Jean-Claude Juncker, who heads the Eurogroup, an umbrella organization for the 16 euro countries, said after am emergency meeting of EU finance ministers. "This is particularly true for the euro area where the economies, and the financial sectors in particular, are closely intertwined."
The agreement on the broad features of the future mechanism comes after a massive selloff in recent weeks of bonds from highly indebted eurozone countries — primarily Greece, Ireland, Portugal and Spain — as well as the euro.
Several analysts and European officials said investors were fleeing fiscally weak countries because they feared losing part of their money through the new mechanism.
Others had questioned that the current €750 billion EU bailout fund, which also includes money from the International Monetary Fund and the EU's executive Commission, will be enough to help debt-burdened nations to emerge healthy from the crisis by the time it expires in 2013.
This market anxiety pushed officials to discuss the future mechanism at their emergency meeting Sunday, rather than wait until a summit of EU leaders in December.
"We wanted to clarify this, once and for all and very clearly," said Rehn.
German Finance Minister Wolfgang Schaeuble said the risk premium highly indebted states like Portugal, Spain or Italy have had to pay compared with the benchmark German bunds "should really go down now."
Jean-Claude Trichet, the head of the European Central Bank who had cautioned against forcing losses on private creditors, stressed that the new mechanism "is fully consistent" with current policies of the International Monetary Fund.
"The proposal of the commission was a very good one," said Trichet.
Any future bailouts would come with strict conditions to cut government spending and raise taxes, similar to what Ireland and Greece had to do to get money.
To allow a state to renegotiate its debts in the "unlikely" case that it should be insolvent, so-called collective action clauses will be added to bond contracts by 2013, said Juncker.
Under these clauses a majority of creditors could agree on a debt restructuring — which could include extending repayment deadlines, a cut in interest rates, or a reduction of the total amount owed. All other investors would have to accept the deal and would not be able to fight it in court.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
More Vermont families seeking food assistance
LISA RATHKE - AP - Sun Nov 28, 5:52PM CST
In this photo taken Nov. 18, 2010, people stand in line to pick up a turkey for Thanksgiving in Enosburg Falls, Vt. A new USDA report on hunger finds that Vermont and Alabama have had the highest...
ENOSBURG FALLS, Vt. (AP) — When the Enosburg Food Shelf opened three years ago in this farm country town, organizers expected to serve 60 families a month, at most. Now, an average of 160 take advantage of it.
Food shelf treasurer Suzanne Hull-Parent says the resources of lower middle-class familes are drying up as the economy continues to wobble.
A new federal report on hunger issued Nov. 15 found that Vermont and Alabama have had the highest increase in "food insecurity" during the last 10 years.
Between 2008 and 2009, the share of households in Vermont that at times don't have enough nutritious food rose from 12.1 percent to 13.6 percent. In Alabama, the rate rose from 13.8 percent to 15 percent in the same period. Tthe Department of Agriculture, which also takes into account population size and other factors, says the states are tied in having had the biggest increase in the last decade.
"The choices that families have to make when it comes to meeting their basic needs are heartbreaking. Choosing between heat and food or housing and food are decisions that people just shouldn't have to make," said Marissa Parisi, executive director of the Vermont Campaign to End Childhood Hunger.
A monthly box of food — juice, bread, meat, cereal, cans of fruit — from the food shelf helps Kyle Thompson, 25, his girlfriend and their 2-year-old son. All three live with Thompson's mother in Franklin.
"It really takes out spending for food so we can afford other things like electricity, saving to move out or getting the car fixed," said Thompson, who works at a Champlain Farms convenience store in Swanton and has been denied food stamps.
"You just got to cut where you gotta cut," he said.
In the last three years, the Vermont FoodBank — a statewide anti-hunger organization — has seen a 40 percent increase in the number of people seeking help from its network of food shelves, meal sites, homeless shelters and senior centers around the state.
And donations are not keeping up with the increased need.
Last year, the Vermont Foodbank distributed 7.6 million pounds of food to as many as 86,000 Vermonters in need, said Executive Director John Sayles. The amount of food has risen every year for the last decade, he said.
The food shelf in Enosburg, like others, has been pressed as the economy has soured.
Plagued by a drop in donations, it wasn't going to give out turkeys this year for Thanksgiving. Then a local business association pulled through, raising more than $3,000, including its own $750 donation.
Not only did the food shelf hand out turkeys and Thanksgiving baskets, it was able to surpass its cutoff of 150 households, reaching all 170 families in need.
"If it wasn't for the food shelf, we wouldn't have been able to have a Thanksgiving this year," said Carlene Adams, 40, who was laid off from her convenience store job in October.
The food shelf is seeing more working poor and extended families, who aren't eligible for food stamps, said Kathy Gaston, one of its founders.
Since May, the number of households coming into the food shelf has grown from 124, or 293 individuals, to 165 households or 394 people by October, Gaston said.
To meet the need, organizers hold monthly fundraising meetings, and volunteers from the community and the high school show up to distribute food, cook for fundraising dinners or collect donations during a Labor Day coin drop.
Megan Paradis, 23, who works as a cashier, was grateful to get a turkey a week before Thanksgiving because she didn't have any more food stamps to buy one for herself, her 3-year-old and boyfriend. She also brought in a friend, who got on the waiting list for a turkey, and signed up for the monthly food supply.
Paradis said the food she gets from the food shelf ensures that she doesn't run out.
"This kind of makes the last ending of the month, where it works," she said.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Australian PM to price carbon pollution next year
ROD McGUIRK - AP - Sun Nov 28, 4:11PM CST
CANBERRA, Australia (AP) — Prime Minister Julia Gillard said on Monday her government would decide next year how to charge Australia's major polluters for the carbon gases that they emit in a bid to curb the nation's greenhouse gas emissions.
Gillard's plan to fast-track Australia's introduction of financial penalties for polluters came hours ahead of a United Nations climate change summit in Mexico starting on Monday that will consider how the Kyoto Protocol on reducing greenhouse gas emissions will be replaced after 2012.
Australia and the United States had been the only industrialized countries to refuse to accept their Kyoto targets on reducing their carbon emissions until Gillard's center-left Labor Party was elected to govern in 2007.
The new Labor government under then-Prime Minister Kevin Rudd immediately signed up to Australia's reduction target, but Rudd this year shelved until 2013 his plan to make polluters pay for permits to emit carbon gases.
Gillard, who replaced Rudd in an internal Labor coup in June before the party was returned at August elections to govern for another three years, said she was confident that her government would decide next year how to make polluters pay after a committee of lawmakers and experts reports on the best strategy to do so.
"2011 is the year Australia decides on carbon pricing," Gillard told an economics think tank.
Labor's previous attempts to make polluters pay have been thwarted in the upper house, the Senate, where the government does not hold a majority. The conservative opposition argues that families would pay the cost of pollution and has promised to never charge polluters.
Australia is one of world's worst carbon polluters per capita because of its heavy reliance on abundant coal reserves for power generation.
Climate Change Minister Greg Combet has downplayed the prospect of a global agreement being reached at the U.N. summit at Cancun.
Beginning Monday, 15,000 government delegates, environmentalists, business leaders, journalists and others will gather in the meeting halls of a Caribbean resort in Cancun for the annual conference of the 193-nation U.N. climate treaty.
Australia's climate change ambassador Louise Hand will lead the 35-strong Australian delegation before Combet heads to Mexico in the second week of the summit to take over.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
'Cyber Monday' deals now last whole week
AP - Sun Nov 28, 4:11PM CST
NEW YORK (AP) — After a weekend of strong online sales, retail websites are rolling out the gimmicks on "Cyber Monday" to draw buyers.
The sales promotions on the Monday after Thanksgiving got their name from a retail trade group, which promoted the idea that people, upon returning to work, would log onto their computers there and shop.
Now it's about the deals online in the way that Black Friday means a shopping frenzy in stores. In fact, as stores promote Black Friday discounts online, it's getting harder to tell the difference between the two as sellers try to grab dollars any way and at any time they can.
IBM's Coremetrics predicts the discounts, free shipping offers and other come-ons will make Cyber Monday the busiest online shopping day of the season.
The promotion follows a weekend that saw strong sales online. From Thanksgiving through Saturday, online spending rose 14 percent, according to Coremetrics data. It also said shoppers were buying 15 percent more items per order.
Online research firm comScore reported late Sunday that e-commerce spending for the first 26 days of November rose 13 percent, reaching $11.64 billion, compared with the same period a year ago. Black Friday saw $648 million in online sales, marking a 9 percent increase compared with the same day last year. Thanksgiving Day, helped by merchants' concentrated efforts to push exclusive deals, enjoyed $407 million in spending, up 28 percent from Thanksgiving 2009.
Gian Fulgoni, comScore chairman, said in a statement that he is seeing consumers beginning to buy "online in a more meaningful way on Thanksgiving Day, which has historically seen low buying activity."
Some retailers had already started touting "Cyber Monday," including Amazon.com, which was offering the "Medal of Honor" Xbox 360 game for $34.99, down from $59.99, and a $499 KitchenAid Professional stand mixer for $299.99.
Walmart.com is promoting "Cyber Week" discounts from Sunday through next Friday, including a 24-inch 1080p HDTV for $199.
Online spending is still a relatively small piece of the holiday pie, between 8 and 10 percent by various estimates. But devotees are confirmed in their enthusiasm for its convenience.
Scott Miller, a police officer from New York, plans to only shop online this Christmas.
"All of my shopping is going to be over the Internet," he said. "Because of my job I don't have enough time to go out, especially at Christmastime, because I want to catch the (overtime) hours."
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Holiday sales encouraging, but are shoppers done?
ANNE D'INNOCENZIO - AP - 14 mins ago
A vendor sells puppets at the Union Square Holiday Market, Sunday, Nov. 28, 2010 in New York. (AP Photo/Mary Altaffer)
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NEW YORK (AP) — Holiday shoppers gave retailers a happy Thanksgiving weekend, crowding stores and malls more than last year.
Add strong spending earlier this month and robust sales online, and retailers head into "Cyber Monday" encouraged. Particularly because many shoppers were buying for themselves, in addition to gifts, though mostly where they saw bargains.
But retailers remain unsure how much people will spend before Christmas in an economy that's still bumpy. Shoppers, grappling with an unemployment rate of 9.6 percent, remain careful about spending and driven by deals.
Discounts, particularly early-morning specials, were deep enough that many shoppers say they bought more than they had planned. But some say that means they're done, and they spent less than last year.
The heavy discounting and lower prices on some things, particularly LCD TVs, held down overall spending. On Friday, retailers at shopping malls had sales of $10.7 billion, an increase of 0.3 percent over last year, according to preliminary figures from ShopperTrak, a research firm that counts shoppers at 70,000 stores.
TV prices are falling almost twice as fast as they did earlier this year amid a glut. They're selling for 15-20 percent less than Christmas 2009.
Earlier buying in November also stole some sales from Friday, said ShopperTrak co-founder Bill Martin. But 2.2 percent more customers came into stores on Black Friday than last year. ShopperTrak tracks sales at stores in shopping malls, not big discounters like Wal-Mart and Target, which draw much Black Friday spending.
Sharon Collins, 57, of Wilmington, N.C., said she had planned to stagger her holiday shopping but found a lot of good buys on Black Friday at Target and Kohl's. By Saturday she had spent about $1,000, reaping savings of about 50 percent. She said she'd budgeted $2,000 but won't need it.
"I am completely done." Collins said. "Unless it is something I really need, I am not going back."
The National Retail Federation trade group estimated on Sunday that 212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year. A fuller picture on spending will come Thursday when retailers report November revenue.
Online, spending rose more than 14 percent from Thanksgiving Day through Saturday, according to IBM's Coremetrics. The average order rose 14 percent; the number of items per order, 15 percent. The numbers were fueled by shoppers taking advantage of deals on Black Friday.
Online research firm comScore Inc. reported late Sunday that online spending in November through Friday rose 13 percent to $11.6 billion, compared with the same 26 days a year ago.
On Thanksgiving, traditionally a lighter day for online spending, e-commerce sales rose to $407 million, up 28 percent from last year. That was helped by more stores pushing exclusive deals. Online spending is still a small piece of the holiday pie — 8-10 percent by various estimates.
Online sellers are stretching what they call Cyber Monday promotions all week in an effort to attract shoppers.
"We're expecting the biggest Cyber Monday. We're seeing double-digit growth rates, and we don't expect it to stop," said Jerry Storch, CEO of Toys R Us, which is offering discounts on toys from Little Tikes to Imaginarium.
Cyber Monday got its name from the National Retail Federation when computer shopping was starting to become popular. People returning to work after the holiday weekend would shop online on office computers. As more homes got high-speed Internet service, Cyber Monday became less of a factor.
This year, shoppers' approach to the holidays has shifted, shaped by retailers. Black Friday is still expected to be the busiest day of the year, but spending was pulled forward as stores from Best Buy to Sears promoted discounts earlier in the month. They often pitched them as "Black Friday doorbusters" weeks before the real thing. More stores opened on Thanksgiving this year, too.
"You are going to have to look at the overall month, instead of just Black Friday," said Laura Gurski, retail practice leader at A.T. Kearney.
Lauren Beckley, a 28-year-old retail co-manager in Cincinnati, said she got a promotion at work this year but still plans to cut her holiday spending by 50 percent. This year, rather than scrambling at the last minute, she started shopping in July, taking advantage of "Christmas in July" promotions that were embraced by more retailers this year.
"I think I am bargain hunting a little more," said Beckley while browsing for DVDs at a Best Buy in suburban Cincinnati on Saturday.
Stores hope to keep shoppers coming back with continuous deals and early-morning events on weekends. But some industry analysts question whether the lull between Thanksgiving weekend and the days before Christmas will be even more pronounced than usual.
"I believe customers will be waiting for the next round of deals," Gurski added.
Stifel Nicolaus analyst Richard Jaffe described the weekend as a "success."
"I think retailers have won the battle of driving customers into the stores, but have they won the war? We won't know until January," he said.
Amy Adoniz, general store manager at Best Buy's Union Square store in Manhattan, reported steady traffic through the weekend after the frenzy Friday. The best sellers have been TVs and laptop computers, but shoppers are also throwing in extra items like Blu-ray players and cables that they hadn't planned, she said. They're also springing for more expensive items, she said.
Mall operators Taubman Centers Inc. and Macerich Co. both reported sales and traffic gains compared with last year, and traffic remained steady through the weekend. Both reported that shoppers' buying for themselves remained strong. Footwear and clothing were big sellers.
Analysts are also watching stores' inventories. Earlier this fall, many retailers worried they'd ordered too much holiday merchandise in the spring when the economy appeared to be strengthening.
There was scattered evidence those worries continue. Gap offered 50 percent discounts throughout its stores until 10 a.m. Friday, rather than discounting fewer items to draw shoppers.
Dana Telsey, CEO of Telsey Advisory Group, said Sunday that she believed inventories were appropriate and retailer profits aren't in danger yet. Dec. 15-24, which accounts for 40 percent of holiday business, will tell the tale.
"It's the crux of the season," she said.
___
AP Business Writer Chip Cutter in Cincinnati contributed to this report.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
EU ministers consider extending Greek loans
GABRIELE STEINHAUSER - AP - Sun Nov 28, 1:51PM CST
BRUSSELS (AP) — European officials say they are considering giving Greece more time to pay back its euro110 billion emergency loan package.
EU monetary affairs chief Olli Rehn said Sunday that finance ministers have agreed "to look into" extending the deadline for Greece to repay its loans to 7 1/2 years from 3 years.
That would bring Greece's loan package in line with one agreed Sunday for Ireland.
Rehn says "the commission has been advocating this alignment."
Greece was bailed out by fellow eurozone nations and the International Monetary Fund this spring after it was close to defaulting on its massive debt.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
S. Africa mines plagued by mismanagement, neglect
DONNA BRYSON - AP - Sun Nov 28, 2:44PM CST
In this Nov. 9, 2010 photo, a mine worker walks past Aurora gold mine in Orkney, South Africa. Hundreds of workers at the gold mine in Orkney have gone months without pay at a time when gold is...
ORKNEY, South Africa (AP) — Mawethu Mguli and hundreds of other workers at the gold mine in Orkney have gone months without pay at a time when gold is going for around $1,400 an ounce.
After the mine's previous owners went bankrupt, the workers expected that a new partnership — headed by relatives of Nelson Mandela and President Jacob Zuma — would get operations back on track when it took over last year.
"Unfortunately, it didn't turn out that way," Mguli said softly as he sat in his dimly lit room in the mine dormitory. The mine northwest of Johannesburg remains idle and the workers are getting by on food handouts and odd jobs.
South Africa sees getting its vast mineral wealth out of the ground as vital to creating desperately needed jobs, fueling growth and redressing the economic ravages of apartheid. But a toxic combination of a crumbling infrastructure, mismanagement and the specter of nationalization is frustrating the drive to improve and expand the country's mines. Some are asking whether political connections mean more than competence in an industry that is a pillar of South Africa's economy.
South Africa is the world's richest mining country in terms of its reserves, according to a Citibank estimate that valued its mineral resources at $2.5 trillion. It is a major producer of diamonds and gold, and has major reserves of less sexy but still lucrative minerals like platinum.
Mining has accounted for an average of 7.7 percent of South Africa's gross domestic product over the last decade, according to the Chamber of Mines, an industry trade group.
Half the country's merchandise exports were mining products in 2009, when the industry employed half a million people. Another half million worked in fields dependent on the mines in this country with a population of 50 million where at least a quarter of the work force is unemployed.
Yet, during a global boom in commodities prices from 2001 to 2008, other countries with major mining operations outperformed South Africa, according to the chamber, whose members include such industry giants as Anglo American and DeBeers. The world's top 20 mining countries saw mining GDP grow at an average of 5 percent a year during the period, while South Africa's mining sector GDP dropped by 1 percent a year.
"How come, sitting on the largest mineral resource base in the world, we are not doing better?" said Sipho Nkosi, a former chamber president who now also heads the Exxaro coal mining company.
The answers are not hard to find.
The country's mining infrastructure — from the power plants needed to get the ore to the surface, to the roads and rail lines to get it to market — is tattered. Talk of nationalizing mines in some political circles has spooked foreign investors. And questions about corruption among the civil servants became so heated that in August the country's mining minister imposed a six-month ban on the issuing of prospecting licenses.
"All of that is quite worrying if you're an investor who's invested or is going to continue to invest billions in this sector," said Alison Turner, an analyst with the British firm Panmure Gordon.
Mining Minister Susan Shabangu told reporters recently she is working with other government departments to address infrastructure problems, including an energy shortfall that just a few years ago forced gold and platinum mines to suspend production because of lack of power. Eskom, the state-owned electricity company, blamed years of under-investment and rising demand.
Now, ambitious plans include a six-unit, coal-fired power station in northern South Africa that will be the first of its kind to be built in the country in more than 20 years.
South Africa has special challenges, including the extraordinary depth of many of its gold mines. According to the Metals Economics Group, which compiles information on the mining industry, the cost per ounce of mining gold in South Africa is $539, about 12 percent higher than a comparable group of North American mines, and 4 percent higher than a comparable group in Australia.
Shabangu said a comprehensive, multi-department plan that looks at power, transportation and other issues will be ready next year.
"We think we are on track," she said.
Shabangu says that while nationalization is not government policy, her African National Congress party is studying its feasibility. The issue is being pushed by Julius Malema, the vocal and populist leader of the ANC's youth league.
Key industry leaders have ridiculed Malema's suggestion. Frans Baleni, general secretary of the National Union of Mineworkers, is also on the central committee of the South African Communist Party, yet he suspects the calls to nationalize are backed by businessmen who want to shift money-losing mines to the state and reap profits in any transfer. Baleni says that could endanger miners' pension plans established by private companies — and that workers would fight anything they saw as endangering their future.
Nkosi, the former Chamber of Mines head, calls nationalization an "antiquated and discredited practice" that has impoverished African and other countries.
Yet, the issue won't die. Turner, the British analyst, said investors will be anxiously awaiting a final decision expected to be made at an ANC policy conference in 2012.
In the short term, investors are watching Shabangu's efforts to clean up a bureaucracy seen as inefficient at best, corrupt at worst.
In an attempt to find out why companies like the two involved in the Orkney mine managed to get into the industry, Shabangu launched an audit of her department's operations. Pending the audit, she put in place the six-month moratorium on prospecting licenses.
Early results from the audit, expected to be completed in February, are not encouraging.
Shabangu said inspectors found some companies had fraudulently claimed significant black ownership to qualify for licenses under so-called black economic empowerment rules established to give opportunities to South Africans discriminated against under apartheid. Other companies got licenses even though they were bankrupt. Inspectors conducting the audit were threatened or offered bribes — when they could find company officials to speak with at all.
Shabangu said black economic empowerment companies are a special concern, and that some are "clueless" about mining. She said the most widespread problem is companies never embarking on the search for minerals for which they have been granted licenses.
Mining is closely associated with apartheid — it was the industry, after all, of the migrant labor system that tore men from their families across southern Africa, creating a legacy of broken homes that persists today. For many, mining still epitomizes the apartheid equation of white power and black poverty.
Sandile Nogxina, the top civil servant in Shabangu's department, told The Associated Press that the government is pursuing two goals: ensuring the industry grows, and ensuring blacks benefit from that growth.
In Orkney, Solly Phetoe, a union organizer in the region, said that after the bankruptcy of one black economic empowerment company, and the disappointing debut of the Mandela-Zuma partnership, all workers want is competent management, whether black- or white-led.
At Aurora Empowerment Systems — whose chairman is Khulubuse Zuma, the president's nephew, and whose managing director is Zondwa Mandela, the former president's grandson — officials referred questions about the Orkney mine to a prominent lawyer, Michael Hulley. Hulley, listed as a non-executive director of Aurora, did not return repeated calls seeking comment.
Mguli, a 51-year-old with four children far away on South Africa's southern coast, had been a cook in the mine cafeteria. He said younger workers had left in search of other jobs, but he believed chances were slim at his age.
Mguli said he could not afford to make his usual trip home for Christmas.
"I'm surviving by borrowing, just to get something to eat."
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Dutch finance minister says EU nations clear $113 billion rescue deal for Ireland
AP - Sun Nov 28, 12:17PM CST
BRUSSELS (AP) — Dutch finance minister says EU nations clear $113 billion rescue deal for Ireland.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
US tries to contain damage from leaked cables
MATTHEW LEE - AP - 2 hrs 49 mins ago
FILE - This Aug. 14, 2010 file photo shows WikiLeaks founder Julian Assange in Stockholm, Sweden. Secretary of State Hillary Rodham Clinton on Friday, Nov. 26, 2010 spoke with the Chinese...
WASHINGTON (AP) — The release of more than 250,000 classified State Department documents forced the Obama administration into damage control, trying to contain fallout from unflattering assessments of world leaders and revelations about backstage U.S. diplomacy.
The publication of the secret cables on Sunday amplified widespread global alarm about Iran's nuclear ambitions and unveiled occasional U.S. pressure tactics aimed at hot spots in Afghanistan, Pakistan and North Korea. The leaks also disclosed bluntly candid impressions from both diplomats and other world leaders about America's allies and foes.
In the wake of the massive document dump by online whistleblower WikiLeaks and numerous media reports detailing their contents, Secretary of State Hillary Rodham Clinton was expected to address the diplomatic repercussions on Monday. Clinton could deal with the impact first hand after she leaves Washington on a four-nation tour of Central Asia and the Middle East — a region that figures prominently in the leaked documents.
The cables unearthed new revelations about long-simmering nuclear trouble spots, detailing U.S., Israeli and Arab world fears of Iran's growing nuclear program, American concerns about Pakistan's atomic arsenal and U.S. discussions about a united Korean peninsula as a long-term solution to North Korean aggression.
None of the disclosures appeared particularly explosive, but their publication could become problems for the officials concerned and for any secret initiatives they had preferred to keep quiet. The massive release of material intended for diplomatic eyes only is sure to ruffle feathers in foreign capitals, a certainty that already prompted U.S. diplomats to scramble in recent days to shore up relations with key allies in advance of the leaks.
At Clinton's first stop in Astana, Kazakhstan, she will be attending a summit of officials from the Organization for Security and Cooperation in Europe, a diplomatic grouping that includes many officials from countries cited in the leaked cables.
The documents published by The New York Times, France's Le Monde, Britain's Guardian newspaper, German magazine Der Spiegel and others laid out the behind-the-scenes conduct of Washington's international relations, shrouded in public by platitudes, smiles and handshakes at photo sessions among senior officials.
The White House immediately condemned the release of the WikiLeaks documents, saying "such disclosures put at risk our diplomats, intelligence professionals and people around the world who come to the United States for assistance in promoting democracy and open government."
U.S. officials may also have to mend fences after revelations that they gathered personal information on other diplomats. The leaks cited American memos encouraging U.S. diplomats at the United Nations to collect detailed data about the U.N. secretary general, his team and foreign diplomats — going beyond what is considered the normal run of information-gathering expected in diplomatic circles.
State Department spokesman P.J. Crowley played down the diplomatic spying allegations. "Our diplomats are just that, diplomats," he said. "They collect information that shapes our policies and actions. This is what diplomats, from our country and other countries, have done for hundreds of years."
The White House noted that "by its very nature, field reporting to Washington is candid and often incomplete information. It is not an expression of policy, nor does it always shape final policy decisions."
"Nevertheless, these cables could compromise private discussions with foreign governments and opposition leaders, and when the substance of private conversations is printed on the front pages of newspapers across the world, it can deeply impact not only U.S. foreign policy interests, but those of our allies and friends around the world," the White House said.
On its website, The New York Times said "the documents serve an important public interest, illuminating the goals, successes, compromises and frustrations of American diplomacy in a way that other accounts cannot match."
Le Monde said it "considered that it was part of its mission to learn about these documents, to make a journalistic analysis and to make them available to its readers." Der Spiegel said that in publishing the documents its reporters and editors "weighed the public interest against the justified interest of countries in security and confidentiality."
WikiLeaks founder Julian Assange claimed the administration was trying to cover up alleged evidence of serious "human rights abuse and other criminal behavior" by the U.S. government. WikiLeaks posted the documents just hours after it claimed its website had been hit by a cyberattack that made the site inaccessible for much of the day.
But extracts of the more than 250,000 cables posted online by news outlets that had been given advance copies of the documents showed deep U.S. concerns about Iranian and North Korean nuclear programs along with fears about regime collapse in Pyongyang.
The Guardian said some cables showed King Abdullah of Saudi Arabia repeatedly urging the United States to attack Iran to destroy its nuclear program. The newspaper also said officials in Jordan and Bahrain have openly called for Iran's nuclear program to be stopped by any means and that leaders of Saudi Arabia, the United Arab Emirates and Egypt referred to Iran "as 'evil,' an 'existential threat' and a power that 'is going to take us to war,'" The Guardian said.
Those documents may prove the trickiest because even though the concerns of the Gulf Arab states are known, their leaders rarely offer such stark appraisals in public.
The Times highlighted documents that indicated the U.S. and South Korea were "gaming out an eventual collapse of North Korea" and discussing the prospects for a unified country if the isolated, communist North's economic troubles and political transition lead it to implode.
The Times also cited diplomatic cables describing unsuccessful U.S. efforts to prod Pakistani officials to remove highly enriched uranium from a reactor out of fear that the material could be used to make an illicit atomic device. And the newspaper cited cables that showed Yemen's president, Ali Abdullah Saleh, telling Gen. David Petraeus that his country would pretend that American missile strikes against a local al-Qaida group had come from Yemen's forces.
The paper also cited documents showing the U.S. used hardline tactics to win approval from countries to accept freed detainees from Guantanamo Bay. It said Slovenia was told to take a prisoner if its president wanted to meet with President Barack Obama and said the Pacific island of Kiribati was offered millions of dollars to take in a group of detainees.
It also cited a cable from the U.S. Embassy in Beijing that included allegations from a Chinese contact that China's Politburo directed a cyber intrusion into Google's computer systems as part of a "coordinated campaign of computer sabotage carried out by government operatives, private security experts and Internet outlaws."
Le Monde said another memo asked U.S. diplomats to collect basic contact information about U.N. officials that included Internet passwords, credit card numbers and frequent flyer numbers. They were asked to obtain fingerprints, ID photos, DNA and iris scans of people of interest to the United States, Le Monde said.
The Times said another batch of documents raised questions about Italian Prime Minister Silvio Berlusconi and his relationship with Russian Prime Minister Vladimir Putin. One cable said Berlusconi "appears increasingly to be the mouthpiece of Putin" in Europe, the Times reported.
Italy's Foreign Minister Franco Frattini on Sunday called the release the "Sept. 11 of world diplomacy," in that everything that had once been accepted as normal has now changed.
Der Spiegel reported that the cables portrayed German Chancellor Angela Merkel and Foreign Minister Guido Westerwelle in unflattering terms. It said American diplomats saw Merkel as risk-averse and Westerwelle as largely powerless.
Libyan leader Moammar Gadhafi, meanwhile, was described as erratic and in the near constant company of a Ukrainian nurse who was described in one cable as "a voluptuous blonde," according to the Times.
WikiLeaks' action was widely condemned.
Pakistan's foreign ministry said it was an "irresponsible disclosure of sensitive official documents" while Iraq's foreign minister, Hoshyar Zebari, called the document release "unhelpful and untimely."
In Australia, Assange's home country, Attorney General Robert McClelland said law enforcement officials were investigating whether WikiLeaks broke any laws.
The State Department's top lawyer warned Assange late Saturday that lives and military operations would be put at risk if the cables were released. Legal adviser Harold Koh said WikiLeaks would be breaking the law if it went ahead. He also rejected a request from Assange to cooperate in removing sensitive details from the documents.
___
Associated Press writers Anne Gearan in Washington; Juergen Baetz in Berlin; Don Melvin in London; Angela Doland in Paris; Robert H. Reid in Cairo; Brian Murphy in Dubai, United Arab Emirates; Mark Lavie in Jerusalem and Nicole Winfield in Rome contributed to this report.
___
Online:
http://cablegate.wikileaks.org/
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Old plant begins to break spell over Salem, Mass.
JAY LINDSAY - AP - Sun Nov 28, 1:41PM CST
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SALEM, Mass. (AP) — "Not in my lifetime" is a retort the Salem Harbor Power Station's opponents got used to hearing over years of warnings that the end was near for the hulking plant.
For six decades, the plant has stood over the historic port's entrance like a smoking sentry, burning the coal and oil that made it a target for environmentalists while paying the millions in taxes that helped it win local loyalty.
But as tough pollution rules approach, the plant looks poised for that predicted exit. Early this month, plant owner Dominion's chief financial officer, Mark McGettrick, told investors that within five years "we would expect Salem Harbor plant to shut down."
The comment rattled city leaders, but environmentalists say Salem — best known for the infamous witch trials of 1692 — now has a chance to demonstrate how a city can best move beyond coal.
"This is the beginning of what's going to be happening all over the country," said the Rev. Jeffrey Barz-Snell of the Salem Alliance for the Environment.
Some closures are already under way nationwide. The power company Exelon Corp. is planning to shutter two Pennsylvania coal plants, both more than 50 years old, by 2012. Edison International plans to shut two 55-year-old coal plants near Chicago by the end of this year.
The Salem plant is older than all those facilities, opening in 1951 before expanding in 1958 and 1972. The 745-megawatt plant can power 745,000 homes and is paying Salem $4.75 million in taxes and fees this year.
Delores Jordan, who lives about a half-mile from the power station, remembers the playground that spanned the plant's property before its smokestacks, rusting oil tanks and massive coal mound claimed the ocean view.
Salem residents, wowed by the promised millions in revenues, supported the plant from the start, said Jordan, 82. The support held strong, she said, even after residue streaming from its smokestacks began leaving a black film on windows and porches.
The plant's pollution eventually earned it a listing in 2000 as one of the state's "filthy five" dirtiest power plants. It also took a big hit in 2007 when an accident killed three workers. And a study a decade ago by Harvard University researchers said the plant caused 30 premature deaths annually.
Such studies prompt deep skepticism locally. And since Dominion Resources Inc. purchased the plant in 2005, it's reduced pollution with steps such as switching to a low-sulfur coal. But Dominion has also signaled with its wallet that the Salem plant was a dropping priority.
Since 2005, Dominion has spent more than $1 billion on its larger and more efficient 1,547-megawatt coal plant at Brayton Point in Somerset, compared with $12 million in Salem.
Dominion spokesman Dan Genest added that Salem is a so-called "merchant" plant, meaning it sells power into a market instead of directly to ratepayers, so Dominion can't shift the costs of any new pollution controls to ratepayers.
"We would not spend the money for those controls, and we would close the plant down if we could not recover our costs," he said.
But ratepayers might still end up paying for such upgrades in Salem.
In recent years, Dominion has asked the local grid manager, ISO New England, for permission to temporarily remove, or "delist," its generators from a key energy market. But the ISO has required Salem to operate, and can continue to do so, if it determines that Salem is needed to guarantee the area gets sufficient power when energy use spikes.
The ISO is now studying how to replace the Salem plant, such as by adding wires to upgrade the transmission system. Such upgrades can take five to eight years, given the complexity that comes with running wires through new areas, said Doug Hurley of the research firm Synapse Energy Economics Inc.
If new environmental rules go into effect while Dominion is required to keep Salem running, the millions in costs to comply are passed on to ratepayers, pending approval by the Federal Energy Regulatory Commission.
"We could have this plant sticking around ... putting out pollution, funded by ratepayers," said Shanna Cleveland of the Conservation Law Foundation, a longtime plant opponent that unearthed McGettrick's remarks.
Salem Mayor Kimberly Driscoll noted the plant meets stringent pollution regulations. And she wouldn't mind an extended life for the plant. This year's taxes and fees are roughly equal to the public works department's budget, she said.
A study that will look at reusing the site is planned, and a luxury marina or a cleaner power generator are among the ideas that have been floated. But Driscoll notes that none of it will match the revenue the plant brings.
Sgt. Peter Gifford, Salem's harbormaster and a lifelong resident, spoke about the plant's roughly 145 jobs as he considered a Salem without a power station he calls "a good neighbor." The work represents a piece of Salem history that Gifford, 57, doesn't want to see disappear.
"I've watched Salem change in my life from a blue collar manufacturing town, to (now) that's the last plant left," Gifford said, as he sat in his work pickup, the plant behind him. "That's it."
___
Associated Press Energy Writer Jonathan Fahey in New York contributed to this report.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Stalled on treaty, climate talks turn to money
CHARLES J. HANLEY - AP - Sun Nov 28, 6:07PM CST
Greenpeace activists wave windsocks as they campaign for the use of renewable energy Saturday, Nov. 27, 2010 in Pasay City, south of Manila, Philippines. The Filipino activists called on President...
CANCUN, Mexico (AP) — Facing another year without a global deal to curb climate change, the world's nations will spend the next two weeks debating how to mobilize money to cope with what's coming — as temperatures climb, ice melts, seas rise and the climate that nurtured man shifts in unpredictable ways.
Beginning Monday, 15,000 government delegates, environmentalists, business leaders, journalists and others will gather in the meeting halls of this steamy Caribbean resort for the annual conference of the 193-nation U.N. climate treaty.
They meet late in a year that may end tied for the hottest globally in 131 years of record-keeping.
As the world warms, the long-running U.N. negotiations have bogged down, unable to find consensus on a legally binding agreement requiring richer countries — and perhaps some poorer — to rein in emissions of carbon dioxide and other industrial, transportation and agricultural gases blamed for global warming.
The Republican takeover of the U.S. House of Representatives and a recent historic shift in emissions — developing countries now produce more greenhouse gases than the old industrial world — all but guarantee the standoff will drag on, at least for another year or two.
"The world is waiting for fruitful negotiations," Mexico's environment secretary, Juan Rafael Elvira Quesada, told The Associated Press.
U.N. officials hope for "incremental progress" on side issues, not an overarching deal, in two weeks of negotiation ending with three days of high-level bargaining among the world's environment ministers.
"Governments need to prove the intergovernmental process can deliver and come to an agreement," U.N. climate chief Christiana Figueres told reporters outside the beachside Moon Palace Hotel.
Mexican naval vessels offshore joined a giant security cordon ringing this sprawling resort area in a country plagued by drug wars, kidnappings and other crime.
Hoping to revive momentum in the talks, delegates look for decisions leading to better terms for developing nations to obtain patented "green" technology from advanced countries, and toward a system for compensating poorer nations for protecting their forests.
In particular, the developing world wants a significant deal on finance, a decision to establish a green fund to handle billions in aid dollars pledged by developed nations to help poorer countries adapt to a changing climate by, for example, building shoreline protection and upgrading water systems to deal with drought, and to install clean energy sources.
In a nonbinding Copenhagen Accord reached by world leaders at last year's climate summit in the Danish capital, richer nations set a goal of $100 billion annually in such climate finance by 2020.
The fund's operational and leadership details would likely be left for post-Cancun negotiation, as would the key question of how it would be financed. A U.N. panel of international political and financial leaders has presented a menu of revenue-raising options, including levies on international flights and on foreign-exchange transactions.
More immediately, less-developed nations will raise concerns about short-term aid, "fast-start finance" promised in the Copenhagen Accord.
"There's been too little for small island developing states. It's a trickle," said Grenada's U.N. ambassador, Dessima Williams, chair of an alliance of island states.
At Copenhagen, industrial nations as a group pledged $30 billion in quick financing over 2010-2012. Independent analysts find that governments individually since have promised $28 billion for the three years.
Poorer nations complain much of the money may not be new, but funds simply reshuffled from other development programs. At Cancun, they're expected to demand a clearer accounting of fast-start finance.
That "would build confidence in the overall funding process," Robert Orr, a U.N. assistant secretary-general, told reporters in New York. "We need new and additional money to address the problem, not repackaged money."
On the flip side, the developed north will seek a better accounting from China, India and other emerging economies of the south on what they're doing to slow the galloping growth of their greenhouse gas emissions.
Nations north and south pledged under the 2009 accord to voluntarily lower emissions by specific amounts or, in the case of emerging economies, to slow emissions growth. Developing countries also agreed to some international scrutiny of the steps they take, but the U.S. complains China has backtracked on that.
At Cancun, India will submit a compromise monitoring plan it hopes will help satisfy the north on the south's emissions actions, while the south obtains a better accounting on climate finance.
Monitoring is "the crux of all issues at Cancun," India's environment minister, Jairam Ramesh, told the AP in New Delhi.
The Copenhagen emissions pledges, even if all were met, would take the world only 60 percent of the way toward preventing serious climate change, the U.N. Environment Program reported last week.
Scientists say emissions overall should be cut 25-40 percent below 1990 levels by 2020 to prevent a dangerous temperature rise of more than 2 degrees Celsius (3.6 degrees F) above preindustrial levels. Temperatures already rose 0.7 degrees C (1.3 degrees F) in the 20th century.
The Copenhagen pledges would together reduce emissions by only 18 percent, independent analysis shows. In the U.S. case, emissions would be cut by only 3 percent below 1990 levels.
For 13 years the U.S. has refused to join the rest of the industrialized world in the U.N. climate treaty's Kyoto Protocol, a binding pact to curb fossil-fuel emissions by modest amounts.
The rise of Republicans in Washington, many of whom dismiss powerful scientific evidence of global warming, seems to rule out for now U.S. legislation to cap emissions, essential for drawing others into a binding global deal to succeed Kyoto, expiring in 2012.
American negotiators say Washington will never submit to a new Kyoto-style deal on emissions unless China, India and others take on commitments under a legally binding treaty. The Chinese and Indians counter that they're still too poor to risk stifling economic growth, and the historic responsibility for industrial emissions lies with the north.
The Obama administration, meanwhile, seeks limited emissions reductions via executive action. But the rest of the world, from Europe to island states facing rising seas, is skeptical of the American will to take demanding long-term action.
As the debates drag on, heat-trapping carbon dioxide fills more of the atmosphere. From 280 parts per million before the Industrial Revolution, the concentration stood at 386.8 ppm in 2009.
If too little is done, temperatures this century may rise by up to 6.4 degrees C (11.5 degrees F), leading to severe climate disruption, say scientists of the U.N.-sponsored Intergovernmental Panel on Climate Change.
The disruption may already have begun.
Researchers point to this summer's historic heat wave in Russia and nationwide floods in Pakistan as portents of things to come. In the Arctic Ocean, the summer melt of the ice cap has reached unprecedented proportions in recent years, and studies suggest the summer ocean may be ice-free as early as this decade.
Here in Mexico, research points to a drying out and shrinking of farm output in some regions, which might lead to a greater exodus of Mexican migrants to the U.S.
__
Associated Press writer Katy Daigle in New Delhi contributed to this report.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
'Harry Potter' leads holiday weekend with $50.3M
DAVID GERMAIN - AP - Sun Nov 28, 5:48PM CST
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LOS ANGELES (AP) — A fairy-tale princess gave young wizard Harry Potter a run for his money at the weekend box office.
"Harry Potter and the Deathly Hallows: Part 1" remained the No. 1 movie with $50.3 million over Thanksgiving weekend, closely followed by the animated musical "Tangled" with $49.1 million, according to studio estimates Sunday.
The next-to-last "Harry Potter" movie raised its domestic total to $220.4 million after just 10 days in theaters, according to distributor Warner Bros. The film also has taken in $389.2 million overseas, giving it a worldwide total of $609.6 million.
"Tangled" is the latest Disney cartoon musical, with Mandy Moore providing the voice of fairy-tale princess Rapunzel. The movie raised its five-day total to $69 million since opening the day before Thanksgiving.
While "Deathly Hallows" continued to work box-office magic, Disney's "Tangled" far exceeded industry expectations, delivering the second-biggest Thanksgiving debut ever behind "Toy Story 2," which had a $57.4 million opening.
Disney head of distribution Chuck Viane said the studio would have been happy if "Tangled" had matched the $34 million debut of its hit "Enchanted" over Thanksgiving 2007. "Tangled" not only shot past that mark but also challenged "Harry Potter" for the No. 1 spot.
"That was the last thing we were thinking of, but it sure is nice to be even thought of in that situation," Viane said. "'Potter' is such a huge hit. To be that close, it was amazing."
Three other new wide releases had so-so openings, led by Christina Aguilera and Cher's song-and-dance tale "Burlesque" at No. 4 with $11.8 million for the weekend and a five-day total of $17.2 million since premiering Wednesday.
Jake Gyllenhaal and Anne Hathaway's romance "Love & Other Drugs" debuted at No. 6 with a three-day haul of $9.9 million and a total of $14 million since opening Wednesday.
Dwayne Johnson's action tale "Faster" opened at No. 7 with $8.7 million for the weekend and $12.2 million since its Wednesday debut.
With a $125 million opening weekend, "Deathly Hallows" had the biggest start yet for the franchise about the young wizard. Its 10-day total also surpasses the previous high of $201 million set by "Harry Potter and the Goblet of Fire" and last year's "Harry Potter and the Half-Blood Prince," according to Warner Bros.
"That kind of tells you how big the last 'Potter' is going to be," said Jeff Goldstein, general sales manager for Warner Bros. "If you look at films like 'Lord of the Rings,' when you get to the last one, anticipation is just overwhelming."
"Harry Potter and the Deathly Hallows: Part 2," the final installment, hits theaters next July.
Despite big business for "Harry Potter" and "Tangled," Hollywood fell short of the Thanksgiving revenue record set last year, when "The Twilight Saga: New Moon" and "The Blind Side" led the box office.
According to box-office tracker Hollywood.com, revenues from Wednesday to Sunday last Thanksgiving totaled $273 million, compared to $267 million this season.
"This one was really close. I thought we might eke out a record," said Paul Dergarabedian, box-office analyst for Hollywood.com.
Other than "Tangled," the new wide releases did not draw huge crowds, each catering to a segment of the audience.
Sony's "Burlesque," with Aguilera as a waitress seeking stardom at a Hollywood musical club, drew women; 20th Century Fox's "Love and Other Drugs," with Gyllenhaal as a pharmaceutical salesman who falls for an ailing woman (Hathaway), brought in date crowds; and CBS Films' "Faster," starring Johnson as an ex-con out for revenge, attracted male action fans.
In limited release, the Weinstein Co. drama "The King's Speech" got off to a majestic start with $349,791 in four theaters in New York City and Los Angeles. That gave it a whopping average of $87,448 a theater, compared to $13,628 in 3,603 theaters for "Tangled."
"The King's Speech" stars Colin Firth as British monarch George VI, father of Queen Elizabeth II, as he comes to power in 1936 while struggling to overcome a lifelong stammer. The film, which has early Academy Awards buzz as a potential front-runner, gradually expands to more theaters through the holidays.
Estimated ticket sales for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Final figures will be released Monday.
1. "Harry Potter and the Deathly Hallows: Part 1," $50.3 million.
2. "Tangled," $49.1 million.
3. "Megamind," $12.9 million.
4. "Burlesque," $11.8 million.
5. "Unstoppable," $11.75 million.
6. "Love & Other Drugs," $9.9 million.
7. "Faster," $8.7 million.
8. "Due Date," $7.3 million.
9. "The Next Three Days," $4.8 million.
10. "Morning Glory," $4 million.
___
Online:
http://www.hollywood.com/boxoffice
___
Universal Pictures and Focus Features are owned by NBC Universal, a unit of General Electric Co.; Sony Pictures, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount and Paramount Vantage are divisions of Viacom Inc.; Disney's parent is The Walt Disney Co.; Miramax is a division of The Walt Disney Co.; 20th Century Fox, Fox Searchlight Pictures and Fox Atomic are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a consortium of Providence Equity Partners, Texas Pacific Group, Sony Corp., Comcast Corp., DLJ Merchant Banking Partners and Quadrangle Group; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC Films is owned by Rainbow Media Holdings, a subsidiary of Cablevision Systems Corp.; Rogue Pictures is owned by Relativity Media LLC; Overture Films is a subsidiary of Liberty Media Corp.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
In air cargo capital, no fear over shipping rules
ADRIAN SAINZ - AP - Sun Nov 28, 10:17AM CST
FILE - In this Dec. 14, 2006 file photo, FedEx planes wait to be loaded and unloaded at their hub in the Memphis International Airport. The Memphis economy relies on FedEx for 30,000 jobs and the...
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MEMPHIS, Tenn. (AP) — As the busiest shipping season of the year begins, the specter of tighter security measures on air shipping after last month's international mail-bomb scare might have sent a shiver through FedEx's hometown.
It might have, if Memphians hadn't spent decades watching the company's planes fly into and out of what has grown into the world's busiest cargo airport, and seeing its delivery trucks heading out in all directions, and generally spotting its name all over this Mississippi River city.
"Everywhere you look, FedEx is into everything here," basketball fan Matt Hine said as he stood in the bustling lobby of the $250 million FedExForum, built six years ago to lure the Vancouver Grizzlies in a move that gave Memphis a status-affirming pro sports franchise.
The Memphis economy relies on FedEx for 30,000 jobs and the billions of dollars of business FedEx creates at Memphis International Airport. FedEx shipped 98 percent of cargo put aboard an airplane in 2007 at the airport, which had a $28.6 billion impact on the area that year, according to a 2009 study commissioned by the airport.
The Memphis identity relies on FedEx and a handful of other major companies, notably International Paper, AutoZone Inc. and The ServiceMaster Co., to lend enough prestige to push interest in the city beyond the cliche — blues, barbecue and Elvis. Those firms fuel confidence in residents and feelings of grandeur in politicians and other civic boosters in a place that has big-city aspirations and big-city problems but still evokes a small-town Southern feel, more New Orleans than Atlanta.
Hine, 38, works in printing, making note pads and menus for the hospitality industry, and he praised FedEx Corp. for its speedy deliveries overseas. As a Memphian, he's also keenly aware of the economic impact the company has on Memphis, and like many others here, he has confidence in FedEx's ability to deal with adversity.
"Them having to fire anyone, that's never concerned me," he said. "It's because of FedEx that Memphis has grown like it has."
So it raised eyebrows here when intelligence officials last month narrowly thwarted a mail-bomb plot blamed on al-Qaida, stopping two explosive packages carrying printer cartridges shipped from Yemen through UPS and FedEx before they could blow up airplanes. Company employees in Yemen were not required to X-ray the printer cartridges the explosives were hidden inside. Instead, they looked at the printers and sent them off, U.S. officials said.
The episode led the Obama administration to announce new cargo rules banning freight out of Yemen and Somalia. It also restricted the shipment of printer and toner cartridges weighing more than a pound on all passenger flights and some cargo flights. Overall cargo security rules were unchanged.
Congress is expected to look at whether more drastic changes are needed to improve air cargo security. U.S. Rep. Steve Cohen, D-Memphis, said he plans to speak with FedEx officials and said the security issue would "unquestionably" be discussed in the House.
All of that raises the question of whether shipping companies such as FedEx may have to cut costs or even jobs to pay for scanning technology. FedEx spokesman Maury Lane said the company is providing no cost estimates for any security measures it may have to implement.
Academics and financial analysts who closely track FedEx say the likelihood that it will have to cut U.S. jobs is quite small, mainly because FedEx will likely pass the costs along to its consumers through rate increases.
American customers could see two other changes. First, sending and receiving packages overseas could get more expensive. Second, it may take a while longer to get that framed picture of your cousins who live in Japan.
"Now, maybe instead of guaranteeing 10 a.m. delivery, it might become like the cable company: 'We'll be there from 10 a.m. to 2 p.m.,'" said Kevin W. Sterling, an analyst with BB&T Capital Markets.
FedEx has a history of dealing with adversity, having weathered the financial fallout from the Sept. 11 attacks to retain its status as the world's second-largest package delivery company, after Atlanta-based UPS Inc.
And it has a history of helping Memphis survive tough times as well. For years, FedEx has lent a hand to Youth Villages, which provides residential treatment, an adoption program and foster care services for children in need.
Volunteers from FedEx have helped kids in the program celebrate birthdays and learn career preparation, and have helped spruce up cottages where children receive residential treatment, said Richard Shaw, chief development officer for Youth Villages.
"Speaking as someone who lives near the airport, I say a prayer when I hear those jets taking off every night," Shaw said. "A good friend of mine once said that Memphis would be like Shreveport had it not been for FedEx ... Most Memphians say thank God for FedEx."
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Cost of 'Twelve Days of Christmas' items
The Associated Press - AP - Sun Nov 28, 11:03PM CST
Prices of items in the Christmas carol "The Twelve Days of Christmas," according to PNC Wealth Management:
— Partridge, $12 (last year: $10)
— Pear Tree, $150 (last year: same)
— Two Turtle Doves, $100 (last year: $56)
— Three French Hens, $150 (last year: $45)
— Four Calling Birds (canaries), $600 (last year: same)
— Five Gold Rings, $650 (last year: $500)
— Six Geese a-Laying, $150 (last year: same)
— Seven Swans a-Swimming, $5,600 (last year: $5,250)
— Eight Maids a-Milking, $58 (last year: same)
— Nine Ladies Dancing (per performance), $6,294 (last year: $5,473)
— 10 Lords a-Leaping (per performance), $4,767 (last year: $4,414)
— 11 Pipers Piping (per performance), $2,356 (last year: $2,285)
— 12 Drummers Drumming (per performance), $2,553 (last year: $2,475)
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Emerging East Asia bonds hit $5.1 trillion in 3Q
AP - Mon Nov 29, 12:41AM CST
MANILA, Philippines (AP) — Foreign money poured into emerging East Asia's bond markets in the third quarter, boosting local currency bonds on issue to $5.1 trillion despite government efforts to slow a tide of cash they worry is pushing their currencies too high.
The Asian Development Bank report released Monday said the value of local currency bonds outstanding was up from $4.8 trillion at the end of the April-June quarter and 17.2 percent higher than a year earlier.
The increase was driven by corporate bonds while growth in sales of government bonds slowed as economic stimulus spending was wound down, the ADB said.
"Companies are taking the opportunity to raise money in Asia's local currency bond markets because of the growing demand from investors," said Iwan Azis, who heads ADB's Office of Regional Economic Integration.
Azis said foreign investors were attracted to Asian bonds because of the region's strong economic growth and its higher interest rates compared with developed economies where rates remain at record lows in the aftermath of the global recession.
Emerging East Asia comprises China, Hong Kong, Indonesia, South Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam
Azis said bond investors had not been deterred by measures taken by some governments to slow the amount of foreign capital entering their markets. Export-reliant countries worry the inflows will contribute to pushing their currencies higher, making their products more expensive overseas, or that rapid reversal could endanger their financial systems.
South Korea in early November indicated it would impose a tax on foreign investment in government bonds. Indonesia in July announced a minimum holding period for foreign investment in short-term government debt to deter speculators and Thailand in October slapped a tax on foreign investment in bonds.
There were $1.556 trillion of emerging East Asia corporate bonds outstanding at the end of September. In local currency terms, this was up 5.7 percent from the previous quarter and 23.8 percent higher than the year before.
The corporate bond market now comprises 30 percent of emerging East Asia's total local currency bonds outstanding.
"What we are seeing is a fundamental change in the investor makeup in emerging East Asia's bond markets, Azis said. "Having now become familiar with these markets, foreign investors are likely to see them as a core part of their portfolios."
Local currency government bonds reached $3.550 trillion, 14.6 percent higher year-on-year and 1.9 percent higher quarter-on-quarter but slowing from a 5.1 percent increase in the second quarter from the first quarter.
As the People's Bank of China and authorities in Indonesia, Korea, Hong Kong, Thailand and Vietnam limited sales of bonds, the growth of emerging East Asia's government bond market slowed in the third quarter, the report said.
Corporate bonds, after rapid growth in recent years, now account for 30 percent of the region's overall bond market and have become the driver of its growth, it said.
China and Indonesia had the fastest-growing corporate bond markets at the end of September, both of which grew 10.9 percent on a quarter-on-quarter basis, followed by Singapore, which grew 7.1 percent quarter-on-quarter.
Growth of the Chinese market reflected the strength of the medium-term note and commercial paper markets coupled with a recovery in issuance by state-owned enterprises. The growth in the Indonesian and Singaporean corporate markets reflected a strengthening of interest by foreign investment funds.
___
Online:
http://www.adb.org/Media/Articles/2010/13407-asian-bond-markets/
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Emerging East Asia bonds hit $5.1 trillion in 3Q
AP - Mon Nov 29, 12:41AM CST
MANILA, Philippines (AP) — Foreign money poured into emerging East Asia's bond markets in the third quarter, boosting local currency bonds on issue to $5.1 trillion despite government efforts to slow a tide of cash they worry is pushing their currencies too high.
The Asian Development Bank report released Monday said the value of local currency bonds outstanding was up from $4.8 trillion at the end of the April-June quarter and 17.2 percent higher than a year earlier.
The increase was driven by corporate bonds while growth in sales of government bonds slowed as economic stimulus spending was wound down, the ADB said.
"Companies are taking the opportunity to raise money in Asia's local currency bond markets because of the growing demand from investors," said Iwan Azis, who heads ADB's Office of Regional Economic Integration.
Azis said foreign investors were attracted to Asian bonds because of the region's strong economic growth and its higher interest rates compared with developed economies where rates remain at record lows in the aftermath of the global recession.
Emerging East Asia comprises China, Hong Kong, Indonesia, South Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam
Azis said bond investors had not been deterred by measures taken by some governments to slow the amount of foreign capital entering their markets. Export-reliant countries worry the inflows will contribute to pushing their currencies higher, making their products more expensive overseas, or that rapid reversal could endanger their financial systems.
South Korea in early November indicated it would impose a tax on foreign investment in government bonds. Indonesia in July announced a minimum holding period for foreign investment in short-term government debt to deter speculators and Thailand in October slapped a tax on foreign investment in bonds.
There were $1.556 trillion of emerging East Asia corporate bonds outstanding at the end of September. In local currency terms, this was up 5.7 percent from the previous quarter and 23.8 percent higher than the year before.
The corporate bond market now comprises 30 percent of emerging East Asia's total local currency bonds outstanding.
"What we are seeing is a fundamental change in the investor makeup in emerging East Asia's bond markets, Azis said. "Having now become familiar with these markets, foreign investors are likely to see them as a core part of their portfolios."
Local currency government bonds reached $3.550 trillion, 14.6 percent higher year-on-year and 1.9 percent higher quarter-on-quarter but slowing from a 5.1 percent increase in the second quarter from the first quarter.
As the People's Bank of China and authorities in Indonesia, Korea, Hong Kong, Thailand and Vietnam limited sales of bonds, the growth of emerging East Asia's government bond market slowed in the third quarter, the report said.
Corporate bonds, after rapid growth in recent years, now account for 30 percent of the region's overall bond market and have become the driver of its growth, it said.
China and Indonesia had the fastest-growing corporate bond markets at the end of September, both of which grew 10.9 percent on a quarter-on-quarter basis, followed by Singapore, which grew 7.1 percent quarter-on-quarter.
Growth of the Chinese market reflected the strength of the medium-term note and commercial paper markets coupled with a recovery in issuance by state-owned enterprises. The growth in the Indonesian and Singaporean corporate markets reflected a strengthening of interest by foreign investment funds.
___
Online:
http://www.adb.org/Media/Articles/2010/13407-asian-bond-markets/
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Oil rises to near $85 as traders eye jobs report
ALEX KENNEDY - AP - 2 hrs 58 mins ago
SINGAPORE (AP) — Oil prices rose to near $85 a barrel Monday in Asia as investors look to this week's key jobs report for evidence the U.S. economy is improving.
Benchmark oil for January delivery was up $1.20 to $84.96 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 10 cents to settle at $83.76 on Friday.
Traders will be closely watching Friday's unemployment numbers for signs more Americans are going back to work as the economy slowly recovers from last year's recession.
Crude advanced despite mixed dollar trading. The euro fell early in the session before recovering to $1.3278 after European Union nations agreed to give 67.5 billion euros ($89.4 billion) in bailout loans to Ireland on Sunday.
Oil normally falls as the dollar strengthens since crude becomes more expensive for investors with other currencies.
"Oil is possibly detaching further from the strong dollar while placing greater emphasis on increasing indications of favorable U.S. economic guidance," Ritterbusch and Associates said in a report. "The important November employment report could prove pivotal in determining the course of the oil trade across December."
In other Nymex trading in December contracts, heating oil rose 2.4 cents to $2.34 a gallon and gasoline added 3 cents at $2.24 a gallon. Natural gas gained 3.6 cents to $4.44 per 1,000 cubic feet.
In London, Brent crude jumped 90 cents to $86.48 a barrel on the ICE Futures exchange.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Philips says CFO quits, names replacement
AP - 2 hrs 37 mins ago
AMSTERDAM (AP) — Royal Philips Electronics NV says its chief financial officer is leaving the company March 31, and named a replacement.
The company says Ron Wirahadiraksa, a Dutch national who is currently the top financial executive at the company's health care arm, will replace Pierre-Jean Sivignon as CFO.
Philips said Monday Sivignon "is leaving for personal reasons and will pursue a career outside the company."
The decisions means Philips will switch CEOs and CFOs almost simultaneously, since chief executive Gerard Kleisterlee is retiring on April 1. His replacement, Frans van Houten, has also been named.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
USDA asked to approve GMO apple that won't brown
SHANNON DININNY - AP - 2 hrs 11 mins ago
In this Nov. 19, 2010 photo, a worker sorts through apples at Crunch Pak, an apple slicing company in Cashmere, Wash. A Canadian biotechnology company has asked the U.S. to approve a genetically...
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CASHMERE, Wash. (AP) — A Canadian biotechnology company has asked the U.S. to approve a genetically modified apple that won't brown soon after its sliced, saying the improvement could boost sales of apples for snacks, salads and other uses.
U.S. apple growers say it's too soon to know whether they'd be interested in the apple: They need to resolve questions about the apple's quality, the cost of planting and, most importantly, whether people would buy it.
"Genetically modified — that's a bad word in our industry," said Todd Fryhover, president of the apple commission in Washington state, which produces more than half the U.S. crop.
But Neal Carter, president of the company that developed the apples, said the technology would lower the cost of producing fresh slices, which have become a popular addition to children's lunch boxes, and make apples more popular in salads and other quick meals.
Carter's company, Okanagan Specialty Fruits of Summerland, British Columbia, licensed the non-browning technology from Australian researchers who pioneered it in potatoes. Essentially, the genes responsible for producing the enzyme that induces browning have been silenced in the apple variety being marketed as "Arctic."
"They look like apple trees and grow like apple trees and produce apples that look like all other apples and when you cut them, they don't turn brown," Carter said. "The benefit is something that can be identified just about by everybody."
The U.S. Department of Agriculture's Animal and Plant Health Inspection Service has considered about 100 petitions for genetically engineered or modified crops. Those that have drawn the most attention have been engineered to withstand certain weed killers, but among those the agency has approved are tomatoes altered to ripen more slowly — the first genetically modified crop approved in the U.S. in 1992 — and plums that resist a specific virus. This is the first petition for apples.
The USDA's biotechnology regulations are designed to ensure that genetically modified crops are just as safe for agriculture and the environment as traditionally bred crop varieties, spokesman R. Andre Bell said in a statement. The Animal and Plant Health Inspection Service works with the Environmental Protection Agency and the Food and Drug Administration, depending on the product, to ensure safety.
The approval process can take years, and it's not clear the apples will be accepted even if they pass government inspection.
Fryhover raised concerns about cross-pollination of conventional trees with genetically modified ones if they were planted in close proximity. He also questioned whether Arctic apples would generate enough in sales to outweigh the $10,000 to $20,000 per acre cost of replanting.
Carter said growers replant orchards all the time and the company aims to have big growers plant the apples in large blocks so cross pollination is minimized. Carter said he's confident the fruit won't harm the environment and he's submitted paperwork to the USDA and FDA to prove his point.
"Some people won't like it just because of what it is," he said. "In the end, it's a great product, no question about it, and people will see the process used to get it had very sound science."
Companies have invested heavily in crops genetically modified to improve flavor, increase yields or nutrition and make them drought resistant, said Andrew Kimbrell, executive director of the Center for Food Safety, a nonprofit public interest group based in Washington, D.C. Often, though, the genes that define those traits are one small part of a complex system, he said.
"Scientists have been saying they're only turning one thing off, but that switch is connected to another switch and another switch," Kimbrell said. "You can't just do one thing to nature. It's nice to think so, but it just doesn't work that way."
He also said the non-browning technology appears to benefit apple growers and shippers more than consumers by allowing companies to sell apples that are older than they look.
"A botox apple is not what people are looking for," Kimbrell said. "I'm predicting failure."
Crunch Pak, based in Cashmere, Wash., is No. 1 in the sliced apple market, with customers including Costco, Kroger Co., Publix and Wal-Mart Stores Inc. The company, founded in 2000, has tripled in size in the past four years, with nearly 500 employees and a new processing plant in Pennsylvania.
Its apples are rinsed in a combination of calcium and ascorbic acid — vitamin C — to maintain freshness. Taste and quality are always important, but spokesman Tony Freytag said the biggest issue is food safety.
"Quite honestly, I would rather have an apple turn brown than think it's still OK because it's still white," he said. "I'm not discounting the anti-browning. It's just not the panacea."
Everyone agreed that consumers will make the final call. They have largely accepted other genetically modified crops, but whether they will do the same with apples remains to be seen.
"There's something about an apple. It's the symbol of health and nutrition, and then to turn around and say it's been genetically modified — doesn't that go against what consumers say they're looking for?" Fryhover asked. "Right now, I wouldn't say the industry is poised to go either direction. We need to know more."
___
Online:
Okanagan Specialty Fruits Inc.; http://www.okspecialtyfruits.com
Washington State Apple Commission: http://bestapples.com
Crunch Pak: http://www.crunchpak.com/
Center for Food Safety: http://centerforfoodsafety.org/
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Tax break for employer health plans a target again
RICARDO ALONSO-ZALDIVAR - AP - Mon Nov 29, 2:12AM CST
FILE - In this Nov. 10, 2010 file photo, Erskine Bowles, left, accompanied by former Wyoming Sen. Alan Simpson, co-chairmen of President Barack Obama's bipartisan deficit commission, speaks on...
WASHINGTON (AP) — Job-based health care benefits could wind up on the chopping block if President Barack Obama and congressional Republicans get serious about cutting the deficit.
Budget proposals from leaders in both parties have urged shrinking or eliminating tax breaks that help make employer health insurance the leading source of coverage in the nation and a middle-class mainstay.
The idea isn't to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions.
Such a re-engineering was rejected by Democrats only a few months ago, at the height of the health care overhaul debate. But Washington has changed, with Republicans back in power and widespread fears that the burden of government debt may drag down the economy.
"There is no short-term prospect of enactment," former Senate Majority Leader Tom Daschle, a leading Democratic adviser on health care. "However, in a tax reform (and) deficit reducing context in the long term, the prospects are much better," said Daschle. He opposes repealing the tax break by itself, but says he would be "willing to look" at it with other changes that improve access to quality health care while reducing costs.
Labor unions believed they had squelched any such talk. Now, they're preparing for another fight.
Tampering with health care tax breaks is "a terrible step in the wrong direction," said Mary Kay Henry, the new president of the Service Employees International Union, which represents many hospital workers. "We want the middle class stabilized, not destabilized."
Employer-provided health insurance is part of a worker's compensation. Unlike wages, it isn't subject to income and payroll taxes.
Repealing the tax break would raise several hundred billion dollars a year, depending on how it's done. Many economists believe employers would boost pay if they didn't provide health care. Proponents of repeal usually call for a tax credit to offset part of the cost of individually purchasing coverage.
The leaders of Obama's deficit commission — Democrat Erskine Bowles, a former Clinton White House chief of staff, and Alan Simpson, a former GOP senator from Wyoming — have proposed to limit the tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. That would allow for a big cut in tax rates.
The commission is supposed to report its plan on Wednesday. It's unclear if leaders have the votes to back their sweeping changes.
A separate group, the Bipartisan Policy Center, is proposing to cap the health care tax break in 2018 and eliminate it over the next 10 years. That's part of a deficit reduction strategy from Democrat Alice Rivlin, a former Federal Reserve vice chairman, and former Sen. Pete Domenici, R-N-M., who once led the Senate Budget Committee.
"The problem of rising debt is so serious that Republicans and Democrats are going to have go back and look at almost everything to see how we solve this," said Rivlin.
Simpson calls the health care tax break a "tax earmark." He said that "you cannot get anything done in this game unless you deal with every single aspect of the federal budget, and the biggest thing to wrap our arms around is health care."
Democrats struggled with proposals to curb the tax break during the health care debate, but strong opposition from organized labor won out. The compromise was a tax on high-cost health insurance plans, which won't go into effect until 2018.
In a twist, the health care law eventually may make it easier to pry people away from employer insurance, a system that dates to World War II and has sustained three generations.
Starting in 2014, new insurance markets will make it easier for people to buy coverage on their own. These state-based "exchanges" would work like the federal employee health plan. Taxpayer subsidies will help individuals and families with low to moderate incomes pay premiums.
"Before health reform, a declining role for employers would have raised concerns," Rivlin and Domenici said in their proposal. But well-run exchanges "will provide a viable — perhaps even superior — alternative."
One Democratic member of Obama's deficit commission is wrestling with the idea.
California Rep. Xavier Becerra says it's a very different situation from the health care debate. Back then, policymakers were looking for money to pay for covering the uninsured. Now, they're looking at rebalancing the role of government in the economy. He's not considering health care tax breaks in isolation.
"What we are saying is that we are going to examine every tax earmark," Becerra said. "They are all on the table. If you want to keep one, then show us how you are going to come up with the money. That's where you really have to put your money where your mouth is."
___
Online:
Deficit commission: www.fiscalcommission.gov
Bipartisan Policy Center: www.bipartisanpolicy.org
Service Employees International Union: http://tinyurl.com/39ftmj2
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Euro rises slightly vs US dollar
AP - 2 hrs 37 mins ago
BERLIN (AP) — The 16-nation euro is up versus the U.S. dollar in the wake of an Irish bailout package, but remains under pressure on continuing concerns about the European economy.
The euro bought $1.3279 in morning European trading Monday, up from $1.3237 in late trading in New York on Friday. The British pound is up to $1.5640 from $1.5602 on Friday, while the dollar dipped to 83.90 Japanese yen from 84.07 in New York.
The EU agreed Sunday to give euro67.5 billion ($89.4 billion) in bailout loans to Ireland, and sketched out new rules for future emergencies in an effort to restore faith in the euro.
The dollar gained strength last week on concerns about the eurozone economy, and as investors sought a safe haven amid increasing military tensions on the Korean peninsula.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Wal-Mart makes firm offer on South African group
AP - 39 mins ago
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JOHANNESBURG (AP) — The U.S. giant retailer Wal-Mart is offering to buy 51 percent of South Africa's Massmart stores, the two companies said in a joint statement Monday.
Wal-Mart is offering 148 rand (about $20) per share to Massmart stockholders in a 17 billion rand (about $2 billion) deal that has sparked concern among South African unions. It would be Wal-Mart's first African foothold. Massmart shares were trading at 143.75 rand Monday morning, up 1.45 percent from Friday's close. Massmart shares have been buoyed since Wal-Mart's interest first became public in September.
Massmart will continue to be listed on the Johannesburg exchange, addressing a concern of some major Massmart stockholders that led Wal-Mart to revise an earlier bid to buy all of Massmart.
Massmart's board recommended shareholders accept, according to Monday's statement, which added that major institutional shareholders supported the deal.
Earlier this month, South Africa's main retail workers union said its members would strike if necessary to force Wal-Mart to respect labor and protect jobs. They acknowledged they have little power to stop the deal.
Wal-Mart has said it would respect any existing union contracts and was "committed to working constructively with the local unions in South Africa."
Union leaders did not immediately return calls seeking comment Monday.
In a statement, Doug McMillon, president and chief executive of Wal-Mart International, made clear his company is pursuing a regional strategy.
"The more we learn about South Africa and the surrounding countries the more we are convinced that this is an important region with attractive growth characteristics," he said.
Massmart, based in Johannesburg, runs about 290 big box, pharmacy, electronics and other stores in 14 African countries, mostly in South Africa.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Wal-Mart makes firm offer on South African group
AP - 39 mins ago
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WMT - Wal-Mart Stores Inc.
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WMT 53.74 -0.27 -0.50%
JOHANNESBURG (AP) — The U.S. giant retailer Wal-Mart is offering to buy 51 percent of South Africa's Massmart stores, the two companies said in a joint statement Monday.
Wal-Mart is offering 148 rand (about $20) per share to Massmart stockholders in a 17 billion rand (about $2 billion) deal that has sparked concern among South African unions. It would be Wal-Mart's first African foothold. Massmart shares were trading at 143.75 rand Monday morning, up 1.45 percent from Friday's close. Massmart shares have been buoyed since Wal-Mart's interest first became public in September.
Massmart will continue to be listed on the Johannesburg exchange, addressing a concern of some major Massmart stockholders that led Wal-Mart to revise an earlier bid to buy all of Massmart.
Massmart's board recommended shareholders accept, according to Monday's statement, which added that major institutional shareholders supported the deal.
Earlier this month, South Africa's main retail workers union said its members would strike if necessary to force Wal-Mart to respect labor and protect jobs. They acknowledged they have little power to stop the deal.
Wal-Mart has said it would respect any existing union contracts and was "committed to working constructively with the local unions in South Africa."
Union leaders did not immediately return calls seeking comment Monday.
In a statement, Doug McMillon, president and chief executive of Wal-Mart International, made clear his company is pursuing a regional strategy.
"The more we learn about South Africa and the surrounding countries the more we are convinced that this is an important region with attractive growth characteristics," he said.
Massmart, based in Johannesburg, runs about 290 big box, pharmacy, electronics and other stores in 14 African countries, mostly in South Africa.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Euro rises slightly vs US dollar
AP - 2 hrs 37 mins ago
BERLIN (AP) — The 16-nation euro is up versus the U.S. dollar in the wake of an Irish bailout package, but remains under pressure on continuing concerns about the European economy.
The euro bought $1.3279 in morning European trading Monday, up from $1.3237 in late trading in New York on Friday. The British pound is up to $1.5640 from $1.5602 on Friday, while the dollar dipped to 83.90 Japanese yen from 84.07 in New York.
The EU agreed Sunday to give €67.5 billion ($89.4 billion) in bailout loans to Ireland, and sketched out new rules for future emergencies in an effort to restore faith in the euro.
The dollar gained strength last week on concerns about the eurozone economy, and as investors sought a safe haven amid increasing military tensions on the Korean peninsula.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Irish bank shares higher over EU-IMF rescue plan
SHAWN POGATCHNIK - AP - 26 mins ago
Irish Finance Minister Brian Lenihan arrives for a round table of eurozone finance ministers at the EU Council building in Brussels on Sunday, Nov. 28, 2010. Finance ministers from the eurozone...
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AIB - Allied Irish Banks P.L.C.
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DUBLIN (AP) — Shares in Ireland's banks rose sharply Monday as investors welcomed an international agreement to provide €67.5 billion ($89 billion) in rescue loans for Ireland, particularly its immediate focus on injecting €10 billion into the cash-strapped banks.
However, opposition leaders condemned the plan's requirement that Ireland commit the bulk of its cash and pensions reserves, €17.5 billion, into its own rescue effort. They warned that the EU-IMF credit line's average interest rate of 5.8 percent would be too high to repay.
The senior International Monetary Fund negotiator, Ajai Chopra, stressed his view that Ireland was now well positioned to reassure investors and, eventually, resume normal borrowing once the interest rates being demanded on open markets fall below the cost of EU-IMF funds provided.
"This is a very good deal for Ireland in current circumstances," said Chopra, who arrived in Dublin 12 days ago to oversee negotiation of a bailout deal that leaders of all 27 EU nations approved Sunday at an emergency meeting.
"It's clearly much better than what Ireland could get if it had to borrow on the market right now. ... As the program begins to work, we would expect that Ireland would be able to go back into the markets and borrow again," he said.
The yields on Ireland's 10-year bonds eased slightly Monday to 9.12 percent, but remained near the euro-era record high of 9.24 percent reached Friday.
The euro currency initially rose in value but quickly slipped back as investors remained unconvinced that the Irish deal would ease wider fears of eventual debt defaults somewhere in the 16-nation eurozone. The cost of borrowing on bond markets rose for Spain, declined for Portugal, and was little changed for Greece.
Chopra said it was smart to require Ireland to use its long-term pension money, which was earning 1 percent interest, to reduce a bailout bill costing far more to finance.
"It's making the best use of the money that Ireland has set aside. It's a sign of strength," Chopra told Irish state broadcaster RTE.
Ireland's three publicly listed banks surged on the Irish Stock Exchange following Sunday's deal, which emphasizes that more of their toxic property-based loans will be transferred to Ireland's "bad bank," the National Asset Management Agency.
The deal provides €10 billion immediately to boost their reserves while €25 billion more remains available to draw down if markets don't resume lending at better rates to the banks. The remaining €50 billion is earmarked for use to cover Ireland's expected deficits through 2014.
Chopra says IMF and EU experts in coming weeks will subject each Irish bank to a series of stress tests including worst-case scenarios to determine how much cash they need.
Ireland has already committed at least €45 billion to bailing out five Dublin banks, a bill that the government was forced to concede in recent weeks it could no longer finance on its own.
Shares in Irish Life & Permanent — the only Dublin bank yet to receive any bailout cash — rocketed 42 percent in the first hour of trade off its record low Friday. Bank of Ireland jumped 23 percent as it announced plans to try to raise €2.2 billion on its own without resorting to another bailout. Allied Irish Banks rose 7 percent, reflecting its humbled status as more reliant on bailout funds and likely to fall soon into majority government ownership.
Some economists condemned the EU-IMF deal as designed to shackle the losses of Irish banks to Irish taxpayers, rather than pass any losses to the banks' senior bondholders — chiefly other banks in Britain, Germany and the United States — that loaned the lost billions in the first place.
"We have a choice between the solvency of the state and the solvency of the banks. We needed to sever those links. This deal instead has soldered the links between the banks and the state," said David McWilliams, a former Irish Central Bank economist who has argued in vain for Ireland to force senior bondholders to share losses.
"Of course the bank shares will rise," he said of Monday's sharp gains. "We've just put 10 billion in their pocket."
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
FDA would boost food inspections under Senate bill
MARY CLARE JALONICK - AP - 1 hr 7 mins ago
FILE - In this Nov. 16, 2010 file photo, Senate Majority Leader Harry Reid of Nev., gestures during a news conference on Capitol Hill in Washington. The Food and Drug Administration would have to...
WASHINGTON (AP) — The Food and Drug Administration would have to step up inspections of food plants under legislation the Senate is expected to pass this week.
The bill, which has stalled in that chamber for more than a year, would give the FDA authority to order a recall of tainted products. Today, the agency must negotiate with sellers of tainted food to issue a voluntary recall. The bill would also require food manufacturers and farms to follow stricter safety standards.
Supporters say passage is critical in the wake of large-scale outbreaks of salmonella and E. coli in peanuts, eggs and produce. Those outbreaks have exposed a lack of resources and authority at the FDA as the embattled agency struggled to contain and trace the contaminated products. The agency rarely inspects many food facilities and farms, visiting some every decade or so and others not at all.
The bill would emphasize prevention so the agency could try to stop the outbreaks before they begin.
Despite wide bipartisan support, the legislation stalled as it came under fire from advocates of buying locally produced food and operators of small farms, who say it would could bankrupt some small businesses. Senators agreed before Congress left for Thanksgiving to exempt some of those operations from costly food safety plans required of larger companies.
Senate Majority Leader Harry Reid, D-Nev. got an agreement to move the legislation by allowing Republicans to offer amendments not relevant to the bill. Oklahoma Sen. Tom Coburn is expected to offer an amendment to place a moratorium on spending for "earmarks," or pet projects in lawmakers' states and districts, and Nebraska Sen. Mike Johanns could offer another to repeal an arcane business tax reporting provision of the health overhaul passed earlier this year.
Democratic Sen. Max Baucus of Montana, the chairman of the Senate Finance Committee, will also offer an amendment on the health tax provision. The Senate is expected to begin voting on the amendments Monday.
Whether the food safety bill can make it to the president's desk during the brief lame-duck congressional session is unclear since the House passed a different version of the legislation in 2009. Iowa Sen. Tom Harkin, the sponsor of the bill, said he has agreement from some members in the House to take up the Senate bill if it is passed.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
FACT CHECK: Small business caught in tax battle
TOM RAUM - AP - 1 hr 6 mins ago
FILE - In this June 15, 2009, file photo, John Engler, president and CEO of the National Association of Manufacturers is seen at the National Summit in Detroit. Newly empowered Republicans suggest...
WASHINGTON (AP) — Newly empowered Republicans say President Barack Obama would subject as much as half the nation's small business income to job-withering tax increases. Obama and his Democratic allies argue that allowing taxes to rise on the wealthiest Americans would affect only a handful of small business owners.
Both can't be right. And both are playing number games as the lame-duck Congress prepares to take up one of the most contentious issues of the postelection season: what to do about an array of about-to-expire Bush-era tax cuts? If Congress fails to act, taxes will go up for essentially every American taxpayer on Jan. 1.
Neither party wants that to happen. Hoping to avoid a December train wreck, Obama has hinted at a possible compromise — perhaps extending the tax cuts for everybody for a year or two. But so far, the president and the Republicans, flush from their big midterm election gains, haven't been able to bridge their differences.
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EDITOR'S NOTE — An occasional look at the assertions of public officials and how well they adhere to the facts.
___
The Obama White House argues that the Bush tax cuts should be extended for everybody earning under $200,000 and couples earning under $250,000 a year. Supporters claim the move would protect middle-class taxpayers while helping rein in budget deficits.
Republicans and a growing number of rank-and-file Democrats argue that, despite rising voter angst over deficits, now is no time to raise taxes on anybody — not with unemployment stuck near 10 percent, the housing market still in a shambles and overall economic growth anemic.
They insist the move would mean tax hikes for hundreds of thousands of small- and moderate-sized businesses whose proceeds are taxed at individual rather than corporate rates.
Here's a closer look at the rival claims:
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THE CLAIM: Obama and his Democratic allies insist that the vast majority of small businesses — or about 97 percent — would be unaffected under his plan. They note that just 3 percent of those reporting business income on their tax returns earn more than the $200,000 - $250,000 thresholds for tax hikes. And they say allowing taxes to rise for the wealthiest Americans would save taxpayers $700 billion over ten years.
Cutting taxes on wealthier Americans "won't significantly boost the economy, and it's hugely expensive," Obama said. "So we can't afford it."
THE FACTS: The 3 percent figure is statistically correct, but misleading. That's because the overwhelming number of small businesses are very small, even tiny. And there are a lot of them — for instance, a house cleaner, a dog walker, an ice cream vendor, somebody who makes money selling things on eBay.
In reporting the raw numbers of tax returns that include business income, the Internal Revenue Service doesn't distinguish between small homegrown businesses and far less common but extremely profitable ventures such as some hedge funds and doctor and lawyer partnerships.
That distorts the overall percentages to make it appear the impact of the White House plan on small businesses is extremely limited. In fact, it would affect about 750,000 taxpayers who report business profits on individual income returns, according to the congressional Joint Committee on Taxation.
Bill Rys, tax counsel for the National Federation of Independent Business, said roughly 75 percent of small businesses pay their business tax at the individual level.
"For small business owners especially, they're really struggling to get out of this recession," Rys said. "The businesses that are likely to be impacted by tax increases are ones that are employing workers."
As to costs, while extending tax cuts to the wealthiest Americans would cost an additional $700 billion over ten years, extending them just for lower and middle-class Americans as Obama wants would cost over $3 trillion over the same period.
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THE CLAIM: Many Republicans say letting the Bush tax cuts expire for upper-income earners will have a widespread negative impact on small businesses. The increase would affect half of small business income, says Senate Minority Leader Mitch McConnell of Kentucky. Sen. Orrin Hatch of Utah calls it "a job-killing tax on small business during tough economic times."
THE FACTS: McConnell focuses on affected business income rather than the 3 percent of individual business owners cited by Democrats. The Joint Committee on Taxation agrees, saying that taxpayers who would see a tax increase account for half the business income reported on individual returns. However, two-thirds of these 750,000 households have average net incomes of about $700,000, the committee says. And some have earnings as high as $50 million, including some of the nation's largest privately held professional firms — hardly "small" business.
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THE CLAIM: Republicans and Democrats alike call small business the nation's prime engine of job creation. Politicians, including Obama, like to say that small businesses create two out of every three new jobs.
THE FACTS: That may be so, but it depends on how you define "small" business.
The Small Business Administration defines a small business as one with fewer than 500 employees. By that gauge, more than 99 percent of the nation's roughly 6 million businesses with employees qualify.
While smaller businesses do a lot of hiring, they also do a lot of firing. "There's less turnover at large companies," said Jim Nunns, senior fellow at the nonpartisan Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute. At the height of the recession, the largest number of overall job losses occurred in businesses with fewer than 50 workers.
As to tax policy, "the incentive to hire doesn't really turn on the tax rate — because, if you pay an employee, it's tax deductible regardless of your tax rate," Nunns said. Also, he noted, most small business owners reporting business income have no employees, and little incentive to hire.
Mark Zandi, chief economist at Moody's Analytics, said Obama's plan to let taxes increase on top earners "will have an impact on small business, but not nearly to the degree that some fear."
But, he added, "why take a chance when the recovery is so fragile? I think small businesses are very important to the job machine. Without them, the job machine can function, but it can 't function well."
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
EU lifts growth forecasts despite debt crisis
AP - 14 mins ago
LONDON (AP) — The European Commission has revised up its economic growth forecasts for the 16 countries that use the euro despite mounting concerns over the debt crisis which is afflicting the single currency zone.
In its autumn forecast, the Commission said Monday that eurozone economic growth this year would likely be 1.7 percent, nearly double its spring forecast of 0.9 percent.
However, for 2011 it has kept its forecast unchanged 1.5 percent. The decrease from 2010 is due to waning global growth and the impact of austerity measures being pursued across the eurozone.
Olli Rehn, the commissioner in charge of economic and monetary affairs, said the economic recovery has taken hold but that governments need to continue to get a grip on their public finances.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
LONDON (AP) — Economic sentiment in the 16 nations that use the euro rose to a three year high in November despite mounting concerns about the debt load of a number of member countries, most notably Ireland, official figures showed Monday.
The European Commission said its economic sentiment indicator for the eurozone rose to 105.3 from October's 103.8, largely on the back of continuing improvements in the services and manufacturing sectors.
The increase was bigger than markets' expectations for a rise to 105.
The survey will fuel hopes that the recovery in the eurozone is on a fairly sound footing despite the debt crisis gripping the single currency zone following much stronger than anticipated economic growth this year.
The key to growth is that Germany continues to grow strongly and the survey will likely reinforce hopes that the export recovery remains intact. More importantly perhaps, the survey indicated that consumer spending is on the up as unemployment declines and wage settlements rise.
Despite the further pick-up in sentiment, the European Central Bank is expected to keep borrowing costs at a record low of 1 percent at its meeting Thursday and for many months to come, partly because higher borrowing costs are the last thing the highly indebted countries like Greece, Ireland, Portugal and Spain need right now.
On Sunday, Ireland became the second eurozone country after Greece to be bailed out by its partners in Europe and the International Monetary Fund.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
BP shares up on $7.1B Pan American sale
AP - 31 mins ago
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LONDON (AP) — Shares in BP PLC are trading higher after the London-based oil company announced over the weekend that it has agreed to sell its 60 percent stake in Argentina-based oil and gas producer Pan American Energy for $7.1 billion.
The sale to Argentina's Bridas Corp., which already owns the other 40 percent of Pan American, is part of BP's plans to sell tens of billions of dollars of assets to help pay for the massive oil spill in the Gulf of Mexico.
The deal takes BP withing range of its target of $25-30 billion in asset sales by the end of next year. It expects to spend nearly $40 billion to handle the Gulf spill, which was sparked by an April 20 rig explosion that killed 11 workers.
BP stock was up 0.5 percent at 438.3 pence ($6.84) on Monday.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.