WASHINGTON — That nice annual tax refund from Uncle Sam isn’t a luxury anymore for growing numbers of people. Instead, it’s increasingly going right out the door to pay bills.
In the latest illustration of how the economic slowdown is hitting home, more than a third, or 35 percent, said they are using the money to pay utility, credit card or other bills, an Associated Press-AOL Money & Finance poll showed Thursday. A year ago, 27 percent said they were using it that way.
About a third said they are saving or investing the money, down slightly from last year. Nearly a quarter said they are using their refund to pay debt from credit cards and other loans — essentially the same as the one in five who said so a year ago.
That’s not to say some people aren’t enjoying their checks. One in five is spending it — an increase from last year — on everything from everyday needs to shopping sprees and vacations.
The average tax refund so far this year has been $2,464, up slightly from a year ago, according to the IRS.
Separately, the government soon will begin sending special tax rebates to millions of Americans in hopes that they will spend the money and spur economic growth advance america cash advance. Those checks will be up to $600 per person and are on top of the refunds.
In the poll, 56 percent said they have received or expect a refund this year, a significant drop from 66 percent a year ago.
According to IRS figures, refunds have been sent to 80 percent of those who filed returns through March 29, down from 85 percent of those who filed during the same period last year. David R. Williams, IRS director of electronic tax administration, said in the end, the proportion getting refunds this year should be the same as last year.
A mountain of cash sits on the edge of financial markets, waiting to tip in when confidence is restored in riskier assets. For investors, this is both an opportunity and a problem.
While it brings hope to those banking on a sharp reversal in investments later this year — those looking for a V-shaped economic and market recovery — it is also causing difficulties because money is not being put to work.
“Basically, what we are seeing is hoarding of liquidity,” said John Stopford, head of fixed income at Investec Asset Management. “It’s distorting pricing. It’s a problem.”
Plenty of evidence exists to show investors stocking up on huge levels of safe-haven cash in the face of credit market gyrations, a worsening global economic outlook and volatile financial markets.
The latest Reuters asset allocation polls, for example, show leading international investment firms holding some 5.9 percent of their mixed-asset portfolios in cash no checking account payday advance. It compares with a long-term average of 4.5 percent.
A steady move into cash is also seen in Merrill Lynch’s monthly poll of fund managers. Some 51 percent were overweight in cash in March, compared with 48 percent in February and 43 percent in January.
Flow data from fund researcher EPFR Global quantifies the trend. It shows a net $140.9 billion flowing into money market funds in the first quarter. To put this in context, developed market equities saw outflows of $69 billion.
Speakers at this week’s Reuters Hedge Funds and Private Equity Summit went further, indicating that the cash hoarding may be far more widespread than just in traditional fund management firms.
Japan’s parliament formally approved acting Bank of Japan Governor Masaaki Shirakawa as the central bank’s permanent head on Wednesday, bringing to a close a political impasse that had left the post vacant since last month.
The backing for Shirakawa, Japan’s youngest BOJ governor in 50 years, came as the central bank kept its main policy rate on hold at 0.5 percent, as expected.
Approval comes in time for the 58-year-old governor to fly to Washington for a meeting of G7 finance leaders on Friday that will seek ways to ease the global credit crisis.
Shirakawa won approval in both houses of parliament, including the upper chamber controlled by opposition lawmakers, but the government’s candidate for deputy governor, former finance ministry official Hiroshi Watanabe, was rejected.
That veto by the upper house leaves the central bank’s policy board with two vacancies and the potential for further wrangling over who should fill those posts.
Financial markets are more focused on U.S no fax payday loans. economic problems than the BOJ leadership, but analysts see Shirakawa, who won parliamentary approval last month to be deputy governor, as a realistic choice to end the three-week gap at the top of the BOJ.
There was frustration, though, that a broader policy stalemate between the government and the opposition Democratic party had delayed decisions on the central bank leadership.
“Everyone’s pretty much fed up. At least they now have a BOJ governor to go to the G7,” said Katsuhiko Kodama, a senior strategist at Toyo Securities Co Ltd. “It’s all rather embarrassing.”
Banks and opportunity funds are hunting for bargains among cut-price European Commercial Mortgage-Backed Securities (CMBS), raising hopes the debt market deep-freeze may be about to thaw.
Growing appetite for European CMBS could provide a breakthrough for banks desperate to free up loan book capacity by issuing new CMBS, which many see as a vital first step back towards cheaper and more flexible lending.
“CMBS is fantastically cheap. We see this as a once in a lifetime buying opportunity to pick up AAA-rated paper at amazing spreads,” said Caroline Philips, Eurohypo’s managing director of securitization in Europe.
The once-thriving CMBS market has been comatose since last summer’s credit crunch triggered a collapse in demand and enormous slack in spreads.
Credit Suisse data from March 27 showed European CMBS cash spreads were 240 basis points over the London Interbank Offer Rate (LIBOR) at AAA level and 750 basis points over at BBB, which Philips said was basically pre-credit crunch prices “with a zero on the end”.
Philips said Eurohypo, which is better known for its CMBS issuance activities, was in the middle of an acquisition spree motivated by “no-brainer” AAA CMBS pricing.
“We have bought around 100 million pounds worth of CMBS in recent months but we want to do more,” she said, adding that the bonds were bought with a view to holding to maturity because potential returns on equity were “enormous”.
Spreads at their current magnitude could indicate huge problems with the underlying credit but some investors say the CMBS sector has been hit too harshly by fallout from the U.S payday loans. subprime residential mortgage crisis and the long-anticipated end of a European property market boom.
Federally owned Atomic Energy of Canada Ltd. is no longer pursuing the sale of its next-generation nuclear reactor in the United Kingdom, announcing yesterday it will focus its energy on capturing business at home.
Some industry critics said AECL, which says it has spent "less than $10 million" trying to snag a purchase from the U.K., is trying to soften the blow of a certain loss and how it might be perceived as it bids for contracts in Canada.
"Why let it blow up later when you can back out now and save some face?" said Shawn-Patrick Stensil, who closely follows the nuclear power sector for Greenpeace Canada.
Less than two weeks ago, Mississauga-based AECL announced that its Advanced Candu Reactor made it onto a short list of four reactor designs approved by the U.K. nuclear regulator, which said it found no safety or security shortfalls serious enough to rule out the Canadian design. The short list also included Areva NP, Westinghouse Electric Co. and GE Nuclear – the same companies currently being considered for a new reactor in Ontario.
At the time, the U.K. government said it would whittle the list to three designs sometime in May. Sources say the regulator sent letters to all the U.K. utilities asking them to rank the designs they preferred. Their responses still left AECL on the bottom of the list.
Hugh MacDiarmid, AECL’s president and chief executive officer, told the Toronto Star that a business decision had to be made.
"We’ve been very carefully evaluating our realistic prospects over there. How much money is it going to cost us to go through step three, how much time, and without any commitment at the end of that?" he said payday loan. "Our sense was that we were unlikely to get the blue ribbon this time around, because we didn’t have the demonstration project under way here in our home country."
MacDiarmid said the U.K. plans to build several new reactors and that AECL intends to participate in subsequent rounds, once it has proven itself in Canada.
With three opportunities to sell in Canada – in Ontario, New Brunswick and Alberta – the Crown corporation didn’t want to spread itself too thin, he added.
"I’m a real believer in having a core mission in life, and I believe AECL’s core mission is to be the supplier of choice to the Canadian electrical utility market. Everything else has to be secondary to that."
Marc Kealey, an international energy consultant and former general manager at AECL, said the company made the right decision. The Canadian government, ultimately responsible as AECL’s owner, is better off backstopping a new nuclear project on its home turf than taking on huge financial risk in a foreign market, he said.
Even with a contract in Canada, Kealey added that AECL and its Candu technology face an uphill battle in overseas markets, dominated by the pressurized-water reactor technology used by Areva and Westinghouse.
Much of AECL’s efforts are focused on Ontario. The province expects to make a decision on reactor technology, and where the new plant will be built, by year end.
Ford Motor Co (F.N: Quote, Profile, Research) reported on Friday that Chief Executive Alan Mulally earned more than $22 million in 2007, citing progress in revamping strategy and structure at the struggling No. 2 U.S. automaker.
Ford, which lost $2.7 billion in 2007, noted Mulally steered through a new four-year contract with the United Auto Workers (UAW) that will allow it to hire new workers at lower wages.
In a statement issued with its annual report, Ford listed Mulally’s 2007 compensation as $21.7 million based on the current accounting standard that includes stock and option grants that vested during the year.
Under a calculation that excludes the value of stock-based compensation that was granted rather than the amount that vested, Mulally’s pay for 2007 was $22.75 million.
That compared to $39 million in total compensation that Mulally was paid in 2006, when he was hired away from Boeing Co (BA.N: Quote, Profile, Research) and received a signing bonus.
Ford paid Chief Financial Officer Don LeClair $11.7 million, including a bonus award of $3 million and the recognition of a higher value for his pension cash till payday. Including stock-based compensation that was granted rather than the amount that vested, LeClair was paid $12.7 million.
Ford paid Mark Fields, the head of its operations in the Americas and a candidate to succeed Mulally, $14.2 million including the value of stock-based awards granted in 2007.
Mulally’s compensation included a $2 million salary and an incentive bonus of $7 million.
Orders to U.S. factories fell for a second straight month, a worse-than-expected performance that reinforced worries that the risk of recession is rising.
The Commerce Department reported Wednesday that factory orders dropped by 1.3 percent in February, about double the downturn that economists had been expecting. Orders had fallen an even bigger 2.3 percent in January, the largest decline in five months.
The falloff in demand was widespread, with steep declines in orders for motor vehicles, various types of heavy machinery and demand for iron and steel.
The report on factory orders showed demand falling by 1.1 percent for durable goods, items expected to last at least three years, while orders for nondurable goods, products such as oil and chemicals, fell by 1.5 percent.
The weakness in manufacturing occurred even though orders for commercial airplanes rose by 5.1 percent in February, rebounding from a big decline in January cheap payday loans. Orders for motor vehicles fell by 2 percent in February after no gain in January. Automakers are struggling with weak demand in the face of soaring gasoline prices.
Overall, orders for transportation products posted a 1.8 percent rise in February as the strength in commercial and defense aircraft orders as well as higher demand for ships and boats offset the drop in motor vehicles.
Orders for heavy machinery plunged by 12.3 percent in February, the biggest decline since January 2004, while orders for iron and steel fell by 2.3 percent.
WASHINGTON — A vast reshuffling of U.S. financial regulators pitched by Treasury Secretary Henry Paulson on Monday is not so much about today’s economic crisis as tomorrow’s.
"These long-term ideas require thoughtful discussion and will not be resolved this month or even this year," Paulson acknowledged in a speech detailing his Blueprint for Regulatory Reform.
The proposals would broadly expand the powers of the Federal Reserve, merge the regulation of stock and commodities markets, fold savings and loan institutions under the umbrella of bank regulation and even allow insurance companies to opt out of state regulation in favor of a newly created federal insurance regulator.
Paulson’s plan also would create a new super-regulator whose powers would cut across various financial services with overarching responsibility for protecting investors and consumers.
The plan also would create a new federal entity to oversee the mortgage origination process so that lending standards never again would erode to the point where they sink the national housing market. That proposal has bipartisan support and could win early approval.
However, very little in the plan can be set in motion by executive order or under existing regulatory authority, so it will be up to the next president and Congress to determine how to proceed.
Leading Democrats who now control Congress didn’t rush to embrace the Paulson plan.
"I would call this the
wild pitch. It’s not even close
to the strike zone," said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, which would oversee many of the proposals.
Other Democrats said the plan offers no solutions for people facing foreclosure from rising interest rates, job losses from a slowing economy or enough oversight.
"The administration’s hands-off policies on regulation of securities and commodities markets and its continued pressure for less and less regulation have contributed to the mess that the markets are in," U.S. Sen. Carl Levin, D-Mich., said in a statement. "Reasonable regulation, not just coordination, of those markets is overdue."
Paulson said the economy’s current stumbles had nothing to do with lax regulation.
"I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years," he said.
The Paulson plan offers three time frames for regulatory changes: short-term proposals that could be enacted before the next president takes office in January, intermediate-term plans that could take two to eight years for congressional approval and long-range goals that serve mainly as discussion points.
The biggest change would be authorizing the Federal Reserve to become a supercop, with supervisory powers over any aspect of financial markets that presents danger to the financial system.
It isn’t clear how much Fed staff would have to increase for the agency to be effective at its expanded responsibilities.
"If you only address issues at a higher level of engagement, you may not have the institutional strength that comes from getting into the details," said Vince Reinhart, who was a Fed division director from 2001 to 2007 us fast cash. "The Fed is ’special forces’ that get helicoptered in when things get really serious. … The mission is very big because any entity could potentially have ‘consequences for financial stability.’"
The most immediate thing that Paulson thinks can and should be done this year is creating a Mortgage Origination Commission to provide much-needed federal oversight for the home loan origination process.
"Simply put, that process is broken," Paulson said.
This new commission, which appears to have support from top Democrats, would be composed of a representative from each of the five federal agencies that have some jurisdiction over banking — the Federal Reserve, Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration — and a representative from the association of state banking supervisors.
The president would appoint a director of the commission, which would design professional standards for licensing mortgage brokers and others who originate home loans. The group would establish educational requirements and either provide a registry for complaints or take disciplinary action against individual mortgage brokers, or both.
"This proposal addresses how the registry requirement would be enforced, and establishes an office to oversee individual and state compliance with its rules. We support this aspect of the recommendations," said George Hanzimanolis, the president of the National Association of Mortgage Brokers.
Another part of the plan is to allow national insurance companies to opt out of state regulation if they’re willing to be regulated by a federal insurance regulator, which doesn’t now exist. The Treasury argues that 50 separate state regulatory schemes put insurers at a disadvantage in a global economy.
But Sen. Dodd of Connecticut, where many top insurers are based, suggested that there may be a more middle-ground approach. He said he thought federal regulation of life insurance could be a good idea.
But, Dodd added, states probably would do a better job regulating the property and casualty insurers, who underwrite policies for protection against losses from hurricanes, earthquakes, tornadoes and other disasters.
Kevin G. Hall of McClatchy Newspapers contributed to this report.
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