The Philippine central bank may pause after reducing the benchmark interest rate at both of its meetings so far this year as elevated oil prices threaten to spur inflation, Governor Amando Tetangco said.
Salaries of 70 Fannie Mae and Freddie Mac executives will be limited to $500,000 per year and their annual bonuses eliminated amid pressure from Congress to stop the big payouts.
The pay and bonus structure of the government-controlled mortgage giants came under fire this fall after it was revealed that 12 executives got $35.4 million in salary and bonuses in 2009 and 2010. Fannie’s chief executive, Michael J. Williams, received about $9.3 million for the two years. Freddie’s chief executive, Edward Haldeman Jr payday advance low fees., was paid $7.8 million.
The government rescued Fannie and Freddie three years ago after they nearly folded because of big losses on risky mortgages. Taxpayers have spent about $170 billion to prop up the two companies, the most expensive bailout of the 2008 financial crisis.
Egypt
The ruling this week overturning a new state fund for science startups is likely headed to higher court.
Attorney General Chris Koster said Wednesday he plans to file an appeal of a Cole County judge’s ruling that declared the Missouri Science and Innovation Reinvestment Act to be unconstitutional.
Circuit Judge Dan Green tossed out the law in a ruling late Monday, saying it was invalid because lawmakers included a “contingency clause” when they passed it last fall, requiring a broader tax credit reform bill to be passed before MOSIRA could take effect. The tax credit bill never passed, and opponents of MOSIRA sued when Gov. Jay Nixon started implementing the science fund no fax pay day loan.
In a statement, Koster said MOSIRA is too valuable to let die on a technicality.
“(MOSIRA) is an important economic development tool that can bring high-tech jobs to Missouri and preserve jobs that are already here,” he said. “I don’t want to see important job-creating legislation fail. We intend to appeal this matter to its conclusion.”
Supporters of MOSIRA have said they also plan to push for a clean up-or-down vote on the matter in the General Assembly this session.
The European Central Bank is negotiating with Greece on behalf of its member central banks to exempt the Greek bonds in their investment portfolios from a debt restructuring, two euro-area officials said.
The ECB wants to swap the investment portfolio bonds for debt that
Wells Fargo Advisors is moving jobs from Minneapolis to St. Louis, though the brokerage arm of Wells Fargo won’t say how many positions would shift to the region.
Wells Fargo Advisors announced to employees in Minneapolis this week that it is closing an office within its Business Services Group there and transitioning those jobs to St. Louis. Employees in Minneapolis can apply for the St. Louis positions.
Raschelle Burton, a Wells Fargo Advisors spokeswoman, confirmed the jobs are moving from Minneapolis but declined to specify how many.
“This is part of a broad and ongoing effort to maximize efficiency,” Burton said.
Wells Fargo Advisors, a subsidiary of San Francisco-based Wells Fargo & Co., is based in downtown St. Louis. The company employs more than 5,000 locally and provides financial services including brokerage, estate planning, and asset management.
In August, Wells Fargo Advisors CEO Danny Ludeman said 200 jobs would be added to the St. Louis headquarters campus within 18 months to improve efficiency following a series of acquisitions. Wachovia acquired St. Louis-based A.G. Edwards in 2007, followed by Wells Fargo’s acquisition of Wachovia in 2008.
Ludeman identified Minneapolis in August as a possible site for jobs that could move to St. Louis, in addition to trader jobs and IT and technical jobs from San Francisco, Seattle and New York.
Fireballs lit up the night sky in Greece’s capital as buildings were set ablaze late Sunday amid widespread rioting and looting before a historic parliamentary vote expected to approve harsh austerity measures demanded to keep the country from going bankrupt and within the eurozone.
At least 10 buildings, including a closed cinema, a bank, a mobile phone dealership, a glassware store and a cafeteria, were on fire. There were no immediate reports of people trapped inside. Dozens of shops were also looted in the worst riot damage the country has seen since unrest in December 2008 following the fatal police shooting of a teenager.
Dozens of police officers and at least 37 protesters were injured in Sunday’s violence, and more than 20 suspected rioters were detained. Clashes erupted after more than 100,000 protesters marched to parliament to rally against drastic austerity cuts that will ax one in five civil service jobs and slash the minimum wage by more than a fifth.
“I’ve had it! I can’t take it any more. There’s no point in living in this country any more,” said a man walking through his smashed and looted optician store.
A protester who declined to give his name said: “I don’t care if an ornament shop is burning, but it’s a shame the building is old. We will win.”
Since May 2010, Greece has survived on a euro110 billion ($145 billion) bailout from its European partners and the International Monetary Fund. When that proved insufficient, a new rescue loan package worth a further euro130 billion ($171 billion) was decided _ combined with a massive bond swap deal that will write off half the country’s privately held debt.
But for both deals to materialize, Greece has to persuade its deeply skeptical creditors that it has the will and ability to implement spending cuts and public sector reforms that will end years of fiscal profligacy and tame gaping budget deficits.
A three-story corner building was completely consumed by flames with riot officers looking on from the street, and firefighters trying to douse the blaze. Protesters set bonfires in front of parliament and dozens of riot police formed lines to try to deter them from trying to make a run on parliament. Clouds of tear gas drifted across the square in front of parliament. Many in the crowd wore gas masks and had their faces covered, while others carried Greek flags and carried banners.
Riot police fired dozens of tear gas volleys at rioting youths, who attacked them with firebombs, fireworks and chunks of marble smashed off the fronts of luxury hotels, banks and department stores.
Streets were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.
Athens Mayor Giorgos Kaminis said rioters tried to storm the city hall building, but were repelled.
“Once again, the city is being used as a lever to try to destabilize the country,” he said.
Conservative New Democracy leader Antonis Samaras said the rioting “hurts the entire country.”
“We are seeing scenes from a future that we must do our utmost to avert,” he said.
Prime Minister Lucas Papademos’ government _ an unlikely coalition of the majority Socialists and their main foes, New Democracy _ was expected to carry the austerity vote, even by a narrow margin.
Combined, they control 236 of Parliament’s 300 seats, although at least 20 lawmakers from both main parties said they would not back the new private sector wage cuts, pension reductions and civil service layoffs dictated by the draft austerity program.
“There are very few such moments in the history of a nation,” Finance Minister Evangelos Venizelos said. “Our country has an acute issue of survival.”
“The question is not whether some salaries and pensions will be curtailed, but whether we will be able to pay even these reduced wages and pensions,” he added credit score. “When you have to choose between bad and worse, you will pick what is bad to avoid what is worse.”
The new cutbacks, which follow two years of harsh income losses and tax hikes _ amid a deep recession and record high unemployment _ have been demanded by Greece’s bailout creditors in return for a new batch of vital rescue loans.
“By Wednesday, finance ministers from eurozone countries must finally approve the financing and support program for Greece,” Venizelos said. “If that does not happen, and it is not at all certain that it will happen unless we raise to the occasion, then we will not be able by Friday, Feb. 17, to officially start the bond exchange process.”
“We won’t be in time to carry out the bond swap by March 5, and we won’t be in time to address the problem of major bond issues that must be paid from March 14-20,” he said. “If that doesn’t happen, the country will go bankrupt.”
The parliamentary debate started shortly after 3:30 p.m. (1330 GMT; 8:30 a.m. EST), and will take about 10 hours, finishing around midnight.
“By midnight today, before markets open, parliament must send the message that our nation is both willing and able,” Venizelos aid. “Unfortunately, the markets have subjugated states.”
German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper Sunday that Greece “cannot be a bottomless pit.”
“That’s why the Greeks must finally put a bottom in,” he added. “Then we can put something in too.”
Highlighting previous promises he said weren’t kept, Schaeuble said “that is why Greece’s promises aren’t enough for us any more,” according to the report.
Asked whether Greece has a long-term future in the eurozone, Germany’s vice chancellor told ARD television “that is now in the hands of the Greeks alone.”
Philipp Roesler said in the interview broadcast that what matters is not just Greece making pledges.
“We want … the Greek parliament also to approve laws and, as far as possible, take the first steps to implement what has been agreed,” he said.
“Only when that happens, only then can there be new aid _ and Greece urgently needs that,” said Roesler, who is also Germany’s economy minister.
Roesler acknowledged that Greece faces “difficult decisions” but stressed that Germany wants it to be able to get out of trouble.
“It is not enough just to give financial aid _ they must tackle the second cause of the crisis, the lack of economic competitiveness,” he said. “For that, they need … massive structural reforms. Otherwise Greece will not get out of the crisis.”
Introducing the legislation Sunday, Socialist lawmaker Sofia Yiannaka said the intense pressure from Greece’s EU partners to pass the measures was the result of delays in implementing already agreed reforms.
“The delays have our imprint. We should not blame foreigners for them,” she said.
“We have finally found out that you have to pay back what you have borrowed … We used to say ‘poor state, but rich citizens’ because we tolerated tax evasion for populist reasons. Is this the country we want?” Yiannaka added.
Leftist parties and the small rightist LAOS _ a former junior coalition partner _ have vowed to vote against the new austerity.
“You are not trying to save Greece, but a handful of industrialists,” Communist Party spokesman Thanassis Pafilis said. “And you disgracefully blame the struggling people who created the wealth we have. You are trying to send them back to the Middle Ages. We will not allow it.”
Picture it: Save for a few disposable point-and-shoots, Kodak is exiting the camera business.
Eastman Kodak Co. said Thursday that it will stop making digital cameras, pocket video cameras and digital picture frames in a move that marks the end of an era for the beleaguered 132-year-old company.
Founded by George Eastman in 1880, Kodak was known all over the world for iconic cameras such as the Instamatic. For the last few decades, however, the company has struggled. It was battered by Japanese competition in the 1980s and failed to keep pace with the shift from film to digital technology.
The company sought bankruptcy protection last month in a case that covers $6.7 billion in debt. It has a year to devise a restructuring plan. Citigroup Inc. was approved to lend the company $650 million to continue operating.
Exiting the digital camera business is especially poignant for Kodak. In 1975, using an electronic sensor invented six years earlier at Bell Labs, a Kodak engineer named Steven Sasson created the world’s first digital camera. It was an 8-pound, toaster-size device that captured low-resolution black-and-white images.
Reached at home Thursday, Sasson told The Associated Press that seeing Kodak exit the business is “a bit sad” but part of a transition facing all companies that use evolving technology.
“The average person probably owns more digital cameras than they realize,” he said. “It’s just the reality that digital imaging is a part of our lives and you can capture images in a lot of different ways. There’s a lot of choices people have, cellphones being one of them.”
Through the 1990s, Kodak spent some $4 billion developing the photo technology inside most of today’s cellphones and digital devices. But fearing that it might cannibalize its celluloid film business, Kodak waited until 2001 to bring its own digital cameras to the market. By then, it faced strong competitors like Sony Corp. and Canon.
These days, digital camera sales are suffering as consumers increasingly take photos on smartphones. Certain smartphone makers such as LG, Nokia, Motorola and Samsung have agreed to pay Kodak to license its digital camera technology, while companies like Apple are fighting its patent claims.
Before Thursday’s announcement, Kodak had already been trying to shrink its product line and sell in fewer retail venues, but as sales declines worsened, the company saw no way to make the business profitable.
“We made the logical conclusion that there was no clear path to profitability, and we have to focus on generating profits at this point,” said Kodak spokesman Chris Veronda.
Kodak sees home photo printers, high-speed commercial inkjet presses, workflow software and packaging as the core of its future business. Since 2005, the company has poured hundreds of millions into new lines of inkjet printers. Once the digital camera business is phased out, Kodak said its consumer business will focus on printing.
A coalition of labor and trade activists joined Democratic lawmakers from industrial states Tuesday to push the Obama administration to take action against the growing imports of auto parts from China.
The push to limit Chinese auto imports comes a week after President Obama announced in his State of the Union address that he was creating a trade enforcement unit to bring cases against countries, mentioning China by name.
It also comes two weeks ahead of a Washington visit by Chinese Vice President Xi Jinping, seen as likely to become president of China when Hu Jintao’s term ends next winter.
Criticism of China’s currency valuation and other trade practices are likely to be a point of contention between the two major trading partners at the Obama-Xi meeting, especially as the U.S. election season heats up.
Those who participated in the Capitol Hill news conference had praise for the Obama administration’s rescue of General Motors (, Fortune 500) and Chrysler Group in 2009, as well as its past trade cases against China. (GM back on top in global sales race)
But they argued that unless there were new cases brought against Chinese parts imports that even more jobs were at risk, since 75% of those employed in the auto industry work for parts suppliers rather than the automakers themselves.
"We’re very proud of the turnaround in the Big Three, but we can’t sit back and celebrate their comeback as long as China unabashedly steals jobs from small businesses who make up the majority of the American automobile industry," said Sen. Debbie Stabenow, a Democrat from Michigan.
The Democratic lawmakers who spoke Tuesday came from Michigan, Ohio and Pennsylvania, all expected to be key battleground states in this November’s general election.
Experts who spoke Tuesday argued that when China targets an industry, it can quickly come to dominate sales.
"If these policies are not stopped, by the end of this decade, China could seize 50% of more of our auto parts market, costing additional hundreds of thousands of U.S. jobs" said Terrence Stewart, an attorney who has won trade cases against China in the past. "The last 15 years of watching other industries will tell you that’s not (just) a possibility but a high likelihood if there is not something done."
The critics say China’s improper support comes in the form of direct subsidies, as well as restrictions on U.S. operations in its market. China has become the largest market for auto sales in the world, and U.S. suppliers’ limited access gives Chinese parts manufacturers an unfair advantage, the critics argued.
Among those joining the presentation Tuesday were the Alliance for American Manufacturing, a trade group supported by small manufacturers and the United Steelworkers union, as well as the Economic Policy Institute, a liberal think tank, and the United Auto Workers.
But missing from the presentation were officials from GM, Ford Motor (, Fortune 500), Chrysler or their suppliers, many of whom have their own plants in China and don’t want to risk alienating Chinese officials by calling for tough trade actions.
"At this point, all the major auto parts producers are invested in China," said Robert Scott, international economist with the Economic Policy Institute. "Not only do they want these subsidies, they’re afraid to complain that they will lose share in China."
China has recently imposed its own tariffs on U.S. vehicle exports to China that would significantly raise the price of any vehicles exported there. It alleges that the U.S. industry is itself benefiting from unfair subsidies.
But even though GM now sells more cars in China than it does in the United States, the Chinese duties will have little impact on its sales there, since less than 0.5% of its Chinese sales are cars built in the United States.
Asked about the move at the Detroit auto show earlier this month, GM CEO Dan Akerson refused to criticize the Chinese action against U.S. exports, saying "All countries, including the United States, have tariffs."
Europe is getting tougher on government debt. After more than two years struggling to rescue financially shaky governments, leaders of the 17 countries that use the euro are ready to agree on a treaty that will force member countries to put deficit limits into their national laws.
At first glance, it seems logical _ after all, the crisis erupted after too many governments spent and borrowed too much for too long.
But a number of economists _ and some politicians _ say the focus on cutting deficits is misplaced and that more fundamental problems are being left unaddressed.
It’s how the euro was set up in the first place, they say _ one currency, but multiple government budgets, economies moving at different speeds and no central treasury or borrowing authority to back them up.
Until those institutional flaws are tackled, the economists say, the euro will remain vulnerable. So far, Greece, Ireland and Portugal have turned to other eurozone governments and the International Monetary Fund for emergency funds to avoid defaulting on their debts.
Nonetheless, Europe’s leading countries are pushing a new Europe-wide treaty that would as the leading edge of their effort to reassure markets. European Union leaders hope to agree on the treaty’s text at a meeting starting Monday, and sign it by March.
The proposed treaty pushes countries to limit “structural” deficits _ shortfalls not caused by ups and downs of the business cycle _ to a tight 0.5 percent of gross domestic product or face a fine. That comes on top of other recent EU legislation intended to tighten observance of the eurozone’s limits: overall deficits of 3 percent of GDP and national debt of 60 percent of GDP.
European leaders are also urging countries to improve growth by reducing regulation and other barriers to business.
Yet economists like Jean Pisani-Ferry, director of the Brueghel think tank in Brussels, says it’s striking that governments are focusing on budget rules, given Europe’s earlier experience with them. An earlier set of rules were largely ignored at the behest of France and Germany in the first years after the euro’s 1999 launch.
And some of the countries that now are in the deepest trouble _ such as Spain and bailed-out Ireland _ stayed well within the debt limit for years.
“This suggests that the simplistic view _ that a thorough enforcement of the rules would have prevented the crisis _ should be treated with caution,” Pisani-Ferry wrote in a recent article for Brueghel.
Some European politicians are also voicing doubts about focusing primarily on deficits. They include new Italian Prime Minister Mario Monti, who has warned that growth is the real answer to shrinking debt in the long term. International Monetary Fund head Christine Lagarde has urged a broader approach. She calls for a willingness to share the burden of supporting banks and other financial risks so troubles in one country don’t become a crisis for the entire currency bloc.
Here are four reasons for concern cited by economists _ but not yet on the summit agendas of the eurozone’s leaders.
NO COMMON BORROWING: Without a central, pan-European treasury, there’s no steady central source of support for eurozone countries that run into economic or financial trouble. Many economists say issuing jointly guaranteed “eurobonds” would make sure no one country would ever default and governments would always be able to borrow. Governments would give up some of their sovereignty, allowing review of their spending and borrowing plans, to get the money.
Pisani-Ferry argues that this would protect governments from the kind of self-fulfilling bond market panic fueled by fears of default, that pushed Greece, Ireland and Portugal over the edge.
Yet the idea of more collective responsibility remains unpopular in prosperous EU countries such as Germany, Finland and the Netherlands. They can borrow cheaply due to their strong finances and would likely pay more to borrow at the rate that includes the shaky ones.
Eurobonds would also likely require a time-consuming change to the European Union’s basic treaty _ which currently bans members from assuming each other’s debts. There would also have to be a mechanisms in place to stop countries with shoddy finances from borrowing too much.
Opponents say that’s unrealistic. “If you have mutual debt responsibility, and freedom of each country to borrow, then each country can drive the eurozone into bankruptcy,” said Kai Konrad, managing director of the Max Planck Institute for Tax Law and Public Finance in Munich.
BANK BAILOUTS: Europe currently has no safety mechanism that would stop a country from sinking under the weight of having to bail out banks based in that country.
At the moment, each country bears the brunt of rescuing its own banks. This can create serious problems in a crisis.
For example Ireland’s loosely regulated banks borrowed heavily and loaned out money freely for speculative real estate projects. When the real estate market collapsed and the loans were not paid back, the Irish government had to step in to guarantee the bank’s bonds _ and quickly went broke. Ireland had a very low debt level of only 25 percent of annual economic output in 2007. As bank losses moved to the government’s balance sheet, by 2011 debt hit 106 percent of annual GDP. The country remains on EU-IMF life support.
Simon Tilford of the Centre for European Reform in London draws an analogy with U.S. insurer AIG, which was bailed out by the U.S. federal government in 2008. AIG was incorporated in the U.S. state of Delaware, yet Delaware did not go bankrupt handling the rescue. The central government stepped in.
TRADE IMBALANCES: Economists point out that gaps in how well countries compete and trade with one another have steadily widened since the euro was created.
Greece’s current account deficit _ the broadest measure of trade _ is even worse than its budget deficit. It buys and borrows far more than it sells and earns abroad.
Normally trade imbalances are evened out by fluctuating exchange rates _ but that can’t happen within the euro. Countries can improve their competitiveness by doing what Germany did in the 2000s _ cut labor costs to business by cutting general unemployment benefits. They can cut red tape and taxes. But that takes years.
Meanwhile, the region is also hampered by an inflexible pan-euro interest rate. Low interest rates _ set by the European Central Bank to see Germany and France through stagnation in the early 2000s _ were too low to control wage inflation and reckless borrowing in places like Greece and Ireland. Wage costs and debt levels rose. Competitiveness and exports declined, weakening the economy and undermining government finances.
CENTRAL BANK POWERS: Yet another structural issue is the limited power of the European Central Bank to support governments.
The bank resisted calls to buy larger amounts of government bonds. That resistance observes the spirit of the EU basic treaty, which forbids the central bank from financing governments.
But it’s a constraint that central banks such as the U.S. Federal Reserve and the Bank of England don’t have. They can buy up their country’s debt, a move that can push down government borrowing costs and reassure markets the state will always pay its debts.
The ECB remains “a limited-purpose central bank,” says Tilford.
He notes that Britain has more debt than Spain, 81 percent of GDP versus 67 percent, yet borrows at just over 2 percent annual interest for its 10-year bonds, while Spanish debt for the same period has a 5 percent-plus interest rate. One difference: markets know the Bank of England has the ability to support the government in a crisis by buying bonds and driving down interest rates.
Many of these issue were raised before the currency was launched in 1999, then got less attention.
Tilford says that “the tendency has been to say the currency union needs all these things but in practice it’s not necessarily the case” so long as countries obey budget rules and manage their finances well.
“It’s become harder to maintain that kind of argumentation now, given how bad things have got.”
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