Finance news. My opinion.

June 30, 2008


Filed under: online — Tags: , , — Professor @ 10:06 am

Malaysia's central bank Governor ZetiAkhtar Aziz said soaring food and energy prices may hurt household spending and damp economic growth, slowing expansion in 2008 to below its March forecast.

“The important consideration in this scenario is to sustain domestic demand,'' Zeti said in an interview yesterday in Basel, Switzerland. The economy may grow between 4.5 percent and 5 percent this year, she said, citing “preliminary'' estimates. The central bank in March forecast expansion of 5 percent to 6 percent.

Slowing growth may make it harder for Malaysia to follow Vietnam, Indonesia and the Philippines in raising borrowing costs this year to tame inflation, even as oil doubled to a record $142.99 a barrel on June 27 and rice and wheat reached unprecedented levels.

“Bank Negara Malaysia does not want to be trigger-happy cowboys shooting straight from the hip at the very first sign of danger,'' said Suhaimi Ilias, an economist at Aseambankers Malaysia Bhd. who expects the central bank to hold rates steady until year-end. “They want to carefully assess the impact on growth and inflation.''

Bank Negara, which kept its overnight policy rate at 3.5 percent for a 17th straight meeting in May, isn't scheduled to review borrowing costs until the end of July.

Ringgit Falls

Malaysia's ringgit fell today, heading for its first quarterly loss since September 2006, on concern that higher oil prices will stoke inflation and restrain growth.

Surging prices amid slowing expansion is complicating economic management for Prime Minister Abdullah Ahmad Badawi as he faces calls to step down after leading the ruling coalition to its worst election result in March general elections.

Malaysia may revise its 2008 budget deficit estimate, Second Finance Minister Nor Mohamed Yakcop said today, after the government last week announced a 15 percent increase in its development spending amid soaring costs. The government will announce its forecasts for growth on August 29, he said.

“Malaysia's major exports are electronics and electrical goods and global demand has been waning,'' said Joanna Tan, an economist at Forecast Singapore Pte paydayloan. “We expect some support from the commodities sector and that will help buffer to a certain extent. It is possible for them to meet their growth forecast.''

`Necessary Response'

Malaysia's inflation may reach a nine-year high of 5 percent this month after the government lifted retail gasoline and diesel prices to trim subsidies used to keep domestic costs low, Zeti has said.

“What we have to monitor very closely is what is the impact on wages and to what extent these prices, increasing costs, are passed on to consumers,'' Zeti said in Basel, where she's attending a meeting of central bankers at the Bank for International Settlements. “When that becomes clear, a necessary response will be based on these considerations.''

Malaysia won't use the exchange rate to counter inflation, because the currency market is “too volatile,'' Zeti said.

The central bank this month raised its 2008 average inflation forecast to 4.2 percent from a March estimate of as much as 3 percent, causing some economists to predict a rate increase in July or earlier.

“Malaysia needs to get a grip on inflation after the price hikes,'' said Tan at Forecast, who expects the central bank to raise rates next month. “There's also concern that investor sentiment will be weighed by the ongoing political developments and that is another challenge.''

`Careful Balance'

Second Finance Minister Nor said June 24 that inflation in Malaysia is being driven by rising costs rather than demand, so higher interest rates won't necessarily cool price pressures.

A “careful balance will be made in determining the interest-rate policy,'' Zeti said. While rising prices will have a “significant'' impact on inflation in the short term, “this does not mean that it's going to result in significant, persistent price increases going forward.''

Higher prices will reduce household purchasing power, and may have a “moderating impact'' on prices, she added.


June 29, 2008

Biz Council to fight for property tax cap

Filed under: money — Tags: , , — Professor @ 8:51 pm

The state's largest business lobby has created a statewide alliance advocating for a property tax cap — something state legislators could not agree on before the end of their scheduled session.

The Business Council of New York State Inc., based in Albany, is backed by a group of businesses, taxpayer groups and other associations supporting Gov. David Paterson's proposed tax cap.

Paterson wants to cap annual property tax increases at 4 percent or 120 percent of the consumer price index, whichever is lower. A supermajority of a school district's voters can choose to override the limit.

Powerful unions, including the 600,000-member New York State United Teachers in Latham, have fiercely opposed that idea and campaigned against the cap in the waning days of the legislative session, which ended June 25. Paterson has repeatedly said he is willing to call special legislative sessions later this year to try to lower future budget deficits or pass key legislation like a property tax cap.

"I want to get to a point where we start to look at substance, more than anything else," Paterson said at a June 23 press conference 500 fast cash. He said he and state leaders would continue negotiations over the summer.

The cap was the key recommendation in a preliminary report from a state tax commission, issued in early June. A final report is due by the end of the year, one reason Assembly Speaker Sheldon Silver cited as a reason why he wasn't willing to take action on any tax cap proposal.

The new tax cap support group has nearly 50 members from Buffalo to Long Island. The group's Web site is:


June 27, 2008

French First-Quarter GDP Growth Revised Down to 0.5%

Filed under: business — Tags: , , — Professor @ 1:51 pm

France's gross domestic product rebounded less than initially estimated in the first quarter as household spending, the driving force of the economy, failed to grow.

Europe's third-biggest economy expanded 0.5 percent in the quarter from the previous three months, when it grew a revised 0.4 percent, Paris-based government statistics office Insee said in an e-mailed statement today. In its preliminary report on May 15, Insee said GDP grew 0.6 percent in the latest quarter.

The first quarter “was a bit supernatural,'' said Jean- Christophe Caffet, an economist at Natixis in Paris. “From there on, growth figures will be particularly bad.''

Soaring energy and food prices are stoking inflation, crimping consumers' spending power across the 15-nation euro region. European Central Bank President Jean-Claude Trichet said June 5 that the ECB may increase its benchmark rate next month to rein in inflation expectations even as economic growth slows.

French inflation, based on a non-EU harmonized method, will peak at a 17-year high of 3.6 percent in the coming months before slowing to 2.8 percent in December, Insee forecast earlier this month. Inflation will average 3.2 percent in 2008, the highest since 1991 and up from 1.5 percent last year, Insee said.

As a result of soaring prices, consumer spending, which has been the main engine of French growth in the past decade, remained flat in the first three months of 2008 after growing 0.5 percent in the fourth quarter, and 0.8 percent in the third, Insee said.

Purchasing Power

French households saved 16 percent of their disposable income in the first quarter, unchanged from the fourth quarter, Insee said. Their gross purchasing power failed to grow after having added 1 percent in the earlier quarter.

France's economy will expand 1.6 percent this year, the slowest pace in five years, as rising prices damp consumer spending and the housing market slumps, Insee said on June 20 no fax payday loans. Confidence among French consumers fell to a record low in June, a report said yesterday.

Producer prices rose 1.3 percent in May from April and jumped 6.7 percent from a year earlier, Insee said in a separate report today. Economists polled by Bloomberg expected a 0.6 percent increase on the month, according to the median of 15 forecasts.

Consumer Spending

“If consumer spending clearly slows in relation to the faster inflation and the decrease in households' purchasing power, we may hope trade will in turn contribute to growth'' through lower imports and stronger exports to countries such as Germany, said Mathieu Plane, an economist at Paris-based Observatoire Francais des Conjonctures Economiques.

Exports jumped a revised 3.2 percent in the first three months of the year. In a June note, Insee said it expects exports to drop 0.1 percent in the second quarter and show little growth in the second half.

Imports also increased by 2.3 percent in the first three months after having fell 1.1 percent he previous quarter. Trade added 0.3 percentage points to the fist quarter compared with 0.7 percentage points the last three months of 2007, Insee said.

French GDP will grow 0.2 percent in the second quarter, the least in almost two years and a third of the pace of the first three months of 2008, Insee said last week. The economy will stagnate in the third quarter and expand 0.2 percent in the final three months, Insee said.

“The second quarter won't be as solid and strong as the first, but even so I think that Insee's forecasts are very gloomy,'' French Finance Minister Christine Lagarde said in a Bloomberg Television interview on June 19. She cited job creation and falling unemployment as reasons to be optimistic.


June 25, 2008

Study: Wireless Internet is top tech amenity for hotel guests

Filed under: finance — Tags: , , — Professor @ 1:56 am

Wireless Internet is the most important technology amenity hotel guests ask for, according to a study by the American Hotel & Lodging Association.

The study shows that 82 percent of guests rank wireless Internet as their top amenity, followed by in-room entertainment systems (48 percent) and airline check-in kiosks (38 percent).

"During the past decade, advancements in information technology have significantly shaped the way the lodging industry plans, controls and manages operations in all segments of the hospitality community," AHLA President and Cheif Executive Officer Joseph A. McInerney said.

The AHLA's 2008 Lodging Survey indicates that 91 percent of hotels offer wireless Internet access, up 35 percent from just four years earlier fast payday loans.

Nashville Business Journal


June 23, 2008

Nicholas Financial Inc. expands to Nashville

Filed under: economics — Tags: , , — Professor @ 5:45 pm

Nicholas Financial Inc. (NASDAQ:NICK) has opened it's first branch in Nashville on Gallatin Road in the Rivergate area.

The company acquires and services automobile and light truck installment sales contracts that it purchases from over 1,400 new and used car dealers.

Based in Clearwater, Fla., Nicholas Financial Inc. specializes in subprime auto and truck loans.

With assets of $190 million, the company is one of the largest publicly- traded specialty consumer finance companies based in the Southeast

Nicholas Financial has 48 branch locations in both the Southeast and Midwest.


June 22, 2008

Polish Premier Says Central Bank Increased Rates `Too Late

Filed under: finance — Tags: , , — Professor @ 8:50 pm

Polish Prime Minister Donald Tusk said the central bank's rate-setting body waited too long before raising interest rates as inflation accelerated.

“They failed to react quickly enough,'' Tusk said on private broadcaster TVN today. “Interest rates should have been increased earlier than they were.''

Tusk echoed comments by Finance Minister Jacek Rostowski on June 20 that Poland's current rate of inflation was due to “mistaken'' policy at the central bank. The annual inflation rate was 4.4 percent in May, remaining above the central bank's target limit of 3.5 percent for a seventh consecutive month.

While the bank has lifted the benchmark rate seven times since April 2007, to 5.75 percent, the annual inflation rate had reached the central bank's mid-range target of 2.5 percent the month before.

Central bank Governor Slawomir Skrzypek rejected Rostowski's remarks, saying yesterday in a statement published in Gazeta Wyborcza the minister was making the bank responsible for external inflationary elements like grain prices or dairy products over which it had no control easy quick payday loans.

Tusk has been on a collision course with Skrzypek since his government took power in November. Skrzypek, nominated by President Lech Kaczynski, whose brother Jaroslaw heads Poland's biggest opposition party, has spoken out against tightening of monetary policy.

The prime minister said he wouldn't change his “negative opinion'' of Skrzypek's candidate to become deputy governor, Gazeta Wyborcza yesterday cited him as saying.

Tusk refused to approve Witold Kozinski, whom Skrzypek nominated in February after his deputies resigned, after Kozinski said it may be necessary to weaken the zloty in the currency market.


June 19, 2008

Strickland signs small-biz paperwork waiver measure

Filed under: online — Tags: , , — Professor @ 2:41 am

Ohio Gov. Ted Strickland signed House Bill 285 this week, a measure that gives one free pass to small businesses in the state that rack up first-time paperwork violations.

The measure, introduced about a year ago and cleared in both chambers of the Ohio General Assembly earlier this year, waives fines or civil penalties for small businesses’ first paperwork violation. The waiver applies to a wide range of state agencies, including the Department of Taxation, Environmental Protection Agency and Department of Natural Resources.

The bill also stipulates that fines and penalties remain intact if the violation could cause serious harm or involve a criminal offense.

H.B. 285 garnered support from small businesses and trade groups, including the state chapter of the National Federation of Independent Business.

State legislators roundly backed it as well creditreports. The measure in March passed unanimously in the House of Representatives and went on to receive unanimous Senate approval last month.

As the measure was moving through the General Assembly, Strickland also signed an executive order calling for state agencies to adopt a common-sense approach when reviewing and applying rules and regulations governing Ohio businesses.

With Strickland’s signature on the measure Tuesday, the law takes effect in mid-September.


June 16, 2008

Housing Starts Probably Declined in May: U.S. Economy Preview

Filed under: term — Tags: , — Professor @ 10:57 am

Builders probably broke ground on fewer homes in May, signaling the residential real-estate market remains the biggest risk to growth, economists said ahead of reports this week.

Housing starts fell to a 980,000 pace last month, from 1.032 million in April, according to the median forecast in a Bloomberg News survey. Building permits, a signal of future construction, fell to a 960,000 rate.

Rising foreclosures, higher mortgage rates and declining property values threaten to keep home sales depressed in coming months, discouraging builders from starting new projects. Declines in construction will limit any rebound in economic growth, even as tax rebates give consumers a temporary boost.

“The first signals of stabilization are going to come from new-homes sales, which we haven't seen yet,'' said Julia Coronado, a senior economist at Barclays Capital in New York. Housing “will be on a downward trend.''

The Commerce Department's construction report is due June 17. Housing starts dropped to a 17-year low 954,000 annual pace in March.

Banks repossessed twice as many homes in May and foreclosure filings rose 48 percent from a year ago as falling house prices trapped borrowers in mortgages they couldn't afford, RealtyTrac Inc. said last week.

One in every 483 U.S. households either lost a home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said.

Builder Losses

The five largest homebuilders have reported a combined $3.4 billion in losses in their most recent quarters as new-home sales fell. Stricter lending standards and rising foreclosures are reducing demand for homes.

A report tomorrow from the National Association of Home Builders/Wells Fargo is forecast to show builder optimism held at the second-lowest level on record this month.

The slump in construction will be one factor restraining economic growth in coming months, a report from the Conference Board may show on June 19. The New York research group's index of leading economic indicators was unchanged in May, according to the median estimate free credit report .com. The gauge points to the direction of the economy over the next three to six months.

Another concern is the spiraling cost of raw materials. Wholesale prices jumped 1 percent last month, pushed up by energy and food costs, a Labor Department report on June 17 may show, according to the Bloomberg survey.

So-called core producer prices, which exclude food and fuel, increased 0.2 percent after a 0.4 percent April gain.

Fuel Costs

The Labor Department's report on consumer prices last week showed a jump in fuel costs also contributed to a 0.6 percent increase in the cost of living in May. The core rate rose just 0.2 percent, indicating companies haven't been able to completely pass the increase in expenses along to customers.

“The energy shock not only boosts headline inflation, but also erodes consumer purchasing power and squeezes profit margins,'' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York.

Federal Reserve Chairman Ben S. Bernanke last week said policy makers are paying “close attention'' to rising commodity costs and will “strongly resist'' any surge in inflation expectations.

At the same time, the risk the economy has entered a substantial downturn “appears to have diminished over the past month or so,'' Bernanke said.

Fed policy makers are scheduled to next vote on the direction of the benchmark overnight lending rate between banks at the conclusion of their June 24-25 meeting.

Rising costs and slowing demand have taken a toll on manufacturing. A report from the Fed on June 17 may show industrial production increased 0.1 percent in May, after a 0.7 percent drop the prior month. Improving sales overseas are helping to prevent a deeper factory slump.


June 13, 2008

Calif. appeals court upholds judgment against Cintas

Filed under: term — Tags: , , — Professor @ 12:15 pm

A California appeals court upheld a judgment against Cintas Corp. on Wednesday, ordering it to pay more than $2 million to 219 current and former Cintas workers and their lawyers.

The ruling confirmed a trial court’s conclusion that Cintas (NASDAQ: CTAS) was liable for not paying workers at its nearby laundry facilities the minimum wage and benefits required under a Hayward, Calif., so-called "living wage" law. The Cincinnati-based uniform supplier’s plants that serviced the city were bound by that law because Cintas was under contract to supply the city of Hayward with uniforms, shop towels and mats, the courts said.

Cintas eventually terminated the contract after four years, and workers filed a class-action lawsuit to collect back wages and benefits cash advance.

The trial court rejected the company’s contention that the city had no authority to regulate wages at facilities outside the city’s boundaries, and the appeals court agreed with that ruling. If Cintas didn’t want to pay the level of compensation required by the law - $8 an hour for workers without health insurance; $9.25 for those with insurance - all it had to do was decline the contract, which it eventually did, the court said.

The court ordered Cintas to pay about $800,000 in back wages and benefits, plus interest, as well as $259,000 in civil penalties. It also must pay $1.2 million in legal fees to the plaintiffs’ lawyers.


June 12, 2008

BOK Holds Rate at Seven-Year High to Fight Inflation

Filed under: money — Tags: , , — Professor @ 7:57 am

The Bank of Korea kept interest rates at the highest level in seven years, saying the risk of faster inflation outweighs concern that economic growth is slowing.

Governor Lee Seong Tae and his colleagues left the seven-day repurchase rate at 5 percent in Seoul today, as forecast by all 19 economists surveyed by Bloomberg News. They last adjusted the benchmark in August with a quarter-point increase.

Surging oil and food prices are driving inflation above the comfort zones of central banks globally, replacing slowing economic growth as their primary concern. Easing the rising cost of living is a priority for President Lee Myung Bak, whose popularity has plunged since his government agreed to resume U.S. beef imports that protesters claim aren't safe from disease.

“President Lee has set tackling inflation as a top priority to win back public support,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “The central bank will have to raise rates if inflationary expectations spread.''

The yield on the five-year government bond fell 2 basis points to 5.84 percent at 12:53 p.m. in Seoul after Governor Lee spoke at a press conference, cooling speculation that the bank may increase interest rates. It earlier rose as much as 8 basis points.

Governor Lee said economic growth would probably slow gradually and inflation would accelerate and added that monetary policy depends on whether exports remain strong, domestic demand cools and inflation quickens.

`Cut or Increase'

“The rate policy is always open for a rate cut or increase as we manage it every month by looking into the economy and inflation,'' the governor said. “Inflation may return to the normal level after it's absorbed in the economy.''

The five year bond yield rose as high as 5.94 percent after the bank distributed a Korean-language statement immediately following the decision that said: “The upward risk to inflation is bigger than the downside risk to growth.''

The statement also said: “It's necessary to manage economic policy to keep inflation expectations from spreading.''

“There was no clear statement from the governor that could be taken to mean that the central bank will raise rates anytime soon,'' said Seo Chul Soo, a fixed-income strategist with Daewoo Securities Co faxless payday advance. in Seoul. “His comments were less hawkish than the market feared.''

The won traded at 1,030.35 versus the dollar from 1,030.10 late yesterday.

Oil Prices

“Difficulties are spreading in the overall economy,'' Finance Minister Kang Man Soo said today, citing the increase in oil prices. “Because the oil-price rise continues, I think difficulties could increase in coming months.''

Central banks in India, Russia, Brazil, Indonesia, the Philippines, Vietnam and Pakistan have all boosted borrowing costs in the past month. China this week ordered lenders to set aside more reserves.

Soaring fuel and food costs drove consumer prices to a seven-year high of 4.9 percent in May, exceeding the central bank's target range for a seventh month. The bank aims to keep inflation between 2.5 percent and 3.5 percent, on average, for the three years to 2009.

The drop in the won against the U.S. dollar this year is another factor that is pushing inflation higher by increasing the cost of imports.

At the same time, a weaker won is helping Asia's fourth- largest economy withstand a slowdown in the U.S. and Europe by making Samsung Electronics Co.'s mobile phones and Hyundai Motor Co.'s cars cheaper overseas.

Economic Growth

The focus of policy makers may shift back to supporting growth should oil prices fall and inflation begin to cool.

South Korea's $970 billion economy grew at the slowest pace in more than a year last quarter as consumers and businesses cut spending.

South Korean households were the most pessimistic in more than three years in May. Their debt rose to a record last quarter as they borrowed to buy houses and settle credit-card bills.

The ability of households to repay debt has weakened, the central bank said last month, because their debt rose faster than their income.


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