Finance news. My opinion.

September 30, 2011

Chevys seeks to close St. Charles restaurant

Filed under: economics, mortgage — Tags: , , , — Professor @ 1:04 pm

The franchise owner of local Chevys Fresh Mex restaurants that filed for bankruptcy this year has asked a judge to terminate its lease in St. Charles.

T&J Restaurants, which owns seven local restaurants and is based in O’Fallon, Ill., filed for Chapter 11 bankruptcy on July 21. T&J closed a Chevys restaurant in Columbia, Mo., in July.

T&J has asked the bankruptcy court to allow it to terminate its lease at 2911 Veterans Memorial Parkway in St. Charles, which remains open.

“The debtor has determined that it is no longer economically feasible to continue its business operation in the St. Charles, Missouri market,” T&J said in a court filing.

A hearing on the lease termination is set for Tuesday.

John Whicker, owner of T&J, previously said he planned to close the Chevys location at the St. Louis Mills Mall in Hazelwood. However, that restaurant remains open and a Chevys employee said it renewed its lease at the Mills in recent weeks. Robert Eggmann, T&J’s attorney, declined to comment.

T&J is a franchisee of Real Mex Restaurants, based in Cypress, Calif.


September 28, 2011

Cyprus’ 2012 budget aims to slash deficit

Filed under: business, house — Tags: , , , — Professor @ 9:48 pm

Cyprus’ draft budget for next year includes some euro840 million ($1.14 billion) in spending cuts and tax increases in a bid to slash the island’s fiscal deficit to 2.3 percent, the finance minister said Wednesday.

Cyprus has endured consecutive credit rating downgrades in recent months, mainly due to the large banking sector’s exposure to debt-laden Greece. The downgrades have made it difficult for the government to borrow from the markets and stoked fears the island may be forced to seek a bailout from its European Union partners.

Finance Minister Kikis Kazamias said the draft budget includes more spending cuts and tax hikes to bolster an initial, euro180 million ($245 million) austerity package that lawmakers passed in August, but which was deemed insufficient to tackle the burgeoning deficit.

The public sector takes up almost a third of all government spending. The new measures include scrapping 1,100 public sector positions and cutting new government workers’ salaries by a tenth, Kazamias said.

Other measures include rolling back social handouts by euro200 million ($272 payday advance.6 million) and raising the sales tax from 15 to 17 percent for at least three years _ a move harshly criticized by opposition parties.

Kazamias said the deficit for 2011 is projected to hover between 6 to 6.5 percent of gross domestic product. More fiscal belt-tightening is expected to shrink the deficit to around one percent in 2013 and 2014, he said.

Debt for 2012 is forecast to remain static at 65 percent of gross domestic product, dropping slightly to 64.2 percent in 2013 and to 62.8 percent in 2014. The finance minister also said growth for 2011 will be between zero and 0.5 percent at best, rebounding in 2012 to between 1 and 1.5 percent.

Kazamias will submit the Cabinet-approved draft budget to parliament next month, saying the risks of lawmakers voting it down were too serious to contemplate.

“In my calculations, there is no scenario of the budget being voted down,” Kazamias said.


September 27, 2011

Prosecutor: Consultant stole $1M from NYC mayor

Filed under: business, legal — Tags: , , , — Professor @ 7:08 am

A political consultant stole more than $1 million from New York City Mayor Michael Bloomberg because he wanted to buy his father’s house, a prosecutor said Monday.

Republican consultant John Haggerty didn’t have the money to pay for the house, but he did have “access to one of the largest mayoral campaigns this city has ever seen. … And with it, the mayor’s money,” Manhattan Assistant District Attorney Brian Weinberg told jurors as Haggerty’s trial opened.

Prosecutors say Haggerty got Bloomberg to underwrite an elaborate 2009 poll-watching effort run by the state Independence Party but then mounted only a meager operation and used most of the money instead to buy the house. Haggerty says he did the job he was paid for and didn’t do anything illegal guaranteed unsecured personal loan.

Bloomberg, an independent, was running for re-election and was the Independence Party’s top candidate.

Defense lawyer Raymond Castello said the campaign used Haggerty as a scapegoat after questions arose on whether the campaign had followed campaign-finance law.

He said the mayor donated over $1 million to the Independence Party in order to maintain a distance from what could be seen as a questionable practice.

“This case is about winning at all costs,” Castello said. “That’s what Michael Bloomberg is all about.”

Bloomberg is expected to testify in the trial.


September 25, 2011

Special report: Jobless in St. Louis

Filed under: finance, term — Tags: , , , — Professor @ 11:12 am

Back when the recession first took hold, we never expected to count this high: 61,000 net jobs lost in Metro St. Louis since employment peaked in February 2008.

The stories of the displaced come in an infinite variety, though increasingly with one disturbing commonality: the unprecedented length of their joblessness. The average jobless stint now lasts 10 months, long enough to cripple not only short-term finances but long-term career prospects. 

In the Sunday Business section of the Post-Dispatch, and here on, we’ll explore these trends, and the impact on our neighbors, in a special report: Jobless in St. Louis. 

George Batten, 50, has been out of work for three years - after spending three decades climbing to an executive post. Construction worker Scott Regna, 31, has seen his income drop from $50,000 in 2006 to a mere $3,000 last year. J.L. Hickman, 62, had worked literally hundreds of full-time and contract jobs before hitting a wall 15 months ago; he’s put in 552 unsuccessful applications since then. The career of 24-year-old Isabel Yerkes has yet to start, as she labors in a part-time retail purgatory after graduating college. Alfreda Lewis, 55, prays each day as she nears the two-year mark without a job and nears the end of her unemployment insurance.

These are just a handful of stories plucked from the tens of thousands being lived, and endured, every day by our family, neighbors and friends in the St. Louis region. Taken together, they amount to a staggering financial and emotional toll that, however and whenever we recapture solid economic ground, will be with us for years to come.

In Sunday Business: 

September 23, 2011

Ford CEO: recovery is slow but ‘on right track’

Filed under: prices, uk — Tags: , , , — Professor @ 8:20 pm

At his first press conference as CEO of Ford, Alan Mulally was asked how he could run such a complex company with no experience in the car business.

The former Boeing executive responded that cars, which have around 10,000 parts, are indeed very sophisticated. Then he smiled and noted that a jumbo jet has 4 million parts _ and it flies.

If there were doubters when Mulally joined Ford in 2006, there aren’t many now. The year he took over, the company lost $17 billion. Last year, it made $6.6 billion, its biggest profit in 11 years. Within weeks of arriving, Mulally took out a huge loan and began pushing through a restructuring that continued even as the recession sent rivals General Motors and Chrysler into bankruptcy.

Behind his sunny demeanor and fuzzy red sweater vests, the 66-year-old Kansan had the steel to rein in the bureaucracy and infighting at Ford. He promoted managers who could work together and fired those who couldn’t. He shed money-losing brands like Jaguar, Volvo and Mercury. He closed six U.S. plants, cut thousands of jobs and saved billions in engineering costs by developing fewer cars for the global market, such as the Fiesta and Focus, instead of unique models for each region.

Mulally still faces big challenges. Ford is struggling to overhaul Lincoln, which was the nation’s top-selling luxury brand a decade ago but fell victim to underfunding and more stylish rivals. Its sales in China, the world’s biggest car market, are just one-third of GM’s. And slow growth in the U.S. is hindering a comeback in car sales.

Mulally spoke with The Associated Press about the economy, the car industry and his management style. Excerpts appear below, edited for length and clarity.

Q: What are your biggest worries about the economy?

A: We’re generally on the right track, but it is going to be a slower recovery than we’ve ever had before. The private sector leading us out of this recession is the most important thing.

Q: President Obama called you when he was on Martha’s Vineyard. Did he ask for advice on the economy?

A: What he wanted to know, because we interact with so many customers, (was) how consumers (are) feeling about everything. They’re looking for both near-term action on jobs and the economy, but they’re also looking for longer-term solutions on our debt, on our budget deficits, our trade imbalances. They’re looking for more clarity on where the United States is going, so that they can plan their near-term actions against the long term.

Q: Why aren’t companies using their cash stockpiles to hire more?

A: The consumer has pulled back. We’re ready with the products and services that people really do want, but we’re going to match our production of goods and services, cars and trucks, to what the real demand is. We’re very disciplined about that. The worst thing you could do is make more than what the market wants, which our industry has done sometimes in the past. The demand is still very, very low.

Q: Is it a permanent trend that people want more fuel-efficient cars?

A: I sure think so. Most of us in the United States and around the world know that we are going to pay more for energy going forward. There will be ups and downs but, in general, it is more expensive to find oil and bring it to market than ever before. So fuel efficiency has just continued to move as the number one consideration. It doesn’t make any difference whether it’s a new Ford Fiesta or an F-150, the customers want the most fuel-efficient vehicle.

Q: Take us through how, inside your company, that changes things.

A: If you look at Ford historically in the United States, we were about 70 percent trucks and bigger SUVs and made 30 percent cars. Around the world, the percentage is the opposite way. But in the United States, we are moving to a tremendously balanced portfolio of small, medium and large vehicles. Over the next few years, we’ll be at the place where nearly 60 percent of our vehicles are small- or medium-sized cars, and about 40 percent will be the larger SUVs and trucks free business cards. It really is a tremendous transformation of Ford.

Q: How do you make that happen? How do you change the employee’s mindset, on down to the engineer and into the assembly line?

A: Every Thursday, we’re all linked up on the Internet and in two and a half hours, we go through about 320 charts. All the charts have the areas that need special attention. We review the entire operation. You can’t fool anybody. Do you have a compelling vision? Do you have a comprehensive strategy to deliver that vision? And are we going to work together to relentlessly implement that? When you do that, it’s like everybody is involved. We have a laser focus now. Every vehicle had to be best in class, quality, fuel efficiency, safety. That is benchmarked against the competition. Everybody knows everything.

Q: Some Ford workers are upset about your compensation. (Mulally made $26.5 million in salary, stock options, bonuses and other compensation last year). What would you say to an hourly worker who asks why your pay is fair when a new hire makes less than $30,000 a year?

A: My compensation is entirely tied to the success of Ford. The vast majority of my compensation is at risk, because the numbers that you see are only realizable if we profitably grow the corporation. And that’s the way it should be. I believe in it so much that most of the management team and most of the salary team _ and also our wonderful employees that are represented by the UAW _ have had profit sharing plans. We’re continuing to talk together about how to align all of our compensation even more. Because the most important thing for everybody is that they get a chance to participate in the profitable growth that we deliver.

Q: Would you say there’s a problem in this country because of the gap between what the richest make and what the middle class is earning?

A: I really believe in capitalism and I think it has served the United States fantastically. It’s so important that we just take stock about what is right about America. We’re going through a rough patch. We’re fixing some issues associated with a couple of really big bubbles that we all created, starting with all of us living beyond our means. We’re straightening that out right now. It’s going to take a little while but we can do it. But what’s really right is the economic model and capitalism and us holding ourselves accountable for making products and services that people really do want. And the market gets to decide who’s successful, right?

Q: I’d like to learn more about you personally and also you in the workplace, your management style.

A: I have always wanted to contribute to something that was meaningful and that helped people. I found my dream at Boeing. I love airplanes and I love design. I also felt like what I was really doing was providing safe and efficient transportation and helping people get together around the world. I don’t have to be the smartest or the brightest. I love working with a lot of talented people to do something that you can’t do just by yourself.

How do you bring everybody together around doing something? You need a compelling vision, a clear strategy (and) relentless implementation. I just love seeing people get a chance to perform and do something in a meaningful way. I think everybody needs to be included. I’ve found that when everybody knows what the plan is and they know what the status is, and everybody is helping each other, magic things happen.

Q: Tell us about some of the people you’ve learned from.

A: So many people I’ve learned so much from, starting with my mother, (who taught me to) contribute to something important, treat others the way you want to be treated and that the purpose of life is to love and be loved, in that order.


September 22, 2011

2 NY insider trading cases pack stern punishment

Filed under: finance, legal — Tags: , , , — Professor @ 5:12 am

A stock trader dubbed the Octopussy because he reached for so much inside information was sentenced Wednesday to 10 years in prison and a California finance researcher convicted in a separate but related insider trading case received a four-year prison term as two judges tried to send a stern warning to Wall Street.

“Insider trading is very, very hard to detect. Because of that, it has to be dealt with harshly,” U.S. District Judge Richard Sullivan said as he gave 34-year-old Zvi Goffer one of the longest prison terms ever handed down in an insider trading case. He added: “These crimes are not going to be tolerated, certainly not in my courtroom.”

U.S. District Judge Jed Rakoff said it was important that each sentence send a tougher message to deter inside trading than previously thought necessary.

“It’s hard to detect but easy to commit so the temptations are great,” Rakoff said as he sentenced Winifred Jiau, 43, of Fremont, Calif., who has remained imprisoned for nine months because it was determined that the Taiwan-born researcher was a risk to flee. Still, the sentence was only half of what was called for by federal sentencing guidelines.

The Israeli-born Goffer, who lives in Brooklyn, was convicted with two others in June in a conspiracy to pay bribes to coax confidential information out of two shady lawyers at a Manhattan firm. The arrests were part of what prosecutors called the biggest hedge fund insider trading case in history. In all, more than two dozen people have been convicted in the probe.

The sentencings Wednesday came weeks before the scheduled sentencing next month of Raj Rajaratnam, a one-time billionaire hedge fund founder who was convicted on insider trading charges earlier this year. Prosecutors say he made more than $50 million through illegal trades and are seeking a prison term of more than 24 years.

When the charges against Rajaratnam and Goffer were announced in the fall of 2009, prosecutors said they had made unprecedented use of wiretaps, in part because white collar criminals were starting to use techniques to cover up their crimes that made them resemble common criminals.

The wiretaps eventually led to a separate probe of researchers in the securities industry who enable illegal secrets to be passed between hedge fund managers and employees of public companies. Jiau was among 13 people arrested last year in that probe.

At his sentencing, Goffer apologized to investors in the stocks in which he had an unfair advantage, saying: “They didn’t have the information I had.”

He began crying when he apologized to his brother, Emanuel, who was convicted at trial along with him and is awaiting sentencing. A third defendant, Michael Kimelman, also awaits sentencing.

“He knows I love him,” he said of his brother. Zvi Goffer said he didn’t always understand the seriousness of the crime but had awakened to its tragic consequences.

“Now today I have to face it and I am terrified,” he said.

The sentence caused Goffer’s wife to break down in sobs.

“What am I going to do?” she called out in court at one point. “It’s not fair!” A woman beside her then shouted a profanity, causing Sullivan to rise from the bench and threaten to bring in U.S. marshals to make arrests.

“This is a courtroom, not a street corner,” he said. “I am not going to tolerate this.”

Goffer was convicted by a jury that viewed evidence that he had arranged to pay two attorneys nearly $100,000 in 2007 and 2008 for inside tips on mergers and acquisitions.

During the two-week trial, prosecutors introduced evidence that Goffer gave conspirators prepaid cellular telephones in an effort to reduce detection by law enforcement.

The judge said Goffer had repeatedly demonstrated that he knew he was breaking the law and didn’t care.

“It’s a game that you and others seem to find exciting,” he said, adding that Goffer had a gambler’s mentality that led him to “double down and go to trial” when he would have shaved three years off his prison sentence by accepting responsibility before trial and admitting his crimes.

“You went for broke. You gambled and lost on that, too,” Sullivan said.

Before starting his own firm, Goffer worked for nine months for Rajaratnam.

Jiau was convicted of charges that she conspired to accept cash and gifts to feed inside information to hedge funds.

Jiau, a U.S. citizen, worked for two years as a consultant for Primary Global Research, a Mountain View, Calif.-based company.

Prosecutors said she earned more than $200,000 by selling “tomorrow’s news today” about earnings and performance of publicly traded companies. The information, they say, was communicated in code with her co-defendants, sometimes using “cooks” to refer to tipsters, “recipe” for the inside information and “sugar” for what she was paid for

Lawyers for both Jiau and Goffer said their clients were left in financial ruin and their careers were destroyed.

Jiau told Rakoff she was “sorry for being here.”

She also apologized to her dog, a Golden Retriever named Hunter who is being cared for by friends, saying: “I’m sorry I broke my promise to take care of you and be with you.”


September 20, 2011

Obama endorses ending 1 day of mail delivery

Filed under: marketing, news — Tags: , , , — Professor @ 2:24 pm

President Barack Obama says the U.S. Postal Service should be allowed to reduce mail delivery to five-days-a-week to cut its massive losses.

The Postal Service lost $8.5 billion last year. It’s facing even more red ink this year as the Internet siphons off large amounts of first-class mail and the weak economy reduces advertising mail.

While the post office has cut more than 100,000 workers in the last few years it needs to cut more, close offices and find other ways to reduce costs to keep operating.

In his economic growth and debt reduction plan unveiled Monday, Obama endorsed the idea of dropping one day of mail delivery _ it is expected to be Saturday _ and urged other changes in postal operations


September 18, 2011

Strauss-Kahn acknowledges moral failings

Filed under: business, technology — Tags: , , , — Professor @ 11:28 pm

Dominique Strauss-Kahn, the former head of the International Monetary Fund, acknowledged Sunday his sexual encounter with a New York hotel maid was a “moral failing” on his part, but didn’t involve violence, constraint or aggression.

In his first interview since his May 14 arrest over sexual assault accusations, Strauss-Kahn told France’s TF1 television channel what happened between him and the maid, Nafissatou Diallo, “was not only an inappropriate relationship, but more than that, it was an error.”

Strauss-Kahn, a Socialist politician who was widely considered a top contender in next year’s presidential race until the case broke, said “it was a failing, a failing vis-a-vis my wife, my children and my friends but also a failing vis-a-vis the French people, who had vested their hopes for change in me.

“I think it was a moral failing and I am not proud of it. I regret it infinitely. I have regretted it everyday for the past four months and I think I’m not done regretting it,” he said at the start of the 20-minute interview. Much of the exchange came off as staged, with Strauss-Kahn appearing calm and unruffled throughout and not surprised by the questions.

Strauss-Kahn’s initial contrition was peppered with anger at his accuser, a Guinean immigrant who maintained he attacked her after she came into his room at New York’s Sofitel hotel to clean.

He said the New York prosecutor concluded “Nafissatou Diallo lied about everything _ not only about her past, that’s of no importance, but also about what happened. The (prosecutor’s) report says, it’s written there, that ’she presented so many different versions of what happened that I can’t believe a word.’”

Strauss-Kahn suggested that financial motives might have been behind Diallo’s accusations.

He also dismissed as “imaginary” separate claims by a French writer that he tried to rape her during a 2003 interview, again insisting “no act of aggression, no violence” had taken place between the two.

The writer, Tristane Banon, has maintained she and Strauss-Kahn tussled on the floor during an interview in an empty apartment, with the politician trying to open her jeans and bra and putting his fingers in her mouth and underwear.

Because a police investigation into the claims is ongoing, Strauss-Kahn said he would not say anything more about the matter. If Paris prosecutors decide to pursue the case, Strauss-Kahn could face a possible trial.

New York prosecutors dropped all criminal charges against him in the Diallo case last month, though Strauss-Kahn is still facing a lawsuit brought by the maid.

Asked whether he had any intention of returning to politics, Strauss-Kahn said he would “take time to reflect” and rest first.

“But all my life was consecrated to being useful to the public good,” he said, adding “we will see.”

The AP does not name people who report being sexually assaulted unless they agree to be identified or come forward publicly, as Diallo and Banon have done.


September 17, 2011

AT&T launches high-speed data network in five cities

Filed under: Uncategorized, mortgage — Tags: , , , — Professor @ 8:40 am

Unbeknownst to most customers, AT&T Inc. has fired up a new wireless data network in five cities in the last few months, offering roughly double the speeds of its older network for a handful of devices quick guaranteed personal loans.

On Sunday, the phone company will start marketing the network in Atlanta, Chicago, Dallas, Houston and San Antonio.

It won’t be selling a new data plan

September 15, 2011

Rate on 30-year mortgage falls to record 4.09 pct.

Filed under: house, mortgage — Tags: , , , — Professor @ 5:44 pm

Fixed mortgage rates fell to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.

Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage fell to 4.09 percent this week. That’s the lowest rate seen since 1951.

The average rate on the 15-year mortgage, a popular refinancing option, fell to 3.30 percent, also a new low. Economists say it is likely the lowest rate on the 15-year ever.

Mortgage rates tend to track the yield on the 10-year Treasury note. Worries over Europe’s debt crisis are pushing investors to shift money into safe Treasurys, forcing the yield lower.

Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent. A decade ago, it was higher than 8 percent.

Still, cheap mortgage rates haven’t helped home sales. Sales of new homes are on pace for the worst year on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.

Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.

Others can’t qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.

Most people pay extra fees to get the low mortgage rates. Those fees are known as points, with one point equaling 1 percent of the total loan amount.

The average fees for the 30-year held steady at 0.7 point. Fees paid on 15-year fixed loans and both 5-year and one-year adjustable rate loans were all at 0.6 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage rose to 2.99 percent. That’s higher than last week’s 2.96 percent, the lowest records dating to January 2005 and the sixth straight week of record lows for this type of loan.

The average rate for the one-year adjustable-rate mortgage fell to 2.81 percent from 2.84 percent. That’s the lowest on records going back to 1984.


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