Finance news. My opinion.

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 stltoday.com, 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: 

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.”

Source

Fiat and Chrysler CEO Sergio Marchionne on Tuesday said the combined companies still aim to produce 6 million cars a year by 2014 despite the increased uncertainty in global financial markets.

Speaking on the sidelines of the Frankfurt Auto Show, Marchionne expressed frustration at Europe’s spiraling debt crisis, which threatens to engulf Fiat’s key market of Italy. It already is sapping consumer confidence with auto sales in Italy forecast at around 1.8 million this year, the lowest level since 1983.

“People don’t even know how to buy groceries for the weekend right now, and we are worrying about 2014,” Marchionne said with some irony.

“In the absence of a cataclysmic event the answer is yes, that is what we are trying too build,” he said, referring to the companies’ production goals.

Fiat SpA has a 53.5-percent majority stake in U.S. automaker Chrysler Group LLC and is looking to combine the companies to create a global automaker. Marchionne said Chrysler is in a better position because U.S. policymakers have done more to stimulate the economy.

The Italian-Canadian CEO said there need to be serious discussions in Europe about promoting growth, and that governments across the continent need to reduce their costs to confront the crisis credibly.

“Anybody who runs a business knows, the only way to maintain a structure when you are under pressure is to reduce costs. … I am talking about everyone in general. Tighten belts, remove all unnecessary expenditures and try to gear up these places toward growth,” Marchionne told the Associated Press.

Despite the weakening market, Fiat is premiering the third generation of the Panda city car, the best-selling car in the segment in Europe, at the Frankfurt Auto Show cash advance loan. The car is slightly longer, but retains much of the look of the original, which has sold more than 6 million units since its launch in 1980.

It is being challenged by Volkswagen, which is launching the Up, the latest entry in the market for tiny, fuel-efficient city cars.

Marchionne said there was no choice but to go ahead with the launch.

“It is never the right moment when the market is weak,” he said. But if the company had to follow volatile markets “then we close up shop and go home.”

Production of the Panda will begin in November at the Pomigliano plant near Naples. But Marchionne has put other investments on hold _ including plans to build Alfa Romeo and Jeep SUVs at a plant in Turin _ while the crisis sorts itself out.

“Everything is on the table now because this uncertainty makes everyone concerned about what the future looks like,” he said.

Marchionne has pledged to invest euro20 billion ($27 billion) in Italy to double production by 2014.

The Fiat CEO also confirmed talks with Suzuki on supplying engines, but indicated the deal was not yet finalized.

“I think there is a potential deal with Suzuki on engine supply. We are going to continue working with the company. … anything that works for them and for us, we will do,” Marchionne said.

Suzuki Motor Corp. on Monday said it will end its alliance with Volkswagen AG following a nearly two-year marriage, after Volkswagen accused Suzuki of violating the terms of its partnership by deciding to buy diesel engines from rival Fiat SpA.

Source

Twenty-five of the 100 largest U.S. corporations paid their chief executives more last year than they paid in federal income taxes, according to a report released Wednesday.

The nonprofit Institute for Policy Studies says the 25 CEOs averaged $16.7 million in salary and other 2010 compensation.

Most of the companies they ran, meanwhile, came out ahead at tax time. They collected tax refunds that averaged $304 million, based on a review of public filings. The think tank says the 25 firms that paid out more in CEO compensation than U.S. taxes reported average global profits of $1.9 billion.

The institute, based in Washington, describes itself as a community of public scholars that works with social movements to promote democracy and challenge corporate influence and military power.

Source

China plans to inspect all of its showcase bullet train lines following a crash last month that killed 40 people, as authorities work to determine who is ultimately responsible for the disaster.

The State Administration of Work Safety will present a report on the July 23 crash to China’s top leaders in September, the agency’s spokesman Huang Yi said in comments Tuesday on its website.

“Of course, a period of analysis is required to determine both the direct and indirect factors behind the crash and to work out who is responsible,” Huang said.

The monthlong inspections of 49 projects and 6,000 kilometers (3,700 miles) of railway lines will run through the middle of next month, and train operations and construction will be suspended if safety problems are found, officials say.

In the crash last month near the city of Wenzhou in eastern China’s Zhejiang province, a lightning strike caused one bullet train to stall and a sensor failure that allowed a second train to keep moving on the same track and slam into it.

Huang said it was clear that there were deficiencies in the safety management of the system.

“This was an accident that was both avoidable and preventable,” he said.

The collision killed 40 people and injured 177, including a toddler orphaned by the crash who was rescued nearly a day later.

The official Xinhua News Agency reported Tuesday that the two-year-old girl, Xiang Weiyi, has been moved to Shanghai to help her recover from severe injuries to one of her legs, after relatives appealed for better help for the girl.

The girl will need a “pretty long time to recover,” it quoted pediatric orthopedist Dr. Zhao Li as saying.

China has 13 high-speed railways in operation, with 26 under construction and 23 more planned, although approvals of new projects were frozen following the Wenzhou crash. Delays on a new Beijing-Shanghai line blamed on equipment and power failures have fanned public anger over the cost and potential risks of the program.

The government has ordered reduced speeds and cut ticket prices for the lines.

Earlier plans called for expanding the network to 10,000 miles (16,000 kilometers) of track by 2020.

Source

Australia’s Macarthur Coal Ltd. on Sunday night rejected a $5.2 billion takeover offer from Peabody Energy Corp. and steelmaker ArcelorMittal, and indicated that it’s in talks with other possible suitors.

Keith DeLacy, chairman of the Brisbane-based mining company, said the offer “appears to be an opportunistic attempt to acquire Macarthur at a time of global economic volatility and regulatory uncertainty in Australia.”

Peabody spent two months pursuing Macarthur last year, but came away empty. This time, the St. Louis-based coal company partnered with ArcelorMittal, the world’s largest steelmaker, which owns 16 percent of Macarthur’s shares best payday advance.

The pursuit represents Peabody’s desire to further expand in Australia, a coal-rich country that’s close to fast-growing Asian markets. Executives have a specific interest in Macarthur because the company is a major producer of a type of coal that’s used as a substitute for coke in steelmaking.

In their July 11 proposal, Peabody and ArcelorMittal offered 15.50 Australian dollars for Macarthur shares

Courting confrontation and compromise alike, House Republicans shrugged off President Barack Obama’s threat to veto legislation to cut federal spending by trillions of dollars on Monday while simultaneously negotiating with him over more modest steps to avert a potential government default.

The Republican bill demands deep spending reductions and congressional approval of a balanced budget amendment to the Constitution in exchange for raising the nation’s debt limit. But Obama will veto it if it reaches his desk, the White House said, asserting the legislation would “lead to severe cuts in Medicare and Social Security” and impose unrealistic limits on education spending.

In response, GOP lawmakers said they would go ahead with plans to pass the bill on Tuesday. “It’s disappointing the White House would reject this commonsense plan to rein in the debt and deficits that are hurting job creation in America,” Speaker John Boehner, R-Ohio said.

By contrast, neither the administration nor congressional officials provided substantive details on an unannounced meeting that Obama held Sunday with the two top House Republican leaders, Boehner and Majority Leader Eric Cantor of Virginia.

Obama said late Monday the two sides were “making progress.”

Several Republicans said privately the decision to vote on veto-threatened legislation is paradoxically designed to clear the way for a compromise. They said conservatives would have a chance to push their deep spending cuts through the House, and then see the measure quickly die either in the Democratic-controlled Senate or by veto.

Barring action by Congress to raise the $14.3 trillion debt limit, the Treasury will be unable to pay all the government’s bills that come due beginning on Aug. 3, two weeks from Wednesday. Administration officials, Federal Reserve Chairman Ben Bernanke and others say the result could be a default that inflicts serious harm on the economy, which is still struggling to recover from the worst recession in decades.

In a gesture underscoring the significance of the issue, Majority Leader Harry Reid, D-Nev., announced the Senate will meet each day until it is resolved, including on weekends.

The two-pronged approach pursued by the House GOP follows the collapse of a weeks-long effort to negotiate a sweeping bipartisan plan to cut into future deficits. The endeavor foundered when Obama demanded that tax increases on the wealthy and selected corporations be included alongside cuts in benefit programs, and Republicans refused.

The failure of that effort also reflects the outsized influence exerted by 87 first-term Republicans, many of them elected last fall with tea party backing.

As late as last Thursday, Republican leaders held a news conference to tout plans to vote this week on a proposed balanced budget amendment to the Constitution.

But the same senior Republicans emerged from a closed-door meeting of the rank and file on Friday to say the House would instead vote on an alternative _ dubbed by its advocates as “Cut, Cap and Balance.” No date has been set for a vote on the constitutional amendment itself.

Officials said the change in course had been requested by members of the Republican Study Committee, whose members are among the most conservative in Congress.

Supporters of the measure say it would cut $111 billion from government spending in the budget year that begins on Oct 1, and $6 trillion more over the coming decade through a requirement that the budget shrink relative to the overall size of the economy.

Additionally, it would require both houses of Congress to approve a balanced budget amendment to the Constitution as a condition for an increase in the debt limit.

Both Boehner and Cantor reacted relatively mildly to the White House veto threat.

“As President Obama has not put forth a plan that can garner 218 votes in the House, I’d caution him against so hastily dismissing `Cut, Cap and Balance,’” said Cantor.

Other Republicans, by contrast, took a harder line.

“I find it incredibly ironic that President Obama is one of the few Americans who think we don’t need a constitutional amendment `to do our jobs.’” Said Rep. Jeb Hensarling of Texas, a member of the leadership.

“The point of cutting up the credit cards in order to raise the debt ceiling isn’t to meet his tax-and-spend demands; it’s to force him to stop spending money we don’t have.”

Senate Republican leader Mitch McConnell of Kentucky made a strong statement of support for the measure.

“Not only is this legislation just the kind of thing Washington needs right now, it may be the only option we have if you want to see the debt limit raised at all,” he said.

“I strongly urge my Democratic friends to join us in supporting it.”

Despite his warning, McConnell and Reid have been deeply involved in writing a fallback measure that is viewed in both houses as promising.

It would allow the president to raise the debt limit by $2.4 trillion in three installments over the next year without a prior vote by lawmakers. Instead, a panel of House and Senate members would be created to recommend cuts in benefit programs, with their work guaranteed a yes-or-no vote in the House or Senate.

Recreating the divide that plagued the earlier negotiations, Democrats want the panel to have the power to recommend higher taxes.

Neither Reid nor McConnell has publicly disclosed the details of the measure, and neither is expected to do so as long as the legislation in the House is pending.

One conservative deficit hawk, Sen. Tom Coburn, unveiled his own proposal to bring federal deficits under control. The Oklahoma Republican recommended $9 trillion in cuts over a decade, including $1 trillion in higher taxes.

____

Associated Press writers Andrew Taylor, Erica Werner and Ben Feller contributed to this report.

Source

St. Louis-based CPI Corp. continued to battle economic and industry pressures in the portrait business in the first quarter of this year with its profit plummeting 89 percent.

The operator of about 3,000 portrait photo studios mostly in Sears and Walmart stores posted a profit of $747,000. or 11 cents a share, compared to $6.5 million, or 91 cents a share, in the same quarter a year ago.

“As we expected, our first quarter results reflect continuing difficult industry and broader economic conditions, which are weighing heavily on our top line,” Dale Heins, the company’s chief financial officers, told investors during a conference call this morning.

Net sales in the quarter were $88.6 million, down 7 percent from $95.5 million in the same quarter last year.

The company also blamed its weak performance on a later Easter, litigation and severance costs, and costs related to the acquisition and incorporation of Bella Pictures — a wedding photography business it bought in January.

But Heins said the company expects a better second half of the year because of $15 million in planned cost savings, including a “significant” reduction in “head count” at its St low fee payday loans. Louis headquarters. He did not immediately respond to a follow-up email about how many local employees have been laid off.

The bulk of the cost savings will also come from changing the operating hours and scheduling of employee hours at its studios, he said.

He also said he expects the company’s recently acquired and re-opened Kiddie Kandid studios inside Babies R Us and to help buoy the company’s performance later in the year.

When asked by an analyst about the costs related to a class-action lawsuit against CPI regarding wages and hours paid to former and current employees, Heins said the company expects the litigation will “cost us some money.”

But he added, “We’re feeling very good about the case.”

Source

NATO blasted Tripoli with a series of air strikes early Thursday, sending shuddering booms through the city.

Ambulances, sirens blaring, could be heard racing through the Libyan capital after the rattling blasts. A NATO statement said the attacks hit military vehicle and ammunition depots, a surface-to-air missile launcher and a fire control radar.

Libyan government officials refused repeated requests for information.

The air strikes rained down just hours after NATO and its partners said it would extend the Libyan mission for 90 more days in support of a rebel insurgency. The opposition that is trying to oust Gadhafi, who has ruled Libya for more than 40 years. The rebels have taken control of much of eastern Libya,

“This decision sends a clear message to the Gadhafi regime: We are determined to continue our operation to protect the people of Libya,” said NATO Secretary-General Anders Fogh Rasmussen.

Extending the mission also reflects resiliency of the Gadhafi regime that is hanging on to power despite the NATO strikes that have targeted military sites and the ruling family since mid-March, a naval blockade and top defections from his government and military.

They included the Libyan oil minister Shukri Ghanem, who said in Rome on Wednesday that he now supports the rebel insurgency who have set up a de-facto capital in Benghazi.

“In this situation you can no longer work, so I have left my country and my work to unite myself with the choice of young Libyans to fight for a democratic country,” the ANSA news agency quoted Ghanem as saying.

Ghanem said he left the regime two weeks ago and arrived in Rome on Tuesday. The Italian Foreign Ministry refused to comment. Up to now Libya has insisted that Ghanem was on a business trip.

Ghanem said Libya’s oil infrastructure had been badly hurt by the war.

Up to now, oil and gas has accounted for 95 percent of Libya’s export income, 25 percent of its gross domestic product and 80 percent of government revenue, according to U.S. government statistics.

The defection followed the departure of eight top Libyan army officers, including five generals, who were presented to reporters in Rome earlier this week by the Italian foreign ministry days after they fled Libya.

Another 13 servicemen loyal to Gadhafi, including a colonel and four commanders, have fled to neighboring Tunisia, the official Tunisian news agency reported. It was the second group of military men to defect to Tunisia this week.

Russian President Dmitry Medvedev, who is visiting Rome, said again Thursday that the Kremlin stood ready to do whatever it can to solve the crisis in Libya through negotiations rather than military action.

Russia has been critical of the NATO-led bombing campaign in Libya, and during a G-8 summit last week,

Meeting Italian Premier Silvio Berlusconi and U.S. Vice President Joe Biden in Rome, Medvedev said Russia will send an envoy to Tripoli and Benghazi as part of the country’s efforts to mediate a solution, an Italian diplomatic official said, adding that the three leaders agreed that Gadhafi must relinquish power. The official was speaking on condition of anonymity under customary Italian government policy.

Also Wednesday, a car exploded next to a hotel where foreign diplomats stay while visiting Benghazi, a rare attack in the Libyan rebels’ de facto capital.

Jalal al-Gallal, a rebel spokesman, said the blast caused no injuries or deaths. The burning car sent plumes of black smoke into the air.

“It’s a cowardly act,” he said, adding that rebels assume it was carried out by Gadhafi loyalists.

The car explosion was the first attack of its kind in Benghazi since NATO started its bombing campaign in mid-March and helped drive government troops away from the city. Despite months of fierce conflict between rebel forces and Gadhafi’s military, Benghazi has been calm.

Source

China’s manufacturers suffered sluggish growth in orders in May as widespread power shortages and inflation-fighting curbs on credit dampened demand, surveys showed Wednesday.

The China Federation of Logistics and Purchasing said its purchasing managers index fell to 52 from 52.9 in April and 53.4 in March. The index has remained above 50, the benchmark for expansion, for 26 straight months.

Economists say the manufacturing trends reflect a moderation rather than a so-called hard landing.

London-based HSBC said its survey of 400 companies, which is adjusted for seasonal factors, showed manufacturers adding workers despite relatively slower output and new orders in May. Its index edged to a 10-month low of 51.6 in May, down from 51.8 in April.

“This is still just a moderation rather than a meltdown in growth, so there is no need to worry about over-tightening,” said Hongbin Qu, co-head of Asian Economic Research at HSBC.

After months of forecasting that inflation would moderate by midyear, China is expected to announce a rebound in inflation in May in its monthly data release later this month, partly due to surging food costs associated with a severe drought that has damaged crops across much of the central part of the country business