Finance news. My opinion.

October 9, 2014


Filed under: loans, news — Tags: , , , — Professor @ 1:52 am

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October 5, 2014

On the witness list: Paulson, Geithner, Bernanke

Filed under: news, technology — Tags: , , , — Professor @ 7:28 pm

WASHINGTON (AP) — It could be an awkward reunion.

Three top former government leaders who devised the 2008 financial bailouts — Henry Paulson, Timothy Geithner and Ben Bernanke — are set to testify this week in a lawsuit over the government’s rescue of the insurance giant AIG.

Six years ago, their rescue plan revived AIG, protected its far-flung financial partners and helped save the financial system. Yet AIG’s former CEO, 89-year old Maurice Greenberg, argues that the government’s bailout was illegitimate and is demanding roughly $40 billion in damages for shareholders.

This despite the fact that Greenberg orchestrated a 2010 deal in which he unloaded $278 million in AIG shares that his holding company owned — a windfall that might have been impossible without the government’s intervention.

The lawsuit alleges that the bailout violated the Constitution’s Fifth Amendment by taking control of AIG without “just compensation.” Greenberg objects to the government’s takeover of a company approaching bankruptcy in exchange for what would eventually become $180 billion-plus in taxpayer-backed loans.

Many legal experts deem the lawsuit a longshot. But the trial serves as a reminder that few were satisfied by the government’s response to the crisis — even those who, like Greenberg, fared far better than the millions who lost homes and jobs.

For Greenberg, the case represents a chance to make the former Federal Reserve chairman (Bernanke) and two past Treasury secretaries (Paulson and Geithner) defend a landmark action made at the most perilous moment for the U.S. financial system since the Great Depression.

All three, of course, have well-honed and oft-repeated arguments in defense of the AIG bailout. Geithner released his memoirs this year, while Paulson appeared in a Netflix documentary film about his experiences last year. The tight-lipped Bernanke is now writing his own book.

During the height of the crisis, no private company was willing to provide loans to AIG. The insurer “faced severe liquidity pressures that threatened to force it imminently into bankruptcy,” Bernanke told the House Financial Services Committee in 2009.

An AIG collapse “would have posed unacceptable risks for the global financial system and for our economy,” Bernanke said. The viability of state and local governments, banks and 401(k) plans was at risk, he warned.

Greenberg’s lawyer, David Boies, is famed for fighting for gay marriage and arguing before the Supreme Court on behalf of Al Gore in the 2000 presidential election. But in congressional hearings and news conferences, the three witnesses he intends to grill before the U.S. Court of Federal Claims have learned to measure their words carefully.

The challenge is whether Boies can use the multitude of their past comments about AIG to trap them in an inconsistency, said Hester Peirce, a senior research fellow at George Mason University and former Senate Banking Committee staffer.

“They are in a pretty difficult position because they might have to contradict what they previously said,” Peirce said.

For Americans who yearn to see reckless bankers held accountable in court, it’s somewhat surreal to have a lawsuit based on the premise that the government’s rescue unfairly punished a company whose collapse would have threatened the global financial system.

How so? AIG was overexposed to subprime mortgages back in 2008. That’s because of a financial instrument known as a credit default swap. It obligated AIG to pay out if the mortgages defaulted.

Its stock and credit ratings had nosedived. The company largely built by Greenberg appeared to be freefalling into bankruptcy, possibly dragging down several major investment banks with it.

So the government provided an initial $85 billion loan — ultimately $182 billion — in return for an 80 percent stake in AIG.

That 80 percent stake angered Greenberg. He remained the company’s most vocal shareholder after being ousted as CEO and chairman in 2005 amid a New York state investigation into suspicious financial transactions under his watch. Greenberg contends that AIG shareholders were singled out for retribution, while the government chose to extend loans on far more generous terms to banks such as Citigroup.

The division within AIG that undermined the company’s balance sheet was established under Greenberg’s watch, noted James Cox, a law professor at Duke University.

“Greenberg probably did create a culture at AIG that nurtured the aggressiveness of the swaps business and the excessive greed that we associated with the crisis,” Cox said. “I don’t see him as a choir boy in this process.”


September 26, 2014

Applications for US unemployment rise 12K to 293K

Filed under: news, uk — Tags: , , , — Professor @ 2:15 am

WASHINGTON (AP) — The number of people seeking U.S. unemployment benefits increased last week after falling sharply two weeks ago. Despite the rise, the level of applications remains near pre-recession levels, a sign that hiring will likely remain healthy.

Weekly unemployment benefit applications rose 12,000 to a seasonally adjusted 293,000, the Labor Department said Thursday. Yet the four-week average, a less volatile measure, fell for the second straight week to 298,500.

The figures are “very low … close to all-time lows when measured as a share of payrolls,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a research note. “We expect robust job growth in the months ahead.”

Two weeks ago, applications had plummeted to 281,000, near a 14-year low first reached in July. Over the past year, the four-week average for applications has fallen 7.1 percent. They climbed above 650,000 during the recession in 2009.

Applications are a proxy for layoffs. Fewer applications indicate that employers are holding onto their workers, likely because they are more confident about the economy. It may also indicate they will boost hiring.

The total number of people receiving benefits ticked up by 7,000 to 2.4 million. A year ago, 3.9 million people were receiving unemployment aid. That number has fallen sharply partly because of the expiration of extended benefits, a program that ended at the beginning of this year.

Applications fell steadily through the summer. At the same time, job gains have been solid, despite a slowdown in hiring in August.

Employers added just 142,000 jobs last month, according to the Labor Department, down from an average of 212,000 in the preceding 12 months. It was the end of a six-month streak of monthly job gains in excess of 200,000. The unemployment rate fell to 6.1 percent from 6.2 percent, but only because some of those out of work gave up looking. The government doesn’t count people as unemployed unless they are actively searching.

Still, most economists expect hiring will continue at a healthy pace this year. Surveys of both manufacturing and services firms show that companies in both sectors added workers in September.


September 24, 2014

Deer are pests for airports, threats to pilots

Filed under: money, news — Tags: , , , — Professor @ 11:03 am

WASHINGTON (AP) — Aviation and wildlife experts say soaring deer populations are nuisances for airports and threats to pilots, especially at this time of year.

Whether driven by hunger or just crazy for love, deer will do seemingly anything to get onto airport grounds and runways, including leaping over tall fences or squeezing under them. But put a deer and a plane together on a runway and both can have a very bad day.

A recent government report says that from 1990 to 2013, there were 1,088 collisions between planes and deer, elk, moose and caribou. Most of the planes suffered damage, and some were destroyed. One person was killed and 29 others injured. About a third of the collisions took place during the October-November mating season.


September 8, 2014


Filed under: management, news — Tags: , , , — Professor @ 5:59 am


September 1, 2014

For sale: Century-old cards of Ty Cobb, Cy Young

Filed under: marketing, news — Tags: , , , — Professor @ 5:59 pm

BIDDEFORD, Maine (AP) — A baseball fan took up smoking a century ago and with it acquired another habit: holding onto little cards that bore the faces of baseball’s earliest greats.

Now, the trove of more than 1,400 tobacco cards featuring a slew of Hall of Famers like Cy Young and Ty Cobb — the legacy of a teenage smoker whose family hung onto a collection that dates to 1909 — is going up for auction.

The cards will be sold by a Maine auction house that is becoming known for selling rare memorabilia, Saco River Auction Co. in Biddeford.

Troy Thibodeau, the company’s manager and auctioneer, said the collection of cards dating from 1909 to 1911 — an era when the Yankees were the Highlanders, the Dodgers were the Superbas and the Braves were the Doves — belongs to the grandchildren of a Brooklyn, New York-born man who began smoking when he was 19.

“Every time he got a card, he threw it in a box,” Thibodeau said.

The collection has been dubbed the “Portland trove” because some of the collector’s descendants ended up in Maine’s largest city. The family doesn’t want to be identified, Thibodeau said.

Due to be auctioned individually and in small lots starting in January, the collection includes about 10 cards depicting Young and a dozen depicting Cobb, along with other Hall of Famers like Chief Bender, Christy Mathewson and Walter Johnson.

Smaller than modern baseball cards, these cards known as “T206″ cards to collectors feature color lithographs on the front and a tobacco advertisement on the back.

“They’re not like your normal baseball card where there’s a stock piece of photography that’s printed on millions and millions of cards. These are truly pieces of art. They’re colorful, they’re bright, they’re folky, they’re Americana,” Thibodeau said.

The collector preferred a cigarette brand from Havana called El Principe De Gales. But there are cards featuring logos from other cigarette brands of the era like American Beauty, Sweet Caporal, Sovereign and Piedmont.

Such a large collection is unusual but not unprecedented. Large collections come up for sale every year or two, collectors say. Part of what makes this one special is that the cards are in great shape.

Scott Hileman from New Jersey-based SportsCard Guaranty, who graded the cards, said they’re all among the type of cards used to market brands that were part of American Tobacco Co. for three years, from 1909 to 1911. He described the trove as “incredible.”

Missing are two of the rarest cards: Those depicting pitcher Eddie Plank and shortstop Honus Wagner. The priciest baseball card ever sold was a 1909 Honus Wagner, which went for $2.8 million.

Nonetheless, the collection is valuable with the potential for some of the single cards to reach into five figures, Thibodeau said.

Saco River is making a name for itself despite being a small auction house.

Last year, a collector from Massachusetts paid $92,000 for an 1865 baseball card depicting the Brooklyn Atlantics amateur baseball club. In 2012, the auction house sold a rare 1888 card of Hall of Famer Michael “King” Kelly for $72,000.

“If you love baseball, this is the beginning of it. This is where stars were made and heroes were born. It’s history,” Thibodeau said.




August 29, 2014

Contracts to buy U.S. homes rise in hopeful sign

Filed under: Uncategorized, news — Tags: , , , — Professor @ 12:27 pm

WASHINGTON • More Americans signed contracts to buy homes in July, a sign that buying has improved as mortgage rates have slipped, the number of listings has risen and the rate of price increases has slowed.

The National Association of Realtors says its seasonally adjusted pending home sales index rose 3.3 percent to 105.9 last month. Still, the index remains 2.1 percent below its level a year ago.

The pressures that caused home sales to stall last year have started to ease. The average 30-year fixed mortgage rate has dropped to 4 short term personal loans.1 percent, a 52-week low. Prices are no longer rising at double-digit annual rates, thereby helping to improve affordability.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.


July 19, 2014

Lumière Place reopens but testing continues on slot machines

Filed under: marketing, news — Tags: , , , — Professor @ 10:48 pm

Updated at 4:30 p.m. 

Slot machine testing is happening Thursday at the Lumière Place casino, which state gaming regulators closed Wednesday night as a result of what is described as a system failure.

Missouri Gaming Commission officials shut down the casino at 11:45 p.m., about four hours after the slot machine problems began, said Leann McCarthy, the commission’s spokeswoman. Regulators ordered the entire gaming floor closed even though the problem was limited to the slot machines.

Lumière Place officials said in a statement “a system failure” of the slot machines began just before 8 p.m. The casino began manually paying customers their slots winnings as workers tried to fix the problem.

The casino on the St. Louis riverfront re-opened before 7 a No teletrak payday loan.m. Thursday. McCarthy said no shutdowns were contemplated Thursday as testing of the slot machines continues.

A Lumière spokeswoman said Thursday afternoon that the company’s IT workers are still trying to determine the cause of Wednesday night’s failure.

Lumière Place officials also said in their statement they are sorry for inconveniencing customers.

Tropicana Entertainment has operated Lumière Place since April 1, after it completed its $260 million purchase of the casino and hotel complex from Pinnacle Entertainment.


July 11, 2014

Businesses, residents hope to bring new life to Hyde Park neighborhood in St. Louis

Filed under: money, news — Tags: , , , — Professor @ 8:23 pm

Julie Longyear started making aromatherapy candles at home part time in 2000. Four years later, she incorporated what would become Blissoma, a botanical skin care products maker. After several successful years, her business outgrew the 1,000-square-foot basement where she made lotions, soaps and other goods.

Longyear considered a building on Keokuk Street in south St. Louis, a gutted shell that needed a complete rehab. Even with a listing price of $80,000, it was too expensive.

Her real estate agent suggested she look instead at Hyde Park on the city’s north side. There, in the 1400 block of North Park Place, Longyear found a 4,000-square-foot, move-in ready building. She paid just over $120,000 — a good deal in 2007 before the real-estate bubble burst, she says.

Even though she was motivated by dollars and cents when she chose to look in Hyde Park, she’s glad she did.

“In the beginning, we were driven by cost concerns, but once I took a look, I felt like this was a place I could contribute to the redevelopment of a neighborhood,” Longyear said.

“It’s just palpable,” she said. “You can really feel the possibilities here.”

Named for one of the royal parks of London but settled by Germans, Hyde Park occupies a slice of the city’s north side, bounded by Interstate 70 to the east, Palm Street and Natural Bridge Avenue to the south, Glasgow Avenue to the west and Ferry Street to the north. It’s just north of the Old North neighborhood and outside the footprint of developer Paul McKee’s NorthSide Regeneration Project.

Like much of north St. Louis, Hyde Park has seen employers large and small vanish over the years and with them went jobs and opportunity. The Hyde Park Brewery, sold and shuttered in 1958, is a distant memory. Meat packing plants, such as Krey and Gruensfelder, were closed by the late ’70s.

As other employers left the north side and manufacturing faded, so too did Hyde Park. Between 1990 and 2000, the neighborhood’s population decreased by 24 percent, from 4,917 to 3,741. The losses accelerated in the next decade: Between 2000 and 2010, the population fell 29 percent to 2,668. Empty homes and vacant lots increasingly became a part of the landscape.

Against this backdrop of empty and crumbling homes and factories, entrepreneurs, like Longyear, saw possibility.

Eleven years ago, Denise Ulmer and her husband, Dan, opened the Cornerstone Café, at 1436 Salisbury Street. Dan retired from the IRS; Denise managed the snack shop at a public swimming pool.

The couple never really had any ideas to open a restaurant, Denise Ulmer said. “It’s just kind of funny; he saw this empty building, and he thought it would be a great place for a restaurant.”

The café today operates at a profit, with the Ulmers and several of their children working there. The café draws visitors but also has a lot of local repeat customers that Ulmer feels a close connection to, nearly tearing up when talking about a longtime customer who recently died.

“We love this area,” she said. “The people are so wonderful here, and I don’t ever remember it being anyone but good people here,” she said.


Vanity Gee, program manager for Rebuild Foundation and Art House, said Hyde Park has plenty of misconceptions. “A lot of people who don’t live here have misinformed beliefs about what this neighborhood is like,” she said. “That could deter some businesses from opening here.”

The Rebuild Foundation, at 1419 Mallinckrodt Street, is a Chicago-based nonprofit that operates a community art center for children and adults, and provides entrepreneurial education.

The neighborhood is ready for businesses to move in and grow, she said. The area needs a grocery to allow residents without cars to shop without paying convenience store prices.

Mostly though, Gee believes the best thing that new businesses could offer Hyde Park is jobs. “What is needed is jobs, long-term permanent jobs,” she said.

“Not only do we need job skills training, but we need job placement,” she said.

Directly across the street from the Ulmers’ Cornerstone Café is one of the newest businesses in Hyde Park, the Sun Café, which opened in February. The café, at 1435 Salisbury Street, is operated by Sun Ministries, a nonprofit group established by Terry Goodwin, a former pastor cash advance loan.

The café is the most public face of the group that provides services to the community by helping them learn marketable job skills with on-the-job training, fostering entrepreneurship and encouraging business and home ownership, Goodwin said.

The group helps residents get GEDs, driver’s licenses and obtain job skills by working at one of four businesses owned by the ministry, including the café.

All of the businesses are nonprofit, and the workers who manage them are volunteer missionaries.

“The goal is not to be profitable, the goal is to provide $10-per-hour jobs,” Goodwin said.

“It has to be sustainable so we can keep the lights on, but everything above that goes into creating jobs.”

Julie Longyear of Blissoma also has been busy creating new jobs in Hyde Park, adding three full-time staff in the last month. Blissoma’s products are selling well, Longyear said, with both nationwide and international sales.

Blissoma is doing well enough that Longyear projects the business may soon need more space than can be provided at her current location, and she has started looking at buildings on the market.

She would like to stay in Hyde Park if possible but says there may be some roadblocks to making it happen, saying it is difficult to get construction loans in an area where few similar sales prevent banks from determining collateral value.

Longyear — who also lives in the building her business occupies — said she was lucky the first time she bought in Hyde Park as she found a turn-key building that did not need significant renewal.

“It was a lot easier since this was both my business and my home, and it cost less than either one alone would have cost in another part of town,” she said.

Goodwin of Sun Ministries agreed that it could be difficult to buy a house or other property in Hyde Park unless a person has sufficient cash in hand to pay for renovation out-of-pocket, this despite the fact that restorable buildings can be purchased for as little as $5,000.

The mission itself has purchased several residential properties in the area with the goal of renovating them for use by the organization’s missionaries. With several newly renovated buildings in the neighborhood, banks could have a better guide to property value in the area in the future.


Terrance Holmes, a lifelong resident of Hyde Park and co-owner of Got U Faded, a barbershop at 1430 Salisbury, says business has improved since others have started moving to the neighborhood.

“It’s good to see other entrepreneurs open up, it’s a win-win for everybody,” he said.

For many years, he never even knew the names of fellow business owners in the neighborhood, Holmes said. Now, they communicate and share ideas.

Both Longyear and Goodwin believe there is potential for everyone to thrive in the neighborhood, both longtime residents and newcomers.

One of Sun’s goals is to help in the development of low-income housing and is planning to hold home ownership workshops for current Hyde Park residents.

Longyear has said that in her time in Hyde Park, her neighbors have been very welcoming. When she was looking for building, neighbors even stopped by to try to persuade her to move in, she said.

Anthony Estelle, who described himself as a lifelong resident of Hyde Park, said in the past 10 years, things have gotten better around the neighborhood. Crime is down, and he even sees more children playing in the park and sidewalks.

He would like to see every house in the neighborhood with a family living in it, he said, but knew that it would take some time for the neighborhood to heal.

“Every building here touched somebody’s life in some way, and when you look at them, it seems to twirl you a little bit, but you still come back to the reality of it: We can’t save everything, but we can save what’s around us,” Estelle said.

“Ten years from now, I’d like to walk the street and see every house smiling back at me.”


June 30, 2014

Oil price weakens ahead of China data

Filed under: mortgage, news — Tags: , , , — Professor @ 11:29 am

The price of oil declined Monday as markets waited for the preliminary reading of China’s manufacturing for June.

Benchmark U.S. crude for August delivery was down 56 cents to $105.18 a barrel at 0800 GMT in electronic trading on the New York Mercantile Exchange. The contract closed down 10 cents at $105.74 on Friday.

Brent crude, used to price international oils, slipped 62 cents to $112.68 a barrel in London.

Oil prices were steady going into the weekend as markets grew accustomed to news reports of violence in Iraq where the Iraqi government is trying to wrest back some of the territory it has lost to insurgents, Desmond Chua, a market analyst at CMC Markets in Singapore, said in a commentary. The price of oil rose in recent weeks as investors worried that the surge of violence in the oil-rich country would strain crude supplies payday loans lenders.

Earlier on Monday, the extremist group that has seized much of Syria and Iraq declared the establishment of a new Islamic state and demanded allegiance from Muslims worldwide.

On Tuesday, a preliminary reading of Chinese factory activity will give investors the latest gauge of the slowdown in China, the world’s biggest energy consumer.

In other energy futures trading on the Nymex:

—Wholesale gasoline drifted down 2.2 cents to $3.052 a gallon.

—Natural gas added 0.6 cent to $4.415 per 1,000 cubic feet.

—Heating oil was down 2.2 cents to $2.982 a gallon.


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