Finance news. My opinion.

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.

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China’s consumer prices moderated in August, helped by slower increases in food prices, opening the way for a possible easing of tight monetary policies to help ward off the impact of a global slowdown.

Consumer prices in the world’s second-largest economy rose 6.2 percent over a year earlier, cooling from a 37-month high of 6.5 percent in July, the National Statistics Bureau said Friday.

The data were in line with expectations, though still above the government’s 4 percent target for the year.

They appear to indicate that repeated interest rate hikes and other curbs meant to chill the overheated economy are taking hold. That could ease the dilemma Chinese leaders face in seeking to dampen politically sensitive living costs, while keeping economic growth on track as the U.S. and European outlook worsens.

Food prices, which comprise a large share of the consumer price index, climbed 13.4 percent, down from 14.8 percent in July.

A 29.3 percent surge in prices for meat and poultry products and 12.2 percent increase for staple grains kept food price increases still relatively strong.

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Power is returning for hundreds of thousands of people after Hurricane Irene passed through coastal states in the South.

Repair crews rushed out in Virginia, the Carolinas and Maryland Sunday after Irene turned north. An enormous job lies ahead. Irene flooded power stations, toppled trees and tore down electrical wires. More than four million homes and businesses are still without power.

In Manhattan, Consolidated Edison said it was optimistic that it wouldn’t need to cut power to the financial district. So far, sensitive underground power lines haven’t been flooded, the company says.

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Christine Lagarde’s bid to head the International Monetary Fund could face new scrutiny now that Greece’s worsening debt storm risks toppling one of her candidacy’s key pillars _ her track record shepherding the eurozone through the worst crisis of its 12-year existence.

With Greece coming close to a default, which would spark a chain reaction that some fear could break up the eurozone, the crisis management strategy of Lagarde and her European colleagues will come in for renewed criticism, analysts say.

Lagarde, France’s finance minister, heads to Washington D.C. next week to try to drum up critical U.S. support for her bid. Her distant lead over the rival candidate, Mexican central banker Agustin Carstens, means a Greek default now is unlikely to derail her campaign.

But it will come back to haunt her _ should she be chosen _ because Europe’s indecisive and disjointed handling of the crisis has caused the total size of the final bill to balloon, experts say.

Ever since Greece began its death spiral early last year, Lagarde has been one of the highest profile architects of the European response. She once threatened to pull the plug on Europe’s financial lifeline to Greece if the country didn’t honor its terms.

But a year on from its bailout, Lagarde and her European cohorts are again preparing yet another rescue package for Greece, despite its failure to meet promised deficit cuts.

“She’ll argue that she’s well placed, with political skills and managerial skills to broker compromises,” said Simon Tilford, chief economist at the Center for European Reform, a London-based think tank. “But the problem is that in many people’s eyes the eurozone leadership is discredited” by its failure to get a handle on its Greek problem once and for all.

“I think she’d make a brilliant president of the EU Commission, but I’m not entirely convinced she’s the right person for this job,” Tilford said.

Many investors and economists say Greece’s debt problems will eventually end in default and that European leaders are guilty of misdiagnosing the crisis from the beginning.

One indication of that strategy’s cost was given Thursday by a top official at the European Central Bank. Nout Wellink, a member of the ECB’s rate-setting council, said European governments need to be ready to increase the size of their bailout fund to euro1.5 trillion _ double the size of the package that Lagarde and other officials said only months ago would be enough to stave off disaster.

“For the sake of argument, a year’s delay has cost at least euro750 billion,” Neil MacKinnon, an analyst at VTB Capital in London. And that excludes indirect costs such as higher interest rates and bond yields, particularly in countries on Europe’s troubled periphery such as Greece, Portugal and Ireland loans for people with bad credit.

Europe’s leaders have been “kicking the can down the road, and now we’re running out of road,” he added.

In launching her candidacy, Lagarde said she’d “bring all my expertise as a lawyer, a minister, a manager and a woman” to the job.

Her popularity is based in part on her reputation for deftness in international negotiations to stabilize the world economy during the world financial crisis. She also was seen as instrumental in getting the IMF and European Union to agree on rescue plans for Greece, Ireland and Portugal when their debt crises threatened the entire shared euro currency.

The 55-year-old headed the law firm Baker & McKenzie in Chicago before joining French politics in 2005. With excellent English, a direct manner and relatively pristine image, she is seen by many as a good candidate to quickly step into the job vacated by Dominique Strauss-Kahn and manage Europe’s continuing debt difficulties as well as the myriad other challenges to the world economy.

Carstens, Lagarde’s rival, has won the support of 12 Latin American countries, but not those with the most voting power _ Argentina and Brazil.

The United States has continued to stay on the sidelines with the Obama administration not announcing its support for a candidate yet. Treasury Secretary Timothy Geithner met with Carstens on June 13 and is expected to confer with Lagarde when she is in Washington next week.

The top position became vacant after Dominique Strauss-Kahn resigned last month following his arrest on sexual assault charges, allegations that he denies.

The IMF’s 24-member executive board is expected to interview both Lagarde and Carstens next week and aims to make a decision by June 30.

Lagarde was unavailable for an interview. Her spokesman Bruno Silvestre said that the potential worsening of the European financial crisis would have no bearing on Lagarde’s candidacy. “She’s ridden the wave, she knows how to handle a crisis,” Silvestre said. Without Lagarde’s input, the crisis “could have been a lot more severe for a lot more people,” he added.

That argument holds little water with Tilford, however.

Europe’s ineffective and divisive handling of the Greek debt crisis “has caused a lot of damage to political relations between member states,” Tilford said. “That’s going to make it difficult to bring about what’s needed, which is closer political integration,” Tilford said.

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JEFFERSON CITY

Ford Motor Co., after increasing its share of the U.S. light-vehicle market for the last two years, is falling short of its retail goal this year, which may put pressure on the automaker to offer larger discounts.

Ford in the first quarter had 13.6 percent of the U.S. retail auto market, which excludes sales to fleet buyers, according to researcher Edmunds.com. That trailed the 14.1 percent target Ford’s board set for executives to match or exceed this year, according to the automaker’s government filings.

Ford’s share slipped as General Motors Co. increased sales incentives 11 percent in the first three months of the year, according to Autodata Corp. Ford, which reduced discounts by 9.1 percent in the first quarter, saw its total U.S. market share fall to 16.2 percent from 16.8 percent a year earlier, Autodata said.

“We believe Ford’s management could be forced to become more aggressive with incentives to avoid additional market share loss,” Joseph Amaturo, an analyst with the Buckingham Research Group who rates Ford “neutral,” said Tuesday. “We are increasingly concerned about net-price erosion.”

Chief Executive Alan Mulally, who has emphasized profits over market share, said Ford will maintain pricing discipline.

“The most important thing about our plan is profitable growth, so that leads us to tremendous discipline on everything about the business,” Mulally said Wednesday.

“The number one thing is to match the production capacity to the real demand.”

Ford, which earned $6.56 billion last year, failed to achieve its market share targets globally and in the Americas, according to its proxy statement filed this month. Ford achieved 44 percent of its corporate market-share goal and 58 percent of its target for the Americas, it said.

Ford has said its market share in Europe fell to 7.6 percent last year from 8.9 percent in 2009 as it resisted matching competitors’ discounts.

The automaker said its retail market share in the U.S. last year was 14.1 percent, trailing the board’s 14.2 percent target.

Mulally said Ford will continue to avoid the heavy, profit-eroding discounts that U.S. automakers used in the past to keep factories running.

“We will always be very disciplined about our production and our pricing and have the pricing reflect the real demand and inherent value of the product,” he said.

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Whether it’s a promising biotech firm or a corner store, everyone feels good when a new small business opens. Capital is invested, jobs are created and empty real estate is filled.

Unfortunately, that doesn’t happen often enough in Missouri. Despite all of the hype generated by our business incubators and entrepreneur-education programs, the Show-Me State still ranks below average on most measures of small-business vibrancy.

In the past decade, Missouri hasn’t even generated enough new businesses to replace the ones that closed. From 2000 to 2009, the latest year for which statistics are available, the state had a net loss of 1,451 firms.

The loss was caused by recessions at the beginning and end of the decade, but even so, the statistic shows a shocking lack of business vibrancy. The nation as a whole had a net gain of 268,000 firms during the decade, despite heavy attrition in the recession years of 2008 and 2009.

Jerome Katz, who teaches entrepreneurship at St. Louis University, pointed out St. Louis’ paucity of new businesses during a recent speech. Katz has a generally sunny personality, but he didn’t smile much while presenting the numbers.

“Business formation here gets worse during difficult times, but even in our best times, our performance is trailing the rest of the country,” he says.

One ray of hope: Missouri moved up to 35th place last year, from 48th, in a Kauffman Foundation ranking of the rate at which a state’s residents start businesses.

That may be illusory. Katz says a high percentage of St. Louis’ recent startups seem to be necessity-based, representing laid-off executives who become consultants or laid-off reporters who become freelance writers.

Those one-person firms count as new businesses, but they’re unlikely to ever hire anyone. The entrepreneurs-by-necessity are likely to go back into paid employment if the job market improves. And even those with more ambitious plans may be starting on shaky ground.

“A lot of this latest class of firms, started by people who are unemployed, are undercapitalized, which means they are at risk of closing,” Katz says. “The rate of firm deaths will probably still be on the high side next year.”

In his speech, Katz ticked off other telling statistics about St. Louis’ small-business climate. The metro area has nearly 1 percent of the U.S. population, but attracts just 0.25 percent of the loans guaranteed by the Small Business Administration, and just 0.2 percent of the SBA’s Small Business Innovation Research grants.

That last number should be much higher, given the amount of cutting-edge research that goes on at local universities. “We’re not doing a good job of turning our research into technology,” Katz says.

He also blames public policies, especially a set of state business incentives that seem more oriented toward chasing smokestacks than nurturing entrepreneurs.

Luring an employer from out of state is a rare event, but Missourians start about a thousand businesses a month, even in these turbulent times. We need to roughly double that number to become as entrepreneurial as the rest of the country.

There are some ideas in Jefferson City that look promising. The proposed Missouri Science and Innovation Reinvestment Act, for example, would encourage the formation of technology-based firms.

One thing’s clear: As we pointed out in last year’s “Can St. Louis Compete?” series, the things the region is doing now aren’t working very well. If we can’t find a way to dramatically increase the rate of business startups here, we will be doomed to another decade of economic mediocrity.

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Staring down at the former chief executive of KV Pharmaceutical Co.

Beazer Homes USA Inc. says it lost money in its fiscal first quarter as the homebuilder reported a decline in closings and new orders. But the Atlanta company said Tuesday that it anticipates seasonal improvements in buyer demand. Beazer had a loss of $48.8 million, or 66 cents per share, for the three months ended Dec. 31. That compares with earnings of $48 million, or $1.17 a share, a year ago. Revenue fell 48 percent to $110.3 million from $213.1 million. The results were worse than expected. Analysts forecast a loss of 50 cents per share on revenue of $163.7 million. Total home closings dropped 43.6 percent to 527 homes, while new orders fell 23.9 percent to 540 homes. The cancellation rate rose to 31.2 percent from 27 percent.

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Prime Minister Nouri al-Maliki will not run for a third term in 2014, an adviser said Saturday, limiting himself in the name of democracy and with an eye on the popular anger directed at governments across the Middle East.

Al-Maliki narrowly held on to a second four-year term after his political bloc fell two seats short of its main rival in national elections last year. He will step down at a fragile time in Iraq’s history _ his successor will be the first Iraqi leader to run the nation without U.S. military help since Saddam Hussein.

Al-Maliki adviser Ali al-Moussawi said the premier also wants to change the Iraqi constitution before he leaves to limit all future prime ministers to two terms.

“Eight years is enough for him, in order to not convert to a dictatorship,” al-Moussawi told The Associated Press, as state TV announced al-Maliki’s decision. “This is the principle and the concept of democracy.”

Saturday’s stunning announcement follows al-Maliki’s decision a day earlier to return half of his annual salary to the government _ a move he said aimed to narrow the wide gap between rich and poor Iraqis.

Al-Maliki is not required to publicly report his pay, but he is believed to earn at least $360,000 annually poor credit personal loans.

The salary cut appeared calculated to insulate al-Maliki from the anti-government unrest spreading across the Middle East, as clerics and protesters warned him not to ignore public bitterness over Iraq’s sagging economy and electricity shortages. The U.S. government estimates that as many as 30 percent of Iraqis are unemployed.

Al-Maliki’s decision to announce he will step down after two terms _ a deadline more than three years away _ appeared fueled by the same desire to shield Iraq from uprisings in Egypt and Tunisia.

But it is particularly surprising, given his drawn-out fight last year to keep his job after his party failed to win the most seats in parliamentary elections last March.

Al-Maliki, a Shiite, remained prime minister only after pulling enough support from allies in closed-door negations and promising to share power with his rival Sunni-based political alliance.

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