Finance news. My opinion.

August 17, 2010

Apple manager charged in kickback scheme

Filed under: economics — Tags: , , — Professor @ 6:30 am

An Apple Inc. manager has been charged in a $1 million kickback scheme involving six Asian suppliers of iPhone and iPod accessories.

Paul Shin Devine, a 37-year-old Apple global supply manager from Sunnyvale, was named in federal indictments and a civil suit brought by Apple (NASDAQ:AAPL) on Friday in San Jose.

The federal grand jury indictment charges Devince, who has been with Apple since 2005, with wire fraud, money laundering and other offenses.

The indictment also names Andrew Ang of Singapore, who works for Apple supplier Jin Li Mould Manufacturing Pte. Ltd.

Court filings on Friday said that Devine was paid by suppliers in Asia for inside information they could use to get negotiate favorable contracts with Apple.

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July 5, 2010

Stocks: If you thought the 1st half was bad…

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

Stocks skidded in the first half of the year, particularly in the second quarter. But investors probably haven’t seen the worst of it.

Welcome to the second half.

With the S&P 500 down more than 15% from the highs of late April and all three major indexes at more than 6-month lows, a bigger selloff could be brewing.

"By year-end we could be roughly where we are now, but between now and then, we could be substantially lower," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

Going back to World War II, a decline of 15% off the highs has often turned a correction into a bear market — a drop of 20% to 30% — according to Standard & Poor’s chief investment strategist Sam Stovall.

Late Wednesday, S&P cut its 12-month price target for the S&P 500 to 1,190 from 1,270, citing the "intensifying headwinds."

The Dow is down 7.6% year-to-date, with most of the losses coming in the past two months when the Dow lost more than 10% on worries that the European debt crisis and signs of slowing in Asia will send the U.S. economy back into recession.

"What we saw in May and June was investors trying to understand that it’s going to be a tepid recovery at best," said Alan B. Lancz, president at Alan B. Lancz & Associates.

"We’ll be selective buyers on the dips," he said. "But the weaning off the government stimulus, China slowing down, BP’s oil spill and the sovereign debt issues are going to be an overhang for some time."

Fear of a double dip: Worries that debt-plagued European nations such as Greece and Spain will default on their borrowings were somewhat mitigated by European leaders establishing a nearly $1 trillion fund to provide support. But with governments struggling to implement cutbacks and the euro flailing near a four-year low, concerns remain in play.

"The European issues highlight the fact that fiscal deficits cannot run indefinitely and that we need to fix some of our long-term debt issues," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management."

Congress’ budget chief said Wednesday that the outlook is daunting considering the level of debt cash advance flexible payments.

Recent reports showing that the housing market is slumping again and that job growth remains anemic have added to worries about the strength of any U.S. recovery.

Volatility: The last two months have also brought a return to the level of volatility seen at the height of the financial market crisis in 2008.

"I think we’ll continue to see volatility, with a lot of it to the downside," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management.

He said that between overly optimistic earnings forecasts getting trimmed and the reality of certain tax cuts expiring at the end of the year, the choppiness is unlikely to calm down.

Corporate earnings growth in question: Despite all the turmoil, analysts have barely cut earnings estimates for the second quarter and second half of 2010, and all of 2011, according to Thomson Reuters.

"Since mid-May, analysts have ratcheted their second-quarter estimates down modestly, but they seem to be taking a ‘wait-and-see’ approach for the next 18 months," said John Butters, Thomson’s senior research analyst.

Earnings are expected to have risen 27.2% in the second quarter versus a year ago, down just slightly from mid-May estimates. Financial sector forecasts have come down the most — which is fitting, since those forecasts were raised the most in late April, when the stock market was at its highs.

Analysts currently expect 2010 earnings to rise 34% from a year ago, the biggest year-over-year growth since Thomson began tracking the info in 1998.

For 2011, analysts expect year-over-year growth of 17%.

On the upside, the P/E ratio for the S&P 500 is 12.3 versus the five-year trailing average of 14.2.

"Either the market is overdoing the fears and there’s room for stocks to rally, or the market is ahead of the analysts and the estimates need to come down," said Butters. 

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June 10, 2010

Elementary: Biggest gains

Filed under: online — Tags: , — Professor @ 12:57 am

Fletcher Elementary School in the City of Tonawanda registered a nice gain a year ago. It moved up nine places from 160th in 2008 to 151st in 2009.

But this year's jump makes last year's seem insignificant. Fletcher has vaulted 93 places to 58th, the strongest improvement by any elementary school in the region.

Buffalo's Elmwood Village Charter School is next with a gain of 84 places, followed by St. Mary's of Lancaster, which has moved up 76 places between 2009 and 2010.

The following are the 10 schools with the biggest gains in this year's standings:

• 1. Fletcher ES (Tonawanda), up 93 places

• 2. Elmwood Village CS (Buffalo), up 84 places

• 3. St. Mary's ES (Lancaster), up 76 places

• 4. St. John Vianney School (Orchard Park), up 72 places

• 5. St. Paul's School (Kenmore-Tonawanda), up 61 places

• 6. Ivers J. Norton ES (Olean), up 55 places

• 6. Windom ES (Orchard Park), up 55 places

• 8. Union Pleasant ES (Hamburg), up 54 places

• 9. Our Lady of Pompeii School (Lancaster), up 51 places

• 10. Newfane IS (Newfane), up 50 places

Source

June 5, 2010

Turning abandoned shopping carts into sales

Filed under: online — Tags: , , — Professor @ 5:48 am

From the first day he launched his online skateboard store in 2002, Mike Duncan faced a problem that has plagued retailers since the dawn of online shopping: abandoned shopping carts.

That’s the term for customers loading merchandise into a virtual cart, then leaving the website without paying for anything. These customers aren’t stealing, but they drive merchants crazy. To them, every abandoned cart is a sale they failed to close.

"If you can get just a small fraction of customers to decide to make the purchase instead of leave, you’re talking about a business adding potentially thousands or hundreds of thousands of dollars a year in sales," says Duncan, who owns gear and apparel shop Warehouse Skateboards in Wilmington, N.C.

Last year, Duncan began using LivePerson.com to tackle his abandoned-cart problem. LivePerson (LPSN) specializes in connecting subject-matter experts with online consumers, and draws most of its revenue from selling its services to online retailers. Merchants like Duncan can rent LivePerson’s software to connect their own customer-service staffers with potential buyers.

For browsers poking through a website, LivePerson’s instant messages — the equivalent of a salesperson approaching in a store and asking, "May I help you?" — can be unsettling. But customers can click a button to dismiss the LivePerson agent and ignore the chat feature.

"We may get two out of 10 customers who dismiss us," Duncan says. From the eight customers who don’t, Duncan gets a wealth of information about his site–and the potential to close sales that might otherwise slip away.

"Customers will ask us, ‘Why can’t I see my shipping rate?’ Well, it’s because at that particular moment of shopping, we hadn’t collected their address yet, but it’s good for us to know they’re wondering that," he says. "Once we started using LivePerson.com, we’ve changed how our menus look, the content, the layout — it’s like we’ve been beta testing every day."

The service helps move more merchandise: "If you go into a store to buy a skateboard, the salesperson is going to say, ‘You need a helmet and some knee pads, right?’ We can upsell our average order value to the tune of $15 and $20," Duncan says. He’s also noticed a decrease in returns, because agents can guide customers — like parents holiday shopping for their kids — who don’t know the nuances of the latest skateboarding gear.

Duncan pays $99 a month for one LivePerson license, which shifts between two Warehouse Skateboard employees who staff the chat line from nine hours a day, Monday through Friday. During the holiday season, he ramps up to four licenses and expands the chat hours to 8 a.m. midnight, seven days a week. The staffers juggle their chat duties with their other customer interactions, using e-mail, fax, and the telephone to communicate

Duncan estimates that he’s been able to convert 1% of his abandoned shopping carts into sales. Sounds small, but for a company generates millions each year in sales (Warehouse Skateboards is privately held, and Duncan won’t divulge its revenue), small percentages add up fast. "It’s been very effective for us," Duncan says of the investment.

Francisco Bustos’, owner of two flower-delivery websites, took a different approach to the abandoned-cart problem. Using performance-monitoring technology from Gomez, he focused on shavings seconds off his sites’ page-load times.

Those seconds quickly add up to dollars: "You can just imagine for Mother’s Day, it’s very important. We can’t allow even two or three hours for the website to be slow or not working," says Bustos, who runs global retailers DaFlores.com and RosesnBoxes from Miami. The business has 10 employees and annual revenue of $3 million.

Gomez helps Bustos zoom in on problem spots. Customers from Australia were abandoning DaFlores in droves. After analyzing the traffic with Gomez, Bustos made back-end changes to speed up local load times. "We’re getting 25% more orders from Australia than we used to," he says.

Gomez prices its service based on consumption, with the bill varying depending on how extensively a customer wants to deploy its testing tools. The rates start at around $4,400 per year.

Bustos says it’s worth the hundreds of dollars each month he pays. The value really hit home one sleepless night at 3 A.M., when Bustos — awake thanks to his newborn son — glanced at his Web stats. To his astonishment, he saw orders piling up, unprocessed. A component had broken in his site’s shopping-cat software. Before Gomez, he only would have noticed something amiss after hours of inaction. But now, he was able to alert his IT expert and get the problem solved just before dawn — a critical advantage, since morning is a florist’s busiest time of day for processing orders.

Duncan puts the plight of the abandoned online shopping cart this way: "It costs a lot of money for a business to drive people to your website. If they leave without buying something, you’ve lost not just a sale but quite possibly a repeat customer." 

Source

June 4, 2010

Seven funds to help make investing BEARable

Filed under: technology — Tags: , , — Professor @ 4:42 pm

Investors are having a hard time getting a handle on the stock market lately. And many are getting worried.

The whipsaw returns are producing flashbacks to late 2008, when triple-digit swings in the Dow Jones industrial average were the norm.

Wall Street’s worry list is long: the European debt crisis, huge U.S. government deficits, saber-rattling between North and South Korea, and the shakiness of the economic recovery.

With so much unsettled, the urge to go on the defensive is understandable.

"We’ve had a big recovery," says Matt Berler, co-manager of the Osterweis Fund (OSTFX), which has a reputation as a haven in a falling market. "Now that it’s behind us, we could see markets gyrate, and really end up going nowhere."

If that’s not for you, your options aren’t limited to shifting more heavily into bonds or cash. You can stick with stocks, but take a more cautious approach.

A select group of mutual fund managers have shown they’re masters of defense, capable of picking the stocks most likely to emerge unscathed when trouble strikes. They can cushion the blow further by selling some of their riskier picks and shifting heavily into cash.

Below are seven funds with top records during two especially steep recent declines in the Dow Jones industrial average: Jan. 14, 2000, to Oct. 9 2002, when the dot-com bubble burst, and Oct. 9, 2007, to March 9, 2009, when subprime mortgage troubles spread throughout the financial system.

The seven, screened by Morningstar, are diversified stock funds that finished in the top 3 percent among their peers during both downturns.

But these funds are about more than just defense. They’ve held up in rising markets as well. All have 10-year records placing them in the top 10 percent among their peers.

The seven, in alphabetical order:

— American Century Equity Income (TWEIX) has one of strongest records among large value funds over the past 15 years, with low volatility no fax payday advances. Lately, the fund has bet heavily on utilities stocks, typically good defensive plays in times of trouble.

— Calamos Growth & Income (CVTRX) supplements its stock holdings with convertibles, stock-bond hybrids giving the holder the option to swap from a bond to a stock at a predetermined price. It’s a way to get more potential upside than with regular bonds, along with a steady income stream and reduced volatility.

— Forester Value (FVALX) was the lone U.S. stock fund to finish 2008 with a gain, up 0.4 percent, while nearly every other fund suffered a double-digit loss. Forester Value trailed 79 percent of its peers last year as the same defensive characteristics, that protected it in 2008, held it back when the market turned around.

— Parnassus Equity Income (PRBLX) emphasizes mature dividend-paying stocks that can ride out downturns. The strategy has landed the fund in the top 1 percent among its peers over the past 3- and 5-year periods.

— Royce Special Equity (RYSEX) buys stocks of small companies with clean balance sheets and steady cash flow, and rarely trades them. It’s helped the fund post an average 11.5 percent return per year over the last 10 years.

— Sequoia Fund (SEQUX), which typically holds just 10 to 25 favored stocks, and sticks with them for years. Its latest top holding, at 20 percent of the portfolio, is Berkshire Hathaway, Warren Buffett’s investment company.

— Yacktman Focused (YAFFX) focuses on large-company stocks. Its performance ranks in the top 1 percent of its peers over the last 3, 5- and 10-year periods. Lately, it has found safety in beverage stocks that aren’t buffeted by economic cycles.

If the recent slide extends into a bear market — defined as a drop of 20 percent or more — these funds should serve investors well.

Source

April 22, 2010

Doctors have few answers on health law

Filed under: management — Tags: , , — Professor @ 9:54 am

Dr. Roger Evans, a cardiologist in Wichita, Kan., is used to answering patients’ questions about their hearts. But lately, he said, he has spent half his time answering a succession of different questions — about the health care law.

Donald Moore, 75, one of those patients, expressed his uneasiness about the law recently: “The fact is that I don’t understand it, and no one else I talk to understands it. Every day, you read something different in the paper.”

Moore’s latest concern was a “rumor that the new health care procedures are going to be monitored and managed by the IRS.”

“That’s a turnoff right there,” he said. “How much is true, how much is fiction, out here no one knows.”

Most of the health care law, which President Barack Obama signed last month has yet to take effect, but for many doctors it is already having an impact.

“We’ve had to add an hour or two to the day because patients want to talk about it,” said Evans, who travels around the state and said questions often left him scratching his head. “I see 30 to 50 patients in a day, and it is the subject of conversation more than half the time.”

After months of public wrangling and brinksmanship in Washington, the nation’s doctors now find themselves having to answer questions about a 2,400-page law that many do not understand themselves, and which they may have opposed. “Not only is the public confused, but so are our members,” said Dr. Lori Heim, president of the American Academy of Family Physicians, which supported the bill. “There’s been a lot of misinformation out in the media. We’ve been trying to get to them simple answers — what does this mean for my practice, what does it mean for my patients, what does it mean for the future?”

Some doctors said their patients were pushing for surgery now, for fear that it will not be covered in the future or that they will end up on a waiting list. “It’s ludicrous to be coerced to perform surgery because of fear of noncoverage in the future,” said Dr. Eustaquio Abay II, a neurosurgeon in Wichita. “I refuse.”

Abay said he had tried to read the law, but gave up because it was all legal jargon to him. “They think we have all the answers, but we don’t,” he said of patients.
While many doctors say they are not besieged, the queries have been particularly robust in states where the plan was unpopular, Heim said.

Joseph Baker III, president of the Medicare Rights Center, a nonprofit organization that operates a hotline for patients with questions, characterized the volume of calls about the bill as moderate. But he said the level of confusion was high, comparable to that created when Medicare added prescription drug coverage in 2004.

Often, Baker said, callers have been getting their information from media commentators or doctors who opposed the legislation. “They’re being told by their providers, ‘Now I won’t be able to take Medicare patients,’” he said.

“People call us confused, panicked, anxious,” he said. “And in most instances, we say there are some benefits in the short term, like closing the doughnut hole,” as the gap in Medicare prescription drug coverage is known, “and that the things that might have a negative impact, like lower reimbursement to providers, will happen over a number of years. Usually that calms people down.”

The questions do not always reflect the actual provisions of the law. The major changes for this year, including coverage on their parents’ policies for adult children under age 26, rarely come up, said Dr. Melissa Gerdes, a family practitioner in Whitehouse, Texas, who said it was not unusual for her patients to discuss politics in the examining room. She said that only one patient had asked about the new law’s provisions on the doughnut hole, and that she could not recall any patient who had inquired about coverage for adult children.

“The big one I get is, ‘Are you going to be able to keep seeing me?’” Gerdes said. (She tells them she will.)

At Dr. Alieta Eck’s free clinic in Somerset, N.J., where all the doctors donate their time, Eck said many of her patients were excited about the new program. “People say, ‘I can’t wait for Obamacare,’” said Eck, who has been outspoken in her opposition to the program. “They’re already getting free care.”

Eck said that her office had not been overrun with questions about the bill, but that during visits at her paid practice, “most patients are fearing that everything’s going to cost them more.”

For many doctors, the big frustration comes when they do not know what to say to their patients.

“Quite honestly, I don’t know how to answer their concerns,” said Dr. Deborah Sutcliffe, a solo practitioner in Red Bluff, Calif. “Sometimes they’re more informed than I am, sometimes they’re not. I haven’t read the damn thing.”

Source

January 11, 2010

El Mirage: Test F-35s before February forums

Filed under: economics — Tags: , , — Professor @ 7:57 pm

The Pentagon will hold public meetings in late February regarding the F-35 jet fighter possibly coming to Luke Air Force Base in Glendale.

The Phoenix suburb of El Mirage says noise tests of the new fighter should be completed at Luke before those public Feb. 22-26 forums. The U.S. Defense Department has not yet said if and when such tests might be conducted.

El Mirage officials cite concerns that F-35 will be far nosier than the F-16, which now flies out of Luke on training missions. El Mirage Mayor Michele Kern asked U.S. Sen. John McCain, R-Ariz., last year to bring F-35s to Luke for noise evaluations and the senator said he would.

“The noise needs to be studied,” said El Mirage spokeswoman Stacy Pearson.

Glendale spokesman Jerry McCoy said Glendale is open to the Luke tests, but they should be conducted in a uniform way and at the same time as at other sites being considered for F-35 training fast payday loans. Luke is the U.S. Air Force’s prime training base for F-16 pilots and Glendale is leading the effort to bring the F-35 training to Arizona.

The F-35 is succeeding the F-16 in the U.S. military arsenal.

Luke fighters now take off and land over El Mirage to the north of the base and Goodyear to the south.

McCoy also said Glendale is urging residents and base supporters to attend the DOD meetings.

Luke is competing with bases in Florida and New Mexico for F-35 training. Sites and times for the public forums on Luke have not yet been announced.

Source

December 7, 2009

Darling Weighs Plans for Further U.K. Taxes on Rich, Bankers

Filed under: online — Tags: , , — Professor @ 3:21 pm

Chancellor of the Exchequer Alistair Darling this week may reverse a tax reduction for Britain’s richest households and will consider a levy on bankers’ bonuses in efforts to win over voters before next year’s election.

Darling said today that lowering the inheritance tax for the richest people is no longer a priority and didn’t dismiss an interviewer’s suggestion on BBC Television’s Sunday AM show that he is considering a one-time charge on bank bonuses. The chancellor is scheduled to publish a Pre-Budget Report with the tax plans on Dec. 9.

“I really can’t believe it would be the first priority of any government, at this time, to give a tax cut to the top 2 percent of estates in this country,” Darling said in the broadcast.

Darling and Prime Minister Gordon Brown are seeking to persuade voters that David Cameron’s Conservative Party, which is sticking to a similar inheritance tax plan, is siding with the rich at a time when the country is recovering from the worst economic crisis since World War II. That strategy has helped Brown’s Labour Party erode Cameron’s lead in opinion polls.

Darling said in 2007 that he would raise the inheritance tax threshold to 350,000 pounds ($578,000) from 325,000 pounds for single people and to 700,000 pounds from 650,000 for couples, starting April 2010. Cameron’s Conservatives want to abolish the tax for single people with estates below 1 million pounds and for couples with estates below 2 million pounds.

‘Lurch to Left’

“If the Labour Party wants to say don’t aspire to get on in life, then so be it,” George Osborne, the Conservative lawmaker who shadows Darling in Parliament, told the BBC program. “It’s part of their lurch to the left.”

Darling said he will not be “held to ransom” by banks threatening staff defections if their bonuses are curtailed, indicating he is considering plans to levy a one-time charge on bankers if they exploit loopholes on current bonus rules.

“We do have a veto over the package,” Darling said of government-controlled Royal Bank of Scotland Plc. “We are not going to be held to ransom by people who believe you can pay extremely large bonuses regardless of what’s going on.”

Osborne said he “wouldn’t rule out” such a charge if his party defeats Labour in the election, which has to take place before June.

An ICM Research poll for the Sunday Telegraph showed that the Conservatives are on course to obtain a majority of between 20 and 25 seats in the 646-seat House of Commons. A ComRes Ltd. survey Dec. 1 showed that the U.K. may be heading for a so- called hung Parliament, with Cameron leading Brown by 10 percentage points, down 3 points from October.

‘Party of Rich’

A YouGov Plc poll in today’s Sunday Times showed that more than half of the 2,000 people interviewed viewed the Conservatives as the party of the rich. Cameron said Brown had been “spiteful’ in his efforts to tell voters of his privileged upbringing and elite schooling.

Darling today stepped up the attack, saying Osborne’s plea to voters to endure tougher times isn’t consistent with tax cuts for the rich.

Darling said this week’s budget statement will spell out some detail on how he plans to implement his pledge to reduce the deficit by as much as half over four years. In April, the budget suggested the chancellor would have to find as much as 60 billion pounds to achieve this.

Darling has already announced tax increases that will account for about one-quarter of that amount, and has earmarked about 9 billion pounds by cutting waste in government departments, leaving him the challenge of finding a further 40 billion pounds by reducing government spending.

NHS Program

Darling told the BBC today that he will scrap a 12.4 billion-pound computer program for the National Health Service that is being developed mainly by iSoft Plc. Similar reductions, rather than staff cuts in schools and hospitals, would indicate “the direction of travel” in this week’s report, he said.

“The NHS had quite an expensive IT System and I don’t think we need to go ahead with it now,” he said.

Brown said yesterday in his weekly podcast that a plan to move more government services online would save about 400 million pounds a year.

Darling’s view is that the economy is too fragile to take more steps to repair the 175 billion-pound deficit this year, a Treasury official said this week. Darling will challenge the Labour government’s opponents to spell out their plans on what they plan to reduce, the official said.

Pound Rebounds

The pound snapped two weeks of declines against the euro last week as industry reports showed that U.K. services and manufacturing industries expanded in November, indicating that the recovery is taking hold.

Darling’s approach, contrasting with Conservative Party calls to make deeper and faster cuts, won the support of two groups in London today. The National Institute of Economic and Social Research, a London-based research group that counts the Treasury and the Bank of England as clients, said Darling should keep stimulating the economy during the next few months before reducing the deficit.

The British Chambers of Commerce said the government should refrain from cutting the fiscal deficit too quickly as the nation’s economic recovery faces “major risks,”

Darling will lower his forecast for the U.K. economy this year, saying the financial crisis has inflicted far deeper pain than he predicted in April, a government official said Nov. 27. Gross domestic product will fall 4.75 percent in 2009, compared with the 3.5 percent drop forecast seven months ago, the official said. Darling said today that growth in 2010 will be “moderate.”

Treasury officials said last week that Darling will scale back his estimate for the cost of bailing out Britain’s banks to no more than 10 billion pounds, from 50 billion pounds.

The reduction in the sum set aside in the government’s accounts to pay for losses will shave about 40 billion pounds off the Treasury’s debt, now about 792 billion pounds, the officials said.

Source

December 5, 2009

Safeway sponsors Cardinals gameday area

Filed under: technology — Tags: , , — Professor @ 9:57 pm

Safeway Inc. is sponsoring a gameday area on Sunday for the Arizona Cardinals home game in Glendale.

Safeway’s Gameday Experiene includes games, video game and TVs broadcasting other National Football League games. It also features food and drink stands offering samples of tailgating fare and other products fans might buy from the grocery store.

Safeway hosted a similar event outside University of Phoenix Stadium for the Nov payday loans with no fax. 15 game against the Seattle Seahawks.

The Cards game against the Minnesota Vikings is televised Sunday night on NBC. The Safeway promotion is free and located east of the stadium. The game starts at 6:20 p.m.

Source

December 4, 2009

Hatoyama to Unveil Stimulus Plan as Economy Weakens

Filed under: online — Tags: , , — Professor @ 10:21 am

Prime Minister Yukio Hatoyama will probably unveil his first stimulus package today amid growing signs that the recovery in the world’s second-largest economy is losing momentum.

Hatoyama, who took office in September pledging to transform the economy by emphasizing quality of life over growth, is grappling with a slide in prices and a surging yen. His approval ratings have slumped, hurting the Democratic Party of Japan’s momentum ahead of upper house elections in July 2010.

He may propose spending of as much as 4 trillion yen ($46 billion) in this year’s extra budget, Finance Ministry officials familiar with the matter said. The package would come three days after the Bank of Japan offered to pump 10 trillion yen ($113 billion) into the banking system, accommodating government calls for it to do more to fight declining prices.

“Right now, the biggest threat for the economy is the strengthening yen, while deflation also poses a very severe risk,” said Yoshimasa Maruyama, senior economist at Itochu Corp. in Tokyo. “The government is mindful of next year’s election and will want to spur employment because that’s what matters to voters the most.”

The yen climbed to 84.83 against the dollar on Nov. 27, the highest since 1995, and has gained more than 5 percent in the past three months. It traded at 88.10 as of 1:18 p.m. in Tokyo from 88.26 late yesterday. The Nikkei 225 Stock Average fell 0.3 percent and has lost 3.1 percent since Hatoyama took power on Sept. 16.

Workers, Environment

The stimulus plan is about “95 percent complete,” Deputy Prime Minister Naoto Kan said at a news conference in Tokyo today. The package is likely to focus on helping small and medium-sized businesses, employment aid, and incentives to buy environment-friendly goods.

Most of the funding for spending will probably come from the 2.7 trillion yen frozen from the previous administration’s extra budget. The remainder will be tapped from reserves in so- called special accounts, or money set aside and used at the discretion of bureaucrats, Jiji Press reported this week, citing unidentified ruling party officials.

Finance Minister Hirohisa Fujii said this week that funding for the package wouldn’t come from bond sales, assuring investors that the measures won’t exacerbate a public debt burden that’s the largest in the industrialized world.

The yield on the benchmark 10-year bond fell to 1.19 percent on Dec. 1, the lowest since January. It was unchanged at 1.27 percent today.

Support for Policies

While Hatoyama’s popularity has slipped, it remains high enough to win support for his policies, and he benefits from voter disgust with the way the Liberal Democratic Party managed the economy before its ouster in August, said Jeff Kingston, director of Asian Studies at Temple University in Tokyo payday loan.

“People are well aware that the DPJ was handed the poisoned chalice of an imploding economy and the mother of all fiscal messes,” Kingston said. “The shifting of stimulus spending away from roads and bridges to nowhere to social welfare spending, environmentally friendly products and child subsidies, plays very well here.”

Hatoyama’s approval ratings fell five percentage points from the previous month to 68 percent, according to a Nov. 30 survey by Nikkei Inc. and TV Tokyo Corp. The poll didn’t provide a margin of error.

Slower Growth

Gross domestic product expanded for a second quarter in the three months ended Sept. 30 after four quarters of contraction. Economists say the government will revise down last quarter’s growth from an annual 4.8 percent pace after a report yesterday showed companies cut spending a record 25.7 percent in the period.

Other figures this week showed the expansion may be weakening. Industrial production advanced at the slowest pace in eight months in October, and wages slid for a 17th month, extending their longest losing streak in six years.

Japan’s economy will probably shrink 5.4 percent this year, more than a 4.2 percent contraction in the euro area and a 2.7 percent drop in the U.S., the International Monetary Fund forecast in October.

Japanese policy makers are adding stimulus programs just their counterparts around the world consider how to withdraw them as the global economy recovers.

The Bank of Japan’s lending program will offer three-month loans at 0.1 percent interest. In a meeting with central bank Governor Masaaki Shirakawa two days ago, Hatoyama applauded the move and refrained from pushing for further monetary easing.

Revive Demand

Economist Akiyoshi Takumori says those measures won’t spur growth unless the government does more to revive demand.

“There needs to be support for the private sector,” said Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The BOJ’s new 10 trillion yen program will be useless unless companies want to invest in plant and equipment.”

Businesses and workers have called for government action. Fujio Mitarai, head of the country’s largest business lobby, said last week that Japan needs to take “urgent steps” against the yen’s advance. Nobuaki Koga, head of the Japanese Trade Union Confederation, met Hatoyama on Dec. 2 to ask for “bold and aggressive” measures.

Source

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