Thursday, April 7, 2011

Stocks fall after another earthquake hits Japan

Stocks fall after another earthquake hits Japan


NEW YORK (AP) -- Stocks fell Thursday after a 7.4-magnitude earthquake struck off the coast of northern Japan. The losses moderated after a tsunami warning was lifted.

The Dow Jones industrial average fell as many as 96 points in morning trading before recovering most of its losses. Japan's stock market had already closed by the time the earthquake struck.

The quake rattled investors, partly since it struck near the same area as the massive earthquake that triggered devastating tsunami on March 11. Stock indexes bounced back after the impact of the quake turned out to be less than initially feared.

The Dow was down 37 points, or 0.3 percent, at 12,388 in afternoon trading. The broader S&P 500 fell 3, or 0.2 percent, to 1,333. The Nasdaq composite index fell 2, or 0.1 percent, to 2,798. All three indexes had been higher in earlier trading.

In the U.S., economic news was mostly positive. The Commerce Department said 382,000 people applied for unemployment for the first time last week. That was the third drop in four weeks. The decline in applications suggests layoffs are slowing.

Major retailers also reported better-than-expected sales for March at stores that have been open at least a year. Analysts had predicted declines because of cold weather and higher gas prices.

Costco Wholesale Corp. rose 4 percent after reporting a 13 percent gain in sales. Limited Brands Inc. rose 1 percent after it said its revenue increased 14 percent because of strong sales at its Victoria's Secret stores. Nordstrom Inc. and Macy's Inc. also rose about 1 percent.

Bed Bath & Beyond Inc. rose 11 percent, the most of any stock in the Standard & Poor's 500 index. The home furnishings retailer posted strong results late Wednesday and said it expected earnings to rise 10 percent to 15 percent this year.

Constellation Brands Inc. rose 6 percent. The maker of Robert Mondavi wine and Svedka vodka recovered from a loss in the same quarter a year ago and reported a double-digit increase in wine sales in North America.

Bond prices rose, sending their yields lower. The yield on the 10-year Treasury note fell to 3.54 percent from 3.55 percent late Wednesday.

The European Central Bank raised its main interest rate by a quarter point to 1.25 percent, a day after Portugal asked for a bailout. The Bank of England kept its main interest rate unchanged at 0.5 percent.

Despite aid request, Portugal's outlook uncertain

LISBON, Portugal (AP) -- Political and economic uncertainty clouded Portugal's future Thursday as it remained unclear who would negotiate the terms of its requested bailout, how much it would be and when it would arrive.

A day after the caretaker government asked for rescue loans from its fellow EU nations, bank stocks that have suffered recently led a rally on the Lisbon stock exchange Thursday. But the yield on Portugal's 10-year bonds barely budged from the unsustainable high of 8.5 percent as investors remained wary of the debt-heavy country's fate.

It was uncertain how much Portugal might receive in a bailout, how soon it could get the cash and -- crucially -- under what terms, as rescue packages come with fiscal policy strings attached and have to be paid back sooner or later.

The country is being run by a caretaker government ahead of a June election, making it hard for foreign negotiators to know who they'll be dealing with for the next four years. Added to that, Portugal is forecast to enter a double-dip recession this year, denying it the growth it needs to pull out of its debt hole. And trade unions, angrily blaming the bailout on bankers, promised more strikes and street demonstrations.

Cabinet Minister Pedro Silva Pereira said Portugal would send its formal request for a bailout to European authorities later Thursday. A delegation from the European Commission and the European Central Bank is expected in Lisbon "very soon" to begin negotiating the terms of a financial rescue package, including how much Portugal might need, he said without elaborating.

Analysts predict Portugal will need up to euro80 billion ($114 billion) -- equivalent to about half its annual gross domestic product.

The country's European partners have long pressed it to accept help, and some were angry that Lisbon left the bailout request so late.

"There is so much obscurity in this and there are so many things that have been handled badly, so first these things have to be sorted out," Sweden's Finance Minster Anders Borg said.

"In this difficult situation, we will end up with complex and arduous solutions, because it isn't possible to create a complete program if you don't have a government and instead it will be about forming different bridge solutions," Borg told reporters in Stockholm. "This means they have put the surrounding world in a very awkward situation."

But German Foreign Minister Guido Westerwelle welcomed Portugal's decision. "This will, we think, tend to calm the situation and it is a contribution to containing the problems and minimizing the danger of contagion," Westerwelle said in a speech in Berlin.

Portugal is already one of the eurozone's poorest countries, and a steep rise in its borrowing costs over the past year has made its financial situation unsustainable. Two rating agencies downgraded its bonds to one notch above junk level in recent days.

That deterioration, which raised the specter of bankruptcy, forced Portugal to announce late Wednesday it is following Greece and Ireland into asking for aid from Europe's bailout reserve and the International Monetary Fund.

Jeremy Batstone-Carr, an analyst at Charles Stanley & Co., said the risk remains that Portugal could soon default.

"The difference is that unlike Greece and Ireland, Portugal is, to all intents and purposes, already bankrupt and has no government to manage either the loan or the austerity program. This takes the peripheral eurozone crisis to another level," he said.

The European Commission, eager to stamp out any sign of a flare-up in the continent's debt woes, said it would act swiftly on any bailout request from Portugal. RBS European Economics said it expected Lisbon to receive a first lump sum by the end of May.

Authorities need to move quickly. Portugal has to repay a euro4.5 billion ($6.4 billion) loan that falls due next week, though analysts expect it can meet that. Then it must come up with almost euro7 billion to roll over a bond and make interest payments in June. Meanwhile, it still needs to collect funds to keep the country running.

There was good news, though, for Portuguese banks which have taken the brunt of investor fears and have had to rely heavily on liquidity assistance from the ECB. Their stock prices surged by up to 5 percent, helping the main Lisbon index rise 1.2 percent and making it one of Europe's best performers.

The outgoing government has battled for 12 months to avert a bailout, introducing tax hikes and cuts in pay and welfare benefits to restore market faith in its prospects. It quit two weeks ago after opposition parties rejected a fresh set of spending cuts.

The main opposition Social Democratic Party has said it supports budget cuts. Its leader Pedro Passos Coelho said he will back a request for "a minimum level of help" ahead of a full bailout, but did not elaborate.

The austerity measures, coupled with a decade of flimsy growth and rising debts, have squeezed domestic spending and worsened Portugal's dire financial condition. Bailout terms would likely tighten those measures, lowering living standards and raising unemployment, which last year stood at a record 11.2 percent.

Marc Ostwald, a market strategist at Monument Securities in London, said it remained to be seen whether the goals of a rescue package are achievable for Portugal.

He said "the more pertinent issue is whether the new government will have the stomach to implement long overdue reforms, which will clearly meet with much public resistance."

Recent policies to reduce the country's debt load have triggered a series protests and strikes, and the civil servants' union announced a walkout on May 6.

Some 340,000 Portuguese are on the minimum monthly wage of euro485 before tax, and 1.4 million take home less than euro600 a month, making further cuts unpalatable for many.

Malin Rising in Stockholm and Geir Moulson in Berlin contributed to this report.

Despite aid request, Portugal's outlook uncertain

Portuguese banks get relief from bailout request but uncertainty over future remains high

Sunday, March 20, 2011

Japan tragedy seared into the world's imagination

OKYO – There are events in history that sear themselves into the world's collective imagination, and enter the realm where myth meets heartbreaking reality.

Japan's tragedy is one of those events. Already, it seems reasonable to surmise it could prove one of the most significant calamities of our time — one that shapes policies, economies, even philosophies for decades to come in an increasingly interconnected world.

There is the sheer, surreal force of the images emerging from afflicted zones: cars perched on rooftops, ships sitting in rice paddies, helicopters in a David-and-Goliath battle against radiation-spewing nuclear reactors.

And the way it haunts us with some of our most basic fears: Death by water. Or rubble. Or nuclear fallout.

Add to that, it's a crisis with an impact that will be felt around the planet: Japan is one of the most advanced countries in the world, its third-largest economy, its most successful car-seller and its second-most generous giver of foreign aid.

"This event has the potential to be the most globally disruptive natural hazard in modern times," said Rob Verchick, a disaster expert at Loyola University in New Orleans. "And it may just be, in the context of globalization, of all time."

The Asian tsunami of 2004 killed more people. The fall of the Twin Towers launched two wars. The collapse of the Berlin Wall spelled the end of an empire.

But in this event, psychological, even philosophical, shock over the confluence of human tragedy and nuclear catastrophe yields some fundamental questions. If a technological power like Japan can be so vulnerable, who's safe? Is even minimal risk, as with nuclear power, too much risk? Do we need to rethink the role of government in protecting the public?

Shaking us from modern-day hubris, we're forced to think about whether even the most advanced societies, with almost obsessively meticulous safety backstops, are still pitifully at the mercy of the elements.

But amid tragedy, Francis Fukuyama, the eminent Stanford philosopher and author of "The End of History and the Last Man," sees the possibility for the crisis to become a galvanizing force for political change in the world.

"It does seem to me a natural disaster like this, because it reminds everybody of how commonly vulnerable they are, could be used as an opportunity to reshape the whole tone and character of politics," Fukuyama told The Associated Press.

The unbelievable sight of rich Japan — famous for trains running like clockwork, state-of-the-art gadgets, concern for safety and order — laid low by a freak force of nature beyond human control has been a terrifying wake-up call. On Friday, Japan's government acknowledged that the triple blow of quake, tsunami and nuclear disaster completely overwhelmed even its elaborately laid out, and fastidiously practiced, emergency response systems.

"The unprecedented scale of the earthquake and tsunami that struck Japan, frankly speaking, were among many things that happened that had not been anticipated under our disaster management contingency plans," said Chief Cabinet Secretary Yukio Edano.

There's another great earthquake that changed the world: Lisbon, 1755. The tsunami-churning temblor flattened the Portuguese city, killed tens of thousands of people, and caused Enlightenment thinkers to re-imagine the role of government and community.

Experts say this crisis could become another historical turning point that may alter mankind's perception of its relationship to the world, and societies' relationship with one another in an age of globalization.

"What the Lisbon earthquake experience contributed to Western history (was) this move of government being responsible to its people and protecting them in a community-driven way," said Verchick. "Is there anything like that that might happen as a result of the Japan tsunami and earthquake and nuclear disaster? I think that the answer is yes. It's related to the idea of global community."

Already the crisis is triggering an urgent rethink of nuclear power around the world, from China to Germany, where pressure is building to sharply accelerate a plan to phase out nuclear energy.

"Fukushima, March 12: 15:36: The End of the Nuclear Age," read the cover of the Germany's prestigious Der Spiegel magazine — referring to the exact time an explosion rocked the Fukushima Dai-ichi nuclear plant where workers are racing to prevent a meltdown.

While the Asian tsunami and last year's earthquake in Haiti triggered an enormous outpouring of worldwide sympathy and aid, the Japan catastrophe is one where people in industrialized countries can more easily see themselves in the victims' shoes.

"One of the things that make this a unique situation is that it is a catastrophic event with incredible terrifying loss that's occurring in a country that is also wealthy," said Verchick, author of the book Facing Catastrophe: Environmental Action for a Post-Katrina World.

Verchick said that in New Orleans, many people who lived through Hurricane Katrina are watching the scenes in Japan with a sense of gut-wrenching familiarity, with some even experiencing symptoms associated with post-traumatic stress disorder.

The Japan tsunami will go down in history as the more significant disaster, according to James Orr, professor of East Asian studies at Bucknell University. Not because of any difference in suffering, but because its effects will be felt around the planet in a more direct way. "Katrina was very much a regional disaster," he said.

And that global punch is given more force from the historic speed with which the images of devastation reached every corner of the planet.

"People all over the world have the ability to almost immediately see the disaster on the ground," said Verchick. "And that actually produces psychological and social changes in people and communities all over the world."

Gadhafi vows 'long war' after US, allies strike

RIPOLI, Libya – A defiant Moammar Gadhafi vowed a "long war" after the U.S. and European militaries blasted his forces with airstrikes and over 100 cruise missiles early Sunday, hitting air defenses and at least two major air bases and shaking the Libyan capital with explosions and anti-aircraft fire.

Despite the strikes, Gadhafi's troops lashed back, bombarding the rebel-held city of Misrata with artillery and tanks on Sunday, the opposition reported.

In the overnight barrage, ship-fired Tomahawk cruise missiles and bombs and missiles from an international arsenal of warplanes including American B-2 stealth bombers and F-15 and F-16 fighter-bombers rained down on Libyan targets — including ground forces — in the widest international military effort since the Iraq war. The air assault came as Gadhafi's overwhelming firepower was threatening to crush the month-old rebellion against his 41-year rule. State television said 48 people were killed in the strikes.

The strikes gave immediate, if temporary, relief to the besieged rebel capital, Benghazi, in eastern Libya.

Airstrikes, apparently from French aircraft, devastated a Libyan tank force 12 miles (20 kilometers) south of Benghazi. At least seven demolished tanks were still smoldering in a field hours later, five of them with their turrets and treads blown off, alongside two charred armored personnel carriers and around a dozen damaged jeeps and SUVs of the type often used by Gadhafi fighters.

Jubilant rebel fighters climbed on the remains on the tanks, shooting assault rifles in the air in celebration. It was not known how many people were killed in the strike — any bodies had been taken away in the morning — but shredded boots and foam mattresses and tomato paste cans strewn around the scene suggested the Gadhafi forces had been camped at the site when they were hit.

U.S. and European military officials said the assault was only the first wave in the international operation in Libya. But already there were signs of differences over the goals. France took a more assertive stance, suggesting the allies' intervention must ultimately lead to Gadhafi's downfall. The U.S. military appeared more wary of overtly taking a side and getting pulled deeper into Libya's conflict, with the top American U.S. officer saying Gadhafi's ouster wasn't necessarily the goal.

Libya's claims of civilians among the dead from the strikes also appeared to make Arab countries nervous, after the Arab League took the unprecedented step of calling for a no-fly zone. On Sunday, Arab League chief Amr Moussa criticized the allied strikes, saying they went beyond what the Arab body had supported.

"What happened differs from the no-fly zone objectives," Moussa told reporters in Cairo. "What we want is civilians' protection not shelling more civilians."

The initial assault aimed to take out Gadhafi's air defenses to clear the way for enforcing a no-fly zone, targeting more than 20 radar systems, communications centers and surface-to-air missile sites. But the U.N. resolution authorizing the action goes much further, allowing "all necessary means" to protect civilians.

That means the U.S. and Europeans have a free hand in the next stages to attack Gadhafi's ground forces besieging rebel cities or other military targets. The rebels, who control most of the eastern half of Libya, hope the allied intervention will tip the scales back in their favor after an onslaught by Gadhafi's forces threatened to reverse their gains early in the uprising — and eventually lead to the toppling of the Libyan leader.

The strikes hit one of Libya's main air bases, on Tripoli's outskirts, the opposition said. Also hit, it said, was an air force complex outside Misrata, the last rebel-held city in western Libya — which has been under siege the past week by Gadhafi forces. Those forces have been bombarding the city from the complex, which houses an air base and a military academy.

Despite the strikes, Gadhafi forces resumed bombarding Misrata after daylight on Sunday, said Switzerland-based Libyan activist Fathi al-Warfali.

"Misrata is the only city in western Libya not under Gadhafi's control; he is trying hard to change its position," said al-Warfali, who told The Associated Press he was in touch with residents in the city.

In Benghazi, the rebel capital and first city to fall to the uprising that began Feb. 15, people said the strikes happened just in time. Libyan government tanks and troops on Saturday had reached the edges of the city in eastern Libya in fierce fighting that killed more than 120 people according to Gibreil Hewadi, a member of the rebel health committee in Benghazi. He said the dead included rebel fighters and civilians, among them women and children.

Sunday, the city was quiet. As part of the international assault, French warplanes hit targets in the Benghazi area.

"It was a matter of minutes and Gadhafi's forces would have been in Benghazi," said Akram Abdul Wahab, a 20-year-old butcher in the city.

Mohammed Faraj, 44, a former military man who joined the rebels, held a grenade in each hand as he manned a checkpoint on the outskirts of the city.

"Me and all of Benghazi, we will die before Gadhafi sets foot here again," Faraj told The Associated Press. "Our spirits are very high."

Asked on ABC's "This Week" if the allied effort aimed to get rid of Gadhafi, France's ambassador to the United Nations, Gerard Araud, said "We want the Libyan people to be able to express their will, I've said ...and we consider that it means that Gadhafi has to go."

Still, the top U.S. military officer said the goals of the international campaign are "limited" and won't necessarily lead to the ousting of Gadhafi.

Asked on NBC's "Meet the Press" whether it was possible that the mission's goals could be achieved while leaving Gadafi in power, Adm. Mike Mullen said, "That's certainly potentially one outcome." Pressed on this point later in an interview on CNN's "State of the Union," Mullen was more vague, saying it was too early to speculate. He said the Libyan leader is "going to have to make some choices about his own future" at some point.

Gadhafi vowed to fight on. In a phone call to Libyan state television, he said he would not let up on Benghazi and said the government had opened up weapons depots to all Libyans, who were now armed with "automatic weapons, mortars and bombs." State television said Gadhafi's supporters were converging on airports as human shields.

"We promise you a long war," he said.

He called the international assault "simply a colonial crusader aggression that may ignite another large-scale crusader war."

Throughout the day Sunday, Libyan TV showed a stream of what it said were popular demonstrations in support of Gadhafi in Tripoli and other towns and cities. It showed cars with horns blaring, women ullulating, young men waving green flags and holding up pictures of the Libyan leader. Women and children chanted, "God, Muammar and Libya, that's it!"

"Our blood is green, not red," one unidentified woman told the broadcaster, referring to the signature color of Gadhafi's regime. "He is our father, we will be with him to the last drop of blood. Our blood is green with our love for him."

The overnight attack early Sunday shook coastal cities, including Tripoli, where anti-aircraft guns could be heard firing.

Libyan TV quoted the armed forces command as saying 48 people were killed and 150 wounded in the allied assault. It said most of the casualties were children but gave no more details.

Mullen said he had seen no reports of civilian casualties.

The cruise missile assault was the "leading edge" of a coalition campaign, named Operation Odyssey Dawn, said Navy Vice Adm. William E. Gortney, director of the Pentagon's Joint Staff.

He said it would take six to 12 hours to assess whether the main targets — Libya's SA-5 surface-to-air missiles — were taken out, then it would be safe to send an unmanned Global Hawk surveillance drone to get a better picture of the area.

French fighter jets fired the first salvos overnight, carrying out several strikes in the rebel-held east, around the Benghazi area, while British fighter jets also bombarded the North African nation. The cruise missile barrage was fired from five U.S. ships in the Mediterranean — the guided-missile destroyers USS Stout and USS Barry, and three submarines, USS Providence, USS Scranton and USS Florida.

The U.S. military announced that Navy electronic warfare aircraft and Marine Corps attack jets joined the international assault early Sunday. Navy EA-18G Growlers launched from unspecified land bases to provide electronic warfare support over Libya. Marine AV-8B Harriers from the USS Kearsarge sailing in the Mediterranean conducted strikes against Gadhafi's ground forces and air defenses.

President Barack Obama said military action was not his first choice and reiterated that he would not send American ground troops.

"This is not an outcome the U.S. or any of our partners sought," Obama said from Brazil, where he is starting a five-day visit to Latin America. "We cannot stand idly by when a tyrant tells his people there will be no mercy."

The U.S. has struck Libya before. Former President Ronald Reagan launched U.S. airstrikes on Libya in 1986 after a bombing at a Berlin disco — which the U.S. blamed on Libya — that killed three people, including two American soldiers. The airstrikes killed about 100 people in Libya, including Gadhafi's young adopted daughter at his Tripoli compound.

GM cuts unnecessary spending after Japan disaster

GM cuts unnecessary spending after Japan disaster


GM reduces nonessential spending after Japan earthquake and tsunami disrupts parts production


NEW YORK (AP) -- GM said Saturday it is cutting unnecessary spending companywide as it assesses the impact of production disruptions from the earthquake and tsunami in Japan.

The move will help the automaker preserve cash as it deals with the financial implications from shortages of parts made in Japan, a company spokesman said. The cost-cutting effort, which includes travel, took effect last week and will be in place for an undetermined period.

The news follows General Motors Corp.'s announcement Friday that two of three shifts will be canceled at a plant in Eisenach, Germany on Monday and Tuesday. Another plant in Zaragoza, Spain will remain closed Monday. The plants produce the Corsa compact car.

In the U.S., GM said Thursday it will halt production at its pickup plant in Shreveport, Louisiana, next week.

"The whole industry is still in the process of figuring out what the implications are from the disaster in Japan," said GM spokesman Klaus-Peter Martin.

On Friday, Honda Motor Co. said it expects to resume auto and motorcycle production in Japan on Wednesday. But in an e-mail Thursday to U.S. dealers, it said it can't guarantee when production will return to full capacity.

The carmaker also asked dealers to suspend May orders for Japan-made vehicles because they may be needed to fill existing orders that have been delayed because of disruptions. Typically, dealers order cars six weeks in advance.

More than 80 percent of Honda and Acura vehicles sold in the U.S. are made in North America. Models sold in North America but made in Japan are the Fit, CR-Z, Civic Hybrid, Insight, Acura TSX, Acura RL and a small number of CR-Vs.

Cisco announces first dividend

Cisco announces first dividend


NEW YORK (AP) -- Cisco Systems Inc., the world's largest maker of computer networking gear, on Friday said its first-ever cash dividend will amount to 6 cents per share and will be paid on April 20.

The company has said since last year that it would start paying a dividend equating to an annual yield of 1 percent to 2 percent, but had not specified the amount or precise timing.

The dividend amounts to an annual yield of 1.4 percent at Thursday's closing price of $17. The shares hit a 52-week low of $16.97 in Thursday trading.

On Friday, the shares were up 14 cents to close at $17.14.

The dividend will be paid to shareholders of record as of March 31.

Technology companies like to hold on to their cash, investing it in their own growth rather than paying dividends. But several of them have started paying small dividends as they find their business maturing. Microsoft Corp. introduced a dividend in 2003 and now carries a 2.6 percent annual yield. Hewlett-Packard Co., which competes with Cisco in many fields, has a yield of 0.8 percent.

Among the holdouts that don't pay a dividend are Apple Inc., Dell Inc. and eBay Inc.

San Jose, Calif.-based Cisco said its "leadership position in the markets we serve is strong," making this the time to reward shareholders.

The dividend amounts to $1.3 billion annually. Cisco has already been transferring cash to shareholders through stock buybacks, at a rate of about $8 billion per year, according to analyst Brian White at Ticonderoga Securities. Most recently, Cisco authorized a $10 billion buyback program in November.

Cisco had $40.2 billion in cash in February, but only $3.1 billion of that was in the U.S. The rest sits at overseas subsidiaries.

Cisco has been reluctant to repatriate that money, because it will then be taxed at the 35 percent U.S. corporate tax rate. It's lobbying Washington for a tax amnesty on overseas earnings, and CEO John Chambers has linked that effort to the size of the dividend.

White said buybacks at the current rate plus the dividend will cost Cisco $6.5 billion to $7 billion more than its U.S. business generates in cash flow. Absent a tax amnesty, Cisco might have to repatriate money at the higher tax rate, borrow money or reduce its buybacks, White said.

Monday, February 21, 2011

Four Traditional Money Rules to Break

Four Traditional Money Rules to Break


Never borrow against a 401(k). Avoid credit cards. Make a bigger down payment on your home or apartment to avoid paying extra mortgage interest. These are among the tried-and-true financial rules consumers have been told to live by for years. But now -- with interest rates still low and credit staging a comeback -- might be a good time to break them.

This solid financial advice isn't suddenly all wrong, but many of these axioms no longer result in higher savings or less debt. That's because the economic recovery has opened up more exceptions and loopholes to standard advice, says David Peterson, president of Peak Capital Investment Services, a financial planning firm. Advisers, for example, typically discouraged clients from taking a loan from their 401(k) -- but this is now the cheapest way to borrow money, with the average rate at 4.25%, lower than most personal loans, to pay back debt they racked up during the recession. But as some parts of the economy have improved -- equities are once again outperforming fixed income, banks are slowly returning to lending, and consumers are spending more -- the rules for making and saving money are changing, at least temporarily.

Here are four traditional money rules you can break -- at least for now.

401(k) Loans

Old school advice: Avoid taking one at all costs.
Now: The most affordable loan available.

For decades, borrowing from a 401(k) plan was synonymous to derailing retirement savings. But right now, the cheapest bank for many borrowers -- especially those who feel secure in their job -- is their own 401(k). Average interest rates on credit cards are 14% and on home equity lines of credit 5.22%. But a 401(k) loan charges a fixed average of prime (currently 3.25%) plus 1%, according to the Profit Sharing/401(k) Council of America. Approximately 90% of employers offering 401(k)s permit employees to borrow from them, according to the PSCA, and the loans can last for up to 15 years. These loans make most sense for consumers stuck with high-interest credit card debt. In a year, a borrower can save around $800 in interest with a loan that eliminates a $5,000 balance on a card with a 20% interest rate.

And the money the borrower pays back goes into their 401(k) -- not to a bank. Repaying can also be easier than it is with a regular loan, says Olivia Mitchell, professor at the University of Pennsylvania Wharton School, who recently coauthored a study on 401(k) loans. About 60 million people contribute to a 401(k), according to the PSCA; once a loan is taken out, any contributions made via automatic payroll deductions first go toward paying down the loan. But, there are still some pitfalls: If you lose your job or leave it voluntarily and can't pay the loan back within 90 days you'll be hit with federal income tax on the outstanding amount, plus a 10% penalty if less than age 59 1/2. And you'll need to reallocate some of what remains into higher-yielding equities until the account is made whole, to avoid missing out on potential gains, says David Wray, president of the PSCA.

Roth IRAs

Old school advice: Convert a traditional IRA into a Roth to save on taxes.
Now: Stick with the IRA.

The Roth IRA's appeal has always been that contributions, rather than withdrawals, are taxed, shifting the tax burden to pre-retirement instead of years down the road when taxes could be higher. Roth IRAs became even more user-friendly last year when taxpayers were allowed to convert from a traditional IRA regardless of income (the limit for conversions had been $100,000 modified adjusted-growth income). But in many cases, staying put in a traditional IRA will lead to bigger savings -- especially for people five to 10 years away from when they plan to withdraw their money, says Peterson. Here's why: It can take years of tax-free growth to make up the taxes incurred during the conversion. For example, someone who converts $100,000 from a traditional to a Roth IRA and pays $30,000 in taxes will need at least five years to make that money back -- assuming a 7% rate of return. And that doesn't address the loss of compounding that would have occurred if that money didn't go toward paying taxes, says Sheryl Garrett, a fee-only certified financial planner.

There's also less time to pay taxes on this conversion now. Savers who converted from a traditional IRA to a Roth IRA last year were able to spread the income from that conversion over 2011 and 2012. But now, all of the income from a conversion made in 2011 (and after) is taxable at once. Also, this conversion comes with the risk of getting bumped to a higher tax bracket during that year because the money counts as income -- so converting might not make sense for someone whose budget is currently stretched thin. Instead, savers might now want to convert a smaller amount gradually once a year that won't put them into different bracket, says Garrett.

Mortgages

Old school advice: Choose the mortgage with the smallest interest payments.
Now: Go with more interest.

Paying the least interest on a mortgage requires two steps: a down payment of at least 20% and paying down the loan quickly. But both strategies can create a setback for a borrower -- especially in still-uncertain housing and employment markets, says Chip Cummings, president of Northwind Financial, a training and consulting company for mortgage firms. With interest rates still low, instead of throwing most of their money into the home -- where some of it could be lost if home values decline -- consumers might want to make a down payment of 10%. Keep the extra cash in an emergency fund in case of sudden job loss or unexpected renovations and take on the added cost of private mortgage insurance.

PMI varies, but on average is 60 basis points. On a $300,000 30-year mortgage, a borrower keeps an extra $30,000 in cash and pays $1,800 a year just in PMI until he or she hits the 22% equity threshold. What's more, a 30-year mortgage, rather than a 15-year one, is one good way to build a savings safety net, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market. On average, monthly payments are 20% to 30% smaller with a 30-year mortgage, he says. That extra money could be stashed in savings for a rainy day or to pay the mortgage if you lose your job.

Credit Cards

Old school advice: Refrain from using them.
Now: Swipe -- with caution.

Stashing credit cards in a bank safe deposit box or freezing them in a block of ice were commonplace for many consumers during the recession in an attempt to lower spending and take time to pay down cards. But now, it seems that in order to hold onto a good credit score and access to credit cards in case of an emergency, borrowers need to make more purchases using them. Prime borrowers who stop using their credit cards will find their credit lines slashed or closed -- largely because their accounts are unprofitable since there's no balance to charge interest on, says John Ulzheimer, president of consumer education for SmartCredit.com, a credit-monitoring web site.

The median FICO score of borrowers with no trigger event, like a missed payment, who've been affected, is 770, according to a 2010 study by Fair Isaac. The result is a higher amount of credit card debt compared to total credit limits available, a ratio that can contribute to about 30% of their credit score. Use your credit cards at least once every three months -- and pay the balance off in full each time -- to avoid this, says Ulzheimer.


Washington: the 'blackest name' in America

George Washington's name is inseparable from America, and not only from the nation's history. It identifies countless streets, buildings, mountains, bridges, monuments, cities — and people.

In a puzzling twist, most of these people are black. The 2000 U.S. Census counted 163,036 people with the surname Washington. Ninety percent of them were African-American, a far higher black percentage than for any other common name.

The story of how Washington became the "blackest name" begins with slavery and takes a sharp turn after the Civil War, when all blacks were allowed the dignity of a surname.

Even before Emancipation, many enslaved black people chose their own surnames to establish their identities. Afterward, some historians theorize, large numbers of blacks chose the name Washington in the process of asserting their freedom.

Today there are black Washingtons, like this writer, who are often identified as African-American by people they have never met. There are white Washingtons who are sometimes misidentified and have felt discrimination. There are Washingtons of both races who view the name as a special — if complicated — gift.

And there remains the presence of George, born 279 years ago on Feb. 22, whose complex relationship with slavery echoes in the blackness of his name today.

___

George Washington's great-grandfather, John, arrived in Virginia from England in 1656. John married the daughter of a wealthy man and eventually owned more than 5,000 acres, according to the new biography "Washington: A Life," by Ron Chernow.

Along with land, George inherited 10 human beings from his father. He gained more through his marriage to a wealthy widow, and purchased still more enslaved blacks to work the lands he aggressively amassed. But over the decades, as he recognized slavery's contradiction with the freedoms of the new nation, Washington grew opposed to human bondage.

Yet "slaves were the basis of his fortune," and he would not part with them, Chernow said in an interview.

Washington was not a harsh slaveowner by the standards of the time. He provided good food and medical care. He recognized marriages and refused to sell off individual family members. Later in life he resolved not to purchase any more black people.

But he also worked his slaves quite hard, and under difficult conditions. As president, he shuttled them between his Philadelphia residence and Virginia estate to evade a law that freed any slave residing in Pennsylvania for six months.

While in Philadelphia, Oney Judge, Martha Washington's maid, moved about the city and met many free blacks. Upon learning Martha was planning one day to give her to an ill-tempered granddaughter, Judge disappeared.

According to Chernow's book, Washington abused his presidential powers and asked the Treasury Department to kidnap Judge from her new life in New Hampshire. The plot was unsuccessful.

"Washington was leading this schizoid life," Chernow said in the interview. "In theory and on paper he was opposed to slavery, but he was still zealously tracking and seeking to recover his slaves who escaped."

In his final years on his Mount Vernon plantation, Washington said that "nothing but the rooting out of slavery can perpetuate the existence of our union."

This led to extraordinary instructions in his will that all 124 of his slaves should be freed after the death of his wife. The only exception was the slave who was at his side for the entire Revolutionary War, who was freed immediately. Washington also ordered that the younger black people be educated or taught a trade, and he provided a fund to care for the sick or aged.

"This is a man who travels an immense distance," Chernow said.

In contrast with other Founding Fathers, Chernow said, Washington's will indicates "that he did have a vision of a future biracial society."

Twelve American presidents were slaveowners. Of the eight presidents who owned slaves while in office, Washington is the only one who set all of them free.___

It's a myth that most enslaved blacks bore the last name of their owner. Only a handful of George Washington's hundreds of slaves did, for example, and he recorded most as having just a first name, says Mary Thompson, the historian at Mount Vernon.

Still, historian Henry Wiencek says many enslaved blacks had surnames that went unrecorded or were kept secret. Some chose names as a mark of community identity, he says, and that community could be the plantation of a current or recent owner.

"Keep in mind that after the Civil War, many of the big planters continued to be extremely powerful figures in their regions, so there was an advantage for a freed person to keep a link to a leading white family," says Wiencek, author of "An Imperfect God: George Washington, His Slaves, and the Creation of America."

Sometimes blacks used the surname of the owner of their oldest known ancestor as a way to maintain their identity. Melvin Patrick Ely, a College of William and Mary professor who studies the history of blacks in the South, says some West African cultures placed high value on ancestral villages, and the American equivalent was the plantation where one's ancestors had toiled.

Last names also could have been plucked out of thin air. Booker T. Washington, one of the most famous blacks of the post-slavery period, apparently had two of those.

He was a boy when Emancipation freed him from a Virginia plantation. After enrolling in school, he noticed other children had last names, while the only thing he had ever been called was Booker.

"So, when the teacher asked me what my full name was, I calmly told him, `Booker Washington,'" he wrote in his autobiography, "Up from Slavery." Later in life, he found out that his mother had named him "Booker Taliaferro" at birth, so he added a middle name.

He gives no indication why the name Washington popped into his head. But George Washington, dead for only 60-odd years, had immense fame and respect at the time. His will had been widely published in pamphlet form, and it was well known that he had freed his slaves, Thompson says.

Did enslaved people feel inspired by Washington and take his name in tribute, or were they seeking some benefits from the association? Did newly freed people take the name as a mark of devotion to their country?

"We just don't know," Weincek says.

But the connection is too strong for some to ignore.

"There was a lot more consciousness and pride in American history among African-Americans and enslaved African-Americans than a lot of people give them credit for. They had a very strong sense of politics and history," says Adam Goodheart, a professor at Washington College and author of the forthcoming "1861: Civil War Awakening."

"They were thinking about how they could be Americans," Goodheart says. "That they would embrace the name of this person who was an imperfect hero shows there was a certain understanding of this country as an imperfect place, an imperfect experiment, and a willingness to embrace that tradition of liberty with all its contradictions."

Many black people took new names after the Revolutionary War, the Civil War, and the black power movement, says Ira Berlin, a University of Maryland history professor who has written books on the history of African-Americans.

"Names are this central way we think about ourselves," Berlin says. "Whenever we have these kinds of emancipatory moments, suddenly people can reinvent themselves, rethink themselves new, distinguish themselves from a past where they were denigrated and abused. New names are one of the ways they do it."

But for black people who chose the name Washington, it's rarely certain precisely why.

"It's an assumption that the surname is tied to George," says Tony Burroughs, an expert on black genealogy, who says 82 to 94 percent of all Washingtons listed in the 1880 to 1930 censuses were black.

"There is no direct evidence," he says. "As far as I'm concerned it's a coincidence."

___

Coincidence or not, today the numbers are equally stark. Washington was listed 138th when the Census Bureau published a list of the 1,000 most common American surnames from the 2000 survey, along with ethnic data. The project was not repeated in 2010.

Ninety percent of those Washingtons, numbering 146,520, were black. Only five percent, or 8,813, were white. Three percent were two or more races, 1 percent were Hispanic, and 1 percent were Asian or Pacific Islander.

Jefferson was the second-blackest name, at 75 percent African-American. There were only 16,070 Lincolns, and that number was only 14 percent black.

Jackson was 53 percent black. Williams was the 16th-blackest name, at 46 percent. But there were 1,534,042 total Williamses, including 716,704 black ones — so there were more blacks named Williams than anything else.

(The name Black was 68 percent white, meaning there were far more white Blacks than black Blacks. The name White, meanwhile, was 19 percent black.)

Many present-day Washingtons are surprised to learn their name is not 100 percent black.

"Growing up, I just knew that only black people had my last name," says Shannon Washington of New York City. Like many others, she has never met a white Washington.

She has no negative feelings about her name: "It's a reflection of how far we've come more than anything. I most likely come from a family of slaves who were given or chose this name."

As the creator of advertisements, events and http://www.parlourmagazine.com, she works with many Europeans, who often ask how she got her name. She plans on keeping it when she gets married, and likens her attachment to that of some black people for racist memorabilia like mammy dolls and Jim Crow signs.

"I don't exactly love it," she says of her name, "But I have to respect it."

Marcus Washington never thought much about his name as one of the few black people working in the overwhelmingly white William Morris talent agency. That changed after he filed a $25 million lawsuit in December accusing William Morris of racial discrimination.

"I'm sure that for some people there, my name triggered the thought that I was African-American, and automatically triggered biases that resulted in me not being given a fair shot," he says.

One 2004 study conducted by researchers at the University of Chicago Graduate School of Business found that job applicants with names that sound white receive 50 percent more callbacks than applicants with "black" names.

The study responded to real employment ads with more than 5,000 fictitious resumes. Half the resumes were assigned names like Emily Walsh; the other half got names like Lakisha Washington. After calculating for the difference in resume quality, the study concluded that "a white name yields as many more callbacks as an additional eight years of experience on a resume."

But what about those 8,813 white Washingtons? What is their experience?

For the family of 85-year-old Larry Washington, who traces his family tree back to England in the 1700s, the experience has changed over the years. (He says he is not related to George, who had no children.)

When he moved to New Jersey in 1962 to teach at a college there, Larry Washington's family tried to scout housing over the phone, but nothing was ever available. "When we showed up, there were plenty of houses," he recalls. After that, he taught his six children to always apply in person.

Over the years, his name made him sensitive to racism: "We just simply recognized these things, and had full sympathy with the people who were really black and getting the real treatment."

His son Paul, who in the 1970s worked for a temporary agency in Long Island, NY, says people in the offices where he was assigned always betrayed their relief when he turned out to be white. He experienced housing discrimination into the `80s, but says that no longer happens.

He is now a geology professor who has lived in ten states from Louisiana to Pennsylvania. Sometimes he wonders if his name helps him get interviews at colleges looking to recruit a rare black geologist, and if it hurts him when the college discovers that he is white.

Paul's children have had much different experiences — like his 25-year-old daughter, an English professor who teaches foreign students, whose new pupils are always amazed to meet someone with "the ultimate American name."

When Paul's brother Larry Jr. was recently traveling through customs in Japan, the inspector looked at his passport and said, "Oh, Mr. Washington!"

"His politeness and the number of times he bowed clearly indicated that he thought I was the member of a very important family," Larry Jr. recalls.

His sister Ida, a veterinarian who lives in Seattle, says she has never experienced discrimination due to her name as an adult. She is married, but uses Washington as her professional name.

"It's very distinctive. I use it with a certain amount of pride," she says.

Back in high school, she became fascinated with black history. "I think my name has made me much more aware of what African-American folks struggle with. I feel in tune with them."

Perhaps her sentiments bring the name full circle — from blacks making a connection to the greatest white Washington to a white person choosing a name associated with blackness.

"I find it touching that freed blacks wanted to identify with the American tradition and the American dream," says Chernow, the biographer. "It makes a powerful statement."

"I have to think," he says, "that George Washington would be very pleased that so many black people have adopted his name."

___

Jesse Washington covers race and ethnicity for The Associated Press. He is reachable at jwashington(at)ap.org or http://www.twitter.com/jessewashington.

___

On the Web:

Census surname study: http://www.census.gov/genealogy/www/data/2000surnames/index.html

Nasdaq nears 10-year high; should you be nervous?

Nasdaq nears 10-year high; should you be nervous?

Technology-heavy index nears levels from dot-com boom; why it may be different this time


NEW YORK (AP) -- The Nasdaq finished within 25 points of its highest level in a decade Friday, reminding investors of a time many would rather forget: The bursting of the dot-com bubble.

Today, tech is hot again. Facebook -- which hasn't even gone public yet -- is worth some $50 billion. Online content company Demand Media rose 33 percent on the day of its initial public offering last month. The Nasdaq composite index closed Friday at 2,834, still only a little more than half its all-time closing high of 5,049 in March 2000. But the index of mostly tech stocks is up 26 percent over the past 12 months.

Should investors be worried about another bubble? Not really, because there's a twist this time around: Technology companies are making money and may valued correctly.

"It is night and day compared to 10 years ago," says Barry Mills, the manager of the $400 million Dreyfus Technology Growth fund. "These business models are real. The revenues are real, and the cash flows are real."

Consider this: Judging by diluted earnings per share, a conservative method of valuing what a company's stocks are worth, the companies in the Nasdaq index were collectively earning $39.28 per share in December 1999 and priced at 103.6 times their annual earnings. Now, the index has diluted earnings per share of $127.64 and a price-earnings ratio of 22.11.

The economic recovery in the U.S. is one reason that technology companies are earning such high profits. Companies put off upgrading their computer systems and other large purchases during the worst days of the recession, and are making up for that now. Others are investing in new technology before they add employees.

International growth is another reason to be optimistic. Half of the profits of the technology companies in the Standard & Poor's 500 index come from outside North America, says Bill Stone, chief investment strategist at PNC Asset Management. China is now the world's second-largest market for PCs, and consumers in emerging market countries are showing strong demand for smart phones.

Technology companies in the S&P 500, a close proxy for the Nasdaq composite, are up 8.4 percent so far this year, about 2 percentage points more than the index as a whole. Last year, tech companies returned 10 percent after dividends, compared with the 15 percent return of the full index.

And tech stocks as a whole may be doing better than index returns show. That's because large companies -- with the exception of Apple -- that were hot stocks 10 years ago have matured and their stocks have stalled. "The Microsofts, Yahoos, and Googles of the world aren't growing like they used to," says Michael Sansoterra, manager of the $510 million RidgeWorth Large Cap Growth fund.

Bigger companies have a larger weighting in the Nasdaq index than smaller ones. Microsoft, for instance, makes up 5.6 percent of the index. The company has fallen 6.6 percent over the past 12 months.

And now to the question on the mind of any investor who was once burned by a bubble: Is it too late to get in?

Stock valuations certainly don't suggest so. Tech stocks in the S&P 500 are priced at 13.3 times earnings, which is just 0.3 more than the broad index. Not only that, but they are cheaper than they were a year ago, when they cost 15.4 times earnings. With stocks trading at reasonable levels, it's harder to make an epic mistake. Such as, say, buying technology stocks in June 2001, when they cost 128.3 times earnings.

"I'm still finding a lot of good values out there," says Samuel Dedio, manager of the $108 million Artio U.S. Smallcap fund. "There looks to be a lot more upside ahead of this."



Sunday, January 30, 2011

Goldman Sachs boosts pay for Blankfein, 4 others Goldman Sachs boosts base salary for CEO Blankfein to $2M; $1.85M for 4 other top executives

NEW YORK (AP) -- Goldman Sachs Group Inc. has more than tripled the salary of CEO Lloyd Blankfein to $2 million, and also granted raises to four other top executives.

The investment bank said in a Securities and Exchange Commission filing on Friday that its board's compensation committee set the new base salary for Blankfein, effective Jan. 1. His previous salary had been $600,000.

The committee set salaries at $1.85 million for four other executives. They are Chief Operating Officer Gary Cohn; Chief Financial Officer David Viniar and Vice Chairmen Michael Evans and John Weinberg.

The filing didn't elaborate on the reasons for the raises. The salaries don't include other forms of compensation the executives can receive, such as stock options.

US, Europe wary of Egypt protest contagion: analysts

US, Europe wary of Egypt protest contagion: analysts


PARIS (AFP) – The United States and Europe are raising pressure for democratic reform in Egypt but face a tricky task amid fears that the violent unrest there could spread far beyond its borders, analysts say.

The United States on Sunday raised pressure on Egypt's long-time President Hosni Mubarak, its closest ally in the Arab world, to make reforms. Secretary of State Hillary Clinton called for an "orderly transition" to democracy.

Denis Bauchard of the French International Relations Institute (IFRI) said US President "Barack Obama has taken the lead, calling for political reform, without sparing Mubarak, and that's quite smart."


Clinton went further on Sunday, saying that Mubarak's move to name his first ever vice-president and a new premier was not nearly enough to answer the concerns of his people.

"We're trying to promote an orderly transition and change that will respond to the legitimate grievances of the Egyptian people which the protests are all about," Clinton told CBS television news.

She urged the government and the military "to do what is necessary to facilitate that kind of orderly transition," apparently implying that Mubarak, who has ruled for nearly 30 years, should not run in September's presidential polls.

Britain, France and Germany also spoke out jointly on Saturday over the street clashes that have left at least 125 people dead.

"We urge President Mubarak to embark on a process of transformation which should be reflected in a broad-based government and in free and fair elections," the three countries said in a statement.

Previously, the Europeans and Americans had acted with "great caution" that was tantamount to "support for the regime", said Didier Billion, an expert at Institute for International and Strategic Relations (IRIS) in Paris.

"One of the lessons here is that we need to be on the right side of history in these countries," said US Senator John McCain, who lost his 2008 White House bid to Obama.

"We need to do a better job of emphasising and arguing strenuously for human rights," he said on the CNN news channel.

"You can't have autocratic regimes last forever. The longer they last, the more explosive the results."

Paris had also taken a cautious line during similar unrest in its former colony Tunisia, not turning against authoritarian president Zine El Abidine Ben Ali until after he was driven out.

The Tunisian uprising set a precedent for the region that has now recurred in Egypt -- a bigger, more strategically important country.

Another IRIS analyst, Pascal Boniface, said Tunisia created a "generic model" for challenging authoritarian governments, which could be reprised "in Africa, Asia, anywhere repressive powers dominate and appear worn out".

Obama made a key speech in Cairo in 2009, shortly after his election, pledging to reach out to the Arab world.

Since then however, optimism has waned amid setbacks to US efforts for Israeli-Palestinian peace.

Now the stakes are high for the United States in managing the crisis in its top regional ally Egypt. Kuwait and Saudi Arabia have backed Mubarak.

"Egypt remains a major pawn in the Middle East," said Billion. The West fears "a domino effect if Mubarak falls, with a protest movement that could grow across the world."

With long-time leaders such as Mubarak, Libya's Moamer Kadhafi, Ali Abdallah Saleh of Yemen and numerous leaders in sub-Saharan Africa racking up decades in power, observers see potentially historic change looming.

"The African continent is at a special moment in its history, with 22 presidential and legislative elections due in the coming year," said one senior French official who asked not to be named.

"It is not a good time for dictators," he added. "This could be contagious."

Egypt's Mubarak faces crisis, protest defies curfew

CAIRO (Reuters) – President Hosni Mubarak, clinging on despite mass popular demands for an end to his 30-year rule, met on Sunday with the generals who may hold the keys to Egypt's future, but in Cairo protesters defied a curfew.

As his key ally the United States called for an "orderly transition," Mubarak's disparate opponents, including the banned Muslim Brotherhood, rallied behind retired international diplomat Mohamed ElBaradei to lead possible talks with the army on organizing a handover of power to a national unity coalition.

"I ask of you patience, change is coming in the next few days," Baradei told thousands of demonstrators on Cairo's Tahrir Square after dark. "You have taken back your rights and what we have begun, cannot go back."

He added: "We have one main demand -- the end of the regime and the beginning of a new stage, a new Egypt."

"The people want the regime to fall!" thousands chanted as troops looked on patiently from their U.S.-built battle tanks.

Baradei, 68, won a Nobel peace prize as head of the United Nations' nuclear body. Though little known to many Egyptians, he had hoped to run in a presidential election in September.

U.S. Secretary of State Hillary Clinton told Fox News: "We want to see an orderly transition so that no one fills a void.

"We also don't want to see some takeover that would lead not to democracy but to oppression and the end of the aspirations of the Egyptian people."

For a week, since Egyptians inspired by the overthrow of the aging strongman in Tunisia began a push for change, it has been unclear who might emerge as an alternative to Mubarak and, more widely, to the military class which has run Egypt since 1952.

MUSLIM BROTHERHOOD

A senior figure in the Muslim Brotherhood, the banned Islamist group that has long seemed the strongest single force against Mubarak, said it backed ElBaradei as negotiator.

The Brotherhood has stayed in the background although several of its senior officials have been rounded up. The government has accused it of planning to exploit the protests.

Some of its leaders walked free from jails on Sunday.

As many as 10,000 people protested in Tahrir Square, a rallying point in the center of Cairo, to express anger at poverty, repression, unemployment and corruption -- themes that are rumbling across the Arab world after first Tunisia and now the most populous Arab state Egypt have been plunged in unrest.

As the curfew started and was ignored, warplanes and helicopters flew over the square. By late afternoon more army trucks appeared in a show of military force but no one moved.

"Hosni Mubarak, Omar Suleiman, both of you are agents of the Americans," shouted protesters, referring to the appointment on Saturday of intelligence chief Suleiman as vice president, the first time Mubarak has appointed a deputy in 30 years of office.

It was the position Mubarak, 82, held before he become president and many saw the appointment as ending his son Gamal's long-predicted ambitions to take over and as an attempt to reshape the administration to placate reformists.

Mubarak held talks with Suleiman, Defense Minister Mohamed Hussein Tantawi, Chief of Staff Sami al-Anan and others.

Clearly those in Tahrir Square did not wish to see Mubarak's ruling structure replaced by a military line-up featuring his closest associates. "Mubarak, Mubarak, the plane awaits," they said. There was also a big protest in Alexandria.

SHOCKWAVES AROUND MIDDLE EAST

The turmoil, in which more than 100 people have died, has sent shock waves through the Middle East where other autocratic rulers may face similar challenges, and unsettled financial markets around the globe as well as Egypt's allies in the West.

In Tunisia, the detonator of the regional movement, an exiled Islamist leader was welcomed home by thousands on Sunday. In Sudan, Egypt's southern neighbor, police beat and arrested students taking part in anti-government protests in Khartoum.

In Egypt, the military response to the crisis has been ambivalent. Troops now guard key buildings after police lost control of the streets, but have neglected to enforce a curfew, often fraternizing with protesters rather than confronting them.

It remains to be seen if the armed forces will keep Mubarak in power, or decide he is a liability to Egypt's national interests, and their own. It was also unclear if Mubarak had decided to talk with the generals or if he was summoned by them.

It was Tunisian generals who persuaded former President Zine al-Abidine Ben Ali to flee last month after weeks of protests.

In Suez, on the canal, one senior local officer, Brigadier Atef Said said his troops would give protesters a free voice:

"We will allow protests in the coming days," he told Reuters. "Everyone has the right to voice their opinion."

The crisis deepened on Sunday after police had disappeared from the streets. Egyptians faced lawlessness on the streets with security forces and citizens trying to stop looters.

Through the night into Sunday, Cairo residents armed with clubs, chains and knives formed vigilante groups to guard neighborhoods from marauders after the unpopular police force withdrew following the deadly clashes with protesters.

Security sources said police would be back on Monday.

TANKS SPRAYED WITH SLOGANS

In surreal scenes, soldiers from Mubarak's army stood by tanks covered in anti-Mubarak graffiti: "Down with Mubarak. Down with the despot. Down with the traitor. Pharaoh out of Egypt."

Asked how they could let people scrawl anti-Mubarak slogans on their mostly American-made vehicles, one soldier said: "These are written by the people, it's the views of the people."

Egypt's armed forces -- the world's 10th biggest and more than 468,000-strong -- have been at the heart of power since army officers staged the 1952 overthrow of the king. It benefits from about $1.3 billion a year in U.S. military aid.

The army appears to be showing restraint and there is no talk at this time about halting U.S. aid to Egypt, Clinton said.

The government has interfered with Internet access and mobile phone signals to try and disrupt demonstrators' plans.

On Sunday, it ordered pan-Arab channel Al Jazeera to shut down and cut off its local broadcasts.

The tumult was affecting Egypt's tourist industry and the United States and Turkey said they were offering evacuation flights Other governments advised people to leave Egypt.

The United States and European powers were busy reworking their Middle East policies, which have supported Mubarak, turning a blind eye to police brutality and corruption in return for a bulwark against first communism and now militant Islam.

Israeli Prime Minister Benjamin Netanyahu said Israel was closely watching events in Egypt, the first Arab country to sign a peace treaty with the Jewish state in 1979.

"This is the Arab world's Berlin moment," said Fawaz Gerges of the London School of Economics, comparing the events to the fall of the Berlin Wall in 1989. "The authoritarian wall has fallen, and that's regardless of whether Mubarak survives."

(Additional reporting by Dina Zayed, Marwa Awad, Shaimaa Fayed, Sherine El Madany, Yasmine Saleh, Alison Williams and Samia Nakhoul in Cairo, Alexander Dziadosz in Suez, Arshad Mohammed in Washington and Peter Apps, Angus MacSwan and William Maclean in London; Writing by Peter Millership, editing by Alastair Macdonald)

Wednesday, January 26, 2011

How recession change us

AP Source: Ally Financial meets with banks on IPO AP Source: Ally Financial meets with investment bankers this week to choose team for IPO

AP Source: Ally Financial meets with banks on IPO

AP Source: Ally Financial meets with investment bankers this week to choose team for IPO


DETROIT (AP) -- A person briefed on the matter says Ally Financial Inc. is meeting with investment bankers this week to choose the team that will handle the initial public stock offering for the former financing arm of General Motors.

Ally is now 74 percent owned by the U.S. government because of a $17.2 billion bailout during the financial crisis. The government is hoping to get some of its money back with an IPO.

The person says bankers are making presentations to Ally on Wednesday and Thursday to get the underwriting business. The person says banks will make suggestions about the size and timing of any stock offer. The person did not want to be identified because the plans are not public.

General Motors declares quarterly dividend General Motors declares quarterly dividend of about 64.7 cents per share

DETROIT (AP) -- General Motors says its board is declaring a quarterly dividend of about 64.7 cents per share on its Series B mandatory convertible junior preferred stock.

The dividend will total $64.7 million. It is payable March 1 to those who own stock as of Feb. 15.

The automaker sought bankruptcy protection in 2009 and accepted nearly $50 billion in government help. The new GM had an initial public offering of stock in November.

Its global sales grew 12 percent last year, and it turned a $4.2 billion profit in the first nine months of the year. Financial results for the final three months of 2010 aren't in yet, but more profit is expected.

Dow breaks through 12,000, first time since 2008 Dow Jones industrial average trades above 12,000 for the first time since June 2008

Dow breaks through 12,000, first time since 2008

Dow Jones industrial average trades above 12,000 for the first time since June 2008


NEW YORK (AP) -- The Dow Jones industrial average broke through 12,000 for the first time in two and half years Wednesday but edged lower in afternoon trading.

Investors were encouraged by President Barack Obama's call to overhaul taxes on businesses and a jump in new home sales in December. The gains were held back by weak profit forecasts from Boeing Co., Xerox Corp. and other big names.

Obama said in his State of the Union address late Tuesday that he wanted to close corporate tax loopholes and use the additional revenue to lower tax rates on businesses for the first time in 25 years.

That change would be popular with business leaders from both political parties. The U.S. has some of the highest corporate tax rates in the industrialized world.

"If he can take steps to simplify the tax codes, be it for individuals or corporations, I think it would be a lot easier to do business," said Jack Ablin, chief investment officer at Harris Private Bank.

The Dow Jones industrial average rose 7, or 0.1 percent, to 11,984 in afternoon trading. It went as high as 12,020 earlier. The last time the Dow traded above or closed above 12,000 was in June 2008.

Boeing was the worst performer of the 30 stocks in the Dow average. Boeing fell 3.3 percent after saying its 2011 profit would be hurt by delays to its new 787 aircraft and higher pension expenses.

Xerox fell 8 percent. The company issued a weak earnings forecast and said its longtime chief financial officer, Lawrence A. Zimmerman, was retiring.

Eastman Kodak Co. fell 8.2 percent. The company's income fell 95 percent on weaker revenue from its camera business and lower royalties from digital imaging.

The Standard & Poor's 500 index rose 7, or 0.6 percent, to 1,298. The last time the S&P index closed above 1,300 was Aug. 28, 2008.

The Nasdaq composite index rose 22, or 0.8 percent, to 2,742.

The Commerce Department reported that new home purchases rose 17.5 percent in December compared with November. Despite the strong one-month jump, new home sales for all of 2010 fell to the lowest level on records going back 47 years.

Bond prices fell, sending their yields higher. The yield on the 10-year Treasury note rose to 3.40 percent from 3.34 percent late Tuesday.

Later in the day, the Federal Reserve will release a statement from its latest policy meeting. It's not expected to announce any changes to interest rates or the Fed's $600 billion bond-buying program.

Toyota recalls 1.7 million cars for fuel leaks In latest hit to quality image, Toyota recalls 1.7 million cars because of possible fuel leaks

Toyota recalls 1.7 million cars for fuel leaks

In latest hit to quality image, Toyota recalls 1.7 million cars because of possible fuel leaks


TOKYO (AP) -- Toyota recalled nearly 1.7 million cars worldwide Wednesday for possible fuel leaks, the latest in a ballooning number of quality problems that could further tarnish the company's reputation in the United States.

The recalls are mostly in Japan, but include Lexus IS and GS luxury sedans sold in North America. That's where the world's No. 1 car company faces the biggest challenges in winning back customer trust.

U.S. dealers will inspect cars to see if loose fuel pressure sensors caused leaks. There were no accidents suspected of being caused by those problems, according to Toyota. The car maker has received 77 complaints overseas, 75 of them in North America, and more than 140 in Japan.

The latest quality hitch follows a spate of recalls that began in late 2009, mostly in North America, which now cover more than 12 million cars and trucks. The recalls involve defective floor mats and gas pedals that get stuck, some of them suspected of causing unintended acceleration.

Wednesday's recalls come exactly one year after Toyota stopped selling eight models in the U.S. because of unintended acceleration problems. The sales suspension affected 60 percent of Toyota's lineup in the U.S., and was the first of four sales halts last year. .

Koji Endo, auto analyst with Advanced Research Japan Co. in Tokyo, said the newest recalls will cost Toyota about 20 billion yen ($240 million), but won't hurt its earnings much.

"But there is that perception of here we go again, and that hurts Toyota's image, especially in North America," he said.

The biggest damage to Toyota's image has been in the U.S. where its response to safety problems was seen as slow. The company's U.S. sales lagged last year despite an industry recovery. Some believe that Toyota's relentless drive for growth hurt quality.

The company has lost some potential U.S. customers: A survey done by consumer website Edmunds.com showed that 17.9 percent of all car shoppers last month were considering a Toyota, a 3.8 percent point drop from a year earlier. That drop in consideration could be blamed on Toyota's recalls, as well as its aging lineup.

"Toyota needs to overcome not just the PR damage sustained by last year's recalls, but also the reality that many of its models are stale," said Jessica Caldwell, director of pricing and industry analysis for Edmunds.

Toyota has stayed popular in Japan, partly because government incentives for green vehicles sent sales of its Prius gasoline-electric hybrid booming.

The company is likely trying to be aggressive with recalls and so the latest one is not a sign that quality is taking another dive at the company, Endo said.

To help respond to customer complaints and investigate quality concerns quickly, the company recently opened two new field offices, in Houston and Jacksonville, Fla. It plans to open another in Denver by the end of the first quarter, and already has offices in New York and San Francisco. The offices are part of Toyota's plan to improve global quality and communication within the company.

In the latest recalls, the largest number of the affected vehicles was in Japan at nearly 1.3 million -- the second-largest auto recall in that nation's history. It involved two different problems.

In one of the problems announced Wednesday, an improper installation of a sensor to measure fuel pressure may cause the device to loosen as a result of engine vibrations, and possibly cause fuel to leak, the company said. That problem also affects 280,000 Lexus cars sold abroad, most in North America.

Included under that recall are the 2006 through 2007 Lexus GS300/350, 2006 through early 2009 Lexus IS250, and 2006 through early 2008 Lexus IS350 sold in the U.S.

Lexus dealers will inspect the vehicles for fuel leakage and will tighten the sensor, if nothing is leaking. If a leak is confirmed, the gasket between the sensor and the delivery pipe will be replaced, it said.

That same problem was also found in the Crown and Mark X models sold in Japan.

The second problem, which affects 141,000 Avensis sedans and station wagons sold in Europe, and New Zealand, was caused by irregular work on the fuel pipe, which may cause cracks and fuel leakage, Toyota said.

That problem was also found in 16 models sold in Japan, including the Noah subcompact, RAV4 sport-utility vehicle and Wish cars.

Toyota also recalled 6,000 trucks made by group company Daihatsu Motor Co., which were sold under the Toyota brand in Japan, for a problem with a metal part connecting a spare tire to the bottom of the truck. The tire could come loose and fall on the road, Toyota said.

Chief Executive Akio Toyoda, the grandson of the automaker's founder, has vowed to regain trust and respond quicker to customer needs.

Toyota shares fell nearly 2 percent to close at 3,400 yen ($41) in Tokyo.

Thursday, December 30, 2010

Atomic Alchemy

Japan nano-tech team creates palladium-like alloy: report
TOKYO, December 30, 2010 (AFP) - Japanese researchers have created an alloy with properties similar to palladium, a precious metal used in many high-tech goods, a news report said Thursday, dubbing the breakthrough "present-day alchemy".

Kyoto University professor Hiroshi Kitagawa and his team said they used nano-technology to combine rhodium and silver, elements which do not usually mix, to produce the new composite, the Yomiuri daily said.

The alloy has similar properties to palladium, which is used in cars' emission-reducing catalytic converters as well as in computers, mobile phones, flatscreen TVs and dentistry instruments.

Like other white metals, such as silver and platinum, palladium is expensive, with its deposits largely limited to South Africa and Russia.

Palladium also has applications in the production of fuel cells -- a clean and renewable energy source that produces electricity by combining hydrogen and oxygen, with water as the only byproduct.

To make the new alloy, the Kyoto team used nano-technology to "nebulise" the rhodium and silver and gradually mixed them with heated alcohol, with the two metals mixed stably at the atomic level, the report said.

Japan's industry ministry has listed 31 rare metals, including palladium and lithium, which are used in industrial products, such as electronic devices and batteries. Of these, 17 elements are called rare earth minerals.

Resource-poor Japan has tried to shift from its dependence on China, which controls the bulk of global rare earth production.

Kitagawa said he hopes to create more alloys using nano-technology, without specifying which ones, the Yomiuri said.

China's online population hits 450 million

BEIJING – China's number of Internet users — already the world's largest — rose to 450 million this year, more than a third of the country's population, a senior official said Thursday.

Official statistics show that the number of users, as of the end of November, is an increase of 20.3 percent compared to last year, Wang Chen, head of China's State Council Information Office, told a news conference. China's population is more than 1.3 billion.

China's boom in Internet usage has come with the growth of an equally extensive policing system, from technical filters that block sites based on certain words to human monitors who scan bulletin boards and micro-blogging posts for political dissent.

Wang said a yearlong government campaign to crack down on pornography, violence and other harmful material accessed on the Internet has resulted in the shutdown of more than 60,000 websites. In addition, government censors deleted 350 million entries of pornographic content, including text, images, and video clips, he said.

Chinese authorities investigated nearly 2,200 criminal cases, and courts handed down sentences in 1,164 cases, he said. More than 1,300 people were punished by the courts, while 58 people were given more than five years of prison time.

Wang said government censors have "made the Internet environment much cleaner than before."

And he warned China had no intention of ending its Internet crackdown: "Our campaign has not come to a stop. This will be a long battle."

Much of China's online growth has come as more people access the Internet through their mobile phones using popular services that support video and other Web products. A report earlier this year by the China Internet Network Information Center said about 277 million people get online with their phones.

The Internet's popularity poses challenges to the Communist government, which is used to exercising tight control over information. In addition to policing porn, Beijing runs an extensive system of Web monitoring and censorship to block information deemed politically subversive dubbed "the Great Firewall."

Ford recalls F-series pickups, Edge, Lincoln MKX

Ford recalls F-series pickups, Edge, Lincoln MKX


DETROIT (Reuters) – Ford Motor Co is recalling about 20,000 new vehicles in North America, mainly its heavy duty pickup trucks, due to the chance than an electrical short could cause a fire, Ford and U.S. federal regulators said on Thursday.

Ford will inform owners of its F-series pickups, small sports utility vehicles Edge and Lincoln MKX of the potential problem by January 10, according to a filing with the U.S. National Highway Traffic Safety Administration.

About 15,000 of the affected vehicles were sold in the United States, and most of the rest in Canada, said Wes Sherwood, Ford spokesman.

Sherwood said the automaker is not aware of any injuries, crashes or fires resulting from the issue.

In a six-day period, a supplier not identified by Ford made body control modules that may produce an electrical short, Ford told NHTSA in a filing.

Sherwood said the suspect vehicles were built between late October and mid-November.

"If an electrical short develops, an overheating condition may occur which can result in an unattended vehicle fire," the NHTSA filing said.

Of the nearly 20,000 vehicles affected, 13,200 are Super Duty F-Series trucks, which are the F-250, the F-350 and the F-450 models.

Some 476 F-150 pickup trucks were affected. That model is the biggest selling vehicle in North America.

About 6,200 Edge and MKX models are affected, Sherwood said.

Edge and MKX are also known as crossover vehicles, because they are built on a car platform rather than a truck platform as are larger SUVs.

Ford will pay for repairs performed at Ford dealerships. Sherwood said the repair time is relatively short, but he did not specify how long each repair will take or how much they will cost the automaker.

(Reporting by Bernie Woodall; Editing by Derek Caney, Dave Zimmerman)