The Italian government cut its 2008 economic growth forecast by more than half, as slumping confidence and rising prices threaten to brake expansion to the slowest among the 15 nations that share the euro.
The $2.2 trillion economy, Europe's fourth-biggest, will grow 0.6 percent this year, the Rome-based Finance Ministry said today in a statement. That's down from a forecast of 1.5 percent in December and would be the weakest rate of growth since 2005.
Italy may be the first and only country in the euro region to enter a recession this year and may have contracted in the fourth quarter, according to Morgan Stanley economist Vladimir Pillonca. Growth is slowing just as rising food and energy prices are fueling inflation and sapping consumer and business confidence.
“If you add to the mix an international situation that is now weaker than expected, this creates a real mess in a country where productivity was already declining,'' said Luigi Speranza, an economist at NP Paribas SA in London.
The government is even more pessimistic about Italy's growth forecasts than executives or the European Union. Confindustria, Italy's largest employers' lobby that has Fiat SpA and Enel SpA among its members, cut its forecast last month to 0.7 percent, a prediction matched by the European Commission, the EU's executive body.
Tax-Dodge Crackdown
The new forecasts cast a shadow over the much-flagged government announcement that it planned to use extra tax revenue stemming from a crackdown on tax dodgers to cut income levies. With the exception of Portugal, Italians are the lowest paid in the euro area, the Paris-based Organization for Economic Cooperation and Development said yesterday check cash advance online payday loan.
“It's possible we may find extra resources since this has happened regularly in the past two years, but we will only be able to verify this in the coming months,'' Finance Minister Tommaso Padoa-Schioppa said in the statement. For the three years from 2009-2011, growth will average 1.5 percent, he said.
After lagging the EU average for more than a decade, Italy is set to be the slowest-growing economy in the region this year. The economy will grow at a fraction of the rate of its biggest trading partners, France and Germany, which will expand 1.7 percent and 1.6 percent respectively, the EU predicts.
Italy's budget deficit will rise to 2.4 percent of gross domestic product, more than the 2.2 percent formerly predicted though still under the European Union ceiling of 3 percent. The shortfall narrowed last year to 1.9 percent of gross domestic product, the least since 2000, the Rome-based national statistics office said Feb. 29. That's about half the 2006 deficit of 3.4 percent.
Inflation Rate
Growth is grinding to a halt at a time when the inflation rate is at an 11-year high of 3.1 percent. Consumer and business optimism have fallen to two-year lows as soaring energy prices leave Italians with less money to spend.
The collapse of Prime Minister Romano Prodi's government on Jan. 24 after 20 months in power has also muddied the economic outlook. Both leading candidates in the election campaign, two- time premier Silvio Berlusconi and former Rome Mayor Walter Veltroni, are promising tax cuts to help revive growth.
Bank of Japan governor nominee Toshiro Muto told lawmakers he'll defend the central bank's independence, responding to opposition claims that he might allow the government to influence monetary policy.
“I want to firmly ensure the Bank of Japan's independence,'' Deputy Governor Muto, 64, said in parliamentary hearings in Tokyo today. “It's extremely important for the bank to secure the transparency of policy.''
Governor Toshihiko Fukui's five-year term expires on March 19, giving Prime Minister Yasuo Fukuda about a week to win the approval of both chambers of parliament and avoid a leadership vacuum at the central bank. The opposition Democratic Party of Japan, which has the most seats in the upper house, has indicated it may reject Muto because his background as a top Financial Ministry official could hurt the bank's autonomy.
“Sacrificing the economic good and stability at the central bank would come at a very perilous time for the economy,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. “When push comes to shove the Democratic Party is going to back down on this because it'll be very easy for the LDP to depict them as irresponsible.''
Parliament may vote on the appointments on March 14, Jiji Press reported today, citing a DPJ lawmaker it didn't identify. The DPJ had wanted a ballot tomorrow so the government has time to select another candidate should the opposition reject Muto.
Lawmaker Questioning
Muto and the two nominees for deputy governor, Masaaki Shirakawa and Takatoshi Ito, were questioned by lawmakers after giving five-minute testimonies to both houses of parliament. The questioning was closed to the media.
Yoshito Sengoku, head of the DPJ's committee on the nomination, said Muto's lower-house testimony “didn't erase doubts'' among the party that his 37 years at the Finance Ministry could affect monetary policy.
Fujio Mitarai, head of Keidanren, the business lobby that represents Japan's biggest companies, yesterday urged politicians to stop wrangling over who will lead the bank, saying a vacancy would “damage the country's credibility.''
Finance Minister Fukushiro Nukaga said the top three positions mustn't be left unfilled at a time when risks to economic growth are rising. “I strongly hope the opposition will agree on the government's nominations,'' Nukaga said today fast cash advance loan cash till payday.
Policy Juggle
Muto, if appointed, will have to juggle the prospect of slower growth and faster inflation. He said the economy faces both upside and downside risks, including financial-market volatility and slower growth in the U.S., Japan's biggest market.
The Nikkei 225 Stock Average has tumbled 17 percent this year on concern that a U.S. recession would hurt Japan's exports, the main driver of growth last year. The yen surged to an eight- year high against the dollar today, eroding exporters' earnings.
Investors see a 61 percent chance the central bank will have to cut the benchmark rate from 0.5 percent, already the lowest among major economies, by December, according to JPMorgan Chase & Co. calculations.
Muto said the bank has no preset schedule for adjusting rates and will “act without hesitation if necessary.'' Costlier oil and raw materials are hurting Japan's small businesses and prices of daily necessities are rising, he said.
Comments `Shrewd'
“Muto's comments were shrewd,'' said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute and a former central bank official. “Muto didn't indicate what the BOJ's next move would be, probably knowing that there's a difference of opinion even among DPJ members on whether the central bank should raise rates or not.''
The government's candidates for the two deputy governor posts also spoke in today's lower- and upper-house hearings.
Shirakawa, 58, a former executive director at the bank, said the Bank of Japan's mission is to ensure prices and the financial system are stable. The deputy's priority is to support the governor, the Kyoto University economics professor said.
Ito, a Tokyo University professor who sits on the government's key economic panel, said the purpose of inflation targeting, which he has advocated, is to keep prices stable and stop them from falling.
In the lower-house questioning, Ito, 57, said the issue of a target was important when the economy was experiencing deflation that has since been vanquished, according to Sengoku, who attended the closed session.
Ito said the central bank's policy framework has become more transparent in the past 10 years, though there is still room for improvement.
Responding to record recalls of products that sickened children, the Senate passed legislation Thursday that would toughen inspections of toys and other playthings made outside the U.S.
The bill calls for a public database of consumer complaints, bolsters the Consumer Products Safety Commission to help it certify the safety of overseas products, bans lead in children’s goods and sets new standards for safe toys.
It won approval by a 79-13 vote after four days of debate. The Bush administration and other critics said the database unfairly could taint manufacturers. But President Bush stopped short of threatening a veto.
Both the Senate and House versions passed with veto-proof margins, increasing the chances a compromise would draw similar support.
"Even though [Bush] doesn’t like it, I think he’s going to have to take it," Senate Majority Leader Harry Reid, D-Nev., told reporters during a conference call.
Congress has much to do before Bush has the chance to make that decision.
"The hard work starts" now, said Sen. Mark Pryor, D-Ark., with negotiators from each chamber working to reconcile their differences. He managed the bill with Sen. Amy Klobuchar, D-Minn.
The House’s version, passed by a 407-0 vote in December, has many differences, including a lower cap for jury awards. Regarding the database, the House version proposes a study on how to create one.
The congressional debate was thick with emotion. The mothers of two boys sickened by toys tearfully urged Congress to speed the legislation to the president, saying many provisions would have helped her children and prevent others from similar dangers.
For Colton Burkhart’s parents, it was a medallion from a gumball-type machine that cost just a quarter, but nearly took his life.
Colton, then 4, swallowed the trinket and almost died from the lead it contained. Four years and a battery of tests, surgeries and therapy later, the Redmond, Ore., boy still has elevated levels of lead in his body.
Colton’s mother, Kara, visited the Senate this week to tell anyone who would listen about Colton’s ordeal http://payday-nofax.com payday loans online. But Colton fared better than another 4-year-old, Jarnell Graham of Minneapolis, who died from lead poisoning under similar circumstances.
It was their cases - and hundreds like them - that spurred the recalls last year of millions of Chinese-produced toys, from Barbie doll accessories to Thomas the Tank Engine. Congress, in turn, produced legislation that would overhaul the Consumer Products Safety Commission, responsible for ensuring that toys and other products pose no hazard.
The Senate bill would nearly double the agency’s budget and increase its staff to nearly 500 people by 2013.
The new database would collect information from people, hospitals and other sources about injuries, illnesses and deaths from consumer products.
The Senate bill would raise the civil penalty cap per violation from $8,000 to $250,000 and the limit for a related series of violations from $1.8 million to $20 million; the House version would raise the penalty limit to $10 million.
The final Senate bill included amendments, including one by Klobuchar that would prohibit agency staff from taking trips paid for by companies and industries they regulate.
Also included was an amendment by Sen. Dianne Feinstein, D-Calif., that would ban phthalates - chemicals in plastic that can cause health problems - in children’s toys and products.
The administration issued a statement this week citing half-dozen provisions about which it had various levels of concern, but none serious enough to merit a veto.
The agency, according to the administration, should enforce safety standards, not attorneys general as the Senate version proposes. Also, new legal shields for whistleblowers "will cause a serious increase in the number of frivolous claims brought against employers," the statement said.
The White House said it was concerned about a requirement that toys be tested by independent and privately owned third parties.
Two top Air Force acquisition officials will testify on Capitol Hill on Wednesday to explain why they passed over Boeing Co. to award a massive $35 billion aerial refueling tanker contract to its French rival.
They won’t lack for an interested audience. Since the contract was awarded Friday, lawmakers, governors, union leaders and Boeing (BA, Fortune 500) executives have demanded an explanation for why the incumbent contractor lost to European Aeronautic Defence and Space Co., the maker of Airbus planes, and its U.S. partner, Northrop Grumman Corp. of Los Angeles.
Sue Payton and Lt. Gen. John L. "Jack" Hudson will testify before the House Appropriations Subcommittee on Defense following last week’s surprise, backlash-inducing decision. In states where Boeing would have built the planes, the outrage and the output of statements denouncing the Air Force’s decision were considerable.
Sens no teletrack payday loans fast cash advance. Maria Cantwell and Patty Murray, both Democrats from Washington, Sens. Sam Brownback and Pat Roberts, both Republicans from Kansas, are among the lawmakers who sent a letter to top Pentagon officials requesting an Air Force briefing this week. And the Kansas congressional delegation on Tuesday asked Defense Secretary Robert Gates to suspend its award of the tanker contract until Congress can review the decision.
Chicago-based Boeing, which has been supplying air-to-air refueling tankers to the Air Force for nearly 50 years, had been widely expected to win the deal.
The contract to build up to 179 tankers is the first of three Air Force awards worth as much $100 billion to replace its entire refueling tanker fleet over the next 30 years.
Hope Now, the foreclosure prevention coalition put together with the Bush administration’s support, claims dramatic success in helping at-risk mortgage borrowers stay in their homes.
The groups has reworked more than 1 million mortgage loans since July, Treasury Secretary Henry Paulson said in a speech before the National Association of Business economists on Monday.
But of those borrowers, only 278,000 actually saw the terms of their mortgages modified. Their lenders either froze or reduced their interest rates, and may have reduced their balances as well to make loans more affordable.
The remaining home owners were put on repayment plans, which merely allow borrowers to make up missed payments by tacking them on to the life of the loan. Critics argue that this does little to make to make mortgages any more affordable for hard-pressed borrowers.
Loan modifications alone increased 19% from December to January, Paulson told the gathering. By comparison, foreclosure starts increased just 5% during the same period, he said.
"I am encouraged that the number of borrowers receiving help is rising faster than the number entering foreclosure."
Loan modifications are indeed making up a greater proportion of Hope Now’s workouts - 36.4% in January, compared with 29.9% in the last three months of 2007 and 19.1% for the three months ended September 30.
Paulson also reiterated the administration’s opposition to any government led bail out of lenders.
"The number of loans being modified shows progress," said Austin King, director of the Financial Justice Center for the Association of Community organization for Reform Now (Acorn), "but it’s still not enough."
"The majority of the work-outs are still repayment plans, which are not going to [keep people out of foreclosure]," said King same day payday loans no fax payday loan. "The reliance on repayment plans is one of the biggest failings of the lenders."
When borrowers are stretched so thin that a financial setback, such as unexpected medical bills or temporary job loss, puts them behind on payments it means they really don’t have enough income to keep up their mortgage payments. And tacking on missed payments on to a loan just makes things worse, according to King. Many of those borrowers will default again.
Even many mortgage modifications have shortcomings and may also simply delay default. If low teaser rates on hybrid adjustable rate mortgages are simply extended for a year or two, borrowers may still fall behind when the rates do finally reset, according to King.
"For modifications to work, they have to make the loans more affordable [permanently]," he said.
In addition to lender cooperation, Paulson also noted in his speech that homeowners have to seek help out if they need it. He noted that lenders only get a 2% - 3% response rate when they contact struggling home owners. The Hope Now alliance, which includes Citigroup (C, Fortune 500), J.P. Morgan (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Bank of America (BAC, Fortune 500) and many other banks, has a 20% response rate.
Still, he noted that leaves 80% of at-risk borrowers without a plan. "If borrowers don’t ask for help, they will have to bear the consequences," Paulson said, "which may very well mean losing their homes when that could have been prevented."
Agilent Technologies Inc. said on Monday it has completed one acquisition and agreed to another.
Palo Alto-based Agilent (NYSE:A) said it has bought privately held Colloidal Dynamics Pty. Ltd, a company that started in Sydney, Australia, and has its headquarters in Warwick, R.I.
Agilent said it has also agreed to acquire TILL Photonics GmbH, which has headquarters in Munich, Germany.
TILL develops and markets life science products for fluorescence microscopy http://paydayloans-on.com payday loans.
Colloidal develops and markets instruments that measure the particle size and zeta potential of concentrated colloids and the pore size distribution in powders.
Financial terms weren’t disclosed.
Agilent said both companies will join its new materials science solutions unit within its life science and chemical analysis business.
Boeing Co.’s loss Friday of the $40 billion Air Force tanker contract wasn’t the first such disappointment in recent years for the St. Louis military aerospace industry.
Twice in less than a dozen years, a pair of major military decisions have had three common features: secrecy until the bitter end, a surprise outcome and a loss for an area company.
A little more than 11 years ago, on Nov. 16, 1996, McDonnell Douglas, based in Hazelwood, was unexpectedly eliminated from the competition for the biggest military contract in history — the $100 billion Joint Strike Fighter — when Lockheed Martin, based in Maryland, and Boeing were selected as finalists.
Not long after, Boeing acquired McDonnell, in a bid to develop more military expertise, and the trademark St. Louis company ceased to exist. But Boeing, which would have built the JSF here, still lost the contract to Lockheed.
Though probably not as big a loss as the Joint Strike Fighter was for McDonnell Douglas, Boeing’s tanker defeat Friday was nevertheless a big blow: another major plane-building contract it didn’t win.
Air Force officials wouldn’t specify on Friday why they chose the Northrop Grumman/EADS KC-30 for the job, though they made comments indicating they felt it was superior in several key areas.
The biggest reason, according to Gen. Arthur Lichte, commander of the Air Mobility Command at Scott Air Force Base, was its size. Boeing offered a smaller 767-200, whereas the Air Force wanted a bigger tanker, capable of hauling more cargo and people, in addition to fuel, around the skies. The KC-30 fit the bill.
That misjudgment is a troubling sign for Boeing, said Loren Thompson, a defense analyst with the Lexington Institute, based in Virginia.
"This is such a stunning upset," he said. "It shows something fundamental has gone wrong (in the relationship) with their biggest military customer."
It’s a legacy of the procurement scandal that scuttled Boeing’s last tanker deal, Thompson said. Four years ago, the company lost a contract to lease 100 tankers to the Air Force after an investigation that led to charges of illegal dealings between a top executive and a chief Air Force weapons buyer, and put both in prison. It was a black eye for Boeing and led to a $615 million settlement. It also changed the dynamic between Boeing and the world’s biggest buyer of military planes, Thompson said.
"There has been a gulf between Boeing and its Air Force customer ever since the procurement scandal," Thompson said paydayloans cash advance. "That has made it hard for Boeing to understand its customer the way it once did."
Although Sue Payton, who oversaw the purchase for the Air Force, said there was no residual bias left over from the scandal, many observers say it did lead the Air Force to conduct an especially rigorous contracting process this time around.
Boeing’s loss increases the pressure to keep its other military plane projects viable, said Richard Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Va. Boeing’s plane-making programs generate good cash flow, but many are on their last legs.
"Their platforms are under pressure," he said. "In five years, the C-17, the F-15, the F/A-18, the T-45, they’re all going to be either ramping down or gone."
Boeing still has strong helicopter programs and growing work on network projects such as Future Combat Systems, but its traditional strength in making military planes could erode if it doesn’t win new contracts, experts say.
Still, the tanker deal was just a small piece of the company’s overall picture, said Scott Hamilton, an aerospace analyst in Washington state. Boeing had $66 billion in revenue last year, split evenly between its defense and commercial divisions. It can absorb the loss of 12 or 18 planes a year.
"Boeing is going to survive," he said.
But the deal may also increase competition in the commercial sector, as EADS subsidiary Airbus has said it would build commercial freighters in Alabama, too, if it won the tanker contract.
And the loss may prompt some soul-searching at Integrated Defense Systems headquarters in Hazelwood, especially because Boeing was so strongly favored to win.
"This was a total shock," Thompson said. "It’s going to have a very demoralizing effect on the company’s military operations."
If there’s one silver lining, Aboulafia said, it’s that the United States’ opening of its military market to the European EADS may lead European countries to think about buying American military hardware, giving Boeing more potential clients. "We’ve opened our markets," he said. "Now they should open theirs."
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Gap Inc. closed out its third consecutive year of declining sales with a 21% increase in its fourth-quarter profit, reflecting the gains from cost cutting triggered by the worst slump in the clothing retailer’s history.
The San Francisco-based company said Thursday that it earned $265 million, or 35 cents per share, during the three months ended Feb. 2. That compared with net income of $219 million, or 27 cents share, in the same period a year earlier.
Revenue totaled $4.68 billion, a 5% decrease from $4.92 billion in the previous year.
In a more accurate measure of a merchant’s health, sales at Gap’s stores open for at least a year fell 3%. It marked the 14th consecutive quarterly decline in Gap’s comparable-store sales, the deepest funk that the company has suffered through since co-founders Donald and Doris Fisher opened the first store in 1969.
The company now operates 3,100 stores under the Gap, Old Navy and Banana Republic brands.
The fourth-quarter earnings matched the average estimate of analysts surveyed by Thomson Financial.
In an effort to placate shareholders while a new management team tries to engineer a turnaround, Gap announced plans to spend $1 billion buying back its stock and raised its quarterly dividend by six percent to 34 cents per share.
Those moves seemed to please investors as Gap shares surged $1.05, or 5.4%, in extended trading after dropping 42 cents to finish the regular session at $19.45.
Although Gap’s sales are still shriveling, tighter controls on spending and clothing inventory have helped lift the company’s profits in each of the last two quarters fast cash loans paydayloans. Last year’s cost cutting included laying off 1,500 workers and the closure of an experimental chain called Forth & Towne that catered to women 35 years and older.
"In 2007, the company made the business decisions and changes necessary to deliver improved earnings for our shareholders," said Gap Chairman Glenn Murphy, who was hired as chief executive seven months ago.
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