Consumers’ mood brightened a bit in March, nudged up by increased confidence in government economic policy, but overall sentiment remained near an all-time low, a survey showed Friday.
The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment rose to 57.3 in March from 56.3 in February. This was a touch above economists’ median expectation of a 56.6 reading, according to a Reuters poll.
The survey hit a record low of 51.7 in May, 1980.
The index of consumer expectations rose to 53.5 from 50.5. Survey director Richard Curtin said confidence in the Obama administration’s economic policies improved consumers’ mood, with 22% of those surveyed rating policy favorably in March, compared with 7% in January.
Americans’ view of their present situation remained dim, with the index of economic conditions slipping to 63.3 in March from 65.5 in February.
"Although the data indicate that the downward momentum in confidence ended in the closing months of 2008, there is no evidence that consumers expect their finances to improve any time soon," Curtin said first cash advance.
While the survey showed 44% of consumers expected government policy to improve their personal finances, an all-time record number of consumers said incomes had declined compared with a year ago.
They also anticipated the smallest annual income gains ever recorded - 0.2% compared to 2.5% a year ago.
Stocks pared losses after the sentiment data, while the dollar held its gains against the euro.
Inflation signals were mixed. The report’s reading on one-year inflation expectations rose to 2% from from 1.9% in February, but five-year inflation expectations fell to 2.6% from 3.1%.
"Overall, there has not been another period in the past quarter century that deflation was more widely anticipated," Curtin said.
OTTAWA – The world will pay a stiff price in future years for current massive government spending aimed to avert an even greater economic disaster, TD Bank's chief economist Don Drummond says.
Testifying before the parliamentary finance committee this morning, the former finance department official estimated it will take many years for the economy to return to what many would consider normal.
"I think there's going to be a lot of difficulties. I think there is going to be a slight recovery in 2010, 2011 and then, after that, I think there's going to be a very protracted period over several years to address the problems that are arising now," he said.
Drummond, who recently projected the Canadian government's deficit would hit $82 billion over the next two years – about $18 billion more than Finance Minister Jim Flaherty projects in the budget – said he sees the economy limping along with meagre growth of between two and 2.5 per cent until 2015.
Still, Drummond said government interventions in the economy likely averted an even greater disaster.
"If they had done nothing and we had the policy response we had in the Great Depression, that's what exactly what we would have had, another Great Depression," he said.
"I still think there's a lot of risk still out there, but we're putting the pieces in place to see it recover by 2010."
The price of ramped up government spending around the world could trigger runaway inflation once economies rebound.
To prevent this, central banks will be left with no choice but to ramp up interest rates thereby causing a second problem, dampening economic growth, Drummond said.
And governments will have to drastically cut down on spending. Ottawa may need to cut program expenditure increases from the pre-recession norm of about six per cent a year to about two per cent.
"I don't think they necessarily have to do what Paul Martin did in 1995 and 1996 and actually cut the level (of spending), but they are going to have ramp it down to about two per cent and the provinces will have to do that sort of thing too, and we're not used to that sort of discipline and making tough decisions," Drummond said.
The problem will be even more acute in the United States, which Conference Board economist Glen Hodgson told the committee has already poured about US$10 trillion into their economy, far more than Canada on a comparison basis.
Wednesday's committee testimony on the economy from parliamentary budget officer Kevin Page – along with today's analysts from the TD Bank, C.D. Howe Institute, the Conference Board of Canada and the Canadian Federation of Independent Business – provided a sobering re-assessment of the assumptions of January's federal budget.
Although there were some variations – Drummond was more pessimistic than Page on the economy and deficit, and the Conference Board's Hodgson more rosy – there was uniformity in the view that the two-month old federal budget was already out of date paydayloans.
A consensus has formed that the economy will fall about twice as far as the budget predicts for this year and will grow much slower in the outgoing years, causing the deficit projections to be billions of dollars off target.
"You might as well throw them in the garbage," said Liberal finance critic John McCallum of the budget projections.
McCallum accused Tory MPs of hiding from the truth and punishing the parliamentary budget officer by cutting his budget simply for being the messenger of bad news.
"I think this is a vengeful government that is punishing Mr. Page because he is embarrassing them by telling Canadians the truth," he said.
In Wednesday's hearings, several Tory MPs suggested Page should be more even handed and also talk about the good things happening in the economy.
Drummond, although he appeared unaware of the context, defended the bringers of bad tidings.
"Cheerleading can maybe influence behaviour in the economy for a month or two, but when it works out differently it just comes crashing down," he said.
While every finance minister wants to spread the good news, Drummond cautioned that, when the situation turns they wind up "looking foolish."
The witnesses agreed that a key to restoring growth lies with improving the availability of credit to businesses.
Canada has not had to bail out the banks, but has injected credit through the Bank of Canada and by buying up mortgages. In the budget, Ottawa said it will create a $12 billion facility help auto leasing and loans.
The program was praised by Finn Poschmann of the C.D. Howe Institute, but he said it will likely have to be expanded. He also said it's critical that it be implemented quickly, by June at the latest, to spur vehicle sales.
The witnesses said the extraordinary programs haven't as yet restored normalcy to credit markets, but added they believed they will work given sufficient time.
"We're frankly in a grand experiment right now, none of us have ever seen this before," said Hodgson.
"What I see the U.S. government is doing is almost experimenting, they try something and if it doesn't work, they move on. I think we're on the right path as governments learn by doing, but we really don't know what the end station is."
Drummond said if the latest US$1-trillion plan to buy up toxic assets from the U.S. banks works, it will restore confidence and growth.
But if it doesn't, "We're going to be in trouble for a long time."
T-Mobile USA plans to double its high-speed wireless network coverage to reach a potential 200 million wireless users by the end of 2009 as it looks to catch up with rival services.
The unit of Deutsche Telekom, which has trailed far behind rivals such as Verizon Wireless, AT&T Inc and Sprint Nextel Corp in this service, said it currently offers high-speed services in about 130 U.S. cities.
The third-generation (3G) network expansion will cover another 100 cities, the company said on Wednesday.
It also said it will sell a high-speed data device made from China’s Huawei Technologies Co to connect laptop computers to its wireless network, the first supply agreement between the two companies payday advance.
The device, which it called a WebConnect Laptop Stick, will connect to its 3G network and Wi-Fi, a short-range high-speed wireless network often found in cafes or other public places.
T-Mobile USA offers Wi-Fi in about 10,000 U.S. locations.
(Reporting by Sinead Carew; Editing by Derek Caney)
Intel is seeking permission from its shareholders to revalue worthless employee stock options, a controversial move that the world’s biggest chipmaker says is needed to retain critical staff.
Under the plan, Intel would exchange underwater stock options — whose exercise prices are above the current stock price — for new options at current market prices. The offer would be open to all employees excluding senior executives.
While the move might offer incentive to hard-working employees, it could face opposition from some shareholders who are not being similarly compensated. Other technology companies that have taken similar actions include Google, eBay and Advanced Micro Devices.
Still, having cut some 20,000 jobs since 2006, Intel said it cannot afford to lose staff crucial to certain projects.
“Many of our employees are engineers, scientists, and other specialists who are working on important multiyear research and development projects or have skills that they have developed over the years and would be difficult to replace,” Intel said in a filing of its proxy statement with the U.S. Securities and Exchange Commission on Monday.
Intel said the plan should be cost-neutral since it had accounted for the cost of the options when they were granted.
Chairman Craig Barrett told Reuters he anticipates Intel shareholders will see the big picture, and the value of retaining key employees, particularly in troubled economic times no fax payday loan.
“I don’t think there’ll be shareholder backlash,” he said in an interview on the sidelines of a panel on wireless technology’s role in health care in Washington D.C.
Intel shares were up 4 percent in early afternoon trading on Monday, riding a bullish wave in broader markets.
So far, shareholders do not appear to be troubled by the plan, since they have more important strategic concerns including the status of microprocessor demand and the health of the personal computer market, according to Stifel Nicolaus analyst Cody Acree.
“As far as the lists of concerns, the stock option re-pricing falls fairly far down the list,” he said.
Intel also said it planned to freeze top executive salaries and reduce contributions to its employee retirement savings plan and employee stock purchase plans — which together should lead to significant cost savings in 2009.
In 2008, Intel Chief Executive Paul Otellini earned $12.1 million in total compensation, including $4.8 million in cash.
99 PCT OF EMPLOYEE OPTIONS UNDERWATER
Companies often offer stock options to employees as a way to motivate and retain staff. But the options lose value when the market price of the underlying stock falls below the exercise price, which pushes them “underwater.”
Sachin Trivedi will do whatever it takes to ensure that his mother has a comfortable life in India.
The 37-year-old sends money home regularly – about $5,000 a year – to cover her living expenses. Once in a while, he’ll even surprise his cousins with monetary gifts.
No matter how deep the Canadian recession gets, Trivedi is determined to keep that money flowing. "I feel that it is my responsibility, so I fulfill that," he said. Even if he lost his job, he would find a way to scrape together the cash. "The money which I’m sending to my mother will always remain."
Such devotion is not unusual. Immigrants across many cultures are just as committed to sending money home to loved ones.
Their determination has been a boon for Canada’s banks. Banks, which charge foreign exchange and service fees for such transfers, say remittances are booming despite the slumping economy; some report double-digit growth. According to Statistics Canada, Canada’s market for remittances is worth up to an estimated $2 billion a year.
Banks are offering new products to try to poach clients from the mom-and-pop shops, travel agents and global money transfer services that dominate this former niche industry. Many banks now consider remittances an "anchor product."
"The remittance business is going to continue to be a big business for banks in Canada (that) have the capability to do this," said Tracy Redies, executive vice-president of personal financial services and wealth management at HSBC Bank Canada.
The promise of more competition has bargain-savvy immigrants such as Trivedi scouting for deals. At the same time, however, an international debate is raging about high remittance fees and the lack of consumer protection in some markets.
Ato Quayson, director of the Centre for Diaspora and Transnational Studies at the University of Toronto, says foreign remittances drive economic growth in developing countries. The World Bank estimates that global transfers totalled $375 billion (U.S.) in 2008; India, China and Mexico are the three biggest beneficiaries.
A recent StatsCan report estimated 40 per cent of immigrants sent money home at least once during their first four years here.
Some experts say Canadian-based immigrants are likely to keep up those payments despite the recession, because much of the money they send abroad covers fixed costs such as mortgage payments. Many will willingly cut back on their own spending to pay those bills.
"The expectation is you … have a better life here and you are expected to give back to your families," observed Rania Llewellyn, vice-president of multicultural banking at the Bank of Nova Scotia saving account payday loan.
If the recession gets worse, Quayson predicts that remittances will actually increase, as immigrants look to their homelands as their financial Plan B. "They’ll think that `look, it is better for us to send money to secure things at home since the West is melting down.’"
And that means revenue for banks. Even those offering "no-fee" transactions still generate profits from exchange-rate markups.
"We don’t (have) any service charges. It is completely free of cost," said Sriram Iyer, president and CEO of ICICI Bank Canada, a subsidiary of one of India’s largest banks. The exchange rate is "very complicated," he said.
ICICI, which claims a one-third market share of Canadian remittances sent to India, will begin offering mobile banking via cellphones this summer, which will include money transfers.
HSBC Bank Canada, owned by HSBC Holdings, headquartered in London, England, says its remittance business increased by 31 per cent between December 2007 and December 2008.
The Bank of Nova Scotia, which struck a partnership with global money transfer giant Western Union last year, says money transfer volumes were up 20 per cent in the first quarter of 2009 over the fourth quarter of 2008.
Bank of Montreal offers a money transfer product for clients sending money to Portugal and is trying to increase its reach in other communities. In the first quarter of 2009, it recorded a 31 per cent increase in global money transfer accounts over the same period last year.
Despite the competition, the World Bank says transaction costs remain high because some countries have spotty financial infrastructures. Many also have limited competition, regulatory hurdles and insufficient access to banks.
The World Bank says it’s difficult for consumers to shop around because prices reflect a variety of factors and markets. But even a small cost decrease, says the bank, would have a "significant effect" on immigrants and their families.
For his part, Trivedi regularly compares rates with his friends to ensure his mother gets the most bang from his buck. Still, he acknowledges that even with no-fee transfers, some of his savings are eaten up by the exchange rate. "Well, they must be making money, right?" he said. "It’s a bank."
Bank of America Corp was involved in accounting for fourth-quarter writedowns at Merrill Lynch & Co before it acquired the brokerage firm, the Financial Times reported on Thursday.
Bank of America’s chief accounting officer, Neil Cotty, was influential in determining writedowns for complex debt instruments and leveraged loans among other assets at Merrill, people familiar with the matter told the newspaper.
Charlotte, North Carolina-based Bank of America bought Merrill Lynch in January and sought government assistance to complete the deal after learning of massive losses at Merrill in December fast cash.
Merrill Lynch said in February it lost $15.84 billion in the fourth quarter, about $533 million more than the loss estimated by Bank of America in January.
(Reporting by Elinor Comlay; Editing by Gary Hill)
A $1.3 billion package of securities backed by Nissan Motor Co. auto loans became the first small piece of what Federal Reserve officials say may grow into a $1 trillion effort to unfreeze business and consumer lending.
Nissan’s planned bond sale marks the debut of the Fed’s Term Asset-Backed Securities Loan Facility, or TALF. The securities will likely price tomorrow, the deadline for investors to apply to the Fed for loans to buy the debt, according to a person familiar with the sale who declined to be identified because terms aren’t set.
The Obama administration is counting on the TALF plan to help end the credit crunch and recession, thawing the market for asset-backed securities so lenders can make new loans to consumers. The program, first announced in November, was hampered by delays as investors, dealers and issuers worked on details.
“A number of people were concerned that some glitches might not have been ironed out this week” in time to meet the first deadline for investors to apply for the Fed loans, said Malcolm Dorris, a senior partner in the securitization group at law firm Dechert LLP in New York. “Getting a deal done in March is good for the program. We are still in the wait-and-see stage.”
Investors have shunned debt backed by consumer loans as unemployment has climbed in the worst financial crisis since the Great Depression. Sales of the bonds plunged 40 percent last year to $106 billion, according to data compiled by Bloomberg, choking off funding to lenders.
Market Decline
About $2.3 billion of debt backed by auto loans has been sold this year, compared with more than $9.6 billion in the same period of 2008, according to data from JPMorgan Chase & Co.
The offering doesn’t require investors to use the TALF. It remains to be seen how many actually use TALF loans, as opposed to cash, to purchase the Nissan debt. The New York Fed’s application window opened yesterday and closes at 5 p.m. tomorrow.
Central bankers and Treasury haven’t been able to meet Fed Chairman Ben S. Bernanke’s goal of reducing consumer interest rates along with the borrowing costs paid by banks. The difference between rates on 30-year fixed mortgages and 10-year Treasuries was 2.1 percentage points as of yesterday, Bloomberg data show. That’s up from an average of 1 faxless payday loan.75 percentage points in the decade before the subprime mortgage market collapsed.
“Now we need to keep it rolling,” former Fed governor Lyle Gramley said, referring to the TALF’s start. “What is at stake is that if we don’t get the credit markets unthawed, we’re not going to have a recovery.”
Spreads Soar
The extra yield relative to benchmark interest rates that investors demand to own debt backed by consumer loans has soared amid concern that defaults will climb. Top-rated bonds backed by auto loans are trading at about 300 basis points more than the one-month London interbank offered rate compared with 65 basis points in January 2008, JPMorgan data show. One-month Libor, a borrowing benchmark, is currently 0.56 percent.
The first phase of the TALF will finance the purchase of as much as $200 billion of AAA rated securities containing loans for autos, education, credit cards and small businesses. Officials eventually plan to include other assets, including commercial mortgage-backed securities.
The Fed originally planned to start the TALF in February, then delayed the debut to ensure “all our legal and procedural steps had been taken,” Bernanke said in congressional testimony Feb. 25. On March 3, the Fed and Treasury said applications for the first deals would be due in two weeks, with loans disbursed on March 25.
Nissan Sale
The largest AAA portion of the Nissan sale maturing in 1.98 years may price to yield between about 185 basis points and 200 basis points more than benchmark interest rates, the person said. JPMorgan and Bank of America Corp. are underwriting the bonds.
Tokyo-based Nissan sold more than $3 billion of debt backed by auto loans last year, Bloomberg data show. Other auto finance companies, including World Omni Financial Corp., have indicated they plan to access the TALF. The Deerfield Beach, Florida-based lender filed a prospectus with the U.S. Securities and Exchange Commission on Jan. 12 to sell securities backed by auto loans.
Huntington Auto plans to sell packaged loans that are eligible for the TALF, a person familiar with the transaction said today. Barclays Plc is managing the sale, the person said.
Kaiser Permanente will eliminate 860 information technology positions, including possibly some in Silver Spring, following a $500 million strategic agreement with IBM Corp. and related changes.
Kaiser and IBM (NYSE: IBM) signed a seven-year agreement March 13 to work together to improve Kaiser’s IT capabilities. The deal focuses on Kaiser data centers that manage company computers and data backups to ensure they are reliable and ready for use, said Phil Fasano, chief information officer of the Oakland, Calif.-based company.
As a result, about 700 positions in Kaiser’s data centers will be eliminated. Data centers are in Silver Spring and the California cities of Corona, Napa, Walnut Creek and Irvine. There are a few small centers in regional offices too.
These jobs will be eliminated over the next six months, Fasano said.
“This is a substantial and very strategic move on behalf of the company to continue our focus as a leader in information technology,” he said credit reports. The deal has been in the works for many months, he added.
In a separate but related move, Kaiser will eliminate 160 additional positions at more than 30 locations across its eight regions as part of a cost-saving effort to realign its IT functions. Most of these employees were notified March 16. They will be eligible for severance benefits.
The 860 jobs represent about 15 percent of Kaiser’s total IT work force of more than 6,000, Fasano said.
More than 14,000 doctors and thousands of other caregivers use Kaiser’s IT systems on a daily basis and about 2.7 million members access their personal health records online.
While some view these cases as providing conclusive evidence that Canadians enjoy little privacy in identifying data such as customer name and address, a closer look at the decisions and industry practices reveal the issue is not entirely settled.
Both decisions involved disclosures of customer name and address information in suspected child pornography cases. In one case, R. v. Wilson, the court ruled the data was not particularly sensitive and the customer had no reasonable expectation of privacy. Moreover, the customer had agreed to Bell Canada’s Privacy Policy that permits the disclosure of personal information in certain circumstances.
In the second case, R. v. Vlasic, the court arrived at a different conclusion on the sensitivity of the data. It ruled that combining customer name and address information with IP address data could render the information sensitive. Nevertheless, it upheld the disclosure of the information without a warrant, since the customer had consented to the Rogers Acceptable Use Policy, which warns of possible disclosure to law enforcement without a court order.
These decisions place the spotlight on the fact that customer privacy on the Internet is not guaranteed by national privacy law. Rather, the law leaves the disclosure decision in the hands of the organization that has collected the data, which can choose whether to turn over personal information in certain circumstances without a warrant.
Moreover, most Internet-focused organizations such as ISPs have drafted user agreements in which their customers have consented to such disclosure policies payday loans.
These cases confirm that courts will typically enforce user agreements regardless of whether subscribers have taken the time to read them.
While most companies are reluctant to publicize their disclosure practices, according to government documents obtained under the Access to Information Act, the RCMP estimates 30 per cent of Canadian organizations do not reveal personal information to law enforcement without a warrant.
The RCMP estimates did not include specific data on ISPs, but their estimates are borne out by current practices. Bell and Rogers chose to reveal customer information in the Wilson and Vlasic cases, however, not all Canadian ISPs would have followed suit. For example, in Atlantic Canada, Bell Aliant requires law enforcement to obtain a warrant in an all non-emergency situations.
The disclosure issue is not limited to ISPs. Similar questions arose last year when the Canadian Internet Registration Authority crafted its who is policy, which governs public access to domain name registrant information. CIRA initially adopted a position that would have required a warrant for all access to such personal information, but intense pressure from the RCMP and Industry Canada led to an exception for law enforcement access without court oversight.
Few Canadians will have any sympathy for the privacy rights of those facing child pornography allegations. Yet, these cases provide an important reminder about the limits of Canadian privacy law, which invariably leaves privacy subject to policies that subscribers rarely bother to read.
Michael Geist can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.
The state could sell off the Arizona State Fairgrounds and other assets and take on more debt instead of raising taxes to help solve a $3 billion budget deficit.
Arizona Rep. John Kavanagh, R-Fountain Hills, said Thursday the Arizona House of Representatives was working on an alternative to the budget plan proposed by Gov. Jan Brewer in an effort to shore up the deficit.
Brewer wants a statewide referendum asking voters to raise sales taxes by 1 cent. Arizona currently has 5.6 percent state sales tax.
Kavanagh said the House budget plan would not have tax increases but instead could raise state debt limits and would look to sell off some assets bad credit payday loans.
That could include the state fairgrounds at Grand and 19th avenues and McDowell Road in west Phoenix.
He said the city of Phoenix has some land along Buckeye Road that could accommodate a new fairgrounds.
The state also could sell off an airport near the Grand Canyon and privatize more state prisons and corrections facilities.
The state needs to raise more revenue in order to avoid drastic cuts to a slew of programs and services, including universities and K-12 schools.
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