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Zhu Zhu Pets robotic hamsters, the must-have toy of Christmas 2009, were named Toy of the Year on Saturday by the Toy Industry Association, also winning two category awards.

The toys, a product of Clayton-based Cepia LLC, won the award for Girl Toy of the Year, for a toy developed for girls of any age, and for Innovative Toy of the Year, for an outstanding toy that combines innovation and play value.

Russell Hornsby is founder, owner and chief executive of Cepia, which has 15 employees.

The Toy of the Year Awards program in New York City is the kickoff to this week’s American International Toy Fair. The Toy Industry Association is a not-for-profit representing more than 500 producers and importers of toys and youth entertainment products sold in North America.

For a complete list of winners, go here.

Cepia created Zhu Zhu Pets (which means “little pig” in Chinese) with affordability in mind personal business card. The suggested retail price for each hamster is $7.99, and accessories range from $3.99 to $19.99.

Sean McGowan, a toy industry analyst with Needham & Co. in New York, projected sales of $300 million in 2010.

The robotic hamsters have a video game in the works.

A former Mattel designer, Russell Hornsby previously founded Trendmasters, a St. Louis toy company with $189 million in revenue that was best known for its Rumble Robots. Trendmasters sold its assets and products to Malibu, Calif.-based JAKKS Pacific Inc. for about $25 million in 2002.

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For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago.

Measured against a basket of currencies from the Group of 10 nations proportioned by how they trade against each other, the greenback is up about 3 percent since 1975, according to Bloomberg Correlation-Weighted Currency Indexes. That was four years after the Bretton Woods agreement, set up in 1944 to link currencies to the price of gold, collapsed. The U.K. pound has dropped 34 percent and the Canadian dollar has fallen 6 percent.

The U.S. dollar gained 6 percent since November after losing 12 percent in the first 11 months of 2009 as measured by the Bloomberg index. Barclays Capital and Morgan Stanley say the U.S. will grow faster than the rest of the developed world this year and 2011. At the same time, Europe faces worsening finances in Greece, Spain and Portugal, Japan’s economy is struggling and concerns about valuations in emerging markets are increasing.

“To quote Mark Twain, the reports of the dollar’s demise have been greatly exaggerated,” said Win Thin, a senior currency strategist in New York at Brown Brothers Harriman & Co., which manages about $40 billion in assets.

Rising Demand

Nowhere is that more evident than in the market for U.S. Treasuries. The amount of America’s government debt held by investors outside the U.S. rose 17 percent to $3.6 trillion in 2009 through November, according to the Treasury Department.

Purchases may continue to rise as investors seek refuge from growing sovereign credit risk in the euro area. The dollar “will benefit from relative liquidity of the U.S. Treasury markets,” Barclays Capital currency strategists led by David Woo in London said in a Feb. 5 report.

Barclays Capital economists said in a report the same day that U.S. gross domestic product may grow 3.6 percent this year, versus 2.5 percent for the developed world, and 3.1 percent in 2011, compared with 2.6 percent elsewhere. Japan’s GDP may expand 1.9 percent this year, and the euro zone 1.3 percent, they said.

A day earlier, strategists at New York-based Morgan Stanley boosted their dollar forecast, saying it will strengthen to $1.24 per euro by year-end from its previous estimate of $1.32. It traded at $1.3676 as of 6:46 a.m. in New York today. The firm sees the U.S. currency gaining to 109 yen from 89.42 today, and rallying to $1.49 to the pound from $1.5578

Reserve Currency

Investors and traders predicted last year the dollar would lose its position as the world’s reserve currency, which means it’s the first place central banks look to park their cash.

“With all the concerns about the problems with the U.S. financial system last year, the banking sector in the euro zone looked a bit more stable,” said Robert Sinche, chief strategist at Lily Pond Capital Management LLC in New York. “That created a sense of the euro as an alternative to the dollar.”

Central banks that disclose breakdowns of their reserves bought a record $60 billion worth of euros in 2009’s second quarter, more than half of their new cash in the period, based on International Monetary Fund data adjusted for exchange-rate changes using methodology developed by Barclays Capital.

They then reversed course, putting 15 percent of new reserves, or $17.8 billion, into euros in the third quarter, the smallest share of any period in which their reserves grew since early 2008. Central banks put 45 percent, or $52 billion, into dollars, up from 36 percent.

Rally by Default

Rather than a referendum on the U.S., the dollar may be rallying by default. Nouriel Roubini, the New York University professor who predicted the credit crisis, said on Feb. 4 that the greenback may weaken for the next three years.

Moody’s Investors Service said last week the U.S. government’s Aaa bond rating will come under pressure unless additional measures are taken to reduce budget deficits projected for the next decade. The ratio of government debt to GDP and revenue increased “sharply” during the seizure in credit markets and recession, Moody’s said.

“If the current upward trend in government debt were to continue and become irreversible, the rating could come under downward pressure,” said analysts led by Steven Hess, a senior credit officer at Moody’s in New York.

The Obama administration’s plan to offset spending by more than $1.2 trillion over 10 years showed larger deficits and higher debt levels than in the original budget, Moody’s said. The ratio of debt to GDP in the U.S. will continue to expand, reaching 76.5 percent in 2019 compared with an earlier forecast of 70.1 percent, Moody’s said.

Treasury Secretary Timothy F. Geithner said in an ABC News interview broadcast yesterday the U.S. isn’t in danger of losing its Aaa rating.

“Absolutely not,” Geithner said, when asked whether a downgrade is a concern. “That will never happen to this country.”

‘A Better Bet’

The U.S. Office of Management & Budget said America’s budget deficit will fall each year through 2014, to $706 billion from $1.56 trillion in 2010, as borrowing needs drop to $814 billion from $1.75 trillion.

“Under stress, people trust the U.S. to do the right thing,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “The U.S. is a better bet.”

A global reserve currency must provide investors with the ability to invest, which requires liquid markets, and few capital controls, according to investors. China’s yuan can’t replace the dollar because it isn’t fully convertible and doesn’t float freely. The euro region and the markets for commodity currencies, such as the Australian, New Zealand and Canadian dollar, don’t have enough trading to absorb the amount of cash the reserve banks hold.

‘No Alternative’

“There is no alternative to the dollar, so it’s status as a reserve currency can’t be under threat,” said Adam Boyton, a senior foreign-exchange strategist at Deutsche Bank AG in New York.

The dollar’s preeminence will remain intact, as it continues to be the most widely used currency in business and finance worldwide, the Federal Reserve Bank of New York said in a report released Jan. 5. Some $580 billion in banknotes, or 65 percent of all bills in circulation, were held outside the U.S. as of March 2009, according to Fed data.

The greenback has an 86 percent share of the foreign- exchange market, more than twice the euro’s 37 percent. Its share of the international debt market is 39 percent.

“The international role of the dollar remains substantial a decade after the introduction of the euro, and despite changes in the value of the dollar and the financial turmoil that began in 2007,” Linda Goldberg, a vice president at the New York Fed, wrote in the report.

Relative Deficits

While the Congressional Budget Office expects America’s debt to reach 65 percent of GDP in 2010, that would still be below the 77 percent of GDP the European Commission expects for Germany, the U.K.’s 80 percent and Japan’s 180 percent.

“I would want to stay away from the euro, the euro zone and some of the emerging European currencies,” Michael Gomez, the co-head of emerging markets at Pacific Investment Management Co., said on Feb. 4 at a conference in Moscow. The Newport Beach, California-based firm manages the world’s biggest bond fund.

At their meeting this weekend in Iqaluit, Canada, Group of Seven finance ministers pledged to press ahead with economic stimulus measures. Canadian Finance Minister Jim Flaherty told reporters that “we need to continue to deliver the stimulus to which we are mutually committed and begin looking at exit strategies to move to a more sustainable fiscal track.”

Yen Gains

Rather than using a weighted average of exchange rates based on trade data, which is reported on lag and subject to revision, the Bloomberg Correlation-Weighted Currency Indexes calculate weights based on variances in exchange rates.

The indexes have a start date of Jan. 2, 1975, and a base value of 100. The index for the dollar was little changed at 102.69 today and the yen index was at 395.70. The Swiss franc index was at 271.20 and the euro index was at 107.60, from 271.23 and 107.58 on Feb. 5 respectively. The index for the euro replicates the German deutsche mark before 1999, when Europe’s common currency started trading.

The New Zealand dollar index fell 0.2 percent to 50.14 today, the Swedish krona index climbed 0.1 percent to 52.89 and the Australia dollar index dropped 0.2 percent to 64.07.

Though the dollar is the world’s reserve currency, it doesn’t affect the movement of foreign-exchange rates as much as the euro, the indexes show. Since the euro’s creation, its correlation to other G-10 currencies has steadily risen, overtaking the dollar in 2004 and all others by December 2008.

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Senate Democrats are expected to take up President Obama’s call and start rolling out their employment creation package by week’s end.

With the balance of power shifted in the Senate, Democrats have moved away from introducing a comprehensive bill similar to the $154 billion legislation passed by the House in December. Instead, the Democrats will likely push through smaller measures in stages.

"First of all, we do not have a jobs bill," said Senate Majority Leader Harry Reid, D-Nevada, on Tuesday. "We have a jobs agenda that we’re working on."

At the top of the list: Renewing existing highway legislation for a year, which is expected to result in one million jobs, Reid said. Also, enacting small business and job creation tax credits. And extending Build America Bonds, a stimulus measure that helps states and municipalities fund capital construction projects.

The president’s fiscal 2011 budget, unveiled Monday, would direct $50 billion to job creation measures, including clean energy initiatives and road projects.

"Infrastructure is where the jobs are, and we need to move in that direction rapidly," Reid said.

Coming next: Enacting the president’s Cash for Caulkers proposal, which would subsidize making homes and buildings more energy efficient, and extending the stimulus grants for surface transportation.

The first job creation bill was unveiled on Wednesday. The measure, promoted by Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah, would absolve any private-sector employer who hires a worker who’s been unemployed for at least 60 days of paying the 6.2% share of the employee’s Social Security payroll tax for the rest of 2010.

Also, employers who keep these workers on the payroll continuously for a year would be eligible for a non-refundable $1,000 tax credit on their 2011 tax returns.

"This proposal isn’t about more and more government spending; it’s about tax relief to get employers hiring again," Hatch said.

Democrats’ other measures, however, aren’t likely to get as warm a reception from the GOP. Already, several Republican senators have come out against using TARP bank bailout funds to jumpstart lending to small businesses and raising taxes on the wealthy.

"If you’re in business now and you’re trying to figure out what the future is, you’re looking at health care taxes, you’re looking at capital gains taxes going up, dividend taxes going up," Senate Republican Leader Mitch McConnell of Kentucky said on CNN’s State of the Union on Sunday. "If you are a small business and pay taxes as an individual taxpayer, your taxes are going up. So, is that a great environment in which to expand employment? I think the answer is no."

Since Obama outlined his job creation push in his State of the Union speech last week, he has traveled up and down the East Coast promoting his small business initiatives. These include jumpstarting small business lending by giving $30 billion in TARP funds to banks and providing these firms with a $5,000 tax credit for each addition to their payrolls.

"Today, one in 10 Americans still can’t find work," Obama said in Nashua, N.H., on Tuesday. "That’s why jobs has to be our number one focus in 2010. And we’re going to start where most new jobs start — with small businesses." 

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Charter Communications Inc. President and Chief Executive Neil Smit, the highest-paid executive in St. Louis, plans to leave the company to run rival Comcast Corp.

Smit, whose resignation from Charter is effective Feb. 28, will become president of Comcast Cable Communications in Philadelphia, The Wall Street Journal reports.

He will be replaced at Charter on an interim basis by Chief Operating Officer Michael Lovett.

Smit joined St. Louis-based Charter as CEO in 2005 and recently led the company’s financial restructuring through a Chapter 11 bankruptcy fast cash advance.

Smit ascended to the top of the Business Journal’s annual list of St. Louis’ highest-paid executives. With $7.4 million in cash compensation for 2008, Smit unseated Edward Jones Managing Partner James Weddle from the perch he’s held for the past two years. Smit rang up his chart-topping payday despite Charter’s staggering $2.45 billion loss last year and subsequent bankruptcy filing.

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I’ve been writing about investing for nearly a quarter of a century. And if I’ve learned one thing after counseling Money readers through three recessions, three stock market crashes, and two derivatives debacles (yes, two: 14 years before the recent flare-up with mortgage-backed securities, derivatives tripped up several government income and money-market funds), it’s this: Savvy investing need not be complicated. Just focus on what’s most important to stay on the path to financial success and filter out all the noise along the way.

To do just that, follow this four-step program:

1. Don’t obsess over the "best" investments.

Cable-TV investing shows may make you feel like a slouch if you’re not constantly searching for hot new investments. But I’ve seen too many Next Big Things turn into the Next Big Letdowns — limited partnerships in the ’80s and, recently, mutual funds that replicate hedge fund strategies, to name two.

In reality, smart investing is more about assembling a group of tried-and-true assets that give you diversification than trying to predict tomorrow’s top gainers. "I’d rather have mediocre funds in the right mix of categories than great funds without an underlying allocation strategy," says Charlottesville, Va., financial planner David Marotta.

The reason is that asset classes, more than individual picks, drive your long-term returns. Creating a well-rounded portfolio isn’t that hard. Marotta figures you need only five or six funds that cover key assets such as large and small U.S. stocks, foreign shares, and bonds — plus maybe another that invests in natural resources, real estate, or other inflation hedges.

2. Think long term, not year to year.

Birthdays and anniversaries are the milestones of our lives. So it’s not surprising that we tend to think in annual terms when gauging our portfolios. Yet it’s dangerous to think of investing as a sprint rather than a marathon.

Why? If you’re seeking the best gains over the next 12 months, you’ll naturally gravitate toward more volatile investments because they’ll give you a better shot at big short-term gains. But your odds of picking those winners year in and year out are extremely slim.

"It’s like someone on a hot streak at the roulette wheel," says York University finance professor Moshe Milevsky. "You know it’s not going to last." What’s more likely to happen is that you’ll end up in investments that go down just as quickly as they went up.

3. Keep a tight rein on costs.

When was the last time you heard someone brag about his razor-thin mutual fund expenses? Probably never. That’s because high returns are a lot sexier than low fees.

Still, you’re better off paying as much attention, if not more, to what your funds charge than to past performance. "The probability of a manager outperforming going forward is small," says Financial Engines chief investment officer Christopher Jones. "But fees are far more predictable." And remember that every dollar you pay in fees reduces the returns you get to keep — and that can add up over the long haul.

To gauge the effect of costs, I used Morningstar’s database to sort all large-cap stock funds with 15-year records into four groups, based on expenses. I then compared each group’s average annualized 15-year returns. Result: The higher a group’s fees, the lower its average return. This mirrors an analysis that Burton Malkiel and Charles Ellis (two heavyweights in the investing world) include in their new book, The Elements of Investing.

4. Keep a tighter rein on yourself.

During my career at Money, I’ve seen stock prices fall more than 20% in a single day (Oct. 19, 1987) and twice drop by roughly half over longer periods (March 2000 to October 2002 and October 2007 to March 2009).

But if those crashes led to similarly steep losses in your portfolio, you can’t blame the market entirely for your misfortune. More often than not, to paraphrase Shakespeare, the fault is not in the markets, but in ourselves. When things are going well we tend to get overconfident and plow more money than we should into risky assets, making us overly vulnerable to downturns. And when a setback inevitably arrives, says Santa Clara University economist Hersh Shefrin, "We bail out and focus so much on safety that we’re not positioned to capture gains when the market turns around, which it typically does very quickly."

Rather than swinging between euphoria in up markets and depression in down ones, you’re better off keeping your emotions — and strategy — on an even keel. Granted, achieving that Zen-like outlook is easier said than done. But the more you can maintain your equanimity and resist Wall Street’s entreaties to fiddle with your investments, the fewer mistakes you’ll make — and the more wealth you’ll end up with in the long run.  

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Mergers are all the rage in Corporate America again. Healthy companies are looking to take advantage of their strong balance sheets and surging stock prices to strike while the iron is hot.

So far this month, Hewlett-Packard has agreed to buy 3Com, Stanley Works announced a deal for tool rival Black & Decker, and in the biggest deal of them all, Warren Buffett’s Berkshire Hathaway is taking over railroad Burlington Northern Santa Fe.

But these strategic deals aren’t the only type of mergers that have made a comeback.

Private equity firms, the so-called "Masters of the Universe" or "Barbarians at the Gate" that became famous for taking over companies in the 80s, are starting to get more active as well.

On Thursday, Pinnacle Foods Group, which is owned by private equity firm Blackstone Group (BX), said it was buying frozen foods company Birds Eye for $1.3 billion.

Earlier this month, defense contractor Northrop Grumman (NOC, Fortune 500) agreed to sell its advisory services unit TASC to an investor group led by private equity firms General Atlantic Partners and Kohlberg Kravis Roberts & Co. for $1.65 billion. (KKR, of course, is the original Barbarian. Its takeover of RJR Nabisco in 1989 was the subject of the book "Barbarians at the Gate.")

Also this month, private equity firm TPG and the Canada Pension Plan teamed to buy prescription drug data provider IMS Health (RX) for $4 billion. That deal is the biggest leveraged buyout of the year.

The return of the Barbarians is worth noting. It could be yet another reflection of growing optimism about the economy. After all, private equity firms don’t often hold on to companies they buy for long.

The goal is usually to clean a company up and generate a healthy return by selling it to another company or bringing it public once again. If private equity firms are now willing to invest instead of sit on cash, they must see something they like.

"Private equity firms have raised a significant amount of money and they have to deploy that cash. So they are going to step up and make some investments," Haag Sherman, managing director with Salient Partners, an investment firm in Houston.

But there’s another reason why more LBOs could actually be good news.

Private equity shops tend to rely on debt to finance their takeovers. As such, their return to the M&A landscape could mean that the credit markets and the banking system really are starting to return to normal.

"The credit markets are no longer on life support. So that has led to stabilization in stocks and the economy, and that’s a good sign," Sherman said.

To that end, Barclays Capital, Credit Suisse, BofA Merrill Lynch, HSBC, and Macquarie Capital all kicked in debt financing to Blackstone for the Birds Eye deal.

Antony Page, a professor at Indiana University School of Law-Indianapolis who focuses on mergers and acquisitions and corporate law, said the comeback in private equity deals could be a refection that banks are willing to once again take on more risk and increase their lending.

But Page said it also shows that private equity firms are being more cautious and are not willing to throw large amounts of money at deals that may not make financial sense. Otherwise, banks would probably remain reluctant to back them.

"Private equity firms are being more selective and the deals are probably looking better for the banks. So banks can be more comfortable about financing them," he said.

Sherman stopped short of saying that the days of easy cheap money are here again. For many consumers, it is still difficult to get approval for a mortgage or a credit card.

Just because Blackstone can get money to buy Birds Eye doesn’t necessarily mean that banks are going to suddenly start making crazy subprime mortgage loans again.

And that’s a good thing. Another credit binge would prove that no lessons were learned from this recession and could set the stage for another nasty downturn.

Still, the latest results from the Federal Reserve’s quarterly survey of senior bank loan officers show that credit is not as tight as it was earlier this year.

According to that survey, released earlier this month, a smaller percentage of banks reported tighter standards for credit cards and other consumer loans than they did in July.

So as long as the economy doesn’t backslide into recession, it seems likely that some banks will be more willing to extend credit to those who need it and deserve it.

"There are good banks and bad banks. Some won’t have to hunker down and preserve capital, " Page said. "Standards won’t be as loose as they were. But there should be some hope for people who have good, if not great, credit and are still good credit risks."

Talkback: Do you think the credit markets have returned to normal? Share your comments below.  

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The Hawaii Medical Assurance Association reported a $55,046 profit in the third quarter of 2009, compared to a $2.3 million profit during the same period last year.

The state’s fourth-largest health insurer said it collected $23.4 million in premium revenues during the third quarter, down from the $28 million it collected during the same period in 2008.

The health plan spent $20.8 million on hospital, medical and administrative expenses, up slightly from the $18.8 million it spent during the same period last year guaranteed online payday loans.

Investment income totaled $97,867 for the quarter, compared to an investment loss of $217,990 in the third quarter of 2008.

The health plan’s reserves totaled $19.3 million, up slightly from $19.2 last year.

HMAA has 25,923 members, down from 29,719 members during the same period in 2008.

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Internet security and naming services provider VeriSign Inc sees near-term pricing pressure in its online security certificates business, but expects to grow margins in 2010 by controlling costs, its top executive said.

The company has been hit by a slowdown in its SSL business — which enables secure e-commerce and communication on the Internet — where the annualized average unit revenue for VeriSign, GeoTrust and Thawte-branded certificates for the third quarter was $234, down 3 percent from the prior quarter.

“We will continue to see some ASP pressure for a while,” CEO Mark McLaughlin said in an interview with Reuters. “With the economy improving, that would start to abate.”

The authentication services business, which includes SSL, forms about 39 percent of VeriSign’s revenue. Naming services — VeriSign serves as the global registry for .com, .net, .tv, .cc, .name and .jobs domain names — makes up most of the rest.

The company was offering discounts for long-term customers to preserve the relationships, he said.

“We haven’t cut our prices, but we’re willing to have discussions around giving discounts,” McLaughlin said online cash advances. VeriSign’s rivals in the SSL business include GoDaddy.

“This is sort of a mixed blessing where the low end of the market is growing faster than the high end of the market,” McLaughlin said.

McLaughlin sees an improvement in margins in 2010.

“Into next year, we’ll continue with this tight expense control. We think that we should be able to continue to get some incremental improvement into next year.”

VeriSign has said it expects fourth-quarter operating margins to be in line with that of the third quarter, when it recorded operating margins, excluding items, of 38.6 percent.

The company, which has been implementing a restructuring strategy to sell its slower growing businesses, expects to sell its last remaining unit to be divested by the end of the year, McLaughlin said.

On November 5, VeriSign swung to a third-quarter profit, but its fourth-quarter revenue forecast fell short of Wall Street estimates.

(Editing by Anil D’Silva)

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Although U.S. President Barack Obama has never set foot there, China cast a long shadow in the Pacific region where he grew up.

Obama, who will visit Shanghai and Beijing for the first time on November 15-18, spent much of his childhood in Hawaii, five time zones away from Washington, D.C.; and beginning in 1967, when he was six years old, he lived in Jakarta for four years.

At the time, China was in the throes of Chairman Mao Zedong’s bloody Cultural Revolution. Abroad, the nation was less interested in selling widgets than in promoting Mao’s brand of radical communism — a force the U.S. saw behind communist movements and political upheaval in Vietnam, Indonesia and elsewhere in Southeast Asia.

In 1979, Obama’s senior year at Punahou school in Honolulu, China and the United States normalized diplomatic relations, launching a three-decade period in which ties between the two grew inexorably tighter and deeper — and complicated.

“Think of what China was in 1979: It was an autarkic, insular, inward-looking country that was preoccupied with its own internal things,” said a senior U.S. official. “Even 10 years ago … there was still a sort of sense of ‘We’re not a part of these global rules, we’re not doing this stuff.’ Now they see themselves as sitting at the table.”

If there were any doubts that China would have a seat at the table from now on, Obama dispelled those when he sent Secretary of State Hillary Clinton there on her first official trip abroad — not Pakistan, Afghanistan or any other foreign policy hot spot.

“That the first major visit (was) to China, and to Asia as well, is symbolic of where the locus of international economic activity — and to some degree the locus of international activity, period — is going to be in the coming years,” said economist and author Zachary Karabell, whose new book “Superfusion” posits that the U.S. and Chinese economies have effectively merged.

Beijing, once considered a wallflower on global affairs, is in turn warming to its more prominent role, though it’s unclear that will translate into greater cooperation with Washington on issues like climate change and the nuclear disputes with Iran and North Korea — not to mention human rights differences.

U.S. Deputy Secretary of State James Steinberg highlighted the tension at the heart of the relationship in a speech in September. “Given China’s growing capabilities and influence, we have an especially compelling need to work with China to meet global challenges,” he said.

But Steinberg added that there was a tacit bargain in which the United States expects China to reassure the rest of the world that its growing role “will not come at the expense of security and wellbeing of others.”

That of course includes America’s.

“The big challenge there is going to be to maintain a competitive U.S. economy, and at the same time to maintain a high degree of stability and equanimity in the U.S.-China relationship,” said Clyde Prestowitz, president of the Economic Strategy Institute think tank.

Indeed, even as the United States and China have grown closer diplomatically, their economic and trade ties have deepened to the point of mutual dependence. Not only does China depend on the U.S. export market to fuel its highflying economic growth rates, the United States relies on China’s vast savings to help finance its burgeoning budget deficits.

“It is clearly unsustainable. This relationship helped give rise to global economic imbalances,” said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. “If we are ever going to free ourselves of these imbalances, we need to reverse this relationship, get China to buy things in the U.S. and the U.S. to invest in China.”

“STAKEHOLDER” STRATEGY 

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A major investor in convicted swindler Bernie Madoff’s Ponzi scheme drowned in his swimming pool in Florida after a heart attack, his attorney said Monday, and the medical examiner’s office confirmed the report.

Jeffry Picower, 67, was found unconscious in his pool shortly after noon Sunday at his Palm Beach, Fla., home by his wife, Palm Beach police said. He was pronounced dead at Good Samaritan Hospital.

Picower’s attorney, William Zabel, told CNN that Picower drowned after suffering a massive heart attack. Sue Jaffe, spokeswoman for the Palm Beach County medical examiner, confirmed those details.

In September, Forbes Magazine ranked Picower number 371 among the 400 richest Americans, with a net worth of $1 billion.

In March, Madoff was convicted of operating a Ponzi scheme and defrauding thousands of investors, and was sentenced to 150 years in prison after pleading guilty to 11 felony counts of fraud, money laundering and perjury. Prosecutors have said it was the largest investor fraud ever committed by a single person, totaling billions in losses to investors.

When the Picower Foundation of Palm Beach announced it was shutting down early this year because of Madoff losses, it initially appeared that the prominent philanthropist had been an unfortunate victim of Madoff’s Ponzi scheme. Picower’s 2007 tax return had valued his foundation’s portfolio at $955 million.

However, in May, court filings by Madoff trustee Irving Picard changed the picture. The trustee’s complaint claimed that Picower had been a key beneficiary of Madoff’s Ponzi scheme for more than 20 years, and "knew or should have known that [he] was profiting from fraud because of the implausibly high rates of return" on his accounts payday advance lender.

Those "anomalous and astronomical rates of return" — as high as 500% in one year and 950% in another year — "were neither credible nor consistent with legitimate trading activity, and should have caused any reasonable investor … to inquire further," the court filings said, referring to Picower as "a sophisticated investor, accountant and lawyer."

Citing backdated account filings and other bogus paperwork, the complaint contends that "Picower and the other defendants also knew or should have known that they were reaping the benefits of manipulated purported returns, false documents and fictitious profit."

The Picowers recently told The New York Times that the publicity and controversy surrounding their connection to Bernie Madoff had been a great source of heartache.

"We always have been private people, and having all this play out in the media has taken a big toll on our health," the couple wrote in response to questions posed by reporters. "We feel stunned, betrayed, angry, sickened, devastated," they said, and were only able to draw strength and consolation "from each other and from the knowledge that we did nothing wrong."

– from CNN’s Mythili Rao 

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