World financial news

Comparison shopping site Become.com on Monday named Charu Rudrakshi chief technical officer.

Rudrakshi will oversee the direction and management of Sunnyvale-based Become Inc.’s global technical operations.

The company said he has more than 20 years of experience in building diverse products, from backend servers to Web applications. He was vice president of engineering at Sunnyvale-based Yahoo Inc., and also worked at eBoodle.com, Verity, Yodlee and Clearwell Systems.

Become.com was founded in 2004 by Michael Yang, who was also a founder of comparison shopping engine MySimon in 1998.

Source

Despite signs that the real estate market might be lurching forward, prices are expected to fall further this year and next.

The average home price in the United States will fall by about 6% by September 2011, according to a joint report between Fiserv and Moody’s Economy.com. And that’s after plunging more than 27% in the past three years.

Most of the projected home price decline will occur during the usually slow summer months of 2010. After that, prices should begin to stabilize, according to Fiserv, and stay almost flat through fall of 2011.

The main reason for continued decline, according to Mark Zandi, economist and co-founder of Economy.com, is foreclosures — the same thing that’s plagued markets for the past three years.

"Foreclosure sales will pick up this spring as mortgage servicers figure out who can qualify for a modification and who can’t," said Zandi.

He figures there are at least 4.5 million mortgage loans either in foreclosure or clearly headed in that direction. When that additional inventory hits the market, it will provide numerous choices for buyers and encourage sellers to drop their listing prices.

The end of two federal programs, which have been propping up markets, will also tamp down prices.

The Federal Reserve has been purchasing mortgage-backed securities since early 2009, scooping up as much as $1.25 trillion worth. That has dampened rate increases by providing a ready market for the securities. But the Fed’s program lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates.

Any resulting rise in rates will cause some buyers to withdraw from the market and others to look for lower priced homes guaranteed online payday loans. Either way, demand for homes drops and so do prices.

A month after the Fed bows out of the mortgage-buying market, the homebuyer tax credit will start to expire. To qualify for the $8,000 credit, homebuyers must sign a contract before April 30 and close by June 30. When the first date passes, many buyers are expected to vacate the market, weakening the demand for homes.

In a broader sense, home prices are ultimately decided by employment. "If [the job market] improvement is stronger than expected, prices will get better. If it’s weaker than expected, prices will be worse," Zandi said.

Worst of the worst

The worst performing market will be Miami, Fla. Moody’s projects prices there to drop a heart-stopping 29.2% by Sept. 30. That follows a 47.7% decline the metro area recorded in the past three years. Grand total: 64% drop.

Other disastrous performances will be turned in by the Hanford, Calif., metro area, where prices are projected to plummet 27.2% through Sept. 30, 2010 following their 36.9% drop for the previous 36 months. Ft. Lauderdale and West Palm will also register steep drops.

There’s some good price news coming out of California’s Central Valley for a change; prices will begin to emerge from their free fall toward the end of this year.

In Merced, for example, which crashed and burned by 71.8% in the past three years (through last September), they’ll only fall only another 6.2% in the next six months before bouncing back with a rise of 10.1% by Sept. 30, 2011. 

Source

European leaders ordered Greece to get the bloc’s highest budget deficit under control and promised “determined” action to staunch the worst crisis in the euro currency’s 11-year history.

The agreement, brokered by German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and European Central Bank President Jean-Claude Trichet, called for closer monitoring of the Greek economy and stopped short of offering concrete steps to help Greece handle a debt load exceeding annual economic output. Greek bonds rose and the euro fell after the deal was announced at a European Union summit today.

“It’s a political message that we wanted to send out,” EU President Herman Van Rompuy told reporters in Brussels. “The Greek government will take the responsibility for cleaning up its public finances.”

The declaration, which Merkel called a “clear political signal” to Greece, left open how the EU would respond to a fresh wave of speculative attacks against Greece or countries such as Spain and Portugal, which are also struggling to cut their budget deficits. The statement echoes prior calls for Greece to get its accounts in order and gave the International Monetary Fund a monitoring role.

Finance ministers are working on measures such as setting up a lending facility for Greece, with each country paying in according to its size, an EU official said. The official, who spoke on condition of anonymity, said it’s premature for a European bond.

‘Breathing Space’

“Markets will only normalize once they outline more detailed measures,” said Andreas Rees, an economist at UniCredit MIB in Munich. “The statement won’t be enough to reassure investors. It’s some breathing space.”

Greek bonds, which have plunged since December on concern the country will be unable to tackle its deficit, extended a three-day rally, with the yield on the two-year government bond falling 35 basis points to 5.11 percent at 7:45 p.m. in Brussels.

Concern about the costs of a hazily worded commitment by Europe’s richer countries pushed the euro down 0.4 percent to $1.3685. Its slide to a nine-month low of $1.3586 on Feb. 5 forced Greece to the top of the EU agenda out of concern that market turmoil might spread.

Called by Van Rompuy to sketch out a 10-year economic strategy, the summit turned into a crisis-management exercise that tests Europe’s ability to run a common currency with 16 separate national fiscal policies.

Rescue Talks

The main event came before the 27-nation EU meeting, when Merkel piloted the Greek rescue talks with Papandreou, Trichet, Van Rompuy, French President Nicolas Sarkozy, Spanish Prime Minister Jose Luis Rodriguez Zapatero and Luxembourg Prime Minister Jean-Claude Juncker, who heads the panel of euro-region finance ministers paydayloan.

Under pressure from political allies at home who are opposed to giveaways to countries that live beyond their means, Merkel pressed for strict conditions on any European financial lifeline for countries that spend too much and save too little.

Demonstrating Germany’s sway in the euro region, the declaration was issued in the EU’s name before other leaders were consulted. Irish Prime Minister Brian Cowen said there was “no detailed discussion” over the Greek backstop.

U.K. Prime Minister Gordon Brown, the main mover behind the EU-wide rescue of banks in October 2008, also wasn’t involved. In London when Merkel’s crisis meeting started, Brown later said Greece is in the hands of countries using the euro.

Greek Deficit

Greece, representing 2.7 percent of the bloc’s $13 trillion economy, posted a budget deficit of 12.7 percent of gross domestic product in 2009, the highest in the euro’s history and more than four times the EU’s 3 percent limit.

Papandreou’s government needs to sell 53 billion euros ($72 billion) of debt this year, the equivalent of about 20 percent of GDP. Greece’s credit rating was cut by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings in December.

Greek plans to cut public-sector wages, trim welfare provisions and raise taxes have provoked street protests that threaten to throw the government’s aim of slicing the deficit by 4 percentage points in 2010.

By living under EU strictures, Greece no longer controls its own economic destiny, Papandreou said. Speaking after the summit, he said: “We have lost a part of our sovereignty because of this loss of credibility. We are determined to regain this lost credibility. We will do anything necessary.”

Resisting IMF

EU leaders resisted putting Greece in the sole hands of the IMF, concerned that recourse to outside assistance would expose Europe’s inability to get its own house in order.

EU treaties bar the ECB or national central banks from bailing out members countries through buying their debt or offering loans, while rules on government-to-government support are more flexible.

Whether from individual countries or the EU as a whole, a financial lifeline for Greece would open a new chapter in the euro experiment by breaking with the orthodoxy that each country has to steer its own economy.

“I don’t think there is any bluff here. This is a very, very serious commitment to back up Greece,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Plc in London. “This is once in a lifetime moment for monetary union.”

Source

In one of his many applause lines at Wednesday night’s State of the Union address, President Obama emphasized the importance of American exports: "Tonight, we set a new goal," he said, "We will double our exports over the next five years, an increase that will support two million jobs in America." It’s no surprise that people cheered; what’s not to like? There’s just one problem: Growing exports is almost entirely out of the president’s — and even business’s — hands.

It’s not that the growth he’s calling for is impossible. Since 1960, the U.S. has seen two periods of fast, sustained growth. From 1970 to 1975, exports more than doubled, going from $56.6 billion to $132 billion. Then from 1976 to 1981, they doubled yet again, from $142.7 billion to $294.4.

More recently, the U.S. saw a 68% surge in exports between 2002 and 2007 to $1.1 trillion. (The latest figure for goods exported: $1.3 trillion.) Much of the more recent growth came from the meteoric rise of countries like China and India. The United States’ chief exports — sophisticated manufacturing items like planes and semiconductors — benefited from the countries’ need to rebuild (or, in many cases, to just build) nationwide infrastructures.

But a nation can only stock up on so many Caterpillar tractors at a time. Then the demand inevitably slowed. To get back to the mid 2000s-kind of growth, the U.S. would have to bank on other countries’ stimulus plans working flawlessly.

There are other paths to export success that involve less brute growth and more finesse. China’s trade partners have long complained about the country’s unwillingness to let the renminbi exchange rate float — right now it’s pegged to the U.S. dollar — which makes China’s exports look cheaper and U.S. imports to the country more expensive.

Address this in China and in other countries in Asia with similar practices, and demand for U.S. products abroad could rise. One economist, Gary Hufbauer, a research fellow at the Peterson Institute for International Economics, estimates that if China were to let the RMB rise by 25%, and if Hong Kong, Singapore, and a few of China’s other neighbors were to do the same, the U.S. would see a 5% increase in goods exported.

"Heavily undervalued currencies are doing the most damage to U.S. trade and U.S. exports," says Robert Scott, director of international programs at the Economic Policy Institute. "That is really our number one unfair trade problem."

Another way to spur exports is to encourage smaller companies to send their goods abroad. According to Dan Griswold, director of the Center for Trade Policy Studies at the Cato Institute, small businesses account for 30% of total U.S. exports.

On Wednesday night, Obama mentioned in passing he would create a National Export Initiative focused on helping farmers and small businesses sell their goods overseas. While the details have yet to be hammered out, Hufbauer suggests the administration needs to provide incentives to banks to allow more lending to small businesses that are pursuing greater exports.

Would that be enough? Any plan would have to account for how difficult it can be for smaller businesses to operate abroad. Even in the Skype and email era, discovering which markets will want what goods and then building relationships over long distances and countless time zones with potential buyers is enormously difficult — especially when the exporter’s production volume might not be very high.

The difficulty in aiding such small players explains why the government in the past has spent so much time and money on the largest, most capital-intensive industries.

A study by the Pew Charitable trust in November found that about 65% of the nation’s Export-Import Bank’s loan guarantees — the main arm of the government that helps promote exports — went to just one company: Boeing (BA, Fortune 500). Not surprisingly, the Aerospace Industries Association released a statement today voicing their support for Obama’s goal: "We’re very pleased that President Obama is making it a priority this year to double exports, enforce trade agreements and reform export controls consistent with national security."

In the end, the problem of creating jobs is so thorny that growing exports will only do so much. As Griswold points out, the health of the U.S. job market is determined mostly by domestic demand. If Americans aren’t spending, there will be fewer jobs here, regardless of what’s happening abroad. "[Raising exports] is not going to be a magic bullet for bringing down the unemployment rate," says Griswold. 

Source

Australian bank lending rose by the most in 11 months, adding to signs of an economic rebound that may prompt central bank Governor Glenn Stevens to raise interest rates next week for a record fourth straight meeting.

Loans provided by banks and other finance companies advanced 0.3 percent in December from November, when they rose 0.1 percent, the Reserve Bank of Australia said in Sydney today. Lending increased 1.5 percent from a year earlier.

Today’s report may increase pressure on Stevens to boost the benchmark lending rate by a quarter percentage point to 4 percent as early as Feb. 2. The nation’s economy, which skirted the global recession in 2009, is forecast to accelerate this year, driven by a surge in consumer confidence and the biggest hiring boom in more than three years.

“It’s very heartening,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “Consumers are quietly rejoicing in the improving economic environment and are a bit more willing to borrow and spend.”

Credit growth “will continue to track higher this year, and in the second half of the year business credit will start to strengthen,” he said.

The Australian dollar rose to 89.07 U.S. cents at noon in Sydney from 89 cents just before the report was released. The two-year government bond yield was unchanged at 4.22 percent.

Rate Bets

Traders are betting there is a 62 percent chance of a quarter-point increase in Australia’s overnight cash rate target to 4 percent at the central bank’s meeting next week, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:58 a.m. Prior to today’s report, the chances of a move were 60 percent.

Lending in December rose three times more than the 0.1 percent median estimate of economists surveyed by Bloomberg News. Loans to consumers to buy houses climbed 0.7 percent from November and 8.2 percent from a year earlier.

Credit provided to consumers for purchases other than housing advanced 0.7 percent from a month earlier for an annual decline of 0.4 percent.

Demand for credit rose after employers added 135,700 jobs in the four months through December, the biggest four-month gain since 2006, pushing down the jobless rate to an eight-month low of 5.5 percent, a report showed on Jan. 14. Consumer confidence jumped in January by the most in six months, a survey by Westpac Banking Corp. showed last week.

The International Monetary Fund said this week that Australia’s gross domestic product will expand 2.5 percent this year and 3 percent in 2011. In October, it forecast 2 percent growth in 2010.

Lending to companies dropped 0.2 percent in December from the previous month, taking the annual decline to 7 percent, today’s report showed.

Source

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.

Source

Only 20 percent of Oregonians have earthquake insurance, even though Oregon is among the states at highest risk for a major earthquake, according to a survey by the state Department of Consumer and Business Services.

Standard home owner policies do not cover earthquakes, but optional earthquake coverage is readily available and relatively inexpensive, the department said.

“Consumers may want to think about their ability to rebuild if their house is destroyed in an earthquake,” said Cory Streisinger, director of the Department of Consumer and Business Services. “Insurance should be weighed as part of other earthquake preparations.”

Jan. 25 will mark the 310th anniversary of the last major Cascadia Subduction Zone earthquake, magnitude 9.0, centered 75 miles offshore. That temblor damaged the coastline from Northern California to Southern British Columbia, according to the Oregon Department of Geology and Mineral Industries.

A 10,000-year geologic record shows these mega-quakes occur every 300 to 600 years, putting Oregon within the window of a major earthquake, said James Roddey, state earth sciences information officer.

Damaging earthquakes have also occurred within the past 16 years in different parts of the state, causing tens of millions of dollars worth of damage.

The Department of Consumer and Business Services Insurance Division last year surveyed 20 insurance companies that account for 80 percent of the home owner insurance premiums in the state.

It found:

• Home owners generally can buy earthquake insurance as an addition to their policy or as a separate policy. The few companies that do not offer earthquake insurance in Oregon typically refer clients to a company that sells stand-alone earthquake policies.
• Earthquake coverage is relatively inexpensive — often less than $300 a year for a $300,000 wood-frame home. Masonry homes are more expensive to insure.
• Owners of older houses may need to bolt their homes to the foundation or make other seismic upgrades before they can buy earthquake insurance.

Earthquake coverage generally features high deductibles. These typically amount to 10 percent or 15 percent of the amount covered by insurance. A home owner with a house insured for $300,000 and a 10 percent deductible would pay $30,000 before the policy would pay. Coverage for contents is separate.

Source

The U.S. economy is in much more serious trouble than news reports, policy makers and pundits might lead you to believe. Cam Harvey explains in his blog payday loans guaranteed no fax.

Source

The U.S. economy remains mired in a recession, prospects for next year are weak and home prices may resume declines, Harvard University economics professor Martin Feldstein said.

“The recession isn’t over,” Feldstein said today in an interview on Bloomberg Radio in New York. “It will be a while before we have enough information to know if the recession ended.”

Feldstein is a former president of the National Bureau of Economic Research and remains a member of the group’s Business Cycle Dating Committee, the panel charged with determining when recessions begin and end. His comments are at odds with those of the panel’s chairman, Robert Hall, who said early this month that the recession may have ended.

Employers in the U.S. cut 11,000 jobs in November, the fewest in 23 months, and the unemployment rate unexpectedly fell to 10 percent from 10.2 percent, a government report showed on Dec. 4.

The report “makes it seem that the trough in employment will be around this month,” Hall said in an interview on the day the figures were released. “The trough in output was probably some time in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.”

The economy has lost more than 7.2 million jobs since the recession began in December 2007. The total number of workers collecting unemployment checks as well as those taking extended government benefits totals about 10 million, according to Labor Department statistics released today.

‘Extended Period’

The Federal Reserve yesterday repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the “deterioration in the labor market is abating.”

Ben S. Bernanke won backing for a second term as Fed chairman today in a 16-to-7 vote by the Senate Banking Committee. The nomination next goes to a vote of the full Senate.

Gross domestic product expanded at a 2.8 percent annual pace in the third quarter after shrinking for each of the previous four quarters. Growth will average 2.6 percent next year, according to the median forecast in a Bloomberg News survey of economists early this month.

Restrained consumer spending suggests “2010 is going to be a very weak year,” said Feldstein, 70, who was chairman of the White House Council of Economic Advisers during the Reagan administration.

“Thrift in the long run is a very good thing, but increasing thrift as you come out of a recession is going to be a drag,” he said easy to get unsecured personal loans.

Housing Market

Regarding the residential property market, where the recession initially emerged, Feldstein said the Obama administration’s effort to revive the housing market is a failure and home prices will continue to decline.

“It was just not well enough designed,” Feldstein said. “They ended up failing.” That suggests the housing slump will “continue to push down house prices,” he said.

“We saw a little pause in home-price declines in the summer but I think that was because of the first-time home buyers program,” Feldstein said. “We’re not going to get that boost.”

The U.S. House voted Dec. 11 to tighten rules for derivatives and create powers to break apart healthy financial firms that pose a risk to the economy. The House rejected a “cram-down” amendment that would have given federal judges the power to lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court.

Mortgages Modified

Lenders permanently modified 31,382 of the 4 million mortgages targeted for loan relief under the Obama administration’s main foreclosure prevention plan through last month, the Treasury Department announced on Dec. 10.

Economic reports today suggested the government’s efforts to revive growth with fiscal stimulus may be working for now, Feldstein said in a separate interview on Bloomberg Television. “The danger is we will run out of steam,” he said.

The index of leading economic indicators rose for an eighth consecutive month in November, a sign growth will extend into the first half of 2010. The Conference Board’s gauge of the outlook for the next three to six months increased 0.9 percent after climbing 0.3 percent in October.

Manufacturing in the Philadelphia region expanded in December for the fifth month, led by sales and employment gains. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 20.4 this month. Readings greater than zero signal growth. The bank’s district covers parts of Pennsylvania, New Jersey and all of Delaware.

(In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.)

Source

The Bank of Canada is widely expected to keep its hands off interest rates Tuesday, holding them at near zero and committing to do so until at least July, despite growing evidence the economy is kicking back to life.

Fears of prolonged economic stagnation eased Friday with a report showing employers hired five times as many workers as expected. The data supported the Bank of Canada's view that economic growth will speed up in the fourth quarter after a disappointing third quarter, when it barely crept out of recession with tepid 0.4 per cent annualized growth.

All 12 of Canada's primary securities dealers forecast the central bank would hold its overnight target rate unchanged at 0.25 per cent at its final policy-setting meeting of the year. The bank releases its rate decision and accompanying statement at 9 a.m. ET.

Two-thirds of the traders think the bank will follow through on its pledge to hold rates at that level through mid-2010, conditional on inflation staying on track.

Reuters News Agency

Source