Business and Finance

Some airline customers won’t see savings this weekend even though several federal taxes on tickets have expired. US Airways and American Airlines say they’ve raised fares to offset any tax savings.

That means instead of passing along the savings from expired taxes, the airlines are pocketing the money while customers pay the same amount as before.

The expired taxes can total $25 to $30 on a typical $300 round-trip ticket faxless cash advance.

The taxes expired after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running.

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Small-cap stocks have been on a roll, performing well over the last decade and particularly well in the early stages of the economic recovery, but how can long small-caps’ strong run last?

There’s a reason investors have been bullish on small-cap stocks: for the past three years and year to date in 2011, the Russell 2000 index has outperformed broader indices payday loans guaranteed no fax. So far this year, the Russell 2000

Troubled car maker Saab Automobile AB has received a euro13 million ($18.4 million) car order from a Chinese company that could help pay this month’s salaries, its owner Swedish Automobile AB said Monday.

The company, previously known as Spyker Cars, claimed the deal with an unnamed Chinese company would provide the ailing car brand with enough funds to also pay back parts of its debt to suppliers.

Last week, Saab said it had run out of cash to pay its 3,700 workers, raising doubts over how long the brand could survive.

Saab spokesman Eric Geers on Monday said the company hopes a prepayment from the Chinese company for the cars will allow it to pay the salaries, which were due last Friday, this week.

Swedish Automobile, which bought Saab from General Motors Co. last year, said it continues to hold talks with several parties to raise more cash for the brand. Among other things, it is in talks to sell and lease back Saab’s real estate.

Shares in the company rose by 22.8 percent to euro1.20 ($1.70) on the Amsterdam Stock Exchange.

The company’s message Monday wasn’t enough to calm concerns among unions and suppliers about the future of Saab.

Hakan Skott, chairman of metalworkers union IF Metall, said his organization is still working toward filing a payment request to Saab this week, demanding the company to “react” within seven days.

And the Swedish Enforcement Authority said it received a payment claim Monday of nearly 45 million Swedish kronor ($6.9 million) against Saab from the supplier International Automotive Components.

The authority’s spokesman, Fredric Orloff, said it is the biggest claim so far against Saab, out of a total of 68 filings.

Separately, Geers said two union members and Saab’s General Counsel Kristina Geers have resigned from the board of Saab Automobile, leaving Swedish Automobile CEO Victor Muller as the only board member.

“We very much regret the current cash shortage which is causing undeserved hardship to all and we are working relentlessly to resolve the current situation,” Muller said.

Muller said Russian businessman Vladimir Antonov is still interested in investing in Saab, but he has so far failed to receive the necessary approval from the European Investment Bank.

“Antonov can provide much needed financing and/or capital to Swedish Automobile/Saab Automobile at this critical time,” Muller said. “We are pushing hard to obtain this vital clearance as soon as practically possible.”

EIB spokesman Par Isaksson declined to comment on the bank’s review of Antonov, saying only that it examines all proposals to change the lending agreement thoroughly.

Antonov has previously said he is prepared to invest between $50 million-$150 million in Saab. He was forced out of Spyker as part of its deal with GM amid reports of money laundering. He has denied those allegations and has never been charged.

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The operator of Japan’s tsunami-hit nuclear plant is making final preparations to launch a crucial system to treat highly radioactive water that has hampered efforts to achieve the primary goal to cool and stabilize the damaged reactors.

More than 100,000 tons of radioactive water have pooled across the Fukushima Dai-ichi power plant, and it could overflow within a couple of weeks if action is not taken.

Operator Tokyo Electric Power Co. said workers Thursday made final tests on a treatment system ahead of full operation planned for Friday. TEPCO plans to eventually reuse the water, some of it temporarily stored in tanks, as core coolant.

Three reactor cores melted after the March 11 tsunami knocked out power and destroyed critical cooling systems.

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The Obama administration declined to brand China a currency manipulator while saying the world’s fastest-growing economy is making “insufficient” progress on letting the yuan rise.

The U.S. “believes that progress thus far is insufficient and that more rapid progress is needed,” the Treasury Department said yesterday in a report to Congress on foreign- exchange markets. The yuan’s real exchange rate remains “substantially undervalued” and the department “will continue to closely monitor the pace” of appreciation.

The report, originally due in April, follows Treasury Secretary Timothy F. Geithner’s push for a stronger yuan. Lawmakers including Senator Charles Schumer, a New York Democrat, say the exchange rate gives China an unfair advantage in the global marketplace. In talks this month between the world’s two largest economies, China agreed on the upward direction of the currency, while differing with the U.S. on the pace.

“We have differences on the degree of appreciation,” Deputy Finance Minister Zhu Guangyao said May 10 in Washington. China’s economy will expand 9.6 percent in 2011 and 9.5 percent next year, according to International Monetary Fund projections released last month.

The Treasury Department backed away from the “nuclear option” of calling China a currency manipulator, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. The Group of 20 nations are “going to have something to say on the global imbalances later this year, so it is better to decide these matters in a world forum rather than for the U.S. to take unilateral action.”

Congressional Criticism

Rupkey said in e-mailed comments that the “late afternoon release before Memorial Day weekend appears well-timed in order to miss congressional criticism. Nice timing, as a war of words helps no one.” The report was released at 4 p.m. yesterday.

The Treasury said “no major trading partner” of the U.S. met the legal standard of improperly manipulating its currency. “Exchange-rate flexibility must play an important role in rebalancing China’s economy towards domestic demand-led growth,” the department said.

China has allowed the yuan to appreciate by 5.1 percent against the dollar from June 2010 through the end of April 2011, or at a rate of about 6 percent per year in nominal terms, the Treasury said. Since inflation in China is higher than it is in the U.S., the yuan has been rising against the dollar at an annual rate of about 9 percent on a real, inflation-adjusted basis.

Yuan’s Increase

By acknowledging the yuan’s increase since last year while criticizing the “limited progress,” the U.S. “once again takes a calibrated approach to Chinese currency policy,” Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF official, said in an e-mail.

The yuan completed its second consecutive weekly gain on speculation that policy makers will tolerate appreciation to tame inflation. The People’s Bank of China set the currency’s reference rate 0.04 percent stronger at 6.4898 per dollar yesterday, the highest level since July 2005.

The yuan strengthened 0.02 percent this week to 6.4917 per dollar as of the 4:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System. It was little changed yesterday and touched 6.4858 on May 26, the strongest level since 1993. The yuan isn’t allowed to move more than 0.5 percent either side of the central bank’s daily fixing.

Hampers Progress

“China’s consistent, large reserve accumulation prolongs a substantial undervaluation and hampers progress toward global rebalancing,” the Treasury said. “It is in China’s interest to allow the nominal exchange rate to appreciate more rapidly, both against the dollar and against the currencies of its other major trading partners.”

China purchases foreign currencies to suppress the value of the yuan. It accumulated $3.04 trillion of foreign-currency reserves as of March, an increase of 24 percent over a year earlier. Its reserves are the world’s largest, accounting for 31 percent of the total.

The Treasury “continues to make the right call on China’s currency policy,” Erin Ennis, vice president of the U.S.-China Business Council, said in a statement yesterday. The council thinks the Obama administration “approach of employing multilateral and bilateral engagement with China is the most useful way to make progress on the exchange-rate issue.”

Stronger Yuan

The council’s members as of April 21 included Apple Inc. (AAPL); Chevron Corp. (CVX); Citigroup Inc. (C); JPMorgan Chase & Co. (JPM); and Bloomberg LP, the parent of Bloomberg News, according to the group’s website.

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A manufacturing firm is expanding its Granite City plant and expects to grow its workforce by 50 percent over the next several years. The project comes less than three years after the company added a second location.

Arnette Pattern Co. Inc. is constructing the 25,000-square-foot addition at 3203 Missouri Ave. in the Granite City Industrial Park. Arnette’s building there was built in 2008. The expansion is expected to give the company the ability to work on larger projects when complete next year.

“We’re just packed. We thought when we built this building we were going to have all kinds of space, but we added more machines and more people and we’re starting to outgrow it,” said company President Gary Zimmer.

The company makes patterns for casting machine parts, does machining work and welds and fabricates parts for heavy industry.

Part of the welding and fabricating shop at the company’s original location at 1801 Cleveland Ave. will be moved to the new addition. It will also house shipping and receiving.

Forty employees work at the company’s two sites. When the new addition is complete, they will probably add up to 20 workers over several years, Zimmer said.

The new building will cost about $1.5 million, plus equipment.

“We’ll be one of the largest pattern and machine companies in this area,” Zimmer said.

The company was started in 1948 by Dale Arnette. Zimmer and his father, William Zimmer, purchased it in 1978.

Before building at Missouri Avenue, the company was considering moving out of town, according to Granite City Economic Development Director Jon Ferry. He said the expansion shows there is both a demand for products and services, as well as the availability of financing.

“Clearly all good signs,” he added.

Contact reporter Scott Cousins at 618-344-0264, ext. 113

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Signs that European bailouts will be larger than originally forecast upended financial markets Friday, sending the dollar up nearly 1 percent and erasing the week’s gains in the stock market.

Stocks in countries that use the euro fell after the European Union warned that the debt loads of Greece, Ireland and Portugal will be larger than originally thought. Officials said that Greece needs to cut spending further, which led to concerns that the assistance the country has already received won’t be enough. The Euro Stoxx 50, an index of large companies in countries that use the euro, fell 0.8 percent.

The Dow Jones industrial average lost 140 points, or 1.1 percent, to 12,555 in early afternoon trading. The S&P 500 fell 14, or 1 percent, to 1,335. The Nasdaq composite lost 34, or 1.2 percent, to 2,829. The slide turned each index lower for the week.

All 30 stocks that make up the Dow index fell. JPMorgan Chase & Co. had the largest loss, 2.2 percent.

Fears of a deepening financial crisis overshadowed reports that found that consumers are feeling more confident in the U.S. economy and that inflation remains in check. Consumer prices rose 0.4 percent in April, the Labor Department said. That was in line with economist’s expectations.

Most of the increases came in volatile food and energy prices. Stripping those out, prices rose 0.2 percent and stayed below the rate of inflation that the Federal Reserve considers normal.

“Inflation doesn’t look like the risk that everyone feared,” said Doug Cote, the chief market strategist at ING Investment Management.

The prices that consumers pay have risen 3.2 percent over the last 12 months, the biggest 12-month gain since October 2008. Companies like Kimberly-Clark Corp. and Colgate-Palmolive Co. that sell households products have raised prices because of higher commodity costs that have cut into their profit margins. Costs for raw materials like oil, coffee, and cattle have risen more than 10 percent this year.

Bond prices rose as investors moved money into assets that are considered safe. The yield on the 10-year Treasury bond fell to 3.15 percent from 3.23 late Thursday.

No major U.S. companies are scheduled to report results Friday. Nordstrom Inc. lost 2.5 percent after the retailer lowered its full-year earnings forecast late Thursday, due partly to the acquisition of an online shopping site HauteLook.

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Google can have its precious flight data company if it promises to play nice, the Department of Justice said on Friday.

The DOJ approved the $700 million takeover deal between Google, the world’s largest search company, and ITA, the world’s largest airline search software company, provided that Google accept certain restrictions.

The search giant would have to continue to licence ITA’s software to airfare websites "on commercially reasonable terms." Google (GOOG, Fortune 500) would also be required to maintain and enhance that software in a manner consistent with ITA’s research and development investment over the past several years.

The company would also have to put an internal firewall in place to prevent Google from accessing "competitively sensitive information" gathered from ITA’s customers. Google also can’t enter in exclusive contracts with airlines that would prevent the airlines from providing certain ticketing information to the search company’s competitors.

"The Department of Justice’s proposed remedy promotes robust competition for airfare websites by ensuring those websites will continue to have access to ITA’s pricing and shopping software," Joseph Wayland, deputy assistant attorney general of the Department of Justice’s Antitrust Division, said in a prepared statement.

The worry, of course, is that Google maintains a 65% share of the search market. If its access to flight information is superior to its rivals, it could easily shut out the competition.

Boston-based ITA specializes in organizing airline data, including flight times, availability and prices. Its data is used on a host of websites like Kayak, Orbitz, Expedia faxless cash advance.com, TripAdvisor and Microsoft’s (MSFT, Fortune 500) Bing, as well as a number of airlines’ websites.

FairSearch.org, a group representing Expedia and Kayak, said Friday that it was pleased with the DOJ’s terms for the deal, calling it a "clear win for consumers." Kayak, with backing from Expedia.com, had offered last year to buy ITA to prevent Google from purchasing it.

When it announced the ITA deal last July, Google said it had no intention of selling airline tickets, but it would likely direct consumers to sites on which they can buy tickets. Google’s users already come to the site for travel searches, but find it difficult to express flight queries through the current search tools, the company said.

With its ITA purchase, Google said it intends to make airline searches simpler. The company painted a picture of the online travel landscape as one of mass confusion, with thousands of options and unclear ticket pricing and availability.

For instance, Google could use ITA’s software to field more advanced searches, like "Where can I travel for $700?"

The proposal still needs to gain approval from a federal judge. The DOJ’s Antitrust Division filed an antitrust lawsuit Friday in U.S. District Court in Washington, D.C., to block the deal. The DOJ then filed a proposed settlement with all the restrictive terms that, the Justice Department said, would alleviate those antitrust concerns.

A Google representative was not immediately available for comment on the proposed settlement’s terms.  

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Canadian entrepreneurs need to spend more money on high-tech equipment and come up with innovative ideas if this country is going to close the productivity gap with the U.S., says the head of the Business Development Bank of Canada.

In an interview with the Star

If oil seems as precious as gold at the moment, the yellow metal is doing its best to keep pace.

In the past couple of weeks, violence and unrest in the Middle East have given new energy to a 10-year-long bull market in precious metals. Gold hit a record $1,435 an ounce on Monday, and is up 26 percent in the past year. Silver prices are on an even steeper trajectory, up 104 percent in a year.

These shiny metals are traditional hedges against inflation, and higher oil prices are certainly inflationary. Gold is also seen as a safe-haven investment during times of global instability.

We haven’t had much inflation since 2001, when gold stood at under $300 an ounce, but we have experienced plenty of instability: The 9/11 attacks, the Iraq war, the global financial meltdown and the Greek financial crisis all have given investors a reason to fear for the safety of their paper assets, and thus a reason to buy gold.

Now there’s Libya. But Wistar Holt, who’s been investing in precious metals for a decade as principal of Holt & Shapard Capital Management of St. Louis, believes the recent run-up in gold has more to do with U.S. monetary policy than with the price of oil.

“The biggest factor is the quantitative easing program by the Federal Reserve,” Holt argues. “They’re basically monetizing debt and driving down the value of the dollar to pay off the debt.”

Holt is an evangelist for gold. He wants everyone to own some, perhaps through an exchange-traded mutual fund, and he thinks it’s going to hit $1,800 an ounce by the end of this year.

“Before the bull market is over, it will be like 1980 and everybody will want to be in gold,” Holt says.

Other investment experts, meanwhile, want to wave a yellow caution flag in front of anyone who’s considering a precious-metals investment. Vanguard recently plotted 140 years of inflation-adjusted gold prices, and only in 1980