Business and Finance

China will limit the yuan’s appreciation to 4 percent over the next 12 months because of a “super cautious” outlook on the global economy, said New York University Professor Nouriel Roubini.

The central bank may end a 20-month peg to the dollar as soon as the second quarter, allowing a 2 percent one- step gain, and then let the currency strengthen another 1 percent to 2 percent in 12 months, Roubini said in an interview in New York. The yuan rose 21 percent between July 2005 and July 2008, when the government halted its advance to protect exports during the global recession.

Roubini’s forecast is less aggressive than the median estimate in a Bloomberg survey of 20 analysts for the yuan to rise 5 percent to 6.50 per dollar by March 31, 2011. Chinese central bank Governor Zhou Xiaochuan said on March 6 that the nation should be “very cautious” in exiting policies adopted during the global financial crisis, including the exchange-rate stance.

“It will be less than what they did in 2005 when everything was going right,” Roubini, 51, who anticipated the global financial crisis, said in the March 4 interview. “They will move by a token amount. The world is much cloudier in every dimension. They are super cautious.”

‘Hard Landing’

Roubini, who chairs New York-based Roubini Global Economics LLC, has become famous for his pessimistic projections. In 2007, he correctly predicted a “hard landing” for the world economy. He said last year that the global economy would shrink through 2009, only for growth to resume in the middle of the year.

Jim O’Neill, the chief Goldman Sachs Group Inc. economist who coined the term BRICs for Brazil, Russia, India and China in 2001, said last month that “something is brewing” on the yuan and predicted policy makers will allow a one-time 5 percent gain. Twelve-month non- deliverable forwards traded at 6.6505 per dollar, indicating bets the yuan will rise 2.6 percent from the spot rate of 6.8265.

“We must be very cautious about the timing of normalizing the policies, and this includes the renminbi rate policy,” Zhou said at a press briefing in Beijing, using another term for the Chinese currency. A global recovery “isn’t solid,” he said.

‘Sooner or Later’

China will exit its crisis policies “sooner or later” as it balances growth and inflation concerns, Zhou said. Regulators ordered banks to set aside more cash as reserves and to curb lending after the economy grew 10.7 percent in the fourth quarter, the most in two years.

Consumer prices probably climbed 2.5 percent in February from a year earlier, the biggest increase since October 2008, compared with 1.5 percent in January, according to the median estimate from 29 economists. A stronger currency would reduce import prices and may reduce the need to sell yuan for dollars to maintain the peg.

“A bit of move in the currency might help,” Roubini said. “If they move it by 2-3 percent, it won’t make a huge difference to inflation pressure. They are always cautious and won’t bow to the pressure from the U.S.”

While President Barack Obama has urged China to let the yuan climb to aid U.S. manufacturers, Chinese exporters say a gain of more than 2 percent may wipe out profits.

Export Recovery

China’s overseas shipments rose 21 percent in January from a year earlier, the fastest pace in 16 months. Fifteen U.S. senators called for stiffer tariffs on China’s imports last week, accusing the country of artificially keeping the yuan cheap. A stronger yuan would increase the purchasing power of Chinese residents and reduce the country’s reliance on exports.

“Most people are concerned about inflation, I am worried about the export-led growth model,” said Roubini. “A weak currency and low interest rate is a massive transfer of wealth from household income to enterprises. It will take more than three, five years to change China’s model of growth.”

Options traders are increasing their bets on the currency. Three-month implied volatility, a measure of expectations for yuan price movements, showed traders expected swings of 3.27 percent on March 4, a one-year high, up from 1.07 percent on Jan. 1. The next day the measure slumped to 2.8 percent as Premier Wen Jiabao said China plans to keep the currency “basically stable.”

“The Chinese authorities will be in no rush to further strengthen their currency,” said Joe Craven, the Asia-Pacific head of currencies and fixed-income at UniCredit Markets & Investment Banking in Hong Kong. “I view options volatility as being currently too high, especially in the shorter-end of the curve.”

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A product of Molson Coors Brewing Co. was the prize in a friendly wager between President Barack Obama and Canadian Prime Minister Stephen Harper over Sunday's men's ice hockey final between the U.S. and Canada at the Vancouver Winter Olympics.

Canada won the game and the gold medal in overtime, 3-2.

Obama had offered to buy Harper a case of Molson Canadian beer in the event of a Canadian victory quick cash. And Harper had wagered a case of Yuengling beer if the Americans had won.

Molson Canadian is a product of Molson Coors, which is headquartered in Denver and Montreal.

Yuengling is made by D.G. Yuengling & Son Inc. of Pottsville, Pa.

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If you haven’t heard, big changes are soon coming for the credit card business.

The CARD Act, which was signed into law last May, will finally go into effect Monday, meaning big changes for the millions of card-carrying Americans across the country.

Among other things, it will eliminate some of the more egregious practices of the past like so-called "double-cycle billing", arbitrary rate increases and hefty fees for exceeding your credit limit.

But while the new law also promises consumers more transparency about their credit card bill, cardholders still need to watch out for a whole new series of traps and tricks.

Higher fees: For starters, consumers could suddenly find themselves socked with a variety of new fees and charges.

Banks and other card issuers have already been aggressively implementing new fees or raising existing ones to help make up for any potential revenue lost as a result of the CARD Act.

Last May, for example, Discover Financial Services (DFS, Fortune 500) announced it would start charging a 2% fee on all purchases made outside the United States.

And whereas 3% was once the standard charge for rolling over a balance from one credit card to another, issuers like JPMorgan Chase (JPM, Fortune 500) are now assessing customers a 5% fee, according to Bill Hardekopf, CEO of the card rating site LowCards.com.

But with the new law setting no restrictions on the types of fees issuers can implement, consumers should pay particularly close attention to the "Terms and Conditions" section of their statement so they know exactly what they are being charged for, warn experts.

"Fees are the one source of revenue that will become more and more important," said Hardekopf.

Tougher to get a card: As Congress moved closer to passing the law last spring, banking industry advocates cautioned that shaking up the status quo would mean that credit would be more difficult to come by for consumers.

So far, that seems to be playing out as predicted.

The amount of credit made available to consumers by credit card companies plunged by $252 billion, or 7%, between March and September of last year, according to IRA Bank Monitor.

Credit is poised to tighten even further. As part of the CARD Act, credit card companies will be severely restricted in how they market cards to college students, potentially shrinking an important part of their business.

But issuers are also expected to implement much more severe underwriting practices. Some may demand, for example, details on an applicant’s income or proof of other savings.

Consumers with poor or even a mediocre credit history, as a result, may find it much more difficult to get a card or have their credit limit extended after the new law takes effect on Feb. 22, said Joseph Ridout of the advocacy group Consumer Action.

"I think it is fair to assume that credit card companies are going to scrutinize their potential customers a lot more closely than they did in the past," he said.

Fewer rewards: Consumers may also be increasingly unable to enjoy the fruits of their spending as a result of the new law.

It wasn’t that long ago where a cardholder could easily earn credit towards a free airline ticket or cash back for every dollar spent. But issuers are now quietly becoming more stingy with their rewards in an effort to save money.

American Express (AXP, Fortune 500), for example, recently told its co-branded card customers they would not be able to accrue reward points on their purchases if they were late with a payment. Only by paying a $29 fee could they recoup those points.

To avoid missing out, experts suggest that consumers carefully read any notices they get from their credit card company about changes to their loyalty or rewards program.

"Rewards can be another way of penalizing people too," notes Nick Bourke, manager of the Pew Safe Credit Cards Project.

Rising rates: One of the biggest victories for consumers in the new law are a series of limits on how and when credit card companies can set interest rates.

Whereas in the past, banks could raise your annual percentage rate just for missing a payment on your cell phone bill or without giving a consumer much advance notice, such practices will soon be outlawed. Issuers now have to alert you at least 45 days in advance before raising your rate under the CARD Act.

The new law won’t shield consumers from rate hikes altogether, though.

In recent months, banks have moved consumers over to so-called variable rate cards, whose rates fluctuate based on the direction of the prime rate. And with that rate at historic lows, experts said consumers should be prepared for at least a moderate increase in their APR at some point.

The new law also does not include any sort of interest rate cap banks and issuers can charge customers that are late on their payment by two months or more.

Credit card companies may remain reluctant to impose any usurious rates ahead of a review of penalty rates and fees by the Federal Reserve scheduled for later this year and given the public discontent for banks these days.

But that doesn’t mean the days of big rate hikes are gone for good, Bourke said — especially for consumers who are overwhelmed by debt. So experts suggest consumers should take extra care to stay current on their bills.

"The [CARD] Act doesn’t absolve anyone from having to pay back their bills or take people out of harm’s way if they run into trouble," said Bourke.

Talkback: Are you college student or under 21 and concerned or pleased about the tougher standards that will make it more difficult for some young adults to get a credit card? E-mail your story to jennifer.liberto@turner.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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Japan’s housing starts fell to the lowest level since the nation celebrated its postwar recovery by hosting the Olympics in 1964, as builders were hobbled by dwindling household incomes and sustained deflation.

Construction companies broke ground on 788,410 homes last year, 27.9 percent fewer than in 2008, the Land Ministry said today in Tokyo. That was the lowest since 751,429 recorded in 1964. The pace of decrease eased in the past four months.

The report highlights a decline that’s likely to see Japan lose its place as the world’s second-largest economy to China this year. Government programs to stimulate the property market have been unable to reverse expectations that home prices will fall, keeping households away from investing in real estate.

“It’s been a very miserable year,” Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo, said before the report was published. “There certainly is an improvement underway, but it’s been slow to materialize, and it’s starting from very low levels.”

Falling wages and mounting job losses sapped demand for new homes last year, sending apartment builder Anabuki Construction Inc. into bankruptcy in November.

Housing starts fell 15.7 percent in December from a year earlier, the slowest pace in a year, today’s report showed.

Other figures today signaled that the economy continues to recover from its worst postwar recession.

Deflation Continues

Industrial production rose for a 10th month in December, households increased spending and the unemployment rate fell to 5.1 percent. At the same time, consumer prices slid for a 10th month and minutes of Bank of Japan meetings showed officials were concerned that deflation and a rising yen would hamper the recovery.

Japan has been blighted by price declines and sluggish economic growth since an asset bubble burst two decades ago. An index of residential land prices has slid more than 40 percent from its 1991 peak, Japan Real Estate Institute data show.

Respondents in a Bank of Japan survey released this month said they expect property values to slump for a seventh quarter. The central bank’s index of household expectations for future land prices dropped, reversing two quarters of improvements.

The average price of condominiums fell 5 percent last year in the metropolitan area of Tokyo, Kanagawa, Saitama and Chiba, according to the Real Estate Economic Institute. Nationwide residential land prices slid 3.2 percent in 2009 after rising for the previous two years, Land Ministry data show.

Sharing Rooms

“More people are asking for discounts, or are looking to share rooms with others,” said Wataru Ichinari, president of Tokyo-based Ichinari Real Estate. “We’re not going to see a full-fledged recovery in the housing market” for at least a couple of years, he said.

Policy makers are trying to revive the market. Former Prime Minister Taro Aso’s administration expanded and extended tax deductions on housing loans. The current government under Yukio Hatoyama included incentives to build and renovate energy-efficient homes in a 7.2 trillion yen ($80 billion) stimulus package passed by parliament yesterday.

The housing recession is depleting business at the country’s construction firms. Anabuki Construction filed for bankruptcy with 140 billion yen in debt, becoming the country’s sixth-largest corporate failure last year, according to Tokyo Shoko Research Ltd. Profits in Anabuki’s condominium business plunged following the global financial crisis, the company said in a statement on its Web site.

Construction Bankruptcies

Bankruptcies in the construction industry last year accounted for more than a quarter of 15,480 failures, the highest among all industries, according to Tokyo Shoko.

Even as the employment market starts to improve, the jobless rate has been above 5 percent since last April and wages have slumped for 16 straight months. Employee compensation will slide a record 3.9 percent in the fiscal year ending March 31, and a further 0.7 percent in the following 12 months, the government said last week.

The job environment will further dissuade potential home buyers, said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “With unemployment so high and wages dwindling, households just aren’t going to be in the mood to buy a new home.”

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The biggest threat to Brazil’s economy next year is the acceleration of growth beyond 6.5 percent, Banco Safra de Investimento said.

“As long as growth estimates stay between 5.5 percent and 6.5 percent, it is still possible for the central bank to manage the growth-inflation issue,” Cristiano Oliveira, chief economist at Banco Safra, said in a telephone interview from Sao Paulo. “Above that, it will be difficult.”

Banco Safra — wholly owned by Joseph Safra, the world’s 62nd richest person, according to Forbes magazine — forecasts the central bank will raise the benchmark interest rate to 10.75 percent by the end of 2010 from a record low of 8.75 percent.

Consumer spending and capital expenditures will boost growth in Latin America’s largest economy to 5.6 percent next year, following an estimated 0.2 percent contraction in 2009, Oliveira said. Brazilian economists project a 5.1 percent expansion in 2010, according to a weekly central bank survey of about 100 financial institutions published today.

Increasing imports and profit remittances by multinationals to headquarters abroad will widen next year’s current-account deficit to “at least $54 billion,” Oliveira said. Brazilian economists expect a record $40.8 billion shortfall, according to the central bank survey.

The current-account deficit will be more than offset by $62 billion in foreign direct and portfolio investments, lifting the real to 1.65 per U.S. dollar by the end of next year, Oliveira said. The currency gained 1.2 percent at 1.7415 per dollar at 1:50 p.m. in New York, compared with 1.7630 on Dec. 24.

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Flash memory maker SanDisk Corp. has been of the hottest stocks on the market in December, up 52 percent in the past 19 trading sessions.

Milpitas-based SanDisk (NASDAQ:SNDK) has gathered a number of positive analyst ratings during that time but there has been little else to explain investors' enthusiasm.

Its stock rose to a 52-week high of $30.14 in trading on Christmas Eve before closing at $30.13. It has more than quadrupled since hitting a 52-week low of $7.73 in March.

In its most recent quarterly earnings report, SanDisk posted a $231.3 million profit on a 14 percent rise in revenue to $935.2 million.

CEO Eli Harari said at the time, "We are encouraged by improved industry fundamentals and our increasingly diversified global markets, which bode well for further growth in the fourth quarter and in 2010 easy fast payday loans."

That followed word in September that South Korea-based Samsung Electronics Corp. had officially dropped a bid to buy SanDisk. Samsung's $5.85 billion offer was rejected last year as too low and later withdrawn.

The companies in May also signed a patent-license deal that reduces the threat of litigation between them in the flash-memory chip market.

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Not all credit card rewards programs are created equal, Denis Agar discovered a few years ago while trying to decide which card would give his family the biggest payback.

The 21-year-old student of urban planning ended up talking his dad into choosing the MBNA Starwood Preferred Guest MasterCard.

The card, linked to the Starwood hotel chain, paid out rewards worth as much as 6 per cent of the value of a hotel stay, a level far exceeding the industry average of 2 per cent.

Agar says the family did not use the hotel’s services much, except on holidays, but it still paid off because it came with so many bonus points and special offers. The card recently has been discontinued.

Agar decided to help others make the same informed decision. He created a chart based on card issuers’ publicly available information.

"You see the ad and it says `Earn points!’ And then you look at the fine print and it says (the rate is) 0.05 per cent (of the value of goods purchased)," Agar notes. That means for every $100 you spend, you get back 50 cents worth of free stuff, not a very good deal in his estimation No teletrack payday loans.

The chart is published on www.redflagdeals.com, Canada’s largest comparison-shopping site, with 2.2 million unique visitors a month. His review is limited to the top 20 no-fee cards that offer rewards programs.

His current top pick is the MBNA Smart Cash Card (it pays 3 per cent in points on the value of all grocery and gas station buys). He adds other good choices might better meet your shopping patterns or goals.

Some rewards are better value than others, he adds, because retailers set the reward cost based on the value to them as a business.

To maximize points, use your card everywhere and remember 200 points on one card is worth more than 100 points each on two cards.

Agar added new advice this year:

"Be mindful of the fact that Tim Hortons can probably swallow the credit card fees, but your local independent coffee shop might have a harder time with that."

Dana Flavelle

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Good-bye, Big Blue.

Whoa, calm down there – Biz isn’t talking about IBM. Rather, Biz means the area’s other big blue behemoth: Terminal 1 at Raleigh-Durham International Airport. The RDU Airport Authority is making plans to renovate the aging facility in the coming years, and a new outside color will be part of the changes.

“We’re going to paint that blue out,” says Chairman Robb Teer, who adds that a new canopy system probably will be built. “I think that alone will give it a modern twist.”

While Teer insists that the authority hasn’t chosen a replacement color, he says beige and silver are being considered.

Hmmph. That’s a little boring, don’t you think? And Biz bets that Airport Director John Brantley, an N.C. State grad, would prefer something in the red family.

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Wilfrid Sio was suspicious when he got an email from PayPal, with a subject line saying account verification.

"Congratulations! You have been chosen by the Online Department to take part in our survey. In return, we will credit $99 to your account, just for your time."

Instead of clicking on the link in the email, he wrote to me instead.

Send it to spoof@paypal.com, I told him.

The company’s response: "You’re right – it was a phishing attempt and we’re working on stopping the fraud. By reporting the problem, you’ve made a difference."

Phishing (pronounced fishing) is a fraud designed to steal your identity. It uses false pretenses to get you to disclose sensitive personal information, such as credit card numbers or account passwords.

A common scam involves sending a fraudulent email that claims to be from a well-known company. Phishing can also be carried out in person, over the phone, through fraudulent pop-up windows and websites.

How do you spot a phishing email?

There are some telltale signs, which I verified by comparing Sio’s spoof against a genuine PayPal email I received recently (telling me the credit card used for my account had expired).

• Generic greeting. A typical phishing email will have a generic greeting, such as "Dear User." The spoof was addressed to "Dear client, PayPal." All real PayPal emails will use your first and last name.
• False sense of urgency. A phishing email will try to deceive you by saying you will be in jeopardy if your account is not updated right away. The spoof said the survey deadline was Nov. 30, three weeks after the mailing date, to avoid losing out on the $99 credit.
• Fake links. A phishing email will have a link that looks legitimate, but may send you to a fraudulent website. The spoof had a link to www.xcyg.net, which preceded the PayPal name and led me to Beijing Sunrise Technology Co. Ltd. (almost entirely in Chinese). Always check where a link is going before you click and if it looks suspicious, don’t click it.

Eric Hagedorn, an experienced eBay seller, says you should never sign into your PayPal account from a link provided by an email, no matter what the email says.

"This is how 90 per cent of all PayPal accounts get hacked – the person gives away their password to a fake PayPal site."

Always log into PayPal by opening a new browser and typing in the following, https://www.paypal.com/ca.

The term "https" should precede any web address (or URL) where you enter personal information. The "s" stands for secure. If you don’t see "https," you’re not in a secure web session and you should not enter data.

Now there’s an extra layer of security for the 8 million registered PayPal accounts in Canada – a foolproof system to prevent your account from being hacked.

The PayPal security key, which costs $5, has two forms. You can carry a small device, the size of a credit card, which lets you create a unique six-digit security code each time you log into your account. Or you can sign up to get unique security codes sent by text message to your mobile phone.

"With this in place, you can give your passwords to hackers and they’ll still be unable to break into your account," Hagedorn says.

PayPal, owned by eBay Inc., accounted for 31 per cent of company revenues in the last quarter. It’s now accepted by other online retailers such as Dell and La Senza.

Next Sunday, I’ll look at prepaid credit cards and problems that can arise when using them online.

eroseman@thestar.ca

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An "excessively loud" triceratops and a little girl’s chemical-laced purse were among the items listed in the U.S. Public Interest Research Group’s 2009 list of dangerous toys released Tuesday.

The 24th annual report, "Trouble in Toyland," targeted 16 examples of toys in 3 categories: toys that it considers dangerously loud, or containing small parts that may present choking hazards for small children, or containing toxic chemicals or lead.

The toys are made or marketed by various companies throughout the world.

Small parts

In the first category, the PIRG, a public advocacy organization, listed toys that "pose potential choking hazards." This included three toys that "may violate" the ban on small parts for children under three, such as the Creative Wood Stacking Rings from Zaidy Products, the Real Wood Shape Sorter Barn from P&C Enterprise and an "unnamed play food tray" from World Market.

The PIRG also identified several toys with small parts that come uncomfortably close to violating bans, thereby posing potential hazards. This includes one of the Baby Born toy kids from Zapf Creation, the Pizza Planet Gift Pak from Mattel, the FurReal Baby Bird from Hasbro (HAS) and the Worky tool set from Nemmer.

"Although the toys do not violate the letter of the law, these parts could block a child’s airway given their shape and size," the report said.

The report said that the baby bottle included with the FurReal Baby Bird "barely passes the small parts test." But Hasbro said the "allegations are false."

"The FurReal Friends product does not contain small parts, is properly age graded for kids four and up, and the packaging contains the appropriate labeling," said a Hasbro spokeswoman, in an e-mail.

Excessively loud

The PIRG also listed several toys deemed "excessively loud" at close range, meaning that they match or exceed 85 decibels within 25 centimeters of the toy, presenting a risk of hearing loss.

The organization pegged the loud toys as the Kota and Pals Stompers Triceratops from Playskool, the Secret Saturdays Cryptid Claw from Mattel (MAT, Fortune 500), the Laugh & Learn Learning Phone from Fisher Price and the Bright Lights Phone from VTech.

Hasbro said, in an e-mail to CNNMoney.com, that its triceratops "complies with all sound requirements."

Lead and chemicals

Five products made the list for containing lead or "potentially toxic chemicals."

This includes a Touch and Feel Cloth Book called "Big Rex and Friends" from Priddy Books. The PIRG said that a red dot on one of the pages contains lead. Likewise, the Alligator Cell Phone charm from the Claire’s retail chain also contains lead, the organization said easy payday loan.

The organization also identified a Collector’s Series toy duck that has lead paint on its face and body. The organization said that the manufacturer of this toy was unknown, but that it was purchased at a Dollar Tree store.

A Dollar Tree spokesman told CNNMoney.com that PIRG informed his company of the lead-tainted duck on Oct. 29, and it was removed from stores at that time.

The PIRG identified two toys containing "potentially toxic" chemicals known as phthalates, including Pretty Princess Puppy Purse from Claire’s and the Elmo Lunch Bag from Fast Forward New York. (See correction.)

A spokesman for Claire’s, Steven Anreder, said the retailer is no longer selling the alligator phone charm. He also said the charm and the puppy purse are not toys.

The organization initially reported that Sassy manufactured the Elmo Lunch Bag. But Rick Locker, a lawyer representing Sassy, told CNNMoney.com that Sassy had nothing to do with the product. He sent the PIRG a letter requesting them to "cease and desist from disseminating erroneous information." The PIRG retracted the misidentification and said it regretted the error.

Efforts to reach other companies named in the report were not immediately successful.

A toy industry group reacted to the PIRG list.

"Protecting children will always be the toy industry’s highest priority," said Joan Lawrence, vice president of safety standards for the Toy Industry Association, in an e-mail to CNNMoney.com. "Consumers have every reason to trust the safety of the three billion toys sold in America each year."

Jonathan Samet, publisher of thetoyinsider.com, an industry observer, said that he didn’t want to minimize PIRG’s warnings, but the noise warnings did not concern him as much as choking and lead.

"Choking is obviously the biggest issue," he said. "Right now, I think safety testing is at its highest level that it’s probably ever been. If you are concerned, then take the toy away from the child and either return the toy to the retailer or just throw it away."

The PIRG released its list just three days ahead of Black Friday, one of the busiest shopping days of the year. This year, Black Friday retail sales are expected to outpace 2008, with 16% more shoppers participating.

Correction: An earlier version of this article, because of erroneous information released by U.S. PIRG, listed an incorrect manufacturer of the Elmo Lunch Bag.  

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