Business and Finance

The European Central Bank left its benchmark interest rate at a record low as policy makers weigh the risks of withdrawing emergency lending measures amid Greece’s fiscal crisis.

The Frankfurt-based ECB kept its key rate at 1 percent, as predicted by all 52 economists in a Bloomberg News survey. President Jean-Claude Trichet has promised to give details on the next step in the ECB’s exit strategy when he holds a press conference at 2:30 p.m. today.

Greece’s soaring budget gap has roiled financial markets and sent bond yields surging in Spain and Portugal, whose deficits have also swelled in the wake of Europe’s worst recession since World War II. The crisis is undermining confidence in the euro area’s economic recovery and complicating the ECB’s plans to scale back the liquidity measures it introduced to nurse the region through the slump.

Trichet must avoid any hint that the ECB will prematurely end its unlimited cash support for euro-area banks, said Colin Ellis, an economist at Daiwa Capital Markets in London. “It could spook markets, push up interest rates and make it more difficult for countries like Greece to finance its debt.”

Greece, which must replenish 20 billion euros of borrowing in April and May, today began selling 10-year bonds.

‘Addicted’

The euro stayed lower against the dollar after the announcement and was down 0.2 percent to $1.3674 as of 1:47 p.m. in Frankfurt.

The Bank of England today left its benchmark rate at a record low of 0.5 percent and kept the target for its bond- purchase program at 200 billion pounds ($302 billion).

The cornerstone of the ECB’s program has been to provide banks with unlimited funding at its key rate in the hope they will lend it on to households and companies. The ECB has already said it will stop giving banks 12 and six-month loans to ensure they don’t become “addicted” to the cheap cash.

Officials will today decide whether to extend the policy of unlimited allotment in its remaining seven-day, one-month and three-month refinancing operations beyond the current guarantee of April 13. Before the global financial crisis, banks were required to bid for funds in auctions.

“Trichet will be very keen to show that the ECB will not have its exit strategy held hostage by the Greek situation,” said Laurent Bilke, a former ECB forecaster who now works for Nomura International Plc in London free credit score. “They always said they would announce the next steps of the exit this month, and they will.”

Demonstrations

The Greek government has announced a series of spending cuts to convince investors it can reduce its budget gap, plans that have prompted protests and strikes. Demonstrators today took over the Finance Ministry building in central Athens and blocked streets in the city.

As well as Greece, ECB policy makers have to take into account the sluggish economic recovery. The central bank in December forecast growth of 0.8 percent this year after a 4.1 percent contraction in 2009. Trichet will present new forecasts today.

“The recovery feels more vulnerable than it did in December, when the ECB initiated the exit,” said Mark Wall, an economist at Deutsche Bank AG in Frankfurt.

Inflation Muted

Euro-area growth almost ground to a halt in the fourth quarter, the European Union confirmed today. Unemployment held at the highest level in more than 11 years in January and economic confidence unexpectedly weakened in February. The European Commission last month said the economy may fail to gather strength for most of 2010.

The cooling recovery is keeping a lid on prices, reducing the need for the ECB to tighten policy any time soon. Inflation eased to 0.9 percent last month from 1 percent in January. That compares with the ECB’s aim to keep inflation just below 2 percent.

Goldman Sachs Group Inc. this week pushed its forecast for the first ECB rate increase into 2011 from the fourth quarter of this year, and said the bank will exit non-standard measures more slowly than previously anticipated.

“The tensions surrounding Greece and the banks in general are likely to inject some concern that a too-fast exit could be dangerous,” Goldman’s chief European economist Erik Nielsen said in a note to investors. “We now believe that they’ll aim for a somewhat more gradual path than the one we have been forecasting for some time.”

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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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Robert Rogalski has been named CEO at Excela Health, a position he has held on an interim basis for three months, the Greensburg-based hospital network announced on Monday.

Rogalski, a former senior counsel and health care practice group leader at Thorp Reed & Armstrong LLP, joined Excela as a hospital trustee six months ago. He brings to the job more than 17 years of experience advising health care systems on a variety of strategic and legal matters, including corporate governance and acquisitions.

“While a number of candidates emerged during the deliberations, we found the opportunity to observe Bob’s strengths firsthand in day-to-day operations a considerable advantage,” Excela board Chairman Paul Mongell said in a prepared statement. “The positive results and substantive work he has performed during the transition period demonstrate the key attributes we seek in moving Excela Health forward.”

Before Thorp Reed, Rogalski was in-house counsel for health systems in western Pennsylvania and upper Midwest. Most recently he served as vice president and general counsel and compliance officer at MedCenter One Health Systems in Bismarck N.D. He has also worked as in-house counsel at the University of Pittsburgh Medical Center and West Penn Allegheny Health System, the first and second largest hospital networks in the region.

Rogalski is a graduate of St. Vincent College. He received his law degree from the University of Pittsburgh.

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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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Four decades ago Stewart Brand opened The Whole Earth Catalog with a rollicking mission statement: "We are as gods, and might as well get good at it."

It was an apt mantra for the eco-friendly, do-it-yourself lifestyle guide, which was so clever it won a National Book Award. Now a futurist, author, and business consultant, Brand opens his latest book, Whole Earth Discipline: An Ecopragmatist Manifesto, with an urgent update of his youthful declaration: "We are as gods and HAVE to get good at it."

The cause for urgency is climate change. Until 2003, Brand writes, "I had only the usual concerns" about the seemingly "dire but distant" issue. Then he saw studies of Greenland ice cores revealing that, in the past, the climate has tipped into a radically different state, such as an ice age, in less than a decade.

Runaway positive feedback is the likely cause. Here’s an example: As human greenhouse emissions mount, global warming causes mirror-like polar ice to give way to dark ocean. That makes the Arctic absorb more solar heat, which melts more ice, leading to yet more heat absorption. This and other positive feedbacks are likely driving the ominously fast melting of Arctic ice, which was half gone by the summer of 2007, three to four decades earlier than predicted — the great melt is unfolding with tipping-point-like speed.

Channeling climate scientists, Brand predicts that fresh water and other resources will be in desperately short supply in many areas of a climate-changed world. A global state of constant war over dwindling resources might well ensue, killing billions.

Too dire? Consider: Tibetan Plateau glaciers, which feed shared rivers of China, India, Pakistan, and other Asian countries, are now melting away to expose a drought-prone tinderbox filled with vying nuclear powers, as well as "feral zones" controlled by Al Qaeda and its allies. If increasingly plausible worst-case scenarios play out, Brand tersely observes, "we’re ants on a burning log."

His scary analysis is the setup for a hopeful, though controversial, message: All may still be well if we get really good at using tools many Greens love to hate cash advance payday loans. To wit: urbanization (which enables efficiencies of scale and lower per-capita use of resources), nuclear power (to displace coal’s heavy greenhouse emissions), biotech (to engender, among other things, biofuel-producing microbes and drought-resistant crops), and geoengineering (such as lofting megatons of smoky particulates into the stratosphere to block sunlight and cool the climate).

Brand’s case for parting ways with environmentalism’s old guard rests largely on surprising developments that, he freely acknowledges, have shown some of his former views were wrong. Who knew that the rise of developing-world megacities, with their sprawling slums, would defuse the population bomb? (In rural villages, Brand notes, "every additional child is an asset, but in the slum, every additional child is a liability, so the newly liberated women in town focus on education and opportunity — on fewer, higher-quality children.")

That the expected number of excess cancers from the Chernobyl nuclear disaster would now be less than 1% of initial projections, and that the Chernobyl area would be a uniquely biodiverse wildlife sanctuary teeming with rare species? That the widespread cultivation of bioengineered corn, once thought to kill monarch butterflies, appears to be greatly benefiting them?

Not surprisingly, Brand’s iconoclasm has heated up the blogosphere, and some deep-dyed Greens apparently feel the trailblazer whose whole-earth visions seeded the first Earth Day in 1970 is doing a Lieberman.

Wrong.

Brand has always been an Obama-like, big-picture pragmatist — his famous catalog’s supreme virtue was its usefulness. And while some of his positions cry out for debate — I’m not sure I’d trust a real god to attempt geoengineering, much less us fumbling, self-taught ones — no one has brought more breadth, clarity, and cogency to bear on the biggest issue of our time. At 70, environmentalism’s pithiest polemicist has outdone himself, giving us one of the most important green tracts since Silent Spring. Read it. 

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The Toronto Stock market ended the session in positive territory after investors pulled up energy stocks in hopes that Exxon Mobil's US$31-billion acquisition of U.S. oil and gas company XTO Energy Inc. could mean other deals in the sector.

The S&P/TSX composite index closed 121.76 points higher to 11,545.69, with shares of nearly every major Canadian energy player higher.

The energy sector was up 2.2 per cent as investors speculated over other possible takeovers within the industry.

The January crude contract on the New York Mercantile Exchange closed the session down 36 cents to US$69.51 a barrel.

Meanwhile, Abu Dhabi's $10-billion bailout to Dubai gave markets a jolt of optimism. The debt repayments quelled fears that the emirate would default and signal a new round of broader credit problems.

"What we're seeing is continued small steps towards fixing in the financial system, towards strengthening the various places that are weak," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

"That certainly doesn't eliminate all the possible things that can go wrong, but every small step is a step in the right direction."

TSX gold stocks were up 1.5 per cent as the February bullion contract on the Nymex rose $3.90 to US$1,122.80 an ounce.

The base metals sector launched the biggest gain of the day, up 2.9 per cent as the March copper contract gained two cents to US$3.15 a pound.

The Canadian dollar gained 0.05 of a cent to 94.40 cents U.S., while the TSX Venture Exchange was up 7.97 points to 1,425.08.

On Wall Street, the Dow Jones industrial average moved up 29.55 points to 10,501.05. The Nasdaq composite index gained 21 guaranteed payday loan.79 points to 2,212.10, while the S&P 500 index climbed 7.7 points to 1,114.11.

Citigroup Inc. said it will pay back $20 billion in bailout money it received as part of the government's Troubled Asset Relief Program.

The New York-based bank was hardest hit by the credit crisis and rising loan defaults, receiving a total of $45 billion in government support. It only needs to pay back $20 billion because the remaining $25 billion was converted into a 34 per cent ownership stake in the bank earlier this year.

Statistics Canada reported that Canadian industries operated at 67.5 per cent of their production capacity in the third quarter, down marginally from 67.7 in the second quarter.

Also in the energy sector, Husky Energy Inc. (TSX: HSE) shares moved higher after the company said it plans to increase its capital spending by 20 per cent to $3.1 billion in 2010. Shares rose 1.6 per cent, or 48 cents, to $28.98.

Inter Pipeline Fund (TSX: IPL.UN) units gained 11 cents to $10.93 after the company announced it plans capital expenditures of more than $292 million next year, with most of it going toward its oil sands transportation segment.

TMX Group (TSX: X) shares were up 98 cents to $31.34 after it announced it will distribute trading data across U.S. and Europe on NYSE network under new data technology and distribution agreement.

Kirkland Lake Gold Inc. (TSX: KGI) said a borehole collapse widened net losses to $10.3 million for the quarter ended Oct. 31, and weakened revenues to $6.9 million, from $8.8 million last year. Shares rose 16 cents to $9.45.

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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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Mahindra-Satyam shares fell to a 4-month low on Thursday, before recovering, on concerns over its outlook after Indian investigators filed new charges over accounting fraud that hit Satyam earlier this year.

“Investors are playing a blind game until the audited numbers are out. There could be more skeletons hidden in the closet,” said HDFC Securities’ head of private client group V.K. Sharma, who is advising clients to stay away from the stock until there is further clarity.

The stock topped the volume chart, with about 30 million shares traded, nearly three times its average daily volume over the past 90 days. It ended up 2.4 percent at 92.75 rupees.

Mahindra Satyam, earlier known as Satyam Computer Services, was acquired by Tech Mahindra in April after the company was hammered by India’s biggest corporate fraud, which came to light in January.

V. V. Lakshmi Narayana, deputy inspector general of India’s Central Bureau of Investigation, told Reuters the extent of the fraud at Satyam could be much larger than the 71.36 billion rupees ($1.5 billion) that founder Ramalinga Raju had confessed to in a letter in January.

“All investigations into the accounting and auditing part of the business have been completed, and we are now going to look into the money diversion from the company,” Narayana, who is part of the team probing the fraud, said from Hyderabad.

“Whatever Raju said is not the complete reality.”

Narayana said the agency estimated losses suffered by investors in the wake of the fraud could be up to 140 billion rupees.

Mahindra Satyam, which has about 35,000 employees, hoped to restate its accounts by the middle of next year, Atul Kunwar, president of its global operations, said on Wednesday.

Vaibhav Sanghavi, director of Ambit Capital, said, “It’s very difficult to assess the situation until the audited numbers are out.”

Officials at Mahindra Satyam did not respond to requests by Reuters for comment. A Tech Mahindra spokesman declined comment.

Shares in Tech Mahindra, a unit of tractor and utility vehicles maker Mahindra & Mahindra, ended down 1.2 percent, having earlier fallen as much as 6.5 percent to a 3-month low.

Kunwar also told the Reuters India Investment Summit on Wednesday that customer attrition had stopped and the company did not need price cuts to win new deals.

On Tuesday, the CBI said it had filed a supplementary charge sheet containing new allegations against Raju and nine others associated with the outsourcing firm.

New charges included that revenues had been inflated by 4.3 billion rupees by creating fake invoices and customers, and that forged board resolutions were used to get loans worth 12.2 billion rupees. 

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Investors will brace for a spate of economic reports this week with their fingers crossed that there is more good news than bad since that will set the tone for the remaining seven weeks of the year.

With Black Friday less than two weeks away, retailers are hoping consumers will be willing to open their wallets during the all-important holiday sales period, helping fuel the economic recovery.

Kicking off the week will be the government’s monthly retail sales report, which investors hope will shed light on how much consumers will be willing to spend.

"Next week is all about consumer spending and the holiday," said Burt White, chief investment officer at LPL Financial.

Retail sales have shown some improvement recently, suggesting that consumers are suffering from "frugal fatigue" and may be more willing to splurge this holiday season, White said.

A rebound in consumer spending, which accounts for the bulk of U.S. economic activity, could help fuel bets that a recovery is firmly underway.

The outlook for consumer spending remains murky with the national unemployment rate at a 26-year high of 10.2%.

"In this environment, anything associated with jobs is probably the most important thing," said Quincy Krosby, market strategist at Prudential Financial.

To that end, investors will likely pay close attention to Thursday’s report on the number of Americans filing first-time claims for state unemployment benefits.

Investors will also focus on the plight of the U.S. dollar, which wallowed near a 15-month low against the euro for most of last week.

The dollar has been taking a beating recently as investors take advantage of rock-bottom interest rates in the United States to bulk up on more risky assets.

"For now, it’s still sell the dollar and buy risk," White said. "It’s a crowded trade, but a good one."

Stocks ended the week on a high note, logging the second consecutive week of gains as optimism about the recovery gained momentum. The question on investors’ minds this week will be ‘can that momentum be sustained?’

Eyes on Bernanke

Demand for riskier assets, like equities, could hit a speed bump Monday afternoon with Federal Reserve chairman Ben Bernanke scheduled to deliver an economic outlook speech at the Economic Club of New York.

While the central bank is not responsible for managing currency fluctuations, some analysts think Bernanke may strike a more hawkish tone given the severity of the greenback’s recent weakness payday loan companies.

Others expect Bernanke to echo recent official policy statements that interest rates will remain "exceptionally low" for an "extended period" of time.

On the docket

Monday: The week starts with a closely watched report on October retail sales before the opening bell.

Economists expect the Commerce Department to report that sales rose 0.9% last month after 1.5% drop, according to consensus estimates gathered by Briefing.com.

Also due Monday morning, a report on manufacturing activity in the mid-Atlantic region and business inventory data from September.

Federal Reserve chairman Ben Bernanke will speak about the outlook for the U.S. economy in New York at midday.

Tuesday: The government’s producer price index comes out before the market opens. Analysts think prices at the wholesale level ticked up 0.5% in October. Excluding volatile energy prices, the index is forecast to rise 0.1%.

Government figures on capacity utilization and industrial production in October are due out at 9:15 a.m. ET.

The market will also digest quarterly financial results from Home Depot (HD, Fortune 500), Target (TGT, Fortune 500) and TJX Companies (TJX, Fortune 500) before the opening bell.

Wednesday: The housing market will be in focus with reports on housing starts and building permits released before the market opens.

Also before the opening bell, the government’s closely-watched inflation gauge is expected to show that consumer prices were flat in October. Excluding food and energy, prices are expected to have risen 0.1% last month after a 0.2% increase the month before.

Thursday: The Labor Department reports on the number of Americans filing new claims for unemployment benefits at 8:30 a.m. ET.

Jobless claims fell to 502,000 filings last week and analysts say a figure below 500,000 this week could help push the market higher.

A report on leading economic indicators comes out after the market opens.

Sears Holdings (SHLD, Fortune 500) will report quarterly earnings in the morning, while PC giant HP (HPQ, Fortune 500) and apparel-maker Gap (GAP, Fortune 500) will post earnings after the closing bell.

Friday: No economic reports are on the docket. 

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