Business and Finance

Global stock markets were mixed Friday on 2011’s last trading day and turned in heavy losses for the year after Europe’s debt crisis and natural disasters battered a struggling global economy. Japan’s benchmark hit its lowest close in three decades.

Benchmark oil hovered below $100 per barrel and the dollar weakened against the yen but rose against the euro.

Asian traders recorded gains for the day Friday but markets in Tokyo, Shanghai and Hong Kong ended the year with double-digit losses.

Japan’s Nikkei 225 index, after three straight days of losses, rose 0.4 percent to 8,429.45, but it was the lowest closing since 1982. China’s benchmark gained 1.2 percent to close at 2,199.42 _ still, a 20 percent loss for the year.

European shares were steady or slightly down in early trading. Britain’s FTSE 100 lost 0.2 percent at 5,555.92. Germany’s DAX was marginally down at 5,846.35 and France’s CAC-40 was nearly unchanged at 3,127.34.

Wall Street appeared headed for a lower closing, with Dow Jones industrial futures down 0.2 percent at 12,194 and S&P 500 futures slipping 0.2 percent to 1,255.40.

Hong Kong’s Hang Seng Index gained 0.2 percent to close at 18,434.39.

Australia’s benchmark S&P ASX 200 ended the year at 4,140.4 _ down 0.4 percent on the day and 14.5 percent lower for 2011. A day earlier, South Korea’s benchmark Kospi closed at 1,825.74 on Thursday _ 11 percent down on its last trading session of the year Thursday.

Analysts said global stocks tumbled in lockstep, suffering from the effects of natural disasters, a wobbly recovery in the U.S. _ and an escalating European debt crisis that has resisted repeated measures taken by the region’s governments and financial institutions.

“The big reason is Europe. Europe tried to muddle through without a real solution. They can save a small country like Greece, but they cannot save a big country like Italy. Two trillion euros in foreign debt _ nobody in the world has that kind of money,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

“Europe will enter a lost decade, a decade of no solutions and no growth,” he said. “Maybe except in Germany, their machinery is still selling.”

Japan’s benchmark plunged after the March 11 tsunami and earthquake disaster that destroyed huge chunks of the island nation’s northeastern region, left 20,000 people dead or missing and set off the world’s worst nuclear crisis since Chernobyl.

Disaster damage extended to key suppliers for major companies like Toyota Motor Corp. and Sony Corp., which suffered production disruptions. The Thai flooding that followed caused similar problems for automakers, including Honda Motor Co., but on a smaller scale.

The Tokyo market also saw two big-name brands lose much of their value.

One was Tokyo Electric Power Co., the utility that runs Fukushima Dai-ichi nuclear power plant, where at least three reactors went into meltdown after tsunami destroyed backup generators to keep power going at the plant.

Some officials say TEPCO may have to be nationalized because of ballooning losses and the costs to bring the reactors under control and compensate victims.

Another was camera and medical equipment maker Olympus Corp., whose offices have been raided by criminal investigators after fabricated accounting to cover up massive investment losses came to light no fax payday loans.

A British executive, who has since resigned from the board, was first to draw attention to the dubious investments, and has become a celebrity figure raising questions about old-style Japanese management.

Across the board, Japanese companies have been slammed by the rising value of the yen, which erodes the value of revenue from exports.

The Nikkei lost nearly a fifth of its value over the past year. It nose-dived right after the disaster, recouped some of those losses in July, but then started a decline that has the benchmark hovering at below the March value.

China’s benchmark Shanghai Composite Index lost 21 percent in 2011 as the impact of Beijing’s multibillion-dollar stimulus faded and the government tightened curbs on lending and investment to cool blistering economic growth.

The flood of state spending and bank lending after the 2008 crisis fueled a surge in real estate and stock prices. In 2010, Beijing responded by clamping down on credit and real estate speculation to cool inflation and soaring housing prices.

Beijing is trying to steer growth to a more sustainable level after 2010’s explosive 10.3 percent expansion. Growth eased to 9.1 percent in the three months ending in September, down from 9.5 percent the previous quarter.

Chinese leaders have promised to ease credit to help exporters and smaller companies cope with falling global demand and weaker domestic growth. But they say most controls will remain in place. That has disappointed stock traders who are hoping for interest rate cuts and looser controls on bank lending. They have responded in recent weeks by dumping stocks and moving some money to U.S. and European markets.

The benchmark Hang Seng Index slipped in the second half of the year as concerns over Europe accelerated, sending it to a 2011 low in early October before bouncing slightly to end the year at a 20 percent loss.

Hong Kong is Chinese territory, but its financial markets are open to foreign companies and investors, which made it a popular destination this year for foreign companies looking to go public, drawn by the prospect of raising their brand profiles with China’s newly wealthy as growth flags in their home markets.

Italian fashion house Prada was one of the biggest names to list in Hong Kong, with an initial public offering in June that raised $2.5 billion, making it the sixth-biggest IPO globally this year, according to deal tracking service Dealogic.

Other foreign companies that took out primary or secondary listings in Hong Kong include MGM China Holdings Ltd., the Macau casino arm of MGM Resorts International, luggage maker Samsonite S.A. and U.S. luxury handbag maker Coach Inc. However, the slumping market means share prices for many companies that went public are ending the year lower than IPO price.

Benchmark crude for February delivery fell 28 cents to $99.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 29 cents to settle at $99.65 in New York on Thursday.

In currency trading, the dollar fell to 77.58 yen from 77.65 yen late Thursday in New York. The euro fell to $1.2913 from $1.2939.

Source

A top European Central Bank official has publicly discussed the reasons for his surprise resignation, saying he is not satisfied with the direction Europe’s currency union has taken.

Juergen Stark said in an interview in Monday’s edition of Germany’s Wirtschaftswoche magazine that the ECB had done its job by keeping inflation under control across the eurozone, which it does through adjusting interest rates.

But he said some governments had tolerated excessive wage costs and unsustainable real estate booms that preceded today’s debt crisis.

Stark is leaving at the end of the year, 2 1/2 years before the end of his eight-year term on the bank’s six-member executive board. The council runs the bank day-to-day at its Frankfurt heaquarters, while interest rate decisions are taken by the broader 23-member government council, on which Stark also sits.

Stark was quoted as saying that “there is a broad theme that serves as the reason for this: that I am not satisfied with the way this currency union has developed.”

Stark said the ECB had done its part by keeping inflation under control but could not be expected to clean up policy mistakes by individual governments that ran up too much debt or let their economies become uncompetitive through high labor costs.

“Don’t overburden the central bank,” he said.

He said governments should have avoided financial trouble by reining in labor costs. Stark was quoted as saying governments also failed to rein in excessive real estate booms that collapsed and contributed to the eurozone debt crisis. He didn’t mention individual countries but wage costs rose in Greece, hampering the economy and state finances, and Ireland and Spain had debt-fueled real estate booms that collapsed.

The ECB earlier said Stark was leaving at year-end for personal reasons.

Analysts have said he appears to have left because of opposition to the European Central Bank’s program to buy government bonds. But Stark was not quoted in the interview as mentioning the bond purchase program.

The purchases lower the borrowing costs faced by indebted governments such as Italy and Spain. High borrowing costs are threatening to leave them unable to be able to borrow anew to pay off bonds that are maturing, resulting in a disastrous default that would shake the eurozone and global economy.

The bank and its President Mario Draghi have said the program is limited and only aimed at steering interest rates, and that governments must reform their finances and not wait for a central bank bailout.

Stark repeated his longstanding opposition to calls for the ECB to sharply increase the bond purchases through its power to create new money. He said that would violate the prohibition in the EU treaty on the ECB using its monetary powers to finance governments, although it is a step that the U.S. Federal Reserve has been allowed to take.

Stark dismissed calls by “real or self-styled experts” to use the “big bazooka” of printing money. “It is a fundamental arrangmenet of a currency union that the monetary financing of state debts through the ECB is not permitted,” he said.

Source

Regulators on Friday closed small banks in Florida and Arizona, boosting to 92 the number of bank failures in the U.S. this year.

The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 157 banks.

The Federal Deposit Insurance Corp. seized Premier Community Bank of the Emerald Coast, based in Crestview, Fla., with $126 million in assets and $112 million in deposits, and Phoenix-based Western National Bank, with $162.9 million in assets and $144.5 million in deposits.

Summit Bank, based in Panama City, Fla., agreed to assume the loans and other assets as well as the deposits of Premier Community Bank. In addition, the FDIC and Summit Bank agreed to share losses on $98 million of Premier Community Bank’s assets.

Washington Federal, based in Seattle, is acquiring the assets and deposits of Western National Bank.

The failure of Premier Community Bank of the Emerald Coast is expected to cost the deposit insurance fund $31.2 million; that of Western National Bank is expected to cost $37.6 million.

Florida has been one of the hardest-hit states for bank failures. Regulators closed 29 banks in Florida last year. The failure of Premier Community Bank brought to 13 the number of Florida lenders shut down this year

California, Georgia and Illinois also have seen large numbers of bank failures.

In all of 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.

From 2008 through 2010, bank failures cost the fund $76.8 billion. The FDIC expects failures from 2011 through 2015 to cost $19 billion.

The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC’s fund balance turned positive in the second quarter of this year; it stood at $7.8 billion as of Sept. 30.

Source

Questioned by senators he once served with, Jon Corzine told a panel Tuesday that he never told anyone to “misuse” customer money that vanished when MF Global collapsed this fall.

An estimated $1.2 billion in client funds are missing. Senators are demanding that Corzine and two other executives at the securities firm explain who authorized the transfer of money in the days before the firm collapsed in the eighth-largest bankruptcy in U.S. history.

“I never gave any instruction to anyone at MF Global to misuse customer funds,” Corzine testified at a hearing of the Senate Agriculture Committee on Tuesday.”

Corzine, a former Democratic New Jersey senator and governor, resigned as CEO of the securities firm last month.

Bradley Abelow, the firm’s president and chief operating officer, and Henri Steenkamp, the chief financial officer, also tried to distance themselves from any decision to transfer the money at the hearing.

Brokers are required to keep client money separate from company funds.

“Funds don’t simply disappear. Someone took action, whether legal or illegal, to move that money. And the effect of that decision is being felt across the countryside,” said Kansas Sen. Pat Roberts, the committee’s top Republican.

Roberts said MF Global violated “a sacred rule of the futures industry,” keeping customer funds separate from the firm’s _ and that it was the first time that had happened. “You don’t break the glass in regards to segregated funds.”

All three witnesses said they don’t know where the money is. Yet their phrasing varied in subtle ways that could have legal distinctions.

Corzine said he did not direct anyone to “misuse” the money.

Abelow said he does not recall “any conversation about customer funds being used for anything other than their intended purpose.”

Steenkamp’s stance was more sweeping. He said he did not “authorize, approve or know of any transfers of customer funds” out of their accounts.

Depending on the circumstances, transferring money from customers’ accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.

The executives said that given what is now known, they wouldn’t have signed the firm’s last quarterly financial statement attesting that its internal financial controls were adequate.

Under a 2002 anti-corporate-fraud law that Corzine co-wrote as a U.S. senator, the top executives of public companies must personally certify the accuracy of their company’s financial statements. It can be a violation of the law for executives to sign a false statement.

MF Global collapsed into the eighth-largest bankruptcy in U.S. history after a disastrous bet on European debt.

The three executives say that they didn’t become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31.

Tuesday’s hearing included an added element of intrigue because Corzine, a former Democratic senator from New Jersey, was pressed by some senators he served with from 2000 through 2005.

The Senate panel is one of three congressional committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office.

Many lawmakers have heard from farmers, ranchers and small business owners in their states who are missing money that was deposited with the firm. Agricultural businesses use brokerage firms like MF Global to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.

Corzine told lawmakers last week that he never intended to authorize the transfer of funds from customer accounts. If any subordinates moved clients’ money in the belief that Corzine had authorized it, “it was a misunderstanding,” he said.

Corzine, Steenkamp and Abelow have been sued in class-action complaints on behalf of MF Global shareholders. The lawsuits accuse the executives of making false and misleading statements about MF Global’s financial strength and cash balances.

MF Global didn’t list the European debt on its balance sheet for all to see. Instead, those holdings were shifted to the company’s “off-balance sheet,” deep in its financial statements. Some separate filings with regulators excluded the European debt entirely.

A lawyer for the trustee overseeing the liquidation of MF Global’s brokerage operations said in court Friday that the trustee’s staff has discovered some “suspicious” trades in MF Global customer accounts that were made in the last days before the firm failed. The lawyer didn’t provide details.

Source

Asian stock markets rose Monday as investors cheered a new European fiscal pact aimed at fixing the region’s debt crisis and preventing a collapse of the euro currency.

Japan’s Nikkei 225 index jumped 1.5 percent to 8,665.76. South Korea’s Kospi added 1.2 percent to 1,896.35 and Hong Kong’s Hang Seng gained 1.6 percent to 18,874.22.

Under the deal reached Friday, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets. They also agreed to automatic penalties if they spend too much.

In addition to tighter controls on spending, Europe’s new “fiscal compact” calls for the launch of a permanent bailout fund for euro nations in 2012, a year ahead of schedule. The deal also will send 200 billion euros ($267 billion) to the International Monetary Fund, which controls another emergency fund for countries in crisis.

But the deal won’t help cut debt today, which in Italy, Greece and Spain has driven government borrowing costs close to levels considered unsustainable installment payday loans. That loose end brought into focus the future monetary policy of the European Central Bank, and whether it would be willing to buy enough national bonds from troubled countries to keep interest rates down.

Analysts at Credit Agricole CIB said “the lack of ECB action in terms of stepping up to the plate as lender of the last resort” still weighed on investment sentiment.

There were also doubts about the willingness of each individual country to ratify the agreement.

Benchmark oil for January delivery was down 7 cents to $99.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.07 to finish at $99.41 per barrel on the Nymex on Friday.

Source

WORKING OUT: After 15 years in Chicago, Sarah Dorsey Tourville is back in her hometown to open the 34th franchise of The Dailey Method, a national network of fitness studios.

Tourville’s studio, in the Village at Schneithorst at 1560 South Lindbergh Boulevard, will officially open tomorrow but is the location for a private cocktail reception tonight.

Tourville, who is former KTRS (AM 550) honcho Tim Dorsey’s eldest daughter, has been the head of ESPN’s ad sales for the Midwest the past 10 years.

She’ll be giving up that job at the end of the year to permanently relocate in St payday loans for self employed. Louis with her two children, Lilly, 4, and Ben, 2 ½. Her ex-husband is also moving here to be close to their children, Tourville said.

Tourville is offering special discounts and packages - such as six weeks of free classes for $100 — over the weekend to celebrate the opening of the studio. She added that proceeds from the opening events will go to St. Louis Children’s Hospital.

Source

New polymer banknotes demand that all money-handling machines in the country be upgraded at a cost of $75-100 million, the Bank of Canada estimates.

That compares to $20-30 million for the last conversion in 2004-2006, bank spokesperson Julie Girard said Tuesday.

Industry analysts and anxious travelers expressed fears Tuesday for the survival of Britain’s venerable tour operator Thomas Cook, after the company, which took more than 22 million people on holidays in the latest year, revealed its financial problems had worsened.

Shares in Europe’s second-largest tour operator lost three-fourths of their already depressed value after the company said it was seeking new agreements with its main creditors, barely a month after announcing it had negotiated new funding arrangements to carry it through the slow winter months.

The company insisted flights would leave as usual and that it was taking new bookings, but Britons who have bought holidays through the firm were worried.

Jamila Juma-Ware, 27, who has booked a holiday at Spain’s Tenerife island in the next three weeks for herself and her mother, said she was “praying it’s going to be all right … but I’m not confident.”

Several small British travel firms have gone under since the global economic crisis hit in 2008, but Thomas Cook is an industry giant and a fixture of Britain’s main streets.

“There are a lot of small independent travel agents around here, but I said I’d rather just book it through someone like Thomas Cook because they’re big and there’s more of a guarantee they won’t go bust,” Juma-Ware said. “And then this week this happens.”

Thomas Cook is, like many airlines and tour operators, suffering from weak consumer demand as Europe’s financial crisis has people worried about their jobs.

Unrest in Egypt and in Tunisia _ normally the top winter destination for French travelers _ flooding in Bangkok and disappointing sales in Russia have all added to the pressure on the company.

Analysts said the financial troubles could scare away customers, darkening the company’s prospects.

“Legitimate questions will be asked as to whether Thomas Cook can survive long-term,” said James Hollins, analyst at Evolution Securities. He added that he believes the company could pull through on the strength of businesses outside Britain, but “a more flexible financial structure and massive turnaround are required.”

Thomas Cook Group PLC shares were down almost 75 percent at 10.41 pence in afternoon trading in London. On July 1, shares had closed at 134.5 pence.

Thomas Cook was due to report annual earnings for 2010-11 on Thursday, but it has put that off indefinitely “as a result of deterioration of trading in some areas of the business, and of its cash and liquidity position since its year end.”

Sam Weihagen, Thomas Cook’s interim chief executive, insisted it was business as usual: “Flights are leaving on schedule, shops are open and we’re taking bookings.”

Weihagen said people who book package holidays will be protected by the Air Travel Organizers’ Licensing insurance program which is funded by contributions from travel companies. However, those who book only flights are advised to buy their own travel insurance.

The group has previously announced plans to reduce its fleet of 41 aircraft to 35, and it hopes to raise 200 million pounds ($312 million) by selling assets, including its stake in Britain’s part-privatized air traffic control service.

Wyn Ellis, analyst at Numis Securities, said Thomas Cook’s announcement could frighten new customers and alarm suppliers. The company, he said, “faces a difficult near-term future which could lead to significant loss of market share.”

The news of the company’s problems upset some prospective travelers near its shop in the St. James neighborhood of London on Tuesday.

Tony Wright, 64, said he’s had “nothing but good experiences” with the brand and would not hesitate to use Thomas Cook again. “We were devastated to hear the news this morning and we hope it’s not as bad as it sounds,” he said.

Others were disappointed the airfares had not dropped.

On Tuesday, Simon Ash visited the branch hopeful that the combination of the company’s financial woes and a lack of tourist interest in Egypt because of rioting there could help him find a cheap ticket to Cairo _ but he could not find one. “The prices they’re giving me are not as good as the ones I’m finding on the Internet,” he said.

Thomas Cook takes its name from the cabinetmaker Thomas Cook, who had a flash of inspiration while walking to a temperance meeting in 1841 to use the railways to help promote abstinence from alcohol. Cook’s first venture was to charter a train which carried about 500 passengers in open coaches on a 12-mile round trip.

“Thus was struck the keynote of my excursions, and the social idea grew up on me,” Cook later recorded.

He organized more trips for temperance societies and Sunday schools. He took his business a step further in 1845 by arranging a trip to Liverpool, which included a 60-page booklet in the price of the ticket.

The International Exhibition in Paris in 1855 inspired Cook to organize a trip to the continent. Ten years later, he was organizing railway tours in North America.

Source

The latest evidence that the economy is making steady gains emerged Friday from a gauge of future economic activity, which rose in October at the fastest pace in eight months.

A string of better-than-expected economic reports this month has led some analysts to revise up their forecasts for growth. Still, they caution that their brighter outlook remains under threat from Europe’s financial crisis.

“Things are looking better than we thought they would _ not great, but better,” said David Wyss, former chief economist at Standard & Poor’s.

The most recent sign was Friday’s report by the Conference Board that its index of leading economic indicators surged 0.9 percent last month. It was the index’s best showing since February. And it was far faster than the increases of 0.1 percent September and 0.3 percent in August.

The index is designed to predict economic activity. The October figure marked the sixth straight increase.

The jump reflected gains in nine of the index’s 10 components. Leading the way: a surge in permits for home construction; a narrower gap between short- and long-term interest rates that suggested less concern about inflation; a recovery in stock prices; and growth in the U.S. money supply.

A longer average workweek and fewer applications for unemployment benefits also contributed to the rise in the index.

All told, the components of the index signaled that the economy is steadily, if still slowly, strengthening.

On Thursday, the government reported further improvement in the number of people seeking unemployment benefits for the first time. The number fell to 388,000, the fewest since April.

In October, the economy added a net total of 80,000 jobs. It was the 13th straight month of gains. Still, the additional jobs were fewer than the roughly 125,000 that are needed each month just to keep up with population growth.

Many economists said the October gain in the leading indicators offered further assurance that the economy is in no imminent danger of slipping back into a recession, so long as Europe doesn’t fall into a severe downturn.

“This was a very positive reading for the leading indicators,” said Mark Zandi, chief economist at Moody’s Analytics. “The economy seems to be holding its own.”

Steven Wood, chief economist at Insight Economics, said the string of positive readings suggests “the economy should continue to experience at least moderate growth over the next six to nine months.”

In the first six months of the year, the economy grew at an annual rate of just 0.9 percent. Growth expanded to a 2.5 percent rate in the July-September quarter.

Before this month, many economists had estimated that growth in the current October-December quarter would roughly match the 2.5 percent pace of the July-September period. But in recent days, based on the healthier economic news, some analysts have boosted their forecasts.

This week, the government said retail sales in October and factory production were picking up. U.S. builders started slightly fewer homes in October. But building permits, a gauge of future construction, surged nearly 11 percent. That gain was led by a 30 percent increase in apartment permits, to their highest level in three years.

Wyss said he expected the annual growth rate in the current quarter to amount to about 3 percent, up from his earlier expectation of 2.5 percent. Economists at JPMorgan Chase & Co. are also expecting a 3 percent growth rate for the October-December period.

Wyss said one reason for his increased optimism is that he thinks a modest rebound in consumer spending will trigger companies to restock depleted shelves.

Even so, an economy growing at a 3 percent rate would still fall shy of the 4 percent to 5 percent pace that economists say is needed to significantly reduce the unemployment rate, which remains stuck at 9 percent.

And without stronger job gains, analysts say consumer spending, which accounts for about 70 percent of economic activity, will remain constrained.

Source

The judge overseeing the bankruptcy of collapsed MF Global Inc. has approved the release of about $520 million to trading customers of the brokerage firm whose accounts have been frozen since Oct. 31.

U.S. Bankruptcy Judge Martin Glenn issued an order Thursday granting the request of the court-appointed trustee that 60 percent of the funds in about 23,300 cash-only accounts be returned to customers.

The money could start moving to customers before Thanksgiving, a spokesman for the trustee says. The complex process of combing through about 38,400 frozen accounts holding some $5.4 billion to verify balances has taken longer than planned.

Trustee James Giddens hopes to eventually have 100 percent of all funds returned in the coming weeks. –

Source