Money world

South Korea’s inflation rate accelerated for a second straight month in July as rising prices defy a series of central bank interest rate increases.

The country’s consumer price index rose 4.7 percent last month from the year-before period amid higher costs for food and transportation, the government’s Statistics Korea announced Monday. That followed an increase of 4.4 percent in June.

The result for July matched the 4.7 percent reached in March, which was the highest since 4.8 percent recorded in October of 2008.

South Korea, Asia’s fourth-largest economy, is not the only country in the region battling rising prices.

Surging inflation is among the factors threatening East Asia’s economic outlook, the Manila-based Asian Development Bank said in a report last week, emphasizing that levels in many economies have risen above 10-year averages.

Inflation in China, Asia’s largest economy, rose to a three-year high of 6.4 percent in June.

The Bank of Korea has raised its key interest rate five times in the past year to 3.25 percent in a bid to stem price pressures, though it kept the borrowing cost unchanged in July.

South Korea’s inflation rate has now been above 4 percent for seven straight months, a level the central bank sees as intolerable. The bank’s next meeting to set the benchmark interest rate is scheduled for Aug. 11.

In June, the International Monetary Fund expressed concern about South Korean inflation and urged “further steady monetary tightening.”

So-called core inflation, which strips out volatile agriculture and oil prices, also accelerated in July, increasing 3.8 percent from the year before, Statistics Korea said. It had risen 3.7 percent in June.

Compared with the previous month, the overall consumer price index rose 0.7 percent in July.

South Korea’s latest inflation figures came after the central bank announced last week that the country’s economic growth slowed in the second quarter to an expansion of 0.8 percent amid weaker exports, manufacturing and services.

The central bank last month raised its inflation forecast for this year to 4 percent from the previous figure of 3.9 percent. It also cut its forecast for economic growth to 4.3 percent from 4.5 percent.

The bank’s inflation target is 3 percent, but it has set a “tolerance range” of plus or minus one percentage point from that level. The consumer price index has exceeded the upper end of that range _ 4 percent _ every month this year through July.

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Global stock markets fell Friday after U.S. lawmakers put off a vote on raising the government’s debt limit and avoiding a potential default.

Oil fell below $97 a barrel as investors watched political wrangling in Washington and mulled possible worst-case scenarios of a U.S. default in the event lawmakers miss a Tuesday deadline to raise the amount the government can borrow.

The Treasury Department says the debt ceiling _ currently at $14.3 trillion _ must be raised or the government won’t have enough money to cover all its bills. That has led to fears the United States could default on its debt and harm the fragile global economy.

“We’re basically standing on the edge of an abyss peaking over, with the bottom nowhere to be seen,” said IG Markets strategist Ben Potter in a report. He warned that without a deal by Monday, markets could “risk significant fear-based selling that could rapidly get out of control.”

In Europe, France’s CAC-40 shed 1.1 percent to 3,672.93 while Germany’s DAX lost 1 percent to 7,118.76. London’s FTSE 100 was down 0.9 percent at 5,822.57.

Wall Street was set to fall. Dow futures dropped 0.4 percent to 12,148 and broader S&P 500 futures gave up 0.4 percent to 1,291.80.

Japan’s Nikkei 225 stock average closed down 0.7 percent at 9,833.03. Hong Kong’s Hang Seng index lost 0.6 percent to 22,440.25 and China’s Shanghai Composite Index shed 0.3 percent to 2,701.73.

South Korea’s Kospi slid 1 payday lenders.1 percent to 2,133.21. Australia and Bombay also declined while Singapore gained 0.1 percent.

The dollar fell to 77.61 yen in Asia from 77.88 yen late Thursday in New York. The euro fell to $1.4279 from $1.4311.

Republican leaders in the House of Representatives delayed the vote on the bill to extend the government’s debt limit and cut federal spending, though there was an expectation it would occur later Thursday evening in Washington.

On Wall Street, a late sell-off Thursday erased earlier gains as investors fretted that the bill headed for a vote in the House of Representatives would fail to lead to a breakthrough in the debt stalemate.

The Dow Jones industrial average fell 62.44 points, or 0.5 percent, to close at 12,240.11 on Thursday. The index had been up as many 82 points earlier in the day following an unexpected decrease in new claims for unemployment benefits.

The Standard & Poor’s 500 fell 0.3 percent to close at 1,300.67. The Nasdaq composite index, however, edged up 0.1 percent to 2,766.25.

Benchmark oil for September delivery was down 59 cents to $96.83 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 4 cents to settle at $97.44 on Thursday.

In London, Brent crude slipped 23 cents to $117.13 per barrel on the ICE Futures exchange.

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WASHINGTON

Stung by revelations that his plan would cut spending less than advertised, House Speaker John Boehner on Tuesday postponed a vote on a debt-ceiling measure that was already running into opposition from tea party conservatives. The move came just a week before an Aug. 2 deadline for staving off the potential financial chaos of the nation’s first-ever default.

With time running short, the speaker promised to quickly rewrite his debt-ceiling legislation after budget officials said it would cut spending by less than $1 trillion over the coming decade instead of the promised $1.2 trillion. The vote originally scheduled for Wednesday is now set for Thursday. That may give Boehner more time to hunt for votes, but it gives Congress and the White House even less time for maneuvering.

Meanwhile, public head-butting between Democratic President Barack Obama and the Republicans showed no sign of easing. The White House declared Obama would veto the Boehner bill, even if it somehow got through the House and the Democratic-controlled Senate.

For all that, it was the tea party-backed members of Boehner’s own party who continued to vex him and heavily influence the debt and deficit negotiating terms _ not to mention his chances of holding on to the speakership.

Their adamant opposition to any tax increases forced Boehner to back away from a “grand bargain” with Obama that might have made dramatic cuts in government spending. Yet when Boehner turned this week to a more modest cost-cutting plan, with no tax increases, many conservatives balked again. They said the proposal lacked the more potent tools they seek, such as a constitutional mandate for balanced budgets.

Rep. Jim Jordan of Ohio, chairman of a large group of conservative Republicans, sent a tremor through the Capitol Tuesday when he said he doubted Boehner had enough support to pass his plan. The Boehner bill would provide an immediate debt ceiling increase but would require further action before the 2012 elections.

Obama strongly opposes that last requirement, arguing that it would reopen the delicate and crucial debt discussions to unending political pressure during next year’s campaigns.

The president supports a separate bill, pushed by Majority Leader Harry Reid in the Democratic-controlled Senate, that would raise the debt ceiling enough to tide the government over through next year _ and the elections.

Boehner wasn’t helped when presidential candidate Tim Pawlenty and the groups Tea Party Patriots and Tea Party Express criticized his plan. A worse blow came when a congressional analysis said his plan would produce smaller savings than originally promised. Of particular embarrassment was a Congressional Budget office finding that Boehner’s measure would cut the deficit by just $1 billion next year.

Boehner’s office said it would rewrite the legislation to make sure the spending cuts exceed the amount the debt limit would be raised. Adding a political touch, it accused the Democrats of declining to put forward specifics subject to the same sort of review.

Earlier, responding to the conservative Republican opposition, Boehner quickly went on Rush Limbaugh’s radio show, then he began one-on-one chats with wavering Republicans on the House floor during midday roll call votes.

“He has to convince a few people,” Rep. Tom Petri, R-Wis., observed dryly from a doorway.

A serious, almost dire urgency ran through Boehner’s efforts. The clock was ticking down to next Tuesday’s deadline to continue the government’s borrowing powers and avert possible defaults on U.S. loans.

Congressional veterans say a final-hour bargain can’t be reached until both parties irrefutably prove to themselves and the public that neither the Democrats’ top goals nor the Republicans’ can be reached in the divided Congress.

Moreover, Boehner’s grasp on the speakership could be weakened if he fails to pass the debt-ceiling plan that bears his name. Assuming no more than five Democrats support the measure _ the same number that backed a GOP balanced-budget bill last week _ Boehner can afford to lose no more than 28 of the House’s 240 Republicans.

His allies predicted he’ll make it, and Boehner got a vocal endorsement from his sometimes rival, Majority Leader Eric Cantor, R-Va. But holdouts were not limited to the much-discussed freshman class, elected in the tea party-fueled 2010 elections.

“He can’t get my vote because I felt like that, for long-term solutions to this problem, all these promises we make in cutting spending never seem to occur,” said Rep. Phil Gingrey, R-Ga. ” I’ve been here nine years and I’ve never seen it happen yet.”

Six-term Rep. Jeff Flake of Arizona, a long-time critic of deficit spending, said he also was leaning against Boehner’s bill even though he knows a tougher measure cannot be enacted. “Obviously you have to weigh that against passing something that just doesn’t solve the problem,” Flake said.

Major business groups weighed in. The U.S. Chamber of Commerce urged support of Boehner’s bill, while the conservative Club for Growth denounced it as too weak.

While Boehner searched for votes, some Americans seemed to edge closer to notion that the Aug. 2 deadline might pass without a solution. The stock market fell again, although not dramatically. California planned to borrow about $5 billion from private investors as a hedge against a possible federal government default.

The White House spoke with veterans groups about what might happen to vets’ benefits if a deal isn’t reached. Obama has said he can’t guarantee Social Security checks and payments to veterans and the disabled would go out on schedule.

The Senate worked on other issues, waiting to see if Boehner’s bill would pass the House and come its way. Reid, D-Nev., said the Boehner bill could not pass his chamber.

Reid has his own plan. Like Boehner’s, it would identify about $1.2 trillion in spending cuts to the day-to-day operating budgets of government agencies. Reid’s proposal, however, would require only one congressional vote to raise the debt ceiling before the 2012 elections. And it counts an extra $1 trillion in savings from winding down the wars in Iraq and Afghanistan.

Both proposals would create a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid.

For seven months, tea party-backed House members _ freshmen and veterans alike _have rewritten congressional traditions. Speakers typically can twist arms, offer favors and issue veiled threats to round up the needed support on tough votes. It’s possible Boehner will be able to do so on the debt-ceiling matter.

But many tea party activists abhor political compromise. They insist that their elected officials stand on principle, regardless of the consequences.

“A lot of the tea party guys owe certain support groups,” said Rep. Walter Jones Jr., R-N.C. He said he had not decided how to vote on Boehner’s bill.

Freshman Rep. Trey Gowdy, R-S.C., bristles at the notion that tea party-influenced newcomers are sheep-like ideologues willing to risk default. “We’re not a bunch of knuckle-dragging, mouth-breathing Neanderthals,” Gowdy said. “We’re interested in answering what we perceive to be the mandate, which is to stop the spending and change the way Washington handles money.”

Gowdy said he was leaning against Boehner’s proposal.

But freshman Rep. Allen West, R-Fla., a tea party favorite, felt otherwise.

“This Boehner plan, does it have everything that I want in it?” West said. “Absolutely not. It is the 70-75 percent plan that we can go forward with.”

Petri, a 33-year House veteran, said Boehner may need the votes of 35 to 40 Democrats, which Democratic leaders say is impossible.

Asked how Boehner will get out of his predicament, Petri paused and said: “When I think of it, I’ll give him a call.”

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BlackBerry maker Research In Motion Ltd. is cutting 2,000 jobs as part of a cost savings plan announced last month and is shuffling some senior executives.

The job cuts amount to about 10 percent of the company’s work force. The company said Monday it will notify affected employees this week. It expects to give more information on the layoffs when it reports fiscal second-quarter results on Sept. 15.

Its U.S. shares fell 41 cents, or 1.5 percent, to $27.50 in premarket trading.

Waterloo, Ontario-based RIM has been hurt by product delays and competition from Apple Inc.’s iPhone and smartphones that run Google Inc.’s Android operating system.

Although its Blackberrys have dominated the corporate smartphone market, RIM has not been able to translate this success to the broader consumer market, where the iPhone and Android phones reign cash advances pay day loan. The launch of its PlayBook tablet computer, meanwhile, wasn’t as successful as the company had hoped.

RIM reported a 10 percent drop in its fiscal first-quarter earnings in June and gave an outlook for the year that was well below what analysts had expected.

Also Monday, RIM said it is naming two executives to take on different parts of the chief operating officer role. COO Don Morrison went on medical leave in June.

Thorsten Heins is being named chief operating officer, product and sales. Jim Rowan will become COO, operations. Morrison is retiring after more than 10 years with the company.

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The union attempting to represent workers at IKEA’s only U.S. plant is challenging the Swedish furniture giant’s vaunted corporate ethos, accusing the retailer of paying its American workers low wages and tolerating unsafe working conditions.

Approximately 320 workers at IKEA’s Swedwood Danville plant will vote Wednesday whether to join the International Association of Machinists and Aerospace Workers.

The machinists union has put IKEA’s reputation as a labor- and environment-friendly Swedish employer at the forefront of its organizing drive as it attempts to organize workers at the company’s subsidiary, Swedwood. They assemble the sleek, low-cost bookshelves and coffee tables that the big-box retailer sells in its distinctive, cheery, blue-and-yellow stores.

IKEA’s corporate conduct is guided by its so-called IWAY Standard, which outlines environmental, social and working rules _ an 18-page document governing everything from drinking water supplied to workers to lighting levels to a ban on child labor. The company says the standards follow a directive that “the IKEA business shall have an overall positive impact on people and the environment.”

Many of the company’s high corporate standards stop at the U.S. border, the machinists’ lead organizer said. The union said workers are grossly underpaid compared to their Swedish counterparts, suffer high injury rates, are forced to work overtime, and demoted or fired for expressing union sympathies.

The IWAY standards say overtime must be voluntary and ban employers from preventing workers from associating freely and collective bargaining. They also require workers be protected from “exposure to severe safety hazards.”

“You should not be able to reap the economic benefits of an image if that image is not true,” said Bill Street, director of the woodworkers department of the machinists international. “When you walk into an IKEA store, you’re walking into a little bit of Sweden.”

The Associated Press was not able to talk directly with workers involved with Street in organizing the Danville plant. He said workers feared retaliation.

An IKEA spokeswoman denied the union allegations that the Virginia plant operates in conflict with IKEA’s principles, saying the Danville operation has consistently measured up to its own internal and third-party audits.

“Swedwood Danville operates according to the same principles as all Swedwood plants,” Ingrid Steen said in an e-mail.

Steen also said IKEA will honor the union vote. “Swedwood respects the right of co-workers to join, form or not to join a co-worker association of their choice,” she wrote.

IKEA’s selection of Danville for its first U.S. factory came with $12 million in incentive grants and the goal of ultimately hiring 780 people in Southside Virginia near the North Carolina line. The region has one of the bleakest economic landscapes in a state that traditionally has an unemployment rate a couple notches below the national rate.

The last capital of the Confederacy, the city of approximately 43,000 has struggled as tobacco and textiles declined. The jobless rate has hovered around 10 percent in recent years.

IKEA, which has 26 Swedwood plants in Europe and saw profits rise 6 percent in 2010, was welcomed by accolades from the Capitol in Richmond to local economic officials, none of whom would publicly discuss the union drive with the AP.

Street, who brought in a union official from Sweden to talk to Danville workers this year, said he quietly began his organizing at Swedwood three years ago mindful of IKEA’s reputation for paying and treating its workers fairly.

“We thought to ourselves this was going to be a very simple, straightforward campaign,” he said in an interview amid one of his many trips to Danville from his home in Oregon. “After all, this was IKEA.”

Ultimately, he said, he concluded the message from IKEA was “Sure, no problem. As soon you get 51 percent of the workers, we’ll come back and bargain.”

Street was able to get the necessary 30 percent of the workers to support a union vote, and the National Labor Relations Board scheduled the balloting at the plant.

One of the union’s complaints is that starting pay at Danville of $8 an hour is approximately half of what their Swedish counterparts earn.

“We know in terms of safety, in terms of health care, in terms of pension, their European counterparts are treated vastly superior than the workers in Danville,” Street said.

IKEA’s Steen described the pay and benefits of Danville workers as “very competitive in the region.” She said many of IKEA’s 16,000 workers worldwide are members of unions or worker associations, adding it’s difficult to compare U.S. workers with workers in Europe.

“Conditions of different countries are very complex questions,” she wrote. “It is difficult to compare different national systems (such as) taxes, cost of living, systems of social insurances, etc.”

Street and the machinists union face an uphill battle in a right-to-work state and amid a period of some of the lowest private-sector union membership in the United States. Union membership fell to 7 percent in 2010, the lowest in decades, according to the Bureau of Labor Statistics.

Arthur B. Shostak, professor emeritus at Drexel University and an expert on the American work force, said the union is smart to target IKEA’s image to make its case, which has received the attention of international union organizers. He said young, hip shoppers might not be inclined to shop at IKEA if they were aware of the union allegations in Danville.

“Ikea has a big stake in protecting its brand,” Shostak said. “Brand protection is very, very important. This is a mess, and not for the union.”

Paul A. Argenti, a professor of corporate communication at the Tuck School of Business at Dartmouth College, said it’s a reach to compare workers in Danville’s rural economy with highly industrialized workers in Europe.

“We’re a developing nation to them,” he said. “Sweden is ridiculously expensive.”

While the union claims have some basis in fact, he said, the machinists are attempting to “paint IKEA as a monster.”

Street said he’s confident, despite declining union numbers and concessions by public sector workers.

“It’s been one of the best times to organize because employers have been overreaching. It’s kick `em when they’re down,” he said.

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Express Scripts will pay Medco shareholders $28.80 in cash and 0.81 of an Express Scripts share for every Medco share held. The deal makes Express Scripts the country’s largest pharmacy benefit manager, with annual revenue exceeding $100 billion.

What is a pharmacy benefit manager? These firms administer prescription drugs for private employers, unions and governments through chain pharmacies and independent drugstores. They also operate mail-order businesses that ship drugs directly to patients, a practice that is becoming popular among employers as a cost-savings measure.

Why does Express Scripts want to buy? The company says it can squeeze out $1 billion in savings from the merger, making Express Scripts more competitive when negotiating purchases from drugmakers and vying for PBM contracts cash advance no faxing. It also says the move will benefit consumers and businesses by lowering costs and improving efficiencies.

Why does Medco want to sell? Though already the largest PBM in the country, Medco recently suffered stumbles that eroded its competitiveness, such as losing a major federal employee contract and business with key customer United HealthCare.

Transaction value

Shares of real estate website Zillow have more than doubled in their trading debut Wednesday.

It’s the latest Internet company to climb sharply in its first day of trading following strong openings from jobs networking site LinkedIn, music service Pandora and Russian search engine Yandex _ although Pandora is almost unchanged from its first-day close, and Yandex trades lower than it did on the end of its first day.

Zillow, founded in 2004, provides online listings for more than 100 million homes for sale and rent. The portal’s “Zestimate” helps estimate property values.

Investors are bidding up Zillow Inc. stock, even though the Seattle company has never posted an annual profit.

Zillow priced shares for $20 per share late Tuesday, $2 more than the top of the range it had predicted Friday free credit score online.

In midday trading Wednesday, Zillow had risen to $38.80 after trading as high as $60 earlier in the session. That means that the value of the company has dropped from more than $1.6 billion to about $1 billion since trading began.

Including a private stock sale of 275,000 shares, Zillow raised $74.7 million. It has no specific plans for the funds, saying only that it will use them for general corporate purposes.

The stock is trading under the symbol “Z” on the Nasdaq exchange.

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Toyota’s electric-gasoline hybrid car technology will be utilized to help ease power shortages in Japan’s disaster-struck northeast, part of a set of measures the automaker hopes will underline its commitment to the region.

Toyota Motor Corp. said Tuesday it will donate emergency power supply systems linked to its Prius hybrid cars to prefectures (states) in the Tohoku region ravaged by the March 11 earthquake and tsunami.

The systems will be fitted to about 40 of the automaker’s Prius hybrids. Hybrid vehicles can be used to store and generate electricity because it is partly an electric vehicle that runs on a high-quality battery.

Toyota’s hybrid technology has already been helping in quake-affected areas, which suffered massive blackouts, as an emergency source of electricity.

The automaker said the positive reviews for its Estima hybrid minivan, which comes with regular electrical outlets to plug in and run household appliances for up to two days, are prompting it to make it available as an option for the Prius within a year.

Toyota also announced Tuesday that it will set up a manufacturing training school in the northeast, hoping to send home the message it remains committed to making cars in Tohoku and Japan overall despite mounting obstacles.

Fears are growing that Toyota and other major manufacturers may move production abroad after the tsunami and earthquake left key suppliers in a shambles, disrupting production.

Another setback are the meltdowns at a nuclear power plant, which is crimping the electricity supply and forcing manufacturers to cut back on electricity use.

Recruiting for the new technical school for high school graduates and employees of Toyota affiliates in the northeast will start in July next year. The first class for 10 to 30 students will begin in April 2013, the world’s largest automaker said in a statement.

Toyota also said it will donate 300 million yen ($3.8 million) for educational help for children, many who lost their parents in the disaster, and another 3 million yen ($38,000) to support the arts in Tohoku.

Last week, Toyota announced it was consolidating its operations among Tohoku group companies, and strengthening research and development in the region to make it Toyota’s third production center in Japan _ after its headquarters in central Japan and Kyushu, southwestern Japan.

One vehicle set to be produced in northeastern Japan is a small hybrid that’s a key part of Toyota’s lineup of green vehicles, according to the automaker.

Other Japanese automakers are also eyeing renewable energy as a business opportunity, taking advantage of the power-generating feature of green cars.

Nissan Motor Co. is testing a super-green way to recharge its Leaf electric vehicle using solar power. Honda Motor Co. already has solar panel and home power generating businesses that it is planning to strengthen as interest grows in renewable energy because of the nuclear crisis.

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In a little more than two weeks, the federal government will max out its credit card.

The U.S. Treasury is fast approaching the $14.3 trillion dollar limit on how much it can borrow. That limit is set by Congress. But this year the Republican-led House of Representatives refuses to raise it, at least not without spending cuts more massive than the White House wants to make.

If nothing changes, come Aug. 2, something unprecedented will happen: The government of the United States will run out of money. It will have to either cut spending nearly in half