Money world

European Central Bank President Mario Draghi

Funds that give everyone from retirees to money managers easier access to junk bonds are fueling the biggest price swings in more than two years after their buying power surged tenfold.

Exchange-traded funds that track high-yield bond indexes exceed $22 billion, up from about $2 billion three years ago.

While that’s just 2 percent of the $1 trillion in U.S. corporate speculative-grade debt outstanding, ETFs are among the biggest holders of benchmark securities, including those of casino owner Caesars Entertainment Corp. and HCA Inc.

ETFs, which drew scrutiny last year as riskier versions emerged, are adding to volatility because of rules that promote trading. A measure of price swings for junk bonds was seven times higher in November than May, making it harder for the neediest borrowers to raise capital guaranteed high risk personal loans.

Their influence in the market for high-yield, high-risk debt is becoming similar to what ETFs, which have grown to $1.5 trillion from $109 billion in 10 years, have done in other assets.

While cash has poured into ETFs, they haven’t outperformed. Speculative-grade bonds on average returned 40 percent since April 2007, compared with 36.3 percent for investment-grade debt and 37.3 percent for U.S. Treasuries, according to Bank of America Merrill Lynch index data.

Source

How might winter weather expose roof deficiencies?

Winter is the time of several holidays. What many people don’t understand is that even a minor roof leak can rob an entire holiday of fun and family time. Winter’s low temperatures can also cost homeowners much money in unnecessary heating expenses as a result of inadequate attic insulation.

Even homeowners with a lot of discretionary income don’t like to spend money on high heating bills. For a fraction of the cost of heating a home for five years, installation of fiberglass attic insulation can save thousands of dollars.

Getting a proper roof and attic inspection is a smart step to take now. Major repairs and large utility bills are not necessary when a simple 30-minute inspection is all that is required to determine what is needed to make a roof weathertight and energy efficient.

Homeowners who suspect their roofs might have suffered damage in this year’s storms should get the free inspections offered by most roofing professionals no fax payday loan. Inspections may reveal damage that is not readily visible to homeowners. These are often the same people whose roofs end up being replaced as a result of storm damage they didn’t even know they had.

The point to all of this is that trying to get a roof to last through the winter might be among the costliest of mistakes a homeowner can make. In addition, wasting money as a result of a poorly insulated attic just doesn’t make “cents.” These two items can save a homeowner thousands of dollars by having a trusted contractor inspect the roof and, at the very least, provide peace of mind during the holiday season. After all, worry-free holidays with more cash in hand always make for a happier season.

Source

Courting disaffected conservatives, House Republican leaders offered Friday to overturn a pair of Obama administration environmental policies and avert a deep cut in payments to doctors treating Medicare patients as part of legislation renewing a Social Security payroll tax cut through 2012.

The tax cut, due to expire on Dec. 31, “hasn’t stimulated the economy at all,” said Rep. Louie Gohmert of Texas, one of several Republicans who emerged from a closed-door meeting and spoke unfavorably about the proposed extension at the heart of President Barack Obama’s jobs program.

“But over the long term, it does add to our deficit,” he added.

A one-year extension would cost an estimated $120 billion. The expense would be offset by cuts elsewhere in the budget, but Republican critics noted the savings would take a decade to materialize fully, while the cut itself would last for only one year.

Despite the misgivings, Speaker John Boehner of Ohio and other Republican leaders are committed to passing the legislation, fearing political fallout if payroll taxes rise on Jan. 1 on 160 million wage-earners.

The situation is similar in the Senate, where 26 of 46 Republicans voted Thursday night against a leadership-backed plan to renew the payroll tax cuts.

Officials said that to sweeten the measure for conservatives, House Republican leaders informed lawmakers they are prepared to add a provision averting a 27 percent cut in payments to doctors who treat Medicare patients, effective Jan. 1. The cost is about $38 billion over two years.

In addition, officials said Boehner and the leadership suggested including a provision that delays and eases a proposed Environmental Protection Agency requirement for new pollution regulations on industrial boilers and incinerators. The House approved legislation along the same lines in October, with the backing of 41 Democrats.

The EPA announced during the day it had agreed to ease the rules, although the change seemed unlikely to satisfy critics.

Another provision that would be added to the payroll tax bill is designed to speed construction of a proposed Keystone XL pipeline that pits environmentalists on one side, and industry and some labor unions on the other. The 1,700-mile structure would carry as much as 700,000 barrels of oil a day from tar sands in Alberta, Canada, to refineries in Texas, passing through Montana, South Dakota, Kansas, Nebraska and Oklahoma.

Despite a three-year review by federal agencies, Obama announced recently he would not decide whether to grant a construction permit until after the election in November 2012.

Democrats and Obama want to pay for the additional year of payroll tax cuts by imposing a 3.25 percent surcharge on individuals and couples with $1 million in income or more, and are hoping to use the issue to depict Republicans as benefactors of the wealthy at the expense of the middle class.

House Republicans are opposed to raising taxes, and the leadership reviewed a list of alternative proposals with the rank and file that officials said had originated with Obama or been embraced by the administration earlier in the year.

Among the options are a pay freeze for federal workers through 2015 and a requirement for them to pay a higher share of their pension costs. Raising the cost of Medicare premiums for the well-to-do is also on the list, as are proposals to charge a fee for mortgages backed by Fannie Mae and Freddie Mac, the sale of spectrum rights now held by the government, and a denial of unemployment benefits or food stamps to million-dollar earners.

“Now is not the time to slam the brakes on the recovery. Right now, it’s time to step on the gas,” Obama said in an appearance at a construction site at which he noted that unemployment last month fell to a 2 1/2-year low of 8.6 percent.

If Congress fails to deliver the legislation to his desk before its scheduled adjournment for the year, “we can all spend Christmas here together,” said the president.

Obama is scheduled to leave on Dec. 17 for a Christmas vacation in Hawaii with his family and friends, spokesman Josh Earnest said. Those plans may be delayed by unfinished business with Congress, as it has been in the past.

Source

Phone hacking by the media cost me my job advising Elle Macpherson, a business adviser told a U.K. inquiry Tuesday, describing how the Australian supermodel wrongly blamed her for leaking intimate secrets to the press.

Mary-Ellen Field told an inquiry into British media ethics that the leaks cast a shadow of suspicion over her, with Macpherson becoming convinced that Field was an alcoholic and ordering her to an American rehabilitation clinic. Field said she was shocked by the allegations that she was a drunk who’d been blabbing about her employer, but went along with Macpherson’s recommendation because she needed her job.

“I have a severely disabled child who can never look after himself so walking away from a high-paying position is not a good idea,” Field said.

The rehab was grueling _ she described it as being “like one of those CIA renditions, except they don’t put you in chains” _ but it didn’t do her much good.

Even though staff at the clinic said she was not an alcoholic, Macpherson fired her anyway, and Field lost her job at her firm shortly afterward. She told the inquiry there was no doubt the sacking was the result of what happened with Macpherson.

Field said her employer told her that “I’d been indiscreet, that the clients didn’t trust me.”

Although it has since emerged that the media leaks were the result of phone hacking not indiscretion, Field said she has not heard from fellow Australian Macpherson in years.

Field was one of several victims of press intrusion testifying Tuesday at Britain’s Royal Courts of Justice. The inquiry was set up after the scandal over phone hacking and other underhanded tactics used at the News of the World, which was closed in July amid allegations of widespread criminality no credit check payday loans.

Among those due to testify Tuesday were British comedian Steve Coogan, soccer player Garry Flitcroft, and Margaret Watson, whose daughter Diane was stabbed to death at her Scottish school two decades ago.

The parents of murdered British schoolgirl Milly Dowler and film star Hugh Grant were the first victims to testify on Monday, with Grant being particularly scathing.

He described mysterious break-ins, leaked medical details and hacked voice mails. Grant attacked the Mail on Sunday tabloid, accusing it of spying on his conversations. The paper denies the charge, but lawyers at the inquiry said Tuesday the tabloid’s response smacked of an attempt to intimidate witnesses.

David Sherborne and Neil Garnham pointed to an article on the Mail’s website describing Grant’s allegations as “mendacious smears driven by his hatred of the media.”

“(Is) everyone who has the temerity to give evidence critical of the press is going to face this the following morning?” Garnham asked.

Sherborne also invoked the Mail article when he said many witnesses were worried about “the sort of intimidatory tactics that we’ve seen in the press this morning.”

The Mail’s lead counsel was not at the hearing but was expected to reply later Tuesday.

Source

Workers at Chrysler’s largest United Auto Workers local have voted in favor of a new four-year contract, a sign that the deal will be approved when voting ends next week.

If Chrysler’s 26,000 union workers ratify their contract, they will join workers at Ford and General Motors in approving deals that give up annual pay raises for most workers but replace them with profit sharing and signing bonuses. The deals also promise at least 13,000 new union jobs at all three companies.

Wednesday’s announcement of the vote by union workers at three Chrysler facilities in Indiana comes on the same day that the United Auto Workers said union members had approved a new contract at Ford Motor Co., with 63 percent of those casting ballots in favor. General Motors Co. workers ratified their deal last month.

The contracts set the wages and benefits for 112,000 auto workers nationwide, and also influence the pay at auto plants owned by foreign companies, auto parts supply companies and other industries.

United Auto Workers Local 685, which represents about 3,500 workers at three Chrysler transmission factories in Kokomo, Ind., approved the contract in voting on Tuesday, said Jerry Price, vice president of the local.

He said that 58 percent of production workers voted in favor of the contract, while skilled trades workers such as electricians and pipe fitters split 50-50. Since most of the local’s 3,500 members are production workers, Price said the vote is a good sign that the contract will be ratified by the time voting ends next week.

He conceded that the contract isn’t the best of the Detroit Three automakers and said those who opposed it were unhappy that GM and Ford workers got better signing bonuses.

“Chrysler’s still not financially as good as Ford or General Motors,” Price said. “We live to fight another day.”

The Kokomo local was among the first in the company to count ballots. Voting is expected to end next Tuesday.

The Chrysler deal includes a $3,500 signing bonus and profit-sharing, but it’s not as rich as the contracts at Ford and GM. Ford’s signing bonus, for instance, is $6,000, while GM’s is $5,000. Chrysler Group LLC has yet to make a full-year profit since it emerged from bankruptcy protection in 2009, while GM and Ford have each made billions.

Chrysler CEO Sergio Marchionne, who also runs Italy’s Fiat SpA, said Wednesday in Turin, Italy, that he is confident the deal will be approved by the UAW even though it doesn’t give workers as much as the company’s Detroit competitors.

“I think the UAW and ourselves hammered out the best possible deal that we could. We know the limitations,” Marchionne told reporters.

If the deal is rejected, it would go to an arbitrator, who would hold a hearing and decide what the workers will get. Workers at Chrysler cannot strike over wages under the terms of the company’s 2009 government bailout.

Chrysler hasn’t made an annual profit since 2005. The company earned $116 million in the first quarter, its first quarterly net profit in five years. But it lost $370 million in the second quarter, mostly because of charges for refinancing debt.

Chrysler expects to earn $200 million to $500 million this year, excluding the debt charges. But the profit is tiny compared with its Detroit rivals. Ford reported a profit of $6.6 billion last year, while GM earned $4.7 billion.

The Chrysler deal promises up to 2,100 new jobs and investment of $4.5 billion in U.S. factories.

At Ford, workers overcame early opposition and overwhelmingly approved their contract in voting that lasted two weeks.

More than 22,000 workers, or 63 percent of those who cast ballots, voted in favor of the pact, while almost 13,000, or 37 percent, opposed it, the union said in a statement Wednesday.

Ford promised $4.8 billion in new investments in its U.S. plants and 5,750 new jobs. Both sides reached agreement on Oct. 4, but like the other two companies, workers had to ratify it with a majority vote.

Most workers won’t get annual raises, but they will get profit-sharing checks, inflation adjustment payments and other bonuses worth at least $16,700 through 2015. The deal at GM was similar.

The vote ends the threat of a strike at Ford, the only company where the union could stage a walkout. Strikes over wages also were banned at GM as part of its government bailout. Ford borrowed billions from private sources and didn’t take government money.

UAW Vice President Jimmy Settles, the union’s top Ford negotiator, said in a statement that workers at Ford were frustrated with the economy, a lack of pay increases and what he called “outrageous” executive pay packages, yet they still approved the pact. Eighty-five percent of the union’s 41,000 members at Ford voted, he said.

“As the nation’s economy remains stalled and uncertain and its employment rate stagnates, we were able to win an agreement with Ford that will bring auto manufacturing jobs back to the United States from China, Mexico and Japan,” union President Bob King said.

The company said the deal means it will add shifts at four U.S. factories: Michigan Assembly in Wayne, Mich., near Detroit, where the Focus compact is made; the Chicago Assembly Plant, where Ford makes the Taurus sedan and Explorer SUV; Louisville Assembly in Kentucky, where Ford will make the new Escape small SUV; and the Auto Alliance plant in Flat Rock, Mich., which will get additional production of the Fusion midsize car.

The company also will move production of medium-duty trucks from a joint venture with Navistar International Corp. in General Escobedo, Mexico, to an assembly plant in Avon Lake, Ohio, near Cleveland. That plant now makes E-Series large van.

The fate of the Ford contract was in doubt early when workers in Wayne, Mich., and Chicago voted to reject it. The deal was losing by a narrow margin until Friday, but several factories voted overwhelmingly in favor to tip it toward passage.

“Our agreement is fair to our employees and it improves our competitiveness in the U.S.,” Mark Fields, Ford’s president of The Americas, said in a statement.

Despite the signing bonuses and profit-sharing, analysts expect a minimal impact to Ford’s labor costs, in part because most of the new workers will be hired at lower wage rates than the company’s longtime workers. Brian Johnson, an auto analyst with Barclays Capital, estimates the contract will add around $70 million to Ford’s costs each year. If large numbers of older workers leave under buyout and early retirement offers, Ford will spend less, he said.

Johnson said Ford could see immediate benefits from the union approval with a ratings upgrade, which would help lower its borrowing costs.

Shares of Ford rose 6 cents to $11.84 in afternoon trading Wednesday.

Source

Missouri plans to broaden its business reach overseas by opening three new foreign trade offices, economic development director David Kerr said Tuesday.

The state recently won a federal grant that will fund three new offices for a year, Kerr said. They’ll be placed in Brazil, India and China and Kerr said. The state has already solicited contractors to staff and run the offices, is due to receive applications today and hopes to have them up and running within a month, said Kerr.

Missouri currently has six foreign trade offices, which help small and mid-sized businesses find export clients and develop trade relationships in overseas markets. Four are in Asia, one in western Europe and one in Mexico.

Like President Barack Obama, Mo. Gov Jay Nixon has made boosting exports a cornerstone of his economic development policy. Last year, the value of all goods exported from Missouri grew 35 percent to $12.9 billion. So far this year, exports are running 14 percent ahead of last year’s pace.

Source

Yoshihiko Noda, elected Tuesday as Japan’s sixth prime minister in five years, faces a host of daunting problems, from post-tsunami recovery and an ongoing nuclear crisis to reviving a limp economy and reining in the nation’s bloated debt.

The legislative vote was largely a formality as Noda was chosen head of the ruling Democratic Party of Japan on Monday. But the list of challenges he faces in his new job would make any politician’s head spin.

Beyond providing vision and a strategy for the enormous task of rebuilding the northeastern coast after March’s tsunami_ the worst catastrophe to hit Japan since World War II _ Noda must unify his fractious party and restore public trust amid widespread disappointment over the government’s handling of the disaster and persistent political infighting.

The former finance minister, Noda succeeds the unpopular Naoto Kan, who officially resigned earlier Tuesday with his Cabinet after a tumultuous 15 months in office, during which he was sometimes opposed by members of his own party.

Noda, 54, is a “moderate voice” in the party, Sheila Smith, a senior fellow at the Council on Foreign Relations in Washington, wrote in a comment. “He has a steady temperament and a reputation for fairness in a party where loyalties have been severely tested of late.”

His Cabinet selection _ which could be announced Wednesday _ will be eyed closely to see how he will spread positions among the ruling party’s various factions. In Monday’s party vote, which went to a run-off, Noda defeated a minister backed by powerful party kingpin Ichiro Ozawa, who is embroiled in a scandal. The result was seen by some as a victory over old-style backroom politics.

A fiscal conservative, Noda is respected for his economic credentials. He has been battling the yen’s recent surge, which hurts the country’s vital exporters, overseeing Japan’s intervention in the currency market earlier this month to weaken the yen.

He has also voiced support in the past for raising Japan’s 5 percent sales tax to reduce the nation’s national debt, twice the nation’s gross domestic product, although he has toned down that tax talk lately.

Given the pressing problems at home, Noda will likely focus on disaster reconstruction and other domestic matters.

But he could face trouble in his relationship with China over past comments about convicted wartime leaders revered at the Yasukuni Shrine in Tokyo, where the souls of all Japan’s war dead are enshrined. Earlier this month, Noda reiterated his claim that the wartime leaders had paid their debts and should no longer be seen as war criminals. He made similar comments in 2005.

Yasukuni visits by postwar politicians have often enraged Japan’s neighbors, who bore the brunt of Japan’s colonial aggression and are sensitive to any efforts by Japan to whitewash its past. He and the rest of Kan’s Cabinet chose not to visit the shrine this year.

China’s official news agency warned Noda on Monday to not to ignore Beijing’s “core interests” or seek to portray it as a threat to regional peace and stability. In a harshly worded editorial, Xinhua demanded Noda not visit Yasukuni and said Tokyo must recognize China’s claim over Japanese-controlled islands in the East China Sea known as Senkaku, or Diaoyutai in Chinese.

The two countries got into a spat last year when a Chinese fishing boat captain was arrested _ and later released _ by Japan after his boat sailed close to the islands.

Earlier this month, two Chinese patrol boats entered waters near the islands, prompting strong protests from Tokyo.

Source

Foreign investors cut their holdings of U.S. Treasury debt in June for the first time in more than two years. The decline came at a time of anxiety about whether the United States would raise its borrowing limit.

China, the biggest buyer of U.S. Treasury debt, increased its investment for a third straight month. But Japan, the second-largest buyer, along with Brazil, Russia, Hong Kong, and a group that includes the Bahamas, Bermuda, the Netherlands and the Cayman Islands cut their investments.

Overall foreign holdings dropped 0.4 percent to $4.5 trillion. It was the first decline since April 2009.

Much of the decline was driven by private investors. Their net purchases of long-term U.S. Treasurys fell a record $18.3 billion in June. Net purchases are the difference between what investors buy and sell in one month.

The decline lowered private investors’ overall foreign holdings by $15.1 billion.

Overall foreign holdings of governments, which include central banks, dropped only $1.7 billion. Governments account for roughly 72 percent of total foreign holdings of U.S. Treasury debt.

Congress and the Obama administration reached a deal on Aug. 2 that would allow the U.S. government to increase its $14.3 trillion borrowing limit by more than $2 trillion. It was approved hours before the U.S. faced a potential default on its debt.

The full increase is dependent on lawmakers reaching agreement on an equal amount of cuts to the deficit over the next decade cash advance flexible payments. Up to $1.5 trillion of those cuts must be negotiated by a special committee of lawmakers over the next three months.

The total deficit cuts fell short of the $4 trillion in cuts that Standard & Poor’s said was needed to achieve a credible deficit-reduction plan. As a result, S&P downgraded the U.S. government’s credit rating from AAA to AA+.

Economists said investors likely worried about how the debate in Washington would be resolved, and those worries contributed to the overall decline. Many economists expect foreign holdings will drop further in July because the borrowing limit was not raised until August.

However, they predict foreign holdings will increase in August. Congress approved an increase in the borrowing limit, and Europe’s debt crisis has made U.S. Treasurys more seem like a safer bet, they said.

“Now people are saying they want to hold U.S. Treasuries. They don’t care what S&P said,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “They are saying they have nowhere else to put their money.”

In June, China increased its holdings 0.5 percent to $1.166 trillion.

Japan trimmed its holdings 0.2 percent to $911 billion. Britain, the third-largest foreign holder of Treasury securities, boosted its investment 0.8 percent to $349.5 billion.

Source

China has ordered ConocoPhillips to immediately halt output at two offshore platforms in the Bohai Bay off its northeast coast, saying recent oil spills were not fully under control.

The State Oceanic Administration said Wednesday it wanted the company to completely eliminate any risks of leaks after spills were found from platforms B and C of the Penglai 19-3 oilfield, which is operated by Houston-based ConocoPhillips’ China subsidiary.

It said satellite monitoring and inspections detected oil near the platforms and said there were signs further leaks may occur.

Last week, ConocoPhillips China, which partnered with state-run China National Offshore Oil Corp. in developing the Penglai field, said it had cleaned up oil from two spills there last month which had covered some 840 square kilometers (324 square miles).China reported a fresh but smaller oil spill Tuesday in the Bohai Bay in another field operated by CNOOC.

Conoco said Wednesday that amounts of oil, “no more than liters per day,” continue to seep out from a naturally occurring fault near platform B. It said final cleanup operations are ongoing near platform C, where “trace amounts” of oil and gas bubbles continue to be observed from the sea floor.

Conoco, based in Houston, estimated that a combined 1,500 to 2,000 barrels of oil and oil-based drilling fluids were spilled. No oil has reached the shore, and no one was injured in the spills, Conoco said.

China reported a fresh but smaller oil spill Tuesday in the Bohai Bay in another field, operated by CNOOC.

The 1 square kilometer (0.4 square mile) spill was caused by a malfunction in the centralized control system for the Suizhong 36-1 oilfield’s central platform, ocean authorities said.

CNOOC said in a statement Tuesday the malfunction had been fixed and that it expected that the oil spill would be cleaned up by the end of the day.

The Oceanic Administration has ordered all offshore oil operators to conduct risk assessments and beef up their emergency plans to prevent or minimize any damage to the marine environment, which is also suffering from algae blooms and red tides.

Source