Money world

Snail mail might soon get even slower.

The cash-strapped U.S. Postal Service announced Tuesday that it will incur about $238 billion in losses in the next 10 years if Congress doesn’t permit it to revamp its outdated business model.

The agency is proposing an adjusted mail service schedule, which will likely cut Saturday delivery, and eliminating its prepaid retiree health benefits. That alone, it says, will cut $90 billion in costs over the next 10 years.

The challenges hurting USPS’s bottom line reflect a "macro change in society," Postmaster General Jack Potter said at a press conference Monday previewing the proposed changes. "All posts around the world are challenged, just as we are, by the diversion of hard copy to electronic medium."

USPS unveiled a list of cost cutting measures, including closing some branches and raising its prices, two moves which would both require Congressional approval. The agency also said that it expects to save another $123 billion between now and 2020 by renegotiating transportation contracts, cutting work hours, and expanding use of self-service kiosks in grocery stores and other popular retail spots — measures that don’t require Congressional approval.

USPS is trying to curb steep losses. It posted a $3.8 billion loss in its 2009 fiscal year, the latest in a multiyear string of whopping losses. Mail volume was down 12.7% for the year, a trend the agency expects to continue over the next decade as more consumers opt for online bill payments and message delivery.

The Post Office was $10 billion in debt as of Sept. 30 — not far off from its $15 billion debt limit, which the agency expects to hit in its 2011 fiscal year.

USPS spent $4.8 million on studies by outside consultants, Accenture, the Boston Consulting Group and McKinsey and Co. to forecast a 10-year outlook and present a plan that the agency calls both "ambitious and aggressive." Any changes to the government agency’s business model would have to be reviewed by the Postal Regulatory Commission, presented in a series of public hearings and approved by Congress.

The Post Office, an independent government agency, does not receive taxpayer dollars and is funded entirely by its own revenue. However, the Postal Reorganization Act of 1970 constrains the agency’s operations. It prohibits USPS from closing small branches based solely on economic factors, and prevents the agency from expanding its services beyond postal delivery free credit report online.

Post offices in some countries, including Italy and Japan, have boosted their sales by offering ancillary services, like banking. But unless Congress steps in, USPS cannot expand beyond the postal-mail realm.

Postmaster General Potter said relaxing some of the agency’s stringent regulations could allow it to tap into its strengths as one of the largest retail networks in America, as well as "The Most Trusted Government Agency" — a title USPS has won the last five years in a row.

With 32,000 post offices throughout the country, USPS has more retail locations than McDonald’s (MCD, Fortune 500), Starbucks (SBUX, Fortune 500), Wal-Mart (WMT, Fortune 500) and Walgreens (WAG, Fortune 500) combined, Thomas Dohrmann, partner at McKinsey & Company, said in the presentation Monday. That said, the average foot traffic for a post office is about one tenth of that at Walgreens — a mere 600 weekly customers.

USPS has already begun taking the axe to its budget. The agency made $6 billion in cuts last year, reducing its workforce by about 40,000 employees and chopping overtime hours, transportation costs and other expenses. Congress passed legislation allowing the organization to cut retiree health benefit payments by $4 billion.

Despite those measures, the agency still expects a net loss of $7.8 billion in fiscal 2010.

USPS employs about 600,000 workers and currently has a nationwide hiring freeze. Additionally, Chief Financial Officer Joseph Corbett says he expects to reduce its payrolls by the equivalent of 50,000 full-time employees in fiscal 2010 through natural attrition and by reducing overtime hours. The agency also wants to renegotiate its contracts with four unions in order to gain greater flexibility in scheduling part-time workers and moving employees across departments.

A significant postal price hike is also under consideration, although the price most consumers care about — the rate for a first-class stamp — is locked in at 44 cents for 2010.

"At the end of the day, I’m convinced that if we make the changes that are necessary, we can continue to provide universal service for America for decades to come," Potter said. "We can turn back from the red to the black, but there are some very significant changes that are going to have to be made." 

Source

We provide no fax payday loans up to $1500, In 1-6 hours money direct in to yours bank account.

Target Corp. on Friday announced a new national TV delivery and installation service.

Target (NYSE: TGT) customers who purchase TVs in-store can have the products shipped to their home and installed staring at $99.

The nationwide service is part of a growing partnership with Minneapolis-based Zip Express. The two firms joined up in 2008 to deliver and install TVs that customers purchased over Target.com.

According to the firm’s web site, Zip Express has 16,000 installers from coast to coast and delivers to every U guaranteed online personal loans.S. ZIP code.

Some prices for Minneapolis-based Target’s services include:

• Any size TV delivery and setup - $99
• TV in-wall installation - $199
• Delivery and wall mount - $249
• TV recycling - $50
• Video game counsel set-up - $99

Source

In today’s troubled economic climate, almost no residential community is immune to the threat of foreclosure. And a foreclosure can affect more than just a single home. Proactive measures must be taken to ensure the overall vitality of entire neighborhood or residential community.

Many such communities have a homeowners’ association or a board of trustees. They have a fiduciary duty to resolve delinquent association fees.

To that end, the company that manages the association should have in place a collection procedure and an attorney to aid the board in implementing decisions related to any foreclosure. An attorney has the ability to place a lien, allowing the association to attempt to recover delinquent association fees.

Maintaining a foreclosed property’s curb appeal to the community association’s standards is critical to sustaining the real estate value of the other homes in the area. The association’s management company, board members, trustees and homeowners should work together to protect their investments.

To preserve adjacent properties and to protect homeowners’ interests when a residence becomes vacant, community associations should keep utilities on. Continued presence of heat and electrical services prevent pipes from freezing and breaking in cold weather. They also give an empty residence a lived-in look. Also important is keeping the residence free of trash or anything else that might cause odors, attract insects or produce other problems. Neighbors can help by contacting the association’s management at the earliest sign of foreclosure activity.

Source

Russia’s economic decline abated in the third quarter as companies began restocking inventories depleted during a record slump in the first half of the year.

Gross domestic product fell 8.9 percent from a year earlier, in line with the government’s estimate, after a 10.9 percent contraction in the second quarter, the State Statistics Service said on its Web site today. On the quarter, output grew a non-seasonally adjusted 13.8 percent.

“The model of economic development has rapidly changed,” said Anton Struchenevsky, an economist at Troika Dialog in Moscow. “Investors are much more sensitive to risk. The euphoric component has gone and this is impeding lending. There is a slight improvement, but it would be a great illusion to think we will return to the pace of growth we had before the crisis.”

The plunge in output is slowing in Russia after the government pumped $26 billion of stimulus into the economy in the first 10 months and oil prices rebounded from the start of the year. President Dmitry Medvedev has called the country’s dependence on oil “humiliating,” even as it pushes the economy toward a 1.6 percent expansion in 2010 after a forecast 8.5 percent drop this year.

Almost 9 percentage points of the 10.4 percent plunge in output in the first half was because of “a massive inventory adjustment,” says Martin Gilman, former head of the Moscow office of the International Monetary Fund, and OAO Gazprom, the world’s No. 1 gas producer, accounted for most of the slump. European consumers tapped stored gas as the delayed effect of dearer oil drove up gas prices earlier this year.

Worst Performance

Russia’s economy is the worst performer among the so-called BRIC group of emerging markets that include Brazil, China and India.

The ruble strengthened 1.3 percent to 30.0150 against the dollar at 1:01 p.m. in Moscow. The currency gained 1.2 percent versus the euro to 44.2867. Russian stocks pared gains after the report, up 0.3 percent to 1308.97 at 1.02 p.m., after earlier rising as much as 0.9 percent.

Gazprom said last month that sales volumes to Europe and other export markets fell 24 percent in the first half from a year earlier as the economic slowdown eroded demand. Since July, Gazprom’s exports were higher than in the same periods of 2007 and 2008, the company said.

‘Major Driver’

“A major driver of Russia’s sharp contraction was the inventory correction and we are seeing the end of that,” said Vladimir Osakovsky, an economist at UniCredit Bank in Moscow, before the data was released payday loans. “Any improvement in Russia’s overall economic performance is linked to this process.”

The price of Urals crude oil has rebounded 70 percent this year as global demand for commodities recovered. Energy, including oil and gas, accounts for about 70 percent of Russia’s export earnings.

The recovery may be slow. Nine interest rate cuts since April failed to spur bank lending and rekindle growth in industry and a slump in manufacturing deepened last month after export demand sagged.

VTB Capital’s Purchasing Managers’ Index fell to 49.1 from 49.6 in October. The index, which is based on a survey of 300 purchasing executives, in September rose above 50, signaling the industry’s first expansion in 14 months.

Output Contraction

A contraction in industrial output accelerated in October to 11.2 percent from 9.5 in the previous month, the statistics service said last month.

“Industry hasn’t returned to stable growth,” Finance Minister Alexei Kudrin said this week. “There are still problems.”

Lenders’ corporate loan books fell 0.5 percent in October, after declining 0.7 percent in September, according to data published on the central bank’s Web site Dec. 3. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline.

The contraction this year may have been as much as 3 percentage points deeper without anti-crisis spending, Deputy Economy Minister Andrei Klepach said on Dec. 10. The economy will probably shrink between 8.5 percent and 8.7 percent this year, he said.

As of Nov. 1, the government had spent 784 billion rubles ($26 billion) of 1.14 trillion rubles earmarked for stimulus measures, Deputy Finance Minister Tatiana Nesterenko said the same day.

Next year “there will be growth, but it will be growth after a big fall,” Kudrin said. The recovery will be complicated as governments retract stimulus programs and raise interest rates. “In the next two to three years this will be a factor that increases the cost of money and slows growth.”

Source

The banking business has the blahs in St. Louis. Profits are down, fewer borrowers are making their loan payments, and capital levels are slipping.

Banks with money to lend say they can’t find enough borrowers who fit their new, higher credit standards. Troubled banks are cutting back on loans.

That’s the upshot from third-quarter results for St. Louis banks as reported by the Federal Reserve Bank of St. Louis. Of 78 locally headquartered banks, 19 are running a loss for the year.

The good news is that few seem in danger of failing soon. Only two tiny local banks — WestBridge and Champion — fail to meet the federal standard as "well capitalized." Gateway Bank was also on that worry list until banking regulators took control of the north St. Louis bank and sold it early this month to Central Bank of Kansas City.

Rick Hummell, CEO of WestBridge, said a group of investors has agreed to recapitalize the bank, lifting it out of the worry zone. The deal still needs approval from shareholders and regulators, he said.

Officials of Champion Bank could not be reached for comment.

Other local banks are having significant problems. First Bank, the eighth-largest bank in the region, lost $274 million in the first nine months of this year. The bank’s capital level is slightly above the "well capitalized" level, but its holding company, First Banks, has fallen to the "adequately capitalized" level.

First Banks, owned by Jim Dierberg, was one of the few St. Louis banks with major operations outside the region. It lost heavily on California real estate development loans and on lending around Chicago.

Although a large majority of banks are profitable, the losses at a few are throwing the entire industry average into the red. The 78 banks lost a combined $239 million in the first nine months of this year. Without First Bank, whose losses are concentrated in California, St. Louis-based banks would have made a slight combined profit.

St. Louis bank performance numbers have been heading south for more than a year. The average bank made an annualized 3 cent profit on each $100 of loans and securities in the September quarter, down from 36 cents a year ago. In normal times, most banks earn more than $1 on each $100 in assets.

As of September, 2.7 percent of loans were far behind in payments at St. Louis banks, compared with just 1.7 percent a year earlier. The leverage capital ratio, a measure of capital adequacy, shrank to 9.6 from 10.3 percent. A 5 percent ratio is needed for "well capitalized" status.

That analysis excludes several large banks headquartered in other parts of the country but with major St. Louis market share, such as U.S. Bank and Bank of America. Such banks don’t break out St. Louis lending numbers.

Troubles are moving down banking’s food chain. Early this year, the crisis was concentrated in the nation’s larger financial institutions, suffering from big losses on mortgage-backed securities, derivatives trading, consumer lending and other management flubs payday loans.

Then smaller banks began feeling the heat, as housing developers went bust. Now the recession is hitting commercial real estate owners — bread-and-butter borrowers for many St. Louis banks. Office buildings and shopping centers are losing tenants, and the rent they pay. The situation is worst among suburban strip shopping centers that lack an anchor tenant, said Ron Barnes, chairman of Midwest BankCentre in Lemay, which is profitable.

Local banks have 37 percent of their assets invested in loans secured by commercial property, compared with a national average of about 17 percent.

Many such loans were written in mid-decade when credit standards were lower. As the loans mature, borrowers find they can’t meet banks’ new, higher standards.

"2010 is going to be another tough year in banking as they work through the remainder of their commercial real estate problem," said Julie Stackhouse, chief bank regulator at the Federal Reserve in St. Louis.

The 78 local banks had $1.22 billion in bad loans in September, but half of them were at First Bank. The figure is up $1.05 billion in the June quarter and $723 million in September 2008.

If things aren’t getting better, at least things are not getting a whole lot worse, said Stackhouse. "We’re waiting for some stabilization."

There’s debate about when that might come. "If nothing else really happens dramatically, then I think we’re over the hump," said Robert Witterschein, president of Southwest Bank. At this point, bankers have identified their likely problems and are coping with them, he said.

But that assumes commercial real estate prices will not fall dramatically from here. Others are worried about that assumption.

"This thing is not close to the end," said Leon Holschbach, CEO at Midland States Bank, a profitable operation based in Effingham, Ill., with branches in Chesterfield and the Metro East.

Overall lending remains stagnant. Local banks had $29.4 billion in loans on their books in September, practically unchanged from June, and down from $30.2 billion in September of last year.

But that figure disguises much churning among lenders. Banks facing problems are trying to shrink their balance sheets by selling off assets. Such banks generally can’t lend freely and turn away good customers.

"We had a couple of really good businesses call us and say their lenders told them to take their business elsewhere," said Dennis Melton, district director of the small-business administration. "Some banks are pushing out the future to survive today."

Source

UBS boss Oswald Gruebel set an ambitious target for annual pretax profit of $15 billion, vowing to rebuild the loss-making bank and win back clients after the subprime crisis and a bitter U.S. tax row.

Chief executive Gruebel told investors on Tuesday his new strategic plan was a “revolution” and reaffirmed his commitment to an integrated banking model twinning traditional wealth management strength with a broad investment banking offering.

But, true to the 65-year-old German’s straight-talking reputation, he did not promise overnight miracles for the Swiss bank.

“A transformation like this is not easy. If it was easy I would not be here,” banking veteran Gruebel, seen as a turnaround guru for reviving Swiss rival Credit Suisse, told UBS’s first strategic presentation since his appointment.

The mid-term target would bring UBS slightly above its pre-crisis performance in 2006, and Gruebel said this would be achieved through a new culture of disciplined risk-taking, strict cost and capital control and adherence to regulation.

“There will be three guiding principles: reputation, integration, execution: this is what we will stand for in the market,” Gruebel told a packed Zurich auditorium. “We want to ensure that what has happened to UBS should not happen again.”

Gruebel’s new targets for the next three to five years also include a cost-to-income ratio of 65 to 70 percent compared to 110 percent now, and return on equity of 15 to 20 percent, compared to negative 16 percent.

“The long time horizon for the turnaround could require a lot of patience and nerves of steel from investors direct lender payday loans.” said Kepler analyst Mathias Bueeler.

UBS shares, which have risen 18 percent this year while the wider DJ Stoxx European banking sector has gained nearly 60 percent, were up 0.23 percent at 17.52 Swiss francs at 1226 GMT, outperforming its peers.

The stock has consistently underperformed rivals in 2009 and fell again after UBS posted a larger-than-expected third quarter net loss on November 3 of 564 million francs, the seventh out of eight straight quarters the Swiss bank has been unprofitable.

UBS has not given any guidance for the full year, but while its investment bank has recovered at an operating level, the bank is seen heading for another loss, albeit much smaller than last year’s pretax loss of almost 28 billion francs.

According to Thomson Reuters I/B/E/S data, the bank is seen making a pretax profit of 7.7 billion francs in 2010.

RESTORING CLIENT CONFIDENCE KEY

Gruebel, credited with turning around Credit Suisse during his 2002-2007 tenure there, said he wanted UBS to boost its number one position as banker to the super rich and remain the number one bank in Switzerland, while focusing growth on Asia.

UBS, the world’s No. 2 wealth manager with $1.7 trillion in assets and the leader in the super rich space, is suffering client withdrawals across the board. 

Read more

Delphi, the auto-parts maker that emerged from a four-year bankruptcy in October, is forming a new board of directors and will name retired Dupont Chief Executive John Krol as its chairman, the Wall Street Journal said.

Initially, Delphi Chief Executive Rodney O’Neal would not be offered a board seat, the paper said.

On Wednesday, Delphi plans to announce seven members of a board that includes a majority of directors with no ties to either former parent General Motors Co GM.UL or Delphi’s lenders, the paper said.

Delphi could not be immediately reached for comment outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Erica Billingham)

Read more

South Africa is paying the price for failing to narrow the gap between rich and poor since the end of apartheid in 1994 as it struggles to pull the country out of recession.

Interest rate cuts that have boosted consumer spending worldwide have failed to have the same impact in South Africa, because only one in six has any form of debt in the formal market, according to Finmark Trust, a research company.

Poor South Africans are getting more pessimistic about the economic outlook as job losses mount, even as the rich benefit from lower borrowing costs and begin to loosen their purse strings. The dual economy is threatening to damp retail sales at companies such as Shoprite Holdings Ltd., the country’s biggest food retailer that targets low-income earners through its Usave and Shoprite stores.

“We continue to be the most unequal society in the developing world,” said Haroon Bhorat, director of the Development Policy Research Unit at the University of Cape Town. “A very unequal growth path is bad for growth.”

South Africa’s Gini coefficient, which measures inequality, was 0.666 in 2008, compared with 0.665 in 1994, according to government data. A reading of 1 reflects complete inequality and zero represents complete equality. Brazil’s Gini coefficient, which used to be level with South Africa, is 0.526.

“I’m worried about losing my job,” said Gladys Mashaba, 33, who lives with her husband and three children in Alexandra township in Johannesburg and works as a cleaner for 3,000 rand a month. “I have to cut my spending. I look for all the specials at the supermarket. That’s the only time I can go shopping.”

Sales Slump

Retail sales fell 3.9 percent in August from a year ago, the seventh consecutive month of contraction, according to the median estimate of four economists surveyed by Bloomberg. The statistics office will report the numbers on Oct. 14.

Six interest rate cuts since December helped push consumer confidence among people earning more than 5,000 rand ($675) a month to 5 in the third quarter from 1 in the previous three months, the Bureau for Economic Research said on Sept low interest payday loans. 30. For those earning less than 5,000 rand a month, sentiment fell to minus 4 from plus 7.

“Interest rate cuts don’t have any effect on me,” said Thabo Matlala, who earns less than 5,000 rand a month as a security guard and has seen many of his colleagues lose their jobs. “I don’t have loans.”

In the lowest income group, who earn a monthly income of less than 2,000 rand, confidence slumped to minus 11 in the third quarter from plus 5, the bureau reported. About 39 percent of the population live on less than 388 rand a month.

Job Losses

“Interest rate cuts haven’t allayed fears on income growth and job security,” said Danelee van Dyk, an economist at Johannesburg-based Standard Bank Group Ltd., Africa’s biggest lender. Falling incomes and employment losses “highlight the risk of social unrest.”

That discontent has led to a series of disturbances in townships around Johannesburg since July to protest against a lack of housing, government services and jobs.

South Africa’s jobless rate rose to 23.6 percent in the second quarter, the highest of 62 countries tracked by Bloomberg. A government report published on Sept. 25 ranks South Africa as the most inequitable country in the world, with the richest 20 percent of the population accounting for 70 percent of total income last year.

“Income inequality in the long run is bad for growth,” and South Africa has had “the most consistently unequal society in the world,” Cape Town university’s Bhorat said at the release of the report. “It is a threat to social stability and to growth itself. The long-term trend is a worrying one.”

Hard Times

Consumers account for two-thirds of expenditure in the economy, and low-income earners make up the bulk of spending on food and other basic items, said van Dyk. Household consumption expenditure will probably contract 3.1 percent in 2009, compared with expansion of 2.3 percent last year, she added.

Source

Bankruptcy professionals have a grim view on the U.S. corporate recovery, despite a recent rise in stocks and an uptick in business deals.

“I think it’s going to be a sad holiday season,” said Lynn Tilton, chief executive officer of Patriarch Partners, a private equity firm that specializes in distressed companies.

Consumers will be stingy with their spending, keeping malls and resorts empty, bankruptcy professionals said at the Reuters Restructuring Summit in New York this week. Even the wealthy will steer clear of the wild, brand-conscious spending that marked the last few years.

“No one is conspicuously consuming they way they did in 2006,” said William Derrough, a managing director at investment bank Moelis & Co. “That excess spending creates little boutique hotels, it creates that restaurant that sells the $19 doughnut and the Kobe beef burger. Those things don’t need to exist.”

Higher unemployment and little bank lending will keep a lid on economic gains, likely forcing thousands more companies into default, bankruptcy or liquidation.

“I just don’t see a rapid recovery,” said Tilton.

EMPTY BERMUDA RESORT

U.S. unemployment has climbed to its highest rate since June 1983, to 9.8 percent, according to U.S. Labor Department data on Friday.

Bankruptcy pros who managed to eke out a small vacation between an avalanche of bankruptcies this year that included automaker General Motors GM.UL and American outdoor apparel chain Eddie Bauer Holdings Inc say resorts are deserted.

“I snuck away last week to Bermuda and the hotel was empty,” said one restructuring expert. “Absolutely empty.”

Miserly bank lending is exacerbating the problem. Until banks lend again to small-sized businesses or lend to companies with below-investment-grade ratings, unemployment will rise still more.

“At the risk of being cynical, which if you are in the restructuring business comes relatively easy, the banks are making money, but they aren’t lending money,” said Henry Miller, chairman and co-founder of investment bank Miller Buckfire.

In addition, there is some $117 billion in debt maturities due in 2011, according to a study by Bain Corporate Renewal Group. Think that figure is high? Debt maturities spike to $165 billion in 2014.

“It’s hard to see how all of that can be refinanced,” said Miller.

SECTORS 

Read more

The jobless rate does not have to start falling before the Federal Reserve starts tightening monetary policy, a top Fed official said on Thursday.

Jeffrey Lacker, president of the Richmond Federal Reserve Bank, told Bloomberg Radio that he places more weight on the outlook for economic growth, and in particular, consumer spending.

“I don’t think it’s a show stopper if the unemployment rate hasn’t started falling,” Lacker said, reiterating similar comments he made in August.

But the Fed needs to look for growth to establish itself firmly before raising interest rates, he said.

The Federal Reserve aggressively slashed its benchmark federal funds rate to near zero last year and put in place a vast array of emergency support programs as it battled a deep recession.

Some Fed officials, including Governor Kevin Warsh, have argued that once the Fed decides to tighten policy, the pace of interest-rate hikes could also be swift.

“I think there is something to that, but we’ll have to judge as the data comes in,” Lacker said. “The question of timing and pace, that is a big open question.”

The Fed has the tools it needs to shrink its balance sheet, Lacker said. He also noted the Fed’s ability to tighten even with a large balance sheet by paying interest on reserves.

“We want to think about doing both … How we time those out, how we stage those, I think that’s for future work,” he said.

Inflation expectations are well-anchored, he said.

Lacker said he had been heartened by recent data on consumer spending, but added that it will take months before it is clear whether the consumer spending recovery is a trend.

That said, the risk of double-dip recession — in which the economy falls back into recession after a brief recovery — has “diminished quite substantially.”

(Additional reporting by John Parry; Editing by Jan Paschal)

Read more