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November 25, 2010

SAP hit with $1.3 billion verdict in Oracle trial

Filed under: mortgage, news — Tags: , , , — Snowman @ 5:03 am

A federal jury on Tuesday ordered SAP AG to pay $1.3 billion to its archenemy, Oracle Corp., for stealing customer-support documents and software in a scheme to siphon off customers.

The verdict amounts to more than half of SAP’s total profit last year and stunned the German software maker. It had only set aside $160 million for anticipated damages, and already paid $120 million of that to Oracle’s lawyers.

The penalty is one of the largest on record for software piracy, and has the potential to reshape the business software landscape because of the extent of the damage to the pocketbook and reputation of one of its biggest players.

The verdict came after less than a full day of jury deliberations, and followed a three-week trial that turned into a Silicon Valley sideshow.

Stoking the drama were colorful public provocations by Oracle’s outspoken CEO Larry Ellison, the looming possibility of a crushing verdict against a company that makes ubiquitous business software, and the specter of Silicon Valley’s most elusive new celebrity, Hewlett-Packard Co. CEO Leo Apotheker.

In the end, Oracle turned the trial into a double feature: a grinding attack on SAP, whose dominance in business applications is under assault from Oracle, and HP, another technology industry heavyweight with which Oracle shares a decades-long partnership that is now coursing with bad blood.

“For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle’s own customers,” Oracle co-president Safra Catz said after the verdict. “Right before the trial began, SAP admitted its guilt and liability. Then the trial made it clear that SAP’s most senior executives were aware of the illegal activity from the very beginning.”

Representatives of SAP, which is based in Walldorf, Germany, expressed disappointment and said the company will “pursue all available options, including post-trial motions and appeal if necessary.”

If the size of the punishment is ultimately allowed to stand, SAP’s takeover in 2005 of a small software-support firm called TomorrowNow, which dragged the company into this mess, will end up costing SAP significantly more than the $10 million it paid for the acquisition.

“This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation,” SAP said in a statement. “The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TomorrowNow, we have accepted liability, and have been willing to fairly compensate Oracle. … Our focus now is looking forward.”

It’s difficult to think of a more thorough legal victory for a software maker pursuing a copyright infringement claim, said Santa Clara University law professor Eric Goldman.

Besides collecting the damages, Oracle was able to publicly humiliate one of its biggest rivals while making another competitor, HP, squirm as it skirted questions concerning the whereabouts of its new CEO, Leo Apotheker. Oracle repeatedly tried to serve a subpoena on Apotheker, a former CEO and top sales executive at SAP, but couldn’t find him within the jurisdiction of the Oakland federal court payday loan.

“Oracle has always dreamed big in this case and all their dreams came true,” Goldman said. “It just turned out to be a real windfall for them.”

SAP boxed itself into a corner by admitting it had trampled on Oracle’s copyrights before the trial began. That left SAP with little do but plead for leniency and “it turned out to be a tough sales pitch,” Goldman said. “This was just a bad case for SAP, up and down the board.”

Oracle, based in Redwood Shores, is the leading maker of database software, which helps companies organize their information. Its aggressive expansion into business applications has forced Oracle into a faceoff with SAP, the leader in that space.

HP was a late addition to the dustup: After HP’s former CEO, Mark Hurd, was ousted in August in the wake of a sexual harassment investigation, Oracle hired Hurd, HP hired Apotheker, and Ellison used both of HP’s decisions as reasons to blast the company.

At the heart of Oracle’s claim against SAP was a series of golden gotcha moments, in which Oracle noticed unusual behavior on secured websites it maintained to help customers solve problems, and uncovered a scheme in which an extraordinary amount of software and documents were being plundered and shipped back to TomorrowNow servers.

Oracle technicians spotted the scam by investigating accounts that were registered with clearly bad information (such as phone numbers like “777-7777″) and user names seemingly connected to the SAP subsidiary (names such as “Tom Now”).

SAP admitted that the now-shuttered subsidiary was secretly siphoning off instruction manuals and technical specifications for Oracle’s software. But its lawyers argued that Oracle’s claims of injury were exaggerated.

Oracle demanded billions based on its estimate of the value of its intellectual property and business it lost.

SAP posited that TomorrowNow actually wasn’t that good at stealing customers from Oracle, and that SAP should only pay for money it made from the 358 customers it gained with the stolen data.

The jury sided with Oracle’s argument that the value of its intellectual property is vast, and that aggressively enforcing copyrights is critical to nourishing a healthy technology industry and funding innovation.

SAP conceivably could ask the judge to lower the damages determined by the jury, but that is usually a difficult argument to win, Goldman said.

“The size of this verdict further reduces SAP’s flexibility,” he said.

SAP shares fell 67 cents, or 1.4 percent, to $48.02 in extended U.S. trading, after the verdict was announced. The stock had fallen 71 cents, or 1.4 percent, to finish the regular trading session at $48.69.

Oracle shares rose 37 cents, or 1.4 percent, to $27.56 in extended trading, after falling 86 cents, or 3.1 percent, to finish the regular session at $27.19.


November 22, 2010

How dancer Karen Kain invests her money

Filed under: Uncategorized, news — Tags: , , , — Snowman @ 7:15 am

Renowned classical ballerina Karen Kain made her name performing around the world, has been a leading supporting of Canadian arts and is the artistic director of The National Ballet of Canada. The latest performance under her charge is Chroma & Serenade & Emergence, onstage from Nov. 24 to Nov. 28 at the Four Seasons Centre for the Performing Arts. Kain, 59, was born in Hamilton and lives in Toronto.

She spoke with the Star???s Emily Mathieu about how financial success influences artists, the folly of betting on ticket sales or the stock market and the allure of stamps.

How did your childhood influence your attitude toward money?

My parents were not wealthy, and with four kids they watched every penny. They were practical and frugal but we were very comfortable, with enjoyable holidays (we often went camping) and treats. I am very grateful for their sensible, no-nonsense attitude toward money.

What has been your savviest investment?

As a young dancer, I was invited to guest around the world and these invitations supplemented my income from The National Ballet of Canada. I was able to buy a very small, charming semi-detached house in Cabbagetown. Cabbagetown enjoyed a real estate boom in the 1980s and it proved to be a very good investment.

What is the best financial advice you ever received? What advice would you pass on to young performers?

I was encouraged to buy a house instead of renting, which is old advice but continues to be very wise. I would encourage young performers to invest in themselves through a RRSP or a home. They should find a financial adviser they trust and start a plan for some savings.

How does financial success influence art or artists? Does it have an impact?

Having financial stability, for many artists, is success and this gives them the freedom to explore and create to the best of their ability. There are many senior artists in this country who live below the poverty line and a recent study was an eye-opener at how difficult life is for artists as they age. The disconnect between artists and financial planning has changed dramatically in recent years and I am so impressed with how financially knowledgeable many of the young dancers are today cash advance flexible payments.

Have you learned any financial lessons the hard way?

You can never predict how many tickets you will sell in the theatre or what will happen on the stock market. I am very conservative in my investing but have been stung, like many people, so don???t invest anything that you are not willing to lose.

What was your first significant (or large) purchase?

My first significant purchase was the little house I bought in Cabbagetown when I was in my 20s.

How do you prefer to pay, cash, card or debit?

I prefer to use my credit card. It provides an excellent list of accounts at the end of each month and keeps me clear-eyed about any of my indulgences.

Do you bank online?

No, I still like to spread everything out on my desk with a pen, chequebook and book of stamps. I know it is very old fashioned but I feel a great sense of accomplishment when those envelopes slide into the mail box.

How do you tip?

I always recognize good service and probably tend to over-tipping.

Do you worry about retirement? At what age do you think you will be able to stop working? Do you plan to?

I don???t worry about retirement ??? remember, I have already retired once. I am lucky to be doing what I love and will continue to do it for as long as I feel I am contributing. I don???t put an age to retirement but I know that my instincts, which have rarely been wrong as far as my career is concerned, will tell me when I am ready.

Given the choice, would you prefer to purchase items that are antique or new?

I love both, especially the eclectic look of the new mingled with antiques. We live in an old original farmhouse in the city so it already is an antique in the modern city and is perfect.

Are money and success the same thing?

Of course not. Success is entirely personal and money is . . . well, it???s money.

Can money buy happiness?

We know it can???t. Money can provide stability and that will help alleviate stress or anxiety but not produce happiness.


November 20, 2010

Feds: Oil spill claims process needs transparency

Filed under: finance, marketing — Tags: , , , — Snowman @ 9:32 pm

The Justice Department is urging the administrator of the $20 billion fund for Gulf oil spill claims to show greater transparency about the process so the victims can feel they are being treated fairly.

Associate Attorney General Thomas J. Perrelli said in a letter to Ken Feinberg on Friday night that this is a critical time for the claims fund as it transitions from initial emergency payments to paying interim and final claims.

Perrelli said he continues to have concerns about the pace of the claims process. He said many of the people and businesses who have claims under review don’t have the means to get by while they wait for their claims to be processed.

“While you have indicated that poor documentation has made it difficult to address some claims quickly, over the past two weeks the number of claims requiring additional documentation has actually gone down _ while the number of claims under review has increased significantly,” Perrelli wrote to Feinberg easy payday loan.

Feinberg told The Associated Press on Saturday he has paid out roughly $2 billion already to some 125,000 claimants. He estimated the total draw on the fund to date at $6 billion, which he said includes government and cleanup claims. An official with the Deepwater Horizon Oil Spill Trust could not immediately be reached to verify that figure. Feinberg described the payments to individuals and businesses as generous, but agrees there is room for improvement.

“I think it’s always wise to listen carefully to constructive criticism from the Department of Justice,” Feinberg said. “They want me to improve transparency, and I plan to do so.”

On the transparency issue, Perrelli said more information should be provided to victims about the principles being used to decide claims. He said there is very little reason not to do so.

BP PLC agreed to pay Feinberg’s law firm $850,000 a month to administer the fund. Feinberg also oversaw the $7 billion government fund for families of victims of the Sept. 11, 2001, terrorist attacks.

When the oil spill claims fund was announced in June, officials said the fund could be used to pay all claims, including environmental damages and state and local response costs, with the exception of fines and penalties.

Money left over likely goes back to BP instant payday loan no faxing. The Justice Department verified that leftover money would go back to BP, but said the money would first be held in escrow for a number of years to make sure all claims are settled.

“I don’t really worry about that because if there’s money left over from the $20 billion, so be it, as long as anyone eligible has gotten paid,” Feinberg said.

An offshore oil rig being leased by BP exploded in the Gulf of Mexico off Louisiana on April 20, leading to more than 200 million gallons of oil spewing from BP’s undersea well. Eleven workers on the rig were killed.


Tax Threatens Budget as Greece Tries to Keep Bailout Promises - Bloomberg

Filed under: money, mortgage — Tags: , , , — Snowman @ 12:32 pm

Greece’s budget planning is going awry because of a perennial problem: taxes.

Finance Minister George Papaconstantinou plans to tackle tax evasion and cut spending on health care and transportation as revenue fails to meet targets. Yesterday, he reduced the estimate for 2010 net budget revenue a second time, to 6 percent compared with 13.7 percent when the country agreed in May to a 110 billion-euro ($150 billion) bailout from the European Union and International Monetary Fund.

“We all know the country’s economy is at a critical turning point,” Papaconstantinou said at a press conference in Athens. There is “a big difference between what we are doing now and what we did in May,” he said.

Greece has among the poorest rates of tax collection in Europe and avoidance remains rife, as more than 33 percent of workers are listed as “self-employed” and yet they provide just 4 percent of revenue, according to estimates from Athens- based EFG Eurobank. Inspectors from the EU and IMF began this week a review of progress to approve a third loan payment.

Taxes are vital to lower what was the largest budget deficit in the euro region last year at 15.4 percent of gross domestic product, according to the IMF. The shortfall will be 7.4 percent in 2010, the Finance Ministry said yesterday.

‘Strange Economy’

“We had an un-functioning, strange economy for 20 years and 18 months doesn’t get it back into place,” said Jason Manolopoulos, who helps manage $100 million for a hedge fund at Athens-based Dromeus Capital. “It’s not only tax evasion, it’s that the Greek tax system is so complicated it pushes people into the grey. It’s going to take time.”

Money from income, corporation and sales taxes increased 3.7 percent in first 10 months of the year, the ministry said. Revenue from taxes is among the lowest in the EU at 32.6 percent of GDP, compared with the 39.3 percent average for the 27 EU nations, according to a 2009 Eurostat report.

Reductions to wages, pensions and investment have helped mask lagging revenue in Prime Minister George Papandreou’s deficit-cutting drive. The government is counting on the last two months of the year to boost state income, buoyed by motor fees, real estate taxes and the effect of increases in sales taxes, even as the economy contracts 4.2 percent.

The IMF said Sept. 14, after approving a second loan installment, that curbing tax evasion and improving collection are key to achieving the deficit-reduction pledges.

“The program’s credibility hinges critically on improving tax compliance,” the IMF said. “Without improved compliance, restoring fiscal sustainability will likely require additional hikes in tax rates and painful expenditure cuts.”

Crimes Unit

In the first nine months of 2010, the country’s Financial and Economic Crimes unit imposed 3.1 billion euros of fines, almost double the year-earlier figure, said Ioannis Kapeleris, who runs the office, in an Oct. 7 interview. His office isn’t responsible for collecting the money, he said.

“We’re being asked today to fix the errors of a decade,” he said. “There was an absence of tax collection. Restoring this mechanism and getting it working again requires some time. It can’t be done from one day to the next.”

The government will announce specific steps next week to curb tax evasion and overhaul tax services, including abolishing 100 offices and deploying collectors elsewhere, Papaconstantinou said yesterday. All the measures announced in the 2011 budget were approved by officials from the EU and IMF, he said.

Back Taxes

The budget includes 1.6 billion euros to be raised from clamping down on tax evasion by collecting back taxes and fines, and a new system to settle disputes to increase revenue next year without raising tax rates, Papaconstantinou said. The government extended the deadline to Nov. 29 after collecting 300 million euros, he said yesterday.

Greeks are complaining about notifications being sent to the dead, unemployed and tax-paying enterprises.

Theodoros Hiotakis, a 57-year-old with a veterinary practice in Athens, said he was “horrified” when he was told he owed 2,500 euros of back taxes.

“I pay my taxes every year, every single year,” Hiotakis said. ‘We’ve told the tax department there’s a mistake and we’re waiting to see what they’ll say.”

Deputy Finance Minister Dimitris Kouselas said that of the 1.5 million notices sent by the tax office, some may be mistakes. Preliminary results from the amnesty show “a significant response from taxpayers,” he said.

Concerns about the fairness of Papandreou’s austerity measures may risk the social and political support that is essential for the program to succeed, the IMF said.

‘Poor State’

Ninety-five percent of income-tax payers declare annual income of less than 30,000 euros, according to data compiled last year by the Federation of Greek Industries.

“The problem with Greece is that it is a poor state with rich people,” said Kapeleris at the Financial and Economic Crimes unit. “Some people didn’t just magically achieve wealth. They were breaking the law, evading taxes.”

Papandreou revealed a budget deficit after coming to power in October 2009 that was twice what was reported by the previous administration, in part exacerbated by falling tax revenue as the country geared up for elections.

Additional tax evasion in the two months before elections amounts to 1.5 percent of GDP when aggregated over all the elections since the return of democracy in 1974 after the military junta, according to a study by Spyros Skouras, a professor at the Athens University of Economics and Business, and Nikos Christodoulakis, a former economy minister.


November 19, 2010

Irish Bailout May Unleash Market Vigilantes on Portugal - Bloomberg

Filed under: Uncategorized, technology — Tags: , , , — Snowman @ 1:23 am

A resolution of the Irish debt crisis may shift the burden of speculation to Portugal.

While officials such as European Central Bank Vice President Vitor Constancio predict a bailout of Ireland will reduce financial pressures in the euro region, analysts from Citigroup Inc. and Nomura International Plc say any relief would be short-lived as investors turn their focus to the next-weakest peripheral nation.

The markets indicate that country is Portugal with 10-year bond yields of 6.92 percent, compared with 8.31 percent in Ireland and 11.71 percent in Greece, which received rescue funds in May from the European Union and International Monetary Fund. Portuguese Finance Minister Fernando Teixeira dos Santos said Nov. 15 that while “there is a risk of contagion,” that doesn’t mean the country will seek financial aid.

“Portugal isn’t in the situation that it is now because of Ireland,” said Steven Mansell, director of interest-rate strategy at Citigroup Global Markets Ltd. in London. “If Ireland reaches an agreement to tap the European Financial Stability Facility or some other mechanism to support its banking sector, I don’t think that will alleviate the pressure on Portugal.”

The government has forecast that economic growth in Portugal will slow to 0.2 percent in 2011 from an estimated 1.3 percent this year. Portugal has made less progress at taming its deficit than some of the other peripheral nations. In the first nine months, the central government’s deficit rose 2.3 percent from a year earlier. That compared with a decline of more than 40 percent in Spain and more than 30 percent in Greece.

Record Yields

While Portugal has no plans to sell more bonds this year, so-called market vigilantes drove up yields on its debt during the past month amid doubts about the country’s efforts to reduce the budget deficit. The 10-year yield reached a euro-era record of 7.25 percent on Nov. 11, 484 basis points higher than benchmark German bunds of similar maturity.

Investors who push up yields to alter government policy are known as vigilantes, a term coined in 1984 by economist Edward Yardeni, president of Yardeni Investments Inc. in New York. They were credited with forcing Bill Clinton to cut the U.S. deficit after he came into office in 1993, helping drive 10-year Treasury yields down to about 4 percent by November 1998 from above 8 percent in 1994.

While Irish and Portuguese bonds probably would rise with a bailout agreement for Ireland, any gains wouldn’t change the underlying problems for peripheral Europe, according to Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank.

Greece Than Ireland

“Wait a few weeks and the markets will just go for someone else, with Portugal at the front of the queue,” London-based Diebel said. “The vigilantes pushed Ireland into the same situation Greece is in. Why would you conclude they won’t do the same to Portugal?”

Ireland’s debt crisis was triggered by the rising cost of bailing out the nation’s banks, including Anglo Irish Bank Corp. and Allied Irish Banks Plc. While Portugal doesn’t face a crisis in its financial industry, it has a larger debt burden and the country has almost 10 billion euros of debt that comes due during the first half of 2011, data compiled by Bloomberg show.

Teixeira dos Santos, the finance minister, said in parliament two days ago that Portugal wants to continue financing itself in the markets.

‘Significantly at Risk’

“Portugal needs more cash than Ireland does because they go to the market on a regular basis,” said Nick Firoozye, head of interest-rate strategy at Nomura in London. “The market may move onto Portugal at some point because it’s significantly at risk.”

While Ireland started to reduce spending in 2008, Portugal has been slower to address its fiscal deficit, the fourth- largest in the euro region, and the government failed to reach an agreement with its biggest opposition party on the 2011 budget plan until the end of last month.

Portugal has proposed to lower its total wage bill for public workers by 5 percent, freeze hiring and raise the so- called value-added tax by 2 percentage points to 23 percent.

The government is counting on exports such as paper and wood products to support expansion. Portugal’s economy unexpectedly grew 0.4 percent in the third quarter from the previous three months, beating economists’ estimates for a contraction, as exports rose and imports grew at a slower pace.

Still, the Organization for Economic Cooperation and Development yesterday forecast the economy will swing to a contraction of 0.2 percent next year.

“Their view on fiscal consolidation is still premised on an excessively-optimistic growth projection,” Citigroup’s Mansell said. “Portugal is hugely reliant on the fortunes of its neighbors and it takes a huge stretch of the imagination to see growth remaining buoyant.”


November 17, 2010

IPOs are back: But where the heck is tech?

Filed under: management, online — Tags: , , , — Snowman @ 9:15 am

This is going to be a hectic week for followers of initial public offerings. Ten companies are currently on tap to make their debut.

If you didn’t know any better, you’d think it was 1998 all over again — except for one thing. There aren’t any major tech companies on this week’s docket.

General Motors, of course, is grabbing all the headlines. The automaker is tentatively set to return to the public markets (GM ticker and all) on Thursday.

The government is selling a portion of the stake it acquired in GM as part of its bailout. The hope is that a leaner-and-meaner post-bankruptcy GM will eventually generate a profit — or at the very least, a smaller loss — for taxpayers.

But GM is not the only well-known firm that’s going to test the public markets. Caesars Entertainment, the casino company formerly known as Harrah’s Entertainment, is set to start trading this week too. Ditto for big consulting firm Booz Allen Hamilton and brokerage firm LPL Financial.

But none of those companies are your classic IPO candidates — hot, rapidly growing upstarts backed by venture capital firms. Instead, Caesars, Booz Allen Hamilton and LPL all count private equity firms as their main investors.

Caesar’s, back when it was still known as Harrah’s, was bought in 2008 by Apollo Management and TPG. One of the main investors in Booz Allen Hamilton is the Carlyle Group. And LPL is majority-owned by Hellman & Friedman and TPG.

This is an interesting trend that isn’t expected to change any time soon. If you look at a list of some of the more high-profile firms that have already filed to go public, you won’t find sexy Silicon Valley darlings like Facebook, Twitter, Zynga and LinkedIn.

None of those firms are expected to file for an IPO until next year, at the very earliest. Many think it won’t be until 2012 or 2013 that any of social networking’s Big Four become publicly traded companies.

Experts say it’s a sign of the times. With the economy still merely chugging along as opposed to solidly growing, the best candidates to go public are companies that are turnaround stories, not hot growth stocks.

"Private equity firms buy things out of the rubble, companies that were cold- shouldered by the market. They buy companies on the cheap, clean them up and take them public again," said Ben Holmes, founder of, a Boulder, Colo.-based research firm focusing on IPOs and secondary offerings.

GM clearly fits that bill. Just substitute the "Treasury Department" and "taxpayers" for "private equity firms."

Holmes does not expect a comeback in venture-backed tech IPOs until it’s clearer that the recovery in the economy is real and sustainable.

Josef Schuster, CEO of IPOX Capital Management, a Chicago-based firm that oversees the Direxion Long-Short IPO Fund, agreed. The price gains for private-equity backed IPOs are likely to be muted in the short-term, since they don’t have a lot of immediate growth potential, he added.

"These stocks probably won’t pop at the open, but they all look reasonable as investments for the long-run," Schuster said.

The window for venture-backed IPOs hasn’t completely slammed shut. But investors looking for more exciting new stocks may have to take risks on smaller companies based outside the United States.

Schuster points out that one of the better-performing recent IPOs is a Chinese company that did have venture backing. Mecox Lane (MCOX), a Shanghai-based online apparel retailer, shot up 57% on its first day of trading late last month.

Sequoia Capital — the venture capital firm that has invested in Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500), Oracle (ORCL, Fortune 500) and many other successful tech companies — is one of the investors in Mecox Lane. Sequoia also invested in another recent Chinese IPO, although not in the tech world: It’s a backer of vegetable producer Le Gaga (GAGA).

Along those lines, another Chinese venture-backed company is set to go public this week. Schuster said he would not be surprised if it wound up trumping GM as the week’s top IPO performer.

BitAuto, a Beijing-based company that provides Chinese consumers with online pricing information about cars, is scheduled to start trading later this week. Venture capital firms DCM and Legend Capital are two of BitAuto’s investors.

It may not be the worst thing in the world that the IPO calendar is currently dominated by stodgier companies. It seems investors learned their lesson from the dot-com bubble in 2000: The days of getting rich quick off a tech IPO are long gone.

With that in mind, Holmes said that of all of this week’s IPOs, the one to watch is GM.

"GM is important for the psychology of the market. It may be a case of ‘as goes GM, so goes stocks’ for the rest of the year," he said. "It feels like we really are crawling out of the hole."

- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of, and Abbott Laboratories, La Monica does not own positions in any individual stocks.  


November 15, 2010

Top Democrat backs 1099 requirement repeal

Filed under: finance, management — Tags: , , , — Snowman @ 7:36 pm

Top Democrats are uniting with Republicans in a show of support for small business owners: Senate Finance Committee Chairman Max Baucus, D-Mont., said Friday that he will introduce legislation to repeal the expanded 1099 reporting requirements set to take effect in 2012.

"I have heard small businesses loud and clear and I am responding to their concerns," Baucus said in a prepared statement. "Small businesses are the backbone of our economy in my home state of Montana and across the country, and they need to focus their efforts on creating good-paying jobs — not filing paperwork."

The measure was adopted in March as part of the massive health care reform law, but only came to light months later when advocacy groups drew attention to the provision. Starting in 2012, businesses will be required to issue 1099 tax forms not only to contracted workers (as they already do) but also to any individual or corporation from which they buy more than $600 in goods or services in a year.

Tax experts say that change would require business filers — including freelancers and sole proprietors — to issue millions of new 1099 forms each year.

Business owners say that the change — intended to raise tax revenue by increasing compliance — will swamp them with an onerous flood of paperwork. Republicans have lead the charge for repeal of what they called a "job-killing" requirement no credit check payday loans. National Taxpayer Advocate Nina Olson warned that the burden of filing all those additional forms "may turn out to be disproportionate" to the benefit it will deliver.

In September, Sen. Mike Johanns, a R.-Neb., proposed a measure to repeal the requirement entirely. Sen. Bill Nelson, a Florida Democrat, countered with a more moderate proposal at the same time, but neither measure passed.

Since then, however, President Obama indicated that he would support a repeal of the measure.

Baucus did not indicate when he plans to introduce repeal legislation. His office did not immediately return a call seeking further comment.

Small business advocates have been lobbying hard to get the measure repealed.

"We are pleased to see that our leaders on both sides of the aisle are willing to do the right thing for our nation’s job creators," Dan Danner, president and CEO of National Federation of Independent Business, said in a prepared statement. "Small business should be the one thing that unifies our leaders as we work to come out of these difficult economic times."  


Forecasters trim recovery expectations: Philly Fed

Filed under: business, online ads — Tags: , , , — Snowman @ 7:24 pm

The recovery in the U.S. economy and labor market is expected to be modestly slower in the fourth quarter than previously expected, according to a survey of forecasters released on Monday.

The Federal Reserve Bank of Philadelphia’s survey of 43 professional forecasters sees the economy growing at an annual rate of 2.2 percent in the current quarter, down from the estimate of 2.8 percent three months ago.

The unemployment rate was forecast to be 9.6 percent in the fourth quarter, in line with the previous estimate. But forecasters revised down the growth in jobs expected over the next four quarters.

Forecasters see nonfarm payroll employment growing at a rate of 86,600 jobs per month this quarter and 104,200 jobs per month in the first quarter of 2011. This is down from previous expectations of 114,100 and 159,300, respectively.

Forecasters cut their inflation expectations. Over the next 10 years, forecasters expect headline CPI inflation to average 2.2 percent at an annual rate, down from 2.3 percent in the last survey. The 10-year outlook for PCE inflation of 2 percent is lower than the previous forecast of 2.11 percent.

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November 14, 2010

Asia-Pacific leaders vow to work for freer trade

Filed under: mortgage, term — Tags: , , , — Snowman @ 5:44 am

Asia-Pacific leaders endorsed a blueprint for future growth Sunday that calls for pushing ahead with free trade agreements and rolling back protectionist measures put in place during the financial crisis.

Wrapping up the annual Asia-Pacific Economic Cooperation, the leaders of 21 economies put aside differences over currency policies to voice a strong commitment to increasing the trade and investment crucial to the region’s growth and resilience.

Leaders representing the U.S., China, Japan, Russia and other regional economies also agreed on the need to reduce trade imbalances and government debt and avoid sharp, potentially disruptive fluctuations in exchange rates.

While many participants remained at odds over currency policies and other issues, they appeared to agree on the vital role freer trade can play in sparking growth.

“We reaffirm our unwavering commitment to achieving free and open trade and investment in the region,” the leaders said in a declaration released after the talks ended Sunday.

The leaders also agreed to take “concrete steps toward realizing a Free Trade Area of the Asia-Pacific,” but set no timetable. The declaration said this goal should build on regional groupings such as the Trans-Pacific Partnership, a U.S.-backed free trade agreement that nine APEC members are negotiating.

At APEC, where congeniality usually trumps conflict, leaders of the world’s three largest economies pledged Saturday not to backslide into retaliatory trade tactics, after discord over such issues marred the meeting of the Group of 20 major economies in Seoul, South Korea, late last week.

The 21 APEC members, whose economies account for more than half of all world commerce, have agreed to refrain from imposing any fresh barriers to trade and investment, or measures to stimulate exports, until the end of 2013.

“We commit to take steps to roll back trade distorting measures introduced during the crisis,” said the declaration titled “Yokohama Vision” after the Japanese port city where the summit was held. The statement acknowledged that some economies may have resorted to emergency tactics to blunt the impact of the global slowdown.

Asia’s robust and resilient growth has hinged on trade, and APEC, founded in 1989, has made knitting the region closer together its main objective.

The document also notes a need to reduce trade imbalances and government debt to help ensure stable and sustainable economic growth. In a rare reference to contentious currency issues, it includes a pledge to move toward more “market-determined exchange rate systems.”

Washington contends that China’s currency, the yuan, is significantly undervalued, giving Chinese exporters an artificial advantage in overseas markets and contributing to the huge U.S. trade deficit. China and some other countries have slammed the U.S. for printing money to help spend itself out of recession, a policy they say is driving the value of their own currencies higher, flooding their markets with excess cash and fueling inflation.

But APEC’s focus is mainly on long-term goals, such as working toward a vast region-wide free trade zone that would encompass all its member economies, from giants China and the U.S. to tiny Brunei and Hong Kong.

Forging such a free trade area, an idea first floated by the U.S. in 2006, would happen outside the confines of APEC, which is not a negotiating body. One possibility would be to build on the Trans-Pacific Partnership, which currently includes only four small economies _ Brunei, Chile, New Zealand and Singapore. The U.S., Australia, Malaysia, Vietnam and Peru are in talks to join them.

Other countries such as Japan are exploring the possibility of joining these trade talks _ although Japanese farmers are vehemently opposed because they worry an influx of cheaper agricultural goods would ruin them.

For the first time, the leaders also approved a growth strategy calling for balanced, sustainable and innovative growth both in the region and within their own borders. Countries should provide better access to credit and social services for women, the poor and other vulnerable groups, it said. They also intend to improve energy security and reduce carbon emissions that contribute to global warming.

Although APEC’s focus is mainly economic, it noted the need to combat terrorism and other threats to security and stable growth, such as corruption, food shortages, disease and natural disasters.

APEC also said that 13 of its member economies had made “significant progress” toward a goal set out in 1994, in Bogor, Indonesia, to achieve free and open trade and investment by 2010 for industrialized economies, while conceding more work was needed.

Developing economies in the region were given until 2020 to reach these so-called “Bogor goals.” However, eight such members volunteered to be evaluated along with five industrialized ones, the U.S., Canada, Japan, Australia and New Zealand.


November 12, 2010

How $10 a week on your mortgage gets you a new car

Filed under: economics, finance — Tags: , , , — Snowman @ 4:08 pm

Just by increasing your mortgage payment you can save enough over time to buy a new car, send a child to university or boost your retirement savings.

How to do it? Take your lunch to work more often, iron your shirts instead of dry cleaning them, or give up a few lattes every week, and put the money into your mortgage.

???It’s $10 a week, easy money. These things are relatively small potatoes, but they add up over a year,??? says Martin Beaudry, vice-president of lending at ING Direct, who irons his own shirts for the week after dinner every Sunday night.

If you changed your mortgage to every two weeks from monthly on a  $250,000 mortgage, at 5 per cent and added $57 to each payment, it is the same as making 13 months of payments a year, not 12, Beaudry says.

???You’d save $30,000 in interest and be mortgage-free four years sooner.???

That’s money in the bank.

His example helps makes the point that over a 25-year mortgage, the interest paid can approach the amount borrowed to buy a house or condo, depending on the interest rate.

Think of investing that!

On a $400,000 mortgage, at 2 per cent interest, borrowing costs are $108,141. However, at 6 per cent, that more than triples to $367,766.

Although rates aren’t that high now ??? a five-year mortgage can be found for less than 4 per cent ??? it’s worth noting how much interests costs can vary.

And it’s important to know that the first five years of a mortgage typically see three-quarters of your payments go to interest and just one-quarter to pay down the principal. So any money put down to reduce the debt then has a magnifying effect.

That’s why mortgage broker Romana Bozic, of The Mortgage Group, recommends boosting mortgage payments ever so slightly ??? as long as you can afford it.

???Adding $25 to a mortgage payment doesn’t make much of a difference to your lifestyle, but it will make a difference to your mortgage,??? she says.

???People get that. It’s what they spend at Starbucks or magazines or lunch at work. They say, ???I can take my lunch every other day.’???

She believes it’s important to balance paying down the mortgage with saving for children’s education and for retirement. Extra cash should go to RRSP contributions, which can be used to reduce taxable income and then get a tax refund. This money can then be used to pay down the mortgage, saving interest costs down the road.

???That seems to be the popular solution,??? agrees Beaudry, who adds it’s important for homeowners not to ???overextend??? themselves when getting a mortgage.

Getting too large a mortgage can be a problem, agrees Sandra Foster, an author on personal finance issues and president of Headspring Consulting Inc.

Although the general rule of thumb is that a household spend no more than 33 per cent of its gross income on the mortgage, that can be too high for some families.

???The bank will lend you more money than you can afford. Add your lifestyle costs into your budget before you assume the mortgage,??? Foster cautions. ???I don’t know about your hydro bill, but mine’s going up more than 2 per cent. You’ve got to look at your overall spending.???

The only time to be putting extra money on the mortgage is when families truly have a surplus, Foster adds. ???If there really is extra cash and all your bills are paid and you don’t owe anything on a credit card at 18.9 per cent interest.???

It’s great to pay mortgages off early ??? the average in Canada is about 18 years ??? but the latest they should be paid is at retirement time, Foster says.

That’s because a person’s income goes down when it comes time to live on a pension, so it’s important to have a lower cost of living.

???That means you don’t have to save quite as much.???


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