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A preliminary ruling issued Friday by the World Trade Organization has found that European jet maker Airbus received billions of dollars in illegal subsidies, according to a report in The Wall Street Journal, citing a person familiar with the matter.

The U.S. Trade Representative’s office acknowledged receipt of the ruling Friday. "We are still reviewing the interim report, which is about 1,000 pages long," said USTR spokeswoman Deborah Mesloh.

The interim ruling, marking the beginning of the end for a five-year dispute between the United States and the European Commission, won’t be released publicly. Instead, the two parties will have time to study the decision and file comments before a final report later this year.

A second interim ruling related to European complaints that Boeing Co. also received subsidies is expected in six to nine months.

In that suit, the European Union complained that Boeing received subsides in the form of research and development funding from the U.S. Defense Department and NASA. Europe also claims the company enjoys "significant" federal tax breaks.

The two parties will have time to study the organization’s decision and file comments before a final report later this year.

Friday’s ruling answers U.S. charges that Airbus benefited from no-interest or low-interest loans from the Brisih, French, German and Spanish governments to launch new jets, including the A380 and the A350XWB. If a particular aircraft did not do well, the United States claims Airbus was under no obligation to repay the loan used auto loans.

Airbus is a unit of the European Aeronautic Defence & Space Co.

Boeing hopes a favorable ruling for the U.S. will force Airbus to find alternative funding, but it could also benefit the Chicago manufacturer in the bid to build the U.S. military’s next generation of aerial-refueling planes.

Northrop Grumman Corp. and its partner EADS have offered an Airbus A330 platform for the contract. In February 2008, the Air Force awarded the team with the contract, only to renege five months later after the Government Accountability Office backed Boeing complaints that the bidding process was shoddy.

Boeing has offered its 767-200ER to replace the Eisenhower-era Stratotankers currently in service.

Later that year, Defense Secretary Robert Gates postponed the contract until the next administration to allow a cooling-off period.

"As a legal matter, the tanker program won’t be affected at all," said Bob Novick, Boeing’s outside council. "But there is a law that directs the U.S. Air Force to consider whether the subsidies uncovered by the WTO impact the bidding."

Eventually, the Air Force will want to replace its total fleet of more than 500 tankers. That could add up to hundreds of billions of dollars in future revenue.

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BreakingPoint Systems, a company that provides tools for testing computer networks, could have run an ad: "Seeking marketing director with social media expertise." Instead, the 65-employee business, based in Austin, let the ideal candidate find it by using Twitter, the popular microblogging service that allows users to send messages of no more than 140 characters.

Pam O’Neal, BreakingPoint’s vice president of marketing, received tweets from Boston marketing professional Kyle Flaherty expressing his interest in the position. (Flaherty had heard about the job from a former colleague who does business with BreakingPoint.) Impressed with Flaherty’s experience, communication skills and blog, O’Neal began a Twitter exchange with him.

Within weeks of first contacting O’Neal, Flaherty headed to Austin for an interview and met the company’s executive team, including CEO Des Wilson. After several more weeks of Twitter exchanges, Flaherty accepted BreakingPoint’s job offer and moved his family to Texas.

"I wasn’t always a social media fan," Wilson says, "but it lets you reach creative leaders like Kyle."

The company now does much of its recruiting through such sites as Twitter, Craigslist, Facebook and LinkedIn. O’Neal says social media tools are especially attractive for small businesses eager to cut hiring costs. Contracting a recruiter to find an executive who earns $150,000 annually can cost $15,000 in fees. Posting ads on job search sites like Monster.com (MWW) could mean spending hundreds of dollars — and precious hours poring over resumes. In contrast, social media tools are mostly free and offer added value: Candidates bring their own online networks, blog content and references, which speeds up the interview process.

Like BreakingPoint, Cincinnati-based Lucrum, a 100-employee IT consulting firm with 2008 sales of $15 million, recently began using social media to recruit.

"It can give you deeper insight into a potential employee," says David Bowman, Lucrum’s director of marketing. He notes that this more personal approach to hiring can benefit smaller businesses, which often place a premium on finding employees who fit the company culture. "One bad hire for a small company can be a death knell," he says.

But Bowman admits that social media isn’t a magic bullet. "Its biggest drawback in recruiting is that it won’t help you appreciate nonverbal communication dynamics," he says. "While Facebook, LinkedIn and Twitter can provide a wealth of information about a potential job candidate, they aren’t substitutes for face-to-face communication."

Utilizing social networks to hire could also reduce workplace diversity, warns David Teten, CEO of Teten Advisors, a private investment firm in New York City.

"Generally sociologists find that people’s social networks tend to be made up of others like them," he says. Complying with employment discrimination laws is just one reason to consider diversity, Teten observes. "If your workforce looks just like you, you’ll have a more homogeneous worldview and be less likely to learn of outside market opportunities," he says.

Tableau Software, an 88-employee Seattle software firm, has mined social networks such as Craigslist, LinkedIn and Twitter to recruit employees. But the company, whose 2008 sales totaled $20 million, has also reached beyond these sources to search for highly specialized workers. Earlier this year, when Tableau CEO Christian Chabot needed a Web developer well versed in Drupal, a content-management platform used to publish Web content, he skipped LinkedIn and went straight to social-networking sites where Drupal enthusiasts gather. Tableau hired a developer it discovered in the Seattle Drupal user group.

To be sure, social media enables businesses to find talented employees efficiently. But getting to know the person behind the blog post, profile page or tweet is essential for companies determined to thrive.  

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CIT Group Inc was in talks with a bondholder group on Saturday, as the lender tried to hammer out a rescue financing deal before markets opened and avoid bankruptcy, a source close to the situation said.

Talks with the bondholder group, advised by investment bank Houlihan Lokey, for a $2 billion to $3 billion financing were expected to continue into Sunday with the aim of announcing a deal by Monday morning, the source said.

If a deal is not reached, the 101-year-old lender that services nearly one million small- and mid-sized businesses could file for bankruptcy protection as soon as Monday, according to the source, who did not want to be identified because talks are private.

Talks are also going on a parallel track for debtor-in-possession (DIP) financing if the lender has to file for bankruptcy, the source said.

JPMorgan Chase & Co, Goldman Sachs Group Inc, Barclays PLC and Morgan Stanley, which is also advising the company, might take part in a DIP financing, the source said.

CIT spokesman Curt Ritter declined to comment.

The ripples from a potential CIT collapse could be widespread and worsen the effects of the economic downturn for some firms.

In one early sign, an Alabama hardware supplier filed for bankruptcy blaming the CIT situation for its woes no fax payday loan.

Moore-Handley Inc said in court papers filed Friday that it was forced to seek bankruptcy protection “due to difficulties accessing funds” under their financing arrangements with CIT.

Still, the impact of CIT’s demise would likely pale by comparison with the collapse of investment bank Lehman Brothers last September, analysts said.

CIT gained a bank holding company status in December so it could draw $2.33 billion of taxpayer money from the U.S. Treasury Department’s Troubled Asset Relief Program.

The company, however, faced a worsening liquidity crunch amid tight credit markets, forcing it to seek further help.

But the Obama administration declined CIT additional help, saying it had set high standards for granting aid to companies, leaving the embattled lender to work out a deal with private investors to avoid collapse.

Talks with JPMorgan Chase and Goldman Sachs for short-term financing did not lead to a deal, leaving the lender to try to get rescue funds from the bondholders.

CIT has about $40 billion of long-term debt, according to independent research firm CreditSights. 

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Home prices continued to tumble in April, falling 18.1% from a year earlier — but the change from March narrowed sharply, indicating that housing markets may be starting to turn.

The 20-city slice of the S&P/Case-Shiller Home Price index recorded a drop of 0.6% from March to April, compared with a 2.2% drop in the prior month. The index has declined every month since July 2006.

"The pace of decline in residential real estate slowed in April," says David Blitzer, Chairman of the Index Committee at Standard & Poor’s. "Thirteen of the 20 metro areas also saw improvement in their annual return compared to that of March."

Not only that but every metro area save one — Charlotte, N.C. — reported improvement in their monthly return compared with March.

"While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions," said Blitzer. "We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."

Blitzer pointed to some factors that may be lifting the housing markets. For one thing, the stock market bottomed out in March and started a strong recovery. The S&P 500 has gained about 37% since then. Consumer confidence has also improved, making house hunters more likely to pull the trigger on deals.

Not all optimistic: The housing market picture is still very murky, according to Pat Newport, a real estate analyst with IHS Global Insight. He’s not convinced that the improved April report means much more than a seasonal variation in housing markets. Spring is, historically, a strong time of year for housing markets.

He said that not only are home prices still falling but other metrics, such as unemployment and foreclosure rates, are worsening as well easy payday loans.

"Foreclosures are still driving markets, and the rate of foreclosure is still going up," Newport said. "I think that’s going to continue"

Job losses will all but guarantee that will happen, according to Newport, especially since price declines have put so many homeowners underwater, owing more on their mortgages than their homes are worth. By some calculations as many as 20% of homeowners are underwater.

When people are underwater and they’re losing their jobs or some of their income, that’s bound to result in more foreclosures, more vacant homes for sale and more downward pressure on prices.

Huge declines from peaks: Phoenix, where homes have lost 35.3% of their value over the past 12 months, was the worst performing market over that period. Las Vegas prices plunged 32.2% and San Francisco dropped 28%.

Denver prices fell the least over the last 12 months, down 4.9%, followed by Dallas at 5% and Boston at 7.7%.

Prices in Dallas rose 1.7% between March and April, the largest increase among the 20 cities. Las Vegas prices dropped 3.5%, the biggest decline — which was still narrower than the month before.

Dallas also has suffered the smallest decline from the top of its market, off just 9.6% from its peak in June 2007. The rest of the cities have all suffered double-digit percentage drops from their peaks, with the worst being Phoenix, down 54.1% from June 2006.  

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Investors welcomed UBS plans to raise 3.8 billion Swiss francs ($3.5 billion) of new capital but said the bank will not turn the corner until it stems client withdrawals and settles U.S. legal problems.

UBS, the world’s largest wealth manager and one of the hardest-hit major banks in the financial crisis, said late on Thursday it was to place 293.3 million new shares at 13 francs with a few big institutional investors.

The Swiss National Bank and banking regulator FINMA have indicated they want UBS to strengthen its capital base before the government withdraws a 6 billion Swiss francs ($5.5 billion) investment made in October to bail out the bank.

“We welcome that the bank has strengthened its capital base,” FINMA head Eugen Haltiner told Reuters on Friday on the sidelines of a banking event in Basel. “We can call the bank well capitalized … The bank is now prepared to weather an unexpected difficult economic scenario.”

UBS stock, which fell 6 percent on Thursday to 13.97 francs, was down 1.4 percent to 13.78 francs at 5:20 a.m. EDT (0920 GMT). The European banking sector was up 1.4 percent.

“UBS had to enhance its capital base after U.S. banks’ capital hikes and due to the high capitalization of its main competitor in Switzerland, Credit Suisse,” Vontobel analyst Tobias Bruetsch said.

“The capital raising should help restore confidence,” he said, adding the dilution amounted to about 10 percent payday loan online.

UBS said the share placement would help increase its tier 1 capital ratio — a key measure of financial strength — to a proforma 11.9 percent from 10.5 percent at the end of March, almost at the 12 percent new minimum required by FINMA.

Credit Suisse said in April its tier 1 ratio was 14.1 percent, making it one of Europe’s best capitalized banks.

NEGATIVE NEWS CONTINUES

Analysts said they were not surprised UBS said it would likely post a second-quarter loss although the bank also said its operating results, helped by improved investment banking conditions and lower losses and write-downs, should be better.

However, investors were disappointed the bank said it has seen net client outflows in its three wealth and asset management units so far this quarter.

“We find it extremely disappointing that the bank suffered another loss, albeit apparently lower than the 2 billion franc loss for Q1,” said Kepler Capital Markets analyst Dirk Becker.

“Even more disappointing was the fact that net new money flows were negative again.”

A string of negative headlines about UBS in the past year has prompted big client withdrawals, particularly over a U.S. case seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets from the taxman. 

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President Barack Obama said a new agency he proposed this week as part of an overhaul of U.S. financial regulations will protect consumers from deceptive lending practices.

The Consumer Financial Protection Agency would oversee products from mortgages to credit cards and require companies to plainly state the terms of financial products while banning “the most unfair practices,” Obama said in his weekly address on the radio and Internet.

“We’re going to level the playing field for consumers,” he said.

Obama proposed on June 17 changes to government oversight of the financial industry that he said would correct a “cascade of mistakes” that helped cause the first global recession since World War II.

The changes, much of which must be approved by Congress, would add an additional layer of regulation for the biggest financial firms. Obama’s plan would make the Federal Reserve the overseer of companies deemed too big to fail and bring hedge and private equity funds under federal scrutiny.

“This crisis may have started on Wall Street,” Obama said in his radio address. “But its impacts have been felt by ordinary Americans who rely on credit cards, home loans, and other financial instruments.”

Obama said some consumers bear responsibility for the financial crisis by taking on too much debt and loans they could not afford. More people, though, were misled by financial companies, he said.

‘No Coincidence’

“It’s no coincidence that the lack of strong consumer protections led to abuses against consumers,” Obama said. “The lack of rules to stop deceptive lending practices led to abuses against borrowers.”

The new agency, Obama said, would prevent unscrupulous financial companies from taking advantage of consumers in the future payday loan lenders.

While Obama’s proposals won support from Democrats who control the House and Senate, it is likely to face a lobbying assault from the financial industry. The American Bankers Association said in a statement after Obama announced his plan that the Consumer Financial Protection Agency may “go well beyond consumer protection” in its mandate and add a new regulatory layer for community banks.

Republican Address

In the Republican address, Senate Minority Leader Mitch McConnell of Kentucky said Democrat proposals to overhaul health care would drive up costs and lead to the rationing of care. McConnell also said Democratic congressional leaders are moving ahead too quickly with legislation.

“Americans want health-care reform, but they want the right health-care reform,” said McConnell. “That means taking the time and the care necessary to get it right.”

McConnell said the Obama administration’s claims that its health-care overhaul proposals would save the government money are the same as claims that passage of the $787 billion economic stimulus bill in February would prevent job losses. The current jobless rate of 9.4 percent is at a 25-year high.

“If the stimulus bill taught us anything, it’s that we should be wary anytime someone in Washington says the sky’s going to fall unless Congress approves trillions of dollars immediately,” McConnell said. “Yet once again in the health- care debate, it’s rush and spend.”

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Wholesale prices jumped slightly in May, the government said Tuesday, but the increase was less than expected and the 5% annual rate of decline was the sharpest since 1949.

The Producer Price Index, which tracks the changes in selling prices for domestic producers, rose by 0.2% last month. The report is widely watched to monitor inflation.

A consensus estimate of economists surveyed by Briefing.com had forecast a 0.6% increase.

The jump in wholesale prices follows a 0.3% increase in the index in April. January’s 0.8% increase snapped a five-month streak of falling prices.

"There’s no story on inflation here, and deflation doesn’t seem to be a concern," said Anika Khan, economist at Wachovia.

Inflation and deflation: Year-over-year, wholesale prices fell 5%, the largest decline in 60 years.

"That continues to show that even further back in the pipeline we don’t have inflation risk," Khan said.

Inflationary concerns rise in tandem with large increases in the so-called "core PPI," which excludes volatile energy and food costs, Khan said creditscores. In May, the core PPI edged up by only 0.1%, matching forecasts.

Conversely, deflation is characterized by "broad-based, continued declines in subsectors, which we haven’t seen," Khan said.

A 2.9% increase in energy goods prices offset a 1.6% decline in consumer foods, the report said. That’s due in large part to gasoline prices, which rose 13.9% following a 2.6% increase in April.

Prices at the pump have increased for 49 straight days, according to a separate survey for motorist group AAA.

Outlook: In the short term, neither inflation nor deflation should occur, Khan said.

"But eventually, we should be taking a watchful eye to the core numbers," she said. "With all of the stimulus spending, inflation should be a problem in the long term." 

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President Barack Obama, speaking to a high-level advisory panel of economic experts, said Wednesday that U.S. financial markets had improved recently but he was concerned the country would face higher unemployment for some time.

"We’re pleased that we’ve seen some progress, that there is some return to normalcy in certain aspects of the financial markets," Obama said at a White House meeting of his 16-member Economic Recovery Advisory Board headed by former Federal Reserve chief Paul Volcker.

"We expect that there is going to be some stabilizing in the economy … will begin to turn again," he added. "The concern that we have is that even in a stabilized situation there is the prospect of higher unemployment for some time to come."

Obama told the group he remained committed to looking beyond the immediate crisis and wanted to put the economy on a sounder footing by promoting clean energy and "green jobs" to help spur economic recovery in the longer term.

The president said the House Energy and Commerce Committee was "making more progress than we would have ever expected" on climate change legislation.

He led the panel, which includes GE (GE, Fortune 500) chief executive Jeffrey Immelt and Caterpillar (CAT, Fortune 500) CEO Jim Owens, in a discussion of green energy issues, including proposals for reducing greenhouse gases emissions with a market-based cap and trade system.

Panel member Richard Trumka, secretary-treasurer of the AFL-CIO labor federation, said there was great potential for the United States to lead in job-creating clean energy exports but voiced concern that free trade agreements the administration was considering would "disadvantage" American business in global competition faxless payday advances.

First quarterly meeting

Obama announced the creation of the Economic Recovery Advisory Board in February, but its work had been entirely behind-the-scenes until Wednesday’s first quarterly meeting, which was carried live by Internet feed on the White House Web site.

Volcker’s role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.

Volcker has continued to weigh in on public policy matters since leaving the Fed in 1987. He was a key adviser to Obama during the campaign and speaks frequently with White House officials on financial-regulatory and other issues.

But he has vented some frustration to associates about his level of access within the White House economic power center.

Obama’s inner circle on economic policy consists of National Economic Council director Lawrence Summers, a former Treasury secretary; current Treasury Secretary Timothy Geithner; Christina Romer, chairwoman of the Council of Economic Advisers; and Austan Goolsbee, a longtime Obama adviser who sits on the Council of Economic Advisers and is also chief of staff on the Volcker panel.

The economic recovery panel, which includes Democrats and Republicans and people from business, academia, public policy and labor union backgrounds, is intended to give Obama some outside perspective on economic issues. 

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The Puget Sound Regional Council decided on Thursday how to dole out $78 million in federal stimulus dollars. The agency’s Executive Board voted to approve a list of projects in King, Kitsap, Pierce and Snohomish counties.

That group was originally slated to meet on March 26 but decided to speed up the process.

The executive board approved the list recommended earlier the same day by the PSRC’s transportation policy board, which included a few changes from previous drafts.

The final version removed a paving project on Orville Road in Pierce County and cut $400,000 from the Port of Tacoma’s Lincoln Avenue grade separation, which would have allowed freight traffic to cross over railroad tracks. Those changes made room for an $825,000 project in Eatonville in Pierce County.

Here is the list:

KING COUNTY

Total funding: $40.4 million

Northeast 36th Street Bridge in Redmond, $11 million.

Renton Rainier Avenue South (State Route 167) Project in Renton, $2 million.

South Spokane Street Viaduct in Seattle, $15.4 million.

North Creek Trail - Section 1, Stage 2, in Bothell, $500,000.

Fourth Avenue Southwest Pedestrian Safety Project in Burien, $625,000 payday loans.

Southwest 98th St - Phase I, Pedestrian Corridor, $1.5 million.

East Valley Highway - State Route 167 to South 212th Street in Kent, $2 million.

First Avenue - Phase IIA, between Southwest 192nd Street and Southwest 200th Street in Normandy Park, $3.8 million.

East Lake Sammamish Parkway Northeast - Northeast Inglewood Hill Road to Northeast 28th Place in Sammamish, $3.5 million.

KITSAP COUNTY

Total funding: $3.95 million

Viking Avenue Improvements Phase II (McDonald’s to State Route 305) in Poulsbo, $3.8 million.

Core 40 Shoulder Widening Program - Blakely Non-Motorized Project Phase II in Bainbridge Island, $150,000.

PIERCE COUNTY

Total funding: $18.7 million

State Route 162 Rechannelization in Orting, $420,000.

Shaw Road Extension Phase III in Puyallup, $2 million.

Lincoln Avenue Grade Separation at the Port of Tacoma, $15.4 million.

Rural Town Center and Corridor Program in Eatonville, $825,000.

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OTTAWA–Finance Department figures show Ottawa’s revenues plunged in December but the federal government still managed to remain in surplus at the end of 2008.

The Finance Department says December, one of the worst months of 2008 for the economy, still produced a $200 million surplus for the government.

That allowed Ottawa to remain in the black by $500 million for the first nine months of its current financial year, although that was well down from the $8.4 billion surplus it had at December 2007.

For the month of December, revenues were down $1.7 billion from the same period last year, while spending was up $300 million.

For the first nine months of the current fiscal year, which ends March 31, revenues are down $1.2 billion, primarily as a result of a cut to the goods and services tax that went into effect last January.

The big spending increase was due to program expenses, which were up by $8 billion, a 5.7 per cent hike, due to higher transfer payments and departmental spending no faxing payday loans.

Finance said transfers to individuals were up by 4.2 per cent, including 7.7 per cent in higher employment insurance payments, while transfers to provinces rose 6.8 per cent and other transfers, for such things as the Newfoundland and Nova Scotia offshore accords, increased $2.3 billion, or 13.5 per cent.

Offsetting the higher spending were $1.2 billion in savings as a result of lower interest rates, which brought down debt charges.

During the economic update in November, Finance Minister Jim Flaherty had projected an overall surplus for the fiscal year that ends on March 31, but in January’s budget forecast the government would experience a $1.1 billion shortfall.

That would constitute the first deficit in a dozen years, but not the last. The latest federal budget predicts massive deficits of $33.7 billion and $29.8 billion in the next two years.

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