Best financial sourse

April 18, 2014

Defend ‘Obamacare’ unabashedly, some Democrats say

Filed under: economics, management — Tags: , , , — Snowman @ 8:36 am

WASHINGTON • With enrollments higher than expected, and costs lower, some Democrats say it’s time to stop hiding from the president’s health care overhaul, even in this year’s toughest Senate elections.

Republicans practically dare Democrats to embrace “Obamacare,” the GOP’s favorite target in most congressional campaigns. Yet pro-Democratic activists in Alaska are doing just that, and a number of strategists elsewhere hope it will spread.

President Barack Obama recently announced that first-year sign-ups for subsidized private health insurance topped 7 million, exceeding expectations. And the Congressional Budget Office — the government’s fiscal scorekeeper — said it expects only a minimal increase in customers’ costs for 2015. Over the next decade, the CBO said the new law will cost taxpayers $100 billion less than previously estimated.

Republicans already were pushing their luck by vowing to “repeal and replace” the health care law without having a viable replacement in mind, said Thomas Mills, a Democratic consultant and blogger in North Carolina. Now, he said, Democrats have even more reasons to rise from their defensive crouch on this topic.

“Democrats need to start making the case for Obamacare,” Mills said. “They all voted for it, they all own it, so they can’t get away from it. So they’d better start defending it.”

Even some professionals who have criticized the health care law say the political climate has changed.

“I think Democrats have the ability to steal the health care issue back from Republicans,” health care industry consultant said Bob Laszewski said. “The Democratic Party can become the party of fixing Obamacare.”

In truth, some Democratic lawmakers often talk of “fixing” the 2010 health care law arrest records. But it’s usually in response to critics or in a manner meant to show their willingness to challenge Obama.

For instance, Sen. Mary Landrieu, D-La., who faces a tough re-election bid, used her first TV ad of the campaign to highlight her demand that Obama let people keep insurance policies they like.

But Landrieu and other hard-pressed Democrats have not gone as far as a pro-Democratic group in Alaska that is unabashedly highlighting the health law’s strongest points.

The independent group Put Alaska First is airing a TV ad that praises Democratic Sen. Mark Begich for helping people obtain insurance even if they have “pre-existing conditions,” such as cancer. The ad doesn’t mention Obama or his health care law by name, but it focuses on one of the law’s most popular features.

Other Democrats should consider such tactics, political consultant David DiMartino said.

“There is still time to tell the story of Obamacare to voters,” he said. Democratic candidates don’t want to be defined entirely by the health law, he said, “but now they can point to its successes to fend off the inevitable distortions.”

GOP strategists don’t agree. The recent upbeat reports might help Democrats temporarily, but “the negative opinion of Americans toward Obamacare is baked in,” Texas-based Republican consultant Matt Mackowiak said. “If Obamacare was truly trending positively,” he said, “Sebelius would have stayed, and Democrats in tough races would be picking a fight on Obamacare, instead of mostly hiding from it.”

Kathleen Sebelius, the health and human services secretary closely associated with the health care law, is stepping down. Democrats say it’s a sign that the biggest problems are past, but Senate Republicans vow to use her successor’s confirmation hearings as another forum for criticizing the law.

Democrats hardest hit by anti-Obamacare ads — including Sens. Kay Hagan of North Carolina and Mark Pryor of Arkansas — continue to defend the health law when asked, but they generally focus on other topics, campaign aides say.

Polls don’t suggest public sentiment is shifting toward Democrats, said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health. But with at least 7.5 million people enrolled despite last fall’s disastrous rollout of insurance markets, Blendon said, Democrats have some strong new material to use.

“Each of the Democratic candidates is going to have to make a calculation on whether or not they can motivate Democrats,” Blendon said. “For Democrats to get an advantage out of the law, they have to convince people they have something to lose if the Senate changes hands.”

Republicans need to gain six seats to control the 100-member Senate.

New political problems might arise for the health care law before the Nov. 4 election. For instance, the individual requirement to carry health insurance remains generally unpopular, and now penalties may apply to millions of people who remain uninsured.

So far, Republicans have had an edge in public opinion, particularly when those with strong sentiments about the law are considered. A recent AP-GfK poll found that strong opponents outnumber strong supporters, 31 percent to 13 percent. And motivated voters often make the difference in low-turnout nonpresidential elections criminal search. But the poll also found that most Americans expect the health law to be changed, not repealed.

That puts Republicans in a tricky situation: GOP primary voters demand repeal, but general election voters in November are looking for fixes.

“It’s not a cheap and easy political target anymore,” Laszewski said. “Republicans are going to have to tell us what they would do different.”

Democrats deride GOP proposals to “replace” the 2010 health care law, saying they collapse under close scrutiny. Since they generally contemplate a smaller federal government role, many of the GOP ideas are likely to leave more people uninsured. Some approaches do not completely prohibit insurers from turning away people with pre-existing medical conditions.

Economist Douglas Holtz-Eakin, who advises many top Republicans, said the emerging GOP plans aren’t tied to the ups and downs of Obama’s law but look ahead to the 2016 presidential election, when the party will need alternatives.

Ultimately, he said, “there can’t be a Republican ‘replace.’ … There needs to be a bipartisan reform.” That doesn’t seem likely, but Holtz-Eakin said it was the only kind of change that will prove durable.

Democrats can cheer the latest statistics, “but they are not out of the woods yet,” he said. “They have waived and deferred a million things they knew were unpopular, and those are still out there.”

AP Director of Polling Jennifer Agiesta contributed to this report.


A online cash advance is a service provided by most credit card and charge card issuers.

December 4, 2012

Sanergy toilets turn poop into profit

Filed under: news, online — Tags: , , , — Snowman @ 10:36 am

In China’s Hunan Province, using the bathroom often means squatting over a dirty hole in the ground. An estimated 2.5 billion people around the world lack adequate sanitation — more than a third of the global population — and 2 million die each year of diarrheal disease.

To David Auerbach, that is both a human-rights crisis and an entrepreneurial gold mine. He and his business partners hatched a plan for profiting on both ends of a messy problem: Sell pay-per-use toilets to local entrepreneurs, then collect the waste and sell that too, after converting it into fertilizer.

Auerbach spent several years in China teaching English after college, then moved on to stints at the Clinton Foundation and Endeavor, a non-profit that supports entrepreneurs in emerging markets. At MIT’s Sloan School of Management, he teamed up with fellow grad students Ani Vallabhaneni and Lindsay Stradley. Vallabhaneni had worked with a chain of dialysis clinics for low-income patients in the Philippines, and Stradley was a veteran of Teach for America and Google.

On a trip to Kenya, the trio saw locals paying about 5 cents to use an unlined pit latrine. Even more common were “flying toilets” — plastic bags used as a toilet, tied off and then thrown outside. The ground is often covered in them.

When they returned, the three cofounders — all 31 now — wrote the business plan for Sanergy and its brand of Fresh Life toilets. Their vision won the 2011 MIT $100K Entrepreneurship Competition and landed the $100,000 Diamond Prize at the 2011 MassChallenge Startup Competition and Accelerator.

A Fresh Life toilet is 3′ x 5′ and made of prefabricated concrete. The floor has a squat plate and two holes, one for urine and one for solid waste, that lead down to removable waste cartridges. The toilets are sold at cost for $500, which includes installation, painting and daily waste collection. Owners are considered franchisees and have to supply toilet paper, soap and a hand-washing stand.

Right now, Stradley says, there are 150 toilets operating in Nairobi’s crammed Mukuru slum, and the company is selling another five to 10 toilets per week. About a third of Fresh Life operators have already purchased an additional unit.

Bob Orengo, a franchisee in Mukuru, sees about 47 customers a day. At five Kenyan shillings a pop, that’s about U.S. $19 a week.

“It’s a good way to start your own business and be self-employed,” he told CNNMoney through an interpreter.

Another Fresh Life operator in Mukuru, Esther Muniyiva, has about 96 customers a day and makes around $40 a week. The big benefit, she says, is that the area around the toilet is clean: “Some people think the toilet is so clean that they could eat in there too.”

Joshua Boger, the former CEO of Vertex Pharmaceuticals, was one of Sanergy’s judges in the MassChallenge competition. He says one of the company’s biggest challenges now is how fast to scale up.

“You don’t build a fertilizer plant for a million people if you only have 100 customers, so they have to go slow — but not too slow,” he says.

Sanergy collects about 1.5 tons of waste each day and sold its first batch of fertilizer in July — two tons at market price, which generally runs $300 to $600 a metric ton, Stradley says. That’s about twice the global price because, thanks to a local fertilizer shortage. It’s badly needed by Kenya’s huge horticulture industry, one of the largest flower exporters to Europe.

It takes Sanergy four to six months to change raw human waste into fertilizer. The process could be sped up with an investment in infrastructure, and Stradley says the company plans to build a high-tech waste management facility within the next year.

The same waste can be used for both fertilizer and biogas, but the company isn’t operating at a scale yet where it makes sense to generate electricity to sell back to the grid, Stradley says: “We need about a thousand toilets to have enough waste to do that.”

If Sanergy’s plans pan out, that won’t be a problem. Within five years, the company’s founders want to provide toilets to more than half a million Africans, generating 11,000 tons of fertilizer annually and 7.5 million kilowatt-hours of electricity.

Their aim is to be profitable within 18 months and to raise an equity investment round of $2 million in early 2013. But investors might question whether the model is sustainable, says Jenny Aker, an assistant professor of development economics at the Fletcher School at Tufts University whose research focuses on West Africa.

“If sanitation services aren’t commonly used or culturally appropriate, would the community be willing to pay for it?” she asks. If Sanergy expands into rural areas, the impact will probably be much lower than in urban zones , simply because there are fewer potential customers, says Aker.

And there’s the issue of using human waste as fertilizer. It’s fine if it’s just used in the flower industry. “What would people think about using human manure as part of growing their food?” Aker asks. “That’s something to consider long-term.”


Apply for a payday loans today and as a first time customer, you can get up to $1000 directly to your account overnight.

November 27, 2012

Cyber Monday starts early this year

Filed under: Uncategorized, term — Tags: , , , — Snowman @ 6:28 am

Post-Thanksgiving online discounts were once relegated to Cyber Monday — but these days, websites are launching deals even before Black Friday. And the resulting shopping frenzy is expected to set records.

IBM Benchmark reported total online sales for Black Friday were up nearly 21% from last year. On Thanksgiving, sales rose more than 17% compared to 2011. Black Friday was the stronger of the two days, eclipsing Thanksgiving by 4:10 p.m. ET.

And a long list of retailers — including , Fortune 500), , Fortune 500), , Fortune 500) and ) — unveiled “pre-Black Friday deals” even before Thanksgiving. , Fortune 500) posted its one-day online shopping discounts on Black Friday, as did beauty brand MAC Cosmetics.

“We’ve absolutely seen this whole weekend turn into one big promotional event,” said Jay Henderson, strategy director for IBM Smarter Commerce. “Black Friday deals are no longer just for the [brick-and-mortar] store, and Cyber Monday deals are no longer just for Monday.”

Cyber Monday’s original appeal, as the first weekday after Thanksgiving, was access to quick Internet speeds while at work. But now broadband at home is ubiquitous, and consumers can also shop on a slew of mobile devices.

And so retailers’ online deals stretch well ahead of Cyber Monday — in some cases, nearly a full week before.

“Retailers are trying to draw consumers in earlier, and one way to do that is to stagger the deals: Pre-Thanksgiving, some on Thanksgiving Day, another set over the weekend, and finally the big bang to close it out on Cyber Monday,” Henderson said.

Mobile devices have become increasingly important during that week before Cyber Monday creditreport. The number of consumers using their mobile device to make a purchase on Black Friday this year increased by nearly two-thirds from 2011, IBM data show.

Apple’s iPad made up nearly 10% of online shopping traffic on Black Friday this year, according to IBM, while the iPhone brought in almost 9% and Android devices comprised 5.5%.

And IBM said shoppers are taking advantage of the technology to find better deals. Despite spending more overall, the average online order fell 4.7% to $181.22, and the number of items in each order decreased 12% to 5.6.

Retailers are taking note. Companies like , Fortune 500) and , Fortune 500) developed special Black Friday mobile apps featuring exclusive deals and store maps.

Still, despite the expanded schedule, Cyber Monday itself remains an important part of the holiday shopping season.

Andrew Lipsman, an industry analyst at data tracking firm ComScore, said he expects sales for the one-day Cyber Monday shopping event to be around $1.5 billion this year. That’s up from his calculations of $1.3 billion in 2011.

It will be a few weeks before full details on Thanksgiving week’s sales are made clear, but last year both Black Friday and Cyber Monday broke records. Total spending over the four-day weekend after Thanksgiving 2011 reached a record $52.4 billion, according to the National Retail Federation.

Black Friday 2012 was shaping up to be robust, with shoppers turning out even on Thanksgiving Day at stores including Toys R Us and , Fortune 500).


October 15, 2012

Softbank could play Sprint’s savior

Filed under: legal, management — Tags: , , , — Snowman @ 7:56 am

Sprint Nextel’s seven-year nightmare may soon be over. The nation’s third-largest wireless carrier confirmed Thursday that it is in talks with Japanese technology giant Softbank to sell at least part of the company.

, Fortune 500) has struggled to keep up with stronger competitors , Fortune 500) and , Fortune 500) ever since its disastrous 2005 merger with Nextel. The company is up to its eyeballs in debt, undergoing an expensive — and late — transition to 4G-LTE, and losing contracted customers in the wake of its decision to ditch the Nextel brand. With smaller rival T-Mobile entering into an agreement to buy , Fortune 500) earlier this month, Sprint is feeling the heat of stronger competition from all sides.

Forced to go it alone, the company has been working on a major upgrade intended to modernize its network. It’s also toying with backup plans: Sprint’s shares rose last week on a Bloomberg report that said the company was considering making a counter-offer to MetroPCS.

But then, seemingly out of the blue, Softbank arrived dangling a new rescue plan. It’s the kind of white knight with deep pockets that Sprint desperately needs. Softbank had roughly $13 billion in cash at the end of last year. Sprint, by comparison, has $21 billion in debt and just $7 billion in cash and short-term investments.

Shares of Sprint jumped by as much as 19% Thursday on the news.

Japan’s third-largest carrier, led by colorful and outspoken CEO Masayoshi Son (he devised a 300-year plan in 2010, which involved brain-computer symbiosis and machines that know how to love), isn’t shy about dealmaking. It owns a stake in ), had a chunk of ) until last year, and orchestrated a blockbuster deal to buy Vodafone’s Japan unit that gave the company a huge presence in the burgeoning wireless space no fax payday loan. Softbank was the first Japanese wireless company to carry the , Fortune 500) iPhone.

Softbank’s flair and assertiveness could give Sprint a needed jolt. The company lost its brief marketing edge — billing itself as the only nationwide network with unlimited data — when T-Mobile recently reverted to its unlimited data plans as well. Despite a network technology transition that appears to be on schedule and promises cost savings and improved coverage, Sprint’s management has been criticized for lacking the chutzpah to do something bolder. The company seems locked in a losing battle with its two much-larger competitors.

“If Softbank does acquire Sprint Nextel, it is not a forgone conclusion that the company will do well,” said Jeff Kagan, an independent telecommunications analyst. “However, the chances it can do well are there if the company can understand the U.S. marketplace.”

Terms of the deal that is being negotiated were not disclosed, and Softbank declined to comment. A Wall Street Journal report said the deal, worth roughly $13 billion, would give Softbank a controling stake in Sprint.

Regulators would likely cheer the deal, which would ensure that four strong, nationwide wireless competitors remain in the U.S. market. In AT&T’s scuttled $36 billion buyout offer for T-Mobile last year, regulators said they opposed the deal because it would bring the number of national wireless choices down from four to three.


October 9, 2012

California gas prices hit record

Filed under: Uncategorized, canada — Tags: , , , — Snowman @ 5:56 pm

Gas prices across California have soared to record highs, shooting up 50 cents a gallon in just the last week.

But even as prices are expected to rise slightly before falling, the spike is not likely to spread to other parts of the United States, experts say.

The average price of a gallon of regular gas in California edged up another 0.3 cent Tuesday, according to AAA’s latest reading, setting a record at $4.671.

It stood at around $4.17 on Oct. 1 but has risen every day since then. The biggest increase was a 17-cent spike Friday, followed Saturday by a 13-cent increase.

On Sunday, California environmental regulators, acting on a request from Gov. Jerry Brown, agreed to allow refineries to start making a cheaper, winter blend of gasoline as soon as possible — a move that could solve shortages of the more expensive summer blend that sparked the price spike.

Normally, refineries wouldn’t start making the winter blend until the end of October.

Most of the country makes the transition from the cleaner summer blends of gasoline to the cheaper winter blends on Sept. 15. California, with warmer average temperatures and the nation’s strictest air pollution rules, makes the transition six weeks later.

The cleaner gasoline is used in the summer to mitigate against the smog that accompanies warmer temperatures.

The switchover can often cause shortages of the summer blend and a temporary rise in prices. Refineries and stations don’t want to have an inventory of the more expensive gas when it is time to start selling the cheaper gas.

Refining capacity is also an issue. Tom Kloza, chief analyst at the Oil Price Information Service, which compiles prices for AAA, said a major refinery in Richmond, Calif., owned by , Fortune 500), still hasn’t returned to operation since an August fire.

More recently, California refineries owned by , Fortune 500) and , Fortune 500) were also off line for maintenance, although the Exxon refinery came back Friday, while Gov. Brown said the Tesoro refinery is due back in operation this week.

But Kloza said supplies are so tight that those latest disruptions caused wholesale gas prices to spike by $1.12 a gallon to $4.15 a gallon between Sept. 25 and Oct. 4.

He said the wholesale prices have already started to fall, dropping 47 cents on Friday and 10 cents Monday.

“I don’t want to say the coast is clear but there is a light at the end of the tunnel,” Kloza said. California retail prices are likely to top out at about $4.75 a gallon and then start to decline, he said.

The spike in California comes while gas and oil prices have remained relatively stable in the rest of the country. The national average for a gallon of regular gas has kept to a narrow range of between $3.78 and $3.82 during the last week. It edged 0.3 cent lower Tuesday, remaining around $3.82 a gallon.


October 5, 2012

Premarkets: Stocks head for early gains

Filed under: finance, news — Tags: , , , — Snowman @ 5:28 am

U.S. stock futures were higher Thursday following two reports on the U.S. labor market.

The Labor Department reported that the number of people filing for first-time unemployment claims rose by 4,000 to 367,000 for the week ended Sept. 29. That was slightly higher than expected.

Ahead of that report, outplacement firm Challenger, Gray & Christmas said U.S.-based employers announced plans to cut 33,816 jobs in September, down 71% from a year earlier.

These reports, along with Wednesday’s ADP report on private sector job growth, are all precursors to the government’s closely watched monthly jobs report due out Friday.

Investors will also be keeping a wary eye on Mario Draghi, the ECB president who recently said he’d do whatever it takes to preserve the euro.

ECB officials kept rates at 0.75% when they met in Slovenia Thursday. And while Draghi isn’t expected to announce any new initiatives when he speaks at 8:30 a.m. ET, he may give more details about where the ECB’s new bond buying program stands.

Meanwhile, the Bank of England left its key interest rate unchanged at 0.5%, where it’s been since early 2009.

At 2 p.m. ET, the Federal Reserve will release minutes for its most recent policy making meeting, in which it announced the latest round of quantitative easing, or QE3. The report could shed light on the Fed’s open-ended program of buying $40 billion in mortgage debt every month.

It’s that kind of monetary easing that explains why markets are higher, even though worries about the global slowdown remain severe, said Elisabeth Afseth, a fixed income analyst with Investec in London.

“Central banks providing large amounts of liquidity to the system — and the search for a pick up above government yields — is driving the risk markets higher, rather than strong confidence in the economy or the fundamentals,” she said.

European stocks were mixed in morning trading. Britain’s FTSE 100 rose 0.1%, while the DAX in Germany and France’s CAC 40 shed 0.1%.

Meanwhile, Asian markets ended higher, with markets in Shanghai closed this week for a holiday. The Hang Seng in Hong Kong ticked up 0.1% while Japan’s Nikkei added 0.9%.

U.S. stocks closed modestly higher Wednesday.

Companies: Shares of , Fortune 500) edged lower in premarket trading, after falling 13% Wednesday on a disappointing 2013 earnings outlook.

) shares rose more than 2% after CEO Mark Zuckerberg announced that as of Thursday morning, there are more than one billion people using Facebook actively each month.

Currencies and commodities: The dollar fell against the euro and British pound, but it gained against the Japanese yen.

Oil for November delivery added 61 cents to $88.75 a barrel.

Gold futures for December delivery rose $12.20 to $1,792.00 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury slipped, pushing the yield up slightly to 1.64% from 1.62% late Wednesday.


September 28, 2012

Fiscal cliff: Payroll tax cut may not survive

Filed under: Uncategorized, loans — Tags: , , , — Snowman @ 9:56 am

For all the uncertainty over how lawmakers will handle the expiring tax cuts under the fiscal cliff, there seems to be growing clarity surrounding at least one measure: the temporary 2% payroll tax cut.

Bottom line: It’s likely toast.

“Nobody is a champion for it,” said Sean West, the U.S. policy director for the Eurasia Group.

That isn’t necessarily surprising, since the payroll tax cut — worth 2% of one’s wages up to $110,100 — was intended to be a temporary way to boost the economy. It was put in place for one year in 2011 but was then extended for this year.

During that time, the measure has saved most of the country’s 160 million workers anywhere from $700 to $1,800 a year.

The payroll tax funds Social Security. The tax cut costs roughly $120 billion a year, but rather than let Social Security funding suffer, the Treasury Department has made the program whole with money from general funds. Translation: It’s adding to the country’s deficit.

At the same time, letting it expire will take money out of workers’ paychecks while the economic recovery is still tempered.

The Congressional Budget Office has noted that the payroll tax cut’s expiration, in combination with the end of extended unemployment benefits, would represent “significant sources of fiscal tightening” next year. (Related: CBO warns of fiscal cliff recession)

And a majority of economists recently surveyed by the National Association for Business Economics indicated they do favor another year-long extension Online payday loans.

But on Capitol Hill, no one from either party has really pushed for another year of the tax cut.

And the White House has been noncommittal. “We’ll evaluate the question of whether we need to extend it at the end of the year when we’re looking at a whole range of issues,” White House spokesman Jay Carney said in early September.

House Minority Leader Nancy Pelosi did allow last week that she won’t advocate for an extension and said it’s time to think about reforming the tax code.

But, she added, “I could be convinced if [a payroll tax cut extension] was part of something that advanced our economy down the road.”

As big a tax break as the payroll tax cut may represent to individuals, it pales in political magnitude to the pending expiration of the Bush tax cuts, which promise once again to suck up most of the oxygen when Congress returns to work in mid-November.

“Perhaps there’s a small chance [President] Obama would take a payroll extension as a sweetener in a deal where he gets re-elected with a weak mandate and can’t get other things he wants,” Eurasia Group’s West said. “But that’s a lot of ifs.”


September 26, 2012

IMF chief Christine Lagarde: ‘We need a sustained rebound’

Filed under: canada, legal — Tags: , , , — Snowman @ 5:04 am

Policymakers around the world need to make good on promises and get it right this time, Christine Lagarde, managing director of the International Monetary Fund, said in a speech Monday.

“This time, we need a sustained rebound, not a bounce,” said Lagarde, speaking before the Peter G. Peterson Institute for International Economics. “If this time is to be different, we need certainty, not uncertainty. We need decision-makers to be real action-takers. We need delivery.”

Lagarde said policymakers are moving in the “right direction,” crediting recent moves, such as the European Central Bank’s new bond-buying plan, the Bank of Japan’s expanded asset purchase program and the move by the Federal Reserve to stimulate the economy through more quantitative easing.

However, she warned that, even though markets have so far responded positively to the moves, the global economy is “still fraught with uncertainty.”

“The situation is a bit like a jig-saw puzzle,” said Lagarde. “Some of the pieces are in place and we know what the picture should look like. But, to complete the picture, we need all the pieces to come together. That will depend on delivering on the policy commitments that have been made and in that respect, there is still a long way to go.”

Top on Lagarde’s list: Europe needs to implement a strong banking union “to break the vicious cycle between banks and sovereigns.” European leaders have been working on a proposal for a centralized banking authority, though it will likely be years before a so-called banking union is in place.

Lagarde also wants a “European firewall,” saying European nations need to carry through on the European Stability Mechanism, or ESM, which is a key component of he breakthrough agreement aimed at stabilizing the euro currency union.

The fund will eventually have €500 billion in capital, paid in by governments over a period of years, to provide loans for troubled members of the 17-nation currency union. It is designed to replace the European Financial Stability Facility, which has backed bailouts for Greece, Portugal and Ireland.

“Given the scale of the problems that face the Eurozone countries in crisis, these programs are extremely difficult — we all recognize that,” Lagarde said. “We also recognize that there is no alternative to the structural reforms and fiscal adjustment needed to get back on the right path.”

Lagarde also criticized U.S. policymakers, who have been delaying until after the Nov. 6 elections any major policy decisions to stop from going over the so-called fiscal cliff - the catch-all phrase that refers to massive tax hikes and across-the-board cuts to federal programs that kick in at midnight on Dec. 31. Lagarde warned that the doing nothing could reduce U.S. growth by 2%.

“We all recognize that political calendars impact the timing of key decisions. This is true everywhere,” she sad. “But the current uncertainty presents a serious threat for the United States and, as the world’s largest economy, for the global economy.”

Lagarde said the IMF continues to predict a gradual recovery. But she also said she expects the IMF”s global growth estimates to be weaker than they were in July, noting that uncertainty about “whether policymakers can and will deliver on their promises,” is dampening the recovery.


September 19, 2012

The case for investing in bonds, too

Filed under: economics, marketing — Tags: , , , — Snowman @ 5:28 pm

I’m 52 and have had 100% of my savings in stocks since I began investing at age 25. Given my high risk tolerance and the fact that I expect that my pension and Social Security to cover a substantial portion of my expenses in retirement, why should I reduce my investment returns by investing in bonds? — Eric C.

If you’ve been putting your dough exclusively in stocks for the past 27 years, then you know firsthand how lucrative they can be over the long term. Since 1985, the year you began investing, stocks have gained an annualized 11%.

Ultimate Guide to Retirement

Getting started401(k)s & company plansInvestingAnnuitiesIRAsSelf-employment plansPensions and benefit plansSocial SecurityInsuranceEstate planningLiving in retirementGetting help

You no doubt also know how risky stocks can be over shorter periods. You’ve lived through the Crash of 1987 when the Dow Jones Industrial Average plummeted 508 points — nearly 23% — in a single day. And you’ve survived both the bear market of 2000-2002, which saw stock prices fall 49%, and the meltdown of 2007-2009, when stock values dropped almost 57% (a setback from which they still haven’t fully recovered).

I’m sure I also don’t have to tell you that bonds returned far less than stocks over the past 27 years and that their yields are especially low right now, with 10-year Treasury bonds yielding less than 2% and investment grade corporates paying only a half percentage point or so more.

Given your experience with stocks and the state of the bond market these days, I can understand why you equate keeping any of your savings in bonds as nothing more than an invitation to subpar returns.

But I think you need to revise your thinking. Here’s why:

You became an investor near the beginning of one of the greatest bull markets in history. The surge in stock prices that began in 1982 and with few interruptions continued through the end of 1999, showered investors with almost unprecedented rewards. It also included some truly phenomenal stretches, like the 10-year span from 1989 through 1998 when stocks gained a compounded 19% a year, almost double equities’ long-term annualized return since 1926. So I think it’s fair to say that this outsize performance has a lot to do with the way you feel about stocks.

Related: Investing: When to ‘take money off the table’

What’s more, up to now you’ve viewed the risks and rewards of stock investing primarily through the lens of a relatively young person. Which means you’ve been much more likely to shrug off stocks’ periodic setbacks. They’re not as scary when you have decades to rebound from them.

But looking ahead, conditions may be quite different. While stocks are still likely to beat bonds over very long stretches, many analysts believe stocks won’t deliver anywhere near the same size gains they did in the go-go ’80s and ’90s, nor will they outperform bonds by as large a margin instant credit report.

That’s certainly been true for the past 10 years with stocks gaining 7.3% vs. 6.3% for bonds. Some investment advisers, like PIMCO’s William Gross, are even forecasting extremely meager stock returns for the years ahead.

And while you may still think of yourself as quite the risk taker, I think you should allow for at least the possibility that a 50% decline in the value of your savings — and the retirement income it might produce — may be much more upsetting as you get closer to the end of your career than it was when you were starting out. I’m a bit older than you, but I’ve found I’m much more sensitive to stocks’ volatility myself.

As you weigh the issue of risk, you may also want to factor into your thinking recent research that suggests that the severity of downdrafts we’ve seen in stocks in the past may occur more frequently than we previously believed.

At any rate, I recommend that you at least consider scaling back your equity exposure. I’m not talking about a total retreat. Rather, I’m suggesting a stocks-bonds mix that allows for long-term growth, but won’t get hammered as much should the market tank during your home stretch to retirement — say, 70% stocks and 30% bonds. As you age, you would then gradually reduce your stock stake, dialing it back to 50% or so of your holdings by the time you retire and then eventually paring it down to between 20% and 30%.

If you expect that your pension and Social Security will cover most of your basic retirement living expenses, you’ll have more leeway in how much you’ll have to draw from your stock portfolio. That flexibility could allow you to be more aggressive and increase your stock percentage a bit. But I’d be wary of going higher than, say, 75% to 80% stocks today and 55% to 60% at retirement.

Related: Am I on track to retire at 67?

Many investors are particularly wary of making bonds part of their portfolio these days for fear they could suffer losses if interest rates rise. But the potential setbacks in bonds — especially those with short- to intermediate-term maturities — pale in comparison to the hits stocks have taken in the past and could take in the future. So despite any anxiety about interest rates rising, bonds are still a worthwhile way to reduce the overall risk level of a portfolio.

Bottom line: I’m all for maintaining reasonable exposure to stocks in the years leading up to and following retirement. But the key word is reasonable. Obviously, you have to decide what’s appropriate for you. But you’ll be a lot better off if your decision includes a realistic reassessment of your risk tolerance rather than simply going with what worked over the past 27 years.


September 18, 2012

Buffett: My cancer treatment is done

Filed under: business, canada — Tags: , , , — Snowman @ 6:28 am

Billionaire investor Warren Buffett says he has completed treatment for a mild case of prostate cancer, according to a published report.

Speaking Friday to executives of newspapers he has recently acquired, Buffett was quoted by The Omaha World-Herald as saying “It’s a great day for me. Today I had my 44th and last day of radiation.” The World-Herald is owned by , Fortune 500), Buffett’s investing company.

In a letter to shareholders in April, Buffett disclosed that he had Stage 1 prostate cancer. Buffett, who is now 82, said at the time that the cancer was “not remotely life-threatening.”

Less than a month later, Buffett told shareholders gathered in Omaha, Neb., that the cancer was “a non-event.”

“Maybe I’ll get shot by a jealous husband, but this is a really minor thing,” he said about the risk to his life.

Buffett, one of the world’s richest men as a result of his investing prowess, has yet to publicly reveal a succession plan, though he says he has already informed Berkshire’s board about his preferred candidates. Upon his departure, Buffett’s job will be divided between a CEO in charge of operations and one or more executives in charge of investments.

The World-Herald quoted Buffett as saying he’s relieved to be done with the radiation.

“I’ll be feeling the side effects for a few weeks yet, but I am so glad to say that’s over,” Buffett said.


Newer Posts »

Powered by WordPress