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2014-15/0258/en_head.json.gz/20590 | When The Chips Are Down: Semiconductor Stock's Future By Greg Sushinsky
Filed Under: Recession, Equity Tickers in this Article: LSI, NSM, TXN, AMAT, MRVL LSI Corporation (NYSE:LSI) has been hit hard by the severe downturn in the semiconductor chip industry. The company has posted a series of losses, and has projected even more for the first quarter of 2009. This bad earnings news has been compounded by the continuing bleak outlook for the short-term future of the semiconductor industry. The stock has been thrashed as well, taken down from a 52-week high of $7.37 per share to as low as $2.36, and recently traded at $3.19. Still, things aren't always as bad as they seem, and it doesn't take much for an industry to take a dramatic turn for the better. So, is there any logic to buying the stock right now?IN PICTURES: 10 Biggest Losers In FinanceA Semi-Cycle of GloomWhile the semiconductor industry has always been regarded as highly cyclical, demand simply fell off the cliff this time around. This marks the end of an awful chip-buying cycle for the company , which has been impacted heavily by the massive recession and an oversaturation of chip manufacturers. LSI reported losses of $622 million (96 cents per share) for 2008 - this followed its $2.5 billion loss in 2007. Although the company has been trying to turn itself around for the last five years, each year has ended in a loss.How the Chips Stack UpDespite the awful climate for chip manufacturers, other companies in the same field didn't all fare quite as badly as LSI. National Semiconductor Corporation (NYSE:NSM), for example, still has positive numbers, showing a profit of 91 cents per share on its earnings for the trailing twelve months (TTM) and expects continued positive results for 2009, though the earnings will be halved. Bellwether stock Texas Instruments (NYSE:TXN) shows a similar trend, although its income falloff may be greater. An optimistic note listed Texas Instruments as raising its mid-point guidance for the quarter, though. LSI does have significant diversification, as do National Semiconductor and Texas Instruments. Still, it doesn't seem that LSI has executed as effectively as others in the industry have. (The semiconductor industry lives and dies by a simple creed: smaller, faster and cheaper. Learn more in The Industry Handbook: The Semiconductor Industry.)
Semiconductor giant Applied Materials (Nasdaq:AMAT) has still managed to eke out profits through the downturn, but it is looking at negative projections for the whole year. Marvell Technology Group (Nasdaq:MRVL), had a negative first quarter, but is hoping to pull off positive results for 2009. Still, while some of these larger companies are hanging in on profitability, the diminished numbers show the global decline in the semiconductor industry. Even in contrast, these companies are able to scratch out profits where LSI has not.A Chip of HopeAbhi Talwalkar, the CEO of LSI, recently predicted in an interview with Reuters that the worst of the chip downturn was nearly over, and with the industry bottomed-out, some of its consumers are seeing the end of inventory tightening. Talwalkar indicated that demand would pick up sooner than later. He also cited that some of the poorly-capitalized chipmakers would have a hard time making it through the rough environment, and that there are "too many players" in the industry. Talwalkar further suggested there would be consolidation.However, industry data released on March 19 showed that the bookings for the semiconductor industry were down another 5% in February, showing that any resurgence is still out of sight. Even after the chip business picks up, LSI will still have a formidable task continuing the re-orienting plan for its business. In order for the company to succeed in the future, a stronger competitive edge and niche product development are needed.The Logical PlayThere is no fundamental action, other than predictive talk, happening right now in the semiconductor industry. Talwalkar's faint talk may be optimistic, and when you see such industry stalwarts as National Semi and Applied Materials having earnings numbers cut in half (or worse), it's a caution to long-term investors to wait. Let the chipmakers, particularly LSI, produce the chip sales and earnings. The way it looks now, you'll have plenty of time to get in on these stocks, should that happen in the future. (Learn how internal return on investment helps determine a stock's ability to propel shareholder returns in Earnings Power Drives Stocks.) by Greg Sushinsky Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor. | 金融 |
2014-15/0258/en_head.json.gz/20632 | Former Executives of Comverse Technology Inc. Charged with Backdating Millions of Stock Options and Creating a Secret Stock Options Slush Fund FOR IMMEDIATE RELEASE
August 09, 2006 Former CEO, CFO and General Counsel Charged with Fraudulently Reaping Millions in Profits $45 Million Seized in U.S. Accounts
WASHINGTON – Three former executives of Comverse Technology Inc. (“Comverse”),
a publicly-held computer software company, were charged today for their roles in orchestrating a
long-running scheme to manipulate the grant of millions of Comverse stock options to
themselves and to employees, the Department of Justice announced today. Former Chief
Executive Officer Jacob “Kobi” Alexander, former Chief Financial Officer David Kreinberg, and
former General Counsel William F. Sorin allegedly orchestrated the scheme by fraudulently
backdating the options and operating a secret stock options slush fund. The charges were announced by Deputy Attorney General Paul J. McNulty and Director
of the Division of Enforcement Linda Thomsen of the Securities and Exchange Commission
(SEC), joined by U.S. Attorney Roslynn R. Mauskopf of the Eastern District of New York and
Acting Assistant Director James “Chip” Burrus of the FBI. The charges stem from a coordinated
investigation led by the Department of Justice’s Corporate Fraud Task Force. Alexander, Krienberg and Sorin, all of whom resigned from Comverse on May 1, 2006,
in the midst of an internal company investigation relating to options backdating, have been
charged by criminal complaint filed in the Eastern District of New York with conspiracy to
commit securities fraud, mail fraud and wire fraud. According to the complaint, between 1998
and 2002, the defendants reaped millions of dollars in profits as a result of their scheme and
issued false and misleading financial statements to the company’s shareholders and the investing
public regarding the true value of the options grants. “The Justice Department is determined to see that our markets operate fairly and
honestly,” said Deputy Attorney General McNulty. “Investors take risks and do their best to see
into the future when picking companies in which to invest. We cannot allow corporate leaders to
operate under different rules, using 20-20 hindsight to line their own pockets. We will continue
to pursue misconduct in any boardroom where we find it.”
In two related actions, the government seized over $45 million from two investment
accounts held in the United States in Alexander’s name based on his alleged participation in a
stock options fraud and a money laundering scheme involving the secret transfer of more than
$57 million to accounts in Israel in an effort to conceal the funds from U.S. authorities. In
addition, the SEC commenced a civil fraud and injunctive case against all three defendants for
their roles in causing Comverse to publicly file false annual and quarterly financial reports and
proxy statements from 1991 through 2005.
Initial appearances for Kreinberg and Sorin are scheduled for this afternoon before U.S.
Magistrate Judge Viktor Pohorelsky in Brooklyn, N.Y. An arrest warrant has been issued for
Alexander.
“As alleged in the complaint, the defendants abused their positions in order to enrich
themselves and favored employees at the expense of the investing public,” stated U.S. Attorney
Mauskopf. “By backdating these options, the defendants, in effect, gave themselves and others
an opportunity to place a bet in the middle of a race -- a bet that paid off handsomely.” “The alleged scheme of these defendants in back-dating options victimized both
Comverse shareholders and the American people,” said Assistant Director Burrus of the FBI.
“Their alleged fraud affected the company’s bottom line by deliberately misstating earnings, a
material misrepresentation to shareholders.” As alleged in the complaint, from 1998 through 2001, Comverse adopted stock option
plans designed to provide additional compensation for executives, including the defendants, and
other employees. In the company’s proxy statements and other public filings, the defendants
represented that the options would be priced at “fair market value” on the date the options were
granted. According to the public filings, the pricing of the stock options under the plans would
serve shareholder interests because executives and employees who received the options would
continue to work diligently to promote the success of the company and thereby contribute to a
rise in the stock price. However, as alleged in the complaint, Alexander, Kreinberg and Sorin fraudulently
backdated the options awarded under each of these stock option plans to days when the stock was
trading at periodic low points. As a result, the options were granted below fair market value, that
is, below the trading price on the date the options were actually granted. For example, in 1999
the defendants set the option price $35 a share below the fair market value on the day the options
were actually granted. Alexander allegedly took for himself more than 300,000 of those
backdated options, for a paper profit of over $11 million. The grant of options below fair market value carries significant disclosure, accounting
and tax consequences. For example, the value of such options must be recorded as a
compensation expense against the company’s revenue and therefore, can significantly reduce the
company’s reported earnings. In addition, the grant of such options must be disclosed to the
shareholders because these options: (1) erode the incentives of executives and employees to work
for the future of the company because such options are at least in part a bonus for past service;
(2) impose a cost on the company because the company is committed to selling its stock at a
discounted price; and (3) reduce the earnings of the company.
As alleged in the complaint, the defendants fraudulently circumvented these accounting
and disclosure rules by secretly backdating the grant documents and by issuing false proxy
statements and periodic public filings misrepresenting that Comverse’s stock options were
granted at fair market value.
In addition to the backdating scheme, the complaint also alleges that Alexander and
Kreinberg generated hundreds of thousands of backdated options, which they parked in a secret
slush fund to be used at Alexander’s sole discretion to benefit favored employees. To create the
slush fund, Alexander and Kreinberg inserted dozens of fictitious names into the list of option
recipients submitted to the Compensation Committee of the Board of Directors. Once the
Committee approved these options, Alexander and Kreinberg deposited the options in an account
aptly named “Phantom” (later re-named “Fargo”).
According to the complaint, on two occasions in 2000, Alexander transferred a total of
approximately 88,000 options from the slush fund to another top executive. Although the
options had a four-year vesting period, on each occasion, Alexander made the options
immediately exercisable. The executive exercised the options the day after receiving them, when
the stock was trading at nearly double the strike price, and sold the stock at a profit of $4 million.
The defendants’ alleged scheme came to light in early March 2006, when a reporter from
the Wall Street Journal called Comverse and inquired about the unusual pattern in the timing of
the company’s stock option grants. In response, the defendants attempted to cover up their
scheme by authorizing false statements to be made to the reporter, and by lying to an in-house
lawyer for Comverse and to the company’s outside auditor. Additionally, Kreinberg logged onto
Comverse’s computer and attempted to alter a database to hide the slush fund’s existence.
The charges in the complaint are merely allegations, and the defendants are innocent
unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Ilene Jaroslaw,
Linda Lacewell, Sean Casey and Kathleen Nandan. The investigation was led by the FBI New
York Field Office. The Department of Justice believes that it is important to keep victims/witnesses of federal crime informed of court proceedings and what services may be available to assist you. | 金融 |
2014-15/0258/en_head.json.gz/20744 | Home >> Exhibitions >>The Common Wealth: Treasures from the Collections of the Library of Virginia >> Personal and Organizational Records Click here for larger image
Mutual Assurance Society, Richmond. Declaration for Assurance Book,
13 March 1803.
The Mutual Assurance Society, Against Fire on Buildings, of the State
of Virginia, chartered in 1794, is one of the oldest fire insurance
companies in the United States. Its records for the first century and a
half of its operations are among the most informative in the Library of
Virginia's collections and consist of 229 volumes and more than 52,000
individual items.
Among the thousands of applications submitted to the Mutual Assurance
Society, perhaps the one for Mount Vernon features the most elaborate
drawing. The oversize, folded illustration accompanied the 1803
application of Bushrod Washington, a member of the society's original
board of directors and nephew of the president. While serving as a
colonel in the French and Indian War, George Washington had left the
care of Mount Vernon to his favorite brother, John Augustine Washington,
Bushrod's father. At his death in 1799, George Washington bequeathed a
life-interest in the property to his wife, adding that at her death
Mount Vernon was to be divided into three parcels, with the Mansion
House and its adjoining acres to pass to his brother's son. Martha
Washington died in the spring of 1802, and Bushrod Washington applied
for a policy in his own name the following year.
Location: Volume 26, Policy No. 2049, Acc. 30177
Assurance Society Collection Index | 金融 |
2014-15/0258/en_head.json.gz/20760 | Luna Gold Corp. TSX VENTURE : LGC
OTCQX : LGCUF
LMA : LGC
Luna Gold Corp. Announces Results for the Third Quarter of 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 13, 2012) - Luna Gold Corp. (TSX:LGC)(OTCQX:LGCUF)(LMA:LGC) ("Luna" or the "Company") today announced its operational and financial results for the three-month period ended September 30, 2012 ("third quarter of 2012").
THIRD QUARTER OF 2012 AND YEAR TO DATE HIGHLIGHTS
Company Developments
Aurizona Gold Mine ("Aurizona") Phase I expansion project approved to increase target annual gold production to 125,000 ounces in 2014
Agreement reached with Sandstorm Gold Ltd. ("Sandstorm") whereby Sandstorm will contribute 17% of the required Aurizona Phase I expansion project capital expenditures, up to a maximum of $10.0 million
Drill programs completed with positive results at Aurizona's Piaba deposit and Boa Esperança, Ferradura, and Conceição near mine targets
Commencement of a six to eight hole diamond drill program at the Touro target in Luna Greenfields
Piaba deep drill program completed and extension of mineralization intersected to below 600 metres vertical depth
Cachoeira Gold Project sold to Brazil Resources Inc. for a gain of approximately $7.3 million
The Company graduated to the main boards of both the Toronto Stock Exchange and the Lima Stock Exchange
Bill Lindqvist appointed as a Director and Mark Halpin appointed as Vice President Corporate Development of the Company
Operational and Financial Results
Record gold production of 19,391 ounces in the quarter and approximately 52,723 ounces in the year to date
Average unit cash cost of production of $749 per ounce for the quarter and $763 per ounce for the year to date
Gross profit at the Aurizona Gold Mine of $6.9 million for the quarter and $22.7 million for the year to date
Operating cash inflow before working capital movements of $5.0 million for the quarter and $15.2 million for the year to date
Net income of $3.5 million for the quarter and $10.8 million for the year to date
Earnings per share of $0.03 for the quarter and $0.10 for the year to date
STRATEGIC OUTLOOK
Aurizona Project Development
In October, the Company announced an update to the gold production guidance for the full year of 2012, increasing the full year target from 60,000 ounces to between 68,000 and 70,000 ounces. This production upgrade was the result of the increase in plant operating availability, improved blend control, and plant debottlenecking, which allowed for more ore throughput in the mill than originally planned. The Company expects the average unit cash cost of production for 2012 to be between $750 and $760 per ounce. Cash costs could rise slightly in the fourth quarter of 2012, as compared to the third quarter of 2012, due to drought conditions being experienced at Aurizona and the resulting purchase of additional water resources required to maintain production. With the exception of these additional water purchases, the average unit cash cost of production remains on target as originally planned at $750 per ounce.
During the third quarter 2012, the Company announced that its Board of Directors had approved a planned Phase 1 expansion program at Aurizona to increase that facility's annual production capacity to a targeted 125,000 ounces of gold.
The cost of the expansion is estimated at $43.2 million of capital expenditures as well as a $6.5 million contingency, for a total cost estimate of $49.7 million. The Phase 1 expansion is now targeted at an annual gold production rate of 100,000 ounces in 2013 and 125,000 ounces in subsequent years, which is an increase over the previous guidance of 100,000 ounces per year. The expansion is targeting low capital cost improvements to the existing Aurizona Mine process plant with minimal impact to the plant's established footprint or current operations, while further expansion studies are being completed. This expansion project is expected to reach completion in Q4 2013. In Q1 2013, the Company is targeting to publicly release a reserve update National Instrument ("NI") 43-101 technical report for Aurizona.
Luna is currently negotiating an EPCM contract with an international engineering company that has proven capabilities globally and in Brazil. Aurizona's increased capacity will be facilitated with the commissioning of an intense leach reactor, a carbon regeneration kiln, and four electrowinning cells in the first half of 2013, and the remainder of the equipment in the second half of 2013.
The Company cautions that both the potential increased production target for both the expansion program and the Phase 1 expansion's associated costs are estimates, and that there is currently insufficient work to support these statements with a NI 43-101 compliant technical report. Permitting approval to construct the Phase 1 expansion is expected in December 2012.
The Brazilian refiner that the Company contracts to refine its gold shut down for maintenance in late September 2012, which delayed gold shipments to October and resulted in an increased quantity of finished gold inventory at period end. Third quarter of 2012 finished goods inventory has now been sold into the market, and revenue will be recognized during the fourth quarter of 2012.
The third quarter of 2012 Aurizona exploration activities were focused on the completion of the infill drill program at the three near mine targets, Boa Esperança, Ferradura, and Conceição. Eight new drill holes were also completed at the Piaba deposit. A total of 87 diamond and reverse circulation drill holes consisting of 7,478 metres were drilled. These results are being incorporated into an updated Aurizona resource, which the Company expects to release during the first quarter of 2013.
During the third quarter of 2012, the Company commenced an initial six to eight diamond drill hole program at the Touro target. The Company will also continue its exploration programs at Luna Greenfields that include soil sampling, ground geophysical surveys, structural mapping, auger drilling, and trenching. The Company expects to announce these drill results during the first quarter of 2013.
"Luna's third quarter of 2012 provides evidence of not only our current success, but also our promising future," stated John Blake, Luna's President and CEO. "At the beginning of 2012, we outlined a challenging annual production target of 60,000 ounces. We have nearly achieved that target after just three quarters, and I am confident that we will deliver upon our revised annual goal of 68,000 to 70,000 ounces. Aurizona is cashflow positive, allowing Luna to return value to shareholders through both the Phase 1 expansion and drilling in the Luna Greenfields."
"While Luna's production results have exceeded expectations, we are only just beginning to realize our considerable potential. Aurizona's Phase 1 expansion will more than double that mine's production capacity, and we look forward to releasing an updated resource estimate for that property. We have also begun diamond drilling at Luna Greenfields, our largest property, and will soon deliver the results of that initiative."
Mr. Blake concluded, "Our goal is to establish Luna as a mid-tier gold producer. Our progress at both Aurizona and Greenfields gives me great confidence that this goal is well within our reach."
For the full version of Luna's third quarter of 2012 Financial Statements and Management's Discussion and Analysis, please visit www.lunagold.com.
LUNA GOLD CORP.
John Blake - President and CEO
This press release includes certain statements that constitute "forward-looking statements", and "forward-looking information" within the meaning of applicable securities laws ("forward-looking statements" and "forward-looking information" are collectively referred to as "forward-looking statements", unless otherwise stated). These statements appear in a number of places in this press release and include statements regarding our intent, or the beliefs or current expectations of our officers and directors. Such forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, words such as "believe", "anticipate", "estimate", "project", "intend", "expect", "may", "will", "plan", "should", "would", "contemplate", "possible", "attempts", "seeks", "goals", "targets" and similar expressions are intended to identify these forward-looking statements. Forward-looking statements may relate to the Company's future outlook and anticipated events or results and may include statements regarding the Aurizona property (including amount of production, cost of production, future potential) and other development projects of the Company, the Company's future financial position, business strategy, budgets, litigation, projected costs, financial results, taxes, plans and objectives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements were derived utilizing numerous assumptions regarding expected growth, results of operations, performance and business prospects and opportunities, general business and economic conditions, interest rates, the supply and demand for, deliveries of, and the level and volatility of prices of gold and related products, the timing of the receipt of regulatory and governmental approvals of our projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our resource and reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the Company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our projects, our gold inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, and our ongoing relations with our employees and business partners that could cause our actual results to differ materially from those in the forward-looking statements. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Accordingly, you are cautioned not to put undue reliance on these forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results. To the extent any forward-looking statements constitute future-oriented financial information or financial outlooks, as those terms are defined under applicable Canadian securities laws, such statements are being provided to describe the current anticipated potential of the Company and readers are cautioned that these statements may not be appropriate for any other purpose, including investment decisions.
Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially include, but are not limited to, changes in gold prices, changes in interest and currency exchange rates, acts of foreign governments, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, adverse weather conditions and unanticipated events related to health, safety and environmental matters), labour disputes, political risk, social unrest, failure of counterparties to perform their contractual obligations, changes in our credit ratings and changes or further deterioration in general economic conditions, uncertainties with respect to operating in Brazil, including political unrest, theft, uncertainties with respect to the rule of law, corruption and uncertain court systems and other risks discussed elsewhere in this press release and our latest AIF filed on SEDAR at www.sedar.com.
Forward-looking statements speak only as of the date those statements are made. Except as required by applicable law, we assume no obligation to update or to publicly announce the results of any change to any forward-looking statement contained or incorporated by reference herein to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements. If we update any one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. You should not place undue importance on forward-looking statements and should not rely upon these statements as of any other date. All forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement.
Other Technical Information
Peter Mah, P.Eng., Certified Mining Engineer, the Company's Vice President Operations is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the development programs and has reviewed and approved the corresponding technical disclosure throughout this press release. Titus Haggan Ph.D., EurGeol Certified Professional Geologist #746, the Company's Vice President of Exploration, is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the exploration programs and has reviewed and approved the corresponding technical disclosure throughout this press release.
Luna Gold Corp.Investor Relations(604) 568-7993www.lunagold.com | 金融 |
2014-15/0258/en_head.json.gz/20776 | Home > VOL. 127 | NO. 137 | Monday, July 16, 2012
Duncan-Williams Opens New Offices, Adds Staff
By Andy Meek
| Email this story | Email reporter | Comments ()
From (email): Message: In recent weeks, it sometimes has seemed that Duncan Williams is never in one place for too long.Almost as soon as the president of Memphis-based investment firm Duncan-Williams Inc. has settled back into the swing of things after returning from one trip, he’s boarding a plane for the next. And that pattern doesn’t look like it will slow down anytime soon, given that the firm has been opening offices around the country at a steady clip.A few days ago, Duncan-Williams – a full-service brokerage and investment banking firm that serves retail and institutional organizations in 50 states and 11 foreign countries – announced the addition of two new offices and a few new investment bankers.Duncan-Williams has opened new offices in Dallas and in Nashville and has added to the bench strength of its Birmingham, Ala., office. Dallas is home to a new public finance office for the firm, and it’s opened an investment banking office in Nashville.Rick Coad has joined the firm in Birmingham as vice president. Previously, he served as a senior vice president for Raymond James | Morgan Keegan and AmSouth Bank. At Duncan-Williams, he’ll be focused on business opportunities in Indiana, Alabama and parts of Tennessee.Memphis-based investment firm Duncan-Williams Inc. has added two new offices and a few investment bankers.“Rick’s experience and banking contacts will complement the existing capabilities in our Alabama office and will help us further our expansion in the Southeast,” said Kevin Ogilby, executive vice president and head of investment banking for Duncan-Williams.Joining the public finance office in Dallas are Brit Stock and Karl Biggers, vice president and managing director, respectively. They joined Duncan-Williams in May, coming from M. R. Beal & Co. in Dallas.Stock has more than seven years of investment banking experience and Biggers has more than 20 years of investment and commercial banking experience.Ogilby said Duncan-Williams sees these hires as an opportunity to expand the firm’s investment banking platform into Texas’ large and diverse market.The firm has already been heavily active there, however. Since 2000, Duncan-Williams has participated in 225 public finance transactions in Texas totaling nearly $9 billion. The firm also has served as senior manager or co-manager on nine negotiated transactions totaling more than $375 million since 2008.Meanwhile, the firm also has opened an investment banking office in Nashville, where Dave Meagher joined the firm as director of health care investment banking.Meagher has more than 16 years of experience in health care and investment banking, and prior to joining Duncan-Williams he worked in the Nashville office of Raymond James | Morgan Keegan, where he focused on medical technology and life sciences. | 金融 |
2014-15/0258/en_head.json.gz/20786 | article_dawnofdecade
How to Start a New Hedge Fund
StreetID Aug 15, 2012 10:00 am
Tips for the launch, how to raise capital, and building your brand.
Starting a hedge fund is much different from launching other kinds of companies. Most significantly, there is almost no chance that you will be able to start this business out of a garage. To get a hedge fund up and running, you need buckets and buckets of cash.
"If you really wanna succeed, and you wanna manage a higher level of assets, out of the gate it takes you eating your own cooking," said Mitch Ackles, President of the Hedge Fund Association and CEO of Hedge Fund PR. "What that means is you have to have some of your money invested at the outset. We're not talking $500,000 -- it has to be several million."
Ackles told StreetID that smaller launches tend to fail. "Let's say you and I were to get together and launch a hedge fund with $10 million; we would probably stay at $10 million," he said. "Raising assets, unless it's from a very wealthy individual, will be very difficult. No institution will look at a fund of that size. So you have to have at least $100 million out of the gate. That means money that is committed, which is called seed capital.
"So let's say I worked at a prop desk at Goldman Sachs (GS). I may have people that are my contacts and they liked the strategy that I employed at that prop desk. While I may not be able to look back and say, 'This was the track record I had,' because this was the property of Goldman, they might know my pedigree, they might know my capability. I can say, 'Look, this is the strategy I'm going to employ.' It's kind of like being first in line at an IPO. There are a group of people that will be seed capital providers. What that means is usually going to your Rolodex first. Who do you know that's a wealthy individual? Even a small endowment or foundation or even a smaller institution."
If you are wondering why someone would provide money to an unproven fund, Ackles said that it's because of the advantages in being the first to jump on board. "You negotiate a deal where they get reduced fees," he said. "So they pay less than the investors that come after them, so they get a sweeter deal."
Launch Time
"Then after that, I've got my $100 million and I launch," said Ackles. "What it takes next is me creating the actual business, just like you and I would do for any [other business]. So I need to have the infrastructure; I need to pick a place for an office, I need to hire a team."
That team could come from a bank if your hedge fund spun off of one. "It might be a portfolio manager at the top, but there are traders that work with him," said Ackles. "And perhaps others -- a compliance person, a legal person. You have to hire people."
Next up: Acquiring Bloomberg or Reuters (TRI) terminals or whatever else you may need to take on the strategy. "After you've got it in place and you begin trading, you need the pieces to market the fund," said Ackles. "So you need a pitch book, which is essentially a PowerPoint presentation that conveys your investment thesis that explains in detail your view on the market, what your strategy is about, why you believe you're able to execute it, and who are the people that provide services to your firm."
For better or worse, investors will want to see some big names attached to your fund. "Having [big names] is essentially showing that you are quality enough that they took you on as a client," Ackles explained. "So you need the service providers, and it's an administrator, an auditor, an accountant, a prime broker, and those types of people will give you further credibility."
"Let's say you've got all of those pieces," Ackles continued. "Now you need someone to help you raise the money. While an investor wants access to the portfolio manager, the portfolio manager has the day job of watching the trades. Typically they will hire marketing people, so there's going to be someone in-house or external that is charged with bringing investors to the table."
Managers still have to come to the meeting, Ackles said, "because you won't give anyone a check for millions of dollars without seeing their face and looking them in the eye."
"But there's someone that has to do all of the legwork and get the meeting and make sure that those things happen, and even help report the fund's performance to databases so that those investors might call them."
Build Your Brand
A hedge fund could have all the pieces in place. But if investors don't know it exists, it won't go anywhere.
"If you don't have a website and you don't speak at events, how are you going to be known?" Ackles questioned. "I may be two blocks from you and have money to allocate to the type of strategy you have, but if I don't know you're there, and we don't meet each other, I'm never gonna write you the check. So you have to have some amount of publicity."
Ackles said that the other thing you need is a brand.
"It's not just your investment thesis and what you are and who you are -- you need imagery to support it," he said. "If you have something interesting to say and comment on about what's going on in Greece or where the industry is heading or about regulation or even where the election is, if you have an opinion and it's legally okay to share it, you should, because you never know who's watching or reading, and that person might be qualified and reach out to you."
For more from StreetID, click here.
Twitter: @StreetID
GS,TRI | 金融 |
2014-15/0258/en_head.json.gz/20795 | Tags: NYC
Funds NYC Pension Funds Want Tougher Wall Street Clawbacks
Wednesday, 21 Dec 2011 09:26 AM
New York City's pension funds want three big Wall Street banks to impose tougher compensation-clawback rules for top executives.
NYC Pension Funds and City Comptroller John Liu called on the boards of Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. to strengthen language in top executives' compensation agreements. The funds held $483.3 million worth of stock in the three banks as of Monday.
In shareholder proposals, released on Wednesday, the pension funds proposed that the banks remove the word "material" from language in compensation contracts that require a "material" loss or reputational harm to have occurred before executives' pay can be reclaimed.
They also proposed that the banks be able to claw back supervisors' pay for the bad behavior of employees they manage, and that all clawback actions be disclosed to shareholders.
"No one should profit or be rewarded with bonuses when engaged in improper or unethical behavior," said Liu. "These tougher clawback provisions will not only recover money that shouldn't have been paid in the first place, but also set the tone for a stronger standard of conduct for company executives as well as their bosses."
A press release from Liu's office noted that JPMorgan, Goldman and Morgan Stanley have each paid more than $100 million over the past 18 months to settle state or federal charges in connection with mortgage securities. There have been no publicly disclosed clawback actions for any of the three banks.
A spokeswoman for Morgan Stanley declined to comment. Representatives for JPMorgan Chase and Goldman did not immediately return requests for comment on the proposal.
The New York City pension system held $108 billion under management as of September 30 for retirement funds of teachers, police, firefighters and other city employees.
The funds held 10.6 million shares of JPMorgan, valued at $324.3 million; 1.2 million shares of Goldman, valued at $107.1 million; and 3.7 million shares of Morgan Stanley, valued at $51.9 million. | 金融 |
2014-15/0258/en_head.json.gz/20991 | Alpha Card Services Named a 2013 Philly.com Top Workplace Alpha Card Services was named as a 2013 Philly.com Top Workplace. Philly.com published the complete list of Top Workplaces on March 17th. Philly.com Top Workplaces
“Being selected as one of Philly.com’s Top Workplaces is such a great honor for Alpha Card Services.” said Lazaros Kalemis, CEO of Alpha Card Services.
Huntingdon Valley, PA (PRWEB) March 19, 2013 Alpha Card Services is pleased to announce that it has been selected as one of Philly.com's Top Workplaces.
The Top Workplaces are determined based solely on employee feedback. The employee survey is conducted by WorkplaceDynamics, LLP, a leading research firm on organizational health and employee engagement. WorkplaceDynamics conducts regional Top Workplaces programs with 37 major publishing partners and recognizes a list of 150 National Top Workplaces. Over the past year, more than 5,000 organizations and 1 in every 88 employees in the U.S. have turned to WorkplaceDynamics to better understand what’s on the minds of their employees. Alpha Card Services, a Huntingdon Valley, PA based comprehensive business solutions provider was selected as one of The Philly.com Top Workplaces based on strong scores for employee engagement, including referral, motivation and loyalty. Employees also were empowered by the overall direction of the company, confidence of the leadership, opportunity for advancement and the values and ethics of Alpha Card Services. 75% of Alpha Card’s Philadelphia area employees participated in the Top Workplaces survey. “Being selected as one of Philly.com’s Top Workplaces is such a great honor for Alpha Card Services,” said Lazaros Kalemis, CEO of Alpha Card Services. “Over the past several years, our leadership team has researched and implemented successful programs to recruit and retain the best talent in the Philadelphia region. From our highly competitive compensation and benefits packages, including Paid Time Off (PTO) and mandatory personal days, to our Employee Appreciation events, to our world-class sales training university and career advancement from within, Alpha Card is the #1 destination for top employees in the Delaware Valley.”
Alpha Card Services, an Inc. 500 I 5000 company from 2007 through 2012, has grown tremendously since its inception in 2000 and remains focused on adapting their award-winning services to meet the ever-changing business climate. Alpha Card Services, a Registered MasterCard® TPP and ISO/MSP of Wells Fargo Bank - Walnut Creek, CA and HSBC Bank, NA Buffalo, N.Y., was founded in 2000 as an agent and merchant friendly ISO. Within ten years the company has expanded their operations in both Pennsylvania and California, maintained zero hold times for over 5 years, and increased its product portfolio to credit and debit card processing, gift and reward cards, POS systems, Payroll services, merchant cash advances, ATM services, check guarantee services and will be introducing additional new products and programs throughout 2013.
John Lauer
Alpha Card Services 866-253-2227 52 | 金融 |
2014-15/0258/en_head.json.gz/21110 | Please rotate your tablet to landscape view for the best viewing experience.
Transcript Transcript Innovation Video 1
Dynamic Streaming Video | Runtime: 2:54
Innovation Video 2
Transcript Transcript Transcript Transcript Chairman’s Letter
Highlights Shareholder Value
Board of Directors Management Council
Glossary Shareholder Info Downloads
Alvin Vogtle had been a fighter pilot during World War II–therefore, a man not easily frightened. He had also successfully escaped from a German POW camp–therefore, a man who understood the importance of taking calculated risks.
As chairman of Southern Company, Vogtle put those attributes to the test. In 1974, the company was awash in short-term debt, and Vogtle needed to buy it down. For that, he would need cash–and his plan for getting it was to issue common stock and use the net proceeds to retire the debt.
It was a daring plan–deliberately diluting the company’s value at a time when the shares themselves were only worth about half of book value. And so, of course, it worked–brilliantly. Vogtle’s bold move preserved the financial integrity of Southern Company and helped keep its operating companies afloat during a time of low revenues and considerable market uncertainty.
Vogtle remembered what his predecessors had taught him–that the financial strength of a business is one of its greatest assets. It was a guiding principle he would soon pass on to others. They–and the generations of employees who followed them–would benefit from the lesson. In 2001, Southern Company was at a crossroads. Its non-regulated subsidiary, Southern Energy, was being spun off as an independent business, soon to be renamed Mirant. The value of the company was being divided, with 60 percent remaining with the core business and 40 percent departing with the spin-off.
In such cases, conventional wisdom would seem to dictate that the dividend be reduced. But that’s not what happened. Southern Company maintained its commitment to shareholders by keeping its 2001 dividend whole and reassured debt investors that the balance sheet would be further strengthened–reaping the benefits of a customer-focused business strategy. Once again, the values of the company’s founders had held sway. The importance of financial integrity was reaffirmed, and a strong company became even stronger. Today, Southern Company has the best financial integrity of any company of size in its industry, and as a result enjoys an industry-leading credit rating, historically low borrowing costs and an outstanding reputation in credit and equity markets worldwide. Which ultimately benefits customers by keeping rates low. Which leads to healthy regulatory relationships and ready access to capital. Which lets us do even more for customers. Which is really what it’s all about.
PICTURED: Meredith Odom, capital markets team leader, is among those responsible for ensuring Southern Company raises capital at the most affordable rates. Brad Hobbs, manager of strategic finance, monitors and evaluates the company’s financial soundness relative to current market trends.
AN ENTERPRISE IS BORN
James Mitchell wants to build an electric network across the Deep South, but U.S. investors are wary. So Mitchell heads across the pond to London, where British capital is ready and waiting. The infusion is the bedrock for Southern Company’s financial future.
The U.S. stock market crashes, but Southern Company survives, thanks to its strong network of companies and firm financial footing. Soon after, company leaders B.C. Cobb and Thomas Martin consolidate their operations into a single holding company.
CHARGING LESS, SELLING MORE
New Commonwealth & Southern president Wendell Willkie enacts a plan to survive the Great Depression by reducing rates and encouraging increased usage. In so doing, Willkie demonstrates that his business is built for the long haul. Other utilities soon follow suit.
AN IMPRESSIVE STREAK BEGINS
Southern Company pays its first dividend to shareholders, starting an uninterrupted stream of more than 260 quarterly payments over the next 65 years–and persuading multiple generations of investors to hold the company’s common stock for the long term. 1974
VOGTLE’S BIG BET
Southern Company Chairman Alvin Vogtle issues new common stock to reduce the company’s short-term debt. In the process, he steadies the helm during a difficult economic period and buys time for the operating subsidiaries to solve their respective financial challenges.
MIRANT SPIN-OFF
Southern Company’s unregulated subsidiary, Southern Energy, is spun off and renamed Mirant. The value of Southern Company’s common stock is divided proportionally, but the dividend is kept whole, as a way of maintaining long-term shareholder value.
DIVIDEND INCREASES
The dividend on Southern Company’s common stock begins a series of annual increases that will eventually raise it from $1.34 per share to $1.96 per share by 2012–a total increase of 46 percent. 2009
INTEGRITY MEANS VALUE
Major construction projects such as Plant Vogtle 3 and 4 in Georgia and the Kemper project in Mississippi require lots of financing, and the Southern Company system is raising capital at historically low rates–thanks to its industry-leading financial integrity. Lower-cost financing means lower electric rates for customers.
A PROUD RECORD
For the 11th year in a row, Southern Company increases its annual dividend. Total shareholder return has outperformed the S&P 500 over the 10-, 20- and 30-year periods ended Dec. 31, 2012, with about half its volatility.
A SOUND FOOTING
Once again, Fortune magazine names Southern Company one of the world’s most admired electric and gas utilities. It is also the fourth year in a row the company has been named No. 1 in the magazine’s “financial soundness” category.
Alvin Vogtle was an ace fighter pilot during World War II.
MEREDITH ODOM
Debt Capital Markets 11 years of service
BRAD HOBBS
Financial Planning 34 years of service | 金融 |
2014-15/0259/en_head.json.gz/260 | Statement by the European Commission, ECB and IMF on the First Review Mission to Cyprus
Statement by the European Commission, ECB and IMF on the First Review Mission to Cyprus Staff teams from the European Commission (EC), European Central Bank (ECB), and the International Monetary Fund (IMF) visited Nicosia during July 17-31 for the first quarterly review of Cyprus’s economic program, which is supported by financial assistance from the European Stability Mechanism (ESM) and the IMF. The program’s objectives are to restore financial sector stability, strengthen public finance sustainability, and adopt structural reforms so as to support long-run growth, while protecting the welfare of the population. Our overall assessment is that Cyprus’s program is on track. All the fiscal targets have been met as a result of significant fiscal consolidation measures underway and prudent budget execution. The authorities have taken decisive steps to stabilize the financial sector and have already been gradually relaxing deposit restrictions and capital controls. While the authorities have started to implement the program with determination, risks remain substantial. Continued full and timely policy implementation is essential for the success of the program. The short-run economic outlook remains difficult and subject to considerable uncertainty. Recent indicators support the program’s projections of a contraction in output of about 13 percent cumulatively during 2013-14. Encouragingly, confidence indicators have improved somewhat from the lows hit in April. But the labor market has weakened more than anticipated, and unemployment has continued to rise. Growth is expected to recover modestly starting in 2015, driven by non-financial services. Financial sector policies have been geared toward restoring confidence in the banking system. The authorities have taken difficult but necessary steps to fully recapitalize Bank of Cyprus, thus allowing it to exit resolution and return to normal operations. Aiming at supporting economic activity while ensuring financial sector stability, they are developing a milestone-based roadmap for the gradual removal of capital controls and administrative restrictions in an orderly and predictable way. The authorities have also set out a clear agenda to restructure and recapitalize other financial institutions, including the cooperative credit sector, before the end of the year, using program resources where necessary, and without involving depositors. Banking sector regulation and supervision is also being strengthened, including the integration of the supervision of the cooperative credit sector into the Central Bank of Cyprus. The authorities have developed an action plan to strengthen the implementation of the Anti-Money Laundering framework. On fiscal policy, the ambitious package of measures already implemented and a prudent execution of spending are yielding results, with the primary fiscal deficit in the first half of the year better than the program target for the same period. Over the longer run, the government’s fiscal policy remains anchored in achieving a primary fiscal surplus of 4 percent of GDP by 2018, needed to place public debt on a firmly downward path. Major structural reforms are being designed to modernize fiscal institutions. To improve efficiency, revenue administration will be substantially overhauled, including by integrating the internal revenue and the value added tax services departments. At the same time the authorities will take measures to fight tax evasion and boost revenue collection, which can also help during the current downturn. The authorities are also embarking on a fundamental reform of the social welfare system to provide better protection of vulnerable groups. The core of the reform is the introduction, by mid-2014, of a guaranteed minimum income (GMI) scheme together with the elimination of duplicate benefits. The GMI will provide assistance to those who do not have sufficient income to cover basic needs, thus effectively expanding the coverage of public assistance, while remaining within the budgetary envelope.
Next steps: Approval of the conclusion of this review is expected to be considered by the Eurogroup and the Executive Board of the IMF in September. Approval would pave the way for the disbursement of €1.5 billion by the ESM, and about €86 million by the IMF. | 金融 |
2014-15/0259/en_head.json.gz/350 | "Impact Investing Opportunities, Part 2" Guests: Ingrid Dyott, Portfolio Manager, Neuberger Berman Socially Responsive Fund Amy O'Brien, Head of Global Social & Community Investing, TIAA-CREF. Part two of Consuelo Mack WealthTrack's impact investing series reveals more ways to make money while doing good. Two investment pros, Neuberger Berman Portfolio Manager Ingrid Dyott and TIAA-CREF's Amy O'Brien, share their strategies to match financial goals with values. D
10:00 am Global Voices
"Poor Us: The Animated History of Poverty" Do we know what poverty is? The poor may always have been with us, but attitudes towards them have changed. Beginning in the Neolithic Age, Ben Lewis's film takes us through the changing world of poverty. You go to sleep, you dream, you become poor through the ages. D
"Richard Russo" The Pulitzer Prize-winning novelist talks with host Marcia Franklin.G 12:00 pm Need to Know
SCOTT SIMON ANCHORS. Need to Know rebroadcasts a report documenting the death of an illegal immigrant who was beaten and tased by U.S. border patrol agents. D
"The Great Plow Up" In the first episode of Ken Burns's THE DUST BOWL, feel the full force of the worst manmade environmental disaster in America's history as survivors recall the terror of the dust storms, the desperation of hungry families and how they managed to find hope even as the earth and heavens seemed to turn against them. D
"Foie Gras Vs. Animal Welfare" France: Foie Gras vs. Animal Welfare. The French love their foie gras, and the fatty liver product is a must at up-market events. D
"United States of Alec" In an encore broadcast this weekend (check local listings), Moyers & Company presents "United States of ALEC," a report on the most influential corporate-funded political force most of America has never heard of - ALEC, the American Legislative Exchange Council. A national consortium of state politicians and powerful corporations, ALEC presents itself as a "nonpartisan public-private partnership". But behind that mantra lies a vast network of corporate lobbying and political action aimed to increase corporate profits at public expense without public knowledge. D
"Flying Idaho" To fly in Idaho is to experience a view that is constantly changing. In fact, there's nothing quite like it in the lower 48. From the first plane to fly in Idaho, the Curtiss Pusher, to the modern marvels of today, we explore what pilots call a three dimensional experience, in a state that treasures its aviators and its aviation history.G 6:30 pm Lights: Celebrate Hanukkah Live In Concert
LIGHTS: Celebrate Hanukkah Live in Concert, is a special taped in High Definition before a live audience in Los Angeles, California. LIGHTS features a distinguished, diverse and dynamic ensemble of musical performers in celebration of the Jewish Festival of Lights. Craig Taubman hosts a musical extravaganza featuring the likes of the Grammy Award-winning group THE KLEZMATICS; cantor/tenor Alberto Mizrahi (first introduced in the PBS success THREE CANTORS); top-selling jazz artist Dave Koz; soulful and dynamic Joshua Nelson; Emmy Award winning actress Mare Winningham; rising star Michelle Citrin, and many others. D
8:00 pm British Beat (My Music)
Petula Clark is host for this special, which travels to London and around Britain to places where the British Beat was born. The program combines a mix of archival full-length performance films with live performances from the Zombies, Wayne Fontana, Eric Burdon and the Animals, and Gerry and the Pacemakers.G 10:00 pm Moyers & Company | 金融 |
2014-15/0259/en_head.json.gz/384 | Cyprus capital controls seen gone by year's end Comments | Print Source: Business News Originally published: Feb 14, 2014 - 7:37 am
NICOSIA, Cyprus (AP) - Cyprus' central bank chief says he expects all restrictions on bank money transfers and withdrawals to be lifted by the end of the year.
Panicos Demetriades says most, if not all, domestic capital controls are likely to be eliminated in the next few weeks.
Demetriades was quoted by the Cyprus News Agency Friday as saying that getting rid of all restrictions- including unlimited money transfers abroad- depends on confidence being fully restored in the banking system and on the government making substantial progress in implementing the country's rescue program.
The controls were imposed to prevent a run on the banks after Cyprus agreed in March on a multibillion-euro international rescue plan that mandated a raid on uninsured deposits in the country's two top lenders. | 金融 |
2014-15/0259/en_head.json.gz/443 | commentsAmerica's new financial values By Dan Kadlec @Money October 27, 2011: 10:33 AM ET (MONEY Magazine) -- After three years of belt-tightening, Tom Van De Water, 41, a customer information systems manager in Stratham, N.H., has finally loosened the family budget. This year he and his wife, Alyson, 41, celebrated their 10th anniversary in St. Lucia, and she bought him a pricey watch for his birthday. Are these signs of a return to the free-spending good old days, when the couple wouldn't have hesitated to buy the best stuff and top off one of their frequent dinners out with an expensive bottle of wine? Not by a long shot. Print
Today the couple, who have three children (ages 8, 7 and 18 months), carefully plan outings. "We treat each time as special," Van De Water says. The family's SUV, a 2007 Honda Pilot, was purchased off a used-car lot, and their maple dining room set was a $900 bargain nabbed on Craigslist. "We're more thoughtful about how we spend," he says. "We're realigning our values." So are a lot of people. Since 2008, the worst economic downturn since the Great Depression has dramatically changed the way millions of families manage their money and their lives. Some actions were predictable, like cutting up credit cards, clipping coupons, and suddenly remembering that, yes, you really do need to save for a rainy day. What you were living through, after all, was a downpour of financial troubles. Now, more than three years after the collapse of financial institutions, stock prices, and home values combined to usher in a new age of austerity, enough time has passed to ask a critical question: Which of our new-found habits and values will really stick, lasting even after the economy rebounds -- and which won't? The Great Recession officially ended in June 2009. The recovery has been anemic at best -- in fact, 80% of Americans believe the country is still in recession, according to a recent Gallup poll -- and the threat of a double dip hangs over us like a swollen storm cloud. That alone suggests that at least some of the behavioral shifts will stay in place for some time. "Big periods of economic upheaval can define a generation," says Paul Flatters, managing partner of Trajectory Partnership, which monitors consumer behavior. "Not so much because of the depth of this recession, but because of its prolonged nature, it will have lasting impact." To help define the new normal, MONEY and our sister publication Time collaborated on a pair of wide-ranging surveys in late summer to explore Americans' changing financial values. The polls were a follow-up to surveys taken in the months immediately before and after the 2008 meltdown. In dozens of interviews, many families, like the Van De Waters, reported that they were relenting on knee-jerk resolutions made at the height of the crisis. After all, never ever eating out again is probably unrealistic, and there's a limit to how long you'll shop only sales, watch free TV, and read at the library. Still, a great many folks are also doubling down on big behavioral shifts like quality time with family and saving more for retirement -- two areas where the readings today are even higher than they were at the deepest point of the pullback. In the MONEY poll, one in five said they were financially better off now than they were a year ago. That isn't exactly a landslide of prosperity. It is, however, twice the rate of those who felt that way in the 2008 survey. Higher earners (households with an annual income of at least $75,000), not surprisingly, were even more likely to report improvement, and folks across the income spectrum have a higher degree of optimism about their personal finances in the coming 12 months than they did three years ago. Far more now have confidence they will hang on to their house, and fewer worry that they'll be forced to accept a pay cut. None of this is to minimize lingering pain. Median household earnings have fallen three years in a row, according to the Census Bureau, and the poverty rate is the highest it's been in nearly 20 years. 0:00 / 1:46 'I've given up thinking about money'In the Time poll, 83% feel Americans have less economic security than they did 10 years ago; more worry about whether they'd be able to find work if they lost their job; and greater numbers report dipping into college or retirement savings to make ends meet than was the case three years ago. Collective optimism has also been dinged. People who live through an economic shock have far less confidence in government for most of their life, according to a National Bureau of Economic Research (NBER) study. The MONEY survey confirms this skepticism: Only 34% were optimistic about the President's ability to restore growth, and 17% were optimistic about Congress. True, the survey was conducted shortly after the August debt ceiling battle, when many were especially fed up with government. Still, people overall are clearly more pessimistic about the economy now than three years ago --even as they are starting to feel better about their own finances. This split between cautious personal optimism and deep concern for the country is one of many profound shifts in financial attitudes over the past three years revealed in the MONEY and Time surveys. Here are other key findings that shed light on where Americans stand now and where they think they're headed when it comes to managing their money. Thrift is in vogueOver the past three years, a taste for designer labels -- so 2007 -- has morphed into a penchant for spotting deals. And living within your means has become cool again. Or at least you've noticed your friends and neighbors have swung around to your way of thinking. The new appreciation for bargains and budgets born during the 2008 financial crisis appears to have become even deeper in 2011. In the MONEY survey, nearly half the respondents said they felt guilty when they purchased a luxury product, and 85% spend more time looking for deals before they buy -- higher readings than in the earlier poll. And 83% were convinced they would remain frugal in the future. Two in three said their financial priorities have changed as well. How? Lots of folks are building an emergency fund (57%), putting less focus on material things (64%), and eating at home more often (80%). That attitude adjustment has put a big crimp in consumer spending, which has been flat for the past three years, according to the Bureau of Economic Analysis. "People now think two, three, four times before they spend," says Flatters. "Marketers have to convince them the purchase is not frivolous." Quiz: Has the economy changed your financial values? A preoccupation with value is likely to persist in part because the next set of consumers, young people, have felt the squeeze too. Dominant beliefs about how society and the economy work are formed from ages 18 to 25, the NBER study found. This age group has suffered the sharpest income drop -- median earnings of those ages 15 to 24 fell 9% last year -- and have been among the hardest hit by unemployment. As if that wasn't searing enough, many young people experienced the trauma of watching their parents lose their jobs and homes, take pay cuts or suffer big drops in home values and retirement accounts. These kinds of setbacks leave emotional scars, says James Burroughs, associate professor at the McIntire School of Commerce. "Students saw their parents get wiped out after working so hard," he says. "To them, it all seems like a futile exercise." So they are likely to place a lasting value on more moderate living with an emphasis on relationships and experiences. Says Burroughs: "They have a much greater awareness that money cannot buy happiness." Family time trumps stuff In the MONEY survey, 75% said spending time with family was more important than ever, up from 69% three years ago, suggesting many folks have tried it, liked it, and are determined to stick to it. And more than half said they'll continue to be more focused on relationships than material gain well into the future. Holly Rasmussen, 42, a business consultant and divorced mother of two children in Parker, Colo., is one of them. To save money after she was forced to take a pay cut during the recession, she got rid of her landline and home fax, downgraded her cable package, and dumped the gym membership. Her most rewarding shift, she says, has been quitting the restaurant habit, which has helped her overhaul her relationship with her kids, ages 13 and 11. 'How the economy changed us'"We have more time together because we're not sitting in a restaurant with people being ushered in and out," she says. "We're in our living room and it's just the three of us talking about our day. We know each other better." Rasmussen says the family now plan meals and cook together often. She figures her quality time with the kids has doubled. She's also teaching them to be smart about money. Like the 58% in the MONEY poll who are asking their offspring to be more careful about what they spend, Rasmussen now puts the children on a budget when they go shopping, giving them a limited amount to spend as they see fit. She says, "Almost instantly they went from wanting the best of the best to, 'Hey, look at these five shirts I can get on the sale rack.'" Investors are wary Despite the market's volatility over the past three years, investors aren't abandoning stocks, and most don't expect big price drops in the near future. That's particularly true among higher earners; just 16% of families earning $75,000 or more believe the market will be lower a year from now. Investors, however, aren't reverting to big bets on tech and other highfliers. Instead they're hunkering down, looking for ways to minimize losses down the road. Half of affluent families have focused on diversifying their assets over the past three years, the MONEY survey found. A telling 43% said they were more concerned with capital preservation than gains, and nearly 30% said this shift is permanent. That describes Richard Anklin's revamped strategy to a tee. Anklin, 64, and his wife, Sharon, 65, both retired, built a $1.3 million nest egg during 30-plus-year careers working at Ford by investing largely in stocks and sticking with them through the ups and downs of the market. Three reasons to love the slowdown Though their investment mix was aggressive for their age, they stayed the course through the recent downturn --their stocks lost 40% after the 2008 crash -- expecting their portfolio to bounce back, as it had so many times before. But three years later, their holdings are still down sharply. Worried by the duration of the downturn and their advancing years, the couple is now making major shifts in their portfolio. They're dialing back on stocks and have annuitized part of their savings to produce steady income -- smart moves since they're in retirement. As a result, though, their projected income from their investments has dropped by a third, and Richard is concerned about whether he and Sharon will be able to maintain their standard of living and help put four grandkids through college as he planned. "But I had to do it," Richard says. "I had to protect my principal." Austerity has eased up Debt played a big role in getting the country into this mess, and eliminating debt, on both a national and personal level, seems key to getting out of it. Washington may be stuck on figuring out the first part, but families are bent on cleaning up their own balance sheets. The credit bureau TransUnion reports that credit card debt this year has fallen to a near decade-long low, averaging $4,700 per borrower. In the MONEY poll, 62% said they are intent on paying down their credit cards -- a far greater number than in the 2009 survey. "People are putting their heads down and systematically paying off debt in ways I've not seen in 30 years," says Mark Cole, chief operating officer of CredAbility, a nonprofit credit counseling agency. Lately, though, there has been some backtracking. Even as they're paying off cards, people seem more willing to use them: In the MONEY survey, only 43% say they no longer carry a balance, down from 63% three years ago. What to do with $1,000 now Just-released Federal Reserve data also show a spike in charging by consumers during the second quarter, although credit card debt overall remains sharply lower than 2008's record levels. Saving rates show a similar pattern: Currently 5%, they're down from a post-crisis peak of 7.1% in May 2009 but still way better than the near-zero rate of pre-recession days. What's going on? Some experts believe consumers are finally finding a sustainable middle ground. After all, it's tough to live like a monk forever. Case in point: Karen Dhanie, 38, whose family cut way back on everything from groceries to vacations after she was laid off in 2009 from her job in regional sales with Citigroup. Now working for Home Depot in Orlando, Dhanie says she and her husband, Harry, 43, a manager at a national pharmacy chain, got fed up with a lesser cellphone plan and upgraded. She no longer drives out of her way to get a better price on everyday purchases. But, she says, "we still are very conscious about what we buy. We're not splurging like before. Our vacations are less luxurious. We plan ahead." Why new habits will last Cole thinks families like the Dhanies will stick with the program. Consumer willingness to spend and borrow, he says, is a function of job security and confidence in the economy, both abysmally low now and likely to stay low for a long while. He says shedding debt is like quitting cigarettes. Once you kick the habit, you get religion and strive not only to avoid future debt but also to pass this wisdom on to your kids. Robert Kaplan, a professor at the Harvard Business School, agrees, noting a rare double whammy: Both government and consumers are pulling in their horns. "This creates enormous economic headwinds," he says. Not everyone sees all the changes as lasting. Scott Hoyt, an economist at Moody's Analytics who has studied the recession's effect on consumers, believes people generally will continue to save more and borrow less, but that they'll start spending again once the economy get stronger. "Consumers make these changes cyclically," he says. He notes that restaurant spending perked up as the economy improved last year, only to fall off a cliff again when things got dicey this summer. What's clear: The longer tough conditions continue, the more folks accept it as normal, which in turn serves to cement their new values. "There's a huge shift of people who now say this is the way it's going to be forever -- or at least a long, long time," says Carl Van Horn, a professor of public policy at Rutgers. Tali Yahalom contributed to this article.Read the next part of this story: Timely moves for changing financial values First Published: October 27, 2011: 5:25 AM ET Related Articles'I've given up thinking about money' -- Video 'How the economy changed us' Quiz: Has the economy changed your financial values? | 金融 |
2014-15/0259/en_head.json.gz/581 | thoughts on economics, finance, crime and identity...
Equilibrium Analysis
In a recent post on his (consistently interesting) blog, David Murphy questions the value of equilibrium analysis in economics and finance, and points to two earlier posts of his in which the same point is made. Here he is in July 2007:An interesting post on the Street Light Blog, on currency misalignments, suggests an interesting question: is economics an equilibrium discipline? The very idea of a misaligned FX rate suggests that the natural state is an aligned one: perhaps the fundamentals move faster than the markets adjust, so FX is never in equilibrium. Perhaps (in the language of statistical mechanics) the relaxation time is much longer than the average time between forcings. And here, in August 2008:My own view is that finance is not an equilibrium discipline, mostly, so while classical economics might work well in explaining the price of coffee... it does rather less well in asset allocation or explaining the return distribution of financial assets. Rather new news arrives faster than the market can restore equilibrium after the last perturbation, meaning that most of the time equilibrium is not a useful concept.In a 1975 paper that remains worth reading to this day, James Tobin was explicit about the limitations of equilibrium analysis in understanding large scale economic fluctuations:Keynes's General Theory attempted to prove the existence of equilibrium with involuntary unemployment, and this pretension touched off a long theoretical controversy. A. C. Pigou, in particular, argued effectively that there could not be a long-run equilibrium with excess supply of labor. The predominant verdict of history is that, as a matter of pure theory, Keynes failed to prove his case.
Very likely Keynes chose the wrong battleground. Equilibrium analysis and comparative statics were the tools to which he naturally turned to express his ideas, but they were probably not the best tools for his purpose... The real issue is not the existence of a long-run static equilibrium with unemployment, but the possibility of protracted unemployment which the natural adjustments of a market economy remedy very slowly if at all. So what if, within the recherché rules of the contest, Keynes failed to establish an "underemployment equilibrium"? The phenomena he described are better regarded as disequilibrium dynamics.Tobin then goes on to develop a dynamic disequilibrium model of the macroeconomy (discussed at length here) which has a unique equilibrium characterized by full employment, steady inflation, and correct expectations. He shows that even if this equilibrium is locally stable, so that small perturbations are self-correcting, it need not be globally stable: sufficiently large shocks to the economy can result in cumulative divergence away from equilibrium unless arrested by a significant policy response. This seems to describe what we have experienced over the past couple of years better than any equilibrium model of which I am aware. Note that Tobin's model is deterministic. The problem here is not that the economy is being buffeted by frequent shocks that arrive before a transition to equilibrium can occur, it is that the internal dynamics of adjustment simply do not approach the equilibrium from certain (large) sets of initial states even in the absence of shocks. The idea that the instability of steady growth with respect to disequilibrium dynamics is an important feature of modern market economies, and cannot be neglected in a comprehensive theory of economic fluctuations was forcefully advanced by Richard Goodwin as far back as 1951, and Paul Samuelson had explored the possibility even earlier. As Willem Buiter has recently lamented, this line of research in macroeconomics simply dried up about a generation ago.Another area in which equilibrium analysis is likely to be inadequate is in the study of asset markets with significant speculative activity. Price and volume dynamics in such markets depend not just on changes in fundamentals but also on the distribution of trading strategies, and this in turn adjusts under pressure of differential performance. The idea of an equilibrium composition of trading strategies is a contradiction in terms: if there were any such thing there would be a new strategy that could enter to exploit the resulting regularity. It is the complexity of this disequilibrium process that allows information arbitrage efficiency to be approximately satisfied, while allowing for significant departures from fundamental valuation efficiency (the distinction, naturally, is also due to Tobin.) Finally consider Hyman Minsky's financial instability hypothesis, built on the paradoxical idea that stability itself can be destabilizing. In Minsky's framework stable expansions give rise to increasingly aggressive financial practices as those firms having the greatest maturity mismatch between assets and liabilities profit relative to their closest competitors. The resulting erosion in margins of safety increases financial fragility, interpreted as the likelihood that a major default will trigger a crisis of liquidity. Such a crisis eventually materializes, devastating precisely those firms whose actions gave rise to greater fragility. The balance of financial practices is then shifted in favor of increased prudence, and the stage is set for another period of stability. Trying to give this analysis an equilibrium interpretation is a futile exercise; expectations of financial market tranquility are self-falsifying, and no fixed distribution of financial practices can be stable. Given the potential of disequilibrium dynamic models to illuminate our understanding of the economy, why are they generally neglected in contemporary economics? In part it is because the quality of a disequilibrium model is hard to evaluate and the dynamics are necessarily arbitrary to a degree. There is a professional consensus on how equilibrium analysis should be done, but none (so far) when it comes to disequilibrium analysis. Furthermore, equilibrium models can be enormously insightful, even in applications to macroeconomics and finance. The work of John Geanakoplos on the leverage cycle is a case in point, and Abreu and Brunnermeier's paper on bubbles and crashes is another. I have used equilibrium methods frequently and will continue to do so. But it seems that there ought to be greater space in the profession for serious work on the dynamics of disequilibrium.
Update (7/31). In an email (posted with permission) David Murphy adds:
One of the main reasons people study equilibrium models is that they are an order of magnitude easier, mathematically, than non-equilibrium. If you consider a simple problem like cooling, for instance, the equilibrium version is high school physics, and the non-equilibrium version is still a research problem (with useful application to the improvement of annealing methods). Economists in my experience are very comfortable with the maths they know (a bit - stress a bit - of stochastic calculus), but they are not willing to venture much further because it gets really, really hard quite quickly. Hence the 'we have a hammer, everything looks like a nail' problem.I think this is correct as far as analytical results are concerned; proving theorems (aside from convergence-to-equilibrium results) with the standard toolbox is not easy in disequilibrium models. But if one adopts a computational approach the reverse may be true. I, for one, find it easier to write an algorithm to simulate a recursive system than one that requires the computation of fixed points in high dimensional spaces. But (as noted above) there does not exist anything close to a professional consensus on how the quality of such models should be evaluated, and so they are usually rejected out of hand at most mainstream journals. Posted by
Rajiv
East Asian Tigers and African Lions
William Easterly has recently argued that contemporary poverty in African nations may largely be accounted for by technological differences that date back for centuries, if not millennia:1500 AD technology is a particularly powerful predictor of per capita income today. 78 percent of the difference in income today between sub-Saharan Africa and Western Europe is explained by technology differences that already existed in 1500 AD – even before the slave trade and colonialism. Moreover, these technological differences had already appeared by 1000 BC. The state of technology in 1000 BC has a strong correlation with technology 2500 years later, in 1500 AD... A large role for history is still likely to sit uncomfortably with modern development practitioners, because you can’t change your history. But we have to face the world as it is, not as we would like it to be... In a recent speech in Kampala, Gordon Brown offered a prognosis (coupled with a long list of policy recommendations) that was decidedly less gloomy about the future of Africa. Building on the observation that the continent is "full of more untapped potential and unrealised talent than any other," Brown continued as follows:Twenty years ago nobody would have predicted that China and India would be the big drivers of growth and political superpowers they have become. And there is no reason to believe the countries of Africa cannot make similar leaps in the decades to come.... just as people have spoken of an American century and an Asian century, I believe we can now speak of an African century...I believe the new African growth will come from five sources;
a faster pace of economic integration in Africa's internal market, and between your market and those of other continents, facilitated by investment in infrastructure
a broader based export-led growth, founded on new products and services
investment in the private sector from African and foreign sources in firms that create jobs and wealth
the up-skilling of the workforce, including through the acceleration of education provision, IT infrastructure and uptake and finally through
more effective governance to ensure that effective states can discharge their task of creating growth and reducing poverty
Each of these five priorities will be difficult to achieve. But we should remember the value of the prize. Because if we can agree a new model of post-crisis growth then Africa - already a 1.6 trillion economy - will continue to grow even faster than the rest of the world. This is not my assessment, but that of the world's leading companies and analysts. For example a report just published by the McKinsey Global Institute claims that Africa's consumer spending could reach 1.4 trillion dollars by 2020 - a 60% increase on 2008. In other words in ten years African consumer spending will be as big as the whole African economy is today.
It is those sorts of projections which mean people are now rightly talking not just of East Asian tigers, but of African lions.Brown is careful to note that this rosy scenario is a "possibility rather than a probability" and that "it will happen through choice not chance." But, as Shanta Devarajan has recently observed, the choices necessary to make it happen are already being made:In recent years, a broad swath of African countries has begun to show a remarkable dynamism. From Mozambique’s impressive growth rate (averaging 8% p.a. for more than a decade) to Kenya’s emergence as a major global supplier of cut flowers, from M-pesa’s mobile phone-based cash transfers to KickStart’s low-cost irrigation technology for small-holder farmers, and from Rwanda’s gorilla tourism to Lagos City’s Bus Rapid Transit system, Africa is seeing a dramatic transformation. This favorable trend is spurred by, among other things, stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and an increasing reliance on home-grown solutions. More and more, Africans are driving African development. Shanta links to a long list of emerging African success stories. While the economic consequences of an African resurgence will be major, the social implications could be even more profound. I believe that the rise of the African lions will do more to shatter racial stereotypes in the United States and elsewhere than any government policy or electoral outcome. But that is a topic for another post. ---
Update (7/25). I do not dispute the empirical claims made by Comin, Easterly and Gong, nor mean to suggest that that Brown's speech and Devarajan's post have any bearing on these claims. But I have serious doubts about the relevance of their findings for identifying future centers of economic dynamism or for shaping development policy. History can matter for long periods of time (for instance in occupational inheritance or the patrilineal descent of surnames) and then cease to constrain our choices in any significant way. Once reliable correlations can break down suddenly and completely; history is full of such twists and turns. As far as African prosperity is concerned, I believe that a discontinuity of this kind is inevitable if not imminent.
From an overview of the McKinsey report referenced by Brown:
While Africa's increased economic momentum is widely recognized, less known are its sources and likely staying power... Africa's growth acceleration was widespread, with 27 of its 30 largest economies expanding more rapidly after 2000. All sectors contributed, including resources, finance, retail, agriculture, transportation and telecommunications. Natural resources directly accounted for just 24 percent of the continent's GDP growth from 2000 through 2008. Key to Africa's growth surge were improved political and macroeconomic stability and microeconomic reforms... total foreign capital flows into Africa rose from $15 billion in 2000 to a peak of $87 billion in 2007... Today the rate of return on foreign investment in Africa is higher than in any other developing region.
David Blackwell, 1919-2010
The renowned mathematician David Blackwell died on July 8 at the age of 91.I first came across Blackwell's name in a widely-cited paper by Kalai and Lehrer on learning in repeated games. Kalai and Lehrer identified conditions under which players with different initial subjective beliefs about each others' strategies will nevertheless converge to behavior that approximates a Nash equilibrium of the repeated game. In establishing this, the authors relied heavily on the Blackwell-Dubins Theorem: Our proof of the convergence to playing an ε-Nash equilibrium is divided into three steps. The first establishes a general self-correcting property of Bayesian updating. This is a modified version of the seminal Blackwell and Dubins' (1962) result about merging of opinions... When applied to our model, the self-correcting property shows that the probability distributions describing the players' beliefs about the future play of the game must converge to the true distribution. In other words, the beliefs and the real play become realization equivalent.While Blackwell's work is familiar in economics largely through this result, he is also known for the Rao-Blackwell Theorem and his book (with Meyer Girshick) on the Theory of Games and Statistical Decisions. [Update: A much fuller discussion of his influence and contributions may be found here.]Blackwell earned his doctorate in mathematics at the age of 22 from the University of Illinois, where his thesis adviser was Joseph Doob. He then spent a year at the Institute for Advanced Study in Princeton, where his cohort included Shizuo Kakutani, Paul Halmos, Leonard Savage, and Alfred Tarski. He was elected to the National Academy of Sciences in 1965 and was the sole recipient of the John von Neumann Theory Prize in 1979 (sandwiched between Nash and Lemke in 1978 and Gale, Kuhn and Tucker in 1980). While his accomplishments are stellar and many, it is also worth contemplating the many slights that Blackwell had to endure over the course of his career:Blackwell was appointed a Postdoctoral Fellow at the Institute for Advanced Study from 1941 for a year. At that time, members of the Institute were automatically officially made visiting fellows of Princeton University, and thus Blackwell was listed in its bulletin as such. This caused considerable ruckus as there had never been a black student, much less faculty fellow, at the University... The president of Princeton wrote the director of the Institute that the Institute was abusing the University's hospitality by admitting a black... Colleagues in Princeton wished to extend Blackwell's appointment at the institute. However, the president of Princeton organized a great protestation... When it was time to leave the institute, Blackwell knew no white schools would hire him, and he applied to all 105 Black schools in the country. After instructorships at Southern University and Clark College, Dr. Blackwell joined the faculty of Howard University from 1944 as an instructor... In three years, Blackwell had risen to the rank of Full Professor and Chairman.Blackwell eventually moved to Berkeley in 1954 (after having previously been denied a position there due to "racial objections"). He became the first black professor to be tenured there, chaired the department of statistics from 1957 to 1961, and remained at the University until his retirement in 1988. It takes a particular kind of strength to manage such a productive research career while tolerating the stresses and strains of personal insult, and carrying the aspirations of so many on one's shoulders. Blackwell was more than a brilliant mathematician, he was also a human being of extraordinary personal fortitude. ---
I am currently in Bogotá co-teaching a course with Glenn Loury at the (very impressive) Universidad de Los Andes. I am grateful to Glenn for bringing to my attention the news that Blackwell had recently passed away.
Update (7/19). Jeff Ely has linked to two other posts in appreciation of Blackwell: Eran Shmaya focuses on his work while Jesús Fernández-Villaverde writes (in Spanish) about his life. Both are well worth reading. Here's an extract from Eran's wonderful post:
We game theorists know Blackwell for several seminal contributions. Blackwell’s approachability theorem is at the heart of Aumann and Maschler’s result about repeated games with incomplete information... Blackwell’s theory of comparison of experiments has been influential in the game-theoretic study of value of information... Another seminal contribution of Blackwell, together with Lester Dubins, is the theorem about merging of opinions, which is the major tool in the Ehuds’ theory of Bayesian learning in repeated games. And then there are his contributions to the theory of infinite games with Borel payoffs (now known as Blackwell games) and Blackwell and Fergurson’s solution to the Big Match game.
One conspicuous aspect of many of Blackwell’s awesome papers is that they are extremely short — often a couple of pages long. He had an amazing ability to prove theorems in the right way, and he wrote with eloquence and clarity. He is the only writer I know who uses the 'as the reader can verify' trick productively, exactly at those occasions when the reader will indeed find it easier to convince himself in the validity of an assertion than to read a formal proof of it. It is very rare that I succeed in reading proofs in papers that were written dozens of years ago: Notations and perspectives change, and important results are usually reproduced in clearer way over the years. But Blackwell’s papers are still the best place to read the proofs of his theorems...
I hope I am not forcing my own agenda on Blackwell’s research when I say that for him game and decision theory were a tool to study conceptual questions about the meaning of probability and information. At any rate, he was clearly interested in these questions... I hope the game theory society will find a way to celebrate Blackwell’s contribution to our community.Kevin Bryan has also put up a nice post on Blackwell.
Update (7/20). Stergios (in a comment on this post) observes that "Blackwell also made fundamental contributions to the theory of stochastic processes" and that his "renewal theorem is taught in any doctoral level course on stochastic models." And Glenn Loury has emailed me a link to a paper by Jacques Crémer "nicely expositing one of Blackwell's more influential results in statistical decision theory."
Andrew Gelman (and his commenters) have more. And Anandaswarup Gadde links to a wonderful profile from about a year ago:
Doob’s foundational work would help broaden the field of mathematics to a dizzying array of uses in science, economics and technology. So it came as no surprise when in 1942, Jerzy Neyman of the University of California at Berkeley asked if Doob were interested in going West. “No, I cannot come, but I have some good students, and Blackwell is the best,” he replied.
“But of course he’s black,” Doob continued, “and in spite of the fact that we are in a war that’s advancing the cause of democracy, it may not have spread throughout our own land.”
The quote, repeated in the book “Mathematical People,” says a lot about the times and even more about David H. Blackwell... who started as an Illinois undergraduate in 1935 and finished with a doctoral degree six years later, all accomplished at a time when residence halls were whites-only, and approximately 100 blacks were included in the student body of nearly 12,000.
What would be the odds of the son of a railroad worker from Centralia – whose parents did not complete high school and whose Depression-era teaching prospects were limited to segregated schools – becoming one of the top theoretical mathematicians (black or white) in the world?
Almost too hard to compute...
After earning a UI doctoral degree in mathematics in 1941 at the age of 22, Blackwell completed a year at the Institute for Advanced Study in Princeton, N.J., where he worked with, among others, John von Neumann, father of modern game theory. Berkeley’s Jerzy Neyman – who had been unable to persuade Doob to join his department – wanted to offer Blackwell a position but appeared to have come up against a deal-breaker.
In an oral history interview at Berkeley, Blackwell, now 90 years old and in “fair” health, recalled what he learned years later – that the Texan wife of the department head told her husband she “was not going to have that darky in her house.”
The job offer never came.
Blackwell focused his efforts instead on realistic career aspirations for a person of color at the time. In 1942 he applied to 105 historically black colleges, received three offers and eventually landed at Howard University in Washington, D.C., in 1944, where he remained for 10 years...
Back at Berkeley, Neyman had never forgotten Blackwell and finally hired him in 1954, where he would stay for the remainder of his career.Read the whole thing. Posted by
To a Man with a Hammer
In an article published about a month ago, Richard Thaler argued that a behavioral propensity to accept "risks that are erroneously thought to be vanishingly small" was responsible for both the devastating oil spill in the Gulf of Mexico as well as the global financial crisis. This prompted James Kwak to respond as follows:Don’t get me wrong: I like behavioral economics as much as the next guy. It’s quite clear that people are irrational in ways that the neoclassical model assumes away, and you can’t see human nature quite the same way after hearing Dan Ariely talk about his experiments on cheating. But I don’t think cognitive fallacies are the answer to everything, and I don’t think you can explain away the myriad crises of our time as the result of them.Dan Ariely is among the best of the behavioral economists and a wonderful communicator but, like Thaler, seems to have fallen victim to a different kind of behavioral propensity: to a man with a hammer everything looks like a nail. Consider, for instance, his recent comments on the subprime mortgage crisis:Behavioral economics argues that... people will often make the same mistake, and the individual mistakes can aggregate in the market. Let’s take the subprime mortgage crisis, which I think is a great example (but a very sad reality) of the market working to make the aggregation of mistakes worse. It is not as if some people made one kind of mistake and others made another kind. It was the fact that so many people made the same mistakes, and the market for these mistakes is what got us to where we are now... Imagine that we understood how difficult it is for people to calculate the correct amount of mortgage that they should take, and instead of creating a calculator that told us the maximum that we can borrow, it helped us figure out what we should be borrowing. I suspect that if we had this type of calculator (and if people used it) much of the sub-prime mortgage catastrophe could have been avoided. There's no doubt that mistakes were made in the sense that borrowers, lenders and purchasers of mortgage backed securities entered positions that they later came to regret. But they did so because such behavior had been profitable in the recent past, not because they were expressing cognitive lapses in the manner of subjects in controlled experiments. More generally, behavior in financial markets is subject to strong selection pressures based on performance, and if deviating from psychologically typical behavior pays off consistently, then such deviations will proliferate. Laboratory experiments are therefore a poor guide to financial practices, the distribution of which can fluctuate significantly over time.This kind of promiscuous application of behavioral economics to everything under the sun has become extremely widespread. And now two prominent behavioral economists, George Loewenstein and Peter Ubel have taken notice: It seems that every week a new book or major newspaper article appears showing that irrational decision-making helped cause the housing bubble or the rise in health care costs... behavioral economics has spawned a number of creative interventions [but] the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address.This is a point that I have made on several occasions to little effect. But the stature of Loewenstein and Ubel within the behavioral economics community might cause their reflections to be taken more seriously. And the choice is not simply one between behavioral economics and rational choice: agent-based computational models (among the earliest of which were developed by Thomas Schelling) constitute a promising alternative for the study of adaptive behavior in complex systems.
Rationality and Fragility in Financial Markets
In a recent paper on financial innovation and fragility, Gennaioli, Shleifer and Vishny argue that investors (and often also financial intermediaries) are hobbled by certain systematic cognitive biases that cause them to neglect unlikely events when assessing asset values. They argue that such "local thinking" results in the creation and excessive issuance of engineered securities that are widely believed to be close substitutes for more traditional safe assets, but turn out to be much riskier than initially anticipated. This psychological regularity, they believe, accounts for a number of historical episodes of financial instability:Many recent episodes of financial innovation share a common narrative. It begins with a strong demand from investors for a particular, often safe, pattern of cash flows. Some traditional securities available in the market offer this pattern, but investors demand more (so prices are high). In response to demand, financial intermediaries create new securities offering the sought after pattern of cash flows, usually by carving them out of existing projects or other securities that are more risky. By virtue of diversification, tranching, insurance, and other forms of financial engineering, the new securities are believed by the investors, and often by the intermediaries themselves, to be good substitutes for the traditional ones, and are consequently issued and bought in great volumes. At some point, news reveals that new securities are vulnerable to some unattended risks, and in particular are not good substitutes for the traditional securities. Both investors and intermediaries are surprised by the news, and investors sell these “false substitutes,” moving back to the traditional securities with the cash flows they seek. As investors fly for safety, financial institutions are stuck holding the supply of the new securities (or worse yet, having to dump them as well in a fire sale because they are leveraged). The prices of traditional securities rise while those of the new ones fall sharply.The authors claim that this sequence of events describes not only the recent experience with collateralized debt obligations and money market funds, but also earlier episodes of financial innovation, including prepayment tranching of collateralized mortgage obligations in the 1980s. In order to explore precisely the implications of local thinking in the context of financial innovation, the authors construct a model based on a number of stark, simplifying assumptions. There are two assets: a traditional safe security and a risky asset that has three possible terminal payoffs. The worst case outcome for the risky asset is also the least likely to occur (this is a crucial assumption). Investors are homogeneous and highly risk averse. Financial innovation takes the form of separating the cash flows from the risky asset into two components: a "safe" security that earns the the worst case payoff regardless of the actual outcome, and a risky residual claim. Under rational expectations this innovation is welfare improving, and the quantity of the substitute issued is precisely such that all such claims would be covered even if the worst case loss were to materialize. That is, the substitute security really is safe.Under local thinking, the least likely event (which is also the worst case outcome) is simply neglected, and beliefs about the other two outcomes are correspondingly inflated. The intermediate outcome is now (mistakenly) perceived to be the worst, and a greater quantity of the substitute security is issued than could be honored if the actual worst case outcome were to be realized. Now suppose that some bad news arrives, conditional on which the objective probabilities of the three outcomes are altered in such a manner as to make the intermediate outcome the least likely. Local thinking then causes investors to become excessively pessimistic: the worst case outcome not only becomes suddenly salient, but the less disastrous intermediate outcome is neglected and the decline in the price of the asset previously thought to be safe is greater than it would be under rational expectations.The development of a theoretical framework within which common elements of various historical episodes can be examined is clearly a worthwhile exercise. But what troubles me about this paper (and much of the behavioral finance literature) is that the rational expectations hypothesis of identical, accurate forecasts is replaced by an equally implausible hypothesis of identical, inaccurate forecasts. The underlying assumption is that financial market participants operating under competitive conditions will reliably express cognitive biases identified in controlled laboratory environments. And the implication is that financial instability could be avoided if only we were less cognitively constrained, or constrained in different ways -- endowed with a propensity to overestimate rather than discount the likelihood of unlikely events for example. This narrowly psychological approach to financial fragility neglects two of the most analytically interesting aspects of market dynamics: belief heterogeneity and evolutionary selection. Even behavioral propensities that are psychologically rare in the general population can become widespread in financial markets if they result in the adoption of successful strategies. As a result, asset prices disproportionately reflect the beliefs of investors who have been most successful in the recent past. There is no reason why these beliefs should consistently conform to those in the general population.I have argued previously for the further development of this ecological perspective on financial instability, and similar themes have been explored elsewhere; see especially Macroeconomic Resilience and David Murphy. As I said in an earlier post, a bit too much is being asked of behavioral economics at this time, more than it has the capacity to deliver.
Update (7/11). David Murphy follows up with characteristic clarity:
I would even go further, because this argument neglects the explicitly reflexive nature of market participant’s thinking. (Call it social metacognition if you really want some high end jargon.) Traders can both absolutely understand that a behavioral propensity is rare and likely to lead to catastrophe and behave that way: they do this because they believe that other market participants will too, and behaving that way if others do will make money in the short term. Even if you think that it is crazy for (pick your favourite bubblicious asset) to trade that high, providing you also believe others will buy it, then it makes sense for you to buy it along with the crowd. Moreover, worse, you may well believe that they too think it is crazy: but all of you are in a self-sustaining system and the first one to get off looks the most foolish (for a while). Most people are capable of spotting a bubble if it lasts long enough: the hard part is timing your exit to account for the behaviour of all the other smart people trying to time their exit too.I agree completely. There are many examples of prominent fund managers trying to grapple with this problem during the bubble in technology stocks a decade ago. This is why markets can (approximately) satisfy what James Tobin called information arbitrage efficiency while failing to satisfy fundamental valuation efficiency. Posted by
Innovation, Scaling, and the Industrial Commons
When Yves Smith makes a strong reading recommendation, I usually take notice. Today she directed her readers to an article by Andy Grove calling for drastic changes in American policy towards innovation, scaling, and job creation in manufacturing. The piece is long, detailed and worth reading in full, but the central point is this: an economy that innovates prolifically but consistently exports its jobs to lower cost overseas locations will eventually lose not only its capacity for mass production, but eventually also its capacity for innovation: Bay Area unemployment is even higher than the... national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years.
The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs... Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs...
There’s more at stake than exported jobs... A new industry needs an effective ecosystem in which technology knowhow accumulates, experience builds on experience, and close relationships develop between supplier and customer. The U.S. lost its lead in batteries 30 years ago when it stopped making consumer-electronics devices. Whoever made batteries then gained the exposure and relationships needed to learn to supply batteries for the more demanding laptop PC market, and after that, for the even more demanding automobile market. U.S. companies didn’t participate in the first phase and consequently weren’t in the running for all that followed...
How could the U.S. have forgotten [that scaling was crucial to its economic future]? I believe the answer has to do with a general undervaluing of manufacturing -- the idea that as long as “knowledge work” stays in the U.S., it doesn’t matter what happens to factory jobs... I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution... our pursuit of our individual businesses, which often involves transferring manufacturing and a great deal of engineering out of the country, has hindered our ability to bring innovations to scale at home. Without scaling, we don’t just lose jobs -- we lose our hold on new technologies. Losing the ability to scale will ultimately damage our capacity to innovate.Grove recognizes, of course, that companies will not unilaterally change course unless they face a different set of incentives, and that this will require a vigorous industrial policy: The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars -- fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability -- and stability -- we may have taken for granted... Unemployment is corrosive. If what I’m suggesting sounds protectionist, so be it... If we want to remain a leading economy, we change on our own, or change will continue to be forced upon us.Neither Grove's diagnosis nor his proposed solutions will persuade those who are convinced that protectionism of any kind is folly. I am not entirely convinced myself, and suspect that he may be underestimating the likelihood (and consequences) of cascading retaliatory actions and a collapse in international trade. But the argument must be taken seriously, and anyone opposed to his proposals really ought to come up with some alternatives of their own.
Update (7/4). In an email (posted with permission) Yves adds:
On the one hand, you are right, any move towards protectionism (or even permitted-within-WTO pushback against mercantilist trade partners) could very quickly get ugly. But the flip side is I wonder if we have a level of global integration that is inherently unstable (both for Rodrik trilemma reasons, international economic integration with insufficient government oversight creates political problems, plus the Reinhart/Rogoff finding that high levels of international capital flows are associated with financial crises). If so, we may have a short run (messiness of reconfiguration) v. long term (costs of really big financial crises) tradeoff.This is a good point. The purpose of my post was to highlight Grove's analysis of the symbiotic relationship between innovation and scaling (which I think is both interesting and valid), and to challenge those who are opposed to his reform proposals to explain how they would deal with the situation in which we find ourselves. Passive tolerance of mass unemployment, widening income inequality, and withering innovative capacity is not an option.
Update (7/4). Tyler Cowen is predictably dismissive of Grove's article, but (less predictably) seems not to have read it very closely. What Grove means by scaling is the process by means of which "technology goes from prototype to mass production" as companies "work out design details, figure out how to make things affordably, build factories, and hire people by the thousands." This is not about increasing returns to scale as economists normally use the term (declining average costs as a function of output). So Tyler's claim that "at best, given the logic of [Grove's] argument, this would imply a tax only on the increasing returns industries" is not correct. And I cannot imagine what he means when he says that the "big exporting success these days is Germany, which has less "scale" than does the United States." Less scale in what sense? Population or per-capita income differences between the two countries are entirely irrelevant here. Is he trying to say that Germany engages in less scaling (and hence more offshoring) than does the United States? This would be relevant, but is empirically dubious. Like Tyler, I am not convinced that Grove's policy proposals are wise. But his analysis of the relationship between innovation and scaling and the need for a policy response really does deserve to be read with more care.
Update (7/6). Tim Duy follows up with a characteristically detailed and thoughtful post. His bottom line: Something more than cyclical forces is weighing on the American jobs machine. Here I have tried to extend the Grove/Smith/Sethi discourse with additional focus on absolute declines in manufacturing jobs and distressing declines in capacity growth rates. These trends may be critically important in understanding the dismal performance of US labor markets. If they are in fact critical, they raise serious questions about US trade policy – questions that few in Washington want to address. Given the extent to which manufacturing capacity has already been offshored, those questions go far beyond the recently announced tiny shift in Chinese currency policy. Simply put, accepting the importance of manufacturing capacity and the possibility that offshoring has had a much more deleterious impact on the US economy than commonly accepted would require a significant paradigm shift in the thinking of US policymakers. If you scream “protectionist fool” in response, then you need to have a viable policy alternative that goes beyond the empty rhetoric of “we need to teach better creative thinking skills in schools.” That answer is simply too little too late.It's worth reading the entire post to see the data and reasoning that drives him to this conclusion.
I'll be away at a (very interesting) conference for the next couple of days and will be slow to respond to comments and emails. Posted by
Market Microstructure and Capital Formation
In an earlier post I argued that recent changes in technology have altered the distribution of trading strategies in asset markets, with information extracting strategies becoming more prevalent at the expense of information augmenting strategies. Specifically, there has been a dramatic increase in the market share of strategies based on rapid responses to market data using algorithms and co-location facilities. One consequence is that the data itself becomes less reliable over time, resulting in greater price volatility and occasional severe disruptions. The flash crash of May 6 was a striking example. While my focus has been on market stability, this kind of transformation in microstructure probably has a number of other important effects. In recent testimony before the joint CFTC-SEC committee on emerging regulatory issues, David Weild has argued that one of these consequences is on the size distribution of publicly traded companies, and on capital formation more generally: There has been a computer arms race unleashed on Wall Street by changes in regulation and technology... [This] is displacing fundamental investing with computer‐trading based strategies and has created new forms of systemic risk, a loss of investor confidence, and a disastrous decline in primary (IPO) capital formation and the number of publicly listed companies in the United States.
From 1997 to Year End 2009 there has been a 40% decline in the number of publicly listed (i.e., NYSE, AMEX and NASDAQ) companies in the United States. On a GDP weighted basis, we have seen a more than 55% decline in the number of publicly listed companies. Today’s market structure has lost the ability to support small capitalization companies and initial public offerings (IPOs) on the scale necessary to help drive the US economy. The U.S. now annually delists twice as many companies as it lists and this trend has been going on since the advent of electronic trading... the unemployment crisis in the United States has been partly caused by changes to debt and equity capital market structure and the events of May 6 may give us an opportunity to come to grips with the notion that we have entered into an era where trading interests are eclipsing fundamental investment and economic interests. Fundamental investing, or so‐called “information increasing” activities, are being displaced by trading, or so‐called “information mining” activities. The growth in indexing and ETFs may be exacerbating this problem. In addition, stock market structure today is geared for large‐capitalization stocks with typically symmetrical order books but disastrous for the vast majority of small‐capitalization stocks with asymmetrical order books (where there is not naturally an offsetting buy order to match against a sell order and vice versa)... The “Flash Crash” was an example of where even normally liquid securities went to a state of “asymmetry” and price discovery broke down... [Until] all trades, quotes and other messages in all interrelated markets are tagged and traceable to the trading venue, broker and ultimate investor, and disclosed to the market, markets will not be perceived as fair... With full tagging, tracking and reporting and the application of posttrade analysis and test bed techniques such as Agent‐Based Models, regulators and market participants will... once and for all be in a position to judge the impact of other participants and to regulate and plan accordingly...It may be time to admit that what works for large, naturally visible companies, is the antithesis of what is needed by small companies and it is these small companies that are essential to grow our markets, reduce unemployment, restore US competitiveness and drive the US economy.I am not aware of any academic research that links market microstructure to the size distribution of publicly listed companies in the manner suggested here, and I am grateful to David for for bringing his testimony and supporting documents to my attention. The issue is clearly of considerable importance and deserving of greater scrutiny.
Update (7/2). In an email (posted with permission) David adds:
I did a presentation to the ISEEE (International Stock Exchange Executives Emeriti) at the end of April. The audience consisted of about 25 mostly former senior stock exchange executives... I was taken aback by the reaction of people from places like the Zurich Stock Exchange, Australian, New Zealand, Bovespa and others who were of the opinion that these electronic market structures (specifically, compressed spread-trading centric electronic continuous auction markets) are hurting primary capital formation in many of their countries as well.
For me, having run strategy for investment banking, research, institutional sales and trading at a major Wall Street firm, it is pretty simple - If one can't make money supporting small cap stocks, one won't support small cap stocks... This has had two effects:
The investment banks tell issuers that they have to do a much larger ($75 million) IPO; minimum IPO sizes have increased at much faster than the rate of inflation. Aftermarket support for IPOs has withered because issuers lose money providing it (unless the companies are much larger).
It is commonly argued that the rise of algorithmic trading has resulted in increased liquidity, although this claim is by no means universally accepted. David (if I understand him correctly) is arguing that even if liquidity has increased for some classes of securities, it has declined for others, with detrimental net effects on capital formation. Posted by
Happiness and the World Cup
Tyler Cowen considers the question of which team's victory in the World Cup would result in the greatest overall happiness, and concludes (based on the number and intensity of fans) that it would be Brazil. As far as the immediate effects of a victory are concerned, this is probably about right. But could there not also be consequences for global economic growth and financial stability? Hein Schotsman of ABN AMRO has looked at these broader economic effects and comes to the conclusion that a victory by a large economy currently running a significant trade surplus would be best. This leads him to the one obvious candidate:According to a detailed analysis of the 32 countries in this year’s tournament, Mr. Schotsman is convinced that a win by the Germans would boost the global economy. Here’s how: Germany is among the world’s biggest economies and has a large trade surplus. A win by the Germans would boost domestic confidence and spending, thus increasing imports from other countries.
“A German victory will result in a relatively big dent in the German trade surplus, which is best for the stability of the world economy. This is just what is badly needed after the credit crisis,” Mr. Schotsman said in a report released Tuesday called Soccernomics 2010.Maybe so. But as far as my own happiness is concerned, I would like to see Argentina prevail against Germany tomorrow. Lionel Messi has been the player of the tournament so far and I would hate to see his team eliminated. ---I thank Ingela Alger for alerting me to this story and sending me references. For those not fully fluent in Dutch, Schotsman's paper may be upload to Google Translate for a reasonably comprehensible rendering. Posted by
Professor of Economics, Barnard College, Columbia University, & External Professor, Santa Fe Institute
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The Astonishing Voice of Albert Hirschman
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2014-15/0259/en_head.json.gz/798 | Government Job Cuts Threaten Black Middle Class
Share Tweet E-mail Comments Print By Corey Dade Originally published on Wed May 9, 2012 3:58 pm
An employee loads flat trays onto a truck at the U.S. Postal Service processing and distribution center in Merrifield, Va. The USPS, which is projecting a $14.1 billion loss this fiscal year, is discussing restructuring options with potential advisers.
Andrew Harrier
Bloomberg via Getty Images
The planned downsizing of the U.S. Postal Service, which wants to shed thousands of jobs and reduce hours at post offices, struck Baltimore native Eric Easter at his core. For him, it will mark the end of an era in which a post office job has meant stability and a path to a better life, as it did for him and his six siblings living in public housing in the 1960s. "You hate to see that disappear," says the 49-year-old Easter, now a documentary filmmaker and producer, who describes his mother's hiring at the post office as a defining moment in his childhood. "It meant moving to a nicer neighborhood, sort of establishing that I have a place in the world," Easter says. "I remember my mom having cocktail parties, and she and her co-workers could hold their heads up among teachers and other folks as people who had taken solid positions in the middle class." Rivaled only by the manufacturing industry, postal and other government jobs built the modern black middle class. Blacks are 30 percent more likely than nonblacks to work in the public sector, according to the University of California, Berkeley's Center for Labor Research and Education. And roughly 21 percent of black workers are public employees, compared with 16.3 percent of nonblacks. A Crumbling 'Pillar' Of The Black Middle Class But government jobs, long considered the most secure form of employment in America, have rapidly disappeared since the start of the last recession in December 2007 — particularly at the state and local levels, where officials have cut budgets to cope with declining tax revenues and the rising costs of unemployment benefits, employee pensions and Medicare. Government has shed 2.6 percent of its jobs over the past three years, marking the greatest reduction in history, according to the nonprofit Roosevelt Institute, a progressive-leaning organization. Roughly 265,000 workers were shed from all levels of government last year, after about 221,000 job cuts in 2010. "Most government jobs have good pay and benefits and are probably what we would consider a good foundation for middle-class incomes, so any loss of government jobs is going to disproportionately hit the middle class," says Howard University research scientist Roderick Harrison. "The black population, which is more dependent on government for middle-class job opportunities, is going to be more heavily hit." Though the recession has ended, government job losses continue to be one of the most powerful drags on the economic recovery. In April, private employers added 130,000 jobs, but that growth was partially undermined by the loss of 15,000 government jobs. As a result, the net growth of 115,000 jobs fell well below most economists' projections and was down from March's revised 154,000 jobs added. The unemployment rate dropped slightly, to 8.1 percent. After the civil rights gains of the 1960s opened opportunities in government, blacks began a steady move into local, state and federal government, particularly in civil servant and teaching positions. And since the collapse of U.S. manufacturing, the public sector has been the biggest employer for African-Americans. Beyond the jobs themselves, their relatively competitive pay scales have lifted generations of blacks into the middle class. Berkeley's labor center found that among industries that pay blacks the highest wages, the biggest proportion of those blacks work in the public sector. The earnings gap between whites and blacks, which exists in all industries, is the narrowest in government, the Berkeley research has shown. For every dollar earned by white government workers, black women in government earn 89 cents and black men earn 80 cents. Overall, black women earn 85 cents and black men earn 74 cents for every dollar earned by whites. Cuts Trigger Resentment But that security is waning. To express their frustrations about the economy, many African-Americans often invoke an old metaphor, to their chagrin: When everyone else gets the sniffles, we catch the flu. April's jobless rates bear out the same, showing unemployment for whites at 7.4 percent, Latinos at 10.3 percent and blacks at 13 percent. "The three pillars of middle-class African-American life were the public sector, good manufacturing jobs, and black entrepreneurs that served the black community during segregation," says economist Steven Pitts, who led the Berkeley Center's research. "With the end of segregation, you put pressure on the black entrepreneurs, and then there was the decline in manufacturing. Now we see the erosion of the third pillar — the public sector." Not surprisingly, then, government cuts trigger resentment among African-Americans, especially since "big government" has become a politically polarizing phrase. Republican elected officials who rode Tea Party support to victory in the 2010 midterm elections placed government cuts at the center of their plans to eliminate state budget shortfalls and reduce the federal deficit. The impact of their strategy is most clearly seen in state government jobs. More than 70 percent of last year's government job cuts occurred in just 12 states, all of which are controlled by majority-Republican legislatures, according to the Roosevelt Institute. The legislatures in 11 of those states came under Republican control in 2010. What Republicans call an attack on "big government," many blacks see as an attack on their livelihoods, given their heavy reliance on the public sector for employment. Pitts, the Berkeley economist, calls it "nonracial policies with racialized outcomes." Since the employment peak of July 2008, blacks and whites have borne most of the job losses in government, according to Harrison. During and after the recession, blacks have lost more jobs in federal and local governments, while whites have gained slightly at the state level. Marc Morial, president and chief executive of the National Urban League, blames the recession for eliminating "almost all the economic gains that blacks have made over the past 30 years," he says. "It took away substantially the gains in employment and the gains in homeownership. We went back to the unemployment rates similar to the 1970s recession." At the same time, Hispanics are bucking the trend. Despite their high unemployment rate, enough of them are joining government to post a net increase in job growth at all levels of government. The number of Latinos in government has increased every month since November 2008. In February, the latest sampling Harrison compiled, the government sector lost 5.6 percent of black workers and nearly 3 percent of white employees but gained 10.6 percent more Hispanics. "Hispanics have been underrepresented in the public sector, and blacks have been overrepresented," says Harrison, a former chief of the Census Bureau's Racial Statistics Branch. "This might be an overcorrection to hire Hispanics as that population grows, particularly in positions where the government has to serve the Hispanic population and needs people who speak Spanish."Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/. View the discussion thread. | 金融 |
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Standard Chartered hit by $300m in Iran fines
The bank had previously disputed the value of the transactions that broke US sanctions
Q&A: Standard Chartered allegations
Profile: Standard Chartered Bank
Bank's shares up on US settlement
Standard Chartered will pay more than $300m (£187m) to settle charges it violated US sanctions on Iran, Burma, Libya and Sudan.
The UK-based bank has been fined $100m by the Federal Reserve while it will also pay the Department of Justice $227m, the regulators said. The violations took place between 2001-2007 and the bank said it had changed its procedures since then.
It has already paid $340m to New York's Department of Financial Services.
The DFS had accused it of hiding 60,000 transactions with Iran worth $250bn over nearly a decade. In total, the bank has paid about $670m over suspect payments.
New York District Attorney Cyrus Vance said: "Banks occupy positions of trust. It is a bedrock principle that they must deal honestly with their regulators.
"These cases give teeth to sanctions enforcement, send a strong message about the need for transparency in international banking, and ultimately contribute to the fight against money laundering and terror financing."
Following the allegations earlier this year, the bank was negotiating with the Fed Bank of New York, the Office of Foreign Assets Control (OFAC), the District Attorney of New York's Office and the Department of Justice.
On Monday, Standard Chartered said that the issues in question took place primarily between 2001 and 2007 and that the settlement was the result of "nearly three years of intensive cooperation with regulators and prosecutors".
"In the more than five years since the events giving rise to today's settlements, the bank has completed a comprehensive review and upgrade of its compliance systems and procedures," the bank said.
Money controls
The Fed pointed to Standard Chartered's "unsafe and unsound practices".
"Under the cease and desist order, Standard Chartered must improve its program for compliance with US economic sanctions, Bank Secrecy Act, and anti-money-laundering requirements," the Fed said. "The United Kingdom's Financial Services Authority, the home country supervisor of Standard Chartered, has agreed to assist the Federal Reserve in the supervision of the cease and desist order."
OFAC enacted a settlement of $132m as well, "which is deemed satisfied by the forfeiture announced by the Department of Justice".
Iran, Sudan and other nations are under US sanctions, meaning they are subject to controls on the transfer of money to and from the US.
Standard Chartered moved more than $200m through the US financial system primarily on behalf of Iranian and Sudanese clients by removing information that would have revealed the payments, the authorities said.
"These transactions otherwise would have been rejected, blocked, or stopped for investigation under OFAC regulations," the Justice Department said.
10 DECEMBER 2012, BUSINESS Profile: Standard Chartered Bank
07 AUGUST 2012, BUSINESS Bank's shares up on US settlement
15 AUGUST 2012, BUSINESS Related Internet links
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2014-15/0259/en_head.json.gz/914 | Securities Law & Policy
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Home > News & Publications > NEWS RELEASE
96/10March 22, 1996
Vancouver Stock Exchange and British Columbia Securities Commission Implement Exchange Offering Prospectus To Improve Investor Protection
Released: March 14, 1996 Contact: Dean E. Holley Joyce Courtney
B. C. Securities Commission Vancouver Stock Exchange 660-4800 or 689-3334 (BC only)
VANCOUVER - The British Columbia Securities Commission and the Vancouver Stock Exchange have taken the final step to implement an Exchange Offering Prospectus (EOP) system in British Columbia. The EOP system is designed to bolster investor protection by improving the quality of information available to investors when companies already listed on the VSE seek to raise additional public capital.
Listed companies offering securities now are required to file an Exchange Offering Prospectus, rather than a Statement of Material Facts (SMF), to qualify the distribution. The EOP, filed with both the Vancouver Stock Exchange and the Securities Commission, will contain disclosure equivalent to that required for all other types of prospectus and will be subject to the same standards of review.
"Investors will benefit because the EOP will contain better, and hopefully more useful, information than was contained in statements of material facts," said Dean Holley, Securities Commission Executive Director. "Listed companies will benefit because the EOP system overcomes some limitations on the types of security that could be qualified for sale by SMF."
Michael Johnson, President and CEO of the Vancouver Stock Exchange, said: "The VSE has been working toward the implementation of the EOP system for some time and we are pleased to see it fully in place. It is a very positive development for both investors and issuers. It offers investor protection because better disclosure will give them more information on which to make investment decisions."
Holley and Johnson signed an operating agreement this week as the final step in the implementation of the new EOP system. The agreement sets out the Exchange's review guidelines, which will be equivalent to those applied by the Securities Commission in reviewing prospectuses.
"The agreement sets standards that are consistent with those of other Canadian stock exchanges and puts the VSE on the same level in terms of information disclosure," Johnson added.
The introduction of the EOP system is one of many changes flowing from a package of legislative amendments that came into effect January 1, 1996. The changes are designed to improve investor protection and to improve the efficiency of the capital markets in the province.
The Commission is an independent crown agency of the provincial government responsible for regulating trading in securities and exchange contracts in British Columbia.
The Vancouver Stock Exchange specializes in raising capital for small and medium-sized companies in technology, mining, oil and gas, manufacturing, financial, retail and medical industries. Each year, listed companies raise more than $1 billion in venture capital through the exchange.
© BC Securities Commission 2004 | 金融 |
2014-15/0259/en_head.json.gz/1088 | From the February 27, 2013 issue of Credit Union Times Magazine • Subscribe! Trailblazer Award: Marketer Kristen Mashburn Leverages Expertise on Behalf of Members
February 27, 2013 • Reprints ‘I wanted to be in marketing since I was a Girl Scout. I loved selling and learned fast how to talk to target audiences,’ says Kristen Mashburn.
Never tell Kristen Mashburn, director of marketing at Listerhill Credit Union, that marketing is little more than the latest ad campaign.
“As marketers, our purpose is to communicate to and on behalf of our members. We are their advocate,” said Mashburn who has been with the Muscle Shoals, Ala.-based credit union for four years. “We are not in the business of putting promotions together but solving problems. That may mean we do a promotion, but ultimately it’s to help solve a problem.” Credit Union Times 2013 Trailblazer Marketer of the Year has never had any doubts about a career in marketing. “I wanted to be in marketing since I was a Girl Scout. I loved selling and learned fast how to talk to target audiences. I’m also the oldest of 17 grandchildren, so you could say I’ve been built and raised to delegate and manage as well,” said Mashburn. “I can’t tell you how grateful I am for the opportunity Listerhill has given me. They took a risk in hiring me and the experience has been empowering, rewarding and humbling because the team here trusts in what we are doing.”
Acknowledging that often marketing departments can be marginalized, she said communication makes the all the difference. “Communicate often. You can’t let yourself or your department be an island. You’ve got to know what’s going on in the organization, calculate results and share the team’s accomplishments,” said Mashburn. “For those who say marketing is not appreciated, for every project answer the question how does it matter? Constantly share what’s been gained for the organization as a whole so that the department is viewed as a valuable part of the team. It’s not about the ‘they make pretty things’ stereotype. Show that there are business-driven goals behind every project and find the metrics and measures to track.”
Given that solutions-based focus, Mashburn and her team rarely linger over any successes. Within 24 hours they have already moved on to the next challenge.
“Sometimes it’s hard to be happy and not be complacent,” said Mashburn. “We can be proud of what we’ve done, but we have to keep finding ways to improve and do more for our members.”
She added the same philosophy applies to growing the membership. “It’s not enough to just maintain your membership. Everyday people move, change jobs or pass away. True innovation is not simply copying what other credit unions are doing. Using the tried and true because it worked for someone else may not work for you. Innovation gets thrown around a lot, its not unique to our industry. A few years ago, I was given advice that if you do it right, you’re going to make people uncomfortable. It’s stuck with me. It’s not about just stirring the pot, but stirring for a productive change. Be inspired by other industries, but real innovation happens when you work on how to solve a common problem and get to the heart of that. Think in more uniquely strategic terms and that solution, that’s where you get really creative.”
To her, change is viewed as a stepping stone to shape strategic planning and drive future initiatives. A believer in the philosophy of what gets measured gets done, Mashburn keeps tracking top of mind for the team. Using an online project management software, members of the marketing team are not only aware of their own project plans but also those tied to or impacting other departments or divisions. “It’s a great way to keep up with those good ideas and they don’t go to waste,” said Mashburn. “It’s easy to brainstorm ideas and say let’s do that sometime but then sometime never comes. The biggest challenge is knowing which ideas to move forward with. So we work through each idea as a team drawing on our different experiences with a focus on getting the results we need not speed. Everyone is involved with the process and a lot of times we’ll go back to those ideas that we couldn’t use and find that they can solve another unrelated problem. It’s a ready pool of ideas.”
Despite the attention to detail Mashburn is no micromanager. “I’m so involved I think I could get that kind of label,” said Mashburn.
“Honestly I believe we are only as strong as when coupled with everyone else’s strengths. So my role is to hold people responsible for their tasks and make sure all those different parts come together and work in harmony rather than in silos. There is a value in being able to draw on as many different perspectives across departments and specialties so interaction has to be encouraged.”
While proud of all Listerhill CU initiatives, a few that stand out include a recently awarded campus card program at the University of North Alabama, where some 7,000 new members can integrate their student IDs with their Listerhill accounts. In addition, in two years the credit union’s “The Hill” accounts for 15-29 year olds has jumped from 2,082 to 5,562. More importantly, the credit union’s brand recognition among locals has changed from being for old people to being fun, everywhere and a friend to the community. A “So Can You” promotion resulted in over $104 million in loans. To breath new life into its popular youth initiative program, the credit union launched SET magazine in a bid to tie Listerhill’s digital and physical presence. The monthly magazine features lifestyle, finance, technology and community features created by local young people and The Hill serves as the only advertiser. The magazine can be found at branches, local universities, community colleges and establishments frequented by the younger crowd.
She added that by being the only advertiser in the magazine, it has helped brand The Hill account in a more targeted fashion, while eliminating the usual noise that Gen-Yers typically tune out.
“As a whole the industry needs to rethink how we are talking to young people. We’ve heard how important it is to talk but we should consider how do young people like to receive information, what does it look like, sound like and are we talking to them the way they want to be talked to or how it seems like they want to be talked to. There’s a big difference,” said Mashburn. “I’ve seen a lot of credit unions adopt what seems appealing to young people but remember this generation is really striving to find genuine interactions and they can tell if you are trying too hard from a mile away. If you don’t have someone of that generation on staff then have focus groups or a team that meets on a regular basis to better understand that younger market.”
She’s optimistic about the future of credit unions particularly in an environment where there has been a general disdain for other financial institutions.
“There’s a lot to be excited about,” said Mashburn. “It’s our time as credit unions to make a statement. There’s so much happening that we can take advantage of. For example, invovation within the payments industry and as it evolves how we can leverage it to solve consumers needs and provide more meaningful value to our membership.” Page 1 of 2 Next » | 金融 |
2014-15/0259/en_head.json.gz/1095 | Amazon Smartphone
How to Guarantee Income in Retirement
Too Late for Apple iWatch?
Internet Sales Tax One Step Closer to Reality
Updated May 6th 2013 7:25PM
Matt Brownell Apr 22nd 2013 12:13PM
Alamy
A tax on online sales, long sought by bricks-and-mortar retailers, moved one step closer to reality Monday when the Senate voted 69-24 in favor of the Marketplace Fairness Act.
The bill seeks to fix what many see as a tax loophole: Under current U.S. law, an online retailer is only obligated to collect a state's sales tax from shoppers if it has a physical presence in that state. While a few states have circumvented that requirement with "affiliate nexus" laws that primarily target Amazon.com (AMZN), the vast majority of states still don't collect tax on online sales by out-of-state sellers.
The bill before Congress wouldn't impose a national sales tax, but it would empower states to tax those out-of-state online sellers if they so choose. It has the support of numerous retailers, as well as the National Retail Federation, the industry's main lobbying group.
While previous versions of the bill have died on Capitol Hill in recent years, today's vote didn't come as a great surprise: More than a month ago the Senate took a symbolic vote on the measure, and passed it 75-24. And while the bill is opposed by a few key conservatives, it also has the surprising support of e-commerce's heaviest hitter, Amazon. Amazon's support of the bill can be traced to the company's push to establish a wider physical presence to facilitate faster delivery -- and the fact that it can handle the burden of taxation better than smaller online retailers.
The loudest voice of opposition in the business community has belonged to eBay (EBAY). Starting Sunday, the company began sending emails to more than 40 million users informing them of the bill and asking them to write their congressmen. In its current form, the bill only exempts online sellers with less than $1 million in out-of-state sales; eBay wants that threshold raised so that it only applies to businesses that do more than $10 million in sales and have more than 50 employees.
"This legislation treats you and big multi-billion dollar online retailers - such as Amazon - exactly the same," wrote eBay CEO John Donahoe in the letter.
The Marketplace Fairness Coalition, which is comprised of retailers supporting the bill, countered with its own letter noting that the vast majority of eBay's sellers would be exempted from collecting sales tax.
The impact on consumers, meanwhile, would be varied, with many Americans seeing little to no impact on their shopping experience. Five states -- Alaska, New Hampshire, Delaware, Montana and Oregon -- don't charge a sales tax at all, so residents of those states would be unaffected by the law. Several other states, including New York and Illinois, have already passed affiliate nexus laws, which means residents of those state are already paying sales tax for purchases from major online retailers like Amazon. And a few others, like South Carolina and Nevada, have alr | 金融 |
2014-15/0259/en_head.json.gz/1138 | Google IPO Hits Roadblocks
Brian Morrissey, Senior Editor
Google's stock offering, which was widely expected to take place this week, will not occur for another week, according to news reports. CNBC and The Wall Street Journal reported last week that the Mountain View, CA, search giant will push its initial public offering back a week while it resolves complexities in registering investors for its unusual share auction. The reports cited people involved in the IPO process as sources. Google never set an official date for its stock offering, saying only in a filing July 25 with the Securities and Exchange Commission that it would happen in August. It opened its IPO registration Web site, www.ipo.google.com, on July 30. Google's IPO, which could be worth up to $3.3 billion, has run into several obstacles. Many professional investors have bristled at the dearth of financial projections in the company's road show presentation and questioned its $108 to $135 per share price range for the stock offering. Google said in an SEC filing Aug. 4 that it failed to properly register stock issued to employees from September 2001 to June 2004. It said the company could face legal action in 18 states and on the federal level as a result. The California Department of Corporations said Aug. 5 it would investigate the stock allocations to determine whether they violated the state's securities law.
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2014-15/0259/en_head.json.gz/1225 | Help | Connect | Sign up|Log in Joshua Lipton
Help Wanted: Advisors Under 50
As wave after wave of layoffs hit the financial firms, there is one financial job that just can’t attract enough applicants to fill the openings: financial adviser or broker. According to industry insiders and consultants, nobody wants to be a stockbroker these days. According to Cerulli Associates, nearly half of all financial advisers today are over 50 years old. And that aging talent pool isn’t being replenished with young blood: Less than 5%, or just 15,000, of the 298,000 U.S. advisers are currently 30 years old or younger, according to Cerulli Associates. “Long term, this will definitely kill us,” says Fusion Advisor Network’s Philip Palaveev of the dearth of young-blood flowing into the business. “When this wave of advisers over 50 years old tries to retire, how will we absorb the clients that they leave behind.” All this seems counterintuitive given that there has never been a more pressing need for financial advice. More than 70 million baby boomers are in “pre-retirement” according to T. Rowe Price, and given the recent bear market, many simply don’t have enough saved to carry them through the golden years. Click here to download a new free Special Report “10 Big Name Stocks That Can Beat The Recession.” In Pictures: 10 Things You Need To Become A Financial Advisor Why aren’t young people being attracted to financial advice? Scott Smith, a senior analyst at Cerulli, attributes the shortage of young advisers to several factors. For one, there continues to be a general lack of awareness about the business, Smith says. A lot of high school and college students aren’t aware of what financial advisers do, exactly, or even that the profession exists. There’s also a reputational problem, made worse by the recent financial crisis. Given that financial firms like Merrill Lynch, Citigroup
, AIG
and other “Wall Street” firms are being blamed for current financial woes and laying off people in droves, the prospect of starting a career as a “broker”or “financial adviser” holds little interest for most young people. Moreover, many are turned off by the prospect of cold-calling and selling for a living. Still a bigger reason is the shrinking number of training programs. “The training programs are no longer around,” says Howard Diamond, managing director of executive search firm Diamond Consultants. Indeed Merrill lynch slashed its financial consultant training program in January. Morgan Stanley
and UBS
have largely done away with their broker training programs as well. Schwab, which caters to independent advisory firms as a custodian, actively supports advisers once in the business and when they transition from wirehouse to independent advisory. Unfortunately, it does little to bring new blood into financial adviser ranks. Luckily, some universities have been stepping in to fill the void. There are now about 100 university financial planning programs across the country, including at schools like Kansas State University, Virginia Tech and Texas Tech, where students take classes on retirement planning, risk management, estate planning, tax law and the latest planning technology. The students graduate prepared to take their certified financial planner exams. Starting salaries are usually between $50,000 and $60,000. Special Offer: Since 1969, Dan Sullivan has made money for readers with timely advice to buy stocks that outperform the market. It’s called high relative strength investing. Get a taste of the action with the latest model portfolio now in the Chartist. What can young financial advisers expect once they get certified and land at an advisory firm? Jon Yankee is co-founder of Reston, Va.-based Fox, Joss & Yankee, a financial planning firm with $200 million in assets under management. Yankee’s firm has hired two young advisers, both of whom had completed M.B.A.s and their Certificates of Financial Planning designations. These associates, both still in their 20s, now help prepare for client meetings, providing support to more senior members of the small firm. “We involve our associates in everything we do,” says Yankee. “Many of the clients now call associates with basic service issues. The partners then don’t have to spend time on paperwork. Instead, we can spend time speaking to clients and addressing the issues that concern them.” There are currently about 175 undergraduates enrolled in Texas Tech’s financial planning program, says associate professor Deena Katz. Typically, she says, students find work right away. But today. she says the school is having a tougher time placing its graduates in jobs because of industry cutbacks. But the need for these young advisers is greater than ever, she says. The profession needs to attract new talent if it’s going to meet and satisfy the growing demand for financial advisers. “We don’t have enough financial planners to handle all the baby boomers,” Katz says. “They will all need advice. They can’t do it on their own. It is way too complicated, and they have now been way too devastated. They aren’t prepared for retirement. So this is a huge opportunity for kids. It’s one of the best-kept secrets.” In Pictures: 10 Things You Need To Become A Financial Advisor | 金融 |
2014-15/0259/en_head.json.gz/1226 | Help | Connect | Sign up|Log in Steve Schaefer, Forbes Staff
John Havlicek: To Retire Well, Invest From Day One
John and Beth Havlicek at the annual John Havlicek Celebrity Fishing Tournament. (Photo courtesy of The Genesis Foundation)
Pro basketball didn’t pay as well back in the 1960s as it does today, but from the start of John Havlicek’s rookie year with the Boston Celtics in 1962 he started investing a portion of his $15,000 salary. He told his financial advisors at the David L. Babson Company he didn’t care about a return right away, but that he wanted to own blue-chips that would keep growing. “I didn’t play the game of taking it out every time the market went down,” says Havlicek. In that same vein, he bought into his friend Dave Thomas’ nascent business of Wendy’s restaurants in the early 1970s. “When he was starting out, they promoted some of our exhibition games,” Havlicek explains. One of the earliest Wendy’s restaurants was within a mile of the basketball star’s Ohio home. He wound up picking up three franchises in Westchester County, New York that he owned for more than three decades until selling them in recent years. He also bought a piece of Lakeview Farms, an Ohio-based food company specializing in dips and desserts that he still represents at occasional trade shows. Today, Havlicek has stepped back from business, but he still keeps an eye on his finances, meeting with his advisors regularly to make sure his money is still growing in between rounds of golf, visits with his 7 grandchildren and fishing jaunts like the annual tournament he hosts for the Genesis Foundation in Martha’s Vineyard to support children born with disabilities and genetic disorders. The tournament attracts sports stars and celebs with ties to the Boston area, where Havlicek played his entire 16-year career for the Celtics, who retired his #17 jersey in 1978, six years before he was elected to the Naismith Basketball Hall of Fame. Follow @SchaeferStreet
Post-Season: Star Athletes On Their Second Acts In Business
Steve Schaefer
Jack Nicklaus: The Golden Bear Still Roars Off The Course
I started covering markets at Forbes in the summer of 2007. Right around then a pair of Bear Stearns hedge funds imploded in the first tremors of the financial crisis, but I swear the recession isn't my fault. Armed with only a basic knowledge of Wall Street at the start, after a few thousand stories I've got a pretty good handle on this business. My contributions to the Forbes brand don't end when I leave the office either: I'm also a two-time MVP of the Forbes .400 softball team. Tips, story ideas, criticism, questions? Follow me here (click under my picture), on Twitter @SchaeferStreet, Google+, subscribe on Facebook or e-mail me at sschaefer_at_forbesdotcom.
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2014-15/0259/en_head.json.gz/1365 | Thomas C. Dawson
Argentina and the IMFBrazil and the IMFPeople's Republic of China and the IMFPeru and the IMFRussian Federation and the IMFTurkey and the IMF
Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department International Monetary Fund
View this press briefing using Media Player.
MR. DAWSON: Good morning, ladies and gentlemen. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. Before I take questions, I'd like to outline some of the press arrangements for the Spring Meetings, which are scheduled for April 12th and 13th here in Washington. On-line press registration for the meetings started today. The registration form can be found at www.imf.org, under the site index reference for meetings.
Also, the Fund and Bank Media Relations Offices will be circulating more detailed information about the precise sign-on procedures today, and I expect there will be further media advisories issued as we near the events next month.
The deadline for signing up for the meetings will be April 9th, and this should give everyone in the media plenty of time to preregister. Preregistration, however, is required.
As for some of the press events leading up to the meetings, the latest Global Financial Stability Report will be released on March 27th, with a press briefing planned to be held in Frankfurt. We expect to release the analytical chapters of the latest World Economic Outlook on April 2nd. Ken Rogoff, our Economic Counselor and Director of Research, will conduct a global conference call to review the chapters, as well.
Details will be circulated to the press in a few weeks, including information regarding embargoed access to the text.
The WEO Global Forecasts will be released on April 9th. Ken and his staff will hold the regular press conference at IMF headquarters to review the forecast and related issues.
On April 10th, World Bank President Wolfensohn and Managing Director Kohler will have separate press conferences here at IMF headquarters to review the meetings or preview the meetings.
Of course, we will have a press conference following the IMFC meeting on April the 12th, and there will be a Development Committee press conference on April the 13th. Stay tuned for updates in the coming weeks, and if you have further questions about the meetings, please contact the Media Relations Division.
Now, if you have any questions, please.
QUESTIONER: Yesterday, there was a statement of the IMF on Argentina, a joint statement, saying that the revision has been approved or that it's going to be presented to the Board. I wanted to ask you about the court t | 金融 |
2014-15/0259/en_head.json.gz/1455 | The Changing Private Equity Landscape in China: The Emergence of the Local RMB Fund
In China, the advent of large, foreign institutional buyout funds and venture capitalists has inexorably changed the economic landscape. The early days of China's ascension into the World Trade Organization (WTO) in 2001 coincided with serious difficulties at "orphaned" state owned assets, newly privatized firms and other enterprises that realized they cannot turn to Chinese banks for capital. Inefficient state-owned enterprises (SOEs), for example, were no longer able to borrow from equally inefficient banks. Due to new regulations governing bank loans – mandating, for example, that loans actually had to be repaid -- the tap, for all practical intents and purposes, was turned off. Chinese firms, consequently, were desperately seeking capital. It was precisely at this time that the world's major private equity firms, flush with liquidity, decided to enter China in a significant way. According to the Zero2IPO Research Center, the amount of China-specific PE/VC money grew 136% annually, from US$500 million in 2002 to US$15.5 billion in 2006.
"Broadly speaking, China has benefited from the private equity industry, as local firms received expansion capital, management support and best practices," says Erik Bethel, Managing Director of ChinaVest, a Sino-American merchant bank that is considered one of China's venture capital pioneers. "I would like to think that our firm has contributed to helping Chinese companies, as we’ve invested roughly US$500 million in local firms since 1981."
Beijing's Changing Attitude
Recently, however, Chinese regulators’ attitude toward foreign financial buyers has evolved from a welcoming attitude to one of cautiousness. Notable examples of transactions that have failed due to increased regulatory scrutiny include the China Securities Regulatory Commission’s (CSRC) rejection of Goldman Sachs’ investment in Fuyao Glass. Fuyao, listed on the Shanghai Stock Exchange, announced on November 2, 2007, that the CSRC had rejected its application to Goldman. The deal was penned on November 20, 2006, at a price of RMB 8 per share. Roughly one year later, after a long period of regulatory delays, Fuyao’s share price grew to RMB 31. The application was rejected on the grounds that the share price had risen too high and that the valuation of Goldman’s original deal was therefore inadequately low.
Another high profile case is the Ministry of Commerce’s (MOFCOM) decision to turn down The Carlyle Group’s purchase of Xugong Machinery, one of the biggest Chinese machinery firms. This was a deal in which Carlyle initially proposed to acquire an 85% stake in the construction equipment maker. After a humiliating public rejection, Carlyle subsequently agreed to acquire a smaller stake in the firm for a higher valuation. The deal is still waiting for regulatory approval.
“Chinese regulators have become increasingly wary of foreign private equity firms for a few reasons”, notes ChinaVest’s Bethel. “The first is purely nationalistic. It relates to a concern that foreigners could own ‘famous,’ or well known Chinese brands. Frankly, this happens in almost every country, whether it be Pepsi’s bid to acquire Danone in France or Dubai Ports acquiring P&O. But possibly the most important reason is that China no longer needs foreign capital. With roughly US$5 trillion in domestic savings, China may actually have to export capital in coming years.”
As a result of multiple concerns, Beijing created obstacles to foreigners seeking to acquire Chinese companies. One obstacle is setting percentage limits on ownership. Certain industries have pre-defined limits. For example, foreigners can only own 19.9% of banks and 25% of airlines. Other industries, however, are not so well defined. In those industries, depending upon the size of the investment, China requires government approval. At the epicenter of the regulatory process is the Ministry of Commerce (MOFCOM). A foreign fund may find itself dealing with MOFCOM’s central office in Beijing, with MOFCOM’s provincial or local branches, or potentially with both. Adding to this challenge, a foreign fund will also have to gain approval from the relevant industry regulator. The industry regulator can reside at the central government level, the provincial level, or the local level -- and often at all three levels simultaneously. Increased regulatory scrutiny has not slowed PE investments at all. In 2007, PE funds invested US$12.8 billion in 177 deals in China, according to Zero2IPO. “In 2008, the global credit crisis may actually increase foreign PE activity in China. If banks in developed countries stop lending, or if the cost of capital goes up, buyout deals could dry up in the U.S. and Europe. And this, coupled with the fact that China’s economy is relatively insulated from global economic turmoil, may spur even higher interest in China,” says Ray Yang, investment director at US$400 million Orchid Asia Fund. Yang further adds that while China might seem to have a lot of liquidity, the percentage of private equity capital to GDP is still much lower than in developed economies. “There are some sectors which are overheated, but if you look at the overall picture, there are still many more opportunities/deals than money,” says Yang.
In 2007, international private equity funds, facing ever more intense competition for deals, adopted new investment strategies, including bridge loans, PIPE deals (in which private equity firms acquire stock in public companies) and mezzanine financing (convertible bonds and other quasi-equity financing). According to industry experts, this past year, there were 22 bridge capital transactions. Notable examples include a US$100M Carlyle deal in Kaiyuan, China’s largest hotel management company, and Merrill Lynch’s investment in property developer Guangzhou Hengda. PIPE investments also grew by 16% in 2007. Meanwhile, nine mezzanine capital deals totaled US$842.8 million. For much of 2006-2007, many private equity veterans think that the environment for foreign private equity firms in China was pretty tough. It was marked by high levels of competition, increased regulatory scrutiny, high valuations, and, most recently, a new competitor: the domestic PE fund.
The Emergence of the Local PE Fund
While foreign funds previously competed with each other in China, they are now facing a new threat -- Chinese domestic funds. In 2007, these local funds accounted for 19% of the total funds raised. Only a few years ago, there were no local funds. Today there are 12.
Local Chinese private equity funds have raised money from increasingly wealthy corporate, government and individual investors. “And today, with Beijing’s support, local PE funds are emerging as viable competitors,” says Bethel.
There are a number of variations of local funds. One common denominator, however, is currency. The trend in China during 2007 was to raise RMB-denominated funds. The government wants investors to use RMB as their investment currency. When they exit, investors are encouraged to conduct an IPO on mainland stock markets, rather than on overseas stock exchanges, where Chinese citizens are still not allowed to invest. The problem is that most foreign investors have Limited Partners (LP’s) who require U.S. dollar (or other freely convertible currency) returns. This means that foreign investors usually require an offshore holding entity to own the assets of the PRC firm. The offshore entity can then exit in the U.S. market via an IPO or a merger or acquisition, and the PE firm can then provide dollar returns to its LPs.
Unfortunately, recent regulations in China have made it extremely difficult, if not impossible, to create offshore entities. This has provided further obstacles for foreign PE funds in China. The Chinese government is also behind the creation of “industrial development funds.” The Bohai Industry Investment Fund, founded in late 2006, was the first. With roughly US$2.7 billion under management, the fund is aimed at spurring industrial development in the city of Tianjin, a port city located near Beijing. Bank of China owns roughly 50% of Bohai. The National Social Security Fund, with US$30 billion under management, is also an investor. In September 2007, another five industrial funds with a combined value of RMB56 billion (roughly US$7.8 billion) received regulatory approvals. These funds include the Sichuan Mianyang High Technology Fund, Guangdong Nuclear Power and New Energy Fund, Shanxi Coal Fund, Shanghai Financial Fund and Sino-Singapore Hi-tech Industry Investment Fund.
There are also a handful of local PE funds that raised offshore capital in foreign currencies. These funds are known as “international domestic funds,” but for all practical intents and purposes, they are viewed to be Chinese. One is Legend Hony, the investment arm of the parent company of computer maker Lenovo. Another is CDH Investments, a spin-off of China International Capital Corporation (CICC-China’s first joint venture investment bank). CDH has US$2 billion under management and has been an extremely active investor. Brian Doyle, a partner at CITIC Capital, another large international domestic fund, is a strong proponent of local funds. “At the end of the day, local funds make decisions where they live, in the markets where they operate, whereas foreign funds have to report back to New York, Connecticut, London, etc. Our investment process is much more streamlined and as a result we have made six investments in 18 months.” Local funds are here to stay. And while these funds have certain advantages, they still face obstacles. KC Kung, a managing partner at US$1.5 billion MBK Partners, an offshore buyout fund focused on making investments in China, Japan and Korea, notes that “local funds have two theoretical advantages – less regulatory scrutiny and fewer ownership restrictions, both of which are often issues with foreign funds.” He adds, however, that, local firms face hurdles as well, such as potentially adverse tax implications on exit, “at least 20% or 25% of the capital gains.” Orchid Asia’s Yang adds other concerns: “While local funds may have better access to deals, a potential problem is that their incentive structure is not as sophisticated as the international funds so it’s hard to retain a professional team.” Conclusion
China's financial system remains flush with liquidity. It is also relatively insulated from the international credit crunch related to the U.S. sub-prime market. As a result, industry experts predict that China’s PE market will remain vibrant in 2008. However, the private equity landscape is changing, and foreign funds may find themselves at a disadvantage. Beijing is increasingly cautious about turning over control of assets to foreigners. Therefore, local private-equity funds, with few ownership restrictions, strong government support and less regulatory oversight, may represent a key challenge for foreigners in the future.
However, putting too much emphasis on the local private equity industry could be dangerous. According to an industry insider, “In the past, Chinese banks, securities houses and state-run investment funds came under pressure from local government officials to invest in projects that failed to produce returns. Furthermore, Beijing’s domestic bank bailout drained the country’s coffers by hundreds of billions of dollars.”Raphael ("Raffi") Amit, a Wharton management professor who interacts frequently with many PE investors in China, notes that “the rapid transformation of the PE market in China, from one that is dominated by foreign PE firms to a market in which the domestic RMB denominated funds play a major role, reflects the maturation of the Chinese PE market.” He adds, “The emergence of a new generation of top notch Chinese PE professionals, available local liquidity, superior access to transactions and fewer regulatory hurdles provides these firms with a competitive advantage and good prospects for investment returns.”
: 2008.02.27
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2014-15/0259/en_head.json.gz/1868 | You are HereHome » Local Assistance » District Office List » South Carolina District Office » Success Stories South Carolina District Office
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Myrtle Beach Real Estate Broker Wins S.C.'s Top Small Business Title 2012 Small Business Person of the Year Radha Herring Found Saw Opportunity in Recession In 2007, the housing market imploded. The real estate industry went into a tailspin. And Radha Herring – the 2012 South Carolina Small Business Person of the Year – started Watermark Real Estate Group in Myrtle Beach.
Radha had wanted to be an entrepreneur ever since she was a child growing up in Myrtle Beach. “I always wanted to have a successful business,” she says. “I think the concept of building something from scratch is exciting.”
And Radha had wanted to run a real estate company ever since she bought her first house in 1999. “Real estate is the only investment you can enjoy with your family while waiting for it to appreciate,” she explains.
After a ten-year corporate career in telecommunications, Radha was ready to make her small business goal a reality in her hometown of Myrtle Beach, part of South Carolina’s famous Grand Strand. One of the first steps she took was reaching out to SCORE. SCORE–an SBA resource partner that provides free, confidential business counseling–connected her to a counselor in Greenville who was a retired real estate broker. Radha’s SCORE counselor advised her on agent commission rates and told her to keep her overhead very low. He also reminded her not to sell herself short when she was growing her business.
“It’s always nice to have someone coach you,” Radha says.
Radha planned her business to be totally web-based with no physical office. Its virtual structure would not only keep overhead costs low, but would also give the business the flexibility to help clients from across the country buy residential and vacation properties throughout the 60-mile Grand Strand.
When Radha opened Watermark Real Estate Group, the housing bubble had just burst and the real estate industry was struggling. Undeterred, she decided to approach the industry’s struggles as business opportunities.
“Once the bubble burst, the writing was on the wall. Foreclosures and distressed sales were going to be a big part of the market,” she says.
Many realtors tried to avoid any involvement with distress properties, like foreclosures. But where they saw only the stigma, Radha saw a unique opportunity for people to buy coastal properties at much lower prices. Watermark quickly began offering potential buyers free access to lists of bank-owned properties. The company’s marketing message centered on the new affordability of vacation properties and second homes in the area.
“I do what all other realtors could do,” Radha says. “I just market it differently.”
Radha and the Watermark agents also worked on strengthening relationships with area lenders in order to match clients with the banks best equipped to handle their mortgages.
Radha’s optimistic approach to the housing crisis obstacles paid off. In 2009, Watermark’s sales were 15 times higher than the previous year, and sales have continued to grow every year since. Watermark has also grown from two agents in 2008 to nine agents today.
“I think people think I’m making it up when they ask, ‘How’s the market?’ and I tell them it’s great,” Radha says. “But I really do think it’s great.”
Another secret to Watermark’s success has been its focus on customer service.
Discussing what sets her business apart, Radha says, “It’s good old fashioned business 101. We answer the phone when it rings. If we’re in the office, our goal is to answer a question within an hour. When we’re out, it’s four hours.”
“Lots of times, callers say Watermark is the first agency to answer the phone.”
And Watermark agents are always reachable during evenings and weekends to better serve clients who work during the day.
Radha and her company have shared their success by getting involved in the community. Watermark is a member of the Myrtle Beach Area Chamber of Commerce, where Radha serves on the Legislative Policy Council. A Clemson University graduate, she also serves on the Clemson Extension advisory board and is a member of the university’s Alumni National Council. In addition, Radha is active in her local Association of Realtors, where she serves on the board of directors and as vice-chair of the Real Estate Leadership Program.
In 2012, SBA named Radha the South Carolina Small Business Person of the Year based on her growth in sales, financial performance, response to adversity and community involvement. | 金融 |
2014-15/0259/en_head.json.gz/2033 | Finding Safe Harbour: How a Small BD Is Doing It Right Harbour Investments is succeeding as the rest of the small broker-dealer space struggles. Doing the exact opposite of so many of their competitors just might be the reason
Photography by Joe Treleven
“We don’t think we’re any smarter than anybody else,” David Rosenow humbly began. “It’s just maybe we’re better listeners at times.”
Rosenow, vice president of business and product development with Harbour Investments, was responding to the question of what makes the Madison, Wis.-based broker-dealer better than its competitors, many of whom have recently shut their doors. Since Harbour is a small firm somehow thriving in a space under fire, it seemed a natural starting point. Despite his diplomatic answer, Rosenow nonetheless surprised us.
“We have a ‘no-OSJ’ platform,” he added.
Come again? In an era of ever-expanding offices of supervisory jurisdiction, to the point where it’s increasingly difficult to distinguish between broker-dealers and larger branch offices, Harbour completely eschews the business model. Why?
“This is how we’ve run our practice and our business all along,” Rosenow explained. “And could it be considered bucking a trend today? Yes and no. Our staff is highly educated and very experienced. Of our 19 staff members, 11 are principals, and three are testing to be principals. So everybody is managing all of the reps. It’s not just one person as a chief compliance officer bringing in and interpreting the rules; it’s all of us combined.”
Or, as Rhonda Meyer, the firm’s vice president and chief operating officer, put it, “it’s common sense, as well as pulling together all of our resources that we have on the staff.”
You’ll find Habour is contrarian in how they run their business, and the way in which they’re succeeding is what makes them so interesting. Founded in 1987 by industry veteran Nick Sondel, the firm’s president and CEO, it has always existed as a small (dare we say boutique?) broker-dealer, counting just 192 producing reps 25 years later. And it appears to be a great place to work, with employee tenure at the home office averaging 13 years.
“When I started the firm so long ago there were a lot of small broker-dealers around, but there weren’t many that seemed to have common sense,” | 金融 |
2014-15/0259/en_head.json.gz/2131 | Aid and growth in the least developed countries Markus Brückner interviewed by Romesh Vaitilingam, 20 May 2011
Foreign aid has a significant positive effect on real per capita GDP growth in the least developed countries if account is taken of the quantitatively large and negative reverse effect of GDP growth on foreign aid. That is the conclusion of research by Markus Brückner of the University of Adelaide, which he discussed with Romesh Vaitilingam in an interview recorded at the annual congress of the European Economic Association in Glasgow in August 2010. [Also read the transcript.]
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Markus Brückner (2011) "On the Simultaneity Problem in the Aid and Growth Debate", Journal of Applied Econometrics, forthcoming . Transcript
Romesh Vaitilingam interviews Markus Brückner for Vox
Transcription of a VoxEU audio interview [http://www.voxeu.org/index.php?q=node/6530] Romesh Vaitilingam: Welcome to Vox Talks, a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam, and today's interview is with Markus Brückner, from the University of Adelaide. Markus and I met at the European Economic Association's annual meetings in Glasgow in August 2010, where we spoke about his research on the relationship between aid and growth in the least developed countries of the world.
Markus Brückner: This is clearly a very policy relevant debate because, of course, that's where the taxpayers' money is and international organizations like the World Bank and the IMF clearly have to know what happens with the average dollar that goes into foreign aid. Unfortunately, empirically, it's very difficult to obtain an estimate of the causal effect that foreign aid has on economic growth and the aid recipient countries, because changes in income per capita in the aid recipient countries are likely to affect the demand and supply of foreign aid. For example, if donor countries act as good Samaritans, then they will increase aid flows during times when the economy of the aid recipient countries is in bad shape relative to times when the economy there is booming.
So, this would mean that economic growth in the aid recipient country itself has an effect on foreign aid. So, this means, then, that the partial correlation between aid and growth doesn't really tell us anything about causal effect. It doesn't tell us anything about the causal effect of foreign aid on economic growth, nor does it tell us anything about the effect that growth has on foreign aid.
So the aid allocation and aid effectiveness literature, in fact, they're well aware of this problem, at least since the 1970s. This issue has been discussed. The issue of simultaneity problem has been discussed in the literature. However, it seems to be the case that even though the literature is aware that economic growth itself may have an effect on aid, there has not really been any within-country time-series evidence on the causal effect that growth has on aid.
And having an understanding how growth affects aid is important, because not only from aid allocation criteria, because it gives us a prior on how large the reverse effect—so to speak, the reverse causal effect—of growth on aid is. And this is important to know when we look at what we call econometrics and ordinary least squares estimate of the effect that aid has on growth. This is to estimate if there is an upward bias to reverse causality or is it a downward bias?
So, in my paper, I take a so called two-step approach. In the first step I estimate the response of foreign aid to economic growth in the aid recipient country, using instrumental variable techniques. And I do this for the least developed countries, because in the least developed countries, these countries are highly dependent on the agricultural sector and also on the commodity exporting sector. So, we can use rainfall variations, and variations in international commodity prices, as instrumental variables for economic growth. So, we can generate plausibly exogenous variations of economic growth, and then see, using these instrumental variable techniques, how foreign aid responded to changes in GDP per capita growth of the aid recipient countries.
And then in the second step, after I quantified with the instrumental variable estimates of the response of aid to economic growth, I adjust the instrumental variable estimation in the growth regressions, where economic growth is regressed on foreign aid to reverse the effect that growth has on aid. And these are my two main findings.
My first main finding is that, based on within-country time-series variation for the least developed countries during the 1996-2000 period, that foreign aid significantly decreased when economic growth in these countries went up. And not only is the sign of this relationship negative, it's also quantitatively large. My instrumental variable estimates yielded, on average, a one percent increase in GDP per capita growth, reduced foreign aid flow to that country by about four percent.
So, this means that aid is highly elastic to GDP per capita growth of the aid recipient country. So, this is interesting from an aid allocation perspective, but it is also highly relevant for the question of, "Is aid effective?" Because it means that when we just regress economic growth on foreign aid, the estimate that we get on aid is, in econometric terms, downward biased, or more economically stated, it understates the effect that aid has on growth.
And so, right now, the status in the aid allocation literature is that aid has no significant average effect on growth. My first main finding, that aid is highly elastic to growth, means that this reverse causality bias that applies that the least squares estimate and underestimates the effect of aid on growth, may potentially be one of the explanations.
And my second main finding is that, indeed, when I adjust for the negative reverse effect of growth on aid, that I find a positive, a significant and economically quite meaningful effect of aid on economic growth. I find that, on average, about a one percent increase in foreign aid to the LDCs, to the least developed countries, during the 1996-2000 period, raised GDP per capita growth by about 0.1 percent.
So, this is, if you think of it like a solid model, with the basic model in economic growth, the standard model, this is pretty much in line with the effect that we find that investment would have on economic growth. A one percent increase in investment, it depends on the capital-output ratio. But more or less, this would be the effect that we would expect, on average, taking into account the capital-output ratio. And indeed, I further explore the effect of aid on investment, and I find, indeed, that when aid goes to these countries, investment picked up.
So it was not the case that all of this aid was consumed, no, some of it did go into investment, and the fact that I find that, on average, it's positive, it's significant and it's quantitatively, indeed, in line with what we would expect from a standard growth model, where part of this aid goes into investment.
Romesh: Can you try and explain a little more how you think the mechanisms are working, by which growth reduces aid by which growth reduces aid. I mean, when you think about... How does it happen? Does a country, or do donor countries see growth happening and say, "Right. We've had an impact there. Let's reign back and put the money elsewhere." How does it work the other way, because people have said aid just crowds out other activities and goes straight into consumption or goes into the pockets of corrupt dictators?
Markus Brückner: Right. So clearly, there may be many channels through which aid affects growth. One channel, the classical channel, is just investment. If you believe that there is a financing problem in these countries, that these countries can not just go to the international market and borrow, and that there are many high return projects sitting around, especially in the rural markets--in very many poor African countries, for example, the rural farmers, they just can't obtain credit. They may have a lucrative project, but they just can't get the credit.
So if the aid dollar goes to these farmers, and clearly they can realize projects that have a high return…There may, of course, be other channels, more macro channels. Real exchange rate appreciation. There may be a rent-seeking channel. All these channels, of course, are captured by the estimate of average effect. The important message of that estimate is that taking into account all these channels of potential rent-seeking activity, of potentially just having an effect on labor supply, on the real exchange rate of appreciation. That on average, taking all these potential different channels into account, aid had a positive and significant effect on income per capita levels in these countries.
Romesh: But the reverse one, the growth on to aid, tell me about how you see that playing out. That seems surprising to me, in a way. You see growth happen year on year, and then you see the aid budget decline.
Markus: Right. This could have several explanations. It could have an explanation from a donor supply point of view, so then when these countries grow, that means that their income per capita levels increase. Donors see that these countries are doing relatively better. I mean there are many different countries that donors can potentially give aid to. So in countries that are doing relatively well, tf donors have some sort of equality motive, then this could be partially an explanation why some countries that are having a high GDP per capita growth do not receive so much aid.
From the demand side, that could also be an explanation because aid is usually associated with conditionality. This is something that you do not like. It's kind of like saying when you're doing well, why should I take aid? In addition, take this conditionality. While if you're doing bad, you just have no outside option. This is potentially the last resort.
Romesh: Can your research say anything about the different forms that aid might take, and why some forms of aid might be more effective than others?
Markus: Yes, those cases. Certainly, there may be food aid that is just given to countries in crisis. This is certainly the kind of aid that we would expect just to be consumed by the people living there. So this wouldn't necessarily have an effect on GDP per capita unless you think that, of course, you need a certain income of nutrients, of food, in order to work. You can even think, even if this aid dollar is just given to these people to eat, well these people need to produce something, so even if it just goes into consumption, these people still work.
So, of course, if work effort is a function of nutrition, then clearly even if there's just a consumption effect, because these people now have enough food to actually work, then even then you can think that it has a GDP per capita effect. This is the case of food aid, where usually people think, "No, it doesn't have so much of a GDP per capita effect."
If it goes into investment, if these are tractors that are going to the country, if it goes into building roads, into building schools, well then clearly you, via the capital build up, you have an effect on GDP per capita.
Romesh: What about the initial conditions, if you like? You talked about focusing on the least developed countries. Is there an issue around the fact that you might have more impact on a very poor country, or actually you might have more impact on a slightly richer country?
Markus: Right. So the least developed countries ‑‑ there are 47 of them in my sample ‑‑ clearly they're highly dependent on aid. About 4%, 3 to 4% is a share of aid in GDP. So clearly aid is a very significant variable in these countries. For the least developed countries, clearly they're a very relevant group. For the other countries, they're not in my sample, so it would be very difficult to extrapolate for them. I focus on the least developed countries because there we have a natural experiment to estimate, due to their dependence on the agricultural sector and commodity export. There we have a natural experiment to use the rainfall and the international commodity prices to estimate very unsymmetrical variable estimation, the effect that growth has on aid.
This is the reason why I focus on the least developed countries, because there we this natural experiment, but also because they're a very focal point of foreign aid flows. For the other countries, extrapolation is always an issue about that. My statement is about the least developed countries. They're very important, and for the other countries I think my research can not address that. It's not aimed to address that.
Romesh: What about the business side? What about the impact of the cyclical things going on in these economies and the impact of aid at different times?
Markus: Right. The effect of short-run versus long-run effects. I address that, indeed, in my research. One can address that with distributed lag regression, so when you look at the effect in year T and then the effect in year T minus one, T minus two, T minus three. So after three years, after four years. So to address your point, I find that the largest effect is actually on impact, and then the effect declines over time. This means that I find that there's a significant effect on the level of GDP per capita, so a dollar given to that country in the long run, it increases GDP per capita.
But in the long run, what we think of the long-run growth rates, so some sort of Solow TFP residual on that growth rate there's no effect. So there's a level effect of aid, in the sense that I give you a dollar and you use that dollar. You build something. You build a road you can then consume more, in terms of the level of consumption. But in terms of the growth rate, there's no long run growth rate effect.
Romesh: Final question, Markus. Let's talk about the policy implications. You've sort of got a good news story for aid.
Markus: I think policy makers, they always have it more difficult than academic researchers in the sense that when they make the decision of whether to give aid to one country or the other, it's always very high context specific. My message is clear and simple: On average, aid works. Clearly for the policy maker, for the IMF, or for the World Bank, or for the United Nations, each project needs to be decided context specific. They know this. My research simply says this to the taxpayer who pays the money, on average, this aid flow significantly helps in raising GDP per capita in the poorest countries in this world. That's an important message, I think.
Romesh: Markus Brückner, thank you very much. Topics: Development
Tags: foreign aid, LDCs
Are post-conflict aid projects more successful than others?Lisa Chauvet, Paul Collier, Marguerite Duponchel
Crushed aid: Why is fragmentation a problem for international aid?Javier Santiso, Emmanuel Frot
Markus Brückner
Associate Professor in Economics, National University of Singapore
Personal experience and risk aversion in times of crisisKoudijs, Voth How poorer nations benefit from EU membershipCampos, Coricelli, Moretti The chartbook of economic inequalityAtkinson, Morelli Economic flaws in the German court decisionDe Grauwe Redistribution, inequality, and sustainable growthOstry, Berg, Tsangarides | 金融 |
2014-15/0259/en_head.json.gz/2187 | Worker Cooperative Federal Credit Union (Unchartered)
HomeField of MembershipEligible Worker CooperativesEligible Housing CooperativesLow Income DesignationCooperativesWorker CooperativesCredit UnionsSurveyIndividual SurveyCoop SurveyLinksCooperative AssociationsCredit UnionsEconomicsLabor UnionsNews and AnalysisWorker Coop Funding SourcesEventsPeopleSubscribersStaffAdvisory BoardAboutSupportersContactNoBAWC StatementOld Home Page
Subscribers (Elects Initial Board of Directors)
The following people have agreed to serve as subscribers for the proposed credit union. The NCUA approved these people to serve as subscribers in May 2011.
(RESIGNED) Michael Leung is the lead organizer of the proposed “Worker Cooperative Federal Credit Union” (unchartered). He has a B.S. in Engineering Physics (2000) from the University of California Berkeley, and a Ph.D. in Physics (2006) from Princeton University. His physics research includes cosmology, accelerator, and particle physics experiments. Mike has since done theoretical work on the worker cooperative capital structure. He is also the founder of Abolish Human Rentals, which lays out principled arguments for a modern abolitionist movement. He currently resides in the San Francisco Bay Area.
Mark Fick is the Senior Loan/Program Officer with the Chicago Community Loan Fund (CCLF). Mark’s work at CCLF is focused on lending to affordable housing, cooperatives and community based organizations. Additionally, Mark coordinates the CCLF technical assistance and training program to provide workshops, technical resources and referrals to community development projects with a specific focus on sustainable design and cooperative housing.
Mark has worked on a variety of grassroots community development and organizing campaigns over the past fifteen years. He serves as a board member of the Northside Community Federal Credit Union and was a co-founder of the Stone Soup Cooperative, a social justice housing cooperative in Chicago. Mark also serves on the board of NASCO Development Services, a development assistance group serving student and community housing cooperatives across North America. Before joining CCLF, he was the Associate Director of the Chicago Mutual Housing Network and the Technical Assistance Coordinator with Statewide Housing Action Coalition (now Housing Action Illinois). Mark is a graduate of the Urban Developers Program at the University of Illinois Chicago.
(RESIGNED) Tim Huet is a founder of the Association of Arizmendi Cooperatives, an enterprise aimed at replicating successful worker cooperatives. The Association has launched in the San Francisco Bay Area five new bakery cooperatives. As part of the Association’s Development & Support Cooperative that helps launch new cooperatives and provides technical assistance to the established outlets, Tim participates in writing business plans; raising start-up capital; negotiating leases; and training workers in democratic business management. He also serves as in-house legal counsel.
During his five years as a worker-owner at Rainbow Grocery Cooperative – as Rainbow grew to be the West’s largest worker cooperative – Tim served in the following capacities: Conflict Resolution Team Coordinator, Personnel Procedures Specialist, and Facilitation Team Coordinator. He was one of the founders the Worker Ownership Fund and a member of the founding board of the United States Federation of Worker Cooperatives. He has served multiple terms on the board of the Western Worker Cooperative Conference and currently serves on the boards of the California Center for Cooperative Development and the Democracy at Work Institute. He served on the Supervisory Committee of his local credit union, the Cooperative Center Federal Credit Union. He resides in a limited equity housing cooperative in Oakland, California.
(RESIGNED) Dave Karoly has been involved with Bay Area worker cooperatives, small business and credit unions for the last 20 years. He is a cofounder of and is currently a part-time staff person with the Network of Bay Area Worker Cooperatives (NoBAWC), the oldest and largest regional organization of democratic workplaces in the U.S. In addition, Dave cofounded and worked in a Berkeley printing cooperative, New Earth Press, from 1991 through 2000. He has also worked with the Association of Arizmendi Cooperatives in 2002-2003 providing bookkeeping support, training and financial analysis to the
Oakland and San Francisco Arizmendi bakeries. Moreover, he has done many workshops and presentations over the years and has helped organize several worker cooperative conferences, including the 2000 and 2001 Western Worker Cooperative Conferences (west coast regional conferences) and the 2004 and 2007 NoBAWC Bay Area worker cooperative conferences.
Melissa Hoover serves as the Executive Director of the United States Federation of Worker Cooperatives, the national membership organization for worker cooperatives, and is a founding director of the nonprofit Democracy at Work Institute, which provides technical assistance and information to organizations and individuals starting or expanding worker cooperatives. She also works with the Arizmendi Association’s development and support cooperative, helping start new cooperatives and providing training and ongoing support for existing Arizmendi cooperatives. Melissa has worked with worker cooperatives and small businesses to strengthen all aspects of financial management, with a focus on creating effective systems and trainings. In addition to several years’ experience on financial and management teams of Bay Area worker cooperatives, she has also provided consulting and cooperative development services to worker cooperatives for several years. She has been a featured speaker and trainer at regional and national conferences. She holds a B.A. in History from Stanford University with a research focus on cooperative movements.
Thomas Butler recently graduated from the University of Texas at Austin, and is currently traveling in the interest of personal and professional co-operative discovery and exploration. In high school Thomas helped start an unofficial cooking co-op. This led him to the 21st St. College Houses Cooperative, where he lived while in school at UT. In addition to House level officer positions, he became heavily involved at the Board level of College Houses, serving as Chairman of the Membership Education and Marketing Committee, Corporate Treasurer, and Chairman of the Board of Directors. Thomas currently sits on the Board of Directors of the North American Students of Co-operation (NASCO), where he Co-Chairs the Membership Engagement Committee.
(RESIGNED) Newell Lessel is president of the ICA-group. With a background in domestic and international economic development, Mr. Lessell has over 15 years of for-profit and not-for-profit management experience. While at ICA he has founded several social purpose ventures, developed the business plans for each of ICA’s first three staffing companies, and helped raise over 3 million dollars of capital for social purpose ventures. He is the founding director of the national Alternative Staffing Alliance, which ICA manages. Prior to joining ICA, he worked as a management consultant in Central Europe. Mr. Lessell has also designed and taught courses on entrepreneurship and financial analysis. He has a MBA from the Yale School of Management and a B.A. from Amherst College.
Steven Yarak is the Business Team Leader at Black Star Co-op, the world’s first co-operatively owned brewpub. A multi-stakeholder co-operative with 17 worker-owners and more than 2,600 consumer-owners, Black Star Co-op was founded in 2006 and opened for business in 2010. While a love of craft beer provided the initial force behind the enterprise, Steven’s passion for the co-operative movement and building a vibrant co-operative economy has become his primary motivation. To this end, Steven participates in the Austin Co-op Think Tank, has served as a regional Director on the Board of the US Federation of Worker Co-ops, and worked with the Filene Research Institute’s i3 program to try and increase business lending from credit unions to small co-ops.
Worker Cooperative Federal Credit Union (Unchartered) Proudly powered by WordPress. | 金融 |
2014-15/0259/en_head.json.gz/3101 | hide Amid budget cutbacks, U.S. shipping sector seeks more federal funds
Monday, May 06, 2013 12:05 a.m. CDT
The Panama registered Mol Explorer cargo ship is pictured at the Port of Long Beach, California December 4, 2012. REUTERS/Mario Anzuoni By Andy Sullivan
WASHINGTON (Reuters) - As Congress imposes deep spending cuts on everything from national defense to child care, shipping industry executives are urging lawmakers to spend hundreds of millions of dollars more on a river network that accounts for a declining share of the nation's domestic freight.
During a lobbying blitz in the past month, roughly 130 tugboat and barge operators fanned across Capitol Hill, meeting with lawmakers and congressional staffers.
The shipping executives argued that the U.S. government should spend $150 million more each year to upgrade the Depression-era locks and dams that enable them to ship soybeans, coal and other commodities down the nation's major rivers. In return, the shippers said, they would pay more in fuel taxes.
For an industry that already is subsidized heavily by the U.S. government - and whose growth in moving domestic freight is being outpaced by rail and interstate trucking - pushing such an argument at a time of budget cutbacks is navigating upstream.
But barge operators have cultivated a bipartisan group of river-state lawmakers, including Republican Senator Lamar Alexander of Tennessee and Democratic Senator Bob Casey of Pennsylvania, who appear ready to fight for the industry's interests when the Senate takes up the issue this week.
The "Battle of the Barges" may not command the public's attention the way that the debates over gun control and immigration have. But the outcome could signal whether the traditional way of doing business on Capitol Hill - coalition-building, campaign donations and face-to-face lobbying - can still get results in an era when partisan conflicts have made it hard to advance legislation of nearly all types.
Barge executives leading the lobbying effort include Peter Stephaich of Campbell Transportation Co in Pennsylvania.
"It does seem to be unusual these days to have both sides come together and support something like this," Stephaich said last month, as he wrapped up a meeting with Alaska Democratic Senator Mark Begich and headed to a fundraiser for Republican Representative Bill Shuster of Pennsylvania.
Begich and Shuster have not announced their positions on the shipping industry's call for more government funding.
Opposition to the industry's push hasn't become public in the Senate, but that is likely to change soon. Taxpayer watchdogs and environmental groups see the industry's current subsidies as overly generous, and vow to fight any increase.
"The idea of expanding a subsidy to the most subsidized form of transportation this side of space travel is not going to happen," said Steve Ellis of Taxpayers for Common Sense. "It's really beyond the pale."
Conservative groups such as the Club for Growth also are signaling they could join the shipping industry's opponents - a move that would get the attention of Republicans wary of facing a challenge from the right when they run for re-election.
The shipping industry has a long history of support in Congress, dating to the early days of the country when rivers were the most reliable form of cargo transportation.
In recent decades, freight rail and interstate trucking have eclipsed the shipping industry. In 1980, 27 percent of domestic freight moved by water; by 2009 that figure had dropped to 11 percent, according to the U.S. Department of Transportation.
Waterborne transportation still plays a key role in moving grain, coal and other bulk commodities from the nation's interior states down the Mississippi River to Louisiana, where they are sent around the world.
Through a fuel tax, the industry pays about 10 percent of the $800 million or so spent each year to keep the nation's rivers open for navigation. The government covers the rest.
By contrast, a fuel tax on car and truck drivers covers about 80 percent of the cost of maintaining the nation's highway system. Freight rail operators cover all of their costs.
The barge fuel tax is supposed to cover half the costs of new construction, but it has not increased since 1994 and does not generate enough revenue to build new locks and dams in a timely manner. At the current pace, some planned projects won't be completed for 77 years, according to an industry trade group.
Industry officials also say they need more help to repair existing structures - a problem they say was vividly illustrated in 2011, when a 280-foot section of canal south of Chicago collapsed, disrupting commercial traffic.
A WORTHY INVESTMENT?
Some analysts question whether a massive new spending push would yield the benefits that the shipping industry claims.
Decaying locks and dams can contribute to delays in shipping, but the system's reliability is affected much more by droughts, floods and other weather events that largely are beyond human control, said Don Sweeney, a transportation specialist at the University of Missouri-St. Louis.
"Are these expenditures likely to yield the kind of economic benefits that would make them good expenditures?" he asked. "I'm not convinced at all."
The shipping industry's proposal would boost its contribution by 30 to 45 percent, to about $110 million a year. In return, the government would more than double its annual contribution to $270 million, on top of the $500 million to $600 million it spends each year on dredging and other waterway maintenance. The government would pay for any cost overruns.
The industry aims to insert the proposal into a broad water-resources bill that the Senate will take up next week.
To push the plan, the Waterways Council, an industry trade group, boosted its spending on lobbyists to $315,000 in the first three months of this year, much more than past year.
The industry's lobbyists include John Breaux, a former Democratic senator from Louisiana, and Bob Livingston, a former Louisiana Republican who oversaw spending issues as chairman of the House Appropriations Committee during the 1990s.
SUPPORT FROM RIVER STATES
The shipping industry's backing in Congress dates to at least 1848, when Congressman Abraham Lincoln fought President James Polk's push to make the industry pay its own way.
More recently, Congress turned back efforts by presidents Bill Clinton, George W. Bush and Barack Obama to get users to pick up a greater share of their costs.
Republican lawmakers often are skeptical about increasing domestic spending, but those from states with significant river traffic have joined Democrats in expanding funds for the U.S. Army Corps of Engineers, which maintains commercial waterways.
That pattern is apparent in the Democrat-led Senate, where Alexander and Casey back the industry's plan.
In the Republican-led House, a similar bill is supported by Democratic and Republican lawmakers from states such as Alabama and Illinois that see a large amount of barge traffic. The bill's lead sponsor, Ed Whitfield of Kentucky, represents a district that borders the Ohio and Mississippi rivers.
While outside groups like Club for Growth use the threat of a primary challenge to wield influence over lawmakers, the shipping industry has taken the opposite approach. Industry employees donated $28,000 to Whitfield last year.
This year, the industry has sent donations to other lawmakers who could prove influential in the debate - including Shuster, who will draft his own water-resources bill as head of the House Transportation and Infrastructure Committee.
American Waterways Operators, an industry trade group, gave $2,500 to Shuster in February and hosted a fundraising dinner in April. The amount raised is not yet public.
A Shuster spokesman said the congressman had not decided whether to back the shipping industry's plan. Stephaich, the industry executive, sounded confident of Shuster's support.
"We've got a desire, a will on both Congressman Shuster's side and in the Senate, with the help of Senator Casey, to hopefully have all of this come together," Stephaich said.
(This story has been refiled to change 5th paragraph reference from "next week" to "this week")
(Editing by David Lindsey and Lisa Shumaker) | 金融 |
2014-15/0259/en_head.json.gz/3164 | Pronunciation: pahn-zee
Part of Speech: Adjective, Proper noun
Meaning: A type of fraud in which money is taken from investors but not invested; rather, large dividends are paid to earlier (would-be) investors with funds taken in from later (would-be) investors. The large "dividends" attract more and more investment capital until the manager absconds with the last "dividends" and remaining capital to a country having no extradition agreement with the country in which the fraud was perpetrated.
Notes: The US Securities and Exchange Commission recently charged Bernard Madoff with conducting a multibillion dollar Ponzi scheme. Mr. Madoff apparently did not understand the "absconding" part of the definition of today's Good Word.
In Play: A pyramid scheme differs from a Ponzi scheme in that participants in a pyramid scheme pay a fixed amount to someone above them in a hierarchy or "pyramid". The recipient passes most of that amount to someone above him or her, keeping an agreed-upon percentage. As the number of participants at the bottom of the pyramid increases, the point is eventually reached where there isn't sufficient money to reach the top and the scheme then usually collapses.
Word History: The eponym of today's Good Word was an Italian criminal by the name of Carlo "Charles" Ponzi (1882-1949), who discovered he could buy US Postal Reply Coupons for return postage in Italy and redeem them for stamps worth 200% more in the US. Friends who wanted to get in on the profit were offered a 50% return on their investment in 90 days. Soon, thousands of people were lining up at his 27 School Street office in Boston to invest. By 1920 Ponzi was taking in a million dollars a week, paying off earlier investors with money from later ones. Then it occurred to Ponzi that the postal coupons were superfluous, so he simply dropped them altogether but continued to rake in millions. When he could no longer pay any "dividends", he absconded to Florida, then to Texas, where he was finally arrested and deported.
Next Word: popinjay
Previous Word: ponderous [ P ] | 金融 |
2014-15/0259/en_head.json.gz/3245 | Sandy-Swamped New Jersey Leading Foreclosures: Mortgages
By Dan Levy and Prashant Gopal - Nov 15, 2012
Foreclosure filings surged in New Jersey, New York and Connecticut last month, even before those three states bore the brunt of superstorm Sandy that now has homeowners digging through the debris. Default, auction and repossession notices increased 140 percent in New Jersey, 123 percent in New York and 41 percent in Connecticut from a year earlier, the biggest annual gains among U.S. states in October, RealtyTrac Inc. said today in a report. Foreclosed properties in counties affected by the storm were valued at $41 billion, the company said. Sandy killed at least 177 people in the eastern U.S. and Caribbean, ravaging beachfront communities, and left more than 8 million homes and businesses in the cold without power for days. Subways and tunnels in Manhattan were flooded and stock exchanges shut down. Insured damages may swell to as much as $20 billion, according to Eqecat Inc., a provider of catastrophic-risk models. “There will be a huge increase in delinquency because of job loss,” Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a homeowner counseling agency based in Newark, said in a phone interview. “There are whole towns where businesses have been wiped out, and people worked in those businesses.” Lou Forst and Suzanne Gambert, a Newark police sergeant and small-business owner who are both longtime residents of the New Jersey city, own a house in Forked River that was heavily damaged by the storm. Two feet of mud covered the inside of the three-bedroom ranch-style home, built on a concrete slab close to Barnegat Harbor, Forst said. ‘Mud and Silt’ “It was completely flooded and we lost all our furniture and appliances, the kitchen and bathrooms we had just redone,” Forst, an instructor in Newark’s police academy, said in a telephone interview. “Black mud and silt were everywhere. It smelled like sewage and a fish market.” The couple had purchased the home in April 2011, realizing a decade-old dream. They paid $437,000 in a short sale, in which the bank sells for less than the amount owed on the mortgage, and spent at least $50,000 on renovations and furnishings, coming down from Newark on weekends to do the work themselves, Forst said. Residences accounted for about 55 percent of the insured real estate damaged by Sandy, according to Eqecat, which estimated total economic losses of as much as $50 billion. About 34 percent of the property losses occurred in New York, 30 percent in New Jersey, 20 percent in Pennsylvania and the remainder in other states, Eqecat said Nov. 1. Third-Worst New Jersey home prices were the third-worst performing among U.S. states in September, down 1.8 percent from the previous month, according to Irvine, California-based CoreLogic Inc.’s index of residential values. That compares with a drop of 0.3 percent nationwide. The share in New Jersey of seriously delinquent mortgages -- more than 90 days behind or in the foreclo | 金融 |
2014-15/0259/en_head.json.gz/3355 | Home > About Us > Who We Are > About the System > Federal Reserve System
The Federal Reserve System is made up of twelve districts or service areas. Each district has an office in a major financial center; most have branch offices as well, for a total of 25 branches nationwide.
Each of the 12 Federal Reserve Banks is separately incorporated, and each has its own president and board of directors. Presidents are appointed to five-year terms by a bank’s board of directors. Each branch office also has its own board of directors.
The directors serve three-year terms and represent the various sectors of the economy, including business and industry, agriculture, finance, labor, and consumers.
Although the Reserve Banks were created by legislative act, they receive no budget appropriations from Congress. Each of them is self-sufficient, earning income from interest on holdings of U.S. Treasury securities, from interest on loans to depository financial institutions, and from fees for the services provided to those institutions.
Reserve Banks’ stock is owned entirely by the commercial banks that are members of the Federal Reserve System. Dividends are paid to stockholders semiannually at a fixed rate of 6 percent.
At the end of each year, Reserve Banks return to the U.S. Treasury all earnings in excess of operating expenses.
District 1A: Boston
District 7G: Chicago
District 2B: New York
District 8H: St. Louis
District 3C: Philadelphia
District 9I: Minneapolis
District 4D: Cleveland
District 10J: Kansas City
District 5E: Richmond
District 11K: Dallas
District 6F: Atlanta
District 12L: San Francisco | 金融 |
2014-15/0259/en_head.json.gz/3365 | Bond Traders Put Pressure on Debt-Laden Nations
Landon Thomas Jr.|The New York Times
Monday, 14 Dec 2009 | 6:06 AM ETThe New York Times The bond vigilantes are back.
But this time they are roaming mostly through Europe rather than the United States — at least for now. Their mission: to force governments to cut budget deficits that have ballooned in the wake of the financial crisis.As big investors in the credit markets, activist bond traders developed a fearsome reputation in the early 1990s by pushing up yields on Treasuries in order to force the government to tame large deficits. Their most famous target was a newly elected president, Bill Clinton, whom they pressured to abandon campaign promises of tax cuts. Today, the bond market posse has set its sights on Europe — particularly Britain and Greece — where stagnant economies and high levels of government spending have led to the highest budget deficits in the region. Although the left-leaning governments in both countries are struggling to show investors that they have a workable plan to reduce deficits — which now average around 13 percent of gross domestic product — bond traders are increasingly demanding higher interest rates to reflect the rising risks. Bond traders last week pushed the spreads between Greek 10-year bonds and their benchmark German counterparts — a measure of investor confidence in the country — to highs of 250 basis points after the nation’s credit rating was downgraded, raising concerns over Greece’s ability to service its enormous debt. In Britain, where the nation’s economy and finances have fallen so sharply that investors fear a possible downgrade of the country’s triple-A rating, bond traders are also taking a hard line. Last week, yields on gilts were pushed to their highest levels since the depths of the financial crisis, after the Labour Party issued a preliminary budget report that skimped on details of spending cuts.“There is a clear drop in confidence on the part of bond investors,” said Mark Schofield, a fixed-income strategist at Citigroup in London. “I think it is all beginning to unravel.” The power of the bond trader to influence governments once prompted James Carville, Mr. Clinton’s political strategist at the time, to say that he wished to be reincarnated as one because “you can intimidate everybody.” Mr. Clinton may not have been intimidated, but he did heed the advice of Robert Rubin, who joined the administration from his post at the top of Goldman Sachs, that a policy of budgetary restraint would keep the bond market happy and interest rates on United States government bonds low.Since then, the vigilantes have been largely in abeyance: As the global economy boomed, public sector deficits were not a concern for investors.All that changed rapidly with the onset of the credit crisis last year. Bond traders surfed the global liquidity wave, buying up government debt all over the world in the view that, just as most big banks were too big to fail, so were sovereign economies, no matter how crushing their fiscal picture.But Dubai World’s recent decision to delay payment on its debt has brought the crisis to reality for complacent bondholders. They have begun to demand that governments with large budget gaps start to pay higher interest rates on their bonds to reflect rising sovereign risk — a development that will lead to higher borrowing costs in countries like Britain, Greece, Ireland and Spain. The United States and Japan also face unusually high debt levels, deepened by huge stimulus programs. For the time being, investors are still willing to lend to them at generous rates. But bondholders are running out of patience as the finances of even the wealthiest nations spiral downward. As bond investors become more impatient, some European countries have taken aggressive fiscal action. In Ireland, the government this month pres | 金融 |
2014-15/0259/en_head.json.gz/3366 | BATS Trading Off to a Shaky Start
Michael J. De la Merced|The New York Times
Friday, 23 Mar 2012 | 12:40 PM ETThe New York Times The debut of BATS Global Markets as a publicly traded company hasn’t been smooth.Shares in the country’s third-largest exchange opened at $15.25 on Friday, falling below the company’s offering price of $16 a share. Almost immediately, volatility in the stock spiked — on news of a system problem at the exchange — and BATS halted trading on its own shares.Investors had been wary of BATS before problems emerged on Friday.The exchange has experienced a precipitous decline in trading volumes this year, as uncertainty around the global markets has hampered business for BATS and its larger rivals, NYSE Euronext and the Nasdaq OMX Gro | 金融 |
2014-15/0259/en_head.json.gz/3405 | From the September-08, 2010 issue of Credit Union Times Magazine • Subscribe! Atlanta CU Carries Out Slain CU CEO's Vision With Branch Re-Opening
September 08, 2010 • Reprints The re-opening of a Credit Union of Atlanta branch to serve in a historic and underserved area downtown here was one project the late President/CEO Dean Gaymon was working on before he passed away in July.
The $55 million CU re-opened its third branch on Auburn Avenue Aug. 31. Closed since May due to renovations, the branch was acquired from a merger between CU of Atlanta and Wheat Street Baptist Church Credit Union in early 2004. While the merger enhanced the products and services offered to members, the branch's design limited the amount of service staff could provide, according to Cassandra Brown, assistant vice president of marketing and business development at CUA. The redesign will afford members the opportunity to open new accounts and investments and apply for loans. The Sweet Auburn branch will also have a walk-up ATM and house the CU's call center.
Gaymon was shot and killed by a New Jersey undercover sheriff's detective July 16. The case is still under investigation.
Through the branch, Gaymon also wanted to continue the CU's commitment to the mostly senior citizen residents of Wheat Street Towers by providing a convenient financial institution, Brown said. CUA was recently certified as a community development financial institution, she added.
Known as the Sweet Auburn Historic District, Auburn Avenue was a hub for African American-owned businesses, social organizations and civil rights' gatherings. Martin Luther King, Jr.'s childhood home is located nearby, as is Ebenezer Baptist Church, once presided over by the young minister and his father.
"Due to the tremendous rich history in the Auburn Avenue area, Mr. Gaymon wanted to make sure that the credit union continued to have a strong presence within the community," Brown said.
"The board of directors [has] been extremely strategic in their plans to position Credit Union of Atlanta as one of Atlanta's premier financial institutions," Brown said. "With CUA's recent certification as a community development financial institution, it is the board's goal that CUA continues to concentrate on underserved communities, thus holding true to the universal credit union creed of 'people helping people.'"
Atlanta Mayor Kasim Reed spoke at the branch re-opening along with representatives from the Sweet Auburn Project, an urban design and historic preservation plan for the area. | 金融 |
2014-15/0259/en_head.json.gz/3408 | Affinity Plus Interim CEO: Markland’s Decision to Resign Prompted by ‘Empty Nest’
August 30, 2013 • Reprints With his son recently heading off to college, Kyle Markland made the decision to resign from Affinity Plus Federal Credit Union on Wednesday to “take a step back and see what he wants to do now.”
Markland, president/CEO of the $1.6 billion Affinity Plus in St. Paul, Minn., stepped down from the president/CEO post after 16 years of service.
Related: Affinity Plus CEO Kyle Markland ResignsAffinity Plus FCU's Numbers Solid
David Larson, who was named interim president/CEO by the board, told Credit Union Times Friday morning that Markland sent a letter out to the credit union’s employees on Wednesday expressing his reasons for resigning.
“He talked about what he plans to do in the future,” Larson said. “His son Andrew just went off to college. Both of his kids are now in college. For the first time, Kyle and his wife will be empty nesters. He said he wanted to take some time, step back and take a sabbatical.”
Larson said Markland’s letter to employees, which was sent within a letter from Affinity Plus’s Board Chairperson Connie Roehrich, was only meant for the credit union’s employees and would not be released externally.
Attempts to reach Markland have so far been unsuccessful.
Larson acknowledged he was caught off guard when he heard that Markland would be resigning.
“Yes, I was surprised to hear that Kyle was leaving. I’ve worked with him for 12 years.”
With his unexpected, new role, Larson said he is ready to take on the interim position.
“I’ve been a senior vice president since 2007 and I’ve had a lot of exposure within our organization,” Larson said. “There’s a great rapport with the leadership team.”
Larson said Affinity Plus will do a national search as well as look internally within the credit union’s ranks. The board is hoping to have the search completed by the end of the year or early 2014 but that deadline is not set in stone, he added.
“We are a credit union in the truest sense of those words. Our members will not see anything different” as a result of the leadership change.
Markland was 33 years old when he took the helm of Affinity Plus in December 1997. When Credit Union Times interviewed him last year upon receiving the publication’s 2012 Trailblazer CEO of the Year award, he said the board took a chance on hiring someone so young of what was then a $357 million financial institution.
During his tenure, membership grew from 70,000 to more than 167,000 members and assets hit $2.8 billion as of March 2012. He was a staunch critic of the Durbin Amendment that capped fees on most debit card swipes and voiced his concerns in a comment letter to Sen. Richard Durbin (D-Ill.).
Markland touted the credit union’s strong loan programs including mortgages which topped the $725 million mark in 2011 at a time when other credit unions were struggling to build their portfolios, he said last year.
Affinity’s Plus “Ditch Your Bank” campaign started well before Bank Transfer Day in November 2011, he noted. The campaign continues to this date, according to the credit union’s website.
Meanwhile, this is the second senior management resignation from Affinity Plus in recent weeks. Liz Hayes, chief administrative officer, gave her notice on July 17 and resigned at the end of July.
Hayes had served at the credit union for 15 years. She told a local publication that she wanted to focus on her master’s thesis and spend time with her daughter, who was planning to attend college overseas this year.
Larson said the resignation of Hayes and Markland are not related. Show Comments | 金融 |
2014-15/0259/en_head.json.gz/3409 | CUNA and NAFCU Opt Out of Data Security Pact
February 13, 2014 • Reprints CUNA and NAFCU both declined to participate in a new partnership between banks and retailers because the other groups would not stress that retailers must do their part to protect consumer data.
Thursday’s announcement of the as yet unnamed effort included some of the largest retail and banking associations, including the National Retail Federation, the Financial Services Roundtable, the American Bankers Association and the National Association of Convenience Stores. The groups said in the release they aimed to help retailers and financial institutions cooperate to protect data security.
“We are committed to working together to ensure customer personal and financial information is secure and protected,” said Tim Pawlenty, CEO of the Financial Services Roundtable. “Exploring avenues for increased information sharing and collaborating on innovative technologies and safeguarding data will be critical in defending against common enemies.”
Although they had been invited to join in the partnership, CUNA and NAFCU declined. The two cited, in part, an unwillingness to change the subject from the retailer's responsibility for safeguarding consumers' payment data.
"Though we support collaboration whenever possible, this unfortunately does nothing for consumers or small financial institutions like credit unions, who continue to pay for all these data breaches," said NAFCU CEO Dan Berger. "We still believe national standards for retailers are necessary to protect consumers' personal financial information, as well as a mechanism to reimburse small financial institutions for their losses.”
On background, a spokesman for CUNA explained the trade declined to join the partnership because it didn't want to shift the focus of its Government Affairs Conference. Thousands of credit union executives are expected to travel to Washington next week to participate in the event, which includes appointments with legislators. The need for greater data protection by retailers is a talking point credit unions are preparing to deliver.
CUNA's members want to discuss this issue without any implication that some sort of understanding has been reached between credit unions with the retailers, because it has not, the executive explained. Credit unions still believe retailers should share in the costs of these data breaches and our members will talk to lawmakers about that, he added. Show Comments | 金融 |
2014-15/0259/en_head.json.gz/3422 | Royal Bank Of Scotland Glitch Tests Customer LoyaltyManagers at The Royal Bank of Scotland have red faces after second IT crash in less than a year annoys millions of customers.IT problems have flared up again at one of the U.K.'s biggest retail banking chains, less than nine months after a three-day total system blackout.
For at least three hours on Wednesday night, customers of NatWest, Ulster Bank and Royal Bank of Scotland found themselves unable to access their accounts either by phone or online. (All three are brands of The Royal Bank of Scotland, a commercial operation that is majority-owned by the British state following its near collapse during the 2008 banking crisis.)
According to The Guardian, the problem continued well into Thursday morning for some customers. Indeed, this week's problem seems to be in many ways a throwback to the snafu earlier this year, in which British checking account customers were unable to pay their mortgages, settle debts, or even withdraw cash for food, and which left some customers arguing over missed transactions even weeks later. This time, however, the bank denies that the problem is software-related.
[ What are U.K. companies' most pressing security concerns? Read U.K. Public Sector's Top Security Worries. ]
Further stoking customers' anger is the fact that so far the bank seems unwilling to accommodate those who, through no fault of their own, may now face problems on their credit scores and other issues resulting from the glitch.
According to The Guardian, a member of campaign group Move Your Money -- which describes itself as "a national campaign to spread the message that we can help to build a better banking system" – described the downtime as "like [the movie] 'Groundhog Day.'"
In its formal response, the bank said, "We are disappointed that our customers have faced disruption to banking services for a period on Wednesday evening, and apologize for that. All services are now running as normal again." It did not offer any more details about the disruption or how it had been resolved.
However, NatWest reportedly told an IT news site that a "hardware fault" on one of its IBM zSeries mainframes was responsible for blocking customers' access to ATMs and online banking services. (Since branches were closed at that time of night, customers were also unable to interact with tellers.) The same IT site claims that last year's three-day emergency was due to human error -- allegedly, an employee "hit the wrong button" during what should have been a routine overnight batch job using banking software from CA Technologies to update a system handling inbound payments.
The problems that occurred last June raised an almighty stink in the U.K., and two brownouts may end up being one too many for the Royal Bank of Scotland. The Twittersphere is full of customers swearing to move their business to rivals: "Disgraceful service. Am moving my banking to Santander! You cannot be trusted with our money!!!"
All in all, it's quite amazing in 2013 to see Tier One banks having so many technical problems -- and responding to them with such poor PR.
Rick Falkvinge, the founder of the Swedish Pirate Party and a campaigner for sensible information policy, will present the keynote address at Black Hat Europe 2013. Black Hat Europe will take place March 12-15 at The Grand Hotel Krasnapolsky in Amsterdam. Comment | Email This | Print | RSSMore InsightsWebcasts
PJS880,
re: Royal Bank Of Scotland Glitch Tests Customer Loyalty I can tell you that if I had all my money stored in a banking facility that was unavailable to me for a number of hours I would no longer be one of their customers. Money is something that you cannot give a second chance of risk for, it may not be available for lack of funds. If you were still customer of the banks after the first episode 3 years ago and were a victim the second time, that is your fault for trusting unreliable sources. Lets see how many customers will let it happen three times.Paul SpragueInformationWeek Contributor | 金融 |
2014-15/0259/en_head.json.gz/3502 | Home > Regulation & Examinations > Bank Examinations > Supervisory Insights
Supervisory Insights
A Changing Rate Environment Challenges Bank Interest Rate Risk Management
Interest rate risk is fundamental to the business of banking. Changes in interest rates can expose an institution to adverse shifts in the level of net interest income or other rate-sensitive income sources and impair the underlying value of its assets and liabilities. Examiners review an insured institution's interest rate risk exposure and the adequacy and effectiveness of its interest rate risk management as a component of the supervisory process. Examiners consider the strength of the institution's interest rate risk measurement and management program and conduct a review in light of that institution's risk profile, earnings, and capital levels. When a review reveals material weaknesses in risk management processes or a level of exposure to interest rate risk that is high relative to capital or earnings, a remedial response can be required.
In today's changing rate environment, bank supervisors are monitoring industry balance sheet and income statement trends to assess the industry's overall exposure to and management of interest rate risk. This article reviews the current interest rate environment, discusses potential risks associated with a rising rate environment and a continued flattening of the yield curve, and analyzes banking industry aggregate balance sheet information and trends. It also reviews findings from recent bank examination reports in which interest rate risk or related management practices raised concern and highlights common weaknesses in risk management, measurement, and modeling practices.
The Current Rate Environment Since the 1980s, and despite upward rate spikes in 1994 and 2000, the level of interest rates has generally been declining (see Chart 1). In September 1981, the rate on the 10-year Treasury bond reached a high of over 15 percent; it has since declined to a low of just over 3 percent in June 2003. During roughly the same period, other rate indices also fell in generally the same manner, though not always in tandem. For example, the Federal funds rate fell from over 19 percent to 1 percent, and the 30-year mortgage rate average peaked at over 18 percent and dropped to under 6 percent.
D During the past 12 months, however, the banking industry has sustained a well-forecasted series of "measured" increases to the target Federal funds rate. Since June 2004, the Federal Open Market Committee (FOMC) has steadily increased the intended Federal funds rate in moderate 25 basis point increments to its current level of 3 percent. Generally, changes in the Federal funds rate will affect other short-term interest rates (e.g., bank prime rates), foreign exchange rates, and less directly, long-term interest rates. However, increases to the Federal funds rate have yet to drive similar increases in longer-term yields. In fact, over the 12 months that the FOMC has moved the target Federal funds rate steadily upward, the nominal yield on the 10-year treasury has rarely crested above 4.5 percent and actually has declined from its July 2, 2004, level. This "conundrum," evidenced by nonparallel movement in short- and long-term rates, has resulted in a flattening of the yield curve.1 Looking forward, many market participants anticipate further measured increases in the Federal funds rate and similar, although not equal, increases in longer-term rates. Over the next year, Blue Chip Financial Forecasts2 is predicting an additional 130 basis point increase in short-term rates and a 104 basis point increase in longer-term rates-a forecast that portends continued flattening of the yield curve (see Chart 2). Chart 2
D Assessing Banks' Interest Rate Risk Exposure A rising rate environment in conjunction with a continued flattening of the yield curve presents the potential for heightened interest rate risk. A flattening yield curve can pressure banks' margins generally, and rising rates can be particularly challenging to institutions with a "liability-sensitive" balance sheet-an asset/liability profile characterized by liabilities that reprice faster than assets. The extent of this mismatch between the maturity or repricing of assets and liabilities is a key element in assessing an institution's exposure to interest rate risk. The shape of the yield curve is an important factor in assessing the overall rate environment. A steep yield curve provides the greatest spread between short- and long-term rates and is generally associated with favorable economic conditions. Long-term investors, anticipating an improving economy and higher rates, will demand greater yields to compensate for the risk of being locked into longer-term assets. In such a favorable environment, opportunities exist to generate spread-related earnings driven by asset and liability term structures. A flattening yield curve can deprive banks of these opportunities and raises concern about a possible inversion in the yield curve. An inverted yield curve, where long-term rates are lower than short-term rates, can present a most challenging environment for financial institutions. Also, an inverted yield curve is associated with the potential for economic recession and declining rates. Given recent rising rates and flattening of the yield curve, bank supervisors have been monitoring trends in bank net interest margins (NIMs) and balance sheet composition.
While various factors (competition, earning asset levels, etc.) affect NIMs, a flattening yield curve is associated with declining NIMs. Chart 3 shows that during the 1990s, generally declining industry NIMs followed the overall flattening of the yield curve. As the spread between long- and short-term rates (the bars) generally decreased from 1991 to 1999resulting in a flattening of the Treasury yield curvebank NIMs also declined (the line on Chart 3 plots trailing four-quarter NIM). Beginning in 2000, after a brief period of inversion, the yield curve steepened dramatically, and over the next five quarters, bank NIMs increased. NIMs have since continued their general decline, and recent quarters have seen the yield curve continue to flatten, raising the potential for continued pressure on bank NIMs.
D Even though median bank NIMs have been declining since 1994, this trend has been accompanied by strong and, in recent years, record levels of profitability. Noninterest income sources (combined with overall strong industry performance) have helped mitigate the effects of declining NIMs. Institutions with over $1 billion in assets report significant reliance on noninterest income; it accounts for more than 43 percent of their net operating revenue. While this diversification of income sources is less prevalent in smaller community banks (institutions that hold less than $1 billion in assets derive only 25 percent of net operating revenue from noninterest income sources), NIMs reported by these smaller institutions generally are higher and recently have improved compared to those of the larger institutions.
In short, while individual banks may be experiencing margin pressures, the downward trend in bank NIMs has yet to result in an industry-wide decline in levels of net income. It is too early to gauge the effects of a continuing or prolonged period of flattening in the shape of the yield curve.3 Bank Balance Sheet CompositionThe Asset Side Despite strong industry profitability, bank supervisors are monitoring changes in the nature, trend, and type of exposures on bank balance sheets. Recent aggregate balance sheet information shows the industry increasing its exposure to longer-term assets, holding greater proportions of mortgage-related assets, and relying more on rate-sensitive, noncore funding sources-all factors that can contribute to higher levels of interest rate risk.4 In general, the earnings and capital of a liability-sensitive institution will be affected adversely by a rising rate environment. A liability-sensitive bank has a long-term asset maturity and repricing structure relative to a shorter-term liability structure. In an increasing interest rate environment, the NIM of a liability-sensitive institution will worsen (other factors being equal) as the cost of the bank's funds increases more rapidly than the yield on its assets. The higher its proportion of long-term assets, the more liability-sensitive a bank may be.
The industry's exposure to long-term assets increased during the 1990s (see Chart 4). Exposure to long-term assets in relation to total assets has risen steadily, from 13 percent in 1995 to nearly 24 percent in 2004, indicating the potential for heightened liability sensitivity.5 Significant exposure to longer-term assets could generate further inquiry from examiners about the precise cash flow characteristics of a particular bank's assets and a review of the bank's assessment of the nature and extent of its asset-liability mismatch and resulting rate sensitivity. Chart 4
D In addition to increasing its exposure to long-term assets, the industry has increased its exposure to mortgage-related assets. Current data show that bank holdings of mortgage loans and mortgage-backed securities comprise 28 percent of all bank assets (see Chart 5),6 compared to 18 percent in 1990. Chart 5
D Mortgage-related assets present unique risks because of the prepayment option that is granted the borrower and embedded within the mortgage loan. Due to lower prepayments in a rising rate environment, the duration of lower-coupon, fixed-rate mortgages will extend and banks will be locked into lower-yielding assets for longer periods. Like mortgage loans, longer-term, fixed-rate mortgage-backed securities are also exposed to extension risk.
It is difficult to assess fully the current magnitude of liability sensitivity or extension risk confronting the banking industry. Even though exposure to long-term and mortgage-related assets has been moving steadily upward in recent years, there are signs that bank risk managers are responding to a changing rate environment and altering their asset mix. Since June 2003, banks have reduced their exposure to fixed-rate mortgage assets and are recently offering more adjustable-rate mortgage loan products (ARMs). As shown in Chart 6, industry exposure to fixed-rate mortgages, while generally increasing since 1995, began to turn sharply downward in the third quarter of 2003.
D And, according to Federal Housing Finance Board data, the percentage of adjustable-rate, conventional single-family mortgages originated by major lenders increased from 15 percent in 2003 to a recent peak of 40 percent in June 2004. Lower levels of fixed-rate mortgages would reduce an institution's exposure to extension risk. In addition, higher levels of ARMs could increase an institution's asset sensitivity. Such changes in balance sheet structure could mitigate potential exposure to rising interest rates.7 Bank Balance Sheet CompositionThe Liability Side The potential for interest rate risk driven by maturity or repricing mismatch cannot be assessed by looking only at the asset side of the balance sheet. Information on the nature and duration of banks' liabilities is also needed. Banks that rely heavily on short-term and more rate-sensitive funding sources could experience a material increase in funding costs as interest rates rise. Some banks may not be able to offset such higher funding costs through increased asset yields. Increased exposure to short-term, rate-sensitive wholesale funding sources can render a bank more liability sensitive, increasing its exposure to rising rates.
Over the past several years, banks have increased their reliance on wholesale, noncore funding sources such as overnight funds, certificates of deposit (greater than $100,000), brokered deposits, and Federal Home Loan Bank (FHLB) advances. Noncore funding sources have climbed steadily from about 25 percent of total assets in 1992 to over 35 percent today. This trend is mirrored by core deposits falling from 62 percent of total assets in 1992 to 48 percent in 2004 (see Chart 7). Combined with an increase in holdings of long-term assets, a shorter-term and more volatile liability structure could expose an institution to significant interest rate risk in a rising rate environment.
D To assess fully the impact of the increase in noncore funding sources and the decrease in core deposits, more information about the tenor of noncore liabilities is needed. FHLB advances are a significant component of noncore funding for many institutions and illustrate the importance of looking deeper into the repricing structure of a bank's funding sources. Call Report data provide some information on the maturity structure of FHLB advances, but the picture is clouded. Recent reports show that while the use of shorter-term FHLB advances (under one year) has been on the rise, 67 percent of all FHLB advances have a maturity greater than one year (see Chart 8).
D The Call Report, however, does not capture the nature and extent of options embedded within the FHLB advance structures. Call Report instructions provide that FHLB advances with a three-year (or longer) contractual maturity are to be recorded in the long-term bucket, even if the advance is callable or convertible by the FHLB at any time. A callable or convertible advance allows the FHLB to convert the advance from fixed- to floating-rate or terminate the advance and renew the extension at current market rates. Therefore, advances such as those reported as having a three-year maturity may actually reprice in the near term, depending on the rate environment.8 Many advances contain embedded options. The FHLB Combined Financial Report (as of June 30, 2004) reflects that of then-outstanding advances, approximately 55 percent were callable and 22 percent were convertible. Translated to bank balance sheets, these data indicate the presence of a greater level of option risk on banks' balance sheets than currently included in Call Report information. In a rising rate environment, the probability increases that the FHLB will exercise its option to call or convert lower-yielding advances, thereby exposing the borrowing institution to higher funding costs.
In conclusion, aggregate industry trendsspecifically higher levels of exposure to long-term assets, mortgage-related assets, and noncore funding sources that exhibit optionalityraise concerns about the potential for heightened levels of interest rate risk in today's environment. These concerns must be tempered by awareness that off-site data provide only a rough, opaque, and end-of-period view of banks' balance sheet cash flow characteristics and composition. Each bank is unique in terms of asset and liability mix, risk appetite, hedging activities, and related risk profile. Moreover, bank risk exposures are not static. Interest rate risk management strategies can change an institution's risk profile quicklyeven overnightthrough the use of financial derivatives (e.g., interest rate swaps). Thus, it is difficult to draw conclusions about the level of interest rate risk strictly from off-site information. Off-site and industry-wide analyses must be joined with on-site examination results to derive a more comprehensive supervisory assessment of interest rate risk exposure, its measurement, and its management.
Supervisory Assessment of Interest Rate Risk Bank examiners assess the level of interest rate risk exposure in light of a bank's asset size, complexity, levels of capital and earnings, and most important, the effectiveness of its risk management process. At the core of the interest rate risk examination process is a supervisory assessment of how well bank management identifies, monitors, manages, and controls interest rate risk.9 This assessment is summarized in an assigned risk rating for the component known as sensitivity to market risk, which is part of the CAMELS rating system.10 An unsatisfactory rating for sensitivity to market risk (the "S" component of CAMELS) represents a finding of material weaknesses in the bank's risk management process or high levels of exposure to interest rate risk relative to earnings and capital. Chart 9 indicates that the number of FDIC-insured institutions with an unsatisfactory "S" component rating is minimal out of the population of nearly 9,000 insured institutions. Fewer than 5 percent of insured institutions are rated 3 or worse for this component, and most of those are in the less severe 3 rating category. Moreover, since 2000, the number of institutions with an adverse "S" component rating has declined steadily.
D To capture emerging trends, FDIC supervisors are conducting periodic reviews of bank examination reports in an effort to discern the nature and cause of adverse "S" component ratings. A review of recent examination reports that presented supervisory concerns about interest rate risk reveals several commonalities in the banks' operating activities: Concentrations in mortgage-related assets, Ineffective or improperly managed "leverage" programs,11 and Acquisition of complex securities without adequate prepurchase and ongoing risk analyses.
In addition, concerns have emerged about the adequacy and effectiveness of bank management's use of interest rate risk models. Weaknesses center on (1) the accuracy of model inputs as well as the accuracy and testing of assumptions, (2) whether the models are capturing the cash flow characteristics of complex instruments, specifically instruments with embedded options, and (3) whether management is using adequate stress tests to determine sensitivity to interest rate changes. Key supervisory concerns identified from a review of examination comments specific to interest rate risk models include: Data input should be accurate, complete, and relevant. Many loans, securities, or funding items may present complex or unique cash flow structures that require special, tailored data entry. Aggregating structural information at too high a level may result in the loss of necessary detail, and the reliability of the cash flows projections may become questionable.
Assumptions must be appropriate and tested. Model results are extremely sensitive to the assumptions used; these assumptions should be reasonable and reviewed periodically. For example, prepayment speeds can change significantly in any given rate environment. And a bank's historical prepayments experience may differ materially from vendor-supplied prepayment speeds. The model's sensitivity to changes in key material assumptions should be evaluated periodically.
Option risk embedded in assets and funding sources should be captured effectively. Many banks have options embedded in their balance sheet through exposure to mortgage-related assets, callable or convertible advances, or other structured products. Interest rate risk measurement systems should be capable of identifying and measuring the effect of embedded options. Significant leverage programs should be understood fully. Management should understand fully the nature of the leverage programs and the risks of the instruments used, and effectively assess the impact of adverse rate movements or yield curve changes. Given that leverage programs often are designed to take advantage of spreads between short- and long-term rates, measurement systems should capture the effects of nonparallel shifts of the yield curve.
Sensitivity stress tests should include a reasonable range of unexpected rate shocks; for example, stress tests should not simply approximate market expectations of a modest ratcheting up of the yield curve over the next 12 months. Bank management should provide for stress tests that include potential interest rate changes and meaningful stress situations using a sufficiently wide range in market interest rates, immediate and gradual shifts in market rates, as well as changes in the shape of the yield curve. The Interest Rate Risk Policy Statement suggests at least a 200 basis point shock over a one-year horizon.
The variance between the model's forecasted risk levels and actual risk exposures should be analyzed routinely (sometimes called "back-testing"). This exercise will highlight areas of material variance and improve identification of errors in assumptions, inputs, or calculations.
Lessons from History Help Place Concerns About Rising Rates in Context Current concerns about the risks of a rising rate environment should be viewed in historical context. An internal FDIC review of bank and thrift failures discloses that interest rate risk is not a common cause of insured depository institution insolvencies. The FDIC review studied the causes of the bank insolvencies that occurred during three periods of rising rates: the period from 1978 to 1982 and the rate spikes in 1994 and 2000. The analysis revealed that no institution failures in the 1990s were caused by the movement of interest rates. However, certain insolvencies in the early 1980s, primarily of savings and loan institutions, were affected by changes in the interest rate environment. The review determined that these insolvencies followed a period of rapid and prolonged increases in short- and long-term rates, during which the yield curve was inverted (for the most part, the yield curve was inverted from September 1978 through April 1982). These institutions were heavily concentrated in longer-term, fixed-rate mortgage loans, and were also challenged by a new and unregulated market for deposits. Additional factors that contributed to these early insolvencies were economic recession, capital weakness, and regulatory forbearance. A historical depiction of institution failures, in relation to the 10-year Treasury bond yield and general periods of yield curve inversion, is shown in Chart 10. From a historical perspective, only in the unique circumstances of the early 1980s can rising rates be associated with bank or thrift insolvency.
Chart 10
D Today's environment is markedly different. Despite rising rates and a flattening yield curve, the curve remains upward sloping. The economy generally has been improving, and the regulatory environment has changed considerably. Stricter regulatory capital standards were mandated in 1988, and limits on permissible investments were adopted in 1989. Prudential standards were implemented following the enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991, and interest rate risk and investment activities policy statements were issued in 1996 and 1998. In addition, the industry now relies on more advanced interest rate risk measurement and management methodologies. Taken together, these developments mitigate the level of supervisory concern about the aggregate level of interest rate risk in the industry today.
Conclusion Interest rate risk is garnering attention given the changing rate environment and trends in aggregate bank balance sheet and income statement information. Rising rates and a flattening yield curve could pressure NIMs, particularly for institutions that exhibit liability sensitivity, given their relatively greater exposure to long-term assets. In addition, banks are exhibiting increased exposure to more volatile, rate-sensitive funding sources with degrees of optionality not fully captured by Call Report data. However, these aggregate measures of bank balance sheet and income statement composition serve only as indicators of the possible presence of interest rate risk. Off-site analysis and on-site examinations identify excessive or poorly managed interest rate risk relative to a particular institution's risk profile, earnings, and capital levels. Examination findings, while revealing weaknesses in some circumstances, overall indicate that bank risk managers are acting effectively to moderate their institutions' exposure to interest rate risk in this challenging environment.
Keith Ligon
Chief, Capital Markets Branch The author acknowledges the assistance provided by Examiners Thomas Wiley, Lawrence Reynolds, and John Falcone in the Division of Supervision and Consumer Protection; and Financial Analyst Douglas Akers with the Division of Insurance and Research, in the preparation of this article. 1 The Federal funds rate is the interest rate at which depository institutions lend balances overnight from the Federal Reserve to other depository institutions. The intended Federal funds rate is established by the FOMC of the Federal Reserve System. Federal Reserve Board Chairman Alan Greenspan said during his February 16, 2005, monetary policy testimony to the Senate Banking Committee, "For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum." (Source: Bloomberg News)
2 Blue Chip Financial Forecasts is based on a survey providing the latest in prevailing opinions about the future direction and level of U.S. interest rates. Survey participants such as Deutsche Banc Alex Brown, Banc of America Securities, Fannie Mae, Goldman Sachs & Co., and JPMorganChase provide forecasts for all significant rate indices for the next six quarters.
3 Refer to the Fourth Quarter 2004 FDIC Quarterly Banking Profile for complete 2004 industry performance results.
4 Except where noted otherwise, data are derived from the December 31, 2004, Consolidated Reports of Condition and Income (Call Reports). Call Reports are submitted quarterly by all insured national and state nonmember commercial banks and state-chartered savings banks and are a widely used source of timely and accurate financial data.
5 Long-term assets include fixed- and floating-rate loans with a remaining maturity or next repricing frequency of over five years; U.S. Treasury and agency, mortgage pass-through, municipal, and all other nonmortgage debt securities with a remaining maturity or repricing frequency of over five years; and other mortgage-backed securities (MBS) like collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and stripped MBS with an expected average life of over three years.
6 Mortgage-related assets includes loans secured by one- to four-family residential properties, including revolving lines of credit, and closed-end loans secured by first and junior liens; mortgage pass-through securities and MBS, including CMOs, REMICs, and stripped MBS. Extension risk can be explained as follows: Changes in interest rates can pressure the value of mortgages and MBS because of the embedded prepayment option held by the mortgage debtor. These options can affect the holder of such assets adversely in a falling or rising rate environment. As rates fall, mortgages likely will experience higher prepayments, requiring the bank to reinvest the proceeds in lower-yielding assets. Conversely, as rates rise, prepayments will slow and result in a longer, extended period for principal return.
7 All ARMs are not the same, and the degree of asset sensitivity will depend on each product's unique structure. ARMs with an initial fixed-rate period of one to five years ("hybrid" loans) have grown in popularity. Freddie Mac's 2004 ARM Survey found that 40 percent of all adjustable-rate mortgages were hybrid products, primarily 3/1 and 5/1 structures. The interest rate on such hybrid loans are fixed for three or five years, respectively, adjusting annually thereafter based on some interest rate index. Accordingly, such hybrid products will not reduce liability sensitivity during the fixed-rate period of the loan.
8 See Instructions for Preparation of Consolidated Reports of Condition and Income (FFIEC 031 and 041) at RC-M-Memorandum Item 5, which provides, "Callable Federal Home Loan bank advances should be reported without regard to their next call date unless the advance has actually been called."
9 "Effective board and senior management oversight of a bank's interest rate risk activities is the cornerstone of a sound risk management process." Joint Agency Policy Statement on Interest Rate Risk, 12 FR 33166 at 33170 (1996); distributed under Financial Institution Letter 52-96 (hereafter Interest Rate Risk Policy Statement).
10 Sensitivity to market risk is rated under the Uniform Financial Institutions Rating System (UFIRS), which is used by the Federal Financial Institutions Examination Council member regulatory agencies. Under the UFIRS, each financial institution is assigned a composite rating based on an evaluation and rating of six essential components of an institution's financial condition and operations: the adequacy of capital (C), the quality of assets (A), the capability of management (M), the quality and level of earnings (E), the adequacy of liquidity (L), and the sensitivity to market risk (S). The resulting acronym is referred to as the CAMELS rating. Composite and component ratings are assigned based on a 1 to 5 numerical scale. 1 indicates the highest rating, strongest performance and risk management practices, and least degree of supervisory concern, while 5 indicates the lowest rating, weakest performance, inadequate risk management practices, and, therefore, the highest degree of supervisory concern. In general, fundamentally strong or sound conditions and practices are reflected in 1 and 2 ratings, whereas supervisory concerns and unsatisfactory performance are increasingly reflected in 3, 4, and 5 ratings.
11 A "leverage" strategy is a coordinated borrowing and investment program with the goal of achieving a positive net interest spread. Leverage programs are intended to increase profitability by leveraging the bank's capital through the purchase of earning assets using borrowed funds. While "leverage" in general defines banking, a typical leverage strategy focuses on a bank's acquisition of wholesale funding, such as Federal Home Loan Bank advances, and the targeted investment of such proceeds into bonds with a different maturity or credit rating, or both, such that a higher yield is earned from the bonds than the interest rate on the borrowings. Profitability may be achieved if a positive net interest spread is maintained, despite changes in interest rates. When improperly managed, these strategies cause increased interest rate risk and supervisory concern.
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2014-15/0259/en_head.json.gz/3574 | How Greece Could Take Down Wall Street
Global Research, February 21, 2012
Web of Debt 21 February 2012
Region: Europe, USA
In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th: Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.
That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt. CDS are a form of derivative taken out by investors as insurance against default. According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs. The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up. CDS are more like bets, and a massive loss at the casino could bring the house down.
It could, at least, unless the casino is rigged. Whether a “credit event” is a “default” triggering a payout is determined by the International Swaps and Derivatives Association (ISDA), and it seems that the ISDA is owned by the world’s largest banks and hedge funds. That means the house determines whether the house has to pay. The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme. According to Rudy Avizius in an article on The Market Oracle (UK) on February 15th, that explains what happened at MF Global, and why the 50% Greek bond write-down was not declared an event of default. If you paid only 50% of your mortgage every month, these same banks would quickly declare you in default. But the rules are quite different when the banks are the insurers underwriting the deal. MF Global: Canary in the Coal Mine?
MF Global was a major global financial derivatives broker until it met its unseemly demise on October 30, 2011, when it filed the eighth-largest U.S. bankruptcy after reporting a “material shortfall” of hundreds of millions of dollars in segregated customer funds. The brokerage used a large number of complex and controversial repurchase agreements, or “repos,” for funding and for leveraging profit. Among its losing bets was something described as a wrong-way $6.3 billion trade the brokerage made on its own behalf on bonds of some of Europe’s most indebted nations. Avizius writes: [A]n agreement was reached in Europe that investors would have to take a write-down of 50% on Greek Bond debt. Now MF Global was leveraged anywhere from 40 to 1, to 80 to 1 depending on whose figures you believe. Let’s assume that MF Global was leveraged 40 to 1, this means that they could not even absorb a small 3% loss, so when the “haircut” of 50% was agreed to, MF Global was finished. It tried to stem its losses by criminally dipping into segregated client accounts, and we all know how that ended with clients losing their money. . . .
However, MF Global thought that they had risk-free speculation because they had bought these CDS from these big banks to protect themselves in case their bets on European Debt went bad. MF Global should have been protected by its CDS, but since the ISDA would not declare the Greek “credit event” to be a default, MF Global could not cover its losses, causing its collapse.
The house won because it was able to define what “ winning” was. But what happens when Greece or another country simply walks away and refuses to pay? That is hardly a “haircut.” It is a decapitation. The asset is in rigor mortis. By no dictionary definition could it not qualify as a “default.”
That sort of definitive Greek default is thought by some analysts to be quite likely, and to be coming soon. Dr. Irwin Stelzer, a senior fellow and director of Hudson Institute’s economic policy studies group, was quoted in Saturday’s Yorkshire Post (UK) as saying: It’s only a matter of time before they go bankrupt. They are bankrupt now, it’s only a question of how you recognise it and what you call it.
Certainly they will default . . . maybe as early as March. If I were them I’d get out [of the euro].
The Midas Touch Gone Bad
In an article in The Observer (UK) on February 11th titled “The Mathematical Equation That Caused the Banks to Crash,” Ian Stewart wrote of the Black-Scholes equation that opened up the world of derivatives:
The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
As Aristotle told this ancient Greek tale, Midas died of hunger as a result of his vain prayer for the golden touch. Today, the Greek people are going hungry to protect a rigged $32 trillion Wall Street casino. Avizius writes: The money made by selling these derivatives is directly responsible for the huge profits and bonuses we now see on Wall Street. The money masters have reaped obscene profits from this scheme, but now they live in fear that it will all unravel and the gravy train will end. What these banks have done is to leverage the system to such an extreme, that the entire house of cards is threatened by a small country of only 11 million people. Greece could bring the entire world economy down. If a default was declared, the resulting payouts would start a chain reaction that would cause widespread worldwide bank failures, making the Lehman collapse look small by comparison.
Some observers question whether a Greek default would be that bad. According to a comment on Forbes on October 10, 2011:
[T]he gross notional value of Greek CDS contracts as of last week was €54.34 billion, according to the latest report from data repository Depository Trust & Clearing Corporation (DTCC). DTCC is able to undertake internal netting analysis due to having data on essentially all of the CDS market. And it reported that the net losses would be an order of magnitude lower, with the maximum amount of funds that would move from one bank to another in connection with the settlement of CDS claims in a default being just €2.68 billion, total. If DTCC’s analysis is correct, the CDS market for Greek debt would not much magnify the consequences of a Greek default—unless it stimulated contagion that affected other European countries. It is the “contagion,” however, that seems to be the concern. Players who have hedged their bets by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets. The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives “weapons of financial mass destruction.” It is also why the banking system cannot let a major derivatives player—such as Bear Stearns or Lehman Brothers—go down. What is in jeopardy is the derivatives scheme itself. According to an article in The Wall Street Journal on January 20th:
Hanging in the balance is the reputation of CDS as an instrument for hedgers and speculators—a $32.4 trillion market as of June last year; the value that may be assigned to sovereign debt, and $2.9 trillion of sovereign CDS, if the protection isn’t seen as reliable in eliciting payouts; as well as the impact a messy Greek default could have on the global banking system.
Players in the future may simply refuse to play. When the house is so obviously rigged, the legitimacy of the whole CDS scheme is called into question. As MF Global found out the hard way, there is no such thing as “risk-free speculation” protected with derivatives. Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://WebofDebt.com and http://EllenBrown.com. Articles by:
Ellen Brown Related content: What’s the big deal with Greece? Debt Default and Its Repercussions in the U.S.
Financial markets are intensely focused on the events unfolding in Greece. Markets seem concerned that once again Greece will not be able to satisfy the austerity requirements their last loan required for further loans. If they are not able to…
Pulling Back the Curtain on the Wall Street Money Machine
On November 27, Bloomberg News reported the results of its successful case to force the Federal Reserve to reveal the lending details of its 2008-09 bank bailout. Bloomberg reported that by March 2009, the Fed had committed $7.77 trillion in…
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2014-15/0259/en_head.json.gz/3818 | Panelists Discuss Taxes and the Economy
Presidential candidates are not the only people discussing the need for economic growth, deficit reduction, and tax reform. A panel of Columbia Law School professors and graduates had their own debate relating to the topics at Reunion 2012, and each participant offered a different perspective.
“The economy is regrettably fragile right now, and the financial position of the U.S. government is not that great either,” said David M. Schizer, Dean and the Lucy G. Moses Professor of Law; Harvey R. Miller Professor of Law and Economics, who moderated the panel. The $1.3 trillion federal deficit is more than twice what it was in 2008, and approximately 11 percent of the nation’s gross domestic product, he said.
“The deficit will decline only if the economy starts to grow,” Dean Schizer added. “The question is how to do that.” The federal government’s $862 billion program to stimulate the economy has not done much to stimulate the economy, he said, noting that economic growth was just 1.5 percent in 2011 and that 13 million Americans are unemployed, half of them for six months or more.
Schizer, one of the nation’s leading experts on tax law, said he is a fan of the policy known as “paygo,” or pay-as-you-go, which requires that every expenditure have a source of funding. First adopted by Congress in 1990, the policy was credited with playing a significant role in eventually turning deficits into a surplus. It expired in 2002, and was later revived as a rule, not law, with modifications in 2011 that limit its effectiveness.
Professor Michael Graetz, Visiting Professor Rebecca Kysar, Peter C. Canellos ’67, and Stephen Friedman ’62 joined Dean Schizer on the panel.
Graetz, Columbia Alumni Professor of Tax Law and the Wilbur H. Friedman Professor of Tax Law, favors a value-added tax, or VAT, as a solution to the current fiscal dilemma. “It exists in 151 countries, so it’s clear we can administer it,” he said. Proceeds from the VAT, which is similar to a national sales tax, could be used to exempt from federal income tax those earning less than $100,000 a year—some 150 million Americans, he said.
Graetz said his proposal—for a 12.5 percent value-added tax, a 15 percent corporate rate, a 15 percent income-tax rate for people earning between $100,000 and $200,000, and a 25 percent or 26 percent rate for those earning more than $200,000—would lower the corporate tax rate, save billions in administrative costs, and put money in consumers’ pockets. It would neither increase nor decrease the amount of money coming into the government, according to the non-partisan Tax Policy Center.
Friedman, who is chairman of Stone Point Capital, a private equity firm in Greenwich, Conn., said regulation is crucial to the economy, although he added that he is concerned about unintended consequences of recent legislation because the law is too hard to understand. Bad risk management on the part of financial institutions was a major factor in the financial crisis, he said, and while the Federal Reserve and Treasury provided liquidity when market mechanisms failed, he is not convinced they could do it again. “The political thrust against bailouts and TARP [the Troubled Asset Relief Program], which saved us, is such that I’m not sure they would be able to do the emergency measures necessary to avert another crisis.”
Many Americans perceive the current tax system to be unfair and biased in favor of the wealthy, said Canellos, a former chairman of the New York State Bar Association Tax Section who is of counsel to the law firm of Wachtell, Lipton, Rosen & Katz. The tax rate on capital gains is less than half of the top income tax rate. In addition, wealthy donors are able to dispose of appreciated assets without ever paying taxes, he said.
Kysar, whose teaching and research focuses on federal income tax and international tax, said the U.S. tax system, which applies to domestic and international income, has led some citizens to renounce U.S. citizenship and move abroad. More importantly, she said, it encourages new companies to incorporate outside the U.S. and invites gamesmanship on the part of companies with foreign subsidiaries. She noted that most other countries use a territorial tax system that taxes income in the country in which it is earned. On the corporate side, she added, there is a stronger argument for switching to a territorial tax system in the U.S.
Above all, said Schizer, there needs to be a plan to reduce the deficit, something Congress has avoided. He cited a recent Gallup poll showing that Americans believe the government wastes an average 51 cents of every dollar it spends. | 金融 |
2014-15/0259/en_head.json.gz/3872 | Last 72 Hrs Silver, Gold, and What Could Go Wrong - 15th Apr 14
Subscribe Now U.S. Retailers Canary in the Coal Mine Companies / Sector Analysis Dec 14, 2010 - 12:52 PM GMT By: James_Quinn Some people have contested my statement that there are thousands more retail stores in the US today than there were in 2007. Yes, many mom and pop stores have gone out of business, but the big boys continued to expand in the face of reality. The mall based mega-retailers dominate the retail landscape in this country. Here is a partial list of the biggest retailers in the US and their store counts.
Just these nine well known retailers alone, have added 6,435 stores since 2007. Some of the stores were international, but the vast majority were opened in the U.S. This increase in store counts in the face of reality is the ultimate in CEO hubris. Inflation adjusted retail sales since 2007 in the U.S. are down 19%. This is a recipe for disaster. Americans must deleverage over the next decade. They have no choice. Their retirement savings levels are pitiful. They will be forced to stop buying crap. The boomers are leaving their high spending years and entering the forced saving phase of their lives, whether they like it or not. Every retail CEO in the country should recognize these facts. But still, they relentlessly expand. A fool and his company are soon parted.
The lifeblood of retail expansion is same store sales. If same store sales do not increase, any store count expansion becomes a death march. Below is a chart of the same store sales increases/(decreases) for November of each of the years listed for six of the largest well known retailers in America. With a base year of 2006, I've shown what the sales level for comparable stores is today versus 2006. This includes the outstanding growth year of 2007, before the financial crisis. Even a CNBC anchor should be able to realize that the "Best" retailers in America have lower sales today than they did in 2006.
Now for the kicker. Inflation since 2006 according to the BLS has been 10%. Therefore, on an inflation adjusted basis, sales for these retailers since 2006 are down by 7% to 17%.
Today, Best Buy reported atrocious 3rd quarter sales figures. Best Buy is rightly considered one of the best run retailers in America. The Apple iPad is a mass sensation. Consumers are supposedly spending again. The age of austerity is over according to the mainstream media. Best Buy's biggest competitor, Circuit City, went out of business two years ago. The world was its oyster. But somehow, the yellow brick road turned from gold to piss.
In the U.S., Best Buy’s same-store sales dropped 5%, while total sales fell 3% to $8.7 billion. The company estimated that its market share declined 1.1 percentage points, losing traction in TVs and gaming software, and it also expects its share for the year to decline. By categories, U.S. sales of consumer electronics, which make up more than a third of Best Buy’s total domestic business, fell 11%, while entertainment software sales, which make up 15% of the total, slid 14%.
It seems that the storyline being sold to the American public by the media is a load of bull. Best Buy is the first of many retailers to be blindsided by reality. Americans are running out of money. They've used up all the equity in their houses. The credit cards are maxed out. Wages are stagnant. Retirement years in a brown cardboard box awaits delusional Boomers unless they stop spending and start saving.
Best Buy's results are the canary in the coal mine. Delusional retail CEO emperors across America need someone to step forward and tell them they have no clothes. Continued expansion in this environment will lead to financial ruin, massive layoffs and bankruptcies.
Based upon history and the known hubris of most CEOs, there will ultimately be thousands of vacant rotting rat infested big box eyesores dotting the landscape over the next ten years. Maybe they can be converted to shelters for homeless delusional Boomers who forgot to save for their retirement. Ask the former CEOs of Montgomery Ward, Circuit City or Blockbuster if it can't happen.
Join me at www.TheBurningPlatform.com to discuss truth and the future of our country. By James Quinn
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James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager. These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer. © 2010 Copyright James Quinn - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. James Quinn Archive
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2014-15/0259/en_head.json.gz/3887 | Toward a leaner finance department
Borrowing key principles from lean manufacturing can help the finance function to eliminate waste.
| byRichard Dobbs, Herbert Pohl, and Florian Wolff
Waste never sleeps in the finance department—that bastion of efficiency and cost effectiveness. Consider the reams of finance reports that go unread and the unused forecasts, not to mention duplicate computations of similar data, the endless consolidation of existing reports, and mundane activities such as manually entering data or tailoring the layout of reports. PodcastToward a leaner finance departmentDownload
The impact is significant. In a recent exercise that benchmarked efficiency at consumer goods companies, the best finance function was nine times more productive than the worst (exhibit). Production times also varied widely. Among the largest European companies, for example, it took an average of 100 days after the end of the financial year to publish the annual numbers: the fastest did so in a mere 55 days, while the slowest took nearly 200. This period typically indicates the amount of time a finance department needs to provide executives with reliable data for decision making. In our experience with clients, many of these differences can be explained not by better IT systems or harder work but by the waste that consumes resources. In a manufacturing facility, a manager seeking to address such a problem might learn from the achievements of the lean-manufacturing system pioneered by Toyota Motor in the 1970s. Toyota's concept is based on the systematic elimination of all sources of waste at all levels of an organization.1 1.
Anthony R. Goland, John Hall, and Devereaux A. Clifford, "First National Toyota," The McKinsey Quarterly, 1998 Number 4, pp. 58-66; and John Drew, Blair McCallum, and Stefan Roggenhofer, Journey to Lean: Making Operational Change Stick, Hampshire, England: Palgrave Macmillan, 2004. Industries as diverse as retailing, telecommunications, airlines, services, banking, and insurance have adopted parts of this approach in order to achieve improvements in quality and efficiency of 40 to 70 percent. ExhibitFinance and accounting efficiency varies considerably within industries.Enlarge
We have seen finance operations achieve similar results. At one European manufacturing company, for example, the number of reports that the finance department produced fell by a third—and the amount of data it routinely monitored for analysis dropped from nearly 17,000 data points to a much more manageable 400.
Borrowing from lean
In our experience, the finance function eludes any sort of standardized lean approach. Companies routinely have different goals when they introduce the concept, and not every lean tool or principle is equally useful in every situation. We have, however, found three ideas from the lean-manufacturing world that are particularly helpful in eliminating waste and improving efficiency: focusing on external customers, exploiting chain reactions (in other words, resolving one problem reveals others), and drilling down to expose the root causes of problems. These concepts can help companies cut costs, improve efficiency, and begin to move the finance organization toward a mind-set of continuous improvement.
Focusing on external customers
Many finance departments can implement a more efficiency-minded approach by making the external customers of their companies the ultimate referee of which activities add value and which create waste. By contrast, the finance function typically relies on some internal entity to determine which reports are necessary—an approach that often unwittingly produces waste.
Consider, for example, the way one manufacturing company approached its customers to collect on late or delinquent accounts. The sales department claimed that customers were sensitive to reminders and that an overly aggressive approach would sour relations with them. As a result, the sales group allowed the accounting department to approach only a few, mostly smaller customers; for all others, it needed the sales department's explicit approval—which almost never came. The sales department's decisions about which customers could be approached were neither challenged nor regularly reviewed. This arrangement frustrated the accounting managers, and no one would accept responsibility for the number of days when sales outstanding rose above average.
The tension was broken by asking customers what they thought. It turned out that they understood perfectly well that the company wanted its money—and were often even grateful to the accounting department for unearthing process problems on their end that delayed payment. When customers were asked about their key criteria for selecting a manufacturing company, the handling of delinquent accounts was never mentioned. The sales department's long-standing concern about losing customers was entirely misplaced.
In the end, the two departments agreed that accounting should provide service for all customers and have the responsibility for the outstanding accounts of most of them. The sales department assumed responsibility for the very few key accounts remaining and agreed to conduct regular reviews of key accounts with the accountants to re-sort the lists.
Better communication between the departments also helped the manufacturing company to reduce the number of reports it produced. The company had observed that once an executive requested a report, it would proceed through production, without any critical assessment of its usefulness. Cutting back on the number of reports posed a challenge, since their sponsors regularly claimed that they were necessary. In response, finance analysts found it effective to talk with a report's sponsor about just how it would serve the needs of end users and to press for concrete examples of the last time such data were used. Some reports survived; others were curtailed. But often, the outcome was to discontinue reports altogether.
Exploiting chain reactions
The value of introducing a more efficiency-focused mind-set isn't always evident from just one step in the process—in fact, the payoff from a single step may be rather disappointing. The real power is cumulative, for a single initiative frequently exposes deeper problems that, once addressed, lead to a more comprehensive solution.
At another manufacturing company, for example, the accounting department followed one small initiative with others that ultimately generated cost savings of 60 percent. This department had entered the expenses for a foreign subsidiary's transportation services under the heading "other indirect costs" and then applied the daily exchange rate to translate these figures into euros. This approach created two problems. First, the parent company's consolidation program broke down transportation costs individually, but the subsidiary's costs were buried in a single generic line item, so detail was lost. Also, the consolidation software used an average monthly exchange rate to translate foreign currencies, so even if the data had been available, the numbers wouldn't have matched those at the subsidiary.
Resolving those specific problems for just a single subsidiary would have been an improvement. But this initiative also revealed that almost all line items were plagued by issues, which created substantial waste when controllers later tried to analyze the company's performance and to reconcile the numbers. The effort's real power became clear as the company implemented a combination of later initiatives—which included standardizing the chart of accounts, setting clear principles for the treatment of currencies, and establishing governance systems—to ensure that the changes would last. The company also readjusted its IT systems, which turned out to be the easiest step to implement.
Drilling down to root causes
No matter what problem an organization faces, the finance function's default answer is often to add a new system or data warehouse to deal with complexity and increase efficiency. While such moves may indeed help companies deal with difficult situations, they seldom tackle the real issues. The experience of one company in the services industry—let's call it ServiceCo—illustrates the circuitous route that problem solving takes.
Everyone involved in budgeting at ServiceCo complained about the endless loops in the process and the poor quality of the data in budget proposals. Indeed, the first bottom-up proposals didn't meet even fundamental quality checks, let alone the target budget goals. The process added so little value that some argued it was scarcely worth the effort.
Desperate for improvement, ServiceCo's CFO first requested a new budgeting tool to streamline the process and a data warehouse to hold all relevant information. He also tried to enforce deadlines, to provide additional templates as a way of creating more structure, and to shorten the time frame for developing certain elements of the budget. While these moves did compress the schedule, quality remained low. Since the responsibility for different parts of the budget was poorly defined, reports still had to be circulated among various departments to align overlapping analyses. Also, ServiceCo's approach to budgeting focused on the profit-and-loss statement of each function, business, and region, so the company got a fragmented view of the budget as each function translated the figures back into its own key performance indicator (KPI) using its own definitions.
To address these problems, ServiceCo's managers agreed on a single budgeting language, which also clearly defined who was responsible for which parts of the budget—an added benefit. But focusing the budget dialogue on the KPIs still didn't get to the root problem: middle management and the controller's office received little direction from top management and were implicitly left to clarify the company's strategic direction themselves. The result was a muddled strategy with no clear connection to the numbers in the budget. Instead of having each unit establish and define its own KPIs and only then aligning strategic plans, top management needed to link the KPIs to the company's strategic direction from the beginning.
Getting to the root cause of so many problems earlier could have saved the company a lot of grief. Once ServiceCo's board and middle management determined the right KPIs, the strategic direction and the budget assumptions were set in less than half a day, which enabled the controller's office and middle management to specify the assumptions behind the budget quickly. The management team did spend more time discussing the company's strategic direction, but that time was well spent. The result was a more streamlined process that reduced the much-despised loops in the process, established clear assumptions for the KPIs up front, and defined each function's business solution space more tightly. The budget was finalized quickly.
It takes time to introduce lean-manufacturing principles to a finance function—four to six months to make them stick in individual units and two to three years on an organizational level. A new mind-set and new capabilities are needed as well, and the effort won't be universally appreciated, at least in the beginning.
Integration tools can be borrowed: in particular, a value stream map can help managers document an entire accounting process end to end and thus illuminate various types of waste, much as it would in manufacturing. Every activity should be examined to see whether it truly contributes value—and to see how that value could be added in other ways. Checking the quality of data, for example, certainly adds value, but the real issue is generating relevant, high-quality data in the first place. The same kind of analysis can be applied to almost any process, including budgeting, the production of management reports, forecasting, and the preparation of tax statements. In our experience, such an analysis shows that controllers spend only a fraction of their time on activities that really add value.
The challenge in developing value stream maps, as one European company found, is striking a balance between including the degree of detail needed for high-level analysis and keeping the resulting process manual to a manageable length. Unlike a 6-page document of summaries or a 5,000-page tome, a complete desk-by-desk description of the process, with some high-level perspective, is useful. So too is a mind-set that challenges one assumption after another.
Ultimately, a leaner finance function will reduce costs, increase quality, and better align corporate responsibilities, both within the finance function and between finance and other departments. These steps can create a virtuous cycle of waste reduction. About the authorsRichard Dobbs is a partner in McKinsey's London office, and Herbert Pohl is a partner in the Munich office, where Florian Wolff is an associate principal.
This article was first published in the Spring 2006 issue of McKinsey on Finance. Visit McKinsey's corporate finance site to view the full issue.
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2014-15/0259/en_head.json.gz/3987 | Business forecast a little bit brighter for NJ
Last updated: Thursday, January 31, 2013, 10:36 AM
By HUGH R. MORLEY Staff Writer The Record
The New Jersey economy will be stronger this year than last, but the improvement will be slow, with changes varying from sector to sector, speakers from the distribution, banking and other industries said at an economic forum at Ramapo College Monday.
With the uncertainty of the election, and the fate of President Obama's healthcare plan largely settled, the strength of the corporate sector will bring slow, steady growth, speakers said at the Northern New Jersey Business Outlook forum.
The slight uptick will be bolstered by improvements in the housing sector, post-Sandy reconstruction and related federal funding, speakers said.
"Overall, members are looking at an optimistic year, but cautiously optimistic with modest growth," said John Galandak, president of the Paramus-based Commerce and Industry Association of New Jersey.
Robert P. Topel, vice president of marketing for the Eastern Region of UPS, said that although there is "still a lot of concern" over the president's health care initiative, businesses appear ready to cast aside the holding pattern of last year.
"They are making some forward thinking decisions, and taking action," Topel said, adding, however, that companies are moving in a "conservative and controlled" way that will limit expansion.
The most buoyant sector is hi-tech, although that will not greatly affect New Jersey because it's only a small part of the state economy. He said he also expects retail to "expand slightly better than average," but that improvement may be limited if the employment market does not improve.
The forum came as federal authorities released data that showed the national gross domestic product shrank in the fourth quarter for the first time in three-and-a-half years, by 0.1 percent on an annualized basis. The national jobs report will be released Friday.
New Jersey added a record 30,200 jobs in December, but the unemployment rate of 9.6 percent is well above the national rate of 7.8 percent, and one of the highest in the nation.
James E. Glassman, managing director and senior economist with JPMorgan Chase, sounded a slightly more upbeat note than his fellow panelists, saying "there is reason to be hopeful."
"We are recovering," he said. "We are in the 4th inning already of a recovery. It's been very slow. And because it's been very slow, everybody is getting kind of beaten down."
Glassman displayed a chart showing after-tax profits of American businesses as a percentage of gross domestic product - indicating that profits had risen dramatically since the recession.
"We are at all time record highs," he said of the profits. "What's happened here is margins have exploded. What that tells an economist is that there is a powerful incentive here to think forward, to start thinking about planning for expansion."
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2014-15/0259/en_head.json.gz/4058 | September 28, 2007 Bill Moyers talks with John Bogle.
BILL MOYERS: Welcome to the JOURNAL. Every week we hear of another publicly traded company being bought by a private equity firm. Some of those investment firms like
Blackstone, the Carlyle Group, and Cerebrus have become almost as well known as the brand-name companies they've been snapping up, from Chrysler to Dunkin' Donuts to Toys R Us. But private equity firms have no real interest in toys, cars, or baked goods. What they are after is big and quick returns on their capital.
To get it, they buy a company and cut the wages, pensions and health benefits of the employees who work there. Take a look at this front page story in Sunday's
NEW YORK TIMES for a glimpse of how this kind of capitalism works. Thousands of nursing homes have been bought up by private equity firms like Warburg Pincus and
Carlyle. Profits were increased by reducing costs, then investors quickly resold the facilities for a big profit � leaving and I quote- "residents at those
nursing homes worse off, on average, than they were under previous owners." Exhibit #1: Habana Health Care Center in Tampa, Florida, purchased by a group of
private equity firms in 2002. "Within months, the number of clinical registered nurses at the home was half of what it had been a year earlier...budgets for
nursing supplies, resident activities and other services also fell..." "When regulators visited, they found malfunctioning fire doors, unhygienic kitchens, and a
resident using a leg brace that was broken..." Basing its report on state government data, the TIMES says 15 at Habana died from what their families contend was
negligent care. But when families sue, they often can't find out even who owns the nursing homes because of the complex corporate structures private equity firms
have created to cover their tracks. It's this kind of capitalism that drives John Bogle up the wall, as you're about to learn. John Bogle believes owners should
be in charge and accountable. He's known and respected world-wide as the father of index funds and the founder of The Vanguard Group, one of the largest mutual
funds anywhere, with over a trillion dollars in assets. FORTUNE magazine named him one of the four giants of the 20th century in the investment industry. TIME
magazine called him one of the world's 100 most powerful and influential people. Among his six books is this one THE BATTLE FOR THE SOUL OF CAPITALISM and more
recently THE LITTLE BOOK OF COMMON SENSE INVESTING. In the current issue of DAEDALUS, the Journal of the American Academy of Arts and Sciences, he has a
blockbuster of an essay on democracy in corporate America. You'll find it on our Web site at pbs.org. I talked with John Bogle when he was in town earlier this
week. BILL MOYERS: Thanks for joining me.
JOHN BOGLE:
BILL MOYERS:
This story in THE NEW YORK TIMES this week. What do you think when you read a story like that?
Well, first, it's a national disgrace. Simply put. And there are some things that must be entrusted to government and some things that must be entrusted to private enterprise. And what we see there, at least in my judgment, is that we've taken medical care, healthcare and going from making it a profession in which the patient is the object of the game preserving the patient "first do no harm" as Hippocrates would say or would have said and turn that into a business. And so, it's a bottom line. I've often said we're in a bottom line society. We're measuring the wrong bottom line.
What does it say to you that the real owners of the nursing home, the private investors have created this maze of smoke and mirrors that make it virtually impossible to find out who the owners really are?
Well, that's so typical of much that's going on in American finance, the way we structure these financial instruments, which are stock certificates or debt instruments. But it's the same thing of the removal of your friendly, local neighborhood bank holding the mortgage and being able to work with you when you fall on hard times to some unnamed, often unknown, financial institution who couldn't care less.
These private equity firms that own these nursing homes wouldn't even talk to THE NEW YORK TIMES. They won't talk to reporters. I mean, there's no accountability to the public.
There's no accountability. And it's wrong. It's fundamentally a blight on our society.
What does it say that big private money can operate so secretly, with so little accountability, that the people who are hurt by it, the residents in the nursing home have no recourse?
It says something very bad about American society. And you wonder the first question anybody would have after reading the article how in God's name do they get away with that? Well, we have all these attorneys that are capable of devising complex instruments, and money managers who are capable of devising highly complex financial schemes. And there's kind of no one to answer to the call of duty at the end of it.
And we're talking about some of the most powerful names in the business. I mean, these are formidable forces, right?
They're formidable forces. But, I'm afraid--
Respectable citizens, right?
Well, I mean, I don't know about that. But, it's certainly -- it's easy to say that greed is taking playing a part greed has a role in a capitalistic society. But, not the dominant role and--
What should be the dominant? What is the job of capitalism?
Well, ultimately, the job of capitalism is to serve the consumer. Serve the citizenry. You're allowed to make a profit for that. But, you've got to provide good products and services at fair prices. And that's the long term, that's what businesses do in the long term. The businesses that have endured in America have done that and done that successfully. But, in the short term, there's all these financial machinations in which people can get very rich in a very short period of time by creating highly complex financial instruments, providing services that can be cut back easily as in the hospital article, not measuring up to basically their duty. We all know that in professions, the idea has been service to the client before service to self. That's what a profession is. That's what medicine was. That's what accountancy was. That's what attorneys used to be. That's what trusteeship used to be inside the mutual fund industry. But, we've moved from that to a big capital accumulation self interest creating wealth for the providers of these services when the providers of these services are in fact subtracting value from society. So, it doesn't work.
So, the private equity nursing homes have added to their wealth. But, they've subtracted from society the care for people who need it.
That is exactly correct. Not good.
THE WALL STREET JOURNAL editorial page celebrates what it called the animal spirits of business. And as if that's the heart of capitalism. What do you think about that?
Well, I like the animal spirits of business. I mean Lord Keynes told us about animal spirits. And it comes out of a part of his work that says, "You know, all the precise numbers and the perspectives mean nothing. What determines the future of a business is its animal spirits." You know, the desire for progress, the desire to create something new.
That's all good. But, it's gotten misshapen. Badly-- BILL MOYERS:
--misshapen.
Well, it's gotten misshapen because the financial side of the economy is dominating the productive side of the economy
Well, let me say it very simply. The rewards of the growth in our economy comes from corporate, largely - from corporations who are a very important measure, from corporations that are providing goods and services at a fair price innovating and bringing in new technology providing a higher quality of life for our society and they make money doing it. I mean, and the returns in business in the long run are 100 percent the dividends a corporation pays and the rate at which its earnings grow. That still exists. But, it's been overwhelmed by a financial economy. The financial economy, which is the way you package all these ways of financing corporations, more and more complex, more and more expensive. The financial sector of our economy is the largest profit-making sector in America. Our financial services companies make more money than our energy companies no mean profitable business in this day and age. Plus, our healthcare companies. They make almost twice as much as our technology companies, twice as much as our manufacturing companies. We've become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.
By the financial sector, you mean?
Banks, money managers, insurance companies, certainly annuity providers. They're all subtracting value from the economy. They have to subtract. To be clear on this now I don't want to overstate it. To be clear on this, they have to subtract some value. But, the question is--
What do you mean they subtract some value?
In other words, you've go to pay somebody something to provide a service. It's just gotten totally out of hand. My estimate is that the financial sector takes $560 billion a year out of society. Five hundred and sixty billion.
Where does it go?
It goes into the pockets of hedge fund managers, mutual fund managers, bankers, insurance companies. Let me give you this just one little example. If you didn't make a $129 million last year I'm presuming that you didn't. You don't rank among the highest paid 25 hedge fund managers. A $129 million doesn't get you into the upper echelon.
And on the way here this morning, I saw a story that now a $1 billion will not get you in the FORTUNE 400. A $1 billion!
Well, I spend a lot of time thinking about that. I mean, you kind of asked the question, which I've asked in some of my work. What is enough here? And the society is out of control. I mean, in THE BATTLE FOR THE SOUL OF CAPITALISM, I talk about the frightening similarities between the American economy in America, our nation, at the beginning of the 21st century and Rome all those centuries ago around the 4th century.
What are the comparisons? JOHN BOGLE:
We have an idea that we are the world's value creator and leader. And I'm talking not just about economic value, but, we like to think of America as having the best values of integrity and citizenship in the world. We're getting a little bit too much self interested. We have our own bread and circuses. And they're a little different than the bread and circuses they had in Rome. But, we surely have our circuses whether it's sports teams or casino gambling or the lottery in the states. And we see this not just in our economy, in our financial system. This very short-term focus on everything. You see it, sadly, in our government. Everybody knows social security is going to run into crisis. We can't run these federal deficits forever. But, everybody looks out two years and says, "Will I be elected two years from now or a year and a half from now?" And, the short term focus ultimately betrays the very values that we have come to be used to in this great nation of ours.
You said the other day to someone that we think we can fight the war in Iraq without paying for it. JOHN BOGLE:
Well, we borrow the money to fight the Iraq War by some estimates and they're not absurd estimates is running now towards a $1 trillion. We could be doing what the British empire did. We could be bankrupting ourselves in the long run. And--
You see us as an empire?
Well, of course it's an empire. We reach all over the world. We thought of ourselves in many, many respects as the policemen of the world. God knows we know we're the policemen of the Middle East. And there are those say, even from Alan Greenspan on up or down, that oil is the root of that. I mean, these are great societal questions. Protecting oil, which is in turn polluting the atmosphere. We have problems as a society. And we don't have to surrender to them. But, we have to have a little introspection about where we are in America today. We've go to think through these things. We've got to develop a political system that is not driven by money. I mean, these are societal problems for us that don't have any easy answers. But you don't have to be an economist to know that a great deal of or a minimum in our economy is coming from borrowed money. People are spending at a higher rate than they're earning, and we're starting to pay a price for that now. Particularly in the mortgage side. But, eventually, that could easily spread and people won't be able to do that anymore. You can't keep spending money you don't have. It gets a lot of it, you know, and it wasn't that many years ago maybe a couple of generations ago that if you wanted something, you saved for it. And when you completed saving for it, you bought it. Imagine that. And that wasn't so bad. But, now, we know that we can have the instant gratification and pay for it with interest payments, of course, over time, which is not an unfair way to do it. We're going to pay a big price for the excessive debt we've accumulated in this society both in the public side and the private side. And it's no secret that this lack of savings in our economy just about zero is putting us at the mercy of foreign countries. China owns I don't know the exact number but, let me say about 25 percent of our federal debt. China does. What happens when they start to buy our corporations with all those extra dollars they've got there? I mean, I think that's very-- these problems are long term, are very much worrisome and very much intractable. BILL MOYERS:
Your book is called THE SOUL OF CAPITALISM. Tell me what you mean by the soul of capitalism.
Well, I try in the book a little definition from Thomas Aquinas about the core of being he's talking about the human soul, of course but, the core of being,the elements that give you meaning, the values that you have-- the whole kind of wrap up of what makes a human being a human being. And that happens in a much more, you know, a much less profound way in a corporation. There is in a good corporation and in capitalism a core of being of providing goods and services, at raising the standard living. And it's done a very good job at that. I don't want to demean that. You know, we went from the beginning of time, to around 1800, the way people lived barely changed at all. And since 1800, the Industrial Revolution, and capitalism around that time has taken us to standards of living that are just that would have been unimaginable to anybody of that day. We have all the perquisites and ease and freedom and safety of modern life. And so I salute capitalism for doing that. It's just we've taken it too far. Today's capitalists are different from yesterday's capitalists-
How so? What's the big difference?
Well, I think much more they're operating on their own. Instead of for the interest of whose money has been entrusted to them. It's an element it's what we call a bottom-line society, again. But I think it's the wrong bottom line. I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it's growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value. Some of it has to happen, don't mistake me. BILL MOYERS: Right. JOHN BOGLE:
But not as much as we have.
What does it say to you that people seem so indifferent to the fact that one tenth of one percent of the population owns most of the wealth in this country?
Well, in the long run, I believe it's unsustainable. You know, this is not going to be, you know, a country like France, say, at the time of before the French Revolution. You know, the lords of France, the kings had probably the same kind of distribution of wealth we had today come by through long generations. Their own castles. We have those castles in America now. But it says to me that, in this society, it's not sustainable. There will be an outcry. Even Allen Greenspan says in his book he's worried, new book-- he's worried about this division in the society. He's worried about dissatisfaction. He's worried about violence in our society. You can only have so much of an advantage to those at the top of the pyramid, and so much disadvantage that's at the bottom of the pyramid, before you start to get some very difficult things going on.
BILL MOYERS: This seems to me to be your great concern, that this self correcting faculty that is built into both democracy and capitalism is in jeopardy?
Actually, I think it's fair to say it's in jeopardy. But there's one sense that it's not in jeopardy. And that is, ultimately, the system will correct. The bigger the boom, I fear, the bigger the bust. In other words, you pay the price. It's not a self sustaining system at this kind of a level. BILL MOYERS:
Do we need new rules? JOHN BOGLE:
One thing is, I believe, to have a federal standard of fiduciary duty for money managers. They've come from eight percent ownership of American business to 74 percent ownership of American business. It's staggering, over unbelievable change. Without any rules as to how they're supposed to behave. We have state laws of proven investing and fiduciary duty and things of that nature. But they don't seem to be working. And our founding fathers actually thought about having a federal statute-- a federal corporate chartering statute. I think we probably need one because if some of the states step up and say improve their governance provisions, corporations will move to another state. So the state system I don't think can prevail. So a federal standard of fiduciary duty which demands that our pension trustees and our mutual fund directors make sure that those pension funds and mutual funds are operated in the prime interest of those who have entrusted their money to them. And that includes responsibility for corporate governance. And it will ultimately turn to be focused more on long term investing. When I came into this business in the 1950's, it was a business focused on the wisdom of long term investing. We changed in that period to a business that is focused on the folly of short term speculation. And think about this for a minute. If you're a true investor holding a company for the long term, you're well aware that the value in that company is company's earnings compounded over time, developing new products and services, developing efficiencies-- trying to size up the proper corporate strategy, you know, making the company more valuable. But, in the folly of short term speculation, you're just thinking will that stock be worth more or less six months from now or a year from now? Give you a very specific example. In the first 15 years I was in this business, the average mutual fund held the average stock for seven years. Call that long term investing. Now, the average mutual fund holds the average stock for one year. That's short term speculation. So, if you're a speculator, you don't care much about ownership interest. You don't care so much about corporate governance. Why vote a proxy, for example, if you'll not even be holding a stock in three months? The other part of it is,and this is really makes it a very difficult problem to solve. And that is a little about of I guess it's Pogo we have met the enemy and they are us. These mutual fund companies-- these management companies are now owned largely by corporate America. Or international corporations Deutsche Bank AXA, big international companies who have bought their way into the US financial system, which is-- don't mean to demean that. But, they own these public corporations-- giant public corporations like insurance companies, big banks-- foreign insurance companies and banks own 41 of the 50 largest mutual fund managers. Now, what is the job of a corporation when they buy into a mutual fund management company? It's to earn a return on the capital they invest in that company. It's not to earn a return on the capital of the investors who invested with that mutual fund. Now, in fairness, they want to earn as much money as they can for the fund shareholders. But, not at their own expense. What we've done is have you know, what I call in the book, a pathological mutation of capitalism from that old traditional owners' capitalism to a new form of capitalism, which is manager's capitalism. The evidence is quite compelling that today corporations are run in a very important way to maximize the returns of its managers at the expense of its stockholders.
Its CEOs.
Its CEOs, well, the upper level of five or six top officers. And they get enormous amounts of pay for actually doing very little. I'm a businessman. Listen, we all-- we chief executives get an awful lot of credit that we don't deserve. Real work in companies is done by the people who are getting themselves together and doing the hard work of making companies grow--
And, yet, these--
These are the people who most often get laid off, right?
They get laid off. And, of course, the ironic part of that is they often get laid off used to be called downsizing. But, of course, in today's America, it's called right sizing. They get laid off. That reduces expenses. That increases earnings and that means the CEO gets more. Just think about the country for a minute. For an agricultural economy, 95 percent, 98 percent agricultural when this country came into existence. And even by 1850, half agricultural. Now it's about, they moved from agricultural economy, to a manufacturing economy, to a service economy. And now to a financial service economy. And the financial service economy is what troubles me. Because it's diverting resources from the investors to the capitalists. To the entrepreneurs. To Wall Street. To the investment bankers. The hedge fund managers. To mutual fund managers. And that is a negative to our societal values. Where agriculture and manufacturing and services, I mean, I'm perfectly willing to give a high value, for example, to art and poetry and literature. They add value to society. It may not be easy to measure it in a society that measures too much of what's not important. And not enough of what is important. As the sign in Einstein's office says-- "There are some things that count that can't be counted. And some things that can be counted that don't count." BILL MOYERS:
John Bogle, thank you for joining me.
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2014-15/0259/en_head.json.gz/4343 | Business | Energy | Shell chief harps on investor friendly policies
Shell chief harps on investor friendly policies
By Emeka Ugwuanyi 28/02/2012 00:00:00
The Anglo-Dutch Shell has advised the Federal Government on the need to make policies that would attract investors into the country’s oil and gas to harness the abundant oil and gas resources.
The Executive Vice-President, Sub-Saharan Africa, Shell Exploration and Production Africa Limited, Mr. Ian Craig stressed the hitches and economic advantages of establishing policies that tend to repel foreign investment.
Craig, who spoke at the Nigeria Oil and Gas conference in Abuja, cited how investor unfriendly policies negatively affected the North Sea assets in the United Kingdom. He said that oil companies including Shell is not risk averse, therefore, oil companies make every effort to minimise the potential impact. So, before we drill in new frontiers we use every available technology and international expertise to improve our chances of success. And before we sink billions of dollars into projects that may take a decade to return the capital, we try to ensure that the necessary fiscal, legal and political structures are in place.
The Shell boss might be making reference to the government to make the contentious provisions in the Petroleum Industry Bill (PIB) to be also favourable to the operator companies.
He said: "We are however, in a long term business so we sometimes find ourselves caught up in large scale socio/political upheaval as we have seen last year. Less obviously, we occasionally have to deal with policy changes in what may be considered the most stable of regimes – such as the introduction of increased Petroleum Revenue Tax in the UK last year."
The noted that the impact of that tax change on the UK industry has been severe and investment earmarked for projects that were considered likely to go ahead fell by 30 percent and exploration activity, the lifeblood of the industry also fell markedly with production falling by over 15 percent due, at least in part, to the tax increase.
He highlighted the need for operators to live with a degree of uncertainty. A fair balance between risk and reward for the oil company and the host nation should therefore address the inherent uncertainties associated with the investment; he added citing the type of risk that evolves as the exploration basin matures. According to him, in the early frontier phase, geological or new technology development risk may prevail but in the mature phase the challenge may be the high cost of maintaining ageing infrastructure and relatively small new prospects.
He said: "The UK’s North Sea used to be the ultimate technology frontier but is now a mature oil and gas province. Indeed, Shell’s Brent Field, which is synonymous with the UK industry, is due to be decommissioned in the near future.
"The early years were dominated by the major oil companies who had the resources, both technical and financial, to take on such challenges. The UK North Sea will go on producing for a good while yet, provided investment levels can be maintained, but increasingly it is new, smaller players who are stepping in. The limited remaining growth prospects and the now mature technology have changed the competitive landscape in favour of the smaller companies."
He said Nigeria too can be regarded as a mature province in some regards. Fifty years of onshore oil production must surely classify this sector as mature and indeed we now see growing involvement of new smaller players. Substantial oil reserves remain onshore but there are non-technical challenges to deal with. The militancy which crippled onshore production from 2005 to 2009 has abated but staggering levels of theft and criminality prevail. He noted that the Nigerian industry moved into shallow water relatively early in its development. The higher costs of offshore production were offset by larger field sizes and a smaller, more secure footprint. For the last 20 years or so most of Nigeria’s oil production has been from shallow water but this too is maturing and substantial investment is needed to maintain or grow production.
"We have the deepwater province and we tend to think of this as a recent development but it was the high risk exploration and development investments made back in the nineties which led to the projects that delivered Nigeria’s first deepwater oil in 2005.
"The timing was fortuitous as the subsequent ramp up in deepwater production compensated for the steep fall in onshore production caused by the activities of the militants in the latter half of the last decade. Please enable JavaScript to view the comments powered by Disqus.
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2014-15/0259/en_head.json.gz/4391 | Resource Center Current & Past Issues eNewsletters This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article. From the October 2010 issue of Treasury & Risk magazine
Getting a Grip on Intangibles
By Russ Banham October 1, 2010 • Reprints
For the past two years. companies have hunkered down and hoarded equity capital and cash on their balance sheets, bringing mergers and acquisitions to a virtual halt. With dealmaking reviving, bidders would be wise to stop, catch their collective breath and ask, "Am I buying what I think I'm buying?" That's the message from Mary Adams, co-author, with Michael Oleksak, of a new book, Intangible Capital. In it, they argue that many mergers and acquisitions come unglued because the customary methods of valuing a target company's intangible assets fail to tell the full story. While no finance executive would disagree that putting a number on an intangible asset like goodwill is more art than science, in a transaction where shareholders are scrutinizing every dollar spent, a better way is surely needed.
If intangible assets were only a small fraction of a company's value, they might not make much of a difference in whether a deal succeeds. But according to an Ernst & Young survey of 709 M&A transactions in 2007, intangibles essentially are the company. The survey indicates that a mere 30% of the average purchase price of a company could be allocated to tangible assets, while 23% could be allocated to identifiable intangible assets like customer lists, contracts and intellectual property. That leaves a whopping 47% in goodwill--the extra value ascribed to a company by virtue of its brand and reputation.
"Goodwill is basically a fudge factor," Adams asserts. "This means that the acquirers were unable to identify the source of roughly half of the value of the acquired company. This is not something that management teams or investors should continue to tolerate. It's a failure of the accounting system to provide helpful information on intangibles."
No wonder so many mergers fail to deliver on expectations. "They don't meet the projections used to price the deal and the intangibles on the balance sheet, which means the goodwill has to be written down," says Adams. "If you can't identify what you're buying going into the deal, how can you do a good job managing it after the deal closes?"
It's a conundrum that many companies are likely to encounter now that M&A is back on track. The first half of 2010 saw 5,026 global M&A deal announcements totaling $881 billion in value, a 13.3% increase from the first half of 2009, according to Mergermarket. The second half of the year continues the trend, given such big-ticket announcements as Intel's $7.68 billion bid for security company McAfee, and mining company BHP Billiton's $40 per share hostile tender offer for Potash Corp. of Saskatchewan, which has since ignited a bidding war with China's Sinochem.
Other deals include Hewlett-Packard's purchase of data storage company 3Par for $2.4 billion, and Intel's plans to consume the wireless unit of Germany's Infineon Technologies for $1.4 billion. "Mergers come in clusters," says Mark Sirower, leader of the commercial due diligence practice at Deloitte Consulting. "Companies have lots of cash on the books, and private equity has lots of funds they need to invest. The amount of M&A activity was strong in the first half of the year and it has only gotten stronger."
Others agree. "Private equity has more than $400 billion in capital sitting in these funds that has to be spent over the next 18 months," says Dan Tiemann, partner in charge of the transactions and restructuring practice at KPMG. "It's a situation of 'use it or lose it.' They seem to be using it.
"Last year, private equity represented only 5% of deals, but they've accounted for 20% through June," Tiemann adds. The big deals we're seeing send a message of confidence, which then encourages other companies to make bets."
"We're facing the foothills of the next boom in M&A activity," agrees Robert Bruner, dean of the Darden Graduate School of Business at the University of Virginia and author of the book Deals from Hell.
"Waves of M&A activity are created by capital market conditions like low interest rates and attractive cash financing conditions, regulatory upheaval creating winners and losers in an industry, and economic activity like the rebounding of Germany and the buoyancy of countries like Brazil, China, India and other emerging countries, which opens the door to more cross-border transactions," Bruner says. "All three factors are now in place."
The pickup in mergers and acquisitions promises more failed combinations down the line, Bruner notes, citing such bust-ups as AOL-Time Warner, Daimler-Benz-Chrysler, Mattel-Learning Co. and Quaker Oats-Snapple. Private equity hasn't been immune, as Cerberus Capital Management's brief ownership of the foundering Chrysler demonstrated.
Adams believes a better grasp of targets' intangible assets will reduce the carnage. "I don't want to give the impression that intangibles do not get valued in today's business world; they get valued all the time, through discounted cash flow, fair value and other valuation approaches," she says. "The problem is that these approaches don't give the full picture of the target company."
Stephan Thollot, a partner in the transaction advisory services division of Ernst & Young in New York, which produced the report on intangible capital, has a similar view of valuation methodologies. "The techniques usually rely on forward-looking information, which makes their forecasting subject to uncertainty," he says.
While acquirers spend much time on detailed due diligence and assessing synergies, they devote far less to "determining what intangible assets target companies have, and how valuable these are in the marketplace," Thollot adds.
Adams, co-founder of consultancy I-Capital Advisors in Winchester, Mass., groups intangible assets into three categories--human capital (the competencies, experience and depth of employees and management); relationship capital (shared knowledge with customers, suppliers, banks, vendors or other close business relationships); and structural capital (systems, processes, databases and intellectual property like patents, trademarks and trade secrets). "These assets are a company's knowledge factory and infrastructure for growth," she says.
To continue to operate this factory, Adams says, the acquirer must know how much investment is needed to preserve and build capacity, the kind of growth it can expect from these investments, and, most importantly, the return they will yield.
Her message resonates with Roger Shannon, CFO and treasurer of Steel Technologies, a Louisville, Ky.-based steel processor with more than $1 billion in 2009 revenues. "Both the tangible and intangible assets have the same value, that is, the value of the cash flows resulting from them," he says. "If you buy a company with machinery, this fixed asset is expected to | 金融 |
2014-15/0259/en_head.json.gz/4392 | Resource Center Current & Past Issues eNewsletters This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article. Microsoft Plans $40 Billion Stock Buyback
In an effort to keep shareholders happy, the software giant also boosts its dividend 22%.
By Nick Turner and Sarah Frier, Bloomberg September 17, 2013 • Reprints
Microsoft Corp., the world’s largest software maker, announced a new $40 billion stock buyback plan and increased its dividend 22 percent, seeking to reward shareholders as the company undergoes a change in strategy and leadership.
The repurchase program, which has no expiration date, replaces another $40 billion buyback plan that was due to lapse at the end of this month, Microsoft said today in a statement. The company’s quarterly dividend will rise to 28 cents a share, payable on Dec. 12 to shareholders of record as of Nov. 21.
The move is a step in the right direction for investors, though the open-ended schedule for the new buyback plan raises questions, said Matthew Hedberg, an analyst with RBC Capital Markets in Minneapolis. The company has come under pressure from activist investor ValueAct Holdings LP, which pushed Microsoft to return more money to shareholders, according to a person with knowledge of the matter.
“What would be more interesting is if they put more parameters on the timing of the buyback -- sooner is better than later,” said Hedberg, who has a neutral rating on Microsoft. “The dividend is more material because it’s incremental to their existing dividend.”
Shares of Redmond, Washington-based Microsoft rose 0.7 percent to $33.04 at 11:49 a.m. in New York. The stock had added 23 percent this year through yesterday.
The new 28-cent dividend tops the 26 cents estimated by analysts, according to data compiled by Bloomberg. The increase gives Microsoft an indicated yield of 3.4 percent, providing one of the largest payouts among technology stocks. Intel Corp.’s 3.8 percent 12-month indicated yield is the only U.S. technology company with a market value of more than $100 billion that pays more on that basis.
After struggling to keep up with rivals in the smartphone and tablet markets, Microsoft is retooling its strategy and seeking a new chief executive officer. Steve Ballmer, who has run the company since 2000, announced plans last month to retire when a replacement is found. The company also agreed to buy Nokia Oyj’s phone business for $7.2 billion, aiming to bolster its position in mobile devices.
ValueAct Accord
Microsoft signed a pact last month to cooperate with ValueAct, saying it would hold regular meetings with the firm’s president, Mason Morfit. Under the agreement, ValueAct also has the option of having Morfit become a director beginning at the first quarterly board meeting of 2014.
George Hamel, ValueAct’s co-founder, didn’t immediately respond to a message seeking comment today.
Coupled with the leadership shakeup, Microsoft’s latest move suggests a shifting attitude at the company, said Rick Sherlund, an analyst at Nomura Holdings Inc. in New York.
“Things are changing at Microsoft with respect to corporate governance that we believe could benefit shareholders over the next six to 12 months,” he said in a report.
While the dividend increase was more than Sherlund had estimated, the significance of the buyback plan is harder to pin down, he said.
“The pace of share repurchase had slowed at the company, so it is not clear that the new program implies any more aggressive plans,” said Sherlund, who recommends buying the stock.
Peter Wootton, a Microsoft spokesman, declined to comment on when the company will make the repurchases.
The size of the buyback eclipses most repurchase programs, though i | 金融 |
2014-15/0259/en_head.json.gz/4457 | Break Ups and Shake Ups
Erik M. Manning
The summer months have been anything but relaxing at troubled insurer American International Group (AIG). Things got off to a good start when the company agreed to sell its AIA Group, an overseas life-insurance business, to Prudential (PUK) for more than $35 billion. The market applauded this news because it has been no secret for some time now that in order for AIG to get back to prominence it must relieve itself of the stake that the government took during the bailout period. The Federal Reserve loaned the company tens of billions of dollars to keep it afloat at the height of the recession, and the U.S. government currently owns about 80% of AIG.
But the good vibes were quickly extinguished when Prudential started noticing serious investor backlash due to the perception that the aforementioned price tag was too high. The United Kingdom insurer the submitted a lower bid that was closer to $30 billion and the deal unraveled quickly. Reports began to arise that AIG’s CEO Robert Benmosche was in favor of trimming the price as long as the deal was consummated, but the board of directors disagreed.
Shortly thereafter, grumblings of a feud between Mr. Benmosche and Chairman Harvey Golub began. These whispers were rapidly verified when in mid-July, Mr. Golub stepped down from his post citing that one of the two had to go, and “it was easier to replace a Chairman then a CEO”. His replacement will be Robert Miller who has extensive experience reorganizing troubled companies, which probably means that he too is no stranger to getting his way. Mr. Benmosche has stated he will quit if he is not given the freedom to run AIG his way. The potential for more hand wringing and head butting is there, however, we hope the fact that Mr. Miller has been on the company’s board for over a year now means the two can work together. Instability at top positions is exactly what AIG does not need at this juncture.
With leadership and directional concerns hopefully in the rearview mirror, the focus once again is being shifted back to asset selloffs and any other ways that capital can be raised to square up with the government. First off, rumors of other bids for AIA, most notably from Chinese groups, have apparently not come to fruition. Therefore, management is now formulating plans to relieve itself of this entity via an initial public offering. AIA is one of AIG’s crown jewels, and the initial pact, if completed, could have cut its debt burden by about a quarter. The chances of an IPO bringing in $30 billion are slim to none, but time is of the essence and this looks to be the road that will be taken. Banking insiders have calculated that AIG could sell up to a 50% stake in the foreign insurer and raise up to $15 billion through a Hong Kong listing. Indications were that Mr. Benmosche was against the IPO and petitioned the board to wait and seek other potential bidders, but even he has to realize that barring a last-minute savior, the IPO will be necessary. Risks of executing such an agreement, coupled with difficulties in gaining that type of funding severely limit the number of potential suitors.
The IPO will get the ball rolling as far as paying off the debt, but it is only the tip of the iceberg. Management is still going to need to aggressively divest businesses and when all is said and done, AIG will be a much smaller company than the one that tumbled during the financial crisis. Two units that are already firmly on their way out of the portfolio are the American Life Insurance Company, an overseas insurance firm, and Nan Shan, a Taiwanese life insurance concern. More recently, it was disclosed that bids were not being accepted for American General Financial, the consumer lending unit. We had not anticipated that this segment would go. In our initial thoughts, when the selloff talks began, the general consensus was that this would be a cornerstone of the future AIG, but this no longer appears to be the case. This highlights the fact that the company sees the urgency in getting out from under the government’s thumb. In recent interviews, Mr. Benmosche has displayed a worry that as long as AIG has such a high number of government borrowings outstanding it could be hard-pressed to tap the stock and credit markets for fresh capital.
Fortunately, the businesses that are being kept have shown signs of life lately. Investment income has been trending higher over the last few months, and general and domestic life insurance policies are rolling in at a steadier clip. Too, the AIG that emerges from the selloffs and debt paybacks may well generate some handsome margins based on the underwriter’s unwillingness to cut its prices too far even during the dark times. On top of this, the aircraft leasing branch, International Lease Finance Corporation, is now operating at a healthy enough rate that it will be able to raise $4 billion from debt markets to pay off a lifeline that it was individually extended from the Federal Reserve during the downturn. Perhaps most important, the erosion of its clientele never reached the levels that many pundits anticipated. With that, retention levels have been stout across the board. And we see no reason why these customers will not stay on board so long as AIG continues to execute its plan to diminish the government’s role.
On that note, though no timeline has been set, once the debt burden has been paid off, management will need to work out a plan with the Treasury Department to reclaim the 80% stake. We would expect a similar tactic to that which is currently occurring with Citigroup (C) That company converted the government’s preferred shares into common stock that will be sold over time. However, this scenario is changing constantly and a recent company release stated that AIG might issue a large number of new common shares that would lead to significant dilution to existing investors. Funds accumulated through this move would then be used to buy back the Treasury’s preferred shares. A combination of these two approaches is also a possibility.
What will be left when all the dust settles is highly debatable. Some on the Street are estimating a near-term government exit while others expect it to be in the fold until well into 2013. A return to the scale and stature of the old AIG is undoubtedly out of the question, but there would be no shame in running a larger-sized successful insurance company. And the game plan to get to just such a position appears to be in the works.
The effects on AIG’s stock cannot go unnoticed either. Anytime news breaks that the company is making maneuvers to alleviate the government presence, the shares jump on this speculation. And if nothing is disclosed for an elongated period their quotation often sags. In total, this equity has climbed more than 30% since the start of 2010. Still, this feat is much less dramatic when one takes in to consideration that it has lost 97% of its value over the last three years. Too, it would still be trading at a nominally low price if not for a 1-for-20 reverse split executed when the company’s future looked bleak. Related Links
Fire Sale Insurance: The Dismantling of AIGSay good-bye to that division | 金融 |
2014-15/0259/en_head.json.gz/5109 | Home / News / Finance / Dell shareholders approve $24.8B buyout offer Dell shareholders approve $24.8B buyout offer
By: The Associated Press September 12, 2013 Comments Off
Dell shareholders have approved a $24.8 billion offer from its founder to buy the company and take it private, ending the struggling computer maker’s quarter-century history as a publicly held company.
At the end of a shareholder meeting Thursday, Dell officials said that based on preliminary results, the proposal had enough votes in favor of it to pass. The company did not immediately announce the tally.
“I am pleased with this outcome and am energized to continue building Dell into the industry’s leading provider of scalable, end-to-end technology solutions,” Michael Dell, the company’s chairman, CEO and founder, said in a statement.
Dell was present for the meeting, which lasted about 15 minutes. About 100 people were in attendance, though few appeared to be rank-and-file shareholders. The meeting ended with a light applause after the approval was announced.
Like other PC makers, Dell Inc. has been hit hard in recent years as consumers shift their buying habits away from traditional desktops and laptops and toward tablets and other mobile devices.
Last month, Dell reported a 72 percent drop in profit for its most recent quarter, as the company cut prices to shore up computer sales. Dell’s stock has plunged by more than 40 percent since Michael Dell returned for a second stint as CEO in 2007. On Thursday, Dell’s stock gained a penny to $13.86.
Michael Dell, who made his offer with an investment group led by Silver Lake Partners, has said he can turn the company around. But he has said the process will involve a painful realignment that is likely to trim its earnings for another year or two. As a result, he believes, the turnaround will be easier to pull off away from Wall Street and its fixation with short-term results.
The deal is expected to be completed within two months. The company will continue to be based in Round Rock, Texas.
Critics of the offer said it undervalued the company. The vote was delayed three times as a result of the opposition.
Before the last delay, Michael Dell and Silver Lake agreed to pay a special dividend of 13 cents per share to supplement a bid that had already been raised from $13.65 per share to $13.75 per share.
Despite the enhanced offer, activist investor Carl Icahn and investment fund Southeastern Asset Management continued to contend that the company was worth more than what was being offered.
Icahn dropped his opposition on Monday, saying that while he still opposed the sale, it would be “almost impossible” to defeat the offer in Thursday’s vote.
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2014-15/0259/en_head.json.gz/5305 | Enbridge, Inc. Q1 2008 Earnings Call Transcript
May. 7, 2008 3:11 PM ET
| About: ENB by: SA Transcripts Executives
Vern Yu - VP, Enterprise Risk
Patrick D. Daniel - President and CEO
J. Richard Bird - EVP, CFO and Corporate Development
Stephen J. Wuori - EVP, Liquids Pipelines
Colin Gruending - VP and Controller
Linda Ezergailis - TD Newcrest
Sam Kane - Scotia Capital
Robert Hastings - Canaccord Adams
Matthew Akman - Macquarie Research Equities -
Robert Kwan - RBC Capital Markets
Steven Paget - FirstEnergy Capital
Andrew Kuske - Credit Suisse
Daniel Shteyn - Desjardins Securities
Andrew Fairbanks - Merrill Lynch
Ramin Burney - National Bank Financial
Enbridge Inc. (ENB) Q1 FY08 Earnings Call May 7, 2008 9:00 AM ETOperator
Good morning, ladies and gentlemen. Welcome to the Enbridge Inc. 2008 First Quarter Financial Results Conference Call. I would now like to turn the meeting over to Mr. Vern Yu.
Vern Yu - Vice President, Enterprise Risk
Thank you, and good morning. Welcome to the Enbridge Inc. first quarter 2008 earnings call. With me this morning are Pat Daniel, President and Chief Executive Officer; Richard Bird, Executive Vice President, Chief Financial Officer and Corporate Development; Steve Wuori, Executive Vice President, Liquids Pipelines and Colin Gruending, Vice President and Controller.
Before we begin, I should advice you that during this call we may refer to certain information that constitutes forward-looking information. Please take note of the legally required forward-looking information disclaimer in our slides, which generally states that you should not place undue reliance in our statements about the future, since we necessarily acquired certain assumptions to reach conclusions about future outcomes and future outcomes are always subject to risks and uncertainties affecting our business, including regulatory parameters, weather, economic conditions, exchange rates, interest rates, and commodity prices. A more fulsome discussion of these risks and uncertainties is included in our security's disclosure filings, which are publicly available both on SEDAR and EDGAR.
This call is a webcast and I'd encourage those listening on the phone line to view the supporting slides, which are available on our website at www.enbridge.com\investor. A replay of the call will be available later today and a transcript will be posted to our website shortly thereafter. The Q&A format will be the same as the Q4 call. The initial Q&A session is restricted to the analyst community. When we have concluded the Q&As for the analyst community, we will invite media on the call for further Q&A.
For both Q&A sessions, we ask that you limit your questions to one plus a follow-up and rejoin the queue. I would also remind you that Colin, Yu, and I will be available after the call for more detailed questions that you may have.
And at this point, I'd like to turn the call over to Pat Daniel.
Patrick D. Daniel - President and Chief Executive Officer
Thanks very much Vern. Good morning everyone. I'm very pleased you're all able to join us. As we reported earlier today, our adjusted operating earnings of the first quarter of 2008 were $239 million or $0.67 per common share, which exceeds the $0.65 consensus forecast, and this provides us now with a very solid basis for meeting our full-year adjusted operating earnings guidance of $1.80 to $1.90 per common share. So, we're very pleased with the start to the year.
Liquids Pipelines and Gas Distribution Services segments both had strong quarters, and I'm very pleased with the results also reported by our affiliate Enbridge Energy Partners where adjusted quarterly net income per unit was over 40%… up over 40% from quarter one 2007. And this resulted in significant increase in the contribution to Enbridge Inc. of course. Richard Bird is going to review the quarterly financials in more detail in a few moments.
I'm going to keep my remarks on the strategic update relatively brief this morning as I'm going to be speaking again later today at the Annual General Meeting in a little more detail. So, what I would like to do is focus on key developments since our year-end conference call.
I'm sure you all know that these are very exciting times at Enbridge, as we are in the midst of the largest growth program in the history of the company. Our very strong geographical positioning, particularly in the crude oil pipelining business is allowing us to expand and extend our delivery networks to reach new markets for our customers, and this is largely driven by the growing oil sands production in Western Canada.
To implement this strategy, as you know, we have some $12 billion in capital expenditures for projects that are commercially secured and are underway today. And I'm very pleased with the progress that we have made in construction and regulatory activities in several of these projects during the quarter.
Let me give you a few examples, starting with… on April 1, we completed Phase I of our Southern Access Expansion on schedule and the pipeline is now ready to accept linefill. Phase I of course added 190,000 barrels per day of net capacity to the Enbridge System and involved building 321 miles of new 40-inch pipeline... 42-inch pipeline from Superior, Wisconsin down to Delavan, Wisconsin.
Stage two of Southern Access Expansion will add an incremental 210,000 barrels per day of capacity to the entire system by the end of quarter one 2009. The second phase of course consists of additional upstream pumping capacity and 133 miles of a new 40-inch pipeline from Delavan, Wisconsin to Flanagan, Illinois. We expect to begin construction on that stage two in June of 2008.
Moving on to the Waupisso pipeline, it is now more than 90% complete and it may actually be in service a month ahead of its June 30 target completion date. And I think you'll agree that given all of the construction delays that we have seen in our industry that we should be very proud of this achievement of bringing a project in a month early in this environment.
Waupisso will have an initial capacity of 350,000 barrels per day and move crude oil from Cheecham terminal, which is south of Fort McMurray, Alberta down to Edmonton. With the addition of pumping stations, Waupisso can be expanded to an ultimate capacity of 600,000 barrels a day. So, we are very well positioned now at Waupisso.
Construction of our Southern Lights diluent return line continues to proceed as plan. Over 90% of the pipeline between Superior and Delavan, Wisconsin has been completed and we continue to expect this project to be in service late in 2010.
Also in the quarter, we received regulatory approval from the NEB that allows us to proceed with the Canadian portions of Southern Lights and the Alberta clipper through pipelines, as well as Line 4 Extension Project, which as you may recall, is between Edmonton and Hardisty, Alberta.
While most of the growth initiatives have been in the crude oil side of the business, we are also pursuing a number of significant initiatives in our Gas division and we've made excellent progress on those as well over the quarter. We completed the Neptune Pipeline in March, and we now have the capacity to move an incremental 60,000 barrels a day of crude oil, and 200 Mcf of natural gas from the Neptune oil and gas field, which is in the Green Canyon in the offshore Gulf to our existing of offshore Gulf of Mexico Pipeline system. We expect production to commence from these fields in the third quarter of 2008, but in the meantime, we do earn standby fees having put those facilities in place.
Construction on our 190-megawatt Ontario Wind Project near Kincardine is also progressing well. We now expect the facilities to begin producing electricity by the start of the first quarter of this year and then we expect that to be fully operational by the end of the year. The most significant news in our Gas segment really was the Ontario Energy Board's approval in February of this year of an incentive regulation plan for Enbridge Gas distribution and this is going to encompass now the next five years.
We are pleased to be operating under incentive regulation, as this will allow us to earn returns in excess of the allowed utility rate of return on equity. And in this instance, the first 100 basis points of savings are going to accrue directly to Enbridge, and the next 200 basis points of savings will be shared 50-50 with our customers. So, we believe that we are going to be able to generate an incremental, probably somewhere in the range of a 100 basis points to 150 basis points improvement in return for our shareholders. At the same time, we've passed significant savings on to our customers.
Now that I have covered a brief summary of the progress on the commercially secured projects of the first wave of growth of Enbridge, let me remind you that we also have an additional $15 billion worth of growth opportunities, which are forecast to come into service after 2007. We’ve labeled this the second wave of potential projects and this includes additional regional infrastructure in Alberta, further mainline expansion, developing new market access, and then… by new market access, we are thinking here primarily the US Gulf Coast and then expansion in the eastern part of PAD II, and then, what we call, longer-term new market access, for example, the Gateway Project of the West Coast and the US East Cost had one access, and on top of all of that, some incremental contract terminal. I think it's fair to say that it’s unlikely that we are going to win all $15 billion worth of that work, but we do expect to win our fair share of it.
Maybe I can spend a few minutes addressing the US Gulf Coast and our Texas access initiative, primarily because transportation of Western Canadian crude oil to the US Gold Coast is a pretty hot topic in our industry today, and it's timely that we do bring you up-to-date on where we are.
First of all, coming back to the fundamentals. Getting Canadian heavy crude to the Gulf Coast will enhance netbacks for Canadian producers and provide a secured source of heavy crude oil to the US Gulf Coast refineries. So, it's got duel benefit. This will allow Canadian producers and Gulf Coast refineries to sharing the economic benefit of what is a converging heavy crude oil price differential between Canadian heavy crude priced in Alberta and Mexican mine crude priced in the Gulf Coast. On a quality basis, these two crudes are the same, but Canadian heavy traded on average at about $11 a barrel discount to Mexican mine in the last quarter of 2007, and that's after taking into account transportation into the Gulf.
So, assuming 400,000 barrels a day, that represents about $1.5 billion per year of economic benefit that can be shared between Canadian producers and Gulf Coast refineries. Canadian producers should see a further economic benefit as the pipeline will improve netbacks on all barrels as they move to other markets as well, it could very well do that.
So, let me just give you a quick update as to where we are in this strategy. First, we have projects underway that will expand our mainline system by 400,000 barrels a day from Western Canada to Patoka, Illinois. And that's two-thirds of the way to the Gulf Coast, right off the path. These projects which are Southern Access Expansion, Southern Access Extension, and Alberta Clipper, all of which I've already talked about have been approved by our shippers and are now either under construction or they're proceeding into construction.
So, given this starting point, we believe that most economic and competitive solution to accessing the Gulf Coast for a volume of 400,000 barrels a day is our Texas Access Pipeline joint venture with ExxonMobil. Here we will extend a large diameter line due south from Patoka to the Gulf Coast at a capital cost of about $2.6 billion. And this is significantly cheaper than building a complete new line from Western Canada at a cost that would be in excess of $6 billion.
Not only that, when our current system expansions are complete, we'll be able to expand the entire Enbridge System all the way to the Gulf on a very cost-effective basis. Basically, all we need to do at that point is add additional pumping stations. We can add another 400,000 barrels a day at system-wide capacity to the Gulf at a quarter of the cost of our current system expansion and we don't need to add any additional pipe. So, for either 400,000 barrels a day by 2012 or 800,000 barrels a day at any time thereafter, the Enbridge mainline is the most economic solution for shippers.
We remain in discussion with potential shippers on the scope and timing of the US Gulf solution. Obviously, one that best fits their needs, bearing in mind that they will need to provide long-term contract commitments to utilize any new infrastructure. Based on these discussions, we believe that the best approach may well be a phased approach, where we refigure existing infrastructure to handle, say, 150,000 to 200,000 barrels a day of transportation, possibly as early as 2010, and then moving on to a new large diameter pipeline south from Patoka when the volume reaches that 400,000 barrel a day threshold sometime after 2011.
Finally, there is a lot of activity in the regional pipeline infrastructure segment in the second wave as well. And these new pipelines will move oil sands crude from the cruiser [ph] projects in the oil sands to the mainline pipeline hubs both at Edmonton and Hardisty.
Beyond our Fort Hills project, there are three other large projects that will be looking to secure pipeline transportation within the next six to 12 months, then a couple more that come further down the road from that. With our existing regional pipeline systems and here I'm including Athabasca and Waupisso, Waupisso about to start operations, Fort Hills under development, delivering to both mainline hubs, we're in the strong position to provide the highest value solution to our customers.
We can provide the benefits of economies of scale and flexibility of multiple delivery points. We can also serve early phases of production using existing capacity until those projects achieve the critical volume thresholds required to support dedicated facilities.
So, those are my comments, at this point, on the status on waves 1 and 2 of development. What I like to do now is turn the call over to Richard Bird to review the quarterly financials, and then I will come back for a very brief summary at the end. Richard?
J. Richard Bird - Executive Vice President, Chief Financial Officer and Corporate Development
Good morning everyone. I will begin with the review of the first quarter results, and then conclude with an update of our financing strategy. As Pat mentioned, we released our first quarter results earlier this morning. Reported net income was $251 million or $0.70 per share, up from $227 million or $0.65 per share in 2007.
The significant increase in reported earnings is mainly due to the following nonrecurring factors. Weather in Enbridge Gas distribution's franchise area was substantially colder than normal in the first quarter of 2008, resulting in increased earnings from EGD. Higher earnings at Aux Sable, which reflected unrealized fair value gains on derivative instruments. These positive variances were partially offset by the recognition of an income tax liability, resulting from an unfavorable court decision related to the tax basis of previously owned pipeline assets in Kansas.
Excluding the one-time and non-operating factors summarized in the news release, our adjusted earnings for the first quarter of 2008 were $239 million or $0.67 per common share, an increase of 4% in adjusted earnings and a 3% increase in earnings per share over the first quarter in 2001. So, a solid start to the year and better than what we had expected for the first quarter.
While the quarter was strong, the significant appreciation of the Canadian dollar since the beginning of 2007 has caused the earnings generated by our US operations to be lower than what they were in Q1 2007. Overall, year-to-date earnings were lower by approximately $8 million or $0.02 a share when compared to Q1 2007 as a result of movement in the currency. As we noted on the previous quarterly earnings calls, we do hedge our economic exposure to the US dollar and we received after-tax hedge payments of $5 million cash in the first quarter of 2008. Unfortunately, on GAAP, we’re not allowed to record these settlements as net income. However, these payments are recognized on our statement of cash flows and on our balance sheet.
In the first quarter, we saw a number of business units perform very well. Let's start with Liquids Pipelines. First quarter earnings rose $7 million to $76 million when compared to 2007. Most of the increase was due to the contribution from AEDC on Southern Lights, which is currently under construction. As well, Enbridge System earnings benefited from AEDC on the Canadian portions of the Southern Access Expansion and Alberta Clipper projects. This was partially offset by increased taxes in the carrier segment.
Earnings from Spearhead were higher this quarter due to increased throughputs, while Olympic Pipelines earnings decreased as a result of the timing of planned maintenance expenses. Enbridge Energy Partners, as Pat mentioned, continues to be a very good news story. After adjusting for dilution gains and mark-to-market gains and losses on derivative financial instruments, Enbridge's earnings contribution from EEP increased by $3.5 million over the prior year comparable quarter, that even in the face of the foreign exchange rate variants going in the other direction.
This increase was due to higher incentive income, and outstanding operating performance within EEP underpinned by all-time high deliveries on the Lakehead System, stronger natural gas throughput and improved gas plant reliability and expanded capacity. These were partially offset by Enbridge's modestly lower average ownership position in EEP of 14.9% in the first quarter of this year, compared to an average of 16.6% in the first quarter last year.
Looking forward, the future for EEP remains bright. In the second quarter, we will begin to see earnings from the first phase of the Southern Access Expansion, which as Pat just mentioned was completed at the end of the quarter. But we won't see a full three months worth from Southern Access given the timing of the associated toll increase. And like Enbridge, Enbridge Energy Partners is well positioned for further earnings and distribution growth as it completes its current suite of organic growth projects.
Gas Distribution and Services had an excellent quarter as earnings were up almost $7 million over 2007, after adjusting for whether and unrealized derivative fair value losses. The increase was due to better earnings from Tidal as improved market fundamentals enabled higher margins to be captured on storage and transportation contracts.
Enbridge Gas Distribution's adjusted earnings were flat to prior-year, that’s despite a shift in rate structure, which will tend to move earnings into the latter part of the year. This together with gains from incentive regulation bodes well for the rest of the year. Aux Sable's first quarter reported earnings of $22 million include a mark-to-market gain of $19 million associated with the financial derivatives used to eliminate commodity price risks associated with this asset.
We've entered into transactions the lock in Aux Sable earnings in the order of $20 million for 2008, both hedges don't qualify for hedge accounting and as such the quarterly changes in the mark-to-market value of the hedges are booked earnings. After adjusting for those mark-to-market gains in the first quarter, Aux Sable recorded earnings of a little over $3 million.
Strong fractionation margins during the first quarter resulted in the earlier recognition of earnings pursuant to the contingent upside sharing mechanism included in the BP agreement. This was an unexpected positive, to be recording those earnings as early in the year, and that should contribute to higher annual earnings for Aux Sable.
Finally in corporate, our corporate expenses are in line with last year after adjusting for nonrecurring items, including a $5 million asset gain and a $32 million income tax expense resulting from that unfavorable court position. Although the decision resulted in a significant impact to reported earnings, the cash impact of that decision is minimal. Tax expense in the first quarter combined with amounts previously recorded provided fully for the liability associated with that decision. Enbridge is appealing the decision and a final resolution of the matter is expected next year.
I'll move now to update you on the financing plan that supports our investment and earnings growth. Starting with our liquidity perspective, we continue to carry a significant amount of unutilized bank credit. At the end of March, our committed facilities for Enbridge and its subsidiaries totaled $6.7 billion, of which only $2.4 billion is either drawn or allocated to backstop commercial paper programs. The remaining $4 billion plus of unutilized capacity is available to provide funding for our capital programs, prior to putting in place permanent financing. We don't plan to dip into this liquidity in any material way or for any material length of time, but it has been sized to absorb a full year's funding requirements plus cushion. This will allow us the flexibility to optimize permanent financing alternatives and to write out any capital market disruptions.
Our updated permanent financing plans are summarized in the flow charts that we've used in the past, starting with capital expenditures of $11.6 billion, and deducting free cash flow of $5.1 billion over the four-year period, we're left with a net funding requirement of $6.5 billion. This breaks down into a debt requirement of $4.6 billion and a gross equity requirement of $1.9 billion to be funded between 2008 to 2011. On the debt side, most of this will be funded on the balance sheet of either Enbridge or Enbridge Pipelines Inc. However, we do intent to utilize project financing for Southern Lights and structuring of that financing is on schedule to be placed in the third quarter of this year.
Turning to the equity side of the chart on the right, we will need to add about $1.9 billion of additional equity over this four-year period. Our initial equity needs will be primarily met with our enhanced dividend reinvestment program and asset sales and monetizations. On the DRIP, earlier this year we introduced a discount of 2%, and actually saw our shareholder participation in that program increase from roughly 4% to 31% in the first quarter.
With investors continuing to participate at this rate, we expect that we would raise roughly $800 million through the DRIP over the next four-year period, and so we've updated our financing plan to reflect that higher participation rate. As such, our remaining equity need is on the order of $1.1 billion over this period of time. And we will use a variety of alternative sources to meet this requirement as noted on the bottom right of the slide.
As I noted on the Q4 call, a conventional equity issue is at the bottom of the list. This is because, we believe that our share price is not yet reflecting our growth outlook, and therefore is currently undervalued. So, issuing shares is definitely not a preferred financing strategy. On the other hand, we have a range of other alternative sources through which we expect to be able to secure capital, fund more favorable terms, including asset sales and monetizations.
In February, we announced our intention to sell our interest in CLH and that sale process is well underway. We have received strong interest from potential purchases, despite the recent uncertainty in the capital markets. Recent sales precedence indicate that we could expect up to $1.3 billion Canadian before tax from the sale of this asset.
Of the after-tax proceeds, we will need to set aside about $400 million to repay the debt financing associated with this asset, leaving a contribution of up to $750 million toward our equity requirements. As such, we expect that the sale of CLH combined with continuing higher DRIP participation, we will take care of all of over 2008 equity needs along with a significant portion of 2009 as well.
Beyond CLH, we are examining several other asset sale or monetization alternatives, which appear to offer favorable valuations and economics. We're also actively examining hybrid securities in order to achieve a lower cost for equity funding in a world where we anticipate progressive improvements in our share price. This type of security has the advantage of providing us with a significant amount of equity credit from the rating agencies, yet results in no earnings dilution to our current shareholders.
A mandatory convertible debenture appears to be the most attractive of these securities. A hybrid security issuance or a further asset sale or monetization would provide a valuable degree of flexibility and cushion to the financing plan at a favorable economic cost, looking after the remainder of our current financial requirements, and in anticipation of success in securing additional growth programs.
In summary, we see the funding of our growth program to be very manageable over the next four years.
And on that note, I'll turn it back to Pat.
Great. Thanks, Richard. So the next four years, as Richard has just indicated, should be a very exciting time of significant earnings growth for Enbridge. We are now fully engaged in building the $12 billion in commercially secured Liquids Pipeline projects that will start to come into service this year and through 2011. Beyond these projects, of course, we are actively developing the second wave of growth opportunities.
We started the year off very solidly. Our financial results for the first quarter were very strong, and we remain confident that we're going to be able to meet our annual guidance range of $1.80 to $1.90 per share. More importantly, we've continued make significant progress on the construction of this first wave of growth. As these growth projects come into service, primarily 2009 and 2010, we expect a steep ramp-up in our earnings and cash flow. These projects will allow us to deliver a compound annual growth rate of 10% for the next four years, 2008 to 2011.
So on that note, I think we can open up for the Q&A session.
The first question-and-answer session is restricted for the analyst community. [Operator Instructions]. The first question comes from the line of Linda Ezergailis from TD Newcrest. You may proceed.
Thank you. Just have some questions on Southern Access Extension. The decision I guess is still pending, still expected in Q2, but I'm wondering if there... what sort of risk there is if even further delays and what the issues are?
Linda, I'll maybe just briefly speak to that and ask Steve Wuori to add to it. It's difficult to assess. We doubt that we will see a delay beyond the second quarter on it. We are of course looking for two approvals regulatory approval from FERC with regard to rates and from the Illinois Commerce Commission with regard basically the right to eminent domain. And both processes have taken longer than expected. We've had some very strong industry interventions in support of us, but of course, every time there is an intervention, then it takes time for the regulator to consider the evidence filed. So, we think things are moving in the right direction, would expect second quarter, but we can't guarantee we are going to have it through in that time. Steve?
Stephen J. Wuori - Executive Vice President, Liquids Pipelines
Yes. I don't think I have anything to add to that Linda. I think Pat has pretty well described what the two approvals are and I think everything is in it’s needed. So, now it's just a matter of the Illinois Commerce Commission and FERC finishing their decision process.
Can you give us an update on the capital spend profile? Previously I had $400 million… I can't remember what I had, but can you give us an update on the CapEx spend?
On the Southern Access Extension?
Timing, yes.
It hasn't changed.
It has not changed and you are earning AEDC in the meantime?
[inaudible] No.
No AEDC on Clipper, Southern Access Expansion, and Southern Lights.
Okay. So there's no AEDC on the expansion.
Can I just ask a quick follow-up question on CLH? Your… at what point would you consider moving it to discontinued operations, and is your annual guidance of $1.80 to $1.90 inclusive of CLH for the full year?
Collin, do you want to speak to that?
Colin Gruending - Vice President and Controller
Sure. Yes, Pat. My name is Colin. The accounts for CLH are on an equity basis, so it's a one liner on our balance sheet, as you know. So, we will not be required to break it out on a discontinued operations basis. And your second question is that…
I can take that one Colin. So, the original guidance range didn't incorporate the sale of CLH, but did incorporate an equity issue. So, you have to effectively take the equity issue out and put the sale of CLH in to true it up with a scenario where the CLH sale procedure is expected.
Great. Thank you.
Thanks, Linda.
The next question comes from the line of Sam Kane from Scotia Capital. You may proceed.
Thank you. I will stay with CLH, you’ve had some problems with euro hedge now. I am just wondering, hypothetically, if say the euro fell 10% against the C dollar. What would be the kind of the financial/economic impacts?
Richard, do you have a sensitivity on the euro?
The hedge that you are referring to is a hedge of the earnings anticipated for the year. So, a significant unfavorable move in the value of the euro versus the value of the Canadian dollar wouldn't impact the earnings that we expect to record up to the point of sale. But, it certainly would impact the gain that we would recognize on conversion back into Canadian dollars from the disposition.
Okay, that's helpful. And just with respect to that, if I heard you correctly, if some folks out there at $1.3 billion pre-tax for that value, whatever they choose at the time to do that vis-a-vis that currency and you are assuming $1.15 billion, presumably the tax rate you are expecting to pay is 12%, 13% or something like that?
I think the tax rate would be a little bit higher than that, Sam.
Okay, because you're using $1.15 billion, if I heard you correct, $400 million for debt and $750 million for equity, that's $1.15 billion, maybe you're assuming a higher price?
Yes. I'm not sure that we're going to pin it down quite that precisely for you.
Okay. Just wanted to get some flavor on that. Thanks.
Okay, thanks Sam.
The next question comes from the line of Bob Hastings from Canaccord. You may proceed.
Hi, thank you. Just on the EGD incentive, you give some guidance there that you hope to be getting 100 basis points to 150 basis points improved return with customer also benefiting. Can you give a little more clarification on the timings of how long it takes to get there? Because you did mention it will be over five years.
It's probably a little early to provide that forecast, Bob. On the basis of our experience going back to the Liquids Pipelines days, when we first moved into incentive totaling, it takes a little while to kind of reorganize and to a certain extent adjust the culture to the new operating environment. So, it's not that you're going to see it quarter-over-quarter right out of the gate, but I would expect that by end of this year we should pretty well have things moving along pretty much as we like and hopefully build to that kind of improvement in turn through the year next year. But, it's a little difficult to tell, because it does impact and it can impact the entire organization.
Okay, thank you very much.
The next question comes from the line of Matthew Akman from Macquarie. You may proceed.
Matthew Akman - Macquarie Research Equities
Thank you very much. I wanted to follow-up, Pat, on your comments on the Gulf Coast line, because I think it’s important to future growth and I agree you guys seem to have gone most of the distance and so it seems almost obvious that the lower cost options has to continue on Enbridge. But, I guess there was an open season held and I'm not sure exactly what happened there, but maybe you could talk about what your thoughts are on why that open season wouldn't have been successful of about and is there something you can do to address shippers’ concerns in the near-term that could kick start that line again?
I'll give you the best reading that we can at this point, Matthew. First of all, I think it's fair to say that probably the upstream producers who are providing the main drive and incentive for this project have experienced some delays in terms of either mining operations or SAGD operations, and hence their timelines may be a little push back from what we originally thought when we started the open season, and hence some hesitancy to make big commitments at a time when they're working out operational challenges in their own upstream operations. As those come into… in the line, I think we're going to find they are more likely to commit. So, I think that upstream timing is probably the prime issue. At the same time, as you know, we're involved in a competitive project and there are two or three or four other alternatives out there that I know that customers want to evaluate and rightfully so. So, I think the important thing from our point of view is to make sure that they do have the full and complete data set and that's one of the reasons why I spent the time on it that but I did this morning to explain that there is no expansion required of our system up to Patoka, it's only new-build $2.6 billion from there down and it’s a much lighter commitment to new capital for them, and significant delivery options and flexibility along the way in our system. But, I think the prime reason for the delay lately is just upstream delay.
Okay, thanks, that sounds very logical. Can I shift on Tidal for a second? You guys are making more money in energy marketing, and while I know you don't take significant risks there, it's nice to get more profit, is that sustainable especially because you'll be doing more around tankage and bringing more daily rent into the province? So, is it possible that actually the profitability for that business could be pretty attractive going forward without taking more risk?
Maybe I could ask Richard Bird to respond to that Matthew.
I think, Matthew, the market conditions that contributed to that opportunity in the first quarter are ones that are going to happen occasionally. So, it would be a little too optimistic to assume that level of profitability from Tidal on an ongoing basis. Particularly a good part of it was due to a particularly nice spread that opened up between the receipt point and the delivery point of some pipeline capacity that Tidal had under contract. It normally delivers a nice tidy profit on a running basis, but in that case, they were able to take advantage of that spread and do very well. But, that condition will recur from time to time, but not on a predictable or a sustainable basis.
Okay. Thanks very much.
The next question comes from the line of Robert Kwan from RBC Capital Markets. You may proceed.
Good morning. Just wondering, can you provide a break-down of the increase just in the major buckets on the Enbridge System earnings and between AEDC and then the offset on the Terrace taxes and then anything else going on there?
Steve here. Robert, I think the pattern that we'll see through the year is generally AEDC moving the system earnings up from Clipper and Southern Access and that being offset by Terrace tax. In the quarter, it's around $3 million to $4 million in increased AEDC over the prior-year quarter offset by about $2 million in increased Terrace tax. Those are the big pieces. There is also some smaller things moving around in terms of O&A costs and so on. But, those are the big items, AEDC up $3 million to $4 million, Terrace tax up about $2 million.
So, with the Terrace being $2 million, has your outlook changed in terms of the guidance you provided coming out of Q4 about the impact at Terrace taxes for '08?
I think it's a little early in the year to do that. I think at the end of the year, on the year-end call, we walked through that whole dynamic and it's too early to say. As you know, as the throughputs go up in a given year in the year of transition with Terrace tax, so also the tax and throughputs are up, they're not up at exactly the pace that would have brought us to the overall guidance of about $20 million that we talked about on that last call. But, it's too early in the year to say as volumes are ramping up coming off the Athabasca Pipeline and other things, it's too early to say. So, I think we'll leave it at where we left it there for now.
Okay. Just my last question here. On the CLH, your referenced the debt repayments. Does repaying that debt free up debt capacity somewhere else to finance the project portfolio?
Yes, that's right Robert. In fact probably the best way to look at that debt repayment is it’s not really repayment per se, it's displacing a portion of the debt that we otherwise would be raising.
Okay. Great. Thanks Richard.
The next question comes from the line of Steven Paget from FirstEnergy. You may proceed.
Thank you. Good morning. Two questions. First, could you comment on where the light versus heavy amounts that Southern Access will be shipping. The second question is on your outlook on steel prices given the rise in the cost of coking coal.
Okay. First of all, Southern Access split, light to heavy. Steve?
It’s Steve. I don't have a specific split. I mean certainly the expansions are all targeted to the heavy crude capacity of the system. Southern Access though is adding 45,000 barrels a day of light capacity downstream through what's called the LSr or the Light Solar Project, actually it’s part of Southern Lights. So, it's certainly targeted more very much to heavily oil movements with some addition, and that's the 45,000 barrels a day of additional light capacity, because there's flexibility needed that is going to depend on how much upgrading is done, and how much synthetic it will move versus heavy. But, certainly Clipper, Southern Access generally targeted to heavy oil.
Maybe just on the second part of your question, Steven, with regard to steel cost, the arrangement that we have with major pipe provider has largely held us immune from significant increases in steel costs. But, either Steve or Richard or either one of you in a position to comment on the general market?
I can comment on that because I know we've looked at what the pricing for steel is for potential second wave projects. We have all the first wave projects locked in as Pat just mentioned. Generally, we're looking at steel prices of 30% to 50% higher than they were at the time when we locked in pricing for the first wave projects. But, that won't, as Pat said, have any impact on those that are commercially secured through 2011.
I think the main value in that Steven is to realize the significant value of that long-term supply deal that we did on Wave 1. So, we've seen quite a significant increase from the time that that was locked into to what way two price would be.
Thank you. I was just looking for your outlook on the very long term in steel.
Okay and thank you.
The next question comes from the line of Andrew Kuske from Credit Suisse. You may proceed.
Thank you, good morning. You've got a number of pipelines coming on stream for a while, I'm just wondering if you can give us some clarity and just some idea of the linefill that would be required for those lines? And then on top of the linefill question, just the relationship between the linefill and then official commissioning where you are earning cash earnings off of those pipelines?
It's a very good question, Andrew, because certainly linefill is a commitment that the industry makes to expansion projects and then needs to fill. The one probably that is the most immediate… well there is two, I guess, Waupisoo and Southern Access. On April 1, we notified the industry that we’re ready to accept linefill on Southern Access from Superior South to a place called Delavan, Wisconsin that is about 320 miles and at the same time because of the agreement we have on Southern Access, Enbridge Energy Partners apply the system full surcharge that applies to the Southern Access capacity. So, each started to earn on that per the agreement as soon as we were ready to accept linefill. I don't have a total number for you. I guess, we could do the calculations, but we don't have a total number of barrels of linefill required for all of Waupisoo and Southern Access, which are the two that are this year as far as linefills are concerned, about obviously a significant amount of crude is required for that.
And then just as a follow-up question. If you were to look at the comparative amount of linefill on your system running all the way down… proposed system all the way down to the Gulf of Mexico versus any competitor pipelines or even an Enbridge type proposal that would be new builds running more directly down say the express corridor and then down to Texas. What would that comparative be roughly, if you have that?
I think roughly in terms of incremental commitments, as Pat mentioned, we’re two-thirds of the way there at Patoka. So, you could argue that two-thirds of that linefill has already been accounted for through other expansion projects. And that's one of the issues as we looked at a bullet line or a direct line from Alberta to the Gulf Coast, linefill is one of the concerns because it's pretty significant in terms of incremental linefill that shippers need to come up with. Other things like transit times, line flow rates, and other factors come into a too. I think our rough proxy would be about two-thirds less incremental linefill required to get to the Gulf via Texas access.
That's great. Thank you.
The next question comes from the line of Daniel Shteyn from Desjardins Securities. You may proceed, Mr. Shteyn.
Good morning everyone. First one the tap to the Gulf Coast. I guess what... certainly there is a lot of issues such as flexible delivery and so on that impact it, but ultimately a lot of the shipper decision revolves around the toll. And I guess my question is, how competitive do you believe your toll would be for shippers from Alberta versus Greenfield Park going from Alberta to the Gulf Coast?
We obviously think it would be very competitive. In fact, we find it a challenge to see how anyone can compete with the advantage of already being two thirds of the way there, Daniel, and having the significant economies of scale associated with our existing system and existing right of away. I'm sure, as you can appreciate in our case, we removed the construction risk around two-thirds of the routing and in terms of right of away access and control of capital cost, we will be using ExxonMobil right of away all the way down and hence not only in terms of the absolute toll number, but the uncertainty, the potential volatility around that as you actually get underway and truly build this thing significantly lower with our system. So, we feel we can compete quite comfortably with all newcomers on this as a result of already being two-thirds of way there.
Right. Just to quantify that a little bit, do you believe that a toll using your facilities could be… I'm not asking of what the toll actually is or that you've offered, but is it maybe, could it be half, two-thirds, a-third of comparable route for a Greenfield pipe?
That's hard to quantify. There are so many assumptions depending on volumes etcetera. Steve or Richard, I don't know whether you want to take a stab at that.
It wouldn't be anything more than that and I'd rather not do that. It's going to depend on CapEx assumptions in a pretty major way. As we've looked out at Alberta to Gulf Coast project, and the cost of it, I think, as Pat mentioned, from Patoka south, we're looking at about $2.6 billion, then you can extrapolate that to 2.5, 3 times that distance and come up with a pretty large CapEx number, which would drive a full that is going to be fair bit higher than what it is through the existing systems in Texas Access. Exactly what that is though, Daniel, it's probably too early to say.
Okay. In terms of the market capacity to absorb the incremental pipeline capacity to the Gulf Coast, what would be your view for a total requirement, you're proposing, I guess, 400,000 and increasing it potentially later on to 800,000 by extending the whole of the Enbridge System. Am I understanding that correctly?
Yes. Those would be the basic parameters, 400,000 would be the base Texas Access expandable to 800,000 barrels a day. And I think that we're pretty comfortable that a 400,000-barrel a day demand, which obviously involves displacement of Mexican and Venezuelan crude in the Gulf is quite realistic. Frankly, an 800,000-barrel a day figure starts to challenge the imagination a little bit more, as to exactly how much will be displaced in the Gulf, and frankly where else Western Canadian barrels are going to move, Eastern PADD II. We've talked about PADD I and then the Gateway Pipeline concept that we are also pursuing that would move barrels to California and Asia. I think that's the interplay that would really weigh into the issue between 400,000 and 800,000 barrels a day into the Gulf Coast. I mean, certainly the Gulf refining capacity is there, but recognizing that it's all displacement barrels, it's displacing of foreign barrels from elsewhere, it really is going to depend on pricing relative to pricing that's available in other markets like PADD II, Easter PADD II and off the West Coast.
Okay. Under this scenario, it's probably unlikely that there could be appetite for any more than 800,000 barrels per day capacity from Alberta to the Gulf Coast well into the middle and the latter part of the next decade, at least from the point of view of availability of Canadian oil sands proved?
Yes. I don't think that's an unfair way of looking at it. Obviously, a lot of things could play into that, including supply disruptions from other sources and other factors. But, timing is I think the issue both from a production perspective and also development of that market perspective. So, that's not bad. I don't think I would say definitively that that will absolutely be the case. But, indicatively, I think that's not bad.
Okay. Thank you for your time.
The next question comes from the line of Andrew Fairbanks from Merrill Lynch. You may proceed.
Hi, good morning guys. Just had a question on the construction cost pressures as you build out the system, do you find that labor productivity is holding up well in most of the various regions? Are there any real areas we should be watching closely as you proceed down the build out?
Andrew, I think it is fair to say that, from the start of Wave 1 to where we are right now, we have noticed significant upward cost pressures and also very significantly lower productivity from the last major round of pipeline construction that we did. However, I think it's fair to say that that has leveled off. We're no longer seeing continued dramatic escalation in costs and we've seen the productivity has kind of established a new level and we are not seeing kind of lower level of productivity that we did in the early stages. And that's largely because many of the companies have now gone out and have got the crews, have got the guys trained up, after many years of not doing a lot of pipeline construction, and hence, we are seeing more of a leveling out in that productivity. So, we anticipate going forward a much easier job. I hardly like to use that word easy in terms of controlling capital costs these days, but a much easier job in terms of keeping these projects on budget.
I think the other factor Andrew is that we're going to have these crews working year-round for several years, which also improves productivity as opposed to the usual pipeline construction way, which is a seasonal type of approach. So that's going to help also to have the crews engaged in working year-round.
All right, it's excellent. Thank you.
The next question comes from the line of Ramin Burney from National Bank Financial. You may proceed.
Good morning everyone. I just have a couple questions here. Can you please provide the status of discussion, if any, with ConocoPhillips and BP regarding their new proposal Alaska Pipeline and if there has been any discussions actually with the Alaska Government?
Very, very informal discussions and nothing substantive at this point. I mean, we did receive a call from the BP/ConocoPhillips Consortium or JV prior to their public announcement of their intent to proceed with plans to build the pipeline and with an indication that there will be a point in their process where they will be interested in either inviting third-party pipelines and/or putting out an RFP for third-parties to participate. So, we maintain contact with them to ensure that we're ready when they're ready for us to come forward, but nothing formal at this point.
All right. Thank you. As far as future plans for your interest in CustomerWorks, now that AGD is no longer a customer for a while now, is that probably maybe your asset sale plan?
CustomerWorks?
It could possibly be... it's going to be a smaller source of earnings in the future than in the past, and it's probably not a critical asset any longer, that's not a big value asset item.
All right. Thank you.
We have a follow-up question from Matthew Akman from Macquarie. You may proceed.
Thanks. Just a quick detail here. Richard, when you provide sort of the generalized earnings guidance of 10% growth, is that 10% off of '07, so '07 through '11, is that what you're thinking about?
Okay. Thank you.
Thanks Matthew.
Another follow-up question from Sam Kane from Scotia Capital. You may proceed.
You mentioned that there was some form of shifting going on in Enbridge Gas Distribution earnings throughout the year, can you just give us a little color on that, dollar vice?
It’s Colin here. There is an interest in the customer that you see a more predictable monthly rate and a good mechanism to achieve that is to increase the fixed charge of the bill and reduce the variable part of the bill. So, there is a scheduled five-year progressive shift in that which basically increases the fixed charge each year. So, that will move our earnings seasonality from the winter quarter into the summer quarters. In terms of Quantum, it was just over $10 million in the first quarter, which you will see come back in Q2 and Q3. And if you're modeling that out five years, for now… form a similar expansion of that now.
So, $10 million, $20 million, $30 million, $40 million, $50 million?
No, $10 million earnings last in Q1.
I am saying within Q1 for years two, three, four, five.
Something like that for now.
Okay. With respect to incentive within what OEB has approved, is there some form of corollary or side-by [ph] into demand side management incentives, is part of that as well or is that a separate stand-alone?
Yes. With regard to the demand sign management, we are protected on that sense or to the extent that we encourage customer conservation, there is a protection mechanism associated with us so that we were held… hold on it.
Okay, thank you.
Now, we are going to open the session for the media to ask questions. [Operator Instructions] The first question comes from [inaudible]. You may proceed.
Unidentified Analyst
Hi. There is just a couple of quick clarifications. Pat, you talked about $2.6 billion now for Texas Access, previously it was $3 billion, what's the difference in price and what did the $2.6 billion include?
Basically, the reason for the difference is just the endpoint of the line and effectively the $2.6 billion is a new line from Patoka, Illinois to Nederland, Texas.
And that’s the 150,000 to 200,000 barrels or is that the 400,000?
That's 400,000 barrels a day.
Okay. Do you have an estimate what it would cost to modify your existing infrastructure to get that 150,000 to 200,000 by 2010?
If we were look at a short-term solution… in terms of our system from Edmonton all the way to Patoka, nothing, everything is already underway. Those projects are under construction. From that point south there are a number of different alternatives that we're looking at. Steve, I don't know whether you want to try to elaborate a bit further. It's pretty early stage.
Yes. It is early stage. One of the projects that we have been discussing with the industry is the reversal of our Line 9 and also the Portland Pipeline system that would move crude through Sarnia, Ontario through Montreal south to Portland, Maine and then off the dock at Portland, and that would make capacity available to move heavy oil to the Gulf Coast in possibly the 2010 timeframe. So, that's the other nearer term solution for moving barrels to the Gulf that we are examining together with the industry. The total expenditure on something like that would be, and this is rough, something under $500 million in total for all of what's required to achieve that. So that gives you some idea of one of the possibilities. We're also looking at other infrastructure that maybe available in the southern corridors that move south to the Gulf Coast. But, Line 9 in Portland is one of the first things we're looking at.
Okay. Thank you. Richard, one question on sale of CLH, I am sorry, [inaudible] do you have a timeline for when the sale will be closed? Given what you said of $1.3 billion, I'm assuming the whole stake is going to be sold, is that correct?
Sale of the whole stake would be our objective and timing would be sometime third quarter, possibly front end of third quarter. But third quarter for sure.
Next question comes from [inaudible]. You may proceed.
Hi. Just looking for a bit more information on the Alaska discussions. Have BP and Conoco given you any indication on the timing, when you say there will be a point in the process where they invite you in or launch an RFP, any expectations on when you'll see that?
No, not really Scott. I think it's probably a little bit too early for them to tell at this point in time. So, I think the purpose of the original contact was just to make sure that they wanted us to know that there would be an opportunity for us to put forward our cases to, you know, what our credentials are to participate. But, difficult for them to know the timing.
At this time, we don't have any further questions in the queue. I will pass the call over to management for closing remarks.
Thank you everyone. I think that's it for the call today. And I guess, if you have any more detailed follow-up questions, please either call myself or [inaudible] in our offices. Thank you very much.
Thank you. Ladies and gentlemen, this concludes the presentation for today. You may now disconnect.
Source: Enbridge, Inc. Q1 2008 Earnings Call Transcript
All ENB Transcripts
Enbridge, Inc. released its FQ4 2013 Results in their Earnings Call on May 07, 2008.
Do you feel more positive or less positive about Enbridge, Inc. after ready these results? | 金融 |
2014-15/0259/en_head.json.gz/5350 | Krugerrands
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Brief History of the UK Gold Coin Bullion Market Since 1964
1964 is the date we consider our company to have started, although we had in fact been dealing in coins for a few years prior to that on a part time basis. It's also the year we started using the name R. & L. Coins, by which name we are still known, even though we changed it back to "Chard" during the last millennium. Our story starts in 1964.
Before 1966, individual UK residents were free to buy and sell any amount of gold coins, and we were able to make a healthy market in gold sovereigns.
Exchange Control Act 1966 to 1971
On 19th April, 1966, the Exchange Control Act came into effect. From this date it became illegal for UK residents to continue to hold more than four gold coins dated after 1817, or to buy any gold coins unless they applied for and were granted a collectors licence from the Bank of England. This was implemented by a 1966 amandment to the Exchange Control Act, 1947. The Dealers, ourselves included had to obtain a dealers licence. It came at a time when interest in collecting all kinds of British coins was blooming in anticipation of decimalisation in 1971. The licensing had the effect of stifling the burgeoning market among new collectors, many of whom started collecting pennies from change. They could no longer graduate to gold coins, as they had to already have a gold coin collection in order to qualify for a licence.
Unrestricted 1971 to 1973
The Exchange Control Act was removed in 1971, and for two years the market started to recover, at the same time as a rocketing gold price, until VAT was applied to gold coins in 1973. This once again placed a serious obstacle in the way of buying gold coins as an investment, although it remained possible to deal in coins already privately owned in the UK, on a commission basis with VAT being payable only on the commission, but this all but stopped the importation of new bullion coins such as Krugerrands.
Second-hand Exemption 1995 to 1999
In January 1995, the second-hand scheme which previously existed for cars, was extended to many other categories including coins. This made it much simpler to buy and sell previously owned gold coins with VAT payable only on the dealers margin.
Tax Free Since January 2000
In January 2000, almost all gold coins, and also gold bars were reclassified in the UK and EU as VAT free investment gold. Since then we have relaunched and expanded the gold bullion side of our business, adding many different types of bullion coins which have been introduced in the intervening years.
Types of Gold Bullion Coin
In those far off days when we started dealing in gold coins, Krugerrands had not been invented, arriving years later in 1967. The main and most popular bullion coins at the time were gold sovereigns. There were also half sovereigns, but they have never been as popular or numerous as "full" sovereigns, and usually carry a higher premium. There were also American $20 gold pieces, and other foreign gold coins, but the gold bullion coin which made up over 95% of the UK market at the time was the British gold sovereign.
Sovereigns split into "new", being Elizabeth II, and "old", being "kings" Edward VII and George V, and four different types of Victoria.
Merchant Bankers
The only major UK bullion coin dealers at the time were two merchant banks, Johnson Matthey (Bankers) Limited, and Sharps Pixley. These banks were long standing members of the London gold market, and were also members of the London gold pool, the five banks who meet twice daily for the London gold fixings. Over the years, we came to know the main gold bullion and gold coin dealers of both these companies very well. We were in regular, daily contact with both firms, and transacted large amounts of business. Both of them were excellent to deal with. In 1973 when VAT was imposed on gold coins, the whole UK market for gold coins was almost killed off overnight, and this brought our dealing with these two banks almost to a stop. In about 1971, N.M. Rothschild & Sons Ltd, who are also longstanding members of the London gold fixing, and therefore major gold bullion dealers, opened a gold coin department, selling mainly to the public, but also to other dealers. It only remained open for a few years, and closed down within a few years. Samuel Montagu and Mocatta Goldsmid were the other two gold fixing members, but as far as we were concerned they only dealt with fellow other major banks, probably in multiples of 1,000 sovereigns.
Clearing Banks
During the gold fever days, a number of the UK clearing banks also started to deal in sovereigns and Krugerrands. Although they were never as competitive as we were, they had the single advantage that they had branches all over the country, having not started closing them down in those days, and it was convenient for investors to be able to get their gold coins at their local bank. The branch staff obviously did not know much about gold coins, and their customers did not always get to know the price until the coins arrived from their head office or bullion department. After 1973, all the banks closed their gold bullion coin departments.
Coin Dealers
In 1971, we were the first dealers to offer a buy-sell spread to the general public, but there were a number of other dealers who were active and competitive in gold coins. One of our biggest and best competitors was Geoffrey Young of Harrogate, who used to quote some unbelievably close spreads on sovereigns, Krugerrands, and many other coins. Apparently an ex-casino croupier, he was an amazingly sharp dealer, and I was always impressed by his ability to pluck a price for almost anything off the top of his head. He hardly ever used a calculator, and his prices were always right on the market price. He probably missed his way, and could have been earning multi million pound bonuses in a city bank. Sadly he is no longer around. There were also a few flashy characters who set up prestigious operations with grandiose names and premises, one in Leeds, and one in Birmingham. It is probably best if we don't go into details about them here. A number of coin dealers used to deal in gold sovereigns and Krugerrands alongside their older collectors coins. Nowadays there are very few coin dealers who bother with bullion coins, because it is completely different from the rest of their business.
Bullion Dealers
The two merchant banks we previously mentioned used to also supply gold bullion products to the jewellery industry, and had branches in Birmingham as well as London. Edward Day & Baker was the Birmingham branch of Sharps Pixley. None of these currently offer investment gold bullion bars or coins, and neither do most of the other specialist bullion dealers supplying the jewellery trade.
Although we still do have a few competitors, there are none of the major dealers from before 1973 left in the investment gold coin business. That appears to leave us as the oldest and biggest of the gold coin dealers from that era. Although we have never stopped dealing in gold coins, between 1973 and 1999, a 27 year period, gold bullion coins constituted only a small proportion of our activities.
In 1998, we realised that the internet, although still relatively new for most UK businesses was almost created with our type of business in mind. Since our earliest days we have dealt in coins by mail order. As it is such a specialist business, most of our customers were very happy to deal by post. Even if they had a good local dealer in their own home town, the chances were that he would not stock everything they wanted. Mail order is ideal for highly specialised businesses. The internet is even more so. We started development work on our first web site, 24carat.co.uk, in August 1998, and went live in November 1998. Since then we have added new, more specialised sites, and built up our original site, so that by January 2000, we had have five main sites, and over 2,000 pages. This is the equivalent of a colour catalogue of the same size, except that some of our web pages would occupy a whole chapter of a book. We can in theory update our catalogue almost instantly, and reach customers worldwide instantly. We still had less than 10% of our products and prices online.
Taking another look at this page in July 2011, we estimate we have over 12,000 pages, but have lost count. Strong Home Market Helps Export Market
Because we now, since January 2000, have a growing UK market for investment gold, we have found that we are also getting export demand which we have not sought out, and at no extra cost. This is largely because of our websites, which can reach the entire globe. Collectors of rare and unusual items can be matched up with the items they seek using internet search engines.
More About The Gold Bankers
Johnson Matthey
Johnson Matthey were an old established business with numerous to deal with as the above two. Our usual abbreviation for them was NMR.
One of my main memories of Rothschilds was when we in regardivision including a merchant banking arm. They used to supply many specialised gold, silver and platinum products to the jewellery industry. As we have said Johnson Matthey were one of the five members of the London gold fixing. In 1984, the banking business caused a banking and financial crisis when it became one of the first of the large merchant banks to hit major financial problems, and collapse. This caused a major review of banking supervision. Our usual abbreviation for them was JM. There banking interests were absorbed by an Australian bank Westpac, and their place as a London gold fixing member is now occupied by Credit Suisse First Boston.
Sharps Pixley
Sharps Pixley, another ancient merchant bank was owned by Kleinwort Benson, but changes, mergers, and takeovers in the merchant banking industry lead to the loss of its former identity, and in 1993 it became part of Deutsche Bank, which remains one of the London gold fixing members. We usually referred to them simply as "Sharps".
Rothschilds are the oldest, and probably the best known of the London gold fixing members. Although they were and remain a major international gold dealer, the only time we have known them be be active in the gold coin market was for a few years from about 1971 to 1973, but we could be a few years adrift with these dates, as we have relied on our memory. We only dealt with them on a very few occasions. They seemed interested only in larger deals direct with larger private investors, and they were nowhere near as accommodating d to one of the first mint bags of a new date of sovereigns, and it must have been 1968 or 1974, a mint-sealed bag of sovereigns used to contain one thousand coins. We bought the bag from Johnson Matthey at £31 per coin and sold it a minute later to Rothschilds at £31.25 per coin. As I had some other business in London I decided to collect it from JM and deliver it to NMR. JM used to accept our cheques, as did Sharps, and most bullion deals in the London market were and still are for 48 hours settlement, that is delivery and payment are normally due with two working days. When I delivered the bag to NMR on the value date, they took it away to count and check the coins, and made us wait a further two days for payment, after which they posted us a cheque. Neither of the other two banks, or any of the other major dealers of that time ever made us wait effectively three days before paying, making Rothschilds the slowest payer we have ever had for a sizeable gold deal. To add insult to injury, we had bought 50 of the same sovereigns back from them on the day after the original sale, and would not deliver us the 50 back from the bag we delivered. Because of the demand for the newly dated sovereigns, they proceeded to make us wait several weeks, after we had paid them to get our own sovereigns back. After that, I cannot remember bothering to deal with them again. We hope they have broad enough shoulders not to object to being mentioned in our story. They are the only member of the "original" London gold pool who still retain their original name, identity and ownership.
Mocatta Goldsmid
the oldest and longest established member of the London gold market, they would only deal in large quantities, usually in multiples of 1,000 ounces, and they hardly seemed to bother with coins. We never dealt with them in the 1960's or 1970's, but sometime after 1973, they must have become more active, possibly when they became part of the Bank of Nova Scotia, and they only recently stopped any dealing in gold coins. They are now known as Scotia-Mocatta.
Samuel Montagu
The other London gold market member with whom we never dealt was Samuel Montagu, later to became Midland Montagu, and are now part of HSBC.
Trade Development Bank
Not one of the elite members of the London gold pool, this Swiss bank also used to deal in gold coins for a few years during the "gold rush" years.
Natwest
National Westminster Bank was one of the British clearing banks to join in and offer dealing services for gold coins sometime around 1971 to 1973, although they too stopped about the same time as most of the others. If we remember NMR as being our slowest payer, we fondly remember Natwest as our fastest ever payer. For some time we had been lobbying their bullion coin department to buy from us. One day they rang us and bought 200 king sovereigns, the price from memory was £24 each. About a minute after we put the telephone down after agreeing the deal, our bank manager phoned us to say that the funds, £4,800 had arrived in our account. We couldn't believe that a bank could transfer money so fast. Even in these days of "electronic" transfers and instant banking, it doesn't happen at that speed. We phoned Natwest's bullion dealers straight back and expressed our astonishment at the speed of the payment, they obviously were anticipating our reaction, and enjoyed their little joke. Normally we would not expect most banks to part with their money until after we had delivered our coins. We were delighted by the compliment they had implicitly paid us.
"Tax Free Gold" website is owned and operated by Chard (1964) Limited
521 Lytham Road, Blackpool, Lancashire, FY4 1RJ, England. Telephone (44) - (0) 1253 - 343081 & 316238; Fax 408058; E-mail: Contact Us The URL for our main page is: http://www.taxfreegold.co.uk/index.html | 金融 |
2014-15/0259/en_head.json.gz/5444 | hide Lawmakers launch new effort to pass China currency bill
Wednesday, March 20, 2013 2:20 p.m. EDT
U.S. Secretary of Treasury Jack Lew in the East Room of the White House in Washington, March 4, 2013. REUTERS/Larry Downing By Doug Palmer
WASHINGTON (Reuters) - A bipartisan group of lawmakers began a new attempt on Wednesday to pass legislation that puts pressure on China to change its currency practices, reviving an effort that previously failed to make it to the finish line.
The legislation, which has 101 co-sponsors, is similar to bills that passed the House of Representatives in 2010 and the Senate in 2011, but ultimately failed to win final congressional approval.
It came as Treasury Secretary Jack Lew was wrapping up a two-day visit to China, where he pressed Beijing to allow the yuan to rise further against the dollar.
"China's exchange rate should be market-determined. That's in our interest and China's interest. They recognize the need to do it for internal reasons as well," Lew told reporters.
Although China's yuan has appreciated 16 percent in real terms against the dollar since June 2010 and hit an all-time high against the dollar on Wednesday, many lawmakers believe Beijing keeps it at an artificially low value to give Chinese companies an unfair trade advantage.
Representative Sandy Levin of Michigan, the top Democrat on the House Ways and Means Committee, introduced the currency bill with fellow Democrat Tim Ryan of Ohio and Republican lawmakers Tim Murphy of Pennsylvania and Mo Brooks of Alabama.
"Currency manipulation by our trading partners has been going on for far too long, with American workers feeling the impact through lost jobs and lower wages," Levin said.
It is supported by U.S. labor groups and domestic textile, steel and other manufacturers that compete in the U.S. market against Chinese imports.
"It's clear the administration is not going to do enough to really press China on currency. That's why congressional action is so important," said Scott Paul, president of the Alliance for American Manufacturing.
But some business groups such as the U.S.-China Business Council have fought the legislation, fearing it would worsen trade ties.
The bill would allow U.S. companies to seek countervailing duties against Chinese goods on a case-by-case basis to offset any exchange rate advantage.
After the Senate passed a similar bill in 2011, Republican House Speaker John Boehner blocked a vote in the House because he said he was worried it could start a trade war.
"This is the year that Speaker Boehner and (Ways and Means Committee) Chairman (Dave) Camp should free the currency bill, or they will show they are completely out of step with the American people, Republicans in Congress, and the vast majority of Republican voters," Paul said.
FALLING YEN
Many U.S. lawmakers also believe Japan is unfairly driving down the value of its yen to help the country export its way out of decades of slow growth.
That has increased pressure on the Obama administration to use talks on a proposed free trade agreement in the Asia-Pacific region to craft rules against currency manipulation, particularly if Japan is allowed into the talks in coming months.
At a Senate Finance Committee hearing on Tuesday, acting U.S. Trade Representative Demetrios Marantis avoided taking a stand, but said the administration was exploring the costs and benefits of including currency in the Asia-Pacific trade talks.
Aluisio de Lima-Campos, a Brazilian trade scholar, has proposed that countries such as Brazil and the United States bring a number of countervailing duty cases against China to pressure it into negotiations on new currency rules.
In a visit to Brasilia this week, acting U.S. Commerce Secretary Rebecca Blank played down the idea of using countervailing duties to try to correct currency imbalances.
"Our countervailing duties efforts have a very different focus. They are really designed to enforce fairness, a leveled playing field for U.S. companies and to make sure that everybody is abiding by the (World Trade Organization) rules," Blank told reporters.
(Additional reporting by Alonso Soto in Brasilia; Editing by Eric Beech and Peter Cooney) | 金融 |
2014-15/0259/en_head.json.gz/5592 | Gary Eggleston
BellaOnline's Stamps Editor
International Reply Coupons And Ponzi Schemes
In mid-December 2008 the Media repeatedly used the term “Ponzi Scheme” to describe Bernard L Madoff’s investment scandal. Few people are even aware of what the original Ponzi scheme was. The original scheme is named after Charles Ponzi, an Italian immigrant. In 1919 and 1920, thousands of people invested money in Ponzi’s company to buy and sell international reply coupons. During one three-hour period Ponzi accepted $1 million from investors. Ponzi’s investment scheme involved buying international reply coupons in countries where the currencies had been devalued as a result of World War I. The leaders of these countries were so busy rebuilding rebuilding their countries after the war they didn’t think to focus on reevaluating the values of what were essentially penny stamps.
Somehow Ponzi became aware of this discrepancy in value between different countries international reply coupons. He recognized that it would be possible to exploit this situation on paper to make some money. Due to the fact that the values for these stamps or coupons had not been adjusted he discovered that it would be possible to buy an international reply coupon in one country for a penny, and then be able to redeem it in another country where the stamp might be worth five times as much.
Ponzi quickly realized that it would be impossible to exploit this situation on the scale he really wanted to achieve. The main reason his scheme wouldn’t work, was that there simply weren’t enough IRCs in existence to make the kind of money he dreamed of getting from his scheme. Plus the cost of moving the stamps from one country to the next would easily have eaten up any real profits he could make from the scheme. But these facts didn’t stop Charles Ponzi.
He opened up shop and promised anyone who invested in his company that they could get a 40 percent return on their money in 90 days. He paid off some of the first investors in his company to prove that his “secret” investment strategy actually worked. The rest of the money he received from his investors was never invested in anything. It simply went into Ponzi’s pocket and allowed him to become a millionaire for a short period of time. He simply paid off some of the first investors with the new money from later investors. In other words he robbed Peter to pay Paul as some people have termed the process of this type of investment scheme. Eventually some people started to question how Ponzi was able to make such great profits from his investment strategy. The government and some newspapers pointed out the fact that there were not enough international reply coupons around to fund Ponzi’s investment plan on the scale he was operating.
Of course this didn’t stop a lot of people from investing in Ponzi’s company. Ponzi’s scheme could work as long as he could continue to bring in new investors to pay off the older investors that decided to take their money out of the investment plan. Eventually his investment scheme collapsed. Ponzi was tried, convicted and jailed. Upon his release he was deported back to Italy in 1934. He later moved to Brazil and died there, penniless in 1949.
Stamps Site @ BellaOnline
Content copyright © 2013 by Gary Eggleston. All rights reserved.
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2014-15/0259/en_head.json.gz/5622 | November 13, 2007 Treasury’s Income Mobility Report Blows Away ‘Mediocre Bush Economy’ and Other Myths
Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 8:44 pm I see that the Treasury Department has updated my related post (“Income Inequality + Economic Mobility = Long-Term Prosperity”) from a couple of years ago. :–>
In all seriousness, it’s hard to overstate the importance of today’s report (“Income Mobility in the U.S. from 1996 to 2005″; press release; full study PDF). That’s because it provides documented evidence of more, not less, economic mobility than in previous eras. Beyond that, taken in combination with an independent report I covered last week, it demonstrates beyond any reasonable doubt that the first four-plus years of the Bush economy were exceptional.
Tuesday’s read-the-whole-thing feature editorial at OpinionJournal.com provides a great overview (bolds are mine), plus some tantalizing details:
….. you may have heard that the U.S. is becoming a nation of rising inequality and shrinking opportunity. We’d refer those campaigns to a new study of income mobility by the Treasury Department that exposes those claims as so much populist hokum.
….. (The study shows) beyond doubt that the U.S. remains a dynamic society marked by rapid and mostly upward income mobility. Much as they always have, Americans on the bottom rungs of the economic ladder continue to climb into the middle and sometimes upper classes in remarkably short periods of time.
The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25. The study tracks what happened to these tax filers over this 10-year period. One of the notable, and reassuring, findings is that nearly 58% of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005. Nearly 25% jumped into the middle or upper-middle income groups, and 5.3% made it all the way to the highest quintile.
Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down. This is a stunning show of upward mobility, meaning that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years.
Also encouraging is the fact that the after-inflation median income of all tax filers increased by an impressive 24% over the same period. Two of every three workers had a real income gain–which contradicts the Huckabee-Edwards-Lou Dobbs spin about stagnant incomes.
….. Only one income group experienced an absolute decline in real income–the richest 1% in 1996. Those households lost 25.8% of their income. Moreover, more than half (57.4%) of the richest 1% in 1996 had dropped to a lower income group by 2005.
….. The key point is that the study shows that income mobility in the U.S. works down as well as up–another sign that opportunity and merit continue to drive American success, not accidents of birth. The “rich” are not the same people over time.
The study is also valuable because it shows that income mobility remains little changed from what similar studies found in the 1970s and 1980s.
….. The political left and its media echoes are promoting the inequality story as a way to justify a huge tax increase. But inequality is only a problem if it reflects stagnant opportunity and a society stratified by more or less permanent income differences. That kind of society can breed class resentments and unrest. America isn’t remotely such a society, thanks in large part to the incentives that exist for risk-taking and wealth creation.
….. As the Treasury data show, we shouldn’t worry about inequality. We should worry about the people who use inequality as a political club to promote policies that reduce opportunity.
The impressive mobility and income statistics in the report collectively remind us of three points that Old Media and too many politicians want us to forget:
First, that those on the bottom rungs of the economic ladder typically don’t stay there very long, i.e., being irretrievably “stuck in poverty” is largely a myth.
Second, since the poor are not the same people from year to year, and since the poor who replace the ones who just moved up are either new workforce entrants or people who have fallen from greater heights, it’s likely that they too will make or remake their way up the economic ladder in a relatively short period of time.
Third, the rich are also not the same people from year to year. To the extent that they still exist, high punitive tax rates single out different people each year, “rewarding” their newfound success with confiscatory tax bills.
The 24% real income increase cited by the Journal should relegate the “stagnant incomes” myth to the economic waste heap once and for all (but it won’t).
Today’s Treasury study also provides a great deal of satisfaction when compared to similar data for the years 1987-1996. Just look at these two charts:
(Sources: “Income Mobility in the U.S. from 1996 to 2005,” issued Nov. 13, 2007; “Income Mobility in the U.S.: evidence from Income Tax Returnsfor 1987 and 1996,” issued May 2007)
Here are the salient points:
Every base-year income group in 1996, with the exception of the lowest quintile and by a relatively insignificant amount, made greater progress during the subsequent nine years than did their 1987 counterparts.
The median income gains during the most recent nine years studied were over double the gains seen in the nine years before that (24.2% vs. 11.1%).
The average American has made far more economic progress during the past 9 years than he or she did during the nine years before that.
Oh, and there’s one more question to address: Is it possible to estimate whether most of the remarkable progress during the past 9 years occurred in the earlier Clinton years or the later Bush 43 years?
Yes it is.
Last week, the Conference Board (“about” page here) released a study on discretionary income that was covered by yours truly (NewsBusters; BizzyBlog). That study and a previous comparable version reported that the following percentages of American households had discretionary income (technically, “those whose spendable income exceeds that held by households with similar demographic features”) in various recent years:
– 1997/1998 – 52%
– 2002 – 52.1%
Though the years involved don’t align perfectly, the fact that the entire percentage increase in households with discretionary income has taken place in the last few years makes it reasonable to conclude that most, and perhaps all, of the income mobility that occurred from 1996-2005 (the years in the Treasury study) took place in the final few years. Certainly no one can credibly claim that the majority of the mobility improvement occurred before 2002. Further, though things can certainly change quickly in this volatile world, broad economic statistics reported since the Treasury study give us no good reason to believe that things have changed for the worse since.
Treasury’s mobility study, combined with The Conference Board’s discretionary income data, shatter yet another myth. It’s a myth Old Media propagates and will continue to propagate day-in and day-out, despite the overwhelming evidence just cited: That, as far as the average American is concerned, the Bush 43 economy has been mediocre, nothing special, or worse, and that it has paled in comparison to the Golden Era of the 1990s.
Now you know better.
Cross-posted at NewsBusters.org. Comments [moderated] (3) 3 Comments [...] It’s not victory – not yet – but every day it seems we get a little closer to victory. These mig | 金融 |
2014-15/0259/en_head.json.gz/5771 | What's Next After Interchange Cap Ruling? Aug. 14 Hearing Set
August 01, 2013 • Reprints Now that U.S. District Judge Richard Leon has invalidated almost all of the Federal Reserve's debit regulations, what might be the next steps?
First, lawyers representing the Federal Reserve and the retail associations which brought the case will have to appear before Leon in his Washington, D.C., courtroom to discuss how long the judge might stay this week’s ruling overturning the current debit regulations and under what conditions the Federal Reserve might proceed to draw up another rule.
Related: Judge Throws Out Fed’s Debit Cap
CUNA, NAFCU Assail Ruling
Ruling Could Force CUs to Add Processors
Financial Researchers Rate Chances of Appeal
Judge Gives Fed One More Week
While Leon threw out the existing regulations on Wednesday, he did not do so immediately, choosing to stay his order pending the Federal Reserve writing another rule.
Both sides have until a hearing on Aug. 14 to make cases for whether and for how long the stay should be continued. Leon's only requirement is that the process of writing a new rule must take “months, not years.”
That’s the first opportunity for the decision to be modified.
Second, the Federal Reserve and Justice Department will have to decide whether they will appeal the decision. CUNA, NAFCU and other trade groups were not defendants in the original case and cannot appeal this decision.
The Indiana University School of Law’s Sarah Jane Hughes, an expert on administrative and payment law, pointed out that while the Federal Reserve can be “very persuasive,” it's not clear that it will succeed in getting the Justice Department to appeal Leon's decision.
“They might decide they don't want to be seen as doing the bidding of the big banks or any number of things,” she pointed out. “We should have a better idea after the meeting on the 14th.”
Should the Justice Department and the Federal Reserve not appeal, the Fed has a number of different ways it could approach a new rule in months rather than years, Hughes said.
She observed that the time between the signing of the Dodd-Frank law and the publishing of the first proposed rule had itself been a matter of months, from July to December 2010 and, presumably, the Federal Reserve would not have to start the process over again from the beginning, thus cutting the time line significantly. Or, the Federal Reserve might choose to use a regulatory short cut, the legal scholar said.
“It's possible the Fed could use an Interim Final Rule which would let the key aspects of a new rule be put into place in the meantime and then come back and make changes,” Hughes said, based on comments and other factors for the last version of the final rule.
But whatever the Federal Reserve does, Hughes was skeptical that its action would end the matter. It was possible, she pointed out, for the retailers to dislike what the Fed did and sue again, and the issuers, whether credit unions or banks, also can sue if they don't like the Fed's new rule. “It's very possible this could run for some time,” she added. Show Comments | 金融 |
2014-15/0259/en_head.json.gz/5824 | Britain's budget
Still cutting Mar 23rd 2011, 15:43
YESTERDAY, we learned that British Chancellor George Osborne has a harder task ahead of him than he'd been envisioning. Inflation continues to come in ahead of forecasts; that's no surprise. But it also seems that the government is borrowing more than it had planned to, largely because tax revenues have come in lower than expected. That probably has something to do with the weakening British economy.Mr Osborne's new budget makes no bones about the likely near-term trajectory for growth. Projected output growth for this year has been revised down to 1.7% from 2.1%, and growth next year may be just 2.5%. Even so, inflation projections are higher. Prices are expected to rise between 4% and 5% this year, though the government reckons the increase will drop to 2.5% in 2012.Mr Osborne hasn't shied away from his deficit reduction goals. It will take a bit longer to balance the budget, as cyclical factors are expected to increase annual borrowing by about £10 billion a year for the next five years, but the government is not deviating off the path to cuts in the structural deficit remains. There are tweaks to the plan, however. Mr Osborne will call for a 2 percentage point cut in the corporate tax rate, a shift he intends to pay for through an increased charge on banks. He's delaying planned increases in petrol taxes, opting to swap them out for a new tax on North Sea oil.Is it a "Budget for Growth" as the Chancellor suggests? There's no question that the government's cuts will reduce the burden of the state on the economy—and the odds of a fiscal crisis. Over the long-term, those are clear positive contributions to growth potential. And over the long-term some other government priorities, like eased planning restrictions and funding for new technical colleges, will likely prove beneficial.But there are risks. That public investment has been cut too much is one. A bigger one may be that the unnecessarily swift cuts add to the British economy's vulnerability at a time of great uncertainty for the global economy. There isn't a lot of leeway for unanticipated shocks in an economy growing at just 1.7% a year. And if Britain were to return to recession that could upset the government's austerity plans and undermine the medium-term outlook for growth.Mr Osborne is hoping that markets and business will reward him for his discipline. And they might. But the world is an unpredictable place. And British voters will punish him, severely, if it turns out that he's gambled away the prospects for a strong economic recovery.
Japanese recovery:
Japan, at a halt Next
Investing:
Stocks for the little guy Recommend123
bampbs Mar 23rd 2011 19:14 GMT
"It was worse than a sin; it was a blunder." Waiting a year would have been wise. | 金融 |
2014-15/0259/en_head.json.gz/5881 | Will 3 Versions of Pfizer Be More Valuable Than 1?
Stephen D., Simpson, |
Like many value-oriented investors, I tend to take a dim view of companies that resort to financial gymnastics to make their reported numbers look better or to get a better valuation from investors. With that said, I'm curious, and more than a little skeptical, as to whether Pfizer's (NYSE: PFE ) long-term plan to potentially break itself up into three separate companies will really generate any long-term value for investors.
To be fair, Pfizer has already done a little bit of this already. The company spun off Zoetis -- the world's largest animal health company with almost 20% share -- earlier this year, and Pfizer's shares have outperformed the S&P 500 by about 5% since then while Zoetis has lagged (though Zoetis is up more than 20% if you take the IPO price as the starting point). Time will tell regarding the ultimate value created by this transaction, but freeing Zoetis to invest in R&D and market development as it sees fit ought to be a win-win for both parties.
The planAlong with Pfizer's second-quarter earnings, management announced that it was going to separate its operations into three business units. The "value unit" (Value Products Group, or VPG) will include mature products (those whose exclusivity ends in 2015 or before), JV products, and biosimilars. Vaccines, Oncology, and Consumer Healthcare -- or VOC -- is pretty straightforward, as it will include Pfizer's vaccines, oncology, and consumer health operations, while the Innovative Product Group, or IPG, includes immunology, metabolic, cardiovascular, neurology, pain, and women's health.
At this point, it is only an internal reshuffling of resources. Pfizer management believes that it would be too difficult to extricate the financials looking backwards, and so the company wants to operate this way long enough to generate three years' worth of audited financials before considering a more formal break-up plan.
Where's the logic?On first blush, there's a lot to dislike about this plan. If run as separate entities, these three businesses will all need their own management and operational infrastructures (including legal, compliance, and accounting units), and that costs money. Likewise, there could be some conflicts in terms of basic R&D, though most drug companies run highly "siloed" R&D operations organized by disease.
I'm also not entirely sold on the idea of stripping out mature drugs from the more innovative growth-oriented operations. While it's true that the decline of major contributors like Lipitor has weighed heavily on Pfizer's growth rate recently, it would be a mistake to think that the company isn't still booking good margins and generating good cash flow from the drug. Lipitor still generated more than $500 million in sales in the second quarter, and that's with considerably less marketing spend to support it.
Last and not least, I'm somewhat concerned about the impact of such a split on foreign sales and profitability. Emerging markets like China, Brazil, and Turkey are becoming more and more of a priority for drug giants, but establishing a marketing and distribution presence takes time and money -- having to basically do that multiple times seems wasteful to me.
On the other hand...Looking at the other side of this potential move, I can see some arguments for how it could help the business. The IPG and VOC businesses will have some potentially meaningful differences owing to their different component parts -- IPG is likely to require a more sustained, intensive sales force effort and more clinical R&D spending, while VOC will require less sales force intensity, different R&D spending, and offer longer-tale value.
Why? IPG's target areas of immunology, metabolic disease, and cardiovascular generally require very large clinical trials and each person in a phase 3 study can cost upwards of $50,000. Likewise, a lot of these diseases are treated at the family practice level, require more bodies, more effort (detailing, sampling), and more resources in marketing. On the other hand, it typically requires less R&D spending to develop vaccines and cancer drugs trials tend to be smaller. What's more, vaccines and consumer health products tend to have long productive lives in terms of cash flow and profits.
Moreover, there are many cases out there of break-ups creating more valuable, better-performing pieces. While the AT&T/Baby Bells example is probably the best-known, Tyco, ITT, and Altria are all arguably success stories -- the key difference in those cases, though was that the split-up businesses were not nearly as similar as Pfizer's potential offshoots. Even so, the argument can be made that these individual units will be more nimble and better able to take advantage of strategic licensing or acquisition opportunities that wouldn't be as value-added to a combined entity.
There is also the example of Abbott Labs (NYSE: ABT ) and AbbVie (NYSE: ABBV ) to consider. While some have cast the decision to separate these two businesses as being solely about reducing Abbott's risk to Humira biosimilars, there's more to it than that. A large percentage of Abbott's business is made up of "long tail" revenue-generating assets that require less marketing and R&D support to maintain like diagnostics, vision care, and nutrition (which is probably why Abbott kept the branded generics business). With the split, AbbVie and Abbott can better align their R&D and marketing spending relative to the revenue and cash flow-generating realities of these businesses.
Bottom lineFor now, Pfizer's potential "split" is more about giving analysts and investors something to talk about than any real change in the business. At a minimum, the company can ponder the idea over the next three years before coming to a final decision. I don't see all that much value in Pfizer at present; while I liked the stock a while back, it has matched the S&P 500 over the past year, and valuation seems more in the range of "OK" rather than "intriguing." Absent a real value-altering move like an underrated/overlooked phase 1/2 drug showing exciting clinical results, I guess it will take moves like this to keep investors interested. Cash in on more dividend-paying stocksOne of the best parts of owning big pharma stocks like Pfizer is their attractive dividends, but smart investors know the importance of diversifying -- seeking high-yielding stocks from multiple industries. The Motley Fool's special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks" outlines the Fool’s favorite dependable dividend-paying stocks across all sectors. Grab your free copy by clicking here.
Stephen D. Simpson, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
at 4:20 PM, FarmaBiz wrote:
The effort has been to pull a part the various business models, find the keepers (strategic, however they define that) and the ones that need to go (non-strategic, though good businesses). So far so good, though I would argue that the biosimilars and generic injectables would be better off in the innovative cores - they just need to think of innovation along continuous flow biologics manufacturing and oral biologics and other changes for the injectables. Bio-pharma seems to have a bit of difficulty distinguishing between invention and innovation.
Following BMS model would hopefully give a 1.5x boost to the P/S ratio. JNJ could use a cleanup as well; just a jumble of unrelated business models.
CAPS Rating: ABBV
AbbVie Inc.
CAPS Rating: ABT
Abbott Laboratorie…
CAPS Rating: ZTS | 金融 |
2014-15/0259/en_head.json.gz/5886 | Apple: Will Board Cave To Einhorn And Pay Out Cash?
For Apple holders, this basically a case of same stuff, different day. The activist investor David Einhorn of Greenlight Capital issued a press release this morning on what on the surface sounds like a technicality. He’s urging investors to oppose the company’s proposal to eliminate a provision in its charter that would allow the company to issue preferred stock. But the root of the issue is simply this: Apple has $137 billion in cash on its balance sheet, and Einhorn has joined the chorus of investors who think the company ought to be paying more cash to holders. He’s not the only one making this case. As I noted in a post yesterday, Legg Mason fund manager Bill Miller has suggested that the company can keep the current cash, but pay out all future free cash flow to holders. That could allow for a massive increase in the current dividend yield of about 2.4%. The company has been paying dividends at an aggregate annual rate of about $10 billion; even so, the company added $16 billion in cash to its stash in the December quarter alone. Greenlight is an Apple holder; it has been since 2010. “However, like many other shareholders, Greenlight is dissatisfied with Apple’s capital allocation strategy,” Einhorn said in the release. “We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders. Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple’s existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple’s financial resources to pursue its business strategy.” Greenlight contends that eliminating preferred stock from the company’s charter “hinders Apple’s ability to implement value creating options.” In a letter to holders included in the release, Einhorn made his case for distributing perpetual preferred shares to existing holders. We believe our suggestion of distributing perpetual preferred stock, while innovative, is also quite simple. Apple could distribute high-yielding, tax efficient preferred stock to existing shareholders at no cost. This new type of easily tradable preferred security would allow Apple to take advantage of the market’s appetite for yield while preserving future operating and strategic flexibility. Importantly, we believe this strategy would require no immediate use of cash other than the ongoing dividend, and would not pose any maturity, re-financing, balance sheet, or default risk. For example, Apple could initially distribute to existing shareholders $50 billion of perpetual preferred stock, with a 4% annual cash dividend paid quarterly at preferential tax rates. Once a trading market is established and the market recognizes the attractiveness of a highly liquid, steady yielding instrument from an issuer backed by Apple’s unmatched balance sheet and valuable franchise, the Board could evaluate unlocking additional value by distributing additional perpetual preferred stock to existing shareholders. With this conservative action, Greenlight believes the Board could unlock hundreds of billions of dollars of latent shareholder value. Assuming Apple retains its price to earnings multiple of 10x and the preferred stock yields 4%, our calculations show that every $50 billion of perpetual preferred stock that Apple distributes would unlock about $30 billion, or $32 per share in value. Greenlight believes that Apple has the capacity to ultimately distribute several hundred billion dollars of preferred, which would unlock hundreds of dollars of value per share. Further, Greenlight believes additional value may be realized when Apple’s price to earnings multiple expands, as the market appreciates a more shareholder friendly capital allocation policy.
Like Miller, Einhorn is basically making the case for Apple paying out future free cash flow – this is almost a separate issue from what to do the current enormous cash pile. A year from now, Apple’s cash position could be pushing $200 billion. That’s simply ridiculous, particularly given the company’s historical aversion to large acquisitions. The company has enough cash to buy literally any other company in the technology business; it could buy Facebook for $70 billion and still have plenty leftover to buy, say, Twitter, Dell, RIMM and Nokia. But as noted, Apple historically just doesn’t do transformative acquisitions, and they aren’t going to buy any of those companies. With the cash position now about 30% of market cap, and generating little return, there’s a case to be made that Apple’s giant cash security blanket is in fact weighing on the company’s valuation. They have more than enough cash for a rainy day; they have enough cash for the great flood. The cash, rather than a strategic advantage, is becoming a burden. Time for Apple to act. AAPL is up $1.63, or 0.4%, to $456.33. | 金融 |
2014-15/0259/en_head.json.gz/5999 | Fannie Mae, Freddie Mac Conference 'Questionable' Spending Criticized By FHFA
Posted: 03/22/2012 12:00 am Updated: 03/22/2012 8:32 am reddit stumble
Mortgage Crisis, Video, Fannie Mae, Financial Regulation, Freddie Mac, Mortgage Bankers Association, Federal Housing Finance Agency, Fhfa, Mortgage, Reuters,
WASHINGTON, March 22 (Reuters) - A federal watchdog faulted Fannie Mae and Freddie Mac, the mortgage finance companies propped up with taxpayer funds, for "questionable" spending on a mortgage industry conference last year, in a report released on Thursday. Almost half of the $600,000 that the two companies spent for a conference held by the Mortgage Bankers Association in October "was of questionable value," the inspector general for the companies' federal regulator said. The inspector general cited $140,000 spent to help sponsor the conference, saying it "did not find sufficient justification" for the sponsorship. It also cited the $140,415 spent to host dinners and business meals, saying the companies could have accomplished the same amount of business at a "substantially lower cost." The inspector general at the Federal Housing Finance Agency also faulted the companies, the two largest sources of U.S. housing finance, for acting without FHFA's approval. In January, the FHFA directed Fannie Mae and Freddie Mac to stop spending money on conference sponsorships and said coverage of employees' food expenses should be reined in, according to the report. FHFA has tightened its scrutiny of Fannie Mae and Freddie Mac's expenditures, which have been criticized by lawmakers. Fannie Mae and Freddie Mac defended their spending on the conference. They told the inspector general that they scheduled more than 200 meetings with customers, including small lenders and financial institutions involved in mortgage lending, as well as mortgage service providers. The annual Mortgage Bankers Association event attracts thousands of industry executives and others who work in the mortgage industry. Ninety Fannie Mae and Freddie Mac employees attended last year, the report said. Both Fannie Mae and Freddie Mac said it was "entirely within the authorities delegated" to each of them by the FHFA to make the decision to attend the conference and sponsor it. FHFA had a similar view at the time, the report stated. The watchdog did say, however, that the $256,458 in travel-related costs and registration fees was comparable to expenses that would be allowable for federal employees. The inspector general said FHFA still needs to look more closely at how much Fannie Mae and Freddie Mac spend on travel and entertainment, and look for ways to curtail future spending. "FHFA should ensure that (Fannie Mae and Freddie Mac) conduct a comprehensive review of their travel and entertainment policies, and revise them," FHFA Deputy Inspector General George Grob said in a memo accompanying the report. An FHFA official said in a written response to the report that the agency agreed with its recommendations and is taking steps to change the way it monitors spending at the two firms.
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2014-15/0259/en_head.json.gz/6209 | Barney "Lolly Pop" Frank Denies Fannie and Freddie Not His Fault. Fannie Mae’s Easy Mortgage Policies Not to Blame, Frank Says
By Josiah Ryan, Staff Writer (CNSNews.com) - House Financial Services Chairman Barney Frank (D-N.Y.) told CNSNews.com on Tuesday that he does not place any responsibility for the current mortgage crisis on former Fannie Mae CEO Franklin Raines, who promoted policies allowing people to get mortgages with smaller down payments and with imperfect credit histories.
“No, no, no.” Frank told CNSNews.com. “I don’t think he (Raines) was in any way responsible. It was a sub-prime lending crisis. If only Freddie Mac and Fannie Mae had problems, we could say it was Franklin Raines. But he was not responsible for Indy Mac or New Century.
“I think it was just a sub-prime crisis,” Frank said.
Raines went from being the Office of Management and Budget director in the Clinton White House to serving as chairman of Fannie Mae from 1999 and 2004. During his tenure, he pursued policies backed by the Clinton administration that facilitated mortgages and home purchases by people with impaired credit or who had not saved a 20 percent down payment.
Earlier this month, the federal government took over Fannie Mae as part of an effort to stave off a national financial crisis sparked by bad mortgages.
In contrast to Frank’s views, Rep. Jeff Flake (R-Ariz.) told CNSNews.com on Tuesday that he believes Fannie Mae and its former Chairman Raines do share some responsibility for the current crisis, and Frank’s argument that Fannie Mae is just a small piece in a bigger puzzle is inconsistent with previous Democratic views.
“Those same people who say they [Fannie Mae and Freddie Mac] were too big to fail because they touch 70 percent of mortgages are the same ones who are saying now they were just a small part of it,” said Flake. “Well, they were a huge part of it.”
Flake said the Clinton administration should have spoken out against Fannie Mae's irresponsible lending policies. “Yes,” Flake told CNSNews.com, “Of course they [the Clinton administration] should have spoken out. Keep in mind that many members of the Republican Study Committee did speak out for more accountability.”
Rep. Jose Serrano (D-N.Y.) told CNSNews.com that he does not believe Raines’ mortgage policies were mistaken.
“Those were not mistakes,” said Serrano. “The problem was that there was greed on Wall Street. There were golden parachutes. It was obscene. That’s the word.
“I don’t think that helping some poor folks get mortgages or helping minorities get mortgages is a problem,” Serrano told CNSNews.com. “In fact we have to be careful that we don’t allow some folks to say ‘that’s the problem – in trying to do the right thing for the poor, we got into the mess.’”
Raines, who resigned from Fannie Mae in 2004 amidst an accounting scandal, was reported to have earned somewhere between $65 million and $90 million during his 5-year tenure as its CEO.
“People say that you should have confidence in the economy, but it sounds to me they are more like confidence men,” said Serrano of Wall Street traders, whom he blames for the crisis.
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2014-15/0259/en_head.json.gz/6515 | Click here to get the RSS Feed! People Are Losing Trust In All Institutions
by Washingtons Blog - May 5th, 2012, 1:30am
Lack of Trust – Caused by Institutional Corruption – Is Killing the Economy
The signs are everywhere: Americans have lost trust in our institutions.
The Chicago Booth/Kellogg School Financial Trust Index published yesterday shows that only 22% of Americans trust the nation’s financial system.
Robert Shiller said Monday:
Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now.”
The National Journal noted last week:
Seven in 10 Americans believe that the country is on the wrong track; eight in 10 are dissatisfied with the way the nation is being governed. Only 23 percent have confidence in banks, and just 19 percent have confidence in big business. Less than half the population expresses “a great deal” of confidence in the public-school system or organized religion. “We have lost our gods,” says Laura Hansen, an assistant professor of sociology at Western New England University in Springfield, Mass. “We lost [faith] in the media: Remember Walter Cronkite? We lost it in our culture: You can’t point to a movie star who might inspire us, because we know too much about them. We lost it in politics, because we know too much about politicians’ lives. We’ve lost it—that basic sense of trust and confidence—in everything.”
After a 50-year decline, just 14 percent of respondents in a 2011 Gallup Poll said that the federal government could be trusted “a great deal
Gallup reported last month that – for the second year in a row – Americans said that gold is the safest long-term investment. This shows that Americans don’t trust the government. Specifically, as Time Magazine points out:
Traditionally, gold has been a store of value when citizens do not trust their government politically or economically.
A tiny percent of Americans think the U.S. government has the consent of the governed
A higher percentage of Americans believed in King George of England during the Revolutionary War than believe in congress today
Many Americans disbelieve the government’s rosy statements about the economy
An NBC News/Wall Street Journal poll from November found that 76% of Americans believe that the country’s current financial and political structures favor the rich over the rest of the country
The U.S. financial system is so corrupt and unregulated that many don’t believe the government and businesses’ promises to follow the rule of law … and simply won’t do business here anymore
It’s not just the U.S. The Guardian noted in January:
The UK public’s cynicism has been stoked by the MPs’ expenses scandal, high-profile organisational failures (such as the BP disaster in the US), the unveiling of News International’s phone-hacking practices, the 2011 summer riots and the ongoing eurozone crisis.
And it’s not some Anglo-American funk. As the Economist reported the same month, trust in government is plunging worldwide:
The latest annual “trust barometer” published by Edelman, a PR firm, on January 24th [finds that] overall trust has declined in the leaders of the four main categories of organization scrutinized—government, business, non-governmental organizations and the media. Of the 50 or so countries examined, 11, nearly twice as many as last year, are now judged “sceptical”, with less than 50% of those polled saying they trusted these institutions. Trust in Japanese institutions plunged to 34%, from 51% in 2011, not surprising given the handling by leaders of the Tsunami and its aftermath. But the collapse in trust was even more striking in Brazil, the country in which trust was greatest in 2011, at 80%, but now, following a series of corruption scandals, has slipped to 51% (admittedly, still above America and Britain, among others).
This headline slump in trust is due, above all, to the public losing faith in political leaders. In 2011, across all countries, Edelman found that 52% of those polled trusted government; this year, it was only 43%. Government is now trusted less even than the media …. Trust in business fell slightly, from 56% to 53%, as did trust in NGOs, which still remain the most trusted type of institution, at 58%, down from 61% in 2011. As in previous years, the barometer is based on a poll of what Edelman calls “informed people”, which typically means professional and well-educated, though this year for the first time the views of the informed were benchmarked against a poll of the public as a whole. For each institution, the broader public was even less trusting than the informed, with government trusted by 38%, business 47%, NGOs 50% and the media 46%.
Lack of Trust Is Killing the Economy
Top economists have been saying for well over a decade that trust is necessary for a stable economy, and that prosecuting the criminals is necessary to restore trust. Indeed, as we have repeatedly noted, loss of trust is arguably the main reason we are stuck in an economic crisis … notwithstanding unprecedented action by central banks worldwide.
Economist Daniel Hameresh writes:
A number of economists have shown recently that income levels and real growth depend upon trust—trust greases the wheels of exchange.
In 1998, Paul Zak (Professor of Economics and Department Chair, as well as the founding Director of the Center for Neuroeconomics Studies at Claremont Graduate University, Professor of Neurology at Loma Linda University Medical Center, and a senior researcher at UCLA) and Stephen Knack (a Lead Economist in the World Bank’s Research Department and Public Sector Governance Department) wrote a paper called Trust and Growth, arguing:
Adam Smith … observed notable differences across nations in the ‘probity’ and ‘punctuality’ of their populations. For example, the Dutch ‘are the most faithful to their word.’ John Stuart Mill wrote: ‘There are countries in Europe . . . where the most serious impediment to conducting business concerns on a large scale, is the rarity of persons who are supposed fit to be trusted with the receipt and expenditure of large sums of money’ (Mill, 1848, p. 132).
Enormous differences across countries in the propensity to trust others survive
Trust is higher in ‘fair’ societies.
High trust societies produce more output than low trust societies. A fortiori, a sufficient amount of trust may be crucial to successful development. Douglass North (1990, p. 54) writes,
The inability of societies to develop effective, lowcost enforcement of contracts is the most important source of both historical stagnation and contemporary underdevelopment in the Third World.
If trust is too low in a society, savings will be insufficient to sustain positive output growth. Such a poverty trap is more likely when institutions -
both formal and informal – which punish cheaters are weak.
Heap, Tan and Zizzo and others have come to similar conclusions.
In 2001, Zak and Knack showed that “strengthening the rule of law, reducing inequality, and by facilitating interpersonal understanding” all increase trust. They conclude:
Our analysis shows that trust can be raised directly by increasing communication and education, and indirectly by strengthening formal institutions that enforce contracts and by reducing income inequality. Among the policies that impact these factors, only education, … and freedom satisfy the efficiency criterion which compares the cost of policies with the benefits citizens receive in terms of higher living standards. Further, our analysis suggests that good policy initiates a virtuous circle: policies that raise trust efficiently, improve living standards, raise civil liberties, enhance institutions, and reduce corruption, further raising trust. Trust, democracy, and the rule of law are thus the foundation of abiding prosperity.
A 2005 letter in premier scientific journal Nature reviewed the research on trust and economics:
Trust … plays a key role in economic exchange and politics. In the absence of trust among trading partners, market transactions break down. In the absence of trust in a country’s institutions and leaders, political legitimacy breaks down. Much recent evidence indicates that trust contributes to economic, political and social success.
Forbes wrote an article in 2006 entitled “The Economics of Trust”. The article summarizes the importance of trust in creating a healthy economy:
Imagine going to the corner store to buy a carton of milk, only to find that the refrigerator is locked. When you’ve persuaded the shopkeeper to retrieve the milk, you then end up arguing over whether you’re going to hand the money over first, or whether he is going to hand over the milk. Finally you manage to arrange an elaborate simultaneous exchange. A little taste of life in a world without trust–now imagine trying to arrange a mortgage.
Being able to trust people might seem like a pleasant luxury, but economists are starting to believe that it’s rather more important than that. Trust is about more than whether you can leave your house unlocked; it is responsible for the difference between the richest countries and the poorest.
“If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia,” ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. That suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are wondering, is 99.5% of this country’s income.
Above all, trust enables people to do business with each other. Doing business is what creates wealth.
Economists distinguish between the personal, informal trust that comes from being friendly with your neighbors and the impersonal, institutionalized trust that lets you give your credit card number out over the Internet.
In 2007, Yann Algan (Professor of Economics at Paris School of Economics and University Paris East) and Pierre Cahuc (Professor of Economics at the Ecole Polytechnique (Paris)) reported:
We find a significant impact of trust on income per capita for 30 countries over the period 1949-2003.
Similarly, market psychologists Richard L. Peterson M.D. and Frank Murtha, PhD noted in 2008
Trust is the oil in the engine of capitalism, without it, the engine seizes up. Confidence is like the gasoline, without it the machine won’t move.
Trust is gone: there is no longer trust between counterparties in the financial system. Furthermore, confidence is at a low. Investors have lost their confidence in the ability of shares to provide decent returns (since they haven’t).
In 2009, Paola Sapienza (associate professor of finance and the Zell Center Faculty Fellow at Northwestern University) and Luigi Zingales (Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business) pointed out:
The drop in trust, we believe, is a major factor behind the deteriorating economic conditions.
As trust declines, so does Americans’ willingness to invest their money in the financial system. Our data show that trust in the stock market affects people’s intention to buy stocks, even after accounting for expectations of future stock-market performance. Similarly, a person’s trust in banks predicts the likelihood that he will make a run on his bank in a moment of crisis: 25 percent of those who don’t trust banks withdrew their deposits and stored them as cash last fall, compared with only 3 percent of those who said they still trusted the banks. Thus, trust in financial institutions is a key factor for the smooth functioning of capital markets and, by extension, the economy. Changes in trust matter.
They quote a Nobel laureate economist on the subject:
“Virtually every commercial transaction has within itself an element of trust,” writes economist Kenneth Arrow, a Nobel laureate. When we deposit money in a bank, we trust that it’s safe. When a company orders goods, it trusts its counterpart to deliver them in good faith. Trust facilitates transactions because it saves the costs of monitoring and screening; it is an essential lubricant that greases the wheels of the economic system.
In 2010, a distinguished international group of economists (Giancarlo Corsetti, Michael P. Devereux, Luigi Guiso, John Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm and Xavier Vives) wrote:
Public distrust of bankers and financial markets has risen dramatically with the financial crisis. This column argues that this loss of trust in the financial system played a critical role in the collapse of economic activity that followed. To undo the damage, financial regulation needs to focus on restoring that trust.
They noted:
Trust is crucial in many transactions and certainly in those involving financial exchanges. The massive drop in trust associated with this crisis will therefore have important implications for the future of financial markets. Data show that in the late 1970s, the percentage of people who reported having full trust in banks, brokers, mutual funds or the stock market was around 40%; it had sunk to around 30% just before the crisis hit, and collapsed to barely 5% afterwards. It is now even lower than the trust people have in other people (randomly selected of course).
In his influential 1993 book Making Democracy Work, Robert Putnam showed how civic attitudes and trust could account for differences in the economic and government performance between northern and southern Italy.
Political economist Francis Fukiyama wrote a book called Trust in 1995, arguing that the most pervasive cultural characteristic influencing a nation’s prosperity and ability to compete is the level of trust or cooperative behavior based upon shared norms. He stated that the United States, like Japan and Germany, has been a high-trust society historically but that this status has eroded in recent years.
Chris Farrell notes:
Trust matters. It’s kind of like a recipe or a software protocol that allows for economic exchange and all kinds of innovation.
There’s compelling evidence that both higher levels of trust in institutions and a belief in the general trustworthiness of individuals in society carry large economic benefits. Sociologists, political scientists and economists have all showed in an impressive body of research that higher levels of trust increase trade and even foster economic growth,.
Dallas Fed president Richard Fisher | 金融 |
2014-15/0259/en_head.json.gz/6549 | You are HereSBA.gov » About SBA » SBA Performance » Open Government » About the SBA.gov Website » Privacy Policy About SBA
About the SBA.gov Website
article Privacy Policy General Disclaimer
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This policy was updated on May 24, 2011.
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2014-15/0259/en_head.json.gz/6607 | Plain City receives good audit report Terrie L. Stephenson Jan 15 2012 - 9:17pm PLAIN CITY -- The annual audit of city finances provided the best rating a city can get, according to Lynn Wood of Wood Richards & Associates.Wood said Plain City has good controls and procedures. He also noted that the budget had to be opened up several times during the fiscal year with approximately $300,000 in adjustments, and the city still got the revenue within approximately $30,000 of expenditures."My compliments to Steve (Davis, treasurer) and Diane (Hirschi, city recorder)," Wood said. Wood said there is $189,485 in unrestricted funds, which, at 9 percent of a year's budget, is within the state's prescribed limits. The sewer fund has $831,560, so Wood recommended the city discuss depreciation and the condition of the sewer system with the city engineer and public works department to see if the revenue and reserve will be adequate for future needs. "(When) the building boom went bust, it affected Plain City dramatically," Wood said. "Is there enough in the sewer fund for your future?"Wood also recommended the city complete its personnel policy and procedures and define what is a full-time employee.Wood said he researched the city's financial history over the past 10 years. For several years the city was able to put several hundred thousand dollars into the capital projects fund annually, he said, but in 2007-08, the building boom came crashing down."I think basically you've come to a break point where things are fairly tight out here," said Wood. "Basically, your revenues have only increased about 82 percent over the last 10 years, and your expenditures are up by 150 percent." He said the increase is largely the result of increased costs of public safety. Wood also said the city issued only one-third the building permits last year compared to 10 years ago."You have a nice mix of revenues, not depending on one individual strain," said Wood. He also said the city should look at restructuring sewer and garbage fees to make sure it is getting all administrative costs into the budget.Council members unanimously approved the audit report. More Stories from Audit | 金融 |
2014-15/0259/en_head.json.gz/6685 | Who Saved Silicon Valley? Angels, Of Course
Like nature, capitalism abhors a vacuum, and Angel investors have been eager and able to capture the early stage space abandoned by venture capitalists. REUTERSCalifornia is America's most fecund cluster of entrepreneurs and innovators, but recently it has suffered a drought of financial irrigation. Since 2005, the amount of venture capital under management has fallen by 60 percent, and so the role of watering the best ideas in Silicon Valley and beyond has fallen to another class of investors: Angels.
As venture capital faltered, the number of Angel investor groups has more than doubled in the last six years. The reason is simple. Like nature, capitalism abhors a vacuum, and Angels have been eager and able to capture the early stage space abandoned by venture capitalists. As entrepreneurs seek initial funding for their extraordinary ideas, they've found the best way to get their technology to market is to seek out Angel Groups for early stage capital before they turn to larger venture capital firms who typically come in at higher thresholds of investment.
Since 2005, venture capital has declined by 60% and the number of Angel investor groups has doubled.
There are many definitions of Angel, but I define it as a serial investor of his or her own money in technology startups by unrelated people. (I emphasize that "his or her own money" point to highlight the single biggest difference between Angel investors and venture investors). While Angels are found throughout history, Angels really took off with the technology IPO windows of the 1970s and '80s. These IPO windows were the supernovae that scattered the elements of previous successful startups: hard-working entrepreneurs, engineers and scientists who have experienced the life altering impact of in-the-money stock options. Winners wanted to win more, and understood entrepreneurship and risk-taking, and therefore had a natural affinity with entrepreneurs. Success attracted the smartest and most innovative ideas and peoples, creating a never-ending runway of beautiful opportunities. So the fact that early investors in their original startup made great returns, and an empathy for the startup process and peoples engaged in that process, combined to create and motivate Angels. Even before the erosion of the venture-financing model, Angels were playing an increasingly critical role in the innovation ecosystem. California, generally, and Silicon Valley, specifically, contains the largest pool of angels anywhere in the world. There are over 50 organized Angel groups in California, accounting for 25% of all Angel groups in the U.S., and about 30 of those are in Silicon Valley. These groups have over 2,000 members, with more than half those in the Bay Area. It's estimated that there are at least as many individual Angels unaffiliated with angel groups, as belong to angel groups. (Some estimates put that ratio at several times larger.) Add to that Super Angels, informal groups of Angels, micro venture capital funds run by Angels, incubators like Y-Combinator, accelerators, and Plug & Play type campuses, and you begin to see the powerful engine driving innovation in California. In short: It's not just a handful of rich institutional investors. It's a complex ecosystem of peer-to-peer support and mentorship in additional to the formalization of an Angel investment engine that is working to put money behind smart projects.
For many Angels, the best way to leverage their wealth and time was to finance and mentor other entrepreneurs and to share in their success. Cashed out entrepreneurs became superconducting magnets for neo-entrepreneurs. Every hardware, software, network or Internet dreamer could find someone who had succeeded in their field, understood and could evaluate their technology and the risks inherent in bringing it to market, and who had money. And while all entrepreneurs need money, what they really need is mentoring and guidance to commercialize their technology or idea. Unless they have previously started or been in a successful startup, it is unlikely they have experienced the hurdles and impediments to bringing a technology to market, and more importantly, to a successful exit. Angels bring that experience, and can help guide entrepreneurs through the commercialization pathway, refine the business model to be lean, executable, and fundable, and navigate to a strategic or financial exit. Equally important, they can connect entrepreneurs to financing sources, identify and vet team members, and keep the enterprise focused and on track. Often, they can also make the strategic connections and introductions essential to a successful exit. Since Silicon Valley and its environs have, decade after decade, attracted 40% or more of all early stage capital in America, it is easy to understand that more entrepreneurs have succeeded and cashed out here than in any other geographical area. How have they done as investors? There is no reliable data on this point, but the Angel Resource Institute, where I am the chairman, has begun the collection of that data and will begin publication of the Halo Report™ (what else!), in the second half of this year. What will the data show? Here's a spoiler: Capitalism still works, and the higher the risk the higher the return.
http://www.theatlantic.com/business/archive/2011/08/who-saved-silicon-valley-angels-of-course/243983/ | 金融 |
2014-15/0259/en_head.json.gz/6708 | Postcard from... Almaty, Kazakhstan
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After growing up in the Northeast of Kazakhstan, I moved to Almaty in 1991 to pursue a career in law. Having lived here now for nearly 20 years, I can happily call it my home.Though Almaty lost its official status as the capital just over 10 years ago, it is still the financial and cultural centre of the country. It is the base for many banks, major corporations and law firms. Almaty is also the location of the oldest theatres and concert halls. The dynamism of the city is well represented by its ethnic diversity. While the majority of the population consists of ethnic Russians and Kazakhs, it is home to over 100 nationalities, a figure that has been increasing all the time since independence, as expatriates move here to benefit from the newly liberalised markets.Located in the South East of Kazakhstan, Almaty is very close to both China and Kyrgyzstan. Most of the country is covered in steppes but Almaty itself is surrounded by beautiful mountains, visible from anywhere in the city. In winter one can spend the day at Chimbulak, a nearby ski resort 30 minutes drive from the city centre. On the way to Chimbulak, one may stop at Medeu, perhaps the world’s most memorable ice rink. At Medeu sits an historic Soviet-era skating arena at which numerous records were set in the 1980s. In the summer there are many possibilities for nature trips to mountains and nearby lakes. The weather in Almaty is considered mild and comfortable compared with most of the country, though it must be said that the temperatures may fall well below zero during the winter.In terms of public transport there is a decent bus service that spans the city, but this is hardly necessary as cabs are easily available and inexpensive. We have been waiting for an underground system for decades but this has not yet materialised. Increasing numbers of vehicles are a cause of traffic and pollution. As one might expect from a city of such ethnic diversity, there is a range of types of cuisine. At restaurants pizzas can be bought alongside Russian Borsch or Sashlyk (a delicious kebab-like dish). Kazakh fare includes the signature national dish Beshbarmak that consists of boiled meat and pasta. The more refined people of Almaty have also developed a taste for Sushi, which you can find at most upmarket establishments.As part of the former USSR until 1991, the legacy of the Soviet period lingers on in Kazakhstan, and especially in Almaty, where it can be seen in the imposing architecture and the jingoistic monuments. However, the changes in both city architecture, as well as lifestyle, in the last two decades are quite dramatic. When I first came to Almaty to enter law school in 1991 it was hard to imagine the city I live in today. Practising law here requires a degree of creativity and lateral-thinking as the legal system is not yet well-established. To practise law effectively demands not only knowledge of the current laws but also an awareness of the context in which they are being developed and frequently amended. This creates a challenging environment to work in, but always an exciting one.Almas Zhaiylgan is a partner in Denton Wilde Sapte’s Almaty office.
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2014-15/0259/en_head.json.gz/6813 | Stock Market Today: December 6, 2013
Harvey S. Katz, Matthew E. Spencer, Adam Rosner, William G. Ferguson
After The Close - What was looking like a disappointing week for Wall Street ended on a very positive note. For the first time in several days, a good report on the U.S. economy was actually good news for stocks. In recent sessions, investors showed some concerns that an improving economy would push the Federal Reserve to begin tapering its bond buying, a move that is not typically greeted kindly by investors. However, today’s strong report on the labor market (more below) gave investors some confidence that the economy now may be on good enough footing to withstand some reduction in monetary support from the Federal Reserve. The major equity indexes, boosted by the favorable employment figures this morning, were off to the races at the opening bell, and never looked back. By the conclusion of trading, the Dow Jones Industrial, the NASDAQ, and the S&P 500 Index had added 199, 29, and 20 points, respectively. In the process, a five-session losing streak was ended and a good portion of the weekly losses were retraced. Overall, advancing issues far outpaced decliners on both the New York Stock Exchange and the NASDAQ, to the tune of about two and half-to-one on the Big Board. As noted, the primary catalyst behind today’s notable response from the bulls was a strong report on the labor market. Specifically, the Labor Department reported that 203,000 new jobs were created last month and that the nation’s unemployment rate fell further than expected, dropping from 7.3% to 7.0% in November. More important, the latest report showed that job creation has averaged slightly more than 200,000 over the last four months, a level that economists feel is needed to make a considerable dent in the nation’s unemployment rate. The employment report was an exclamation point on a good week for the U.S. economy. Looking ahead to next week, the economic beat will be pretty quiet, with the only major reports coming late in the week on retail sales (Thursday) and producer prices (Friday).
From a sector perspective, there was much to like, with all of the major groups finishing comfortably in positive territory. One standout was the industrial sector, with stocks of manufacturing companies getting a boost from the aforementioned labor report, which showed that 27,000 manufacturing jobs were added last month, well above expectations. Meanwhile, the technology sector, relative to the gains booked by the other major groups, did not fare as well, with some weakness from the industry heavyweight Apple (AAPL) and a lackluster showing from the software makers and communications equipment stocks. The technology showing was also a big reason why the NASDAQ advance today was not as stout as those turned in by the Dow 30 or the broader S&P 500 Index.
There was also some notable earnings news from Corporate America, mostly from the retailing industry. Of note, shares of Big Lots (BIG) fell sharply after reporting lower-than-expected earnings. Conversely, shares of West-Coast lifestyle retailer Pacific Sunwear (PSUN) jumped on its latest quarterly results. These two reports were the big stories among a handful of retailing companies reporting October-period results today. – William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned. -
2:30 PM EST - After more than a week in which good news on the economy has been bad news for Wall Street, the market and the economic beat are now marching in order, as one would expect that they would.
Thus, after the Labor Department reported early this morning that the nation had added 203,000 new positions last month, or modestly more than the 180,000 generally forecast, the stock market, down modestly for five days in a row, took off on a bullish run.
In fact, equities climbed at the opening bell and have not really looked back at all since, gaining new momentum after lunch. Thus, as we enter the final 90 minutes, or so, of the concluding trading day of the week, we find that the Dow Jones Industrial Average is up 187 points, and is now trading at just above 16,000. Also moving higher on a day that is seeing almost three times as many stocks moving up as heading down on the Big Board and a positive plurality of better than two-to-one on the NASDAQ, are the Standard and Poor's 500 Index (up 20 points, to above 1,800 again) and the NASDAQ, which is climbing 32 points.
What is behind this latest rally, which comes in spite of the now greater possibility that the Federal Reserve will soon start to slow its rate of bond purchases? In some sense, the report may reflect confidence that even if the Fed does opt to taper its bond buying as early as later this month, the economy is now strong enough to handle such action easily. Whatever the rationale, the good news for those long equities is that the market's mini-slump, which commenced late last week, may be over for now. Meanwhile, we would watch the closing 90 minutes of the trading session to see if the gains can be sustained for some clue as to what the market may be telling us for Monday morning. Stay tuned. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned. -
12:30 PM EST - The U.S. stock market is putting in a good showing today, after several days of weakness. At past noon in New York, the Dow Jones Industrial Average is up 150 points; the broader S&P 500 Index is ahead 17 points; and the technology-heavy NASDAQ, which lagged a bit this morning, is now up 31 points. Market breadth suggests an improved tone, as advancing issues are well ahead of decliners on the NYSE. Meanwhile, all of the market sectors are making progress, with notable advances in the basic materials and industrial issues. The financials are also quite strong. While there is no weakness in the market today, some of the consumer names are lagging the other sectors a bit.
Technically, the market seems to reversing course, after pulling back for several consecutive sessions. Today’s move up currently puts the S&P 500 Index just back above the widely-watched 1,800 level. Hopefully for the bulls, this level will hold, and buyers will look to extend today’s move over the next few days. Sentiment seems to be improving, as the VIX is lower by about 8%, to under 14 today.
Meantime, traders received a key piece of economic news this morning. As might have been inferred from the releases put out earlier this week, the November employment figures were quite strong. Specifically, nonfarm payrolls rose by 203,000 for the month, which was better than had been expected. Further, the headline unemployment rate dropped to 7.0%, from the 7.3% reading registered in October. The rally today comes as a relief, since traders have had a mixed reacted to some positive news lately. While a stronger economy may have some on Wall Street concerned about a shift in Fed policy, today’s numbers may have been simply too encouraging to be squashed by such fears.
Elsewhere, the consumer seems to be doing better, as well. The University of Michigan’s Consumer Sentiment survey came in with a reading of 82.5 for December, which was also ahead of expectations. Consumer figures are quite important, as sentiment and retail spending truly reflect the mood of the average citizen, and are a good measure of the economy’s health.
In the corporate area, a few big retailers put out figures today. American Eagle Outfitters (AEO) stock is off, as investors seem less than impressed with the company’s outlook. Further, Big Lots (BIG) shares are losing ground on similar concerns. Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – October-quarter earnings reports, many from retailers with fiscal years that end in January, continue to keep investors busy. One of the biggest movers ahead of the bell is Ulta Salon (ULTA). Indeed, shares of the cosmetics retailer are plunging in pre-market trading, as October-period results missed the mark and guidance was weaker than expected. Other stocks indicating notably lower openings on earnings news include Big Lots (BIG), which operates a chain of closeout stores, teen apparel and accessories retailer American Eagle Outfitters (AEO), discounter Five Below (FIVE), Zumiez (ZUMZ), a seller of action-sports related clothing and equipment, and contact lenses manufacturer The Cooper Companies (COO). It was not all bad news, however, and shares of West-Coast lifestyle retailer Pacific Sunwear (PSUN) and wireless networking company Finisar Corp. (FNSR) are moving higher ahead of the bell, with PSUN showing considerable strength. The stock of Sears Holdings (SHLD) is also indicating a stronger opening this morning, after the department store operator announced plans to spin off its Land’s End clothing business. – Matthew E. Spencer
- Before The Bell - Once again, it is all about the Fed, as nervous investors scrutinize each and every piece of economic data being issued by private research groups and the government for some suggestion as to whether or not the central bank is more or less likely to start to taper its bond-buying activities when it next meets on December 17th and 18th.
In general, the recent succession of reports, including a number of key issuances that had been delayed for a time by the partial government shutdown, has been better than generally forecast. Included in this group have been releases on the gross domestic product, where yesterday brought a surprisingly strong upward revision. Specifically, the report showed that growth had surged to 3.6% in the third quarter, up from an initially estimated gain of 2.8%, which had been issued last month. Add in some better-than-expected metrics on manufacturing activity, auto sales, and the trade gap, and the consensus seems to be moving in the direction of a more restrictive bias on the part of the Federal Reserve. The question is just when this less-generous Fed policy will start to evolve.Of course, we have been down that road before, and we seem to be going over that same ground each time the bank convenes, which is about every six weeks. Once more, we are faced with that possibility, which we believe has only about a 50% chance, or less, of being realized later this month. And even if the Fed does become nominally less accommodative, which is the most we think might happen, the impact would not be material, but largely symbolic. Thus, it is a little head scratching as to just why Wall Street overreacts, which is what it may, indeed, be doing now, as suggested by the fact that stocks have generally tracked lower for five sessions in a row, the latest being yesterday, when the aforementioned GDP advance sent the bulls scampering a bit. That is especially so since much of the quarter's accelerating GDP gain was due to a surge in inventories. Those stockpiles will now, presumably, need to be worked off, and that running down of such stockpiles will hamper growth in the current quarter, which may come in at 2%, or even less.Meanwhile, after a series of half-hearted attempts to pare the deficit, stocks concluded the session mostly in the red, led in this regard by the Dow Jones Industrial Average (which lost 68 points) and the Standard and Poor's 500 Index (which closed eight points in the red). The losses, though, were less pronounced elsewhere, with the small-cap Russell 2000 Index actually posting a modest gain on the day, as did the Standard and Poor's 400 Mid-Cap Composite. As for groups, there was some selective buying in the tech sector, with chipmaker Intel (INTC - Free Intel Stock Report) bouncing back from recent softness, while Boeing (BA - Free Boeing Stock Report), a stalwart performer thus far this year added to its year-to-date gains with better than a one-point advance. However, the gold stocks fell back, as the precious metals again headed lower following a modest technical bounce on Wednesday. It seems that the stronger growth, which is increasing the odds that the Fed will act, is not sitting well with gold investors. Then, there is another Fed-related concern, namely what this morning's key report on November payrolls and the jobless rate would imply for monetary policy. Here, expectations had been that the nation had created some 180,000 jobs in the last month, while the unemployment rate was expected to have eased from 7.3% to 7.2%. Data issued moments ago, however, showed that the nation had added 203,000 positions in November, while joblessness fell to 7.0%, as forecast, the lowest since November 2008. The upbeat news, meantime, initially blunted the early advance in the equity futures. However, soon after the futures rebounded and the stock market now seems poised to start the day materially to the upside, in spite of the stronger payrolls figures, which, on the surface, would seem to strengthen the case for a near-term tapering. Of course, the better jobs data also strengthens the case for earnings, and that is always a market mover. Finally, the yield on the 10-year Treasury note has climbed to 2.90% on this data, while the 30-year Treasury is now yielding 3.93%. - Harvey S. KatzAt the time of this article's writing, the author did not have positions in any of the companies mentioned.
Stock Market Today: December 5, 2013Third-Quarter GDP Surges On Revision - December 5, 2013The Beige Book Again Shows Modest-To-Moderate Growth December 4, 2013 | 金融 |
2014-15/0259/en_head.json.gz/7135 | HSBC Executive Resigns During Money Laundering Hearing Share Tweet E-mail Comments Print By editor Originally published on Tue July 17, 2012 5:06 pm
David Bagley, HSBC's head of group compliance, resigned in the middle of a Senate hearing today that was looking into charges that the bank had been lax in meeting government requirements, allowing Mexican cartels to launder money and giving terrorists access to the American banking system. Bloomberg reports: "Bagley was among at least six HSBC executives who testified before the Senate's Permanent Subcommittee on Investigations today after the panel released a 335-page report describing a decade of compliance failures by Europe's biggest bank. London- based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report. "'As I have thought about the structural transformation of the bank's compliance function, I recommended to the group that now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance,' Bagley said. 'I have agreed to work with the bank's senior management towards an orderly transition of this important role.'" The Wall Street Journal reports that the investigation focused a lot of attention on the Mexican side. It noted that HSBC's Mexican arm sent up to $4 billion in bank notes "by car or aircraft to the HSBC bank in the U.S." "U.S. authorities have flagged such volume of bulk cash shipments for scrutiny, in part because drug cartels are believed to use such flows of money to hide illicit proceeds," the Journal reports. According to The Telegraph, Stuart Gulliver, chief executive of HSBC, issued an apology. "We have sometimes failed to meet the standards regulators and customer expect... we take responsibility for fixing what went wrong," he said. The Telegraph adds that HSBC will likely face a hefty fine of up to $1 billion.Copyright 2013 NPR. To see more, visit http://www.npr.org/. View the discussion thread. | 金融 |
2014-15/0259/en_head.json.gz/7184 | "Liberty is not a means to a political end. It is itself the highest political end." -Lord Acton
Fama and French on Regulation
In their new blog, the two highly-regarded financial economists discuss regulation. Here's Kenneth French:Some people have argued that the turmoil was caused by a lack of government regulation. What do you think? Do we need more regulation? KRF: It is not obvious that financial regulations were weakened during the last few years. This claim seems to have been the product of a Presidential election in which both candidates were running against the incumbent. In fact, one could easily point to important new laws and regulations such as Sarbanes-Oxley to argue that market regulation increased. As more tangible evidence, the SEC's budget increased from $377 million in 2000 to $906 million in 2008. It is certainly true that different regulations could have reduced the magnitude of the current turmoil, but that is like saying a different portfolio allocation could have produced higher returns. So far so good, but I start to lose him later on in the Q&A.Second, we should improve the capital requirements and other regulations that limit the default risk of financial firms. The ongoing bailout of Wall Street is probably not a one-time event. Even with an improved resolution mechanism, it is easy to imagine that under similar circumstances we will bail out the banks again. If so, they have a strong incentive to take more risk. When things work out their shareholders keep the profits and when they don't taxpayers cover the losses. As we saw with Freddie Mac and Fannie Mae, this is not a good business model for taxpayers. If we are going to insure financial firms, we need regulations that will limit the risk they take.Perhaps greater regulations are necessary if we are going to insure financial firms. But why should we be insuring financial firms in the first place?! Is a private market for insurance really so hard to find? My spam email folder suggests otherwise. To those who would argue that government intervention is necessary because insurance companies (AIG) can mess up just as badly as financials, I have only one thing to say: buyer beware! Don't punish the taxpayers because a bank chose a reckless insurer. I like how Eugene Fama finishes off the Q&A:The ideal legal and regulatory system would be ground rules that allow bad financial innovations to fail and work themselves out of the system without government intervention. Again, the devil is in the details. More generally, current events are certain to produce more regulation, and much of it is likely to be counterproductive. My longtime colleague, George Stigler, was famous for his argument, buttressed by empirical evidence, that regulators are eventually captured by the regulated. As a result, regulation often has results opposite those intended.Amen!
second-tier
zbigniew cheezinski
Fama produces incredible work, his stuff shows up in my class and work all the time. The man is to be revered.
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2014-15/0259/en_head.json.gz/7303 | OPIC | 28 June 2011
OPIC announces funding for The Silverlands Fund, wich focuses on acquisitions of farmland in Africa. (Photo: Bikyamasr)
WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved nearly $500 million in financing for five new investment funds that could ultimately invest more than $1.5 billion in the renewable resources sectors of South and Southeast Asia and Africa, helping the fast-growing economies of the former to manage their environmental challenges, and the latter to enhance its farming sector.
The new funds fulfill a pledge made by OPIC President Elizabeth Littlefield at the UN Climate Change Conference in Cancun last December, when she announced that OPIC would provide at least $300 million in financing for new private equity investment funds that could ultimately invest more than $1 billion in renewable resources projects in emerging markets.
Later that month, OPIC announced a Global Renewable Resources Funds call for proposals to help catalyze and facilitate private sector investments promoting renewable resources globally. OPIC selected the five funds from among 56 respondents to the call.
The two Africa-related funds also support Feed the Future, the Obama Administration’s global hunger and food security initiative, by which the U.S. Government is helping countries transform their own agricultural sectors to grow enough food sustainably to feed their people. President Obama has pledged at least $3.5 billion to the initiative.
“The impressive response OPIC received to its call for proposals, and the creation of these five new investment funds, demonstrate that the development of renewable resources is not only an urgent global need but also a significant investment opportunity,” Ms. Littlefield said. “These funds will provide much-needed capital to the frontier economies of South and Southeast Asia, which face significant environmental challenges; and to the farming sectors of sub-Saharan Africa, which can benefit greatly from increased investment.”
In Cancun, the U.S. and other developed countries confirmed a commitment to scale-up climate finance to developing countries, both in the short and long term, in the context of meaningful and transparent mitigation actions. In addition to climate assistance programs administered by USAID, U.S. Department of State and U.S. Department of the Treasury, OPIC also is at the forefront of U.S. climate finance initiatives.
“This is exactly the kind of public-private collaboration we need to get significant clean energy funds flowing to developing countries,” said U.S. Special Envoy for Climate Change Todd Stern. “OPIC is one of the most innovative and effective U.S. government agencies in delivering climate finance while leveraging private investment.”
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2014-15/0259/en_head.json.gz/7305 | Home > Consumer Protection > Consumer News & Information > FDIC Consumer News
FDIC Consumer News Important Update: Changes in FDIC Deposit Insurance Coverage
Safe Mobile Banking: Our Latest Tips for Protecting Yourself Using a smartphone, "tablet" computer or other mobile device to manage your finances can be convenient and help you monitor your money from practically anywhere. At the same time, it's important to take steps to protect your account information.
Be proactive in securing the mobile device itself. Depending on what security options are available on your device, create a "strong" password (consisting of unusual combinations of upper- and lower-case letters, numbers and symbols) or PIN (with random numbers instead of, say, 1234 or the last four digits of your Social Security number) and periodically change it.
"Always secure the device with a strong password or PIN in case it falls into the wrong hands," said Elizabeth Khalil, a Senior Policy Analyst in the FDIC's Division of Depositor and Consumer Protection. "Don't give that password or PIN to anyone or write it down anywhere." Also, never leave your mobile device unattended. And make sure you enable the "time-out" or "auto-lock" feature that secures your mobile device when it is left unused for a certain period of time. Be careful about where and how you conduct transactions. Don't use an unsecured Wi-Fi network, such as those found at coffee shops, because fraud artists might be able to access the information you are transmitting or viewing. Also, don't send account numbers or other sensitive information through regular e-mails or text messages because those are not necessarily secure. Take additional precautions in case your device is lost or stolen. Check with your wireless provider in advance to find out about features that enable you to remotely erase content or turn off access to your device or account if you lose your phone. Quickly contact your financial services providers to let them know about the loss or theft of your device. Notifying your bank quickly will help prevent or resolve problems with unauthorized transactions. Research any application ("app") before downloading it. Just because the name of an app resembles the name of your bank � or of another company you're familiar with � don't assume that it is the official one of that bank or company. It could be a fraudulent app designed to trick users into believing that the service is legitimate. "The best place to download an app is from the official Web site of the bank or company that you are doing business with or from a legitimate app store. Note that the business will often direct you to an app store," said Jeffrey Kopchik, a Senior Policy Analyst in the FDIC's Division of Risk Management Supervision. "Also, if possible, be sure to protect your financial apps, ideally with a password that is different from the password for your device." Be on guard against unsolicited e-mails or text messages appearing to link to a financial institution's Web site. Those could be "phishing" messages containing some sort of urgent request (such as a warning that you need to "verify" bank account or other personal information) or an amazing offer (one that is "too good to be true") designed to lead you to a fake Web site controlled by thieves. "The concern is that on that fraudulent site you may provide sensitive information while believing you are providing the information to your bank or another trusted party," said Matthew Homer, a Policy Analyst in the FDIC's Division of Depositor and Consumer Protection.
For more on phishing, see Avoiding Scams: Sticking to the Basics Can Go a Long Way. Previous Story | 金融 |
2014-15/0259/en_head.json.gz/7663 | Wednesday 16th April 2014 Home
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interviews I would say 90% of the Basin is essentially unexplored. I think it would be foolish to say the largest deposit has been discovered.
Declan Resources president/CEO David Miller talks about uranium activity in Saskatchewan’s Athabasca Basin ...Read More Grandich on 2011
A December 16 interview
By Kevin Michael Grace
Q: So tell me, to what do you attribute the hammering gold took the last week?
A: I think we saw technical selling which was exaggerated by year-end trading, where when people looked around there weren’t a lot of things they could sell that had profits, and gold was one of them. The physical market remained very strong. In fact, a lot of people spoke about premiums expanding on purchase. There’s people talking about central banking intervention and all that; that’s just more sour grapes than anything else. Q: Everyone is talking about the 200-day moving average being breached.
A: The thing about that, Kevin, is that that it is an important issue for a pure technician. The problem is that it’s been broken at least a half a dozen times in this bull run starting at $400, and that didn’t end up stopping the market from driving much higher later on. I think it’s an important thing to look at for the short term and even intermediate, but I don’t think it’s something that overrides the bullish fundamentals in that market. I won’t lose sleep over it.
Q: How low could gold go in the short term?
A: I think support is about $1,530 in gold and $26 in silver. They can still be tested and maybe be broken briefly, but I think that’s the downside risk for the short term.
Q: I keep hearing about this liquidity problem, but the Dow has done pretty well. Where do these losses come from?
A: I think there’s been an over-exaggeration of how dire things were. I think it was more fluctuating positioning than an enormous number of people suffering dramatic losses. That’s why the US stock market wasn’t shorted. Q: We’ve heard prophecies of doom with regard to Europe for several months now. Have the markets discounted this already?
A: People do get conditioned to it. That doesn’t mean that if the dire things happen, that it’s all going to be well and good. I am not one of those anticipating a total collapse of the markets.
Q: The US dollar is now the “safe haven.” But if you take the American federal debt and add it to the State and municipal debt, it would seem the US is worse off than Europe.
A: It’s worse. Europe is just the opening act; the real problem will come when it hits the shores in America. In terms of a safe haven, the lows on the US dollar index was around 70, we’re at 80; so we’re talking about a market that’s about only 15% up from its multi-decade lows. I don’t know how you consider that a safe haven. I just think the acuteness of the moment has made the Euro very weak versus the dollar. I don’t consider it a safe haven at all.
Q: Do you think that in the future physical trading of gold could become more important in determining price than paper trading?
A: I like to hope that would be the case because I do concur that there’s two distinct markets and that the paper market has not truly represented what takes place in physical. The good news has been that the manipulation and pressures from the paper market would last for sometimes months or even years, but now they have a diminishing effect that sometimes only lasts for hours or days, and the physical market and its internal strength reverses these negative influences. Q: It seems like everything I learned as a young man about capitalism is no longer true. For instance, how it is possible to determine the price of gold when paper trades are leveraged at 100:1, and we don’t know how much gold exists?
A: That’s part of Jim Sinclair’s argument. I think you have to look at the whole financial arena. When you think of what just happened a few years ago [in 2008], expecting anything to be fair or reasonable is foolhardy. The financial industry effectively sold tens of billions of dollars of bad cars they knew were going to crash, and then bought life insurance on the drivers. That industry is around and still leading. These people are doing things that are unimaginable in the history of finance. I know the mainstream media doesn’t like hearing that, but they’ve been the goats and the patsies. I don’t know anybody that’s gone to jail over this. Q: Why isn’t Jon Corzine, as the English expression has it, “assisting police with their inquiries”?
A: Where is the uproar over this? Where are the press conferences demanding there be a special prosecutor looking into this thing? That’s the sadness of where we are today. Believe it or not that’s one of the reasons the most dire goldbugs have predicted $5,000, $10,000 dollars an ounce. When it all comes unglued, nothing on paper is going to be worth anything, in their view.
Q: After 2008, we were told there was more than $10 trillion in counter-party obligations. Three years later, nothing has been done about this.
A: There was a determination we’re not going to look at it. We’re just kicking the can. CNBC and all the rest of the media are just not going to cover this. Thankfully, with the Internet people can learn about this and have a voice.
Q: Perhaps I’m a terribly cynical person, but I no longer believe government statistics. For example, where I live, the price of a loaf of bread has increased 60% in seven years. Yet, supposedly, inflation isn’t a problem.
A: Most people don’t believe the claim of 2% inflation, but they can’t do much about it; they can just try and live with it. As consumers we can look at all our bills; our food and clothing is much more than that. That’s why bonds are the most horrific investment anyone can make, worse than stocks right now. To give our money away at 2% for 10 years or 3% to 4% for 30 years when we all know that it’s costing us already that much more… The people that make the laws, it’s in their interest not to have the real truth come out.
It is unfathomable to look at metal prices, even after this correction, and then look at the valuations that have been placed on mining shares —Peter Grandich
Q: I wonder if that’s a problem with democracy. Bloomberg reported that the US government fought against revealing that it gave $13 billion in secret loans to the banks, but it seems that people would rather watch the Kardashians instead of thinking about the implications of this.
A: Reality television is a great symbol of how bad things have gotten. People don’t want to face reality, so they watch TV shows and dream that their lives can be that way. There are shows now where people are benefiting from other people’s misfortunes, like Storage Wars. Or these shows about pawn shops; this is the whole unravelling of the fabric of how life used to be lived. Q: Tell me about your $1-million offer. [Grandich put $1 million in a bank to backstop an open bet that gold would reach $2,000 before it reached $1,000.]
A: The media just loves to wheel out the bearish viewers of gold any chance it gets, and of course during the height of the decline they were all brought ought, including the worst forecaster of them all, Jon Nadler. I said enough is enough, and we really need to put our money where our mouth is. I was pleasantly surprised at the manner in which Dennis Gartman conducted himself with me. He took the high road, but I wasn’t surprised to see Nadler and Jeff Christian’s comments. For Nadler to say at MarketWatch that he’s been an advocate of gold, urging as a core holding and has only tried to temper people when they’ve gotten overly bullish is the biggest lie I’ve heard stated in the gold market. We’ll see now if the gold market recovers, whether some of the appeal of Nadler, Gartman and Christian as commentators will be lost. Q: Gold producers have this year been making a profit of $800 to $1,000 dollars per ounce. I look at their share prices and find them inexplicable.
A: Probably in a few weeks I will write something saying this is the year for juniors. And I’ll have to cross out the numbers 2006, 2007, 2008, 2009, etc, because every year I’ve said the same thing. It is unfathomable to look at metal prices, even after this correction, and then look at the valuations that have been placed on mining shares. It is unthinkable that 10 or 15 years ago, when metals were one-fifth or one-tenth of where they are now, that we would have thought that prices would increase to this level, and the shares would not come remotely close to reflecting that. Q: If, as it appears, you can actually make money with a gold grade of 0.2 grams per tonne, you kind of think gold would sell itself.
A: You would, but we must remember that even to this day if you take the total market cap of all the major producers they don’t equal things like IBM. It’s still a rather small part of the overall investment portfolios for people around the world. We live it and breathe it each day, but to the bottom line of people in general it isn’t as critical. For Canadians, it’s frustrating because it’s really second nature for you. Here in America, the only thing people know about natural resources is they wonder if there enough gas so I can drive my car around.
Q: Do you think there any particular stocks that will do well in 2012?
A: I don’t think people have recognized yet how strong this developing iron-ore play in Quebec is. There are companies I work with like Alderon TSX:ADV and Cap-Ex Ventures TSX:CEV that are really advancing up the corporate ladder and had tremendous years in 2011. Then there are companies that make no sense in terms of how advanced their projects are versus their market caps. I can think of no better story that meets that criterion than Sunridge Gold TSX:SGC. In the next three to six months, we’re going to see prefeasibilities and final feasibilities on multiple projects of theirs that are going to make their net asset value multiple times more than their total market cap. If I had to pick one stock whose price is totally out of whack, that’s Sunridge. Why is that? A significant part is where they operate, in Eritrea. Despite it being actually a very good place to operate, the perception is still very bad. If that starts to change a little, and they continue to have great success as they have on the corporate front, we could see a dramatic re-evaluation of their stock. Q: I’m very interested in this because the Canadian media has been very hostile to Eritrea.
A: What happened was this little country, Gabon, which is on the other side of Africa, was about to lose its seat on the Security Council, and they leaked this story they were about to force everything to stop in Eritrea. One of the things that’s going to change this story is you’re going to see the Chinese announce an acquisition in Eritrea. There’s a current company out there that won’t say who it’s involved with, but it’s in talks with a major partner. The Chinese have been in Eritrea sniffing around; they’ve looked at Nevsun TSX:NSU and Sunridge and others. Once the Chinese take a foothold in the country, all that crap in the UN will come to a halt, because they’re the next big thing economically. The worst in Eritrea is going to be behind us. Peter Grandich is the founder of Grandich.com and Grandich Publications, LLC, and is editor of The Grandich Letter, first published in 1984. Grandich Publications, Inc. provides research, analysis, and investor relation services for certain of the companies featured in the articles appearing in its publications. Grandich is the author of Confessions of a Wall Street Whiz Kid, which Kevin Michael Grace reviewed here.
Tagged with: Alderon Resource Corp (ADV) · Cap-Ex Iron Ore Ltd (CEV) · Nevsun Resources Ltd (NSU) · Peter Grandich · Sunridge Gold Corp. (SGC) 16 Responses to “Grandich on 2011”
jorgen johanson says:
December 22nd, 2011 at 9:16 am thak you for a great letter somone tell the trut wee need moore people like MR Peter Grandish best wishes jorgen johansson.
TIk says:
December 23rd, 2011 at 9:09 am As long as there is no internal stability in Eritrea, the Chinese or the Canadian media do not make significant difference to the prospects of a healthy investment in Eritrea.Harnessed and fettered people cowering under the heavy hand of tyranny are not a necessarily peaceful people. They are a humiliated people and mining companies are accomplices in the national humiliation. You and the Chinese leave a bad test in the thinking of oppressed peoples through out the world.
Yes, if the people are muzzled from speaking to praise, appraise, and to criticize constructively and to have their views expressed in the open, things will remain very unhealthy for investment. As long as the government operates in the dark, things will remain lawless, ill thought, and ill implemented. What is in the dark is a poor prospect for investment. Additionally, Eritrea suffers from the absence of the rule of law.
The Chinese can come and loot the defenseless and desperate Eritrean people. You may join them in the loot thinking the crisis are “behind us.” You are playing foolhardy hoping others will also be fooled. Your optimism is sadly misplaced; you are a poor prophet in this case. You can find a few to hoodwink, but even there, it will not work, because there no are requisite instruments of rule of law, equity, transparency and a sense of justice in poor Eritrea.
John N. says:
December 23rd, 2011 at 10:18 am Eritrea is doing very good in deed. The UN and UNDP reports on child mortality, education, health services and many of the social justice shows Eritrea’s huge success. Besides their strategy on food security is exemplary. None of African countries has yet showed progress as in Eritrea. The mining companies are more than happy to work and see how the out come of the revenue Eritrea is turning it to social development. For Eritrea it wont matter whether it is Canadian, Chinese or British that are investing on it’s soil. As long us they get money they will continue to harvest high quality of social justice and food security!
December 23rd, 2011 at 12:54 pm On the contrary Tlk, there exists a well written and established mining law in the country, and the Eritrean government has shown their seriousness and reliability in developing the country’s mining industry. Well aware of the resource trap. I’m sure it will be of benefit for the Eritrean people.
Tes says:
December 23rd, 2011 at 1:56 pm Mr. Tlk….you obviously have issues that you need to take care of. There is absolutely nothing that is going to stop Eritrea’s move to prosperity. Thanks for the G. of Eritrea (GOE) the country is ready to take off economically. If there is a rule of law any where in the world it is in Eritrea.
Hab says:
December 23rd, 2011 at 2:47 pm TLK
Grandich is right. The crisis is over in Eritrea. But, you don’t want to hear any good news about Eritrea. Who cares about people bloated with presumptuous righteousness and patronizing attitude, anyway. You don’t matter. Eritrea will prove you and your ilk wrong, as happened in the past.
I am an Eritrean and care very much about the wellbeing of the people. I know what the government is doing in terms of economic development and social equality is right.
Solomon says:
December 25th, 2011 at 7:07 am I was surprised , but also laughed to read your comments- a comment that is full of hatred,that lack credibility. you said,’there is no internal istability in eritrea’. I doubt that your hatred might have overwhelemd your IQ. I do not know in which planet you live.
As for Eritrea,it is the land of peace, generiosity,coupled with a well diciplined political leadership and with a hard working people.They believe in mutual respects by bieng masters of their own affairs and not interfering on thers’s affairs.Un like others, the people and Government of Eritrea are masters of their politcal policies and economies- based on their long stand policy of self reliance that develoved during the struggle for independence.
you have to wake up and smell the freshness of self reliance and self dependence and that is the strategies and policies of the people and Government of eritrea.Eritrea is endowed with pricious minerals and rich natural resources, coupled with hard working people and healthy political leadershiop. And these worries and frustrates to all the enemies of Eritrea.
easy says:
December 25th, 2011 at 8:13 am Oh my god, Liars are always the first to speak so that they have to smokescreen truth. the fact is Mr/Mrs Tlk, Eritrea is a country with the most convenient investment climate compounded with a sound political stability. Apart from the machinations of malicious outsiders like the Yankees and their Ethiopian dogs(which i believe you are an Ethiopian) who are hell bound to see Eritrea fail, Eritrea has proved invincible. Contrary to the devilish wishes of its enemies Eritrea will be the paradigm of economic success in the world in general and in Africa in particular.
Merhaui says:
December 26th, 2011 at 11:13 am When it comes to its mining industry Eritrea has established a well written code and the government has shown its reliability in its desire to develop the industry in a responsible way. I agree with the writer when he states “…all that crap in the UN will come to a halt, because they’re the next big thing economically.”
ghirmai Berhane says:
December 26th, 2011 at 12:15 pm Responding to TLK.s posting,
Eritrea is land of democracy from centuries back, twisted views like yours cause death and distraction, eritrea is a country that is one of the few countries that is gaining in wining on hunger and poverty,education. there more school, health center, hospitals, farm projects, roads, more people are drinking cleaner water, and access to medicine, rule of law and transparency, you must be a remnant of the of the 40s sad history of eritrea, Let the people who know run the show
Sad says:
December 26th, 2011 at 3:03 pm Yes, Exploitation has never stopped in Africa. The Eritrean youth become no payments at all. Only the dictator in Asmara makes all business alone, as if the country were a properity of his grndmother.The chinese are makeing now a good figure in Africa with no other intention except exploitation and exporting their ideology, if there is sitll any!
rezz B says:
December 27th, 2011 at 1:59 am @Tlk,you need to seek more knowledge on this story. Time will tell any way.
sl says:
December 27th, 2011 at 8:37 am tlk are you ok? is there a reason why you are wetting your pants?
DG says:
December 27th, 2011 at 12:05 pm TLK is an Ethiopian or an angry sk opposition that wish ill of Eritrea. Thank you Mr. Grandish for the truth. Eritrea will survive and will shine than any African country. The fabricated sk sanction will be thrown to the dust been and the enemy of Eritrea will be naked crying soon.
Eritrean says:
December 27th, 2011 at 12:51 pm TIk,
What nonesense. But it shows how disturbed you are. Look at what you said above:
“The Chinese can come and loot the defenseless and desperate Eritrean people.”
Obviously, you are one of those ill wishers of Eritrea, who never want that country to progress at all.
Shame on you
Helen says:
December 28th, 2011 at 7:39 am Tlk is nothing different than Gabon. All accusations based on lies, he is simply talking trash. Eritrea is the most stable country in the world.If we the masses, people of Eritrea, accept and love our Government what is the problem to you and all those who accuse us because we do not entertain hypocrites.If the reality was not painful to you and people like you the media would have reported our unconditional support in action at the UN General meeting in August 2011. That was an event where we flock to New York city by the thousands to show our support for our President. He loves his country, He works hard and we love him.
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2014-15/0259/en_head.json.gz/7712 | Open access, compliments of MIT Sloan Executive Education and their program, Essential IT for Non-IT Executives
The Business Models Investors Prefer
Magazine: Summer 2011Research Highlight June 22, 2011
Reading Time: 6 min Peter Weill, Thomas W. Malone and Thomas G. Apel
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New research suggests that the stock market particularly values business models based on innovation and intellectual property.
Image courtesy of Flickr user alvazer.
Why are investors so bullish on companies like Apple and Disney? Is it financial metrics, great management, industry prowess, good investor relations or good timing? Probably all of these. But something else may be at work, too. In research we conducted at the MIT Sloan School of Management, we found that the stock market consistently values certain types of business models more highly than others. Specifically, we found that in recent years, investors have favored business models focusing on licensing intellectual property (such as Walt Disney’s business model) and a certain kind of highly innovative manufacturing (such as Apple’s). We developed a framework that includes 14 types of business models. (Surprisingly, we found there is no universally accepted definition of the important concept of a business model.) Then, using data from Compustat, we classified all the more than 10,000 companies that are publicly traded on U.S. exchanges within the framework by identifying the percentage of each company’s revenue generated through each of the 14 business models; we used a combination of manual classification and a custom-developed rule-based software program. By classifying companies’ revenue into these 14 business models, a new picture emerged of not only individual companies, but businesses more generally. The individual classifications were then aggregated to construct an index for each business model. Those indices then allowed us to compare total stock market returns — as measured by changes in stock price plus dividends — for different business models in the U.S. markets over a 12-year period, from 1997 through 2009. The results provide insight into investor treatment of various business models. In particular, the findings underscore the importance of innovation and intellectual property in the U.S. economy.
T.W. Malone, P. Weill, R.K. Lai, V.T. D’Urso, G. Herman, T.G.
Apel and S.L. Woerner, “Do Some Business Models Perform Better than Others?” working paper 4615-06, MIT Sloan School of Management, Cambridge, Massachusetts, May 18, 2006.
Our business model framework is based on defining the types of assets a company sells and the rights it grants customers to use those assets. We define four asset types and four ways companies manage asset rights to generate revenue. The four asset types are: Financial assets, which include cash as well as securities like stocks, bonds and insurance policies that give their owners rights to potential future cash flows;
Physical assets, which include durable items such as computers, as well as nondurable items such as food;
Intangible assets, which include intellectual property such as patents and copyrights, as well as other intangible assets like knowledge, goodwill and brand value;
Human assets, which include people’s time and effort. People of course cannot be legally bought and sold, but their time and knowledge can be “rented out” for a fee.
The four ways companies manage assets rights to generate revenue are as:
Creators, which sell ownership of products they have created by transforming or assembling raw materials or components. Ford, 3M and Intel are examples of this type of company;
Distributors such as Wal-Mart or Amazon.com’s retail business, which sell ownership of products they bought but did not substantially change, except by transporting, repackaging or marketing;
Landlords, which sell only the right to use assets for a specified period of time; Marriott, Hertz, Accenture and Citigroup are examples of the landlord model. We included in this category companies that employ licenses or subscriptions to sell limited rights to use their intellectual property (IP) assets — companies such as Microsoft and The New York Times; Brokers, which receive a fee for matching buyers and sellers without ever taking ownership or custody of the product; examples include Charles Schwab, eBay and realtors.
The Business Model Framework
View Exhibit
One of the advantages of this framework is that we can compare companies that have similar business models and thus require similar capabilities but operate in different industries. For example, a physical landlord can sell the use of a broad range of assets including hotel rooms, plane seats, software, information or rental cars. We can also assess what business models investors prefer at different times and how a company’s business model has changed over time. For example, Disney has dramatically shifted its business model over the last 20 years from renting physical assets like theme parks (65% of revenue in 1984 but only 30% in 2009) to licensing intellectual property (15% of revenue in 1984 but 63% in 2009), with clear investor buy-in for this strategic shift. Disney stock outperformed the S&P 500 stock index over the last five years and beat that index by more than 20% in the two-year period ending December 31, 2010. Business models provide a cross-industry lens for analyzing how a company is managed and the resulting stock market total return. The differences in the stock market total return of companies deriving revenue from different business models are striking — with returns for different types of business models ranging from about 145% to 240% over the 12 years we studied. An interesting picture emerges:
Eighty-one percent of total revenue from companies listed on U.S. exchanges comes from physical assets. Manufacturing — creating physical assets — generated about 57% of all company revenues. Manufacturers are generally highly valued by investors, with manufacturers who innovate even more highly valued. Twenty-eight percent of all company revenues derives from landlord type transactions but with major differences in total stock market returns. Financial and physical landlords were the poorest performing of the common business models, while IP landlords were the second-highest performing. Contractors — a model that includes consulting firms and other businesses that primarily “rent out” human assets — had performance in the middle of the pack. Market Performance of the Most Common Business Models
Innovative manufacturers — which we define as those who invest more than their industry average in research and development — are the top performers in the market. Apple is an example of an innovative manufacturer. Apple’s business model in 2008 was 86% manufacturer, 7% contractor and 7% IP landlord, and the results — products like the iPhone, iPhone apps, iPad, MacBook Air, iTunes — have paid big dividends. This is a powerful combination from an investor perspective.
Returning to Disney, we see that the company’s shift in business models over time has played directly into the sentiment of investors. Disney has reduced revenues from one of the least valued business models, physical landlord, while increasing its reliance on one of the most valued business models, IP landlord. And Disney has also retained innovative manufacturing, the more highly valued part of the manufacturing business model.
Key Questions for Company Leaders to Answer
Of course, the business models that investors value most today may not be the ones they will favor 10 years from now. But the concept of business model provides a fundamental tool for analyzing many important strategic decisions. For example, companies can use our framework to help decide when to dispose of one business unit, when to invest in another one and where to look for potential acquisitions. In making these decisions, the framework helps you analyze your business, not just in the context of your own industry, but also in the context of companies in very different industries that have similar business models.
We suggest that leaders should consider the following key questions:
What are our business models today, and how have they changed over the last 10 years?
How do our business models compare with those of our traditional and nontraditional competitors?
How can we adjust our overall business model to include more revenue from the models that are most highly valued today (such as IP landlord and innovative manufacturer) or that we believe will be most highly valued in the future?
To make any change in our business model, what competencies do we need to further develop, and what strategic experiments can we do today to test new business models for tomorrow?
About the AuthorsPeter Weill is a senior research scientist and chairman of the Center for Information Systems Research at the MIT Sloan School of Management. Thomas W. Malone is the Patrick J. McGovern Professor of Management and the founding director of the MIT Center for Collective Intelligence at the MIT Sloan School of Management. Thomas G. Apel is a research affiliate with the Center for Information Systems Research. The research team also included George Herman, Stephanie L. Woerner, Steve Kahl, Richard K. Lai, Victoria T. D’Urso and more than 20 MIT undergraduate, graduate and postgraduate students. This research was funded by the National Science Foundation (grant number IIS-0085725), the MIT Center for Collective Intelligence and the MIT Center for Information Systems Research. Tags: Customer Retention, Employee Retention, Financial Management, Stock Market
Reprint #: 52402
How to Identify New Business Models
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1 Comment On: The Business Models Investors Prefer N CRL | July 21, 2011
This is a very helpful business model that can be used to evaluate any enterprise in different industry sectors. | 金融 |
2014-15/0259/en_head.json.gz/7751 | The Diane Rehm Show The Risks Of Credit And Debit Cards And How To Safeguard Consumers Transcript for: The Risks Of Credit And Debit Cards And How To Safeguard Consumers MR. DIANE REHM10:06:53Thanks for joining us. I'm Diane Rehm. Credit card experts say small-scale data security breaches are common. The one experienced by Target last month was notable mostly for the size of the theft. About 40 million credit and debit card records were stolen from that retailer. Neiman Marcus also revealed a significant breach.
MS. DIANE REHM10:07:18Here in the studio to talk about safeguarding Americans' credit and debit card data: Doug Johnson of the American Bankers Association, and Shane Sims of PricewaterhouseCoopers, from an NPR studio in New York, Robin Sidel of the Wall Street Journal, and, by phone from Bella Vista, Ark., Mark Horwedel of the Merchant Advisory Group. I'm sure many of you have your own questions. Give us a call, 800-433-8850. Send us your email to [email protected]. Follow us on Facebook or send us a tweet. Welcome to all of you.
MR. DOUG JOHNSON10:08:09Thank you.
MR. SHANE SIMS10:08:10Thank you, Diane.
MR. MARK HORWEDEL10:08:11Thanks for having us on today. Appreciate it.
MS. ROBIN SIDEL10:08:12Hello.
REHM10:08:13And, Robin, if I could start with you, tell us what we know so far about these data breaches that occurred at Target and Neiman Marcus.
SIDEL10:08:26Well, we don't know that much about what happened at Neiman Marcus. They haven't really released a lot of information. We know a lot more about Target. And there was malicious software known as malware that got into their system. And that's where the bad guys got in and pulled out the data from credit card and debit card customers. And then the company also revealed that there was a breach of other data as well, email addresses, regular addresses and names that was separate from, actually, the credit card incursion.
REHM10:09:01As I understand it, the Neiman Marcus breach occurred more than a month ago. How come we're just learning about it?
SIDEL10:09:13Well, I think that retailers often don't know exactly how to handle this. I mean, first of all, it takes a while for them to figure out what has gone on. And then they don't really know the extent of it. So there's always this internal battle at a company about when you publicly disclose something and even if you need to publicly disclose something because there are a lot of these breaches that happen that you and I never know about.
REHM10:09:39Robin Sidel of the Wall Street Journal. Turning to you, Shane Sims, how does this happen? At what point? Explain to us what it is that occurs to create the theft.
SIMS10:09:57So what happens is these criminals from all over the world will target an organization. And they'll go through a multi-step process to accomplish their objectives, which in this case is the theft of payment card information.
REHM10:10:11What do you mean a multi-step process?
SIMS10:10:15So step one for them will be to do some reconnaissance of systems that are used on the Internet by the Target organization. So whoever they are targeting to steal the information from, they're going to understand that their attack service looks like.
REHM10:10:30How long does that normally take?
SIMS10:10:33I would say that takes days to weeks.
REHM10:10:37OK.
SIMS10:10:37To really establish what the attack service looks like. And then once they find a vulnerability with those systems, they will exploit that vulnerability and then have access to the target network.
REHM10:10:50So explain exactly where the theft occurs and how.
SIMS10:10:56Yeah. So once they achieve access to the network, they begin to explore the inside of the infrastructure of the organization they've targeted. And they will look for systems that have the information they want. And a lot of times -- and in the case that we're dealing with here -- the point-of-sale systems contain the information that the attackers are after. So they will actually navigate to those systems and install malwares Robin mentioned on those systems to get the information.
REHM10:11:28Now, I gather there's no way for a company to know that somebody has even targeted it before the thefts begin.
SIMS10:11:42What we typically see is the criminals get into the environment, and they're inside the network for days to weeks trying to understand where the data is and establishing their foothold. And the organizations do not know this activity is going on.
REHM10:11:58I gather that you were a special agent for the FBI for 10 years, focusing on cybercrime, so you've seen this happen many times.
SIMS10:12:11I have. I've been involved in cybercrime since it began in the '90s. And I've had an interesting seat to witness how criminals have evolved over time. And I think what we're seeing here are very organized groups. They're very sophisticated. They understand how companies secure their information. And they work very hard to plan and develop ways to circumvent that security.
REHM10:12:34Now, what happens once they glean this information? How do they then use it?
SIMS10:12:44Well, they use it in a variety of ways. So we often see that the theft of credit card information or payment card information in general is then sold on the black market and on the Internet. And there's value to each unique account number in all the data that would be contained on the mag stripe, the magnetic strip on the back of the credit card or debit card. So these criminals can actually profit from selling the data that they've stolen. Or they can use it themselves to then commit various frauds, like credit card fraud.
REHM10:13:14Shane Sims of PricewaterhouseCoopers. And now to you, Doug Johnson of the American Bankers Association. If your credit or debit number is stolen without your knowledge and somebody makes a purchase, what's the liability to the consumer and to the bank?
JOHNSON10:13:42Well, the liability to the consumer is really zero in most cases because the bank will reimburse.
REHM10:13:50If it's a credit card purchase.
JOHNSON10:13:52Or if it's a debit card purchase. I think the difference is, is that, to the extent that it's a debit card purchase, the transaction may actually end up on the account and the customer may not be aware of it. And so they may end up having some other transactions and may overdraft their account based upon the fact that they were not aware those transactions occurred. That's the difference. If there's fraud on the account, regardless whether or not it's debit or credit, essentially the customer will be made whole and reimbursed by the financial institution.
REHM10:14:21But I gather you've got to be responsible for notifying the bank pretty quickly.
JOHNSON10:14:29Absolutely. You should always be evaluating your account, not just your account statement but also your online account because that's where you're going to see the unauthorized transaction most quickly. Don't wait for your monthly statement. But if you do wait for your monthly statement, you still do have 30 days to make that -- to the extent that it's a transaction that wasn't caused by the fact that you lost a card. If you've lost your card, immediately contact your financial institution because you only have several days to be able to do that, to the extent that you know the card was lost.
REHM10:15:02Is it better to use a credit card or a debit card?
JOHNSON10:15:07Well, every customer is going to have their own preference. But I think that clearly, as I just described, there is some additional potential consumer pain when you're talking about a debit card because there may be that unauthorized transaction on the account, you may not be aware of it, and because of that, you may end up overdrafting your account.
JOHNSON10:15:26But to the extent that you're someone that evaluates your account on a continual basis -- and that's what we really recommend -- and you see that transaction immediately, you can refute that transaction, and then it won't cause you any particular harm on the debit side.
REHM10:15:44Shane Sims, Forbes posted an article on its website yesterday titled, "Why Even North Korea Outpaces the U.S. in Credit Card Security." Talk about the so-called EMV cards that are available in Europe and even in North Korea and why we don't have those here.
SIMS10:16:13I wish I had an answer to that question. And Doug may have one for us, but, yeah, the Chip and PIN, as it's referred to on these cards that are being used in Europe, just gives the consumer an extra layer of protection. I think you can call it multi-factor authentication as a way to describe it. So when you execute the transaction, you have to have the chip that's on the card present for the transaction.
SIMS10:16:38And the consumer has to enter a PIN. So there's two factors there, and it makes it more difficult if the criminals were to actually steal the credit card information to then actually commit the credit card fraud.
REHM10:16:50So from your view, Doug, at the American Bankers Association, why is it that we don't all have those EMV cards, providing at least one more layer of security?
JOHNSON10:17:08Well, first of all, Diane, in our country, we didn't legislate it. And I think that's the first piece. Secondly, we have a large economy. We've got thousands of financial institutions. I think, going forward, we both, as bankers and as retailers, have an obligation to move as swiftly as we can toward EMV, to put that other layer of security in there. And I think that, yeah, there's expenditures that are going to have to be made on both sides. And I think that's what we need to do.
REHM10:17:33Mark Horwedel of the Merchant Advisory Group, would you like to see that EMV technology in place as soon as possible?
HORWEDEL10:17:46Yes. I think that I would add that the current plans to move to EMV in the U.S. need to be supplemented some additional steps that so far are not a part of the EMV road maps that major card networks have focused on. So we want to see a holistic approach that includes a number of other steps as well.
HORWEDEL10:18:14And I think, as Mr. Sims pointed out, one of the foremost steps is that U.S. consumers should be equipped with a PIN, whether we're talking about a debit card or a credit card, so that, again, I think, as he said, it's not just about having something that you're carrying with you, a card or some other device, but you also have something that you have to know a PIN.
REHM10:18:38All right. Mark Horwedel of the Merchant Advisory Group. Short break. More on that when we come back.
REHM10:20:00And welcome back. We're talking about credit card theft, the big data theft that occurred at Target during the Christmas holidays. And now we have learned that Neiman Marcus had a breach of security as well. Doug Johnson is here in the studio. He's with the American Bankers Association. Shane Sims is a partner at PricewaterhouseCoopers.
REHM10:20:34Robin Sidel is on the line with us. She's with The Wall Street Journal covering the credit card industry. And by phone from Bella Vista, Ark., Mark Horwedel of the Merchant Advisory Group. Mark, I want to come back to you. You were telling us that you feel that there have to be some additional steps taken in addition to that chip, such as...
HORWEDEL10:21:10Requiring a personal identification number or PIN on every transaction, that's been the rule throughout most of the rest of the world most recently. In Canada, when they converted to EMV, while they had PINs on all their debit cards prior to the conversion, they added PINs to all their credit cards as well. And the merchants feel very strongly that that step needs to be taken in addition to those that have been outlined by the card brands so far in order to more thoroughly protect the U.S. consumers.
REHM10:21:49Robin, I wonder if you would talk about the timeline for widespread adoption of this EMV technology here in the U.S.
SIDEL10:22:02Well, as of -- some rules came out from Visa and MasterCard a couple of years ago. And as of 2015, the liability will shift to merchants. Right now, if there's fraud, the banks pick up the tab. And by 2015, that liability will shift to merchants. But this is a battle that has been going on for years. And it bubbles up and then calms down. And obviously it's situations like this where there's a very public breach that it really bubbles up and people start talking about it again. But the credit card industry and the merchants have been fighting over this issue for years.
REHM10:22:39So, Mark, in your view, is that 2015 deadline on the shift of responsibility from the banks to the merchants going to speed up the process?
HORWEDEL10:22:56It'll speed up the process. It's an impossible date to make. Many merchants simply cannot make that date. There aren't even enough resources, frankly, at...
REHM10:23:07What resources are necessary? Explain.
HORWEDEL10:23:13Well, the resources -- I was about to refer to the resources even at Visa and MasterCard and the processing -- third-party processors that do business with the merchants in the U.S. to thoroughly test and certify the entire merchant community in the U.S. before that date.
REHM10:23:30I don't understand. I wonder, Shane, if you would explain.
SIMS10:23:40I'm not sure actually. What we're dealing with here is a crime wave that has evolved over the last decade. And it's going to get worse over the next 10 years. It's not going to slow down. We have to do something. We need to step up the protection of the consumer. And we need to help organizations in the private sector help protect their networks and where the information exists because this crime wave is really going to get worse.
REHM10:24:05Doug Johnson, what is the hardware and the software that need to go into place to create a safer use of the credit card?
JOHNSON10:24:20Well, first of all, on the card itself that the banks issue, there will be a chip on that card. And...
REHM10:24:27Not until 2015?
JOHNSON10:24:30Well, some institutions -- an increasing number of institutions, they're already deploying the chip on the card.
REHM10:24:37Who?
JOHNSON10:24:38Well, Bank of America, for one, has the card. There's a number of other institutions and some credit unions that have the card deployed as well. And you'll see an increasing number of those institutions over time doing that. And institutions also have the responsibility by fall of 2015 to put EMV on their ATMs. And so that will actually protect the ATM because that's where there's a great vulnerability to bank customers because you can do a direct cash out as opposed to having to buy merchandise. And so that's another piece of protection that I think is very important.
REHM10:25:11When you say a direct cash out, explain that.
JOHNSON10:25:15So in -- let's use the Target breach as an example. If, in fact, the PIN was compromised and not encrypted or decrypted so the criminal has essentially the account number and the PIN, well, then essentially that criminal can go to an ATM -- any ATM and essentially have access to that individual's account. And so they don't have to go through that process of having to buy merchandise and fence merchandise or do things of that nature, which sometimes happens on the criminal side.
JOHNSON10:25:49So that's why as part of this movement toward EMV, it's important to also protect the ATM environment because a breach at a retailer can also make the customer vulnerable at that ATM.
REHM10:26:00Robin, talk about the politics behind all this. What is the delay?
SIDEL10:26:09Well, it's a real chicken-and-egg scenario. And the banks and the merchants need each other, but they also fight over a lot of things in this industry. And it's just been going on for years. The banks -- it's expensive to issue these cards for the banks, and so they don't want to issue the cards until the merchants have the hardware and software in place. And the merchants say they don't want to turn the switch and get this stuff in place because nobody has the cards. So it's a classic chicken-and-egg situation. And they've been fighting over it, as I said, for a very long time.
REHM10:26:48Is there any estimate on how much the adoption of the EMV card could reduce the risk of fraud?
SIDEL10:27:00I think the view in the industry is that it would be significant. I was speaking with a senior executive in the credit card industry yesterday. And the problem is, as he said, everybody knows that the U.S. is more vulnerable than other parts of the world, so the fraudsters are coming to the U.S. And so if you make it an even playing field, that's going to be less likely to happen. The U.S. won't be the only target. And, look, nobody knows if the chip and PIN is going to be the salvation that people think it is. I mean, the bad guys are pretty smart, and they keep coming up with new ways to infiltrate the system.
REHM10:27:37So right now, the question is, who's going to bear the cost of changing the system, Robin?
SIDEL10:27:49They both will. They both have to. I mean, you know, the banks have started issuing some of these chip and PIN cards but a very, very small amount. And they're actually only really issuing them to people who travel frequently abroad. So if you have a travel credit card or one that's an airline credit card perhaps, that signals you travel a lot. And so they're issuing them to those people -- it's a small group -- to make their life easier when they go abroad. But it's millions and millions of dollars for both the banking industry and the merchant industry.
REHM10:28:22Doug Johnson, you already have a credit card with that chip installed. Had you used that card at Target, would you have been protected?
JOHNSON10:28:37Well, we don't know at this particular juncture because there's some question as to whether or not the PIN information, when it was compromised, was encrypted which would make it very difficult for someone to decrypt or whether or not it was plain text, which would allow someone to have that PIN information and then be able to essentially, you know, use that information. I think that what EMV does is it makes a random number associated with the transaction.
JOHNSON10:29:11And so if, for instance, Target had their point-of-sale device where you swipe -- EMV enabled and you swipe it, that transaction has a unique number associated with it. And that card has a unique number associated with it for that transaction, so you can't use -- you can't duplicate that because the chip is what's making that random number essentially. So there is an extra level of protection, Diane, that would've existed to the extent that EMV was in place both at the point of sale as well as on the card.
JOHNSON10:29:43Now, if the card was enabled and the point-of-sale device wasn't, well, then you don't have full protection. And that's why when we fully implement this on a voluntary basis toward the end of next year, if the retailer does not put the point-of-sale device in place as EMV enabled, they have the liability.
REHM10:30:02I see. Mark, you might just talk about how retailers who are -- who had their security breached, such as Target and Neiman Marcus, how does this affect them?
HORWEDEL10:30:20It creates a lot of problems. It's probably more reputational damage than anything else because consuming public is concerned about the security surrounding the use of their cards. And so it's -- you know, it's a very costly event for merchants. I would suggest much more costly than from anybody else's perspective associated with payments.
REHM10:30:47Here's an email from Russ in Punta Gorda, Fla. "Please ask why the people that have credit cards and debit cards in the U.S. should not be given the chip cards. Everyone in Europe has. Last year, I was in a restaurant in France where the card reader would not take my swipeable card, so I had to pay cash and go to the place down the street where my magnetic strip could be read to replenish my cash." So, Robin, how long have these EMV cards been available in Europe and elsewhere?
SIDEL10:31:38For a long time, for years, and just increasingly. It's usually kind of a staggered process where they adopt them country by country. And Canada has adopted it in the past couple of years as well. And that's -- the person who wrote in, I mean, that is an issue, and that is why, I guess, his credit card company -- maybe they didn't travel often enough to kind of be in that group that gets one of these cards from his U.S. credit card company.
REHM10:32:09Do you want to comment, Shane?
SIMS10:32:13Yeah, I totally can sympathize with the person that posted that question. It's happened to me, too, traveling overseas. And it's very frustrating for consumers. And it's very concerning for consumers when these merchants have these breaches, even though, as we've learned here today from Robin and Doug and Mark, that there's really no impact -- no financial impact to the consumer. That doesn't change the fear factor. And it's really, really important that we begin to do something, whether it's the chip and PIN and/or improve security on the backend of these merchant environments.
REHM10:32:47Well, indeed, as Doug has pointed out, these folks who've had their security compromised could, in fact, have their ATMs compromised as well. So whether in fact they're really hurt remains to be seen. And you're listening to "The Diane Rehm Show." I'm going to open the phones, 800-433-8850. First we'll go to, let's see, David in Lebanon, Ohio. You're on the air.
DAVID10:33:32Thank you, Diane. Great show today so far.
REHM10:33:34Thank you.
DAVID10:33:36I'm not terribly objective because I work for an insurance company that insures credit unions against losses due to credit and debit card, just like we're talking about right here. And I know we've weighed in quite a bit on how this has impacted the consumer and the merchant to a degree. But what nobody really talks about -- and it always irks me -- is that the credit card brands themselves, Visa and MasterCard, have almost no downside on this, almost no responsibility when it comes -- monetarily when it comes to these losses.
DAVID10:34:21And that's always irked me that they just keep pushing to make it easier and easier for consumers to use their cards to the detriment of the merchants and the financial institution.
REHM10:34:34That's interesting. How do you respond, Doug Johnson?
JOHNSON10:34:38Well, the networks themselves are responsible for putting together the operating rules associated with the use of the cards. And so I agree that the liability isn't there. I think their responsibility is to really ensure that there's a proper level of information security requirements for merchants and for banks. And that's what's called the payment card industry data security standard. But I think that, you know, from the network's perspective, that's really their job is to try to build a consistent set of security requirements for the network and to ensure that the network works seamlessly.
REHM10:35:13Mark, do you want to comment?
HORWEDEL10:35:16I think that they do suffer damage from the standpoint of the impact on their brands and, you know, the views of consumers about using their cards. I would say, however, that when these breaches occur, merchants pay a tremendous amount of money to the brands by way of PCI fines. And so, you know, indirectly they profit from this.
REHM10:35:39All right. Thanks for that. And let's go to Grants Pass, Ore. Marcus, you're on the air.
MARCUS10:35:49Yes. Hi, Diane.
REHM10:35:49Hi.
MARCUS10:35:50Just wanted to say how much we love your show. I listen to it every day on the way to work.
MARCUS10:35:55In fact, I'm on the way to work right now to the hospital.
REHM10:35:57Good.
MARCUS10:35:57And, you know, as a frequent traveler to Europe -- we have a home in Switzerland. My dad immigrated here to the United States many years ago. And we still have family. We go there quite often, at least once a year, sometimes twice a year. And, you know, it gets really, really frustrating now when you have to go to the grocery store, and you can't buy things in the grocery store because your card doesn't get read anymore.
MARCUS10:36:22And the United States has made it very, very difficult for American citizens to get bank accounts in Europe. And so now you have to take cash. And, you know, traveler's checks are Stone Age, so...
REHM10:36:35All right. So what you want to know is how you can get a credit card that would work there, right?
MARCUS10:36:43Exactly, and, you know, why we can't get them. I know since I've been on hold waiting a little while, you know, you've discussed that, but it's just another...
REHM10:36:49OK. All right. Let's see what the response is, Doug Johnson.
JOHNSON10:36:55Well, I think that the European traveler was the first one to get the cards among United States citizens. And I agree with their frustration. I think that clearly we have an imperative to try to employ additional cards as fast as we possibly can. That's...
REHM10:37:12So can one simply apply for a card to...
JOHNSON10:37:16In many financial institutions. You can at your financial institution, yes.
REHM10:37:19All right. We're going to take a short break here. When we come back we'll hear more, take your calls. Stay with us.
REHM10:39:57And we're back discussing the thefts that have occurred through use of credit cards, debit cards. Here's an email from Pete, this one for you, Shane Sims. "How do the merchants detect a theft event?"
SIMS10:40:18There's many ways they could detect it. So if you go back to my discussion earlier about there's these different steps or different phases to a cyberattack, the first step is reconnaissance. So, you know, the criminals are looking for systems and looking for security holds on systems. That's a detection point. Once the criminals get access by exploiting one of these security holds, they install malware or this malicious software on the systems.
SIMS10:40:43That's a detection point. When they actually collect the payment card information and transfer it out of the environment to a system on the Internet that the criminals control, that's a detection point.
REHM10:40:54But somebody's got to be watching at all those points.
SIMS10:40:58It's very difficult. And the moral of the story is, most of the time detection comes by way of a third party. So either...
REHM10:41:04What does that mean?
SIMS10:41:05Either law enforcement notifies the merchant or the banks are triangulating all this credit card fraud back to a common point of purchase. And then they notify the merchant.
REHM10:41:17So it's after the fact.
SIMS10:41:19After the fact.
REHM10:41:21Almost everything is after the fact, Doug.
JOHNSON10:41:25I think it is true that financial institutions spend a lot of time talking amongst themselves to find that common point of compromise. We see authorized transactions that are reported to us by our customers. Those transactions obviously wouldn't have been at the store that was compromised. And so it's trying to find exactly what that common point of failure is. And so I think that's right that we end up, in a lot of cases, informing the retailer that we found that.
REHM10:41:53All right. And here's another from Michael in San Antonio. "Please discuss the likelihood that these breaches are inside jobs conducted or facilitated by the retailer's employees. And why don't banks and retailers do more to protect consumer information?" What about the possibility of an inside job, Shane?
SIMS10:42:22That's a very interesting question. And PricewaterhouseCoopers does a global information security study every year. And over the last three or four years we've seen this insider threat concept rise up in the study as a concern. And when we're doing our investigations of these breaches, we consider that as an element of the crime.
SIMS10:42:42You know, did an insider who had knowledge of how that network operates, were they colluding with the outside criminal organization? We have had some situations where insiders were at risk of colluding. Most of the time, from our perspective, though, all of these jobs are committed by an external threat actor.
REHM10:43:03And in the case of Target, is your assumption or is the evidence thus far leading to someone outside the United States?
SIMS10:43:16My knowledge of that incident is strictly through the news media. And from what I've read and what I've seen it would indicate that it's an outside job.
REHM10:43:24Robin, what do you know?
SIDEL10:43:27Well, I think one of the other potential risks in these kinds of situations are outside vendors. And companies like Target use a lot of outside vendors for all different things with their systems. And...
REHM10:43:39Give me an example. Give me an example.
SIDEL10:43:42Well, a vendor who will help safeguard or monitor or update their point-of-sale device. They use outside companies for a lot of these different things, so that kind of broadens the potential places where this incursion could've occurred. And so that's one thing I think people in the industry are very concerned about, not only it being somebody from the inside who had that access, but there are a lot of people from the outside who also can have that access and, you know, act in cahoots with an organized group.
REHM10:44:19Mark Horwedel, Congress has called for an inquiry into the Target data breach. Do you expect any widespread changes to be made?
HORWEDEL10:44:35You know, it's hard to know until, you know, we actually get into the middle of if there is in fact a committee hearing on the subject. I suspect that, you know, something like that might well lead to the discovery that there are other places where we can go to make the payment environment safer, many of which frankly we've advocated as a part of the conversion to EMV.
REHM10:45:04And, Doug Johnson, what could lawmakers do to make this process more safe?
JOHNSON10:45:14Well, I think that a lot of the discussion is around trying to build a national data breach reporting standard because one of the things which is currently true in our environment is there's a variety of state laws that companies have to abide by and financial institutions have to abide by in terms of breach notification.
JOHNSON10:45:32And I think there needs to be some clarity there so we have swifter notification of those breaches. Clearly I think that there's a necessity also to ensure that all the partners within the payment system have a comparable level of security. That's what the payment card industry data security standard is supposed to accomplish.
JOHNSON10:45:51But I think that one of the things that we see within the financial services environment right now is that there's a lot of attention being paid to those third parties that we've been discussing here on this call. And I think that there could be some value in having retailers have that same level of attention to their partners that are part of the payment process.
REHM10:46:13So what if Congress passed a law saying that every credit card issued should have this EMV chip in it and ordered that by say the end of 2015, every retailer had to have that mechanism in place to read that card here in the U.S.? What might congress be able to do there?
JOHNSON10:46:47Well, if Congress was to put that in place, it would be actually frankly very similar to what the networks are trying to do on a voluntary basis through their guidelines. Institutions and retailers are not going to be specifically required to have EMV in place by the fall of 2015. But if they don't they have to incur additional liabilities associated with those transactions. Right now...
REHM10:47:13But of course they'll be insured, so they'll put it off onto the insurance companies.
JOHNSON10:47:18And the insurance companies will make some determination as to whether or not there was any negligence associated with that particular breach. So you get into that process as well.
REHM10:47:29All right. Let's take a call in Richardson, Texas. Hi Seena, you're on the air.
SEENA10:47:37Hi, Diane. Thank you for taking my call.
REHM10:47:39Sure.
SEENA10:47:41I actually have a second question that's come up while listening to your show. The reason I called was in regards to the financial benefit. Obviously this type of crime is done due to somebody trying to make money. And my question is, how much money is made by reissuing the credit cards and all of the hassle that everybody has to go through to correct the situation?
REHM10:48:13I'm not sure I understand the question.
SEENA10:48:18Well, when this happens and -- like, I myself am in a situation that I can't use my card for much of anything at this point. I have to wait for...
REHM10:48:30Why?
SEENA10:48:31I have to wait for a new card to be issued to me.
REHM10:48:33Usually they issue cards within 24 hours.
SEENA10:48:40Well, mine's taken over a week, and I know a lot of people, it's taken over a week at this point because there's so many that have to be reissued. What is the financial benefit -- who makes the money by having to reissue these cards?
REHM10:48:55Doug Johnson.
JOHNSON10:48:56Well, banks certainly don't make money by reissuing cards. There's essentially a substantial cost associated with the reissuing of those cards. It could be as much as $10 a card when you put in all the various costs associated with that. So I would certainly not call it a money-making operation. It's actually something that's very costly to financial institutions.
REHM10:49:17Robin, from your point of view, what can consumers do to protect themselves against fraud?
SIDEL10:49:27Well, I think we've discussed that a bit. And, you know, obviously you really need to pay attention to your statements, to your online account, looking at your transactions. And while debit cards are also zero liability, if someone takes that money out, as we discussed before, that money can be gone and it could take a lot longer time to replace it. So a credit card, if you didn't make that purchase, you don't have to pay. But a debit card, that money's already gone.
REHM10:49:58OK. What about all the online apps and shopping, Shane Sims?
SIMS10:50:05Yes. You know, as businesses continue to grow and expand and try to leverage the Internet to the best of their ability, it extends their attack surface. So the attack surface gets bigger. And as mobile apps go out...
REHM10:50:18You mean, if you have an app on your cell phone.
SIMS10:50:22Exactly. So that's just another point where criminals are looking to exploit so they can get access to the consumer's information.
REHM10:50:29But it's interesting because those apps can offer real economic savings to a consumer. So that's why they're so popular.
SIMS10:50:42No doubt. I mean, I'm a fan myself as a consumer. And I think the moral of the story here for businesses and merchants is that security has to be baked into the business strategy. So as you expand your business and think about your business in a creative way, security has to be a part of that discussion.
REHM10:51:03Well, I'm not sure where you're leaving me. If someone shops at a particular grocery store, for example, Safeway here in the Washington area, Safeway has an app that offers greater savings to individuals. Are you saying that it's Safeway's obligation to put in more security with that app than normally they'd have just at the point of purchase?
SIMS10:51:42Yes. Securing the information that you're collecting from a consumer is an obligation of the merchant. So -- and I think this goes back to a point that came up earlier that we might've lost here a little bit, is that we've talked about payment card information being stolen. But a lot of consumers are very, very concerned and worried that if criminals have access to these merchant networks, that their personal identities may be at risk, too. And I think in the example that you just mentioned, that's a very, very true risk that consumers have.
REHM10:52:12And of course Edward Snowden has shown all of us that nothing is safe. Would you agree?
SIMS10:52:22No doubt. He -- that situation has brought the insider threat angle, you know, back into the forefront of senior executives.
JOHNSON10:52:31I just think it prudent for individuals to just use every tool they have available to protect themselves.
REHM10:52:36Are you saying, don't use apps?
JOHNSON10:52:39No. I'm saying, look very carefully at your transaction activity.
REHM10:52:43But that's after the fact.
JOHNSON10:52:46And it is after the fact, but it shouldn't stop you from making the transactions, because by and large 99 percent of those transactions are -- and more than that are going to be perfectly fine. That's why you monitor accounts on an ongoing basis. There's risk everywhere in the world. This is a very real risk. It's a risk that's going to continue to increase.
REHM10:53:05Doug Johnson of the American Bankers Association, and you're listening to "The Diane Rehm Show." Let's go to Jordan in Charlotte, N.C. You're on the air.
JORDAN10:53:21Hey, thanks, Diane.
JORDAN10:53:22I appreciate you talking about this. There's one thing I haven't heard the whole time since the Target breaches, who the culprit is. And with, you know, the focus on technology being the first defendant against our, you know, financial safety, who did this and how much money did they make off of it? And isn't there a vested interest in us finding out, you know, exactly who this culprit was?
REHM10:53:49Sure. Shane, how far along are we in that knowledge?
SIMS10:53:54Yeah, that process takes a very long time for law enforcement to understand, you know, the actual people, the human beings that executed this attack. It could take months to years. And one of the advantages of cyber crime itself is that you can be anywhere on Earth. You know, you could operate from a country that makes it very difficult for U.S. law enforcement and U.S. agencies to cooperate with those countries and bring people to justice. So it's a very, very difficult challenge, but I know that the law enforcement agencies here in this country are working very hard to make that happen.
REHM10:54:26Robin, do we have any idea how much money is involved?
SIDEL10:54:33We don't at this point. There's a lot of rumors and speculations that these -- some cards have already gone onto the black market. Obviously it's the black market. It's very hard to track, but there's certainly the sense that this is real. JPMorgan Chase was very concerned about the prospect of fraud.
SIDEL10:54:55And so they reissued 2 million debit cards, which is very unusual for a bank to do, because they usually don't like to reissue cards until there's real evidence of fraud. And sometimes they would rather take the risk of fraud than to pay for reissuing cards. But it was enough of a concern that a big bank like Chase reissued 2 million cards. And that's really saying a lot.
REHM10:55:17Doug.
JOHNSON10:55:18Yes, it is saying a lot. I think that institutions don't want to inconvenience their customers to the extent that they feel they can monitor those accounts and look for unusual activity. And so in this case, obviously because of the very breadth of the breach, different institutions took a very aggressive approach, or the approach that made the most sense for them. But when you have on the order of 10 percent of your client base essentially impacted by this, that's pretty serious business.
REHM10:55:44And, Mark, what about the retailers involved? How much do you figure they will lose in dollars, or is it simply reputation?
HORWEDEL10:55:59No. It's -- there are severe fines and penalties that are leveled on the retailers that are involved in this that this happens to. And the reputational problems go on top of that.
REHM10:56:16All right. So last words, look at your statements every single month very carefully. Use your credit cards thoughtfully. But there's no way you're going to know at point-of-sale whether your information is being compromised. Is that a fair statement?
SIMS10:56:43That's a very correct statement, Diane.
REHM10:56:45All right. Shane Sims of PricewaterhouseCoopers, Doug Johnson of the American Bankers Association, Robin Sidel of the Wall Street Journal and Mark Horwedel of the Merchant Advisory Group, thank you all so much. And thanks for listening, all. I'm Diane Rehm.
Transcripts of WAMU programs are available for personal use. Transcripts are provided "As Is" without warranties of any kind, either express or implied. WAMU does not warrant that the transcript is error-free. For all WAMU programs, the broadcast audio should be considered the authoritative version. Transcripts are owned by WAMU 88.5 FM American University Radio and are protected by laws in both the United States and international law. You may not sell or modify transcripts or reproduce, display, distribute, or otherwise use the transcript, in whole or in part, in any way for any public or commercial purpose without the express written permission of WAMU. All requests for uses beyond personal and noncommercial use should be referred to (202) 885-1200. | 金融 |
2014-15/0259/en_head.json.gz/7855 | hide Former Credit Suisse exec to earn $45 million stock bonus in new role
Tuesday, May 14, 2013 1:02 p.m. CDT
By Rod Morrison
May 14 (PFI) - The former head of investment banking for EMEA at Credit Suisse will receive a stock bonus worth about US$45 million in today's terms from his new employer over the next seven years, according to a regulatory filing.
Jamie Welch left Credit Suisse in early May to become chief financial officer and head of business development at Energy Transfer Equity , a diversified energy company based in Houston, Tx.
Welch's annual salary at ETE will be US$550,000 with a guaranteed 100 percent bonus. He will receive 750,000 shares, currently priced at US$60 each, over the next seven years if he stays with the company.
Welch started as a project finance lawyer at Minter Ellison in Melbourne and moved to Milbank Tweed in New York in the mid 1990. He later joined Lehman Brothers and then the project finance team at CSFB in 1997.
He was named head of energy and moved to London last year.
Credit Suisse named Marisa Drew and Ewen Stephenson as co-heads of investment banking EMEA to replace Welch.
(Rod Morrison is editor of Project Finance International, a Thomson Reuters publication; Editing by Ciara Linnane) | 金融 |
2014-15/0259/en_head.json.gz/7866 | hide Exclusive: Activist Jana digs in for long Agrium battle
Michael Wilson, president and chief executive officer of Agrium, addresses shareholders at the company's annual general meeting in Calgary, By Nadia Damouni and Rod Nickel
NEW YORK/WINNIPEG (Reuters) - From Agrium Inc's perspective, a campaign by Jana Partners LLC to break up the Canadian fertilizer company is effectively dead in the water. But the $3.5 billion activist hedge fund believes it is only getting started.
Jana's five-month-long agitation has put a spotlight on the $17 billion market cap company, which produces nutrients such as potash in bulk and sells fertilizers directly to farmers.
Shareholders are taking notice as both Agrium and Jana work the phones and hold meetings to make their respective cases, according to investors and sources close to Jana and the company. So are some rivals and private equity firms that are curious to see if Jana's battle throws up an opportunity for them to do a deal, sources close to those firms said.
Jana has made a number of demands, including that the Canadian company spin off its retail arm, return capital, cut costs and improve disclosure - moves that it says will add about $50 per share in value. Agrium's shares closed at $105.88 apiece on the New York Stock Exchange on Thursday.
The company, for its part, has raised its dividend this year and just completed a share buyback, and its shares have risen by more than half this year - which each side says bolsters its own case for what's best for the company.
Agrium and Jana also have diametrically opposite views of the evidence that is emerging from their behind-the-scenes blitz with shareholders, indicating that the activist investor may have a long, protracted battle on its hands. Jana is Agrium's largest shareholder with a roughly 4 percent stake.
Sources close to the company said most of the top 10 shareholders have told Agrium that they do not support Jana's idea to split the company by spinning off its retail arm.
The hedge fund, meanwhile, is not ready to go away. It believes "most shareholders want to see Agrium address the operational and structural issues we've raised," a source close to Jana said. For those who are not persuaded, the source said, the activist will "keep making our case for change as we've successfully done in other situations".
In the event of a proxy fight, sources close to Jana said it can field nominees to the board of directors well ahead of Agrium's annual shareholder meeting next year, after working with a number of industry executives on its analysis of the company.
Jana is among the top U.S. activist investors. In the past, it has won high-profile campaigns at companies such as Marathon Petroleum Corp and McGraw-Hill Companies Inc.
CAMPAIGN NOISE
Reuters spoke with seven Agrium shareholders. Five of them - including four who were among the company's top 20 shareholders as of June 30 - said they believed management should at least consider Jana's proposals. The other two said they did not believe Jana's arguments held any merit.
Separately in August, Montreal-based Letko Brosseau Investment Management Inc, the company's No. 11 shareholder with a 1.6 percent stake, defended the management against Jana.
As is often the case around activist situations, Jana's agitation has also stirred very preliminary interest among some private equity firms and industry rivals in potential deals for parts of the company, but no one is yet willing to make an offer or even look further without Agrium's blessing, according to several sources close to those firms.
Private equity firms including KKR & Co LP, CVC Capital Partners, Clayton Dubilier & Rice LLC and Bain Capital have made preliminary inquiries with their own bankers about the possibility of a deal for parts of the business, these sources said. They have not approached Agrium, the sources added.
Some of Agrium's rivals have put in "courtesy calls" to Agrium to gauge interest, two of the sources said. The rivals, including CF Industries Holdings Inc, Mosaic Co, Yara International and Israel Chemicals Ltd, would be interested in Agrium's non-retail businesses, they said.
Those private equity firms and rivals declined to comment.
Calgary, Alberta-based Agrium has said its wholesale and retail businesses are more valuable together than apart, and its board has rejected Jana's call to break up the company.
The company has raised its annual dividend to $2 per share from 45 cents per share over the year, and last week completed a $900 million share buyback. The company's shares are up 56 percent since the beginning of the year, although that in part reflects a surge in grain prices after the worst U.S. drought in a half century.
From the company's perspective, the share price rise and return of capital should keep shareholders happy with its strategy.
Moreover, Agrium's shareholders told Reuters a relatively conservative Canadian investor base that is suspicious of American activist investors is also firmly in Agrium's camp, raising the bar all the more for Jana. About half of Agrium's top 50 shareholders were Canadian funds as of June 30, according to Thomson Reuters data.
" didn't measure the Canadian reaction to an activist who would suggest that management could be doing more for the shareholders," said one Agrium shareholder, a top 10 holder as of June 30.
ACTIVIST'S FIGHT
A U.S. based investor, who holds roughly 1 percent of Agrium's shares, said Jana's efforts to persuade other investors could lose steam if the company reports good third-quarter earnings next month and the stock continues to perform well.
For Jana, however, Agrium's moves are signs that it is making headway in getting the company to heed its demands. Jana argues that since it first started discussions with the company and other shareholders at the end of May, Agrium shares have risen about 35 percent.
The top 10 shareholder, who spoke on the condition of anonymity, said: "I think management has been stonewalling - it is an old-fashioned reaction. Let management show us that what Jana has suggested won't result in additional value in the pockets of a shareholder."
Agrium for its part has said it has given detailed arguments against Jana's proposals.
In August, Agrium said its board had spent two months with its adviser Morgan Stanley evaluating a spin off of its retail business. The bankers believe the company's retail business would likely trade around 8 times its estimated earnings before interest, taxes, depreciation and amortization as an independent company.
Information provided by the bank cites third-party research analysts as already valuing the business in the 7 times to 8 times range, "suggesting virtually no upside from a separation."
The bankers have also told Agrium's board that there is a risk that the wholesale business, if it were separated from the retail unit, could trade below the valuation that is implied in such a model, resulting in a lower value overall.
A sale is a worse option, these bankers argue. The retail business has a low tax basis, which would trigger a sizeable tax bill if Agrium were to sell it.
The sources close to potential bidders said the retail business, which has an estimated EBITDA of $900 million, could be valued around 9 times that profit for a potential $8 billion leveraged buyout, which would be by far the largest private equity transaction in the sector.
Jana has argued, however, that Agrium's management has been inconsistent on the valuation of the retail arm, noting that Agrium CEO Michael Wilson told shareholders at an investor event in 2011 that he believed the business should be trading at 11 times EBITDA.
"We think it is unconscionable that, after years of arguing that retail was undervalued based on where selected peers were trading, when we challenged them to address this undervaluation, the company suddenly switched to new lower multiple peers to argue the business isn't undervalued after all," one of the sources close to Jana said.
(Additional reporting by Michael Erman, Soyoung Kim and Greg Roumeliotis in New York and Euan Rocha in Toronto; Editing by Paritosh Bansal and Edmund Klamann) | 金融 |
2014-15/0259/en_head.json.gz/7889 | BSA/AMLMortgageFair LendingCFPBCompliance Management
Inside Farmer Mac’s risk management machine At 25, agency is very different creature than at the start
Comments: comments "We reduced maximum LTV ratios for certain areas without losing business. You won't see institutions looking to win business by doing higher LTV loans or farmers wishing to over-lever operations," says Tim Buzby, president and CEO of Farmer Mac, in an interview.
Tim Buzby would be first to admit that he’s not farm-raised. “I grew up in a little town in south New Jersey that does have a lot of farming, but I never actually worked on a farm,” says the president and CEO of Farmer Mac. “Having been here for 13 years now, it’s amazing how it rubs off on you.”
But Buzby, the agency’s CFO prior to stepping up to the top staff post a year ago, hasn’t been satisfied with merely learning from the numbers (which he can quote from memory). He often joins Farmer Mac’s outreach staff when they visit with the bankers and Farm Credit System institutions that use, or could use, the company’s services. He’s also visited farms, interested in learning more about the people whom he sees as the ultimate customers of Farmer Mac’s services.
“Outreach is important,” says Buzby. “We find that a lot of people are aware of Farmer Mac, but they don’t fully understand what we do. But I like to say that the best meetings I go to are the ones where somebody else does most of the talking, so we can figure out ways to help.”
Farmer Mac has passed the 25-year milestone, having come into being with significant participation by ABA. (The association continues as a partner today, through which members qualify for special pricing.) The first of four significant revisions of its charter came in 1990, each step building on the original model. Buzby notes that amendments made in 1996 helped business really take off.
Beyond mere longevity, Farmer Mac has passed two financial milestones. In 2012, it purchased $1.1 billion of farm and ranch loans and U.S. Department of Agriculture guaranteed securities in a single calendar year—more than double the volume seen in 2008. The corporation’s outstanding business volume came to $13 billion.
Buzby says Farmer Mac is poised to exceed 2012’s volume by “quite a bit. And I think that we will likely exceed that again next year.”
He adds that “if you had told me five years ago that we were going to purchase $1 billion in loans in 2012, I would have said, ‘You need to explain to me how we’re going to do that.’ Now, if you told me that we’re not going to do $2 billion annually five years from now, I’d ask you to explain to me why not.”
Sources of volume vary from year to year. Over the last couple of years, the business from Farm Credit System institutions has been down and that from banks has been on the upswing, says Buzby. Putting aside activity in rural utility credit and USDA loans, he says, banks account for about 75% of agency volume currently.
Part of the driving force behind the growth is today’s interest rate challenge.
“Long-term fixed rates are the primary driver of much of the business that comes to us,” says Buzby. Bankers see this as a time to investigate ways to give farmers the fixed rates they want to lock in without putting the bank into a bind as market rates rise.
In addition, many small banks have customers who may be outgrowing the bank. “There’s the constant need to keep customers you have and to gain new ones,” says Buzby. “They are looking to lay off risk, and we like to be there for them to do that with us.”
We spoke with Buzby at Farmer Mac headquarters in Washington, D.C. Here are additional highlights of the interview, edited for clarity.
ABABJ: Enterprise risk management is a challenge facing banks of all sizes. Farmer Mac’s services address liquidity, credit, rate, market, and concentration risks. Is that an angle that brings more banks into your customer base?
Buzby: We don’t directly offer tools like stress-testing models, though we can provide industry statistics to bankers for their risk-management planning. But part of our overall understanding of our market—how we decide where we’re going to get the most bang for our buck—is through looking at banks’ call reports and seeing who is concentrated in ag. We see what their capital positions are and who has had strong growth, so we can target market and offer financing to institutions that may be facing risk-management issues.
We try to get to either the people who lend or the people who handle risk management. Often the ag lending group is trying to grow the portfolio. So they are not incented to sell loans, necessarily. On the other hand, the treasurer’s office or the CFO within that same bank might be looking at their loan-to-deposit ratio and determining that, in fact, they would love to have an outlet to sell loans, but they might not be familiar with Farmer Mac. If we can get the ag folks talking to the finance folks, together we can come up with something that works.
ABABJ: Risk management is something Farmer Mac itself must be concerned with, too.
Buzby: Internally, we do a lot of stress testing, capital-adequacy management. We have a regulator [Farm Credit Administration’s Office of Secondary Market Oversight] that is solely focused on us. They look at us as a financial institution that has credit risk, interest rate risk, capital risk, liquidity risk. We have our own internal policies and procedures. They look very closely at how those have been developed and how they’ve evolved.
ABABJ: One of the major points of Dodd-Frank, regarding the residential mortgage secondary market, is the concept of “skin in the game.” But that element of the original Farmer Mac schematic was eliminated in 1996, so that you can now buy 100% of loans.
Buzby: Before the change, the skin-in-the-game requirement was causing institutions to feel if they kept the first 10% of risk on an ag real estate portfolio, that they hadn’t really put off any risk. And the banks’ regulators didn’t feel that Farmer Mac was absorbing any risk, and the banks weren’t getting any capital benefit then.
So, typically, now we take all the risk in a portfolio. However, in order to provide a pricing advantage for some institutions, we’ll let them keep a first-loss position—1%, 2%, 3%, say—in exchange for a lower fee. If we’re talking to a lender about selling us a pool of loans or entering into a long-term standby purchase agreement, and they think the price is too high, we’ll try to lower the price that way, or we’ll encourage them to give us better loans.
They might want to shed, say, $50 million worth of risk on these types of loans. What are they willing to pay to shed that risk? They could just sell those loans and that risk would be gone. But then their portfolio shrinks, so they may not want to do that.
They may be willing to pay 30 basis points a year for that, but not 50. We may be charging 45. We try, in those discussions, to be a completely open book. We tell them what our costs are, and we try to run a very efficient operation, so people don’t see their bank as paying for our operation.
ABABJ: Where do you see ag land prices going?
Buzby: I don’t think we’re in the midst of a bubble that’s going to crash. Land values get talked about in the aggregate, generally, but there are certainly many pockets around the country where the trajectories are different. Often, individual transactions get talked about that are not representative of agriculture for that broad a region.
I think there’s a healthy balance right now in terms of people who are buying the land to farm over the long term, not to buy and sell in three years at a profit. So I try not to focus on land values and what that means for a specific farmer. I look more at the overall health of agriculture.
If commodity prices remain reasonable or strong, that should bode well for the farmer overall. You know, when corn prices are at $7, that’s great for corn farmers, but it’s not necessarily good for those farmers who use corn as an input. Most of the farmers producing crops will make money this year. And those who are using those crops for inputs are much better off than they were a year or so ago.
ABABJ: Farmer Mac has exposure in deals involving over 100 different commodities. Are there any of concern to you?
Buzby: Within the past year, we reduced our maximum LTV ratios for certain areas of the country. I don’t think that has, in any way, caused us to lose any business. It’s just a precaution. I don’t think we’ll see institutions looking to win business by doing higher LTV loans. I don’t think you see many farmers wishing to over-lever their operations.
Specifically, 60% LTV is our maximum in those areas that I mentioned. It’s not like every loan we’re doing there is at 60%. The average in our portfolio is in the low 50s and that’s original LTV. So over the past decade, we’ve done a lot of loans with an original LTV average in the 50s, and since then, for all of those loans, you’ve had the principle balances paid down, and generally you’ve seen land prices come up. So I think we’re in a pretty good position.
ABABJ: When you do deals for loans, how long are they typically under your roof?
Buzby: Until they’re gone. So generally, whether it is a loan that we’ve purchased or a long-term standby purchase commitment, generally, once a loan is put into the program, it’s there for its life—on average, seven-plus years on a weighted-average term.
ABABJ: A change was made, too, in the first half of 2012, regarding debt-coverage ratios.
Buzby: That was a similar change in time when we changed the LTV standards. Again, we were taking a look at the overall standards and tightening things up a bit. Not because we were overly concerned or had any specific issues, but just an adjustment that we thought made sense. We don’t want to be in a position where we’re sacrificing quality in order to gain quantity.
ABABJ: You came to Farmer Mac from the residential mortgage world. Securitization, once hot, has been weak to moribund since the crisis. How would you describe Farmer Mac’s current and future use of securitization?
Buzby: Many people make the argument we were created to be like Fannie Mae and Freddie Mac. While that may have been the case, we almost immediately departed from their business model. Our business is very different from the homogenous commodity of home mortgages in which Fannie and Freddie for a period of time securitized very successfully. The concept had been that we could replicate their model. But in actual practicality, it hasn’t come to bear.
Ag mortgages are difficult to securitize because they’re not homogenous. They have different payment characteristics, and you have collateral types that are very different. Prepayment characteristics, therefore, are very difficult for investors to model. And, quite frankly, the ultimate investors demand a higher return than we would to buy the loans and keep them ourselves. We’d rather keep the loans and pass on better savings to the ultimate customer.
We’ve long been largely a buy-and-hold player, as well as providing direct financing to institutions through what we call our AgVantage product, which is a securitized lending function. [Banks sell mortgage-backed bonds to Farmer Mac. The bonds are secured by a pledge of the issuer’s qualified agricultural mortgage loans and by the issuer’s general credit.] And also through our long-term standby purchase commitment program.
We have done securities in the past; in the future, we could. I’ve talked to people on our board of directors about it, and my view was if the board wanted us to do a securitization, we can do a transaction, but that’s not a business. We are here to conduct a business, not a series of individual transactions. The resources necessary are costly. If we can’t replicate that many times over, it wouldn’t be an efficient way for us to do business.
That being said, we continue to be in conversations about securitization with a number of players and how we might be able to bring that to bear. We think, ultimately, there will be the possibility for us—even if it’s only with specific customers, under specific circumstances. That would provide another source of liquidity.
ABABJ: Among the many crops Farmer Mac has been involved with is ethanol production. How is that doing?
Buzby: It’s doing fairly well. We got into ethanol at the beginning of 2006, and our portfolio grew to about $335 million at one point. Now, it’s down to about $130 million. We did take some losses on that portfolio—most notably in 2008 and 2009. But overall, we’ve made money on that industry.
We currently don’t have any delinquent loans in our ethanol portfolio. We expect that with where corn prices are; once we start to see financial statements coming in from the ethanol producers early next year, we’ll see that the producers themselves did pretty well this year. I expect that that portfolio will run off pretty quickly over the course of the next couple of years. It’s always a concern because it’s a volatile industry, and the economics can shift in a heartbeat with changing corn prices and changing gasoline prices.
There’s not a lot of ethanol financing getting done. Nobody’s asking us to do it. I think a lot of lenders are in the same position we are. We’ll certainly be cautious the next time those sorts of opportunities come about.
ABABJ: What do you think has been the chief lesson? Buzby: Don’t move too far too fast just because you see business opportunity. At the time, we were looking at ethanol as an opportunity to grow and charge higher fees. I wouldn’t say we shouldn’t have gotten into it, but we initially intended to get into it more aggressively than we actually did. Good thing we didn’t. Topics: Business Credit, Risk Management, Rate Risk, Credit Risk, Tweet Steve Cocheo Steve Cocheo’s career in business journalism has taken him to all 50 states and nearly every corner of banking in institutions of all sizes. He is executive editor of ABA Banking Journal, digital content manager of ababj.com, and editor of ABA Bank Directors Briefing. He coordinates the popular Pass the Aspirin and First Person features and wrote the booklet series Focus On The Bank Director. He is the only journalist to have sat in on three federal banking exams, was a finalist for the Jesse H. Neal national business journalism awards, and a winner of multiple awards from the American Society of Business Publication Editors. Related items
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2014-15/0259/en_head.json.gz/7999 | Another Testing
The recovery continues. Slowly. Slowly.
It’s frustrating (again) to have to say it, but it appears that this new year will offer us more of the same. Last year virtually repeating itself, as did the year before that and the year before that.
But this time there appears to be at least some optimism that the economy’s vicious cycle may be approaching its end, albeit with more of a whimper than a bang. And within a handful of bright, or at least not gloomy, spots there may be opportunities for transportation agencies and highway and bridge contractors to be pro-active in their fight against the agonizingly slow recession climb-out.
Not only is reauthorization a pivotal event (whether it happens or doesn’t) but also the states’ struggles to fund even essential work, and the need, that can no longer be put off, to do repair or maintenance work will be key influences. And then there is an election in November. As one leading transportation industry group analyst told Better Roads in Washington, D.C., in December: “2012: It’s a make-or-break year for transportation infrastructure.”
As the American Road and Transportation Builders Association (ARTBA)’s Dave Bauer points out, there are “50 autonomous markets” out there, making it not only difficult to come up with a single estimate for the United States, but also meaning that amid a sea of gloomy news there can be patches of economic sunshine that could make 2012 a very different place for some local or regional contractors and agencies.
A look at some of the leading forecasts for 2012 find a general agreement on the course the year will follow.
If economic forecasting is something of a crystal ball process, 45 professional forecasters surveyed by the Federal Reserve Bank of Philadelphia may be the best gazers in the business. These forecasters, surveyed by the Fed in November, predicted, on average, a real GDP growth of 2.4 percent in 2012 (the same figure that the National Association for Business Economics predicts; but Morgan Stanley and Kiplinger estimates are closer to 2 percent) and a 2012 unemployment rate of 8.8 percent. The Fed’s forecasters predicted growth of 2.7 percent in 2013 and 3.5 percent in 2014. The forecasters also predicted unemployment at 8.4 percent in 2013 and 7.8 percent in 2014. They expect nonfarm payroll employment to grow at a rate of 123,200 a month in 2012, compared to 106,500 a month in 2011. These same Fed forecasters estimate core Personal Consumption Expenditures (PCE) inflation in 2012 will average 1.6 percent, and 1.8 percent in 2013.
A Wall Street Journal survey of 52 economists in November put GDP growth in 2012 at 2.3 percent and 2.6 percent in 2013, with unemployment at the end of 2012 at 8.7 percent, and at 8.1 percent at the end of 2013.
But there seems to be little doubt the unemployment rate in construction, including transportation infrastructure, will exceed the national average through 2012 as it did, by a wide margin, through 2011.
Because the Federal Reserve is keeping the lid on short-term interest rates and also trying to bring down already low long-term rates, various estimates suggest there will be little significant movement of rates in 2012.
The election has the potential to be very influential to highway and bridge industries both before and after the polls close. “2012 is an election year, which does not body well for meaningful action in Washington,” says Association of Equipment Manufacturers (AEM) President Dennis Slater. “Both sides are already in full ‘campaign mode,’ it seems, and this presents a real danger of a stalling economy.” But the November elections may also offer some possible cause for optimism. A late-winter or early spring reauthorization, increasingly finding bipartisan support and looking more and more likely, might well help cement the idea in the public mind that transportation infrastructure is one of the essential investment programs for America’s future. This in turn may well become a position that might replace the refuse-to-spend-anything stands of some hardline politicians. Transportation investment may also be reasonably popular in the new Congress of 2013 which could be more supportive of transportation infrastructure funding than this one.
One thing that did happen in 2011 and that must continue in 2012 is the role of contractors in pressing Washington. Pressure in 2011 helped build the bipartisanship that unlocked stalled reauthorization negotiations. Industry groups urged contractors to be aggressive with members of Congress when they came back to their home districts, and get them out to jobsites and company facilities. Just how much of an effect such visits had is hard to pin down, certainly there have been major political and economic pressures, but there’s little doubt that contractor visits by congressmen helped start the ball rolling away from intransigence and towards bipartisanship. One leading Washington industry group lobbyist told Better Roads in December, “You can tell when you walk into the office of a member of congress who has made visits and who hasn’t, it’s a different atmosphere. They get it.” But as another said, “Our message is still not compelling enough.”
A Better Roads’ December survey of both agency and contractor readers reinforces the impression of uncertainty in the near future. But it also reinforces a growing hope for the long term, something that has been largely absent in our last two surveys. It’s almost as if the respondents were in a holding pattern mindset, working with less of everything – money, equipment, manpower, jobs – and looking beyond 2012.
From the Better Roads 2012 Outlook survey
Do you expect changes next year in dealing with government agencies, e.g. contract bids, environmental regulations, sustainability requirements, etc.?
It’s a fine distinction, but interestingly, government agencies are a little more optimistic than contractors. But when it comes to specifics, the uncertainty is equally shared.
Only a few contractors (9.7 percent) plan to increase spending on new equipment or fleet replacements, 43.1 percent expect to spend the same as 2011 but 47.2 percent expect to spend less. A lot of contractors (43.1 percent) expected their financial results in 2012 to be about the same as 2011, with little more than a quarter (26.4 percent) predicting better results, but 30.6 percent expecting to fare worse.
Both surveyed groups expect more maintenance and less big new projects, something we have come to expect in these times.
It has been my sense that the industry is changing and will never return to a pre-recession structure, that changes wrung by the recession will exert a long-term influence. Precisely how is, of course, still largely guesswork as the economy still barely avoids stalling. Our survey shows a majority of contractors (56.9 percent) are unsure what changes will happen to the industry in 2012, but only a few (8.3 percent) expect it to return to the way it was before the recession. More than a third (34.7 percent) believe the industry has changed forever. Slightly less than half (45.8 percent) of contractor respondents anticipate that the kind of highway and bridge construction work put up for bids by their state will change in 2012. Among agencies, 33.9 percent say they expect to make changes to the kind of work they out up for bid.
Do you expect your financial results this year to be better than last year, about the same, or worse?
Survey comments suggest contractors expect changes to include more maintenance and repair work and less new construction, smaller job packages, and relatively more bridge work as older bridges can no longer be left unworked. Or, as one respondent puts it, “What $ they have will be to band aid [sic] today’s problems.” Agencies looking at how the job mix may change also commonly see more repair and maintenance, smaller projects and more bridge work. Innovative bidding and “more quick fix, less rebuild” are also responses. One response suggests that, “projects will likely be those that can be advanced quickly, and will be projects that can be constructed within the existing footprint.”
Do you anticipate that the levels of highway and bridge construction work put up for bids by your state in 2012 will increase, decrease or stay about the same?
Almost half (48.6 percent) of contractor respondents say they expect the levels of highway and bridge construction work put out for bids by their state agencies to stay about the same, and almost 40 percent (38.9 percent) expect it to go down. Only 12.5 percent saw a raise, perhaps reflecting the fact that some regions may actually buck the trend either through better income streams or by addressing needs that can no longer be avoided. Among agencies a majority (53 percent) expect the amount of work they put up for bid will stay about the same, but 26.8 percent expect it to fall, with 20.2 percent looking at an increase, again possibly reflecting regional or local factors.
Do you anticipate that levels of highway and bridge construction work put up for bids by your agency in 2012 will increase, decrease or stay about the same?
Looking back at their operations over the past five years, most contractors say they have become leaner and more efficient, and those changes came not in the pursuit of expansion or profit but in the struggle for survival. In the coming year a majority of companies say they are seeking out new areas of work (51.4 percent) and nearly half (48.6 percent) say they would work in cooperation with other companies more than they have in the past. More than a quarter (26.4 percent) of contractor companies intend to use more software and digital planning and tracking, and almost one-fifth (19.4 percent) say they will bid a narrower range of work, i.e. specialize more. When asked where they see their companies in three years, a lot of respondents said they expected to be in much the same position they are in today, facing uncertainty and fighting for survival. But some expected | 金融 |
2014-15/0259/en_head.json.gz/8174 | Space Coast CU’s Mortgage-Backed Securities Suit on Hold
February 08, 2013 • Reprints A suit filed by Space Coast Credit Union against several Wall Street banks and ratings agencies over claims it lost more than $100 million from collateralized debt obligations that were sold to Eastern Financial Florida Credit Union, was recently put on hold.
The U.S. District Court for the Southern District of Florida said this week it would need more time to review the banks’ and rating agencies’ motion for dismissal.
Among the banks named in the Space Coast suit were Wells Fargo Securities, formerly known as Wachovia Capital Markets, J.P. Morgan Securities, formerly known as Bearn Stearns & Co. Inc., Merrill Lynch and its subsidiary, Merrill Lynch Home Loans, UBS Securities, and Barclay’s Capital Inc. Other defendants named were Richard S. Fuld Jr., former chairman/CEO of Lehman Brothers, and Moody’s Investors Service Inc.
Eastern Financial Florida was conserved by the NCUA in 2009 and merged soon after with Space Coast.
In its complaint filed in early 2012, the $3 billion Space Coast in Melbourne, Fla., said the CDOs led to a phony demand for residential mortgage loans, which also led to creating one of the state’s largest housing catastrophes.
Space Coast said creating and selling CDOs revolved around shoe-horning residential mortgage securities into Moody's and S&P's credit rating models to generate investment grade ratings, according to the CU’s suit. Investors were misled because they relied on the credit ratings, the credit union said. In May 2011, Space Coast filed a suit against Barclays saying the $10 million worth of the firm’s Markov CDOs bought by Eastern Financial Florida were based on riskier synthetic assets. The purchase allegedly led to losses on the entire investment. Last spring, the Wall Street banks told a federal court judge in Miami that Eastern Financial was warned about the risks associated with CDOs. “Each of the 12 CDOs at issue here was offered pursuant to a separate offering circular. These offering circulars contained page after page of disclosures and disclaimers, explaining to Eastern Financial the nature and risks of the particular CDO investments, the place of each tranche within each CDO, and the credit rating expected to be assigned by the rating agencies of each tranche,” according to a joint motion from the banks and ratings agencies to dismiss the suit.
A separate U.S. Department of Justice suit filed this week against the S&P and other firms claimed the agency assigned false high ratings on the CDOs in exchange for payments from several of its Wall Street clients. | 金融 |
2014-15/0259/en_head.json.gz/8175 | Baltimore's MECU Agrees to Buy Local Bank
April 04, 2013 • Reprints A big credit union has struck a deal to buy a small bank in Maryland.
The $1.2 billion Municipal Employees Credit Union of Baltimore announced Thursday it has agreed to buy the $61 million, two-office Advance Bank, also of Baltimore.
The agreement is subject to regulatory approvals and expected to close in the fourth quarter of this year, the federally chartered mutual savings bank and credit union said in the announcement.
No purchase price was announced, but the deal calls for MECU to acquire all loans, investments, real estate, accrued interest receivables and other banking-related assets, as well as to assume all deposits, Federal Home Loan Bank advances, and accrued interest payable. “Advance has served its community well for over 50 years and we look forward to building on that relationship and to bringing expanded products, services and convenience to its members,” said Bert Hash, CEO of the nine-location, 103,600-member MECU.
“We also look forward to expanding our footprint and to having Advance’s employees join the MECU family,” Hash said in the announcement.
“Both MECU and Advance are mutual institutions that are owned by their members,” said Advance President/CEO John Hamilton. “We are pleased that this new partnership will allow us to continue to serve our customers with the same care and commitment that they have come to expect.”
Advance Bank had $6 million less in assets at the end of 2012 than it did at the end of 2011, but made $196,000 last year compared with a loss of $836,000 the year before, according to the Investigative Reporting Workshop at American University.
The acquisition marks continued growth by MECU, which recently merged a small health services credit union in Baltimore.
MECU’s purchase continues a new trend of credit unions buying banks that includes acquisitions by Landmark Credit Union in Wisconsin, United Federal Credit Union in Michigan and GFA Federal Credit Union in Massachusetts all within the past year and a half. Show Comments
Eyes on the Senate | 金融 |
2014-15/0259/en_head.json.gz/8278 | The companies that helped define franchising success. October 1, 1998
URL: http://www.entrepreneur.com/article/16630
Like the wild west, franchising has a hearty share of pioneers: entrepreneurial companies that have broken ground in their industries, claimed impressive territories, lassoed lots of consumers and, most important, survived the onslaught of competitors.
But don't mistake these companies for old-timers content to sit back and reminisce about the early days of franchising. These pioneers are constantly seeking innovative ways to improve their systems and meet consumer demand as they face the new millennium.
As a result of their steadfastness, these franchises have become household names not only among consumers but also with prospective franchisees seeking a tried-and-true trail to success. To introduce you to these grandfathers of | 金融 |
2014-15/0259/en_head.json.gz/8329 | Local Small Businesses Get Boost from Cash Mobs
by Free Enterprise
Mar 28, 2012 Facebook Twitter Republish
The first International Cash Mob day was held recently, with online activists using social media to drive consumers en masse to locally owned stores throughout the world.
Reuters reports on the concept of cash mobs–flash mobs designed to create sudden, local spending–and how they are helping small businesses grow and compete in a difficult economy.
"I grew up in a family with a small business I know these small businesses can't afford a million dollar ad campaign. When you spend $1 at these local stores that stays in the community," said Kelly Ziegler, co-founder of the Cash Mob movement in Kansas City, Missouri.
The recent organized cash mobs included gatherings in Cleveland, Kansas City and New York, and the concept has also been used in Los Angeles, Boston and elsewhere in the U.S. and worldwide.. The concept’s founder, Andrew Samtoy, said the goal is for each participant to spend at least $20 in a locally owned business. Last November, Samtoy, a lawyer in Cleveland, held the first cash mob, and consumers spent on average $40 within an hour and a half. With such success, people in Samtoy’s social media networks picked up on the idea, leading to the inaugural Cash Mob Day on March 24.
There is no standard for how cash mobs are orchestrated. Approaches to rallying consumers vary depending on the location and the organizer. The mob in Cleveland, for example, focused on one business at a time, while organizers in Kansas City, Missouri, drove spending sprees in nine different locations simultaneously. In all cases, the local private sector found an influx of revenue that supports growth, something that is particularly important during slower sales seasons.
These events are a boon to small businesses facing growth-threatening circumstances like high taxes, regulatory uncertainty from Washington, and weak demand from the national consumer base. Cash mobs also give consumers a way to support their community’s small business, said Cleveland independent book store owner, Dave Ferrante. "We have a very limited marketing budget and it brought in people who wouldn't have been here. It sounds corny but we really build a base one customer at a time."
Sometimes the most successful innovations are the most obvious. Amy Cortese, the organizer for the Park Slope cash mob in Brooklyn, New York, said of the phenomenon: "It is surprising that no one had thought to do this before."
Given the success with consumers and businesses, however, these flash spending sprees may continue to offer America’s business community much needed commerce and local support.
Read more about how cash mobs are impacting locally owned businesses.
Small Business Saturday Set to Boost Local Economies
Tennessee & North Carolina Get a “Small Business Boost” | 金融 |
2014-15/0259/en_head.json.gz/8385 | Home builder PulteGroup tops 2012 stock winners list
Pulte Group and SprintNextel were among the year's big winners in stocks. / Richard Drew, AP by Adam Shell, USA TODAYby Adam Shell, USA TODAY Filed Under
NEW YORK - Investors who bought housing stocks nailed it in 2012.
Signs of a housing recovery that may finally stick catapulted home builder PulteGroup to the top of the performance charts. Pulte shares nearly tripled, rising 188%, ranking it No. 1 out of the 500 large-company stocks that make up the Standard and Poor's 500-stock index.
Pulte, which sells homes under the brands Pulte Homes, Del Webb and Centex, and also has a financial arm that issues home loans to buyers, has benefited from data point after data point that points to a real estate market on the rise.
Home sales, housing starts and prices all improved in 2012, just as the number of foreclosures fell. In November, housing starts hit 861,000, the second-highest level since July 2007. Pending home sales rose to a level not seen since 2009-2010, when the government was offering incentives to first-time home buyers. The more solid foundation in the housing market has also done wonders to rebuild shares of Lennar, the nation's largest home builder. Lennar, which ranked sixth best in 2012 returns, soared nearly 97%.
Other big winners in 2012 include four more stocks that doubled. Sprint Nextel, the nation's third-largest wireless carrier, rallied 142%. The telecommunications company benefited from the massive shift to smartphones and other hand-held communications devices. Sprint Nextel is the last of the major wireless players to offer unlimited data plans, which is boosting its smartphone sign-up subscriptions.
Whirlpool, which makes durable, big-ticket items such as refrigerators, freezers and dishwashers, gained 114%. The maker of consumer discretionary products benefited from an improving jobs market, the housing rebound and income gains for consumers. Similarly, online travel service provider Expedia also got a boost from the rebounding economy, as well as travelers' willingness to spend money on non-discretionary things such as family vacations. Its shares rose 112%.
Bank of America rose 109%. The bank's big move partly reflects a rebound from a steep 58% drop in 2011. It also profited from the improving housing market, which has boosted consumer confidence and reduced the number of underperforming and underwater mortgages. The financial sector was the best-performing of the 10 sectors in the S&P 500, gaining nearly 25%.
Investor optimism rose in March 2012 when Bank of America passed a bank stress test issued by regulators. That raised hopes that the "too-big-too-fail" bank, which now sports a measly 0.4% dividend yield, will get the OK from the government in 2013 to boost its dividend and buy back shares of its stock, both of which are investor-friendly.
But for every big winner on Wall Street there was a big loser.
Apollo Group topped the loser list in the S&P 500. The for-profit education provider fell 61%. The government has targeted Apollo and other for-profit educational institutions because of the high debt levels of graduates and a relatively poor employment track record for for students.
Computer chip maker Advanced Micro Devices tumbled 56% amid a tough environment for traditional PCs in a tech world shifting rapidly to smartphones and tablets. Shares of electronics retailer Best Buy plunged 49% as it struggled to compete with online sales and shoppers' increasing use of the Internet to comparison shop for the best deals. Another victim of the rapid shift toward hand-held devices and tablets was computer market Hewlett-Packard, whose shares fell 45%. J.C. Penney, the department store retailer, also suffered steep declines, losing 44%, amid investor concerns that its new pricing strategy would not be a cure-all for declining sales and lack of momentum in the hyper-competitive retail world.
Copyright 2014 USATODAY.comRead the original story: Home builder PulteGroup tops 2012 stock winners list
Home builder company soared 188% in 2012; four other stocks doubled their price. A link to this page will be included in your message. | 金融 |
2014-15/0259/en_head.json.gz/8437 | Laurie DavidRussell SimmonsBarry LevinsonBelle Knox Mark Miller
Author of The Hard Times Guide to Retirement Security and syndicated columnist.
Posted: December 16, 2008 05:24 PM
How to Profit from a Career Switch to the Non-Profit Sector
, Career Advice
, Career Change
, Careers
, Economy
, Layoffs
, Non-Profits
, Recession
, Switching To Non-Profit
, Working At a Non-Profit
Hey, all you laid-off, middle-aged bankers, accountants, programmers, marketers and other well-trained corporate types out there--listen up: Ever thought about working at a not-for profit?
The business world is crumbling all around us, but non-profits have been growing faster than either the business or government sector--and they're facing a shortage of talent. Best of all, the non-profit sector is gradually waking up to the potential of encore career switchers--people who want to move into new lines of work with meaning in the second half of life.
The MetLife Foundation and Civic Ventures reported in June that a big shift in focus already is well underway. They released a report showing that 5.3 to 8.4 million people between the ages of 44 and 70 are doing work that combines income and personal meaning with social impact, and noted that half of the people in this age group not already in encore careers see this as their future career direction.
But are non-profit employers interested in hiring them? Last month, MetLife and Civic Ventures released a second wave of research, this time focused more specifically on non-profit employer attitudes. This study contained more good news for anyone contemplating a non-profit career move:
--Non-profits are worried about finding top talent as they grow; 42 percent see recruiting and hiring talent as a top concern.
--Non-profits that have experience hiring late-career or retired workers are more likely than other employers to see them as appealing candidates, by a margin of 53 to 40 percent, and they seem to like candidates who've switched to non-profits from the business world.
--Nearly 70 percent say encore workers bring valuable experience to non-profits.
Non-profits are hardly immune to the effects of recession. Demand for their services will rise dramatically in the coming months and years as poverty levels and home foreclosures rise, yet they also face pressure on their own revenue sources. The bear market in stocks will force foundations to cut back on grants as their endowment portfolios shrink, and donations from frightened high-net-worth individuals will fall, too.
But longer term, non-profits are expected to keep growing. In fact, the sector will need to hire 640,000 new senior managers by the year 2016, according to The Bridgespan Group, a strategic consulting firm that works with non-profits. And Bridgespan's data shows that the total number of non-profit groups grew at a 6 percent annual rate from 1995-2004.
"All the data says there is a looming leadership deficit," says David Simms, managing partner of Bridgestar, an arm of Bridgespan that recruits managers for non-profit positions. "That's not to say there aren't talented people already in the non-profit sector, because there are. But in terms of supply and demand, you have older boomers leaving to retire or simply to do something new. So there will be a lot of positions to fill."
Simms says job seekers don't need to target only non-profits where they have subject expertise, or even a pre-existing passion for the work. Employers, he says, are looking for people with functional expertise in areas like finance, technology, marketing and communications and general management.
But transitioning to non-profit work does require some recalibrated thinking. He advises job-seekers to get their feet wet by volunteering or serving on the board of a non-profit, which can be a great way to learn about cultural and organizational differences.
Compensation also can be an adjustment. Pay may not be at Wall Street levels--that is, if there actually are any Wall Street jobs left for comparison. "They pay a bit less than the private sector, but it's not like you have to survive on peanut butter," Simms says.
Job-hunting techniques also need adjusting. Only 10 percent of non-profit openings are posted on any of the online job boards, although Bridgestar itself operates a site for non-profit senior management jobs that it hopes will grow into a major portal for these opportunities.
And most non-profit hiring is local; candidates generally aren't interested in relocating and most employers are too small to have funds available to pay for relocation. That makes local person-to-person networking the most important job-hunting tool, Simms says.
"Friends serving on boards of non-profits can be a great networking tool. Also think about your alumni association or your university's career resources. Non-profits will often notify them of openings."
You can find more background articles and research on this topic over at RetirementRevised.com.
The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living (Bloomberg)
by Mark Miller
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2014-15/0259/en_head.json.gz/8494 | Is Equifax Selling Your Salary Information?
Jeff Ifrah
less- Explore: Data Collection Equifax Personally Identifiable Information Wages Tweet Send
According to a recent NBC News report, Equifax, one of the three largest American credit reporting agencies, has assembled an enormous database containing employment and salary information for more than 190 million U.S. adults. Very few people knew of the existence of the database, but the information in it allegedly is being sold to third parties without consumers’ consent.
According to the report, an Equifax-owned company, The Work Number obtains substantial information– through the assistance of human resources departments and other sources around the country including government agencies and Fortune 500 companies. The Work Number then sells this information. According to The Work Number’s website, payroll information comes from over 2,000 employers. Reports have stated that the database is so detailed that for many individuals it has weekly pay information, as well as other sensitive information such as the identity of the individual’s health care provider and whether the individual has ever filed a claim for unemployment benefits.
Seven members of Congress recently wrote a letter to Equifax asking for more information on the legality of The Work Number. “What is most concerning to us is that this massive database appears to generate revenue using consumers’ sensitive personal information for profit,” the letter states.
Companies state that they agree to sign up for The Work Number because it gives them a simple way to outsource employment verification of former employees. Companies provide their human resources information to The Work Number and The Work Number automates the process. There is no longer a need for companies to spend the time to verify a former employee’s work history.
In 2009, according to the NBCNews.om report, Equifax said that the data The Work Number had amassed covered 30 percent of the working U.S. population, and the database is now adding 12 million records annually according to NBCNews.com.
It is not entirely clear what Equifax is doing with the data, where it is selling it, and what can be sold without consent. In a statement after NBCNews.com broke the story Equifax said, “The Work Number does not provide debt collectors with salary/pay rate/income information. They can request only employment verification data which The Work Number will provide if there is permissible purpose as detailed by the Fair Credit Reporting Act.” Equifax also denied reports that the salary information is sold to debt collectors.
Equifax did confirm that “pay rate” information is shared with third parties including mortgage, automobile, and other financial services companies — as authorized under the Fair Credit Reporting Act.
Since the data is considered a credit report, consumers are entitled to one free report every year, which shows the data contained in the reports and what entities have requested the data.
Companies that collect and share data will continue to face scrutiny from state and federal government agencies that have shown a consistent effort focused on protecting consumers’ privacy rights. Consumer protection laws continue to evolve and provide individuals with specific rights as well as restrictions on companies regarding information that can be shared. All companies that deal with consumer information need to take a proactive approach to make sure that they are in compliance with all governing laws. The FTC, in particular, has shown a willingness and focus to utilize laws such as the Fair Credit Reporting Act to take enforcement action against companies offering employment and credit data.
Topics: Data Collection, Equifax, Personally Identifiable Information, Wages
Published In: Consumer Protection Updates, Finance & Banking Updates, Labor & Employment Updates, Privacy Updates, Science, Computers & Technology Updates
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Facebook Should Small Investors be Exposed to the Risks of Hedge Funds? Testimony of Joseph P. Borg Director, Alabama Securities Commission and President of the North American Securities Administrators Association, Inc. Before the United States House of Representatives Committee on Oversight and Government Reform Subcommittee on Domestic Policy
Chairman Kucinich, Ranking Member Issa, Members of the Subcommittee,
I’m Joe Borg, Director of the Alabama Securities Commission and President of the North American Securities Administrators Association, Inc., better known as NASAA. I appreciate the opportunity to testify today on an issue of importance to retail investors.
Introduction Let me begin with a brief overview of state securities regulation, which actually predates the creation of the Securities and Exchange Commission (SEC) and the NASD by almost two decades. State securities regulators have protected Main Street investors from fraud for nearly 100 years. The role of state securities regulators has become increasingly important as over 100 million Americans now rely on the securities markets to prepare for their financial futures, such as a secure and dignified retirement or sending their children to college. Securities markets are global but securities are sold locally by professionals who are licensed in states where they conduct business.
In addition to licensing, state securities regulators are responsible for registering some securities offerings, examining broker-dealers and investment advisers, providing investor education, and most importantly, enforcing our states’ securities laws.
Similar to the securities administrators in your states, the Alabama Securities Commission prosecutes companies and individuals who commit crimes against investors, and brings civil actions for injunctions, restitution, and penalties against companies and individuals who commit securities fraud. Another of our responsibilities is to order administrative actions to discipline brokers and firms who engage in violations of rules and regulations by selling unsuitable investments, charging excessive fees, and otherwise taking advantage of investors.
State Securities Regulators Have a Unique Understanding of the Challenges and Risks Confronting Investors
State securities regulators have a special appreciation for the plight of everyday investors who are confronted with a bewildering array of new and complex investment products. We are the only securities regulators who interact with, and advocate for, individual investors on a personal basis each and every day. We read their complaint letters, listen to their phone calls, and conduct in-person interviews with them – often in their homes – all to ensure that their individual complaints and questions are addressed. We also hold interactive “town meetings” and investor education events. While these events allow us to provide your constituents with valuable investor education, they also provide us with the opportunity to listen and gain valuable insight into their thought processes regarding investments and investment decision-making. In short, state securities regulators are uniquely qualified to address the potential impact of making alternative investments such as hedge funds widely available to the average individual investor.
It is our experience that the vast majority of individual investors who would characterize themselves as “actively engaged” in their investments do not buy securities – rather they are sold securities. In other words, most individual investors rely upon the recommendations of salespersons or the media hype surrounding a particular instrument when making investment decisions.
It is now common knowledge that the average retail investor will not read and cannot understand the typical prospectus. Due to the length and complexity of these documents, retail investors have by necessity come to rely upon the representations of salespersons or easily digested media characterizations.
Additionally, there are vast numbers of individuals who are entirely passive in the selection of their investments. Many of our nation’s school teachers, fire fighters, policemen, and other state, county, and municipal employees rely upon professional advisers to manage their pension funds wisely.
My remarks should not suggest to you that I believe the retail investing public is unable to properly evaluate investments. Nor am I suggesting that regulators should, by adopting a paternalistic approach, withhold alternative investments from the average retail investor. What I do suggest to you today is the following: New investments with highly complex structures, opaque investment holdings and strategies, and dubious profitability have arrived on Main Street, and precisely because of this trend, the investor protections afforded by statutes like the Investment Company Act are more important than ever.
Currently, the world’s leading financial experts cannot agree on either the risks or the merits of many of these investments. Due to a lack of transparency, the level of individual and systemic risk attached to these investments remains unknown to the individual investor. Fee structures and lack of full disclosure obscure real returns. The structure of these new instruments places investors in a vulnerable position, subject to the whims of controlling persons, the lure of past performance “promises”, and literally without recourse. Even the very basic threshold questions of what these new instruments are and what federal registration provisions apply to them appears to have confounded those charged with making such decisions. In light of the complexity and uncertainty surrounding these instruments, allowing them to be offered to the public without appropriate regulatory protections poses serious risks to investors.
The Investment Company Act Offers Vital Protections Against the Risks Inherent in the Public Offering of Alternative Investments
As a threshold matter, we believe that when private equity firms engage in public offerings they should be subject to the requirements of the Investment Company Act of 1940 (“the ICA”). The ICA is a shield, protecting main street investors against the potential misuse of their invested funds. It also helps to inoculate the market as a whole – and our economy – against the harm that purely speculative financial interests can sometimes have and the loss of investor confidence that often results.
In 1936, Congress recognized that the Securities Act of 1933 and the Securities Exchange Act of 1934 were insufficient to protect investors from the unique risks posed by investment pools. These pooled investment vehicles, or investment companies, posed special problems to the investing public. As unregulated entities, the investing public was required to accept the representations of the managers on blind faith. While the Securities Act of 1933 and the Securities Exchange Act of 1934 protected investors from potential abuse by corporate managers and financial intermediaries, they could not adequately protect investors from abuses by organizers of pooled investment vehicles. After an exhaustive four-year study, Congress enacted the ICA to impose additional layers of protection for investors, including independent Boards, fiduciary duties, shareholders rights, heightened disclosures, restrictions on permissible investments, and even limits on fees and loads. While mutual funds are the classic and best understood type of investment company, companies such as leveraged buyout funds have traditionally been considered investment companies. However, until now, the risks associated with these funds have been limited because they have always functioned as either private investment companies or they have relied solely on investments from qualified purchasers. The public offering of these investments raises new and serious concerns for millions of everyday investors.
The Blackstone IPO, as the most prominent representative of these vehicles, circumvents the governance protections that the ICA mandates, even though it is no longer a private investment company. For example, under the ICA, a fund must have independent directors who represent the interests of public investors. That is not the case with Blackstone. It is critical to understand that in reality, both pre and post IPO, Blackstone functions as an investment company that earns its income through investments. There is no basis for exempting Blackstone from the protections mandated under the ICA.
The SEC Has Taken a Consistently Broad View of What Constitutes an Investment Company
The SEC has viewed this type of structure broadly and flexibly since the enactment of the ICA in 1940. The SEC made the following findings in its Tenth Annual Report issued in June 1944:
The “Investment Company” concept
Although the terms “Investment company” and “Investment trust” have been part of the language of the financial community for some time, a definition precise enough to distinguish them sharply from holding companies on the one hand and operating companies on the other did not exist prior to the enactment of the Investment Company Act of 1940. The distinctive feature of the Act in this connection is its use of a quantitative or statistical definition, expressed in terms of the portion of a company’s assets which are investment securities. Thus the statute provides, inter alia, that a company is an “investment company” if it is engaged in the business of investing, reinvesting, owning, holding, or trading in securities, and owns investment securities (defined to exclude securities of majority-owned subsidiaries and of other investment companies) exceeding 40 percent of its total assets (exclusive of Government securities and cash items). However, the Act provides machinery whereby the Commission may declare by order upon application that a company, notwithstanding the quantitative definition, is nevertheless not an investment company. Thus, companies that believe the application of the quantitative test would unreasonably cause them to be classified as investment companies are given the opportunity of obtaining administrative dispensation by showing that they are primarily engaged in a business or businesses other than that of investing, reinvesting, owning, holding, or trading securities, either directly or through majority-owned subsidiaries or through controlled companies conducting similar types of businesses. Since November 1, 1940 about 50 such applications have been filed. Knotty questions have been raised by these applications, including difficult and complicated problems of valuation especially with respect to the so-called “special situation” companies”.
Such an application was filed on behalf of a company, Bankers Securities Corporation, whose portfolio contained securities of companies engaged in a great variety of enterprises, railroads, utilities, banks, newspapers, insurance companies, industrial companies of every kind, hotels, apartment houses, retail establishments, department stores, and many others. Extensive hearings were held before a trial examiner, briefs were filed and oral argument was had before the Commission. The company contended that it was primarily engaged in the real estate and department store business because the bulk of its investments were in those fields. Based upon the history and operations of the company, its investments in special situations, its statements of policy, and other relevant factors, the Commission concluded not only that the record before it fell short of sustaining the claim that the company was primarily engaged in non-investment company business but that the record demonstrated affirmatively that the applicant was organized and always had been operated as an investment enterprise. The applicant appealed from the order of the Commission denying the application to the United States Circuit Court of Appeals for the Third Circuit. On November 21, 1944 that Court unanimously affirmed the Commission’s order. Bankers Securities Corp. v. SEC, 146 F.2d 88 (3d Cir. I944)
In its administrative opinion in Bankers Securities Corporation, the SEC recognized that even funds engaged to a significant degree in “special situations” – as is Blackstone – qualify as investment companies:
In the course of its history, applicant has obtained large and controlling interests in various businesses, disposed of some, and retained others. Its officers have actively managed controlled businesses for the purpose of rehabilitating important investments in the portfolio. This is a well-recognized form of investment company business, known as dealing in ‘special situations’. . . . Not only does this record fall short of sustaining applicant’s claim that it is primarily engaged in non-investment company business, but it demonstrates affirmatively that Bankers Securities Corporation was organized, and has always been operated, as an investment enterprise. Public investment in the company was invited and has been maintained on representations which meant, in essence, that the company was diversifying stockholders’ risk by a varied investment program. Stockholders were not asked to rely on the skill of applicant’s management in the merchandising, or in any other specific mercantile or commercial business. They were given to understand that the management was alert always to find profitable repositories of invested funds, and the history of the company bears out the understanding, created in stockholders, that the company was not committing itself primarily to any specific business.
In the Matter of Bankers Securities Corp., 15 S.E.C. 695 (April 7, 1944).
For decades, the SEC has been guided by In re Tonopah Mining Co., 26 S.E.C. 426 (1947). Tonopah set forth five factors to determine whether a company was operating as an investment company – the company’s history, its public representations, the activities of its officers and directors, the nature of its assets, and the sources of its income – all of which serve as a proxy for what a “reasonable investor” would believe to be an investment company. Tonopah identified the most important factor as whether “the nature of the assets and income of the company … was such as to lead investors to believe that the principal activity of the company was trading and investing in securities.” Blackstone unquestionably meets this test. The Blackstone structure is intended to mask “the nature of the assets and income of the company” in order to avoid the strictures of the ICA, and to allow its continued operation as a de facto private company. Neither purpose serves the interests of investors or marketplace.
Blackstone Is an Investment Company and Should Be Treated as One for the Benefit of Investors
Blackstone attempts to escape the conclusion that it is and has always been an investment company through a purely structural maneuver: adding a new layer in its corporate form (Blackstone LP) – and then selling units in Blackstone LP to the public. But measured by the true nature of its activities and its investment holdings, Blackstone should be regulated as an investment company. As the prospectus makes abundantly clear, investors are being told they will share in the rewards and bear the risks of Blackstone’s investment activities. The point is reinforced through the identification of carried interest as a significant source of potential gain for investors.
Presumably Blackstone would suggest that their offering poses no undue threat to investors because, while it may be risky, those risks are disclosed. The public policy issue, however, is how much risk, even when disclosed, should be transferred to the general public. In a perfect world, a careful financial adviser will say Blackstone is too risky, too opaque, and too conflicted so we won’t invest. However, the real world operates much differently. Securities salespersons sell whatever their firms tell them to sell. They are not likely to delve deeply into the “disclosed risks” with the customer sitting across the kitchen table. The IPO disclosures come dangerously close to an affirmative statement by Blackstone that it will conduct its business in whatever way it chooses and that investors agree to waive any rights or remedies for such conduct (see p. 179-181 of the S-1). It is for precisely these reasons that Congress enacted the ICA: Not just to ensure disclosure, but to impose affirmative duties on such companies and to delineate boundaries in the operation of these inherently risky enterprises.
A fundamental principle of U.S. securities law is that of substance over form. This principle is essential to regulators as well as the investing public. This is because it facilitates our ability to stay ahead of the myriad ways that speculators will attempt to separate people from their money. The securities laws, including the ICA, are remedial in nature. Their purpose is to protect investors and to act as a shield between the economy and financial speculators. Congress intended that the SEC not ignore the substance of an investment, and look beyond its form if a fundamental purpose of the law may be imperiled.
In the Blackstone IPO (which apparently will now be followed by offerings by Kohlberg Kravis Roberts & Co. and Och-Ziff Capital Management), a fundamental purpose of the ICA – protection of the investing public from the potential risks of investment pools – is imperiled. When private speculators turn to the public markets for capital, what Justice Brandeis called “other people’s money,” they cannot continue to operate as if they were still a private concern.
Conclusion Alternative investments have a legitimate place in our financial markets. Indeed, we do not object to access to these investments by retail investors so long as they are accompanied by all appropriate and necessary investor protections, rights, and remedies. This can only be accomplished by ensuring such investments are offered pursuant the appropriate Act. Your constituents, America’s retail investors, are not accustomed to the realities of alternative investments: complex capital structures; portfolios of illiquid and difficult to value securities; the use of substantial leverage; concentration of investments; self-dealing transactions with affiliates; excessive compensation arrangements detrimental to their interests; and disenfranchisement as shareholders. Congress sought to eliminate these elements of alternative investments from the public marketplace. Surely your constituents are still deserving of the protections so wisely provided to them.
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2014-15/0259/en_head.json.gz/8787 | Biography of Herbert J. B. Willis
Bronx County, NY Biographies
HERBERT JEWELL BLAKE WILLIS - Throughout a career that has a record of great value to the financial interests
of The Bronx, Mr. Willis has been a decided influence in shaping the affairs of prominent banking institutions
by means of the positions of special trust to which he has from time to time been assigned. Today, as vice president
of The Bronx National Bank, he is a highly esteemed member of that group of business men and financiers, who, to
a very considerable extent, maintain the fundamental status of the business life of this section of the city.
Herbert Jewell Blake Willis, son of Henry Spencer Willis, a chemist, and Angenette (Blake) Willis, was born February
3, 1874, in Brooklyn, where he attended the public schools and Brown's Business College; and he has been since
1910 a member of the New York Chapter of the American Institute of Banking, an auxiliary school of New York University,
where he received the first elements of his knowledge of banking. Mr. Willis began work when he was sixteen years
old, in the employ of the old Nassau Bank, at the corner of Beekman and Nassau streets, New York City, where he
continued until the bank became merged with the Irving National Bank. The stockholders then appointed him custodian
of assets and acting liquidation agent of Nassau Bank, a position of honor and trust such as is adequately filled
only by those who have absolutely proven their solidarity in financial matters. Mr. Willis remained in that office
until 1918, when at the solicitation of the board of directors of The Bronx National Bank of the city of New York,
he accepted the position of cashier, which he held until November, 1923, when he was elected vice president of
the banks.
In civic affairs, as well, Mr. Willis has shown efficiency and ability, as for seven years he was the town clerk
of the Borough of Tenafly, New Jersey. Fraternally, he is affilited with Alpine Lodge, No. 77, Free and Accepted
Masons, of New Jersey; and he is a member of the Sons of the Revolution, and of the Closter Polo Club, of Closter,
Herbert Jewell Blake Willis married, September 19, 1894, in Tenafly, New Jersey, Catherine Westervelt, daughter
of Andrew Westervelt, who was born in Tenafly, New Jersey, descendant of an early Dutch settler of that township,
and Catherine (Westervelt) Westervelt. Their children; 1. Amy Willis, who married Martin Frobisher, professor of
bacteriology in Johns Hopkins University, Baltimore, Maryland. 2. Angenette Willis, who married Lieutenant John
William Black, in June, 1924, the year of the graduation of Lieutenant Black of the United States Air Service from
West Point.
From: The Bronx and its people A History 1609-1927
Board of Editors: James L. Wells,
Louis F. Haffen
Josiah A. Briggs.
Historian: Benedict Fitspatrick
Publisher: The Lewis Historical Publishing Co., Inc.
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Bronx County, NY
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2014-15/0259/en_head.json.gz/8807 | Treasury Printing Less Currency As Cash Use Declines
· Wednesday, July 6, 2011
· 3 Comments The printing presses at the Bureau of Engraving and Printing aren’t running as fast as they used to, but it isn’t because the government is spending less:
The number of dollar bills rolling off the great government presses here and in Fort Worth fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Department did not print any $10 bills.
The meaning seems clear. The future is here. Cash is in decline.
You can’t use it for online purchases, nor on many airplanes to buy snacks or duty-free goods. Last year, 36 percent of taxi fares in New York were paid with plastic. At Commerce, a restaurant in the West Village in Manhattan, the bar menus read, “Credit cards only. No cash please. Thank you.”
There is no definitive data on all of this. Cash transactions are notoriously hard to track, in part because people use cash when they do not want to be tracked. But a simple ratio is illuminating. In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation’s economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent of economic activity.
“This morning I bought a gallon of milk for $2.50 at a Mobil station, and I paid with my credit card,” said Tony Zazula, co-owner of Commerce restaurant, who spoke with a reporter while traveling in upstate New York. “I do carry a little cash, but only for gratuities.”
It is easy to look down the slope of this trend and predict the end of paper currency. Easy, but probably wrong. Most Americans prefer to use cash at least some of the time, and even those who do not, like Mr. Zazula, grudgingly concede they cannot live without it.
Currency remains the best available technology for paying baby sitters and tipping bellhops. Many small businesses — estimates range from one-third to half — won’t accept plastic. And criminals prefer cash. Whitey Bulger, the Boston gangster who lived in Santa Monica for 15 years, paid his rent in cash, and stashed thousands of dollars in his apartment walls.
Indeed, cash remains so pervasive, and the pace of change so slow, that Ron Shevlin, an analyst with the Boston research firm Aite Group, recently calculated that Americans would still be using paper currency in 200 years.
“Cash works for us,” Mr. Shevlin said. “The downward trend is clear, but change advocates always overestimate how quickly these things will happen.”
Cash also provides a degree of anonymity and privacy that paying by credit card, debit card, or check never will. If I buy something with cash, the government won’t know who bought it, where they bought it, or what it was that was purchased. Yes, cash makes criminal transcations easier, which is one of the reasons that laws have been written to regulate and monitor large cash transactions. However, there are also perfectly legitimiate reasons why someone would want their buying history to be secret, which is why any move toward a government-mandated “cashless” society should be viewed with suspicion.
Personally, I’m one of those people who uses electronic money more than cash these days, mostly because it’s just more convenient than carrying around large amount of bills all the time. Nonetheless, there are some transactions for which cash will always be a more efficient means of payment so, any evolution to a “cashless” society anytime soon seems a long way off to say the least.
FILED UNDER: Doug Mataconis, Economics and Business, Quick Picks Related Posts:
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Once Again, Nobody Wants A Dollar Coin
PD Shaw says: Wednesday, July 6, 2011 at 13:36
Having had my credit card number stolen recently, I’m reluctant to use my credit card for small transactions (under $20 or $30, depending). Paying for small items with cash makes it easier to keep track of credit card transactions and monitor who you’re giving your card number to.
Like or Dislike: 0 0 Vast Variety says: Wednesday, July 6, 2011 at 13:37
Other than the occasional snack out of the work vending machine I can’t remember the last time I actually used cash to pay for something. I don’t recall the last time I ever wrote a check either. I use a debit card for everything.
Like or Dislike: 0 0 mantis says: Wednesday, July 6, 2011 at 13:59
I just noticed yesterday that I hadn’t paid for anything in cash in more than a month, and I don’t even know where the checkbook is. Everything goes on the credit card, which gets paid off at the end of each cycle, and the points go toward vacations. | 金融 |
2014-15/0259/en_head.json.gz/8855 | Finance 99% of Income Protection claims paid out at record speed Print article 2013-01-10 17:39:19 - dg mutual, an Income Protection specialist for self-employed professionals, has paid out 99% of claims for the fifth year running while settling claims faster than ever before. It is the fifth year the Birmingham based Mutual Society has paid out 99% of Income Protection claims, which is one of the highest pay-out rates in the industry. The speed of payments has improved with 67% of claims paid out within one week and 95% settled within two weeks; a 5% improvement on the previous year.
As 2012 continued to see tough economic times with the high cost of living, it has never been more vital for self-employed professionals to have Income Protection insurance to help stay afloat in times of illness.
CEO of dg mutual, David Thompson, says: "Income protection insurance is there to provide an income when you are unable to work due to illness or injury so it’s essential our customers receive their money as soon as possible. “Our values in settling claims quickly are very important to us so it's great to see that 2012 was a record year for us.”
The 2012 figures show that each new claim:
• averaged 15 days absence, proving it’s not just long term conditions that can be covered
• the average age of a claimant was 46
• 7% of dg mutual members made a new claim in the year.
About dg mutual
dg mutual has specialised solely in Income Protection since 1927 – originally designed to protect the incomes of dentists but now including most professional occupations.
dg mutual is authorised and regulated by the Financial Services Authority and an active member of the Association of Financial Mutuals (AFM).
As a Mutual Society dg mutual has no shareholders as it is owned by its members and is run solely for the benefit of its members who have the right to share in the running and surpluses of the business.
For further information, please contact Catrina Laskey on 01603 219191 or email [email protected] Author:Catrina Laskeye-mailWeb: www.reflectionpr.co.ukPhone: 01603219191 Disclaimer: If you have any questions regarding information in these press releases please contact the company added in the press release. Please do not contact pr-inside. We will not be able to assist you. PR-inside disclaims contents contained in this release. Latest News | 金融 |
2014-15/0259/en_head.json.gz/8961 | Speech by SEC Staff:
Keynote Address at 2007 Mutual Funds and Investment Management Conference
Andrew J. Donohue1
Director, Division of Investment Management
Thank you very much. Before I begin, I would like to remind you that my remarks represent my own views and not necessarily the views of the Commission, the individual Commissioners or my colleagues on the SEC staff. It is a privilege and an honor to be here before you today as the Director of the Division of Investment Management. Throughout my 30-plus-year career in the fund industry, I have developed a genuine and healthy respect for the Securities and Exchange Commission, the Division of Investment Management and the regulatory regime that fostered a vibrant and varied fund industry that, most importantly, was beneficial to America’s investors. Since the passage of the Investment Company Act in 1940, the fund industry has grown and prospered in part because of the ingenuity, entrepreneurial spirit and commitment to excellence exhibited by most fund industry personnel. I believe, however, that one of the fund industry’s greatest strengths is its effective regulatory regime and the protections it has afforded American investors.
The mutual fund regulatory regime has a fundamental focus of managing the conflicts of interest inherent in the fund structure and of ensuring that the interests of investors are paramount to those of fund management. It is those ideals that I am proud to represent and hope to continue to foster as the Director of the Division of Investment Management. Being successful in this mission, however, is not an easy task. Thankfully, I have some tremendous role models. As Division Directors, Paul Roye, Barry Barbash, Marianne Smythe, Kathryn McGrath, Joel Goldberg, Sydney Mendelsohn, Anne Jones and Allan Mostoff displayed astute wisdom, strong leadership, practical problem-solving skills and an unwavering commitment to investor ideals. As a result, funds stand in the position of prominence they hold today: at over $10 trillion in assets and the unrivaled investment vehicle of choice for the average American. Funds have achieved this milestone despite the very well-publicized anti-investor behavior revealed during the so-called mutual fund scandals of the very recent past. They have also reached this milestone despite an admittedly comprehensive regulatory regime that some have labeled rigid, out-of-date, and even anti-competitive. I, however, strongly disagree. I believe our fund regulatory regime with effective SEC oversight to be true strengths of the industry, and I seek to follow the example of my well-respected predecessors to promote investor-oriented policies and a healthy fund industry benefiting investors.
While passing the $10 trillion threshold was a significant event for the fund industry, it would be foolish to gloat about past accomplishments and today’s achievements. If we are to be successful in serving America’s investors, the fund industry and fund regulators need to focus on where we are going tomorrow.
Looking toward the future, there are several areas that I believe we need to work on. The first is modernizing regulations so that they are effective in the 21st century. The second is continuing to recognize the increasing globalization of the securities markets and the importance of international coordination and cooperation. The third, and possibly most important, is remembering the basics, those fundamental regulatory requirements that helped to build a strong fund industry by protecting fund investors. The fourth is promptly identifying and confronting our fears, not ignoring possibly risky practices or emerging negative trends or issues.
II. Modernizing Rules for the 21st Century
If the Division of Investment Management wants to retain its role as a relevant and respected regulator in the 21st century, then we must seriously consider which of the regulations we administer has outlived its utility or is in need of a 21st century makeover. In the latter category, the investment adviser and investment company books and records rules immediately jump to mind. I think the current requirements in some cases may, at a minimum, be confusing to funds and advisers. In other cases, I think the requirements may be inadequate for the needs of our examiners. And in all cases, I think today’s issues with the books and records requirements stem in part from the fact that the requirements were primarily developed in the early 1960s when the world, especially from a technology perspective, was a very different place. By the way, in the beginning of the 1960s, there were less than 200 mutual funds having assets of less than $20 billion. Thus, the books and records requirements were written for a far different environment than exists today.
Back when the SEC adopted its current books and records requirements, what we today call “snail mail” was actually the gold standard in communication. Neither overnight delivery, two-day priority packaging nor e-mail--let alone instant messaging--yet existed. If an investment adviser had a particularly urgent message, I suppose the adviser headed down to the local telegraph office and had the telegraph officer bang out a message. In fact, when I started working in the industry in 1975, the firm I worked for was “advanced” and had a telegraph type system in our offices (as well as an IBM selectric typewriter). Needless to say, the world has certainly changed—as has the fund industry. Unfortunately, the books and records requirements generally have NOT changed along with it.
If the recordkeeping rules are not working well for the fund industry and are not working well for our examiners, then the ultimate losers in that equation are fund investors. Therefore, I believe it is time to engage in a significant overhaul of our recordkeeping requirements after a thoughtful and comprehensive review. The staff of the Division of Investment Management has begun this effort—with a view toward moving away from the paper and file-drawer focus of our current recordkeeping rules and focusing instead on technology-based alternatives. Essential to this process is an understanding of how funds and their investment advisers implement technology currently to maintain and retrieve books and records and meet their other regulatory requirements. In order to improve our understanding of these practices, Investment Management staff have been participating in some on-site examinations, though not in an examiner’s role. Instead, they are meeting with CCOs, compliance staff and back-office personnel in order to listen and learn from those in the trenches regarding practical and effective recordkeeping techniques. In addition, Division staff are working with examination staff to understand the practical limitations that the current rules may bring to bear on the recordkeeping process and the SEC’s effective oversight of the fund industry.
While this recordkeeping modernization initiative is critically important, it is not an initiative that should be rushed. If the SEC is going to modernize the books and r | 金融 |
2014-15/0259/en_head.json.gz/8962 | Speech by SEC Chairman:
Introductory Remarks at April 13, 2004 Open Meeting
Chairman William H. Donaldson
Foreign Bank Exemption From Insider Lending Prohibition
Good morning. The first item on today's agenda is a final rule, recommended for adoption by the Division of Corporation Finance that would establish an exemption for qualified foreign banks from the insider lending prohibition enacted as part of the Sarbanes-Oxley Act. The Act itself provides banks an exemption from the insider lending prohibition for certain lending by banks that are insured under the Federal Deposit Insurance Act. However, generally only domestic banks satisfy these criteria. Today's recommended rule would exempt those foreign banks that satisfy specified criteria similar to those that qualify domestic banks for the statutory exemption. The recommended rule helps establish a more level playing field for foreign and domestic banks. Importantly, while the rule removes unnecessary burdens for foreign registrants seeking access to our markets, it is also consistent with the goals of the Sarbanes-Oxley Act. The rule applies only upon the satisfaction of carefully crafted conditions that are designed to track the policies underlying the existing exemptions in the Act. By removing burdens that might discourage foreign participation in our markets while at the same time respecting the go | 金融 |
2014-15/0259/en_head.json.gz/8963 | PR Newswire Association LLC
Via E-mail: [email protected].
Jonathan G. Katz, Secretary
U.S. Securities & Exchange Commission
450 Fifth Street
Re: Release Nos. 33-8145; 34-46768; File No. S7-43-02
Ladies & Gentlemen:
PR Newswire Association LLC is pleased to submit this letter in response to the Securities and Exchange Commission's request for comments on its Proposed Rule: "Conditions for Use of Non-GAAP Financial Measures".
PR Newswire established the immediate, simultaneous electronic distribution of full text press releases to news media in 1954. Today, operating around the clock, 7 days a week, PR Newswire accurately, quickly and cost-effectively transmits information received directly from the issuers of that information to thousands of print, broadcast, wire and online news media, the investment community and individual investors in the United States and overseas. PR Newswire offers access to 22,000 media outlets worldwide, over 58,000 registered journalists, and up to 3,600 websites, which include major consumer and investor portals, online publications and news sites, and equities trading and industry-specific sites with a cumulative audience of more than 100 million visitors monthly. Through the financial portals, like Bloomberg, Dow Jones and Reuters, news is actively pushed to millions of professional investors where it is often enhanced with commentary and analysis. Recipients of this news have access not only to the stories that journalists may write about the news release but the full text of the news release itself. Retail investors are actively alerted to corporate news through the media but also through their own direct access to many heavily trafficked portals like Yahoo!Finance, AOL and www.msn.com that carry the PR Newswire feed. Through the PR Newswire feed, all constituents, both institutional and retail investors alike, have access to these corporate stories simultaneously, ensuring a level playing field, and providing access to information quickly and efficiently. We are strongly supportive of Section 409 of the Sarbanes-Oxley Act which requires companies to: "disclose to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer, in plain English, which may include trend and qualitative information and graphic presentations, as the Commission determines, by rule, is necessary or useful for the protection of investors and in the public interest."
As noted above, PR Newswire has been following this same philosophy for almost 50 years and we appreciate the opportunity to comment on portions of the Proposed Rule Change where we believe we have the benefit of years of experience working with corporations, investors and the media.
The proposed new item 1.04 to Form 8K would require the filing with the Commission of releases of announcements disclosing material non-public information about completed annual or quarterly fiscal periods. The proposal cites comments from the American Bar Association (ABA) which suggest that requiring an 8K filing of earnings reports which would:
"1) enhance the attention and level of care companies bring to those disclosures because companies would be aware that the disclosures will become part of the formal reporting system"1 and 2) "would bring those disclosures into the formal disclosure system where they would be available electronically on a widespread basis". The current practice, followed by over 97% of companies trading on US stock markets2 is to issue a news release to the general public via a commercial newswire as soon after the close of the quarter that financial results are available. This requirement is part of the public company guidelines promulgated by the various self regulatory organizations ("SROs"). While we believe that adding the requirement to file a Form 8K for certain quarterly earnings results may be a positive enhancement to the current "best practice", we do not believe that a Form 8K filing alone should ever be deemed sufficient.3 Investors and the media have been following the same tried and true methods of public dissemination of information through the newswires for decades; and corporations can rely on the fact that their most important constituents will find their news easily and efficiently on the newswire. Investors have been trained actively to follow aggregate financial databases (like Dow Jones, Reuters, Bloomberg, etc.) and financial Web sites (like Yahoo!Finance, AOL, etc.) and know that they can expect to find all breaking stories from the public companies in which they invest. We take issue with the second point suggested by the ABA, i.e., that submitting an 8K would bri | 金融 |
2014-15/0259/en_head.json.gz/9057 | Former JPMorgan Chase employees may be arrested in coverup
Tampa Bay TimesFriday, August 9, 2013 9:58pm
Government authorities are planning to arrest two former JPMorgan Chase employees suspected of masking the size of a multibillion-dollar trading loss, a dramatic turn in a case that tarnished the reputation of the nation's biggest bank.
Economy's low tide exposes JPMorgan Chase's messy deals
JPMorgan to pay $1.7 billion for role in Madoff scheme
A dream derailed for former poster child for immigration reform
The arrests are expected to take place in London in the coming days, according to people briefed on the matter who asked not to be identified by the New York Times.
The employees — Javier Martin-Artajo, a manager who oversaw the trading strategy from London, and Julien Grout, a low-level trader responsible for recording the value of the soured bets — could ultimately be extradited under an agreement with British authorities.
The losses at the heart of the case stemmed from outsize wagers made by the traders at JPMorgan's chief investment office in London. The losses, which JPMorgan initially disclosed last May, have since reached more than $6 billion.
After more than a year of gathering evidence about the bet, federal prosecutors and the FBI in Manhattan have concluded that the two employees lowballed losses as the trades spiraled out of control.
While authorities are not pursuing charges against JPMorgan's top executives, according to the people briefed on the matter, the bank is nonetheless bracing for civil charges from regulators. In an unusually aggressive move, the SEC is seeking to extract an admission of wrongdoing from the bank.
Former JPMorgan Chase employees may be arrested in coverup 08/09/13
[Last modified: Friday, August 9, 2013 9:58pm] | 金融 |
2014-15/0259/en_head.json.gz/9207 | From: Bart (129.171.32.13)
Subject: The Collapse of American Power Date: March 19, 2008 at 6:11 am PST
In his famous book, "The Collapse of British Power" (1972), Correlli Barnett reports that in the opening days of World War II, Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power.From their inception, America's 21st century wars against Afghanistan and Iraq have been red-ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the U.S. Treasury bonds that the U.S. government issues to finance its red-ink budgets.The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the U.S. savings rate is approximately zero, the United States is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the U.S. government's domestic expenditures. Foreign borrowing is paying U.S. government salaries � perhaps that of the president himself � or funding the expenditures of the various Cabinet departments. Financially, the United States is not an independent country.The Bush administration's $410 billion deficit forecast is based on the unrealistic assumption of 2.7 percent GDP growth in 2008, whereas in actual fact the U.S. economy has fallen into a recession that could be severe. There will be no 2.7 percent growth, and the actual deficit will be substantially larger than $410 billion.Just as the government's budget is in disarray, so is the U.S. dollar, which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve's effort to stabilize the very troubled financial system with large injections of liquidity.A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the United States can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a U.S. Treasury auction of new debt instruments is not fully subscribed.The United States has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war or the lost U.S. GDP from diverting scarce resources to war. Experts who are not part of the government's spin machine estimate the cost of the Iraq war to be as much as $3 trillion.The Republican candidate for president said he would be content to continue the war for 100 years. With what resources? When America's creditors consider our behavior, they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it and believes that foreigners will continue to accumulate U.S.debt until the end of time.The fact of the matter is that the United States is bankrupt. David M. Walker, comptroller general of the United States and head of the Government Accountability Office, in his Dec. 17, 2007, report to the U.S. Congress on the financial statements of the U.S. government noted that "the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of Sept. 30, 2007." In everyday language, the U.S. government cannot pass an audit.Moreover, the GAO report pointed out that the accrued liabilities of the federal government "totaled approximately $53 trillion as of Sept. 30, 2007." No funds have been set aside against this mind-boggling liability.Just so the reader understands, $53 trillion is $53,000 billion.Frustrated by speaking to deaf ears, Walker recently resigned as head of the GAO.As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in World War II, or against a small landlocked European country that clings to its independence and is not a member of the European Union?Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest U.S. statistics as reported in the Feb. 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of U.S. gross domestic product and U.S. manufacturing comprised 12 percent of U.S. GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.The dollar has even collapsed in value against the euro, the currency of a make-believe country, the European Union. France, Germany, Italy, England and the other members of the European Union still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the United States owes the world. The U.S. "superpower" cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.The United States will never repay the loans. The American economy has been devastated by offshoring, by foreign competition and by the importation of foreigners on work visas, while it holds to a free-trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.When the dollar ceases to be the reserve currency, the United States will no longer be able to pay its bills by borrowing more from foreigners.I sometimes wonder if the bankrupt "superpower" will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.To find out more about Paul Craig Roberts, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.COPYRIGHT 2008 CREATORS SYNDICATE INC. | 金融 |
2014-15/0259/en_head.json.gz/9287 | World Trade WT/MIN(96)/ST/28
Organization (96-5194)
MINISTERIAL CONFERENCE
Singapore, 9-13 December 1996
Statement by H.E. Ms. Ayfer Yilmaz
Minister of State for Foreign Trade
It is a great privilege for me and my delegation to participate in this First Ministerial Conference
of the World Trade Organization. I would like to take this opportunity to thank the Government of
Singapore for the wonderful organization of this Conference and for the warm hospitality extended
to us.
I would also like to express our appreciation to the distinguished Director-General for his
important contributions that enabled the World Trade Organization to take its place among the foremost
international organizations of our day.
I am confident that the WTO will gain even further prominence in the years to come as the
dominance of trade in our national economies become even more important and its contribution to
the well-being of the peoples of the world will be more and more evident.
The first two years of this Organization have shown that the decision taken at Marrakesh to
establish the WTO has been a correct one. With its membership of over 120 countries and many others
waiting to join the Organization, the WTO has already consolidated its position. The report of the
Director-General outlining the activities of the Organization during its first two years illustrates this
reality very accurately.
The Turkish Government believes that liberalization of trade at regional level contributes to
trade expansion in the global context.
In the regional framework, the most important step taken by Turkey was the completion of
the Customs Union with the European Union on 31 December 1995. The Customs Union will be the
main factor shaping Turkey's liberal foreign trade policies and orientations within the wider WTO
framework.
Indeed, the steps taken by Turkey or those that will be taken in the very near future are in
compliance with its obligations for the completion of the Customs Union. As they are parallel to its
commitments vis-à-vis the World Trade Organization, these measures will facilitate and accelerate
Turkey's implementation of the WTO provisions.
In this regard, I would like to give brief information about the areas in which we are taking
measures within the framework of the Customs Union. They cover the following:
- Abolition of tariff and non-tariff barriers;
- common customs tariff towards the third countries;
- customs code;
- liberalization of trade in agro-industrial products.
Internal practices
- Competition policy;
- intellectual and industrial property protection;
- rules on State aids;
- public procurement procedures;
- harmonization of standards;
- harmonization of agricultural policy;
- environmental cooperation.
Turkey is also a very active member of the Black Sea Economic Cooperation Organization,
(BSEC), and the Economic Cooperation Organization, (ECO). These two organizations cover an area
ranging from the Balkans in Europe to the boarders of China in Asia. Many members of these
organizations have not yet joined the WTO. Turkey is trying its best to promote the objectives of the
WTO also within the framework of these organizations. We see our regional initiatives as a
complementary element of our participation in the global trading system.
Turkey is convinced that a liberal international trade system based on the principles of free
competition, non-discrimination and elimination of barriers to trade will serve the interests and welfare
of the whole global community. We see our regional initiatives as a complementary element of our
participation in the global trading system embodied in the WTO.
The measures we have taken in light of these policies have proved that we are on the right
Indeed, when Turkey started to implement its trade liberalization policies in the 1980s, it ranked
67th in the world share of exports and 51st in imports. Today, it has become 36th in the former and
27th in the latter. When considered from the trade volume aspect, we rank as the 16th country in
the WTO. Before the Customs Union with the European Union, the tariff protection in Turkey was
about 21 per cent. It is now down to 5.6 per cent and is set to fall further to 3.5 per cent with the
implementation by Turkey of the EU's Uruguay Round commitments.
We believe our main priority should be to see that the Uruguay Round commitments are fully
implemented. At the same time multilateral trade liberalization should be sustained. Every support
should be given to achieve the efficient functioning of the WTO and the multilateral trading system. We are of the view that introduction of new issues for the future work of the WTO should not promote
new forms of protectionism.
We recognize the need for time and assistance by some developing countries to achieve these
objectives. We know that once they are ready, they will be even more enthusiastic to participate in
new initiatives. However, these considerations should not lead us to be reluctant to new issues. Because,
the ultimate objective before us is full liberalization and we should not lose momentum so soon after
we have embarked on this promising venture we call the WTO.
We believe that we should start preparing the ground for further initiatives. The Turkish
approach to issues like trade and investment; trade and competition and more transparent rules in
government procurement will be shaped by these considerations. In fact, as the world gradually abandons
protection through tariffs, countries begin to observe the enforcement of trade-related measures more and more strictly. Failure to implement the universally acclaimed principles like fair competition or
intellectual property rights, or compliance with international standards concerning consumer safety
or the environment, will in practice eliminate the opportunities of a country for marketing its products
abroad. Under these circumstances, any country that wishes to have a place in world trade, integrate
into the world economy and stimulate economic growth, should try to implement these principles as
effectively as possible.
Taking this opportunity, I would like to briefly state the views of Turkey on different issues
that we shall be taking up during this Conference.
I. BUILT-IN AGENDA
Dispute Settlement System
Dispute settlement system is the heart of the WTO system. It gives the opportunity to every
country to protect its trade interests not on the basis of economic power but on the basis of common
and enforceable rules. We understand that between January 1995 and 18 October 1996 over 40 distinct
matters have been raised in the DSB, and in respect of 12 different matters dispute settlement panels
have been established. This demonstrates that the dispute settlement system is an outstanding success
of the WTO's first two years. However, the Dispute Settlement Understanding should be interpreted
in such a way to attach special consideration to the regional initiatives which are complementary to
the multilateral system embodied in the WTO. Furthermore, all Members should refrain from attitudes
representing double standards vis-à-vis the regional integrations.
Notification obligation
Great importance should be attached to the work of notifications. We believe that transparency
of the WTO system mainly depends on how complete the compliance with notification requirements
is. Moreover, a credible notification process is essential for the effective operation of the WTO. Hence,
we support the establishment of a strong body with a mandate to review the notification obligations
and procedures throughout the WTO Agreement.
Twenty-eight countries have applied to join the WTO. Many of them are major developing
countries, and among the most significant emerging markets. We believe that further participation
of developing countries in the multilateral trading system will contribute substantially to the expansion
of world trade, economic growth and prosperity to the benefit of all. We attach great importance to
the success of the accession negotiations. The accession procedures should of course be concluded
in compliance with the basic principles of the WTO. We welcome the recent conclusion of accession
process for Ecuador, Bulgaria, Mongolia and Panama.
Technical cooperation and developing countries
As stated by the Director-General in his report, the technical cooperation activities of the WTO
have gained further importance with the accession of new members and active participation from many
other developing members.
Trade and development and the participation of the developing countries
We all recognize that the active participation of developing countries in the Uruguay Round
negotiations have facilitated the creation of the WTO. Participation of the developing countries strengthens the multilateral trade rules and disciplines and paves the way to the full universality of
the Organization.
Since the entry into force of the WTO Agreements, there has been significant growth in
international trade both in goods and commercial services and the share of the developing countries
both in output and revenue terms in international trade has increased.
We also recognize that developing and the least developed countries need both technical and
financial assistance to implement the development policies and to adjust themselves to the competitive
environment in the global economy.
In this respect, we encourage the Committee on Trade and Development to continue its work
and support the "WTO Plan of Action" for LLDCs and the "Guidelines for WTO Cooperation" prepared
by the Committee.
Additional market access opportunities should be granted to the LLDCs as outlined by the
Director-General in the Lyon G7 Summit.
Turning to unfinished business, we must ensure a meaningful and important outcome of the
current negotiations in the services area. These are the negotiations on basic telecommunications and
maritime transport. Our aim is to obtain substantial market access and national treatment commitments
on MFN basis. In this context, our priority should be the successful conclusion of the ongoing
negotiations in these areas.
Bearing in mind the share of commercial services in international trade and the need for further
liberalization in this sector:
1. Turkey expects all Members to contribute to the negotiations on basic
telecommunications. 2. We should be prepared to start negotiations on financial services in 1997. Further
liberalization in this field will ensure transparency, non-discrimination and additional
gains for all the participating countries. 3. Working Party on GATS Rules should continue its work to provide a sound basis for
the initiation and completion of the negotiations on emergency safeguard and public
procurement. Strengthened multilateral disciplines will serve to establish a balance
between the rights and the obligations of the developed and developing Members. 4. Negotiations on maritime transport services should start as soon as possible. On the other hand, specific needs and the requirements of the developing and the least developed
Members should be taken into account to allow their full participation in the process for further
liberalization.
The inclusion of intellectual property protection in the Uruguay Round through the TRIPS
Agreement is a major achievement.
Strengthened multilateral disciplines in intellectual property protection and enforcement will
ensure smooth operation of market forces and fair competition in the global economy.
We would like to stress the importance of full implementation of the TRIPS Agreement and
in particular the need to extend the scope of geographical indications beyond the wines and spirits to
foodstuffs, handicraft and agricultural products. Discussions should start in 1997 to enable the
TRIPS Council to devote sufficient time and energy to develop a work programme for further negotiations
in this field.
The environment and trade relationship is another issue that deserves our attention. Turkey
is fully conscious of the importance of environmental concerns. It welcomes the work that was
undertaken by the Committee on Trade and Environment, addressing the relationship between trade
and environment.
There is still a need to continue to work on the evaluation of relationship between the multilateral
environmental agreements and the multilateral trading system, as well as ensuring transparency.
We would like to underline the need to avoid recourse to unilateral and discriminatory trade
measures under the guise of environmental protection and to pay appropriate attention to the special
conditions and needs of the developing countries.
Regional trade agreements
We believe that regional arrangements facilitate the integration of the countries of that region
with the global economy. We are of the view that full compliance with the provisions of the GATT 1994
would make the regional agreements complementary to the multilateral system.
The establishment of the "Committee on Regional Trade Agreements" and the work undertaken
by that Committee is an important indication of the political will of the Member countries to bring
the regional agreements before the WTO for examination.
The Committee should continue its work as outlined in its terms of reference to achieve greater
transparency and consistency with GATT 1994 rules.
Textiles and clothing, functioning of the TMB
Agreement on Textiles and Clothing (ATC) is one of the most important achievements of the
Uruguay Round. I believe that full implementation of the ATC will enable the developing countries
to increase their export earnings and to achieve sustainable development through participation in
international trade.
We are satisfied with the impetus gained during the first stage of implementation of the ATC. We encourage all WTO Members to apply the ATC fully so as to achieve smooth transition and
integration of all the textiles and clothing products to the GATT 1994 at the end of the transition period.
We recognize the important job done by the TMB for supervising the implementation of the
ATC under difficult circumstances.
We are confident that greater transparency will be provided in the TMB's future work.
Turkey fully supports the ongoing work in the WTO for the harmonization of non-preferential
rules of origin and believes that the document on Integrated Negotiating Text for the Harmonization
Work Programme will facilitate the so-called Harmonization Work Programme. We also believe that
it contributes to the efficiency of the negotiations and provides a basis for the coherence of the rules
that are being established.
Turkey gives importance to the special needs of net food-importing developing countries as
well as the least developed ones stemming from the implementation of the Agricultural Reform
Sanitary and phytosanitary measures
Being aware of the necessity of developing a procedure to monitor the process of international
harmonization and the use of international standards, guidelines and recommendations, Turkey endorses
the approach set out by the relevant committee.
Furthermore, we reiterate our commitment to the full implementation of the Agreement including
its notification and other transparency provisions.
II. NEW ISSUES
Turkey supports the idea of establishing a group to conduct a study and develop a multilateral
agreement on government procurement practices.
However, such a multilateral initiative should be flexible enough to accommodate a variety
of existing national procurement regimes. It should also permit satisfactory time-limit to countries
to adjust their domestic procedures, keeping in mind that a new imitative is a long-term process.
In order to follow up the developments in the area of government procurement, Turkey applied
to the Committee on Government Procurement for observer status. It was granted this status as of
Turkey is ready to join a consensus aiming at beginning an examination of the relationship
between trade and investment.
However, in the conduct of this work in the WTO, special attention must be paid to development
dimension and the priorities of the developing countries.
Another aspect that needs to be considered in the conduct of this work is the outcome of the
ongoing negotiations at the OECD on Multilateral Agreement on Investment (MAI). I believe that
important progress has been achieved during these negotiations. The results of the MAI could contribute
to the work aiming at an examination process of the relationship between trade and investment.
On the other hand, in order to ensure the development dimension of the issue the educative
contribution of the UNCTAD to this process is essential.
Trade and competition policy
The need for strengthening the coherence between trade and competition policies today is more
evident. In fact, in some of the Uruguay Round Agreements and Understandings there are provisions
regulating trade-related competition issues. I believe that in international trade, open and secure market
access conditions against anti-competitive practices could be achieved.
I would like to state our readiness to join a consensus within the WTO on the proposal to establish
a working group open to all Members to study issues raised by Members relating to trade and competition
policies in order to identify any areas that may merit further consideration in the WTO framework.
Trade and labour standards
I believe that the debates on labour standards do not constitute a priority issue of the WTO
Agenda. The International Labour Organization is the most appropriate forum for such work.
Further liberalization
Turkey supports the new sector specific initiatives like Information Technology Agreement
(ITA) and the enlargement of the coverage of zero for zero treatment for certain pharmaceutical products
for further tariff liberalization.
Turkey gives high priority to the simplification and harmonization of import and export
procedures since complexity of such procedures could constitute a burden to trade. Therefore, we
recognize the significance of trade facilitation as an important part in arriving at lower trade barriers
and improved market access.
I am convinced that under your guidance, we shall conclude our meeting in Singapore,
successfully, and on the eve of the fiftieth anniversary of the multilateral system we shall look towards
the next century with more confidence. | 金融 |
2014-15/0259/en_head.json.gz/9319 | About Public Offering Contact us: Subscribe to Public Offering Public Offering Special Sections
Is Private Equity Cheating?
Chief mergers and acquisitions reporter for the NYT and editor of Dealbook
Capital Markets and Investments Corporate Finance Print this post
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Bookmark and share If Jerry Springer had a show about business, this might have been an early episode. There was even special security in the audience. On Friday, I moderated a panel at CBS’s annual Private Equity and Venture Capital Conference. The topic: Pushback — Private Equity’s Social Impact. The rabble-rouser among the panelists was Andrew Stern, the outspoken president of Service Employees International Union (SEIU). On the other side, defending the private equity industry, was Gwyneth M. Ketterer ’91, the COO of Bear Stearns Merchant Banking and John Franchini, Partner, Milbank, Tweed, Hadley & McCloy. With the panel taking place less than a month after the SEIU staged a massive protest that drew police to the scene in the middle of a presentation by Carlyle Group’s David Rubenstein at a Wharton conference, the organizers of this conference were understandably nervous. They took precautions by having undercover officers in the audience, which quickly became standing-room only. While there were no protesters this time, Mr. Stern didn’t disappoint: he threw several proverbial grenades into the room that caused sparks to fly. He derided private equity on its tax treatment, its debt load and its treatment of its employees. By constantly wrapping his arguments against the industry in the context of being an American patriot and by framing the debate as one about inequalities, he quickly gained some sympathy from the audience members (most of whom were either in private equity or students seeking to enter the industry). But when it came to offering concrete ways to improve the industry and its relationship with labor, he was short on details. Ms. Ketterer, a feisty veteran of the industry, sparred with Mr. Stern, calling him out on his lack of specific suggestions. For example, she asked why unions were typically not willing to take equity in lieu of cash as a way to incentivize the workforce. Mr. Stern said he agreed that they should be more progressive in their thinking. Several vocal members of the audience lit into the private equity industry, at times becoming quite emotional while Ms. Ketterer and Mr. Franchini tried to explain the dynamics of the marketplace. Towards the very end, in effort to reach a common ground, Ms. Ketterer said she appreciated how explosive the issues had become and expressed an interest in finding a solution. But the fight seemed to never end. Like Mr. Springer’s show, the panel ended with audience members still involved in a raucous debate. Stay tuned for the next episode. Comments
by Mike Wilson | March 07, 2008 at 1:45 AM
Very interesting situation
This post is closed to new comments.
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Private Equity and Venture Capital Club
The Private Equity Council | 金融 |
2014-15/0259/en_head.json.gz/9502 | Asia and the IMF: Toward a Deeper Engagement
Posted on November 12, 2009 by iMFdirect Update: IMF Managing Director Dominique Strauss-Kahn delivered speeches in both Singapore and Beijing. In Singapore he spoke of a leadership role for Asia, while in Beijing he addressed how China is leading the world out of recession and the need for further reform of China’s dynamic economy.
By Anoop Singh
(Version in 日本語)
Asia’s standing and influence continues to grow and the IMF is working with the region to help it meet its full economic potential as it recovers from the global crisis. In mid-November, the Managing Director of the IMF, Dominique Strauss-Kahn, begins a six-day trip to Asia. First he’s in Singapore attending the 16th Asia-Pacific Economic Cooperation (APEC) Finance Ministers’ Meeting, and then goes on to China November 16-17, one of the region’s most dynamic economies. In Singapore, the Managing Director co-chairs a roundtable discussion on economic policy challenges facing the region and will deliver a lecture on the role of Asia in reshaping the post-crisis global economy. In China, he will discuss with the authorities their policy response to the global crisis and ask senior government officials about their outlook for the Chinese and world economies.
The visit is another sign of the importance which the IMF attaches to its relationship with Asia as the region leads the world away from crisis toward global recovery. It will also provide Asia and the IMF an opportunity to deepen their engagement.
Asia has contributed much to the global recovery and contributed significant financial resources to the Fund to help it assist other members to cope with the crisis. First, as highlighted in the October 2009 Asia and Pacific Regional Economic Outlook, that was recently launched in Seoul and Tokyo, the powerful stimulus measures that many countries took to counteract the crisis have helped the region lead the global recovery.
There is growing recognition in many countries for the need to reorient the drivers of medium term growth. As Premier Wen Jiaobao recently indicated, China has “made vigorous efforts to stimulate consumption and make domestic demand, particularly consumer spending, the primary driver of economic growth”. The Managing Director of the Monetary Authority of Singapore, Heng Swee Keat, recently took the view that “to sustain growth, Asian economies with big domestic markets will need to continue with structural reforms to boost domestic demand…. Measures to encourage new investments in the corporate sector and in public infrastructure, as well as in education and healthcare, will be necessary for most Asian emerging economies in order to realize their growth potential”. Greater reliance on domestic sources of growth will, in time, offset weak export demand from advanced economies at the center of the crisis.
Asian countries have played a critical and catalytic role in boosting the IMF’s resources. In the early days of the crisis, Japan provided $100 billion to bolster the IMF’s lendable resources during the economic crisis. This commitment— the single-largest supplemental financing contribution by an IMF member country—has helped catalyze other contributions to the Fund and reflects Japan’s continuing global economic leadership. Through the New Arrangement to Borrow and Note Purchase Agreements, Asia has raised its contribution to the Fund by $178 billion, including a pledge of $ 50 billion from China, $10 billion each from India and Korea, and $2 billion from Singapore.
More recently, the Reserve Bank of India paid $6.7 billion for 200 metric tons of gold from the IMF—about half the total sales volume of 403.3 metric tons that was approved by the IMF’s Executive Board in September 2009. This transaction will help toward putting the Fund’s finances on a sound long-term footing and, by helping the Fund finance its subsidy account, enable it to significantly increase concessional lending to the poorest countries.
The IMF, for its part, has continued to expand ways to hear views from the region. A notable development will be the inaugural meeting later this week in Singapore of a new, advisory group of eminent representatives from across Asia who will be hosted by the Managing Director. The Fund will seek the views of this group on the economic issues facing Asia and how the IMF can best help in meeting those challenges. Indeed, we are already adapting to meet the needs of our Asian members. Take the example of the IMF’s global role through the lens of one of its key responsibilities: surveillance. Using the knowledge we garner from our near-universal membership, we have brought more of a cross-country perspective to our analysis, both within and outside our region during this critical period of global financial crisis when timely information on what other policymakers were doing was critical. This has given regional policymakers access to a wider global perspective and the thinking of economic teams across the world. This improvement has already been acknowledged by some Asian voices, such as Singapore’s Finance Minister Tharman Shanmugaratnam [see YouTube video below]. In addition, the IMF has redesigned its lending facilities to better match the conditions in borrowing countries. For example, we extended an exceptional access loan to Mongolia earlier this year, and so averted a potential balance of payments crises that would have demanded disastrous cuts in social services In contrast, that country’s financial markets have now stabilized, capital outflows have been reversed, and inflation has fallen.
Through all these different channels, Asia is rising to meet the responsibilities of its growing economic weight and that trend is clearly illustrated in its closer and stronger relationship with the IMF.
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Filed under: Asia, Economic Crisis, IMF, International Monetary Fund, Multilateral Cooperation, recession Tagged: | APEC, China, gold, Heng Swee Keat, India, Mongolia, Reserve Bank of India, Singapore, Strauss-Kahn, Tharman Shanmugaratnam « Asia’s Corporate Saving Mystery Post-Crisis: What Should Be the Goal of a Fiscal Exit Strategy? » | 金融 |
2014-15/0259/en_head.json.gz/9538 | HomeNational PostNewsOpinionMarketsInvestingPersonal FinanceMortgages & Real EstateTechExecutiveEntrepreneurJobsSubscribeExecutiveExecutive Women
Executive Women
Credit Suisse’s most senior female investment banker says it will be years before women make up a greater share of senior positions in bankingAmbereen Choudhury & Elisa Martinuzzi, Bloomberg News | October 3, 2013 3:56 PM ETMore from Bloomberg News
Marisa Drew, Credit Suisse Group AG’s most senior female investment banker in Europe, expects it will take at least five years before women start to gain a greater share of senior positions in the industry.
“It takes about 10 years to see the talent pipeline come through, and we’re probably about four to five years in from the inflection point of when we saw a materially more evenly balanced intake at the junior level in Europe,” Drew, 49, said in an interview at Credit Suisse’s office in London.
Banking trails other industries in the number of board positions held by women, according to data compiled by recruitment firm Egon Zehnder International. Women make up about 19 percent of European bank boards, compared with 33 percent in the household-products industry, which has the highest level of female representation, the data show. Fiona Woolf, a partner of the law firm CMS Cameron McKenna LLP, this week was named to be the 686th Lord Mayor of London, only the second woman chosen to head the financial district’s municipal government in 800 years.
One of the keys to boosting female representation is to retain bankers when they move from processing transactions originated by more senior colleagues to striking their own deals, making more direct contact with clients, Drew said.
Typically, that promotion coincides with women starting a family, and it “can be overwhelming,” said Drew, who has been married for 24 years and has no children. Credit Suisse, Switzerland’s second-largest lender, doesn’t disclose specific targets for boosting the number of women at its investment bank.
Companywide Numbers
Like most banks, Zurich-based Credit Suisse doesn’t publicly report the number of women employed by division, and instead provides companywide percentages. In 2012, more than a third of the bank’s employees were female, including 16 percent in senior management, filings show. The bank had about 46,300 employees as of June 30.
At Deutsche Bank AG, continental Europe’s biggest lender, women accounted for about 18 percent of managing directors and directors at the firm at the end of 2012, up from about 15 percent four years earlier, according to its latest annual report. About 22 percent of UBS AG’s directors or more senior employees were female at the end of 2012, according to the annual report of Switzerland’s biggest bank, compared with 21 percent in 2011.
Investment banks lag behind U.K. and European consumer banks in female representation with 10 percent of the boards made up of women, according to a survey published by British recruitment firm Astbury Marsden in September.
“Investment banking still hasn’t evolved materially in terms of the job structure and creating the flexibility that other industries like perhaps tech have, but it’s changing,” Drew said. “We as managers have to be more creative and less rigid and adopting the attitude of: ‘I don’t care where you get it done or how you get it done as long as you get it done by when the client needs it done.’”
RelatedTerence Corcoran: Battle of the boardroom sexesWading into women-on-boards discussion ‘risky’Making sense of ‘comply or explain’ board gender-diversity policies
Drew works with the Women in Banking & Finance industry association and backed a flexible working initiative at Credit Suisse, which was tested during the London Olympics in 2012. She’s also devised jobs for bankers who deal with clients to allow them to work part time or from home.
Drew, who’s been in investment banking for more than 25 years, was named co-head of European investment-banking department with Ewen Stevenson, 47, in May, replacing Jamie Welch. The firm ranks ninth in providing European merger advice this year and seventh in managing stock sales in Europe, Middle East and Africa, according to data compiled by Bloomberg.
Drew’s Deals
She moved to Credit Suisse from Merrill Lynch & Co. to head its European leveraged corporate finance business in 2003. A U.S. citizen, she relocated to London in 1999 where she helped set up Merrill Lynch’s European leveraged finance group, which helps companies raise funds for deals and investments.
She helped finance the first cellular phone network in Medellin, Colombia and cable television systems in Europe as well as technology companies in Eastern Europe after the fall of the Berlin Wall. This year, Drew helped raise money for London- based Liberty Global Plc’s purchase of Virgin Media Inc., the U.K. pay-TV operator in a $24 billion transaction.
Even though the number of women in senior positions hasn’t changed much in the past decade, she said, behind the numbers attitudes in U.K. have morphed even among women. Drew said that when she first arrived in the U.K., women were hesitant to attend networking meetings.
‘Really Shocked’
“I held the first meeting, and no one showed up,” Drew said. “I was really shocked. At that time, there was a big reluctance to be part of something that was female centric as they feared it would hurt their reputation or standing with their male peers.”
Drew said she has focused her attention on schools and universities where she sought to persuade careers advisers a banking job would be just as suitable for women as other professions, in spite of the industry’s demands for long hours.
“There is a lead time to getting people through to become senior bankers,” said Chris Roebuck, visiting professor at Cass Business School in London, likening the situation to the approximate six years needed to become a senior doctor in the U.K.’s National Health Service. “You cannot suddenly produce senior female investment bankers from nowhere.”
www.bloomberg.com
Topics: Executive, Executive Women, Credit Suisse Group AG., Financial Services Sector, Marisa Drew, women in business, Women's Issues
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2014-15/0259/en_head.json.gz/9557 | Coastal Insurance Reforms a Good Start Coastal Insurance Reforms a Good Start
Eli Lehrer September 04, 2009 Originally published in The Star News Print
When he took office at the beginning the year, Insurance Commissioner Wayne Goodwin set his sights on North Carolina’s broken coastal insurance system. Now the legislature—with Goodwin’s guidance—has agreed to a plan that will fix the system’s most serious problems. The new coastal insurance system makes sense for the state and greatly reduces the chances of an all-out insurance collapse. But it’s only a start.
Still, what has happened is a near miracle since, at this time last year, the state faced the real possibility of a mass exodus from its homeowners’ insurance market. The problem stemmed from the state’s Beach Plan: a government-mandated, industry run mechanism originally set up to provide limited, high-cost coverage for coastal residents unable to get it elsewhere. The Plan had grown to an unsustainable size. While neighboring Virginia—which has far more total insured value along its coast than North Carolina-- forced only a few hundred homeowners to join its own equivalent of the Beach Plan, North Carolina’s plan writes coverage for almost one state homeowner in 20. Although it has to charge a lot for coverage, the Beach Plan still doesn’t take in enough to cover its expected losses were a major hurricane to hit. Following a big storm, the Beach Plan, under state law, would have had to charge special taxes—assessments—to every insurer in the state. The assessments, due all at once, would have devastated the industry. Larger insurers would have taken major profit hits and left the state. Smaller, North Carolina-only insurers might well have drained their operating reserves, become insolvent, and gone out of business. Tens of thousands of North Carolina residents could have lost homeowners insurance altogether.
Last summer, Farmers’ Insurance, then the state’s number eight carrier, withdrew from the market rather than face the risk of these assessments. Among industry insiders, furthermore, it was an open secret that at least one other large company had prepared a plan to withdraw from the state during 2009 if the situation did not improve.
Now it has. The reforms raise rates in the Beach Plan, reduce the risk of assessments, and encourage more private competition. Already, it seems to be working: one insurer has announced its intention to enter the state and Goodwin tells me that another is on its way. The great bulk of North Carolina residents who live inland, furthermore, should see modest rate decreases (or at least, smaller-than-expected increases) as a result of decreased implicit cross subsidies for coastal residents. Nonetheless, the reforms are only a start. When they look at coastal insurance in future years, Commissioner Goodwin and the legislature should consider at least three other steps.
First, as rates rise in coastal areas, the state should help incumbent homeowners of modest means to retrofit their houses. People who have lived in coastal areas a long time, own their homes, and can’t afford higher premiums should receive help—property tax credits probably make the most sense—to install storm shutters, roof tie-downs, and other adaptations that make their homes safer.
Second, the state should continue to revisit the Beach Plan’s management. Although the risk of market-wrecking assessments has gone down significantly, it still exists. In the long term, the North Carolina Beach Plan should aim for a tiny, well-managed true “market of last resort” similar to the one that exists in Virginia. Taxpayers shouldn’t pay for coastal risk. Finally, the state needs to revisit the way it sets insurance rates. Right now, the state follows a system—once common, now unique to North Carolina—where an industry run “Rate Bureau” negotiates an overall rate plan with the insurance commissioner and individual insurers then file their own prices on top of it. This system imposes administrative costs that work their way into insurance rates and tends to discourage creative new products. At minimum, North Carolina should make insurers do rate filings entirely on their own and remove the red tape around smaller decreases and increases in their insurance rates. Commissioner Goodwin and the legislature deserve a lot of credit for their reforms. The state is better off for them. But it’s only a start. Search CEI.org | 金融 |
2014-15/0259/en_head.json.gz/9714 | > International Economics
> Exorbitant Privilege $17.95
Exorbitant Privilege
The Rise and Fall of the Dollar and the Future of the International Monetary System
Definitive history of the dollar's rise and potential fall in modern times by a pre-eminent economist
Penetrating account of the global financial crisis's impact on currencies around the world
Analyzes the prospects for American economic power in a reshaped global economy in the coming years
Explains in accessible prose how the international currency system works
New afterword bringing the discussion up to the present
Recent events in the US--high unemployment, record federal deficits, and unprecedented financial distress--have raised serious doubts about the future of the dollar. So profound has been the impact that some say the dollar may soon cease to be the world's standard currency. Is the situation that bad? In Exorbitant Privilege, one of our foremost experts on the international financial system argues that while the dollar is bound to lose its singular status to newcomers like the Euro and the Chinese Renminbi, the coming changes will be neither sudden nor dire. Barry Eichengreen puts today's crisis in historical context, revealing that only after World War II, with Europe and Japan in ruins, did the dollar become the world's monetary lingua franca--the reserve currency
of the world's banks and the kind of cash accepted virtually everywhere. Now, with the rise of China, India, Brazil and other emerging economies, America no longer towers over the global economy like before. And the U.S. itself faces very serious economic and financial challenges as it contemplates its medium-term future. But despite this, Eichengreen concludes, predictions of the dollar's demise are greatly exaggerated. The paperback edition features a new afterword that takes the story up through 2012. Show more Exorbitant Privilege
Chapter 1: IntroductionChapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6, Chapter 7, Exorbitant Privilege
Author Information Barry Eichengreen is Professor of Political Science and Economics at the University of California, Berkeley. His previous books include The European Economy Since 1945, Global Imbalances and the Lessons of Bretton Woods, Capital Flows and Crises, and Financial Crises and What to Do About Them. He has written for the Financial Times, Wall Street Journal, Foreign Affairs, and other publications. Exorbitant Privilege
Shortlisted for FT/Goldman Sachs Business Book of the Year 2011! Shortlisted for FT/Goldman Sachs Business Book of the Year 2011!
"A fascinating and readable account of the dollar's rise and potential fall"--The Economist
"A rare combination of macroeconomic mastery, historical erudition, good political instincts and the sort of stubborn common sense that is constantly placing familiar problems in a new light."--Financial Times
"This short, accessible book about the U.S. dollar by Barry Eichengreen may be one of the most important published this year.--Barron's
"[A] brisk primer on the dollar's role in the international monetary system."--Bloomberg News
"Exorbitant Privilege is a book for anyone who has been perplexed why, despite the frequent predictions of the dollar's demise over the last fifty years, it has managed to maintain its position as the world's pre-eminent reserve currency. The book includes both a lively historical account of the dollar's role in the international monetary system and an incisive and balanced discussion of future challenges."--Liaquat Ahamed, author of Lords of Finance
"Short and eminently readable.... In just 177 pages of text, [Eichengreen] provides a wealth of material for both the lay reader and the scholar.... You can't do better than Eichengreen for a solid read on the dollar's wild ride."--The American Prospect
"Compact and readable...Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate....is [also] a pithy and amusing history of the international monetary system....for those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done."--Business Insider
"Barry Eichengreen's book couldn't be more timely... Elegant and pithy."--Finance & Development, IMF.org
"The book, written for the general public, is useful and pleasant to read also by the so-called professionals. Those used to Eichengreens clear and fluent prose will find here a particularly light touch obtained by dropping here and there a good dose of anecdotal hints to lessen the weight of serious history and rigorous economics...provides a masterful users manual for the crisis that began in 2007."--EH.net
"This slender and pleasant book is a story of the dollar in the world financial system, and an attempt at speculating on the future of the U.S. currency.... [It] is good reading, contains well organized facts and discussions, and raises important and difficult questions."--Journal of Economic Literature
"The historical narrative in this book is fascinating and I highly recommend it to both specialists and nonexpert advanced readers."--Journal of Economic History
"[A] detailed and fast-moving analysis of the rise of the greenback as an international currency." --EnlightenmentEconomics.com
"This is a brisk and invigorating account of a century of international monetary developments by one of America's foremost economic historians.... As would be expected, Exorbitant Privilege is extremely well informed, cogently argued, and broadly persuasive. Events and policies, such as the Suez war, the EMS breakdown or the current financial crisis--together with sharp criticism of the excessive deregulation favoured by both Alan Greenspan and Larry Summers--are splendidly documented. Conflicting views of what might happen in the future are clearly put forward and analysed. Unexpectedly, perhaps, the book also displays fairly frequent touches of humour. In other words, it is both erudite and readable."--New Left Review
"When everyone from Brazil's leader to Sarah Palin questions the dollar's status as a reserve currency, it is time for an expert to sort out the truth from the hyperbole. Barry Eichengreen performs this service with unwavering clarity."--Sebastian Mallaby, Council on Foreign Relations
"A truly superb book on the role and global standing of the dollar--past, present and future. Those exposed to the evolution of the globally economy, and that's virtually all of us, will find his book extremely thoughtful and a great read."--Mohamed El-Erian, CEO and co-CIO of PIMCO
"Eichengreen is the master of international money in history and its troubles. Exorbitant Privilege is a fine account of whence it came and a judicious survey of where it might go."--James K. Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too
"Barry Eichengreen again demonstrates his ability to integrate economic history and theory with political analysis in order to illuminate the critical issues of international finance. The timely and accessible book is must reading for all concerned with the prospective balance of international power--financial, economic and political--in a multi-polar world."--William H. Janeway, Warburg Pincus
"Surprisingly compact and readable book, Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate.... A pithy and amusing history of the international monetary system.... Those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done." --BusinessInsider.com
"A brief and readable account of how the international monetary system got where it is today and of past efforts, both successful and (mainly) unsuccessful, to reform it." --Foreign Affairs
"A timely book on monetary economics and currencies that is clear and easy to read, with elements of drama and excitement."--The Finance Professionals' Post, a publication of the New York Society of Security Analysts
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Deepak Nayyar
Backwaters of Development
Shovan Ray
Financial Crises
Golden Fetters
The Economies of Rising Inequalities
Daniel Cohen, Thomas Piketty, and Gilles Saint-Paul
Fixing Failed States
Financial Crises and What to Do About Them
Evolution of Development Policy
Syed Nawab Haider Naqvi
Working and Living in the Shadow of Economic Fragility
Marion Crain and Michael Sherraden | 金融 |