Aided by a number of developments, the Swiss franc has been the second-best performing major currency over the past six months, reports Bloomberg. Since March 29, the currency has outpaced the dollar and the euro by 8.9% and 7.8%, respectively.
First, growing fears about the risk of default by some European nations and the negative impact that could have on the eurozone economy -- and its common currency -- sent many investors scurrying to invest in what has long been seen as Europe's safe haven currency.
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The Swiss franc has also been bolstered by the purchases of those who fear that renewed weakness in the U.S. economy and the likelihood of more monetary accommodation by the Federal Reserve will eventually lead to inflation that will drive down the value of the dollar.
Moreover, efforts by Eastern European governments to unwind low-interest franc-denominated mortgages taken on by citizens in those countries -- which have suddenly become more costly in local currency terms -- are exacerbating the squeeze, according to Bloomberg. The Smart Money Is Betting Against the Franc
The key question, of course, is will the trend continue? While there's no guarantee that the franc won't keep strengthening, various technical and sentiment indicators, as well as some fundamental developments, suggest the Swiss currency is due for at least a short-term correction.
To begin with, the franc is at a level relative to the dollar that has been a major barrier to further strength in the Swiss currency. At the same time, the F/X rate and the trend of its 14-day RSI (Relative Strength Index), a measure of momentum, are diverging somewhat, a development that has often marked short- and medium-term turning points.
In addition, the smart money is making sizable bets against the Swiss currency. Based on data from the U.S. Commodity Futures Trading Commission, commercial traders -- defined by the CFTC as those firms that are engaged in business activities hedged by the use of the futures or option markets -- have their biggest short positions in the franc since December 2009, notes DailyFX.
Bullish sentiment towards the franc has also reached contrarian extremes. According to market blog Trader's Narrative, the Daily Sentiment Index reading for the Swiss unit has reached 95% (out of 100%), while a recent Financial Times report, Resurgent Swiss Franc Seems Unstoppable, was notable for its paucity of bearish perspectives.
To top it off, fundamental conditions are not as supportive as some might believe. In recent weeks, the Swiss National Bank has softened its previously hawkish stance (over inflation concerns), while the strength seen in the currency so far will likely weigh on the nation's exports, undermining growth overall and, ultimately, demand for the Swiss currency.
Right now, the Swiss franc might seem like the one investment you can't do without: That's often the time when savvy investors start thinking otherwise.
Robert Gibb is a Victoria-based Dividend Reinvestment Plan (DRIP) investor who has been investing in dividend paying stocks for years. My Own Advisor recently contacted this seasoned do-it-yourself (DIY) investor to answer a few questions about investing in stocks, his thoughts on Canada’s real estate market and what advice he has for young Canadians. My [...]
WASHINGTON (AP) - The Obama administration has finalized new fuel economy rules that will require the fleet-wide average of new cars and trucks sold in the U.S. to double over the next 13 years.
The average fuel economy must reach 54.5 miles per gallon by 2025, up from 28.6 mpg at the end of last year.
The regulations will bring dramatic changes to the cars and trucks in U.S. showrooms, with the goal of cutting greenhouse gas emissions and fuel consumption.
To meet the standard, automakers will need to introduce new technology to improve gasoline-powered engines. And they'll need to sell more alternative fuel vehicles. Critics say the rules will add thousands to the price of new cars and make them unaffordable for many.
The administration says the latest changes will save families more than $1.7 trillion in fuel costs and bring an average savings of $8,000 over the lifetime of a new vehicle sold in 2025. The standards also are the biggest step the U.S. government has ever taken toward cutting greenhouse gas emissions, Environmental Protection Agency Administrator Lisa Jackson said. Tailpipe emissions from cars and light trucks will be halved by 2025, the government said.
President Barack Obama said the new fuel standards "represent the single most important step" his administration has taken to reduce U.S. dependence on foreign oil.
But Republican presidential candidate Mitt Romney has opposed the standards, and his campaign on Tuesday called them extreme and said they would drive up the price of new cars. Any savings at the pump would be wiped out by rising costs of cars, the campaign said.
The gas mileage requirements will be phased in gradually and get tougher starting in 2017. They build on a 2009 deal between the Obama administration and automakers that committed cars and trucks to average 35.5 mpg by model year 2016.
In the arcane world of government regulations, the rules don't mean that cars and trucks will average 54.5 mpg in 13 years. It's actually closer to 40 mpg in real-world driving.
Under the complex regulations, dubbed "Corporate Average Fuel Economy, or CAFE," automakers can have lower mileage by using credits for selling natural gas and electric vehicles, changing air conditioning fluid to one that pollutes less, and even for placing louvers on car grilles to improve aerodynamics. They won't have to improve pickup truck mileage much for the first few years, but big improvements will come later, after 2020.
Still, automakers have been adding technology to boost gas mileage, mainly because people want to spend less on gasoline, which averaged about $3.75 per gallon this week. The research firm J.D. Power and Associates says that fuel economy is the top factor people consider when buying a car in the U.S.
By 2025, some bigger models may disappear, and dealers could offer more efficient gas-electric hybrids, natural gas vehicles and electric cars. There also will be smaller motors, lighter bodies and more devices to save fuel, such as circuits that temporarily shut off engines at traffic lights.
The changes will raise new car prices, but the government says that will be more than offset by the savings at the pump.
The new rules were adopted after an agreement between the administration and 13 automakers last year. That's a change from the past, when automakers fought stricter fuel economy changes, saying it cost them too much to build vehicles to meet the stricter standards.
Industry leaders repeatedly told the Obama administration that they wanted one nationwide fuel standard, fearing separate mileage standards from California and other states.
"They wanted certainty so that as they invest in the future they will know what rules they are playing by," Jackson said.
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Fuel economy standards were first imposed on U.S. automakers in the 1970s. The aim was to make cars more efficient and reduce the nation's dependence on foreign oil at time when the Arab oil embargo was creating gasoline shortages. The administration says this is the first update in decades.
The National Highway Traffic Safety Administration will enforce the standards, calculating the average mileage of cars sold by each automaker. Automakers can be fined if they don't comply.
The requirements, which can be imposed without congressional approval, will be reviewed in 2018 and could be reduced if the technology isn't available to meet the standards.
The rules are tough, but General Motors (GM), the largest U.S. car company, will roll out features to comply, spokesman Greg Martin said.
"Consumers want higher fuel efficiency in their cars and trucks, and GM is going to give it to them," he said.
The administration likes to tout cooperation between automakers and the government in forming the latest rules.
Bill Moyers sits down with Trudy Lieberman, director of the health and medical reporting program at the CUNY Graduate School of Journalism, and Marcia Angell, senior lecturer in social medicine at Harvard Medical School and former editor in chief of the New England Journal of Medicine.
Officials at the Environmental Protection Agency are considering whether to bar BP from receiving government contracts, a move that would ultimately cost the company billions in revenue and could end its drilling in federally controlled oil fields.
Over the past 10 years, BP has paid tens of millions of dollars in fines and been implicated in four separate instances of criminal misconduct that could have prompted this far more serious action. Until now, the company's executives and their lawyers have fended off such a penalty by promising that BP would change its ways.
That strategy may no longer work.
Days ago, in an unannounced move, the EPA suspended negotiations with the petroleum giant over whether it would be barred from federal contracts because of the environmental crimes it committed before the spill in the Gulf of Mexico. Officials said they are putting the talks on hold until they learn more about the British company's responsibility for the plume of oil that is spreading across the Gulf.
The EPA said in a statement that, according to its regulations, it can consider banning BP from future contracts after weighing "the frequency and pattern of the incidents, corporate attitude both before and after the incidents, changes in policies, procedures, and practices."
Several former senior EPA debarment attorneys and people close to the BP investigation told ProPublica that means the agency will re-evaluate BP and examine whether the latest incident in the Gulf is evidence of an institutional problem inside BP, a precursor to the action called debarment.
Federal law allows agencies to suspend or bar from government contracts companies that engage in fraudulent, reckless or criminal conduct. The sanctions can be applied to a single facility or an entire corporation. Government agencies have the power to forbid a company to collect any benefit from the federal government in the forms of contracts, land leases, drilling rights, or loans.
The most serious, sweeping kind of suspension is called "discretionary debarment" and it is applied to an entire company. If this were imposed on BP, it would cancel not only the company's contracts to sell fuel to the military but prohibit BP from leasing or renewing drilling leases on federal land. In the worst cast, it could also lead to the cancellation of BP's existing federal leases, worth billions of dollars.
Present and former officials said the crucial question in deciding whether to impose such a sanction is assessing the offending company's culture and approach: Do its executives display an attitude of non-compliance? The law is not intended to punish actions by rogue employees and is focused on making contractor relationships work to the benefit of the government. In its negotiations with EPA officials before the Gulf spill, BP had been insisting that it had made far-reaching changes in its approach to safety and maintenance, and that environmental officials could trust its promises that it would commit no further violations of the law.
EPA officials declined to speculate on the likelihood that BP will ultimately be suspended or barred from government contracts. Such a step will be weighed against the effect on BP's thousands of employees and on the government's costs of replacing it as a contractor.
Even a temporary expulsion from the U.S. could be devastating for BP's business. BP is the largest oil and gas producer in the Gulf of Mexico and operates some 22,000 oil and gas wells across United States, many of them on federal lands or waters. According to the company, those wells produce 39 percent of the company's global revenue from oil and gas production each year -- $16 billion.
Discretionary debarment is a step that government investigators have long sought to avoid, and which many experts had considered highly unlikely because BP is a major supplier of fuel to the U.S. military. The company could petition U.S. courts for an exception, arguing that ending that contract is a national security risk. That segment of BP's business alone was worth roughly $4.6 billion over the last decade, according to the government contracts website USAspending.
Because debarment is supposed to protect American interests, the government also must weigh such an action's effect on the economy against punishing BP for its transgressions. The government would, for instance, be wary of interrupting oil and gas production that could affect energy prices, or taking action that could threaten the jobs of thousands of BP employees.
A BP spokesman said the company would not comment on pending legal matters.
The EPA did not make its debarment officials available for comment or explain its intentions, but in an e-mailed response to questions submitted by ProPublica the agency confirmed that its Suspension and Debarment Office has "temporarily suspended" any further discussion with BP regarding its unresolved debarment cases in Alaska and Texas until an investigation into the unfolding Gulf disaster can be included.
The fact that the government is looking at BP's pattern of incidents gets at one of the key factors in deciding a discretionary debarment, said Robert Meunier, the EPA's debarment official under President Bush and an author of the EPA's debarment regulations. It means officials will try to determine whether BP has had a string of isolated or perhaps unlucky mistakes, or whether it has consistently displayed contempt for the regulatory process and carelessness in its operations.
In the past decade environmental accidents at BP facilities have killed at least 26 workers, led to the largest oil spill on Alaska's North Slope and now sullied some of the country's best coastal habitat, along with fishing and tourism economies along the Gulf.
Meunier said that when a business with a record of problems like BP's has to justify its actions and corporate management decisions to the EPA "it's going to get very dicey for the company."
"How many times can a debarring official grant a resolution to an agreement if it looks like no matter how many times they agree to fix something it keeps manifesting itself as a problem?" he said.
Documents obtained by ProPublica show that the EPA's debarment negotiations with BP were strained even before the April 20 explosion on the Deepwater Horizon rig. The fact that Doug Suttles, the BP executive responsible for offshore drilling in the Gulf, used to head BP Alaska and was the point person for negotiations with debarment officials there, only complicates matters. Now, the ongoing accident in the Gulf may push those relations to a break.
Discretionary debarment for BP has been considered at several points over the years, said Jeanne Pascal, a former EPA debarment attorney who headed the agency's BP negotiations for six years until she retired last year.
"In 10 years we've got four convictions," Pascal said, referring to BP's three environmental crimes and a 2009 deferred prosecution for manipulating the gas market, which counts as a conviction under debarment law. "At some point if a contractor's behavior is so egregious and so bad, debarment would have to be an option."
In the three instances where BP has had a felony or misdemeanor conviction under the Clean Air or Clean Water Acts, the facilities where the accidents happened automatically faced a statutory debarment, a lesser form of debarment that affects only the specific facility where the accident happened.
One of those cases has been settled. In October 2000, after a felony conviction for illegally dumping hazardous waste down a well hole to cut costs, BP's Alaska subsidiary, BP Exploration Alaska, agreed to a five-year probation period and settlement. That agreement expired at the end of 2005.
The other two debarment actions are still open, and those are the cases that EPA officials and the company have been negotiating for several years.
In the first incident, on March 23, 2005, an explosion at BP's Texas City refinery killed 15 workers. An investigation found the company had restarted a fuel tower without warning systems in place, and BP was eventually fined more than $62 million and convicted of a felony violation of the Clean Air Act. BP Products North America, the responsible subsidiary, was listed as debarred and the Texas City refinery was deemed ineligible for any federally funded contracts. But the company as a whole proceeded unhindered.
A year later, in March 2006, a hole in a pipeline in Prudhoe Bay led to the largest ever oil spill on Alaska's North Slope – 200,000 gallons -- and the temporary disruption of oil supplies to the continental U.S. An investigation found that BP had ignored warnings about corrosion in its pipelines and had cut back on precautionary measures to save money. The company's Alaska subsidiary was convicted of a misdemeanor violation of the Clean Water Act and, again, debarred and listed as ineligible for government income at its Prudhoe Bay pipeline facilities. That debarment is still in effect.
That accident alone -- which led to congressional investigations and revelations that BP executives harassed employees who warned of safety problems and ignored corrosion problems for years -- was thought by some inside the EPA to be grounds for the more serious discretionary debarment.
"EPA routinely discretionarily debars companies that have Clean Air Act or Clean Water Act convictions," said Pascal, the former EPA debarment attorney who ran the BP case. "The reason this case is different is because of the Defense Department's extreme need for BP."
Instead of a discretionary debarment, the EPA worked to negotiate a compromise that would bring BP into compliance but keep its services available. The goal was to reach an agreement that would guarantee that BP improve its safety operations, inspections, and treatment of employees not only at the Prudhoe Bay pipeline facility, but at its other facilities across the country.
According to e-mails obtained by ProPublica and several people close to the government's investigation, the company rejected some of the basic settlement conditions proposed by the EPA -- including who would police the progress -- and took a confrontational approach with debarment officials.
One person close to the negotiations said he was confounded by what he characterized as the company's stubborn approach to the debarment discussions. Given the history of BP's problems, he said, any settlement would have been a second chance, a gift. Still, the e-mails show, BP resisted.
As more evidence is gathered about what went wrong in the Gulf, BP may soon wish it hadn't.
It's doubtful that the EPA will make any decisions about BP's future in the United States until the Gulf investigation is completed, a process that could last a year. But as more information emerges about the causes of the accident there -- about faulty blowout preventers and hasty orders to skip key steps and tests that could have prevented a blowout -- the more the emerging story begins to echo the narrative of BP's other disasters. That, Meunier said, could leave the EPA with little choice as it considers how "a corporate attitude of non-compliance" should affect the prospect of the company's debarment going forward.
ProPublica reporters Mosi Secret and Ryan Knutson and director of research Lisa Schwartz contributed to this report.
As a new administration is set to take over in the White House, Bill Moyers checks in with author Sarah Chayes on the state of affairs in America's other war in Afghanistan. An author and former journalist, Chayes has lived the last 7 years in Afghanistan helping to rebuild the country.
Bill Moyers sits down with former Nixon White House strategist and political and economic critic Kevin Phillips, whose latest book BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM explores the role that the crumbling financial sector played in the now-fragile American economy.
Fuels from waste and biologically regenerating raw materials represent an increasing alternative to the mineral oil production for the decentralized energy-technical future. They are to replace the missing oil quantities of the future increasingly. These hydrocarbon materials are contended in raw biological materials, like wood and plants, but also in the waste products of our [...]
The rate of job cuts for production workers in manufacturing has slowed dramatically in the past few months, as companies start to rebuild inventories.
However, they are still aggressively slicing their nonproduction workers--engineers, managers, sales staff, and the like. Over the last three months, employment of manufacturing nonprod workers is falling at a 7.6% annual pace, compared to a 4.2% pace for production workers.
SAN FRANCISCO -- A "manipulative" scheme that made unlawful profits on the price of crude oil was flagged in a complaint Tuesday by the Commodity Futures Trading Commission, a sign that the regulator is cracking down on potential speculation in energy markets.
The CFTC said it filed a civil enforcement action against Parnon Energy, Arcadia Petroleum of the United Kingdom, and Arcadia Energy of Switzerland in the U.S. District Court for the Southern District of New York.
Also charged were James Dyer of Australia and Nicholas Wildgoose of California for unlawfully manipulating and attempting to manipulate crude-futures prices on the New York Mercantile Exchange from January to April 2008.
The long-awaited $9 billion stock offering from AIG and the U.S. Treasury is on track to price late Tuesday despite recent market weakness. Randall Smith has details.
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The defendants allegedly made at least $50 million by cornering the supply of West Texas Intermediate light sweet crude at Cushing, Okla., the regulator alleged in its complaint. The pipeline hub there is the key point at which all crude futures are priced for trading on Nymex.
"Defendants conducted a manipulative cycle, driving the price of WTI to artificial highs and then back down, to make unlawful profits," the commission said in a statement.
The allegations come as the barrel's price has surged well above $100 in recent months. This month, crude prices slumped after CME Group (CME), the operator of Nymex, increased margin requirements for trading crude-futures contracts.
The last time crude spiked above $100 a barrel was in early 2008. At that time, speculation was at least partly blamed for the increases. When the global financial crisis hit in the second half of that year, crude slumped below $40 a barrel.
Parnon Energy is the trading and marketing arm of Parnon Holdings, which the CFTC said operates as a "common enterprise" with Arcadia Petroleum, based in London.
The affiliates traded West Texas Intermediate through a collective "WTI book" run by Dyer and Wildgoose, according to the CFTC's complaint.
Phone calls to Parnon's U.S. offices were referred to Colin Hurley, chief financial officer of Arcadia Petroleum in London. Calls to Hurley's phone weren't picked up.
(Toronto, Canada) Morgan Solar Inc., a Toronto based solar energy start-up specializing in concentrating solar optics, has developed a new type of high concentrated photovoltaic system called the Sun Simba HCPV. By reducing the required materials and complexity of the system, Morgan Solar will deliver a highly efficient HCPV system mounted on a dual [...]
Acclaimed author Barry Lopez joins Bill Moyers to discuss nature, spirit and the human condition. Lopez is an essayist, author and short-story writer, whose many books include ARCTIC DREAMS, winner of the National Book Award and OF WOLVES AND MEN, a National Book Award finalist.
As Hurricane Isaac heads for the Gulf Coast, several oil refineries might have to temporarily shut their doors. This could, according to USA Today, drive up gas prices 10 cents a gallon or higher over the next few weeks.
With the nationwide average price already at $3.75 a gallon, thanks in part to oil refinery closures in Illinois and California, this bump caused by even more prolonged refinery closures could push drivers over the edge. To help save some hair pulling and checkbook rebalancing, we took a look back at our favorite -- and weirdest -- gas saving tips throughout the years.
Nation editor Katrina vanden Heuvel and University of Pennsylvania professor of political science Adolph Reed, Jr. to discuss the promises from the DNC and expectations of Barack Obama.
Apple changed its idevice connector and now the new iPhone 5, iPod touch and iPod nano can't connect to the millions of 30-pin "dock" cables and accessories littering the planet -- unless you're willing to pay, that is.
The headline number for this morning's PPI report was an 0.6% decline in the price of finished goods less food and energy ("core PPI"). In fact, core finished goods PPI has fallen for 4 out of the past 6 months. So if we just look at this number, inflation seems like it isn't a problem,
However, I prefer to look at a different statistic in the PPI report--the PPI for traditional service industries. Never heard of it? You are not alone. Starting a few years ago, the BLS aggressively broadened its coverage of the service sector. In particular, the "traditional service sector" includes everything from telecommunications and web search portals to health care to banking to management consulting to fitness centers.
So now the BLS publishes a PPI for these service sector industries (it's at the back of the report, pp 20-21). I wrote about the service sector PPI on my blog in February, in a post entitled "The PPI says: Service Sector Deflation is Almost Here."
Now, we have a really big divergence in the path of the core finished goods PPI and the service sector PPI. Core goods inflation is collapsing. But services PPI is slowly ticking up.
I think the service sector PPI is a better measure of the underlying inflation rate, because it covers a broader swathe of the economy. So this chart tells us that inflation is slowly starting to recover.
(Palm City, Flordia) Sol Inc. (Solar Outdoor Lighting) has arranged for the donation of 42 solar lighting systems to 11 communities in Peru affected by the August 2007 earthquake. Philanthropist David Russell, who, funded the donation with the assistance of Practical Action of Peru and local governments facilitated a partnership with Sol Inc. to ensure [...]
This week I continued replacing the old wood windows that came originally with my house and as I found out last year, none of the windows in my house (Model Home Version 0.1 for our area) were very well insulated (if at all), which in itself suggests the “investment” in new windows will be a [...]
The launch of the Apple Inc. (NASDAQ: AAPL) iPhone 5 began in Asia and has moved toward the United States, where it will be available for sale today. The evaluations of the effects of its sales and the level of sales are preposterous. Some experts still hold that sales will make a significant addition to fourth-quarter gross domestic product. However, they do not know what the profit margin is on the smartphone or what the costs are for carriers to sell it. Another set of forecasts that are improbable is that Apple will sell as many as 20 million iPhone 5 units over the weekend, which begins today. However, several carriers and Apple itself are out of the handsets. How can something that is not available be sold. According to Barron's, one analyst was particularly aggressive:
Sterne Agee Analyst Shaw Wu predicts: "Apple will likely ship 27 million iPhones for the September quarter, up from our recently raised view of 26 million."
Canadian Auto Workers Deals
The three large American auto firms have to hope that their negotiations with the United Auto Workers will be as easy as the ones they have had with the Canadian Auto Workers. The CAW have set deals with Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). These almost certainly will be ratified. Since Chrysler is the smallest of the three companies, it does not want to be the only one that could be harmed by worker slowdowns or strikes. It is on a hot sales streak it cannot afford to have interrupted. According to the AP:
CAW President Ken Lewenza called it a difficult few days but said GM ultimately agreed to the framework of a deal that the union reached with Ford Motor Co. earlier this week.
The union decided to keep working past a midnight Monday strike deadline after reaching a deal with Ford and extending its contracts with GM and Chrysler.
Workers stayed on the job as talks continued, but the union warned it could go on strike after giving GM and Chrysler 24 hours' notice. They wanted the Ford contract to serve as a template for the other two companies.
Like the Ford deal, the GM agreement cuts wages for new hires and freezes pay for current workers. But it also gives them lump-sum payments to cover inflation and for ratifying the deal.
Luxury Car Sales Slump in Europe
Even the luxury end of the car market has begun to suffer in Europe. Apparently, the 1% have begun to feel the pinch of recession. They must have decided to hold their current cars longer, or go down-market to buy cheaper vehicles. Both Daimler, owner of Mercedes-Benz, and Porsche cut forecasts. Fortunately, recent car sales data in the U.S. shows each continues to do well in the world's second-largest car market. And the appetite for luxury cars in China, the world's largest market, has been good. Bloomberg reports:
"If a downturn lasts for longer, which this one is, premium is not immune from pricing trends," said Arndt Ellinghorst, a London-based analyst at Credit Suisse Group AG with an outperform recommendation on BMW, Porsche and VW, and a neutral on Daimler. "The pricing environment in Europe is the biggest problem," with incentives spreading from Italy, Spain and France to Germany.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Market Open Tagged: AAPL, F, featured, GM
Bill Moyers sits down with NYU president and modern renaissance man John Sexton for a wide-ranging conversation about God, baseball, and the importance of thoughtful discourse in society. Previously a champion debate coach and scholar of religion and law, Sexton discusses his unique take on theology, contemporary politics, and the evolving role of universities throughout the world. Born to a struggling Catholic family in Brooklyn, John Sexton still teaches undergraduates in addition to his work as president of one of the world's largest and most prestigious universities.
This week, the Senate responded to the growing demand for a new Pecora Hearing, the 1930s investigation into the causes and effects of the Great Depression. ring, the 1930s investigation into the causes and effects of the Great Depression. A 92-4 vote in Senate supported the creation of a bipartisan and independent commission to investigate wrong doing in the lead-up to the economic crisis. For context, Bill Moyers speaks with economist Simon Johnson and Ferdinand Pecora biographer and legal scholar Michael Perino. Johnson is a former chief economist of the International Monetary Fund (IMF) and a professor at MIT Sloan School of Management, and Perino is a professor of law at St. John's University and has been an advisor to the Securities and Exchange Commission.
Britain has pushed for Brussels' new banking regulator to supervise all 6,000 eurozone banks - including Germany's Landesbanks - in a move that puts London on a collision course with Berlin.
Despite the endless drumbeat of advice to "save, save, save for retirement," most Americans are saying "tomorrow, tomorrow, tomorrow." Then tomorrow turns into today, and more immediate priorities keep pushing long-term planning off into the future.
In the latest Employment Benefit Research Institute survey, 56 percent of workers reported that the total value of their household's savings and investments, excluding the value of their primary home and any defined benefit plans, was less than $25,000, and about 29 percent said they have less than $1,000. Those numbers are hardly enough to fund even the most modest of retirement dreams.
Truth is, with savings so slim, there's precious little room for error when planning for retirement, because people's nest eggs aren't much of a safety net. But failing to save enough is just one of many mistakes people make when planning for the twilight years. There are a host of retirement planning missteps that can make an already less-than-ideal situation even worse.
Here's a look at where people commonly go wrong, and how they can adjust course to reach retirement in good financial shape.
1. Rethink Retirement
"The retirement message doesn't work. Most people don't have the willpower or the financial ability to forgo spending today for a hazy benefit tomorrow," says Sol Nasisi, chief economist at www.BestCashCow.com, which provides information on banks and credit unions. "Instead, people should think about building personal wealth, a process that it is ongoing and has immediate benefits, but also provides for people when they decide to stop working. Building and accumulating wealth is a much more powerful, immediate message than saving for retirement.
Changing the message changes how one thinks about saving and investing. "Building wealth is a much more active process than saving for retirement, and its benefits can be realized much quicker," Nasisi adds. While this may seem top be just a shift of semantics, "Building wealth is largely a matter of outlook and philosophy. Saving for retirement is a chore, building wealth is a challenge," he says.
Also, forget about the idea of retirement as a permanent vacation.
"The old idea of retire at 65, move somewhere warm, play golf, no longer works," points out Matthew Tuttle, a certified financial planner with Tuttle Wealth Management. "With life expectancies increasing, playing golf and going to early bird dinners every day can get old [after] 35 years. Rethink what retirement means: It could be working fewer hours or changing jobs to something you like more."
Know too, that you may not have as much control over your retirement date as you imagine. "Most people assume they will retire at a certain age, but two in five people retire earlier than planned," warns Katie Libbe, vice president of consumer insights at Allianz Life. "This could be due to layoffs, illness, or any number of factors. The key is to start saving early."
2. Anticipate the Unexpected
When you're young and healthy, you'll spend very little time in the doctor's office, but for most of us, that will change later in life. According to a Fidelity Investments study, a 65-year-old couple who retired in 2010 will need $250,000 to pay for medical expenses throughout retirement, not including nursing-home care. The study found that health care costs average $535 a month, or about one-fifth of an average couple's total monthly expenses of $2,842.
Failing to prepare for the reality that eventually, your young bones will be old is a critical mistake. "Medicare is not free and it doesn't cover everything, including prescription drugs," says Ross Blair, CEO of www.PlanPrescriber.com. "Not planning ahead in retirement for catastrophic medical expenses as well as prescription drug costs and supplemental insurance plans could potentially be devastating to a retiree."
The good news is, there are some tax-free ways to compensate for those expenses. You can contribute to a Health Savings Account. Individuals can contribute $3,050 in 2011, while a family can contribute $6,150 a year tax free. If you're over 55, you can add an extra $1,000 as a catch-up contribution. "When someone turns 65 and ages into Medicare they can use these funds for prescription drugs, certain Medicare plans and other health coverage other than premiums for a Medicare supplement policy, such as Medigap," says Blair. Proper protection is key, be it health, disability, life, or long term care insurance.
3. Forget Tradition
Conventional wisdom may not apply to you. "Following standard industry advice that you should get real conservative, meaning investing heavily in bonds, by the time you are 65 is a recipe for having to find a job in your 70s and 80s when you run out of money," says Tuttle.
Likewise, you shouldn't count on history repeating itself. "You can't assume you'll always get the same return on your investments," cautions David Spader, a financial analyst with www.SavingsAccount.org, which provides information on savings, money market and CD rates. "Don't think you'll be able to beat the market for 30 years."
4. Handle Your 401(k) Wisely
A 401(k) is not a piggy bank. Sure, it's your money, and good for you for participating in your employer's plan -- a surprising number of people don't even do that, believing that they can't afford to. Hopefully, you're contributing enough to get the maximum amount of free money from the company's match, if yours offers it. But borrowing from yourself is a bad idea.
"Taking a loan from a retirement plan can look appealing as a way to get out of a hole, but it can actually create more problems," says Scott Halliwell, a certified financial planner with USAA. "This tactic removes the growth potential on those funds, and, if you lose your job and can't repay the funds, the loan will be treated as a distribution and subject to taxes and penalties."
While it may be convenient, think twice about leaving retirement funds in an employer plan after you leave that job. "The employer plan has limited investment options. The employer makes all the decisions. As soon as possible, most people should roll their employer retirement funds into an IRA," advises Radon Stancil, a certified financial planner with Diversified Estate Services. You can do this tax-free and once the funds are in an IRA, you the owner, have all the control.
5. Redefine Investing
Investing has increasingly become synonymous with putting money in stocks, bonds or mutual funds. While this should be one facet of building wealth, it should not be the only investment vehicle, nor should it necessarily be the primary investment vehicle, says Nasisi. To be truly diversified, an investor should look to real estate, an investment in a business, or starting a side business, he adds.
"Take the initiative and invest some money in yourself and things you can control instead of forking over all your savings to others," says Nasisi. "Look for ways to build income streams that will generate reliable cash well into the future."
6. Set Priorities
You have to put your hard earned money in the right places. "Forget the shiny new BMW or the latest iPhone, save the money and put it to work for you," says Nasisi. While it's a very admirable goal to save money for your children's college education, truth is, there are many ways to pay for college. "But go into the bank on the day you retire and ask to take out a 'retirement loan," says Charlie Long, a financial adviser with Exemplar Financial Network. You get the point.
It can also be a mistake, especially in this low-interest-rate environment, says Long, to pay off a low-interest mortgage, when those funds could be used elsewhere.
Realize that when it comes to retirement you can't "wing it." Stephen Cunha, a certified financial planner with Baystate Financial Services says to remember the five P's: Prior Planning Prevents Poor Performance. You want a written plan that includes an analysis of all financial goals, retirement income needs, insurance, tax, investment and an estate plan, he adds. However, your plan can't be engraved in stone, and should be monitored periodically. You need some tangible evidence of what you want and why, and and idea of how you plan to achieve it -- otherwise, how can you expect to reach your goals?
Natural disasters are unpredictable and cannot be avoided. Nevertheless, precautions can be taken to avoid the damage caused by these disasters. The shift in climate throughout the world has resulted in various natural disasters such as a flood or tsunami in recent years. Although this cause both infrastructural and human loss, economists say, that this [...]
With all the volatility in the stock market today, some individual investors are wondering if they should be more active with a portion of their portfolio, or back away from equities entirely. But if you bail out of stocks, where can you find decent returns? DailyFinance's Laura Rowley talks with Stuart Ritter, financial planner with T. Rowe Price.
This post is part of a series called Under the Hood, where l take a detailed look at specific Canadian ETFs or index funds. The fund: First Asset Morningstar US Dividend Target 50 Index ETF (UXM) The index: The fund tracks the Morningstar US Dividend Target 50 Index, which was created specifically for this ETF. [...]
Greece's international lenders will consider giving the country more time to implement austerity measures agreed under its multi-billion euro bail-out, according to IMF managing director Christine Lagarde.
The JOURNAL takes an in-depth look at the news of the week to sort out the media-frenzied hype from the facts the public needs to know. Factcheck.org's Kathleen Hall Jamieson and ON THE MEDIA's Brooke Gladstone dissect the campaign coverage.
This week was a short one, but a good one. Between work, blogging, soccer, and working out – time flew. Despite an overall successful week on all fronts, I’m still somewhat behind on blogging and answering all the incoming email requests. However, despite getting overwhelmed a times, all I can do is try my best. [...]
Can the stranglehold of money on politics be broken? Bill Moyers sits down with Joan Claybrook, president of Public Citizen, and Bob Edgar, president and CEO of Common Cause, to discuss how Beltway business as usual may stand in the way of real change in Washington.
I am so very happy that the author of the well known blog American Debt Project recently agreed to participate in the interview series on my blog known as Let’s Talk Money. This series is a great way to get to know other bloggers that write about money. It often includes the challenges they have dealt with and their plans for their financial future.
Without further ado, let’s take a look at this week’s interview.
Please provide a brief introduction about yourself and your personal finance blog including when you created your blog. If comfortable, please share if you are married and how many children you have.
I love Tackling Our Debt’s Let’s Talk Money series! I have been wanting to do this for a while and am excited to talk money. I started my blog in June 2011 with the goal of paying off over $38,000 of consumer debt. I’ve since paid off nearly $10,000 and think this year will be even better. I am not married and don’t have kids but I would like both in the not-too-distant future.
Outside of a regular job, have you found ways to make additional income? If yes, please explain.
I love selling stuff on eBay. I have a small business where I help businesses list surplus, usually industrial items for a commission. Although this business started out very small, I am now making a few hundred dollars a month for a small investment of my time each week.
I also have a vending machine placed in an office. Having just one vending machine doesn’t make very much money, but I am not losing money and I own a pretty cool asset- a full-size soda vending machine. When my situation improves, I’d like to have a route of 10 vending machines.
I have tons of ideas on how to make money all the time but I have learned to be more focused and work deliberately. Not every idea will happen, but if I can implement one or two each year, I can make an impact on my income.
Have you ever lost a large amount of money in investments?
I lost what was a lot of money to me: $5200. This happened back in July/August 2011. You can read the full story here. Although I definitely want investing to be a part of my portfolio, right now I am not ready to jump back in and am much more focused on paying off debt and researching small business opportunities.
Do you utilize an employer retirement plan?
We have a SARSEP retirement plan at work but it offers no match. I’ve heard the standard financial advice to be to skip employer plans without a match, but for me, this is the one area of my finances where I have been good about diligently saving money. I increase my contribution by $50 per paycheck every six months, and that has been relatively painless. I also like that it reduces my taxable income.
How important is planning for retirement to you?
I am going to be honest: I am an excellent planner in my career (in fact my official job title is Strategic Planner) but I have a really hard time envisioning my future past the next 6 months. This is something I am working on based on studies that suggest that seeing yourself in the future where you want to be and making very specific goals and plans to get there is very effective (like Think and Grow Rich by Napoleon Hill). And when it comes to retirement, I have no plan and no vision. I think it is because I don’t like the idea of retiring and doing nothing, I would like to still own businesses and be active well after retirement age. But I am seeing that having a regular monthly cash flow outside of work gives you options, and so I am now working on my long-term plans in order to start taking more actions now to get there.
What is the most expensive item you have ever purchased?
My Mazda3. I wanted this car so bad and I loved the body, handling and sticker price. I am a hardline negotiator and brought in my mom, aunt and cousin (who are three beautiful, intimidating ladies) when I picked out the car. It got a little ugly, but in the end I paid $15,200 for a car with an $18,500 sticker price! I love negotiating and making deals. I want to get out of debt so I can get serious about building up my businesses.
@American Debt Project – Thank you so much for participating this week. I love the opportunity to get a peek into the life of the person behind the blog.
Remember to check out ADP’s blog and to catch up with her on Twitter @IAmDebtProject as well.
Texas Instruments Inc. (NASDAQ: TXN) has issued its mid-quarter update as a harbinger of what to expect for its third quarter report. The chip-maker sees earnings of $0.38 to $0.42 EPS and sees sales of $3.27 to $3.41 billion. When the company gave its earnings report in July its third quarter guidance was $0.34 to $0.42 in earnings per share and $3.21 to $3.47 billion in revenue. Be advised that TI did say that earnings would hit by $0.07 in charges when it gave guidance last quarter.
Thomson Reuters had estimates as of this morning at $0.45 EPS and $3.34 billion in revenue. Unfortunately, TI gave no other details and they may not even come out in the conference call.
TI shares closed down by 0.3% at $28.58 against a 52-week range of $25.78 to $34.24. Thomson Reuters has a consensus analyst price target of $31.46. Shares are trading up 1.4% at $28.98 in the after-hours session since its guidance did not have a warning in it. It may also be worth noting that TI shares closed between some key moving averages today: the 200-day moving average is $30.05 and the 50-day moving average is $28.31.
We would note that Intel Corporation (NASDAQ: INTC) led the chip sector off with a bad warning last week and shares finally closed up marginally today. Intel shares lost over 7% of their value in the two trading sessions combined after the warning.
The Market Vectors Semiconductor ETF (NYSEMKT: SMH) has not been battered along with Intel and its shares closed up 0.5% at $32.58 on Tuesday. This chip-stock ETF saw its shares gain by 0.4% to $32.70 initially in the after-hours session.
Did you know that usury was actually illegal at one point? My son is charging interest… to his coworkers… like a payday loan. That’s better than anything I could make in the market. According to wikipedia, back in the day (and we’re talking another century): Moneylending during this period was largely a matter of private loans advanced to [...]
Christina Galitsky is Technology Review's 2006 Humanitarian of the Year and one of this year's TR35. The Lawrence Berkeley Lab scientist employs her training in chemical engineering to find solutions to environmental problems in the U.S. and abroad--particularly in poor countries such as Sudan and Bangladesh. She spoke to us recently about how seeing her innovations in action inspires her and what kinds of problems she hopes to work on in the future.
According to this morning's trade report, the advanced technology trade deficit widened to $18.2 billion in the third quarter, up from $12.9 billion in the second quarter of 2009 (advanced technology products include 10 categories, such as information and communications, biotechnology, and aerospace).
The third quarter ATP deficit, at $18.2 billion, was just below the $18.9 billion of a year ago. I believe that was the record, though, I'm not 100% sure.
Nevertheless, the widening of the ATP trade deficit is not good news for U.S. production jobs, since it means that even as demand for innovative products recovers, the production benefits are primarily being felt overseas. Employment in the computer and electronic products industry, for example, fell at a 10% annual rate in the third quarter.
What about royalties and license fees to produce the new technology--doesn't the U.S. benefit from that? The total trade surplus in royalties and license fees was $14.4 billion in the third quarter, smaller in magnitude than the advanced trade deficit. Given that royalties and license fees include movies and tv shows as well, it's likely that the amount of revenue from licensing the overseas production of advanced technology products was actually substantially less.
Aided by a number of developments, the Swiss franc has been the second-best performing major currency over the past six months, reports Bloomberg. Since March 29, the currency has outpaced the dollar and the euro by 8.9% and 7.8%, respectively.
By MATTHEW DALY and TOM KRISHER
Even a temporary expulsion from the U.S. could be devastating for BP's business. BP is the largest oil and gas producer in the Gulf of Mexico and operates some 22,000 oil and gas wells across United States, many of them on federal lands or waters. According to the company, those wells produce 39 percent of the company's global revenue from oil and gas production each year -- $16 billion.
A year later, in March 2006, a hole in a pipeline in Prudhoe Bay led to the largest ever oil spill on Alaska's North Slope – 200,000 gallons -- and the temporary disruption of oil supplies to the continental U.S. An investigation found that BP had ignored warnings about corrosion in its pipelines and had cut back on precautionary measures to save money. The company's Alaska subsidiary was convicted of a misdemeanor violation of the Clean Water Act and, again, debarred and listed as ineligible for government income at its Prudhoe Bay pipeline facilities. That debarment is still in effect.
By 
As Hurricane Isaac heads for the Gulf Coast, several oil refineries might have to temporarily shut their doors. This could, 
iPhone 5 Sales Forecasts
Despite the endless drumbeat of advice to "save, save, save for retirement," most Americans are saying "tomorrow, tomorrow, tomorrow." Then tomorrow turns into today, and more immediate priorities keep pushing long-term planning off into the future. 
I am so very happy that the author of the well known blog 
Texas Instruments Inc. (NASDAQ: TXN) has issued its mid-quarter update as a harbinger of what to expect for its third quarter report. The chip-maker sees earnings of $0.38 to $0.42 EPS and sees sales of $3.27 to $3.41 billion. When the company gave its earnings report in July its third quarter guidance was $0.34 to $0.42 in earnings per share and $3.21 to $3.47 billion in revenue. Be advised that TI did say that earnings would hit by $0.07 in charges when it gave guidance last quarter.