Category: Economy


Source: The News Tribune

Wanted for hire: Library assistant. Qualifications: High school graduate or equivalent. Pay range: $15.81 to $19.23 per hour.

Posted for only a week, an entry-level opening for a librarian’s assistant drew 309 job seekers to a crowded meeting hall in South Tacoma Monday, all vying to land a coveted city job with benefits during a difficult economy.

Among their ranks was a laid-off Weyerhaeuser information technology professional, an out-of-work paralegal and a struggling single mother of three in the midst of a career change.

“I’m one step closer,” said Lori Warren of Tacoma, a former HVAC service technician who is struggling to keep her family afloat on a part-time Wal-Mart salary with no benefits. “Maybe one of us here today will finally get a job.”

In all, more than 548 candidates applied when the city posted the job from July 20 to 26, said city human resources analyst Teresa Dent.

“That’s a huge number of applicants,” Dent said.

Of those, all but eight qualified to move on in the hiring process, receiving invitations to take an 89-question exam Monday at the American Veterans Hall. A total of 309 people actually showed up to take the test. At least one position – and as many as four – will be filled, Dent said.

Fostered by the dour economy, the turnout also likely was augmented by the city’s efforts in recent years to make its hiring process far more accessible via online application submissions, Dent said.

The applicant pool was so big, in fact, the city pulled the job announcement after just one week – typically, they’re left up for two or three weeks, Dent said.

“I just had an inclination that we were going to get a big response,” she said.

Not quite as big as the 1,400 applicants for a single city meter-reader job that drew more than 800 test-takers to the Tacoma Dome last year. But that job – which drew wide media attention – was posted longer than the current opening, Dent noted.

“If we would’ve left (the library assistant position) open that long, we probably would’ve have reached at least that many applicants,” Dent said.

Rebecca Richards, an unemployed wife and mother who took the exam Monday, said she’s been looking for regular work since being laid off from a dentist’s office about a year ago.

“It’s discouraging,” Richards said. “You try to stay positive, but I’m up against people with master’s degrees, pilots, even lawyers for this job.”

Julie Rubenzer of Lakewood – laid off since Key Bank shut down its local customer service center last December – holds a paralegal degree, some medical training and years of work experience. She’s far more qualified than the librarian’s assistant position requires, but she’ll gladly take the work.

“A job is a job,” she said. “In this economy right now, with all the competition out here, I don’t think you can box yourself in.”

Within the next three weeks, city human resources officials will score the tests and rank candidates. Applicants in the top three ranks – which could include multiple people per ranking – will be brought back for a second round of clerical testing and interviews, Dent said.

“It’s hard,” Dent said. “We’d like to give them all a job, if we could.”

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Source: The Independent

As fires wreck Russia’s harvests and poor countries brace for shortages, it’s boom time for Kansas farmers.

Wildfires, floods, crippling droughts, and even a threatened plague of locusts have wrecked crops and ruined harvests around the world, raising fears of global food inflation shortage and food riots.

But as they hose off the dust and chaff caked on their exhausted combine harvesters, farmers in America’s plain states are adjusting to something possibly wonderful: a combination of unusually good wheat yields and suddenly soaring prices – thanks to disastrous circumstances elsewhere – has put them at the centre of a gold rush.

“It feels like Christmas in August,” admitted Darrell Hanavan, of the Colorado Wheat Administrative Committee, noting that the harvest just completed in his state seems to have been the most bountiful for 25 years. More importantly, the dollar value for the crop is almost sure to set a record.

The thin soil of the plains is not always so kind. Scorching drought and relentless rains are frequent visitors to the breadbasket of America. So it is startling for some to find themselves singled out for good fortune, while the rest of the US combats an unemployment rate that refuses to come down.

Russia announced that weeks of fierce heat and uncontrolled fires would cost the country a quarter of its crop and that its wheat exports, which will be frozen from tomorrow, may not resume until next year. Output in Ukraine and Kazakhstan has slumped too. Canadian wheat farmers have been struggling with crops drowned by rains that won’t stop, and in eastern Australia, the wheat crop could be devastated by a plague of locusts expected to start hatching next week.

Egypt, the world’s biggest wheat importer, and Indonesia and Thailand, which also both rely on imports of grain, complained this week that they face a sudden price squeeze on such staples as bread, pork and sugar and with that, the risk of social unrest of the kind witnessed in 2008, when food price hikes provoked riots in a number of countries.

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Source: The Independent

As fires wreck Russia’s harvests and poor countries brace for shortages, it’s boom time for Kansas farmers.

Wildfires, floods, crippling droughts, and even a threatened plague of locusts have wrecked crops and ruined harvests around the world, raising fears of global food inflation shortage and food riots.

But as they hose off the dust and chaff caked on their exhausted combine harvesters, farmers in America’s plain states are adjusting to something possibly wonderful: a combination of unusually good wheat yields and suddenly soaring prices – thanks to disastrous circumstances elsewhere – has put them at the centre of a gold rush.

“It feels like Christmas in August,” admitted Darrell Hanavan, of the Colorado Wheat Administrative Committee, noting that the harvest just completed in his state seems to have been the most bountiful for 25 years. More importantly, the dollar value for the crop is almost sure to set a record.

The thin soil of the plains is not always so kind. Scorching drought and relentless rains are frequent visitors to the breadbasket of America. So it is startling for some to find themselves singled out for good fortune, while the rest of the US combats an unemployment rate that refuses to come down.

Russia announced that weeks of fierce heat and uncontrolled fires would cost the country a quarter of its crop and that its wheat exports, which will be frozen from tomorrow, may not resume until next year. Output in Ukraine and Kazakhstan has slumped too. Canadian wheat farmers have been struggling with crops drowned by rains that won’t stop, and in eastern Australia, the wheat crop could be devastated by a plague of locusts expected to start hatching next week.

Egypt, the world’s biggest wheat importer, and Indonesia and Thailand, which also both rely on imports of grain, complained this week that they face a sudden price squeeze on such staples as bread, pork and sugar and with that, the risk of social unrest of the kind witnessed in 2008, when food price hikes provoked riots in a number of countries.

Continue Reading…

Source: WSJ

Harsh heat and a lack of rain in Russia have killed half of the crop in some hard-hit areas. The slump in production in one of the world’s most fertile breadbaskets has pushed prices up 62% since early June, and last month saw the biggest and fastest increase since 1959.

Wheat prices, which briefly rose above $7 a bushel on Monday, are at their highest level since September 2008, the year when low supplies of the grain fueled a global food crisis that led to riots in several countries.

“That’s a massive increase in a very short time frame,” said Terry Roggensack, an agriculture specialist at the Hightower Report, a Chicago-based commodities firm. “It is a scramble period.”

While prices are still well below the levels of 2008 and global stockpiles are much stronger than they were two years ago, the specter of the 2008 shortage looms large, particularly for countries that can’t depend on their own production.

This weekend, Egypt, the world’s largest wheat importer, bought 180,000 metric tons of wheat, its second purchase in the past two weeks and more than it had initially planned. China is warning local businesses against grain hoarding. In India, officials have allowed once-plentiful stockpiles to rot in fields, leaving many people hungry and driving up local prices.

All are seeking to avoid a repeat of 2008, when Egypt, Haiti and Pakistan were among countries hit by riots over rising food costs. At one point, the World Bank said higher commodity costs had pushed up food prices 83% in three years. Commodity prices plunged amid the darkest days of the financial crisis later that year and in 2009. But even then, some analysts predicted a food crisis would return when the economy recovered.

Russia’s troubles are having an even bigger impact in part because many of the world’s wheat exporters have experienced some crop problems. Big exporters like Canada have struggled with excessive rains, while Australia has battled locusts. Patches of wheat-growing regions in the European Union also have been struck by drought.

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Source: Bloomberg

Goldman Sachs Group Inc. and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week.

Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for “illiquid” funds such as private equity or real estate, said Lawrence Kaplan, an attorney at Paul, Hastings, Janofsky & Walker LLP in Washington.

Giving banks until 2022 to fully implement the so-called Volcker rule is an accommodation for Wall Street in what President Barack Obama called the toughest financial reforms since the 1930s. The Glass-Steagall Act of 1933 forced commercial banks such as what is now JPMorgan Chase & Co. to shed their investment-banking units in less than two years.

“One of the big concerns for the banks was how to unwind these funds,” Kaplan said. “This takes a lot of that argument away by giving them as much as 12 years to do so.”

The proposal, named for former Federal Reserve Chairman and current Obama adviser Paul Volcker, 82, seeks to avoid future bailouts by curbing risk-taking and initially aimed to ban banks from investing in hedge funds and private equity. It was “watered down” in final negotiations last week, allowing lenders to invest as much as 3 percent of their capital in the funds, Deutsche Bank analysts Matt O’Connor and Michael Carrier wrote in a note to clients last week.

Volcker’s View

Andrea Raphael, a spokeswoman for Goldman Sachs, declined to comment, as did Citigroup’s Duncan Smith. Both banks are based in New York.

Partly as a result of last-minute changes to the wording of the bill, analysts, lawyers and congressional staffers say it’s unclear whether the extension period for illiquid funds would run concurrently with the other transition periods. That could mandate full compliance in less than 12 years.

Barclays Capital analyst Jason Goldberg wrote in a report yesterday that there would be a seven-year transition period for the Volcker rule. Citigroup analyst Keith Horowitz wrote that banks would have until 2018.

‘Nine Years’

“In our understanding, it is nine years,” said Mike Westling, a spokesman for Senator Jeff Merkley, the Oregon Democrat who proposed changes to the rule that were later incorporated by Senator Christopher Dodd, chairman of the Senate Banking Committee.

The Glass-Steagall Act gave banks one year to get out of the underwriting business. Their banking licenses were subject to revocation if they were in violation six months after that.

A separate part of last week’s bill allows banks to provide “initial equity” in new funds to help “attract unaffiliated investors.”

“There has to be something like that in there, to literally make it work,” said Jim Reichbach, U.S. head of the banking and securities practice at Deloitte LLP. “Someone has to put the first dollar in.”

The banks must reduce their investments in each fund to less than 3 percent of total investor contributions within one year of formation, according to the bill. They can apply for a two-year extension.

No Capital Infusions

The Volcker rule forbids banks from stepping in with capital infusions or other forms of support when their own funds fail. In December 2007, Citigroup agreed to assume $59 billion of assets bought by “structured investment vehicles” sponsored by the bank. During the following two years, Citigroup lost more than $3 billion on the SIVs, which were a kind of hedge fund that invested in mortgage bonds, credit-card securities and other assets that soured amid the financial crisis.

Goldman Sachs has $29.1 billion of principal investments, Keith Horowitz, a Citigroup analyst, wrote yesterday in a report summarizing the potential impact of the Volcker rule. JPMorgan has $8.88 billion and Morgan Stanley has $6.34 billion, wrote Horowitz, who doesn’t cover Citigroup.

Alyson Barnes, a spokeswoman for Morgan Stanley, declined to comment, as did Joe Evangelisti, a spokesman for JPMorgan. The two banks are also based in New York.

In the case of Goldman Sachs and Morgan Stanley, investments in private-equity funds might pay off before the Volcker rule requires an exit, based on regulatory filings.

‘Substantially All’

“Substantially all” of Goldman Sachs’s $11.5 billion of investments in private-equity, hedge funds and real-estate funds are slated to be liquidated in the next 10 years, according to a company filing. Morgan Stanley estimated in a filing that 60 percent of its $1.81 billion of private-equity investments and 50 percent of real-estate investments will be liquidated within the decade.

Citigroup’s hedge-fund and private-equity business, Citi Capital Advisors, oversees about $14 billion, 38 percent of which is the bank’s own money, according to a marketing brochure for the unit from April. At least four of the bank’s 14 hedge funds consist only of proprietary capital. Citigroup’s Metalmark Capital Partners private-equity unit started a new fund last year with $1.7 billion of capital commitments from the bank and its employees, according to the brochure.

The bank plans to raise more than $3 billion from outside investors for hedge funds and private equity during the next two years, people with direct knowledge of the matter said this month. Such fundraising would reduce the bank’s percentage of its own funds, they said.

The Volcker rule’s limits may still be enough to push banks to reconsider whether to stay in the hedge-fund and private- equity business, said Randall Guynn, head of the financial- institutions practice at Davis Polk & Wardwell LLP. The specter of future caps might deter would-be investors, he said.

“They may think that there’s not enough skin in the game from the sponsors,” Guynn said.

Source: Examiner

In their most tenacious effort to control the ‘spin’ on the worst oil spill disaster in the history, BP has purchased top internet search engine words so they can re-direct people away from real news on the Deepwater Horizon catastrophe.

BP spokesman Toby Odone confirmed to ABC News that the oil giant had in fact bought internet search terms. So now when someone searches the words ‘oil spill’,  on the internet, the top link will re-direct  them to BP’s official company website.

This would not be the first time that BP has tried to control information to protect the company’s public image.

Shortly after the Deepwater Horizon exploded on April 20, 2010, BP executives quickly underestimated the size of the disastrous oil spill. Some suggest they did it to avoid costly EPA per-gallon spill fines. The less oil spilled, the lower the fines.

A month into the spill, the public learned through independent science, that the spill was in fact a million gallon a day gusher. BP got caught in their own lie when the used a syphon pipe in one of the broken riser pipes and proudly proclaimed that they were capturing 5,000 barrels of oil a day. With the oil obviously still gushing, they had to up their spill rate to explain the reported discrepancy in their earlier estimates.

As the dead bodies of birds, turtles and dolphins began showing up on land, BP used a private security company as their ‘oil spill police’ to try to keep photographers and reporters away from the true death toll from their spill. Tides of black goo lapping a shore lined in corpses did not portray the company image Tony Hayward and his oil rich executives wanted.

BP can spend millions on advertising campaigns, and they can try to misdirect people on the internet. But no matter how hard BP tries or how much money they spend on public relations, they will never be able to hide the apocalypse unfolding in the Gulf of Mexico. You just can’t buy or smile your way out of a multi-billion gallon oil spill disaster.

The world is watching the Gulf of Mexico from airplanes, boats and satellite images. Sending people to the BP company website when they click on the words ‘oil spill’ is not going to erase the horrors of the Deepwater Horizon disaster, nor will the trickery of British Petroleum.

Source: Reuters

U.S. authorities are expanding their probes of past mortgage securities deals, with New York’s attorney general opening an investigation into whether eight banks misled rating agencies, a source familiar with the matter said.

New York Attorney General Andrew Cuomo’s office on Wednesday served subpoenas on four U.S. banks and four European lenders, the source said.

Cuomo is targeting Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs Group Inc, Morgan Stanley, UBS and Merrill Lynch, now owned by Bank of America, the source said.

The investigation comes as Wall Street and major banks around the world are attracting scrutiny from regulators stemming from transactions that occurred in the run-up to the subprime mortgage meltdown and financial crisis.

The Wall Street Journal on Wednesday reported that U.S. federal prosecutors, working with securities regulators, were conducting a preliminary criminal probe into whether four banks misled investors about their roles in mortgage bond deals.

The banks under early-stage criminal scrutiny are JPMorgan Chase, Citigroup, Deutsche Bank and UBS, the newspaper reported on its website, citing a person familiar with the matter.

The banks have also received civil subpoenas from the U.S. Securities and Exchanges Commission as part of a sweeping investigation of banks’ selling and trading of mortgage-related deals, the report said.

A spokesman for JPMorgan told the Journal the bank had not been contacted by federal prosecutors and was not aware of any criminal investigation. The other banks either declined comment or were not immediately available.

The reports come less than a month after the SEC charged Goldman Sachs with fraud over its marketing of a subprime mortgage product.

Federal investigators are also probing Morgan Stanley, The Wall Street Journal reported on Wednesday. The bank’s chief executive, James Gorman, said he had no knowledge of any such investigation.

The companies that rated the mortgage deals were McGraw-Hill Cos Inc’s Standard & Poor’s, Fitch Ratings and Moody’s Investors Service, a unit of Moody’s Corp.

The New York attorney general’s investigation was first reported by The New York Times.

Spokesmen for UBS and Deutsche Bank declined to comment, and a spokeswoman from Credit Agricole declined to comment on the New York Attorney General’s investigation. The other banks did not immediately return messages seeking comment.

Source: Marketwatch

A compromise measure requiring the government to conduct a one-time and unprecedented audit of the Federal Reserve’s emergency-response programs was unanimously approved Tuesday by the Senate as part of sweeping bank reform legislation.

The amendment also calls for releasing the names of institutions that received in total more than $2 trillion in loans from the central bank during the peak of the financial crisis.

The provision received a vote of 96-0, with support following a compromise reached late Thursday.

“This makes it clear that the Fed can no longer operate under the kind of secrecy it has been operating under,” said Sen. Bernie Sanders, I-Vt., the measure’s author.

The legislation is attached to sweeping bank-reform legislation under consideration on Capitol Hill. It would need to be reconciled with a more expansive audit-the-fed provision approved in the House last December.

The Senate measure would — for the first time in the central bank’s 95-year-history — require a Government Accountability Office audit of the financial institutions that borrowed from the Fed during the financial crisis.

In addition, the legislation would require the Fed on Dec., 1, 2010, to put on its Web site all of the recipients of the central bank’s emergency assistance between December 2007 and the date of the statute’s enactment.

Sanders agreed to make several changes to the legislation to garner the support of the Obama administration and wavering senators who had concerns with the original measure. With the changes, Sanders obtained the support of Senate Banking Committee Chairman Christopher Dodd, D-Conn., which he said was important to bringing on board other senators needed to obtain the 60 votes necessary for passage.

The legislation originally would have left open the possibility of future audits, however, Sanders eventually compromised to stipulate that it would be a one-time audit. The measure’s house counterparty, which was introduced by long-time Fed opponent, Rep. Ron Paul, R-Texas, permits continuing periodic audits.

The Senate measure originally would have required the names of bank recipients of the Fed’s emergency lending to be posted within 30 days of the reform bill’s approval, but the section was later changed so that the names need only be posted on Dec. 1, 2010. The original measure would have required posting of names annually.

With the compromise language, the GAO is also prohibited from conducting studies on the Fed’s interest rate policy. This change was in response to concerns from the Fed and others that such studies would impact the central bank’s independence when it came to monetary policy such as whether to raise or lower interest rates.

It also prohibits the GAO from auditing the Fed’s so-called normal discount window lending. However, it does permit an audit of the discount window emergency lending programs, such as Term Asset-Backed Securities Loan Facility, in response to the financial crisis. The discount window is a government lending facility through which commercial banks and, in response to the crisis, investment banks borrowed reserves.

The GAO would be required to begin its Fed audit within 30 days of enactment and completed within a year.

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Source: AP

The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent.

Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank, are also involved in the effort.

The action reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further.

The Fed said action is being taken “in response to the reemergence of strains in U.S. dollar short-term funding markets in Europe.”

The debt crisis first erupted in Greece and there are fears that it could spread to Spain, Portugal and other eurozone countries. The crisis has pushed up demand for the U.S. dollar and has sharply weakened the value of the euro, the currency used by 16 European countries.

The Fed said the action was being taken to “prevent the spread of strains to other markets and financial centers.”

The Bank of Japan will be considering similar action soon, the Fed said.

A so-called “swap” line with the Bank of Canada provides up to $30 billion. Figures weren’t provided for the other central banks. The arrangements are authorized through January 2011.

The Fed had wound down these crisis-era programs with other central banks in February, along with other emergency programs to get lending flowing more freely again and return stability to financial markets. At that time, financial strains in the United States were easing, and the Fed began to take steps to move policy closer to normal.

It also had begun to lay out a plan to reel in the unprecedented stimulus money pumped out during the crisis. The Fed’s balance sheet ballooned to $2.3 trillion, more than double where it stood before the crisis struck. The program reopened on Sunday will expand the Fed’s balance sheet, economists say. However, the program poses little credit risk to the Fed because the arrangements are with other central banks, they added.

Source: Bloomberg Businessweek

Ipreo Holdings LLC, a New York-based provider of software and market intelligence services for investment banking and corporate clients, has filed a lawsuit against financial giant Goldman Sachs alleging copyright infringement and theft of trade secrets.

The lawsuit, filed in U.S. District Court for the Southern District of New York on Thursday, charges several unidentified employees of Goldman Sachs with illegally accessing an Ipreo database and stealing data from it.

The lawsuit seeks at least $1 million in compensatory damages and another $2 million in punitive damages from Goldman Sachs.

A spokeswoman for Goldman said the claims were without merit but offered no other comment.

Ipreo maintains a database called Bigdough, which it claims took years of effort and substantial investment to build. According to the company’s description of Bigdough, the database is the most complete and accurate listing of “buy-side portfolio and asset managers, sell-side institutions, funds and 80,000 contacts in the financial industry.” The company claims over 16,000 subscribers to the database.

“The database is of unparalleled value to financial institutes such as defendant Goldman,” from a marketing standpoint, Ipreo claimed in its complaint.

Ipreo said at least two Goldman Sachs employees, and possibly several more, illegally accessed the Bigdough database on dozens of occasions in 2008 and 2009. In its complaint, Ipreo alleged that its database had been illegally accessed at least 264 times by Goldman employees using login credentials belonging to someone else.

The company claimed that Goldman employees downloaded substantial amounts of data from its database during these illegal visits. Ipreo claimed that Goldman tried to play down the seriousness of the situation when informed about the illegal access.

Goldman admitted that the IP addresses associated with the illegal logins belonged to it, but tried to portray it as the act of a lone employee, the complaint noted.

“Defendants knew they lacked Ipreo’s permission to use or license the contacts, annotations or other copyrighted protected expression in the database,” the complaint.

It sought to hold Goldman vicariously liable for allowing its employees to use company systems and infrastructure to illegally access Ipreo’s database. The company had the right and the ability to monitor its employees and control what they do on the network, but failed to do so, the complaint said.

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