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Jan 21, 2010

MarketWatch : Personal Finance Daily : January 21, 2010


Personal Finance Daily
JANUARY 21, 2010

Thursday's Personal Finance stories

By MarketWatch

Don't miss these top stories:

These days, with financial-services firms trumpeting the news on billboards, online and in ads everywhere, it's impossible to forget that as of Jan. 1 people of any income level can convert their regular IRAs to Roths. But just because something's possible doesn't mean it's right for you.

As Robert Powell details in his column today, there are plenty of traps to the conversion process, not a few of them driven by the fact that converting means taking income from your IRA. That temporary income spike may hit you in various unexpected ways (for instance, if you're receiving Social Security benefits, be careful).

Speaking of unexpected surprises, have you looked at your credit-card terms lately? As Chuck Jaffe writes, lenders are devising all sorts of new ways to extract dollars from your wallet -- even after the new consumer-friendly law goes into effect Feb. 22.

Here's a fun one: Some lenders use "pick-a-rate" pricing, so the underlying index on which your variable rate is based itself varies. That way, the lender can pick whichever underlying rate best suits the company at any given time. Rates go up, you pay. Rates go down, you keep on paying.

Yet another reason to be really careful when dealing with credit-card debt. And IRA conversions. And just about anything to do with your money.

-- Andrea Coombes , assistant personal finance editor

P.S. Yesterday I said home builders, back in boom times, should have gone against the pack and started building smaller homes before the housing-market crash. Turns out, some of them were doing just that -- read our story today on how home sizes have been shrinking for a couple of years now: Builder, buyers embrace smaller homes.


Credit-card issuers find creative ways to skirt new law

Between now and Feb. 22 when the new credit-card rules go into effect, you'll see a lot of excited media types talking about all of the good to come out of those regulations, but as a consumer you should worry about what's still on the menu. The card issuers have been cooking up all kinds of new things that their bottom line will find appetizing, but that may make you sick.
See Chuck Jaffe.

Down, but not out, in Brooklyn: a daughter's story

When our then-22-year-old daughter told us in the fall of 2008 that she intended to move out of our house and live in New York City on her own, we told her it would be tough. She didn't believe us. Mariana proved us wrong. She not only lived in New York on a salary of less than $30,000 from a publishing-industry job, she managed to save $5,000 over the course of a year. On top of that, she stashed about $1,000 in her 401(k) account.
See full story.


12 traps to avoid when converting to a Roth IRA

If the high number of phone calls to mutual-fund firms and the comments posted to articles on the subject are any sign, savers are showing a lot of interest in converting their traditional IRAs into Roth IRAs, but they should be wary about acting on that desire too hastily because some expensive traps are waiting for the ill-informed.
See Robert Powell.


Homeowner renovations set to pick up, but forecaster sees bottom in 2010

Remodeling activity by U.S. homeowners, which has fallen more than 30% from its peak in 2007, is set to pick up again this year as the recession loosens its grip and home sales continue to rebound, according to a remodeling-market indicator released Thursday.
See full story.

Home sizes fall as builders, buyers embrace economic reality

New-home buyers responded to the tough times in 2009 by opting for smaller houses, driving down the average size of a house built in the U.S. for the first time in 27 years. Data released Wednesday by the National Association of Home Builders found the average size of a new home fell to 2,480 square feet last year from 2,520 square feet in 2008. The last time the average home size fell was 1982.
See full story.

FHA raises fees, tightens mortgage underwriting

The Federal Housing Administration said Wednesday that it would raise down-payment requirements, boost its mortgage-insurance premiums and tighten its loan underwriting practices in a bid to strengthen its capital reserves and remain solvent in the face of rising foreclosures and delinquencies.
See full story.

Mortgage rates fall: Freddie Mac

The average rate on 30-year fixed-rate mortgages slipped below 5% this week, following bond yields lower for the third week in a row, Freddie Mac's chief economist said on Thursday.
See Mortgages.


Was it Obama, Philly, Fed or China?

U.S. stocks fell sharply Thursday. Why the sudden drop?
Read MarketWatch's new blog, Market Junkie.

Can the lost decade be found again?

More stocks are making the hard climb to the top. Mark Hulbert explores what that means in this edition of the Hulbert Financial Files. Plus, the editor of the Hulbert Financial Digest searches the lost and found for the truth about Wall Street's "lost decade."
 Listen to Audio Report.


Microsoft issues patch for flaw used in Google attack

After scrambling for days under intense scrutiny, Microsoft Corp. has issued a patch for a flaw used in its Internet browser technology thought to have been used in recent cyber-attacks on Google Inc. and other companies.
See full story.


Obama proposes new limits on banks' risky trading

In his toughest response yet to the financial crisis, President Barack Obama proposed Thursday that strict limits be imposed on the size and trading activities of the nation's biggest banks.
See full story.

Goldman cuts compensation after facing bonus heat

Goldman Sachs Group Inc., a prime target of the backlash after the financial bailout, on Thursday said it cut a key compensation benchmark to the lowest level in its history as it tries to soften criticism over fat bonuses.
See full story.

Jobless claims surge in latest week

First-time claims for state unemployment benefits jumped unexpectedly by the largest amount in eight months, but government statisticians said special factors might have fueled the increase. The number of initial claims in the week ending Jan. 16 rose 36,000 to 482,000, the Labor Department said.
See Economic Report.

Supreme Court rolls back spending limits

Overturning a two-decade-old rule, the Supreme Court on Thursday ruled that corporations can spend money to support or oppose candidates in federal campaigns.
See full story.

Commentary: Great news! Corporate money's back in politics

Just when the Democrats thought their election prospects couldn't get any worse, the Supreme Court goes and rules that corporate money can come rushing back into campaign finance.
See full story.

House can't pass Senate bill, Pelosi says

In a troubling new development for the White House and Democrats, House Speaker Nancy Pelosi on Thursday said that she doesn't have the votes to pass the Senate's health-care bill.
See full story.

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The Economist this week: January 21,2010

Politics this week

Jan 21st 2010
From The Economist print edition

Beset by difficulties of co-ordination and transport, a massive relief operation to help victims of Haiti’s earthquake moved with excruciating slowness. A week after the quake, only 200,000 people had received food aid; perhaps 1m need it. But medical care was improving, and the United Nations, American troops and aid agencies were working to set up a supply chain. Some 200,000 people are feared to have been killed in the disaster. See article
For the first time in 50 years Chile elected a conservative president. Sebastian Piñera, a wealthy businessman, narrowly defeated Eduardo Frei of the Concertación, the centre-left alliance that has governed for the past two decades. See article
Hugo Chávez, Venezuela’s president, ordered yet another nationalisation. The government will take over six hypermarkets owned by Exito, a Colombian business, and France’s Casino after it accused them of raising prices after this month’s devaluation of the bolívar.


A Republican won a special election for Ted Kennedy’s old Senate seat in Massachusetts. Scott Brown’s victory, in a state that has not elected a Republican senator for Congress since 1972, was a huge upset for the Democrats and came after Barack Obama had thrown his full weight behind the Democratic candidate in an effort to get out the vote. The Democratic defeat was widely interpreted as a repudiation by independent voters of many of Mr Obama’s policies, one day before the first anniversary of his inauguration. See article
Mr Brown’s win put the fate of health-care reform in jeopardy, as he provides the Republicans with 41 votes in the Senate, enough to block legislation. The Democrats said they would not try to push through a bill before Mr Brown is seated. Mr Obama urged his party to “coalesce around those elements of the package that people agree on”. See article

An Iraqi parliamentary panel recommended that some 500 candidates should be barred from competing in a general election, due in early March, because of their alleged past ties to the Baath party. This angered many Iraqi Sunnis and increased sectarian tensions, even though more Shias are on the list. A leading Sunni, Saleh al-Mutlaq, is also included.
At its headquarters in Egypt the Muslim Brotherhood, one of the Arab world’s most influential Islamist movements, elected a cautious 66-year-old conservative, Muhammad Badeea, to replace 81-year-old Mehdi Akef as its “supreme guide”. See article
At least 200 Nigerians were killed in clashes between Muslims and Christians in Jos, in central Nigeria. Houses, churches and mosques were burned and 20,000 people fled. The violence apparently broke out after an argument between Muslim and Christian neighbours over rebuilding homes destroyed in previous clashes.
Riots erupted in Kenya’s capital, Nairobi, after the government said it would deport a Jamaican Muslim accused of extremism. Many of the rioters were Kenyan Muslims, especially Somalis, who say the government discriminates against them. The police raided a Nairobi suburb populated largely by Somalis and arrested scores of them for allegedly being in Kenya illegally.

Taliban suicide-bombers and gunmen staged an attack in Kabul, the Afghan capital, as President Hamid Karzai was swearing in new members of his cabinet. The attack was beaten back, leaving 12 dead and more than 70 injured. Earlier, parliament had again rejected many of Mr Karzai’s ministerial nominees. See article
A survey by the UN Office on Drugs and Crime found that more than half of Afghanistan’s people had to pay a bribe to a public official last year. The police topped the list of bribe recipients. Nearly 60% of those surveyed saw corruption as a bigger problem than lack of security. See article
Pakistan’s Supreme Court published a lengthy judgment confirming that the amnesty granted to President Asif Zardari and others by the former president, Pervez Musharraf, was unconstitutional. It ordered the government to reopen a money-laundering case against Mr Zardari. See article

Jyoti Basu, leading light of the Communist Party of India (Marxist) and chief minister of the Indian state of West Bengal from 1977-2000, died, aged 95. Tens of thousands of people, including most of India’s leading politicians, attended his funeral procession in Kolkata. See article
A vote in Hong Kong’s Legislative Council to approve funds for a high-speed rail-link with China prompted raucous protests. See article
In a verdict condemned by human-rights groups abroad, a court in Vietnam convicted four activists of trying to overthrow the communist government and sentenced them to up to 16 years in prison.


Viktor Yushchenko, the winner of Ukraine’s “orange” revolution five years ago, was resoundingly voted out in the first round of the Ukrainian presidential election. A second round will be held on February 7th between Viktor Yanukovich, the front-runner, and Yulia Tymoshenko, the current prime minister. See article
Under pressure from the European Parliament, Bulgaria withdrew its nominated European Commissioner, Rumiana Jeleva, who also quit as foreign minister. The Bulgarians put forward Kristalina Georgieva, a vice-president of the World Bank, instead.
A British court ruled that a British couple must demolish their home in northern Cyprus, in line with a European Court ruling upholding a Greek-Cypriot claim. There may be more demands by Greek-Cypriots for demolition of holiday homes built on land they owned before Turkey’s 1974 invasion of the north. That could upset talks between Greek- and Turkish-Cypriots aimed at unifying the island.
Mehmet Ali Agca was released from prison in Turkey after serving 29 years. Mr Agca shot Pope John Paul II in St Peter’s Square in 1981.
A strike at the Belgian headquarters of Anheuser-Busch InBev led to a shortage of its beer in Belgium. Belgians, a big beer-drinking nation, were urged to quench their thirst with some of the estimated 8,000 other brews on offer.

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NFA permanently bars Chicago commodity pool operator, Wextrade Commodity Managers LLC

For Immediate Release For More Information Contact:
Larry Dyekman (312) 781-1372,
Karen Wuertz (312) 781-1335,

NFA permanently bars Chicago commodity pool operator, Wextrade Commodity Managers LLC
January 21, Chicago - National Futures Association (NFA) has accepted a settlement offer from Wextrade Commodity Managers LLC (WCM) to permanently withdraw from NFA membership. Paul J. Adrian, WCM's principal, is barred from NFA membership for a period of three years. WCM is a Commodity Pool Operator located in Chicago, Illinois. The Decision, issued by an NFA Hearing Panel, is based on an NFA Complaint filed in May 2009 and settlement offers submitted by WCM and Adrian.
The Complaint charged that WCM and Adrian failed to supervise the firm and its commodity futures activities. Additionally, the Complaint charged that WCM commingled the pool's assets, received funds in unauthorized names or accounts and failed to provide required information to NFA. The Complaint also charged that WCM used deceptive promotional material and failed to review the promotional material prior to its use. Finally, the Complaint charged that WCM failed to register an associated person and failed to list a principal.
In the event that Adrian reapplies for NFA membership or associate membership or principal status with any NFA Member after the three-year bar, he must pay a fine of $50,000.
The complete text of the Complaint and Decision can be found on NFA's website (
NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.

Forbes . com : Daily Opinions

 Daily Opinions

 January 21, 2010

Latest Stories

What Can (Scott) Brown Do For Us?

Dan Gerstein
Both parties should take heed of the Mass-acre's message.
More by Dan Gerstein Read More

Europe's Troubled IMF Borrowers

Nouriel Roubini
Can Iceland, Latvia and Ukraine repay?
More by Nouriel Roubini Read More

How Obama Can Get His Groove Back

John Zogby
Bring back the consensus builder and problem solver.
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Mr. Europe Goes To Downing Street

Quentin Letts
The president of the E.U. pays a visit to Gordon Brown.
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Fact And Comment

Steve Forbes
The financial crisis inquiry commission garnered lots of headlines in January.
More by Steve Forbes Read More

Other Comments

Steve Forbes
Often comments made by others stimulate, irritate, abuse or amuse this editor's mind.
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The Massachusetts Mandate

David Gratzer
Voters knew they were stopping Obama's bill when they elected Scott Brown.
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Liberal Insularity Lost Massachusetts

Rich Karlgaard
In a football game, if two teams of comparable talent are separated by only one fact: --Team A watches Team B's practices and reads its playbook --Team B watches only itself and reads only its own playbook You would reasonably conclude that Team A has a huge advantage. Something like that exists in American politics today. Going into the ...
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Destabilizing Force

Claudio M. Loser
Bank of International Settlements contributes to Argentina's recipe for stagnation.
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Disaster In Haiti

Forbes staff
Thoughts on the crisis and what comes next.
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For more stories, visit us at

Money Morning

January 21, 2010
Have You Tried America's New Gold-Backed "Dollar"?

America's new money - which could entirely replace the regular dollar - is backed by pure gold.

Here's how that could save your retirement and even make you rich, starting today.

Sponsored content

Never "Short" a Country That Has $2 Trillion in Cash

By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning

The first rule of successful global investing - to paraphrase the words of New York Times columnist Thomas Friedman - is a simple one.

Never short a country with $2.3 trillion in currency reserves.

I'm well aware that bond king Bill Gross has been sounding the alarm about a China bubble, and that Forbes magazine is predicting a major meltdown by the Asian giant. I've also heard all about noted short-seller James S. Chanos - who made his name by correctly calling the Enron Corp. demise - who recently described China as "Dubai times 1,000 - or worse."

Just yesterday (Wednesday), in fact, U.S. stocks suffered their worst beating of the New Year on fears that new bank lending curbs in China might blunt the worldwide economic rebound. Asian markets also were down yesterday.

So what's really going on here? China is making its banks tighten credit. Some of the biggest banks, I've heard, have actually suspended loans for the rest of January!   Many analysts and media pundits believe this is the beginning of the end of the Great China Growth Story.

Don't believe it.

To find out why you shouldn't short China, read on...

Fitz-Gerald on...
- How to Profit in Any Kind of Market

- Will China Supersede Saudi Arabia as the Key to U.S. Oil Prices?

China Can Stonewall Google, but Its "Great Firewall" is Really a False Front

By Jason Simpkins, Managing Editor, Money Morning

China has been eager to portray itself as the winner in the recent global dustup with Internet-search giant Google Inc. (Nasdaq: GOOG). At the very least, however, China wants it made clear that it wasn't the loser.

Experts quoted in such state-run media outlets as Xinhua and The People's Daily have derided Google for abandoning the largest and fastest-growing online community in the world, and forfeiting $400 million and $600 million in annual revenue.

And while China's top officials have mostly avoided the topic, government spokesmen have defended the country's censorship practices as "consistent with international conventions."

"China has tried creating a favorable environment for the Internet... China, like other countries, administers the Internet according to law," spokesperson Jiang Yu said at a regular briefing last week.

What China hasn't done is to acknowledge what the real stakes are here. This is more than just a squabble between an Asian country and a Western company: It's a realization by China that it may no longer be able to repel an overwhelming tide of free - and unfiltered - information.

China's "Great Firewall" is more of a proverbial dike, and Mountain View, CA-based Google is a hole that needs plugging.

In the digital age, Google's mission "to organize the world's information and make it universally accessible and useful" is more than just feasible.

It's unavoidable.

Read full article...

China Tells Banks to Curb Lending After a Generous January

By Don Miller, Associate Editor, Money Morning

Stocks worldwide plunged yesterday (Wednesday), commodities sank, and the dollar pushed higher after Chinese authorities demanded domestic banks slowdown lending amid concerns about asset bubbles growing in the economy.

Overall credit growth in China will be capped at $1.1 trillion (7.5 trillion yuan) for 2010, Liu Mingkang, chairman of the China Banking Regulatory Commission, told Bloomberg News in an interview in Hong Kong. Some banks were asked to limit credit because they failed to meet standards for capital reserves and other regulatory requirements, Liu said.

New loans in the first 10 days of this year were "relatively high," he told the Asian Financial Forum.

That may be understating the situation.


Gata Dispatches: The Manipulation of Gold

'Countless' analysts know gold is manipulated, but most are invisible

9:40p ET Wednesday, January 20, 2010
Dear Friend of GATA and Gold:
The blogger known as Friend of Friend of Another who elaborates on the famous "Another" postings at the old forum this week remarked in new commentary that "today countless gold analysts around the world acknowledge that gold is a manipulated item." FOFOA's new commentary is headlined "Gold: The Ultimate Hedge Fund," and you can find it at his blog here:
While GATA is glad to hear that "countless" gold analysts agree with us, the GATA delegation that has just returned from the Vancouver Resource Investment Conference would have had no trouble counting such analysts there -- maybe a half dozen outside the GATA delegation itself, with Sprott Asset Management Chief Investment Strategist John Embry being the most eloquent. (We hope to direct you to the text of Embry's remarks soon.) But if you can find even one or two such gold price suppression scheme-acknowledging analysts at, say, the annual gold mining conferences in New York, Denver, and San Francisco or the PDAC conference in Toronto, please let us know, as we're never invited there, and all we hear from those parts is ridicule.
Further, FOFOA seems to think that it's some sort of revelation for him to note that the gold price has failed to keep pace with the vast inflation of the world money supply because central banks and their investment house agents have created derivative instruments, paper gold, to match most paper gold demand. He also seems to think that it is a revelation that only buyers taking possession of real metal can hamper the scheme.
But the former observation was made comprehensively in regard to most commodities back in 2001 by the British economist Peter Warburton in his brilliant essay, "The Debasement of World Currency: It Is Inflation, But Not as We Know It," which remains crucial to an appreciation of the world financial system and can be found at Gold-Eagle here:
The latter observation, about taking delivery of metal, has been made by GATA, Jim Sinclair, and others for years, with GATA board member Adrian Douglas hammering at it lately in several incisive essays, like these:
Of course FOFOA may mean that "countless gold analysts" acknowledge privately that gold is manipulated, because acknowledging it publicly can be bad for business or even dangerous. If that is what FOFOA means, we won't argue. After all, his own anonymity is part of the proof. While we can admire his scholarship, thoughtfulness, and eloquence, that still leaves us bearing alone the ridicule for expressing what everyone is supposed to know already, for re-enacting constantly, in "Groundhog Day" fashion, the next-to-last scene from "The Emperor's New Clothes."
We can get lonely in this and would be glad of some company from those "countless" gold analysts. So come out, come out, wherever you are.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:
Phoenix Resource Investment Conference
Thursday and Friday, February 4 and 5, 2010
Renaissance Glendale Hotel and Spa
Glendale, Arizona
Registration discount code: "GATA"

* * *
Support GATA by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:
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GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
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