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Jan 26, 2010

MarketWatch: Personal Finance Stories January 26, 2010

MarketWatch
Personal Finance Daily
JANUARY 26, 2010

Tuesday's Personal Finance stories

By MarketWatch

Don't miss these top stories:

How many hours of sleep do you get each night? In our culture, getting by on just a few hours is almost a boast and people who sleep eight or more admit to that fact somewhat apologetically. I was struck anew by this recently when a friend of mine who'd come down with a long-lasting flu told me she'd finally discovered that getting 8-1/2 hours of sleep a night was helping her recover. She sounded almost embarrassed about it. But as she told me about her new sleep cycle, I realized I was positively yearning for the same thing. A long and full night's sleep. For some reason -- maybe because my husband works evenings so I often stay up late to hang out with him -- I rarely seem to get as much sleep as I'd like.

And I don't even have a baby in the house. New parents of course face serious sleep deprivation, and those who re-enter the paid labor market aren't able to take that much-needed afternoon nap with the baby. But a lack of sleep can affect your ability to learn, not to mention your focus and memory. That's not a good thing if you want to excel at your job. Read Ruth Mantell's Diary of a Recession Baby today for four tips on how to cope as a sleep-deprived worker.

I remember reading once about a company that encourages its employees to nap in the afternoon. The article described how the company even provides workers a quiet space to take it easy. I wonder if that perk survived the economic downturn? Here at MarketWatch, no naps. But there is strong, black tea in the kitchen, and many, many cups of it keep me going...

-- Andrea Coombes , assistant personal finance editor

FAMILY FINANCE

Tips for sleep-deprived working parents

It takes a Marine to raise a baby, at least in our household. My husband, Dan, who left the service in 2004, took care of Eve's 1 a.m., 3 a.m. and 5 a.m. feedings during her first few weeks of life as I recovered from a C-section and a nasty bug caught in the hospital.
See Diary of a Recession Baby.


U.S. government trims food inflation cost

The U.S. Agriculture Department trimmed its food inflation forecast for 2010, projecting prices at grocery stores and restaurants will rise at the same rate.
See full story.


INVESTING

Noted investor warns that stocks are overpriced and new bubble is forming

Stocks are likely to move higher in coming months, but prices are expensive and long-term investors should watch out for a frothy bubble that Federal Reserve policy and government actions are creating, one noted institutional investor is warning.
See Fundwatch.


Surprise! Munis yield more than Treasurys

What are the odds that President Obama will, in his State of the Union address Wednesday night, announce plans to reduce federal tax rates? Not very high, needless to say.
See Mark Hulbert.


The timeless rules of investing

Princeton Economics Professor Burton Malkiel talks with Kelly Evans about his book "The Elements of Investing," which advocates a "buy and hold" strategy, despite the poor performance of past decade.
 Watch Video Report.


Exchanges push for sub-penny pricing

The major U.S. stock exchanges are pushing regulators to allow price quotes in increments as small as a tenth-of-a cent. The changes are part of the exchanges' push to become more attractive to electronic traders who have left their platforms for private "dark pools."
See full story.


HEALTH CARE

The new crusade against Alzheimer's

One of the truly great human accomplishments of the past century has been the revolution in longevity. People in most of the world are living longer, by far, than their forebears. That is an upheaval with profoundly positive economic consequences. But there are also some drastic downsides to the vast expansion in population.
See Marshall Loeb.


With health reform in limbo, groups issue call to arms

Health-care reform hangs in the balance after last week's Massachusetts special election changed the balance of power in Washington. Now many interest groups that spent much of the last year negotiating with lawmakers are in wait-and-see mode ahead of President Obama's State of the Union address on Wednesday. But groups representing doctors, seniors and women rallied their troops Monday, urging lawmakers to press on with reform efforts despite tough new political realities.
See Health Matters (blog).


Brown election creates uncertainty among insurers

It seemed so simple back then -- those salad days before the Massachusetts election. Back, oh, about a week ago. Now, with the election of Republican Scott Brown to the U.S. Senate, the health-care reform waters have been muddied again. And health insurance investors don't like it.
See full story.


Even thin people face health risks

Even some thin people could be at risk for health issues typically associated with individuals who are fat, Ron Winslow reports.
 Watch Video Report.


Quest for a free workout

Gym rats have long complained about all the new faces at health clubs in January, a consequence of New Year's fitness resolutions. Now, with the shaky economy, the newbies are crowding free and low-cost venues such as running trails, bike paths and even malls, where power-walkers stride in the early mornings.
See full story.


REAL ESTATE

Home prices dip in November

Home prices in 20 major U.S. cities fell 0.2% in November compared with October on a not seasonally adjusted basis, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
See Economic Report.


Home-price gains will maintain slow pace

Joel Naroff, the president of Naroff Economic Advisors, says reports on November's home prices "are fairly consistent with our expectations on the market: slow and steady, but nothing spectacular." And Naroff says the improvements will remain small, as federal buyer incentives and the Federal Reserve's support of mortgage rates are phased out.
 Listen to Audio Report.


Wind turbines power 2.4 million more homes in 2009

New wind-turbine generation capacity grew by a record 10,000 megawatts in 2009, picking up the pace from 8,400 megawatts added in 2008, the American Wind Energy Association said Tuesday.
See full story.


ECONOMY & POLITICS

Deficit to hit $1.35 trillion in 2010, CBO says

The U.S. government will in 2010 record its second-biggest budget deficit since World War II, the Congressional Budget Office estimated Tuesday, while economic growth will probably stay "muted" for the next few years.
See full story.


U.S. consumer confidence rises to 16-month high

A little more optimism about the current economic climate sent the U.S. consumer confidence index to a 16-month high in January, according to a survey released Tuesday by the Conference Board.
See Economic Report.


Obama to propose budget freeze

President Barack Obama is expected to call for a three-year freeze in spending for a portion of the U.S. federal budget in a first tiny step toward controlling the growing deficit, according to reports Monday.
See full story.


Bank of England governor says Obama has put radical reform on the table

Mervyn King, governor of the Bank of England, said Tuesday that President Barack Obama had put "radical reform" on the agenda for global regulators with his plan to restrict the size and trading activities of the biggest banks in the U.S.
See full story.


Federal probe launched into AIG's payouts

A special investigator is examining allegations that the Federal Reserve Bank of New York improperly limited disclosures about the government's $182 billion rescue of American International Group Inc.
See full story.


Commentary: Capt Bernanke's sinking the U.S.S. Titanic

Let's call it "Titanic II," a classic remake. The Fed's the new Titanic. Bernanke, the egomaniacal captain. His character reminds me of Bogart playing the paranoid, obsessive Captain Queeg in "The Caine Mutiny." Remember that threatened Navy captain who navigates into a fog, panics, nearly rams a battleship? That's "Capt. Ben" in "Titanic II." And given his handling of our banking system and the global economy, he'll sink the Titanic. Capt. Ben's a tragic figure.
See Paul B. Farrell.

NYTimes.com: Democrats, Get Down to Business



The New York Times E-mail This 


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OPINION   | January 25, 2010
Op-Ed Contributor:  Democrats, Get Down to Business
By HAROLD FORD Jr.
President Obama should take four simple steps to shift attention from health care and toward creating jobs, improving the economy and reining in the size of government.







THE GATA DISPATCHES: : At NYFed, Geithner was told of benefit to banks in AIG bailout

At NYFed, Geithner was told of benefit to banks in AIG bailout

By Hugh Son
Bloomberg News
Monday, January 25, 2010
http://www.bloomberg.com/apps/news?pid=20601109&sid=aWFaHlDACUNo&pos=13
NEW YORK -- Timothy F. Geithner, who has denied that the financial condition of American International Group Inc.'s bank counterparties was a consideration in structuring the insurer's bailout, was told by a senior colleague that the rescue was a way to remove "uncertainty" for the firms.
Buying mortgage-linked assets from banks was better "from a financial-stability perspective" than other plans to shield AIG from losses on contracts guaranteeing the bonds, Margaret McConnell, then a Federal Reserve Bank of New York vice president, wrote in an e-mail to Geithner on Oct. 22, 2008. Geithner, now Treasury secretary, led the New York Fed at the time of AIG's rescue and McConnell's e-mail.
The special inspector general of Treasury's Troubled Asset Relief Program wrote in a 2009 report that Geithner said the New York Fed didn't weigh the financial status of banks, including Goldman Sachs Group Inc., when deciding to fully reimburse them for $62.1 billion of devalued assets. U.S. Rep. Darrell Issa, the ranking member of the House oversight panel that called Geithner to testify this week, has described the rescue of New York-based AIG as a "backdoor bailout" of banks.
The New York Fed weighed two other options for stanching losses tied to AIG's credit-default swaps in the weeks after the September 2008 rescue, the inspector general, Neil Barofsky, said in the Nov. 17, 2009, report. One included asking counterparties to cancel their swaps and selling the underlying assets for an investment in a vehicle that would assume ownership of the securities. Another was for a Fed-backed vehicle to take over AIG's responsibility of backing the assets.
The first alternative was deemed too time-consuming and the second made regulators uncomfortable because it would give them "long-term credit relationships with supervised institutions," Barofsky said in the report.
Paying banks through a Fed-funded facility known as Maiden Lane III made sense, McConnell wrote in the Oct. 22 e-mail to Geithner, "because it seems to remove considerably more uncertainty for the firms and arguably for the system."
Andrew Williams, a Treasury Department spokesman, said "the creation of Maiden Lane III to help stabilize AIG and the financial markets was prudent, and it is highly likely that the Fed will get back every dollar it committed to Maiden Lane III with interest and, quite likely, a profit."
Jack Gutt, spokesman for the New York Fed, declined to comment on the e- mail.
The value of securities and cash held in Maiden Lane III climbed 4.5 percent to $23.5 billion in the three months ended Sept. 30, according to a New York Fed report.
Geithner agreed to testify at a House oversight panel hearing scheduled for Jan. 27 after e-mails released by Issa indicated the New York Fed asked AIG to limit what the public knew about the bank payments.
"It has become all too clear that the New York Fed was more interested in protecting the interests of Wall Street instead of Main Street," said Issa, a California Republican, in a statement.
The McConnell e-mail obtained by Bloomberg News is part of 250,000 pages of documents the New York Fed provided to the House Oversight and Government Reform Committee after the panel issued a subpoena this month asking for e-mails, phone logs, and other documents tied to AIG's rescue, which swelled to $182.3 billion.
"Questions have been raised as to whether the Federal Reserve intentionally structured the AIG counterparty payments to benefit AIG's counterparties," Barofsky wrote. "Geithner and the New York Fed's general counsel deny that this was a relevant consideration for the AIG transactions."
Barofsky, who agreed to testify this week, wrote in November that the rescue "provided AIG's counterparties with tens of billions of dollars they likely would have not otherwise received."

* * *

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Thursday and Friday, February 4 and 5, 2010
Renaissance Glendale Hotel and Spa
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Registration discount code: "GATA"

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Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
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News Alert: G.M. Reportedly Agrees to Sell Saab to Spyker

Breaking News Alert
The New York Times
Tue, January 26, 2010 -- 12:58 PM ET
-----
G.M. Reportedly Agrees to Sell Saab to Spyker
General Motors has struck a preliminary deal to sell Saab to
Spyker Cars, a tiny Dutch maker of high-end sports cars,
according to an official with knowledge of the deal, saving
Saab from what seemed like certain extinction after earlier
bids for the Swedish unit of G.M. collapsed.
G.M. had begun the process of shuttering Saab's production
line and other facilities in Trolltattan, Sweden, at the
beginning of the year, but the deal with Spyker will halt
that process and buy time for Saab to begin rolling out new
cars.
Read More:
http://www.nytimes.com?emc=na
-----
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Sign up by texting NEWSALERTS to 698698 (NYTNYT).
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Forbes.com Intelligent Investing,, January 26,2010



Intelligent Investing with Steve Forbes

Features

Intelligent Investing Panel
The Pieces Of AIG
Follow AIG's pieces but stay away from the company as a whole.
With Alexandra Zendrian
Intelligent Investing
Nero's SEC Violin Concerto
The SEC is making concept releases while Wall Street is on fire.
With Bill Singer

Video: Intelligent Investing With Steve Forbes

Intelligent Investing With Steve Forbes
Alwaleed: Citi's Future Holds Promise
Alwaleed Bin Talal says Citi's only concerns are mortgages and a weakened consumer.

Fobes .com: Latest Stories, January 26,2010


Latest Stories

The Death Of Gentry Liberalism

Joel Kotkin
The elites are no longer deciding elections. Obama, take note.
More by Joel Kotkin Read More

Broke? Blame The Government

Brian S. Wesbury and Robert Stein
The private financial system didn't cause the recession.
More by Brian S. Wesbury and Robert Stein Read More

Dealers Or No Dealers

Richard A. Epstein
Why the government should back off and let companies fend for themselves.
More by Richard A. Epstein Read More

Rebuilding Global Markets

Edited by Elisabeth Eaves
Ideas for world leaders at Davos.
More by Edited by Elisabeth Eaves Read More

India's Birthday Wish

Bala Chakravarthy
As the country turns 60, it seeks more business innovation.
More by Bala Chakravarthy Read More

Why China's Leaders Matter

Robert Lawrence Kuhn
A writer defends his book.
More by Robert Lawrence Kuhn Read More

Seven Questions for Week No. 4

Rich Karlgaard
1. How would you reform America's big banks? President Obama, spanked by Scott Brown's win over Martha Coakley on Jan. 19, got mad and lashed out at … banks. OK, it was an obvious political diversion. But is there deeper wisdom here? Is now the time to break up America's too-big-to-fail banks? If you think so, ...
More by Rich Karlgaard Read More

Our Vanishing Ultimate Resource

Steven Malanga
Plummeting birthrates threaten prosperity worldwide. Can America buck the trend?

Money Morning : Wall Street's Stranglehold on the Economy is C Americanshoking


January 26, 2010
Wall Street's Stranglehold on the Economy Is Choking Americans

By Shah Gilani, Contributing Editor, Money Morning

America's Founding Fathers were afraid of any concentration of power in the republic. They were particularly afraid that banking interests could hijack our fledgling democracy.

And yet today, 234 years later, our Founding Fathers' worst fears have come true. Wall Street's stranglehold on the economy threatens our very prosperity, and the future of a truly democratic republic.

It's high time we address the truth about Wall Street's tyranny and set a course for a more secure economic future - one that's anchored by a safe banking system, not a system rigged by banks.


How is Wall Street is choking America? Read on...

Gilani on...
- The Seven Themes That Will Lead to Maximum Profits in 2010

- "Financial Reform" Just Camouflage for Wall Street's Latest Power Play

Pocket Fast 2,840% Gains... Starting 24 Hours From Now

Our research team has unearthed an opportunity to begin pocketing as much as 2,840% gains... before the next market correction. It has to do with one tiny mining company - and one enormous discovery. The company has found an estimated $49.2 billion worth of the most strategic metal on earth today. It's not gold or uranium. But the Daily Mail calls this substance "a wonder." Bottom line: The discovery could help to replace $10.4 trillion in oil profits, while powering the global economy of the future.

To find out how soaring demand from the U.S., China, Russia and others is about to send shares of this obscure company soaring... please go here now for the full report.

Sponsored content

With This Options Strategy, Investors Can Snap Up Global Stocks at Discount Prices

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

Everyone likes getting a bargain, especially on high-quality products. But when it comes to the stock market, that search for bargains can be a long one. That's especially true right now - after the rally that started in mid-March has propelled so many stocks to new yearly highs.

But here's what most investors don't realize: While it may be hard to find truly undervalued stocks, there is a way to buy perfectly valued shares at a substantial discount to their market price.

At times, that discount can equal 20% or more.

What's more, this strategy can be utilized in virtually any market environment: It doesn't matter whether the bulls are running the show, as they have been recently, or if the market is suffering from a "fiscal hangover," as it was in early 2009.

The technique is known as "selling cash-secured put options" - and, while trading options is viewed as complex and scary by many investors, this particular play is both simple in execution and relatively low in terms of risk.


Here's how it works...


Disastrous December Collapse Exposes False Start to Housing Market Rebound

By Jason Simpkins, Managing Editor, Money Morning

Reports of a rebound in the U.S. housing market have proven premature - just as we warned.

Home sales surged 28% from September to November, giving hope to prognosticators who declared the housing crisis over. But as Money Morning Contributing Editor Martin Hutchinson pointed out in a Dec. 31 article, sales plunged sharply the month after the government's new homebuyers tax credit was originally set to expire.

Existing home sales plunged 17% to a 5.45 million annual rate in December, taking the wind out of a housing market that was just beginning to show signs of life. The decline in December sales was the biggest since the National Association of Realtors (NAR) began keeping records in 1968.

Existing home sales surprised the markets in November - when the $8,000 tax credit was originally set to expire - by zooming 7.4% to an annual rate of 6.54 million units, the highest since February 2007. But that increase proved unsustainable as ineffective government programs and high unemployment continue to hamstring the housing market.

The homebuyers tax credit has been extended to include deals signed by April 30 and closed by June 30. However, Money Morning's Hutchinson believes that will hardly be enough to salvage future home sales.


Read full article...

News Alert: Obama Seeks Three-Year Freeze on Spending in Domestic Programs

Breaking News Alert
The New York Times
Mon, January 25, 2010 -- 8:08 PM ET
-----
Obama Seeks 3-Year Freeze in Spending on Many Domestic Programs
President Obama will call for a three-year freeze in spending
on many domestic programs, and for increases no greater than
inflation after that, an initiative intended to signal his
seriousness about cutting the budget deficit, administration
officials said Monday.
Read More:
http://www.nytimes.com?emc=na
-----
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Sign up by texting NEWSALERTS to 698698 (NYTNYT).
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GURUS BLOG: The Spanish Pension System -- The Ponzi Scheme

 

Original version in Spanish  can be found in the next address:

http://www.gurusblog.com/

 Fernando Guzmán Cavero


 

GurusBlog

The Spanish Pension System enter into deficit in 2022

sistema pensiones español déficit
2 years ago Unesp, The employer's insurance, commissioned released  A report on the sustainability of 
 the Spanish pension system to a committee of experts, whose composition is very heterogeneous and among those are Rato, Juan Huts, Former Secretary General of Employment with the PP; Juan Manuel Eguiagaray,Former Socialist Minister of Industry; Jose Maria Fidalgo, Former Secretary General of CCOO, together with Victor Perez Diaz, Professor and sociologist; Xavier Sala-i-Martin, An economist at Columbia University, and Pilar González de Frutos, Chairman of UNESP.

The results announced a few days ago are all more or less we can perceive, and even when we get into long-term projections we can all make mistakes, I think that given the varied composition of this committee of experts, it is worth noting that yields predictions The report, which should be a warning sign for our political leaders, whether they are party.


The fact is that according to the report, the Spanish pension system, enter into financial failure within 12 years, this poses no danger to those currently receiving pensions of their retires plans, how does it work? In all Ponzi scheme The new contributions cover current obligations, the problem is for those who today are contributing to the pension system and in a few years we would have the right to collect our pensions .... most likely not be enough new contributors so they can pay for our services.

I leave with some data from the study. It does not take a mathematician to deduce that the system endures.
Today there are 7.6 million aged 65 and over (16.6% of the population), and 31 million between 16 and 64 (67.6%). In 2050, projected long-term population conducted by the INE, people over 64 years would be 16.4 million (30.8% of total) and those aged 16 to 64, 29.3 million (55 % of total). Today there are 4 people of working age (16 to 64) by more than 64 years each; in 2050, that ratio will have fallen to 1.8. At some level, this ratio would be below the threshold that defines the sustainability of the pension system.

The study, at least that is publicly accessible does not provide the methodology used for calculations, apart from the projection of the structure of the population pyramid, it would be interesting to know that average unemployment rate were considered. It is not the same project an unemployment rate of 8% to 10% who consider sustainable unemployment levels between 15-20%.

Indeed, with pensions and an aging population, the report also notes another problem to manage in the future. A rising health care costs.

Solutions: 

The report gives a more or less generic. Rather than extend the retirement age, calls for more work. That is one of the current problems is that it is anticipating the retirement age while the age of delayed return to work because young people are learning more. The solution is fine, but I think that is willful. If you currently anticipating retirement age and the age at which delayed work, which would rather not think our unemployment rate in these circumstances.

The report has however, a sentence to emphasize:
A public deliberation requires certain rules, such as respect for the truth of the statements made. This requires, for one, will be informed in a truthful manner, complete and on time, ie as soon as possible, the problem identified, possible solutions, the costs thereof. Also needed, and much, that the agencies responsible for managing the system make this transparent and accessible management information they may have.

We have over huge problem with pensions in our country (a problem not unique to Spain) and now it's time that we all know where we are and take appropriate action, with a brave public debt. Hide it would be a scam ... .. The Hoax.

On the Spanish pension system we have debated long and hard on the blog, see "Mathus, Ponzi and pensions“, “Pension System Sustainability Study in Spain"Or"The Spanish pension system, like all good pyramid scheme is not sustainable

We leave you the video where Rato also presents the results of the report: (The video is in Spanish)