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Feb 17, 2010

MarketWatch: Personal Finance Daily, February 17, 2010

MarketWatch
Personal Finance Daily
FEBRUARY 17, 2010

Wednesday's Personal Finance stories

By MarketWatch



  
Don't miss these top stories:

Will the health-care system ever get overhauled? Who knows?

For now, the insured are blessed with insurance companies who in some cases apparently can raise rates exorbitantly -- as the recent situation with WellPoint in California demonstrates -- and the uninsured are lucky enough not to have to deal with insurers but must pray they never get sick or injured.

If the worst does happen, there are some options for the uninsured. Read Kristen Gerencher's Vital Signs today for a look at the various types of health clinics available to people who either don't have insurance or for whatever reason can't get in to see their regular doctor. Then, don't miss our story by Anya Martin on how, even with insurance coverage, heart-disease patients can expect to pay steep out-of-pocket costs to manage their care.

I'm lucky enough to have employer-sponsored coverage. But should decent insurance be available only to people who work at certain companies? Doesn't seem right to me.

-- Andrea Coombes , Personal Finance editor

Where to get health care if you face obstacles

Lack of insurance or timely access to your regular doctor doesn't have to mean going without needed health care. If you're uninsured and seeking stop-gap medical care before you find coverage again, you can triage your way to better health by understanding the trade-offs of several care options, experts say. A retail clinic, urgent-care or community health center may be a suitable fit, depending on the severity of your medical need and your personal preferences.
See Vital Signs.


Heart-disease patients need to budget for preventive care, prescription costs

An ounce of prevention may be worth a pound of cure, but when it comes to heart disease, chances are your insurance won't cover a trip to a dietician, a gym membership or other services that could help you reduce your risk factors.
See Health Care.


Appealing a change in drug coverage

Every winter, millions of Medicare Part D recipients go to fill a prescription, only to learn that their plan no longer covers the medication. People in this situation can always switch to a similar drug that's covered, provided their doctor says it's safe and effective. But they also can launch a formal appeal of the denial -- and the odds of success are high.
See Health Care.


TAXES

Personal Finance Minute: Taxes

April 15 is coming up fast, so watch for an estate-tax pitfall and consider a deductible donation for Haiti relief, among other issues. Andrea Coombes reports.
 Watch Video Report: Personal Finance Minute.


Congress may restore IRA provision

Do you think there is a chance, good or bad, that Congress will reinstate a law that expired last year allowing people over age 70 1/2 to give money from their individual retirement accounts directly to charities?
See Tom Herman's Tax Report.


HSBC reportedly involved in tax evasion case

HSBC Holdings Plc. is involved in a recent tax evasion case brought against a Virginia-based investor, and has joined the ranks of banks under scrutiny for helping wealthy Americans evade taxes, according to a report Tuesday.
See TaxWatch.


HIGHER EDUCATION

Stafford loan rates are falling

Undergraduates looking for ways to fund their college education now have another reason to look into subsidized Stafford loans: Interest rates are dropping.
See College Costs.


Filing for aid? Don't do this

It's time to start filling out the Free Application for Federal Student Aid (fafsa.gov ), but one mistake could leave you missing out on vital financial aid for college. Here are some common mistakes families make.
See College Costs.


REAL ESTATE

What happens when Fed exits mortgage market?

The central bank is helping to keep rates low and fund loans for home buyers and refinancers, but in March it plans to end its support. Greg McBride at Bankrate.com says buyers still have some time, but if you're eager to refinance, get going.
 Watch Video Report.


Fed should sell mortgage-backed bonds: Plosser

The Federal Reserve should begin to sell off its stockpile of mortgage-backed securities as the recovery gains strength, Philadelphia Fed President Charles Plosser said Wednesday in a speech on the Fed's independence.
See The Fed.


Housing starts show signs of life

Housing starts showed signs of life in January, rising to their highest level in seven months, according to Commerce Department data released Wednesday.
See Economic Report.


Builders expect surge in demand, economist says

Home builders got out the shovels and the backhoes last month, breaking ground on a greater number of single-family and apartment homes. More importantly, though, economist Patrick Newport of IHS Global Insight says builders are "anticipating a surge in demand," thanks to the home buyer tax credit. Newport says they've been stocking up on building permits for single-family homes for the last three months. And Newport thinks demand will continue to grow even after the tax credit expires.
 Listen to Radio Report.


Mortgage applications fell 2.1% last week: MBA

The volume of mortgage applications filed last week dropped a seasonally adjusted 2.1%, compared with the previous week, the Mortgage Bankers Association reported on Wednesday.
See Mortgages.


Commentary: More gloom ahead in commercial real estate

Over the next few years, a wave of commercial real estate loan failures could threaten America's already-weakened financial system.
See Outside the Box.


ECONOMY & POLITICS

A year into stimulus, achievements are debated

Two million jobs have been saved or created due to the stimulus act signed into law by President Barack Obama a year ago, the White House said Tuesday as it marks the anniversary of the $787 billion spending package.
See Capitol Report.


Commentary: The tragedy of the Senate

To paraphrase Shakespeare about Evan Bayh's decision not to stand for reelection to the U.S. Senate, let's say, "Nothing in his life in the Senate became him like the leaving it."
See Darrell Delamaide's Political Capital.


Industrial upswing continues in January

The Federal Reserve reported Wednesday a broad-based gain in production at the nation's factories, mines and utilities in January, suggesting that the upswing in industrial output seen over the last two quarters may have legs.
See Economic Report.


INVESTING

What's a gold medal worth?

How much gold is there in those Olympic medals? What are they worth? And now that gold has boomed to more than $1,100 an ounce, should athletes forgo framing the thing and just, um, you know...melt it down the moment they get the medal home?
See Brett Arends.

GATA DISPATCH

Goldman Sachs may have helped fool Greek bond buyers

By Elisa Martinuzzi
Bloomberg News
Wednesday, February 17, 2010
http://www.bloomberg.com/apps/news?pid=20601087&sid=asBNXSLtlN9E&pos=1
Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.
No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.
Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters, and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.
"The price of bonds should reflect the reality of Greece's finances," Blain said. "If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled."
Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment.
Goldman Sachs, Wall Street's most profitable securities firm, is being criticized by European politicians, including Germany's ruling Christian Democrats, who have questioned whether the firm helped Greece hide its deficit to comply with the currency's membership criteria. Greece is also being faulted by fellow euro-region countries for failing to disclose the swaps to EU regulators.
The swaps used by Greece to manage debt were "at the time legal," Greek Finance Minister George Papaconstantinou said on Feb. 15. The government doesn't use the swaps now, he said.
Eurostat, the EU's statistics office, this week ordered Greece to hand over information on the swaps transactions by the end of this week in an investigation that may extend to other EU countries.
Goldman Sachs earned about 735 million euros ($1 billion) underwriting Greek government bonds since 2002, data compiled by Bloomberg show. Goldman Sachs underwrote 10 bond sales. Prospectuses for six of them, obtained by Bloomberg, contain no mention of the swaps. The other four couldn't be obtained.
The yield on Greek 10-year government bonds jumped to as much as 7.2 percent on Jan. 28 amid the worst crisis in the euro's 11-year history. The premium, or spread, investors demand to hold Greek 10-year notes instead of German bunds, Europe's benchmark government securities, widened yesterday by 18 basis points to 323 basis points.
The spread reached 396 basis points last month, the most since the year before the euro’s debut in 1999, compared with an average of 57 basis points in the past decade. A basis point is 0.01 percentage point.
"When people start to fear that the numbers aren't accurate, they fear the worst," said Simon Johnson, a former International Monetary Fund chief economist who is now a professor at the Massachusetts Institute of Technology's Sloan School of Management in Cambridge, Massachusetts.
Goldman could face legal liability "if it could be established that they were knowingly hiding risk, and therefore knew or had reason to know that the bond disclosure documents were misleading," said Thomas Hazen, a law professor at the University of North Carolina at Chapel Hill. "But that would be a tough hill to climb, in terms of burden of proof. There'd have to be some sort of smoking-gun memo."
The swap enabled Greece to improve its budget and deficit and meet a target needed to remain within the region’s single currency. Knowledge of their existence may have changed investors' perception of the risk associated with Greece, and the price they may have been willing to pay for the country's securities.
"From what we know, this is an egregious example of a conflict of interest" for Goldman Sachs, MIT's Johnson said. "Even if the deal had been authorized, it doesn't let them off the hook."
A Greek government inquiry this month identified a series of swaps agreements with securities firms that allowed the country to hide its mounting deficit. Greece used the swaps to defer interest payments, causing "long-term damage" to the Greek state, according to the Feb. 1 document, commissioned by the Finance Ministry.
European Union officials said this week they only recently became aware of the transaction with Goldman. The swaps don't necessarily break EU rules, European Commission spokesman Amadeu Altafaj told reporters in Brussels on Feb. 15.
The transaction with Goldman consisted of a cross-currency swap of about $10 billion of debt issued by Greece in dollars and yen, according to Christoforos Sardelis, head of Greece’s Public Debt Management Agency at the time.
That was swapped into euros using a historical exchange rate, a mechanism that implied a reduction in debt and generated about $1 billion in an up-front payment from Goldman to Greece, Sardelis said. He declined to give specifics on how the swap affected the country's deficit or debt.
European politicians such as Luxembourg Treasury Minister Jean-Claude Juncker this week criticized Goldman Sachs for arranging the Greek swap and are pressing the firm and Greece for more disclosure. Chancellor Angela Merkel’s Christian Democrats aim to push for new rules that will force euro-region nations and banks to disclose bond swaps that have an impact on public finances, financial affairs spokesman Michael Meister said.
"Investment banks are guilty of being part of a wider collusion that fudged the numbers to make the euro look like a working currency union," said Matrix's Blain. "The bottom line is foreign exchange and bond investors bought something sellers knew not to be the case."

* * *

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http://gata.org/tshirts
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
http://www.cartserver.com/sc/cart.cgi
Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:
http://www.goldrush21.com/
* * *
Help keep GATA going
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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To contribute to GATA, please visit:

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Forbes.com: Executive Top Pics

The Cloud, Down To Earth
February 16, 2010
Lee Gomes

Here's a free online service small businesses can start using right away.

SAP's 'Timeless' Future
February 16, 2010
Dan Woods

Why the software giant should stick to its knitting.

The Most Unusual Hotels In America
February 16, 2010
Monte Burke

Rest your head in one of these quirky spots, and you're likely to have an atypical stay.

Britain's Unemployment Curse
February 17, 2010
Parmy Olson

A jump in jobless claims and trend to hire temporary staff point to worsening labor market conditions in the U.K.

Jobs You Can Do In Paradise
February 12, 2010
Helen Coster

Live where you'd most love to be, working as anything from a mountain guide to a sommelier or a ski photographer.

Fastest-Shrinking Restaurant Chains
February 17, 2010
Tom Van Riper

Slumping casual dining companies have largely abstained from mass closures, but they may not be able to avoid it much longer.

Easy And Effective Tech Fixes At Your Fingertips
September 4, 2009
Gene Marks

Want to get more out of your day without spending a fortune on new gadgets? Read on.

Housing Shortage Coming In 2011
February 13, 2010
Alexandra Zendrian

If new houses aren't built soon in the U.S., there won't be enough next year.

ZDNet: Ditching Firefox for Google Chrome not an option?



Featured TalkBack

I received an incredible number of emails explaining why the new version of Chrome still isn't a good alternative for Firefox. There are some valid points, but for me, none of them hit home enough to prevent me from thinking that switching is a great idea. by Garett Rogers

Recommended
What are the top paying IT and Business job roles in your country?
Find out with the activeTechPros / activeBizPros salary benchmark wizard.

» IT professionals - go to activeTechPros

» Business professionals - go to activeBizPros

Join us and use this useful resource for free.
Must-Read News


Hackers "fix" XP BSoD rootkit

Adobe plugs more gaping holes in PDF Reader

Microsoft Live ID authentication problems hit users across the Web

Malicious PDF files comprised 80 percent of all exploits for 2009

Apple bans iPhone hackers from iTunes App Store
ZDNet Blogs


Smartphone Evolution 2.0: Who's the biggest loser?

Google Buzz: Privacy concerns grab Gov't attention, hint at desperation

Are we ready to go fully 64-bit yet?

Driverless eSATA cards: worth the wait?

The slow demise of the printer

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» IT professionals - go to activeTechPros

» Business professionals - go to activeBizPros

Join us and use this useful resource for free.
TechRepublic Hot Topics


Improve your consultancy's productivity with these iPhone apps

Escape into three geeky podcasts

Poll: Which of your communications providers is the worst?

Poll: Do you trust the iPhone's encryption to protect sensitive documents?

Product Spotlight: Notepad++ text editor
Latest from SmartPlanet


Genetics 101 for the masses

France can teach us as we switch nuclear power back on

Patch Adams continues fighting for joyful, loving health care

Silicon wires make your drapes a solar cell

Yahoo makes Web surfing easier for the disabled
Photo Galleries

It comes as no surprise to anyone that Microsoft finally made their Windows Mobile 7 plans public. We will see Xbox LIVE games, Zune music and video, and a dedicated Bing button on future devices.
Toy Fair 2010
Samsung Wave hands-on
ZDNet Videocasts

ZDNet correspondent Sumi Das explains how new networking technologies will one day connect your thermostat and meter to your PC so you are better able to track, monitor, and analyze the energy usage in your home.
Macworld 2010: Quickoffice launches cloud services on iPhone
Macworld 2010: Controlling a telescope via iPhone

FORA TV : Kofi Annan Pushes for Economic Fairness Over Regulation

Five Reasons Why Gold Will Not…



Gold has made some exciting moves recently, but what can we expect in the future? In today’s video, I point out five reasons that I do not expect gold to make a new high just yet.
http://www.ino.com/info/528/CD3233/&dp=0&l=0&campaignid=3

If the current cycle persists, there will be some interesting trades to be had in this market and a possible new high before summer.

The video is free to watch and there are no registration requirements. I hope you enjoy this gold update and make a comment on the blog about how you feel about this video and this market.
http://www.ino.com/info/528/CD3233/&dp=0&l=0&campaignid=3
All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Real Politics: February 17,2010


February 17, 2010
You can always find the latest political news at RealClearPolitics.com.
Top 5 Stories on RealClearPolitics
Bayh's Exit Spurs Debate About Partisanship - Dan Balz, Washington Post
Sen. Evan Bayh's surprise decision not to seek reelection touched off a debate Tuesday among strategists and scholars about whether the Indiana senato...
Someone Will Have to Step In & Lead if Obama Can't - Jeff Birnbaum, WT
Whether we realize it or not, Washington has come to a standstill and at a very dangerous time. Democrats, who have control on paper, have neither eno...
The Future Is Greek - Anne Applebaum, Slate
I have seen America's future, and it is Greece. By this I do not mean that the Midwest will soon be covered with ancient ruins or that Texans will swa...
Today's Tea Parties and the Boston Tea Party - Richard Samuelson, RCP
Are this year's "tea parties" really tea parties? What could today's protesters have in common with the "Indians" who dumped 90,000 pounds of tea in ...
Can Dems Pass Health Bill Through Reconciliation? - Mike Madden, Salon
WASHINGTON -- The White House is convening a healthcare reform "summit" next week, with Republican and Democratic leaders from the House and Senate. B...
More Opinion and Analysis
Education: Too Important for a Government Monopoly - John Stossel
The government-school establishment has said the same thing for decades: Education is too important to leave to the competitive market. If we really w...
Both Parties Lose as Bayh Leaves - Ruth Marcus
WASHINGTON -- The most striking part of Sen. Evan Bayh's retirement announcement was his on-air job application. He'd be interested in managing a busi...
Who Doesn't Trust Science Now? - David Harsanyi
All of you deniers and flat-earthers who are exploiting the glacial temperatures and bizarre snowfall to mock global warming fears are missing the poi...

Money Morning: February 17,2010

February 17, 2010

Turn $50 into $204,100?

We’ve just uncovered a unique situation that could put a good chunk of cash in your pocket in 2010...

Forbes says, "[This investment] gets so little attention, that you still have the opportunity to find some


hidden gems."

Yet your broker is practically forbidden from recommending this investment to you.

So what exactly is this investment? Why can't your broker promote it to you? And can it really turn $50 

into over $200 thousand?

Read this report for full details.

Sponsored content


How Banks Are "Crowding Out" the U.S.
Rebound

By Martin Hutchinson, Contributing Editor, Money Morning

When U.S. President Barack Obama unveiled the $787 billion "stimulus" bill of extra spending and modest
tax cuts last year, it became clear that the U.S. budget deficit was going to eclipse the 10% of gross domestic
product (GDP) level for at least one year (and, as we now know, probably three years).

On those grounds, I opposed the "stimulus" - a position that was a lot less popular then than it has since 

become. However, as I'll show you below, it now looks as if I was right - and the implications for the 
U.S. economy are highly worrisome.

You see, the theory postulated by economist John Maynard Keynes holds that the extra spending stimulates

additional output fails to address the question of where the money comes from.

Government cannot create wealth - it has to borrow it. If, before the stimulus, government finances were in

good shape, as was the case in China, then stimulus does indeed stimulate: The modest budget deficit that
it causes is easily financed, and the extra spending creates some jobs and maybe some useful infrastructure, 
depending on how well targeted it is.

In the United States, however, government finances were in a mess before the stimulus began.

To find out how banks are blunting the recovery, read on ....



Hutchinson on...
- Despite India's Optimism, There May Be a Better Time to Buy

- As Greece's Woes Demonstrate, the Fuse Has Been Lit on the Global Debt Bomb

Money Morning Mailbag: How the Demise of 
Glass-Steagall Helped Spawn the Credit Crisis

By Shah Gilani, Contributing Editor, Money Morning

Question: Please address why the removal of the Glass-Steagall Act in 1999 caused the financial
lmeltdown of 2007 and why its reinstatement is the only way to stop the financially risky behavior 
allowed after it's removal. Address why we will very likely have another meltdown (probably in 2010) 
unless reinstated.

Answer: Mr. Scott: While the overturning of what remained of Glass-Steagall did not cause the meltdown, 

it certainly contributed mightily to the systemic nature of the crisis.

Allowing commercial banks and investment banks to marry created giant operations that became too big 

to fail and too profitable to break up. Everyone was making money. The overriding problem was not the 
integration of commercial (deposit-taking and loan-making) banks with investment (capital-markets trading)
banks, but the extraordinary migration of all banks into the same products, trading, and risk-taking 
businesses. I am definitely including the ubiquitous game of mortgage origination, securitization, 
sales and trading.
Continue...



Money Morning Mailbag

We'd like to hear from you! If you have an idea that amplifies something you've read in Money Morning, send it to us here to share: mailbag@moneymappress.com

"ALL BRANCHES... of our government ARE IN BUSINESS with Wall Street..."
from Money Morning Reader, T.S.

Investment Strategies: For Market-Beating Profits, 
Here Are Three Stocks That Aren't on Wall Street's 
Radar Screen

By Marc Lichtenfeld, Guest Writer, Money Morning

When I was an analyst at the uber-contrarian Avalon Research Group, we only initiated coverage on a stock
if our opinion went against the consensus, or if the security was barely (or not at all) followed by Wall Street.

For this column, I'm going to focus on the latter - and show you how this seemingly unconventional investment 

strategy can actually make you a lot of money.

If you want quantifiable proof, consider this nice bit of research from Cem Demiroglu at Koc University in Turkey, 

and Michael Ryngaert at the University of Florida: In 2008, they conducted a study that showed that stocks without
any analyst coverage experienced a 4.82% higher return than their peers after coverage initiation.

The lesson here is simple.

Read full article...

Forebe. com : Intelligent Investing, February 17, 2010


 

Intelligent Investing with Steve Forbes

 

 

Features

Intelligent Investing
The Great Semiconductor Surprise
Chip supplies are down, prices are up and multiples at companies from Micron to Intel are far too low.
With Rick Whittington
Intelligent Investing Panel
Housing Shortage Coming In 2011
If new houses aren't built soon in the U.S., there won't be enough next year.
With Alexandra Zendrian

Video: Intelligent Investing With Steve Forbes

Intelligent Investing With Steve Forbes
Wesbury Says Mark To Market Was The Problem
First Trust Advisors chief economist Brian Wesbury lays out the case that mark to market was the culprit for the market downturn.