WASHINGTON — The post office will run out of money this year unless it gets help, Postmaster General John Potter told Congress on Wednesday as he sought permission to cut delivery to five days a week.
"We are facing losses of historic proportion. Our situation is critical," Potter told a House panel.
The agency lost $2.8 billion last year and is looking at more losses this year. Reducing mail delivery from six days to five days a week could save $3.5 billion annually, Potter said.
Potter also urged changes in how the post office prepays for retiree health care to cut its annual costs by $2 billion.
If the Postal Service does run out of money, the lingering question, Potter told the House Oversight post office subcommittee, is which bills will be paid and which will not. Ensuring the payment of workers’ salaries comes first, he said, but other bills may have to wait.
Potter first raised the possibility of delivery cutbacks in January, but the idea has not been warmly received.
"With the Postal Service facing budget shortfalls, the subcommittee will consider a number of options to restore financial stability and examine ways for the Postal Service to continue to operate without cutting services," subcommittee Chairman Stephen F. Lynch, D-Mass., said.
Lynch said the financial stability of the Postal Service is "critical to the American expectation of affordable six-day mail delivery payday loan lenders."
Even if the agency succeeds in reaching its planned cuts of $5.9 billion, there could still be a $6 billion deficit in 2010, Potter said.
"Without a change we will exhaust our cash resources," he said. "We can no longer afford business as usual."
Asked whether layoffs would occur, Potter said it is possible but he hopes avoidable.
Last week, the post office said it planned to offer early retirement to 150,000 workers and is eliminating 1,400 management positions and closing six of its 80 district offices.
Dan Blair, head of the independent Postal Regulatory Commission, noted that Congress could consider appropriating money to help the post office.
The agency does not receive a taxpayer subsidy for its operations, although Congress subsidizes overseas voting and free mail for the blind.
William Young, president of the National Association of Letter Carriers, stressed in his testimony that the agency is not seeking a bailout, "but we are here to ask the Congress for help."
DETROIT — A public tiff between Italian automaker Fiat SpA and Chrysler LLC apparently ended Friday when Chrysler rescinded a statement on its website that Fiat would be responsible for part of Chrysler’s debt if the two companies join forces.
Chrysler, in a Web video on Thursday explaining why an alliance for the two companies would be good for Chrysler and the country, said Fiat would be responsible for 35 percent of what Chrysler owed to the U.S. government.
But Fiat on Friday denied that it would be responsible for any of Chrysler’s debt.
The two companies are talking about an alliance in which Fiat would take a 35 percent stake in Chrysler in exchange for Fiat’s small-car technology.
Chrysler, in a statement issued Friday, reversed the claim and said Fiat would become an equity holder.
"To clarify, this does not mean Fiat would assume responsibility for any of Chrysler LLC’s debt," the statement said.
Fiat Group said Friday that it "intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler saving account payday loan."
The Chrysler video featured CEO Robert Nardelli saying that the company can be viable on its own, but a deal with Fiat would enhance that viability.
Fiat is discussing trading its small-car and small-engine technology for a 35 percent stake in Chrysler in a noncash deal. The deal would help Chrysler bring badly needed small cars to its showrooms while helping Fiat re-enter the American market with the Alfa Romeo brand and the update of the iconic Fiat 500.
In the video, Chrysler said an alliance with Fiat would help it leapfrog five or six years ahead in development of fuel-efficient and clean-air technology.
Any deal with Fiat is contingent upon the company gaining U.S. government approval of its viability plan and the release of additional government loan money to Chrysler.
We got some new building permits data from the Home Builders Association of St. Louis. First, a little good news: Permits in February hit their highest mark since October.
But, bad news, too. The number of permits so far this year — 377— is down 60 percent from the first two months of 2008, and barely a quarter of the tally for those hopping days of 2004 and 2005 cash advance.
If this is the bottom, we’re pretty low.
It’s called the Valley of Death, a point where technology ventures with proven products can’t get the financing they need to bring their innovations to market.
In today’s tight credit market, that valley has grown into a deep, dark, life-sapping chasm.
Acknowledging the need to bridge the gap, the Ontario government announced today the creation of a $250 million, five-year "emerging technologies" fund targeted at clean technology, life sciences and digital media companies that are based in the province and hungry for growth capital.
The fund, which will begin distributing money in July, is designed to spur investments from the private sector by matching small- and medium-sized funding that comes from qualifying venture capital funds and angel investors.
In return for its contribution, the government fund will receive an interest in the company equal to that received by private investors.
"The goal is for the fund to be self-sustaining through return on investment," according to a statement from the Ministry of Research and Innovation. Minister John Wilkinson, calling the program a North American first, said the fund is based on a "co-investment" model that has worked well in Scotland.
"If the private sector puts up at least a quarter of a billion dollars, we will match it dollar for dollar," said Wilkinson, emphasizing the need to increase the pool of venture capital in Ontario that flows to companies based in the province.
"Where I come from the home town always supports the home team," he said. "We know if we don’t have a vibrant venture capital community, companies are either going to fail or look for investment in other jurisdictions."
Wilkinson made the announcement at the head office of Ecobee Inc faxless payday loan., a maker of smart thermostats that encourage energy conservation.
Executives were on hand from a number of companies that will benefit from the fund, including solar thermal supplier EnerWorks Inc., pipe-leak detection firm Echologics Engineering Inc., and ArcticDX Inc., which does advanced genetic screening for disease.
The Canadian venture capital scene is much more averse to risk than their U.S. counterparts, forcing many Canadian start-ups to raise money south of the border. The tolerance for risk has dropped even lower during the current economic downturn.
"Canada has lacked the necessary risk capital to create a vibrant innovation ecosystem like you see in Silicon Valley," said Stuart Lombard, founder and chief executive officer of Toronto-based Ecobee. "This fund goes a long way to creating the right conditions for innovation to flourish in Ontario."
The $250 million from the new Emerging Technologies Fund is in addition to the $90 million the McGuinty government earmarked toward a $205 million public-private Ontario Venture Capital Fund announced in November 2007.
Officially launched last June, the venture fund is being managed by TD Capital Private Equity Investors but money has been slow to reach the market.
Asked whether the government is prepared to fund companies that might fail, Wilkinson said that’s what venturing funding is all about. Without it, Research In Motion Ltd. and other companies that today are big local job creators might never have emerged.
"We’re prepared to take the risk, but we’re also prepared to reap the reward, just like our private-sector partners," he said.
The suit may not make the man, but it could make him more happy if he loses his job.
That is what men’s retailer Jos. A. Bank Clothiers Inc. is betting on with its latest promotion. The Hampstead, Md.-based company said Monday it will refund a customer up to $199 for a suit purchased by April 9 if he loses his job between April 16 and July 1. The customer would only need to provide proof of purchase and unemployment to keep the suit and the cash.
The men’s clothier believes this could be another of its creative gimmicks to help drive sales, which actually rose during the third quarter of last year.
The latest promotion is “like giving all of our customers a bit of unemployment insurance,” said R. Neal Black, CEO of Jos. A. Bank.
The special rebate is part of Jos. A. Bank’s $199 sale going on through April 9.
Mark Millman, president of Millman Search Group in Owings Mills, said he believes the promotion shows Jos credit report. A. Bank understands the basic needs of its customers. It underscores the company’s willingness to help customers “make do” in the economic crisis, Millman said.
“The promotion is unusual, but we are in unusual times,” he said. “This program is likely to receive nationwide attention, and hopefully other companies will follow in their footsteps.”
Jos. A. Bank (Nasdaq: JOSB) operates 461 stores in 42 states, including seven locations in the Pittsburgh area: Downtown, Mt. Lebanon, Monroeville, Grove City, Cranberry, Robinson and Ross.
Jos. A. Bank stock closed Monday at $26.09 per share.
NEW YORK — With the dollar surging more than 20 percent over the past year and seemingly on track for further gains, year-on-year earnings comparisons for the first quarter are getting bleaker, a potential blow for the nascent rally seen in U.S. stocks last week.
The dollar index, which measures the greenback against a basket of six major currencies, has gained more than 22 percent since March 2008, and it’s up more than 7 percent since the start of this year.
"The dollar has done quite well, and that makes earnings comparisons difficult for multinationals in the U.S.," said Ken Tower, market strategist at Quantitative Analysis Service.
Companies that make sales overseas in other currencies lose out when they have to translate those into a stronger dollar in quarterly reports.
At least 45 percent, and perhaps more, of the sales of S&P 500-component companies come from overseas. Only two-thirds of companies disclose where their sales come from, according to Standard & Poor’s.
"That translates into a low single-digit percentage headwind to sales," said Alec Young, market strategist at S&P.
For U.S. firms’ earnings, the problem isn’t only that sales are weaker when they get translated, it’s also that U.S.-made products have become more expensive, and therefore less competitive on markets around the world, just as overall sales have shrunk amid the global recession.
"The stronger dollar and its negative impact on the export business are pretty painful when the global economy is already so weak and companies are looking for any strength they can find," said Don Straszheim, president of Straszheim Global Advisors.
The problem didn’t seem to be of an immediate concern to investors, though online payday loans. Investors seem content to bet that, for now, much of the bad news has been priced in, making way for a big rally last week.
Last week, the Dow Jones industrial average rose a whopping 9 percent The S&P 500 Index gained 10.7 percent on the week, while the Nasdaq Composite jumped 10.6 percent.
But analysts say the dollar’s performance may start to weigh on multinationals’ earnings, thus hurting the U.S. stock market.
On the Dow, seven stocks whose prices hover well above others now call the shots in terms of influencing the blue-chip average: IBM, Chevron Corp., Exxon Mobil Corp., McDonald’s Corp., Wal-Mart, Coca-Cola and Procter & Gamble.
Unfortunately, all of these firms drive a substantial amount, if not most, of their sales, from overseas. When it posted earnings last month, Wal-Mart warned currency translations could hurt profit to the tune of 13 cents a share. Further gains in the dollar could make things worse.
Besides their still uncertain impact on the coming quarters, currency rates will play an increasingly important role over the next few years as the global economy tries to recover from the recession, says Straszheim.
"We’re already hearing many U.S. multinationals saying the stronger dollar is hurting their earnings from abroad," he said. "This is going to be a big (political) issue for the next couple of years.
"With the global recession that we’re in, there’s a great risk for every country in the world to try to export their problems and gain market share through currency."
OPEC will push members to comply with production cuts agreed last year when they meet tomorrow in Vienna to confront sagging demand for oil, ministers said.
“We would like to see compliance as high as possible,” Ali al-Naimi, the oil minister for Saudi Arabia, the group’s biggest producer, told reporters when he arrived at his hotel in Vienna today. “It is over 80 percent now, it can be better.”
While supply and demand are not yet balanced, inventories of oil will come down in due time, al-Naimi said. He declined to say whether he’ll recommend another round of supply cuts.
Members the Organization of Petroleum Exporting Countries are still implementing 4.2 million barrels a day of reductions agreed in three separate meetings last year to support oil prices. OPEC, facing an economic slump that’s kept oil below $50, had implemented about 79 percent of planned reductions as of last month, according to a report from the group yesterday.
More cuts are unlikely because earlier moves have succeeded in tightening supplies as demand falls, a delegate from one OPEC country said this morning. The group may instead meet again before its next scheduled September gathering, the delegate said, declining to be named because the decision is not final.
“We have to insist on higher compliance of the cuts, which we believe has been good, but needs to be completed,” Venezuelan Oil Minister Rafael Ramirez said in an interview in Vienna yesterday. Qatar’s oil minister echoed that view today.
Algerian Energy Minister Chakib Khelil said earlier this week that OPEC probably will reduce production. “The market expects a reduction and we have to reduce, otherwise prices will fall.”
The group already faces a 61 percent plunge in net oil revenue this year amid declining production and prices, according to the U.S. Energy Department. It estimates OPEC will earn $383 billion in 2009 from crude exports.
Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah said yesterday that “all options are on the table.”
“We don’t want to hurt the international economy, but at the same time we don’t won’t to hurt ourselves,” the Kuwaiti minister said in an interview at Vienna airport yesterday. “It is a very difficult equation. It is still undecided.”
Crude oil futures yesterday fell to $46.25 a barrel in New York. While prices have risen 3.7 percent this year, they are down more than $100 a barrel from their peak last July.
“OPEC should not think about cutting more until they meet their quotas,” Francisco Blanch, head of global commodity research at Merrill Lynch & Co., said in a Bloomberg Television interview. “There is a risk of over-tightening and the last thing the global economy needs is a spike in oil prices.”
$75 Oil Wanted
There remains too much oil in the market, Iranian Oil Minister Gholamhossein Nozari said today in Vienna.
Iran’s OPEC Governor, Mohammad Ali Khatibi, said in an interview yesterday that OPEC would need to cut production if it wants prices to rise quickly to between $75 and $100 a barrel. That price level seems to be the “collective opinion” of oil producers and companies, he said.
Saudi Arabia is “100 percent compliant” with the agreed cutbacks, which will help reduce the glut, al-Naimi said bad credit payday loans. Last year, Saudi King Abdullah and al-Naimi both said a fair oil price for producers, companies and consumers is about $75.
OPEC’s Ministerial Monitoring Committee met today in Vienna to examine compliance with existing cutbacks, ahead of tomorrow’s full meeting. Minister from Iran, Kuwait and Nigeria left the meeting without commenting to reporters.
OPEC’s monthly report yesterday showed varying adherence to quotas, citing data from secondary sources that include analysts and news agencies.
Saudi Arabia had reduced crude production to 7.89 million barrels a day in February, or 166,000 barrels a day less than its target, the only country to do so, the report showed. Meantime, OPEC’s second-largest producer, Iran, was pumping 277,000 barrels a day more than its quota, meaning it had completed only 51 percent of its promised reduction. Nigeria had completed 54 percent and Angola 15 percent.
World oil consumption is usually lowest during April through June, after the end of the Northern Hemisphere’s winter period, and annual oil use is contracting for a second consecutive year for the first time in a quarter century.
The Paris-based International Energy Agency and OPEC cut their 2009 forecasts for oil demand for a seventh month yesterday and reduced supply estimates as the global economic slump saps consumption as well as investment in new fields.
Both organizations see demand slumping more than 1 million barrels a day this year, to about 84.5 million barrels a day.
Earlier this month, when prices were lower, most analysts expected an OPEC cut, though some now doubt that view.
In a March 3-4 Bloomberg survey, 31 of 41 analysts said OPEC will curb output again, and the rest expected no change. Thirteen forecast a reduction of 500,000 to 1 million barrels a day, 12 said 1 million barrels and two estimated 1.5 million.
Now, “the probabilities are overwhelming that they will not cut,” Edward Morse, an economist at New York-based LCM Commodities LLC, said yesterday in a Bloomberg television interview. “If oil prices were at $40 or in the $30 range, I think it would be a fairly high probability they’d cut. With prices above $40, flirting with $50, they have the economy on their minds.”
Russian Oil, G-20
Russia, the largest producer outside OPEC, is sending a delegation headed by Deputy Prime Minister Igor Sechin to the Vienna meeting. OPEC Secretary General Abdalla El-Badri said on Feb. 9 he was “very disappointed” that non-OPEC producers including Russia had failed to help reduce excess supply in the oil market.
The weekend meeting also coincides with a U.K. gathering of finance ministers from the Group of 20 nations, who will prepare for an April 2 summit to address the global recession.
Efforts by the G-20 to boost global growth will be more meaningful to oil markets than OPEC’s decision because prices reflect the economic slowdown, said Daniel Yergin, chairman of Cambridge Energy Research Associates.
“GDP is going to determine the price,” Yergin, author of a Pulitzer-Prize winning history of oil, said March 11 in Boca Raton, Florida.
Dramatic changes in the global economy may merit restoring a federal rule aimed at preventing a massive plunge in a stock price caused by a rush of short selling, the head of the Securities and Exchange Commission said Wednesday.
SEC Chairman Mary Schapiro said the agency "hopefully" will propose for public comment next month reinstatement of the so-called uptick rule, which forces short-sellers, investors who bet on stock prices dropping, to sell above the market closing price guaranteed online payday loans.
Bernard Madoff, accused of an “unprecedented” $50 billion financial swindle, was charged on Tuesday with 11 criminal counts that could put him in prison for the rest of his life.
Madoff, 70, a former Nasdaq stock market chairman and money manager, is expected to plead guilty on Thursday, his lawyer said.
U.S. prosecutors provided new details of the alleged fraud in court papers, saying Madoff’s crime spree lasted from “at least” the 1980s.
The government said in court documents it wants Madoff to forfeit all of the money and property that can be traced back to the alleged fraud — a sum it estimated at more than $170.8 billion. Prosecutors did not say how they arrived at that figure.
They said the investigation is continuing. No one else has been charged since Madoff was arrested three months ago.
“The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years,” Acting U.S. Attorney Lev Dassin in Manhattan said. “While the alleged crimes are not novel, the size and scope of Mr. Madoff’s fraud are unprecedented.”
Madoff was charged with securities fraud, mail fraud, wire fraud, three counts of money laundering, making false statements and perjury among other charges, according to the court documents. He faces up to 150 years imprisonment, according to sentencing guidelines.
NO PLEA DEAL
There is no plea agreement with Madoff, who remains under house arrest cash till payday. He returned to his Manhattan penthouse apartment after a court hearing where prosecutors announced expanded charges against him.
When defendants agree to plead guilty, they often reach a plea bargain, only admitting guilt on some of the charges in exchange for their cooperation.
In this case, however, Madoff is expected to plead guilty to all 11 counts at his next court appearance on Thursday, his lawyer said. The government may then ask the judge to jail him until he is sentenced.
Prosecutors have said Madoff confessed in December to running a massive Ponzi scheme — a fraud in which early investors are paid with the money of new clients.
The purported swindle operated for decades, offering amazingly consistent returns of between 10 percent and 12 percent, but collapsed in last year’s market meltdown.
In court papers, prosecutors contended Madoff hired numerous employees “with little or no prior pertinent training or experience in the securities industry” to communicate with his investment clients and “generate false and fraudulent documents.”
They said Madoff’s investment business had about 4,800 client accounts as of November 30. 2008, and issued statements for that month reporting that client accounts held a total balance of about $64.8 billion.
The discounts and sales at the mall have been terrific. I needed new shirts and bought four at 60 percent off. I also replaced a worn-out pair of shoes and got a second pair at half price.
And have you seen the ads for large-screen TVs and laptops? How about cars? I’m not in the market for them but if I were, I’d be buying now.
This is the brighter side of the recession, the opportunity for people with savings and a secure income to snap up bargains from struggling retailers. It is also a strong argument to rebut those who claim promoting savings will only prolong and worsen the economic downturn.
Borrowing and spending way beyond our means, regardless of whose fault it was, contributed mightily to the mess we are in. When we save first, we are able to spend without worries, which keeps the economy growing.
"If people are economically secure, there is little or no reason to cut spending," said Stephen Brobeck, executive director of the Consumer Federation of America. "If they are not, however, they should try to get their financial house in order. If they do, the economy will benefit over the long haul."
Brobeck’s comments are particularly appropriate in light of the results of a survey released by the federation and the American Savings Education Council during America Saves Week Feb. 22-March 1.
The survey of more than 1,000 American adults, conducted by Opinion Research Corporation in early February, found 77 percent are concerned about the impact of the recession on their personal finances, including 53 percent who are "very concerned."
Yet, the worries and concerns seem to exceed the actual economic impact of the recession so far.
For example, the number who said they are saving enough for retirement declined only slightly, from 52 percent last year to 49 percent now, a difference within the survey’s margin of error. The percentage who said they do not spend all their money and save the difference barely fell, from 74 percent to 73 percent online payday loans.
The number who said they have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor’s visit actually went up from 71 percent to 72 percent. The proportion who said they are reducing consumer debt rose from 38 percent to 44 percent. Also, 40 percent said they are free of consumer (nonmortgage) debt now, up from 39 percent last year.
"For most Americans to date recession-related concerns have been greater than financial losses," Brobeck said. "But tens of millions who still have their jobs and have suffered little or no loss of retirement savings worry that a deepening recession will eventually cost them income or even their jobs."
Paying down debt and building an emergency reserve can help soothe those fears, organizers of America Saves Week stressed in hundreds of activities and events throughout the week.
The easiest way to save, if available to you, is to ask your employer to deposit just enough of your paycheck into your checking account to cover your expenses, and the rest into a savings account, suggest the CFA and NACHA-The Electronic Payments Association. The latter is a nonprofit association that oversees the Automated Clearing House network for electronic payments.
"Just like retirement savings, if you automatically save the money, you are less likely to spend it," said Jan Estep, president and CEO of the NACHA group. "Splitting direct deposit is easy to set up for new employees or established users. The process takes minutes to complete. Just talk to your employer."
2009, TRIBUNE MEDIA SERVICES INC.
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