Financial thoughts

The U.S. Federal Reserve on Wednesday said it will not raise interest rates until at least late 2014, even later than investors expected, in an effort to support a sluggish economic recovery.

Without making major shifts to its outlook for the economy, the central bank described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices.

It depicted business investment as having slowed, dowgrading its assessment from the December meeting.

Economic conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014,” the central bank said in a statement.

Richmond Fed President Jeffrey Lacker, an inflation hawk who rotated into a voting seat this year, dissented against the decision. He preferred to omit the description of the time period for ultra-low rates.

As part of an effort to provide more insight on its thinking to financial markets and the public, the Fed later on Wednesday will begin publishing individual policymakers’ projections for the appropriate path of the benchmark federal funds rate. That release is scheduled for 2 p.m. (1900 GMT)

If the Fed can convince financial markets it will be on hold longer than they had anticipated, long-term interest rates could drop as investors price in the new information.

“A significant contingent of the committee views this exercise not so much as a process improvement but more as an opportunity to ease again via the forward rate communications channel,” Stephen Stanley, an economist at Pierpoint Securities, said ahead of the Fed’s announcement.

There is also the possibility that officials will announce an explicit inflation target, perhaps a hard marker of 2 percent or a range of 2 percent or a bit below guaranteed online personal loans. The Fed has been debating a statement on its long-run goals, but whether one will be released on Wednesday is unclear.

While forecasters expect the U.S. economy grew at a 3 percent annual rate in the last three months of 2011, they look for growth of just around 2 percent this year.

Fed officials appear likely to bide their time in determining whether more monetary stimulus is needed. Many economists expect they will eventually decide on another spurt of Fed bond buying - probably one focused on mortgage debt.

In response to the deepest recession in generations, the Fed slashed the overnight federal funds rate to near zero in December 2008. It has also more than tripled the size of its balance sheet to around $2.9 trillion through two separate bond purchase programs.

The policy is credited with having prevented an even more devastating downturn, but it has been insufficient to bring unemployment down to levels considered normal during good economic times.

In December, the U.S. jobless rate stood at 8.5 percent, and some 13 million Americans were still actively looking for work but could not find it.

Analysts said the Fed’s shift in communications will put an even greater emphasis on a post-meeting news conference by Fed Chairman Ben Bernanke set for 2:15 p.m. (1915 GMT).

“The chairman is likely to remain non-committal to any additional policy easing, but he is likely to reinforce the Fed’s commitment to ‘review the size and composition of its securities holdings’ and be ‘prepared to adjust those holdings as appropriate,’” said Millan Mulraine, senior macro strategist at TD Securities.

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A federal judge on Friday dismissed a Utah company’s $1 billion federal antitrust lawsuit against Microsoft Corp. after a jury failed to reach a unanimous verdict.

Novell claims Microsoft duped it into developing the once-popular WordPerfect writing program for Windows 95 only to pull the plug so Microsoft could gain market share with its own product. Novell says it was later forced to sell WordPerfect for a $1.2 billion loss.

The trial has been ongoing in Salt Lake City for two months. Jurors got the case Wednesday morning, but by Friday told the judge they were “hopelessly deadlocked.”

They had expressed confusion to the judge about the complicated case throughout deliberations, even bringing one question to the court that could not be answered. The judge told jurors to simply disregard the question.

Earlier Friday, the judge denied a request from one juror to be removed from the case.

Microsoft lawyers have argued that Novell’s loss of market share was its own doing because the company didn’t develop a compatible WordPerfect program until long after the rollout of Windows 95. WordPerfect once had nearly 50 percent of the market for word processing, but its share quickly plummeted to less than 10 percent as Microsoft’s own Office programs took hold.

Microsoft co-founder Bill Gates testified last month that he had no idea his decision to drop a tool for outside developers would sidetrack Novell. Gates said he was acting to protect Windows 95 and future versions from crashing.

Novell could have worked around the problem but failed to react quickly, he said.

Novell has argued that Gates ordered Microsoft engineers to reject WordPerfect as a Windows 95 word processing application because he feared it was too good.

Novell’s lawsuit is the last major private antitrust case to follow the settlement of a federal antitrust enforcement action against Microsoft more than eight years ago. The trial began in October in federal court in Salt Lake City.

Novell is now a wholly owned subsidiary of The Attachmate Group, the result of a merger that was completed earlier this year.

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Further signs of stress emerged Tuesday to indicate that Europe’s most recent summit agreement to get the euro countries to tighten rules against excessive government spending has only made limited progress in pulling the continent out of its debt crisis.

While figures showed that Europe’s banks parked more money at the European Central Bank than they have at any other time this year, Italy’s borrowing rates traded at levels not far from those that forced Greece, Ireland and Portugal into seeking financial bailouts.

The news that overnight deposits by banks to the ECB hit a year high are a sign of distress and mistrust in the system, and come just days after the continent’s banking regulator warned that they need to raise much more capital to plug potential losses from shaky European government debt.

The ECB said banks left euro346.4 billion ($458 billion) with the ECB at a low 0.25 percent interest rate rather than lend it to other banks, indicating they were concerned they might not be paid back. That topped a previous high from Friday of euro334.9 billion.

The rise in their deposits comes in the wake of an agreement by European leaders to forge a new treaty among the 17 members of the eurozone and as many as nine other EU members to toughen rules against accumulating excessive government debts. The treaty won’t be completed until March and tries to address long-term issues, while markets are questioning governments’ ability to pay their debts in the shorter term of the next several months.

“Market sentiment remains cautious regarding the strains in European debt markets,” said Nick Bennenbroek, an analyst at Wells Fargo Bank.

Fears of default have led to elevated yields on bonds issued by Italy, the latest focus of the crisis. Yields on Italian 10-year bonds traded at an elevated 6.66 percent on Tuesday, close to the 7 percent levels that led to the bailed-countries giving up on bond market borrowing. Italy is considered too large to bail out.

Banks have also been under strain because they hold government bonds and could suffer losses in case of a default. They are also being pressed by the European Union to find money to increase their financial buffers against losses.

Shares in Germany’s Commerzbank AG fell over 5 percent Tuesday amid speculation the bank might need more government support after the European Banking Authority last week said it was euro5.3 billion short of new capital requirements. The bank has said it won’t take more government help.

Italy did manage to raise euro7 billion ($9 online cash advance.4 billion) in a bond auction Monday, though the relatively strong demand was boosted by a bank association promotion waiving fees to buy the bonds.

Investors remain worried about the future of both Italy and the wider 17-nation eurozone despite an EU deal last week to tighten controls on spending. While that deal will boost longer-term budget discipline, it does little to lower current debt and exposed deepening political division.

Last Friday’s deal also does not fix the deeper imbalances within the eurozone, such as wide gaps between countries with competitive economies and trade surpluses and those which have poor business environments that limit growth and ability to pay debt.

The impact of the agreement to work out a new debt treaty has been blunted by Britain’s decision not to join and questions about how it would be enforced. EU officials sought an accord among all 27 EU states, but Britain did not join the agreement after its request to shelter its financial services sector from what Britain considers burdensome regulation was rejected.

European Commission President Jose Manuel Barroso urged British Prime Minister David Cameron not to block EU institutions such as the European Court of Justice for supporting and helping enforce the treaty.

Barroso said “it is the European institutions that are the best guarantee that the interest of all European states, including the U.K., will be fully respected.”

There are other potential hitches. Through the new intergovernmental treaty, the participating countries can agree to go beyond the rules in the current EU Treaty _ but can’t sign up to new rules that contradict existing ones.

That is set to cause problems for one of the central summit decisions _ creating more automatic sanctions for budget sinners.

Under the current EU Treaty, the European Commission can declare a country to be in excessive deficit _ a move that forces the country to spell out in detail how it will bring down its deficit and debt or face sanctions _ only if a qualified majority of EU countries agree.

The summit decisions aim to simplify this procedure, by giving the commission the right to declare a state to have an excessive deficit unless a qualified majority of countries vote against it.

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Steinhauser contributed from Brussels. Frances D’Emilio contributed from Rome.

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Will the new voice of economic development in St. Louis be coming from a few hours’s drive east?

Louisville media are reporting this morning that Joe Reagan, chief executive of Greater Louisville, Inc., is telling people that he’s one of two finalists for the top job at the St. Louis Regional Chamber and Growth Association. Spokespeople for RCGA and GLI did not immediately return calls Monday morning, but Insider Louisville.com reports that Reagan recently e-mailed supporters about the news, and GLI confirmed it to the Louisville Courier-Journal.

News about RCGA’s search has been held close since longtime CEO Richard Fleming announced in January that he is retiring. Fleming is due to leave at year’s end, and presumably the RCGA board hopes to make a hire before then. Last week, people familiar with the search told the Post-Dispatch that the search committee was down to three finalists - one local and two from elsewhere - and that an announcement was expected soon.

Also last week, St. Louis Mayor Francis Slay stirred the pot with a blog post calling for the RCGA’s economic development role to be joined in with the economic development agencies of St. Louis City and County and said he’d discuss such a move with whoever the new CEO is. The idea was met with a rebuke by RCGA’s two top board members and skepticism by other in the regional economic development world.

In Reagan, RCGA would be getting a new boss with experience running the same type of organization. Greater Louisville Inc. is both an economic development group and a Chamber of Commerce, funded mostly by private businesses with some public support. He has run GLI since 2005 and makes about $400,000 a year, according to Insider Louisville.

To get a sense of what he might earn running the $9 million-a-year RCGA: Fleming made $467,000 in base pay and bonuses in 2009, plus another $136,000 in benefits and retirement compensation and a $196,000 payout on a multiple-year retirement package, according to RCGA’s tax return. The website reports that some GLI companies are raising money to keep Reagan in Louisville.

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The parents of Madeleine McCann, whose 2007 disappearance sparked a media frenzy, told a London courtroom Wednesday how they were left distraught by the relentless U.K. press and its insinuations they were responsible for their daughter’s death.

Kate and Gerry McCann told Britain’s media ethics inquiry that the coverage had hurt their efforts to find their daughter after she vanished during a family vacation in Portugal, shortly before her fourth birthday.

“We were trying to find our daughter and you (the media) are stopping our chances of doing that,” Kate McCann said.

“These were desperate times,” she said, adding that the couple felt powerless. “When it’s your voice against a powerful media, it just doesn’t hold weight.”

Madeleine’s disappearance sparked an international manhunt and intense press coverage. The McCanns said the press was initially sympathetic but soon changed, with some articles implying the couple was hiding something.

The couple successfully sued several British newspapers over suggestions that they had caused their daughter’s death and then covered it up.

Prime Minister David Cameron set up the public inquiry into media ethics and practices in response to a still-evolving scandal over phone hacking by tabloid journalists. This week it has taken evidence from celebrities including actor Hugh Grant and comedian Steve Coogan, and from ordinary people left bruised by unwanted media attention.

Gerry McCann said he and his wife did not think their phones had been hacked, but he volunteered to testify at the inquiry “for one simple reason _ we feel a system has to be put in place to protect ordinary people from the damage the media can cause.”

Inquiry lawyer Robert Jay said the couple had experienced “the good, the bad and the particularly ugly side of the press.”

It is still not clear what happened to Madeleine, despite her parents’ far-reaching international campaign and numerous reported sightings from around the world.

Earlier, a lawyer for several phone hacking victims said that illegal eavesdropping was widely practiced by Britain’s tabloid journalists, producing stories that were both intrusive and untrue.

Mark Lewis said phone hacking was not limited to Rupert Murdoch’s News of the World tabloid, which the media mogul shut down earlier this year as outrage grew over the scandal.

“It was a much more widespread practice than just one newspaper,” he said.

Lewis claimed that listening in on voice mails was so easy that many journalists regarded it as no more serious than “driving at 35 mph in a 30 mph zone.”

He said the News of the World got caught because it hired a private investigator, Glenn Mulcaire, who kept detailed records of his snooping assignments. Mulcaire and News of the World reporter Clive Goodman were jailed in 2007 for hacking into the voice mails of royal aides.

“The fact that evidence doesn’t exist in written form doesn’t mean to say that the crime didn’t happen,” Lewis said.

Lewis said when a News of the World reporter was arrested for phone hacking in 2006, he had a “eureka moment” about the source of a false story on two of his clients.

The story alleged a romantic relationship between soccer players’ association chief Gordon Taylor and lawyer Joanne Armstrong. Taylor said he believed the story was based on a voice mail message from Armstrong thanking Taylor for speaking at her father’s funeral.

The message said: “Thank you for yesterday. You were wonderful.”

Lewis said a tabloid journalist “added two and two and made 84. … If it hadn’t been so sad, it would have been funny.”

In 2008, Murdoch’s News International agreed to pay Taylor hundreds of thousands of pounds (dollars) in compensation for the hacking of his phone in return for keeping quiet about the deal _ one of several attempts by the company to hush up the scale of its illegal activity.

Murdoch shut down the News of the World in July after evidence emerged that it had routinely eavesdropped on the voice mails of public figures, celebrities and even crime victims in its search for scoops.

More than a dozen News of the World journalists and editors have been arrested and several senior Murdoch executives have resigned in the still-evolving scandal. Two top London police officers also lost their jobs, along with Cameron’s media adviser.

Lewis has represented many prominent hacking victims, including the family of murdered 13-year-old Milly Dowler, whose voice mails were accessed by the News of the World after she disappeared in 2002. The girl’s parents spoke Monday before the U.K. inquiry, saying the hacking gave them false hope their daughter was still alive during the investigation into her disappearance.

The inquiry, led by Judge Brian Leveson, plans to issue a report next year and could recommend major changes to media regulation in Britain.

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Spain paid an interest rate of nearly 7 percent to raise euro3.56 billion ($4.8 billion) in an auction of 10-year bonds Thursday, the highest rate since 1997 and a level seen as unsustainable over the long term.

The finance minister insisted, however, that a bailout was out of the question and said Spain’s overall debt load _ about 70 percent of gross domestic product _ is manageable.

“The sustainability of our debt is beyond any doubt,” Elena Salgado told Cadena Ser radio.

She said the 2011 budget had allotted euro27 billion for debt interest payments and “even with all this tension we are going to spend 3 billion less.”

Salgado also said at least 12 of the 17 countries that use the euro are seeing their borrowing costs rise, so Spain is not a special case.

“We are seeing systematic attacks on our sovereign debt” the minister said. “Today it is Spain, yesterday it was Italy, the day before that it could have been Belgium, and tomorrow it could be any other country, even the ones considered central to the euro, such as Austria or France.”

Thursday’s rate of 6.97 percent compared with 5.43 percent in the last such auction Oct. 20.

Demand was relatively weak. The amount of debt sold came in under the euro4 billion maximum target set by the Treasury and the bid to cover ratio was 1 cheap payday advance.54, compared with 1.76 last time.

After the auction, yields on Spanish 10-year bonds shot up. In early afternoon they stood at 6.79 percent on the secondary market. That was 4.93 percentage points above the yield of the equivalent benchmark German bund.

Spain’s chapter of the European debt crisis has engulfed the campaign for Sunday’s general elections.

Opposition conservatives are expected to score a landslide win over the ruling Socialists, saddled with an economy that has 21.5 percent unemployment, posted zero growth in the third quarter and is not expected to improve much next year.

Spain is struggling to recover significant economic growth after enduring nearly two years of recession prompted in part by the collapse of a real estate bubble. It is the periodic focus of fears it will be the next eurozone country to require a bailout, after Greece, Ireland and Portugal.

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Employees are more focused on pay and less on whether their occupation is rewarding, according to a recent survey by compensation specialists Mercer. In previous studies, Mercer found most Canadian respondents said job fulfillment was the key issue.

Yet 47 per cent of survey participants say they are not satisfied with base pay and 42 per cent do not feel they are paid fairly, given their performance and contribution to the organization. At the same time, fewer employees than five years ago understand how their pay is determined, which may contribute to their overall sense of dissatisfaction.

Mercer partner Iain Morrison thinks base pay is a primary concern because  of anxiety about job security and being able to pay for the most basic things. “Since 2008 employees have seen layoffs, pay freezes and reduced availability of training and development,” he says.

The large number of Canadian employees considering leaving their job within six months (36 percent) or who are not looking for work but open to new offers (22 per cent) further underscores high levels of employee disengagement. In fact, employees “sitting on the fence” are more negative about their employment situation than people who are actively seeking new employment.

“You can’t just throw money at these people. You have to find ways to motivate them,” Morrison continues. “If they cannot be re-engaged, it may make sense to try and manage some of them out, because they are the least productive employees and they are not saying anything good about the business.”

After base pay, survey results reveal that Canadian respondents view a good retirement savings or pension plan as the second most important element of the employee value proposition. And somewhat unexpectedly, having a company-provided retirement plan rivals or is more important to younger respondents than having a flexible work schedule.

“Retirement savings have not been on the radar for 25-40 year olds before. But the media has created awareness and employees in their 20s hear their parents close to retirement worrying about pension savings,” says Mercer principal Madeline Avedon.

Overall benefits programs were rated as good or very good by the majority of survey respondents and more than half said they are satisfied with their health benefits. However, 43 per cent want more choice and control to reduce the value of some benefits in order to increase the value of others to meet their needs. About the same number also said they would be willing to contribute towards the cost of new or improved benefits that are important to them.

Also read: Your 2012 raise may be less than inflation and How to improve your odds of getting a raise .

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Norwegian oil company Statoil ASA said Monday it has agreed to buy Texas-based Brigham Exploration Co. for $4.4 billion in cash, giving it control of fields in North Dakota.

The offer represents $36.5 per share and is a 36 percent premium over the average trading price of Brigham stock for the last 30 days, Statoil said.

The Brigham board of directors has recommended shareholders to accept the offer and the executives of the company have agreed to sell their shares, representing 2.5 percent of the total, Statoil said.

It said the deal will give it more than 375,000 net acres in the Williston Basin, which holds potential for oil production from the Bakken and Three Forks formations in North Dakota. Brigham also holds interests in 40,000 net acres in other areas.

The current production is approximately 21,000 barrels of oil equivalents per day, and could potentially ramp up to 60,000-100,000 over five years, Statoil said.

“The U.S. unconventional plays hold a substantial resource base and represent an increasingly important part of future energy supplies,” Statoil CEO Helge Lund said in a statement.

“Entering the Bakken and Three Forks tight oil plays and taking on operatorship represents a new significant step for Statoil. We are positioning ourselves as a leading player in the fast growing U.S. onshore oil and gas industry, in line with the strategic direction we have set out,” he said.

Brigham is based in Austin, Texas and has over 100 employees in Austin and North Dakota. Statoil said it will maintain the Austin location and retain the current employees.

“We are impressed by the performance and technological prowess demonstrated by the employees of Brigham and look forward to further responsible development of these world class assets. We will build on Brigham’s good neighbor program and continue to engage with local authorities and communities in the Williston Basin area,” said Bill Maloney, executive vice president for Statoil in North America.

The Norwegian company said it expects to close the transaction at the end of the first quarter 2012.

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Last week, the government tabled Bill C-11, the latest attempt to reform Canadian copyright law. The bill mirrors its previous copyright bill and is expected to sail through the House of Commons with committee hearings that will pick up where they left off in March.

When Bill C-32 was introduced in June 2010, many noted that there was a lot to like in the bill, but that the digital lock provisions, which give locks on DVDs, CDs, and electronic books enhanced legal protections, constituted a glaring problem that undermined much of the attempt to strike a balance.

The effect of the rules is that consumer rights found in the bill are lost when the copyright owner installs a digital lock that can restrict access.

Consumers purchasing DVDs from foreign countries may find they will not play on Canadian DVD players and students may be restricted from copying portions of their electronic books for class assignments.

In trying to understand the government