Financial thoughts

Millions of jobless Americans are getting their unemployment benefits back.

Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.

The approval came a day after the Senate voted 59 to 39 to restore the payments, ending a seven-week stalemate.

Some 2.9 million people were scheduled to run out of benefits by the end of the week. The jobless stopped getting their checks in early June, after Congress failed to extend the deadline to apply for unemployment insurance.

Senate Republicans, as well as Nebraska Democrat Ben Nelson, prevented the legislation’s passage, saying it should be paid for first. They suggested covering the $34 billion tab with unused stimulus money, a step the Senate Democratic leadership rejected.

Federal unemployment payments, which last up to 73 weeks, kick in after the state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier Online payday loans.

The payments will be retroactive to the previous deadline of June 2. But it could take up to a month for states to start sending the checks again, experts said.

Lynda Kahn of Coral Springs, Fla., can’t wait to get that check. She stopped getting benefits last week and applied for Medicaid, only to be turned down because she doesn’t have dependent children. But she did get a supermarket gift card from a local charity to supplement her $200 a month food stamp allotment.

Kahn depends on her unemployment check, which was $275 a week plus a $25 stimulus-funded supplement that will be discontinued for those newly unemployed. She lost her job as a manager for a doctor’s office last August.

"It covers my mortgage payment," she said. 

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Comedian Chris Rock, hard-edge rockers Nine Inch Nails and alternative pop band Maroon Five have joined the list of artists boycotting Arizona over its new immigration law.

The three were added to the list of boycotting artists compiled by a group called the Sound Strike (www.thesoundstrike.net).

Vocalist Ben Harper and alternative band Throwing Muses also joined the Arizona boycott. Sound Strike was formed in May by Rage Against the Machine singer Zack de la Rocha in protest of Arizona’s immigration law, which gives police more authority to question detain suspected illegal immigrants empire payday loans.

Cypress Hill, Kanye West and Rise Against already previously announced boycotts. Critics of the law say it unfairly targets Hispanics. Supporters, including Gov. Jan Brewer, say it will help police combat Mexican drug cartels and smugglers.

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EarthLink, Inc. has filed at the Federal Communications Commission a petition to oppose the proposed $30 billion merger of Comcast Corp. and NBC Universal.

The Atlanta-based Internet service provider argued the merger would lead to Comcast getting involved in anti-competitive actions that would reduce consumer choice, restrict content diversity and interfere with Internet competition.

EarthLink (NASDAQ: ELNK) proposed the FCC adopt a condition requiring Comcast to offer wholesale standalone broadband access to independent Internet service providers.

"The access condition that EarthLink proposes today for the Comcast-NBCU merger will be a win for consumers and a win for online competition," said EarthLink Chairman and CEO Rolla Huff, in a statement. "The condition essentially enables Comcast customers to 'break the bundle' and purchase only the services they need or want. We look forward to working with the FCC and the U.S. Department of Justice to ensure the transaction results in greater consumer choice and competition."

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Research in Motion Ltd. is reportedly working on a touchscreen Blackberry smartphone with a slide-out keyboard and a tablet computing rival to Apple Inc.'s iPad.

The Wall Street Journal cited unnamed sources in a report Tuesday on RIM's (NASDAQ:RIMM) attempts to develop new products to compete with Apple's (NASDAQ:AAPL) popular lines.

The new smartphone runs on a new version of the BlackBerry operating system, the Journal reported, includes the ability to read finger gestures to expand and contract images and move through screens low fee payday loans.

The new tablet device connects to cellular networks via a BlackBerry phone, the paper reported, and could come out by the end of the year.

RIM's North American smartphone market share plunged to 38 percent in the March quarter from 54 percent a year earlier, while Apple's share grew to 23 percent from 18 percent.

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If federal regulators get their way, you may soon be warned before you receive another unexpectedly high bill from your cell phone company.

The Federal Communications Commission said Tuesday it is seeking public comment on proposed regulations that would require wireless phone companies to notify customers of any charges that exceed their monthly plans.

Customers would therefore be alerted before being charged additional fees for extra data usage, roaming or text messaging, the FCC said in a statement.

The FCC said it has received hundreds of complaints from customers who received surprisingly high phone bills. The new rule would aim to help wireless users avoid "bill shock."

"We are hearing from consumers about unpleasant surprises on their bills," Joel Gurin, chief of the FCC’s Consumer and Governmental Affairs Bureau, said in a statement. "There can be many causes of bill shock, including unclear or misunderstood advertising, unanticipated roaming or data charges, and other problems. All can lead to charges that people don’t expect to get."

The FCC has therefore decided to begin gathering information from the public about whether or not alerting customers about these unanticipated charges would be beneficial.

The plan would be similar to a rule in the European Union that requires cell phone companies to notify customers via text message if they are running up extra charges.

The CTIA, a wireless industry association, released a statement after the FCC’s announcement saying that carriers already keeps customers well informed when they reach their monthly cell phone usage limits.

"We look forward to educating the Commission on all of the carriers’ activities and offerings so that customers can stay informed," CTIA President and CEO Steve Largent said in a statement. 

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Though home prices moderated nationally in January, home prices in the Nashville-Davidson-Murfreesboro-Franklin area continued to decline, according to data released today by First American CoreLogic.

Nashville-area home prices declined by 4.21 percent in January compared to one year ago, a deepening of the 3.94 percent reduction witnessed in December 2009. Excluding distressed sales, the January year-over-year decline was 2.46 percent, compared to December’s 3.04 percent decline. First American CoreLogic forecast that Nashville-area home prices, including distressed sales, will tick up 0 cheapest personal loan rates.10 percent over the next 12 months.

National home prices declined by 0.7 percent in January, compared to the national decline of 3.4 percent in December. Nationally, First American CoreLogic expects home prices to rebound 4.5 percent over the next 12 months.

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A new Illinois non-traded real investment estate trust (REIT) bought the Pleasant Hill Commons shopping center in Kissimmee for $12.4 million in cash.

Inland Diversified Kissimmee LLC, a related entity to Oakbrook, Ill.-based Inland Diversified Real Estate Trust Inc., bought the 70,642-square-foot Publix-anchored shopping center from Winter Park-based MCP Retail LLC on Feb. 18, said a filing with the U.S. Securities & Exchange Commission. MCP Retail LLC is an entity related to developer Michael Collard Properties Inc.

Lou Quilici of Inland Real Estate Acquisitions Inc. handled the transaction, said a news release.

The property is 100 percent leased, the SEC filing said, and has tenants including Tijuana Flats, Subway, Jackson Hewitt, Metro PCS, Pizza Hut, BonWorth and Fantastic Sams.

Inland Diversified Real Estate Trust filed its prospectus in August 2009 to be taxed as a REIT beginning with the tax year ended Dec flexcheck cash advance. 31. This was the firm’s second purchase and was funded by proceeds from its initial public offering, the SEC filing said. The REIT focuses on the acquisition and development of a diversified portfolio of commercial real estate assets.

The REIT is related to The Inland Real Estate Group of Companies Inc., a fast-growing buyer of retail property in the United States and one of the largest shopping center owners in North America. Inland-sponsored firms own and manage more than 113 million square feet of commercial real estate in 46 states and manage properties valued at more than $25.3 billion.

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Think recessions spur laid-off workers to launch new ventures? Think again.

A study released this week by the Kauffmann Foundation found that the number of new businesses incorporated annually in the U.S. has remained remarkably consistent over the years.

"We have a surprisingly steady supply of new firms, despite frequent and sometimes sharp changes in economic conditions," the study’s authors concluded. "No matter which data set one examines, any given year’s total of new companies is consistent with other years, with annual numbers fluctuating only mildly."

Researchers Dane Stangler and Paul Kedrosky crunched data from the U.S. Census Bureau, the Small Business Administration and the Bureau of Labor Statistics, covering 1977 through March 2009. About 600,000 new businesses were formed each year during that 30-year period. The data includes formally established new enterprises as well as new franchise locations and other outposts of existing companies.

For more than a year, the potential for startup growth has been promoted as the silver lining of the recession.

The conventional wisdom goes that as people lose their jobs, they are inspired to launch that innovative little company that’s been percolating in the back of their minds for years.

Recessions also lower the cost of entry for new companies and make customers more willing to explore less-expensive alternatives to current products or services they’re using, said Rhonda Abrams, founder of entrepreneurial consulting firm The Planning Shop.

"I liken a recession to a forest fire — it can be devastating, but can clear out weak and old growth," Abrams said. "Small upstart companies have a chance to get a hold better when their competitors are weakened."

But Kaufmann researcher Stangler said there just isn’t data to back up that kind of ‘hopeful thinking."

"It’s not that the reasons behind that thinking are bad, it’s just that from the evidence, we don’t expect there to be a huge increase in the amount of startups or a decrease during this recession," he said. The Kaufmann Foundation, based in Kansas City, Mo., is a nonprofit organization focused on entrepreneurship research and advancement.

To check their findings from the last three decades, Stangler and Kedrosky went back even further, to census reports from the 1940s and 1950s. There, they found remarkably similar results. Only one year — 1946 — had a noticeable startup spike, a result the researchers attribute to the effects of the end of World War II and a flood of returning war veterans.

What’s behind the consistency in startup launches? Stangler said two findings stood out: Even in down times, the U.S. has a fairly stable and consistent economy. Also, the number of working-age adults in the workforce fluctuates little.

But just because there’s no data to prove that economic turmoil spurs business growth doesn’t mean recession-era entrepreneurs should be disheartened, Abrams said. Citing her own research, she notes that the majority of current Fortune 500 companies were started during tough economic times.

The Kauffman Foundation has similar findings: More than half of 2009’s Fortune 500 companies launched in bear markets, it reported in June.

"Even if the numbers of new companies are consistent, you have a better chance at being a big success if you form during a recession or a depression than in good times," Abrams said.

She also believes that when the dust has cleared, this recession will have spurred more new businesses than past downturns because the percentage of those who are unemployed will remain persistently high.

"More people will turn to consulting and other kinds of low-cost-of-entry businesses to tide them over," Abrams said. 

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Consumer confidence in Italy unexpectedly rose in December to the highest in more than seven years as Italians grew more optimistic about purchasing durable goods after Europe’s fourth-biggest economy emerged from a recession.

The Isae Institute’s consumer confidence index rose to 113.7, the highest since July 2002, from 112.8 in November, the Rome-based research center said today in an e-mailed statement. Economists had forecast a drop to 112.7, the median of 12 estimates in a Bloomberg News survey showed.

Italy’s economy snapped five quarters of contraction and expanded 0.6 percent in the third quarter and the recovery is gaining momentum as consumer spending and exports pick up. Confindustria, Italy’s employers lobby, this month raised its forecast for 2010 growth to 1.1 percent from 0.8 percent, saying the recovery “will not derail.”

The gain in Italian optimism contrasted with growing pessimism in Germany. Consumer confidence in Europe’s biggest economy fell for a third month as households became more concerned about job security and rising energy prices, a separate report said yesterday. Consumer confidence in France fell in December for the first time in nine months and spending by French consumers declined in November, a separate report said today.

Italians were more optimistic about their personal situation and their ability to buy durable goods such as cars and appliances, today’s report said.

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The Obama administration expects the cost of the Troubled Asset Relief Program to be $200 billion less than projected, helping to reduce the size of the budget deficit, a Treasury Department official said yesterday.

The administration forecast in August that the TARP would ultimately cost $341 billion, once banks had repaid the government for capital injections and other investments. Congress authorized $700 billion for the program in October 2008.

Banks have paid back $71 billion so far, and a planned repayment by Bank of America Corp. would bring that figure to $116 billion. Treasury Secretary Timothy Geithner said in an interview last week that he expects the TARP to get as much as $175 billion in repayments from banks by the end of 2010.

“The fact that they are spending less TARP money means that recovery is better and stronger than expected, and that’s all positive for growth,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Calyon, the investment banking unit of France’s Credit Agricole SA. “It shows that things are progressing in the right direction.”

The financial bailout program, begun under President George W. Bush, has drawn fire from critics in Congress who say the government has done more to help Wall Street banks than average Americans. Last month Republican Representative Kevin Brady of Texas told Geithner he should resign during a hearing of the Congress’ Joint Economic Committee.

Create Jobs

House Speaker Nancy Pelosi, a California Democrat, said last week that legislation is being written to use some TARP funds to help local communities and small businesses.

Pelosi said TARP funds would be “appropriately used” to pay for new jobs promotion programs because “the more jobs we create the more money comes back into the public till” as tax revenue that will “reduce the deficit.”

House Republican Leader John Boehner said Geithner should shut down the financial bailout program and use money left in the fund to reduce government debt.

The U.S. budget deficit reached a record $1.42 trillion in the 2009 fiscal year that ended Sept. 30 as the government spent money on stimulus programs to pull the nation out of the worst recession since the 1930s and tax revenue declined.

“The deficit is definitely a concern that’s overhanging the dollar, there’s no doubt,” said Calyon’s Kotecha. “But there is a long way to go before the deficit improves to a point where concerns completely recede. On the margin, it’s good news for the dollar but I don’t think we will see a huge impact off this news.”

Turning a Profit

The yield on the benchmark 10-year Treasury note was little changed at 3.47 percent as of 7:50 a.m. in London, according to BGCantor Market Data.

The trade-weighted Dollar Index fell 0.4 percent to 75.604 as of 7:55 a.m. in London from 75.911 in New York late last week. The index tracks the U.S. currency against the euro, yen, U.K. pound, Canadian dollar, Swiss franc and Swedish krona.

The Treasury invested about $245 billion last fiscal year into U.S. banks to shore up the financial system. In the long run, those investments are expected to turn a profit of $19 billion, compared with a previous estimate of a $76 billion cost, the Treasury official said yesterday.

The government’s net cost for its investments in banks, auto companies and insurers came to $42 billion last fiscal year, the official said, about $110 billion less than projected in August.

‘Not Good Enough’

The Treasury official said the TARP should be judged on the basis of its effects on the financial system, and not its cost.

The U.S. economy expanded for the first time in a year in the third quarter, growing at a 2.8 percent annual rate. The Standard and Poor’s 500 Financials Index has jumped 140 percent since March 6, and the cost of three-month dollar loans in London between banks fell to 0.257 percent on Dec. 4 from 1.41 percent at the beginning of the year.

Employers cut 7.2 million jobs since the recession began in December 2007. Payrolls fell by 11,000 workers in November, the smallest decline in 23 months, figures from the Labor Department showed last week. The jobless rate declined to 10 percent, from a 26-year high of 10.2 percent in October.

Geithner, in last week’s interview, said the decline in job losses was “progress, but not good enough.”

As banks repay their TARP funds, the Treasury is disposing of the stakes it acquired through the program. To exit TARP, and the additional oversight it brings, banks must buy back the government’s preferred shares and also agree on how to dispose of warrants the Treasury received as part of the deals.

Goldman Sachs Group Inc. redeemed its warrants for $1.1 billion, while JPMorgan Chase & Co., Capital One Financial Corp. and TCF Financial Corp. have opted to let the Treasury auction their warrants. That process is now under way.

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