Financial thoughts

Protesters and police fought running battles in central Athens Sunday, as Greek lawmakers debated legislation that would introduce severe austerity measures to stave off bankruptcy.

The clashes broke out around 6 p.m. local time (1600 GMT) as tens of thousands of people, responding to calls from unions to protest the measures, streamed into Syntagma Square facing Parliament.

Peaceful protesters fled to adjacent streets as a group of around 100 anarchists threw bottles, rocks, pieces of marble and firebombs at police, who responded with tear gas and stun grenades.

Police say an officer was injured by a flare shot at him from a gun. He was taken to hospital.

Among those affected by the tear gas were well-known composer Mikis Theodorakis, 86, and veteran leftist politician Manolis Glezos, 89. The two have been actively campaigning against Greece accepting a euro130 billion ($171.46 billion) bailout from the European Union and the International Monetary Fund that would help Greece avoid bankruptcy as early as next month, when a euro14.5 billion bond matures.

The legislation will also approve a bond-swapping deal with private creditors that will allow Greece to shave off at least euro100 billion ($131 billion) of its euro360 billion debt.

An ambulance picked up two injured people from the square. At least two more injuries have been reported, including a photographer who was hit by both a firebomb and a flare.

By 7 p.m. local time, clashes had spread beyond the square to other streets. A Starbucks near the Athens University main building was on fire.

The debate started shortly after 3:30 p.m. local time (1330 GMT), and will take about ten hours, finishing around midnight. At the start of the meeting, opponents of the legislation adopted a tactic of frequent and loud interruptions and objections but had calmed down by mid-evening.

Tens of thousands of protesters gathered in the square outside Parliament as the debate began, with more arriving constantly.

Communist-affiliated unions held a separate meeting at the same time and started marching to Parliament before halting their march as the clashes broke out.

Police fear if the communists and anarchists meet, further violence would erupt and are trying to keep the two apart. Authorities have deployed some 6,000 policemen in the city center.

Pro-Communist unionists had earlier driven through Athens’ neighborhoods, calling for people to participate in the demonstration. Protesters are expected to remain outside the building throughout the vote.

The two parties backing the coalition government have 236 deputies in the 300-member Parliament, but at least 13 conservative and seven Socialist lawmakers have declared they will vote against the legislation, defying their leaders’ threats of sanctions. Early Sunday, a conservative lawmaker resigned, repeating the actions of three Socialists earlier this week.

Debt-stricken Greece does not have the money to cover a euro14.5 billion ($19.12 billion) bond repayment on March 20, and must reach a vital debt-relief deal with private bond investors before then. Greece’s woes have threatened its future in the 17-country zone that uses the euro currency.

The Europeans are waiting to see Greece finally act on their commitments.

German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper Sunday that Greece “cannot be a bottomless pit.”

“That’s why the Greeks must finally put a bottom in,” he added. “Then we can put something in too.”

Highlighting previous promises he said weren’t kept, Schaeuble said “that is why Greece’s promises aren’t enough for us any more,” according to the report.

Asked whether Greece has a long-term future in the eurozone, Germany’s vice chancellor told ARD television “that is now in the hands of the Greeks alone.”

Philipp Roesler said in the interview which was broadcast Sunday that what matters is not just Greece making pledges _ “we want … the Greek parliament also to approve laws and, as far as possible, take the first steps to implement what has been agreed,” .

“Only when that happens, only then can there be new aid _ and Greece urgently needs that,” said Roesler, who is also Germany’s economy minister.

Roesler acknowledged that Greece faces “difficult decisions” but stressed that Germany wants it to be able to get out of trouble.

“It is not enough just to give financial aid _ they must tackle the second cause of the crisis, the lack of economic competitiveness,” he said. “For that, they need … massive structural reforms. Otherwise Greece will not get out of the crisis.”

Germany is ready to help, Roesler said, but “we only can and want to help if there is something in return from the Greek side.”

Introducing the legislation Sunday _ amid much interruption _ Socialist lawmaker Sofia Yiannaka said Parliament is called to approve painful measures with its back to the wall, adding that the intense pressure from Greece’s EU partners to pass the measures was the result of delays in implementing already agreed reforms.

“The delays have our imprint. We should not blame foreigners for them,” she said.

“We have finally found out that you have to pay back what you have borrowed … We used to say ‘poor state, but rich citizens’ because we tolerated tax evasion for populist reasons. Is this the country we want?” Yiannaka added.

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Regulatory hurdles regarding the marketing of its prenatal drug, Makena, contributed to KV Pharmaceutical Co.’s continuing losses for the third quarter of fiscal year 2012, which ended Dec. 31. The Bridgeton-based drug maker reported a net loss of $37.8 million for the quarter, or a loss of 63 cents a share, compared to a loss of $47.8 million, or loss of 96 cents a share, a year ago. Net revenues rose 46 percent to $5.1 million. “There is substantial doubt about the company’s ability to continue as a going concern,” KV said in a filing lodged at the Securities and Exchange Commission.  

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European leaders maintained pressure on Greece to accept terms demanded by international lenders during a weekend of talks to avert a financial collapse.

Interim Greek Prime Minister Lucas Papademos struck a tentative deal with party leaders to boost economic competitiveness and extend spending cuts after euro-area finance chiefs told them an increase in the 130 billion-euro ($170 billion) aid package wasn

The Swiss Competition Commission said Friday it has launched an investigation into possible cartel behavior by a dozen banks including the country’s two biggest institutions UBS and Credit Suisse.

The banks are suspected of colluding to influence key interest rates and the trading conditions for derivatives, the commission said in a statement Friday.

“Specifically, collusion between derivative traders might have influenced the reference rates LIBOR and TIBOR,” it said.

The London Interbank Offered Rate, LIBOR, and the Tokyo Interbank Offered Rate, TIBOR, underlay many commercial interest rates.

The commission said the banks are also suspected of illegally influencing market conditions for derivatives based on these reference rates.

The foreign institutions named in the Swiss probe are Bank of Tokyo-Mitsubishi UFJ, Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, JP Morgan Chase & Co., Mizuho Financial Group Inc., Rabobank Groep N.V., Royal Bank of Scotland Group PLC, Societe Generale SA, and Sumitomo Mitsui Banking Corporation.

Competition authorities in the United States and Britain have launched similar investigations.

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At long last, the Holy Grail of Internet IPOs is here. Facebook filed Wednesday to raise $5 billion in an initial public offering.

In 2011, Facebook earned $1 billion on sales of $3.7 billion. As of December 31, Facebook had 845 million monthly active users.

The company crossed the line into profitability in 2009, five years after it launched in founder Mark Zuckerberg’s Harvard dorm room. Facebook earned $229 million that year on sales of $777 million, and has remained profitable ever since.

It’s not yet known on which stock exchange Facebook will trade, though it said it plans to use the ticker symbol "FB."

Facebook will likely re-file its paperwork several times over the coming months. Those updates will add more details and could even restate some of the financial information detailed in Wednesday’s filing.

In this initial paperwork, companies don’t declare how many shares they’re going to sell, or how much those shares will cost. Those details will be added in an updated filing shortly before trading begins.

Without that share price information, Facebook’s valuation is still speculative.

Facebook has its own guesses, though. The company said it conducted its own valuation of its stock at the end of each quarter, and as of December 31 determined it to be worth $29.73 a share.

Zuckerberg’s letter to investors: ‘Hacker Way’

Revenue breakdown: Advertising accounted for 85% of Facebook’s 2011 revenue, or almost $3.2 billion.

Facebook’s other revenue stream is its payment system for purchases within apps and games: Facebook Credits. Facebook keeps 30% of the revenue from those payments, and passes the remaining 70% on to the app developer.

Those fees brought in $557 million for Facebook last year.

Revenue from Zynga, which makes FarmVille and other games played on Facebook, represented 12% of Facebook’s total revenue in 2011.

About 44% of Facebook’s revenue came from overseas last year, compared with 38% in 2010 and 33% in 2009.

As of December 31, Facebook had $3.9 billion in cash and liquid assets.

Exec compensation: Another choice tidbit: In 2011, Facebook CEO Zuckerberg raked in a $500,000 base salary. But he requested — and will receive — only $1 per year in salary starting January 1, 2013.

Don’t feel too bad for Zuck, who remains the largest shareholder in the company he created. His total compensation in 2011 came to $1.48 million, according to Facebook’s calculations.

He was one of the lowest-paid among Facebook’s executive ranks. Facebook COO Sheryl Sandberg topped the list with a total package Facebook estimated at $30.9 million, almost all of it in stock.

Engineering VP Mike Schroepfer made an estimated $24.7 million — again, mostly in stock — while CFO David Ebersman collected an $18.7 million pay package. (For more on Ebersman, see Fortune’s profile: "The man behind the Facebook IPO.")

As far as the regular rank-and-file at Facebook, the company had 3,200 full-time employees as of December 31. That was a 50% increase from the previous year, and Facebook said it "expect[s] this growth to continue for the foreseeable future."

Facebook also noted that it has bought out some small companies mainly to acquire employees, and said that it intends to continue that strategy.

How much Facebook is worth: Trading won’t begin for several months, as Facebook now has to field questions from regulators and court investors for its stock sale.

Most analysts estimate Facebook’s valuation will fall somewhere between $85 billion to $100 billion. But the value of Web companies can be extremely volatile.

A recent example: Zynga (). The FarmVille maker’s IPO filing reported that it valued its shares in August 2011 at $17.20 each, which gave the company a valuation of $14 billion. But when Zynga went public in December, shares sold for just $10 — valuing the company at $7 billion.

Several other Internet companies made their public debuts in 2011, but the end of the year proved to be a turbulent time for the sector. Shares of Groupon (), Pandora (), Zillow (), LinkedIn () and Angie’s List () all suffered steep double-digit losses for November, though most clawed back at least a bit in December or January. 

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World stock markets were mixed Wednesday, as a modest improvement in manufacturing data from China offered reassurance over its economic slowdown, though Asian markets fell back from early gains.

Benchmark oil hovered below $99 per barrel while the dollar rose against the euro but fell against the yen.

In early European trading, Britain’s FTSE 100 advanced 0.8 percent to 5,724.91 and Germany’s DAX both rose 1.1 percent at 6,525.76. France’s CAC-40 jumped 1.3 percent to 3,340.45. Wall Street was set to open higher, with Dow Jones industrial futures rising 0.2 percent at 12,607 and S&P 500 futures gaining 0.2 percent at 1,310.40.

A better-than-expected Chinese manufacturing index for January, issued by a government federation, fueled an early rally in most markets across Asia. But that evaporated after the release later in the morning of a competing, seasonally adjusted survey by HSBC suggesting conditions were still deteriorating.

Tokyo’s Nikkei 225 edged up less than 0.1 percent to close at 8,809.79. Hong Kong’s Hang Seng was down 0.3 percent to 20,333.37 while Seoul’s Kospi added 0.2 percent to 1,959.24.

By afternoon, shares in mainland China had retreated back into negative territory, with the benchmark Shanghai Composite Index shedding 1.2 percent to 2,268.08.

“Rumors that pension funds will not be invested in shares have raised worries over inadequate liquidity,” said Cai Dagui, an analyst at Ping’an Securities, based in Shenzhen.

Shares will likely remain unstable as investors await annual earnings reports, he said.

The mixed signals from China compounded uncertainties over its outlook, showing that despite resilient consumer demand exports remain sluggish payday loans with no fax.

Such concerns are especially acute for Australia, whose economy has thrived on exports of coal, iron ore and other commodities to China.

Australia’s S&P/ASX 200 fell 0.9 percent to 4,225.70, while India’s Sensex edged 0.1 percent higher to 17,208.68.

Taiwan, Indonesia and New Zealand gained ground, though Singapore declined.

Overnight Tuesday, an unexpected drop in U.S. consumer confidence dragged shares down on Wall Street, where the Dow Jones industrial average lost 20.81 points, or 0.2 percent, to 12,632.91. The S&P slipped 0.60 point to 1,312.41 while the Nasdaq composite index rose 1.90 points to close at 2,813.84.

Overall, though, U.S. shares had their best start in 15 years, thanks to a modest improvement in the economy. Sentiment was further buoyed by hopes of progress in Europe after leaders there agreed on the broad outlines of a deal to tie the countries that use the euro closer together and on hopes that Greece is close to a debt-reduction deal with private creditors.

Benchmark oil for March delivery gained 38 cents to $98.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to end at $98.48 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3070 from $1.3084 late Tuesday in New York. The dollar fell to 76.16 yen from 76.20 yen.

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Private nonresidential construction may pick up this year, as demand grows for new U.S. projects.

The Architecture Billings Index held at 52 last month, a sign of expansion, according to the American Institute of Architects. The commercial and industrial component — a proxy for private building activity — climbed to 54.1 in December, the highest in 10 months, the Washington-based association said Jan. 18.

The monthly survey of U.S.-based architecture firms is a leading indicator of nonresidential construction, said Kermit Baker, chief economist for the association.

Cass Informations Systems reported fourth-quarter net income of $5.5 million, or 53 cents per share, compared with $5.1 milllion, or 48 cents per share, in the corresponding period of 2010.

For the year, Cass–a Bridgeton-based provider of invoice payment and information services–reported record net income of $23 million, or $2.21 per share, compared with $20.3 million, or $1.95 per share, in 2010.

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Leaders of the world

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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