My finance view

There’s no shortage of deals for the consumer suffering the recession.

Automakers will make your car payments. Apartment complexes will look the other way should you decide to break your lease. A clothier will fork over a cash rebate for the new suit you just bought.

All you have to do to qualify is lose your job.

From corporate giants to obscure pet manufacturers, businesses are offering incentives to millions of Americans who are spending less out of fear they will lose their jobs. Companies are trying to remain viable until the economic pendulum swings the other way.

In that pursuit, it’s hello to

empathy and farewell to marketing that appeals to conspicuous consumption, sex appeal and other base interests.

"Marketers in general are not altruistic," said Mary Albrecht, a professor of marketing at Maryville University. "What they try to do is move people forward in the buying process. They realize that people perceive risk as a wall that can keep them from buying. They’re trying to show them a way over the wall."

General Motors and Ford, for example, are offering programs that cover the payments of vehicles purchased through company financing in the event a buyer is pink-slipped. The domestic automakers followed the lead of Hyundai of America, the first out of the block with such a plan.

No one has turned in a vehicle to date, Hyundai spokesman Jim Trainor said Thursday. Still, such incentives have been applauded by marketing experts because they give customers a little more security about their purchases.

Historically, companies that adapt to economic and social cataclysm are the ones that survive, said Terry Clark, a professor of marketing at Southern Illinois University Carbondale.

He cites Woolworth’s, the five-and-dime that remained in declining urban downtowns while its competitor, S.S. Kresge, re-christened itself "Kmart" as it followed the population to the suburbs.

Offering a perk to consumers when they are down, Albrecht noted, can engender good will and, possibly, continuing patronage paperless payday loans. Customers using the free health care in Walgreens "Take Care" clinics, for example, are likely to return to the pharmacy long after the service ends at the end of the year, Albrecht said.

Established firms may view the recession as an opportunity to, as Clark puts it, "make a virtue out of necessity." But for fledgling companies, virtue is a way to get an otherwise obscure brand in front of the public.

A small California pet care concern, "Dogswell," will provide free bags of dry dog food to the first 10,000 jobless workers.

"There are really two bottom lines in business — profit and social awareness," said Marco Giannini, the founder of the five-year-old firm. "This is the second part, social awareness. We’re doing a small part to promote a social cause and its helping us profit, too."

So far, more than 5,000 people have taken advantage of the "Bow-Wow BailOut."

Giannini’s offer aside, consumer advocates are reminding customers to remain vigilant.

Scott Mulford, a spokesman for Illinois Attorney General Lisa Madigan, said consumers need to be particularly aware of enticements attached to the purchase of big-ticket items.

"We urge consumers to closely check the terms of any offer ask questions and, by all means, get it writing before they sign anything," Mulford said.

And while companies hope such enticements will lure more business, they must still overcome the doubts of people like Alicia Otera of Maryville, Ill. She ignored the incentives during a three-month stretch of unemployment. And she plans to continue to ignore them now that she has landed at Boeing Corp. as an independent contractor.

Working or not working, Otera said, now is not the time for a major purchase. "I don’t want to bet on my future with a $500 car payment and lose my home."

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Legislation to curb credit card fees and limit consumer penalties cleared a congressional panel on Wednesday, a day ahead of a meeting between industry executives and President Barack Obama at the White House.

The bill is an early test of political will for Democrats pushing for regulatory reform amid the economic crisis and would mean sweeping changes for card-issuing banks, many of which have received government bailout money.

Members of the House Financial Services Committee voted 48 to 19 for the Credit Cardholders’ Bill of Rights which in practice would codify into law restrictions on deceptive practices issued by the Federal Reserve in December.

The legislation would stop credit card issuers from imposing arbitrary interest rate increases and penalties, and halt certain billing practices.

Nine Republicans, or almost a third of that party’s members on the committee, voted in favor of the measure.

Committee chairman Barney Frank told reporters after the vote he was not surprised the measure attracted bipartisan support. “The mood in the country has changed,” he said.

Frank said Obama, who campaigned for credit card reforms, wants to make changes to the bill. Frank provided no details.

Later on Wednesday, White House spokesman Robert Gibbs told reporters that Obama wanted to make sure the legislation codified the Fed’s rules into law.

Executives from Bank of America Corp, American Express Co, Citigroup Inc, Wells Fargo & Co, JPMorgan Chase & Co, Capital One Financial Corp, Visa Inc and MasterCard Inc will be among 13 credit card executive due to meet Obama early on Thursday afternoon at the White House faxless payday loans.

“We are working closely with Congress on legislation that will promote simplicity, require transparency, demand fairness, and ensure accountability — so that we can strengthen consumer protections against abusive and deceptive practices,” White House spokeswoman Jen Psaki said.

Banks say the legislation would hurt fee income at a time when they are trying to climb out of a financial hole created by the collapse of the housing boom.

The American Bankers Association trade group, which represents the biggest credit card issuers, said it is concerned the House bill could reduce the availability of consumer credit and make it more expensive.

Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, said consumer groups supported making the Fed rules law, but wanted to go further.

“We hope the president will also support further reforms, such as the… Senate’s stronger ban on ‘no reason’ fee increases and its protection for college students from unfair credit card marketing,” Mierzwinski said.

BILLING PRACTICES 

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Former employees of Nortel Networks Corp. (TSX: NT) should be represented in court by one court-sanctioned legal team because that's the most efficient way to protect them without being an undue drain on the company's resources, an Ontario judge was told Monday.

Mark Zigler, a lawyer for the firm Koskie Minsky, told the court it made no sense to have multiple groups of lawyers representing different groups of former employees of the insolvent telecommunications equipment maker.

"You'll just have more and more lawyers working on the same file," Zigler said.

Koskie Minsky has been retained by a group representing Nortel pensioners, who Zigler said could number between 17,000 and 18,000.

The company and the court-appointed monitor support having Koskie Minsky chosen as a court-recognized legal team for all employees that would be paid by Nortel.

Several other groups of employees or ex-employees want different legal representation, saying their needs are different from those of the pensioners, and their lawyers were in court Monday seeking court orders that they should also be paid by Nortel.

But Zigler argued that Koskie Minsky is well positioned to represent all groups because it has a broad mandate and could use economies of scale to handle and avoid duplication of effort.

Nortel and a court-appointed monitor both say a single law firm should represent all former employees to minimize the drain on Nortel's resources, which would be used to pay the lawyers.

However, a lawyer for about 500 people who recently lost their jobs disagreed, saying their issues – such as unpaid severance and health benefits – are fundamentally at odds with the interests of pensioners.

Janice Payne said the needs of the recently axed workers could be overwhelmed by the much larger group that is primarily interested in preserving pensions.

Very few of the people let go by Nortel shortly before or since its Jan. 14 bankruptcy-protection filing have any interest in the pension, she said, either because they're not entitled to benefits or because they asked to take their money out when they left Nortel.

In contrast to pensioners, who have continued to receive payments despite the insolvency, the laid-off employees were cut off as soon as Nortel got court protection from creditors, she said online instant cash advance.

"We submit there is no duplication when the groups have such divergent interests," said Payne, a partner in Ottawa firm Nelligan O'Brien Payne, working with two other firms on the case.

She also said it's troubling that Koskie Minsky's position is supported by Nortel, which she said creates the impression that the company is choosing the employees' counsel.

"The optics are terrible," Payne said.

Lawyers for Nortel argued in court that the company, the monitor and the court had an obligation to preserve Nortel's limited financial resources.

They said it was more efficient for one firm to be the court-recognized legal representative for all the employees, so it was in favour of having Koskie Minsky get that designation.

Other groups can still hire lawyers to represent their interests but they shouldn't be paid out of the company's funds because the multiple legal teams would be less efficient and more costly, they said.

"This is really not about people's right to choose their counsel," said Derrick Tay, one of Nortel's lawyers.

The Canadian Auto Workers is also seeking to represent not only the active union members at Nortel but also about 600 who have retired. The union wasn't seeking fees from Nortel.

Nortel said it had never recognized the CAW's assertion that it represented retired members and opposed the union's application on Monday on that ground.

Justice Geoffrey Morawetz reserved his decision and didn't indicate when it would be released.

The iconic Canadian telecom technology company, which originated as part of Bell Canada and has a history stretching back a century, has suffered multiple blows in recent years.

It currently employs about 6,000 people in Canada.

It had about 30,000 employees worldwide as of last September, but there have been two major reductions since then.

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Martha Stewart Living Omnimedia Inc will pay the lifestyle guru, Martha Stewart, $2 million “for her services as a performer, for making public appearances, and as an author and provider of content” under a new employment agreement.

In a filing with the U.S. Securities and Exchange Commission, the company said Stewart is entitled to an annual bonus based on the achievement of the company and individual performance goals fast cash advance.

For 2008, the company posted a loss of $15.7 million, or 29 cents a share.

Stewart’s employment agreement was scheduled to expire in September 2009 and the new agreement extends until March 31, 2012.

(Reporting by Jennifer Robin Raj in Bangalore; Editing by Lincoln Feast)

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China’s economy is showing some signs of improvement, but a big fall in wholesale prices in Japan suggested the world’s second-largest economy was sliding back toward deflation.

A jump in China’s industrial output last month, along with a record rise in new lending, gave further credence to the idea that the bottom of the worst global crisis since the Great Depression may not be far away.

The solid data lifted the Chinese yuan, as well as stocks and copper prices in Shanghai, leading Asian equities higher.

“It does seem that confidence is slowly growing among investors that the worst may be over for the global economy, and this will help boost commodities and other markets,” said Hideyuki Ishiguro, a supervisor at the investment information section of Okasan Securities in Japan.

China was planning a new economic stimulus package targeted at boosting consumption, the China Securities Journal reported on Monday, citing a senior official of the State Information Center, which is affiliated with the country’s top planning agency.

In the latest sign that Beijing’s efforts to revive the economy were beginning to bear fruit, new loans and money supply growth surged to record highs in March.

Industrial output growth picked up to 8.3 percent in March from a record low of 3.8 percent in the first two months of the year, according to comments from Premier Wen Jiabao at the weekend loan till payday.

But the picture was not all rosy for China, which needs economic growth of around 8 percent to keep its massive and growing workforce employed.

An adviser to China’s central bank said the economy was unlikely to hit a bottom soon, while the outlook for fiscal revenue in the coming months was “not optimistic,” the Ministry of Finance said.

JAPAN EYES DEFLATION

And while things were looking modestly brighter in China, the economic situation in Japan remained bleak.

Wholesale prices are falling at their fastest rate since 2002, March figures showed on Monday, as weakening domestic demand on top of falling commodity prices drives Japan toward its second bout of deflation this decade.

With interest rates already almost at zero, analysts say the Bank of Japan has limited weapons to fight deflation in the country’s worst recession since World War Two.

“The BOJ has reached its limit in terms of conventional monetary policy moves,” said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.

“If prices continue to slide, the BOJ may need to expand its government bond buying, and move toward quantitative easing.” 

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The Treasury Department opened a $5 billion financing support program on Wednesday to help auto suppliers keep parts flowing to General Motors Corp. and Chrysler LLC.

The program, first announced last month, will provide government guarantees for the financing of auto parts that have been shipped to the Detroit carmakers but have not yet been paid for. The funds will be made available from the government’s Troubled Assets Relief Program in a financial entity similar to a revolving credit cheap credit report.

GM and Chrysler will designate the suppliers that need the financing, giving them a large role in determining which suppliers will survive. Ford doesn’t intend to use the program.

GM said its suppliers were allocated $2 billion. Chrysler said it would receive $1.5 billion under the program.

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Pulte Homes, the fourth-largest U.S. homebuilder, said it would buy the third largest, Centex Corp, for $1.3 billion in stock as it looks to save costs and get through the housing downturn.

The deal, which Pulte said would create the largest U.S. homebuilder, calls for the exchange of 0.975 common shares of the company for each share of Centex, valuing the acquisition at $10.50 per share.

The companies said that represented a premium of 32.6 percent over the stock’s 20-day average price. The proposed price is also 37.8 percent above Centex’s closing price on Tuesday.

Centex shares jumped 28 percent to $9.75 in early New York Stock Exchange trade on Wednesday, while Pulte fell 3.6 percent to $10.38. Moody’s placed the ratings of both Pulte and Centex under review for downgrade.

“It’s pretty normal consolidation in a very troubled industry,” said Gary Shilling, president of investment research firm A. Gary Shilling & Co. “It’s exactly what you’d expect. These companies are obviously in big trouble.”

Experts predict more strategic stock-for-stock deals this year in distressed sectors, as they help companies reduce costs while allowing shareholders to benefit when conditions improve. With such transactions, companies in struggling industries can bulk up without having to deplete much-needed cash or trying to raise scarce and costly debt financing.

“You have both weakness in sales and write downs on land and existing inventory of houses,” Shilling said. “All these things are putting pressure for consolidation in the industry.”

At Tuesday’s close, the S&P Homebuilders Select Industry Index was down nearly 10 percent so far this year no fax instant cash advance.

Pulte, which would take on $1.8 billion of Centex debt, will own about 68 percent of the combined company. It said it would realize annual cost savings of about $350 million from the deal and expects to retire more than $1 billion of debt maturities before the end of this year.

Based on current prices, the combined company would have a market capitalization of $4.1 billion and a presence in more than 59 markets across the United States, Pulte said.

Last year, Pulte and Centex delivered more than 39,000 closings with combined pro forma revenues of $11.6 billion. The combined company would have had more than $3.4 billion of cash as of March 31, 2009.

The deal would allow Pulte to return to profitability more quickly, Chief Executive Richard Dugas said on a conference call.

Dugas expects further consolidation in the industry. The deal would put Pulte and Centex in a stronger position because they acted first, he added.

Dugas will be chairman and CEO of the combined company. The boards of both companies have approved the deal, which is expected to close in the third quarter.

Citigroup acted as lead financial adviser to Pulte, with Banc of America Securities, Merrill Lynch and JPMorgan Securities Inc as financial advisors. Sidley Austin LLP acted as legal adviser.

For Centex, Goldman, Sachs & Co was financial adviser, and Wachtell, Lipton, Rosen & Katz was legal adviser.

(Reporting by Christopher Kaufman, Paritosh Bansal and Ed Krudy; Editing by Lisa Von Ahn)

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IBM’s talks to acquire smaller computer and software rival Sun Microsystems Inc broke down on Sunday after Sun rejected IBM’s $7 billion offer, a source with knowledge of the matter said.

The collapse of negotiations, if final, is likely to hurt Sun’s shares as a buyout was seen as a means of survival for the once-storied Silicon Valley company, which has been losing market share. A deal would also have helped IBM compete more effectively against rivals such as Hewlett-Packard Co.

The source, who was not authorized to speak publicly about the matter, said Sun was unhappy with International Business Machines Corp’s offer of $9.40 per share or below, and that it was unclear if talks would resume.

The bid represented a premium of up to 89 percent on Sun’s shares before deal talks were first reported last month.

“Sun is now sort of damaged goods,” said Peter Falvey, a technology banker at Revolution Partners. “If IBM got under the covers and didn’t like what they saw, then what does that mean for other potential buyers?”

An IBM spokesman declined to comment, while Sun officials did not return calls.

Sources told Reuters last month that IBM was in exclusive talks to buy Sun and had proceeded to the due diligence stage. One source had said on Saturday that IBM lowered its offer price for Sun to $9.50 a share from $9.55 a share and that a deal may be announced this week.

Sun shares had risen to $8.49 on Friday, from $4.97 on March 17, a day before talks between the two technology companies were first reported health insurance quotes. The Wall Street Journal had previously said IBM’s original bid was $10-$11 a share.

DEAL FACTORED IN

The collapsed talks are expected to damage the smaller Sun more than IBM, the world’s largest technology services provider, which has fared relatively well despite the global economic slump thanks to its outsourcing business and its shift from hardware to higher-margin software sales.

Kaufman Brothers analyst Shaw Wu said it was a mistake for Sun to reject the bid, citing the leap in Sun shares since reports of the deal talks.

“The acquisition is already factored into the market’s thinking. To reject it over 50 cents a share, or whatever it may be, doesn’t seem like a very prudent move,” Wu said.

Sun posted an 11 percent decline in quarterly revenue for its fiscal quarter ended December 28, while gross margins shrank to 41.9 percent from 48.5 percent from a year earlier.

The company rose to prominence selling high-end computer servers in the 1990s but never fully recovered from the dotcom bubble burst earlier this decade. Analysts also say it has failed to fully capitalize on its software assets including Solaris and Java.

Some analysts have thought from the start that a deal between Sun and IBM could prove difficult, particularly due to the likelihood of intense antitrust scrutiny. 

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Home mortgage rates continued to march lower, according to two separate reports released on Thursday.

The average 30-year fixed mortgage rate sank to 5.13%, down from 5.19% the week prior, according to Bankrate.com’s weekly national survey.

The average 15-year fixed-rate mortgage fell to 4.73% from 4.80% the week prior, according to Bankrate.com.

Bankrate obtains its data by surveying the top 10 banks and thrifts in the top 10 markets every Wednesday.

Meanwhile, a report from Freddie Mac showed that the 30-year fixed-rate mortgage fell to 4.78% in the week ending April 2, down from 4.85% the week prior.

The 4.78% rate is the lowest on record according to the Freddie Mac survey, which dates back to 1971 for that particular mortgage. The 30-year fixed rate averaged 5.88% at this time last year, according to Freddie Mac.

Freddie Mac reports the 15-year fixed rate mortgage fell to 4.52%, down from last week when it stood at 4.58%.

There is a difference in reported rates between Bankrate and Freddie Mac because lending rates are constantly fluctuating and the surveys are conducted at different moments.

The two agencies also report the rates with a different average number of "points," which borrowers can purchase at closing to buy down their lending rates. Therefore, the more points a borrower purchases up front, the lower the lending rate. Bankrate.com’s averages have fewer points than Freddie Mac’s average.

While rates are already very low, one analyst said that they could potentially dip a little bit more. "They could dip maybe another 20 basis points from where they are, but not a huge amount," said Brian Bethune, chief financial economist at IHS Global Insight.

Bethune also said that he thinks mortgage rates will stay low for a while car insurance. "I wouldn’t expect them to necessarily jump back up again, but it all depends on the path of the economy."

Mortgage rates follow Treasury rates: No matter which report you look at, the consensus is that mortgage rates are low. The 30-year fixed mortgage rate moves in correlation with the yield on the 10-year Treasury bond. Therefore, lower the yields on government debt weighs on mortgage rates.

"Rates are just coming down as a catch up phenomenon because the 10-year Treasury has come down by 25 to 30 basis points in the past couple weeks," said Bethune. The yield on the benchmark Treasury dropped after the government announced its massive debt-repurchase plan in an effort to encourage lending and spur recovery in the housing market.

The government said two weeks ago that it would be buying more than $1 trillion in debt in an effort to provide liquidity in the credit markets. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.

"Once we start to see a recovery, the Federal Reserve will start to reverse a lot of its liquidity programs," said Bethune. "We will see rates move up simply reflecting the anticipation that the Fed is going to start to pull liquidity out of the system."

But Bethune said that he expects the economic recovery to be slow, and rates should not move up significantly until 2010. 

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Australia’s trade surplus unexpectedly widened in February as imports of consumer goods fell and exports of gold surged.

The trade surplus expanded to A$2.11 billion ($1.47 billion) from a revised A$926 million in January, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg News was for A$700 million.

Global demand for resources such as gold, sought by investors seeking to protect their wealth amid a deepening recession, may cushion Australia’s economy even as consumers and businesses cut spending. Central bank Deputy Governor Ric Battellino said this week Australia will remain one of the better-performing economies in the developed world.

“Australian exports steadied in February, after some big falls in the previous few months,” said John Edwards, chief economist at HSBC Bank Australia Ltd. in Sydney.

“Today’s trade numbers will be warmly welcomed” by the central bank, and support the view that policy makers will keep borrowing costs unchanged next week for a second month, Edwards added.

The Australian dollar rose to 70.10 U.S. cents at 12:41 p.m. in Sydney from 69.78 cents just before the report was released. The two-year government bond yield fell 2 basis points to 2.79 percent. A basis point is 0.01 percentage point.

Stocks Rise

The benchmark S&P/ASX stock index rose 2.7 percent, paced by shares of mining companies such as Newcrest Mining Ltd., the nation’s largest gold producer, which jumped 3.5 percent.

Exports rose 4 percent to A$24.9 billion in February, today’s report showed. Gold shipments jumped 55 percent, or by A$784 million. Imports fell 1 percent to A$22.8 billion, led by a 13 percent drop in consumer goods from aboard.

Gold rose to more than $1,000 an ounce in New York in February for the first time in almost a year as investors, spooked by plunging stocks and a global recession, boosted physical demand for the metal.

Gold held in ETF Securities Ltd.’s exchange traded funds rose to 7.32 million ounces, the Jersey, Channel Island’s-based company said on March 30. Zurich-based Zuercher Kantonalbank’s Gold ETF holdings rose to 4.36 million ounces as of March 27, from 4.22 million ounces a week earlier.

The rise in February gold shipments from Australia was almost entirely offset that month by gold imports of A$782 million, HSBC’s Edwards said free business card templates. “Removing the gold transaction, exports were up about 1 percent and imports fell 4 percent.”

Iron Ore

There are signs demand for exports may slide in coming months.

Chinese steelmakers, the world’s largest buyers of iron ore, have asked suppliers to temporarily cut prices by 40 percent until an annual contract-price agreement is reached, the China Iron and Steel Association said March 30.

The Organization for Economic Cooperation and Development this week forecast the steepest economic contraction in more than 50 years across its member nations. The combined economy of the world’s most-industrialized countries will shrink 4.3 percent in 2009, it said March 31.

“There are limits on how much we can insulate ourselves from what is happening abroad, and therefore there are probably still some difficult times ahead,” the central bank’s Battellino said March 31.

Gross domestic product is “likely to fall in 2009,” he said. In February, the central bank tipped 0.5 percent growth.

Australia’s economy, the world’s biggest shipper of coal and iron ore, unexpectedly shrank 0.5 percent in the fourth quarter, the first contraction in eight years.

Job Losses

Miner BHP Billiton Ltd. is among companies firing workers and trimming investment plans as overseas orders for natural resources fall.

BHP Billiton said in January it will shed 3,400 workers in Australia as it shuts a nickel mine, closes part of a refinery and reduces coking coal output by as much as 15 percent.

Reports published last month show the unemployment rate rose to a four-year high of 5.2 percent in February as companies cut the largest number of full-time jobs in two decades.

Retail sales tumbled 2 percent in February, the biggest drop in almost nine years, as households spent less at department, furniture and clothing stores, a report showed yesterday.

To stoke economic growth, central bank Governor Glenn Stevens and his board lowered the overnight cash rate target by a record four percentage points to a 45-year low of 3.25 percent between September and February. They will cut the rate by at least another quarter point on April 7, according to 13 of 16 economists surveyed by Bloomberg News last week.

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