My finance view

Marriage break-ups can be tense. And when divorcing couples sell their homes, it’s buyer, agent and everyone else beware.

There are about one million divorces a year in the United States and in most cases, there’s a home that needs to be sold. That can mean great bargains, because couples divorcing — like those in foreclosure — are often among the most motivated of sellers, willing to accept offers below market value.

Still, house hunters may well pay the price in terms of aggravation and time when working with these sellers.

Buyers must wade through the venom generated by the divorce. Often, one spouse is anxious to sell while the other tries to sabotage the deal — either out of spite or an unwillingness to end the marriage.

"Most of my divorcing clients dislike each other very much so navigating the transaction can be tricky," said Scott Weeda, a Seattle-based real estate agent who specializes in divorce.

In other cases, one spouse may delay signing off just to aggravate the ex. Other times, one party may want to maximize the profits while the other just wants to get out.

"In many cases, the joint ownership is the only remaining tie that connects couple selling," Weeda said. "They sometimes want to cut that ASAP."

Buyers may find themselves in agreement on a deal with one spouse until the other vetoes the deal. Sometimes, buyers don’t even know there’s a problem until the last minute.

Charles Vallis, a Massachusetts-based agent for discount broker Redfin, had a recent sale in which his buyers went to contract and had a closing date, but then the wife in the divorce disappeared.

"She was nowhere to be found for the last few days before closing," said Vallis. "The day before, their attorney notified us that they might not be able to close because the wife was unreachable faxless payday advance."

One of the buyers, Megan McGuire, who works in public relations for a large law firm, said she "floored" by this. "We thought it was really reckless on her part."

She and her husband, Josh Ledeen, had already given notice at their rental and had made a date with the movers. "We would have been out on the street," said McGuire.

Vallis kept leaving messages for the wife and calling her attorney, who couldn’t reach her either. Luckily, her husband was anxious to sell. He even changed the locks before the final walk-through because he feared his wife might damage the interior.

After days of desperately trying to contact the wife, the sellers’ attorney finally got a call back and read her the riot act about the legal consequences of breaching the contract. The sale closed on time — but the agitation cost the buyers sleepless nights.

To try and avoid these situations, Randy Morrow, an Arlington Va.-based real estate agent who represents divorcing couples, tells potential buyers to find out early whether a divorce is acrimonious.

"Then, there’s a very good chance the settlement will not happen on schedule," he said. "Buyers should talk to their agents about placing protective language in the offer. If a case is really nasty, I would tell my clients to run."

Carol Ann Wilson, an expert in divorce financial planning, also advises house hunters to delve deeper into the sellers’ backgrounds if the sale involves a divorce.

"If buyers find that both parties haven’t signed off on the selling agreement," she said, "buyers should back off. The deal could be easily derailed." 

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NEW YORK

Swiss central bank President Philipp Hildebrand, who ended 15 months of intervening in foreign- exchange markets this year, may prove powerless to stop the franc from extending a record rally that he calls a “burden.”

Options traders are more bullish on the franc for the next three months than any major currency except the yen, according to data compiled by Bloomberg. Bank of Tokyo-Mitsubishi UFJ Ltd. says it may appreciate 7.9 percent to 1.17 per euro in six months after rising more than any major peer since intervention ended in June. Standard Bank Plc estimates an advance to 1.20.

Currency traders say Hildebrand probably won’t renew efforts to stop the gains after previous sales failed to halt the appreciation that made exports more expensive and saddled the Swiss National Bank with $22 billion of exchange-rate losses in the first nine months of 2010. While policy makers said on June 21 that intervention was no longer needed as the risk of deflation had ebbed, price increases have since slowed.

“The SNB cannot do much, they are just observers,” said Beat Siegenthaler, a Zurich-based currency strategist at UBS AG, ranked by Euromoney Institutional Investor Plc as the world’s second-biggest foreign-exchange trader. “Of course they are very worried. Their options are limited.”

The franc advanced 1.2 percent last week to 1.2627 per euro, climbing to a record 1.2439 on Dec. 22. It gained 0.7 percent against the dollar to 96.23 centimes, extending its 2010 rise to 7.6 percent. The Swiss currency rose 0.1 percent against the euro and dollar as of 12:51 p.m. in Tokyo today.

Monetary Union

Switzerland’s currency, a haven in times of economic turmoil, has strengthened 17 percent against the euro this year amid concern the fiscal crisis engulfing Greece, Ireland, Portugal and Spain will curb growth in the 16-country region and may force some nations out of the monetary union.

The franc’s gain against the euro is an additional “burden” for Swiss exports, which account for about 50 percent of gross domestic product, Hildebrand, 47, told reporters in Zurich on Dec. 16. Growth in Switzerland’s $492 billion economy is likely to be “significantly lower in the quarters ahead,” partly because of the currency’s strength, he said.

Werner Abegg, a spokesman for the central bank, declined a Bloomberg News request to arrange interviews with policy makers.

The SNB said it had started selling on March 12, 2009, its first solo foreign-exchange intervention since 1992. The policy, designed to ward off deflation, protect exports and revive growth, sparked the biggest one-day decline since the euro’s 1999 start. The franc slumped 3.4 percent to 1.5299 per euro. By the end of June 2010, it had strengthened 16 percent to 1.3184.

SNB’s Losses

The central bank said on Nov. 12 that it had a nine-month loss of 8.46 billion francs ($8.8 billion) after depreciation in the euro and dollar caused its holdings to decline in value by 21.2 billion francs. A year earlier, the 103-year-old bank reported a profit of 6.89 billion francs.

“The SNB tried intervening, and that clearly didn’t work, so they stepped away,” said Richard Benson, a London-based executive director at Millennium Asset Management, who oversees $14 billion of currency funds. The franc “will carry on strengthening whilst the stresses and strains of the euro zone cease to be resolved,” he said.

Derivative traders are paying a 2.56 percentage-point premium for three-month call options, which grant the right to buy the franc against the euro, relative to puts, which allow for sales, Bloomberg data show. That compares with an average premium of about 1 percentage point over the past two years.

Ratings Downgrades

The franc may strengthen toward 1.10 per euro next year as the debt crisis in Europe intensifies, Lee Hardman, a London- based strategist at Bank of Tokyo-Mitsubishi, wrote in a note to clients on Dec. 22.

Fitch Ratings cut Portugal’s debt rating one level to A+ on Dec. 23, citing concern about the “financing environment” for the government. Moody’s Investors Service said on Dec. 15 it may reduce Spain’s Aa1 credit rating and a day later placed Greece’s Ba1 classification on review for a possible downgrade direct payday lenders. Ireland was cut five levels by Moody’s on Dec. 17. Switzerland has top AAA rating from the three companies.

Analyst forecasts remain bearish on gains by the franc. As recently as Nov. 30, the median of 28 estimates compiled by Bloomberg was for the franc to end 2010 at 1.33 per euro. The currency will trade at 1.30 by the end of March, a separate survey of 34 strategists showed.

Some investors say the franc is too strong, with the nation’s benchmark interest rate 0.75 percentage point below the European Central Bank’s 1 percent. Two-year notes yielded 48 basis points less than German securities of similar maturity on Dec. 23, compared with 39 basis points at the end of September.

Relative Value

The currency is 34 percent overvalued against the euro, based on the relative costs of tradable goods and services as measured by the Organization for Economic Cooperation and Development in Paris.

“The market is getting a little carried away with its concern over the European sovereign-debt risks,” said Jurgen Buscher, Zurich-based head of JB Private Asset Management and the former director of foreign exchange at Deutsche Bank Private Wealth Management. The franc may weaken to the 1.30 per euro to 1.40 over the next year, he said.

Switzerland’s trade surplus, which frees the country from dependence on foreign capital and can prompt purchases during times of turmoil, declined to 1.93 billion francs last month from 2.05 billion francs in October, the Federal Customs Office said on Dec. 21.

While the stronger franc helped spur a 3.4 percent drop in exports last month, the Swiss economy is benefiting from its proximity to Germany, according to Steven Barrow, head of Group of 10 currency strategy at Standard Bank in London.

‘Saving Grace’

German gross domestic product will grow 3.6 percent this year, more than double the 1.7 percent for the euro region, according to economists’ estimates compiled by Bloomberg. Switzerland’s GDP will rise 2.7 percent, the forecasts show.

The currency gain “is obviously detrimental as far as trade is concerned,” Barrow said. “The saving grace has been that Switzerland’s closest trading neighbors, northern Europe and Germany in particular, have actually been quite strong.”

Germany’s benchmark DAX Index of stocks has rallied 18 percent this year, while the Swiss Market Index is little changed from the end of 2009.

Swiss economic growth will probably slow by a percentage point next year to 1.7 percent, according to the median in a Bloomberg survey of 13 economists. That compares with 1.45 percent for the euro area and 2.5 percent in Germany, surveys show. Greece and Portugal will likely contract, with Spain’s GDP increasing by 0.6 percent.

Inflation Forecast

Hildebrand cut the central bank’s 2012 inflation forecast to 1 percent on Dec. 16 from 1.2 percent, almost six months after SNB Vice Chairman Thomas Jordan said that intervention was no longer necessary because the threat of deflation had largely disappeared. Consumer prices increased 0.2 percent in November from a year earlier, down from a 1.1 percent gain in May.

Policy makers said in their quarterly report on Dec. 24 that “if a deflation risk emerges, the SNB would take the measures necessary to ensure price stability,” repeating a statement made from their meeting a week earlier.

They may still have to live with a stronger currency as long as the euro area remains in crisis, according to Collin Crownover, head of currency management at State Street Global Advisors Inc. in Boston, which manages $1.9 trillion of assets.

“The issues in the euro-zone periphery won’t be solved, they will continue into next year,” said Crownover. “I don’t see the SNB coming back in again. Of course there is always a set of circumstances where they feel they have to. But in absence of really strong appreciation, they are most likely going to be on the sidelines. They got very little for their intervention.”

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Masked gunmen with rocket launchers are blocking access to what officials believe may be a mass grave site in Ivory Coast, the United Nations said, as concerns grow that the West African nation that suffered a 2002-2003 civil war could return to conflict.

The U.N. reported that heavily armed forces allied with Laurent Gbagbo and joined by masked men, were preventing people from getting to the village of N’Dotre, where the global body said “allegations point to the existence of a mass grave.”

The U.N. did not elaborate on the possible victims, though it has expressed concerns about hundreds of arrests, and dozens of cases of torture and disappearance during the political turmoil since the presidential runoff vote was held nearly a month ago.

“As the violence goes on the number of dead, wounded and missing persons is increasing rapidly,” U.N. deputy spokesman Farhan Haq said late Thursday.

Gbagbo has refused to step down from the presidency despite international calls for his ouster from the U.N., U.S., former colonizer France, the European Union and the African Union. The international community recognizes Alassane Ouattara as the winner, though Gbagbo maintains control of the national military.

Alain Toussaint, an adviser for Gbagbo, has said that he didn’t believe soldiers or people close to Gbagbo would carry out the acts of violence that have been reported.

At least 173 deaths already have been confirmed in violence over the vote, and the U.N. is warning there could be untold more since it has been unable to investigate all the allegations. Even the top U.N. envoy in the country was stopped at gunpoint while trying to look into reports of human rights abuses, the U.N. deputy human rights commissioner in Geneva said Thursday.

“Many of the abducted remain missing, and the security forces are refusing to reveal their whereabouts,” Human Rights Watch said in a statement. “Several witnesses interviewed by Human Rights Watch had come across bodies with bullet wounds of those arrested or abducted, leading to strong fears of extrajudicial executions.”

The U.S. State Department has ordered most of its personnel to leave because of the deteriorating security situation and growing anti-Western sentiment, and former colonizer France is also urging its citizens to leave. A youth leader accused of inciting a pro-Gbagbo group that has led violent attacks against foreigners in the past has called for a demonstration Wednesday.

Meanwhile, Ouattara is trying to assert his control over state institutions in a bid to cement his rule. State television that had been controlled by Gbagbo was yanked from the air in most cities outside Abidjan late Thursday, and Gbagbo’s access to state funds also has been blocked.

Ouattara’s allies hope the move by the West African economic and monetary union late Thursday will set the stage for mass defections if incumbent Gbagbo cannot pay civil servants and soldiers in the military that he still controls.

Officials with the regional monetary union made the announcement after an emergency session, and later said in a statement that only representatives of Ouattara’s government will have signing privileges on state accounts. The regional bank, known by its acronym BCEAO, regroups the treasuries of eight West African countries.

There has been much speculation in recent days as to whether Gbagbo would be able to pay state salaries, despite nightly assurances on state television that the paychecks would be available before Christmas.

On Thursday morning, several banks in downtown Abidjan posted notices in their windows saying that they would not be cashing civil servant paychecks because they hadn’t received a guarantee from the government that they would be reimbursed.

Lines of impatient civil servants formed outside the banks, but just after noon the notices were removed and one by one people started receiving their money.

While Ouattara has the backing of the international community, Gbagbo still controls the country’s military and also had dominated state media until late Thursday. Gbagbo-controlled state television was yanked from the air though in most cities outside Abidjan and remained off the air Friday.

It was not immediately clear how the signal was cut off. Advisers to Ouattara refused to comment, but the event falls in line with a series of strategies Ouattara has been employing to try to break Gbagbo’s stranglehold on the news.

A week ago, Ouattara’s supporters unsuccessfully attempted to seize control of the channel. State TV had run continuous footage of Gbagbo taking the oath of office in the days after he declared victory without mentioning that his claim was heavily contested.

Ivory Coast was once an economic hub because of its role as the world’s top cocoa producer. The 2002-2003 civil war split the country into a rebel-controlled north and a loyalist south. While the country officially reunited in a 2007 peace deal, Ouattara draws his support from the northern half of the country, where he was born, while Gbagbo’s power base is in the south.

Gbagbo claimed victory in the presidential election only after his allies threw out half a million ballots from Ouattara strongholds in the north, a move that infuriated residents there who have long felt that they are treated as foreigners in their own country by southerners.

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In a decision released in the last mad dash toward the holidays, the Ontario Energy Board had given Hydro One most of what was on its Christmas list.

The board has granted the provincially-owned utility most of the money it asked for on in its application to raise transmission rates sharply.

The decision appears likely to translate into a rate increase of close to 15 per cent on Hydro One

DP World, the port management arm of indebted state conglomerate Dubai World, sold the bulk of its Australian businesses to a Citi investment fund Wednesday for $1.5 billion.

Unloading the stake will help the sea cargo handler pay down debt and retain a foothold in Australia while it focuses on emerging markets that have fueled much of its growth.

Under the terms of the deal, DP World will keep a 25 percent stake and continue to manage the ports in Brisbane, Sydney, Melbourne, Adelaide and Fremantle.

It is selling the remaining 75 percent in the Australian operations to Citi Infrastructure Investors, a private equity division of the New York-based bank.

DP World CEO Mohammed Sharaf told reporters it was not part of a broader effort to dismantle the company’s globe-stretching operations.

“We’re not in a selling spree out there. We’re talking about bringing in strategic partners,” he said. “They approached us.”

DP World is one of Dubai’s more profitable state-linked companies. It ranks as the world’s fourth largest port operator, with business at 50 cargo terminals on six continents, including the Mideast’s largest in Dubai.

It pulled in $219.2 million in profit in the first half of this year.

The company is part of the city-state’s struggling Dubai World conglomerate, but was exempted from its parent’s $24 cash advance no fax.9 billion debt restructuring effort.

DP World said it expects to retain its existing management and staff in Australia. It employs about 2,100 people throughout the country, according to a corporate website.

The $1.5 billion it expects to generate includes the repayment of debts held by the Australian division.

DP World has had a presence in Australia since 2005, when it took over operations in Adelaide following the acquisition of U.S. railroad operator CSX Corp.’s international port business.

It gained operational control of the other four ports through its buyout of Britain’s Peninsular and Oriental Steam Navigation Co. the following year.

The agreements that give DP World the right to manage the five ports run for an average of more than two decades, following recent deals to renew its concessions at Adelaide, Brisbane and Sydney, according to the company.

Yuvraj Narayan, DP World’s chief financial officer, said all proceeds from the Citi sale will go toward paying down the company’s debt.

Executives expect the deal to close toward the end of the first quarter next year.

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A top Dubai fiscal official on Monday tamped down rumors the city-state was close to selling prized financial assets, including its stake in the London Stock Exchange.

The denial from the governor of the sheikdom’s international banking center was in response to an unsourced story in Britain’s Sunday Times, which reported that the emirate’s oil-rich neighbor Abu Dhabi was seeking to take control of core Dubai financial holdings for $1.5 billion.

Just last week Borse Dubai, the state-owned company that owns a fifth of the London exchange, halved its stake in trans-Atlantic exchange operator Nasdaq OMX Group Inc. to help cover a $2.45 billion loan coming due in February.

Dubai International Financial Center governor Ahmed al-Tayer “categorically denied” reports that the emirate had received bids for any of its other financial assets, according to a statement issued late Monday by Dubai’s media office.

It added that he “emphasized that the Borse Dubai was currently not looking to dispose of its investment” in the London Stock Exchange.

A London Stock Exchange spokeswoman declined to comment.

Earlier in the day, the new board of indebted state conglomerate Dubai World met for the first time since a shakeup of the company’s leadership last week.

The man picked as Dubai World’s new chairman in the reshuffle, Sheik Ahmed bin Saeed Al Maktoum, underscored the company’s commitment to repaying its creditors.

“Sheik Ahmed emphasized adopting a strategy that aims at optimizing Dubai World’s performance along with that of its related companies, and fortifying its financial position, which in turn will enable the company to meet its financial and contractual commitments,” a Dubai media office statement said.

The new chairman, a top aide and uncle of Dubai’s hereditary ruler, also runs the city-state’s airline Emirates.

Dubai World, whose holdings include seaports, Las Vegas real estate and high-end retailer Barneys New York, earlier this year got creditors to agree to new terms on repaying $24.9 billion of debt. Its Nakheel property subsidiary is still working on securing a similar deal for at least $10.5 billion in debt it owes.

The International Monetary Fund estimates Dubai and its many state-linked companies owe as much as $109 billion.

A number of government-linked firms have begun shedding assets to raise cash, but Dubai is reluctant to lose control of investments in core hometown industries like tourism, shipping and finance.

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The European Central Bank and Bank of England set up a temporary swap line to help ease liquidity strains at Ireland’s lenders in case the sovereign-debt crisis intensifies.

The Bank of England could provide up to 10 billion pounds ($15.5 billion) to the ECB in exchange for euros if needed, the Frankfurt-based central bank said in a statement today. The facility will allow funds to be made available to Ireland’s central bank.

This is a “precautionary measure for the purpose of meeting any temporary liquidity needs of the banking system” in Ireland in pounds, the ECB said. It expires at the end of September 2011.

Irish banks have been relying increasingly on funding from central banks amid an outflow of deposits and as wholesale funding markets remain volatile. Moody’s Investors Service said today it estimates Ireland’s six government-guaranteed lenders may have funding in excess of 90 billion euros from the ECB and at least 40 billion euros from the Irish central bank.

Moody’s also today downgraded its rating on Ireland by five levels to Baa1 from Aa2. The Irish government last month agreed on an 85 billion-euro aid package with European governments and the International Monetary Fund. The U.K. is lending Ireland money as part of the deal.

“In the weeks prior to the announcement” of the bailout, “problems in the Irish banking system became particularly acute as confidence and available funding for Irish banks rapidly dissipated,” Moody’s said.

Ireland’s four largest lenders, Bank of Ireland Plc, Allied Irish Banks Plc, Anglo Irish Bank Corp., and Irish Life & Permanent Plc, have operations in the U.K.

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Wal-Mart Stores Inc., the world’s largest retailer, raised prices on hundreds of toys this month, squeezing more out of sales during the biggest shopping period of the year.

Wal-Mart managers in the U.S. received instructions to mark up an average of 1,800 types of toys per store, according to a company e-mail dated Nov. 30 obtained by Bloomberg News. The e-mail didn’t disclose specific increases. The prices were changed “to better enable your store and the company to have a successful financial month,” according to the e-mail.

The directive from Wal-Mart, which has 3,800 U.S. stores, told managers to do the markups as soon as possible. The move may help Chief Executive Mike Duke fulfill his October prediction that sales in U.S. stores open at least a year will be positive this quarter, after six straight drops.

“In previous years Wal-Mart has come out and hammered everyone with unbelievably low toy prices,” said Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth in Hanover, N.H. “They stepped away from that this year, and after Thanksgiving their prices have crept back up.”

The price increases were due to temporary discounts on products that ended Nov. 30, Ravi Jariwala, a spokesman for Wal-Mart, said.

“Once a rollback ends, the item returns to its original everyday low price,” he said in an e-mail.

Wal-Mart, the biggest toy seller in the U.S., is vying with Target Corp., Toys R Us Inc. and Amazon.com Inc. for sales of playthings, which may advance as much as 3 percent this year, according to market researcher NPD Group Inc. About 40 percent of annual toy sales occur in November or December, NPD said.

Target has boosted the number of toys in its holiday catalog by 10 percent, though the total number available is the same, according to spokeswoman Tara Schlosser. Toys R Us has opened 600 temporary “pop-up” stores this year, up from about 80 last year.

Analyst Brian Sozzi of Wall Street Strategies cut his rating on Wal-Mart stock from hold to sell, saying the retailer may have lost market share to rivals such as Target.

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The European Central Bank may ask members for a capital increase to protect itself from any losses stemming from its government bond purchases, said a euro-area central bank official with knowledge of the talks.

Any new money would come from the 16 national central banks which use the euro and contribute most of the ECB’s 5.8 billion euro ($7.8 billion) capital base, the ECB’s statutes show. The matter may be discussed at the next Governing Council meeting on Dec. 16 and no decision has yet been made, said the official, who spoke on condition of anonymity. Germany would view any ECB request positively, a government official said.

The debate suggests the ECB is concerned its program to buy the bonds of strained governments such as Portugal and Ireland, which now totals 72 billion euros, may end up saddling its balance sheet with losses. Bundesbank President Axel Weber opposed the purchases when they were introduced in May and the risk is that seeking support could raise new questions about the ECB’s independence from politics.

“The link to this potential hike in ECB capital and what’s going on in the markets is certainly the fact that the ECB is buying government bonds which are not AAA-rated and are more risky than bunds,” said Marco Valli, chief euro-region economist for UniCredit SpA in Milan.

An ECB spokeswoman declined to comment. The ECB’s potential capital request was reported by Reuters late yesterday.

Capital Keys

Any increase would be supplied by the national central banks according to their capital subscription keys, according to the ECB website freecreditscore. The formula is calculated using the respective country’s share in the total population and gross domestic product of the European Union.

Germany’s Bundesbank is the largest contributor with 18.9 percent, followed by the French and Italian central banks, with 14.2 percent and 12.5 percent, respectively. The Bank of England and other non-euro members contribute 7 percent of the ECB’s subscribed capital.

According to the ECB’s statutes “the Governing Council, acting by the qualified majority” shall “determine the extent to which and the form in which the capital shall be paid up.”

ECB officials have been putting pressure on the governments to do more to end the region’s sovereign-debt crisis on concern the central bank is shouldering too much of the burden. President Jean-Claude Trichet said late yesterday leaders should consider extending and broadening the region’s bailout fund. Standard & Poor’s today cut the outlook on Belgium’s credit rating to negative from stable.

Austrian central bank Governor Ewald Nowotny raised the issue of capital increases for national central banks last week.

“We are clearly seeing that risks are increasing in the system for European central banks because we are having to take on a whole range of extra risks,” Nowotny said in Vienna on Dec. 10. “So in the whole European system we’ll have to get a better capital base for central banks.”

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