My finance view

Some details of the bipartisan spending measure agreed to Friday night by President Barack Obama, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Reid, D-Nev.

The House and Senate appropriations committees were still working Monday on determining specific cuts and program levels for the next six months. House and Senate votes on it are expected this week. The spending cuts total almost $38 billion below current levels. Some $12 billion in cuts already have been enacted as part of three stopgap spending measures, including:

_$5.3 billion from several accounts previously used by lawmakers to “earmark” pet projects for their districts and states.

_$1.7 billion from leftover funds from the 2010 Census.

_$1.5 billion from high-speed rail grants, as requested by Obama.

_$650 million by not repeating a one-time appropriation for highway projects.

_$468 million from several education programs targeted by Obama.

_$350 million from Labor Department programs, including grants for community service jobs for senior citizens.

_$276 million pandemic flu prevention programs, as requested by Obama payday loans direct lenders.

_$200 million from unspent wildfire funds.

_$200 million from unspent Social Security Administration Internet technology funds.

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Additional cuts likely to be reflected in this week’s legislation include:

_$4.2 billion in defense accounts previously earmarked.

_$2.5 billion from Labor Department and Health and Human Services Department programs, including $390 million from heating subsidies and $300 million more from Social Security Administration information technology.

_$1.1 billion from an across-the-board cut to domestic accounts.

_$700 million from clean and safe drinking water projects.

_$630 million from military construction and the Veterans Affairs Department.

_$495 million from first responder grants.

_$350 million by not repeating emergency aid for milk farmers.

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While most of the world has yet to upgrade to Windows 7, Microsoft is gearing up to launch the next version of its PC operating system.

Web forums lit up last week with the news that PC manufacturers had just gotten their hands on a new Windows 8 test build. Several analysts reported that equipment makers had received "early beta" test versions of the operating system, after trying out much more rudimentary "alpha" versions earlier in the year.

Microsoft (MSFT, Fortune 500) declined to confirm anything about Windows 8, but it’s customary for the software giant to release its future operating systems in multiple test stages.

Considering that Windows 7 has been on the shelves for just 17 months, what’s Microsoft’s big hurry?

Tablets. Or "slates," as Microsoft likes to call them.

Windows 8 will operate on the ARM microchip architecture, the technology that powers most of the world’s smartphones and tablets. In the past, Windows has always required devices to have a processor built on the x86 platform, which Intel (INTC, Fortune 500) or AMD (AMD, Fortune 500) designs.

Analysts expect Windows 8 to feature enhanced graphics, 3-D support, facial recognition, instant-on capability, and a Windows app store.

You know, all things that the iPad and other tablets and smartphones can do now.

Though Windows 7 works on a very small handful of tablets running Intel’s Atom processor, ARM compatibility will open up Windows to a far wider range of devices. Getting Windows 8 on ARM-based devices means Microsoft may finally be able to develop some semblance of a tablet strategy.

"Microsoft cannot act fast enough for a tablet," said Neil MacDonald, a Microsoft corporate strategy analyst at Gartner. "They are already two generations behind Apple and Google."

Analysts predict Microsoft will release Windows 8 to the public sometime between this summer and the first quarter of 2012, with a tablet-compatible version likely to come in the summer of 2012. Dell (DELL, Fortune 500), for instance, is rumored to be working on a Windows 8 tablet, codenamed Peju, which won’t be ready until the middle of next year.

"Windows 8 could be available as soon as this holiday season, but Microsoft won’t be able to get its ARM version out that quickly," said Trip Chowdry, analyst at Global Equities Research payday loans with no fax.

Though the tablet play is most crucial, analysts note that Microsoft is also desperately trying to get its customers off outdated versions of Windows. About 54% of PCs currently run the 10-year-old Windows XP, and 11% are on the five-year-old Vista, according to Net Applications.

Many businesses skip one cycle between their Windows updates. For those that took the Vista bait but sat Windows 7 out, Windows 8 could entice them to upgrade off the widely panned Vista.

Releasing another version of Windows could also help convince many of those XP laggards to finally update their systems — not a bad idea, considering they’d be three releases behind after Windows 8’s debut.

"Not every customer deploys every release, because some customers may not need the specific new capabilities of that release," said Al Hilwa, analyst at IDC. "So I don’t see an issue of having too fast of a development cycle."

Still, Microsoft is being unusually secretive about Windows 8. The company is typically is unafraid to discuss or even release beta versions to the public, but this time it’s working quietly. Some experts suspect that that the company doesn’t want to impede the success of Windows 7 in any way.

Microsoft hasn’t even confirmed that the name of its next Windows iteration will be "Windows 8." Internally, Microsoft refers to it as Windows. Next, but many Microsoft employees on LinkedIn refer to the new OS as Windows 8.

One amusing twist: Windows 8 is likely to actually be Windows 6.2.

Microsoft discontinued naming its operating systems after version numbers following Windows 3.1. But officially, Windows 95 was version 4, Windows 98 was version 4.1, Windows 2000 was version 5, Windows XP was version 5.1, Windows Vista was version 6, and Windows 7 was version 6.1.

Or, as many view it, version "mopping up the Vista mess." That could end up being the best feature of Windows 8: It will move Microsoft one version further away from its Windows nadir.  

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WASHINGTON

Enda Kenny will push for the quick formation of an Irish government and the re-negotiation of an international bailout after what he called a “democratic revolution” reshaped the nation’s political landscape.

Kenny’s Fine Gael party will open contacts this morning on forming a new government, lawmaker Alan Shatter said. The Feb. 25 election left Kenny in a position to form an administration with Labour or independent lawmakers after the ruling Fianna Fail party suffered its worst ever defeat.

“We must have a stable government,” Shatter said in an interview with Dublin-based broadcaster RTE today. Labour is “part of the picture.”

Kenny, 59, will fly to Helsinki on March 4 to meet leaders including German Chancellor Angela Merkel at a gathering of the European People’s Party. Kenny said on broadcaster RTE that he will start the process of reopening the terms of the bailout Ireland received last year from the European Union and the International Monetary Fund. He’s seeking to lower the 5.8 percent interest rate on aid loans and end the protection of senior bank bondholders.

“We can count on a good match forthcoming with Germany and France in one corner and Ireland in the other as a Battle Royale gets played out in front of a worldwide audience,” Mark Grant, managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, said in an e-mail yesterday.

Bonds Decline

Irish government bonds opened lower, sending the 10-year yield up five basis points to 9.40 percent as of 7:32 a.m. in London. Greek 10-year yields also rose five basis points, to 11.93 percent.

So far, 154 lawmakers have been elected to the 166-seat Dail, as the Irish parliament is known, according to RTE’s website. Fine Gael had won 70 seats and Kenny said “no time can be wasted” in forming a government. Labour won 36 seats, Fianna Fail had 18 and Sinn Fein had 13.

“With Fine Gael in charge we don’t expect any radical policies vis-á-vis rocking Ireland’s relationship with the EU/IMF,” according to Cathal O’Leary, head of fixed-income sales at NCB Stockbrokers in Dublin. “Ireland will continue to implement the 15 billion-euro ($21 billion) fiscal consolidation plan, with 9 billion euros of cuts still to be achieved.”

‘National Government’

Fine Gael will probably shy away from relying on the support of “high-maintenance” independent lawmakers, the party’s finance spokesman Michael Noonan said on Feb bad credit payday advance. 26. Labour leader Eamon Gilmore said a coalition between his party and Fine Gael would be “the closest thing we might get to a national government.”

“This country has huge problems,” Gilmore said in an interview with RTE yesterday. “The new government is going to be faced with major decisions.”

Labour hopes to hold a party conference to approve a coalition with Fine Gael on March 5, lawmaker Ciaran Lynch said today on RTE.

Fine Gael raced to its best-ever election performance as voters punished Fianna Fail after the government presided over the worst recession on record and a 85 billion-euro rescue in November. Fianna Fail lost about 60 of the 78 seats it won in 2007, with Deputy Prime Minister Mary Coughlan among the victims.

Stress Tests

Fine Gael lawmaker Richard Bruton said taxpayers can’t be expected to shoulder all of the cost if stress tests next month reveal further capital needs in lenders including Bank of Ireland Plc and Allied Irish Banks Plc. The state has already injected about 46 billion euros into the financial system, with another 8 billion euros due to go in next month.

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Singapore will spend S$6.6 billion ($5.2 billion) on benefits including tax cuts and rebates as the government prepares to face elections within the next year.

The government will hand cash to all adult citizens as a “dividend” from record growth, upgrade homes and invest in improving productivity, Finance Minister Tharman Shanmugaratnam said in the city state’s budget speech yesterday. Companies will be required to increase contributions into employees’ pension funds and pay more to hire foreign workers, he said.

Prime Minister Lee Hsien Loong has pledged to ensure lower- income families aren’t left out of the island’s expansion, as quickening inflation threatens to erode purchasing power in Asia. Economists at Citigroup Inc. and Standard Chartered Plc say the budget may signal higher costs for businesses at a time when consumer-price growth is already at a two-year high.

“It’s a redistributive pre-election budget,” said Kit Wei Zheng, an economist at Citigroup in Singapore. “There will be some wage inflation pressures,” though the government is trying to offset the higher costs with one-time measures, he said. Those steps announced yesterday include tax breaks and rebates.

The administration expects inflation to average 3 percent to 4 percent this year, up from a previous forecast of 2 percent to 3 percent. Consumer prices may rise 5 percent to 6 percent in the first few months of 2011, it projects.

Inflation Threat

“The rising cost of living is a concern,” Shanmugaratnam said. “We are providing lower- and middle-income Singaporeans with benefits in this budget that for many households will more than offset their increase in household expenses — even before taking into account any wage increases.”

Singapore’s expansion is forecast to slow this year to less than half of 2010’s pace, when a rebound from the global recession spurred wages and boosted home prices to a record. The economy expanded 14.5 percent last year, the fastest rate since independence in 1965. The government has said this year’s growth will be 4 percent to 6 percent with “some upside potential.”

Rising commodity prices may hurt Asia’s growth should they force governments to tighten domestic policies to control inflation, Shanmugaratnam said.

“Food and other commodity prices have climbed sharply, because supply has been affected by harsh weather conditions while demand continues to grow in China and elsewhere,” Shanmugaratnam said. “The political uncertainties in the Middle East have also driven oil prices up. There will not be early relief from these inflationary pressures.”

Currency Appreciation

Singapore’s first approach is to seek to moderate medium- term inflationary pressures through the currency, Shanmugaratnam said. The island’s dollar rose as much as 0.6 percent yesterday and has climbed more than 10 percent in the past year to be the second-best performing currency in Asia excluding Japan.

The central bank “has permitted the Singapore dollar to appreciate against a basket of foreign currencies over the last 18 months, which has helped counter inflation in imported goods,” the minister said. “However, using the exchange rate to offset sudden spikes in prices, such as what we have seen in oil prices over the last six months, would require a sharp appreciation of the Singapore dollar. This would disrupt our exporters.”

Of the S$6.6 billion in benefits that the government announced yesterday, S$3.2 billion will be distributed this year while the rest will be for “longer-term social investments,” Shanmugaratnam said. The government will also spend S$10 billion to upgrade its public housing estates to preserve their value, he said.

Tax Rebate

The measures announced yesterday include a 20 percent income-tax rebate capped at S$2,000 for earnings in 2010 and the scrapping of radio and television license fees. The government will also supplement the salaries of low-income Singaporeans, and reduce marginal tax rates on personal incomes from 2011 to result in lower payments for most taxpayers.

While the top personal tax rate is higher than in Hong Kong, “there is no pressing competitive need for us to reduce it at this point,” the minister said. Hong Kong taxes individuals at a maximum 17 percent, while Singapore levies a 20 percent rate.

The gap between Singapore’s most affluent and poorest people widened last year as higher wage earners received bigger increases in income, according to the statistics department.

The People’s Action Party led by Lee has been in power since independence and holds 82 of the 84 elected seats in parliament. At the last election in 2006, the ruling party won about 67 percent of votes, 8 percentage points lower than the previous poll. The next election must be held by February 2012.

Pension Payments

Companies will have to pay more into employees’ pension funds, the government said yesterday. An employer currently pays up to 15 percent of a worker’s wage into employee pension funds, and this will increase by half a percentage point next month. From September, the rate will be lifted a further half point to 16 percent, subject to a raised cap, the finance minister said.

Singapore has cut taxes in recent years to encourage businesses to set up operations or expand in the city state.

Exxon Mobil Corp. is among the companies that are adding capacity and the nation’s two casinos, which opened last year, have hired tens of thousands of workers at their hotels, malls and gaming centers.

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China ordered its banks Friday to hold back more money as reserves in a new move to curb lending and cool a spike in inflation.

The order raising reserves by 0.5 percent of deposits was the second such move this year by the central bank and followed six reserve increases in 2010. Reserves vary by institution but are about 20 percent for China’s biggest state-owned lenders.

Beijing is using a series of repeated, gradual hikes in interest rates and reserve levels to stanch a flood of lending that helped China rebound quickly from the global crisis but now is fueling pressure for prices to rise.

Inflation is politically dangerous for China’s communist leaders because it erodes economic gains on which they base their claim to power. Poor families are hit hardest in a society where some spend up to half their incomes on food and millions have seen little benefit from three decades of economic reform.

Consumer inflation climbed to 4.9 percent in January, driven by a 10.3 percent jump in food costs. Analysts expect the inflation rate to continue to climb through midyear as rising demand outstrips food supplies.

Beijing has raised interest rates three times since October, but economists say more rate hikes are needed and it will be months before the effect is seen high quality business cards.

Chinese savings rates are so high that rises in reserve levels still allow the total amount of money available for lending to grow. Instead, they are seen instead as a signal to banks to slow lending or face more drastic controls.

The central bank also announced recently that it will watch lending by individual banks and impose controls on them if necessary.

China’s banks lent just over 1 trillion yuan ($153 million) in January. That was after their 2010 lending rose to nearly 8 trillion yuan ($1.2 trillion), overshooting the official target of 7.5 trillion yuan.

Analysts say Chinese leaders acted too slowly in heading off inflation after they deflected the 2008 crisis and growth quickly returned to normal levels. The government has set a 4 percent inflation target this year but private sector analysts say consumer prices could rise by up to 6 percent.

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JERUSALEM

Exporting Ontario power at prices lower than those paid by Ontario customers makes sense, says energy minister Brad Duguid.

So do the province

American International Group, which received a massive bailout in 2008, said Wednesday that it expects to complete a recapitalization by the end of the week that will allow it to fully pay back the government.

Following through on a plan announced last year, AIG (AIG, Fortune 500) will convert outstanding preferred shares acquired by the Treasury into common stock. When the transaction is complete, the Treasury will own approximately 92% of AIG’s common shares.

The company said Wednesday that it expects Treasury will sell its shares of common stock over time, repaying the debt.

"With today’s announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008," Robert Benmosche, AIG President and CEO, said in a statement.

In addition, AIG said it will repay the Federal Reserve Bank of New York $21 billion to cover the loans made by that branch of the central bank paperless payday loans. That payment comes from applying proceeds from various asset sales, the latest of which came on Wednesday when AIG unloaded its Taiwan unit for $2.16 billion in cash.

Benmosche also thanked the American people for their support.

"We remain grateful for their support of AIG, and we remain convinced that the American people will realize a profit on their investment in our company," he said.

Investors who stuck by the company through the recession will also be rewarded as part of the recapitalization.

AIG plans to issue 75 million "warrants" next week that will allow current shareholders to purchase common stock at price of $45.00, a 23% discount from its Wednesday close of $58.40. 

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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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