My finance view

A year ago, when Sydney property agent Peter Green

The U.S. is starting the year on a positive note, a sign that investors may be too gloomy.

Payrolls rose 200,000 in December, double the gain in November. A weekly measure of consumer confidence ended 2011 at a five-month high. And manufacturers reported their business in December grew at the fastest pace in six months. The combination indicates the world

A judge has appointed a receiver for the Ridge Point Crossing apartments in St. Louis County, a two-property complex that’s owned by an affiliate of Gannon International.

The appointment is the latest of a string of apartment properties owned by Creve-Coeur based Gannon that have been put in receivership following loan defaults in the past year.

Ridge Point Crossing includes 292 units at 11251 Graben Drive in St. Ann and 96 apartments at 11302 Bonanza Drive in Maryland Heights.

Wells Fargo sought a receiver for Ridge Point Crossing last month after an affiliate of Gannon defaulted on a $9.9 million loan secured by the property, according to court filings.

The Gannon affiliate “has failed to make debt service payments, make critical vendor payments and keep up with payroll obligations,”  St. Louis County Circuit Court Judge Robert Cohen wrote in his order appointing Nolan Real Estate Services receiver of Ridge Point Crossing on Dec. 13.

As receiver, Nolan Real Estate will collect rent at the property, make repairs and pay utilities.

Bill Schierholz, president of Gannon’s real estate group, could not be reached for comment payday loan. Daniel Spirn, an attorney representing Wells Fargo, declined to comment.

The appointment of a receiver at Ridge Point Crossing follows similar appointments at Gannon-owned apartment complexes in the past year.

In April, a receiver was appointed for the 272-unit Springwood Apartments in Bel-Ridge after PNC Bank alleged Gannon defaulted on a $5.7 million loan secured by Springwood and failed to properly maintain the apartments. Springwood has since been sold.

In June, a receiver was appointed for the 336-unit Suson Pines Apartments at 5625 Suson Hills Drive in south St. Louis County after PNC alleged Gannon defaulted on a promissory note and owes the bank more than $13 million.

The real estate arm of Gannon International, which is owned by Chief Executive William Franke, owns nine apartment properties in the St. Louis area.

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Wallets may soon be going the way of typewriters, pay phones and videocassette recorders.

Oh, they’ll still be a great place to carry photos, receipts and odd slips of paper, but technology forecasters say we’ll soon be reaching for cellphones when it’s time to pay or be paid.

It’s a dream that Kevin Stock is ready to live.

For nearly a year, Stock, of St. Louis, has been carrying around a small white plastic device he can attach to his phone at a moment’s notice, creating his very own credit card terminal. All he needs is someone willing to play along.

“I’ve looked for opportunities, for sure,” Stock said. “But I haven’t been too successful.”

So far, the only taker has been his roommate. Once a month they tally up their bills, and Stock collects what he is owed through a swipe of his roommate’s credit card.

And while Stock has been able to travel no further down the mobile payment path, industry experts say it’s only a matter of time — most say it’s several years out — before we witness a radical shift in the way we exchange cash.

“I don’t think it’s going to go away overnight or in the next year. But mobile payments is where it’s headed,” said Trevor Dryer, head of product management, mobile payments and point-of-sale for financial software maker Intuit.

Already, the financial sector is crawling with companies hoping to carve out a piece of a market that sees billions upon billions of dollars changing hands every year in the form of cash.

Much of that exchanging is done by choice, with some people simply preferring to deal in cash or checks. But there’s also the fact that small businesses often find it too expensive to maintain a merchant account — required to accept credit card payments.

Getting around that was the inspiration behind the Square device carried by Stock.

Square, whose founders include St. Louis native and Twitter inventor Jack Dorsey, offers credit card processing services to pretty much anyone with the right smartphone — most iPhones and Android-based phones.

The service is easy to use. An application links your phone and bank account, while the small card reader (the company gives them away) plugs into the earplug jack. From there, you just need someone willing to hand you a credit card and sign the screen with their finger. A day or so later, the money shows up in your bank about, minus a 2.75 percent fee.

The 2-year-old firm has shipped more than 800,000 card readers — 2,500 to St. Louis — and is now processing $2 billion in payments annually. But while that sounds like a lot of money, keep in mind that the nation rings up some $2 trillion annually in credit card charges.

Square is proving popular with a wide range of users, including musicians, massage therapists, restaurants and craft fair vendors.

“Right now, there are 26 million small businesses (in the nation) that only accept cash. It’s a huge market,” said spokeswoman Lindsay Wiese.

Until September, that market included St. Louis Osuwa Taiko, a traditional Japanese drum group that now uses Square a couple of times a month to sell CDs, T-shirts and other souvenirs after shows.

So far, it’s tough to say how much of a boost they’re getting from the device. But Junsei Ito, the group’s treasurer, said they made 20 credit card sales during a three-day Japanese festival over Labor Day Weekend.

“It seems like people buy more,” Ito said. “They don’t tend to carry a lot of cash these days. And they don’t carry checks, either.”

Similar to Square is Intuit’s GoPayment system, which also uses a card reader to send money either to a bank account or a prepaid credit card. Intuit’s mobile division is processing some $5 billion a year in credit card charges, said Dryer, the company’s mobile payments chief.

And while it started as a way to offer contractors, plumbers and electricians an easy way to take credit cards, the company loves to point out that Girl Scouts use the devices while hawking their cookies door to door.

“They are probably using their parents’ phones,” Dryer said. “But it’s a testament to how simple this product is that 9-year-old girls are using it.”

Other systems have looked for ways to remove the physical credit card from the equation. Among them are those using what’s known as near field communication, or NFC. Basically, it lets two devices exchange money when they come into contact with each other.

The technology is at the heart of MasterCard’s PayPass system, in which users tap their credit cards against a PayPass terminal to complete a purchase. In recent years, MasterCard has teamed with Google and several phone and financial services firms to create Google Wallet. Phones equipped with the technology can be used much like credit cards — they make payments simply by tapping them against an NFC terminal.

Several phone developers have included NFC in their devices, with BlackBerry and Nokia making plans to do so. Google’s Android-based devices have it, though the payment service suffered a blow recently when Verizon Wireless blocked its use in the new Galaxy Nexus phone. Verizon is part of a consortium called ISIS that is developing its own payment system.

While MasterCard sees potential in the technology — and the speed with which these trends can catch on — the company isn’t ready to sing the death of plastic. There are, after all, some advantages in having that physical card, said James Anderson, group head of mobile for MasterCard.

Among them, he said: “The batteries don’t go flat.”

One young startup in Des Moines, Iowa, however, is trying to create a new payment system in which credit cards never enter the picture.

Dwolla relies on bank accounts and actually prohibits the use of credit cards. Dwolla’s cost structure is simple: You pay 25 cents for any transaction, regardless of size.

Eliminating credit cards from the system removes the need to collect the types of fees — generally in the 3 percent range — charged on every credit card transaction, said Ben Milne, the company’s founder. Without the credit card fees, he said there’s no reason to base charges on the size of the transaction.

“The cost to move $1 million is the cost to move a dollar,” Milne said.

Not that they come close to moving that much money at any one time. The company’s average transaction is around $450, with a maximum of $10,000 for businesses and $5,000 for consumers. Still, Dwolla is on pace to handle more than $350 million worth of transactions over the next year.

And with some $20 trillion spent every year in cash transactions, Milne sees a lot of room for growth: “It’s likely the biggest market in the world.”

Still, for the Squares, Dwollas, Google Wallets, clearXchanges and GoPayments of the world to achieve widespread acceptance, some things need to happen. Among other things, experts say, there are too many participants. And they expect a wave of acquisitions and failures to thin the herd.

And many of the systems, at least in their present incarnations, are simply too cumbersome, they say.

Andy Schmidt, research director for Commercial Banking & Payments for TowerGroup, believes we’ll eventually get to the point where payments are all based on the simple exchange of phone numbers and email addresses.

As Stock from south St. Louis has seen, people are often reluctant to go through the hassle of pulling out their credit cards for minor exchanges.

“It’s not so much that you might capture my credit card information,” Schmidt said. “It’s that it’s quicker to give you cash. That’s what you are fighting.”

There also are concerns about the potential for identity theft and credit card fraud as credit card information is stored and transmitted through cellphones.

Michelle Jun, a senior attorney for Consumers Union, said consumers should make sure they are protected against fraud.

In general, the best protections are provided by those based on credit cards and, to a lesser degree, debit cards.

Both offer caps on liability in the event of fraud or identity theft. More vulnerable are those that rely on prepaid cards or that link directly to a cellphone account.

“Unfortunately, all of the different protections aren’t the same,” Jun said. “Make sure you know what you are getting into before you start charging away.”

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Workers in the U.S. earning the minimum wage are worse off now than they were four decades ago.

The CHART OF THE DAY shows that after adjusting for inflation, the federal minimum wage dropped 20 percent from 1967 to 2010, even as the nominal figure climbed to $7.25 an hour from $1.40, a 418 percent gain.

The decline would have been worse if not for increases that took place from 2008 through 2010 in how much employers were legally obligated to pay. Combined with more stable consumer prices, those adjustments helped trim the reduction in earnings from 41 percent at the end of 2007, following a decade of no change in minimum pay.

Will Santa drop any loot into your 401(k) or IRA this year?

Typically, investors can count on a “Santa Claus rally” in the stock market between Thanksgiving and New Year’s, as an upbeat mood about the coming year prompts investors to indulge in stocks along with all the holiday fare.

But this year, questions abound about whether a fragile economy could fall back into recession. The European debt crisis looks increasingly out of control, while the latest chapter in Capitol Hill dysfunction raises the chance of higher taxes for all taxpayers and a smaller safety net for the unemployed.

“Supercommittee failure means that there is a greater risk that the payroll tax cut expires, though there is still a chance this could be attached to a year-end spending bill,” said Goldman Sachs economist Alec Phillips.

Payroll tax relief, which was enacted to put more spending money into consumers’ pockets, will expire at the end of the year if Congress takes no action, and so far, Congress has shown no inclination to work cooperatively on tax or deficit-cutting measures. If the payroll tax cut disappears, the government will collect about $110 billion more a year, but that money will no longer be in paychecks as potential spending money.

That’s a concern to investors, because the economy needs consumer spending to grow. In addition, extended unemployment benefits, which provide people with about $50 billion a year to spend, would not be available either.

JPMorgan Chase economists have estimated that if the stimulus expires, the economy will go from a 3 percent annual growth rate this quarter to a 1.5 percent growth rate in the second quarter of next year as households encounter a ’sharp hit” to their after-tax income. The economists expect “consumer spending to stagnate.”

The stock market has slid the last couple of days as investors have envisioned ongoing paralysis, a recessionary threat and the potential of a negative credit rating for U.S. debt. Investors were shaken in August, when Standard & Poor’s responded to government inaction on the nation’s debt by knocking the U.S. credit rating down a half a notch, but the agencies have suggested recently that no further downgrades are planned.

That should be a relief to investors, because downgrades can inflict higher borrowing costs on countries, making it difficult to operate. But instead of U.S. Treasury yields rising, as they would based on fear of a downgrade, the 10-year bond dipped below 2 percent this week based on a different concern: Moody’s economist John Lonski said investors were worried that automatic cuts in government spending and further federal deficit trimming would slow the economy. Investors move money to safety in bonds, and consequently, yields fall.

Besides the $110 billion payroll tax cuts and $50 billion in unemployment help that could disappear, there are trillions in additional measures that will arise over the next year that could interfere with consumer spending and be a drag on the economy. If the “Bush tax cuts,” enacted in 2001 and 2003, expire according to schedule at the end of 2012, consumers will have about $4 trillion less to spend over the next 10 years.

For middle-income people, the tax cuts that could expire include a $1,000 child tax credit for parents. But it will decline to $500 without congressional action. Low-income taxpayers also now have a 10 percent tax bracket, but that will escalate to 15 percent if the deadline for an extension runs out. For middle-income and affluent people, the current tax structure will allow about 33 million people to escape the higher alternative minimum tax, if Congress keeps it going. For the rich, the expiration of an estate tax break will mean paying taxes on assets over $1 million, compared with protecting $5 million now.

Meanwhile, as investors worry that a wrong move on taxes and spending could hurt consumers and undermine the economy, trouble in European banks is starting to affect distant areas. Fearful banks are holding on to capital instead of lending, and strategist Ed Yardeni notes that’s interfering with lending in emerging markets.

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Bloomberg News is reporting that Stifel Nicolaus has resumed talks with Regions Financial to buy Morgan Keegan, citing people familiar with the talks.

According to the Bloomberg report, private equity firms recently lowered their bids to acquire Memphis-based investment banking and securities brokerage firm Morgan Keegan, which has more than 3,100 employees in more than 300 offices nationwide.

In June, Birmingham, Ala.-based Regions announced it hired Goldman Sachs to help explore a sale of Morgan Keegan.

Bloomberg reported last week that the private equity firms lowered their bids for Morgan Keegan by at least $200 million, prompting Regions to resume talks with St. Louis-based brokerage firm Stifel Financial. The highest bid from the private equity firms was about $750 million, according to Bloomberg, and earlier this year, Stifel indicated it would pay more than $1 billion for Morgan Keegan.

Private equity firms Thomas H. Lee Partners LP and Aquiline Capital Partners LLC made a joint bid for Morgan Keegan, as did Carlyle Group LP and Blackstone Group LP, according to Bloomberg. Lowering market conditions and MF Global Holdings’ bankruptcy affected their bids, Bloomberg reported.

Representatives from Regions did not immediately return calls for comment. Stifel declined to comment.

 

 

 

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Stocks gained steadily Monday on a round of corporate takeovers and reports that Europe’s bailout fund will be larger than anticipated. The Dow Jones industrial average was up nearly 130 points in the late afternoon. The Nasdaq composite index turned positive for the year.

Mattel and J.M. Smucker were among companies that rose after announcing acquisitions.

Investors are still waiting for a resolution to Europe’s debt problems. European leaders said they made progress at a weekend summit and plan to unveil concrete plans for containing the crisis by Wednesday. The Dow was up about 40 points in the first hour of trading but moved steadily higher through midday following reports that Europe’s takeover fund will be greatly expanded.

“The market is expecting that there will be some kind of deal worked out Wednesday,” when European financial ministers are scheduled to meet, said Uri Landesman, president of Platinum Partners. “If there’s not a deal by then, the market is going down significantly.”

Even with concerns about Europe, U.S. companies are still reporting bigger profits. “Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point,” Caterpillar Chief Executive Doug Oberhelman said.

The maker of construction equipment reported a 44 percent surge in income, more than Wall Street analysts were expecting, thanks to strong growth in exports. The company said it expected the global economy to continue recovering, albeit slowly.

The Dow Jones industrial average rose 126, or 1 percent, to 11,934 at 3:10 Eastern. Caterpillar jumped 5 percent, the most of the 30 companies in the Dow.

The Standard & Poor’s 500 index gained 17 points, or 1.4 percent, to 1,256. The Nasdaq composite rose 64, or 2.4 percent, to 2,701. The gains turned the Nasdaq positive for the year. The S&P 500 is the only major market index that remains lower than where it started the year.

The Russell 2000 index of small companies rose 3 percent as investors moved money into higher-risk assets.

Strong earnings reports from McDonald’s Corp. and other big U.S. companies last week drove the Dow Jones industrial average to its third straight weekly gain. The S&P 500 finished the week at its highest level since Aug. 3, just before Standard & Poor’s downgraded the U.S. government’s credit rating.

Other major U.S. companies due to report earnings this week include UPS Inc., Ford Motor Co. and Procter & Gamble.

Analysts expect companies in the S&P 500 to report earnings growth of 14 percent for the third quarter, according to data provider FactSet. They expect a 10 percent gain in revenue.

Expenses are also expected to climb. Higher costs for raw materials helped drag down income 8 percent at Kimberly-Clark Corp., which reported results Monday. The stock fell 5 percent. The company is a major consumer products maker whose brands include Huggies and Kleenex.

Higher costs also hurt cigarette maker Lorillard, which reported a 3 percent drop in income. Lorillard’s stock fell 0.8 percent.

A series of corporate deals helped lift the market, said Phil Orlando, chief equity strategist at Federated Investors. “This is telling us that companies think stocks are cheap, and they’re willing to spend some of the cash that’s sitting around on their balance sheets,” he said.

Deals announced included:

_ HealthSpring Inc. jumped 33 percent after Cigna Corp. said it will buy the health insurer for about $3.8 billion in cash. Cigna fell 0.4 percent.

_ RightNow Technologies Inc. gained 19 percent after Oracle Corp. said it will buy the tech service company for about $1.5 billion. Oracle rose 0.8 percent.

_ Mattel Inc. rose 2 percent after it agreed to buy Hit Entertainment, the owner of the Thomas & Friends and Barney brands, for $680 million in cash.

_ The J.M. Smucker Co. added 1 percent after it bought most of Sara Lee Corp.’s North American foodservice coffee operations for about $350 million.

Asian and European markets rose earlier Monday after Japan said its exports grew for a second straight month in September and a report showed China’s industrial production returned to growth in October. Japan’s Nikkei 225 index rose 1.9 percent, Hong Kong’s Hang Seng index rose 4.1 percent and South Korea’s Kospi index rose 3.3 percent.

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BlackBerry users experienced technical glitches with their smartphones for a second day after an unexplained problem cut off Internet and messaging services Europe, the Middle East and Africa.

The new round of troubles on Tuesday involved the BlackBerry

To find symbolism in the Greek financial crisis, just go to the source. The national image on the two-euro coin in Greece depicts an ancient myth about the abduction of Europa, a Phoenician princess, by Zeus, the king of the gods in the form of a bull.

The saga known as the “Rape of Europa,” whose protagonist rides the bull’s back in an image reproduced by artists over the centuries, mirrors the turbulent journey of Greece and the rest of Europe, hitched together in an agonizing spiral that seems to go on and on and on.

The crude parallel ends there, however _ Zeus turned into a human, had his way with Europa, and she bore him children. The last chapter in modern Greece, meanwhile, is still blank. Will there be a debt default, with its ominous implications for the global economy? How long will Greeks endure the erosion of what was a good life?

The future is a void, and anger and helplessness dig deep in the Greek psyche. Joblessness is climbing and essential services such as health care and policing are losing resources.

The crisis may pale beside the bloody conflict or poverty in Libya or Afghanistan, but the hardship is as much psychological as economic. It is the shock of undercut expectations, the loss of benefits and prospects once taken for granted as part of the European contract.

The mood now resembles the plot of “Groundhog Day,” a 1993 movie about a man who wakes up to the same day over and over again.

“We don’t see how we can escape from this problem,” said Kostas Theofanides, engineering manager for British Petroleum in Greece. He spoke Thursday evening at a resort hotel on the Athenian coast, where Greek and German business executives, nametags on their suits, mingled during a forum that hummed with talk of investing in a country on the edge.

Greeks, whose previous governments were accused of hiding the extent of the country’s ballooning budget deficit, now talk with withering honesty about their problems. Even at investment forums. Theofanides said his compatriots are angry, unsafe and depressed, and wonder how long they have to put up their daily stew of taxes, austerity, unemployment and general uncertainty.

He ticked off the possibilities: Two years? Three years? Ten years, 25 years? Who knows.

But there is plenty of blame to go around, and nobody is exempt _ from free-spending Greeks, to the politicians they elected, to Germany and the international lenders with their dire prescriptions of cuts and then more cuts.

With a sly smile, Dimitrios Gardikiotis, director at an information technology company, suggested Germany had been plotting Greece’s downfall for the past 20 years, luring its junior economic partner into dissolute ways so that it could barge in and buy assets on the cheap.

‘”I’m preparing your economic death. Then I will buy you and your wife and your children,’” said Gardikiotis, imagining what he thought might be a German viewpoint. He said it in such a disarming manner that it was hard to tell what he really thought.

“Greeks actually point their fingers at others, not at themselves,” Gardikiotis said. “Of course, there are certain mistakes, and everybody has to recognize their responsibility.”

History is to blame as well, in some Greek quarters.

Its students point to centuries of Ottoman rule that ended in independence in 1829, giving other European nations a headstart in building democracy. Then bouts of civil strife stunted progress. The king and the prime minister sparred during the National Schism in the early 20th century, the Western-backed government fought the communists in the late 1940s, and a military junta ruled between 1967 and 1974.

For a few resentful Greeks, there are always the Nazis, who occupied Greece during World War II payday loans for bad credit. On Thursday, several people in uniforms, including a man doing his best to impersonate Adolf Hitler, turned up with a Nazi flag and other insignia outside the German Embassy.

“The Germans owe us millions in war reparations, let them pay what they owe us,” said 75-year-old Demetris Kollatos, a fixture on the protest circuit who vaguely recalled the German occupation of Athens during his childhood. “In their greed to get everything, they’ll lose everything.”

Mostly, there is grim confusion and numbing fatigue. Greece is struggling to meet the terms of a euro110 billion ($146 billion) international bailout from other eurozone countries and the International Monetary Fund, but there is growing doubt about whether it can dodge a default. The country is in a third year of recession, with another on the way.

The government is tightening up on tax evaders, but some edicts, including those about what receipts taxpayers need to save in order to avoid penalties, have changed several times. A columnist in the English-language Athens News, who draws on historical figures for his alias, Alcibiades Ouranos, predicted a looming deluge of bureaucracy:

“Thing A should be dealt like that, but we acknowledge that B, C and D are unfairly hurt by that legislation, so we declare that B should do that, C should do something else and D should do that, but only if they do not fall into category E, have F blahblahblah. So bring us statements from agency G, H and I who monitor such things, to establish that you are indeed a B and not an A.”

Some Greeks think they are venturing onto new psychological terrain after nearly two years in which the concept of crisis, which should be exceptional by definition, is as banal as the protests and strikes that convulse Athens from time to time.

Despoina Ergenidou is director of the Numismatic Museum, a monument to the coins and currency of ancient Greece that is housed in the mansion where Heinrich Schliemann, the German archaeologist who excavated Troy, lived in the late 19th century.

“It’s not just the economy. It’s ethical values,” she said in an interview in her office, flanked by a garden in downtown Athens. “They are losing what they believe. I don’t mean religion. We were working for something better, we believed in things, people, good ideas. We were working for those ideas. It’s not like that anymore.”

In ancient times, Ergenidou said, there were no banks, so people hoarded coins in hiding places, in pots or pouches, behind walls and under floors. Many families survived war and other hardships through their domestic economies, a garden to grow vegetables or some farm animals.

Those were truly hard times. They were also glorious times, when hundreds of cities and kings minted coins in different denominations and metals. There were tetradrachms and staters and obols, gold and silver and brass, and coins with images of turtles, foals and owls.

It is tempting to find relevance in the words of ancient Greek philosophers to Greece’s modern predicament, in which avarice played a star role. Aristotle recognized the value of money as a tool for the interchange of goods, beyond barter, but warned of its artifice and the imbalances generated by seeking cash without restraint.

“It appears necessary that there should be a limit to all riches, yet in actual fact we observe that the opposite takes place; for all men engaged in wealth-getting try to increase their money to an unlimited amount,” he wrote.

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