President Barack Obama, offering an election-year prescription to spur the economy, said the wealthiest Americans should pay more taxes in the name of fairness, to bring down the deficit and ensure those trying to make ends meet don
The cost of living in the U.S. was little changed in December for a second month as stores cut prices to boost holiday sales and fuel expenses fell, reinforcing the Federal Reserve
The Federal Reserve should provide enough policy accommodation to give the unemployment rate, currently at 8.5 percent, a chance to drop, a top Fed official said on Friday.
Chicago Federal Reserve President Charles Evans added he was worried that recent improvements in the U personal loans for people with bad credit.S. jobless rate could be “transitory.”
Retails sales in the 17-nation eurozone dropped in November, official statistics showed Friday, as consumers felt the bite of austerity measures and feared the currency union could slip deeper into crisis.
Retail sales in the eurozone fell 0.8 percent compared with October and were down 2.5 percent from November 2010, according to Eurostat, the EU’s statistics agency.
The steepest declines were seen in Portugal, which had to be bailed out in April and where sales fell 2.6 percent during the month and were down a massive 9.2 percent from a year earlier.
But even in richer states like Germany and the Netherlands, consumers were more reluctant to part with their money, with retail sales slipping 0.9 percent in both countries during November. That shows how the eurozone’s worsening debt crisis is taking its toll even on countries with strong economies.
For the whole European Union, which includes non-euro members like the U.K. and Sweden, November retail sales dropped 0.6 percent from October and 1.3 percent compared with a year earlier.
Consumers appear worried by high unemployment, which remained stuck at 10.3 percent in November _ unchanged from October but above the 10 percent seen a year earlier _ and a darkening outlook on the economy easy pay day loans.
The weak data also underlines how many people found themselves in a worse position at the end of 2011 than at the end of 2010 _ when there were hopes that the continent was turning a corner after two difficult years brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
Spain’s unemployment rate was highest at 22.9 percent, up from 20.4 percent a year earlier. That’s more than four times as high as in Austria, where only 4 percent of people were looking for work. For the whole EU, the unemployment rate remained at 9.8 percent.
The dark mood is set to continue in the eurozone, with a Eurostat economic sentiment indicator falling 0.5 of a point to 93.3 in December, far below the long-term average of 100.
Italy and Spain, the eurozone’s third and forth largest economies which have been pulled into the eye of the crisis in recent months, grew especially pessimistic about the economy. Economic sentiment fell 4.6 points in Italy and 1.3 points in Spain.
In the 27 EU countries, economic sentiment was down 0.8 point at 92.
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.”
U.S. online sales this holiday shopping season are up 15 percent compared to last year, after what may have been the busiest week of the season, said research firm comScore on Sunday.
Shoppers have spent $30.9 billion online from Nov. 1 through Dec. 16, up from $26.9 billion at the same point last year, said the Reston, Va., company, which tracks Web use.
Online sales surpassed $1 billion on four days last week. Total sales for the week climbed 15 percent to $6.31 billion compared to last year.
The five days that ended on Friday “will almost certainly be the heaviest week of the online holiday shopping season,” said comScore chairman Gian Fulgoni. Online spending will begin to slow as Christmas draws closer, he said.
But “Cyber Monday,” the Monday after Thanksgiving, is still the largest online shopping day ever, according to comScore. Sales for that day rose 22 percent from last year to $1.25 billion. Cyber Monday sales topped $1 billion for the first time last year.
The holiday shopping season can make up to 40 percent of retailers’ annual revenue. The online sales data point to Americans’ growing comfort with using their personal computers, tablets and smartphones to shop for the holidays.
Discounting and promotions have also boosted shopping this year. ComScore said on Sunday that shoppers have received free shipping on at least half of all their purchases in each week of this year’s holiday shopping season.
Britain’s Treasury chief defended Prime Minister David Cameron’s decision to veto changes to the European Union treaty, saying Saturday the move protected U.K. economic interests.
Cameron rejected an invitation to join 26 European partners in a tighter financial alliance to save the euro which he said didn’t adequately protect Britain’s national interest and meant giving up too much control over regulation of Britain’s dominant financial sector.
The move isolated Cameron from the European Union and raised doubts about whether Britain realistically can remain a member of the 27-nation bloc _ prompting cheers from the prime minister’s typically anti-EU party and jeers from the opposition.
Britain’s typically brash media reflected the divide Saturday, with The Guardian headline “Cameron Cuts UK Adrift” batting against the Daily Mail’s “The Day He Put Britain First.”
Treasury chief George Osborne defended Cameron on BBC radio, saying he thinks Britons are pleased the prime minister “stood up for the British national interest.
“We have protected Britain’s financial services and manufacturing companies that need to be able to trade their products into Europe from the development of eurozone integration spilling over and affecting non-euro members of the EU,” he said.
Osborne added that if the prime minister had “caved in” to signing the treaty, the “full force” of the EU could have undermined British interests.
“We were not prepared to let that happen,” he said.
Osborne’s vote of confidence echoed support from other Conservative lawmakers over the prime minister’s move to set Britain apart.
But Cameron also is facing a chorus of criticism from the opposition Labour Party and growing tensions with his Conservative Party’s junior coalition partner, the Liberal Democrats.
Deputy Prime Minister Nick Clegg has rejected talk of a rift between his Liberal Democrats and the Conservatives and backed Cameron’s move, but dissent bubbled up from elsewhere in the party.
One Liberal Democrat lawmaker accused Cameron of “betraying Britain,” while another called the fallout “a black day for Britain and Europe.”
Emboldened by Cameron’s move, Conservatives stepped up calls for a full re-negotiation of Britain’s position in the EU, but Liberal Democrat deputy leader Simon Hughes shot down that idea in an interview with Sky News, insisting the issue was “not on the table” and telling the Tories to “calm down.”
In Italy, Premier Mario Monti has summoned union leaders to discuss his new austerity plan as lawmakers tinker with his tough proposals to try to rescue the country from its debt load and get the economy growing again.
Unions have bitterly contested Monti’s proposal to reform Italy’s generous pension system and have called a strike for Monday. Monti’s office said Saturday the premier, fresh from the EU summit in Brussels, would meet with union leaders on Sunday to discuss the proposals.
Monti has also proposed restoring a property tax suspended during Premier Silvio Berlusconi’s government. The proposal has renewed criticism of the tax-exempt status of the Catholic Church in Italy, even though the church merely enjoys the same tax-exempt status as any non-profit.
U.S. stock futures are edging lower ahead of a full day of economic reports.
Investors will receive reports Wednesday on consumer prices, factory production, foreign demand for U.S. debt and a measure of homebuilder confidence. Positive reports could be further evidence that the U.S. economy is not in danger of slipping back into another recession.
Concerns linger about Europe’s debt crisis. Greece’s new prime minister Lucas Papademos’ government will face a confidence vote later in the day. The government must pass austerity measures to receive additional financial assistance.
Dow Jones industrial average futures were down 40 points, or 0.3 percent, to 11,998 two hours ahead of the opening bell. S&P 500 futures fell 7, or 0.5 percent, to 1,247. Nasdaq 100 futures shed 4, or 0.2 percent, to 2,356.
Italian Premier Silvio Berlusconi resigned Saturday after parliament’s lower chamber passed European-demanded reforms, ending a 17-year political era and setting in motion a transition aimed at bringing the country back from the brink of economic crisis.
A chorus of Handel’s “Alleluia,” performed by a few dozen singers and classical musicians, rang out in front of the president’s palace as thousands of Italians poured into downtown Rome to rejoice at the end of Berlusconi’s scandal-marred reign.
Hecklers shouted “Buffoon, Buffoon!” as Berlusconi’s motorcade entered and exited the presidential palace, where he tendered his resignation to President Giorgio Napolitano, the palace said in a statement.
Respected former European commissioner Mario Monti remained the top choice to try to steer the country out of its debt woes as the head of a transitional government, but Berlusconi’s allies remained split over whether to support him.
Their opposition wasn’t expected to scuttle Napolitano’s plans to ask Monti to try to form an interim government as early as Sunday, but it could make Monti’s job more difficult.
Napolitano will hold consultations Sunday morning with all Italy’s political forces. The back-to-back, 10-minute meetings he has scheduled indicated the talks wouldn’t drag on and that Monti would be nominated by the end of the day. Late Saturday, Berlusconi’s party said it would support Monti, albeit with conditions.
Berlusconi’s resignation was set in motion after the Chamber of Deputies, with a vote Saturday of 380-26 with two abstentions, approved economic reforms which include increasing the retirement age starting in 2026 but do nothing to open up Italy’s inflexible labor market.
The Senate approved it a day earlier and Napolitano signed the legislation Saturday afternoon, paving the way for Berlusconi to leave office as he promised to do after losing his parliamentary majority earlier in the week. He chaired his final Cabinet meeting Saturday evening and thanked his ministers.
Berlusconi stood as lawmakers applauded him in the parliament chamber immediately after the vote. But outside his office and in front of government palazzos across town, hundreds of curiosity-seekers massing to witness the final hours of his government heckled him and his ministers.
“Shame!” and “Get Out!” the crowds yelled, many toting “Bye Bye Silvio Party” posters as they marched through downtown Rome in a festive indication that for many Italians, like financial markets, the time had come for Berlusconi to go.
Berlusconi supporters were also out in force, some singing the national anthem, but they were outnumbered.
Earlier in the day, Berlusconi lunched with Monti in a clear sign the political transition was already under way, news reports said.
While the euroskeptic Northern League remained opposed to Monti’s nomination, some lawmakers suggested they could support a Monti-led government for a few months to enact the additional EU-demanded reforms before elections are held in early 2012.
In a statement issued late Saturday, Berlusconi’s Peoples of Liberty party said its members would support Monti, but added that they would also ensure that Monti’s Cabinet, legislative agenda and the timeframe of his government meets their requirements.
Napolitano appealed for lawmakers to put the good of the country ahead of short-term, local interests _ an indirect appeal to members of Berlusconi’s party and the allied Northern League to work with the new government.
“All political forces must act with a sense of responsibility,” he said.
It was an ignoble end for the 75-year-old billionaire media mogul, who came to power for the first time in 1994 using a soccer chant “Let’s Go Italy” as the name of his political party and selling Italians on a dream of prosperity with his own personal story of transformation from cruise-ship crooner to Italy’s richest man pay day loan lenders.
While he became Italy’s longest-serving post-war premier, Berlusconi’s three stints as premier were tainted by corruption trials and accusations that he used his political power to help his business interests.
His last term has been marred by sex scandals, “bunga bunga” parties and criminal charges he paid a 17-year-old girl to have sex _ accusations he denies.
In the end, his downfall came swiftly: Just last week Berlusconi boldly told a G-20 summit in Cannes, France, he was the only one who could steer Italy out of its economic morass. A week of battering on the markets and the defection of several party members later, his fate was sealed.
Italy is under intense pressure to quickly put in place a new and effective government to replace him, one that can push through even more painful reforms and austerity measures to deal with its staggering debts, which stand at euro1.9 trillion ($2.6 trillion), or a huge 120 percent of economic output. Italy has to roll over a little more than euro300 billion ($410 billion) of its debts next year alone.
Markets battered Italy this past week amid uncertainty that Berlusconi would really leave and questions over whether Italy’s notoriously paralyzed parliament could rally around a replacement. But Italy’s borrowing rates pulled back after Napolitano made clear he intended to tap the politically neutral economist Monti to try to head an interim government to push the reforms through.
The yield on benchmark Italian 10-year bonds fell to 6.48 percent Friday, safely below the crisis level of 7 percent reached earlier this week.
Greece, Ireland and Portugal all required international bailouts after their own borrowing rates passed 7 percent. The Italian economy would not be so easy to save. It totals $2 trillion, twice as much as the other three countries combined.
An Italian default could tear apart the coalition of 17 countries that use the euro as a common currency and deal a strong blow to the economies of Europe and the United States, both trying to avoid recessions.
The head of the International Monetary Fund, Christine Lagarde, said Saturday that Italy’s political transition over the next few days should send a “clear sign of clarification and of credibility” that the country is now on the right path to get its finances back in order.
Speaking to reporters in Tokyo, Lagarde had high praise for Monti, saying she had great esteem for the “quality” economist with whom she had long enjoyed a “extremely warm” and effective relationship.
The IMF has a key role to play over the next few months in overseeing Italy’s efforts to pull itself back from a Greek-style economic disaster, monitoring how it implements reforms to rein in debt and spur growth, which is projected at a scant 0.6 percent this year and 0.3 percent next year.
Amid market turmoil last week, Berlusconi was forced to ask for IMF monitoring of Italy’s finances, a humiliating prospect for the eurozone’s third-largest economy and an embarrassment for the long-defiant Berlusconi.
The premier, however, received a warm sendoff from one of his closest pals, Russian Prime Minister Vladimir Putin, who called Berlusconi “one of the last Mohicans of European politics” who had brought political stability to Italy.
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.