Finance and Economic

Banks must endure financial fitness tests these days, with the results not always pretty or predictable.

This concept isn’t such a bad idea for average citizens either.

The darkest stories of recession involve lost jobs, lost homes and lost hope. It is not uncommon for others, those who avoid dire straits and experience some sense of relief, to overlook their financial responsibilities.

According to financial advisors, Americans too often are unaware of what they spend; most of their savings earn no interest; they pay too many bank fees; they carry too much credit card debt; they don’t invest for retirement; and they have no emergency fund set aside.

Remember: Just because you’re receiving a regular paycheck and no one’s knocking on the door to repossess your car, doesn’t mean that you and your family are financially fit.

“If you exercise a lot but eat horribly and are always stressed, you’re not going to be physically fit because a lot of things must work together,” said Kim McGrigg, manager of community relations for the Money Management International credit counseling agency in Denver. “The same goes for your finances, since you must examine savings balances, liabilities and future goals to see that everything is properly coordinated.”

Give yourself a test: Track your spending and income over a three-month period. Write down all money spent, including cash, using a small notepad or electronic device. Calculate your cash flow, listing all income sources in a basic budget. Don’t include anything as incoming until you are sure of it.

Record all expenses, and not simply obvious mortgage or car payments but also those you track through receipts and credit-account payments. Important additional expenses are food, transportation, medical costs and clothing.

Totaling your incoming and outgoing expenses produces a cash-flow statement. If you had an operating surplus of several thousand dollars, your net worth should have increased by at least as much. A negative income statement isn’t good. There should also be room for conscientious saving and investing.

“People treat ATMs like candy machines and keep going back again as the handful of money disappears,” observed Barbara Steinmetz, certified financial planner with Steinmetz Financial Planning in San Mateo, Calif. “I had one client with $15,000 worth of ATM withdrawals in one year and had no clue whatsoever what she had spent all that money on.”

You may think you are richer than you are.

“It’s not really helpful to make $100,000 a year when you find out that you spend $200,000, for what you make is the input and what you spend is the output,” warned Harold Evensky, CFP with Evensky & Katz in Coral Gables, Fla. “Start with liabilities, striving to minimize or eliminate consumer debt such as credit cards and car loans because they are very expensive, non-deductible forms of debt.”

There are “new kinds” of bills that consumers must cope with, such as for cellphones and cable television, McGrigg noted. Shop for the best deals and carefully go over the breakdown on your statements to see whether you need everything for which you’re being billed. If you receive a cable package in which you don’t watch most channels, weed out what you don’t want and trim that bill, she advised.

“I have clients who simply don’t open their mail every day, just thumb through to see if any envelopes look interesting or important,” said Steinmetz. “They may wait a week or more to open many of them, but you should open them right away because it is all about taking responsibility for your financial life.”

The most common financial mistake is spending beyond one’s means, and in second place is not saving to build up a nest egg, according to Evensky. Don’t focus on the total number of dollars needed at retirement when figuring how much you should save, but simply get started right away even if it is just $50 a month. If you save money now and save continuously, you will never have a chance to miss that money, he believes.

“An emergency fund is important, but remember that there is no magic answer,” said Evensky. “If you have a very secure job, maybe two to three months in emergency funds that could cover staying in your house and paying necessary bills is OK.”

Having adequate life, liability, house, auto and health insurance is also crucial, he said. Even though no one ever wants to think about it, such protection can make a big difference to your family.

Pay yourself before paying your bills, counseled McGrigg. The easiest way to build up an emergency fund, for example, is to deduct money every time you get paid and put it away before you have a chance to spend it. Most banks can do this automatically for you so that you never even get your hands on the money, she said.

“Another mistake is opening lots of new credit card accounts, especially store accounts just to save 10 to 15 percent on that first purchase,” McGrigg concluded. “Taking out credit on a whim or while standing in line is not a good idea, especially if you have larger financial goals.”

Because goals are what being financially fit is all about.

Source

The signing ceremony for a deal to end Yemen’s political crisis was postponed indefinitely Sunday after the Yemeni president refused to sign it personally, a Gulf official said, signaling the possible collapse of the agreement.

Ahmed Khalifa al-Kaabi, a media official for the six Gulf Arab nations sponsoring the agreement, told The Associated Press that their foreign ministers would meet in the Saudi capital, Riyadh, on Sunday to try to find a way to salvage a deal.

The standoff between Yemeni President Ali Abdullah Saleh and the hundreds of thousands of street protesters demanding his immediate departure after 32 years in office threatens to pull the impoverished and fragile nation into greater disorder and destabilize the rest of the Arabian peninsula.

The Gulf Cooperation Council, an association of Yemen’s oil-rich neighbors, offered a deal that calls for Saleh to step down within 30 days and for the ruling party and the opposition to come together in a national unity government. In exchange, Saleh would get immunity from prosecution.

The GCC comprises Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Oman and Bahrain.

Yemen’s opposition parties, which had initially agreed to the deal, said they would not sign it if Saleh refused to do so personally.

For their part, representatives of the those staging anti-Saleh demonstrations since early February have rejected the deal outright, demanding that Saleh immediately step down and face trial for the killings of protesters and corruption.

They say the established opposition political parties taking part in the talks do not represent them, and even if a deal were reached it seemed unlikely that it would end the protests.

The ceremony was expected to be held in Riyadh on Sunday or Monday.

In what appeared to be a last-minute bid to salvage the deal, Saudi Arabia’s King Abdullah spoke to Saleh by telephone on Sunday, according to a brief Yemeni government statement paperless payday loans.

The deal’s collapse would raise the prospects of more bloodshed in a nation already beset by serious conflict and deep poverty and which is home to al-Qaida’s most active offshoot.

At least 140 people have died in the government’s crackdown on the protests, which have nonetheless grown in number week after week. The violence has prompted several top military commanders, ruling party members, diplomats and others to defect to the opposition.

Still, Saleh has clung to power and has the key backing of Yemen’s best trained military units, which he placed under the command of one of his sons and other close relatives.

Al-Kaabi’s citing of Saleh’s refusal to personally sign the deal indicated the GCC blamed him for the deadlock.

Government officials said Saleh had told GCC Secretary-General Abdullatif bin Rashid al-Zayani on Saturday that he intended to ratify the deal after sending a close aide and a senior ruling party official to sign it.

The officials spoke on condition of anonymity because they were not authorized to speak to the media.

The opposition, whose leaders have said before that they have little trust in Saleh’s word, feared he was leaving himself room to stay in power.

Leaders of the street demonstrations said they planned to step up their protests to force Saleh out.

Tens of thousands of protesters were out Sunday in a number of Yemeni cities, including Aden and Taiz in the south, to demand that he step down.

“We will not pay attention to any mediation or foreign intervention,” said protest leader Abdel-Hadi al-Azazi in Sanaa, the capital. “We will continue to march and protest until the uprising’s goal is achieved _ the ouster of the regime.”

Source

Aetna says its first-quarter profit rose 4 percent as claims left over from the previous quarter came in lower than the health insurer expected. But it says revenue and enrollment dropped.

The insurer also says it has agreed to buy Prodigy Health Group, a large administrator of self-funded health care plans, for about $600 million. New York-based Prodigy operates in 15 states.

The Hartford, Conn., insurer said Thursday its net income rose to $586 million, or $1.50 per share, in the three months that ended March 31 same day payday loans. That’s up from $562.6 million, or $1.28 per share, a year ago. Revenue fell 3 percent to $8.38 billion, and enrollment dropped 5 percent.

Analyst forecast lower behind 96 cents per share on $8.32 billion in revenue.

Aetna is the third largest commercial health insurer behind WellPoint and UnitedHealth.

Source

The OECD is recommending that Japan as much as quadruple its sales tax rate to deal with a crushing deficit that’s bound to grow as it spends on reconstruction from last month’s earthquake and tsunami.

Economists in the group of the world’s wealthiest countries said in a report released Thursday that the country should boost the sales tax, now 5 percent, to as high as 20 percent while cutting corporate taxes.

OECD Secretary-General Angel Gurria says Japan has to perform a balancing act as it finances reconstruction following the March 11 disasters while sustaining its economic recovery and cutting debt.

The Organization for Economic Cooperation and Development also recommends education system changes, freer trade with other countries and other reforms.

Source

NEW YORK

Workers stopped a highly radioactive leak into the Pacific off Japan’s flooded nuclear complex Wednesday, but with the plant far from stabilized, engineers prepared an injection of nitrogen to deter any new hydrogen explosions.

Nitrogen can prevent highly combustible hydrogen from exploding _ as it did three times at the compound in the early days of the crisis, set in motion March 11 when cooling systems were crippled by Japan’s 9.0-magnitude earthquake and tsunami.

Nuclear officials said there was no immediate threat of more explosions, and but the nitrogen plans were an indication of the serious remaining challenges in stabilizing reactors at the Fukushima Dai-ichi plant and halting the coastal radiation leaks that have cast a shadow on northeastern Japanese fisheries.

Nitrogen normally is present inside the containment that surrounds the reactor core. Technicians will start pumping more in as early as Wednesday evening, said Junichi Matsumoto, a spokesman for the plant operator. They will start with Unit 1, where pressure and temperatures are highest.

“The nitrogen injection is being considered a precaution,” said spokesman Hidehiko Nishiyama of Japan’s Nuclear and Industrial Safety Agency.

Workers have suffered near-daily setbacks in their race to cool the plant’s reactors since they were slammed by the tsunami, which also destroyed hundreds of miles of coastline and killed as many as 25,000 people.

But there was a rare bit of good news Wednesday when workers finally halted a leak of highly contaminated water into the ocean that had raised concerns about the safety of seafood.

Officials had said the runoff would quickly dissipate in the vast Pacific, but the mere suggestion that fish from the country that gave the world sushi could be at any risk stirred worries throughout the fishing industry.

In the coastal town of Ofunato, Takeyoshi Chiba, who runs the town’s wholesale market, is warily watching the developments at the plant, about 120 miles (200 kilometers) down the coast.

“There is a chance that the water from Fukushima will come here,” he said, explaining that fishermen in the area still haven’t managed to get out to sea again, after the tsunami destroyed nearly all of their boats pay day loan lenders. “If Tokyo decides to ban purchases from here, we’re out of business.”

After radiation in waters near the plant was measured at several million times the legal limit and elevated levels were found in some fish, the government on Monday set its first standard on acceptable levels of radiation in seafood.

“Right now, just because the leak has stopped, we are not relieved yet,” Chief Cabinet Secretary Yukio Edano said. “We are checking whether the leak has completely stopped, or whether there may be other leaks.”

Stemming the leak of highly radioactive water is progress because it limits the contamination of the surrounding environment, but now workers must turn their focus to their primary goal: cooling the reactors and bringing them under control.

That mission has been hampered by highly contaminated water that is pooling throughout the plant, making it difficult or impossible to access some areas.

The pools have been an unavoidable side-effect of a makeshift cooling method: pumping water into the reactors and letting it gush out wherever it can. That messy process will continue until they can restore normal cooling systems _ which recycle water, rather than spitting it out.

Getting rid of that pooling water has vexed TEPCO; it has ordered a floating storage facility and is also requesting a vessel that decontaminates water from Russia.

With those solutions not available for some time, the utility decided to take a drastic measure Monday: pumping 3 million gallons of less contaminated water into the sea to make room in a warehouse for the more highly radioactive water.

The warehouse is almost empty, and officials planned to check it thoroughly for any cracks before starting to fill it up again. The building is not meant to hold water, but it also hasn’t leaked yet, so engineers decided it could make a safe receptacle.

“We must carefully check and repair the facility to make the water will not leak out and affect the environment,” Nishiyama said.

Source

European Union leaders called for worldwide stress testing of nuclear plants on Friday and committed to putting their 143 reactors through the toughest security checks possible.

France, one of the nations most reliant on nuclear energy, with 58 reactors, said it would immediately close any plant if it failed a test.

At the end of a two-day summit, the EU nations agreed to submit their nuclear plants to tough safety tests by year-end and promised to heed the lessons from the accident at Japan’s Fukushima Dai-ichi nuclear complex.

German Chancellor Angela Merkel said the 27 leaders agreed “on uniform euro stress tests and the highest possible safety standards.”

“The experience of Japan has to be reflected in the new stress tests. This is not business as usual,” she said.

Merkel’s comments come two weeks since a magnitude-9 quake triggered a tsunami that knocked out the Fukushima reactor’s cooling system. Japanese Prime Minister Naoto Kan said Friday the fight to stabilize the plant remains “very grave and serious,” as officials said they suspected there was a breach in the core of a reactor that could mean more serious contamination.

The fallout has set off fears of the biggest radioactive contamination since the 1986 disaster at Ukraine’s Chernobyl, which spewed radiation across a wide distance and continues to haunt Europeans.

“European stress tests will be prepared in a coordinated fashion,” Merkel said after the summit. “The aim is the highest possible safety standard,” she said, insisting the EU would press for other European nations to follow suit.

EU officials will follow up the nuclear issue during talks in Ukraine next month. Nuclear energy is key for Ukraine, a country of 46 million. Ukraine today operates 15 reactors at four power plants, which generate nearly half of all its electricity.

“Because the danger does not stop at our borders, we encourage and support neighboring countries to do similar stress-tests,” said EU President Herman Van Rompuy. “A worldwide review of nuclear plants would be best.”

There are currently 442 nuclear power reactors in operation around the globe, with 65 more under construction. Five are in long-term shutdown.

Source

Tiffany & Co. lowered its first-quarter earnings guidance Monday because of store closings and limited hours in Japan resulting from the earthquake and tsunami.

The dimmer outlook came as the jeweler said strong holiday demand and new products helped its fourth-quarter net income rise 29 percent.

Tiffany is one of the U.S. retailers most exposed to Japan’s economy and appetite for luxury goods. Of Tiffany’s 233 stores, 56 are in Japan. It’s also one of the first companies to specify the business impact of the quake.

The jewelry maker known for its turquoise box now expects first-quarter earnings of about 57 cents per share, down from a previous forecast 62 cents per share.

Analysts surveyed by FactSet predicted lower earnings of 55 cents per share.

The company’s stores in the Kanto and Tohoku regions, which make up more than half of its Japanese sales, were closed or had reduced hours after the disasters. Physical damage was limited to only a few stores, the company said.

The retailer expects Japanese sales, 18 percent of its business, will drop 15 percent in the first quarter.

For the full year, the company anticipates adjusted earnings of $3.35 to $3.45 per share. Wall Street forecasts $3.70 per share.

Fourth-quarter net income increased to $181.2 million, or $1.41 per share, for the period ended Jan. 31. That compares with $140.4 million, or $1.09 per share, a year ago.

Excluding a charge tied to moving its New York headquarters staff, earnings from continuing operations were $1.44 per share.

Analysts expected earnings of $1.39 per share.

Its stock gained $2.89, or 5 percent, to $60.18 in premarket trading Monday.

Revenue improved to $1.1 billion from $981.4 million, matching expectations. The company reported sales increased across all regions and said new products, such as its yellow diamond collection, helped its performance.

Tiffany’s full-year earnings climbed 39 percent to $368.4 million, or $2.87 per share, from $264.8 million, or $2.11 per share.

Adjusted earnings from continuing operations were $2.93 per share.

Annual revenue rose 14 percent to $3.09 billion from $2.71 billion.

Source

Chinese authorities have arrested 3,001 people in their latest crackdown on rampant product piracy and seized fake or counterfeit medicines, liquor, mobile phones and other goods, officials said Sunday.

The campaign launched in October comes as Beijing faces pressure from the United States and other trading partners to stamp out product copying. China is a leading soure of fake goods despite repeated crackdowns, but Chinese officials have promised the latest enforcement will produce lasting results.

Communist leaders have given the new crackdown special prominence, publicly linking it to efforts to transform China from a low-cost factory to a creator of profitable technology by nurturing companies in software and other fields. China’s fledgling software, music and other creative companies have been devastated by unlicensed copying.

“Intellectual property protection is essential for building an innovation-oriented country and achieving a shift from `China manufactured’ to `China innovated,’” Li Chenggang, deputy director of the Commerce Ministry’s law department, said at a news conference. He was joined by officials of China’s commerce, intellectual property and other agencies.

Trade groups say illegal Chinese copying of music, designer clothing and other goods costs legitimate producers billions of dollars a year in lost potential sales. The American Chamber of Commerce in China says 70 percent of its member companies consider Beijing’s enforcement of patents, trademarks and copyrights ineffective.

Businesspeople have expressed optimism about the latest effort because a rising Communist Party star, Vice Premier Wang Qishan, has been put in charge and an enforcement office set up in the Commerce Ministry payday loans.

A report distributed at Sunday’s news conference said that goods seized in the latest crackdown include 26,000 mobile phones, some with phony Nokia and Apple labels, copies of Louis Vuitton bags and Rolex watches, automotive components, DVDs and clothing.

It said authorities shut down 292 websites selling counterfeit and fake goods.

Also Sunday, the official Xinhua News Agency said 23 people accused of producing fake medicine were detained in the central city of Jingzhou in Hubei province. It said they made more than 100 million capsules filled with sawdust and wheat flour and sold under the brand names of 201 different types of medication.

Xinhua said the medicines were sold by mail and over the Internet but gave no details of whether anyone was injured or which brand names were counterfeited.

Piracy is especially sensitive at a time when Washington and other Western governments are trying to create jobs by boosting exports. In 2009, the World Trade Organization upheld a U.S. complaint that Beijing was violating trade commitments by failing to root out the problem.

Rampant copying also has hampered Beijing’s efforts to attract technology industries because businesspeople say companies are reluctant to do high-level research in China or bring in advanced designs for fear of theft.

Source

China faces a 60 percent risk of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices, according to a Fitch Ratings gauge.

Fitch sees the risk of “holes in bank balance sheets” should a property bubble burst, Richard Fox, a London-based senior director, said in a phone interview on March 4. The risk assessment is from a macro-prudential monitor used by the ratings company.

Chinese banks fueled record property-price gains by extending a record 17.5 trillion yuan ($2.7 trillion) of loans over 2009 and 2010 under the stimulus program that propelled the nation through the financial crisis. Regulators’ efforts to contain the risks for lenders have included stress tests for declines in house prices and a crackdown on lending to local- government financing vehicles.

China’s risk of a systemic crisis is based on the nation’s MPI3 classification, the highest of three risk categories, in a Fitch monitor begun in 2005. The indicator signaled crises in Iceland and Ireland and has been tested back to the 1980s, Fox said.

In contrast with Fitch’s concern, the Hang Seng Finance Index (HSF), which includes five Chinese banks traded in Hong Kong, advanced 1.5 percent as of 3:34 p.m. local time.

Fitch’s concern contrasts with gains in banks’ profits and capital adequacy ratios and declines in non-performing loan ratios, according to data released by the China Banking Regulatory Commission payday loan.

The industry’s “capitalization has been noticeably strengthened throughout 2010, with capital ratios of major banks being well supportive of their standalone credit profiles,” Liao Qiang, a director of financial institutions ratings for Standard and Poor’s in Beijing said today.

‘Strong Liquidity’

“With reasonable loan loss reserves at present, good pre- provisioning profitability and strong liquidity, Chinese banks are likely to gradually absorb potential spikes in credit costs caused by looming bad loans, particularly from China’s property sector and local government financing platforms,” Qiang said.

Chinese banks listed in Hong Kong will likely report “strong” 2010 earnings when they report at the end of the month, BNP Paribas SA said in a report today.

In November, Moody’s Investors Service said that it had “concerns over the intrinsic, stand-alone strength of China’s banking system.” At the same time, the largest lenders weren’t materially damaged by the global financial crisis and aren’t likely to pose any significant contingent liability risk to the government balance sheet, the ratings company said.

Absorbing Losses

“Furthermore, we expect that future credit losses — arising from the surge in lending in 2009, from exposures to the property market, from risky loans to local government financing vehicles, and from off-balance sheet operations in the ‘shadow’ banking system — will be mostly absorbed by the banks themselves, either from capital, or from future earnings,” Moody’s said in a statement.

To limit risks for banks, China has increased oversight of lending to the local-government vehicles, which surged during the nation’s two-year stimulus program. In a March 5 speech to lawmakers, Wen pledged a “comprehensive audit” of local- government debt, while the Ministry of Finance said separately that “local governments face debt risks that can’t be overlooked.”

Banks have also been told to assign a higher risk rating to local-government loans.

The country’s “systemically important” lenders may be subject to an overall capital adequacy ratio of as high as 14 percent when their credit growth is judged excessive, a person with knowledge of the matter said on Jan. 28. Other lenders would need to meet a 13 percent threshold, the person said. The minimum ratio, used to gauge banks’ ability to withstand financial stress, is currently 11.5 percent for big banks.

Lenders including China Minsheng Banking Corp. and Agricultural Bank of China Ltd. (1288) have announced plans to sell more than 80 billion yuan ($12 billion) of shares and 70 billion yuan of subordinated bonds this year.

Source