South Korean President Lee Myung Bak said a new era in inter-Korean relations was possible if the North begins behaving sincerely, after the nuclear-armed nation accused Lee of
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Workers used white tarps Friday to cover the exterior signs of Shula’s 347 Grill, which abruptly closed last week at the Roberts Tower, the stylish but empty condo building in downtown St. Louis.
Taped to the front door was a sign that read, “We are closed to make exciting changes!”
How the street-level space will change could not be immediately determined, but Shula’s will not return. Robert Zarco, the lawyer for Fort Lauderdale, Fla.-based Shula Steak Houses, said Friday that the company pulled its St. Louis franchise, which he said was held by a firm controlled by businessmen brothers Mike and Steve Roberts.
Zarco said Shula’s main concern in St. Louis was that employees of the local restaurant were not getting paid.
“The tension was between the employees and the franchisee arising from the employees’ claiming they were not paid their wages and salaries,” he said. “In our view it impairs the brand and corporate good will of our company when employees are not paid.”
Efforts to reach Roberts company officials were unsuccessful.
Zarco said the Roberts company did not fight the loss of its Shula 347 Grill franchise. The restaurant, on the ground floor of the Roberts Tower, opened last spring.
About 30 Shula restaurants in a chain begun by retired Miami Dolphins coach Don Shula operate in more than a dozen states.
The sleek glass-and-concrete Roberts Tower, at 411 North 8th Street, is a Roberts development that has no residents two years past what had been its expected opening.
The 25-story tower adjoins the Roberts Mayfair Hotel, where some hourly workers have said they sometimes do not get paid on time.
Pending against another Roberts entity, Roberts Hospitality Services II, are liens for unpaid state sales and use taxes. The largest is for nearly $1.3 million. Nearly all of that amount is for what the lien document describes as “addition to tax” to the $25,412 in taxes owed for June 2011.
Ted Farnen, spokesman for the Missouri Department of Revenue, said Friday that the lien would be ’significantly” altered but would not say whether the amount would be revised up or down.
Also owed by Roberts Hospitality Services are payments to vendors. Among them is a $19,294 judgment obtained by Middendorf Meat Co. Its lawyer, Vincent D. Vogler, said Middendorf sued to collect for food sold to the Mayfair and what had been the Roberts’ Indigo Hotel on Lindell Boulevard. The Indigo is now operated as a Comfort Inn.
In October, yet another Roberts company
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The plan central banks announced Wednesday could ease financial strains that threaten Europe’s common currency and may tip the global economy into recession.
The Federal Reserve, the European Central Bank, the Bank of England and the central banks of Canada, Japan and Switzerland said they’d make it easier for banks to get the dollars they need to lend.
The move was a powerful confidence-booster, a signal that central banks are prepared to act in concert to encourage lending.
Stocks rocketed in response.
“The coordination was a big thing,” said Michael Hanson, an economist at Bank of America Merrill Lynch. “It had a psychological effect.”
Still, the plan isn’t a permanent fix. It doesn’t address the root of Europe’s crisis: Debt burdens are overwhelming Spain, Italy and some other nations and spreading fears that they’ll default. A default by one or more governments could topple the entire continent’s economy. Skittish banks that hold much of these countries’ bonds have been reluctant to lend to each other.
On Tuesday, the finance ministers of the 17 countries that use the euro failed to reach an agreement on resolving the crisis. Their failure raised the stakes for the leaders of the 27 countries in the European Union who will hold their own meeting next week. Investors will be looking to the leaders to show progress toward a longer-term solution.
Analysts say the eurozone nations ultimately must approve closer coordination of their spending policies so fiscal discipline can be imposed on individual countries.
Here are some questions and answers about the move and the European crisis.
Q. What did the Fed and other central banks do Wednesday?
A. They agreed to make it easier for banks to obtain U.S. dollars to fund loans all over the world. This should lead banks to loosen credit, which had tightened because of Europe’s financial crisis. Many banks lend in dollars because so much trade and investment is denominated in the U.S. currency. The Fed, the ECB and the other central banks agreed to lower the interest rate on dollar loans.
Q. How would this help?
A. The Fed has provided dollars to all five central banks since May 2010. But the interest rates were too high for many banks. The Fed and the other central banks are easing those rates. And the ECB will reduce the collateral banks must provide to get dollar loans. All this should lead more European banks to borrow dollars from the ECB. That’s important because those banks have had less access to dollars through other means, such as American money market funds. The money funds have reduced lending to European banks for fear the banks have too much debt from troubled countries. If those countries defaulted, banks in Europe could collapse.
Q. Does this mean the Fed is “bailing out” European banks?
A. No. Here’s how it works: The Fed provides dollars to the ECB. In exchange, it gets an equal amount of euros. The ECB then lends the dollars to banks. If the banks don’t pay back the loans, the ECB absorbs the loss. The ECB returns the dollars to the Fed at the same exchange rate as the initial swap.
Q. How will we know if this plan works?
A. One sign will be what happens when the ECB offers dollar loans on Wednesday. Most analysts expect many more banks to take advantage of the dollar loans now that the terms have eased.
Q. Will this do anything for governments like Greece and Italy that are on the verge of default?
A. Not really. It might help calm investors’ nervousness about the overall crisis. It could slightly lower rates that those countries pay. But it won’t reduce their debt burdens. It does buy European leaders time by keeping credit flowing. But investors will soon turn attention to the European leaders’ meeting next Friday. Geoffrey Yu, a strategist at UBS, said markets could plummet if that meeting doesn’t produce results.
Q: How did Europe get into this mess?
A: The euro made it easier to do business across Europe and made the continent a potent economic bloc. Yet the experiment was flawed. Countries were harnessed to one another despite different economies and cultures. Banks lent at low rates even to weaker countries like Greece. The euro meant lenders didn’t have to worry that individual countries would run up inflation that would reduce the value of the loans. Governments overspent for years and got away with it because they could borrow at low rates. But once the Great Recession struck, their debts became devastating.
Q: Why is a solution so hard?
A: The ECB and Germany have resisted aggressive action. Many economists want the central bank to buy the debt of Italy and other struggling countries. That would push down interest rates and ease those countries’ borrowing costs. The ECB has bought Italian and Spanish bonds. But it’s loath to do so in a big way. The ECB says it must control inflation, not be a lender of last resort to governments. And it doesn’t want to set a precedent for bailing out financially ailing nations. Germany opposes one idea _ creating joint bonds backed by the whole eurozone _ because it fears its own borrowing costs would surge if it had to borrow jointly with weaker countries.
Q: What options are European officials considering?
A: Things that would have been unthinkable just weeks ago. One option is to have countries cede control of their budgets to a central authority. That authority would stop countries from spending beyond their means. There has also been talk of forming an elite group of euro nations to guarantee each other’s loans. It would require fiscal discipline from any country that wants to join. Once that happens, the ECB might be more willing to buy government bonds aggressively, thereby pushing down interest rates and easing governments’ debt burdens. Analysts say that some progress toward such a solution at the summit next Friday is crucial.
Q: Can Europe’s leaders solve this mess?
A: The coordinated move the central banks announced Wednesday is expected to ease pressure on the financial system in the short run. But a lasting resolution requires persuading up to 17 countries and the ECB to agree to a solution to both ease government debt loads and impose budgetary discipline. “This is not just a crisis of Greece or this or that country,” says Nicolas Veron, senior fellow at the Brussels-based think tank Bruegel. “It’s a crisis of European institutions.”
Forecasters say Hurricane Kenneth is weakening rapidly and has been downgraded to a Category 2 storm in the eastern Pacific.
There is no threat to land from what had been the strongest late-season hurricane in that area on record when it earlier reached Category 4 status.
The U.S. National Hurricane Center in Miami said Wednesday that Kenneth has maximum sustained winds near 110 mph (175 kph). The storm was centered about 840 miles (1,350 kilometers) south-southwest of the southern tip of Baja California, Mexico best payday advance.
It is moving west at 9 mph (15 kph)
Kenneth is expected to weaken further and could be downgraded to a tropical storm by Thursday. There are no coastal watches or warnings in effect.
The eastern Pacific hurricane season ends Nov. 30.
Investors were cautious on Friday ahead of U.S. jobs figures, with stocks down slightly after enjoying a couple of bumper days on hopes of a Europe-wide plan to fix the banking sector.
After a week of wild gyrations stemming from Europe’s debt crisis, investors are turning their attention to the U.S. government’s jobs report for September _ the payrolls data often set the market tone for a week or two after their release.
Following last month’s unexpectedly flat outcome and a raft of better than anticipated economic data, hopes are that the U.S. economy generated around 60,000 jobs during September, though some in the markets think it could be double that. That’s still low and not enough to get the unemployment rate down from the 9.1 percent level.
“Modest job gains will do little to alleviate concerns about the pace of recovery, however, with the risk of recession remaining all too real,” said Mitul Kotecha, an analyst at Credit Agricole.
Those concerns have dominated European trading following two big days of gains. Earlier, Asian shares advanced following the previous day’s continuing advance.
Germany’s DAX was down 0.2 percent at 5,631 while the CAC-40 in France fell 0.5 percent to 3,062. The FTSE 100 index of leading British shares was 0.4 percent lower at 5,272, with Lloyds Banking Group PLC and Royal Bank of Scotland PLC underperforming in the wake of a downgrade of their credit ratings from Moody’s.
Wall Street was poised for a modestly lower opening, too _ Dow futures fell 0.3 percent to 11,015 while the broader Standard & Poor’s 500 futures fell the same rate to 1,154.
Trading in currency markets was also subdued ahead of the figures, with the euro unchanged at $1 guaranteed high risk personal loans.3426 and the dollar flat at 76.77 yen.
Beyond the U.S. figures, investors will continue to digest developments in Europe’s debt crisis. Over the past couple of days, there have been mounting hopes that European policymakers are preparing a plan to shore up the banking sector in the event of a Greek debt default.
Thursday’s decisions by the Bank of England to launch new monetary stimulus and a big liquidity operation from the European Central Bank have also helped support investor sentiment.
“Hopes that European politicians have a good understanding on the potential need to recapitalise the banking system has been key support to risk appetite in recent sessions,” said Jane Foley, an analyst at Rabobank International. “The very nature of the political process is slow, however, suggesting that once again there is room for disappointment and volatility in the markets.”
Earlier in Asia, Japan’s Nikkei index rose 1 percent to close at 8,605.62 after the country’s central bank said the economy is “picking up” and predicted an eventual return to a moderate recovery.
South Korea’s Kospi index jumped 2.9 percent to close at 1,759.77 and Hong Kong’s Hang Seng ended 3.1 percent higher at 17,707 after surging 5.7 percent the day before.
Markets in mainland China were closed for a weeklong holiday.
Oil prices tracked equities lower _ benchmark crude oil for November delivery was down 55 cents to $82.94.
____
Kelvin Chan in Hong Kong contributed to this report.
World stock markets took a beating Monday over fears that the U.S. economy was heading back into a recession just as the European debt crisis was heating up and the eurozone’s economic indicators were slumping.
Any troubles in the world’s largest economy cast a long shadow over the markets, and a report Friday that the U.S. economy failed to add any new jobs in August caused European and Asian stock markets to sink sharply Monday.
But the news from Europe was also discouraging. Wall Street, which was closed Monday due to the Labor Day holiday, braced for losses Tuesday after the yields in so-called peripheral eurozone countries _ Greece, Italy and Spain _ rose sharply against those of Germany, whose bonds are widely considered a safe haven.
Although retail sales in the 17-nation eurozone rose unexpectedly in July, a survey of the services sector Monday showed a slowdown across the continent for the fifth consecutive month. The purchasing managers’ index for the eurozone showed the services sector was still growing _ unlike the manufacturing sector _ but only barely. That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week.
“There’s so much uncertainty, so much fear, that investors don’t know what to do,” said David Kotok, chairman and chief investment officer at Cumberland Advisors. “I don’t remember the last time stocks were so cheap and nobody wanted them.”
Investors were also shaken by signs that the Italian government’s commitment to its austerity program is wavering. Prime Minister Silvio Berlusconi’s government has backtracked on some deficit-cutting measures, prompting EU officials to urge Italy to stick to its promised plan.
The difference in interest rates between the Greek and benchmark German 10-year bonds, known as the spread, spiraled to new records on Monday, topping 17.3 percentage points. Yields on the Greek bonds were above 18 percent.
Mario Draghi, the incoming chief of the European Central Bank, told a conference in Paris that among the common currency’s problems was a lack of coordinated fiscal policies and that the solution was more integration.
He dismissed the idea of eurobonds _ debt issued jointly by the eurozone countries. Some have argued this would help weaker countries borrow more easily because they wouldn’t have to pay such high interest rates. But stable countries like Germany would likely see their rates rise.
Instead, Draghi suggested the eurozone should adopt rules that would require more budget discipline.
Renewed jitters over the eurozone debt crisis also contributed to the slump in financial stocks amid concerns the banks would need to raise new capital. Deutsche bank closed down 8.9 percent in Frankfurt, while Societe Generale in Paris shed 8.6 percent.
The U.S. unemployment crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. Until then, however, traders coming back from the U.S. holiday weekend will have little to hold onto.
The August jobs figure was far below economists’ already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding. U.S. hiring figures for June and July were also revised lower, only adding to the gloom flexcheck cash advance.
Many traders have already pulled out of any risky investments _ such as stocks, particularly financial ones, the euro and emerging market currencies _ and pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold.
With Wall Street closed, investors focused their selling in Asia and Europe, where the equity losses Monday were some of the heaviest this year.
“We’ve got some rough riding ahead,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, adding he was “concerned that we could see a second wave of selling when most traders are back at their desks.”
Dow futures were down 1.8 percent at 11,010 points while the broader S&P 500 futures were 2.0 lower at 1,145.70.
After Asian indexes closed lower, with the Japan’s Nikkei 225 shedding 1.9 percent, European shares booked sharp losses. Britain’s FTSE 100 closed the day down 3.6 percent to 5,102.58. Germany’s DAX slumped a massive 5.3 percent to 5,246.18, and France’s CAC-40 tumbled 4.7 percent to 2,999.54.
The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market. The U.S. has seen a slump in consumer and business sentiments.
Traders were hoping for signs that the Federal Reserve might take action at its September meeting to support the economy _ perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.
“Right now the possibility has increased,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “I think they have to do something. The markets are expecting QE3.”
Banking stocks were among the hardest hit Monday, partly because the U.S. government on Friday sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.
Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.
In Asia, Australia’s S&P/ASX 200 followed the broaden trend to close down 2.4 percent and South Korea’s Kospi slid 4.4 percent. Hong Kong’s Hang Seng slid 3 percent. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also were down.
Shanghai’s benchmark Composite Index down 2 percent to 2,478.74, its lowest close in 13 months. The Shenzhen Composite Index lost 2.4 percent.
In currencies, the euro weakened to $1.4100 from $1.4187 in New York late Friday. The dollar was roughly flat at 76.87 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.
Benchmark oil for October delivery was down $2.12 to $84.33 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.
In London, Brent crude for October delivery was down $1.63 at $110.70 on the ICE Futures exchange.
The tax-credit bill unveiled this week by House and Senate lawmakers would cut $1.5 billion in spending through 2016. Here’s how:
(Numbers in millions)
Spending cuts
Eliminate renters from Senior Citizen $855.0 Property Tax credit
Tighten caps on Historic Preservation tax credit 664.6
Tighten caps on Low Income Housing tax credit 190.9
End Neighborhood Preservation credit 72.8
Tax Amnesty (in 2012 & 2013) 46.4
End Rebuilding Communities credit 20.1
End Self-Employed Health Insurance credit 17.1
End Small Business Incubator credit 2.6
End Brownfields Jobs credit .825
New spending
Aerotropolis tax credits 309.7
Amateur sports tax credits 36.0
Total savings $1,523.8
Source: Joint Committee on Tax Policy
McDonald’s said Friday net income rose 15 percent in the second quarter as the world’s biggest burger chain continues to get customers to buy new menu items even as they cut back spending in other areas during the economic downturn.
McDonald’s Corp. has consistently outperformed its fast-food peers throughout the recession and its aftermath despite that it’s raised prices this year, in part because of its strategy to give customers more reasons to frequent its restaurants.
The chain is upgrading its restaurants, offering wireless access, expanding the number of locations with 24-hour service, introducing healthier food like oatmeal and smoothies, and selling fancy coffee drinks. It’s also testing changes to improve customer service, such as sending an employee to walk through the drive-thru and punch orders into a hand-held device.
Pete Bensen, the chief financial officer, said customers are telling McDonald’s that “the service is friendlier, the food is hotter, the restroom is cleaner.”
McDonald’s has bucked the trend as the recession has been brutal for the restaurant industry as economic woes have caused consumers to scrutinize their discretionary spending. At the same time, companies have been squeezed by higher costs for everything from tomatoes to fuel. They’ve had to walk a fine line between raising their prices to offset their costs without turning off customers completely.
McDonald’s, which has raised its prices twice this year, said it, too, is grappling with higher costs and trying to figure out how much of those it can pass on to customers. McDonald’s increased menu prices an average of 1.4 percent at the end of May, on top of a 1 percent increase in March. The price increases also helped the company’s results.
McDonald’s net income rose 15 percent to $1.4 billion, or $1.35 per share, during the quarter. Revenue was up 16 percent to $6.9 billion, topping analysts’ estimates of $6.6 billion.
Bensen said the company will continue to consider more price increases but doesn’t want to drive away customers. Normally, he said, a price increase of 2 to 3 percent is enough for the company to maintain margins, so “something more” could be needed this year low fee pay day loans. The restaurant has some flexibility, he said, because customers are paying more for groceries anyway.
McDonald’s, based in Oak Brook, Ill., said it expects costs for most of its ingredients to rise 4 to 4.5 percent in the U.S. and Europe this year. That’s the same prediction it made three months ago, implying costs may have stabilized. The costs for beef, corn and fuel and other materials that McDonald’s needs to make and transport its products are down from highs this spring but still up from a year ago.
McDonald’s will also face rising costs in other areas. It said it expects an income tax rate of 31 to 32 percent for the year, up from the 29.3 percent effective tax rate it paid last year. It expects interest expenses to rise 8 to 10 percent in 2011, based on current rates. Also, McDonald’s employees are staying longer, which leads to higher pay. So labor costs have also increased slightly.
Like many companies, McDonald’s is investing in emerging markets like China and seeing strong growth there. What sets McDonald’s apart is that it is still making strides in the U.S.
Revenue in the U.S. grew 4 percent. That’s a metric that many companies would envy, but it was lethargic compared with the 25 percent revenue growth in Africa, the Middle East and Asia, and 21 percent in Europe. McDonald’s President Don Thompson did caution that Europe “is still fragile,” citing high unemployment rates.
The U.S. continues to become a smaller proportion of overall revenue. The U.S. accounted for 31 percent of total revenue, down from 35 percent in the same period a year ago. Europe made up 41 percent of revenue, up from 39 percent a year ago. Asia, the Middle East and Africa accounted for 22 percent of revenue, up from 20 percent a year ago.
McDonald’s stock rose 3 percent mid-day trading to $89.11.
A federal safety official says it will probably be months before investigators know what caused an ExxonMobil oil pipeline to rupture near Billings, Mont., spilling about 1,000 barrels of crude oil into the Yellowstone River.
Cynthia Quarterman, head of the safety agency that regulates pipelines, told a House committee Thursday that it will likely be August or September before water levels in the river are low enough to exhume the section of damaged pipe responsible. She said it would be about two months after that before investigators identify a cause.
She said investigators have not found any violations of federal safety regulations by Exxon related to the spill.
ExxonMobil Pipeline Company President Gary Pruessing said the company wants to lay a new pipeline 30 feet below the riverbed.
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