Ontario teachers will take home less pay and earn smaller pensions under a deal aimed at erasing a projected $17.2 billion shortfall in their pension plan.
Details of a negotiated deal approved by union representatives and the Ontario cabinet began reaching teachers by mail during this final week of the school year, or earlier by email.
A three-part plan calls for:
Five Build-A-Bear Workshop stores in Japan have been closed in the aftermath of the devastating earthquake.
This is yet another reminder that the world is flat — and that global is increasingly local, as the saying goes.
Overland-based Build-A-Bear has a franchisee who runs nine stores in Japan. All of the stores’ employees are safe, a company spokeswoman said.
The five stores that have closed are all in shopping malls that have shuttered in the wake of the disaster. These stores are in Sendai, Hanyu, Narita, Koshigaya and Tsuchiura.
Build-A-Bear’s foundation also announced this week that it is making a donation of $25,000 to the American Red Cross for relief efforts in Japan.
In addition to company-owned stores in the United Kingdom, Build-A-Bear has franchisee agreements in 12 countries including South Africa, Thailand, Mexico, and the United Arab Emirates.
Another one of its franchised stores in Bahrain was also recently closed due to the political turmoil in that country.
Smurfit-Stone Container Corp., a local company that recently emerged from bankruptcy protection, has been acquired by RockTenn, a manufacturer of paperboard, containerboard and consumer and corrugated packaging, the companies announced Sunday.
The deal, worth about $3.5 billion, is half cash and half stock. It would pay $35 a share for Smurfit-Stone stock, a 27 percent premium over the closing price Friday. The deal would make the company a wholly owned subsidiary of RockTenn, based in Norcross, Ga.
Axel Weber’s candidacy for the European Central Bank presidency got a boost after two smaller countries laid claim to an ECB Executive Board post, saving the top job for one of the European Union’s powers.
Belgium and Slovakia nominated candidates for an ECB seat becoming vacant in May, clearing an obstacle to a bid by the German banker for the top job when Jean-Claude Trichet’s term ends in October.
“I still fail to see the credible candidate that would oppose Weber, or would be an alternative to Weber,” said Jean Pisani-Ferry, a former EU and French government economic adviser who runs the Bruegel research institute in Brussels.
Already unfolding behind the scenes, the campaign for ECB president runs in parallel with efforts to contain the debt crisis that last year forced EU-led emergency lending of 178 billion euros ($238 billion) for Greece and Ireland.
The race is to succeed France’s Trichet in the second-most important financial job in the world after the U.S. Federal Reserve chairman. The decision may turn on domestic political demands facing leaders such as German Chancellor Angela Merkel, efforts to balance regions and the influence of “big” and “small” states, and a desire for consensus.
The Bundesbank chief would also confront the curse of the frontrunner in becoming the first German to win a top EU post since Walter Hallstein, who served as the first European Commission president from 1958 to 1967.
Rompuy Beats Blair
EU history is littered with favorites who ultimately failed to get the top job, from failed bids to run the European Commission by Belgium’s Jean-Luc Dehaene in 1994 and Guy Verhofstadt in 2004 to Tony Blair’s campaign to be the first EU president in 2009. Weber himself drew fire from Trichet after he criticized the ECB’s decision to buy government bonds last year, a tactic that blunted the debt crisis’s impact. Weber’s view was “not the position of Governing Council,” he said in October.
Thirteen of the 17 politicians who will name the next ECB chief were in on the decision to snub the former U.K. premier in favor of Herman Van Rompuy, a haiku-writing former Belgian leader with a low profile even in his home country.
In Europe’s informal division between “small” and “large” countries, the smaller ones staked their claim to keeping the ECB board position that Austria’s Gertrude Tumpel- Gugerell, 58, will leave on May 31.
Belgium on Jan. 17 nominated central bank official Peter Praet, who turns 62 tomorrow, a past loser in ECB personnel sweepstakes. Slovakia, one of three eastern European countries using the euro, put forward Elena Kohutikova, 57, a former central bank deputy governor.
Gender Politics
Gender politics plays a role. Praet’s appointment would make the Frankfurt-based central bank an all-male club.
“We need the most competent candidate to fill the vacancy,” French Finance Minister Christine Lagarde said after yesterday’s EU meeting in Brussels. “If the competencies are equal, then my choice is for the woman.”
Whoever wins, the appointment will keep two of the six board seats rotating among smaller countries, while the four biggest — Germany, France, Italy and Spain — claim permanent representation.
Under that logic, a Belgian victory might dim the chances that Luxembourg Central Bank Governor Yves Mersch, 61, will emerge as a compromise candidate for the top post. Luxembourg was part of Belgium in the 19th century and the two countries are often lumped together in EU personnel decisions.
The Belgian-Slovak jockeying will act as a prelude to the replacement of Trichet, whose eight-year term ends Oct. 31.
German Antidote
The campaign come as inflation accelerates a two-year high of 2.2 percent in December, shifting the ECB’s focus from the debt crisis back to its original, German-inspired mission of maintaining price stability. The ECB aims to keep inflation below 2 percent.
Weber, 53, could be the antidote to waning German enthusiasm for the euro as consumer prices rise and the bill for aiding debt-hit states threatens to mount, said Carsten Brzeski, an economist at ING Group NV in Brussels.
“We could see fading euro support from the German public if inflation remains high,” said Brzeski, a German who once worked in the European Commission’s economics department. Weber’s appointment would “boost German confidence in the central bank, to have this guardian of price stability back.”
Here, EU politics and the voting math kick in. No deadline is set for a decision, the first time Europe has named a new top central banker since the ECB’s first two presidents were simultaneously selected at a dramatic summit in May 1998, eight months before the euro came into being.
Veto Club
At the time, Wim Duisenberg of the Netherlands, backed by Germany, faced a veto threat from France. A political deal was struck to give him the job, as long as he stepped down midway through his eight-year term to make way for Trichet, who will have served a complete mandate.
The EU has since dropped the policy of allowing lone countries to block high-level appointments. The voting formula now requires anywhere from two to six of the euro region’s 17 countries to band together to wield a veto, with bigger countries holding more sway.
Weber, a self-confessed non-diplomat, broke from the European consensus by opposing the ECB’s bond purchases that have helped at least three of the countries that will elect Trichet’s successor — Ireland, Greece and Portugal.
Merkel Lobby
While Bild newspaper reported Jan. 15 that Merkel has begun to lobby for Weber, she isn’t doing so publicly, partly because she still has to persuade French President Nicolas Sarkozy. Sarkozy opposes a Weber candidacy, France’s La Tribune newspaper reported in October, without citing sources. He has not commented publicly on the matter.
Germany wants the discussions out of the public eye so that Trichet, the incumbent, “does not get weakened prematurely by such a debate,” German Finance Minister Wolfgang Schaeuble said yesterday in Brussels.
France would need one other “large” country — Italy or Spain — to marshal enough votes for a veto. Even if Sarkozy backs Weber, Italy and Spain together could reject him. The only declared candidate for the top post is Bank of Italy Governor Mario Draghi.
Draghi “is not only technically prepared but he’s also a wise man,” former Italian Prime Minister and European Commission President Romano Prodi, who counts the central banker as a friend, said in a Jan. 17 Bloomberg Television interview.
The knock on Draghi is that, with the ECB’s vice presidency held by Vitor Constancio of Portugal, his selection would put two southern Europeans in charge of the bank. A third, Jose Barroso of Portugal, runs the EU commission. Draghi’s experience at Goldman Sachs Group Inc. might not also sit well with leaders who blame investment banks for the economic crisis.
“Politics will be the major thing,” said Paul de Grauwe, an economics professor at the Catholic University of Leuven and two-time unsuccessful Belgian candidate for an ECB post. “It’s certainly not going to be very transparent. These are things that are decided in smoke-filled rooms.”
Greece’s parliament approved the government’s 2011 budget that aims to cut the fiscal deficit to about half of last year’s level when it swelled to the largest in Europe and triggered a regional debt crisis.
The budget passed by a vote of 156 to 142 in the Athens- based parliament. Measures include 14 billion euros ($18.4 billion) in spending cuts and additional revenue aimed at cutting the shortfall to 7.4 percent of gross domestic product, from a projected 9.4 percent this year and meeting conditions of a 110 billion-euro bailout from the EU and International Monetary Fund approved in May.
“I am not calling on you to vote for this because it leads us to the road to salvation, I call on you to vote for this because it is a punctual continuation of a plan we committed to, so we can respect the sacrifice Greek citizens made in 2010,” Finance Minister George Papaconstantinou told the country’s 300- member parliament.
Greece’s debt woes broadened into a euro-area crisis this year and governments from Lisbon to Rome have struggled to convince investors they can reduce debt and deficits enough to prevent future bailouts. The EU and IMF agreed on an 85 billion- euro aid package for Ireland last month, and borrowing costs in Portugal and Spain rose to euro-area records on concern they may be next.
Heightened Concerns
Fitch Ratings, the only rating company that still considers Greece debt investment grade, followed Moody’s Investors Service and Standard & Poor’s this month in placing the country’s credit rating on review for a possible downgrade. Moody’s cited heightened concerns about whether the country will be able to reduce its debt to “sustainable levels” and a “substantial” shortfall in 2010 revenue.
The extra yield investors demand to buy Greek 10-year bonds over German bunds rose to 905 basis points yesterday, nearing the May 7 record of 1973 basis points at the time of the bailout.
Greece’s debt as a percentage of GDP stood at 127 percent in 2009, the highest in the 27-nation EU. The EU says the measure will rise to 156 percent in 2012. Greece has said debt as a percentage of GDP will peak in 2013. The European Commission forecasts the economy will contract for a third year in 2011, shrinking 3 percent, before returning to growth in 2012.
Protests
Greece’s two biggest unions staged a 3-hour walkout yesterday and transport workers held their fourth 24-hour strike this month no fax pay day loan. About 2,000 workers marched to parliament before the budget vote to protests the additional austerity measures, police estimated.
Prime Minister George Papandreou and his socialist Pasok party came to power in October 2009 and soon revealed that the deficit was twice what the outgoing government had estimated. Papandreou who campaigned on pledges of higher spending and wage increases, has managed to maintain much of his popular support even as he implements the deepest austerity measures in decades, triggering regular protests by unions, Pasok’s voting base.
During the final budget debate, Papandreou said the government has had three goals since it was elected: to save the country from bankruptcy, stabilize the economy and proceed with necessary structural reforms. He said those who still talk about a Greek default are being “unfair” and that the memorandum has given it the needed stability to proceed with necessary changes and return to growth in 2012.
Top Pick
Papandreou was still the top pick to run the country according to 42 percent of Greeks surveyed in a poll by Public Issue published in Kathimerini newspaper on Dec. 12. That compared with the 43.9 percent support he had in the 2009 elections. Sixty-six percent of respondents said the economic situation in Greece would worsen, the poll showed.
The government has said it expects a 4 billion-euro shortfall in tax revenue this year even after raising taxes and beginning a crack-down on tax evasion. Greece has lowered pensions and wages to offset the lag, which is hurting efforts to cut a deficit that swelled to 15.4 percent of GDP in 2009, the largest of any euro area state in the currency’s history.
Other measures to cut the deficit to 17 billion euros include increasing the lowest sales-tax rate to 13 percent from 11 percent, extending a levy on profitable firms and freezing pensions. To boost growth, Greece will reduce the tax on non- distributed corporate profits to 20 percent from 24 percent as well as give the key tourism industry a cut in value-added tax, reducing the rate to 6.5 percent from 11 percent.
FedEx says its fiscal second-quarter earnings tumbled on rising costs and one-time charges, but is raising its prediction for the full-year as holiday shipments are beating its expectations.
Its results missed Wall Street estimates, however. Its shares fell more than 2 percent in pre-market trading.
The Memphis, Tenn., company said Thursday its net income rose to $283 million, or 89 cents per share, in the September-November period. That’s down 18 percent from $345 million, or $1.10 per share a year ago.
It earned $1.16 per share excluding one-time costs such as the integration of its trucking operations and higher maintenance expenses. But that was below analysts’ forecasts of $1.31 a share.
Revenue rose 12 percent to $9.63 billion. Thomson Reuters says analysts expected $9.7 billion.
FedEx now expects to earn $5 to $5.30 a share for the year. It previously expected $4.80 to $5.25. Analysts expect $5.21 a share
Dec. 11, 2008: Bernard Madoff is arrested after telling senior employes that his investment company was “basically, a giant Ponzi scheme,” and he had “absolutely nothing.” Media reports later identified the employees as his sons, Mark and Andrew.
Dec. 12, 2008: Losses from Madoff’s scheme are estimated to top $50 billion by his own account. Authorities would later put the loss at $20 billion, making it the biggest investment fraud in U.S. history.
Dec. 23, 2008: French investor Rene-Thierry Magon de la Villehuchet is found dead after committing suicide after he discovered that he had lost his entire savings, and his clients’ money, to Madoff’s Ponzi scheme.
March 12, 2009: Bernard Madoff pleads guilty to 11 charges, including fraud, perjury and money laundering. He gets a prison sentence of 150 years. The judge jails him immediately after the plea.
March 17, 2009: Federal prosecutors tell a judge they want to seize jewelry, business interests and more than $30 million from Madoff’s relatives, including loans Madoff made to his sons, Mark and Andrew.
June 29, 2009: Bernard Madoff’s wife, Ruth Madoff, breaks her silence and publicly says she was among the victims of her husband’s deceit. She said he “stunned us all with his confession and is responsible for this terrible situation in which so many now find themselves.”
July 2, 2009: Federal marshals force Ruth Madoff out of the $7 million Manhattan penthouse where she and Bernard Madoff lived.
July 14, 2009: Bernard Madoff arrives at prison in North Carolina to serve his 150-year sentence easy payday loans.
Aug. 3, 2009: Ruth Madoff is ordered to report expenses above $100 to a trustee appointed to locate and liquidate Madoff’s assets to pay back thousands of burned customers.
Oct. 2, 2009: Court-appointed trustee Irving Picard sues Bernard Madoff’s family members in U.S. Bankruptcy Court in Manhattan, claiming they used the family business as a “piggy bank.” Mark Madoff is accused as improperly using $66 million from the business to buy luxury homes in New York City, Nantucket and Connecticut.
Feb. 24, 2010: Mark Madoff’s wife Stephanie files court papers asking change her last name to Morgan from Madoff. She said the change would help her avoid “additional humiliation” and harassment that included threats. Mark filed papers saying he did not object to the move.
Dec. 8, 2010: Court trustee Picard files a lawsuit in London seeking to recover at least $80 million from the international arm of Madoff’s business. Defendants include Mark and Andrew Madoff.
Dec. 10, 2010: Picard files civil racketeering charges against Austrian banker Sonja Kohn and 55 other defendants demanding that they give up nearly $20 billion, and accusing Kohn of accepting at least $62 million in secret kickbacks from Madoff for soliciting investors for the fraud.
Dec. 11, 2010: Mark Madoff is found dead in his New York apartment after apparently hanging himself while his 2-year-old son was sleeping in a nearby room.
China ordered its banks Friday to hold back more money as reserves in a new move to curb lending and rising inflation that communist leaders worry might stir unrest.
It was China’s second reserve increase in two weeks and came as Beijing tries to restore normal financial conditions following its recovery from the global crisis and cool inflation that surged to a 25-month high in October.
Analysts also expect China to announce a second interest rate hike after its surprise Oct. 19 increase but there was no word Friday of any changes in rates.
The state-owned banking industry was ordered to set aside an additional 0.5 percent of deposits as reserves, effective Nov. 29. Reserves vary by institution but could be as high as 19 percent for the biggest commercial lenders.
Economists say money flooding through the economy from China’s stimulus spending and heavy bank lending helped to push inflation to 4.4 percent in October, well above the government’s 3 percent target. Politically sensitive food costs jumped more than 10 percent.
Poor families in China spend up to half their incomes on food and communist leaders see inflation as a possible trigger of unrest.
Regulators worry that excessive lending is fueling overspending on real estate and other assets and might leave banks burdened with unpaid loans if ill-considered projects default.
Friday’s order came after China’s stock markets closed. Stocks fell this week on investor fears the government might respond to October’s inflation by tightening economic controls and further slowing China’s growth faxless payday loans.
China’s post-crisis expansion peaked at 11.9 percent in the first quarter of this year and cooled to 9.6 percent in the three months ending in September. The World Bank says next year’s economic growth should slow to 8.7 percent.
Raising reserve requirements allows Beijing to slow lending growth without increasing costs for borrowers through a rate hike. The government has used such targeted tools to try to restrain housing costs and make other changes while avoiding large rate increases.
A rate hike is politically fraught because it increases costs for state companies and heavily indebted finance agencies set up by local governments to use bank loans to invest in infrastructure and real estate projects.
Analysts say the modest quarter percentage point rate hike on Oct. 19 was meant as a warning to banks to cut back runaway lending.
Chinese leaders also worry that higher interest rates will attract inflows of foreign speculative “hot money” into stocks and real estate. Unauthorized inflows of money meant to profit from China’s rebound and a rise in its currency, the yuan, have surged in recent months despite Beijing’s moves to tighten capital controls.
Gov. Bill Richardson said this week he will release $1 million for early childhood programs across New Mexico.
The federal stimulus money will support programs that serve homeless children and provide home visiting services for infants and their families provided through the Children, Youth and Families Department.
Of the $1 million, $234,000 will go to programs that serve homeless children and their families and $766,000 will go to home visiting services.
CYFD intends to restore budget cuts to contractors that have existing contracts with the state to serve at-risk families with infants cash advance today. The department will issue a request for proposals for the homeless childcare programs.
St. Joseph Community Health has also committed $234,168 of its own funds to support early childhood programs on top of the state money.
Allen Sanchez, CEO of St. Joseph, said investments in early childhood programs are critical during the current recession.
The Atlanta City Council Friday overwhelmingly adopted a fiscal 2011 budget that will provide raises to city police officers and firefighters and a bonus to most other city employees.
Mayor Kasim Reed, citing the impacts of the recession on city tax revenues, originally had recommended an increase only for police officers.
But council members intervened this week after complaints that it would be unfair to increase pay for one group of city employees and not others.
Under the $558 million budget, which takes effect July 1, police officers and firefighters will get a 3.5 percent raise starting in January.
Other city workers will receive a $450 bonus, to be paid out within 30 days.
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