Economic and Finance
The euro fell to an 11-year low against the yen and reached the weakest in 15 months versus the dollar after French borrowing costs rose at a bond sale today.
The 17-nation currency slumped against most major peers after France sold 7.96 billion euros ($10.3 billion) of debt today in its first auction of the year as credit companies threaten to cut the nation
A defiant President Barack Obama, tired of Senate Republicans stalling his nominee to lead a new consumer protection agency, put him in charge Wednesday over their opposition.
“I refuse to take `no’ for an answer,” the president said.
Outraged GOP leaders in Congress immediately suggested that courts would determine whether Richard Cordray’s appointment was illegal.
With a director in place, Obama said the Consumer Financial Protection Bureau can start overseeing the mortgage companies, payday lenders, debt collectors and other financial operations often blamed for practices that helped undermine the economy.
Obama announced the move with Cordray by his side before a cheering crowd in Ohio, a politically vital state where Cordray once was attorney general.
“Every day that we waited was another day when millions of Americans are left unprotected,” Obama.
Until Cordray took over, the office didn’t have all the tools needed “to protect consumers against dishonest mortgage brokers or payday lenders, and debt collectors who are taking advantage of consumers,” Obama said. “And that’s inexcusable. It’s wrong.”
In political terms, the recess appointment during the congressional break raised the level of confrontation for a president seeking re-election by championing the middle class and challenging an unpopular Congress. Acting right after Tuesday’s GOP presidential caucuses in Iowa, Obama sought to grab attention and show he would not be slowed, making his most brazen leap-frog over Congress.
Senate Republicans had halted Cordray’s nomination because they think the consumer agency is too powerful and unaccountable.
The Senate’s top Republican, Mitch McConnell of Kentucky, accused Obama of an unprecedented power grab that “arrogantly circumvented the American people.”
Added House Speaker John Boehner, R-Ohio: “It’s clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward. This action goes beyond the president’s authority, and I expect the courts will find the appointment to be illegitimate.”
It was unclear who might undertake a legal fight. But people familiar with the matter said an outside private group regulated by the consumer agency might be in the best legal position.
By going around the Senate, where Democrats hold an edge but Republicans can block action, Obama essentially declared that the chamber’s short off-and-on sessions are a sham intended to block him, but don’t prevent him from such an appointment.
Yet it was his own party that started the practice when Republican George W. Bush was president.
In reality, Obama had little choice to get the consumer agency fully running after months of stalemate.
White House communications director Dan Pfeiffer announced Obama’s move on Twitter after senior administration officials first confirmed it to The Associated Press. Obama spokesman Jay Carney said White House lawyers have determined Obama is within his bounds to appoint Cordray now.
Cordray, who’s expected to take over this week, stands to serve for at least the next two years, covering the length of the Senate’s session.
At a high school in the Cleveland suburb of Shaker Heights, Obama said Republicans were only blocking Cordray because they wanted to water down consumer protections.
“I’m not going to stand by while a minority in the Senate puts party ideology ahead of the people we were elected to serve,” he said.
More than a standoff over one significant appointment, the fight speaks to the heart of a presidential campaign under way. Presiding over a troubled but improving economy, Obama’s must persuade a weary middle class that he is their advocate, while fending off criticism from Republicans challengers and lawmakers.
Obama has constitutional power to make appointments during a congressional recess.
Expressly to keep that from happening, Republicans in the Senate have had the Senate running in “pro forma” sessions, meaning open for business in name with no actual business planned. Democrats started the practice under Bush to halt him from making recess appointments.
The Senate held such a session on Tuesday and planned another one on Friday. Republicans contend Obama cannot make a recess appointment during such a break of less than three days, based on years of precedent, and they point to comments by Obama’s own Justice Department echoing that view.
Regardless, the Obama White House now contends such an approach is a gimmick.
For all practical purposes, the Senate is in recess and Obama is free to make the appointment on his own, without Senate confirmation, administration officials said.
McConnell shot back that Obama’s move “lands this appointee in uncertain legal territory, threatens the confirmation process and fundamentally endangers the Congress’ role in providing a check on the excesses of the executive branch.”
The president also was expected to announce other recess appointments, possibly including nominees to the National Labor Relations Board.
Republicans have had little opposition if any to the qualifications of Cordray. Their objection is with the consumer agency itself.
Obama and his team say lawmakers should try to revise the Wall Street oversight law if they don’t like it, not keep the agency from performing its job.
Before his remarks Wednesday, Obama met with a family that got taken advantage of by a mortgage broker. He wanted to use their story as an example of how the consumer agency can crack down on such practices.
Obama was focusing on the most Democratic congressional district in Ohio, a Cleveland suburb, a day after Mitt Romney won Iowa’s Republican presidential caucuses by just eight votes. Obama’s trip signals the White House’s intent to keep the president in the public eye even as the political world focuses on the GOP’s selection process.
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A man who accepted nearly $2 million in gold bars at night in a Rexdale parking lot took the gold to Egypt and gave it to Islamic scholars, court records show.
Joseph Adam, a Toronto resident, is ordered to appear on Jan. 10 in the Ontario Superior Court of Justice, commercial division, to explain himself.
The court case involves two insolvent sister companies, UM Financial Inc. and UM Capital Inc., that manage sharia-compliant home mortgages. In a sharia-compliant mortgage, rather than pay interest, a buyer rents the home from the money lender, gradually purchasing the property. Ownership is transferred when the full value is paid.
Court documents show 172 homeowners were involved with the UM companies when they went into receivership in October.
Filed under: Uncategorized, reports by Fred
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Australian manufacturing (AIGPMI) expanded for the first time in six months in December, driven by gains in basic metals, transport and publishing, a private survey showed.
The manufacturing index (AIGPMI) was 50.2 last month compared with 47.8 in November, the Australian Industry Group and PricewaterhouseCoopers said in a survey released today. It was the third reading for 2011 that was above 50, the dividing line between expansion and contraction.
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The curtain is falling on the worst year for Hollywood in recent memory.
The movie industry sold 1.28 billion tickets in North America in 2011, according to Hollywood.com, the lowest since 1995. That was good for $10.2 billion in box office revenue, down 3.5% from last year.
Analysts said the disappointing results came from a combination of a weak economy and expanding home entertainment options.
"Consumers are still trying to repair their balance sheets," said Miller Tabak analyst David Joyce. "It’s not so much the titles."
Spiking ticket prices have also played a role, said Paul Dergarabedian of Hollywood.com. Average ticket prices have risen over 80% since 1995, and have jumped from $6.88 to $7.96 in just the past four years.
Louis C.K. tops $1 million in sales of comedy special
"With the overpricing that we’ve seen in the past couple years, when that happens in a recession, moviegoers reevaluate," Dergarabedian said.
In addition, the burgeoning entertainment available online and through services like Netflix () has created "an extraordinarily competitive landscape when it comes to media and technology," he added.
Harry Potter and the Deathly Hallows Part II ranked as the highest-grossing film in North America this year, raking in over $381 million, followed by Transformers: Dark of the Moon and Twilight: Breaking Dawn.
Maine scallop fishermen expect to get record prices for their catch this season with strong global demand and a diminished supply from Japan and other competing, scallop-producing nations.
The weak U.S. dollar also is helping boost prices, said Dana Temple, who owns Crescent Bay Inc. seafood company in Cape Elizabeth.
“The prices these guys are going to get are probably going to be higher than they’ve ever gotten in the history of this fishery,” said Temple, who’s been selling scallops for 35 years. The higher price for fishermen also means consumers will pay more in restaurants and food stores.
Sea scallops, which are similar to but bigger than bay scallops, have been harvested along the Maine coast since the late 1800s, and at times, it has been the state’s second most-valuable seafood, behind lobsters.
The state’s scallops are considered high quality because they’re brought to shore the same day boats drag them off the ocean floor with devices that look like big metal mesh bags or divers harvest them by hand. The large boats that drag for scallops on Georges Bank off southern New England can spend five days or more at sea before they bring their catch to port. The scallops are shucked at sea, with the shells thrown back into the ocean.
But Maine’s fishery has had its ups and downs, with fishing increasing sharply when scallops are plentiful. In the 1980s and `90s, Maine fishermen routinely harvested well over a million pounds of scallop meat in state waters, with the catch valued at $5 million to $10 million a year. The harvest peaked at 3.8 million pounds worth $15 million in 1983.
In recent years, the catch has fallen off sharply, which regulators blame on overfishing. Fishermen caught 195,000 pounds valued at $1.6 million in Maine waters last year, according to the Department of Marine Resources. That was just a drop in the bucket compared to the entire U.S. wild catch, which totaled 58 million pounds valued at $455 million.
Still, scallops provide a supplemental income in the winter for fishermen who go after lobsters, groundfish and sea urchins at other times.
Maine instituted measures two years ago to help restore scallop populations and address overfishing. It shut down 20 percent of the coastline to scallop fishing, froze the number of fishing licenses, shrunk the season, increased the legal size limit and limited the daily catch. The areas closed to fishing are scheduled to open after the current season ends.
There are signs the conservation efforts have started to pay off. In Cobscook Bay near Canada, the mass of scallops increased five-fold in one area just a year after it was closed to fishing cash advance to savings account. Fall surveys show promise in some, but not all, of the other closed areas.
“I think it’s coming back,” said James Ackley, a Machias fisherman. “But it took 12 to 15 years to get where it was, so it won’t get back overnight.”
The Maine scallop season began Dec. 17 and runs through March. Its opening day drew lots of boats, especially to Cobscook Bay. There, fishermen reported smaller and fewer scallops than expected, prompting the Department of Marine Resources to call a meeting with fishermen this week to get a handle on what’s going on.
The scallop population is highly variable from place to place, and fishermen won’t know for certain how successful the conservation efforts have been until closed areas are reopened next year, said Robin Alden, director of Penobscot East Resource Center, a Stonington-based nonprofit that works on fishery issues in eastern Maine.
“We don’t know yet if the scallop closed areas are going to replenish,” she said. “It’ll probably be yes in some places and no in others. It depends on whether you chose the right areas in the first place and then what Mother Nature does with it.”
But for the scallops fishermen get, the price will likely be high. Ackley and others expect perhaps $10 a pound or even more.
The U.S. scallop market has been strong in recent years, with the per-pound price that fishermen received rising 28 percent from 2009 to 2010 to $7.92 a pound.
With Japanese scallop exports way down after last March’s tsunami and nuclear disaster, supplies remain tight and prices will likely stay high, Temple said. Although there’s little, if any, health threat from Japanese scallops, buyers don’t want to pay high prices for scallops that the public is wary of, he said.
“Japan used to send hundreds of loads of product over here, and it’s tough to sell it now,” Temple said.
The higher prices and rebounding scallop populations are good news for Maine fishermen, Ackley said. But he’s concerned those factors could also result in more fishing that would send stocks plummeting again.
Maine sells 800 scallop fishing licenses a year, but last year, only 234 fishermen actually caught scallops. If the population and price are good enough, more could head out this year.
“I think the effort will be more this year than it’s been for four or five years,” Ackley said. “And I believe next year there will be even more effort.”
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+%3Cp%3EPrime+Minister-elect+Mariano+Rajoy+pledged+to+shrink+Spain%92s+public+sector+and+reduce+spending+to+tackle+the+euro+area%92s+third-largest+budget+deficit+without+saying+how+he%92ll+finance+higher+pensions+and+tax+breaks.+%3C%2Fp%3E+%3Cp%3E%93The+one+and+only+part+of+public+spending+that+will+increase+is+pensions%2C%94+Rajoy+told+lawmakers+in+Madrid+today.+%93All+other+components+may+be+reduced.%94+Pensions+accounted+for+112+billion+euros+%28%24146+billion%29+of+spending+in+the+2011+budget.+%3C%2Fp%3E+%3Cp%3ERajoy%2C+whose+People%92s+Party+secured+the+biggest+majority+any+Spanish+party+has+won+since+1982+in+Nov.+20+elections%2C+presented+his+program+in+Parliament+today+before+taking+office+on+Dec.+21.+%3C%2Fp%3E+%3Cp%3ERajoy%2C+who+defeated+the+ruling+Socialists+with+a+campaign+focused+on+the+sovereign+debt+crisis%2C+said+he%92ll+freeze+public+hiring+and+%93reshape%94+the+public+sector+as+he+seeks+to+meet+a+pledge+to+regain+investor+confidence+and+recover+Spain%92s+AAA+credit+rating.+Rajoy+didn%92t+give+details+of+how+he+will+execute+the+16.5+billion+euros+in+spending+cuts+that+the+outgoing+government%92s+budget+plan+shows+are+needed+next+year.+%3C%2Fp%3E+%3Cp%3E%93We+see+where+the+additional+spending+will+come+from%2C+but+I+don%92t+see+where+the+cuts+will+come+from%2C%94+said+Gilles+Moec%2C+co-chief+European+economist+at+Deutsche+Bank+AG+in+London.+%93Increasing+pensions+is+a+bit+surprising%2C+I+would+like+to+see+more+detail.%94+%3C%2Fp%3E+Missing+Target++%3Cp%3ERajoy+said+he%92ll+announce+spending+cuts+at+his+second+Cabinet+meeting+on+Dec.+30+as+Spain%92s+budget+deficit+may+exceed+the+outgoing+government%92s+target+of+6+percent+of+gross+domestic+product+this+year.+A+new+budget+will+be+presented+for+2012+before+March+31%2C+he+said.+%3C%2Fp%3E+%3Cp%3ERajoy+said+one+of+his+first+bills+will+be+a+law+to+flesh+out+a+constitutional+amendment+on+budget+discipline+approved+by+his+party+and+the+outgoing+Socialists+in+September.+The+law+will+call+for+the+debt-to-GDP+ratio+to+be+cut+to+60+percent+by+2020+and+for+the+structural+public+deficit+to+be+limited+to+0.4+percent+of+GDP%2C+he+said+%3Ca+href%3D%22http%3A%2F%2Fus-paydayloans.com%22%3Epaydayloans%3C%2Fa%3E%3C%21–+.+–%3E.+%3C%2Fp%3E+%3Cp%3ERajoy+inherits+an+economy+which+stalled+in+the+third+quarter+and+may+contract+in+the+final+three+months+of+the+year%2C+according+to+the+Bank+of+Spain.+%3C%2Fp%3E+%91Couldn%92t+Be+Darker%92++%3Cp%3E%93Expectations+for+the+next+two+quarters+are+not+good+at+all%2C%94+Rajoy+said.+With+the+economy+%93growing+by+half+the+rate+of+the+rest+of+the+European+Union%2C%94+Spain+is+%93being+left+behind%94+and+%93the+outlook+couldn%92t+be+darker%2C%94+he+said.+%3C%2Fp%3E+%3Cp%3ESpanish+10-year+yields+fell+to+5.13+percent+at+2%3A20+p.m.+in+Madrid+from+5.31+percent+on+Dec.+16%2C+and+as+high+as+6.78+percent+on+Nov.+17%2C+the+most+since+1997.+%3C%2Fp%3E+%3Cp%3EAdding+to+pressure+on+Rajoy%2C+Fitch+Ratings+put+six+euro+members+including+Spain+on+review+for+a+possible+downgrade+on+Dec.+16%2C+saying+a+full+solution+to+the+debt+crisis+is+%93technically+and+politically+beyond+reach.%94+Fitch%2C+which+stripped+Spain+of+its+AAA+rating+in+2010%2C+rates+Spain+AA-.+%3C%2Fp%3E+%3Cp%3EAs+well+as+spending+cuts%2C+Rajoy+said+the+banking+system+needs+to+be+cleaned+up+as+the+industry+tightens+credit+amid+176+billion+euros+of+troubled+assets+linked+to+real+estate.+%3C%2Fp%3E+%3Cp%3EHe+said+banks+would+have+to+straighten+out+their+balance+sheets+by+selling+off+finished+property+and+carrying+out+a+%93very+prudent%94+valuation+of+less-liquid+assets+such+as+land+and+unfinished+real-estate+projects.+%3C%2Fp%3E+%3Cp%3ERajoy+also+pledged+to+overhaul+the+labor+market+in+the+first+quarter+to+give+companies+more+flexibility+on+how+they+organize+and+pay+their+staff.+%3C%2Fp%3E+%3Cp%3ERe-invested+profits+from+companies+will+be+taxed+10+percentage+points+less+than+those+paid+to+shareholders+and+taxes+will+be+reduced+for+small+enterprises%2C+Rajoy+said.+%3C%2Fp%3E+%3Cp%3EHe+told+lawmakers+his+government+would+%93improve%94+the+tax+treatment+of+private+pensions+and+bring+back+a+tax+rebate+for+the+purchase+of+homes.+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.bloomberg.com%2Fnews%2F2011-12-19%2Fspanish-power-handover-looms-as-rajoy-weighs-economy-danger-of-budget-cuts.html%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+
Afghanistan’s new central bank governor expressed confidence Sunday that the government can recover up to 80 percent of the $825 million it cost to bail out the private Kabul Bank.
The near-collapse last year of Kabul Bank, once the nation’s largest private lender, created economic and political turmoil, prompted the freezing of some international aid and became a symbol of the country’s deep-rooted corruption.
According to the International Monetary Fund, Kabul Bank operated like a “Ponzi scheme” that resulted in fraud on a massive scale. The case has been closely followed by international donors because it is seen as a test of government officials’ pledge to root out patronage and graft and to show accountability to world financial institutions such as the IMF.
Last month, the IMF approved a three-year $133.6 million loan for Afghanistan because it found the government had taken steps to address governance and accountability issues that surfaced during the Kabul Bank crisis. The decision reassured international donors, many whom had withheld aid while waiting for the IMF decision.
Since the crisis, Kabul Bank has been split into two parts _a healthy one being run by the Afghan Finance Ministry, and another which is has taken over hundreds of millions of dollars in bad loans us fast cash. The Afghan government hopes to put the healthy bank up for sale in the middle of next year.
Central bank chief Noorullah Delawari said 80 percent of the $825 million has been identified as receivable, and the bank hopes to get 20 percent back in the near term, and 60 percent in one to five years. It was still working to identify 20 percent of the funds _ or about $152 million _ still missing.
“A total of $825 million has been paid so far by the central bank and the government to Kabul Bank. Of that, $80 million has been received from the loans which were given by the Kabul Bank to individuals, almost 20 percent is going to come back in the near future and that is from properties mostly in Dubai and in Kabul,” Delawari said.
He added that a delegation would travel to Dubai in coming days for meetings with officials there to find properties owned by those who took loans. Those properties would then be seized and sold.
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