Sarkozy Says EU Must Back Greece

French President Nicolas Sarkozy said the European Union must support Greece or risk destroying the euro as Prime Minister George Papandreou heads for Paris to lobby support for the debt-laden country.

“If we created the euro, we cannot let a country fall that is in the eurozone,” said Sarkozy, who hosts Papandreou in Paris tomorrow. “Otherwise there was no point in creating the euro. We must support Greece because they are making an effort.”

EU leaders have so far refused to give financial aid to Greece and have ordered the government to cut its budget deficit, the EU’s highest, on its own. While Papandreou says steps taken this past week to slash the shortfall warrant more help from the EU, German Foreign Minister Guido Westerwelle said today that his country is “not going to write a blank check.”

Papandreou is touring Luxembourg, Berlin, Paris and Washington after his government passed a 4.8 billion euro ($6.5 billion) austerity package yesterday. German Chancellor Angela Merkel, who met him yesterday, said the question of a bailout “absolutely doesn’t arise” and the steps taken to cut the deficit make her optimistic that a rescue won’t be needed.

Awareness Rises, but Women Still Lag in Pay

Posted by Tetyana Matychak in Budget on March 12th, 2010

Companies in the United States, Spain, Canada and Finland lead the world in employing the largest numbers of women from entry level to senior management, according to a report published Monday by the World Economic Forum. Yet the report also found that, despite increasing awareness of gender disparities in the workplace, women at many of the world’s top companies continued to lag behind their male peers in many areas, including pay and opportunities for professional advancement.

Moreover, many of these companies have yet to implement policies to address these gaps, despite pressure from many of their governments to do so.

The forum, based in Switzerland, surveyed 600 heads of human resources offices at the largest employers in 20 countries representing 16 different industries.

The poll assessed companies according to a range of criteria, including rates of female representation, whether the companies measured or set targets for gender balance in pay or promotion, and whether they offered benefits, like paid family leave, to promote work-life balance for their employees. Read the rest of this entry »

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Stock investors ask: What’s the next big thing?

Posted by Tetyana Matychak in Fund Markets on March 11th, 2010

A year after the stock market began its comeback from 12-year lows, investors are looking for the next big thing.

Stocks have lost some of the momentum that propelled the Dow Jones industrial average up 61.4 percent from its close of 6,547 on March 9, 2009. That’s natural - bull markets tend to slow down as they head into their second year. But the lethargic pace of the economic recovery has also been a bit of a drag on stocks. And so investors are waiting for signs that the economy is ready to put up some solid, sustainable growth numbers.

The most likely trigger: job growth. Investors need to see a Labor Department report that says employers are creating more jobs than they’re cutting.

Until then, investors are going to stay cautious. Analysts say the market is likely to move sideways or drift higher, as it’s been doing over the past few weeks. Tuesday’s trading fit the pattern of modest moves. The Dow rose nearly 12 points. The average is up 1.3 percent so far this year.

But that doesn’t mean the market isn’t going to have its fitful moments. And it certainly has volatile industries that are expected to move the rest of the market. On Tuesday, the financial companies that led stocks higher in the past year again drove trading. Analysts said financial shares rallied as investors reacted to rumors that the government might prohibit the trades known as short sales in stocks of companies it owns. The government has large stakes in Citigroup Inc., American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac after bailing them out during the 2008 financial crisis. Read the rest of this entry »

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Retail gasoline prices match 2010 high

Posted by Tetyana Matychak in Budget on March 10th, 2010

Motorists are well down the road to higher pump prices as warmer weather and the driving season approaches.

Average retail gasoline prices, continuing a surge that started last month, have now matched their 2010 high on the way to prices that many analysts believe will top $3 per gallon this spring.

The nationwide average retail gasoline price rose 0.6 cents Monday to $2.753 per gallon, virtually identical to the high water mark of $2.7583 reached on Jan. 14, according to auto club AAA, Wright Express and Oil Price Information Service.

Prices have risen 9.2 cents in the last month and are now 80.6 cents higher than levels of a year ago.

The Energy Information Administration, which is among those predicting $3 gallon gas this spring, will release figures on nationwide retail gasoline prices later Monday. Read the rest of this entry »

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Low Rates Needed for ‘Some Time’

Posted by Tetyana Matychak in Banks on March 9th, 2010

Federal Reserve Bank of Chicago President Charles Evans said low interest rates are likely to be needed “for some time” as high unemployment lingers and inflation stays below his goal.

“With the unemployment rate at 9.7 percent and inflation significantly under my benchmark for price stability, there is no conflict between our policy goals,” Evans said in the text of a speech in Arlington, Virginia. Weakness in the job market, including long-term unemployment, means that “This accommodation will likely be appropriate for some time.”

Fed Chairman Ben S. Bernanke said last month the U.S. economy is in a “nascent” recovery that still requires low interest rates to encourage demand by consumers and businesses once federal stimulus fades. At the same time, policy makers are winding down emergency programs and laying plans for an eventual reduction of the Fed’s balance sheet to prevent an increase in inflation as the economy recovers.

The U.S. unemployment rate held at 9.7 percent in February and payrolls dropped 36,000, less than forecast, a sign that the labor market may be stabilizing after a recession that has eliminated 8.4 million jobs. The economy expanded at a 5.9 percent annual pace in the fourth quarter, the fastest rate in six years, the Commerce Department reported last month. Read the rest of this entry »

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For Landlords, the Numbers Are Starting to Look Better

Posted by Tetyana Matychak in Investing on March 5th, 2010

Home prices are falling, rents are tumbling, and apartment vacancies are rising. So why are thousands of small investors becoming landlords?

Because real-estate prices have fallen much faster than rents, the math of buying a rental has actually improved substantially in most parts of the country. Money invested in an apartment complex today typically generates annual returns of 7% to 8% right off the bat, up from less than 6% at the peak of the housing bubble in 2006.

If your property appreciates in value or rents rise, you could end up with double-digit annualized returns when you sell it. But higher returns usually come with higher risks. If you overpay for a rental property or you buy in the wrong market at the wrong time, you can lose a lot of money.

In general, landlords should pick communities where real-estate prices and rents appear to have nearly bottomed out, and jobs are stabilizing. Some of the best deals are in places like Fort Worth, Texas, or Columbus, Ohio, where prices never went wild. Markets like Las Vegas and Phoenix, both plagued by overbuilding, and Detroit, hurt by auto-industry woes, still look dicey.

But other markets like San Francisco or Chicago can still be attractive for landlords who find the right neighborhoods. Fred Bertucci, 50 years old, has been investing in small apartment properties in the Chicago suburbs since 1990. In August, he and his business partner, Kevin Moriarty, 54, bought a six-unit apartment house out of foreclosure for $280,000. It brings in about $25,000 per year in net operating income, he says, or about a 9% yield on the dollars invested. That’s up from roughly a 5% yield several years ago when prices were higher, he says. Read the rest of this entry »

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How to Fix Your Finances in 2010

Posted by Tetyana Matychak in Budget on March 4th, 2010

Still mulling over your New Year’s financial resolutions? - David Laibson, a Harvard University economics professor, has one for you—one that many of us may wish we’d made last year.

“Promise that you’ll never try to time the market again,” he suggests, a not-too-subtle gibe at the many investors who sold their stock in the depths of the downturn early this year and then missed the huge rally that followed.

That’s not the only thing many of us could afford to improve. We would also like to save more, earn more and spend more wisely in 2010. But despite the fresh promise of a new year and a new decade, tackling all our goals at once can be overwhelming.

So to help you accomplish your many New Year’s ambitions, here’s a year’s worth of personal-finance aspirations, timed to major holidays to raise your chances of success: Read the rest of this entry »

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The Skinny on Buying Disability Insurance

Posted by Tetyana Matychak in Budget on March 3rd, 2010

Disability-insurance benefits from the workplace and the government are getting harder to come by—and that’s putting more pressure on consumers to purchase their own coverage in case a medical condition keeps them from working.

But disability insurance can be confusing. Policies may include conditions that make it tough for people filing claims to actually qualify for the benefits. And some policies may limit payouts for certain diagnoses, particularly mental illness. To protect themselves, consumers considering buying disability coverage need to read the fine print.

The percentage of companies that paid all or part of the cost of workers’ private long-term disability insurance fell to 48% last year, from 59% in 2002, according to LIMRA, an association of financial-services and insurance companies. Many employers are “taking a step back in terms of what they pay and putting the onus on employees” to purchase richer benefits if they choose, says Michael Bailey, a principal at Mercer, a consulting unit of Marsh & McLennan Cos.

At the same time, disability claims are pouring in to the Social Security Administration, and that’s resulting in bigger backlogs. The agency expects claims to jump to 3.3 million in the current fiscal year, ending Sept. 30, from 2.6 million two years earlier. That’s led to a greater number of cases pending—about 794,000 this month, up from about 557,000 in late 2008. Read the rest of this entry »

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The Carry Trade Can Be Unforgiving

Posted by Tetyana Matychak in Currency on March 2nd, 2010

Billions of dollars are wagered daily in the “carry trade,” in which traders sell the currencies of countries with low interest rates like the U.S. and Japan while simultaneously buying the currency of countries with higher rates like Australia and Brazil.

These arbitrage opportunities can persist for years at a time. But before you try your hand at the carry trade, be aware that currency values can change in seconds, causing sudden losses. And because currency trading typically involves heavy financial leverage—traders borrow as much as $500 for each dollar they invest to amplify results—the carry trade can rapidly become the scary trade.

That is what happened in the fall of 2008, when traders suddenly rushed to the safety of U.S. dollars during the financial crisis. Those who had sold the dollar and Japanese yen to own higher-yielding currencies quickly piled up big losses as these other currencies sank in value. The losses wiped out several years’ worth of gains in the carry trade.

While amateur traders see the carry trade as a road to riches, “I see it as a way to get broke,” says Amarjit Sahota, chief executive at HiFX Inc., which helps companies and individuals manage currency exposure. Read the rest of this entry »

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High Yields Aren’t Always a Good Thing

Posted by Tetyana Matychak in Investing on March 1st, 2010

In the parched landscape of income investing, dozens of closed-end funds yield more than 10%.

Just as wanderers in the desert shouldn’t mistake a mirage for an oasis, investors shouldn’t regard these funds as salvation. Often, the income you earn in the short run mightn’t be worth the principal you lose in the long run.

Like mutual funds, closed-ends are baskets of stocks or bonds. Unlike a mutual fund, a closed-end trades like a stock; you can buy shares only from other investors. Thus the price isn’t set merely by the value of a closed-end’s investments, but by the whims of those who trade its shares. When investors pay more than the portfolio’s net asset value, that is called a “premium.” When the shares trade at less than NAV, that is a “discount.”

As of last week, 11 of the roughly 650 closed-ends tracked by Lipper Inc. traded for at least 20% more than their portfolios are worth. In many cases, investors are paying those big premiums in pursuit of high yields.

Buy such a fund, and you may double-dose on risk. A yield that looks stable can crumble; then the premium may collapse as panicked investors dump the fund. That leaves you with less income than you expected—and a big market loss to boot. Read the rest of this entry »

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Housing Prices Fall at Slower Pace

Posted by Tetyana Matychak in Budget on February 25th, 2010

Home prices kept falling, but at a slower rate, at the end of last year as the housing market continued to stabilize.

The national S&P/Case-Shiller home-price index declined 2.5% in the fourth quarter, compared with the same period a year earlier, according to a report released Tuesday. The slight drop is a clear improvement from earlier in the recession. In the fourth quarter of 2008, for example, home prices fell 18.2% from the same period in 2007.

“Overall, this report suggests that the recent positive momentum in the U.S. housing market is gaining further traction and underscores that home prices are continuing to stabilize,” Millan Mulraine, a TD Securities analyst, wrote in a note to clients. “As such, we may only be a few months away before we see a monthly gain in national home prices.”

The month-to-month change in home prices for a composite index of 20 housing markets that S&P/Case-Shiller tracks showed that home prices rose 0.3% in December from the prior month, adjusted for normal seasonal variation. That measure of home prices also rose 0.3% in November.Prices fell in just five of the 20 markets included in the survey, remained flat in one and rose in the other 14. Read the rest of this entry »

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