NEW YORK The threat of a financial crisis spreading from Europe shook markets on Wednesday. The euro dropped to a nearly two-year low against the dollar. Oil prices sank to their lowest this year, and stocks took another fall.
The Dow Jones industrial average fell 180 points to 12,322 shortly after noon Eastern. The Dow has lost 6.7 percent this month, nearly wiping away all its gains for the year. Energy, banks and technology stocks fell the most.
In Brussels, leaders of the 27 countries that make up the European Union met to discuss ways to keep the debt crisis in Europe from getting worse, including proposals to promote jobs and growth.
Analysts are turning increasingly skeptical that European leaders will succeed at preventing Greece from dropping the euro or agree on ways to jump-start the region's economy. The Organization for Economic Cooperation and Development warned Tuesday that the 17 countries that use the euro risk falling into a "severe recession."
Germany's DAX and France's CAC-40 closed more than 2 percent lower. The euro continued falling against the dollar, reaching $1.25, its lowest level since July 2010. Concerns about the stability of the European currency union if Greece leaves have knocked 5 percent off the euro this month. Yields on German government bunds fell as money shifted into low-risk investments.
If Greece exits, it could spread havoc throughout the global financial system. Bond traders may turn on other struggling governments in Spain and Italy. One big fear is that people in Spain and Italy will start a bank run, pulling euros out of banks for fear that their countries will soon follow Greece's lead. European banks have close ties to U.S. banks.
In other trading, the Standard & Poor's 500 index fell 19 points at 1,297. The Nasdaq composite index slumped 42 points to 2,796.
Benchmark crude lost $1.50 to $90.37 in New York. It fell as low as $90.18 earlier in the day. Prices haven't been below $90 since Nov. 1.
The dollar rose and yields on U.S. government debt fell as traders shifted money into the protection of Treasurys. The yield on the 10-year note sank to 1.71 percent, close to a record low, from 1.77 percent late Tuesday.
Financial watchdog to introduce new rules for prepaid debit cards - Consumer Reports.org
Today, the Consumer Financial Protection Bureau is expected to issue new rules for prepaid debit cards, which tend to offer weaker consumer protections than those provided by traditional debit cards, yet are being used by many in the U.S. as a substitute for bank accounts.
At this time, the CFPB is holding a field hearing in Durham, North Carolina on prepaid cards.
Our recent analysis of prepaid cards (pdf) found that industry competition is beginning to help bring down fees, but that those same fees are not always disclosed up front and can still add up quickly.
Consumers Union, the advocacy arm of Consumer Reports, called on the CFPB to adopt rules that protect the people who regularly rely on prepaid cards.
"The prepaid card market has exploded in the U.S., but consumers still don't enjoy the protections they need to ensure they are getting a fair deal," says Michelle Jun, senior attorney for Consumers Union. "It's time for the CFPB to require clear disclosure of all fees in a simple format so consumers know the costs before they purchase a card. Prepaid cards should get the same strong protections as traditional debit cards so consumers have the peace of mind that their money is safe if their card is lost or stolen."
Previously:
Prepaid cards: Plastic that's less than fantastic: They're often loaded with fees but lack basic protections
Prepaid debit cards cost more to use than bank checking accounts
Source:
CFPB Urged to Require Better Disclosure & Protections For Prepaid Cards [Consumers Union]
CSUMB's outgoing president says financial aid will be next leader's biggest challenge - Monterey County Herald
The financial picture is looking bleak for college students as federal and state cuts to financial aid are looming.
One of the biggest challenges that outgoing CSU Monterey Bay President Dianne Harrison says her successor will have is turning to private sources for help in this area. But that won't be the only challenge — CSUMB's new president will need to continue the expansion of the relatively young campus and continue to improve the "student experience," Harrison said.
In an interview with The Herald, Harrison, 61, spoke about the strain California's budget problems have placed on CSUMB, the need to focus on real reforms and not on distracting issues, and what the next president will need to do to keep the university moving.
"The other part that's going to be important is to continue engaging deeply in the community here," Harrison said. "As a new campus, that's always a challenge. We don't have a long history of alumni. We have to depend on the community, friends and supporters.
"There's a need for the president, as the face of the university, to be visible and active in the community, responsive and engaged. It's going to be incumbent upon the president to increasingly rely on private sources for student support, faculty support and university support."
Harrison will officially end her tenure at CSUMB at midnight June 10, when she takes on the presidency of CSU Northridge, the largest school in the California State University system.
Claudia Keith, CSU spokeswoman, said an interim president for CSUMB would be named by then.
"The campus will not be left without leadership," she wrote in an email.
Leadership gets taken for granted, Harrison said, but it's necessary. When you have every department focused on their area of expertise — academics, transportation, housing, food services — you need an overseer to guide the college in the direction it needs to go, Harrison said.
"Even if everybody is doing their most focused work, you have to go above that and still think, what are we going to be doing in three years? What will we be able to do to help us be fully prepared for where the job market happens to be at that point? What's our role? Often that's left to the president," Harrison said. "Can a university run without one? Maybe for a short time, but it would be chaos."
There are also more immediate considerations, such as planned cuts to financial aid at the federal and state level.
A little-noticed congressional decision to reduce or eliminate Pell Grants goes into effect July 1. It will affect hundreds of thousands of the poorest college students. Pell Grants provide up to $5,550 a year to help defray the cost of attending college, but starting this summer, students without a high school diploma or a GED will no longer qualify. Changes in income requirements will also reduce the pool of qualifying students, as well as a new limit on how many years a student has to finish their higher education.
Coupled with the federal changes, a proposal by Gov. Jerry Brown could significantly decrease Cal Grant funding and leave some students without grant aid.
In his latest state budget proposal, Brown proposes that eligibility for Cal Grants be tied to eligibility for the Pell Grant — which could leave nearly two out of five new financial aid recipients with smaller or no Cal Grant aid.
"For students who are the neediest financially, we have thus far been able to accommodate tuition increases into their financial aid packages, but now we have potentially another perfect storm," Harrison said. "If we're not able to support our students with as much federal financial aid or state support, then we're back to really getting support from private sources."
The silver lining in the proposed cuts to financial aid is California's "Middle Class Scholarship Act," targeted at students with family incomes of less than $150,000, who right now don't qualify for federal or state financial aid. The proposal would cut fees by two-thirds, and would save CSU students about $4,000 a year.
"Sometimes people assume administrators are not as concerned about the student experience as teachers are, and that's not an accurate picture," Harrison said. "We're all committed and passionate to make sure in this very difficult time that we keep the quality of student education front and center, and that's tough to do when every few months we get more news about additional cuts. So we spend a lot of time planning, trying to anticipate and see if we can generate other kinds of revenue, but there's not a lot of choices out. We can't set up a retail store and reap the profits."
As if to prove her point, she reiterates one of her proudest achievements as president of CSUMB: making it easier for students to navigate the system, leading to increased retention rates. When she arrived in 2006, the campus was struggling to meet its recruitment goals and retention was problematic. In both areas, the campus has improved.
"We have turned a corner on having a campuswide culture that truly is focused on student success," Harrison said. "There are (several) things I'm proud of, but those would be front and center."
Claudia Meléndez Salinas can be reached at 753-6755 or cmelendez@montereyherald.com.
How About National BIG Business Week? - Huffington Post
When I worked at KPMG, the big international accounting and consulting firm, there was one senior manager who made me report to his office every morning so he could "inspect" me. That's because, having just graduated from college and with no prior training, I could barely remember to wear the same colored socks, let alone properly knot my tie. I would frequently forget my belt. Or not comb my (long-forgotten) hair. KPMG was, and still is, a giant firm. And our clients were amongst the biggest companies in the world. There, I not only learned how to analyze financial statements and question transactions, but I also learned how to dress and how to behave in a corporate environment. I learned about office politics and how big businesses were run. Those lessons have helped me throughout my professional life. Particularly in running my small business.
Which happens to be what the country is celebrating this week. This week is National Small Business Week.
In Washington and around the country, the Small Business Administration and other chambers of commerce and similar organizations have been holding events celebrating small business. Big companies are launching campaigns and releasing surveys all timed around the festivities. Even the president has joined in the fun, having lunch at a diner with a few "typical" small business owners so that he can discuss the issues and let us all know of his support. He even released a new tax proposal targeted at small businesses.
I run a small business. I speak to small business people all around the country. I write blogs about and for small business owners. National Small Business Week? It's a nice thing. But what we should really be celebrating are big businesses. What we should really have is a National Big Business Week.
Except that this is too politically incorrect. Imagine the president hoisting a beer with the CEOs of Exxon, DuPont and General Electric and then proposing tax breaks for them. Or a series of events in Washington put on by the... Big Business Administration? The public would be outraged. The 99 percenters would re-organize, pitch tents near Battery Park and parade down the Mall. The media would write articles defending the common man, the hard-working small business owner, the blue collar worker while attacking those corporate giants that are at the center of the celebration. No, we're not going to see a National Big Business Week anytime soon. But we should.
Because it's the big companies in this country that are truly the engines of our economic growth. It may be politically correct to celebrate the little guy. But it's the big guy who should be receiving the attention.
Yes, there are anywhere between 20 and 30 million small businesses in this country depending on who you ask. But half of all employees in the private sector are employed by big companies:
About 28 percent, or 30.4 million Americans, are working for a company with 49 employees or less, while about 26 percent, or 28.3 million, are working for a company with 50 to 499 employees. The big employers also have seen the biggest growth in employment over the past two decades, according to the Bureau of Labor Statistics.(Speaking as a person who runs a ten-person company, I consider any company with more than 150 people to be pretty big, but that's another topic for another time.)
Former White House economics adviser Jared Bernstein isn't much impressed by small business either. Last October he wrote:
The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it's really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise -- and too often, noise that has little to do with what this economy really needs.
According to the Wall Street Journal, big companies have emerged from the recession leaner and stronger and poised for growth.
Small businesses need big business. My small business needs big business. Without big corporations, a company like mine couldn't survive. At the very least, I would barely know how to dress professionally! Like my own experience, big companies train the entrepreneurs of the future. Sure there are the Bill Gateses and the Mark Zuckerbergs. But these are anomalies. Most startups are founded by former big company employees. They learn how to do things right and where things are wrong by working for the giants.
Jeff Bezos, the CEO of Amazon, got his education on Wall Street. Gordon Moore, the founder of Intel, learned the ropes at the Fairchild Semiconductor Corporation. The list of other small business owners who once trained at big companies (made up of names you and I have never heard of) is endless.
Big companies hire the smart college grads and teach them all the stuff about business that you don't learn in school. Many of these people stay in the corporate environment. And just as many take what they learned and start their own companies. Most of them, like myself, have nothing but good things to say about their experiences working at the big firm.
Say what you want about small businesses, but my most profitable clients are my big clients. My firm has about 600 active clients, most of them small. And most of my small customers are great. They're truly my company's bread and butter. But the meat comes from my handful of large clients. Those are the guys with the bigger budgets, and the greater room for error. Where a small client balks when we charge for the time we need to spend to plan a project, a big customer wonders if we should be spending more. Where a small client argues over every penny on an invoice, a big client (once we figure out how to get our invoice through their accounts payable maze) normally pays in full when due (or 800 days later in some cases!). There are lots of reasons why doing business with a smaller company is better than with a bigger company. But the numbers don't lie. The projects with my larger clients are bigger, better and more profitable.
Big firms enable startups to get off the ground. They invest in and partner with young companies and provide sponsorship dollars to organizations and industry groups that support new technologies and ideas. Of course they're doing this for their own benefit, hopefully finding that new technology that they can license or that undiscovered genius they could hire. But don't forget... they're also the ones employing the spouse while the other spouse works for nothing over a couple of years getting his or her business off the ground. They're the ones providing the health insurance, the retirement savings, the day care benefits for that one member of the family because the other member's startup could never afford those things.
Big companies create economies for small businesses. Comcast, one of the largest public companies in my hometown, built their headquarters in the center of the city. How many contractors, professional service firms, parts manufacturers and other small businesses were involved on that project? How many other small businesses provided indirect services to those working on the project? And how many small businesses, like maintenance and security firms, cleaning supply distributors, computer support and trash removal companies continue to provide services just to keep that one office building running?
Comcast makes other investments in the city, both philanthropic as well as strategic. Their executives go home to mansions on the Main Line and pay for small companies to provide them with landscaping, roofing and pizza delivery services. I'm not saying that Comcast is the greatest company in the world. I'm not thrilled with my $150-a-month cable bill (did my son just order The Dark Night On Demand again?). But I am saying that as other big companies like Comcast grow, the small businesses around them all benefit.
And, despite what the occupiers say, it's the big companies that truly provide the infrastructure for small businesses to succeed. It's the banking, the electricity, the transportation, the machinery, the chemicals and of course the capital to help us finance our growth. Take a look at your 401K and tell me where your money's invested. Those mutual funds aren't holding shares in my company (and hopefully not Facebook either!). We all have a stake in the S&P 500.
So let's celebrate National Small Business Week. Hooray for small business! We're the little guys fighting for survival and living the American dream. We're the ones who are courted by the politicians and romanticized in the press. We work hard and there's no shame in that. But let's not forget our friends in the ivory towers. Because without Big Business, we wouldn't have much to celebrate.
Another version of this post appears on The Philly Post.
Follow Gene Marks on Twitter: www.twitter.com/genemarks
Banks stocks sink after JPMorgan announces loss - Yahoo Finance
Major bank stocks fell sharply Friday after JPMorgan Chase surprised investors by announcing a $2 billion trading loss.
JPMorgan's stock dropped 9 percent in early trading, the most of the 30 stocks in the Dow Jones industrial average. Gains in technology, energy and other stocks mitigated the losses. After the first half-hour of trading the Dow was off 18 points at 12,837.
Broader market indicators were mixed. The Standard & Poor's 500 index fell one point to 1,356 and the Nasdaq composite index, which is weighted toward technology stocks, edged up eight points to 2,942.
The direction for financial stocks was clear. JPMorgan led other bank stocks sharply lower after its late Thursday disclosure of a $2 billion loss at a London trading unit.
JPMorgan's blunder comes in the midst of a political battle over how closely to regulate banks, though JP Morgan's CEO Jamie Dimon said the trades would not have been affected by the so-called Volcker rule, expected to take effect this summer.
That didn't stop investors from cutting their exposure to the financial sector. Bank of America fell 2.2 percent, Morgan Stanley was down 4.2 percent, Citigroup fell 3.8 percent, and Goldman Sachs fell 3.9 percent.
Also on Friday, the Labor Department said that the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent last month. It was the first decline since December and the biggest drop since October. Declines were driven by gas and energy prices.
A measure of consumer confidence from the University of Michigan released Friday morning was better than analysts had expected. The index was at its highest level since January 2008.
Crude and gasoline futures slid again Friday.
1 comment:
I learn a lot of valuable information in here. Financial crisis is really a big problem that this country is facing. It is important to manage well the financial flows and see to it that everything is in order.
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