New Greek leader Samaras to miss key EU summit - Daily Telegraph New Greek leader Samaras to miss key EU summit - Daily Telegraph

Sunday, June 24, 2012

New Greek leader Samaras to miss key EU summit - Daily Telegraph

New Greek leader Samaras to miss key EU summit - Daily Telegraph

The three members of the new Greek government , Democratic Left, Pasok and New Democracy, are drawing up proposals to they hope will safeguard the country’s economic future while retaining financial support from international bodies.

The core element is to get the “adjustment period” before new tax hikes and spending cuts are introduced extended by at least two years. The coalition is looking to lower value-added on agricultural products as well as on cafes, bars and restaurants. It also wants unemployment benefit paid for two years rather than one.

The new Government is working to create a 10-year plan that would lead the country out of its current financial crisis. The proposals come a week after elections narrowly gave New Democracy a lead over the anti-bail out party Syriza.

Mr Samaras' surgery for a detached retina is not the only setback for coalition which was just formed last week. Finance minister Vassilios Rapanos has also been hospitlised after suffering abdominal pain.

The doctor treating the 61-year-old has ruled out him being able to travel to Brussels for the June 28-29 summit.

At the Brussels summit, European Union president Herman Van Rompuy hopes to unveil a proposal for a banking union, if he can reach a compromise over the role of the European Central Bank.

"Banking union is a fundamental element," he told German paper Welt am Sonntag, in an interview published on Sunday. "I think we can move forward there more quickly than in other areas."

A banking union would be the first step in a long-term roadmap to political union that he will outline to EU leaders, with dates and institutional problems such as treaty change set out by year's end.

Weekend Edition – The Secret to Business Success - NASDAQ

It's quite a challenge for every entrepreneur to build a product or service that can resonate into a successful business. One of the things I have learned over the many years of being an entrepreneur is that you must always look at the business through the eyes of your customers. Most decisions should be made with the customer squarely in mind.

Everyone knows full well that you won't get everything right, but things will get messy if you lose track of your customers' needs. Investors should keep this concept in mind as they assess the investment potential of various dividend stocks. Is the company still giving its customers everything they want, or has it fallen out of favor? Has the quality of its products or services improved over the years? Are they consistently achieving positive results?

We have hundreds if not thousands of options for dining out these days. If you have ever watched Guy Fieri on the TV show "Diners, Drive-Ins, and Dives," he visits many local eateries that are recommended by viewers to visit. Toward the end of each segment, Mr. Fieri sits in the dining room with the customers and many recount how many years they have been coming to that particular place, as well as how many times a week they get their food fix there.

This feat isn't easy to accomplish from a business standpoint - unless you put a lot of tender loving care into your business. Everyone from the owners to the lowest employee on the totem pole must be on the same page, and truly care about the product being offered. That's the sort of effort that keeps people coming back, day after day, year after year.

We certainly hope all the hard work we've put into our business over the years shines through. Thanks again to all our users for making it a pleasure to serve the needs of fine folks like yourselves!

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We want to make sure everyone understands that the stocks on our Best Dividend Stocks List are the names we currently like for new investor capital, regardless of what date the stock was first recommended on. If and when a stock is removed from the list, we will clearly state whether the stock should be sold (which is rare but occasionally will happen), or simply held in one's account until we see a better entry point or catalyst.

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Thank you for sharing part of your weekend with me, and please be sure to pass this post on to anyone you think we can get inspired and educated about money, building wealth, and using common sense to do so.

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Financial transaction tax on City would help rebalance Britain's economy - The Guardian

George Osborne is adopting a crafty approach to European plans for a new tax on financial transactions. The big four eurozone countries – Germany, France, Italy and Spain – are now all in favour of a levy and the chancellor's response is to let them get on with it.

Britain could have cut up rough about a so-called Tobin tax, but Osborne has decided that the aggro is not worth it. His assumption is that a financial transaction tax (FTT) will raise costs in Frankfurt, Paris, Milan and Madrid, and so drive business to the City.

The chancellor is also dubious about claims that the money will be spent on "good causes" such as development aid or helping poor countries adapt to climate change. In the event that an FTT does prove to be a cash cow, Osborne thinks hard-up European governments will use it to reduce their budget deficits.

From a narrow political perspective, the chancellor's stance makes sense. If the City prospers as a result of being a cheaper place to do business than rival financial centres in Europe, then London and the south-east will benefit. This will make it harder for Labour to win the swing seats in the home counties that it needs to form a government.

Critics of the FTT say that Osborne's approach is good economics as well as good politics. The Robin Hood tax is nothing of the sort, they say. Banks will pass the levy on to their customers and it will make it more expensive for exporters to hedge against currency movements and for homebuyers to get a mortgage.

The notion that the Robin Hood tax is actually a Sheriff of Nottingham tax cuts little ice with those European governments now planning to press on with the idea. They acknowledge that there will be what economists call behavioural effects from an FTT – some transactions will no longer happen as a result of the levy – but they are confident that the overall tax take will increase as a result. Revenue has to be raised from somewhere, so better that it come from the reviled financial sector than, say, raising income tax or VAT. The principle goes back to the 18th century French finance minister Jean-Baptiste Colbert, who said the "art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the smallest possible amount of hissing".

At the very least, an interesting experiment is now in prospect. If FTT supporters in Europe are right, the UK government will soon be looking enviously across the English Channel at all the lovely, easy wonga being raised in Germany and France. If there is an exodus of finance and financiers to Canary Wharf and Mayfair, Osborne will be able to say: "I told you so."

In one respect, however, the chancellor will be a loser whatever happens. One of the avowed aims of the government is to rebalance the economy, both from finance to manufacturing and from south to north. This is an entirely laudable and sensible objective, but desperately hard to achieve and not at all consistent with policies designed to reinforce the City's already considerable competitive edge.

A recent paper entitled Spatially Unbalanced Growth in the British Economy, by the Cambridge academics Ben Gardiner, Ron Martin and Peter Tyler, details how the north-south divide has widened as a result of two factors: the hollowing out of manufacturing and the rise of the post-big bang City. "Whilst financial services have grown in every region over the past four decades, the south has witnessed by far the most rapid increase, more than quadrupling real output from this part of the economy."

The study notes that in 1971 the south accounted for 56% of national output in financial and business services. By 2008 this had risen to 67%. So, while there are regional centres of strength in financial services, such as Leeds and Edinburgh, London's dominance has increased.

One strand of economic theory holds that market forces will even out these imbalances. Rising output and employment in the south will lead to pressure on resources and higher costs in financial services. Businesses will then move to the north and set up businesses in sectors such as manufacturing where costs are lower.

It is hard, however, to square this theory with the facts. Stronger growth in London and the south-east has acted like a magnet, attracting investment and sucking talent out of the northern regions of the UK. Britain has a comparative advantage in financial services, and there has been a cluster effect. The Cambridge paper estimates that the northern regions would be £43bn richer had they grown at the same rate as the national economy between 1972 and 2010.

If anything, the financial crisis of the past five years has made the imbalances worse. It was manufacturing rather than finance that suffered most from the recession, and the north is more dependent on manufacturing than London and the south-east. The north suffered most in the economy's initial deep slump, gained least during the short-lived recovery and was first to feel the pain of a double-dip recession. Austerity is hitting the region hardest, because almost all the employment growth in recent years has been in the public sector.

If the Treasury is right in its realpolitik calculation that the City stands to gain from an FTT in large chunks of the eurozone, this will make the imbalances in the economy worse rather than better. It could be argued that encouraging trading in complex derivatives will increase the size of the financial sector, generating higher tax receipts which can be recycled into higher public spending in the poorer regions. This, though, was, precisely what happened in the years before the crisis. As a model it proved unsustainable.

Vince Cable made the case last week for an interventionist approach to house building, noting correctly that one of the big factors that helped Britain out of the slump in the 1930s was a private-sector construction boom. The business secretary proposed using the public sector balance sheet to leverage in private capital to the housing sector. This makes sense, especially at a time when interest rates on government borrowing are so low, but any expansion of housing supply would inevitably be skewed to London and the Home Counties, where demand is strongest.

The Cambridge paper argues that there is an urgent need for a clearly identified industrial policy in tandem with a regional policy to address the north-south divide. But the ideas floated – a national investment bank, a much-expanded regional growth fund, impact investment funds to promote advanced manufacturing – will all cost money at a time when Osborne is counting the pennies.

One argument that could be deployed by FTT supporters is that it would help make the financial sector less prone to speculative bubbles while generating a steady flow of income to be used to finance economic rebalancing. At least one half of the coalition might find such a prospect enticing.

Volkswagen's finance arm ponders Greek euro-zone exit: paper - Reuters UK

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Volatile tech stocks hit hard after S&P downgrade - The Business Journal

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Tech stocks plummeted Monday morning after the Standard & Poor’s downgrade of the U.S. credit rating Friday, faring even worse than the overall market.

The slide could spell bad news for tech companies looking for a big market debut. Reuters reports that some companies are pulling or postponing IPOs as economic woes worsen.

After opening, the Dow slipped 332 points to 11,112.70, the S&P fell 45 points to 1,154.10 and the NASDAQ composite dropped 103 points to 2,429.82. Tech stocks are in a rapid sell-off and, just like last week, taking a greater blow than the overall market.

Forbes' Eric Savitz has a good post on why tech stocks are taking such a beating. They tend to be more sensitive to swings in the market as consumer spending on electronics (hardware and software) drops off when the economy worsens. Tech stocks also tend to be more volatile in general due to higher beta.

Amazon, Microsoft, Google and Apple are all trading lower this morning: Shares in (AMZN) were down more than 3 percent; Microsoft (MSFT) was down almost 2.5 percent; Google (GOOG) was down more than 3 percent; and Apple (AAPL) was down 2.5 percent.

Washington tech companies such as Clearwire and Zillow also took a hit.

Last week was the worst five-day trading period since November 2008. Following last Thursday's 513 point drop (one of the worst days ever for the Dow), the S&P downgraded the U.S. credit rating from AAA, the highest level, to AA+. This marked the first time the nation’s credit rating has fallen below AAA.

The S&P said the downgrade was due, in large part, to the failure of the U.S. debt reduction deal to address federal spending problems. However, the S&P also commented this morning on how tech stocks might be affected by the new rating.


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Business after Supreme Court ruling - South Bend Tribune

NEW YORK -- Small business owners will be watching when the Supreme Court issues its ruling on the constitutionality of the Patient Protection and Affordable Care Act. The overhaul of the nation's health care system requires that by 2014, all businesses with more than 50 employees must provide health care benefits that are deemed affordable under the law.

Opponents of the act have targeted a key provision known as the individual mandate. It requires all people to buy health insurance or pay a penalty. The rationale for the mandate is that the more people in the health insurance pool -- in particular, younger and healthier people who need little health care -- the cheaper care will be for everyone.

Opponents of the individual mandate contend that it's unconstitutional to require people to buy health insurance. The court has the power to uphold the law or rule all or part of it unconstitutional.
With a decision expected in the coming days, here are some questions and answers about how this affects small business owners:

What will owners have to do if the law is upheld in its entirety?
Employers will be subject to the law if they have 50 or more full-time workers or the equivalent of full-time workers (two people working half-time are the equivalent of one full-timer). Small businesses that don't comply with the law -- either by not offering insurance or by offering insurance that's not considered affordable -- will have to pay penalties.

To be considered affordable, the insurance must pay for at least 60 percent of covered health care expenses, and employees may not be forced to pay more than 9.5 percent of their family income (before deductions and adjustments) for coverage offered by employers. Penalties are set according to a complicated formula in the law; they start at $2,000 per worker when there is no coverage, with the first 30 workers excluded from the calculation. Companies also face penalties if they provide coverage that isn't deemed affordable.

Employers get a tax deduction for providing insurance, but some business owners may decide it's cheaper to skip the insurance and pay the penalty, says Paul Keckley, executive director of the Deloitte Center for Health Solutions. Deloitte is a consulting and financial advisory firm.

"You can lose the tax deduction, pay the penalty and be better off," Keckley says. But he also points out that the penalties are scheduled to rise over time, and so eventually employers are likely to comply with the law.

The law also requires small businesses to provide what's called an essential health benefits package. The states are permitted to determine what benefits should be contained in policies that are issued in their states. That means that businesses that have employees in more than one state will have to comply with each state's requirements.

Employers can buy insurance from health insurers. Others may opt to join companies known as professional employer organizations like Insperity or ADP's TotalSource division that provide health insurance and other human resources services. The law creates what are being called health insurance exchanges -- markets where employers and individuals can search for the best rates. J

ohn Arensmeyer, CEO of the Small Business Majority, an organization that lobbies on behalf of small businesses, says the exchanges essentially give small businesses negotiating power on insurance rates that they haven't had in the past.

How many small business owners does this affect?
Relatively few. The Census Bureau doesn't report the number of businesses with more than 50 employees. But it counted 616,693 companies with 20 to 99 employees in 2008, the most recent figures available. That was about 10 percent of the 5.91 million small businesses (those with fewer than 500 employees) the agency counted. Since those figures include companies too small to be covered by the Affordable Care Act, the number of small businesses subject to the law is likely to be much lower.

The National Federation of Independent Business, the largest U.S. small business advocacy group says on its website that its typical member employs five people, but notes that it has "thousands" of members with more than 100 workers. The NFIB argued against the law before the Supreme Court in March. The group's membership includes about 350,000 small business owners.

Are there advantages for small businesses to the Affordable Care Act?
The act limits how much premiums can go up each year, Keckley says. But it's widely predicted that if the individual mandate is struck down, premiums will rise because fewer people would be buying insurance than they would if the mandate stands.

Some companies' premiums may drop under the law compared with what they're paying now. The law eliminates the surcharges that insurers impose on companies that have patients with serious medical conditions.

"It gives small businesses peace of mind. They won't see their premiums rise significantly if one person gets sick," says Larry Levitt, a senior vice president at the Kaiser Family Foundation, which studies health care policy.

The exchanges are expected to offer small businesses lower rates than insurance companies charge. Businesses also will get tax credits for six years for providing coverage.

What happens to small businesses' costs if the entire law is thrown out?
"It's essentially back to the way things used to be," before the law was passed in 2010, Levitt says.
Small business owners who would have benefited from lower premiums because they don't have employees with serious medical conditions pay more without the law, he says.

"The ability of the insurance companies to keep costs down will be tougher," says Arensmeyer.

But several major insurers don't plan to turn the clock back entirely. This month, Aetna, Humana and UnitedHealth Group said they'll continue to cover what's called preventive care, which includes immunizations and screenings for some medical conditions, and won't charge co-pays. They also said they'll continue to cover adult children up to age 26 through their parents' insurance plans.

Levitt says many small business owners will still try to offer health insurance. It's a benefit that helps companies attract and retain good workers. And it contributes to a positive work atmosphere.

Keckley expects that lawmakers will "come back with a lot of a la carte legislation that would address the insurance industry." And Arensmeyer says some states are likely to enact individual mandates of their own.

What if the individual mandate is thrown out?
"It's likely the premiums would be higher, and small businesses buying insurance on their own would face that," Levitt says.

The higher premiums would come from the fact that younger, healthier people won't be required to buy insurance, and therefore won't in effect be subsidizing the premiums for older people who tend to have more medical conditions.

But the exchanges created by the law would still exist, Arensmeyer noted. And that might help small businesses find insurance that they can afford.

Nervous investors make a dash for cash - Daily Telegraph

"However, in the past three months money has been coming out of markets, and deposits into cash are up."

Mr Gregson added that cash was the only asset class that could fulfil the remit set to him by many clients at the moment: not to lose capital.

Such is the market uncertainty that Barclays is allocating a substantial 45pc of low-risk investors' portfolios to cash. Move up the risk appetite scale and the proportion is reduced to 12pc for those who want moderate risk and 7pc for those who have high tolerance.

Barclays uses a mixture of floating-rate notes, short-term bonds and instant-access accounts for its clients' cash allocation – with at least half of the money in instant-access accounts for liquidity purposes.

Mark Dampier of Hargreaves Lansdown, the advisory firm, said cash was the more attractive asset for investors right now.

"While many cash accounts fail to beat the rate of inflation, at least your capital is protected if you keep it in cash," he said. "It may be an unpopular view among advisers, but the markets can lose you money."

Mr Dampier added that although fixed-rate accounts might offer a greater return on your money than the "cash park" facilities found on fund supermarket platforms, the most important thing about today's market conditions was keeping your assets liquid.

Cash parks allow investors to "park" their cash before investing it in an Isa, protecting its tax-free status and buying the individual more time to choose which fund to invest in. You can then return to the investment platform when you consider there is a worthy investment opportunity and transfer your money into a stock or fund without losing its tax-efficient status.

The cash park on the Hargreaves Lansdown platform pays 0.25pc for deposits of more than £50,000, 0.1pc for less. Fidelity Fundsnetwork's cash park facility pays Bank Rate minus 0.2 percentage points – currently 0.3pc. Bestinvest's facility pays 0.25pc on deposits of more than £20,000, but nothing for smaller sums.

Mr Dampier said: "The market moves so much at the moment that there may be a buying opportunity today that has passed in a week. If your cash is locked away in a 30-day notice account, that is no good," he said.

"Yes, you may not get an inflation-beating return in the cash park, but your capital is protected and your portfolio liquid."

While savers' fears about investing in the market are well founded, Adrian Lowcock of Bestinvest urged them to steel their nerve if they could.

"There is no doubt that the uncertainty in Europe, particularly around the Greek elections, has put investors off. It is important that, if you do put cash aside in an Isa or Sipp while waiting to invest, you actually take action and invest it. Don't forget about it," he said.

"It is human nature not to act in times of crisis. Ultimately when investing they buy high and sell low, when in fact they should be looking for the longer term and buying on weakness, not waiting for a rebound."

The euro crisis has hit this year's Isa investors hard and their caution is understandable. Last week The Daily Telegraph's Your Money section disclosed that many savers will have seen as much as 25pc wiped off the value of their fund in just three months as global economic fears intensified.

Several of the biggest and most popular funds have been hardest hit. Aberdeen Emerging Markets, for example, was one of the best-selling Isas in the run-up to the end of the tax year. But anyone who invested £10,000 in mid-March would now be sitting on a fund worth £9,156, according to Morningstar.

An investor who bought the popular JP Morgan Natural Resources fund would have seen a £10,000 investment fall by almost £2,500 to just £7,683 – which means that the fund needs to climb by more than 30pc from here just for savers to break even.

And there is little sign of relief on the horizon despite the Greek election result, which did not rule out the threat of the country exiting the euro.

Fund managers are in a cautious mood, too. A survey of 260 asset managers across the globe by Bank of America Merrill Lynch found that cash positions rose to 5.3pc in June, levels similar to those seen at the height of the financial crisis in January 2009 and the highest since March 2003 and December 2008.

Falling sipp rates

The rates paid on cash by Sipp providers have come in for criticism in the past – last year several financial advisers branded them as "unacceptable".

Investors who choose to keep Sipp allowances in cash frequently earn Bank Rate (0.5pc) or less; the average rate is just 0.75pc, according to Investec Bank.

With inflation still riding high at 2.8pc, this gives negative real returns for hundreds of thousands of pension investors.

Advisers said that on average investors held almost 10pc of their Sipp in cash. Investors are allowed to deposit £50,000 or 100pc of their salary a year into a pension, whichever is the lower. This means that potentially £5,000 a year of pension savings is guaranteed to be eroded by inflation.

The average amount of cash held in a Sipp is £39,000, Investec said, with some investors having as much as £50,000 in cash – built up over years of pension contributions.

Lionel Ross of Investec said: "The stagnant Bank Rate is having a knock-on effect on the rates paid on the cash element of Sipps. Advisers are now waking up to the need to challenge their current cash account provider to ensure that their clients are getting the highest possible returns on their deposits, which should in turn enhance overall pension fund performance.

"Given ongoing market volatility, investors, particularly those nearing retirement, are increasing their cash allocation. However, it is essential that they check that this money is held in an account paying a competitive rate of interest."

Around £90bn is held in Sipp accounts nationwide.

Not all Sipp cash rates are bad, however. Investec's own offering pays 2.25pc for sums of £25,000 or more. James Hay Partnership pays between 1.4pc and 2.9pc, and Hargreaves Lansdown said it offered fixed deals paying up to 2.5pc for Sipp holders who wanted to hold cash for three months or more.

But Darius McDermott of Chelsea Financial Services warned investors to avoid cash funds. "There are funds that invest in cash or cash equivalents but other than providing more of a 'safe haven' for your money, as they invest across more than one financial institution, they offer little incentive at the moment. Most are returning only in the region of the Bank Rate so you'd be better off in a bog-standard savings account," he said.

Moneyfacts, the financial information service, said a higher-rate taxpayer would need to find an account paying at least 4.7pc to negate the impact of tax and inflation. However, there are few accounts available that will pay this much, meaning that once people have exhausted their Isa allowance they will struggle.

Basic-rate taxpayers have more luck, with 210 accounts that overcome both the effect of inflation and the taxman's cut by paying 3.7pc or more.

Birmingham Midshires has a three-year fixed-rate bond that pays 4pc and can be opened with a deposit of just £1. Secure Trust Bank's five-year fixed-rate cash bond requires a larger deposit of £1,000 but pays an impressive 4.45pc.

The best one-year bond on the market is from Cahoot and pays 3.6pc. For instant access go to – the bank's online saver account pays a market-leading 3.2pc and can be opened with £1.

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