NEW YORK SHARES

U.S. markets rise

NEW YORK, June 14 (UPI) -- U.S. stock markets appeared to defy gravity Thursday, heading higher despite a global downturn.

With stocks lower in Asia and Europe, the Dow Jones industrial average added 155.53 points, or 1.24 percent, to 12,651.91.

The Nasdaq composite index gained 17.72 points, or 0.63 percent, to 2,836.33.

The Standard and Poor's 500 gained 14.22 points, or 1.08 percent, to 1,329.10.

On the New York Stock Exchange, 2,166 stocks advanced and 920 declined on a volume of 3.5 billion shares traded.

The Bureau of Labor Statistics Thursday said consumer prices for all items rose 1.7 percent in the past 12 months before seasonal adjustment.

In a separate report, the Labor Department said first-time unemployment benefit claims rose by 6,000 to 386,000 in the week ended Saturday.

The benchmark 10-year treasury note fell 14/32 to yield 1.643 percent.

The euro rose to $1.2628 from Wednesday's $1.2557. Against the yen, the dollar fell to 79.40 yen from Wednesday's 79.48 yen.

In Tokyo, the Nikkei 225 index dropped 0.22 percent, 18.95 points, to 8,568.89.

In London, the FTSE 100 index slid 0.31 percent, 16.76, to 5,467.05.

Europe's auto capacity may be too high

DETROIT, June 14 (UPI) -- An auto industry expert said automakers in Europe need to reduce production capacity in order to stay competitive.

Richard Hanna, global automotive leader for PriceWaterhouseCoopers, said: "These factories are very capital-intensive. They need to be sweating to make money.

"We don't see, overall, the European market growing. You have to take some capacity out," he said.

Due to the great recession, U.S. automakers trimmed manufacturing capacity by about 5 million vehicles per year, Hanna said.

Automakers are face a serious economic downturn in Europe and a possible disruption of financial systems if Greece or any other nation leaves the eurozone, the 17-country region that shares the euro as currency, The Detroit News reported Thursday.

"The current business environment in Europe is challenging and will require some tough decisions," said Ford Motor Co. spokesman Mark Truby.

"The industry still has not faced up to the overcapacity issues despite the severe economic issues since 2008," Truby said.

Chrysler and Fiat Chief Executive Officer Sergio Marchionne said all eyes on are the upcoming weekend election in Greece, which could decide the fate of the currency region.

"I think a lot depends now on what happens on June 17. I don't want to exaggerate the value of that vote, but it is going to be the catalyst for a variety of decisions," Marchionne said.

Quarterly statements outline the story that has automakers on edge in Europe.

Ford, for example, lost $149 million in Europe in the first three months of 2012, after posting a $293 million profit for the last quarter in 2011.

General Motors came out even January through March in Europe in 2011 and lost $300 million on the continent in the first quarter this year, the newspaper said.

Poll: Small businesses back Obamacare

WASHINGTON, June 14 (UPI) -- Half of the respondents in a recent survey of small business owners said they prefer that the U.S. Supreme Court leave the Affordable Care Act mostly intact.

The bill, signed into law in 2010, could be upheld, struck down or modified by the country's high court.

A business advocacy group, Small Business Majority, said a recent poll of 800 business owners in Florida, Illinois, Louisiana, Michigan, Missouri, New York, Texas and Virginia showed strong support for the law.

Fifty-percent of the respondents indicated they would like the Supreme Court to leave the bill, known in some circles as Obamacare, mostly upheld. Concurrently, a third of the respondents indicated they would like the court to cancel the healthcare program that many Republicans deem too costly.

By an 8-to-1 majority, respondents indicated they would use their state's online insurance exchange program, while a 2-to-1 majority indicated they would like their state to set up an insurance exchange program.

The insurance exchange program is one that allows owners of independent businesses to join a larger risk pool.

Small Business Majority said 49 percent of entrepreneurs indicated their interest in buying insurance through the Affordable Care Act would increase when a tax credit for small businesses offering insurance becomes available to small business participants.

Small Business Majority said the survey was conducted by Greenberg Quinlan Rosner Research. The results have a margin of error of 3.5 percentage points.

Nokia to phase out 10,000 jobs

ESPOO, Finland, June 14 (UPI) -- Finnish handset giant Nokia said Thursday it would phase out 10,000 jobs by the end of 2013 in a broad restructuring plan meant to save billions of dollars.

The total financial repositioning is not completely known. Nokia said it plans to sell some assets, such as its line of Vertu luxury mobile phones, which it is selling to EQT VI, a private equity firm. It said it was aiming to reduce operating cost by $2 billion by the end of next year.

The company said it would cut research-and-development units, which would mean closure of Nokia facilities in Ulm, Germany, and Burnaby, Canada.

Its manufacturing plant in Salo, Finland, would close, although Nokia said it would keep its R&D unit in Salo going.

In a statement, Nokia said "this period of transition" includes a shakeup of its executive team.

Among the leadership changes, Nokia said Juha Putkiranta would serve as executive vice president of operations. Timo Toikkanen would take the post of executive vice president of mobile phones.

The company's chief marketing officer, Jerri DeVard, will "step down," Nokia said. Chris Weber would take the post of executive vice president of sales and marketing.

With the changes, Nokia is aiming to "focus on the products and services that our customers value most, while continuing to invest in the innovation that has always defined Nokia," said President and Chief Executive Officer Stephen Elop.

Elop called the job cuts "a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength."

Nokia employs 139,000 people, the company's Web site says.

Americans over 60 lost at least $2.9 billion in 2010 to financial exploitation — ranging from simple home repair scams to complex insurance swindles. That figure was up 12% from 2008, according to a study released Thursday by MetLife Mature Market Institute, the National Committee for Prevention of Elder Abuse and Virginia Tech University.

The rise in abusive tactics led the Consumer Financial Protection Bureau to begin looking into the types of scams affecting older Americans and coming up with the best ways to prevent them. A specific focus will be on the credentials of people who tout themselves as financial advisors.

"The silent crime of financially exploiting the elderly is widespread, and it is devastating. It is critical for us to act," Richard Cordray, the agency's director, said at a White House forum Thursday ahead of World Elder Abuse Awareness Day.

"The generation that rebuilt and sustained this nation out of a devastating Depression, the dark hours of World War II and the anxious fears of the Cold War deserve our care now," Cordray said.

Tougher oversight by regulators is needed to prevent financial predators from preying on vulnerable elderly victims, said Patricia L. McGinnis, executive director of California Advocates for Nursing Home Reform, a San Francisco group that often deals with financial abuse.

"The bottom line is, you need to go after the predators. You need to punish them and you need to convict them," she said. "Put them in jail and make an example of them, but more importantly, get the money back for that victim. Make them whole again."

McGinnis described efforts by regulators and advocates to prevent the scamming of older Americans as a game of Whac-A-Mole.

A recent scam enticed senior citizens to put large amounts of savings into deferred annuities, reducing their savings to qualify for a particular federal veterans benefit. The veteran might get $1,000 a month from the benefit, but loses access to the cash for years. Meantime, the annuity salesperson earned a commission of 8% to 12%, she said.

Victims often are reluctant to fight back.

"I can't tell you the times I talk to people and they say, 'It was my own fault,'" McGinnis said. "They are very embarrassed."

The scams have increased as the economy has struggled. Survey results released this week by the nonprofit Investor Protection Trust found that 84% of experts who deal with financial exploitation of the elderly said the problem has worsened.

But there is a lack of comprehensive information on the problem, which the consumer bureau's inquiry could help solve, said Elizabeth Costle, director of the consumer and state affairs team at the AARP Public Policy Institute.

Financial predators often target the elderly because they are viewed as gullible, Cordray said.

"Many seniors have routines, and their predictable patterns make them easier targets for predators," Cordray said. "Abusers often assume that the victim will be too embarrassed or too frail to pursue legal action against them, and unfortunately that assumption is too often proven to be correct."

The agency's inquiry seeks comments from the public on several issues. They include detailing the unfair, deceptive and abusive practices targeted at the elderly, finding the types of financial planning resources, and evaluating the credentials of financial advisors. The agency will be accepting public comments until Aug. 13.

Cordray said that some people who tout themselves as experts on elderly financial issues have had only a few hours of inadequate training.

"We need to distinguish between the true experts and those engaged in predatory conduct," he said.

The qualifications of financial advisors are important as new retirees must decide what to do with lump-sum 401(k) payouts and often must juggle many complex options, Costle said. The ability to understand those options gets more difficult as people age.

"As people get older, particularly up into their 80s ….they're just less able to process financial information," she said. "They're more likely to be trusting of people and they open themselves up to more abuse, which is perpetrated both by strangers and by caregivers and family members who are close to them."

Congress and the White House have increased their focus on the issue.

Lawmakers included the Elder Justice Act in the 2010 healthcare reform law to coordinate federal efforts. As part of the law, Health and Human Services Secretary Kathleen Sebelius on Thursday announced $5.5 million in grants to states to "test ways to prevent elder abuse, neglect and exploitation."

jim.puzzanghera@latimes.com

Ed Balls has warned that an emergency multibillion-pound package to inject lending into the British economy still fails to address the lack of economic confidence and demand. The shadow chancellor said the Bank of England's thinking still seemed to be driven by Montagu Norman, the governor who led it through the depression of the 1930s.

He said the measures announced on Thursday night at the Mansion House in London by the chancellor, George Osborne, and the bank's governor, Mervyn King, should have been implemented two years ago and would not work if businesses were not investing.

Osborne warned that the "debt storm" on the continent had left the UK and the rest of Europe facing their most serious economic crisis outside wartime. In a joint proposal between the Bank of England and the Treasury, banks will receive cut-price funds, provided they pass on the benefits to their business customers.

This new "funding for lending" scheme could provide an £80bn boost to loans to the private sector within weeks and alleviate growing fears of a second slump since the start of the financial crisis in 2007.

In a second scheme, within the next few days the bank will begin pumping a minimum of £5bn a month into City institutions to improve their liquidity.

Balls told Sky News: "Simply giving the banks billions of pounds doesn't translate into loans to business. If business is not investing and creating jobs and if our economy is not growing, that's the fundamental problem, and I've said consistently for two years that you can't do this simply by throwing money at the banks.

"You've got to accept that the fiscal plans of the chancellor haven't worked, they've backfired, they've taken us back into recession."

Speaking on BBC Radio 4's Today programme, Balls compared the government's fiscal policy to the 1930s depression era: "It failed then and it's failing now".

He said the announcements were a clear sign that the bank was worried. He did not dismiss the injection of cash for lending in principle, but argued that fiscal, as opposed to monetary policy was critical to recovery, pointing out that, apart from Italy, the UK was the only country in the G20 in recession.

The government has described the plans as an attempt to stretch its "plan A" to the limit. There has been concern from some banks that the plan does not change the dynamic as they will be expected to take the risk on the loans.

The treasury minister Mark Hoban told Today that the government's fiscal tightening had had no impact on growth. He said taxpayers' money would not be at risk as a result of the £80bn bank credit scheme.

Conservative MP Andrew Tyrie, chairman of the Commons treasury select committee, welcomed the plans: "The measures look as if they will encourage lending to businesses by ensuring liquidity is more easily available to banks."

Balls said: "The Bank of England's new funding for lending scheme is a significant admission that the government's existing policies have failed. Businesses will be desperately hoping it is more successful than George Osborne's Project Merlin and credit-easing schemes which have actually seen net lending to businesses fall."

He said Osborne's speech was dangerously complacent. "He is sticking with policies that have choked off the recovery, pushed up unemployment and are leading to £150bn of extra borrowing."

Balls also attacked Osborne over his remarks about a possible Greek exit from the eurozone.

"I was at the Mansion House last night and there was a frisson around the room when our chancellor started openly talking about whether Greece should leave the eurozone. I do not think that is a very wise or sensible thing to do," he told BBC Breakfast.

"I think Greece has got to sort out its issues – and that is a matter for Greece. What I am really worried about in the eurozone is that countries like Spain or Italy – which are huge, to which we as a country are very exposed – they have not sorted out their problems.

"Unless we get a global growth plan going, including in the eurozone, you can't turn this round. I am afraid that our government seems to be urging the wrong actions in Europe as it takes the wrong actions here in Britain too."

The shadow chancellor pointed out that Osborne had "snuck out another U-turn" in his speech, in particular to the objectives of the new financial policy committee at the bank.

"Labour and business organisations like the CBI have been calling for the new financial policy committee to have supporting economic growth as one of its key objectives. The chancellor voted against our amendment on this but in the face of an imminent defeat in the House of Lords he has now backed down."