- ALL BUSINESS: Cash is king for investors NEW YORK (AP) -- That old saying "cash is king" certainly rings true these days. Investors can't seem to get enough of it, which ultimately could be bad news for the stock market and the economy....
- The old is new again at Saturday Evening Post INDIANAPOLIS (AP) -- The Saturday Evening Post, a centuries-old publication that helped make illustrator Norman Rockwell an American icon and showcased some of the greatest U.S. writers, is returning to its roots to show readers the value of a quiet read in an increasingly frenetic digital age....
- Texas brewer, once near defeat, shines again SHINER, Texas (AP) -- By all accounts, Shiner beer shouldn't have made it this long. The Spoetzl Brewery ferments its brew in a one-stoplight town that's not on the way to anywhere, and much larger regional brewers long ago succumbed to consolidation and the muscle of national brewers....
- Malaysia makes bold changes in race-based policies KUALA LUMPUR, Malaysia (AP) -- The economic downturn is allowing Malaysia's leader to chip away at an affirmative action program for Malay Muslims that has been considered virtually untouchable in the past....
- Job seekers seek solace with fellow faithful BEVERLY, Mass. (AP) -- Her fellow job seekers offer knowing groans as Diane Castro recalls the day she was laid off: The fear of being summoned to the front office. The phones in nearby cubicles going off like grenades. Finally, a ring at her desk....
- Cool gadgets: Where tech is headed Tech competition is heating up: Google vs. Microsoft! Microsoft vs. Apple! Apple vs. Palm! Here's how the second half of '09 is shaping up.
- Seven banks fail, pushing 2009 tally to 52 Seven banks were shut down by authorities Thursday, pushing the tally of failed banks for 2009 to 52, more than doubling the failures in 2008.
- Oil's record high, one year later One year ago, on July 3, 2008, oil prices settled at a record high -- a once-unthinkable $145.29 a barrel
- Bank vaults slammed shut to small businesses Despite emergency stimulus measures, small business lending continues to fall. In the just-ended quarter, the Small Business Administration's flagship program backed 30% fewer loans than it did a year ago, and 55% fewer loans than it did in 2007, before the recession set in.
- Japan backs dollar as reserve currency Read full story for latest details.
- Josie Natori's stylish evolution Josie Natori followed her business dreams from the Philippines to Wall Street. But after nine years as a banker, she needed a more creative outlet. In 1977 she launched a lingerie company with an East-meets-West flair. Today her brand includes four intimate-apparel lines, as well as a ready-to-wear clothing collection, home and bath products, eyewear and fragrance. Natori, 62, shared her story with Fortune Small Business in her Manhattan showroom.
- The Chinese give Tim Geithner a warm welcome - to a point. When the Treasury Secretary met with leaders in Beijing to offer assurances that the U.S. can repay its debts, he received a somewhat sympathetic ear.
- Financier Stanford indicted for $7B fraud Billionaire financier Robert Allen Stanford has been indicted on charges of criminal conspiracy to commit mail, wire and securities fraud, actions that earned his company an estimated $7 billion dollars, according to court documents unsealed Friday.
- Mark Bloom goes from jet setter to pauper In the annals of fraud, hedge fund manager Mark Bloom will probably be remembered for two details. First, his alleged $20 million scam tipped off regulators to the larger, purported $554 million one at the brokerage firm WG Trading. Second, the former big spender is now so cash-strapped that he's planning on using a public defender when his case gets underway this summer.
- My death-defying climb with Jim Collins It's 7 a.m. when I park in front of Jim Collins' house in Boulder, Colo. He's already out front, slim and wiry, his 50 years given away by nearly-white hair. Collins looks up from sorting piles of hooks, harnesses, ropes and cantilevered clasps. "Want to see where we're going?" he says. Collins is energized, caffeinated, enthused -- which seems to be his natural state. If he were a dog, he'd be a Jack Russell terrier.
- Revenue Recognition: Will a Single Model Fly? Elements unique to long-term contracts pose a challenge for FASB and IASB in their bid to create one standard covering all customer relationships.
- Twice the Effort for a Revolver: A Good Deal It took some doing, but Ducommun is among the few companies able to recently acquire a five-year line of credit with decent terms.
- CFOs on the Move: Week Ending July 3 Facebook, eGistics, Spansion, Charles & Colvard, NeuStar, Cumulus Media, QL2 Software, Century Payments, SeaBright Insurance Holdings, Aspen Technology, Akebia Therapeutics.
- Banks Take Aim at Revolvers With lenders shrinking the length and size of their commitments to companies and charging more, liquidity risk is rising.
- Will Whopping Goodwill Hits Hurt Deals? The big question for many investors is whether the backlash from past mergers will cool deal valuations going forward.
- Economics focus: Put out Uncertainty over the size of the output gap complicates the task of central banksHAVING raised the alarm on deflation, the Federal Reserve has now begun to sound the all clear. The statement it released after its policy meeting on June 24th notably omitted the warning from its three prior meetings that “inflation could persist for a time below rates that best foster economic growth and price stability”. To be sure, with the economy gradually finding a bottom and the rate of decline in home prices slowing, the chances of a downward spiral of deflation and economic activity have diminished. Yet it seems premature to write off the threat as long as a large output gap persists. The output gap is the difference between actual economic output and the most the economy could produce given the capital, know-how and people available. When actual output exceeds potential, demand for products and labour bids up prices and wages, fuelling inflation. When actual output falls short, competition for scarce sales and jobs puts downward pressure on inflation.Estimating how big the output gap is, and how much of a deflationary threat it still poses, is not easy. The Congressional Budget Office (CBO) estimates that the gap topped 6% in the first quarter of this year and will average more than 7% in 2009, which would be the largest figure on record. Given that core inflation was so low when the recession began, it is not a stretch to believe that, with so much slack in the economy, it could yet turn negative. But this view has been challenged in a note by John Williams and Justin Weidner of the Federal Reserve Bank of San Francisco. Rather than follow the conventional route of deriving an inflation forecast from an estimate of potential output, they do the opposite: they infer the output gap from the behaviour of inflation. As in the euro zone, where consumer prices fell for the first time ever in the 12 months to June, and Japan, where inflation excluding perishable food was -1.1% in May, inflation in America is now negative because of a drop in fuel prices last year. But core inflation is 1.8%, within its range this decade. The authors take this as evidence that the output gap may have been only 2% in the first quarter, implying little or no threat of deflation. ...
- Economics focus: Deliver us from competition If competition in banking leads to too much risk-taking, the right remedy is better supervisionRICKY GERVAIS, a comedian, tells a story about an anxious flight. When informed that the airline no longer offered newspapers to passengers, in order to cut costs, he found it all too easy to imagine a maintenance worker inspecting the plane’s undercarriage and asking: “Do we really need all these rivets?”That firms which strive hard to sustain profits may act incautiously is a concern in many industries. The severity of today’s financial crisis is blamed by some on the pressure of competition on banks. There is a bulky academic literature that links liberalisation of markets with an increase in bank failures. It argues that the lifting of restraints, such as interest-rate caps on deposits or rules that prevent banks from operating in certain markets, leads to more intense competition. That is good for borrowers, but it also hurts banks’ profit margins by reducing the “franchise value” that comes from expected earnings. ...
- Economics focus: The lessons of 1937 In a guest article, Christina Romer says policymakers must learn from the errors that prolonged the Depression AT A recent congressional hearing I cautiously noted some “glimmers of hope” that the economy could stabilise and perhaps start to rebound later in the year. I was asked if this meant that we should cancel much of the remaining spending in the $787 billion American Recovery and Reinvestment Act. I responded that the expected recovery was both months away and predicated on Recovery Act spending ramping up greatly. Only later did it hit me that I should have told the story of 1937.The recovery from the Depression is often described as slow because America did not return to full employment until after the outbreak of the second world war. But the truth is the recovery in the four years after Franklin Roosevelt took office in 1933 was incredibly rapid. Annual real GDP growth averaged over 9%. Unemployment fell from 25% to 14%. The second world war aside, the United States has never experienced such sustained, rapid growth. ...
- Economics focus: Fatalism v fetishism How will developing countries grow after the financial crisis?FORTY years ago Singapore, now home to the world’s busiest port, was a forlorn outpost still garrisoned by the British. In 1961 South Korea was less industrialised than the communist north and dependent on American aid. In 1978 China’s exports amounted to less than 5% of its GDP. These countries, and many of their neighbours, have since traded their way out of poverty. Given their success, it is easy to forget that some development economists were once prey to “export fatalism”. Poor countries, they believed, had little to gain from venturing into the world market. If they tried to expand their exports, they would thwart each other, driving down the price of their commodities. The financial crisis of the past nine months is stirring a new export fatalism in the minds of some economists. Even after the global economy recovers, developing countries may find it harder to pursue a policy of “export-led growth”, which served countries like South Korea so well. Under this strategy, sometimes called “export fetishism”, countries spur sales abroad, often by keeping their currencies cheap. Some save the proceeds in foreign-currency reserves, rather than spending them on imports. This strategy is one reason why the developing world’s current-account surplus exceeded $700 billion in 2008, as measured by the IMF. In the past, these surpluses were offset by American deficits. But America may now rethink the bargain. This imbalance, whereby foreigners sell their goods to America in exchange for its assets, was one potential cause of the country’s financial crisis. ...
- Paul Krugman's London lectures: Dismal science The Nobel laureate speaks on the crisis in the economy and in economicsTHE London School of Economics was once so popular among young American scholars that British students used to joke that LSE stood for “Let’s See Europe”. A distinguished sightseer, Paul Krugman, returned to the LSE on June 8th to give the annual Lionel Robbins memorial lectures. Mr Krugman, who gave the Robbins lectures 21 years ago, tried to answer two big questions in the course of his three talks. Why did economists not foresee calamity? And how will the world economy climb out of recession? The immediate cause of the crisis, “the mother of all global housing bubbles”, was spotted by many economists. That house prices had risen too far was obvious, even if policymakers had seemed less sure. The surprise was that the bursting of the bubble would be so damaging. “I had no idea it would end so badly,” said Mr Krugman. ...