Startup Spider

[JoeDuggins]

I'm gonna fire up the news spider now.  Let's see how it goes. 

[NewsSpider]

We find this interesting.
NEW YORK (CNNMoney.com) -- Regional banks in Maryland and Minnesota were closed by regulators Friday, bringing the total number of failed banks this year to 83, the Federal Deposit Insurance Corporation said. Baltimore, Md.-based Bradford Bank, which operated nine branches, will reopen Monday as part of Manufacturers and Traders Trust Company.  M&T, which is based in Albany, N.Y., agreed to assume all of Bradford Bank's $383 million in deposits and will purchase "essentially all" of its $452 million in assets, the FDIC said.In Minnesota, the eight branches of Mainstreet Bank of Forest Lake will be taken over by Stillwater-based Central Bank.Central will pay a premium of 0.1% to the FDIC for the failed bank's $434 million in deposits and will purchase its $459 million in assets, the FDIC said. The combined cost of Friday's two closures to the FDIC is an estimated $192 million.Access to funds. Customers of the failed banks will be able to access their money over the weekend by writing checks or using ATM or debit cards. Checks will continue to be processed, and borrowers should make their payments as usual, the FDIC said. The FDIC, the federal agency that has protected bank deposits since the Great Depression, will guarantee account balances up to $250,000. Qualified depositors of the failed banks will retain their FDIC coverage.A bad year. With Friday's closures, the number of banks shut this year is more than three times the number of  banks that failed in 2008, and it's the highest tally since 1992, when 181 banks failed.  The majority of this year's failures have been small, regional banks that fell victim to losses on real estate and consumer loans as unemployment surged to a 25-year high. But there have also been a number of large institutions closed in 2009.Last week, regulators in Texas closed Guaranty Bank, which had about $13 billion in assets and was the third-largest bank to fail this year. That came one week after Alabama-based Colonial BancGroup became the sixth-largest bank failure in U.S. history on Aug. 15.The wave of failures is expected to continue, raising concerns about the size of the FDIC's insurance fund.The FDIC said Thursday that the number of institutions on its so-called "problem bank" list reached 416 in the most recent quarter  -- the highest level in 15 years. The agency also reported that its trust fund decreased by $2.6 billion, or 20%, during the quarter to $10.4 billion.Over the next five years, the FDIC expects roughly $70 billion in losses due to the failure of insured institutions.  First Published: August 28, 2009: 6:27 PM ET

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We find this interesting.
If the global economy continues to show signs of stabilization and investors remain bullish, the U.S. dollar could continue to be used as a funding currency for carry trades, he added.   That could further weaken the buck, since investors will continue to favor higher yielding currencies such as the Australian dollar and the euro, at the expense of the dollar. However, the likelihood of a robust economic recovery remains in question and analysts say the Fed will probably intervene before the dollar falls too far.That's partly because policy makers want the U.S. economy to become more export oriented and a weaker dollar means lower profits for American producers when their goods are sold overseas. The U.S. is also under pressure to stabilize the dollar as overseas central banks become more concerned about their holdings of dollars and dollar-denominated assets. China, which sits on the world's largest foreign-exchange reserves, has called for an alternative reserve currency to challenge the dollar. On Thursday, French president Nicolas Sarkozy also called for an end to the dollar's reign as the primary international currency. "We're at levels where our trade partners are getting very uncomfortable with the weaker dollar," Schlossberg said. As those partners grow more vocal, that "may force the Fed to raise rates sooner," he added. First Published: August 28, 2009: 3:22 PM ET

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[JoeDuggins]

That's odd, it posted half a story...... hmmmm....  Any thoughts? 

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CNNMoney.com) -- The dollar continued to lose ground Friday at the end of a week in which it became cheaper for banks to borrow in yen than dollars for the first time in 16 years. The greenback has been retreating since March, when rising stock and commodity prices began luring investors into more risky investments and away from the safety of U.S. currency. At the same time, the dollar has been weakened by an ever-expanding U.S. budget deficit, which has made some of the nation's main trading partners nervous. The dollar index, which tracks the buck against a basket of currencies, has hovered near 78 in August, down sharply from a high near 90 in early March. The ongoing decline was highlighted Wednesday when the cost of borrowing dollars for three months slipped below the rate on similar loans in yen for the first time since 1993, according to the British Bankers Association. The shift reflects how far bank-to-bank lending rates have fallen since monetary policy makers around the world drastically began slashing interest rates last year and unleashed a tide of liquidity to help forestall the worst economic crisis since the Great Depression. The trend carried over into Friday, with the Libor rate on 3-month dollar loans at 0.3475% compared with 0.39063% for loans in yen. The London Interbank Offered Rate -- or Libor -- is a daily average of rates that 16 different banks charge each other and is a benchmark for a variety of consumer loans."The U.S. economy is awash in money," said Sacha Tihanyi, a currency strategist at Scotia Capital in Toronto.  "Liquidity is not an issue." Put differently, there are simply more dollars floating around now, which makes them cheaper to borrow. In addition, the Federal Reserve's benchmark interest rate now stands at historically low levels near zero percent, which makes it less expensive for institutions to borrow from the Fed and contributes to lower interbank lending rates.This has also made the dollar a funding currency for the carry trade, an investment strategy where people use the currency of a country with exceptionally low interest rates to buy higher yielding assets.The carry trade is popular because it allows investors to earn interest while potentially making a profit on more risky bets. But it only works if investors are upbeat about the prospects for a global economic recovery. "The carry trade is tied to positive risk appetite," said Boris Schlossberg, director of currency research at Global ForEx Trading in New York. "Carry trades assume global growth and a widening out of interest rates."0:00
      /2:45Investing in Chinese equitiesIf the global economy continues to show signs of stabilization and investors remain bullish, the U.S. dollar could continue to be used as a funding currency for carry trades, he added.   That could further weaken the buck, since investors will continue to favor higher yielding currencies such as the Australian dollar and the euro, at the expense of the dollar. However, the likelihood of a robust economic recovery remains in question and analysts say the Fed will probably intervene before the dollar falls too far.That's partly because policy makers want the U.S. economy to become more export oriented and a weaker dollar means lower profits for American producers when their goods are sold overseas. The U.S. is also under pressure to stabilize the dollar as overseas central banks become more concerned about their holdings of dollars and dollar-denominated assets. China, which sits on the world's largest foreign-exchange reserves, has called for an alternative reserve currency to challenge the dollar. On Thursday, French president Nicolas Sarkozy also called for an end to the dollar's reign as the primary international currency. "We're at levels where our trade partners are getting very uncomfortable with the weaker dollar," Schlossberg said. As those partners grow more vocal, that "may force the Fed to raise rates sooner," he added. First Published: August 28, 2009: 3:22 PM ET






Why the deficit will raise taxes  Problem bank list tops 400 Track 17 major currencies
 

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CNNMoney.com) -- Most small businesses are having trouble finding loans and credit lines these days, but auto dealers are in their own special financing hell. Their inventory is expensive, their industry is in shambles, and their largest lenders are in tatters.Recognizing that dealers need help, the Small Business Administration began rolling out new programs tailored for them. Four months in, the new programs are drawing a tepid response from lenders. A pilot project launched in July to back inventory loans to auto dealers has so far approved just one loan, according to the SBA."There's been no progress in freeing up credit," says Scott Gorden, principal in charge of dealerships at LarsonAllen, a Minneapolis-based accounting firm that works with 600 dealers across the country "Far and away, it's still the biggest issue faced by dealerships today. If you cut credit to them, they'll be closing. If they can't get the floor plan financing, they will shut down."Auto dealers' credit troubles started almost a year ago, as banks tightened their credit standards for small businesses in response to the deepening recession. But a bigger problem came when industry-specific lenders like Chrysler Financial, General Motors Automotive Credit and Ford (F, Fortune 500) Credit began to pull back."They first became protective of their brand. So a Ford-Subaru-Volkswagon dealer would only get financed from Ford Credit for the Ford brands," Gorden says. "But then they started taking a look at the less profitable dealerships, and we had a number of clients who got notice from the [lender] or the bank that the financing would end in 30, 60, 90 days."Todd Gayle, owner of AutoMax in Greenville, N.C., is among those who had his financing cut off. Gayle's independent, used-car dealership has sold a variety of brands in the past 10 years, using a $3.1 million credit line from New South Federal Savings Bank, a regional bank based in Birmingham, Ala. On January 27, Gayle received a letter notifying him that his credit line was on "cease and desist" status. The bank gave him 60 days to find an alternative credit source."Even though I've had eight previous, perfectly paid loans and I'm the number-one retailer of pre-owned vehicles within 50 miles, I can't get floor plan financing," he says. "They think the loans are toxic, and with all the audits going on, they're not willing to take on that kind of loan."The SBA has two new initiatives aimed at helping dealers like Gayle. In early May, the agency temporarily stretched its size standard of what counts as a "small" business, a move specifically aimed at making more car dealers and auto industry suppliers eligible for a government-backed loan. The SBA insures up to 90% of qualifying small business loans against default, reducing the risk for lenders.But the initiative had a major flaw. Although more auto dealers became eligible for the SBA's loan programs, the SBA does not cover "floor plan" loans, the main kind of financing used by auto dealers. A typical floor plan loan is a revolving credit line that a dealership uses to purchase vehicles. As the cars and trucks sell, the dealership pays down the loan.Without floor plan financing, a dealership can't operate. The SBA set out to fix the problem. In July, the agency launched a pilot program offering government guarantees on floor plan credit lines that are between $500,000 and $2 million. Like other SBA loans, these credit lines are administered by banks and other SBA lenders -- a list that includes few of the auto industry's traditional credit institutions. The SBA will insure up to 75% of the value of loans made through its floor plan financing pilot program. The program will run through September 2010, at which point the SBA will decide to whether terminate it, extend it, or make floor plan financing a permanent loan product.Gayle heard about the SBA's initiative and began hunting for a willing lender. At one bank, he asked them to consider the SBA's 75% guarantee and offered to put a Certificate of Deposit in the bank to cover the other 25% of the loan. But the lender turned him down, he says, because it didn't want to do a deal with anyone in the auto industry.Gayle has approached 20 banks so far and been turned away each time. In the meantime, he's been without credit and unable to restock his inventory. Sales have plummeted 60% and he's had to cut his staff of 24 down to nine. Without a credit line, Gayle is worried about his dealership's survival."I'm in dire straights and I'm confused about where to go from here," he says.So far, just one loan has been approved through the floor plan lending project, although the SBA says others are in the queue.Gorden isn't optimistic. "Big banks are not doing the program because of the size. Two million is too small. Most of the big banks, their floor plan lines are $5 million, $10 million, $20 million or more," Gorden says. "And the smaller banks and credit unions don't have the expertise to manage a floor plan landscape."Unlike other loans, revolving floor plan lines of credit require the lender to manage its ongoing risk by tracking the inventory used as collateral, which means a lot of paper shuffling for the lender. But some experts don't buy that excuse."There's no question that if you were to line up the different categories of potential commercial lending, floor plan lending does have a greater set of burdens and costs associated with it because of the nature of the loan," says Doug Greenhaus, director at the National Automotive Dealers Association. "But you can hire [companies] to do the back-end work."Greenhaus is frustrated that lenders are blackballing the entire auto industry and refusing to evaluate specific businesses on their own merits. "I don't care how bad the economy is," he says. "There are people who lose money and people who still do very well and make money."For Gayle, his dealership, and his staff, the time for finding a solution is running out."In the eyes of everyone else, one business doesn't matter," he says. "But the ripple effect is ridiculous -- the insurance company we're with won't have our policy, the [auto] service company across the street won't have our business, my employees won't have jobs or health insurance, our tax dollars in property and income will be gone, and so on."  To write a note to the editor about this article, click here.

 






New loans for car dealers - but will they help?  Car dealers face extinction  'Chrysler made a big mistake' - one dealer's story

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CNNMoney.com) -- Undeterred by the miniscule odds, people were lining up Friday for a chance to score the estimated $333 million Mega Millions jackpot. The odds really are microscopic. You have a one in 175,711,536 chance of winning. That's a 0.0000006% chance. Still, since tickets are just $1, and the jackpot payout is double the odds of winning, if a person bought all 176 million combinations, he or she would be guaranteed to win at least $157 million. So playing the Mega Millions on Friday could make sense ... if you could afford to spend $176 million on tickets. Bear in mind, that only works if there is a single winner who doesn't take a lump sum payout.The 12-state lottery anticipates hundreds of millions tickets to be purchased before the 11 p.m. ET drawing Friday night for what will be at least the third-largest U.S. lottery jackpot of all time. The New York Mega Millions branch said it expects ticket sales to eclipse $1 million per hour starting with the noon hour on Friday."This is a huge jackpot," said Jennifer Givner, spokeswoman for the New York Mega Millions. "There's a lot of excitement about it, and we probably made a conservative estimate of the jackpot."Mega Millions guarantees its jackpot, so it could go even higher, depending on the number of ticket sales. In fact, Mega Millions raised its jackpot estimate by $8 million on Friday based on stronger-than-expected sales.Sander Sharman, who owns the newsstand on 9th Avenue and 57th Street in New York said Mega Millions sales have been overwhelming. The line for lottery tickets was out the door."It's never been anything like this," said Sharman just before 1 p.m. ET on Friday. "We usually do 1,200 sales in a day, and already we have 4,200."All of that business is good news for retailers like Sharman. Lottery retailers get a 6% commission on all sales and a $10,000 bonus for selling the jackpot-winning ticket.How it works. After the drawing, the 12 participating states begin to count up their tickets and check to see if there is a match. Winners get about 50% of the pool, with roughly 35% divided between the state coffers and 15% going to lottery retailers and administrative costs.If there is a winner or multiple winners, the states will likely know by early Saturday morning, according to Givner. If not, the money is returned to the pool and the game continues with an even higher jackpot.That's been the case for the last 14 bi-weekly drawings -- no one has hit the nail on the head. But some have come close: On Tuesday, 17 Pepsi Bottling Group employees in Albany, N.Y., split a ticket and guessed right on five of the five numbers. But they missed the final Megaball number, and split just $250,000.The last jackpot winner was on July 7, when a former New York City Transit employee won $133 million. The jackpot then went back to its base of $12 million.0:00
      /3:10You won the lottery! Now what?Winners can choose between a lump-sum cash payment and annuity payments. If the $333 million jackpot winner chooses the annual payment plan, he or she would receive $12.8 million per year, before taxes, for the next 26 years. The lump sum is calculated using the present value of U.S. Treasurys based on Friday's market rates. Using that formula, Mega Millions estimated that the winner will take home $210 million before taxes if he or she chooses the lump sum option.The vast, vast majority of winners choose the lump sum payments, according to Givner.Jack Peragine, a 54-year old New York doorman said he hopes he gets the chance to decide how he collects his winnings."I buy lottery tickets here and there, but I figured I'd definitely get one today," he said. "It's like the [New York] lottery slogan says, 'Hey, you never know.'"The 12 states that participate in the Mega Millions are California, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Texas, Virginia and Washington. First Published: August 28, 2009: 12:59 PM ET






Lottery fever: how to take the cash?   How to spend a quick $370 million 

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CNNMoney.com) -- Regional banks in Maryland, Minnesota and California were closed by regulators Friday, bringing the total number of failed banks this year to 84, the Federal Deposit Insurance Corporation said. Baltimore, Md.-based Bradford Bank, which operated nine branches, will reopen Monday as part of Manufacturers and Traders Trust Company.  M&T, which is based in Albany, N.Y., agreed to assume all of Bradford Bank's $383 million in deposits and will purchase "essentially all" of its $452 million in assets, the FDIC said.In Minnesota, the eight branches of Mainstreet Bank of Forest Lake will be taken over by Stillwater-based Central Bank.Central will pay a premium of 0.1% to the FDIC for the failed bank's $434 million in deposits and will purchase its $459 million in assets, the FDIC said.Affinity Bank of Ventura, California, operated 10 branches which will be taken over by Pacific Western Bank.Pacific Western will assume all of Affinity's deposits of approximately $922 million and purchase its $1 billion in assets, according to the FDIC. The combined cost of Friday's closures to the FDIC is an estimated $446 million.Access to funds. Customers of the failed banks will be able to access their money over the weekend by writing checks or using ATM or debit cards. Checks will continue to be processed, and borrowers should make their payments as usual, the FDIC said. The FDIC, the federal agency that has protected bank deposits since the Great Depression, will guarantee account balances up to $250,000. Qualified depositors of the failed banks will retain their FDIC coverage.A bad year. With Friday's closures, the number of banks shut this year is more than three times the number of  banks that failed in 2008, and it's the highest tally since 1992, when 181 banks failed.  The majority of this year's failures have been small, regional banks that fell victim to losses on real estate and consumer loans as unemployment surged to a 25-year high. But there have also been a number of large institutions closed in 2009.Last week, regulators in Texas closed Guaranty Bank, which had about $13 billion in assets and was the third-largest bank to fail this year. That came one week after Alabama-based Colonial BancGroup became the sixth-largest bank failure in U.S. history on Aug. 15.The wave of failures is expected to continue, raising concerns about the size of the FDIC's insurance fund.The FDIC said Thursday that the number of institutions on its so-called "problem bank" list reached 416 in the most recent quarter  -- the highest level in 15 years. The agency also reported that its trust fund decreased by $2.6 billion, or 20%, during the quarter to $10.4 billion.Over the next five years, the FDIC expects roughly $70 billion in losses due to the failure of insured institutions.  First Published: August 28, 2009: 6:27 PM ET Goodbye local bank branch  Preparing for a major bank shakeout 

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CNNMoney.com)  -- A $9 trillion federal deficit over 10 years may be too hard to comprehend. But this part is easy: Such unwieldy amounts of debt could have an impact on Americans' bottom line one way or the other -- if not tomorrow, then the day after.The U.S. government has been spending a great deal more than it has been taking in, and it is on track to do so well beyond the next 10 years. It has been borrowing money to make all that spending possible and it has to pay the money back with interest. How, you ask? By borrowing more.The solution is straightforward if unpleasant: Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow, lawmakers will have to raise taxes and cut spending.The more the country lives on a credit card, the more it makes itself beholden to the demands of its creditors -- many of which are overseas. The danger is that buyers of U.S. debt could become concerned that the country is running too high a balance. If so, they will demand higher interest rates -- thereby making the country's debt problem worse -- or they'll put their money elsewhere.At that point, things would get ugly."Taxes would rise to levels that would make a Scandinavian revolt. And the government would not be able to provide anything but the most basic public services. We would no longer be a great power (or even a mediocre one), and the social safety net would evaporate," tax policy expert and Syracuse University professor Len Burman wrote in a recent op-ed cheerfully titled "Catastrophic Budget Failure."That's why acting sooner rather than later makes sense. But acting too soon could cause its own set of problems since the economy is only beginning to lick its wounds from a punishing recession.Economists and tax experts, no matter their ideological position, agree raising taxes when the economy is down is self-defeating.But as the economy finds a solid footing, the hard choices will have to be made. "We need to do this in stages at the right time," said David Walker, former U.S. comptroller general, in a CNNMoney.com video.0:00
      /6:16Deficit in critical conditionRight now there is a lot of talk, but not a lot of planning, about how to address the situation.In fact, President Obama is pledging to keep taxes low for most people.For example, Obama has proposed keeping in place the 2001 and 2003 tax cuts for families making less than $250,000 (under $200,000 for individuals). The cuts are scheduled to expire in 2011. A number of temporary tax relief measures, including the patch to protect the middle class from the Alternative Minimum Tax, are set to expire even sooner. And Obama has said he would like to keep many of those measures in place as well.Experts say that's not going to cut it."Taxes are going up and they're going up for a lot more people than those making more than $250,000. Why? Math. The numbers don't come close to working," Walker said.For instance, the president's proposal to raise taxes only on high-income families would raise an additional $600 billion over 10 years, said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. That's not a lot when the government is staring at a 10-year deficit of $9 trillion. A 10-year deficit of that magnitude means the debt held by the public -- the accumulation of all annual deficits over the decades -- would reach 82% of gross domestic product come 2019. That's double the 41% recorded in 2008.When lawmakers do decide to act, they will need to do more than just tinker with tax rates, according to Williams.Tax experts have been calling for fundamental tax reform to make the system less complex. Plus, Williams said, Congress will likely need to seek out a new source of revenue beyond the income tax. One idea that has been talked about increasingly is a value-added tax, which is a tax on goods and services at every stage of production up to the point of sale.A multi-pronged approach may work best because "no piece by itself is enough," Williams said. "There's a really big hole to fill and [lawmakers] are just talking about dollops." First Published: August 27, 2009: 11:15 AM ET






U.S. between a deficit and a hard place  Gale, Auerbach: What caused the deficit, why it matters 

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CNNMoney.com) -- The number of institutions on the government's so-called "problem bank" list surpassed 400 in the latest quarter, climbing to its highest level in 15 years, according to a government report published Thursday.The numbers, published as part of a broader survey on the nation's banking system by the Federal Deposit Insurance Corporation, revealed that the number of banks at risk of failing reached 416 during the second quarter.The FDIC, which insurers bank deposits, has been hit by a wave of relatively large and costly failures as of late, prompting concerns about the size of the agency's insurance fund. To that end, the FDIC reported that the fund decreased by $2.6 billion, or 20%, during the quarter to $10.4 billion.The number of banks under scrutiny by regulators has moved steadily higher since the recession began in late 2007. A year ago, the number of banks on the FDIC's watch list was 117. At the end of this year's first quarter, the number stood at 305.FDIC chairman Sheila Bair said she expected the trend to continue."We expect the number of problem banks and failures will remain elevated even as the economy begins to recover," she said Thursday. The names of the banks on the list are never made available to the general public by regulators out of fear that depositors at those institutions may prompt a so-called "run on the bank."Regulators indicated that the number of assets controlled by those institutions, however, climbed to $299.8 billion in the latest quarter, up from $220 billion in the previous period.Over the years, the problem bank list has been viewed as a telling, albeit backwards-looking, barometer on the overall health of the nation's banking industry.Still, few of the lenders that are on the list actually reach the point of failure. On average, just 13% of banks on the FDIC's problem list have been seized and shuttered by regulators.So far this year, 81 banks have failed, and dozens more are expected to follow as banks cope with continued losses in real estate and various consumer loans.Gauging performanceAs a group, banks lost $3.7 billion during the second quarter, hurt in large part by their decision to set aside money to insulate themselves against bad loans, according to Thursday's report.In a sign of how much of a trouble spot the issue of credit remains for many lenders, the percentage of loans and leases where borrowers were behind on payments rose to 4.35%, the highest level since banks first started reporting that data to regulators in 1983. Last quarter, the delinquency ratio was 3.76%.0:00
      /2:56Bank stocks: Still a risky betBair suggested however, that banks might be turning a corner in that respect, citing improvement among some real estate-related loans and a drop in the number of loans more than 30 days past due."We're going to need another quarter or two to confirm a trend," she said.Still, Bair indicated that the agency was bracing for more failures, adding that it would look to replenish the agency's depleted insurance fund. So far this quarter, there have already been two significant bank failures: Texas-based Guaranty and Colonial BancGroup of Alabama.Bair said Thursday that regulators would likely impose a special assessment on banks sometime next month to help replenish the insurance fund. That's on top of another special assessment against banks earlier this year.What remains uncertain, however, is whether such precautionary measures would prevent the FDIC from having to tap its $500 billion credit line from the Treasury Department, which was approved earlier this year.Bair downplayed the idea, but did not rule it out altogether.Regulators could levy even more assessments against banks to avoid using funds from the Treasury. But such a move could harm many of the banks that are trying to survive the current crisis, notes Frank Barkocy, director of research at Mendon Capital Advisors, a money manager that invests primarily in bank stocks.Barkocy said that if higher fees "push others to the brink" then the FDIC might want to consider other options, such as money from the Treasury, instead.--CNNMoney.com senior writer Jennifer Liberto contributed to this report. First Published: August 27, 2009: 10:11 AM ET






Barbarians back at bank gates  Don't mess with Texas banks 

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CNNMoney.com) -- An increasing number of economists agree with the government's response to the recession, saying they believe the economy is on the road to recovery, according to a survey released Monday.The majority of respondents, or 76%, do not believe a second stimulus package is necessary, said the report from the National Association for Business Economics. "This is almost certainly one of the fastest-moving and most controversial economic policy environments we have experienced in a generation," said NABE president Chris Varvares. Respondents expressed "an impressive degree of confidence in monetary policy," but their views on budget policies are "more vexing," Varvares added. The semi-annual survey includes responses from a panel of 266 economists.Fiscal policy. The number of economists reporting that fiscal policy is "about right" rose to 35%, marking the highest since March of 2008. That's up from 22% in March 2009. But 50% of those surveyed said fiscal policy is still too stimulus focused, up from 33% in March. Three-quarters said they would like to see more restriction over the next two years, but only 28% expect that. In fact, almost 42% of economists said they expect fiscal policy to become even more stimulus oriented. About 20% said the stimulus actually reduced growth during the past quarter. Stimulus outlook. About half of respondents said stimulus will add between 0.5 and 1.5 percentage points to gross domestic product growth in the second half of 2009. About a third said it would add less than 0.5 percentage points. GDP is the broadest measure of the nation's economic activity.About 58% said the stimulus will add between 0.5 and 1.5 percentage points to GDP growth from the fourth quarter of 2009 to the fourth quarter of 2010.The first revision of the second-quarter GDP showed the economy declined at a rate of 1% -- unchanged from the government's initial estimate.The Fed and monetary policy. Almost 70% of the economists said the Federal Reserve's current monetary policy is "about right." That's up from 63% in March and from 56% a year ago. But results were split on the central bank's moves over the next six months. Almost half said the interest rate policy should remain on hold, while 45% said it should become more restrictive. However, 56% of economists said the Fed would likely hold rates at current levels over the next six months, while 44% predicted an increase. First Published: August 31, 2009: 8:19 AM ET Lacker: US may not need all planned stimulus  U.S. between a deficit and a hard place   Economy shows stabilization: GDP down 1% 

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CNNMoney.com) -- Finding work in this recession takes determination, perseverance and, most of all, sacrifice. With unemployment as high as 9.4% and job prospects scarce, job seekers are willing to accept as little as half of what they were making before, if it means finding a job. In a recent survey, 65% of out-of-work respondents reported willingness to accept wages up to 30% lower than their previous compensation. And, 3% and 4%, respectively, said they would accept up to 40% and 50% of prior wages, according to the 2009 Annual Career Fair Survey released by Next Steps Career Solutions."In the old days people would expect to get at least a 10%-15% bump when they were making a transition from this job to the next," said Paul Bernard, an executive coach and career management adviser who runs his own firm. Now, "being asked to take cuts in the 20%+ range is pretty standard."That was true for Rebecca Eason, who used to make a comfortable $33,000-a-year living in Tennessee. After losing her job as an office manager for a steel company, Eason, 29, says she has settled for a temporary position making $9.25 an hour until something better comes along. Her current position is a 40% paycut from what she was making previously and also comes without benefits like health insurance. Her husband, Chris, also lost his job this summer and found a temporary position for 50% of his previous salary. Although Eason says she is thankful they are both employed, living on less has not been easy. "Every penny covers our mortgage, life insurance, groceries, gas -- just the basic necessities," she said. "My hope is that as companies start to feel more confident about the economy, then I will be able to find something better." 0:00
      /01:49'My personal recession isn't over'Eason's situation has become all too common since the recession began. "I see it every day," said Jay Meschke, president of EFL Associates, a division of professional services company CBIZ. "People are out there accepting positions as much as 50% below what they were making before." "If it is a choice of putting food on the table, paying for a kid's school expenses, or attempting to get on a healthcare plan -- many people are flat out accepting jobs well beneath their former market values," he said. But those who do accept lower salaries in order to ride out the recession might find that they've permanently damaged their value in the workplace. Getting back in the gameExperts are divided on whether job seekers will be able to command what they formerly earned once the economy improves. Some say taking a substantial paycut will have implications on a job seeker's future compensation demands. "Job seekers that take severe pay cuts in order to secure a job today may find it extremely difficult to recoup forfeited wages once the economy recovers," said Patrina Campbell, a spokeswoman for Next Steps Career Solutions. "Your future salary will be based on what you were making at your last employer," Bernard explained. In addition, pay cuts are often coupled with lesser titles or demotions, making it harder for employees to jump back to their original level, he added. The length of stay at an interim job is also an important factor, noted Todd Uterstaedt, president and CEO of Baker & Daboll, an executive coaching firm in Cincinnati. If an employee stays in a lesser paying position for two or more years, it's hard to make a case that they can return to the compensation level they held previously, he said."There's a new perception of that person in the marketplace, the longer they stay in that role."On the other hand, candidates can use interim positions to their advantage. If the job involves developing some skill sets and competencies that make them more marketable, then they have a better case of asking for a higher level of compensation the next time around, Uterstaedt said. In a recovery there will be increased demand for labor and employees will have greater options, argued Meschke. Therefore, "employers will have to pay the going rate" to keep top talent from going elsewhere, and that means offering a highly competitive salary. But that will also likely vary by industry, he added. Some sectors, such as financial and automotive, could see permanent price point reductions when it comes to compensation. First Published: August 31, 2009: 12:31 PM ET






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CNNMoney.com readers and viewers reveal their battle with the rising costs of health insurance.      View photos   
 


   FIXING HEALTH CARE
   
      

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  WASHINGTON (CNNMoney.com) -- Earlier this year, public outrage boiled over with news of eye-popping pay to top executives on Wall Street. White House officials later acknowledged they had misjudged the velocity and volume of furor triggered by "bonusgate," which raised the profile of corporate executive pay.Could that happen now in health care?Some of the known salaries are pretty big. Last year, the head of Cigna (CI, Fortune 500) made $11 million and the head of United Health Group (UNH, Fortune 500) made $9.4 million, according to the Corporate Library.Fifty-two health and accident insurance companies have until Friday to turn over salary details on employees who make more than $500,000 a year.Last month, Rep. Henry Waxman, D-Calif., head of the House Energy and Commerce Committee, asked for the figures as part of a broader look at how health insurers operate.And last week, Sen. John D. Rockefeller IV, D-W.Va., who runs the Senate Commerce panel, also asked the biggest health insurers to cough up particulars of premium dollars spent on patient care.Some policy watchers believe the congressional push has the potential to shake things up. In fact, a controversy over CEO pay could renew debate over a public option, a government-run health insurance plan that would compete with private insurers.Public option advocates hope outrage over big-time salaries prompts a new rally for their case.The debate over pay"I think they will get some information that will surprise policyholders, because there's not a great deal of awareness of how much these executives do make," said Wendell Potter, a former Cigna vice president who now works for a left-leaning media group. "A lot of money they're paying in premiums is going to make executives richer and richer every year."But health insurers call the salary quest a politically motivated "fishing expedition" that distracts from other reform issues such as expanding access, controlling costs and improving the quality of care.They say it is the latest in a series of attacks against them as the debate to redo the nation's health care system enters the final stretch."These letters were sent at a time when the industry dared to raise questions as to whether there should be a government run plan," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's lobbying group. "Health insurance profits are not what's driving health care costs."Most executives of publicly traded companies draw their big pay checks from bonuses, stocks and options to buy and sell stocks at sweet prices. Their compensation is tied to profit levels and how the company is valued.In health insurance, profits come out of the pot of money left over after premium dollars are used to pay for patient care. The formula that accounts for how much of premiums are spent on patient care versus administration, marketing and profits is called a "medical loss ratio." And that's one of the things lawmakers want to know more about. In the early 1990s, health insurers spent more than 90 cents of every dollar collected on patient care, but that has been declining. In 2007, national publicly-traded health companies spent about 81 cents of every dollar on patient care, according to a PriceWaterhouseCoopers report.Advocates who want executive pay included in the reform debate want to reverse that trend and force insurers to spend more on patient care.Profits and patient care"These guys are operating on the sole basis that they want to retain as much as they can in premium dollars for their investors and their own pay," said Robert McGarrah, counsel for the AFL-CIO Office of Investment. "That's why we need a public plan, so we'll have a benchmark." America's Health Insurance Plans, the industry advocacy group, argues that the industry is not sacrificing patient care for profits. It points to the industry's ranking as 35th on Fortune's report on most profitable sectors returning a 2.2% profit in 2008. (In 2006, the sector ranked 21st and averaged a 7.1% profit.)But while health insurance might not be the most profitable of industries, even in an off-year like 2008, several top chief executives made more than $5 million, according to analysis by the Corporate Library, an independent corporate governance research firm.AHIP and other insurers say executive compensation should be debated across the board on Wall Street, not just for health insurance companies."While executive compensation is an important issue, the health care industry should not be singled out alone," said Chris Curran, spokesman for Cigna. "We have been diligently working on a plan that guarantees coverage for everyone ... without adding to the debt burden of the country that a government sponsored plan would create."But advocates like Potter say the difference between health insurers and other companies is that in health insurance, those dollars that go to reward top employees could be going to patient care."I think it's significant because Americans are spending more and more of their premium dollars on compensation for the executives and other highly paid employees," said Potter, now a senior fellow for the Center for Media and Democracy.The salary request is part of a broader investigation into the health insurers' business practices, following recent hearings into why health insurers drop some patients, congressional aides said.0:00
      /2:47Health insurance nightmare"As Congress continues to debate health care reform, it is important we have all of the facts," said Rep. Bart Stupak, D-Mich., who has led the push along with Energy Chairman Waxman.In the Senate, Rockefeller's inquiry went to the top 15 health insurers. The industry's answers are due Sept. 8.CNNMoney.com sought comment from a dozen of the bigger publicly-traded insurers, and all said they planned to respond to the requests."We have received the letter, are in the process of reviewing it, and have not yet determined a response, although we certainly take the request seriously," said Aetna's (AET, Fortune 500) Fred Laberge. First Published: September 1, 2009: 1:46 PM ET






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CNNMoney.com) -- More Americans signed sales contracts to buy homes in July than in June, marking the longest streak of monthly increases on record, said a report released Tuesday.The pending home sales index from the National Association of Realtors rose 3.2% in July after rising by 3.6% in June. That's 12% higher than July 2008, and it marks the sixth straight increase since record-keeping began in 2001.The reading far exceeded forecasts of economists surveyed by Briefing.com, who predicted a 1.5% increase.Signed real estate contracts often take many weeks or months to complete, so they are considered a forward-looking indicator.A new directionMomentum in the housing market has clearly turned for the better, said NAR chief economist Lawrence Yun, in a written statement."The recovery is broad-based across many parts of the country," Yun said. "Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit."The first-time home buyers tax credit, passed earlier this year as part of the economic stimulus package, is worth 10% of the home purchase price up to $8,000. People who have not owned a home in the previous three years are eligible for the credit. However, the tax credit expires on Nov. 30 and it usually takes about 90 days to close on a house after a contract is signed. As of Sept. 1, there were only 90 days left before the credit ends.Housing affordability has also improved, the NAR said.  The average middle-income family can now spend less than 25% of monthly income to buy a median-priced home, Yun said, adding that housing payments  as a percentage of income in 2009 are at a record low."As long as home buyers stay within their budget, mortgage payments will be very manageable," Yun said.Regional salesThe pending home sales index is broken down by regions. The West soared above the rest, jumping 12.1% in July, while  the South saw pending home sales activity rise 3.1% for the month. In the Northeast, activity fell 3%, and in the Midwest saw a decline of 2%. First Published: September 1, 2009: 10:22 AM ET Is a reverse mortgage right for you?  Act fast! Homebuyer tax credit ends soon  Life after foreclosure  Expensive homes miss the recovery
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CNNMoney.com readers describe how President Obama's $787 billion stimulus package has helped them -- or hasn't.      View photos   
   NEW YORK (CNNMoney.com) -- More than nine out of 10 cities are slashing spending this year as the recession wreaks havoc on their sales and income tax revenue, a new study found.And the future looks even worse, as the housing market's steep declines continue cutting into property tax revenue, according to the National League of Cities, which issued the update on city fiscal conditions Tuesday.City finance officers' pessimism is running at its highest level in the history of the group's 24-year survey. The economic situation on the local level has grown more dire in the seven months since the group released its last report."City leaders know the worst is still ahead of them in terms of revenue declines and service cuts," said Chris Hoene, the league's director of research.The Obama administration's $787 billion stimulus package is expected to help offset some of the cities' misery, but the money won't have much impact until 2010, Hoene said.Spending cutsTo combat declining revenues, 62% of cities are delaying or canceling infrastructure projects, the study found. That's a 20 percentage point increase from the league's February status report. Some two-thirds of cities are laying off workers or instituting hiring freezes, roughly the same figure as reported earlier this year.Meanwhile, officials are also raising taxes and fees, as well as tapping city coffers. Some 45% of cities have increased fees for services, while 25% have upped property taxes. More than one in four have added fees.Also, cities are expected to draw from their ending balances -- which are similar to states' reserve funds -- for the first time since the recession of the early 1990s. Ending balances are expected to decline to 20.8% of budgets, a drop of 3.5 percentage points.Cities are taking these and other actions to close a projected 2.1% budget gap for 2009, the report found.In Northglenn, Colo., park lawns are being mowed less frequently and some streets are not being repaired -- the results of a $900,000 paring of the Denver suburb's $18 million 2009 budget. But these moves weren't enough. Two weeks ago, the city laid off 11 workers.The coming year will bring more cutbacks, such as the likely elimination of the July 4th fireworks display, said Mayor Kathleen Novak. More details will be unveiled when the budget is presented in two weeks."We're really trying to keep our core services intact, but the extra things we'd like to do are being cut back," said Novak, who is the league's president.Property tax painWhile income and sales tax revenues are expected to decline in 2009, property taxes are still projected to grow, albeit at a slower pace. That's because there is often a few years' lag in adjusting property tax assessments.Many cities are still collecting taxes based on the value of homes from 2006 and 2007, the height of the market, Hoene said. In coming years, however, the rolls will likely be adjusted to reflect the steep plunge in home prices."It takes awhile for cities' revenues to catch up to what's happening in the market," he said.Sales tax revenues are expected to decline 3.8% in 2009 as consumers rein in spending, while income tax receipts are projected to fall 1.3% as unemployment takes its toll, the survey found.Cities got more bad news Tuesday when a federal report showed that metropolitan area unemployment worsened in nearly 200 places in July. Detroit, which has the highest unemployment rate among large metro areas, saw its level rise to 17.7% in July, up from 17.1% in June, according to the Bureau of Labor Statistics. Meanwhile, El Centro, Calif., once again had the nation's highest metro unemployment rate, coming in at 30.2%, up from 29.4% a month earlier.Property tax revenues should rise by 1.6% this year, but then decline for the next three years.Cities are also bracing for reduced aid from state governments, which are facing $26 billion in shortfalls for the current fiscal year. States have been slashing spending for local aid, social services and education as they look to balance their budgets. Neither states nor cities are allowed to run deficits, in most cases.Stimulus kicks inCities are expected to receive billions of dollars in stimulus funds in the next 18 months. Stimulus dollars will help Riverside, Calif., replace four police motorcycles and 14 patrol cars, as well as maintain the positions of two department staffers. These funds are part of $12 million in stimulus grants the city is expecting to receive in coming months. The money will also go towards efforts including homelessness prevention and energy-saving initiatives.But little of that will help the city balance its budget, said Riverside Mayor Ron Loveridge. City leaders had to cut nearly $25 million out of the 2009-2010 budget, which totals $190 million. They didn't even consider stimulus funds when preparing the spending plan."The stimulus will help, but boy it won't be any silver bullet," said Loveridge.Elsewhere, stimulus funds may do more to make up budget reductions. Some cities will receive money for infrastructure projects in 2010, which will help offset the cutbacks in capital initiatives, Hoene said."It will hit the local government level at a time when they are most in need," he said. First Published: September 1, 2009: 3:48 AM ET