Financial life in a big town

Plastics maker Spartech Corp. cut its loss for the fourth quarter in half.

Clayton-based Spartech reported a loss of $27.7 million in the fourth quarter that ended Oct. 29, or 90 cents a share, compared to a loss of $55.7 million, or $1.81 a share a year ago.

Spartech produces plastic sheet, compounds and packaging products. Sales of higher margin products for transportation and construction customers helped Spartech’s sales increase 13 percent in the quarter, to $293.2 million, compared with $259.6 million a year ago.

For its 2011 fiscal year, Spartech posted a loss of $21.1 million, compared with a loss of $50.4 million in fiscal 2010.   

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Federal authorities are investigating a suspected embezzlement of potentially millions of dollars from a St. Louis area medical practice, according to a source close to the investigation.

The FBI and U.S. attorney’s investigation comes on the heels of the termination by Metropolitan Urological Specialists PC of Dunard Morris, who until recently served as its chief executive. The investigation focuses in part on whether money was diverted from the firm’s bank loans, the source said. The amount of missing money isn’t known but could be millions, the source said.

The medical practice also maintains that Morris subleased a $5,475-a-month luxury apartment using company funds without approval of the firm’s board of directors.

During the last two years, the company has shown signs of cash flow problems, including the buildup of about $1 easy payday loans.3 million in delinquent federal, state and local taxes, interest and fees, St. Louis County records show.

Asked about the federal investigation, U.S. Attorney Richard Callahan said Thursday, “I don’t want to prejudge anything, but it is a matter that has our interest.”

Morris did not return phone calls Thursday. One of his lawyers, Patrick Smith at DLA Piper law firm in New York, has declined to comment. “I’m not authorized to talk with you,” he said. Morris’ local counsel, Richard Sindel, declined to comment.

Metropolitan’s attorney, Mayer Klein, said the medical firm “terminated” Morris in mid-September but would not detail why. He did confirm that the company is investigating the missing money.

“There were some concerns with regard to prior management, and we’re working with everyone involved

Asian stocks fell Wednesday after the U.S. lowered its economic growth estimate for the third quarter and climbing yields on Spanish bonds magnified worries over Europe’s debt load.

Hong Kong’s Hang Seng fell 2 percent to 17,882.10. South Korea’s Kospi lost 2 percent to 1,789.83 and Australia’s S&P/ASX 200 shed 1.6 percent to 4,066.80. Japanese stock markets were closed for a public holiday.

Wall Street slipped Tuesday after a government report showed the U.S. economy grew at a 2 percent annual rate from July through September, down from an initial estimate of 2.5 percent. Economists had expected the figure to remain the same.

The Dow Jones industrial average lost 0.5 percent to close at 11,493.72. The Standard & Poor’s 500 fell 0.4 percent to 1,188.04. The Nasdaq composite fell 0.1 percent to 2,521.28.

Higher borrowing costs for Spain, meanwhile, renewed worries about Europe’s debt crisis. The higher rates suggest that investors are still skeptical that the country will get its budget under control despite a new government coming to power this week.

Investors have been worried that Spain could become the next country to need financial support from its European neighbors if its borrowing rates climb to unsustainable levels.

Greece was forced to seek relief from its lenders after its long-term borrowing rates rose above 7 percent. The rate on Spain’s own benchmark 10-year bond is dangerously close to that level, 6.58 percent payday advance lenders.

Underscoring jitters was the lack of market reaction to an announcement by the International Monetary Fund that it will provide quick cash on flexible terms to countries facing sudden financial stress.

“Failure of this news to result in significant gains across markets shows just how cautious investors are,” Stan Shamu of IG Markets in Melbourne said in a report.

Concerns remain that Europe’s debt crisis is pushing the region toward recession, which would slow industrial activity in countries around the world that export to Europe.

Australian resource shares took a big hit after the country’s House of Representatives approved a proposal to impose a windfall profits tax on big mining companies. The Senate is expected to endorse the measure in early 2012.

BHP Billiton, the world’s largest mining company, fell 2.6 percent. Rival Rio Tinto lost 1.6 percent and Energy Resources of Australia slid 4.2 percent.

Benchmark oil for January delivery was down 65 cents to $97.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.09 to finish at $98.01 per barrel on the Nymex on Tuesday.

In currencies, the euro fell to $1.3466 from $1.3509 late Tuesday in New York. The dollar rose slightly to 76.99 yen from 76.97 yen.

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Is this the end of the app as we know it? The app is dead. Long live the web app?

It may be too early to pronounce the downloadable application officially dead, but some tech pundits are already preparing obituaries for this staple of the mobile world.

The number of people applying for unemployment benefits fell last week to the lowest level since early April, a sign that layoffs are easing and hiring may pick up.

The Labor Department says weekly applications dropped by 5,000 to a seasonally adjusted 388,000. It was the fourth decline in five weeks.

The four-week average, a less volatile measure, dropped to 396,750. That’s the first time the average been below 400,000 in seven months.

Applications need to consistently drop below 375,000 to signal sustained job gains payday loan lenders. They haven’t been that low since February.

The total number of people receiving benefits also fell to the lowest level since Sept. 2008, when Lehman Brothers collapsed and the financial crisis intensified.

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Small Business Administration guaranteed loans hit a record $210.9 million for the eastern district of Missouri in the past year.

That’s a 51 percent increase from a year ago and a record level of SBA lending, according to SBA St. Louis District Director Dennis Melton.

In the eastern Missouri SBA’s 2011 fiscal year, which ended Sept. 30, there were 533 loans to small businesses and start-up companies, totaling $210.9 million. For the 2010 fiscal year, there were $139.2 loans to 566 borrowers.

The previous record was in fiscal 2007 when the SBA’s eastern district reached $178.4 million in loans for 1,173 borrowers.

The SBA said fee waivers on certain kinds of loans

Officials in violence-wracked Bahrain began work Monday on proposed political reforms that include boosting the powers of parliament, but the steps were dismissed by an opposition leader as too little after more than eight months of clashes in the Gulf kingdom.

The package of changes would transfer some new powers to elected lawmakers, but leaves intact the sweeping controls of Sunni rulers. Bahrain’s majority Shiites began protests in February seeking more rights and demanding an end to the monarchy’s grip on the country’s affairs.

The reforms are likely to be approved, but they appear unlikely to ease a crisis that has left about 35 people dead and delivered a serious blow to the economy of the strategic island nation _ home to the U.S. Navy’s 5th Fleet.

The official Bahrain News Agency said the prime minister met with government officials to discuss the reform package. The final report will be submitted later for approval to Bahrain’s King Hamad bin Isa Al Khalifa.

The proposed reforms include allowing parliament to vet Cabinet ministers. They also call for a review of voting districts _ which Shiite leaders claim are gerrymandered to undercut Shiite political strength easy payday loans.

Shiite’s account for about 70 percent of Bahrain’s population, but say they have faced decades of discrimination such as being blocked from top political and security posts.

The main Shiite political party, Al Wefaq, walked out of national reconciliation talks in July. Months earlier, their 18 members in parliament had resigned en masse to protest crackdowns that included hundreds of arrests and Shiite workers purged from jobs.

The Wefaq leader, Sheik Ali Salman, scoffed at the proposed reforms as doing nothing to reduce the powers of the 200-year-old dynasty. He said the measures “keep Bahrain as a dictatorship, not a democratic state.”

“We can go and ask the people of Bahrain,” he told reporters. “Do they want a referendum to decide whether to have an elected government or not?”

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Stocks got a boost Thursday after the release of surprisingly strong U.S. economic data and the overwhelming approval by Germany’s parliament of a bill to strengthen a bailout fund intended to help European countries mired in debt crises.

News that the U.S. economy grew by more than previously thought in the second quarter of the year and a surprisingly large drop in weekly jobless claims drove stocks.

The Commerce Department said the U.S. economy grew at an annual rate of 1.3 percent in the April-June quarter, up from an estimate of 1 percent made a month ago. The improvement reflected more consumer spending and a bigger boost from trade.

“The quality of the improvement far outweighs the scale of improvement with the U.S. consumer key to future growth,” said Michael Woolfolk, an analyst at The Bank of New York Mellon. “The risk for the third quarter is to the upside, with the outside possibility that it could well come in at the upper end of the 2.0-3.0 percent range.”

Further good news emerged from the Labor Department, which found that jobless claims last week dropped 37,000 to a seasonally adjusted 391,000, the lowest level since April 2. It’s the first time applications have fallen below 400,000 since Aug. 6.

The mood in stock markets had already been largely positive after a clear victory for Chancellor Angela Merkel in a vote on beefing up Europe’s bailout fund. More encouraging for the markets, perhaps, was the fact that Merkel did not have to rely on support from opposition parties.

In the short-term, the markets’ hope is that the vote in favor of an expanded rescue fund _ with 523 lawmakers in favor, 85 against and 3 abstentions _ indicates Germany is fully behind efforts to shore up Europe’s defenses against a crisis that has already seen three countries bailed out and stoked talk that Greece will default.

Germany is the biggest economy among the 17-countries that use the euro currency and has to contribute more than others to boosting the firepower of the bailout fund, the so-called European Financial Stability Facility, or EFSF. If passed, Germany will be guaranteeing loans in the future for up to euro211 billion ($288 billion), rather than euro123 billion so far.

“The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control,” said Sony Kapoor, managing director of Re-Define, an economic think-tank.

In Europe, Germany’s DAX was up 1.4 percent at 5,657 while France’s CAC-40 rose 1.5 percent to 3,041. The FTSE 100 index of leading British shares was underperforming, trading up 0.3 percent to 5,234.

Wall Street was poised for big gains at the open _ Dow futures were up 1.3 percent at 11,115 while the broader Standard & Poor’s 500 futures rose by the same rate to 1,163.

The improved appetite for risk on Thursday also helped the euro brush off another survey showing that Europe’s economy was grinding to a halt. When risk appetite is high, the euro usually garners support against the dollar. Following the German vote, it was trading 0.8 percent higher at $1.3646.

In its monthly survey of economic conditions around the 17 countries that use the euro, the EU’s executive arm, the European Commission said confidence fell further in September following the previous month’s precipitous collapse. Its economic sentiment indicator stands at 95, against August’s 98.4, and is below the long-run average. The last time it was lower was in December 2009.

The further decline in confidence is likely to pile the pressure on the European Central Bank to reverse recent course and start cutting interest rates again, if not in October, then in November when Italy’s Mario Draghi will have replaced the current head Jean-Claude Trichet.

Earlier in Asia, Japan’s Nikkei 225 index swung between gains and losses before finishing up 1 percent to 8,701.23. South Korea’s Kospi index shot up 2.7 percent to 1,769.29. China’s Shanghai Composite Index dropped 1.1 percent to 2,365.34. Markets in Hong Kong were closed due to severe weather.

Oil prices tracked equities higher too _ benchmark crude for November delivery rose 23 cents to $81.44 per barrel on the New York Mercantile Exchange.

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Canada and the U.S. will continue along a long, slow path of tepid economic growth for the rest of this year and next, economists say.

“Growth will be very near the stall rate and next year won’t see much of a recovery,” said Warren Jestin, chief economist at Scotiabank.

Jestin joined other chief economists from Canada’s big banks as they presented updated forecasts to the Economic Club of Canada in Toronto on Thursday.

Their cautious view was echoed by U.S. Federal Reserve Chairman Ben Bernanke Thursday.

Speaking to the Economic Club of Minnesota Thursday, U.S. Federal Reserve Chairman Ben Bernanke said policy makers will discuss the tools they could use to boost the recovery at their next meeting this month and stand ready to use them if necessary.

While Bernanke said that Congress and President Barack Obama must put the federal government’s finances on a “sustainable trajectory” over the long term, he warned that policy makers should not “disregard the fragility of the economic recovery.”

Growth in Canada and the U.S. will come in at about 2 per cent this year, Jestin said.

Look for Canada, with its strong domestic economy, to outpace the U.S., where the housing market and jobless rate, continue to drag down growth.

“The U.S. is like a vehicle with a broken transmission. It doesn’t matter how much gasoline you put in the tank,” said Derek Burleton, deputy chief economist at TD Bank Group.

That’s the Catch-22 facing Obama, who delivered a televised address Thursday outlining a jobs creation payroll.

The U.S. president’s plan included a reduction in payroll taxes for small businesses, payroll tax cuts for employees, aid for the long-term unemployed, funds for infrastructure spending and money for laid-off teachers and veterans.

Next week, Obama is expected to send a plan on how to offset the spending to the special 12-member congressional committee charged with coming up with $1.5 trillion (U.S.) in deficit cuts.

“This is certainly an unprecedented period in U.S. economy history,” BMO chief economist Sherry Cooper said.

In Canada, labour market data for August, to be released Friday by Statistics Canada, is likely to continue to show improvement, economists said.

It’s more evidence that the domestic economy is holding up well, even as exports pull down growth.

Meanwhile, the Organization for Economic Cooperation and Development slashed its growth forecasts for the U.S. and Japan and said central banks around the world should be ready to ease monetary policy if economies weaken further.

The U.S. will grow 1.1 per cent in the third quarter and 0.4 per cent in the fourth, instead of the 2.9 per cent and 3 per cent predicted in May, the OECD said in its interim economic assessment.

Japan will expand 4.1 per cent in the third quarter before stalling in the fourth, and the three biggest euro economies will grow 1.4 per cent and then shrink 0.4 per cent.

With files from the Star’s wire services

To read about Obama’s job creation plan see A2

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Japan’s government has unveiled a $100 billion loans program to ease the strains of a strong yen and encourage companies to turn adversity into opportunity.

The one-year facility announced Wednesday by the finance ministry aims to prompt Japanese companies to shift their yen holdings into foreign currencies and spur overseas mergers and acquisitions.

A strong yen erodes the value of exporters’ profits abroad but it also makes potential acquisitions outside of Japan less expensive.

Through the program, the government will send foreign currency reserves to the Japan Bank for International Cooperation. The state-operated bank would then extend loans to commercial banks so they can help companies with overseas investments and secure natural resources.

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