Financial life in a big town

People are finally replacing the cars and trucks they held onto during the economic slump, giving a boost to sales at Chrysler, GM and Nissan in November.

Chrysler’s sales rose 45 percent from a year earlier, while GM’s climbed 7 percent and Nissan’s 19 percent. The three companies were among the first to report U.S. sales of new cars and trucks on Thursday.

Dealers say they’ve had strong floor traffic all month, with surprisingly high sales for a month that’s normally lackluster because of colder weather and holiday distractions. But this November, buyers went to showrooms because of good deals on leases, more confidence in the economy and a need to trade in older cars, says Ryan LaFontaine, a partner in a six-dealer chain in Michigan.

The activity underscores projections that Americans bought new cars at the fastest pace in more than two years as they replace aging vehicles. Analysts expect that the annual sales rate for November could range between 13.3 million and 14 million cars and trucks. That is far better than the rate of 12.6 million through the first 10 months of the year.

November sales also could approach the 14.1 million annual rate from August of 2009, when the government offered big rebates for drivers to trade in their gas-guzzling clunkers.

Sales at Chrysler Group LLC last month were led by the Jeep Compass small SUV, which had a nearly ten-fold increase in sales. Jeep brand sales rose 50 percent, while Chrysler brand sales nearly doubled on strong demand for its 200 and 300 sedans. But Chrysler also raised its incentives to nearly $3,300 per vehicle, up 6 percent from October.

At General Motors Co., buyers snapped up small cars and pickup trucks. Sales of the Chevrolet Cruze compact rose 54 percent, while the Silverado pickup, GM’s top-selling vehicle, saw sales jump 34 percent.

“We are seeing a broad spectrum of customers return to the market,” says Don Johnson, GM’s U.S. sales chief.

At Nissan, the tiny Versa led sales with a 38 percent increase, but SUV and truck sales also rose 32 percent.

People have been holding onto their vehicles in an unstable economy, and the rate of cars that are scrapped has surpassed sales for several years. The average age of a car on U.S. roads is a record 10.6 years, according to the Polk auto industry research firm.

The sales increases at the three car companies also reflect consumer confidence for November, which rose to the highest level since July, according to the Conference Board. October’s number was the lowest since the recession.

With the increased confidence, car buyers are releasing pent-up demand, said Larry Dominique, executive vice president of data for the TrueCar.com automotive website. “I think consumers are just starting to say `it’s time to start spending money again,’ ” he said.

TrueCar expects November sales to be nearly 12 percent higher than a year earlier, capping six months of sales gains compared with the same month in 2010. Last November, the annual sales rate was only 12.3 million as the auto industry was just starting to recover from the economic meltdown.

Sweet lease deals, helped by low interest rates and high used-car values that make leased vehicles worth more when they’re returned, also are fueling sales. GM, for instance, is offering a Cruze lease $169 per month for 39 months. According to TrueCar, the average industry spending on incentives such as leases and low-interest loans was $2,534 per vehicle in November, up 2.5 percent from October.

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Bistate wage gender gap

The wage gap between men and women yawns wider in Missouri and Illinois than elsewhere, according to new data from the Bureau of Labor Statistics.

The average full-time woman worker in Missouri made just 75 percent of the average man’s earnings in 2010. Women in Illinois did a little better at 78 percent. The national average is 81 percent.

The bureau doesn’t blame the gap on state-to-state differences in sexism. Instead, it cites “variations in the occupations and industries found in each state and the age composition of each state’s labor force.”

In Missouri, the median weekly wage stood at $813 for men and $616 for women. Illinois was at $814 for men and $634 for women. The national average is $824 for men and $669 for women. (Jim Gallagher)

Ralcorp in ‘buy’ mode

Italy’s borrowing rates skyrocketed during bond auctions Friday, battering stock markets in Europe as the continent’s escalating debt crisis laid siege to the eurozone’s third-largest economy.

The auction results are another sign that Italy’s new technocratic government under economist Mario Monti faces a battle to convince investors it has a strategy to cut down the country’s euro1.9 trillion ($2.6 trillion) debt. They are also likely to fuel calls for the European Central Bank to use its firepower to cool down a debt crisis that’s rapidly getting worse.

“Mario Monti has failed so far to impress bond markets he has the power and authority to do what is required,” said Louise Cooper, markets analyst at BGC Partners. “I don’t rate his chances either.”

Driving the markets fears is the knowledge that Italy is too big for Europe to bail out, like it has done with smaller nations Greece, Portugal and Ireland. Given the size of its debts _ Italy must refinance $300 billion next year alone _ the government has to continually tap investors for money. But when borrowing rates get too high, it fuels a potentially devastating debt spiral.

Friday’s auctions indicated that investors see Italian debt as increasingly risky. The country had to pay an average yield of 7.814 percent to raise euro2 billion ($2.7 billion) in two-year bills _ sharply higher than the 4.628 percent it paid in the previous auction in October. And even raising euro8 billion ($10.7 billion) for six months proved exorbitantly expensive. The yield for this auction spiked to 6.504 percent, nearly double the 3.535 percent rate in October.

Following the grim auction news, Italy’s borrowing rates in the markets shot higher, with the ten-year yield spiking 0.34 percentage point to 7.30 percent _ above the 7 percent threshold that forced other nations into bailouts.

Italy was not the only country in the 17-nation eurozone in experiencing a disappointing auction this week. Even Germany _ the region’s strongest economy and the main funder of eurozone bailouts _ suffered a shock Wednesday when it failed to raise all the money it sought, its worst auction result in decades. Spain too saw its borrowing rates ratchet sharply higher even after a landslide election victory for the conservative Popular Party, which has made getting Spain’s borrowing levels down its top priority.

Monti, who replaced Silvio Berlusconi as Italy’s leader earlier this month, has pledged to quickly implement new austerity measures followed by deeper reforms. He spent much of his first week in office meeting with European Union officials and the leaders of France and Germany laying out his plans.

During the meetings, Monti emphasized his intention to balance the budget by 2013 and to introduce “fair but incisive” structural reforms,” his office said in a statement following a Cabinet meeting Friday.

Monti also has pledged to reform the pension system, re-impose a tax on homes annulled by Berlusconi’s government, reduce tax evasion, streamline civil court proceedings, get more women and youths into the work force and cut political costs.

EU monetary affairs commissioner Olli Rehn told the Italian Parliament that “full and effective implementation will be key.”

He urged a “clear and ambitious roadmap for reform and an ambitious timeline” and expressed particular concern about low employment among Italian youth.

“Over the longer term, productivity will depend on a well-educated labor force,” Rehn said. “I am particularly concerned about high unemployment, which is a tremendous waste of talent that Europe simply cannot afford.”

Rehn was in Rome to monitor Italy’s compliance with promises to liberalize its labor market, reduce the bloated public sector and sell off some state assets.

There were also signs that contagion over Europe’s debt crisis was moving eastward. Moody’s downgraded Hungary’s sovereign debt to junk status _ from Baa3 to Ba1 with a negative outlook _ a decision Hungary hotly criticized. Hungary is not a member of the eurozone, but trades with many eurozone members.

This week’s developments have ratcheted up the pressure on the European Central Bank to step up its bond purchases in the markets, though Germany remains adamantly opposed. The current program is designed to support bond prices in the markets, thereby keeping a lid on the borrowing rates.

So far, the ECB has been buying limited amounts of bonds and has to sell an equivalent amount of assets. The ECB said Monday it bought bonds worth only euro4.5 billion last week, down from euro9.5 billion a week earlier.

Potentially, the ECB has unlimited financial firepower through its ability to print money and many countries in the eurozone, including France, want the bank to act more decisively to solve the debt crisis.

However, Germany finds the idea of monetizing debts unappealing, warning that it lets the more profligate countries off the hook for their bad practices.

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President Nicolas Sarkozy appeared to temper his calls for the European Central Bank to play a bigger role in solving Europe’s debt crisis as he agreed to a German effort to change EU treaties to improve the governance of the troubled eurozone.

Speaking after meeting with German Chancellor Angela Merkel and Italian Premier Mario Monti on Thursday, Sarkozy said “propositions for the modification of treaties” would be presented in the coming days.

He wouldn’t elaborate on what these changes may be but said they would be ready in time for the next EU leaders summit on December 9.

This was the first meeting of the three leaders since Monti took over last week following mounting market concerns over Italy’s huge debts.

The meeting in Strasbourg, France comes amid signs that even Germany and France _ the eurozone’s two biggest economies _ are not immune from the crisis that’s already seen three relatively small countries bailed out.

All three leaders said they would do what it takes to stabilize the situation and save the euro.

“We want the euro, we want a strong, stable euro … we will do everything to defend it,” Merkel said.

France has been reluctant to resort to changes to EU treaties to improve the way the eurozone countries work together and set policies and prevent future crises low fee payday advance. Germany had pushed for such changes, saying voluntary pledges by national governments are no longer enough to boost market confidence.

Merkel insisted that the proposed changes would “not deal with the European Central Bank,” which she stressed was responsible for monetary, not fiscal, policy. Sarkozy did not push for a greater role at their closing press conference, while Merkel insisted on the bank’s independence.

Many think the ECB is the only institution capable of calming frayed market nerves.

Potentially, the ECB has unlimited financial firepower through its ability to print money. However, Germany finds the idea of monetizing debts unappealing.

Monti, meanwhile, reiterated his pledge to balance Italy’s budget by 2013 though he sidestepped the question on whether achieving that aim would require more austerity measures, and if so, whether it risked triggering a recession in the eurozone’s third largest economy.

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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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Whether people celebrate or criticize Occupy Wall Street, the movement has reinvigorated calls for local buying just in time for the manic holiday shopping season.

Buying local and American-made became a battle cry for some in the movement that blames big business greed for shuttering American operations and shipping those jobs overseas.

“Some people talk about buying local and not supporting large chain stores, but really I think we want to encourage people to think consciously about where they shop,” said Zach Chasnoff, 33, of south St. Louis.

Chasnoff has wielded a bullhorn at a few Occupy St. Louis rallies, though he said he couldn’t speak as a representative of a movement. He said he’d been waiting for an opportunity to ignite this particular discussion.

Chasnoff owns a house painting business that fluctuates from two to seven employees during his busy season. When the bottom fell out of the economy in 2008, he was virtually unemployed for about seven months and didn’t know if he’d keep his house, he said. Meanwhile, bank bailouts and news of continued executive bonuses infuriated him. He blames greed for companies’ transferring jobs overseas and cheap foreign goods for undercutting American-made items.

Many economists challenge that logic, saying that free trade ultimately benefits the U payday loans.S.

“It feels almost anti-patriotic to buy goods made elsewhere right now. You are perpetuating the loss of manufacturing jobs,” Chasnoff said, echoing long-standing protests by some against, for instance, buying foreign cars.

Buying local, on the other hand, puts consumers, not corporations, in control, he said.

Would it work?

Steve Farazzi, a professor of economics at Washington University, said that the wage disparity concerns at the root of the Occupy Wall Street movement wouldn’t be solved by shopping at boutiques and farmers markets.

“I’d have a hard time telling people that their holiday shopping patterns will have an important impact on income distribution,” Farazzi said.

If globalization has killed American jobs and driven down wages, then the tool to combat the trend would be higher wages in emerging markets such as China, not necessarily closing operations there. China’s extremely cheap labor is the problem for American workers, not the fact that Chinese workers have jobs formerly held by Americans, Farazzi explained.

Rising global wages would level the playing field for American workers, he said, and it would increase the demand for all goods if we have more people who can afford to buy. But Farazzi acknowledged that a push to boost wages for Chinese workers

Peabody Energy Corp. on Wednesday announced that it has increased its stake in Australia’s Macarthur Coal Ltd. beyond 90 percent — the threshold beyond which it can force remaining shareholders to sell their interests.

The announcement means St. Louis-based Peabody now has full control over the mining company, ending an 18-month quest. It also means Peabody will pay out an extra $100 million, bringing the total value of the acquisition to almost $5 billion.

Peabody last month promised to sweeten the offer slightly, to $16.40 a share from $16.14, to help increase its stake beyond 90 percent, giving it fuller control of the company.

Acquiring 100-percent of Macarthur “brings clear strategic and financial benefits,” Gregory H. Boyce, Peabody’s chief executive, said in a statement. He said the company “looks forward to completing operational improvements, accelerating the realization of synergies and advancing Macarthur’s growth pipeline.”

Queensland-based Macarthur controls 270 million tons of coal reserves and operates mines that produced about 4 million metric tons last year in the face of severe flooding that restricted output.

The additional sales volume is small for Peabody, which sold almost 250 million tons of coal worldwide last year. But Macarthur is the world’s largest exporter of pulverized injection coal — a commodity that’s in high demand from steelmakers. The bulk of Peabody’s sales volume is lower-priced coal that’s burned for electricity generation.

The acquisition also continues Peabody’s rapid expansion in Australia, a coal-rich country nearer to energy hungry China.

Peabody failed in an effort to gain a controlling stake in Macarthur last spring, offering as much as $3.8 billion. In July, the company made another bid with a minority partner, steelmaker ArcelorMittal, which was already a 16-percent shareholder.

Luxembourg-based ArcelorMittal dropped out and agreed to sell its interest to Peabody after China’s Citic Resources, Macarthur’s largest shareholder, agreed to accept the cash takeover offer, giving the suitors a majority stake.

Peabody recently sold $3.1 billion of notes to help finance the acquisition.

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Honda Motor Corp. says it is beginning to restore some production of cars and motorcycles that took a hit from the recent flooding in Thailand.

The Japanese company has restarted output of some motorcycle and power products at its subsidiary in Thailand. It had suspended motorcycle output at the plant since Oct. 11 due to supply problems.

Honda’s auto factory in Thailand remains closed because of the floodwaters.

Honda will continue to limit production at six auto plants in the U.S. and Canada. But it says some factories will produce at rates exceeding the 50 percent the company announced previously. It expects to return to normal levels on Dec. 1 and 2.

Honda says it plans no layoffs at its North American plants.

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Greece’s embattled prime minister and main opposition leader agreed Sunday to form an interim government to ensure the country’s new European debt deal, capping a week of political turmoil that saw Greece face a catastrophic default that threatened its euro membership and roiled international markets.

As part of the deal, Prime Minister George Papandreou agreed to step down halfway through his four-year term. He and conservative opposition head Antonis Samaras are to meet Monday to discuss who will become prime minister and the makeup of the Cabinet.

The new unity government’s main task will be to pass the European rescue package, reached after marathon negotiations between European leaders barely a week ago _ a move considered crucial to shoring up the euro. The interim government will then lead the country into early elections, expected early next year.

Officials had been anxious to reach some form of agreement before a meeting of eurozone finance ministers in Brussels on Monday.

“Of course it’s a breakthrough,” government spokesman Elias Mossialos said. “It is a historical day for Greece, we will have a coalition government very soon, early next week. The prime minister and the leader of the opposition will discuss tomorrow the name of the new prime minister and the names of ministers.”

Papandreou sparked the latest crisis by announcing last week that he was taking the hard-fought debt agreement to a referendum. That outraged European leaders, who said such a vote could raise the specter of Athens leaving the common currency _ setting off an unpredictable chain reaction that could drag down other European countries.

They also warned a vote would jeopardize the disbursement of a vital $11 billion (euro8 billion) installment of Greece’s existing $152 billion (euro110 billion) bailout, which the country desperately needs to avoid the potential of a catastrophic default within weeks.

In the ensuing market turmoil, Italy _ which also faces severe financial difficulties, but is considered too big to bail out _ saw its borrowing costs spiral, sparking fears it could be dragged into the fray.

Papandreou withdrew the referendum plan Thursday in the wake of European anger and after it sparked a rebellion among his own Socialist lawmakers, many of whom called for him to resign. The turmoil also pushed the conservative opposition party to publicly declare it would back the debt agreement.

Any interim government that is formed with the support of both major parties will be almost guaranteed to push the European rescue package through parliament, even if it has to be approved by a reinforced majority of 180 of the legislature’s 300 lawmakers.

The new European deal would give Greece an additional $179 billion (euro130 billion) in rescue loans and bank support. It would also see banks and private investors write off 50 percent of their Greek debt holdings, worth some $138 billion (euro100 billion). The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without relying on constant bailouts.

Greece’s lawmakers must now approve the package, putting intense pressure on the country’s leaders to swiftly end the political crisis so parliament can convene and put it to a vote.

A planned meeting with the leaders of all political parties in parliament, which was to take place Monday evening, was canceled after two leftist parties refused to attend, the president’s office said.

Sunday’s agreement came after a late-night meeting between Papandreou and Samaras called by President Karolos Papoulias at Papandreou’s request to end a two-day deadlock. Direct talks had failed to get off the ground because Papandreou had said an agreement had to be reached on a new government before he stepped aside, while Samaras insisted Papandrepou resign before the start of negotiations and demanded quick elections.

An opposition conservative party official said Samaras’ New Democracy party was “absolutely satisfied” with the outcome of the talks and that party officials were to hold meetings late Sunday night with Finance Minister Evangelos Venizelos and his advisers to discuss how long it would take to finalize the new debt deal and when elections could be held.

“Our two targets, for Mr. Papandreou to resign and for elections to be held, have been met,” the official said, speaking on condition of anonymity to discuss the process.

The Finance Ministry said a late-night meeting between Venizelos and opposition party members determined the “most suitable” date for elections was Feb. 19.

Two turbulent years after coming to power in a landslide election victory, Papandreou has seen his popularity plummet as his government has been forced to severely cut spending while hiking taxes to tackle a runaway deficit and debt that led Greece to become the first eurozone country to seek an international bailout.

Ireland and Portugal have since followed suit, but European leaders have been desperate to ensure other countries with larger economies are not also dragged down.

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Associated Press writer Nicholas Paphitis in Athens contributed to this report.

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More than 2 million new U.S. patients will be eligible to receive a next-generation blood thinner drug called Xarelto, after the Food and Drug Administration approved the medication to treat a common heart problem that can lead to stroke.

Federal health officials approved the drug from Johnson & Johnson and Roche to prevent strokes in patients with atrial fibrillation, a condition that causes the heart’s upper chambers beat chaotically and ineffectively. The irregular heartbeats can cause blood clots which travel to the brain, blocking blood flow and occasionally causing a stroke.

“This approval gives doctors and patients another treatment option for a condition that must be managed carefully,” said Dr. Norman Stockbridge, director of FDA’s cardiovascular and renal products division.

The once-a-day pill was first approved in July to prevent strokes in patients receiving hip and knee replacements. Today’s approval expands the drug’s indication to the much larger group of roughly 2.2 million Americans with atrial fibrillation.

For more than half a century, atrial fibrillation patients have relied on the tough-to-use blood thinner warfarin, sold under the brand name Coumadin. Doctors often have trouble gauging the right dose of the drug for each patient. Too much warfarin can cause dangerous internal bleeding, and too little can result in strokes.

In a setback for the drugs’ developers, the FDA did not approve a manufacturer-requested claim that Xarelto was superior at preventing stroke and blood clots when compared with warfarin. Instead the FDA states that the companies’ 14,000-patient study showed Xarelto and warfarin were about the same in preventing stroke creditreport.

Also, the FDA added a boxed safety warning, the most serious kind, stating that patients should not stop taking Xarelto without notifying their doctors first. Discontinuing the drug can increase the risk of stroke.

Numerous drugmakers have been working to develop an updated alternative to warfarin, one of the most widely-used medications in the U.S. Last year U.S. pharmacies filled 32 million prescriptions for warfarin, according to data tracker IMS Health.

Last October, the FDA approved the first alternative to warfarin for atrial fibrillation _ Pradaxa, known chemically as dabigatran, made by the German company Boehringer Ingelheim. That drug’s label states that the daily pill “significantly reduced” stroke and blood clots in a study of 18,000 patients.

In September a panel of outside advisers to the FDA voted 9-2 to recommend approval for use in atrial fibrillation. The panel’s recommendation came despite questions from FDA scientists about the reliability of some data submitted on Xarelto.

Xarelto is the first in a new class of blood thinning drugs that work by blocking a clotting protein called factor Xa. Older blood thinners, including warfarin, work by preventing blood platelets from sticking together.

Known chemically as rivaroxaban, Xa was discovered by German drugmaker Bayer and co-developed with New Brunswick, N.J.-based J&J. J&J holds U.S. marketing rights to the drug while Bayer markets the drug in the rest of the world.