Financial life in a big town

Maine’s lobstermen are working harder for less, as demand drops for their expanding harvest.

Lobstermen pulled in a robust 76.3 million pounds in 2009, according to the Maine Department of Marine Resources. That’s the largest harvest in years, according to state records and estimates, but only in terms of volume.

The 2009 take was worth $223.7 million, which is about $22 million less than the prior year, according to the department. State statistics show that the harvest has dropped in value, year-to-year, since 2005, when it totaled nearly $318 million.

As with most things, the recession is to blame. Cash-strapped consumers are avoiding delicacies such as lobsters, driving down the overall price, according to George Lapointe, commissioner of the Maine Department of Marine Resources.

"I think it’s largely a function of supply and demand, and the world economic condition," he said. "Lobster is a luxury product."

Lapointe said the price of lobster managed to "claw its way" back to a range of $2.75 to $3 per pound in 2009, after slumping to $2 to $2.50 in the fall of 2008. That pales in comparison to five years ago, he said, when lobstermen were getting $4 to $4.50 per pound.

Lobstering is an essential part of Maine’s economy, he said, providing about $500 million in annual revenue to coastal communities. He said the tourism industry has managed to hold up, despite the recession, but visitors to Maine only account for one-sixth of lobster purchases.

Lapointe said cruise ships, which are traditionally among the largest consumers of lobsters, are cutting back on their purchases and this has been painful for lobstermen.

"They are certainly in a financial squeeze right now," he said. "When they fish harder, they use more bait and more fuel, and those are huge costs for them."

Lapointe said fuel cost is consuming as much as 40% of a lobsterman’s take, up from 10% to 15% in recent years.

More lobsters, less money

David Cousins, president of the Maine Lobstermen’s Association and a lobsterman for 42 years, said the 2009 harvest was the biggest since the early 1990s, when the annual take peaked at an estimated 100 million pounds. But that is little comfort, considering the dropping prices and increasing costs.

"Our business is based on a $4 dollar-plus lobster [per pound]," said Cousins. "When you’re getting $2.90 a pound, you’re going the wrong way and it just doesn’t work anymore.

The cost of Atlantic herring, an abundant fish used as bait in lobster traps, jumped to a range of 25 to 30 cents per pound from 3 cents in the mid-1990s, said Cousins. The cost of bait now consumes 20% of gross revenue for lobstermen, compared to 2% in mid-1990s, he said.

"Our [net] income has dropped by 35% to 40%, and sometimes 50%, because of increased cost of fuel and increased cost of bait," Cousins said.

This spells trouble for the industry and some lobstermen have lost their boats to bank foreclosures, he said.

"There are a lot of people who are in serious trouble up here, because they have a lot of money out on their business - they owe for boats and traps and houses and trucks and all that," Cousins said.

But getting out of this hardscrabble business isn’t much of an option for most lobstermen, despite its difficulties, he added.

"People are hanging on as long as they can, because there aren’t any jobs any more," Cousins said. 

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Facing firm demands from the European Union and financial markets to cut its deficit, Greece announced cost-cutting measures Wednesday that will save the debt-challenged country €4.8 billion, $6.53 billion, this year.

The Greek government plans to cut civil service workers’ entitlements by 12%. This includes a 30% decrease in holiday bonus payments, according to The Wall Street Journal’s online edition. Officials also said civil service pensions will be frozen for the year.

To increase revenue, the Greek government said it will raise the value-added tax to 21% from 19% on items including clothing and footwear. Sales tax on food and medicine will rise to 10% from 9% and the tax rate on printed products will increase to 5% from 4.5%.

The country will boost the tax on alcohol by 20% and raise the tax on tobacco to 65% from 63%. Taxes on gasoline prices will be hiked by €0.08 per liter.

Officials expect the measures will reduce Greece’s budget deficit to 8 free credit report.7% of the country’s gross domestic product this year from a level of 12.7% last year, according to the report. The European Union had given Greece until March 16 to show it is making progress in cutting its deficit from more than four times the allowed level.

Umbrella union for civil servants ADEDY is already speaking out against the measures and has called for a 24-hour general strike on March 16, said the Journal.

In a speech to parliament Tuesday, Greek prime minister George Papandreou said the country risks bankruptcy if it neglects to find lenders to cover its €300 billion, $409 billion, in debt, the Journal said.

Greece is preparing to raise between €3 billion and €5 billion, $4.1 billion and $6.8 billion, in a 10-year bond sale.  

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NEW YORK – A more upbeat outlook on jobs pushed Americans' confidence in the economy higher in December for the second month in a row, a survey released Tuesday said.

Consumers' expectations for the job market over the next six months reached their highest level in two years, but Americans remain gloomy about their current prospects.

Meanwhile, a closely watched home price index released Tuesday showed that home prices rose for the fifth month in a row in October, but the recovery continues to be uneven with only 11 of the 20 metro areas tracked showing gains.

The U.S. Conference Board said its consumer confidence index rose to 52.9, up from a revised 50.6 in November, but the reading is still far short of the 90 that would signify a solid economy. In October, consumer confidence was 48.7.

Economists surveyed by Thomson Reuters predicted a reading of 52 for December.

The index, which hit a historic low of 25.3 in February, had enjoyed a three-month climb from March through May, fuelled by signs that the economy might be stabilizing. The road has been bumpier since June as rising unemployment has taken a toll on consumers.

Economists watch consumer sentiment because spending on goods and services for consumers accounts for about 70 per cent of U.S. economic activity by federal measures.

Stocks extended their increases into a seventh day following readings. In morning trading, the Dow Jones industrial average rose 23.05, or 0.2 per cent, to 10,570.13.

One key component of the Confidence index that measures consumers' outlook over the next six months rose to 75.6 from 70.3 last month, the highest level since December 2007, when the index was 75.8. But the survey's other main component, which measures shoppers' current assessment, actually fell to 18.8 from 21.2.

The survey of 5,000 households ran Dec. 1 through 21.

"Regarding income, however, consumers remain rather pessimistic about their short-term prospects and this will likely continue to play a key role in spending decisions in early 2010," Lynn Franco, director of The Conference Board Consumer Research Center said in a statement.

Still, many retailers are breathing sighs of relief after the holiday selling season turned out better than expected, according to MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash.

However, even though shoppers saw their confidence improve slightly and bought a bit more, they've been cautious in their spending. During the Christmas season, they focused on practical items for loved ones and even for themselves, while shying away from buying gift cards and opting for deeply discounted items instead.

Experts say such patterns might remain for several years amid unemployment that could be stubbornly high.

The unemployment rate dipped in November to 10 per cent, down from a 26-year high of 10.2 per cent in October. Some analysts worry it will again start to rise in coming months and won't peak until hitting 10.5 per cent next summer.

Still, businesses cut their payrolls by a net of just 11,000 jobs in November, the smallest decrease since the recession started two years ago, according to the November job report.

For December, economists surveyed by Thomson Reuters expect that the unemployment rate will tick up to 10.1 per cent, but they also expect no job losses on net when the government reports figures Jan. 8.

According to The Standard&Poor's/Case-Shiller index, home prices edged up 0.4 per cent to a seasonally adjusted reading of 145.36 in October from September. The index was off 7.3 per cent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters.

The index is now up 3.4 per cent from its bottom in May, but still almost 30 per cent below its peak in April 2006.

The Conference Board survey showed that consumers' assessment of current conditions worsened in December. Those saying conditions are “bad" increased to 46.6 per cent from 44.5 per cent, while those saying business conditions are "good" decreased to seven per cent from 8.1 per cent.

Consumers' six-month outlook improved in December. Those anticipating business conditions will be better over the next six months increased to 21.3 per cent from 19.7 per cent, while those expecting conditions will deteriorate declined to 11.9 per cent from 14.6 per cent.

The outlook for the job market was also more positive. The percentage of consumers expecting more jobs to become available in the months ahead increased to 16.2 per cent from 15.8 per cent, while those expecting fewer jobs declined to 20.7 per cent from 23.1 per cent. However, the proportion of consumers anticipating an increase in their incomes declined to 10.3 per cent from 10.9 per cent.

13:01ET 29-12-09

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A federal appeals court on Tuesday upheld a lower court’s $290 million patent infringement ruling against Microsoft that will prevent the world’s largest software maker from selling the current version of its popular Word program.

The injunction goes into effect on Jan. 11, but Microsoft said sales of Word will not be affected: The company will have a new version of the Word software available before that date that eliminates the feature in question.

"We have been preparing for this possibility … and have put the wheels in motion to remove this little-used feature from these products," said a Microsoft spokesman. "Therefore, we expect to have copies of Microsoft Word 2007 and Office 2007, with this feature removed, available for U.S. sale and distribution by the injunction date."

Microsoft noted that Word 2010, which is scheduled for release early next year, does not contain the technology covered by the injunction.

The U.S. Court of Appeals for the Federal Circuit affirmed an August 2009 ruling by a Texas jury that found Microsoft in violation of a patent held by Toronto-based document collaboration firm i4i payday loans for people with bad credit. After the jury ruled in favor of i4i, a U.S. District Court judge fined Microsoft $290 million and said that Microsoft could no longer sell Word 2003 or Word 2007, with the disputed feature that allows users to edit XML — a computer code that instructs the computer how to display content in a document.

Microsoft had appealed the lower court’s ruling, saying the i4i patent was invalid. The appeals court rejected Microsoft’s claim on Tuesday, upholding the validity i4i’s patent and the lower court’s ruling that Microsoft willfully violated it.

"We couldn’t be more pleased with the ruling," said i4i chairman Loudon Owen in a statement. "This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed."

The injunction does not affect copies of Word that have already been sold, and Microsoft will be allowed to support those previous versions.

Shares of Microsoft (MSFT, Fortune 500) rose 1% Tuesday. 

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CVS Caremark Corp has found a way to stop the Energizer bunny. It will discontinue sales of the company’s alkaline batteries early next year.

The national drug store chain will still offer customers lithium batteries produced by Energizer Holdings Inc, but the move comes as CVS and other retailers narrow the variety of products they sell.

“After testing various options in the battery category in a number of stores, we found that our customers responded best to an offering which included a single ‘national brand’ alkaline, plus Energizer lithium and our own private label batteries,” a spokeswoman said.

CVS said it decided to sell Procter & Gamble Co’s Duracell alkaline batteries and would continue to sell Energizer lithium batteries in all of its stores.

A spokeswoman for Energizer did not return calls seeking comment.

Alkaline batteries account for the majority of U.S. battery sales. Duracell Coppertop is the leading alkaline battery in the United States, with a 41.6 percent share, followed by Energizer Max, which has a 27.8 percent share, according to Information Resources Inc., a Chicago-based market research firm.

IRI’s data covers the 52 weeks ended on November 1. It includes sales at supermarkets, drugstores and mass market retailers, but excludes sales from Wal-Mart, club stores, gas stations and convenience stores.

Last month, Deutsche Bank analyst Bill Schmitz said he expected retailers to make shelf space decisions over the coming weeks. He expected Energizer to get additional space at Wal-Mart Stores Inc and Safeway Inc stores and said it could see a “potential loss” at CVS.

According to Schmitz, Energizer had about $25 million in sales at CVS.

Major U.S. retailers, including CVS, have been putting more emphasis on their private label products. Such goods typically carry lower prices than their branded rivals but are more profitable for the stores. Store-branded household goods have gained popularity during the downturn, as shoppers try to curb their spending.

Private label alkaline battery sales rose 5.5 percent, in dollars, to a 18.9 percent share during the latest 52 week period, according to IRI. Sales of Duracell and Energizer’s top alkaline batteries declined 4.6 percent and 1.9 percent, respectively, during the same period.

(Reporting by Jessica Wohl, editing by Gerald E. McCormick, Leslie Gevirtz)

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Continental European stock markets which have recently lagged are set to outperform the United States and the UK, with consumer stocks, financials and exporters leading the way.

Fund managers and analysts said the most growth will come from the German and French markets, with Credit Suisse expecting Germany to be the best play on global recovery.

The analysts said consumer stocks will gain from a rise in domestic spending, financials will be boosted in a virtuous circle of rising liquidity levels, and exports will do well as demand from emerging markets overshadows a stronger currency.

“The German DAX .GDAXI and French CAC .FCHI should outperform the UK and the U.S. equity market in the medium term,” said David Hussey, head of pan-European Equities at MFC Global Investment Management.

“Valuations on a range of metrics are more attractive and growth prospects are better, with greater demand for exports from emerging markets than for comparable U.S. companies. The consumer in continental Europe is generally less leveraged than in the UK and U.S. and housing is more affordable.”

On valuation grounds, continental Europe offers investors better value. On a forward P/E basis, it trades at a 8 percent discount to global markets.

So far, the French CAC and the German Dax have only risen 1.3 percent and 1.9 percent respectively this quarter, while the FTSE .FTSE, the S&P 500 .SPX and the Dow Jones industrial average .DJI have risen 4.1 to 7.1 percent.

CONSUMER TO SPEND

Although some economists expect U.S. GDP growth to outperform next year over Europe, Credit Suisse said leading indicators show U guaranteed approval cash advance loans.S. and European growth will be broadly at the same level.

However, lower household debt levels in core Europe than in the United States and UK will put the European consumer in a better position. European Cental Bank figures show 2008 gross debt outstanding is 94.1 percent of gross disposable income in the euro zone compared to 129.8 percent in the U.S.

“The European consumer is going to be stronger than the U.S. as the savings rates are historically higher, the debt levels are lower so they are starting at a better place,” said Hussey.

French shoppers defied expectations in September by spending more than they did the previous month on everything from cars to toasters and televisions.

“Consumer stocks can really do well really driven by domestic demand and financials as a geared play for the overall economy,” said Andrew Goodwin, fund manager of the SVG European Focus Fund at SVG Investment Managers.

Fund managers like financials because if there is to be a recovery, a recovery in the banking sector is set to drive it through the increased provision of liquidity to corporates and consumers.

Although analysts do not expect a complete consumption boom in Germany, they see much less downside risk than in other economies. They said it does not have the high debt levels and overheated real estate problems of other countries, so there is more potential for upside. 

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WASHINGTON–A group of businessmen on Monday launched a new coalition to urge the federal government to make a major investment in electric transportation, pointing to electric cars as the best way to confront the nation's dependence on imported oil.

Top executives with more than a dozen companies, including Nissan Motor Co., Fedex Corp., electric utility PG&E Corp. and battery developers A123 Systems Inc. and Johnson Controls-Saft, announced the formation of the Electrification Coalition to lay the groundwork for millions of electric cars to reach U.S. highways.

Issuing a lengthy plan to electrify the nation's fleet, the coalition urged Congress to pass a series of tax credits and loan guarantees to bring 14 million electric cars to the road by 2020 and more than 100 million by 2030. The group envisions a network of electric vehicles in six to eight cities in the short term and an expansion across the country, making 75 percent of all vehicle miles traveled powered by electricity by 2040.

"There's no pie-in-the-sky here," said Frederick W. Smith, FedEx's chairman, president and CEO. "It's simply a matter of organization, a matter of will and a matter of execution.''

Participants, however, acknowledged that the proposals would be expensive and would require a major commitment from Congress. The group's blueprint would cost more than $120 billion over eight years and promote tax credits for the installation of advanced batteries, loan guarantees for the retooling of plants, and tax credits for public charging stations and home charging equipment no credit check payday loans.

"Ultimately the consumer will make the judgment about where this country goes, but from the standpoint of public policy we can set the stage for it," said Sen. Byron Dorgan, D-N.D., who joined the group for its announcement.

Nissan President and CEO Carlos Ghosn said the auto industry was working quickly to develop zero-emissions cars in response to concerns about oil security, tighter emissions requirements in the United States and elsewhere and a public thirst for alternative vehicles not tied to petroleum.

Ghosn said the world market of 600 million vehicles is expected to expand to 2.5 billion vehicles in 2050 with the growth in vehicle purchasing in developing nations such as China and India, making electric cars a must. Nissan is releasing the Leaf, an all-electric car, in limited numbers next year and plans to put the vehicle into mass-production globally in 2012.

"The time is right for electric cars – in fact the time is critical," Ghosn said.

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On the Net:

Electrification Coalition: http://www.electrificationcoalition.org/

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Creditors of Saad Investments Company Ltd (SICL) held their first official meeting on Thursday, accountancy firm Grant Thornton said, taking a next step in the troubled firm’s restructuring process.

Banks are seeking repayment of a loan of up to $2.8 billion taken out in 2007 by Cayman Islands-registered SICL, a unit of Saudi investment firm Saad Group.

The meeting took place in the Cayman Islands, SICL’s court-appointed liquidator Grant Thornton said in a statement.

A spokesman for Saad Group declined to comment.

Regulators and bankers are grappling with up to $22 billion of debt restructurings at Saad and a second Saudi firm, Algosaibi, viewed by some as the biggest financial blow to the region since the global credit crisis began.

The two groups are involved in a complex legal dispute. Algosaibi said in October it would ask a New York court for a default judgment against the billionaire head of Saad, Maan al-Sanea, over allegations he defrauded the company out of $10 billion payday cash advances.

A Cayman Islands court on Sept 18 appointed Hugh Dickson, Stephen Akers and Mark Byers of Grant Thornton as joint official liquidators of SICL, the accountancy firm said, after hearing a winding-up order from creditors.

In addition to SICL, the Cayman court has appointed Grant Thornton liquidators to a further nine Saad Group companies, the accountancy firm said.

One of these companies is Singularis Holdings, which acquired a 3 percent stake in HSBC in 2007.

In July, a Cayman court froze the assets of SICL and a number of other international Saad units.

(Reporting by Tom Freke; editing by Simon Jessop and Andrew Callus)

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Contracts in the $450 trillion derivatives markets would need to be cleared through central counterparties unless they are exempted by regulators, under a financial regulation reform bill introduced by U.S. Senate Banking Committee Chairman Christopher Dodd on Tuesday.

The bill here calls for all swaps to be centrally cleared, but said regulators may exempt the contracts if no central clearinghouse accepts the swaps, or of if one of the counterparties to the trade is not a dealer.

Details on what constitutes a swap and a major swap participant, both of which would fall under the regulation of the Commodity Futures Trading Commission and Securities and Exchange Commission, are included in the bill.

The CFTC and SEC would adopt rules further defining terms within 180 days of the act being implemented and the regulators would have the right to prescribe definitions for swaps to include transactions that have been structured to avoid the classification, under the bill online payday advance.

Regulators are pushing for the majority of derivatives to be cleared through central counterparties, which stand between trade counterparties and assume the risks of the trade, to reduce systemic risks posed by the interconnectiveness of the contracts.

Derivatives can be used to hedge against or bet on the changes in value of the underlying assets such as stocks, bonds, commodities.

(Reporting by Karen Brettell and Kevin Drawbaugh; Editing by Leslie Adler)

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The U.S. job market will likely start to grow in early 2010, as signs of economic expansion should encourage companies to hire workers, said Macroeconomic Advisers LLC chairman Joel Prakken.

He cautioned the labor market will remain sluggish for a protracted period with full employment unlikely to be reached until 2014.

Prakken was speaking on a conference call with reporters after the release of the October ADP Employer Services report, jointly developed with Macroeconomic Advisers.

Earlier, the ADP National Employment Report showed U.S. private employers shed 203,000 jobs in October, fewer than a revised 227,000 jobs lost in September.

(Reporting by Richard Leong, Editing by Chizu Nomiyama)

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