Financial life in a big town

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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Banks have pared their reliance on central banks and governments for liquidity support as the worst financial crisis since the Great Depression ebbs, according to a study by the Bank for International Settlements.

“The take up of many measures has declined,” economist Petra Gerlach wrote in the study, published in the Basel, Switzerland-based BIS’s latest quarterly review.

The report comes as central banks such as the U.S. Federal Reserve trim some of the emergency programs they introduced to combat the crisis. The Fed has completed its purchase of U.S. Treasuries, while the European Central Bank conducted a final auction of 12-month funds in December. The Bank of Japan stopped its purchases of commercial paper and corporate bonds.

The shift “seems to reflect” the increased ability of banks to raise funds in markets, although it may also be the result of some lending programs becoming more restrictive, Gerlach said. She also said support may need to be removed to avoid distorting competition and so banks don’t have an excuse not to postpone repairing balance sheets quick cash.

While the decline in demand for liquidity is “clearly good news,” some institutions are relying more on governments and central banks than others, Gerlach said.

“This suggests that a differentiated exit strategy is desirable,” she said. “Such an approach would aim for a timely discontinuation of public support while taking into account that some financial institutions remain weak.”

The BIS also noted that banks within the European Union had a combined exposure of more than $200 billion to sovereign debt in Greece, Spain and Portugal at the end of the third quarter of last year. That dwarfs the exposures of the U.S. and Japan, where combined exposure is less than $20 billion.

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The biggest gathering of the global mobile phone industry begins on Monday in Barcelona, and much of the talk will be about the company that is not there: Apple.

Its iPhone has been imitated by larger competitors like Samsung Electronics, Nokia, LG and Research In Motion. All of them will be showing touch-screen devices and application stores, two innovations popularized by the iPhone.

In App Planet, a special section of the sprawling Fira de Barcelona convention grounds in the city’s center, more than 50 small software developers, many of whom make applications for the iPhone, will display the device’s capabilities. Elsewhere, manufacturers of netbooks and other mobile, connected devices will show their answers to the iPad, the tablet computer Apple introduced last month in San Francisco.

Meanwhile, Apple’s longtime rival, Microsoft, will be seeking some attention for the first glimpse of its Windows Mobile 7 operating system software for cell phones. The company does not plan to offer it on devices yet, according to people familiar with the company’s plans. Microsoft’s impact on the industry has been diminishing in the face of increased competition from other operating systems.

Apple, one of those new competitors, has never exhibited at big industry trade shows, including the Mobile World Congress. Secretive and focused, Apple rarely ventures beyond its own well-staged promotions. The company has sent executives to the Barcelona show, but has never taken center stage.

“They typically do not exhibit at non-Apple events, but we would very much like to have them join us,” said Claire Cranton, a spokeswoman for the GSM Association, the organizer of the annual Barcelona convention. “Apple products will be highly visible at the show.”

Apple has leapfrogged its Asian rivals to become the world’s third-largest maker of smartphones, the fastest-growing part of the mobile phone market. As of December, Apple had a 16.4 percent share of the market, behind Nokia and Research In Motion, which makes the BlackBerry, according to Strategy Analytics. And Apple is growing faster than either one.
Apple’s ’s growing influence on the global mobile industry stems from the way the iPhone convinced consumers to use wireless data. Wireless carriers worldwide have been seeking to increase their revenue from data use, like texting or browsing the Web, as the revenue from voice calls decline. The iPhone’s 133,000 apps that do anything a computer can do and more increase data use.

“With the iPhone, Apple has changed the paradigm of the mobile phone industry, just as Apple changed the MP3 industry with the iPod,” said Carolina Milanesi, an analyst at Gartner, a research firm free business cards. “They have shifted the focus from the technology to the services.”

The new iPhone 3GS will be part of the official display of T-Mobile, the wireless unit of Deutsche Telekom, which sells the device in 12 countries and is the exclusive seller in Germany.

Michael Hagspihl, a T-Mobile vice president in Bonn in charge of relations with cell phone makers, said the iPhone had brought T-Mobile 1.2 million new customers in Germany. “It’s been a real success for us,” Hagspihl said. “The iPhone has brought lots of new customers to our network, and our data consumption has gone through the roof.”

Should Apple ever decide to sell the iPhone through multiple operators in the United States, T-Mobile USA would definitely be interested, Hagspihl said.

So far, AT&T has the exclusive American rights to the iPhone.

But in France and Britain, Apple ended exclusive relationships and is selling the iPhone through several operators besides its original partners, France Telecom’s Orange and Telefonica’s O2.

Even after losing the exclusive selling rights in France, Orange has had no decline in iPhone sales, said Cynthia Gordon, an Orange vice president who oversees the relationship with Apple.

“Apple has had a major impact on the overall market and a very positive impact on Orange’s business,” Gordon said.

Orange is one of Apple’s biggest operator partners, Gordon said.

The French operator sells the iPhone in 29 countries in Europe, Africa, Asia and the Middle East. Through October, Orange had sold 1.7 million iPhones, which she said was more than any other operator in Europe and Africa.

IPhone sales are helping Orange offset declines in voice revenue, Gordon said.

“It has been a platform for us to build on our own sales,” she said. Besides attracting new customers and retaining old ones, the iPhone allowed Orange to develop the Orange TV Player, a programming application for viewing 60 TV channels on the iPhone in France.

Apple and Orange developed the application together, she said.

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Solar power company GreenVolts Inc. hired Uday Bellary as its chief financial officer.

Bellary worked previously at Atrica Inc., where he was CFO and helped the company raise $34 million in equity and debt. That company was ultimately bought by Nokia Siemens Network. He was also CFO of Metro Optix. and MMC Networks.

GreenVolts’ CEO David Gudmundson will be his boss. Gudmundson took over as CEO in October, when previous CEO Gary Beasley left for a job in private equity.

Fremont-based GreenVolts makes “concentrating photovoltaic” technology — systems that track the sun and with mirrors that focus sunlight onto solar cells for greater generating efficiency.

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The casual shoes in your closet were likely made in Asia.

But one new GTA footwear company, Oliberté, took a different path and became the first international footwear firm to pick Africa for its manufacturing centre.

Actually, Oliberté founder and CEO Tal Dehtiar chose the continent first and then chose the product.

The enterprise is the natural follow-up to his five years of running MBAs Without Borders, a charity that paired business volunteers with entrepreneurs in 25 developing countries.

He founded the non-profit entity after graduating from McMaster University’s MBA program, instead of heading for Bay St. like his classmates.

"I love business. I love helping people. I love developing countries," says Dehtiar, who speaks four languages. "I had to find a way to make it all work together."

Last year, MWB became a division of the Washington-based non-profit agency CDC Development Solutions and Dehtiar was free to search for another enterprise.

"I wanted something tangible. People said `If you really want to help, we need you to make a product in Africa that people are willing to buy,’" says Dehtiar. "I thought, what product has been around for years?"

The answer: Shoes.

With a thriving tannery industry in Ethiopia and extensive rubber production in Liberia, making shoes would be a good fit for Africa, he thought.

Working from his office and warehouse in Oakville, Dehtiar hopes his concept will make a difference, and the urban casual footwear will appeal to the fashion-conscious city dweller with a social conscience.

Born in Israel, with a Latvian mother and Ukrainian father, he grew up in Toronto after the family moved to Canada. His parents, both graduate engineers who run an upscale furniture showroom (Room Deco Furniture in Woodbridge), are good role models for Dehtiar’s brand of small business entrepreneurship.

"We’re not going to be in Ethiopia because it’s cheap," he says. "We’re going to make sure the factories are paying their workers properly."

He has also chosen factories that met international environmental standards.

If the company name sounds familiar, that’s because you may have seen Dehtiar pitching his idea on the Jan. 6 episode of Dragon’s Den, the CBC TV show that gives entrepreneurs a chance to convince the show’s venture capitalists to invest in fledgling companies. He was asking for $200,000. Unfortunately, the guest judge on the show, fashion personality Jeanne Beker, didn’t appreciate the casual shoes.

But viewers haven’t seen the whole story payday loans. Since the CBC segment was taped in May, Dehtiar’s enterprise has flourished. From a standing start (he sold 500 pairs of shoes in 2009), Oliberté is running now with orders for more than 10,000 pairs from stores in Europe, Australia – sales that will cover his costs without even adding in North America.

This year, he estimates about 20 per cent of his sales will be in Canada, while Europe and the U.S. will capture 40 per cent each. He has a couple of part-time warehouse staffers and a part-time designer as well as project managers in Africa.

Canada’s a tougher market, says Dehtiar.

"We’re a conservative society," he says.

Retailers told him that as they emerge from a recession they only want known brands for this year.

"They said we love what you’re doing. It has huge potential. Stick around," he says. "In the U.S. they are a little more risk taking."

The shoes are also available through the company’s website.

He has a few target markets for the goat-leather-lined shoes, which come in seven styles and retail for up to $129. He aimed at educated, higher-income customers, and then noticed a big following from the fashionable urbanites (U.S. footwear chain Underground Station carries his line). Then the evangelical community came on board, intrigued by the humanitarian values.

Despite the compelling story, starting a new company is plain hard work.

Dehtiar has invested about $100,000 so far, and he has investors interested, possibly including the Business Development Bank of Canada. Finding financing was tough at first since the banks he approached said running a charity for five years didn’t count as business experience and the 29-year-old was too young.

Getting the shoes to entertainers could be a marketing gambit that pays off. Actress Kristen Stewart from Twilight picked them up at the Toronto International Film Festival. Snoop Dogg has a couple of pairs. So does Somalia-born Canadian hip hop artist K’naan, whose song "Wavin" Flag was chosen as the soccer anthem for this year’s FIFA World Cup in South Africa.

Celebrities can pick up his shoes at the behind-the-scenes lounges at the upcoming Grammy Awards and the Black Entertainment Awards. All the Miss America pageant contestants will receive Oliberté shoes.

In demand as a speaker, Dehtiar is becoming a celebrity himself. This winter he will visit business classes at the University of Michigan, Pepperdine and Duke.

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The largest stimulus program in the nation’s history is starting to move into a new phase: Out with the rescue, in with new spending to create jobs.

Top White House advisers said Wednesday that most of the economic stimulus spent so far has helped prop up the states, paying for food stamps, Medicaid and filling budget gaps that kept police officers, firefighters and teachers employed.

In 2010, most of the remaining recovery spending will be funneled into projects that build roads, lay high speed rail, install broadband in rural areas and fund research at health institutions.

White House economist Jared Bernstein acknowledged that most of the jobs created or saved so far have been public sector jobs. One of the largest areas of jobs saved so far included some 300,000 teachers that kept their jobs.

Private sector jobs are next

Bernstein said he is confident that new spending will create more jobs in the private sector.

"The private sector US economy will begin generating robust employment at some point in the near future," Bernstein said. "Precisely when that is no one can say. But what we can say is that point is a lot closer because of the Recovery Act."

In the past few weeks, the White House ramped up its message that it’s tackling the top economic worry on Americans’ minds: jobs.

U.S. unemployment dropped slightly to 10% in November from 10.2% the month before with 11,000 jobs lost.

The $787 billion stimulus package was passed in February, along party lines, in part to help stem job losses low interest personal loan. But it remains a political flash point on Capitol Hill, with Republicans criticizing its impact.

Slow road to growth

On Wednesday, top White House advisors briefed reporters on the progress and future of the stimulus package. They maintain that stimulus is working to curb job losses, although they acknowledge it still has a ways to go.

"Is it fully offsetting the job market impact of the deepest recession since the Great Depression? Bernstein asked. "Of course the answer is no. But the Recovery Act is helping to offset some of that pain."

As of Dec. 4, the federal government had either spent or was on the verge of spending $301.7 billion of the stimulus package, in addition to $93 billion paid in tax relief, said Edward DeSeve, a special White House adviser on the economic stimulus package. That leaves about $392 billion remaining.

When asked why President Obama was pushing for more infrastructure spending to create jobs, when the impact of the upcoming year of infrastructure spending has yet take place, Press Secretary Robert Gibbs said more spending would compliment those existing stimulus programs that have proved popular and have drawn too many applications.

He denied the call for more spending is a second stimulus proposal and called the new push for spending on infrastructure and programs to help homeowners make homes conserve less energy "targeted." 

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European Central Bank council member Ewald Nowotny indicated he sees no need to raise interest rates in the first half of 2010 as inflation pressures stay muted.

“Our interest rate decisions are to be seen in connection with our price stability goal and in this context I do not see major threats for price stability in the near future,” Nowotny, 65, said in an interview in Vienna. The comment was in reply to a question whether economists were correct to assume no increases in the first half. There is no “strong need” to shift policy in the absence of inflation pressures, he said.

The Frankfurt-based central bank is starting to withdraw emergency measures designed to fight the financial crisis as the euro-region economy recovers from its worst recession since World War II. While President Jean-Claude Trichet says the ECB has no immediate plan to raise its benchmark rate from the current 1 percent, officials have given themselves room to do so next year if necessary.

The ECB on Dec. 3 tightened the terms of its final tender of 12-month funds to take account of any rate increase next year and Executive Board Member Juergen Stark said five days later that rates that are left too low for too long may fuel more bubbles.

‘Steady Hand’

At the same time, the aftershocks from the recession are keeping a lid on prices. The ECB projects inflation to average 1.3 percent next year and 1.4 percent in 2011, below its 2 percent ceiling.

“If there’s no infringement with regard to these goals then I wouldn’t see strong pressure or a strong need to change the policy that we have, that means a policy of steady hand,” said Nowotny, who joined the ECB in September 2008. He said the ECB never “precommits” to any specific policy.

Nowotny “validates expectations that it’ll take a bit more than six months for the ECB to change its monetary policy stance,” said Laurent Bilke, an economist at Nomura International in London. “I assume the ECB needs to see some further signs of consolidation of economic momentum before they act. We’ve really only seen one quarter of positive GDP growth.”

The ECB is pulling back some of the flagship policies introduced at the depth of the crisis to encourage banks to lend again. In addition to stopping the 12-month tender, it will discontinue its six-month loans after March and only guaranteed unlimited funding in its other refinancing operations until April 13.

Survey

The ECB will probably lend banks 75 billion euros ($122 billion) in the 12-month tender, according to the median of 23 forecasts in a Bloomberg News survey. That compares with a forecast of 150 billion euros in a survey conducted before the ECB announced that the rate would be indexed. The results will be announced at 9:30 a.m. in Frankfurt.

Nowotny, an economist and former chief executive officer of Vienna-based Bawag PSK Bank, said he expects no changes on terms of the three-month operation as “tenders that we didn’t mention will go on for the time being as they are now payday loan.”

When the first year-long operation expires next summer, the ECB “will take all measures necessary to prevent a liquidity shortage” by providing funds with a shorter maturity, he said.

“What the markets see — and I think this message has been taken very well — is that with the decisions that we took in December, the ECB is signaling a cautious policy of exiting,” Nowotny said. “Our intention clearly was not to send a signal on rates.”

Recovery

The economic recovery is giving the ECB room to embark on exit strategies. Europe’s economy resumed expansion in the third quarter as governments stepped up spending and exports rose. A slump in industrial output eased in October and manufacturing expanded for a second month in November.

The pace of the recovery may be restrained by the euro’s 16 percent appreciation against the dollar since mid-February. The current level of the euro “is bearable,” Nowotny said. “But it’s quite obvious that a prolonged and strong revaluation of the euro would have a negative effect on the export performance of the euro area.”

The euro was little changed at $1.4550 today after falling 0.8 percent yesterday.

The ECB this month raised its economic outlook, forecasting growth of 0.8 percent next year and 1.2 percent in 2011 after a 4 percent contraction this year. Nowotny said it’s a ‘positive outlook but a very cautious one,”

Collateral Rules

The central banker also said that the ECB won’t consider the situation of individual euro-region member countries when normalizing its collateral rules. Greek government bonds, which were cut to BBB+ by Fitch Ratings last week, may not be eligible as collateral if the ECB reverts to pre-crisis rules in 2011.

“The policy with regard to collateral is part of monetary policy and it is only monetary policy considerations that are relevant in this case,” Nowotny said. “We’re not looking at particular countries.”

The ECB currently accepts bonds rated BBB- as collateral for loans after relaxing its rules in response to the financial crisis last year. It may revert to the old rules at the end of 2010, under which A- is the minimum required rating.

Soaring government bond-yield spreads in countries with excessive deficits “can serve as a wake-up call,” Nowotny said. Rising deficits are “a matter of substantial concern both for the ECB and the European Union.”

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SEATTLE — The date for the 787 Dreamliner’s first flight has inched closer, and Boeing hopes to fly not one but two 787s by year’s end.

According to a person close to the jet program, Boeing has set a new target date of Friday, Dec. 18, for the initial flight — four days earlier than its previous plan.

And a second Dreamliner is set to take to the air just 10 days after the first one, the person said.

After more than two years of delays, excitement is growing among those working on the new airplane, who now anticipate a pre-Christmas flight and look forward to a New Year test-flight program that could erase the memory of 2009’s embarrassing glitches payday loans for self employed.

The schedule’s acceleration follows the successful retesting of the wing last week, which validated the fix for a structural flaw that caused a test failure last May and the consequent suspension of the planned June first flight.

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Did Cyber Monday outshine Black Friday this year?

Early reports suggest that Americans shopped more enthusiastically online for holiday bargains than they did in stores on Black Friday.

Cyber Monday sales rose 14% this year compared to 2008 and consumers also bought nearly 30% more items per order versus last year, according to research firm Coremetrics.

Also, the firm said shoppers bought 10% more items per order online than they did in stores on Black Friday.

"We are seeing good online buying momentum because people are looking for the very best deals, and are going online for the most convenient way to shop," John Squire, chief strategy officer, Coremetrics, said in a report Tuesday.

Clothing and jewelry e-tailers were the most popular shopping destinations on Cyber Monday. Although department stores saw a 33% increase in traffic to their Web sites, the average order volume actually fell 10% versus last year, the report said.

Kindle top seller at Amazon.com

Cyber Monday, which is the e-tailers version of Black Friday, is the day that e-tailers furiously push big discounts, free gift cards, free shipping and any other gimmick they can think of to entice consumers to spend even more of their holiday shopping dollars online.

Amazon.com (AMZN, Fortune 500) spokesman Craig Berman said its wireless Kindle e-reader was the "best-selling item across all of Amazon’s product categories on Monday."

"This November has become the biggest month for Kindle sales since we launched the product two years ago," Berman said. But he declined to disclose how many Kindle units have been sold over that period.

Also, Berman said the e-tailer sold out of its Cyber Monday deal of the day, which was an 8GB iPod Touch for $158.

Other hot sellers Monday included the hugely popular Zhu Zhu pet hamsters, which are sold on Amazon through third party vendors.

Although the retail price of each hamster is $9.99, Berman said some of the hamsters, such as Mr. Squiggles, were selling for as much as $63 each.

4.3 million shoppers a minute

An average of 4.3 million consumers per minute visited shopping Web sites throughout the day Monday in North America, according to Internet monitoring firm Akamai, which tracks traffic trends to more than 270 e-tailers.

The firm, which monitors North American visitors to sites such as American Eagle Outfitters, Overstock.com, QVC.com and eBags.com, said traffic peaked at about 9:30 p.m. ET, reaching 5.1 million visitors per minute.

Pedro Santos, chief strategist for e-commerce with Akamai, said he expects heavy online traffic to continue on subsequent Mondays leading up to the last shipping day before Christmas.

Here’s a sampling of what other sellers were serving up to customers.

Walmart.com is offering nearly 150 specials on such items as flat panel TVs, gaming systems and toys as well as 97-cent shipping on laptops, digital cameras and MP3 players.

Wal-Mart (WMT, Fortune 500) said in a statement the deals are being offered through Friday, but only while supplies last.

For book lovers, Barnesandnoble.com is chopping prices by 50% on all New York Times bestsellers and offering a $10 gift certificate for every $100 purchase.

Still, don’t expect any special deal on Barnes & Noble’s "Nook" eBook reader, which industry experts peg as one of the hottest products this holiday season.

A quick check on the book seller’s Web site showed that if you order the Nook Monday, it won’t be shipped until Jan. 4. And the "extra" incentive to Nook buyers is free shipping and a free gift certificate.

About 96.5 million Americans planned to shop online Monday, up from 85 million in 2008, according to the National Retail Federation.

Despite these expected traffic numbers and heavy discounts, Cyber Monday is still seen as more of a ceremonial start to online holiday shopping.

The busiest online shopping day tends to be later in December, and is the last day that gifts can be shipped to guarantee delivery by Christmas Day.  

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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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