Finance topics

Moviegoers have shown a willingness to be entangled by Spider-Man’s web over and over again. Now, as Disney prepares to buy the comic book powerhouse Marvel, it faces the question of whether fans will also get attached to characters as obscure as Ant-Man and Iron Fist.

The Walt Disney Co. is making a $4.2 billion bet that they will as it nears completion of its acquisition of Marvel Entertainment Inc. this week. The cash-and-stock deal brings those characters and thousands of others to an entertainment empire that already includes Mickey Mouse, Kermit the Frog and Hannah Montana.

Disney’s biggest challenge will be to get enough people enthused about second-string superheroes to justify the price — about $1.2 billion, or 40 percent more than what Marvel’s stock was worth when the deal was announced Aug. 31.

The high price means Disney will have to find new ways to earn revenue from Marvel — perhaps by bringing Marvel-licensed toys to more store shelves around the world, and by digging deep into its comic vault for potential new blockbusters.

Although Disney is constrained by the fact that big-name Marvel superheroes such as Spider-Man are already locked up in long-term deals with rival movie studios, Disney has had a history of successfully turning unknown talent such as Miley Cyrus, the actress behind "Hannah Montana," into multibillion-dollar enterprises.

"With Marvel, it’s not just about ‘Iron Man’ and ‘Hulk,’" Caris & Co. analyst David Miller said. "It’s all about the other 5,000 characters that you and I don’t even know about yet."

Disney shares are already being helped, having risen more than 20 percent since the deal was announced, partly on the hope for new character development and better use of Marvel heroes in movies, stores and theme parks.

Marvel shareholders are expected to give final approval to the offer on Thursday.

The deal has already spawned a bout of speculation in the comic book world about who will be the Next Big Thing.

Possibilities include classics such as Ant-Man, the alter-ego of mad scientist Dr. Henry Pym, and Dr. Strange, the mystical go-to guy whenever there’s an extradimensional threat. Both are connected to The Avengers line of characters that Marvel had started developing for the big screen long before Disney made the deal; Iron Man and the Hulk are among the Avengers that Marvel already has tapped.

There are about 5,000 more characters, including obscure ones such as martial arts master Iron Fist from the 1970s and up-and-coming ones such as the Runaways, a street-savvy pack of teenagers who have become a recent Marvel comic-book hit.

Whoever is the next star, Marvel has a track record of success: Its "Iron Man" movie took in $572 million at box offices worldwide despite the character once being a B-lister in the pantheon of superheroes.

"They picked the right one and they did it the right way," said Gareb Shamus, whose company Wizard Entertainment Group runs several of the Comic-Con fan conventions around the nation. "When you do that, you’ve got a franchise that could last forever."

Through the deal, Marvel gains the ability to quickly reach more markets worldwide. Disney is by far the world’s top licenser of its character brands, with $30 billion in retail sales in fiscal 2008, compared with fourth-place Marvel at $5.7 billion, according to License! Global magazine.

"It gives Marvel the opportunity to expand internationally and leverage the Disney retail relationships as well as their licensee relationships," said Tony Lisanti, the magazine’s global editorial director.

Source

Russia’s central bank cut its benchmark interest rate for the 10th time since April to discourage speculative ruble trades and ease credit flows.

Bank Rossii cut the refinancing rate by a quarter-point to a record low 8.75 percent and lowered the repurchase rate charged on one- and seven-day central bank loans to 7.75 percent from 8 percent effective Dec. 28, it said in a statement today. The bank last lowered the rates by half a percentage point on Nov. 24.

The decision to cut rates may “soften the impact of factors constraining the economic rebound and will make the tendency toward GDP growth more sustainable,” Bank Rossii said. With bank liquidity rising, the cuts may limit the inflow of short-term foreign capital that could lead to volatility on the ruble market, according to the statement.

The central bank has cut the refinancing rate from 13 percent in April after the world’s biggest energy exporter lurched into its deepest economic decline since the government began regularly updating economic data in 1995, contracting 10.9 percent in the second quarter and 8.9 percent in the third. The bank has eased policy to aid the recovery and stem speculative inflows that have fueled ruble volatility.

Equity Funds

There’s some evidence the Moscow-based bank’s currency policy is working. The ruble has lost 2.7 percent against the dollar since Nov. 11, when it reached the strongest level of the year, after gaining 13 percent in the previous three months. Bank Rossii’s efforts to deter speculation are “appropriate,” International Monetary Fund senior Russia representative Odd Per Brekk said last month.

Russian authorities are trying to discourage the use of the ruble in so-called carry trades, in which investors borrow in low-yielding currencies to buy high-yielding currencies that can generate a quick profit.

Russian equity funds drew $59.5 million in the seven days ended Dec. 16 after posting an inflow of $181.7 million a week earlier, according to EPFR Global. The country may post a net capital outflow in the fourth quarter after oil prices retreated in December and investors fled emerging-market assets on concerns about Dubai’s debt restructuring, central bank Chairman Sergey Ignatiev said on Dec. 22.

Russia may see a net outflow of $40 billion for the year, according to the central bank.

‘Zero Growth’

Policy makers are also trying to revive lending after previous rate cuts failed to ease credit flows.

The financial industry will show “zero growth” next year as provisions for mounting bad loans tie up cash that might have gone to companies and households, Alexander Turbanov, head of the Deposit Insurance Agency, said last week.

“We could not drastically change the situation with lending in industry,” Deputy Economy Minister Andrei Klepach said last month. “There is stagnation in lending and borrowing.”

Policy makers will be looking for signs that today’s cut feeds through to bank loans. Lending to companies by Russian banks rose 0.8 percent last month, Bank Rossii First Deputy Chairman Gennady Melikyan said last week sam day payday loan. Lending to households fell 0.2 percent in the month, while bank assets grew 2.8 percent, Melikyan said, adding that the data don’t include OAO Sberbank, the country’s biggest lender, or take exchange-rate shifts into account.

‘Frozen’ Loan Books

“Banks are not lending at present, and have effectively frozen their corporate loan books,” said Clemens Grafe, chief economist at UBS AG in Moscow. “Instead, they are concentrating on building up buffers to absorb expected loan losses, and this is clearly restricting the economy.”

Russian banks’ corporate loan books fell 0.5 percent in October, following a 0.7 percent decline the previous month, the central bank said on Dec. 3.

Corporate borrowing costs from domestic banks fell in November to the lowest level this year, sliding to an average of 13.6 percent compared with 13.9 percent a month earlier and 17.4 percent in January, the central bank said on Dec. 23.

The country will post “steady economic growth” next year because the negative factors that led to the worst slump since the 1998 default, including lower prices for commodities and a lack of external financing, are “no longer in effect,” Ignatiev said this week.

Further Cuts

The economy may grow 5 percent or more in 2010, faster than the government is estimating, and output will return to its pre- crisis level in less than three years, Ignatiev said Dec. 22.

The refinancing rate may be lowered as much as 1 percentage point in 2010, Arkady Dvorkovich, President Dmitry Medvedev’s chief economic adviser, said Dec. 8, adding that the inflation rate next year may slow to 8 percent or more.

“Average lending rates may drop more,” Dvorkovich said. “Lending rates for large and medium companies are at 14 percent to 16 percent. I think they may drop by 3 percentage points.”

Russia has continued easing its policy rates even as the IMF has urged Bank Rossii to halt the reductions, warning they may be inflationary.

“Further cuts in policy interest rates should be put on hold until the monetary implications of the very large end-year liquidity injection associated with the fiscal deficit become clear,” the IMF said in a report this month.

The IMF warned Bank Rossii to step up efforts to contain inflation and embrace a more “ambitious” policy to reduce consumer-price growth to below 5 percent in 2010.

Consumer prices rose 9.1 percent on an annual basis in November, the slowest pace in more than two years, according to the Federal Statistics Service.

The ruble gained for a third day against the dollar, adding 0.4 percent to 29.4683 at 11:57 a.m. in Moscow, heading for its strongest close since Dec. 4. Against the euro the Russian currency was little changed at 42.5934.

Source

Target Corp. and U.S. retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect.

Sales in November and December may fall 1.2 percent to $436.7 billion from the same period in 2008, said Britt Beemer, chairman of consumer polling firm America’s Research Group. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said in a Dec. 21 interview.

Target Chief Financial Officer Douglas Scovanner says the credit-card legislation is exacerbating a spending slump just as consumers begin to consider more discretionary purchases they would usually buy with credit. Items such as clothing, jewelry and home goods suffered steeper declines during the recession and are among the most profitable sales for retailers.

“It will mute the impact of the rebound that would have otherwise occurred,” Scovanner said. “Diminished availability of credit equals diminished spending.”

Reduced lending may shave at least half a percentage point off sales at stores open at least a year once more of the Credit Card Accountability, Responsibility and Disclosure Act goes into effect in February, Scovanner said in a Nov. 17 interview in Minneapolis, where the chain is based. In November, Target’s comparable-store sales declined 1.5 percent.

‘Tighten Up’

The act bans so-called universal default, the practice of raising interest rates based on a missed payment with another lender. The rules are already causing lenders to “tighten up,” said Brad Jolson, senior director for risk management solutions at Fair Isaac Corp. FICO, as the company is known, is the Minneapolis-based provider of the credit-scoring formula most widely used by lenders.

Available credit to U.S. consumers through cards fell to $3.6 trillion this year from a peak of $4.7 trillion last year, according to a study released in July by TowerGroup, a Needham, Massachusetts-based financial research and advising firm.

“We’re scared to death of what this law is going to do,” said Edward Record, CFO at Stage Stores Inc., the Houston-based operator of 759 stores including the Bealls and Peebles chains. “It’s definitely going to hurt consumer spending.”

Store-Brand Cards

About a third of Stage Stores’ sales comes from store-brand credit cards, and as much as a quarter from other issuers, Record said in a Dec. 17 telephone interview. He said he expects the general-purpose cards will be more affected because Stage Stores was “pretty conservative” with its own cards.

Stage Stores added 8 cents to $12.42 in New York Stock Exchange composite trading yesterday and has advanced 51 percent this year. Target fell 54 cents to $48.79 in trading yesterday. The shares have gained 41 percent this year.

Target also offers its own branded credit cards through a portfolio it funds mainly with JPMorgan Chase & Co. Writeoffs for loans deemed uncollectible rose to 14.99 percent in November on an annualized basis, up from 13.49 percent in October and 11 percent a year earlier, Target said in filings.

Proponents of the credit-card law say the rules protect consumers and put more cash at their disposal, benefiting shoppers and retailers. Some issuers may have hurt sales between the law’s passage and enactment by raising rates in anticipation of the coming restrictions, said U.S. Representative Carolyn Maloney, a New York Democrat and a sponsor of the law.

“Much of the damage was and is self-inflicted,” she said in a Dec. 16 telephone interview. “Virtually all of the consumers I’ve talked to like my card reforms.”

Managing Risk

The law will reduce lenders’ flexibility to manage risk, said Peter Garuccio, a spokesman for the American Bankers Association, a Washington trade group representing about 95 percent of U.S. banking assets. That leaves them the options of “not making cards available or doing so at higher prices,” he said in a telephone interview on Dec. 21.

JPMorgan Chase and Bank of America Corp., the two largest issuers, referred questions on the law to the American Bankers Association. Bank of America decided not to raise card interest rates before the law goes into effect except in instances where customers miss at least two payments within 12 months, Betty Riess, a spokeswoman, said yesterday by telephone.

Less credit hurts larger sales disproportionately, according to Beemer, the consumer researcher.

“Credit drives purchases over $50,” he said. He estimates that half those transactions were made with credit cards before access diminished this year.

Applications Rejected

This year, 22 percent of the consumers that Beemer’s Charleston, South Carolina-based firm surveyed said they had credit-card applications rejected, compared with 12 percent last year. More than 37 percent said their credit limits had been reduced in the past year. That means fewer sales of items such as appliances, Beemer said.

The National Retail Federation, which hasn’t taken a stance on the credit-card law as a whole, has said proposed rules under the law threaten stores’ ability to grant so-called instant credit at checkout.

The Federal Reserve’s proposed guidelines would require retailers to ask customers for information on income and other assets, according to the industry group. That may all but eliminate merchants’ ability to issue store cards or raise borrowing limits at the register, Mallory Duncan, general counsel of the Washington-based federation, said in a telephone interview. The current practice is to use credit scores, purchasing history and other credit-bureau information, he said.

“It’s going to have quite a chilling effect on our ability to initiate new accounts,” Duncan said.

Source

Gold prices plunged Thursday as the dollar surged against the euro amid concerns about the economic health of certain European nations.

February gold fell $28, or 2.5%, to settle at $1,107.40 an ounce after falling to a low of $1,098 an ounce earlier in the session. The retreat came two weeks after gold settled at an all-time high of $1,218.30 an ounce.

Carlos Sanchez, a precious metals analyst at CPM Group in New York, said the selloff was "definitely attributable to the stronger dollar, and some stop-loss selling."

The dollar jumped 1.3% against the euro to $1.4346, its highest level since early September. The euro came under pressure after Standard & Poors downgraded Greece’s credit rating, raising concerns about the health of other strained euro zone economies like Ireland.

A stronger dollar tends to weigh on the price of gold, since the precious metal is traded in U.S. dollars around the world.

The buck was also supported by a Wednesday statement from the Federal Reserve that said U personal loan for poor credit.S. economic conditions continue to improve, even as the central bank held interest rates near historic lows.

Sanchez said a firm move below $1,100 an ounce could pave the way for a brief retreat toward a range near $1,050 an ounce. However, he expects the weakness to be short lived.

Gold, which has gained about 24% this year, has been on a tear over the last few months as the dollar has weakened substantially.

While the dollar has regained ground in recent days, many traders expect gold prices to push higher into next year amid strong investor interest and the outlook for low U.S. interest rates.

In a research report out Thursday, analysts at Morgan Stanley raised their forecast for gold prices next year by 20% to $1,200 an ounce. The investment bank also raised the outlook for 2011, but reduced forecasts from 2013 onwards.  

Source

Sweden’s central bank kept the benchmark interest rate unchanged and said it will stick to plans to leave the rate at a record low until autumn next year to support the economic recovery and reach its inflation target.

The seven-day repo rate was left at 0.25 percent, the Stockholm-based Riksbank, the world’s oldest central bank, said on its Web site today. The decision was expected by all 15 economists surveyed by Bloomberg.

“The recovery in the economy is continuing and inflationary pressure will be low in the coming period,” the Riksbank said in its statement. Today’s decision was necessary “to attain the inflation target of 2 percent and to support the economic recovery. The recovery is from a low level and there will be ample spare capacity over the coming years.”

The largest Nordic economy’s contraction this year will be the severest since World War II, Finance Minister Anders Borg said last month. The export-reliant nation’s slump has been deeper than in neighboring Denmark and Norway after Swedish manufacturers, including the world’s biggest maker of ball bearings SKF AB and truck maker Volvo AB, cut thousands of jobs to adjust to smaller markets. Exports make up half of Sweden’s $480 billion economy.

‘Earlier’

“We still believe that the Riksbank will hike earlier than they forecast since the labor market will stabilize earlier and develop better than they predict,” said Annika Winsth, chief economist at Nordea Bank AB in Stockholm. Nordea forecasts a rate increase to 0.75 percent in April.

The krona was up 0.3 percent against the euro, after earlier having appreciated 0.5 percent, at 10.4310 at 10:19 a.m. in Stockholm. Against the dollar, the krona was up 0.4 percent at 7.1989.

The economy will shrink 4.5 percent this year and grow 2.7 percent next year, the bank forecast today. That compares with an earlier forecast of a 4.6 percent contraction in 2009 and 2.5 percent growth next year.

The central bank also revised its unemployment forecast, saying the rate will peak at 10.1 percent next year, compared with a previous estimate of 10.3 percent, and fall to 10 percent in 2011.

Unemployment

Sales abroad slumped for a 12th consecutive month in October, forcing companies to cut more jobs and threatening to send unemployment higher than the 8.1 percent rate recorded in October, not adjusting for seasonal swings. Ericsson AB, the world’s largest maker of mobile-phone networks, last week said it must continue cutting jobs and costs, affecting 946 people.

“We’re facing rising unemployment,” Borg said on Dec instant payday loans. 4. His ministry predicts the jobless rate will peak at 10.7 percent in 2010 and the economy will shrink 4.9 percent this year.

Industrial production fell for a third month in October, with the decline deepening to 2.7 percent from a 0.5 percent fall in September, Statistics Sweden data show. Industrial output sank an annual 16.1 percent in October and hasn’t grown for 15 months, according to the office.

“The Swedish economy is split in two, where industry is performing very poorly while other parts are doing better,” Winsth said. “The Riksbank focuses a lot on industry and the problems we’re experiencing there.”

Inflation Outlook

The Riksbank today said prices will fall 0.3 percent this year compared with an earlier estimate of a 0.4 percent drop. It cut its inflation expectations to 0.8 percent from 0.9 percent next year and said prices will rise 3 percent in 2011.

The recession has undermined price pressure, with Sweden posting eight months of deflation through November, the longest period of price declines since 1980, when records start. Consumer prices fell an annual 0.7 percent last month, compared with the Riksbank’s 2 percent price growth target.

Prime Minister Fredrik Reinfeldt’s government, which is preparing for an election in September, will spend 32 billion kronor ($4.5 billion) in 2010, or about 1 percent of gross domestic product, on tax cuts and welfare to support demand. His administration came to power in 2006 promising to create jobs by reducing taxes and unemployment benefits. The government trails the opposition by 7.5 percentage points, according to an opinion poll published this month by Statistics Sweden.

Some indicators have pointed to economic improvement. Sweden emerged from recession in the second quarter and expanded 0.2 percent in the three months ended September. Stimulus measures have helped send consumer confidence higher, with the index rising to 11.4 in November from 7.5 in October, marking a fourth consecutive month of positive readings.

“The economic ground should be sufficiently solid for the Riksbank to start hiking the repo rate by the end of summer next year,” Danske Bank said in a report yesterday.

Other central banks are also exercising caution. Oslo-based Norges Bank will probably leave its benchmark rate on hold today after raising the rate a quarter point on Oct. 28 to 1.5 percent as policy makers adjust their stance to lower oil investment and the impact of a strong krone on exports.

Source

Otterbein Homes has acquired Pioneer Home Health Care, a Medicare-certified home health agency with operations in the Wilmington area.

Pioneer Home Health Care was established in 2005 by licensed physical therapists Tim McCormick and Kimberly Neikirk. Neikirk has been named executive director for the new venture for Otterbein, and McCormick will assume the position of therapy supervisor.

All of the other current employees will remain with the company, according to a press release.

Otterbein’s five full-service retirement communities in western and northern Ohio are located in Lebanon, St. Marys, Cridersville, Pemberville and on the Marblehead Peninsula on Lake Erie. Avalon by Otterbein neighborhoods, which offer skilled nursing and rehabilitation, are located in Perrysburg and Monclova in northern Ohio and Springboro and Middletown in southern Ohio Same day payday loans.

Avalon in Hamilton Township is under construction.

Jill Hreben, CEO of Otterbein Homes, said: “Extending the Otterbein brand to include home health services was critical to our continuing strategic goals, and we recognized an outstanding alignment with the level of care and the values displayed by Kimberly and Tim and the other partners at Pioneer.”

Otterbein Homes serves nearly 1,700 people and is related to the East Ohio and West Ohio Conferences of the United Methodist Church.

Source

New Zealand house prices increased at a slower pace in November and property sales fell for a second month as home-loan interest rates increase.

Prices rose 0.2 percent from October when they gained 1.3 percent, the Auckland-based Real Estate Institute of New Zealand Inc. said today in an e-mailed statement, citing an index. Property sales fell to 6,056.

Reserve Bank Governor Alan Bollard last week said house- price inflation would moderate in 2010, reducing the need for him to raise the benchmark interest rate before the middle of the year. Lenders have increased home-loan interest rates for fixed terms of one year or longer as global funding costs have increased, curbing demand for property.

“No longer do borrowers get the benefit of certainty and low rates that had been a feature of previous cycles,” said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington. “The prospect of higher interest rates and a still weak labor market will continue to be major headwinds facing the housing market.”

The interest rate on a two-year home loan was 7.15 percent in October from 6.31 percent in June, according to central bank figures Online payday loans. Bollard on Dec. 10 said he may increase the official cash rate around the middle of 2010.

The jobless rate rose to a nine-year high of 6.5 percent in the third quarter and may reach 6.7 percent next year, the central bank forecast last week.

House Sales

House sales slumped last year amid a deepening recession, and only began rising on an annual basis in March. Sales in November surged 41.5 percent from a year earlier to 6,056, the institute said today.

Still, sales fell for a second month in November from 6,091 in October and 6,464 in September.

The level of sales is consistent with troughs in previous housing downturns, Goh said.

The dip “could hint at the start of an easing in housing market activity at a time when we are getting a supply response with a rise in the number of houses for sale,” he said.

The median time to sell a house rose to 33 days from 31 in October, and fell from 44 days in November last year, the institute said today.

Source

If you want to buy a house, the state of Missouri wants to give you $1,250.

And if you make the place more energy-efficient, it will give you $500 more.

State officials are poised to pass a measure next week that would give a sizable break on property taxes to most people who buy a house in 2010. It is Jefferson City’s latest bid to boost the state’s weak housing market, and the newest item on a growing menu of sweeteners to make buying a house more appealing, sweeteners that some warn could eventually cause a hangover.

The measure was pitched last month by Gov. Jay Nixon and state Treasurer Clint Zweifel as a way to spur housing sales and spur the state’s economy.

"This is so vital to our state’s economic growth," Nixon said. "We want to do everything feasible to encourage people to buy homes."

So next Friday, they will ask the Missouri Housing Development Commission — which Zweifel chairs and to which Nixon appoints most of the members — to set aside $15 million of its reserve funds for one-time property tax reimbursements for Missourians who buy a home in 2010. To qualify, St. Louis-area households must earn $95,060 or less; if they do, they can get up to $1,250 in property taxes reimbursed by the state.

Home buyers who add energy-saving appliances, new windows or other "green" improvements, can qualify for another $500. With a $15 million cap for the program, the state expects to write between 9,000 and 11,000 such checks — roughly one for every 10 homes sold in Missouri this year.

It comes on top of the $8,000 federal tax credit for first-time home buyers, which many economists say has helped prop up home sales this year. Last month, Congress voted to extend that program through April and expand it to include $6,500 for some repeat buyers. States from California to Delaware have thrown in their own incentives, too, and in January the Missouri housing commission launched a program to give an advance on the $8,000 credit, a program more than 1,200 people have used so far. Illinois launched something similar in July.

Now, Missouri plans to up the ante. If the housing commission approves, the agency will put much of its reserve funds — separate from the state’s cash-strapped general budget — toward the waivers.

"This hopefully is another tool in the toolbox," Zweifel said. "It’s important to put our dollars to work."

Still, given Missouri’s record-high foreclosure rates and a job market that is giving pause to many would-be buyers, some housing advocates wonder if the $15 million might be better spent in other ways no faxing payday loan.

"In terms of the level of need, it strikes me as a little strange," said Chris Krehmeyer, president of Beyond Housing, a St. Louis-based group that provides mortgage counseling and builds affordable housing. "We’re not seeing folks who are buying homes saying ‘I wish someone would pay my taxes next year.’ People are saying, ‘I need help to stay in the home I own.’"

Typically, the state’s housing commission finances affordable housing projects and will issue nearly $100 million in tax credits for those projects in early 2010. But, Zweifel said, the broader housing industry is a big pillar of Missouri’s economy, and supporting it, too, means creating jobs. This provides a fast way to do it.

"The goal was partially to spur home purchases, but also to find a way to quickly put $15 million to work for Missourians," he said. "We wanted to create a program that helps spur economic development and job creation, not something that’s permanent in nature."

The temporary nature of this and the $8,000 federal tax credit has some housing economists warning of trouble when the programs end. Such props must be taken down eventually, and critics point to a plunge in auto sales after the end of the government’s "Cash for Clunkers" program as a warning for what might happen to the housing market.

Then there’s the question of just how much impact it will have. Most people aren’t going to make a decision on whether to move based on $1,250, said Carlos Garriga, an economist who studies housing at the Federal Reserve Bank of St. Louis.

"It’s just kind of a bonus," he said. "Even at the margins, how many people will move because of this? It’s not that big."

Still, said Mark Stallmann, chief executive of the St. Charles County Association of Realtors, it’s the sort of thing that makes it easier to buy a house. And with the real estate market as weak as it is right now, every little bit — even a $1,250 check from the state — helps.

"Anything that reduces the cost of homeownership, that’s an incentive to help families get in a home, that’s a good thing."

Source

Chancellor of the Exchequer Alistair Darling is considering a levy on bankers’ bonuses and this week may reverse a tax cut for Britain’s richest households in efforts to win over voters before next year’s election.

Darling yesterday refused to rule out a tax on excessive bonus payments, although he pledged to hold back from measures that would harm Britain’s banks. He said that lowering the inheritance tax for the richest people is no longer a priority for the pre-budget report on Dec. 9.

“We are not going to be held to ransom by people who believe you can pay extremely large bonuses regardless of what’s going on,” Darling told BBC television yesterday. “You have to be fair. You have to be reasonable. But you have got to keep an eye on what the long-term effects are.”

Darling and Prime Minister Gordon Brown are seeking to persuade voters that David Cameron’s Conservative Party, which is sticking to a similar inheritance tax plan, is siding with the rich at a time when the country is recovering from the worst economic crisis since World War II. That strategy has helped Brown’s Labour Party erode Cameron’s lead in opinion polls.

Bank shares fell in London trading today. Royal Bank of Scotland Group Plc slid 2 percent to 33.95 pence and Lloyds Banking Group Plc lost 2.3 percent to 54.73 pence. The FTSE 350 Banks Index declined 1.4 percent, the biggest drop in more than a week.

Pound Weakens

The pound weakened against the dollar and the euro. The British currency dropped to $1.6386 as of 10:33 a.m. in London, from $1.6474 at the end of last week. It weakened to 90.47 pence per euro, from 90.18 pence.

Darling said he has not yet seen bonus plans from government-controlled Royal Bank of Scotland and that he has the power to veto any proposals he considers excessive. Darling has also said that he is opposed to punitive measures that would damage a bank’s capital position, making it less likely that he will introduce an industry-wide windfall tax.

“It’s not a black and white world,” Darling said.

The government may impose a one-year windfall tax on British banks that would raise several hundred million pounds, the BBC reported, without attribution. Options may include a “super-tax” on big bonus earners, a larger employers’ national insurance charge or a direct tax on investment banks, the BBC said.

Conservative Plans

George Osborne, the Conservative lawmaker who shadows Darling in Parliament, told the same program that he “wouldn’t rule out” a charge on excessive individual bonuses if his party defeats Labour in the election, which has to take place before June.

An ICM Research poll for the Sunday Telegraph showed that the Conservatives are on course to obtain a majority of between 20 and 25 seats in the 646-seat House of Commons. A ComRes Ltd. survey Dec. 1 showed that the U.K. may be heading for a hung Parliament where no party has an outright majority, with Cameron leading Brown by 10 percentage points, down 3 points from October.

Darling stepped up the attack yesterday, saying Osborne’s plea to voters to endure tougher times isn’t consistent with tax cuts for the rich.

A YouGov Plc poll in yesterday’s Sunday Times showed that more than half of the 2,000 people interviewed viewed the Conservatives as the party of the rich. Cameron said Brown had been “spiteful’ in his efforts to tell voters of his privileged upbringing and elite schooling.

Not ‘First Priority’

“I really can’t believe it would be the first priority of any government, at this time, to give a tax cut to the top 2 percent of estates in this country,” Darling said yesterday.

Darling said in 2007 that he would raise the inheritance tax threshold to 350,000 pounds ($578,000) from 325,000 pounds for single people and to 700,000 pounds from 650,000 pounds for couples, starting April 2010. Cameron’s Conservatives want to abolish the tax for single people with estates below 1 million pounds and for couples with estates below 2 million pounds.

“If the Labour Party wants to say don’t aspire to get on in life, then so be it,” Osborne said. “It’s part of their lurch to the left.”

Darling said this week’s pre-budget statement will spell out some detail on how he plans to implement his pledge to reduce the deficit by as much as half over four years. In the April budget, the Treasury forecast a shortfall of 175 billion pounds in the year through March 2010, or 12.4 percent of gross domestic product — the largest in British postwar history.

Cost Cutting

Darling told the BBC yesterday that he will scrap a 12.4 billion-pound computer program for the National Health Service that is being developed mainly by iSoft Plc. Similar reductions, rather than staff cuts in schools and hospitals, would indicate “the direction of travel” in this week’s report, he said.

“The NHS had quite an expensive IT system and I don’t think we need to go ahead with it now,” he said.

Brown said today the government will reduce spending by more than 12 billion pounds over the next four years through efficiency gains. Ministers had found 3 billion pounds of new savings since April, including 1.3 billion pounds by “streamlining” central government, he said in a speech in London.

Brown said on Dec. 4 in his weekly podcast that a plan to move more government services online would save about 400 million pounds a year.

Today, he promised to reduce the pay bill for senior civil servants by 20 percent over the next three years, and said that more civil service jobs will be moved from London and the southeast of England to parts of the country where living costs are lower. The government will halve spending on consultants and cut its marketing budget by a quarter, Brown said.

Source

The Bundesbank raised its growth forecasts for Germany, Europe’s largest economy, saying the outlook for the next two years has “brightened perceptibly.”

Gross domestic product will rise 1.6 percent next year and 1.2 percent in 2011 after dropping 4.9 percent this year, the Frankfurt-based Bundesbank said in its bi-annual economic outlook today. In June, it predicted the economy would stagnate in 2010 after contracting 6.2 percent in 2009.

“The outlook for the German economy has brightened perceptibly in recent months,” the Bundesbank said. The recovery is being driven by “extensive” monetary and fiscal stimulus,” it said, adding that exports, business investment and private consumption will gain in importance as those measures wane.

The economic revival in Germany is helping the 16-nation euro region shake off its worst recession since World War II, giving the European Central Bank room to scale back its emergency stimulus measures. The ECB yesterday said it will reduce its long-term lending to banks next year in an exit strategy that some economists say paves the way for eventual interest-rate increases in the second half of 2010.

“Germany fell further in the recession, so it can expect a bit more of a bounce,” said Colin Ellis, an economist at Daiwa Securities SMBC Ltd. in London. “The ECB will have to be very cautious about removing stimulus too early no faxing 1 hour payday loans. Pricing pressures are likely to remain subdued.”

Benign Inflation

The Bundesbank said German inflation will remain benign, averaging 0.9 percent next year and 1 percent in 2011 after just 0.3 percent this year. It predicted unemployment will rise to 10.1 percent in 2011 from 8.1 percent today.

It’s a “balancing act” for central banks to withdraw stimulus measures without threatening the economy, Bundesbank President Axel Weber, who also is a member of the ECB’s Governing Council, said yesterday in an interview with ARD television. “There’s no need to send a signal on interest rates at the moment” as inflation is contained, he said.

Germany’s economy emerged from recession in the second quarter and growth accelerated to 0.7 percent in the third. Chancellor Angela Merkel’s government is spending 85 billion euros ($128 billion) to stimulate activity, while demand for the country’s goods is growing as the global recovery gathers pace.

Exports will gain 4.5 percent next year and 4.3 percent in 2011, according to the Bundesbank. It predicts consumer spending will increase 0.2 percent in 2010 and 1 percent the following year.

Source