Exclusive - Wal-Mart's everyday hiring strategy: Add more temps

By Dhanya Skariachan and Jessica Wohl

(Reuters) - Wal-Mart Stores Inc has in recent months been only hiring temporary workers at many of its U.S. stores, the first time the world's largest retailer has done so outside of the holiday shopping season.

A Reuters survey of 52 stores run by the largest U.S. private employer in the past month, including one in every U.S. state, showed that 27 were hiring only temps, 20 were hiring a combination of regular full, part-time and temp jobs, and five were not hiring at all. The survey was based on interviews with managers, sales staff and human resource department employees at the stores.

The new hiring policy is to ensure "we are staffed appropriately," when the stores are busiest and is not a cost-cutting move, said company spokesman David Tovar. Temporary workers, he said, are paid the same starting pay as other workers.

Using temporary workers enables the company to have adequate staff on busy weeknights and weekends without having to hire additional full-time staff.
Tovar said fewer than 10 percent of its U.S. workforce is temporary - or what the company internally calls "flexible associates" - compared to 1 to 2 percent before 2013. The majority of its workforce is still regular full-time staff, he said.

Walmart U.S. Chief Executive Bill Simon also confirmed that the company is hiring more temp workers. "Their hours flex by the needs of the business from time to time," he told reporters the day before Wal-Mart's annual meeting last week.

The hiring strategy could save Wal-Mart money by trimming labor costs at a time when its margins remain under pressure. Many consumers are still struggling given a high jobless rate and lack of income growth, leaving retailers of everyday goods with little pricing power, according to other company CEOs and benefits experts. Competition from dollar stores, other big box discount chains and grocery stores is also intense.

It also could set an example for some other companies as they look for ways to cushion themselves from a potential rise in healthcare costs next year as a result of President Barack Obama's health care reforms, according industry experts and retail executives. Tovar said that the move wasn't related to these reforms, commonly known as Obamacare, but he did acknowledge that it could take a year or more for temporary workers to receive health care benefits. Turnover in retail often occurs within the first few months.

FEWER FULL-TIMERS

Wal-Mart's U.S. staffing has remained relatively flat even as more stores have opened in recent years. At the end of fiscal 2013, Wal-Mart had "more than 1.3 million" workers in the United States, the majority of them at 4,005 Walmart U.S. stores, compared with "approximately 1.4 million" workers in the United States at the end of fiscal 2009, the majority of them at 3,656 Walmart U.S. stores, according to the company's annual filings for both years.

The temporary workers are often being hired on 180-day contracts, according to the survey of Wal-Mart stores. The temps could eventually be hired for a regular full or part-time job or they could reapply for their temporary position, the Wal-Mart staff said.

Temp workers typically have a completion date after which they have to reapply for work, but part-time employees work fewer hours than full-time workers indefinitely.

"Full-time people are getting slimmer and slimmer," said a supervisor at a store in North Carolina, who asked not to be named, as did other store-level employees who were interviewed for this story, because she is not authorized to talk to the media.
She said that the five new employees hired this year at the store are all temps and hours of existing employees are being cut.
"Everybody who comes through the door I hire as a temporary associate," said a store manager in Alaska, who asked not to be identified. "It's a company direction at the present time."

"Long-term associates are particularly distraught by this short-term hiring as many are looking for more hours and full-time work," said Mary Pat Tifft, a member of the Organization United for Respect at Walmart, or OUR Walmart, a group of current and former Walmart employees campaigning for better wages, hours and benefits. It does not define itself as a union, although its members do pay $5 monthly dues. OUR Walmart is part of the United Food and Commercial Workers International Union.

WEAK LABOR MARKET

The move to hire more temps throughout the year has not caught on with Wal-Mart's rivals such as Target, Costco and Sears, all of which said they are hiring full time and part-time employees but don't plan to hire temps outside of seasonally busy periods like the holidays.

"I don't know about others' practices or philosophies, but I can say that Costco's general hope and expectation when hiring an employee is to make it a long-term relationship," said Patrick Callans, vice president for human resources and risk management at Costco.

Only discount chain Dollar General Corp told Reuters it does hire temp workers year-round but declined to comment on the reasons.

Labor market experts said that the relatively high U.S. unemployment rate, which was 7.6 percent in May, and the large number of people not counted because they have left the labor force at least temporarily, does give companies like Wal-Mart the conditions to attract temp workers. That may be less the case if the economy continues to improve and the jobless rate falls.

Hiring temps is "one strategy" that retailers could use to mitigate the potential rise in healthcare costs due to the new healthcare care law, said Neil Trautwein, a healthcare lobbyist for the National Retail Federation. "Another strategy could be employing more part-time employees."

Wal-Mart already has begun to change the healthcare plans it provides workers. Last November, it said that newly hired part-time employees would have to work a minimum of 30 hours a week, up from 24 hours previously, before they can qualify for health coverage.
Its U.S. employees also faced an 8-36 percent increase in premiums in 2013, the company said at the time, prompting some workers to forego insurance. The majority of eligible employees at Wal-Mart sign up for the company's health insurance.

Under the reforms, large companies must next year offer healthcare to 95 percent of employees who work more than 30 hours a week or pay a penalty of $2,000 per worker for the entire workforce.

When the work hours are so variable that the employer is not certain whether an employee qualifies, they can elect to determine eligibility by measuring hours during a period of up to 12 months, a strategy Wal-Mart said it plans to use.

Temp workers may therefore have to wait a year - provided they are still employed at the company - to find out if they are eligible.

"A temporary worker may never get that far," said Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer's legal, regulatory and legislative group. "They may never get the coverage."

(Reporting by Dhanya Skariachan in New York and Jessica Wohl in Chicago; Additional reporting in New York by Caroline Humer; Editing by Jilian Mincer, Martin Howell and Tim Dobbyn)

Japanese stocks lead rout in Asia, dollar slumps on Fed uncertainty

By Chikako Mogi

TOKYO (Reuters) - Japanese stocks dived into bear market territory and Asian shares hit new 2013 lows on Thursday as the prospect of reduced stimulus from central banks rattled investors, triggering a broad sell-off from riskier assets.
The tumult in global markets also sent the dollar skidding as uncertainty about whether the Federal Reserve would scale back its massive stimulus and the slide in Japanese shares forced a clean-out of long-dollar positions.
MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> tumbled 1.9 percent to its lowest since November for its biggest daily drop in three weeks when global financial markets were rattled by comments from Fed Chairman Ben Bernanke suggesting the U.S. central bank could tone down its bond-buying stimulus plan if the economy continued to improve.

Around the same time the Bank of Japan also held off from taking fresh measures after a bold reflationary scheme on April 4, a stance repeated at its meeting last week when the bank decided against fresh steps to quell heightened volatility in domestic bonds that has threatened to undercut its ultra-easy monetary policy.

As a result, investors have been unwinding short-yen and long-Nikkei positions.
The position adjustments were exacerbated as some hedge funds sold assets for cash ahead of their half-year book closing, some traders said.
"It's a combination of Bernanke and the BOJ that triggered this turmoil, magnifying the moves of positions that needed to be sorted out," said Tetsuro Ii, chief executive of Commons Asset Management.
"The BOJ disappointed those who had high hopes for the great portfolio rebalancing by Japanese institutional investors, and are now rushing to close such bets. I think the Nikkei is close to completing such adjustments but currencies may take a bit more time given the markets' size."
The dollar index (.DXY), measured against a basket of six major currencies, was down 0.27 percent to its lowest since February 20.
The dollar slid 1.3 percent to 94.82 after earlier touching a 10-week low of 94.30, wiping all gains made on April 4 when the BOJ unveiled its bold bond-buying scheme aimed at reflating the economy, encouraging speculators to bet on a weakening yen. The dollar is now down more than 8 percent from a 4-1/2-year peak of 103.74 yen scaled last month.
Japan's Nikkei stock average (.N225) dived 6 percent, extending a selloff that began on May 23 on worries over slowing growth in China and the Fed's policy outlook. The Nikkei scaled a 5-1/2-year high last month. (.T)
"Investors are becoming risk averse on global assets," said Yasuo Sakuma, portfolio manager at Bayview Asset Management, adding that such weak sentiment may last as long as there are concerns about the Fed scaling back its stimulus measures.
LESS LIQUIDITY SUPPORT?
The Fed's aggressive quantitative easing in the form of massive bond-buying has been the main driver of risk asset rallies, so the prospect of a reduction has raises fears about funds being withdrawn from markets and potentially triggering a collapse in prices, especially where they are seen at overbought levels.
The Philippines stock market (.PSI) maybe symbolic of the current risk aversion: the market touched its lifetime high last month but has quickly trimmed its gains to just 10 percent so far this year from more than 20 percent.
"Foreign investors are rushing out the door to secure whatever gains they still have," said April Lee-Tan, research head at COL Financial in Manila.
Some analysts also noted a sharp sell-off in Singapore government bonds triggered by offshore investors, sending the 10-year yield up by nearly 90 basis points in less than one month.
Australian shares (.AXJO) earlier fell 1 percent to a fresh 5-1/2-month low while South Korean shares (.KS11) slipped 1.1 percent. Chinese markets slumped on weak May economic data, after reopening from a Monday to Wednesday holiday, while Hong Kong also resumed trading on Wednesday after a break.
Shanghai shares (.SSEC) slid as much as 3.8 percent to their lowest since December while Hong Kong shares (.HSI) shed as much as 3.3 percent to their lowest since September.
Japanese government bonds soared with the benchmark 10-year yield dropping below 0.8 percent for the first time in nearly a month, as stocks plunged with a resurgent yen.

"Market volatility is expected to stay elevated until the Fed's policy meeting next week, at which we may see with more clarity into the tapering issue," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. "If volatility in stocks subsides, currencies will return to trading on fundamentals."

The Fed's next policy meeting will be held next week, on June 18-19.
The Bank of Korea held interest rates steady on Thursday, possibly matching the analysts' consensus view that the cut in May was the last one for the year because South Korea is on a track to recovery.
U.S. crude futures were down 0.5 percent at $95.36 a barrel and Brent fell 0.4 percent to $103.11. (O/R)

Asia interest rates: http://link.reuters.com/wyd26s
Japan stocks, bonds buying: http://link.reuters.com/faq68t
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(Additional reporting by Ayai Tomisawa in Tokyo and Erik dela Cruz in Manila; Editing by Eric Merjer and Shri Navaratnam)

IBM layoffs: IBM lays off hundreds of employees and more cuts are on the way

Examiner- by CHRISTIAN SAVOY
IBM layoffs: After a less than stellar first quarter earnings report, IBM revealed that there would be more layoffs coming in the second quarter, Newsday reported on June 12. According to the report, hundreds of IBM employees have already received pink slips and the layoffs were just the start of more to come.  
IBM spokesman Doug Shelton said the layoffs are aimed at trimming its U.S. workforce and he gave the following statement in an email: “Change is constant in the technology industry and transformation is an essential feature of our business model. Consequently, some level of workforce remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans.”
Bloomberg TV explained that IBM is starting to downsize its workforce in an effort to reduce expenses. It was previously thought that most of the jobs would be overseas, however, Bloomberg says that the IBM layoffs are aimed at several levels of employees.
The main reason for the IBM layoffs is pretty obvious whether IBM executives want to admit or not: the company has lagged in any growth efforts and sales have stagnated. Unfortunately for Big Blue and its employees, this is the start of yet another round of layoffs — one of several in the last few years.

Americans’ choice: Constitution, world peace, economic abundance OR 1% dicts

Life has provided Americans many years to choose one of two futures:

• Unalienable rights, limited government under the US Constitution, enforcement of war law that proves US wars as Orwellian unlawful, and obvious economic solutions to end national debt, optimize infrastructure, and have full-employment
• 1% lies of omission and commission to divide humans between “us” and “them” that destroys explicit Constitutional rights for all “persons,” war-murders in the millions, millions of agonizing deaths from preventable poverty, torture, newly disclosed full-spectrum searching of the innocent with their tax dollars, and bankster economics that escalates our debt, and enables deteriorating infrastructure despite massive unemployment.

Full documentation of the above facts are here and here.
The 1%’s form of government rejects limits of the Constitution and law, therefore by definition is “un-American.” We have other names to describe a form of government unlimited by rule of law: fascism is likely the most accurate, but certainly one of dictatorship.
The etymology of dictatorship embraces dictate, or government by dicts: what is said or dictated at any given time unlimited by law.
The US government we’re promised under American ideals and our Constitution is a republic: government explicitly limited by its Constitution and rule of law.
The NSA’s 4th Amendment violations is just the latest “emperor has no clothes” obvious un-American acts by our 1% “leaders” in government and economics, and “covered” in their criminality by corporate media.
The 1%’s “leadership” annually kills millions, harms billions, and loots trillions of our dollars.
A bright new future is just choices away.
Be proud of your choices.

RBS chief executive Stephen Hester quits with £1.6m-plus payoff

U

Hester, parachuted into the bailed bank during the 2008 crisis, will stand down at end of year as RBS prepares for privatisation

Stephen Hester will leave RBS with £1.6m in pay and benefits and up to £4m in long-term incentive plan awards over the following three years. Photograph: Getty

The chief executive of Royal Bank of Scotland, Stephen Hester, was forced out of his job on Wednesday with a payoff at least £1.6m – and possibly up to £5.6m – as the bailed-out bank started preparations for privatisation next year.
Hester, parachuted in to take charge of the near-bankrupt RBS during the 2008 banking crisis, admitted it was the "board's decision" that he should go. Last month he said he was ready to see through his "mission" to return RBS to the private sector after its £45bn taxpayer bailout.
George Osborne, the chancellor, backed the RBS board's decision to introduce a new face at the helm of the 81% taxpayer-owned bank. But Treasury sources dampened expectations that the government would fire the starting gun on selling shares in the bank in the very near future.
The surprise announcement of Hester's departure came after the stock market had closed. It then emerged that Osborne met the bank's chairman, Sir Philip Hampton, last week to discuss the succession planning being undertaken by the bank, which is aiming for privatisation by the end of 2014. Osborne has never commented on the timetable for a share selloff.

 RBS issued a video statement from chief executive Stephen Hester
Describing the role he has held since October 2008 as "bruising and difficult" Hester said: "It is a sensible thing for the board to look forward to privatisation and I can completely understand that a fresh face with an ability to commit many years into the future may be a good thing for privatisation."
The 52 year-old, who has described running RBS as a "soap opera", was recruited during the depths of the 2008 banking crisis. He replaced Fred Goodwin as the bank attempted to shore up its finances after the disastrous takeover of ABN Amro left the bank on the brink of collapse. He has cut 39,000 RBS jobs – another 2,000 job losses are expected to be announced this morning – and reduced the size of the bank's balance sheet by £1tn, an amount equal to about two-thirds of the UK's annual GDP. The bank also reported a record-breaking annual loss of £24bn.
Hester will receive £1.6m in pay and benefits when he departs and up to £4m in awards of long-term incentive plans over the following three years. The package may provoke a furore, as payments to Hester have done in the past. He has been forced to waive his annual bonuses every year except 2010 since he has been running the bank.
Dominic Hook, national officer of Unite, said: "With over 30,000 job losses over the last five years and major stress for RBS staff there is likely to be a lot of anger over Stephen Hester's taxpayer-funded multimillion pound exit package."
The departing chief executive told Channel 4 News that the arguments over bankers' pay would go on for years. "Of course wrangles about bankers' pay are not going to stop with me … other people can carry on that baton," he said.
The bank said he was contractually entitled to the £1.6m, that he would not get a bonus for 2013 – the year RBS was fined £390m for rigging Libor – and still had 2m shares locked up in long-term incentive plans. The number of shares that can be released is capped at 65% – £4m at the current share price.
Hester and Hampton have been saying since February that the bank could be privatised next year, when a five-year restructuring programme will be complete.
"While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey. I will therefore step down at the end of this year to allow a new CEO to lead the group in this next stage," Hester said.
"I'm co-operating amicably. It is a board decision, not mine, but I am completely comfortable with the rationale behind it," he said, adding that he had "some human regrets" about not seeing through the privatisation.
"I have been pretty clear that I suppose I feel torn about this. I feel a sense of loyalty to the company and I want to do what is right for the company."
In 2012 he admitted he considered resigning in the row over his bonus payment. But in recent months he had been indicating that he wanted to see the bank through to privatisation and sources believed he would stay on for another two years to see through the process.Hampton said the board wanted Hester to make a commitment to stay for another four years. The chairman, who was part of the clean-up team put into RBS after the £45bn taxpayer bailout, said he thought the selloff of the taxpayer stake could be ready towards the end of 2014.
"If you work back from that date a new chief executive should in place for at least nine months, from early 2014," said Hampton. Hester's achievements had been "considerable", he said, and Osborne said Hester had made "an important contribution to Britain's recovery from the financial crisis".
Osborne is preparing to use his Mansion House speech next week to say more about reform of the banking system and respond to the report by the parliamentary commission on banking, which may not be published until next week.
Treasury sources were playing down expectations that the chancellor would spell out a timetable for the privatisation of RBS next week although a selloff of part of Lloyds Banking Group, in which the taxpayer owns a 39% stake, could come first.
Osborne said: "Having brought RBS back from the brink, now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy, helping businesses and job creation here, and which can return to the private sector in a way that ensures value for the taxpayer."

'Corporate Pirates': How 'Fix the Debt' CEOs Plan to Make Billions in Offshore Havens

(Image via Institute for Policy Studies)Members of Fix the Debt, the coalition of CEOs who promote fear-mongering over the national debt as a guise for cutting social support programs, are “brazenly” pursuing new legislation to widen tax haven loopholes which, according to a new report, will earn them billions.
Published Wednesday, the report—Corporate Pirates of the Caribbean (pdf)—by the Institute for Policy Studies reveals that group member corporations could gain as much as $173 billion in “windfalls” should Congress adopt the group’s proposal for a “territorial” tax system.
This reform—a centerpiece of “Fix the Debt” co-founders Erskine Bowles and Alan Simpson’s recent deficit reduction proposal—would increase incentives to exploit tax havens by permanently exempting US corporations’ foreign earnings from US federal income taxes.
“These Fix the Debt corporations are like modern day pirates,” says report co-author Scott Klinger. “Their crews are not sword-wielding ruffians, but high-priced lobbyists and accountants who fight for, win, and then exploit loopholes in the tax code that allow them to avoid paying their fair share of the tax burden.”
Under the current tax code, the report explains, US-headquartered corporations are required to pay a tax rate of 35 percent on their profits, regardless of where in the world those profits are earned. However, those corporations are given “full credit” for any taxes paid to foreign governments and “any profits deemed permanently reinvested offshore” are exempt from US taxes until and unless they are returned to the US.

Thus, if a corporation is able to shift their overseas profits to a country where corporate profits are lightly taxed and the taxes paid there are “permanently exempted”—as would be the case under the territorial tax system—the change would be “enormously profitable” for those companies raking in offshore profits.
Some of the major findings of the report include:

• The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
• Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as “repatriation”). If Congress adopts Fix the Debt’s proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
• The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
• The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
• Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.

“If these corporate CEOs were serious about strengthening the American economy, they wouldn’t be seeking more tax breaks that will only add to the national deficit,” adds report co-author Sarah Anderson.
IPS released the report one day ahead of House Ways and Means Committee hearing scheduled Thursday to examine multinational corporations’ use of low- or no-tax countries to shift profits offshore to avoid paying U.S. taxes.

_____________________

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License
This article originally appeared on: Common Dreams

Stock Market Under Severe Panic Attacks: Nikkei Plunges 6% to Re-Enter Bear Market, China’s Tanking Too, And S&P Futures Are Below 1,600!! Bonds, Stocks, Dollar Pounded In First Dow Jones Three-Day Losing Streak Since 2012!!

Broad stock-market decline is gathering momentum

The continuing decline in the broad stock market, as represented by the Standard & Poor’s 500 Index, is gathering momentum. The picture appears to have completely changed from what had existed between last November and the top in mid-May.

Now, rallies are sold and have no staying power. Even so, everyone is well aware that there is supposedly a large community of “under-invested” accounts — both professional and retail. If that is true (I have my doubts), then they are getting the pullback they supposedly wanted, in order to buy stocks. So far, they haven’t been aggressive enough, even if they are active, to halt the decline.

http://www.marketwatch.com/story/bulls-are-no-longer-dominant-2013-06-12
Nikkei Plunges 6% to Re-Enter Bear Market
Japan’s benchmark Nikkei 225 trimmed its losses after plunging as much as 6 percent on Thursday in a vicious sell-off after the yen rallied over 1 percent against the greenback.
Uncertainty over central banks rolling back stimulus saw the dollar/yen drop below the key 95-handle, hitting a new 10-week low. The Nikkei index is now down 21 percent from last month’s five-and-a-half-year high of 15,942, placing the benchmark index firmly back in bear market territory.
Elsewhere in Asia, Chinese markets experienced a bout of heavy selling with theShanghai Composite down over 3 percent after being closed since last week. Seoul shares fell over 1 percent fell to a new seven-week low and Australia’s S&P ASX 200 hit a fresh five-and-a-half-month low.
http://www.cnbc.com/id/100811628

http://www.zerohedge.com/news/2013-06-12/nikkei-futures-plunge
http://e.nikkei.com/e/fr/marketlive.aspx
http://www.businessinsider.com/japan-june-13-2013-6
Oh, And Now China’s Tanking Too…
As such, the Shanghai Composite is off over 3%.
The Shanghai Composite, via Bloomberg.com

Read more: http://www.businessinsider.com/china-june-13-2013-6#ixzz2W42mdLvc
In One Chart, You’ll See Why This Japan Situation Is Putting Speculators In A Whole World Of Hurt
As this chart from Nomura shows, shorting the yen has been a wildly popular trade among speculators, as net short positions (red line) against the yen are near their most extreme levels in years.



Read more: http://www.businessinsider.com/yen-rise-slamming-speculators-2013-6#ixzz2W424IqUU

S&P Futures are below 1,600




http://www.zerohedge.com/news/2013-06-12/monkeyhammered-nikkei-plummets-6-risk-exodus
World Bank Cuts Global Outlook as China Slows, Europe Contracts 
The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe’s contraction.
http://www.moneynews.com/Economy/World-Bank-Global-Outlook/2013/06/12/id/509647
Bonds, Stocks, Dollar Pounded In First Dow Jones Three-Day Losing Streak Since 2012
It was bound to happen: after the Tuesday “winning” streak was lost 8 days ago on the 21st unlucky week, it was the turn of the “BTFD mentality” that had prevented a 3-day losing streak in the Dow Jones since December. And while today’s selling was still somewhat contained, it did not prevent the DJIA from closing below the psychological 15,000, sending GLPer Zazz directly to the hospital suffering from severe panic attacks.
http://www.zerohedge.com/news/2013-06-12/dow-jones-slides-closes-under-15000-first-three-day-losing-streak-2012

Another Bumpy Ride in Store for Markets

Thursday could be bumpy, as rising interest rates continue to shake up markets and traders watch foreign exchange markets with a wary eye.
“It’s a trade of reallocation. Money moving out of asset classes into other asset classes causes that kind of volatility and lack of liquidity,” said Paul Hickey of Bespoke. He said he expects to see a stock correction in the single digits at most. “This kind of activity is the kind of activity you see when the market is going down.”
http://www.cnbc.com/id/100811203

This Is What Crisis Feels Like…” Then it all changed. Literally within a day.”
On December 1, 2001, Argentina’s economy was in trouble. Unemployment was high, debt was high, and recession had taken hold. But life was somewhat ‘normal’. Basic services still functioned. And no one had to really worry about… food. Or water. Then it all changed. Literally within a day…
http://www.zerohedge.com/news/2013-06-12/guest-post-what-crisis-feels

Bank Of England’s Haldane: “We’ve Intentionally Blown The Biggest Bond Bubble In History”…(Next Phase, BOOM!!)
http://www.zerohedge.com/news/2013-06-12/bank-englands-haldane-weve-intentionally-blown-biggest-bond-bubble-history

BOJ Shirai says expects JGB yields to eventually stabilize

By Leika Kihara

Asahikawa, JAPAN (Reuters) - The Bank of Japan expects bond yields to stabilize over time with its flexible market operations and massive asset purchases, a central bank policymaker said, signalling that it has no immediate plans to take fresh steps to calm volatile markets.

Sayuri Shirai, a former IMF economist who is among the BOJ's nine board members, stuck to the central bank's assessment that the economy will resume a moderate recovery around mid-year but warned that meeting its 2 percent inflation goal will take time.

Expectations of future price rises and an economic recovery will work to push up interest rates, although the BOJ's huge bond buying and its strong commitment to ultra-easy policy will offset some of the upward pressure, Shirai said on Thursday.

"The BOJ will continue to closely monitor market developments. With flexible market operations, taking into account discussions with market participants, the BOJ expects both short and long-term interest rates to move stably as a whole," she told business leaders in Asahikawa, northern Japan.

The BOJ kept monetary policy steady on Tuesday and held off on new measures to quell bond market turbulence, judging that its massive monetary stimulus in April was sufficient to revive the stagnant economy and pull it out of chronic deflation.
The decision contributed to a sharp sell-off in global equities, including Japanese shares, as the prospect of less stimulus from central banks - particularly from the U.S. Federal Reserve - depressed sentiment.
The dollar fell to a 10-week low against the yen on Thursday amid uncertainty about whether the Fed will pare back its stimulus program, with a plunge in Japanese shares accelerating the fall.
Recent losses in Japan's Nikkei share average have sparked dollar selling as foreign investors unwound hedges they took out to protect themselves from a weakening yen.
The Nikkei dived 6 percent on Thursday, a potentially unwelcome development for Prime Minister Shinzo Abe's bold monetary and fiscal stimulus that relies heavily on boosting sentiment to revive the world's third-biggest economy.
The benchmark 10-year government bond yield slipped below 0.8 percent during the session for the first time in nearly a month, as share prices withered on a resurgent yen, which hurts the export-reliant economy.

Shirai made no direct mention about Thursday's market moves in her speech but said that despite recent corrections, the trend of a weakening yen and rising share prices have had a positive effect on Japan's economy.

"We expect Japan's economy to resume a moderate recovery around the middle of 2013," she said, adding that risks to the economic outlook was balanced as a whole.
On consumer prices, she said the risk balance was slightly tilted toward the downside, warning that it will take considerable time for Japan to achieve 2 percent inflation.

The BOJ launched an intense burst of monetary stimulus in April, pledging to double its bond holdings in two years to meet its inflation goal in roughly two years.

(Reporting by Leika Kihara; Editing by Shinichi Saoshiro and Shri Navaratnam)

Clearwire urges shareholders to accept Dish offer

By Sinead Carew

NEW YORK (Reuters) - Clearwire Corp's (CLWR.O) board urged shareholders on Wednesday to accept a tender offer from Dish Network Corp (DISH.O) over an earlier deal with majority owner Sprint Nextel Corp (S.N) to buy out the minority shareholders of the wireless service provider.
The decision was a boost for Dish Chairman Charlie Ergen who is also in a takeover battle with SoftBank Corp (9984.T) to take full control of Sprint.
Both Sprint and satellite TV service provider Dish want control of Clearwire's vast trove of wireless airwave licenses.
Dish is looking to expand into the wireless market because its traditional pay television business has matured, while No. 3 U.S. mobile provider Sprint wants to beef up its wireless network to better compete with bigger rivals Verizon Wireless (VZ.N)(VOD.L) and AT&T Inc (T.N).
Clearwire asked shareholders to accept Dish's tender offer of $4.40 per share based on the unanimous recommendation of a special committee set up by the board to evaluate the offer. It urged investors to vote against Sprint's $3.40 per share offer to buy the more than 49 percent of the company it does not already own.
Sprint said it was evaluating Clearwire's statement and would "review any corresponding filings before determining its next steps." It said it intends to enforce its governance rights as Clearwire's majority shareholder. It previously said its $3.40 per share bid was final.
Clearwire said it would postpone a June 13 shareholder vote on the Sprint bid until June 24. Dish said on Wednesday it was extending its tender offer for Clearwire shares to July 2 from a previous deadline of June 28.
Dish also said shareholders with 245,411 shares had tendered shares as of Tuesday, June 11.
Several Clearwire shareholders had said they were not happy with the Sprint offer even before Dish's counter bid. Clearwire shares have risen more than 25 percent since Dish announced its offer. The stock closed at $3.48 on May 29 before Ergen made the offer and was about 5 percent higher at $4.37 by the end of trading on Wednesday.
Strategic investors with 13 percent of Clearwire's public shares have already committed to vote for the Sprint offer. But it was not clear if those commitments from Intel Corp (INTC.O) and cable companies Comcast Corp (CMCSA.O), and privately held Brighthouse Networks would be maintained after the Clearwire recommendation.
Intel declined to comment on Wednesday's developments. Comcast and Brighthouse were not immediately available for comment.
SoftBank, which approved the Sprint bid for Clearwire, had previously said it would be happy with majority ownership of Clearwire even if shareholders voted down the deal because Sprint would still control of the company.
Earlier this week, SoftBank raised its bid for Sprint to $21.6 billion for 78 percent of the company in response to Dish's offer of $25.5 billion.

(Reporting by Sinead Carew, Nicola Leske, Liana Baker, Edwin Chan and Soyoung Kim Editing by Andre Grenon)

John Thain: 2008-Style Crisis Can Absolutely Still Happen

John Thain, former chairman and CEO of Merrill Lynch and COO at Goldman Sachs, told Bloomberg Television’s Erik Schatzker and Sara Eisen on “Market Makers” today that a crisis like the one in 2008 could “absolutely” happen again.” Thain said, “If anything, too big to fail is a bigger problem because the biggest financial institutions are more concentrated today than they were. Dodd Frank did not solve too big to fail.”
Thain, who is currently CEO of CIT Group, also commented on selling the company to a larger bank, saying that would be “obvious.” He said, “The big banks are awash in deposits and they can’t generate attractive assets. We, in all our businesses, are able to generate very high-yielding, attractive assets, so the logic of that is obvious.”

 

**BLOOMBERG TELEVISION**
Thain on how comfortable we should be with what Wall Street has become since September 2008:

“If you are asking about too big to fail and can what happened in 2008 could happen again, the answer is yes, it absolutely can happen again. If anything, too big to fail is a bigger problem because the biggest financial institutions are more concentrated today than they were. Dodd Frank did not solve too big to fail.”

On why there is so much resistance from the leaders on Wall Street re: too big to fail and why anyone would put the financial system and economy at risk again by being so large and complex:

“There are different things. They push back against parts of Dodd Frank because a lot of parts of Dodd Frank have nothing to do with the financial crisis or too big to fail. Proprietary trading was not the problem in the financial crisis. There are a lot of things in Dodd Frank that don’t help the too big to fail problem. The higher capital levels do help the too big to fail problem and make the failure much less likely. Higher capital levels are fine. But the regulatory burden and all of the rulemaking that goes inside of Dodd Frank, a lot of that is not helping.”

On whether he has any desire to go back to Wall Street to run one of the largest institutions:

“I’ve been at bigger companies and I’ve been at smaller companies. The New York Stock Exchange was a relatively smaller company especially when I started. I enjoy the challenge of fixing things, whether it was Merrill Lynch, which was certainly broken when I got there, or the NYSE or CIT, it has been fun to take companies that have good core businesses that have been damaged by the prior management and fix them.”

On how Merrill Lynch today compares to the firm that it was:

“I regret having to sell Merrill Lynch because it was a great company with a great history. It had a very good culture, but in the environment we were in, it was not likely to survive. It was necessary to protect shareholders and employees.”

On whether firms like Merrill Lynch survive and thrive inside the global universal banking model differently than when they were independent:

“Merrill was already pretty broad in its businesses. It would have been better if it could stay independent. Right now it’s contributing a significant portion of Bank of America’s overall earnings, given the problems in BofA’s other business, but I think it would have been better for the company if it remained independent.”

On how Goldman Sachs is doing coming out of the crisis and trying to restore its reputation:

“I think they are doing very well. One of the things is they have gotten through the crisis in relatively good financial shape. If anything, there’s less competition for them now. I actually think they are doing fine.”

On whether he feels any sense of loyalty to the firms he used to work for:

“I worked at Goldman Sachs for 25 years. I basically grew up there. You can’t help but feel loyalty there. The New York Stock Exchange was a great place to work. I enjoyed that job a lot. I got to be on TV more. That was a big turnaround. When I left, it was in much better shape and a global player. Merrill – I wasn’t there that long, but it was a great company. I do feel an affinity to all of those places.”

On how far along CIT is in its transformation:

“When I started at CIT, there was a tremendous amount to do. It’s basically completed — the repairing of the damage coming out of the bankruptcy. The last piece was the lifting of the written agreement by the Federal Reserve. We got that a week or so ago…it is also a symbol of the fact that we are now a bank and bank holding company that’s in good standing with all of our regulators and we are now really focused on growing our business going forward.”

On whether CIT is still in restructuring mode and whether the company will have to announce more layoffs:

“We have been bringing our expense structure down. One of the things I had to do when I first started was to shrink the company. We had to get rid of the bad assets around the balance sheet and we refinanced $31 billion of debt. We are rationalizing some of our businesses. Our expenses are a little bit too high, we are working on bringing those down, but we are also working on growing assets.”

On how big he’d like the CIT bank to be and how much of its funding should be deposit based:

“Funding was absolutely one of the first challenges. Just to give an idea, on the day I started, our senior debt paid LIBOR plus 10 with a three percent floor. So you have a commercial finance company in this rate environment trying to make money with 13% debt. That’s basically impossible. We have refinanced or repaid all $31 billion of debt that came out of the bankruptcy. The other thing we have been doing is putting almost all of our new U.S. assets in our bank. We have a Utah bank that is FDIC regulated. It has been growing very nicely. We put all of those U.S. assets in there and we now have almost a third of our overall funding coming of that bank.”

On whether he’s been approached for a takeover:

“We would not talk about that on the air or anywhere else. I get asked this question a lot. If you look at the environment, the big banks are awash in deposits and cannot generate attractive assets. We and all of our businesses are able to generate high-yielding, attractive assets. The logic of that is obvious, but we are doing well I ourselves.”

On whether he would have to do right by shareholders if presented with an opportunity such as what happened with Merrill Lynch:

“I think I have a good track record of doing right by shareholders. I know who I work for.”

On the prospects for the universal banking model given the current regulatory environment:

“It’s a very normal thing, whatever you have a crisis, that there’s an overreaction to the crisis and an attempt to say, we’ll we’re going to make sure that this never happens again. If you look over many bubbles, this is the same thing that happened after the last bubble. The biggest issue right now for big global banks is the combination of higher capital standards, which is probably a good thing, but then excessive amounts of regulation in terms of their business. You don’t really need to have both. If you have significantly higher capital standards, than a lot of the regulatory burden that comes out of Dodd Frank is an overreaction.”

On the market conditions and whether we’re in store for another 1994:

“It’s hard to know…I think there’s no question that rates will go up and they will go up over time. It’s just a question of when and how violently. I’m less worried than sometimes the market seems to be about the Fed slowing down their purchases because I think they can slow down their purchases and still maintain their balance sheet and not adversely disrupt the market.”

On whether he’s worried about the impact it will have across the banking sector:

“No actually, such low rates actually makes it difficult for the banking sector because it’s hard to generate assets with yield. If interest rates were generally higher, I think that would help the financial sector. It would help us. We are asset sensitive. Our assets would re-price faster than our liabilities, so a higher rate environment would actually help our business.”

CNBC: Thomson Reuters Gives Elite Traders Early Advantage

A closely watched consumer confidence number that routinely moves markets upon release is accessed by an elite group of traders, for a fee, a full two seconds before its official release, according to a document obtained by CNBC.
A contract signed by Thomson Reuters, the news agency and data provider, and the University of Michigan, which produces the widely cited economic statistic, stipulates that the data will be posted on the web for the general public at 10 a.m. on the days it is released.
Five minutes before that, at 9:55 a.m., the data is distributed on a conference call for Thomson Reuters’ paying clients, who are given certain headline numbers.
http://www.cnbc.com/id/100809395

Closure of Greek state-run broadcaster ERT triggers political crisis as unions call 24-hour general strike

Surprise closure of ERT one of the biggest crises to afflict three-party coalition government

Greece's two largest unions have called a 24-hour general strike to protest at the government's move to close state-run TV and radio as workers defy attempt to shut them down.

Broadcast signals went switched off just hours after the government closed the Hellenic Broadcasting Corporation, known as ERT, and fired its 2,500 workers, to cut "incredible waste." But ERT journalists defied the order and continued a live Internet broadcast as thousands of protesters gathered outside the company's headquarters north of Athens.

The European Commission has denied responsibility and did not seek the closure of ERT, according to European Economic and Monetary Affairs Commissioner Olli Rehn.

"The Commission has not sought the closure of ERT, but nor does the Commission question the Greek government's mandate to manage the public sector," he said.

"The decision of the Greek authorities should be seen in the context of the major and necessary efforts that the authorities are taking to modernize the Greek economy. Those include improving its efficiency and effectiveness of the public sector."

The civil servants' union ADEDY said it had called a strike and a series of protests to be held outside the ERT headquarters. The larger GSEE union was also meeting to ratify the decision and join the nationwide strike.

Journalist unions also launched rolling 24-hour strikes, halting private television news programs, while the government's centre-left coalition partners demanded that ERT's closure be reversed.

A government spokesman said a new public broadcaster would be launched before the end of the summer. "When you restructure something from the foundations, you have to close it, temporarily," he said.

But conservative Prime Minister Antonis Samaras faces stern opposition from his own coalition partners - the Socialist Pasok and Democratic Left party - for the decision. The executive order to close ERT must be ratified by parliament within three months but cannot be approved without backing from the minority coalition lawmakers. The surprise closure of ERT is now one of the biggest crises to afflict the three-party coalition government since it was formed nearly a year ago.

Despite tensions over a number of issues, notably related to the austerity measures demanded by Greece's international creditors, the coalition government has surprised many by surviving. It has also been credited with stabilising the bailed out Greek economy and easing the threat of an exit from the euro.

Left-wing opposition leader Alexis Tsipras slammed the closure as "illegal" during an interview on ERT's online broadcast. "Many times the word 'coup' is used as an exaggeration," he said. "In this case, it is not an exaggeration."

ERT started radio programming in the 1930s and television in the mid-1960s. Alhough it was widely regarded as reflecting government positions - it had a channel run by the military during the 1967-74 dictatorship - the broadcaster was also valued for showcasing regional and cultural content and for covering major sporting events such as the football World Cup and the Olympics.

The decision to close it was announced during an inspection in Athens by officials from Greece's bailout creditors. The so-called "troika" of the European Union, European Central Bank and International Monetary Fund has been pressing the government to start a long-delayed program to fire civil servants.

The European Commission said it had not sought the closure of ERT but "nor does the Commission question the Greek government's mandate to manage the public sector."

 

Recovery: Record 23 Million American Households Receive Food Stamps

(Pictured: Depression era food line)

Just when you thought America was coming out of recession…

The number of American households on food stamps reached a new record high in March, according to new data released by the Agriculture Department.
The March numbers the USDA released Friday reveal 23,116,441 households enrolled in the Supplemental Nutrition Assistance Program (SNAP), or food stamps, each receiving an average monthly benefit of $274.30.
The number of individuals on SNAP did not break any records but remained high, with 47,727,052 people enrolled in SNAP, receiving an average monthly benefit of $132.86.
The number of individuals on SNAP hit a record high in December, with 47,792,056 people enrolled.
SNAP has been in the news in recent years and months as the program’s rolls have ballooned and the cost has quadrupled since 2001 and doubled since President Obama took office.

Nearly a quarter of the households in this country depend on the government to put food on the table.
One hundred million of our fellow countrymen  are enrolled in at least one welfare program aimed at helping them make ends meet.
Recovery?
This is a depression and it won’t be getting better any time soon.

Regulation is what keeps bankers out of prison – Godfrey Bloom

Central bankers and retail bankers hide behind regulation. They are not dominated or guided by regulation! It’s what keeps these people out of prison when they cheat the general public, and ytou are part of the conspiracy.

Economics vs. "Need"

One of the most common arguments for allowing more immigration is that there is a “need” for foreign workers to do “jobs that Americans won’t do,” especially in agriculture.
One of my most vivid memories of the late Armen Alchian, an internationally renowned economist at UCLA, involved a lunch at which one of the younger members of the economics department got up to go get some more coffee. Being a considerate sort, the young man asked, “Does anyone else need more coffee?”
“Need?” Alchian said loudly, in a cutting tone that clearly conveyed his dismay and disgust at hearing an economist using such a word.
A recent editorial on immigration in the Wall Street Journal brought back the memory of Alchian’s response, when I read the editorial’s statement about “the needs of an industry in which labor shortages can run as high as 20 percent” — namely agriculture.
Although “need” is a word often used in politics and in the media, from an economic standpoint there is no such thing as an objective and quantifiable “need.”

You might think that we all obviously need food to live. But however urgent it may be to have some food, nevertheless beyond some point food becomes not only unnecessary but even counterproductive and dangerous. Widespread obesity among Americans shows that many have already gone too far with food.
This is not just a matter of semantics, but of economics. In the real world, employers compete for workers, just as they compete for customers for their output. And workers go where there is more demand for them, as expressed by what employers offer to pay.
Farmers may wish for more farm workers, just as any of us may wish for anything we would like to have. But that is wholly different from thinking that some third party should define what we desire as a “need,” much less expect government policy to meet that “need.”
In a market economy, when farmers are seeking more farm workers, the most obvious way to get them is to raise the wage rate until they attract enough people away from alternative occupations — or from unemployment.
With the higher labor costs that this would entail, the number of workers that farmers “need” would undoubtedly be less than what it would have been if there were more workers available at lower wage rates, such as immigrants from Mexico.
It is no doubt more convenient and profitable to the farmers to import workers at lower pay than to pay American workers more. But bringing in more immigrants is not without costs to other Americans, including both financial costs in a welfare state and social costs, of which increased crime rates are just one.
Some advocates of increased immigration have raised the specter of higher food prices without foreign farm workers. But the price that farmers receive for their produce is usually a fraction of what the consumers pay at the supermarket. And what the farmers pay the farm workers is a fraction of what the farmer gets for the produce.
In other words, even if labor costs doubled, the rise in prices at the supermarket might be barely noticeable.
What are called “jobs that Americans will not do” are in fact jobs at which not enough Americans will work at the current wage rate that some employers are offering. This is not an uncommon situation. That is why labor “shortages” lead to higher wage rates. A “shortage” is no more quantifiable than a “need,” when you ignore prices, which are crucial in a market economy. To discuss “need” and “shortage” while ignoring prices — in this case, wages — is especially remarkable in a usually market-savvy publication like the Wall Street Journal.
Often shortages have been predicted in various occupations — and yet never materialized. Why? Because the pay in those occupations rose, causing more people to go into those occupations and causing employers to reduce how many people they “need” at the higher pay rates.
Virtually every kind of “work that Americans will not do” is in fact work that Americans have done for generations. In many cases, most of the people doing that work today are Americans. And there are certainly many unemployed Americans available today, without bringing in more foreign workers to meet farmers’ “needs.”
Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com. To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2013 CREATORS.COM
This article originally appeared on: The New American

Jeffrey Hirsch to Moneynews: Economy Poised for 'Deceleration'

The U.S. economy is poised for a period of deceleration, according to Jeffrey Hirsch, the editor-in-chief of Stock & Commodity Trader’s Almanacs.

"I don't think there's a lot of acceleration of growth," Hirsch told Newsmax TV in an exclusive interview.

"I'm suspecting that things will sort of calm down and we'll be looking for the next sort of catalyst to really ramp up the economy other than Fed Kool-Aid-ing quantitative easing."

Watch our exclusive video. Story continues below.




The Federal Reserve purchases $45 billion of Treasurys and $40 billion worth of mortgage securities every month to put downward pressure on borrowing costs, according to Bloomberg News.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

The policy-setting Federal Open Market Committee said May 1 that it will continue buying bonds “until the outlook for the labor market has improved substantially.”

The chief market strategist of the Magnet A-E Fund doesn’t see a continuation of stock indexes reaching record highs on an almost daily basis.

"We're poised for a correction, some sort of a fall," Hirsch said. "Perhaps a bit of sideways action through the seasonally weak period, May through October. We may have seen at least an interim high point here in May."

Hirsch was asked about the impact on markets of the prospect of Fed tapering of its quantitative easing program.

"It will be a negative effect," he said. "It will reel the market in. I don't expect any major tapering or telegraphing of it until at least Q4 of 2013, and perhaps not until [Fed Chairman Ben S.] Bernanke leaves office in January 2014," he said.

"There's an outside chance that Mr. Bernanke will take another term. He's been there a long time. [I am] pretty sure he has a more lucrative future in the private sector. I suspect Jan. 31 will be his last day in office and leading up to that and around that time, when a new chairman comes in and creates the Fed in their image, that will be when things will change and when the market will start to falter."

Also discussed was the outlook for precious metals.

"Gold and silver have been in a sort of negative seasonal pattern," he said. "We're sort of looking at that negative season ending. We're looking to sort of trim our shorts in gold to get into the longs over the next month or so."

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.
© 2013 Moneynews. All rights reserved.

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AIG Financial Products Probed By Ben Lawsky For Alleged Risk Failures

AIG Financial Products, the derivatives unit that nearly toppled the insurance company in 2008, is under fresh scrutiny after regulators alleged it may have failed to properly measure and manage risk, misled supervisors and investors, and lacked appropriate checks to limit outsized risk-taking.
The concerns, recently raised with AIG by the New York Department of Financial Services, the state’s top financial regulator, have led the department to escalate its inquiry into the company, according to people familiar with the matter.
It may take years for AIG to fully address the state's concerns, these people said the regulator noted. That delay in rectifying the company’s risk management practices may expose holders of AIG securities to possible harm.
AIG recently repaid the government for its $182 billion rescue of what was once the world’s largest insurer, delivering a profit. Bad bets in the company’s Financial Products unit on a type of derivative known as credit default swaps nearly sank the insurer. In recent years, the financial group has slimmed down, focusing less on business lines and generally reporting profitable quarters.
Last week, U.S. regulators preliminarily designated AIG as “systemic”, one of a handful of non-banks whose potential failure could threaten the nation’s financial system.
But the probe by the New York DFS, led by Benjamin Lawsky, could delay the company’s plans to fully put its toxic past behind it. Lawsky last year threatened to revoke the state banking license -- the equivalent of a corporate death sentence -- of Standard Chartered, a large U.K. bank, over alleged money-laundering violations.
Lawsky, who some bank attorneys privately said is the New York regulator they most fear, has set his sights on AIG, an insurer whose giant derivatives portfolio could once again damage the company and its stakeholders if not properly managed. As a result, AIG may be subject to heightened supervision, a prospect that may curb investing and limit earnings if DFS decides to rein in certain business lines or activities.

After recording losses of $101.8 billion and $8.4 billion in 2008 and 2009, respectively, AIG has since posted $34.1 billion in combined profit over the last three years. During this year’s first quarter, the company recorded $2.2 billion in net income.
AIG declined to comment. A representative for Lawsky declined to comment.
In its latest quarterly filing with securities regulators, the company said its Financial Products "portfolio continues to be wound down and is managed consistent with our risk management objectives. Although the portfolio may experience periodic fair value volatility, it consists predominantly of transactions that we believe are of low complexity, low risk or currently not economically appropriate to unwind based on a cost versus benefit analysis.”
AIG, already partly supervised by the Federal Reserve, is due to come under increased oversight by the Fed once federal regulators finalize the company’s systemic tag. Designation as a “systemically important financial institution,” or SIFI, carries with it stricter rules governing activities, capital, liquidity, dividends and executive pay schemes.
But until that process is complete and the Fed finalizes the rules that govern the systemic label, Lawsky’s oversight of the company may represent the government’s last line of defense against the kind of risk-taking that nearly rendered AIG insolvent during the financial crisis in 2008.
Already, Lawsky’s office has raised questions over how the insurer manages the risk of possible losses from its securities holdings. DFS also has challenged company models that attempt to estimate possible trading losses.
Regulators around the globe have been questioning banks’ use of “value at risk” models, known as VaR, since they proved inept during the financial crisis.
In a May 3 presentation to investors, the company said that the aggregate VaR on a portion of its derivatives holdings from the financial products division was “effectively zero.”
The regulatory concern from Lawsky’s office comes as AIG works to shed risk in its Financial Products division.
At its peak in 2008, the unit had $2.7 trillion in exposure to counterparties through derivatives and other obligations. As of March 31, that had been whittled down to $122 billion, according to the company.
The number of treading positions had fallen to 1,600, a reduction of 95 percent from the 35,200 positions the unit had in 2008.
“Over time, significant progress has been made to stabilize the company by reducing its risk profile and implementing an orderly restructuring plan,” the Federal Reserve Bank of New York, which oversaw a portion of the government bailout, says on its website. “Many of the risk areas that brought AIG to the brink of failure have been addressed, or are in process of being addressed, including the orderly wind-down of AIG Financial Products.”
The company declared in 2011 that it had completed its active wind-down of the Financial Products unit’s legacy positions.

Downgraded: Greece Ousted from Index of ‘Developed’ Countries

Source: WSJ
The latest setback for Greece: MSCI Inc. MSCI -0.92% booted the euro-zone member from its index of developed countries.
The decision, announced late Tuesday, is the first time the index provider demoted a country from its “developed” to its “emerging-market” category since the launch of its flagship emerging-markets index in 1987.
It affirms what investors have believed for years. Multiple bailouts by the European Union and the International Monetary Fund, a sharp contraction in gross domestic product and a still-large debt burden mean Greece now has more in common with Hungary than France.
MSCI, which estimates that almost $7 trillion of investments track its indexes, said Greece failed to qualify as a developed market based on several criteria, including the ease with which money managers can trade shares on the country’s stock market. About $1.4 trillion tracks the MSCI Emerging Markets Index.
While there is some debate as to how certain countries should be labeled, MSCI emphasizes size and accessibility of stock markets. Developed markets tend to have large stock markets and rules that encourage foreign investment, while the opposite is often true for emerging markets.

“Greece is not qualifying in terms of the size of the market,” Remy Briand, managing director and global head of MSCI index research, said in a conference call.
When it officially joins the MSCI Emerging Markets Index in November, Greece will have a 0.3% weighting, Mr. Briand said.
Greece’s stock market staged a rally last year and at the start of this year, but shares have sold off in recent weeks as investors have moved away from riskier assets globally. The FTSE Greece index has slipped almost 5% in the past month, according to FactSet.
The government continues to struggle with debt payments. It also is under pressure to raise money through asset sales, which are off to a weak start. On Monday, Greece didn’t receive any bids in the auction of its natural-gas monopoly, darkening the country’s financial outlook.
Greece has been an emerging market before. MSCI had Greece categorized as an emerging market until May 2001, when it was reclassified as a developed market shortly after adopting the euro.
Other countries saw promotions on Tuesday. Qatar and United Arab Emirates were moved to emerging-market status from the frontier category.
Tuesday’s moves by MSCI are “a reminder of the continued shift of economic power from the West to the East,” Thomas Costerg, an economist at Standard Chartered Bank, wrote in an email.
South Korea and Taiwan, however, will maintain their status as emerging markets, MSCI said. The firm has kept South Korea under review for a potential upgrade to developed-market status since June 2008, while Taiwan has been under review since June 2009.
MSCI classified Morocco as a frontier market, a step down from emerging market. MSCI said it may begin consultations with investors over whether Egypt should be excluded from its emerging-markets index because of foreign-exchange shortages in the country.

Cavemen of Manchester: Migrants from Eastern Europe live in squalor underground

Caverns above River Mersey being used by homeless migrants

Were once used as an air raid shelter by townspeople in Second World War

Highlights growing desperation of Eastern Europeans to live in Britain

Charity says some rough sleepers have fallen in river or suffered arson

Its network of caverns helped to shelter terrified townspeople from wave after wave of Luftwaffe bombing raids.
Seven decades on, the ancient system of caves is providing a  makeshift home to desperate migrants from Eastern Europe.
Attracted to Britain for a better life, they are living in squalor 20ft up a thickly wooded cliff above the River Mersey in Stockport.
Scroll down for video 
http://www.dailymail.co.uk/news/article-2340116/Cavemen-Manchester-Migrants-Eastern-Europe-live-squalor-underground.html

Squalid: An Estonian huddles up in a cave near Stockport that is strewn with rubbish and filth. For him it is home

Safe: Despite the filthy conditions in the cave, it is much more secure and comfortable than the street

Their plight underlines the growing lengths to which Eastern Europeans will go in order to stay in the country, which critics say will worsen when curbs on migration are lifted for Romanians and Bulgarians next year.

 

One of the cave-dwellers was an Estonian man who identified himself only as ‘KP’.
He would only say, ‘It is not good’ in broken English as he rooted through rubbish barely a stone’s throw from the M60 motorway.
Estonians, along with Poles and Czechs, gained access to British benefits two years ago but they cannot claim them without a permanent address.

Homeless people are forced to live in the caves near Stockport

Debris: The sleeping area of a homeless man in the caves, surrounded by piles of rubbish

Entrance: The cave network is just a few minutes' walk away from the Stockport town centre

Wilderness: The caves are precariously located 20ft above the River Mersey and are fairly inaccessible

According to homelessness  charity Wellspring, Stockport’s  sandstone caverns now hold up to four occupants at any one time.

Project manager Jonathan Billings said the number of people needing support has more than doubled to 140 in three years – with many from Eastern Europe.
He said some rough sleepers had fallen into the river or been  targeted by arsonists.

‘Nobody wants to see people  living in a cave,’ he said. The caves were reputedly dug by hand in the 17th century.

Parts were used as air raid shelters for up to 6,500 people during the Second World War and were recently reopened as a tourist attraction.

A resident said: ‘We used to play in them as kids, but they’re lethal. It’s shocking to think people are living in them in 2013.’
Last week the Mail reported how 50 Romanian migrants were living in makeshift shelters on a rubbish dump in Hendon, north London.

Camping out: Another area of the caves which has been used as a shelter by a homeless person

Hidden: The homeless seek out the caves because of the privacy they can provide

Entrance: A homeless man's belongings are visible from an opening above the cave system