News in Review

House approves healthcare overhaul

The House of Representatives gave final approval to a sweeping healthcare overhaul, expanding insurance coverage to nearly all Americans and handing President Barack Obama a landmark victory.

On a late-night 219-212 vote, House Democrats approved the most dramatic health policy changes in 40 years and, on March 23 Obama signed it into law.
The overhaul extends health coverage to 32 million Americans. It expands the government health plan for the poor, and bars insurance practices, such as refusing to cover people with pre-existing medical conditions, and require insurers to cover children up until 25 years old under their parents’ health plan.

The vote capped a year-long political battle with Republicans that consumed the U.S. Congress and dented Obama’s approval ratings, and fulfilled a goal that had eluded many presidents for a century—most recently Democrat Bill Clinton in 1994.

“This legislation will not fix everything that ails our healthcare system, but it moves us decisively in the right direction. This is what change looks like,” Obama said.

Google risks China’s fury by slam dunking censorship

Google shut its mainland Chinese-language portal and began rerouting searches to its Hong Kong site, unleashing Beijing’s ire and prompting worry over its prospects in China.

China lost little time in warning Google that its spurning of self-censorship had angered the one-party government, wary of ceding control over China’s 384 million Internet users.

Google’s decision comes during heightened tensions between Beijing and Washington over a range of issues, from Internet freedom to the yuan exchange rate, economic sanctions on Iran and U.S. weapons sales to Taiwan.

Google startled the world and the business community in January when it said it might quit China over censorship, and after suffering from a sophisticated hacking attack that it said came from within China. Beijing has denied it was involved in any hacking.
Google’s public complaints made a parting of ways with China’s government hard to avoid.

Time Warner leads bids of up to $1.5 billion for MGM

Time Warner Inc, Lions Gate Entertainment Corp and billionaire Len Blavatnik’s Access Industries put up rival bids of $1.2 billion to $1.5 billion for studio Metro-Goldwyn-Mayer, sources familiar with the matter, told Reuters on Monday.

The offers were far less than MGM first expected. MGM, which is struggling with $3.7 billion in debt, had initially hoped for bids of at least $2 billion.
The studio said in a statement on Monday it “received a number of bids” which it will review over the next “several weeks.”

The Friday deadline for a second round of bids for MGM was unofficially extended after Time Warner did not immediately put in a bid, the sources said.
MGM also said it expects to work with lenders to extend the forbearance period on its bank debt, which ends March 31, and that it “expects to seek a forbearance agreement for its revolving line of credit, for which a payment is due April 8.”

Independent studio Lions Gate, industrial holding company Access and Time Warner declined comment. The sources spoke on condition of anonymity because details of the auction have not yet been made public. MGM studio said in November it was exploring a potential sale of the company.
A committee of MGM’s creditors is expected to meet on Tuesday and will assess the company’s situation, the sources said.

U.S. private sector axes 742,000 jobs in March

The jobless rate accelerated in the U.S. last month, surpassing economists’ expectations, according to a report by ADP Employer Services released in March.
Private employers cut jobs by a record 742,000 in March versus a 706,000 revised cut in February that was originally reported at 697,000 jobs, said ADP, which has been carrying out the survey since 2001.

The big drop foreshadows a huge decline in the non-farm payroll reading in the government’s employment report that will be released on Friday, some analysts said.

Global stocks firm as U.S. economy, Greece fears ease

Easing fears about the American economy and European debt held up world equity markets last month, extending a rally that has taken many into positive territory for the year.

Wall Street looked set to open flat after a big jump on Friday.

MSCI’s all-country world stock index was up half a percent, driven by strong performances in Japan and emerging markets. European shares were flat to higher.

The world index was in the black year-to-date for the first time since January, apart from a brief blip on Friday. Last week’s U.S. data was lifted by sentiment when employers cut fewer jobs than expected last month and consumers showed signs of heeding their penny-pinching behavior.

Worries about Greek and other peripheral euro zone economy debt were also calmed by a series of weekend comments by politicians and policymakers.
French President Nicolas Sarkozy promised on Sunday that euro zone countries would help Greece if its financial problems worsened and vowed a crackdown on market speculators.

The cost of insuring Greek sovereign debt fell and the yield spread between Greek bonds and benchmark German Bunds narrowed.

U.S. millionaires ranks up 16 percent last year: study

The number of U.S. households with a net worth of at least $1 million jumped 16 percent last year after dipping sharply during the financial crisis, an industry consulting group said last month.

Households with a net worth of $1 million or more—excluding their primary residence—totaled 7.8 million in 2009, up from 6.7 million in 2008, according to Spectrum Group. The number of millionaire households shrank by 27 percent in 2008, it said. The current total is still well below the record 9.2 million millionaire households reported in 2007, Spectrum said.

Last year’s spike came as U.S. stock markets rallied. The S&P 500 Index rose 28 percent, and the largest wealth management firms reported strong earnings as their clients’ accounts recovered from the 2008 meltdown.

The study also found ultra high net worth families—those with at least $5 million—grew 17 percent last year to 980,000, Spectrum said. Households with $500,000 or more topped 12.7 million, up 12 percent.

The study was based on surveys of 3,000 affluent households and online surveys of roughly 2,600 families.

U.S. seeks 335 years forill Petters in ponzi case

Federal prosecutors said Tom Petters should be sentenced to 335 years in prison for running a $3.65 billion Ponzi scheme, but defense lawyers pleaded for mercy, saying their client has a tumor on his pituitary gland.

The 52-year-old founder of Petters Group Worldwide Inc was convicted in December by a federal jury in St. Paul, Minnesota, on all 20 criminal counts he faced, including wire fraud, mail fraud and money laundering.

“The defendant’s fraud is beyond comprehension,” prosecutors said in a court filing. “A life sentence is wholly deserved and justified given the defendant’s corrupting influence on individuals and institutions, and his strident refusal to accept any responsibility.”

Petters’ lawyers said their client should be sent to the Federal Medical Center in Rochester, Minnesota, because of his health and because the national notoriety of his case would make him a “marked man” in prison.

A 335-year sentence would be more than twice the 150 years Bernard Madoff got for his estimated $65 billion Ponzi scheme. Madoff pleaded guilty rather than face a jury at trial.

A Ponzi scheme occurs when money from new investors is used to pay earlier investors.

U.S.-China feud over currency heightens

The United States shouldn’t try to make a political issue out of the yuan, a Chinese central banker said, as the two countries press toward a potential bust-up over Beijing’s currency regime.  

The latest rhetorical salvoes underlined how long-running friction caused by the yuan’s de facto dollar peg could come to a head next month when President Barack Obama’s administration decides whether to brand China as a “currency manipulator.”

People’s Bank of China Vice Governor Su Ning said the United States should look to itself to boost exports and not cast blame on other countries, when asked to comment on remarks on Thursday by Obama, who called on China to move to a “more market-oriented exchange rate.”

Smart phones will shake up paid content debate

Media companies wanting to bring a paid-for culture to the Internet might just get what they want if they pay more attention to the smart phone revolution that is changing the way people access the Web.

Huge numbers now use mobile phones instead of desktop computers to get online—a development that has spawned whole new business models in China, the world’s biggest Internet market.

Paying to read content on the Web, an outlandish idea as recently as a year ago, is slowly but surely establishing itself as the next business model in the Western media mainstream, spearheaded by Rupert Murdoch’s News Corp.

But meantime, sales of smart phones –part of a telecoms economy very different from the PC Web—are set to outpace sales of desktop computers by 2012, IT research firm Gartner said this week. Some believe it could be as early as this year.

OPEC sticks to its guns, demand rising

OPEC ministers agreed not to change oil output targets they are already exceeding, anticipating that demand will pick up later in the year to mop up extra barrels.

But with economic recovery still fragile as powerhouse China considers curbs on credit, members discussed last month their adherence to production levels set in December 2008 to keep supply at 24.84 million barrels per day (bpd).

OPEC Secretary-General Abdullah al-Badri said the producers would next meet on October 14 in Vienna, pushing back slightly from the usual September slot.
“Good demand, reliable supply, beautiful prices—we are very happy,” Saudi Arabian Oil Minister Ali al-Naimi said just before entering the meeting.

Benchmark crude futures traded at over $82 per barrel—in the area that OPEC’s biggest exporter considers appealing to both consumers and producers alike, despite overproduction by OPEC.

Bernanke defends Fed role on smaller bank oversight

Federal Reserve Chairman Ben Bernanke last month defended the central bank’s supervision of smaller banks, which it would lose in regulatory reform proposals, in a hearing before a congressional panel.

Bernanke, in testimony prepared for delivery to the House of Representatives Financial Services Committee, argued against a piece of the Senate regulatory overhaul bill that would shift supervision of thousands of bank holding companies with assets under $50 billion and state-chartered banks to other regulators.

“The insights provided by our role in supervising a range of banks, including community banks, significantly increase our effectiveness in making monetary policy and fostering financial stability,” he said.

U.S. says no explanation yet for California Prius claim

Federal safety investigators have found no evidence so far to support or disprove a California motorist’s claim his Toyota Motor Corp Prius sped out of control on its own, but rather cautioned the case may never be explained, U.S. regulators said last month.

The National Highway Traffic Safety Administration (NHTSA) engineers drove the 2008 hybrid in an effort to recreate the episode of unintended acceleration reported by owner James Sikes, 61, but were unable to do so, the agency said in its first statement on the analysis conducted with Toyota.

“So far, we have not been able to find anything to explain the incident that Mr. Sikes reported,” NHTSA said. “We would caution people that our work continues and that we may never know exactly what happened with this car.”

Sikes told police and reporters he was driving the car on a freeway near San Diego last Monday when it unexpectedly surged forward on its own as he was passing another vehicle, and reached speeds exceeding 90 miles per hour.

Police helped Sikes bring the car under control and then to a stop. The incident, which officials said lasted 20 minutes and covered about 30 miles, added a new dimension to the already charged atmosphere surrounding Toyota’s safety crisis over unintended acceleration.

Two NHTSA investigators joined Toyota experts to examine Sikes’ Prius. NHTSA said it drove the car on the freeway and obtained a copy of diagnostic readouts from the vehicle’s data recorder.

NHTSA, as part of those investigations, examined numerous vehicles based on complaints and found no problems with the electronic systems, records show.
Toyota steadfastly maintains its throttles are sound. Experts have said that unintended acceleration industry-wide is a relatively rare occurrence and likely difficult to pinpoint.

But the San Diego Prius allegation raised new questions at a time when Toyota was trying to reassure consumers that it was turning the corner in its worst-ever safety crisis. Also, the Prius has been a “halo” car for the world’s top automaker and dominates the market for fuel-efficient hybrid vehicles.

Authorities believe floor mat problems in Toyota and Lexus vehicles are linked to five U.S. crash deaths since 2007, and they are investigating 47 other fatality reports over the past decade that allege unintended acceleration.

Some broadcasters like spectrum plan

Some U.S. TV broadcasters have indicated they support a proposal to give up their airwaves to help resolve a shortage of spectrum for advanced mobile phone services, the top communications regulator said.

Federal Communications Commission Chairman Julius Genachowski said “a number of broadcasters” were open to his plan, which would call for them to give up airwave licenses for auction in exchange for receiving a share of the proceeds.

Some analysts have been skeptical about whether the plan would appeal to broadcasters unless the FCC offers them a very big percentage of the auction proceeds.

He did not name specific broadcasters, nor would he comment on the percentage of proceeds that would go to broadcasters under the plan. Analysts say there could be a public outcry if the FCC gives broadcasters too big a share, since wireless auction proceeds typically go to the U.S. Treasury.

The country’s broadcasters, including General Electric’s NBC, News Corp’s Fox, Walt Disney’s ABC and CBS Corp hold spectrum licenses estimated to be worth $50 billion.

Genachowski will unveil on March 16 the National Broadband Plan aimed at promoting U.S. Internet speeds and usage. He promised on Friday that the spectrum plan would be attractive to everybody, including broadcasters and viewers.

“We’ve developed a plan that is a real win-win for all involved. We’ve every expectation it will work,” he said.

Add to: del.icio.us | Digg | NewsVine | Mixx | FaceBook | Twitter