Business News: Business School Essays, For a Fee

Business News: Business School Essays, For a Fee

Business School Essays, For a Fee

Posted: 29 Nov 2010 08:41 AM PST

The Best U.S. Business Schools

Posted: 30 Nov 2010 05:05 AM PST

The Best International B-Schools

Posted: 30 Nov 2010 05:05 AM PST

A Website for the World's Materialists

Posted: 24 Nov 2010 02:00 PM PST

Google Investigated by EU Over Ads, Search

Posted: 30 Nov 2010 03:41 AM PST

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By Aoife White

(Updates with comments from analyst, Google starting in fourth paragraph.)

Nov. 30 (Bloomberg) -- Google Inc. is being probed by European Union antitrust regulators for allegedly discriminating against competing services in its search results and for stopping some websites accepting rival ads.

The European Commission will check whether Google “imposes exclusivity obligations on advertising partners, preventing them from placing certain types of competing ads on their websites, as well as on computer and software vendors, with the aim of shutting out competing search tools,” it said in an e-mailed statement today.

Microsoft Corp. service Ciao from Bing, U.K. price- comparison site Foundem, and French legal search engine Ejustice.fr and Microsoft Corp. service Ciao from Bing filed an antitrust complaint against Google in February. The antitrust probe adds to separate criticism from French, German and British data protection regulators over Google’s StreetView service that collects data from private homes.

“Given the dominance of Google in the European search market this doesn’t come a huge surprise,” said Sam Hart, a media analyst at Charles Stanley in London. He said remedies “often end up being relatively insignificant in terms of market position” and are “incredibly unlikely” to alter the company’s market position.

Antitrust regulators have power to impose fines of up to 10 percent of revenue for monopoly abuses. The EU’s highest ever penalty of 1.06 billion ($1.38 billion) was against Intel Corp. last year.

Biggest Search Engine

Google, owner of the world’s biggest search engine, said in an e-mailed statement it “worked hard to do the right thing by our users and our industry” by marking ads clearly and enabling users and advertisers to move data to other services.

“There’s always going to be room for improvement and so we’ll be working with the commission to address any concerns,” Google, based in Mountain View, California said.

The commission said it will also investigate whether Google abused its dominant position by promoting its own services over rival price-comparison sites.

Google is “stifling innovation,” Foundem said in an e- mailed statement. It “should not be allowed to discriminate in favor of its own services” and should clearly label its own services in search results, the U.K. shopping-search site said.

On Sept. 25, the commission said it had closed investigations into Apple Inc.’s practices after it relaxed restrictions on the development tools for iPhone applications and introduced cross-border iPhone warranty repair services within the EU region.

--With assistance from Matthew Campbell in Paris. Editors: Peter Chapman, Anthony Aarons

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

Many Key Pieces in Tax-Cut Extension Puzzle

Posted: 29 Nov 2010 09:18 PM PST

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By Ryan J. Donmoyer

Nov. 30 (Bloomberg) -- President Barack Obama and congressional Republicans plan to kick-start negotiations today at the White House over a possible extension of Bush-era tax cuts that are set to expire Dec. 31.

They will have to confront six areas of dispute dealing with taxes as well as issues such as renewing federal subsidies for extended jobless benefits that run out today. Some of the tax elements are subject to budget-balancing rules, which require offsetting tax increases or spending cuts to renew. Others must be approved by a two-thirds majority to fund with deficits. Still others weren’t enacted under President George W. Bush or already have expired.

The Tax Coalition, a Washington group that includes anti- tax organizations such as Americans for Tax Reform and business trade associations such as the U.S. Chamber of Commerce, warned lawmakers yesterday that a delay in extending the Bush-era tax cuts would hurt the economic recovery.

“It’s going to muck up economic decisions” and cause widespread selling of stocks as investors seek lower capital- gains tax rates before year-end, said Mark Bloomfield, president of the American Council for Capital Formation, a Washington group that advocates for lower taxes on investments. Consumers and investors “will be frozen because they don’t know what the government’s going to do.”

Target: Highest Bracket

Groups including the AFL-CIO labor union back only an extension of the middle-class tax cut. AFL-CIO President Richard Trumka this month said it is “absolutely insane” to preserve lower tax rates at the top.

“We need to focus on creating jobs by giving tax breaks only to middle-class families,” Trumka said earlier this month. “Millionaires and Wall Street already had their party, which tanked our economy and left Main Street stuck paying the bill.”

Following are the six elements, their revenue implications and a description of where Obama and lawmakers stand.

The fight between Obama and congressional Republicans centers on whether to cap an extension of lower tax rates and higher credits adopted in 2001 for single taxpayers who earn more than $200,000 a year and couples earning more than $250,000. Obama supports the cap; Republicans and some Democrats don’t.

The 2001 law carved a new 10 percent bracket from the 15 percent rate and reduced other marginal rates to 25, 28, 33 and 35 percent. In 2011, the 10 percent rate is scheduled to be absorbed into the 15 percent rate, and the other brackets will rise to 28, 31, 36 and 39.6 percent, respectively.

Credits, Subsidies

Lawmakers agree on preserving the 10, 15, 25 and 28 percent brackets for taxpayers earning less than $250,000, which requires an act of Congress. The government would forgo $66 billion in revenue in 2011 and $1.18 trillion across a decade by doing so. Budget rules allow these cuts to be financed with deficits.

There’s also no dispute over preserving provisions such as a $1,000 child credit, relief from the so-called marriage penalty and subsidies for education, adoption and child care. Those provisions are permitted to add another $24 billion to the deficit in 2011 and $746.3 billion over 10 years.

Republicans support the extension of lower rates in the top brackets, along with abolishment of provisions that phase out deductions and personal exemptions for high wage earners. Under current law, Congress would have to raise taxes or cut spending elsewhere in the budget by about $21.3 billion for 2011 and $573 billion over the next decade to retain the 33 and 35 percent tax brackets. Alternatively, lawmakers can waive the budget law by declaring an emergency, which would require 60 votes in the Senate.

Alternative Minimum Tax

For married couples, the 33 percent rate currently applies to taxable income between $209,250 and $373,650, after which the top rate takes effect. If a couple had about $50,000 in deductions, for example, they’d have to earn about $425,000 a year to pay the top rates. Many would pay the alternative minimum tax instead.

While Obama and Congress clash over taxes for 2011, they are under pressure to act by Dec. 31 to roll back a $66 billion tax increase already on the books for 2010 because of the alternative minimum tax. The levy was created in 1969 to prevent 155 wealthy Americans from avoiding tax by claiming extensive deductions, credits and exemptions.

It replaces common deductions such as those for medical expenses and state and local taxes with a flat exemption. Amounts that exceed the exemption are taxed at a 26 percent or 28 percent rate, depending on the amount of income. Taxpayers who may owe the AMT must calculate their liability under both systems and pay the higher amount.

Unintended Consequence

Because the AMT wasn’t indexed for inflation, over time it has come to affect Americans with more modest incomes, many of whom are surprised to find they owe it. Congress has spared these taxpayers with a series of annual “patches” that increase the flat exemption amount to account for inflation.

Lawmakers said Nov. 9 they are drafting legislation to set the 2010 exemptions at $72,450 for married taxpayers filing jointly and $47,450 for single taxpayers. The exemptions currently are $45,000 and $33,750.

If nothing is done, it would result in an average tax increase of $3,000 to $5,000 in 2010 for about 25 million households, most of whom have never paid the AMT, according to H&R Block Inc., the largest U.S. tax-preparation firm.

A one-year patch would cost the government about $66 billion in foregone revenue and can be financed with deficits under budget rules.

Capital Gains, Dividends

The 2003 tax law reduced taxes on most long-term capital gains to 15 percent from 20 percent. It also set a 15 percent rate for many dividends that had been taxed as ordinary income at an individual’s top marginal rate. Those previous rates are slated to be reinstated in 2011 unless Congress acts, although assets held longer than five years would qualify for an 18 percent capital-gains tax rate.

Obama proposes preserving the 15 percent rates on both for individuals earning less than $200,000 and joint filers earning less than $250,000. He supports allowing the capital gains rate to revert to 20 percent for high earners. He also would cap the dividend tax rate at 20 percent rather than allowing dividends to be taxed as ordinary income. Budget rules don’t provide for the 20 percent rate for dividends to be financed with deficits, so Obama or lawmakers would have to waive them or find an estimated $10 billion elsewhere in the budget for 2011, or $100 billion over 10 years.

Obama won enactment of higher taxes on investment income as part of the health-care law he signed in March. In 2013, a 3.8 percent Medicare tax will apply for the first time to investment income claimed by high-income taxpayers.

Business Tax Breaks

Republicans are seeking to keep the 15 percent rates in place for high-income taxpayers. That would require budget offsets of about $314.6 billion over 10 years or a waiver of the rules.

Congress also is struggling to renew dozens of expired tax breaks, about 80 percent of which benefit businesses. They include a research and experimentation credit popular with such companies as Dow Chemical Co. and Harley-Davidson Inc.

Another break is tax deferral on profits that companies including General Electric Co. and JPMorgan Chase & Co. earn from financing equipment sales or issuing credit cards overseas. Versions of the legislation also would extend the Build America Bonds program used by states and cities to finance things such as road building and repairs.

State, Local Taxes

A handful of tax breaks for individuals also are popular with lawmakers, the biggest being a deduction for state and local sales taxes.

Like the AMT patch, most of these tax breaks expired at the end of 2009, and lawmakers have been under pressure to renew them since. They’ve been unable to agree because Republicans, and a few Democrats, object to the revenue-raising proposals added to comply with budget rules, the largest of which calls for higher taxes on so-called carried interest.

Carried interest is the compensatory share of profits earned by managers of investment partnerships. It can qualify for lower capital gains rates even as the share is tied to the manager’s labor rather than a capital investment. Democrats have framed the proposal as ending a loophole exploited by executives at private-equity firms and passed legislation taxing carried interest at the higher rates that apply to wages.

Carried-Interest Fight

Republicans have opposed the proposal with the help of the real estate and venture-capital industries. They argue that the change is so sweeping it would also raise taxes on family partnerships. They’ve also opposed other revenue offsets in the bill, including higher levies on oil and gas companies.

Dropping the carried interest provision would provoke outrage among Democrats who still control the House during the lame-duck session.

Senate Finance Committee Chairman Max Baucus of Montana said this month that he’s committed to keeping the carried interest provision in the measure. Analysts say that would make it tough to find 60 votes in the Senate in support of dropping the proposal.

The funding puzzle is further complicated by the fact that a one-year extension would renew the breaks for 2010 only. Extending them through 2011 would more than double the cost.

Estate, Gift Taxes

There’s no federal estate tax for 2010 because of a phase- out schedule established by the 2001 law; in its place is a complicated capital gains tax.

The expiration is sandwiched between two sets of rules for 2009 and 2011, which has perplexed lawyers, accountants and wealthy families.

In 2009, individuals had a $3.5 million tax-free allowance they could distribute to heirs; couples had a $7 million exemption. Amounts beyond those were subject to a top 45 percent tax rate. Next year, the estate tax is slated to return, with a higher top rate of 55 percent and a lower tax-free allowance of $1 million per individual. That would generate $34.4 billion in revenue for 2011, according to the Congressional Research Service.

Obama favors, and the House of Representatives has passed, permanently reinstating the 2009 rates and allowances.

Extending the 2009 parameters through 2011 requires no offsets.

Any long-term change that generates less revenue than a 55 percent rate and a $1 million exemption would require budget- balancing measures. A 45 percent rate in 2011 would generate $18.1 billion in revenue, according to the CRS.

Most Republicans favor repealing the estate tax, which would require $666.1 billion in revenue offsets over the next decade under the budget rules.

Phase-In Proposal

More recently, Republicans such as Senate Minority Leader Mitch McConnell of Kentucky have endorsed an approach advanced by Senators Jon Kyl, an Arizona Republican, and Blanche Lincoln, an Arkansas Democrat, to phase in a $5 million tax-free allowance and set the top rate at 35 percent. That would require up to $315 billion in budget offsets or a waiver.

No proposal yet has mustered the 60 votes needed to clear procedural hurdles in the Senate and pass.

The last major element of the debate involves Obama’s tax policies rather than those of Bush. The 2009 stimulus bill created a new Making Work Pay tax credit that increased the paychecks of married couples by up to $800 in 2009 and 2010. That credit expires Dec. 31, along with the Bush-era tax cuts, and would cost about $61.8 billion a year to extend. It would require budget offsets. The stimulus measure also expanded refundable credits for the working poor.

Illinois Senator Richard Durbin, the No. 2 ranking Democrat, said on Nov. 28 that Democrats would insist on an extension of Obama’s policies during negotiations. He also said Democrats would tie extension of federal subsidies for extended unemployment benefits to the tax discussion.

--Editors: Jodi Schneider, Robin Meszoly

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Durbin: Debate to Go Beyond Bush Tax Cuts

Posted: 29 Nov 2010 10:05 AM PST

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By Joshua Zumbrun

(Corrects Sen. Dorgan’s state in 11th paragraph in story appearing on Nov. 28.)

Nov. 28 (Bloomberg) -- Senator Dick Durbin of Illinois, the senate’s No. 2 Democrat, said negotiations over extending the Bush-era tax cuts also will include prolonging emergency unemployment benefits and other tax credits.

“I want to put a couple other things on the table,” Durbin said today on NBC’s “Meet the Press.” “We do have unemployment running out,” he said, and “I also want to make sure the earned-income tax credit, the childcare tax credit, and the ‘Making Work Pay’ tax credit are part” of the discussion.

At issue are tax cuts passed in 2001 and 2003 that are set to expire Dec. 31. Obama is scheduled to meet with Democratic and Republican congressional leaders Nov. 30 at the White House to discuss the legislative agenda.

Additionally, emergency jobless benefits that kick in after the initial 26-weeks of payments end will expire at the end of this month. Without congressional action, about 2 million Americans will lose the federally funded benefits, according to a Labor Department estimate.

Arizona Senator Jon Kyl, the chamber’s second-ranking Republican, said there is “an opportunity for us to sit down and negotiate a resolution to this that’s good for the economy.” Kyl also repeated a key sticking point for Republicans: “We don’t believe taxes should be increased on anyone.”

Obama has argued the country can’t afford indefinitely extending tax cuts for the wealthiest Americans, defined by the president as individuals making more than $200,000 and couples earning more than $250,000.

Obama on Tax Cuts

“I believe it is a mistake for us to borrow $700 billion to make tax cuts permanent for millionaires and billionaires,” Obama told reporters Nov. 14. “It won’t significantly boost the economy and it’s hugely expensive, so we can’t afford it.”

Republicans, who won a majority of House seats in the Nov. 2 elections and narrowed the Democratic margin in the Senate, are pushing to permanently extend all the current tax rates. While Obama has said he wants to permanently extend just the tax cuts on earnings up to $200,000 for individuals or $250,000 for households -- about 97 percent of all taxpayers, according to the Internal Revenue Service -- he has indicated he’s open to negotiations on achieving that goal.

“We should be focusing on what it takes to move this economy forward,” Durbin said. “We should not be worried about the discomfort of the wealthy.”

Expiring Legislation

Unless Congress acts, marginal rates will increase for all income-tax payers. Tax credits benefiting families will be cut in half. The so-called married penalty that forces some couples to pay more than if they were single will be reinstated. Rates will rise on most dividends and capital gains, and a levy on estates valued over $1 million will be resurrected.

“What’s likely to happen is there will be an extension of the tax cuts for everybody for a period of time,” Senator Byron Dorgan of North Dakota, a Democrat who is retiring, said in an interview today on CNN’s “State of the Union” program.

Extending only the current rates for individuals earning less than $200,000 and couples making under $250,000 would add more than $3 trillion to the national debt over the next decade. Sustaining tax cuts for those with higher incomes would add an additional $700 billion to the debt over the next decade, Treasury Secretary Timothy Geithner has said.

An across-the-board extension of all Bush-era tax policies would cost the government about $5 trillion in foregone revenue and interest cost on the debt, the Congressional Research Service estimated last month.

--With assistance from Ryan J. Donmoyer in Washington. Editors: Carlos Torres, Daniel Enoch

To contact the reporter on this story: Joshua Zumbrun in Washington at jzumbrun@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

India Revives an Old Plan for New Growth

Posted: 24 Nov 2010 08:00 AM PST

Vitamin D, Calcium Supplements Are Unnecessary, IOM Study Finds

Posted: 30 Nov 2010 04:46 AM PST

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By Allison Connolly

Nov. 30 (Bloomberg) -- Vitamin D and calcium supplements are unnecessary and may even be harmful, according to a study commissioned by the U.S. and Canadian governments.

While vitamin D and calcium are important for bone health, Americans and Canadians get enough of both, an expert committee commissioned by the Institute of Medicine found. The committee reviewed more than 1,000 studies and comments from scientists.

“As North Americans take more supplements and eat more of foods that have been fortified with vitamin D and calcium, it becomes more likely that people consume high amounts of these nutrients,” the committee wrote in the report, posted on the institute’s website.

The committee found most people get enough calcium, except girls aged between 9 and 18. Postmenopausal women taking supplements may be getting too much and increasing their risk for kidney stones, the panel said.

North Americans get enough vitamin D through their daily diet and sunshine, the study found, contradicting tests that have become popular in recent years and aren’t based on “rigorous scientific studies.”

“Confusion has grown among the public about how much vitamin D is necessary,” the report’s authors said.

The Institute of Medicine is an independent, non-profit group based in Washington that advises policy makers and the public. It’s an arm of the National Academy of Sciences.

--Editors: Kristen Hallam, Phil Serafino.

To contact the reporter on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net.

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net.

Merck Names Kenneth Frazier CEO, Replacing Clark

Posted: 30 Nov 2010 04:45 AM PST

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By Tom Randall

(Updates with Frazier’s background in second paragraph.)

Nov. 30 (Bloomberg) -- Merck & Co., the second-biggest U.S. drugmaker, named Kenneth C. Frazier as chief executive officer effective Jan. 1, succeeding Richard T. Clark, who will continue as chairman of the board.

Frazier, 55, has been president since April, the Whitehouse Station, New Jersey-based company said in a statement. He was executive vice president and president of global human health from 2007 to 2010, after joining the company in 1992 as vice president and general counsel.

Clark, 64, was named CEO in 2005 and oversaw the $49 billion 2009 acquisition of Schering-Plough Corp. Merck is eliminating 15,000 jobs and closing facilities by 2012 to save $3.5 billion by 2012. Clark, who joined Merck in 1972 as a quality control inspector, will advise Frazier during the transition, the company said.

Frazier said he is “looking ahead to a period of dramatic industry change,” according to the statement. “For Merck to be a leader in the future, we must continue to adjust our operating model and achieve a level of transformation never before seen in our industry.”

--Editor: Reg Gale.

To contact the reporter on this story: Tom Randall in New York at trandall6@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

Euro, Italian Bonds Drop on Contagion Concern as Futures Fall

Posted: 30 Nov 2010 04:30 AM PST

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By Stephen Kirkland

Nov. 30 (Bloomberg) -- The euro weakened for a third day and Italian and Spanish bond yields rose compared with German debt on concern the region’s crisis is worsening. U.S. index futures declined while European stocks fluctuated.

The euro depreciated 0.9 percent against the dollar at 7:25 a.m. in New York. The extra yield investors demand to hold 10- year Italian debt instead of benchmark German bunds widened to more than 200 basis points for the first time since the euro’s debut in 1999. The difference in the cost of insuring subordinated and senior European financial-company bonds rose to the most since May 2009. Standard & Poor’s 500 Index futures lost 0.6 percent. The Stoxx Europe 600 Index slid 0.1 percent.

Government securities and the euro are being dragged down by concern Portugal and Spain may suffer the fate of Ireland, which had to ask for an 85 billion-euro ($111 billion) rescue package to help bail out its banks. A report today may show real-estate prices in 20 U.S. cities rose in September at the slowest pace in eight months, indicating the latest slump in sales is destabilizing housing.

“Euro-area contagion is becoming fairly indiscriminate,” Valentin Marinov, a currency strategist at Citigroup Inc. in London, wrote in a report today. “There is so far little indication that euro-area politicians will act quickly and forcefully enough to prevent further spread widening. We cannot exclude more euro selling.”

Euro, Dollar

The euro weakened against all but one of its 16 most-traded peers, dropping as much as 1.1 percent to $1.2980, the lowest level since Sept. 16. It fell 1.3 percent to 109.13 yen. The Dollar Index advanced a third day, gaining 0.4 percent to 81.133 after reaching 81.346, the highest level since Sept. 20.

The difference in yield between Italian 10-year bonds and German bunds widened to as much as 212 basis points, the most since 1996. The Spanish-German yield spread rose to 281 basis points and the yield premium for Belgian 10-year bonds reached 131 basis points, the most since January 2009.

Credit-default swaps insuring Italian government bonds rose seven basis points to 253, contracts on Spain increased nine basis points to 361 and Portugal climbed 11.5 basis points to 551, all record highs, according to CMA, a data provider.

The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers rose 8 basis points to a 2 1/2-month high of 173, while an index of subordinated notes climbed 23.5 basis points to 318. The gap between the two widened 15.5 to 145 on expectations subordinated bondholders will be forced to share the cost of bailing out lenders.

European Stocks

The drop in European shares brought this month’s decline in the Stoxx 600 to 1.6 percent, the worst month since May. Hochtief AG rose 3.5 percent after Actividades de Construccion y Servicios SA won approval from Germany’s financial regulator for its 2.7 billion-euro ($3.5 billion) bid for the German construction company. Alstom SA gained 3.3 percent as Deutsche Bank AG raised its recommendation on the world’s third-largest power-equipment maker to “buy.”

The MSCI Asia Pacific Index decreased 0.7 percent to the lowest level since Oct. 5, while the MSCI Emerging Markets Index slipped 0.3 percent to a two-month low. The Shanghai Composite Index dropped 1.6 percent, capping its first monthly retreat since June, after Zhong Jiyin of the Chinese Academy of Social Sciences wrote in a commentary in China Daily that recent increases in banks’ reserve requirements won’t be enough to reverse excessive liquidity in the system.

The decline in U.S. futures indicated the S&P 500 may fall for a third day. The S&P/Case-Shiller index of house prices climbed 1 percent from September 2009, the smallest year-over- year gain since February, according to the median forecast of 28 economists in a Bloomberg survey. The figures are due at 9 a.m. New York time. Other reports may show consumer confidence rose and businesses expanded.

Baldor, ABB

Baldor Electric Co. may jump in U.S. trading after ABB Ltd., the Swiss maker of factory robots and electrical equipment, agreed to buy the company for about $3.1 billion in cash to expand in the North American market for industrial motors and drives.

Gold for immediate delivery rose 0.5 percent to $1,373.70 an ounce. The S&P GSCI Index of 24 commodities fell 0.1 percent and oil sank 0.4 percent to $85.42 a barrel.

--With assistance from Paul Armstrong, Paul Dobson, David Merritt, Abigail Moses, Michael Patterson and Dan Weeks in London. Editors: Stephen Kirkland, Justin Carrigan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Paul Sillitoe in London at psillitoe@bloomberg.net

Coca-Cola CEO Says More Than One Climate Accord Needed

Posted: 30 Nov 2010 04:16 AM PST

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By Kim Chipman

(Adds India minister, Temple professor comments from fifth paragraph.)

Nov. 30 (Bloomberg) -- Coca-Cola Co. Chief Executive Officer Muhtar Kent said multiple international accords, not a single treaty, are needed to fight climate change.

“I don’t think one treaty can work for the world,” Kent, 58, said in an interview in Cancun, Mexico, where delegates from more than 190 countries are gathered for United Nations-led talks on setting rules to limit global warming.

The world’s largest soft-drink maker is among companies in the Mexican resort lobbying envoys on the shape of an eventual accord that may restrict emissions from burning fossil fuels, channel up to $100 billion to poor nations and protect forests.

A year ago in Copenhagen, delegates failed to draft a treaty, leaving in limbo the 1997 Kyoto accord that mandated cuts in carbon-dioxide emissions until the end of 2012. While envoys aim to replace that agreement with new commitments, UN officials say a treaty is unlikely to be drafted this year.

Comments by India’s environment minister and Kent add strength to suggestions from climate envoys that working for a single binding treaty may not be the best way forward for the negotiations set to end Dec. 10.

“An international agreement is not anywhere on the horizon,” Jairam Ramesh said today in New Delhi. “Action has to be domestic. That’s what the last 15 months has shown.”

Rich, Poor Divide

Since the Copenhagen round of talks concluded with a non- binding agreement, negotiators have been unable to bridge the divide between richer nations bound by the Kyoto treaty and poorer countries led by China and India that reject similar rules for their industrializing economies. Indian and Chinese leaders say their priorities are economic growth and ending poverty.

“We’ve been at it for 18 years on climate change but that’s not unique,” said Duncan Hollis, an associate professor at Temple University’s Beasley School of Law in Philadelphia and editor of the “Oxford Guide to Treaties” to be published next year. “Breaking this up into smaller pieces and trying to knock off one piece at a time is certainly worth trying.”

Momentum is building instead for extending national and regional plans to limit greenhouse gases, from domestic carbon markets to renewable-energy standards, in which utilities are forced to include a fixed percentage of clean energy in the mix they sell to consumers.

Indian Viewpoint

The UN talks in their second day today in Mexico are moving away from a global treaty, Ramesh said. Meetings instead should focus on “domestic actions,” the minister said, adding that India won’t accept limits on growth set by other nations.

While executives from 400 companies including Tesco Plc and Unilever NV released a statement saying they’d work to end deforestation and use of refrigerants that harm the atmosphere, the Coca-Cola executive went further, delving into the politics of treaty-making.

“There can’t be just one framework,” Kent said, adding that “you can’t judge India’s progress with the same metrics as U.S. progress.”

The UN framework needs to become “more flexible” and allow countries to have different timelines for moving ahead with efforts to curb fossil-fuel emissions, Kent said.

Government Incentives

While companies can accomplish much on their own to reduce emissions and protect the environment, only governments can set a price on carbon and provide the incentives needed to spur shifts in energy use, he said.

President Barack Obama failed to win passage in Congress this year of legislation to cap carbon emissions linked to global warming. Prospects for action will grow slimmer next year when Republicans take control of the House of Representatives and expand their minority in the Senate. Dozens of Republican lawmakers elected this month have expressed skepticism about global warming or action to curb it.

--With assistance from Randall Hackley in London and Natalie Obiko Pearson in New Delhi. Editors: Peter Langan, Todd White

To contact the reporter on this story: Kim Chipman in Cancun, Mexico, at kchipman@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Treasuries Rise as Europe Debt Crisis Spurs Demand for Safety

Posted: 30 Nov 2010 04:10 AM PST

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By Keith Jenkins and Wes Goodman

Nov. 30 (Bloomberg) -- Treasuries rose for a third day on speculation Ireland’s funding crisis will spread to Portugal and Spain, increasing demand for the relative safety of U.S. government debt.

U.S. securities also gained as the Federal Reserve prepared to buy $6 billion to $8 billion of notes due from 2014 to 2016 today. The central bank scooped up $9.4 billion of debt yesterday, part of its plan to boost growth.

“Persistent concern surrounding the euro-zone debt crisis is supporting the Treasury market,” said Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London. “The size of the Fed’s bond-purchase program adds to the support, as does the asset-allocation shift away from euro-denominated debt.”

Benchmark 10-year yields declined four basis points to 2.78 percent as of 6:38 a.m. in New York, according to BGCantor Market Data. The 2.625 percent security maturing in November 2020 advanced 12/32, or $3.75 per $1,000 face amount, to 98 20/32.

Ireland on Nov. 28 became the second country to tap European assistance, following Greece. The rescue package is worth 85 billion euros ($112 billion).

The cost of insuring the debt of Italy, Spain, Portugal and Ireland surged to records today. Contracts on Italy rose 14 basis points to 260, Spain increased 13.5 basis points to 365.5 and Portugal was 17.5 higher at 557 and Ireland was up 11 at 615. Swaps on Belgium rose 10 basis points to a record 193 and Greece was up 14 basis points at 983.

European Default Risk

The swaps protect debt against default, and traders use them to speculate on credit quality. An increase suggests deteriorating perceptions of creditworthiness and a drop shows improvement. The contracts pay the buyer face value in exchange for the securities if a borrower fails to meet its debt agreements.

It may take years to bring down Europe’s debt levels, said Anthony Crescenzi, a strategist at Pacific Investment Management Co., which runs the world’s biggest bond fund.

The Irish bailout doesn’t solve the problem of reducing the nation’s debt, said Crescenzi, who is based at Pimco’s main office in Newport Beach, California.

“The average interest rate is said to be about 5.8 percent,” he said in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan” yesterday. “Can we expect Ireland’s economy to grow 5.8 percent in years ahead? Probably not. The debt will grow faster.”

Yield Outlook

Treasuries are still heading for their biggest monthly loss since March amid signs the U.S. economy is improving.

The yield difference between two- and 10-year notes may narrow as the Fed buys securities this week, according to BNP Paribas SA.

“This week, there are four remaining Fed buybacks, two today, no coupon auctions and month-end extension buying flows,” analysts at the bank, including Cyril Beuzit, head of interest-rate strategy in London, wrote in an e-mailed report today. “All of these factors should be supportive of Treasuries, and the 2s-10s curve should flatten in such a scenario.”

The yield difference between the two- and 10-year notes was 229 basis points today. That’s the least since Nov. 12, according to Bloomberg generic data.

“We stay bullish on Treasuries, with our year-end forecast being 2.60 percent for the 10-year note,” the analysts wrote.

Money Managers

Treasuries also gained on speculation money managers will add to their holdings to match changes in benchmark bond indexes at the end of the month, analysts Ajay Rajadhyaksha and Dean Maki at Barclays Capital Inc. in New York wrote in a report yesterday. The company is another primary dealer.

The indexes will incorporate the two-, five- and seven-year notes the government sold this month.

U.S. government securities handed investors a 0.8 percent loss this month as of yesterday, Bank of America Merrill Lynch indexes show, as the economy improved. German bonds fell 0.9 percent, while Ireland’s government securities plunged 11 percent. Investors in Japan’s sovereign debt market, the biggest in the world, lost 1.1 percent, the indexes show.

Investors should stay away from Treasuries even as the Fed buys them under its program known as quantitative easing, said Roger Bridges at Tyndall Investment Management Ltd. in Sydney.

‘Avoid Like the Plague’

“I’d avoid them like the plague if you can,” said Bridges, who oversees the equivalent of $11.5 billion as head of debt at the unit of Australia’s largest insurer. “The economy’s doing quite well. It makes you ask, was the QE needed?”

Treasuries will gain for the rest of 2010 and decline in 2011, according to a Bloomberg survey of banks and securities companies, with the most recent forecasts given the heaviest weightings. The 10-year yield will be 2.62 percent on Dec. 31 and 3.23 percent at the end of next year, the survey shows.

Industry reports today will show consumer confidence rose while gains in real-estate prices slowed, Bloomberg News surveys of economists show.

The Labor Department may say on Dec. 3 that American employers added jobs for a second month in November while the jobless rate held at 9.6 percent, according to the surveys.

“Elevated” unemployment and “subdued” inflation helped spur the Fed to arrange its $600 billion stimulus program, the central bank said in a Nov. 3 statement.

The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the securities, widened to 2.14 percentage points from this year’s low of 1.47 percentage points in August. The five-year average is 2.09 percentage points.

--With assistance from Tim Catts in New York and Abigail Moses in London. Editors: Keith Campbell, Peter Branton.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

European Stocks Increase; Hochtief Gains as Remy Cointreau Falls

Posted: 30 Nov 2010 04:06 AM PST

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By Julie Cruz

Nov. 30 (Bloomberg) -- European stocks fluctuated near an eight-week low as the region’s debt crisis intensified and investors awaited reports on house prices and confidence in the world’s largest economy. Asian shares and U.S. futures fell.

BNP Paribas SA led bank stocks lower, falling for an eighth day as Italian and Spanish government bonds slumped. Nestle SA lost 1.4 percent as Credit Suisse Group AG cut its rating on the stock for the first time in almost six years. Hochtief AG gained 2.7 percent after Actividades de Construccion y Servicios SA won approval for its 2.7 billion-euro ($3.5 billion) bid for the German construction company.

The benchmark Stoxx Europe 600 Index slipped less than 0.1 percent to 262.13 at 1:02 p.m. in London, heading for a 1.4 percent decline in November, the measure’s first monthly drop since August. The gauge sank yesterday as the bailout of Ireland failed to reassure investors that the region will contain its sovereign-debt crisis. Standard & Poor’s 500 Index futures slipped 0.5 percent today, while the MSCI Asia Pacific Index retreated 0.8 percent.

“U.S. housing prices and consumer confidence were two main themes in 2010, so it’s very important to see what signs those indicators will give to the market,” Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt, said. “We will see sideways trading as nothing has the power to push the market up in the next few weeks.”

U.S. House Prices

A report today may show real-estate prices in 20 U.S. cities rose in September at the slowest pace in seven months as the slump in sales continued to destabilize house prices.

The S&P/Case-Shiller index of house prices climbed 1 percent from September 2009, the smallest year-over-year gain since February, when the market began to recover following a three-year drop, according to the median forecast of 28 economists surveyed by Bloomberg News. The figures are due at 9 a.m. New York time. Other reports may show consumer confidence rose and businesses expanded.

Italian and Spanish government bonds fell, driving the extra yield investors demand to hold the securities instead of German bunds higher, as Europe’s debt crisis intensified.

Spreading Crisis

The drop pushed the yield spread between 10-year Italian securities and similar-maturity German debt to more than 2 percentage points for the first time since 1997. Spanish bonds fell yesterday by the most since the start of the euro era as a bailout for Ireland failed to assuage speculation that the debt crisis will spread. The cost of insuring the debts of Italy, Spain, Portugal and Ireland surged to records and the euro slid.

In Germany, unemployment fell for a 17th month in November as business optimism improved, underscoring the gulf between Europe’s biggest economy and peripheral nations struggling to cut their debt, a report showed today.

The number of people out of work declined a seasonally adjusted 9,000 to 3.14 million, the lowest since December 1992, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decrease of 20,000, according to the median of 31 estimates in a Bloomberg News survey.

In the U.K., consumer confidence unexpectedly dropped to a four-month low in November as looming public-spending cuts dented Britons’ outlook for 2011, a report by GfK NOP Ltd. showed.

Banks Drop

BNP Paribas, France’s largest bank, dropped 3.2 percent to 45.66 euros for the longest falling streak since January 2008. Dexia SA, the lender that received a 6 billion-euro bailout during the credit crisis, slid 3.2 percent to 2.84 euros. Societe Generale SA sank 3.7 percent to 35.69 euros. ING Groep NV, the largest Dutch financial-services company, lost 3.2 percent to 6.78 euros.

Deutsche Postbank AG retreated 1.9 percent to 21.95 euros, the seventh day of declines for the longest falling streak since March 2007. The German lender being acquired by Deutsche Bank AG is close to a deal to sell its Indian operations for about 11 billion rupees ($239.7 million), according to a person with direct knowledge of the matter.

Nestle, the world’s largest food company, fell 1.4 percent to 55 francs. The recommendation on the shares was cut at Credit Suisse after the stock’s outperformance versus peers caused the brokerage to reassess its opinion.

The recommendation was lowered to “neutral” from “outperform,” where it had been since January 2005. The shares trade at 17 times profit, a premium to peers, compared with a price-earnings ratio of 12 in 2005, when they were at a discount to rivals, Credit Suisse analyst Alex Molloy wrote in a report.

Ageas, Remy

Ageas slid 5.8 percent to 1.71 euros, declining for an eighth day, its longest losing streak in six months. The insurer formerly known as Fortis was cut to “hold” from “buy” at Rabo Securities.

Remy Cointreau SA plunged 2.8 percent to 50.65 euros after France’s second-biggest distiller said first-half profit tumbled on a writedown of its Metaxa brand due to slumping sales in Greece.

Net income slid 65 percent to 14.1 million euros. The company reported a gross impairment of 45 million euros because of Metaxa, a whisky- and wine-based spirit. Sales increased 18 percent to 428.2 million euros, or 11 percent excluding currency shifts and acquisitions.

Hochtief jumped 2.7 percent to 57.43 euros, the biggest advance in almost two weeks. “During its investigation, BaFin requested significant improvements from ACS,” Germany’s financial regulator said in a statement yesterday. ACS’s revised offer document submitted yesterday “provided all the required improvements. Therefore BaFin has approved the proposal,” the regulator said.

Madrid-based ACS on Sept. 16 announced an all-stock offer to buy Hochtief, proposing eight of its own shares for every five of the German builder’s.

Alstom SA gained 3.1 percent to 31.90 euros as Deutsche Bank AG raised its recommendation on the world’s third-largest power-equipment maker to “buy.”

Atos Origin SA surged 2.7 percent to 31.57 euros after Royal Bank of Scotland Group Plc rated France’s second-biggest provider of computer services “buy” in new coverage.

--Editors: {Will Hadfield}, {Andrew Rummer}

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

ECB Tried to Force Ireland Into Bailout, Minister Says

Posted: 30 Nov 2010 03:53 AM PST

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By Finbarr Flynn

(Updates with details on ECB policy in third paragraph.)

Nov. 30 (Bloomberg) -- European Central Bank officials tried to force Ireland to seek a bailout earlier this month and European officials are now trying to do the same to Portugal, Irish Justice Minister Dermot Ahern said.

“Clearly there were people from outside this country who were trying to bounce us in as a sovereign state, into making an application, throwing in the towel before we had even considered it as a government,” he told Irish state broadcaster RTE in an interview today. “And if you notice, they are doing the same with Portugal now.”

Asked about who was pressuring Ireland, he said “quite obviously people from within the ECB.”

The Frankfurt-based central bank’s drive to withdraw emergency stimulus from the euro-region’s 16-nation economy is being complicated by a worsening fiscal crisis across the bloc’s periphery. While Ireland was given a 85 billion-euro ($111 billion) rescue package on Nov. 28, that didn’t stop a bond market selloff that yesterday sparked the biggest slide in Spanish government debt since the euro’s 1999 debut.

The cost of insuring Portugal against default rose 11.5 basis points to a record 551 today, according to CMA prices. Portugal and Germany last week denied a report in the Financial Times Deutschland that Portugal was facing pressure to ask for aid.

‘Incredible Pressure’

ECB officials, who say they are politically independent, told Ireland on a Nov. 12 conference call that it should press for outside help to rescue its banks and contain a debt crisis, according to a person briefed on the discussion.

Speculation of a bailout mounted in the following days, even as the Irish government denied talks were underway. Ahern himself said in an interview aired on Nov. 14 that bailout speculation was “fiction.” That evening, the Finance Ministry said it was in talks.

EU officials “were leaking in the papers that Sunday, quite incredible pressure on this country,” Ahern said today, adding that he won’t stand in the next general election for personal reasons.

An ECB spokesman declined to comment on his remarks.

Ireland’s crisis has forced the ECB to buy government bonds and pump money into its banking system. Irish domestic lenders increased their reliance on ECB funding by 3.3 percent in October and the central bank today purchased more Irish bonds, according to two people familiar with the transaction.

The bailout has sparked a wave of domestic criticism accusing Prime Minister Brian Cowen of giving up the country’s sovereignty for punitive terms. More than 50,000 people took to the streets of Dublin on Nov. 27, a day before the government agreed an average interest rate of 5.8 percent for the loans from the EU and IMF.

“The government was cleaned out in the negotiations,” said Michael Noonan, finance spokesman for Fine Gael, the largest opposition party. “The interest rate of 5.8 percent is far too high and verges on the unaffordable.”

--Editors: John Fraher, Alan Crawford

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net