Hastie asset sale hopes dim, creditors told

The administrator of the collapsed Hastie Group engineering empire has dashed lingering hopes of substantial returns for creditors, signalling that few businesses will find new owners following the company’s collapse.
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Speaking after a creditors’ meeting in Melbourne, Ian Carson of PPB Advisory said Hastie’s enormous debt bill included $100 million owed to “many thousands of creditors”, with rural and regional suppliers particularly hard hit. This amount is in addition to the half a billion dollars owed to banks that funded Hastie’s acquisition binge.

Many creditors had travelled from regional Australia for the “sombre” meeting, Mr Carson said. These included labour hire firms, and suppliers of plastic fittings and guns for fastening.

“They’re really normal, ordinary businesses…and a lot of them are locals. You know, Albury and Shepparton, regional areas,” Mr Carson told a media conference after the meeting.

Mr Carson said of the 44 businesses under its control, just five had been sold for a combined sum of less than $30 million, and another one or two might be sold for modest amounts.

Receivers and managers McGrathNicol, appointed by Hastie’s banks, have taken charge of Hastie’s better-performing assets, but Mr Carson was downbeat on the prospect of substantial returns from the sale of those companies.

“It’s hard to imagine there’ll be a material return even after McGrathNicol,” Mr Carson told BusinessDay.

Asked whether he had greater insight into the cause of Hastie’s collapse, Mr Carson said: “There have obviously been some failures. Whether it’s corporate governance or other things.”

He estimated that about 1,200 jobs had been saved across Hastie’s local workforce now under PPB’s remit, of the 2700 stood down at its collapse. This tally excludes the 1800-odd workers employed by companies taken over by McGrathNichol.

The stood-down workers are being urged to apply for the federal government’s GEERS program, which provides payments to people who are owed entitlements by their bankrupt or insolvent employer.

Mr Carson said it was difficult to determine exact numbers of job losses as some workers had simply taken on work with rival contractors.

Collapse

Hastie had about 7,000 workers across the globe when it collapsed in late May, after the discovery of a long-standing accounting “irregularity” scared off a recapitalisation plan.

Its investors included Lazard Private Equity and Thorney Holdings, the Pratt family’s investment fund, which had supported an equity raising for the Sydney-based company last year.

Hastie’s chief executive Bill Wild said after the collapse that Hastie had a culture of “no bad news” and told staff members they had been let down by management. The collapse has also been blamed on overpriced acquisitions before the financial crisis that the company had failed to integrate.

On the prospect of legal action related to the collapse, Mr Carson said this course had not been his focus so far but he would be meeting with directors and shareholders in the months ahead.

Listed litigation funder IMF (Australia) and law firm Slater & Gordon have confirmed they are following developments closely.

There’s also been a 150-day extension period sought for the convening period before the second creditors meeting, Mr Carson said.

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Marine reserve compensation ‘a drop in the ocean’

Commercial fishermen are set to receive compensation of about $100 million to help them adjust to the establishment of the world’s largest network of marine reserves around Australia, Prime Minister Julia Gillard said this morning.
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But the industry has swiftly poured scorn on the figure. Brian Jeffriess of the Commonwealth Fisheries Association told the National Times the government ”were kidding themselves” if they though that was enough.

Ms Gillard told ABC radio that the 44 marine reserves, covering more than 3 million square kilometres of Australian waters, would affect only about 1 per cent of commercial fishing.

She added: ”There will be assistance available in the vicinity of $100 million.”

Environment Minister Tony Burke announced the massive expansion of marine protection – the world’s most comprehensive – in Sydney this morning, ahead of next week’s Rio+20 summit on global sustainability.

The plan offers differing levels of protection, ranging from full-blown national parks that prohibit mining and most types of fishing, to multi-use zones, which will still allow oil and gas exploration as well as some types of commercial fishing.

Conservationists welcomed the announcement, though many expressed concern that more of the areas should have been marked as national parks.

But the plan puts the Gillard government on a collision course with the fishing industry.

Mr Jeffriess said the Great Barrier Reef Marine Park – a relatively small area compared with today’s announcement – alone had cost $250 million and rising in adjustment assistance.

While praising Mr Burke’s lengthy and close consultation with the industry, he criticised the fact the government had revealed the plan without announcing compensation at the same time.

”If you’re sitting there as a small business in a regional area dependent on the fishing industry, what are you supposed to do? For those who don’t know whether they can stay in business at all, their staff will desert in droves. We’re bitterly disappointed.”

Imogen Zethoven, a Coral Sea campaigner from the Pew Environment Group, said the announcement was a ”historic moment” in protecting the unique tropic waters beyond the Great Barrier Reef, which are home to sharks, tunas, and marlin, as well as healthy coral reefs, atolls, cays and islands.

Wilderness Society marine campaign manager Felicity Wishart said the announcement was a ”welcome first step” but included ”some major omissions that undermine the effectiveness of the overall system”.

Mr Burke said the plan would take the success of Australia’s national parks on land and apply them to the sea.

”Our oceans have been such a missing piece of that jigsaw and this now allows us to fill that in,” he said.

”For generations, Australians have understood the need to preserve precious areas on land as national parks. Our oceans contain unique marine life which needs protection too.”

 

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MPs call on Fairfax to abandon NZ plan

The NSW upper house has passed a motion calling on Fairfax management to abandon plans to outsource local production jobs to New Zealand.
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Fairfax – the publisher of this website – on Tuesday confirmed plans to move regional editorial production jobs, including page design, layout and sub-editing roles, to Fairfax Editorial Services in New Zealand.

On Thursday, the NSW upper house unanimously backed a motion of support for Fairfax workers.

“Fairfax’s proposed changes will undermine the quality of news and current affairs reporting in the Hunter, the Illawarra and the rest of NSW,” Greens MP John Kaye said in a statement.

Mr Kaye, who moved the motion, accused Fairfax of “stubbornly pushing ahead with these changes”.

“The NSW upper house calls on Fairfax management to put quality news and current affairs reporting in this state ahead of budget considerations and to abandon its outsourcing plans,” he said in a statement.

Paul Murphy, director of media at the journalists’ union, the Media Entertainment and Arts Alliance (MEAA), will meet Fairfax representatives at 1pm (AEST) on Thursday.

The meeting has been described as a fact-finding mission.

It follows the passing of a no-confidence motion in Fairfax Media CEO Greg Hywood on Wednesday by staff at The Newcastle Herald and The Illawarra Mercury.

Mr Hywood has maintained the New Zealand plans won’t have any negative impact on the quality of the affected dailies or associated community titles.

Comment is being sought from Fairfax on the NSW upper house motion.

– AAP

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Lies, love and money: Shelley Zimmerman perjury charge

George and Shellie Zimmerman …. both sued for failing to pay credit car bills. Killed … Trayvon Martin.
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George and Shellie Zimmerman struggled with money problems.

The year they married, he was sued, accused of failing to pay a credit card bill. Three years later, she was sued for the same thing.

Both were in and out of community college, records show, and spent their first years together in a home owned by her parents.

Then their lives were turned upside down – George Zimmerman shot and killed Trayvon Martin, an unarmed 17-year-old, in Florida in February – and the money began pouring in.

Now what Shellie Zimmerman told a judge about family finances has made her a focus of national attention.

It is the reason her husband is back behind bars and the basis for her arrest this week on a charge of perjury.

What is known about her?

She is a 25-year-old who wants to be a nurse and, when pressed, aggressively defends her husband.

Although George Zimmerman has been vilified, especially on the internet, for killing Martin, she testified at his bond hearing in April that she had never seen him angry.

“Do you believe he’s a danger to the community?” asked his attorney, Mark O’Mara.

“No, I do not,” she said.

She and family members did not respond to phone calls and email, but acquaintances described her as respectful, polite and a good match for Zimmerman.

George Michael Zimmerman married Shellie Nicole Dean in November 2007 in Daytona Beach, according to public records. He was 24. She was 20 and a cosmetologist who specialised in facials.

She enrolled at Seminole State College – formerly Seminole Community College – in the fall of 2008 and left the school in the fall of 2010, their records show.

Olivia Bertalan, a neighbour the couple helped after a burglary, described Shellie Zimmerman as a “stay-at-home student.”

“We had common interests,” Bertalan said. Both wanted to become nurses.

The couple had moved into Sanford’s Retreat at Twin Lakes in 2009, records show.

Frank Taaffe, one of George Zimmerman’s most visible friends and early defenders, said he met Shellie Zimmerman once or twice at homeowners association meetings.

She was much less active in that group than her husband, he said.

Together the Zimmermans mentored two black middle-school students, a brother and sister, according to family members.

Leanne Benjamin, a longtime friend of George Zimmerman’s, met the children in December, she said.

“They did this because of their love of education and a desire to help people,” she said of the couple, adding that she was aware they struggled with money.

“I know they didn’t have anything before this all happened,” she said.

That began to change in April when TheRealGeorgeZimmerman南京夜网 was created. It was a website dedicated to George Zimmerman that allowed supporters to make donations via PayPal.

On February 26, George Zimmerman shot and killed Martin after calling authorities to report a suspicious person in his gated community.

Sanford police did not arrest Zimmerman, saying they didn’t have enough evidence to contradict his self-defence claim.

The shooting set off a storm of controversy.

Zimmerman went into hiding. Civil rights leaders travelled to Sanford, and thousands of protesters took to the streets.

Zimmerman and his family received death threats, and a growing chorus demanded his arrest.

Donations began to roll into the PayPal account, according to O’Mara and court records.

They kept coming after a special prosecutor filed a second-degree-murder charge against Zimmerman on April 11, and he was locked up in the Seminole County Jail.

At a bond hearing April 20, Shellie Zimmerman testified that she and her husband were broke.

In truth, they had access to more than $US130,000 in the PayPal account, according to prosecution paperwork.

George and Shellie Zimmerman talked about the money several times on a recorded phone line at the Seminole County Jail, according to court records.

He talked her through how to transfer it and directed her to pay off their bills, records show.

She moved $US74,000 into her account during one four-day period while he was in jail, records show, and George Zimmerman’s sister transferred an additional $US47,000 into hers.

On Tuesday, Special Prosecutor Angela Corey charged Shellie Zimmerman with perjury. She was released from a short stay in the Seminole County Jail after posting $US1000 bail.

What will happen now?

The charge is a felony and could carry a five-year prison term.

But Bill Sheaffer, an Orlando defence attorney and legal analyst for WFTV, predicted that if she enters a plea, she would likely wind up on probation.

Shellie Zimmerman has no record of prior arrests, and the lies she’s charged with telling did not send an innocent man to prison or allow a guilty one to go free, he said.

Still, “if the criminal justice system is to seek the truth, nothing sabotages that more than a liar,” Sheaffer said.

Shellie Zimmerman is not a key witness in her husband’s case, and the lies she’s accused of telling probably won’t impact his prosecution, he said, but they did him no good.

Sheaffer said she has “significantly tarnished, at least in the court of public opinion, her husband’s credibility.”

Orlando Sentinel/MCT

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Brown predicts more Greens in Canberra after next election

Tomorrow Senator Brown – who resigned as Greens leader in April – will formally resign from the Senate.Former Greens leader Bob Brown says he has no regrets about quitting Federal Parliament and predicts there will be three more Greens senators after the next federal election.
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Senator Brown said that if the Greens kept up poll results similar to their current 14 per cent primary vote, they will boost their numbers in federal parliament.

”There will be three more senators for a start, but there will be more Greens in the parliament,” he told reporters in Canberra today.

The Greens had a 11.8 per cent primary vote in the 2010 election and have nine Greens senators and one lower house MP (deputy leader Adam Bandt) in Canberra.

”Look at those polls for the Greens, they’ve gone up since I got out. Quite clearly I should have done it earlier,” he joked.

Tomorrow Senator Brown – who resigned as Greens leader in April – will formally resign from the Senate.

”And that’s that,” he said.

Senator Brown joined the Senate in 1996 and had been leader of the Australian Greens since 1992.

He insisted that in hindsight, he had no regrets about his decision to go: ”I’m very happy”.

It’s not all smooth sailing for the Greens, however. Senator Brown said the party needed more donations and called for more financial support.

”We’re short of funds and we’d like a lot more,” he said, encouraging any large donors to get in contact via his post office box.

”I’d be very happy to go as a middle person.”

Former foreign minister Gareth Evans famously complained of ”relevance deprivation syndrome” after leaving Parliament but Senator Brown said he had no fears he would suffer the same plight.

”I’m a more casual, easygoing guy,” Senator Brown said.

Senator Brown will also continue to campaign for the Greens and other environmental causes.

His parting gift to his parliamentary colleagues was a poster of James Price Point in Western Australia, in a bid to save the area from a gas plant.

He also pledged to continue supporting Greens candidates at both state and federal elections.

”I’ll be campaigning with the Greens candidates to the very day they put me in a box,” he said.

Follow the National Times on Twitter: @NationalTimesAU

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Marginal seats in sights as Lib team takes shape

The Liberal Party’s plan to seize marginal Victorian seats off Labor is heating up, with a former federal MP and a successful Vietnamese migrant among those heading the team.
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The party is confident it can win the Victorian seats of La Trobe, Deakin, Corangamite and Chisholm at the next election.

John Nguyen, who lost to acting Speaker Anna Burke in 2010, is running again in Chisholm.

A bitter preselection battle in Corangamite — the country’s most marginal seat — will be resolved on Sunday, while the vote for Deakin will be decided on Saturday.

Mr Nguyen fled Vietnam in 1979, arriving in Australia nine months later with nothing. He is now a partner at Ernst & Young.

”I want to make a contribution. It’s about what I can do for others,”  Mr Nguyen told the National Times.

His parents live in Kensington, an area home to thousands of new migrants particularly from Africa, and Mr Nguyen says his frequent trips to the suburb solidify his desire to create opportunity for others to succeed in Australia.

”I spent five years in New York and saw everyone working towards the American dream. It’s about opportunity for others.”

Mr Nguyen is a firm believer in the Liberal Party’s values of free markets and enterprise, and freedom and responsibility to choose.

He fled Vietnam with his grandparents and siblings when he was five, making a boat trip to a United Nations refugee camp in Malaysia, where he spent nine months before coming to Australia though policies championed by the Fraser government.

But he backs the party’s stance on border security, saying Australia has and always will welcome refugees.

”At some point in time we need to protect our borders,” Mr Nguyen said.

”I get a bit uncomfortable when people say that by supporting these policy I’m against refugees, but it’s not like that.”

Mr Nguyen said hearing a talk from opposition immigration spokesman Scott Morrison, who said people did not appreciate the moral dilemmas of shaping border protection policy and dealing with refugees, firmed his views.

He said  the party was not  polling as strongly in Victoria  because of the state’s history as a moderate state, citing how multiculturalism was much more vibrant and successful in Melbourne than Sydney.

Running against the high-profile Ms Burke would be a challenge, he said, paying tribute to Ms Burke as a decent person who stood up for him at a hostile question and answer session last election.

”I want to run as a Liberal candidate not as an Asian candidate,” said Mr Nguyen. ”I want people to vote for me on my values, not because where I come from.”

Ms Burke  – who has held the seat since 1998 – said: “I’ll be working hard, as I always have, to look after the interests of the people of Chisholm and to see that Labor is returned to government.

“The major issues which locals are talking to me about are higher education, aged care, open space and urban amenity and the services which affect them everyday.”

Former Liberal MP for La Trobe Jason Wood has also been preselected for the seat, which he held from 2004 until 2010 when he lost by 1600 votes to Laura Smyth.

Nick McGowan, a former peacekeeper and Victorian Premier Ted Baillieu’s 2006 campaign media director, has been preselected unopposed to contest Jaga Jaga.

The seat is held by Families Minister Jenny Macklin, who won in the last election on a two-party preferred vote of 62-38.

Mr McGowan works for Victorian Employment and Industrial Relations Minister Richard Dalla-Riva.

Follow the National Times on Twitter: @NationalTimesAU

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Reverse mortgages on the rise

Demand for reverse mortgages is increasing as poor investment markets leave older retirees strapped for cash.
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Superannuation funds are said to be weighing up whether they should offer reverse mortgages to their retiree members. If the talk comes to something, the market for reverse mortgages would be greatly expanded.

Super funds are about providing retirement income for their members and for many of those people, their retirement savings will not buy much more than a new car and some maintenance on the house. Cash-poor retirees are increasingly going to look favourably upon unlocking some of the equity in their homes.

Also known as ”equity-release” products, reverse mortgages are available to home-owning over-65s or over-60s (depending on the provider), who borrow against their homes and make repayments on the loan. But as the interest and fees are capitalised, the outstanding loan amount grows quickly. The loan is repaid when the owner goes into a retirement home or an aged-care facility, or dies.

In its latest survey of the reverse-mortgage market, Deloitte says there was about $3.3 billion in funding at the end of last year, a 22.5 per cent increase over the past two years. About 5000 new borrowers accessed equity in their homes last year, with more than 42,000 reverse mortgages in total.

Many retirees’ investment portfolios have been hit hard by the dreadful investment returns of the past five years, which makes the attraction of reverse mortgages understandable.

Retirees may not be generating enough money from their savings and the age pension to provide for their living expenses or to maintain their home. They want to keep their financial independence without being a burden on others. A reverse mortgage could also be used to help pay for home-based care, even if it means less left in equity in the house for the children.

The average age of new borrowers last year was 75, and borrowers told Deloitte they used the money to make home improvements (18 per cent), repay debts (16 per cent) and supplement retirement income (15 per cent).

Reverse mortgages can be a good solution for some people as long as they are careful and borrow only relatively small amounts.

With interest rates low and likely to go lower, not many people are interested in taking out a reverse mortgage with an interest rate that is fixed for a period of time, and providers are generally not offering fixed-interest loans. While a variable interest rate may go lower in the near term, it’s bound to rise over the period of the loan, which is likely to be least a decade for most people. Higher interest rates will make the debt grow even more quickly.

The single-biggest potential danger is where the debt blows out to be worth more than the house.

Reverse-mortgage providers who are members of industry body SEQUAL (Senior Australians Equity Release Association of Lenders), and the better providers, have ”no negative-equity guarantees” whereby, if there is a shortfall in covering the debt on the sale of the house, the lender wears the loss.

There are conditions in reverse-mortgage contracts, such as maintaining the property to the standard required by the lender. If the borrowers fail to maintain the house, the ”no negative-equity guarantee” may be rendered void.

It is essential to obtain independent legal advice on the contract, as well as advice on whether a reverse mortgage will affect social security entitlements.

Many people would prefer to have a reverse mortgage provided by their super fund.

Big super funds have buying power, which can mean lower prices for members. The big super funds offer good deals to members on life insurance, for example. If reverse mortgages were to be offered by super funds, they could be on better terms, such as lower interest rates and more consumer-favourable contracts, than from established players.

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Drawing the line around our city

Melbourne’s urban development is all wrong.FOR more than 10 years – December 1999 to February 2012 – I led the Committee for Melbourne. Decreasing density was seen by the committee as one of Melbourne’s greatest threats. Now we see the urban growth boundary extended again.
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Over the past few months I have spent significant time in two cities that take a very different approach to density and public transport: London and Salt Lake City.

London is a low-rise city. It has an urban density more than three times that of Melbourne, but without skyscrapers. It does so by having consistent four-storey (or thereabouts) development across the entire city.

Those who object to the ”Manhattanisation” of our CBD and Docklands, may like this concept.

The fairly consistent density across the city is one of the reasons that public transport has less impact on the public purse. On the downside, thin roads and four-storey heights along most streets restrict the amount of light that gets to the ground, adding to a compressed feel in many parts of the city.

I don’t like the feel of compression, but there are pros and cons to the London option of medium to high density everywhere.

Salt Lake City in Utah has a population of around 900,000 and an average density almost equal to Melbourne’s, but very little public transport.

With much higher vehicle usage, and a particular weather-related inversion effect in winter, the city suffers from days of poor air quality. Public transport provision may help clear the air, but the retrofitting of public transport into low density areas is extremely expensive.

So the residents of Salt Lake City have little choice but to use cars. As fuel prices become more expensive there will be an adverse impact on the community and the environment.

What lessons then can we learn for Melbourne? Firstly, quality of life is improved with good public transport. Secondly, retrofitting public transport into low density cities is extremely expensive. Far better to build public transport as one builds a city. Thirdly, while there can be too much density – as in Mumbai – there can also be too little density as in our outer suburbs.

Why is Melbourne allowing the government to extend the urban growth boundary rather than looking for better urban density designs? Is it because we fear the voices of the anti-development set? And if we do opt to extend the city, why are we doing so without provision of decent public transport – particularly light rail, trains and trams – to these new areas?

In effect, Melbourne is becoming like Salt Lake City – with ultra low densities and poor public transport. The cost of this is not felt just by those living on the urban fringe. Food prices for all may go up as market gardens get gobbled up. Poorer air quality – as more car journeys take place in the outer urban areas – impacts everybody and inner urban congestion increases.

So should we go for the London option – four to five storeys everywhere?

In my opinion, variety is better. Areas of high density in places such as the CBD, Docklands and Fishermans Bend make sense and provide high density options for people who prefer it.

Four-storey medium density design around public transport nodes also makes sense. Likewise, having suburban streets with lower density makes sense to give people different living options – provided that public transport and service provision are as readily available as they are in established suburbs. We must demand and be prepared to pay for these provisions in outer suburbs too.

What we should not do is extend the urban boundary. It may give a perception of doing something, but without thinking about public transport and services and what such lack of foresight may bring, it impacts on all residents of Melbourne.

Rather than taking the hard solution to consult with the community and determine where our density mixes are going, we are again simply extending our boundary and again falling into the trap of decreasing density – and that is dangerous.

Andrew MacLeod is the former CEO of the Committee for Melbourne.

Comment at The National Times.

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JPMorgan sends false signals to wider debt market

Influence … JPMorgan can change the market perception of a company.JPMorgan Chase & Co’s disastrous bets on corporate debt may have caused unexpected collateral damage: erratic behavior in a barometer that measures the financial health of blue-chip U.S. companies.
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Those bets used Wall Street derivatives called credit default swaps. They are supposed to act like homeowners insurance, allowing bondholders, banks and hedge funds to buy protection against declines in the value of corporate debt, and ultimately protection against a default.

In this case, though, they became more like the pawns in a battle between JPMorgan and hedge funds on the other side of its bet. This struggle so dominated a corner of the market that it sent false negative signals about the credit quality of some major companies whose underlying finances were largely unchanged, market experts said.

A Reuters analysis shows that in recent weeks the trading may have sharply increased the cost of default insurance for companies such as railroad operator CSX Corp and McDonald’s Corp.

In late April, CSX indicated it was in good financial shape. The company reported first-quarter earnings that beat analysts’ expectations, while ratings agency Standard & Poor’s said it expected CSX’s credit “to remain satisfactory.”

Yet the cost to insure against a default at CSX surged 28 per cent to $US64,300 for five-year protection on $US10 million in debt on May 14 from $US50,100 on May 1. At the same time, the company’s stock fell just 5 per cent.

A CSX spokesman declined to comment.

There was a similar pattern at McDonald’s. The cost of protecting the fast-food company’s debt against default rose more than 19 per cent to $US24,300 on May 14 from $US20,400 on May 10, while McDonald’s stock fell just 1.1 per cent.

Again, there was no news during that time to explain a significant increase in the cost of default insurance. “It’s business as usual for us at McDonald’s,” spokeswoman Becca Hary said when asked about the jump.

CRITICAL PERIOD

The first two weeks of May were a critical period because JPMorgan announced May 10 that a flawed trading strategy led to at least $US2 billion in paper losses for the bank. The losses could eventually total $US5 billion or more, analysts said.

Trading in default insurance for major U.S. companies showed unusual spikes during that time.

To be sure, renewed concerns about the U.S. economy and the European debt crisis are at least partly responsible for increasing worries about companies’ financial health. There is no way to quantify whether JPMorgan-related trading contributed more or less than the broader economic concerns to the increases in costs for credit default insurance.

A JPMorgan spokeswoman said there was no causal link between the credit derivatives prices and the trading tied to the bank’s losses. The theory, she said in an emailed statement, “is wrong and ridiculous.”

But the Reuters analysis showed the 121 companies underlying the index of credit derivatives at the heart of the trading battle had a sharper increase in default insurance costs than 41 companies in a separate index that was not believed to be part of the big bets.

The trend held true even when distressed companies, whose default insurance costs are more sensitive to market movements, were removed from the analysis. Reuters used data from Markit, the index publisher, for the analysis.

New York University finance professor Marti G. Subrahmanyam, who looked at the results of Reuters’ analysis, disputed JPMorgan’s statement that there was no cause-and-effect relationship between the big bets and the subsequent increase in default insurance costs.

“How could it be otherwise?” Subrahmanyam said. “The whole market knows that one agent has a substantial position, and the market will react to that.”

WIDER INFLUENCE

Peter Tchir of TF Market Advisors, a financial advisory firm in New Canaan, Connecticut, analyzed the trading in May and said the spikes in default insurance were a result of the struggle between JPMorgan and the hedge funds. That type of trading “can just influence the whole market,” Tchir said.

On Friday, Barclays Capital analysts said default insurance for some companies was more expensive than their credit quality seemed to warrant.

Making a direct comparison is impossible because there are no companies that are exactly similar to the 121 in the index at the center of the trades, Subrahmanyam cautioned.

But if the broader economic concerns were the dominant factor, companies in the unrelated index should have had an equally strong jump in the cost of their credit insurance, Subrahmanyam said.

A surge in credit default swap prices can sometimes make a big difference for companies. When the cost of insurance increases, it can signal a company is in trouble because investors, increasingly worried that debt won’t be repaid, buy more protection against default.

For example, the cost to protect against default at Bank of America Corp climbed last autumn, sending jitters through the stock market.

A company’s borrowing costs can be affected. At least 33 of the 121 companies in the credit default swap index in the JPMorgan trades have loan commitments from banks whose interest rates are tied to various versions of the index or their individual default insurance costs. Companies use these loan commitments to provide cash for day-to-day operations.

Financially strong companies typically do not tap the loan commitments except in times of stress.

A look at one credit agreement illustrates how borrowing costs can be affected. Caterpillar Inc has a $US3.9 billion loan commitment whose interest rate will go up if its five-year default protection increases, according to Thomson Reuters LPC data.

From May 1 to May 14, the construction equipment maker’s five-year default insurance has increased to $US104,000 a year from $US82,900. That means that if Caterpillar had to tap the loan commitment, its cost to do so would have increased. Under the agreement, though, the company’s interest rates on the loan would be calculated based on a maximum default insurance cost of $US100,000.

Reuters

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European rifts deepen as markets reject fixes

Tensions among European leaders are breaking into the open as markets reject their fixes for a debt crisis that threatens to overwhelm the eurozone’s financial firewalls.
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German Finance Minister Wolfgang Schaeuble sniped at Greek yacht owners in comments published yesterday while Spanish Prime Minister Mariano Rajoy declared “battle” on the European Central Bank. Austrian Finance Minister Maria Fekter retracted a forecast that Italy would need aid, and Spain pushed back against Finnish advice on how to use its 100 billion-euro ($126 billion) bank bailout.

Rifts are deepening with Greek elections on June 17 risking the first exit from the single currency as voters buckle under the continent’s most severe austerity program. Spanish bond yields reached a record after the nation’s request for aid for its banks fueled speculation the world’s 12th biggest economy may need a full rescue.

“What we’re seeing now says much about the deepening cracks in Europe’s political financial and economic edifice,” Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, said in a telephone interview.

Monti meeting

French President Francois Hollande, who is pushing back against the austerity measures advocated by Germany, will meet Italian Prime Minister Mario Monti in Rome today. Mr Monti called for a “credible package of growth measures” yesterday as he said Europe faces a “particularly intense and crucial phase.”

Borrowing costs for Spain and Italy, southern Europe’s biggest economies, rose yesterday, as disagreements between European leaders further undermined confidence that politicians are prepared to deal with the fallout from the Greek election.

“It’s not easy to cut the minimum wage in Greece if you think about all the yacht owners,” Mr Schaeuble said in an interview in Stern magazine. “But the Greek minimum wage is just dropping to the level of Spain. If the country wants to become competitive again, it has to sink.”

The yield on Spain’s 10-year debt rose to a euro-era record of 6.75 per cent yesterday while Italy’s benchmark bond yields increased to 6.22 per cent. The Spanish rate has jumped more than 50 basis points since Mr Rajoy agreed the bailout package of as much as 100 billion euros for the nation’s banks on June 9.

Battle cry

Mr Rajoy yesterday called for the ECB to take steps to ease the government’s interest costs in a letter to European Commission President Jose Manuel Barroso. Spain’s bond market has already received support from the ECB as banks channeled emergency central bank loans into government debt. Lenders took a record 263.5 billion euros from the central bank in April and the Bank of Spain will release data for May today.

“That is the battle we have to wage in Europe,” Mr Rajoy told Parliament in Madrid. “I am waging it.”

Hours later, Deputy Economy Minister Fernando Jimenez Latorre said Spain will stick to the tools it has used so far to shore up its banks, rejecting calls from Finland, one of the euro region’s six AAA rated sovereigns, to break up failing lenders.

Full bailout

Wrangling over the Spanish bank bailout is adding to concerns over the single currency’s future. The package will probably fail to avert a full sovereign bailout out for Spain, and Mr Monti may have to follow Mr Rajoy in seeking aid within months, James Nixon, chief European economist at Societe Generale said.

Mr Monti told the national parliament yesterday that the EU hasn’t time to wait for austerity plans to stabilise borrowing costs and officials must support growth as Italy slides deeper into a recession.

The Italian economy shrank by 0.8 per cent in the first quarter compared with 0.7 per cent in the previous three months and a 0.3 per cent contraction in Spain in the first quarter. The Italian Treasury is due to auction as much as 4.5 billion euros of bonds today. Yields jumped at a sale of one-year bills yesterday.

“Above all, Europe needs more growth,” said Monti, who visited Berlin late yesterday to receive an award from Schaeuble. The single currency area is “in a particularly intense and particularly crucial” situation, he added.

Greek vote

European leaders will meet in Brussels on June 28 in a attempt to plot a route out of the crisis.

Any measures may come too late for Greeks who will vote June 17 on whether to back Alexis Tsipras, who wants to scrap the austerity plan dictated by the EU and the International Monetary Fund as a condition of its bailout. New Democracy leader Antonis Samaras, who supports the bailout conditions, said backing Tsipras will see Greece thrown out of the euro.

“We have no sense that European partners will follow this tactic of blackmail heard from some quarters and stop funding,” Mr Tsipras, whose Syriza party is vying for first place in pre-election polls, said in an interview in Athens yesterday with Bloomberg Television. “Something like that would be catastrophic not only for Greece but for the entire euro area.”

Mr Schaeuble told the German magazine he had sympathy for the suffering of ordinary Greeks who were suffering because of decades of economic mismanagement by their leaders.

“I can’t spare him that,” the German finance chief said. “Crises are seldom fair.”

Bloomberg

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Housing trend points to southern gloom

Victorians are closing more mortgages than they’re opening.As policy-makers embrace the “structural change” from mining-led growth from yesteryear’s credit-led expansion, spare a thought for those states that do not participate directly in the mining boom.
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Victoria is the prime example. Its economy is based around three industries that are under simultaneous pressure. The biggest is property. Second is manufacturing and third is finance.

Last Friday, Victorian Department of Sustainability & Environment (DSE) released transfer and mortgage data for May, which showed a continued paucity in the number of housing transfers and finance commitments, and ongoing weakness therefore for Victoria’s other two critical industries.

According to the DSE, the annual number of Victorian home transfers fell slightly over the month – from 172,706 in April 2012 to 172,524 in May – which is the lowest level reached in the series’ history and 12 per cent below average levels.

The DSE’s mortgage finance statistics are unique in that they provide data on both mortgage lodgements (i.e. new mortgages) and mortgage discharges (i.e. mortgages repaid in-full). Below is a chart showing both series on a rolling 12-month basis:

As you can see, mortgages discharged have risen above mortgages originated for three successive months and the gap is slowly widening.

According to the DSE, the annual number of mortgages discharged (192,534) actually exceeded the number of mortgage lodgements (191,602), meaning that 932 mortgages were lost in the state of Victoria in the 12 months to May.

To give you some perspective, this compares with the average of about 13,700 annual net mortgage creations since the series began in 2002:

Between 2003 and 2005, there were around 11 mortgages created for every 10 mortgages discharged. In the 12 months to May 2012, however, the number of mortgages lodged has slipped just below the number of mortgages discharged, signalling that Victorians are deleveraging.

So far, Victoria’s jobs market has held up under these strains. But overall, the weakness of the DSE data suggests the recent deflation of dwelling prices in Melbourne will continue.

With this weakness, combining with the pressure now being applied to Victoria’s manufacturing sector, the future looks difficult for the former dynamo.

Leith van Onselen is an economist who has previously held positions at the Australian and Victorian Treasury and Goldman Sachs. This is an extract from a longer report on Victorian housing available free at MacroBusiness. link: www.macrobusiness南京夜网.au

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Entangled in web health

Wellness and the web … Researching illness on the internet can be a double-edged sword.My son was 18 months old when he was diagnosed with meningitis. He had a high fever, was listless and vomiting, and, crucially, had a rash on his belly. A rash that stayed resolutely scarlet when I pressed it.
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It wasn’t a medical professional that diagnosed my son. It was me, an ordinary mum with no medical training but 24-hour access to health-related advice, courtesy of the internet.

My self-diagnosis resulted in a panic-stricken dash to Emergency, where we endured a six-hour wait before being sent home. It turns out my son didn’t have meningitis, just an unspecified virus that cleared up in a few days.

I was both relieved and ashamed. I was right to worry, but instead of contacting the doctor I’d allowed the internet to tell me what I didn’t know.

Cyberchondria is the term used to describe the state of escalating concern caused by researching medical matters on the web. If my kids contract anything unusual – beyond the common winter sniffles – I’ve been known to spend hours online, terrifying myself with the possibility it might be a horrible affliction.

It sounds ridiculous, particularly when a visit to the doctor or after-hours clinic is easy to come by in the middle of Sydney, but self-diagnosing via the internet is incredibly common.

A study conducted by Bupa Health showed that nearly 80% of Australians admitted to going online for health information. Almost half of those (47%) look for information to make a self-diagnosis.

Parents’ appetite for web-based information may be fueled by the need for immediate answers. If we’re worried about our children’s health, even a day’s wait to see the doctor can be interminable. The ability to ‘diagnose’ our kids there and then is therefore too tempting for many of us.

Rachel Holden, a mum from Bondi, first got concerned when she noticed her young son, Edward, was experiencing facial seizures. She says, “I researched his symptoms online, which lead me to believe he had something serious, such as Tourette’s or autism. I looked at the internet pretty much every day, changing the wording in my searches to come up with something positive.”

Rachel eventually saw her doctor, but he dismissed her concerns as the irrational fears of a first-time mum. Despite his assurances that Edward was fine, Rachel’s online analysis convinced her something awful was causing his seizures. She finally got a referral to a pediatrician. He also told Rachel her son was absolutely fine and that he’d grow out of his condition. And the doctors were right: he did.

Rachel found the experience exhausting and emotionally draining. “The worst part was that as a first-time parent I had no benchmark, and I hoped the internet would give me one. Instead I went down a helter-skelter spiral the moment I typed the symptoms into a search engine.”

The doctor’s viewpoint  Dr Mike Torry, a GP with pediatric experience, sees many parents who research their children’s health online. Although he believes self-diagnosis can cause unwarranted anxiety, he doesn’t feel it’s always a bad thing.

“Some people use the internet to find out more about their child’s symptoms prior to an appointment. It can make for informed parents who are able to have an engaged discussion regarding their child,” he says.

Dr Torry also believes that access to information via the web can prompt parents to act more quickly, explaining, “As a population we’re becoming increasingly aware about our families’ health. The internet facilitates that interest and can encourage parents to seek help sooner than they might have done 15 or 20 years ago.”

Still, he points out that the negative consequences of web-based research are concerning. “It’s understandable that parents want immediate answers but paranoia fueled by the web can lead to an almost constant state of hyper-vigilance and awareness,” he says.

This level of constant concern is worrying – it not only causes parental stress, but can have a knock-on effect for the whole family. The unrelenting scrutiny for signs of illness, combined with numerous health-related conversations, might lead children to have unrealistic perceptions around illness and disease. As Dr Torry explains, “Frequent analysis of children’s wellbeing has the ability to impact their self-confidence, create anxiety and hinder their move towards independence.”

And the stress and paranoia caused by inaccurate self-diagnosis has a flip side that’s equally as troubling. Dr Torry is concerned that parents may look online and be assured symptoms are the sign of something minor when there could actually be a serious problem.

“It could be very easy to find information that suggests everything is okay even though the child needs urgent medical attention,” he says.

If you’re concerned about your child’s wellbeing, the best idea is to book an appointment with your GP or local childhood health practitioner as soon as you can. And if you’re tempted to consult the internet in the meantime, Dr Torry makes the following recommendations:This story Administrator ready to work first appeared on Nanjing Night Net.

Laughing at beginners … yes, it happens

Yes, people will be watching when you make mistakes as a learner … but so what?I was late to skiing, very late. Not for me the glow of the goggle tan entitled on the first day back at school after winter holidays.
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Skiing was a club I simply had no access code to. My parents had left the grey skies of England for summer blues, damned if they were going to embrace the cold on annual leave. Skiing, to them, was strictly done while being dragged behind a boat in a pyramid formation at Sea World each winter. Even then, it was done by others while they watched, why exert yourself unless you have to?

God forbid I mention snowboarding – still considered at the time to lead to drug addiction, body piercing and an almost certain life of prostitution by the parents of my goggle-tanned school friends.

In my family, we had no generations of privately educated ancestors with names etched on members-only ski club walls, granting us access through the front door of the private ski lodge. The world of skiing in Australia was as foreign to me as the British Order of the Garter is with a door bitch or bastard measuring one’s worthiness to enter the hallowed white halls.

Twenty year later I have (I think) managed to negotiate my way to the front of the queue, past the door bitch and into the club – only to discover there’s another club within, managed by a hierarchy of self-appointed folk who are watching beginners’ every move and laughing in their wake. The inner circle of ‘I ski/snowboard better than you’ skiers and boarders.

Then there’s the ski club members. Not all private ski clubs and their lodges are created equal either, some even sing anthem-style songs heralding their greatness over other ski clubs, while standing before dinner served up by the club chef. Other ‘more lowly’ and more accessible clubs have you pitch in and make dinner yourself. Either way, like True Blood’s vampires, you have to be invited through the front door to get in, but your tens of thousand of membership dollars will get you uber-cheap accommodation for life. Oh the irony.

Let’s not forget the highly competitive clique of race club parents (think soccer mums in Prada) whose little miss and master are ‘naturally’ destined for the Olympics. They spend their days begging for more funding from the government and emailing for sponsorship from private ski brands from their iPad at 37,000 feet at the front of the plane.

If only they could trade in a spare gemstone in the top drawer, a racehorse hind quarter or an acre of ‘the farm’ and contribute to junior’s cause, while the really worthy get the funding on offer. Oh, that’s right, there is no alpine racing funding (that’s another blog begging to be written).

But alas, I digress. The average first-time skier in Australia won’t know the difference between the seasonaires pulling beer for a lift ticket with no care for those who paid for their own, the locals who live and work there year-round, and the clubsters and trustafarians who lay claim to the land that the indigenous had before them.

Thankfully the first-time skier or snowboarder will be too focused on keeping their butt off the snow to notice, but know: we are watching you. Beginners are like sitting ducks to the Royal family on hunt day.

I arrived at my first time at the snow with a suitcase filled with stilettos clearly keen on après. Five sliding skater steps on an icy access path saw me return to my lodgings and don a pair of gym shoes (the only flats I had brought) channelling Jerry Seinfeld with jeans in humiliation.

Warren Miller makes a mockery of the beginner on the chairlift in many a feature ski film. Plant yourself at the top of a chairlift and watch the games begin.

Snow It All loves a beginner, the more converts to the snow the merrier I say. There are telltale signs that reveal the beginner to the snow world of Australia and if you’re considering joining ‘the club’ this winter and setting foot on snow for the first time, let me warn you of the dress code lest you hear snickering behind you in the lift line.Denim is called Texas gore-tex for a reason. Only an oversized cowboy from Houston would consider jeans appropriate ski attire. Denim is cotton and it will get wet.Garbage bags may be a cheaper option than rental gear but as they say ‘you are what you wear’. Two holes for arms and one for the head may work for a turtle but you are far from the sea.You are not washing dishes, leave the Marigold rubber gloves at home. They may be waterproof but they freeze, retain the cold and play havoc with the manicure.Beware the ‘turkey gap’ otherwise known as ‘the gaper’. Exposing that flap of exposed skin between the ski goggles and the beanie is akin to Madonna flashing her breast to a stadium of 55,000. One is forced to look away.When carrying your ski poles under your arm, have the baskets and pole tips facing in front of you or you may find a few small children shish-kebabbed on the end behind you. They are pesky to remove.Skis are to be carried over the right shoulder with the tips at the front or to be carried by Sven, the personal ski instructor.Skis and snowboards on the roof of the car should be with the bindings facing skyward, and preferably without boots still attached, while driving through satellite ski towns.Snow tyre chains are for the snow, unless you’re in an episode of Survivor and searching for fire from the flint sparks on the bitumen. If you are in a front-wheel-drive don’t put them on the back tyres. They become, like Kevin Rudd, redundant.Lift passes should be put on zipper pockets, not tied to the zipper at the front of your jacket. Why? Because if you zip your jacket up with the lift pass on it then you’ll spend the day getting lift-pass lash as it continually hits your face. You can thank me for that one later.Beware the riding-high snow-pants and that pesky leg hem that sits above the ski or snowboard boot begging for a damn dragging down. If you’re showing off your boot tops you can go back to the end of the queue.

There are many more telltale ‘new to the snow’ signs. Backpack done up while on the chairlift, hanging upside down from the lift as it makes it’s way back down or the permanent snow plough legs on the dance floor.

What beginner mistakes did you make your first time at the snow? What ones do you notice most often? What tips do you have for beginners Post a comment below and share your stories.

WIN WIN WIN 

You won’t look like a beginner in these swanky his and hers jackets from our friends at Burton Australia on Facebook. The Women’s Sage Down in medium (RRP$429.95) will keep riders uber toasty and warm and the Men’s Large Arctic Jacket (RRP$279.95) features a Trail Mapped Insulation with Sherpa fleece. For stockists check out the Burton Stockists page.

To enter just share your beginner rookie mistakes you made when learning to ski or snowboard or tell us how to spot a beginner at the snow by posting a comment on our blog. If you are a first timer this year then share with us what you’re looking forward to the most. Terms and conditions.

FUR TEDDY’S SAKE – LOST SNOW BEAR IN NEED OF A HOME

Hotham Alpine Resort posted a pic of Teddy on their Facebook page on Monday night after the opening long weekend. Poor Teddy had got separated from his best mate who took him to the snow. Now Teddy wants to go home and has lost his way.

Is this your Teddy? If it is contact [email protected]南京夜网.au and they’ll make sure Teddy finds his way home. In the meantime he’s living the high life with Harry the Snow Dragon, riding the chair, boarding the slopes and sipping hot chocolates at tea time.

FIT TO SKI & SNOWBOARD – WEEK TWO

Snow It All has teamed up with Mark Richardson from Body Language Personal Training to create four simple three-minute video workouts you can do at home – lower body, upper body, core and cardio.

Last week we focused on legs and you can view that video here. This week we focus on the upper body. Any production value complaints see the manager of No Budget Productions.

Join in the fun and ‘like’ our Snow It All Facebook Page. This week we’re giving away Snowy Mountain Cookies  and a Dragon Alliance prize pack then Monday to Sunday is White Ninja bandeanie week, one a day to give away. Plus follow us on Twitter @misssnowitall

Last week’s winners of the Brookfarm Winter Hampers are Celtic 62, Rabbitoh Shane, Marralduci and Jules. Check your emails for a note from us.Latest snow weather report and web camsFull ski season coverage

This story Administrator ready to work first appeared on Nanjing Night Net.