Apple Inc. hopes to revolutionize the education industry
After a customer backlash, Verizon Wireless on Friday dropped a plan to start charging $2 for every payment subscribers make over the phone or online with their credit or debit cards.
In a statement on its website Friday, the company said “customer feedback” prompted the decision to drop the “convenience fee” it wanted to introduce on Jan. 15.
Verizon wanted to steer people to electronic check payments, which are cheaper, and automatic credit card payments, which are more reliable.
A petition on Change.org against the fees had gathered more than 95,000 names by Friday afternoon, a day after Verizon, the country’s largest cellphone company, announced the fees. The petition was set up by Molly Katchpole, who earlier this year started a successful campaign to make Bank of America drop a $5-per-month fee for debit card use electronic check payday advance.
Payment processors for power companies usually charge “convenience fees” of up to $5 for every payment made by phone or online, but cellphone companies haven’t taken the step yet. The furor against Verizon hints that they may have to wait further.
Verizon Wireless serves 91 million phones and other devices on accounts that pay the company directly, and more who pay indirectly through other companies. It’s a joint venture of Verizon Communications Inc. of New York and Vodafone Group PLC of Britain.
LONDON/PARIS (Reuters) - A European summit deal to strengthen budget discipline in the euro zone failed to restore financial market confidence on Monday, forcing the European Central Bank to step in again gingerly.
The euro fell, stocks slid and borrowing costs for Italy and Spain rose as investors weighed the outcome of last week’s summit that split the European Union, with Britain blocking treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union.
Friday’s initial market rally petered out in less than 24 trading hours due to legal uncertainty surrounding the new pact and the absence of an unlimited financial backstop for the single currency.
French President Nicolas Sarkozy said the legal basis of a new accord to enforce debt and deficit rules in the 17-nation euro area with quasi-automatic sanctions and intrusive powers to reject national budgets would be worked out before Christmas.
“In the next fortnight, we will put together the legal content of our agreement. The aim is to have a treaty by March,” Sarkozy told newspaper Le Monde in an interview.
“You have to understand this is the birth of a different Europe — the Europe of the euro zone, in which the watchwords will be the convergence of economies, budget rules and fiscal policy. A Europe where we are going to work together on reforms enabling all our countries to be more competitive without renouncing our social model,” he said.
Traders said the ECB intervened to buy short-term Italian debt after yields on Italian and Spanish debt spiked. But ECB sources told Reuters last week that purchases would remain limited with a maximum ceiling of 20 billion euros a week.
There is no prospect of a “big bazooka” to shock the markets.
Despite the central bank dabbling, Italian 5-year bond yields shot up above 7 percent, widely seen as a danger level while 10-year yields spiked above 6.8 percent and Spanish 10-year yields topped 6 percent.
Investors’ appetite for short-term paper drove Italian one-year borrowing costs down just below 6 percent at an auction but yields remain uncomfortably high.
“Let’s not raise expectations too high, there will be more summits,” credit ratings agency Standard & Poor’s chief European economist Jean-Michel Six said.
“Time is running out and action is needed on both sides of the equation, on the fiscal and monetary side,” he told a business conference in Tel Aviv.
S&P has put 14 euro zone governments on watch for a possible rating downgrade in the coming weeks, arguing that the deepening debt crisis and looming recession will increase their potential liabilities and reduce their ability to cope with them.
If some of the euro zone’s ‘AAA’-rated members are downgraded, it would call into question the solidity of the euro zone’s rescue fund, which would likely suffer a similar fate fast cash loans.
“There is probably yet another shock required before everyone in Europe reads from the same page, for instance a major German bank experiencing difficulties in the market,” Six said. “Then there would be a recognition that everyone is on the same boat and even German institutions can be affected by this contagion.”
Interbank lending rates in the euro zone fell to their lowest level since May after the ECB threw cash-starved banks a lifeline last week by offering unlimited three-year liquidity to counter a credit crunch.
Political aftershocks from Friday’s historic rift between Britain and the rest of the 27-nation bloc continued to shake Europe on Monday with Prime Minister David Cameron facing tension in his coalition and doubts in the business community.
Cameron was assured of a hero’s welcome from Eurosceptics in his Conservative party in parliament but faced a backlash from his Liberal Democrat coalition allies when he explains a veto that has cast Britain adrift from its continental partners.
LibDem Deputy Prime Minister Nick Clegg said on Sunday he was “bitterly disappointed” with an outcome that would diminish Britain’s global influence and was bad for jobs and business.
In business, the chief executive of the world’s largest advertising group, Martin Sorrell of London-based WPP, told Reuters that Britain’s interests would be better serviced “inside the EU tent” than on the sidelines.
In Brussels, officials were groping for a strong legal basis for the planned fiscal compact, with Britain arguing that the euro zone cannot use the EU treaty institutions — the European Commission and the European Court of Justice.
European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters most of the practical measures to strengthen budget enforcement could be implemented immediately under a set of rules known as the “six-pack” agreed in October.
Euro zone finance ministers may hold an extra meeting before the end of the year to try to nail down details of the agreement before their winter break, diplomats said.
The euro area faces the next potential crunch point in mid-January when Italy, which has a debt mountain of 1.9 billion euros or 120 percent of its annual output, has to start issuing tends of billions of euros in bonds towards a 2012 total of 340 billion euros needed to roll over maturing debt.
Michael Leister, rate strategist with German bank WestLB in Duesseldorf, said the summit outcome had done little to restore confidence in the absence of stronger central bank action.
“The question is will this help to stabilise sentiment? I don’t believe so, given that those comments from
Summoned by Congress, Jon Corzine embraced a bold strategy Thursday to distance himself from MF Global’s fall and $1.2 billion in missing clients’ money:
Answer each question. Be courteous. And don’t huddle with your lawyer before replying.
He said very little. Nevertheless, it was a risky strategy, even for a risk-taking financial executive. Anything Corzine might say could be used against him in a courtroom, should he ever be charged in the MF Global case.
Yet the former CEO of the securities firm never declined to answer questions by invoking his Fifth Amendment right against self-incrimination.
The one-time senator and New Jersey governor was subpoenaed by his former colleagues to explain how MF Global collapsed just over a month ago in the eighth-largest bankruptcy in U.S. history. It’s the first time in more than 100 years that Congress has subpoenaed a former senator to testify, according to Senate historian Don Ritchie.
Looking strained and speaking hoarsely during nearly three hours of testimony, Corzine said he never intended to break rules that require firms to safeguard client funds. He said he doesn’t know what happened to the missing money, but added that customers’ losses weigh on his mind “every day, every hour.”
He said several times that he did not become aware of the shortfall in client accounts until Oct. 30, one day before MF Global filed for bankruptcy following its disastrous bets on European debt.
“I’m not in a position, given the number of transactions, to know anything specific about the movement of any specific funds,” said Corzine, who took over as CEO more than a year and a half ago.
In his testimony to the House Agriculture Committee, Corzine sought to deflect blame for the company’s collapse, arguing that he inherited a firm already doomed by his predecessors’ bad financial decisions.
Legal experts said they were surprised by Corzine’s decision to answer each question, however vaguely, given the legal risks. The FBI and federal regulators are investigating MF Global.
It’s hard to see how the testimony will benefit Corzine, said Robert Mintz, a defense attorney in Newark, N.J., who specializes in white-collar cases.
Mintz said Corzine’s answers leave him open to “a barrage of questions about facts and circumstances that will no doubt be the subject of review by prosecutors and regulators.”
Two other congressional panels have also voted to subpoena Corzine.
His testimony provided his first public comments since the firm’s spectacular collapse. A lawyer who handles white-collar criminal cases accompanied Corzine and sat behind him during the hearing. But Corzine never turned to seek his advice.
The hearing wasn’t particularly confrontational, though a few members expressed disbelief that Corzine could be so detached as CEO.
Rep. David Scott, D-Ga., told him it strained belief “for you to sit there and say instant payday loans… you know nothing about” the missing customer money. A lot of farmers in Georgia need to know, Scott said. “The key to this is you. You’re the CEO.”
Corzine said he was confident that others at MF Global were checking daily to ensure that the firm’s money and clients’ fund were being kept separate.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he said.
He said MF Global toppled, in part, because of a large quarterly loss caused by his predecessors’ accounting moves. Rating agencies responded to the loss by downgrading the firm’s credit rating, which panicked investors and trading partners.
“The marketplace lost confidence in our firm,” he said.
He disputed media reports that he personally pushed the company to make big, doomed bets on risky European debt using too much borrowed money.
He said he made the high-stakes bets only after discussions with company executives who traded European debt long before he arrived. And he said he reduced MF Global’s investment risks in some ways.
Some outside experts challenged some of his assertions.
Janet Tavakoli, an expert on the transactions MF Global specialized in, said Corzine’s remarks seemed to divert attention from the firm’s fundamental flaw under his leadership: It lacked the cash to cover its bets after investors started to fear that a major European nation would default.
“His entire testimony looks like a very skilled way to try to detract from that key issue,” said Tavakoli, president of Tavakoli Structured Finance.
Lawmakers have heard from farmers, ranchers and small-business owners who are missing money deposited with the firm. Agricultural businesses use brokerage firms to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.
A Democrat, Corzine represented New Jersey in the Senate from 2001 through 2005. He later served a single four-year term as governor, losing a re-election bid in 2009. Before entering politics, he was CEO of Goldman Sachs.
Several class-action lawsuits on behalf of shareholders have been filed against Corzine and three other top executives, accusing the firm and its leaders of making false statements about MF Global’s stability.
Stephen Gillers, a professor at New York University School of Law, said lawyers typically advise clients in Corzine’s situation not to answer questions.
“When you answer a full day’s worth of questions, you’re committing yourself to a story that could come back to haunt you,” Gillers said.
Mintz added: “It only makes sense if your answers can satisfy those posing the questions. Short of that, the risks far outweigh the benefits.”
Stocks are rising at the open on hopes for a plan to restore long-term confidence in the euro.
French and German leaders are meeting to discuss closer political and economic cooperation between the 17 nations that use the currency. They want tighter control of budgets, to prevent the kinds of debts that might to cause Greece and others to default.
Stocks overseas rose modestly Monday, while the yields on Italian bonds dove, suggesting traders believe that Italy is less likely to default. Italy’s government agreed this weekend on a package of austerity and economic growth measures.
The Dow is up 135 points, or 1.1 percent at 12,154. The S&P 500 is up 16, or 1.3 percent at 1,261. The Nasdaq composite index is up 32, or 1.2 percent at 2,659.
On the eve of “Cyber Monday,” online retailers reported an even stronger start to the holiday shopping season than brick-and-mortar stores.
Research firm comScore reported on Sunday that e-commerce spending jumped 26 percent on Black Friday, the day after Thanksgiving, compared with the same day a year ago. ComScore reported $816 million in online sales for the day, up from $648 million.
The 26 percent growth rate for online sales compares with a 7 percent retail sales increase reported for Black Friday by ShopperTrak, which gathers data from individual stores and shopping malls. At $11.4 billion, the brick-and-mortar sales total still dwarfs the online total.
Gian Fulgoni, comScore chairman, said in a statement that e-commerce enjoyed a banner day, despite some analysts’ predictions that early store openings on Black Friday could hurt online sales.
“With brick-and-mortar retail also reporting strong gains on Black Friday, it’s clear that the heavy promotional activity had a positive impact on both channels,” Fulgoni said.
Thanksgiving is also a big day for online sales, and comScore reported an 18 percent increase this year compared with a year ago, with $479 million in sales.
Online sales also have been strong throughout November pay day loans. Online sales through Saturday rose 15 percent compared with the same period a year ago, according to comScore, which is based on Reston, Va. Through the first 25 days of the month, online sales have totaled $12.74 billion.
ComScore said 50 million Americans visited online retail sites on Black Friday, up 35 percent from a year ago. Each of the top five retail sites reported double-digit gains in visitors, in percentage terms, led by top retail site Amazon. Walmart ranked second, followed by Best Buy, Target and Apple.
Next up is Cyber Monday, when many online retailers run promotions for the first business day of the week following Thanksgiving. Cyber Monday sales topped $1 billion last year, making it the heaviest day of online spending ever. ComScore’s Fulgoni expects another record will be set this year.
ComScore reported online sales for Black Friday two days after another researcher, IBM Corp.’s Coremetrics unit, reported a smaller online spending gain for Black Friday. Coremetrics reported a 20 percent increase, compared with comScore’s 26 percent.
Democrats on Congress’ supercommittee secretly presented Republicans with a revised deficit-cutting proposal earlier this week that calls for a blend of $1 trillion in spending cuts and $1 trillion in higher tax revenue over the next decade, officials in both parties said Wednesday night, adding that compromise talks remain alive though troubled.
The previously undisclosed offer scaled back an earlier Democratic demand for $1.3 trillion in higher taxes, a concession to Republicans. At the same time it jettisoned a plan to slow the growth in future cost-of-living increases in Social Security benefits, a provision liberal Democrats oppose.
The one-page proposal was handed to Republicans at a meeting Monday night attended by some but not all members of the supercommittee. At the same session, GOP lawmakers in attendance advanced a revised proposal of their own that signaled for the first time they would be willing to accept higher revenues as part of a plan to cut deficits over the next decade.
Given the unusual secrecy of the meeting and the committee’s Nov. 23 deadline, it appeared that the pace of activity on the panel was accelerating. Less clear was whether there was still time to bridge enormous differences on priorities, or whether each side was laying the groundwork for trying to blame the other in case gridlock triumphs.
The committee, comprising six Republicans and six Democrats, has been working for weeks. Evidence of progress has been scarce, with Republicans demanding large cuts in benefit programs such as Social Security and Medicare, while Democrats pressed for additional tax revenue as a condition for agreeing to make deep spending cuts.
Few details are known of the session Monday night, except that Sen. Pat Toomey, R-Pa., outlined a plan on behalf of the four Republicans in attendance, and Sen. Max Baucus, D-Mont., countered with the revisions in an earlier Democratic proposal.
One official said the meeting lasted several hours.
Any progress that may have been made by the panel has largely been overshadowed in the past two days by a Democratic campaign to dismiss the GOP proposal as a prescription for deep tax cuts for the wealthy at the expense of the middle class.
In a sign of the political struggle unfolding, Democrats circulated a four-page analysis that relied not on a review of what Toomey outlined, but on what they described as a different, similarly drawn proposal.
Republicans countered that for all the rhetoric, both sides had shown flexibility on the issues that long have been at the root of Congress’ inability to compromise on sweeping plans to cut deficits.
“Republicans have put revenues on the table. Democrats have put entitlements on the table,” said Sen. Lamar Alexander, R-Tenn. “They both need to put more of each on the table.”
Alexander said the so-called supercommittee could expect help from a bloc of 45 senators that have signed on to a letter pledging support for a deficit bargain that mixes new revenues with curbs on the growth of government benefits programs payday loan lenders.
Democrats sounded far less upbeat.
“I have yet to see a real, credible plan that raises revenue in a significant way to bring us to a fair, balanced proposal,” said Sen. Patty Murray, D-Wash., the co-chair of the 12-member supercommittee.
In something of a dissent, the No. 2 Senate Democratic leader, Richard Durbin of Illinois, said he considered this week’s GOP offer “an honest effort” and “a breakthrough that can lead to an agreement. That’s what we need.”
Asked why he considered it to be a breakthrough, he told reporters, “The word `revenue.’ It is a breakthrough.”
Durbin said the bipartisan group of 45 senators planned to release a statement later Wednesday urging the supercommittee to keep working toward a target in the $4 trillion range, well above its mandated savings target of $1.2 trillion to $1.5 trillion.
The revised Democratic plan totaled $2.3 trillion in savings over the next decade, including projected savings in interest costs the government would realize from lower deficits.
Spending on Medicare would be restrained by $350 billion over a decade, and on Medicaid, by $50 billion.
Another $200 billion would come from defense, and an identical amount from a broad swath of government programs ranging from the parks to transportation.
Democrats also called for an overhaul of the tax code that would result in an individual rate of no higher than 35 percent and a scaling back of itemized deductions.
Republicans, too, favor tax reform. In his presentation, Toomey called for a top rate of 28 percent, which appears to require deeper cutbacks in the existing deductions than Democrats favor in order to yield $250 billion in higher revenue.
Aides in both parties requested anonymity to describe the GOP proposal, and they differed on some of the details.
Broadly speaking, however, the GOP plan would raise new revenues of at least $500 billion, both skimmed off the top as Congress completes an overhaul of the tax code and from proposals such as auctioning broadcast spectrum, raising Medicare premiums and increasing aviation security fees.
The plan also would cut spending by about $700 billion, mixing a less generous cost-of-living adjustment for Social Security beneficiaries with further cuts to agency operating budgets and curbs on the booming growth of Medicare and the Medicaid health care program for the poor and disabled.
Lower interest payments on the national debt would provide the remaining savings.
French luxury powerhouse LVMH Moet Hennessy Louis Vuitton said Tuesday that its revenue grew strongly in the third quarter after a the purchase of jewelry giant Bulgari and a rebound in Japan.
The company behind Dom Perignon champagne and Marc Jacobs said sales rose to euro6.01 billion ($8.28 billion), up 19 percent from the previous quarter.
The biggest jump was in the jewelry and watches division, which doubled its sales from last quarter to euro636 million.
The overall sales were up 17 percent from the same quarter a year earlier payday loans.
The quarter also benefited from strong sales in Hong Kong and Macau and a return to luxury consumption in Japan after its devastating earthquake and tsunami.
LVMH said it was confident that sales would remain strong for the rest of the year.
The latest setback in Greece’s financial crisis sent the Standard and Poor’s 500 index to its lowest level of the year, putting it on the edge of a new bear market.
The index, the benchmark for most U.S. stock funds, has fallen 19.4 percent since its high for the year on April 29. A 20 percent drop would signify the start of a bear market, ending a bull market that began in March 2009. The S&P 500 has gained 76 percent since then, including dividends.
European markets slumped, dragging U.S. stocks down along with them, after Greece said it will miss deficit reduction targets it agreed to as part of its bailout deal. Benchmark indexes in Germany, France and Spain all fell 2 percent.
The Dow Jones industrial average fell 258.08 points, or 2.4 percent, to 10,655.30. The S&P 500 lost 32.19, or 2.9 percent, to 1,099.23. That’s below its closing low of 1,119 for the year, reached on Aug. 8.
Indexes measuring smaller stocks fell even more than the Dow and S&P, which are dominated by large companies. The Nasdaq composite slid 79.57, or 3.3 percent, to 2,335.83. The Russell 2000 index of small companies plunged 5.4 percent to 609.49.
All 10 company groups in the S&P index fell. Banks, energy, and consumer discretionary stocks had the steepest declines. The yield on the 10-year Treasury note fell to 1.75 percent from 1.91 percent late Friday as investors piled into lower-risk investments. The yield hit a record low of 1.71 percent on Sept. 22.
“The market is continuing to trade based on what is happening in Europe, and that is going to overshadow everything else,” said Quincy Krosby, market strategist at Prudential Financial. “The math (for the Greek bailout) didn’t add up a year ago, and the math doesn’t add up today. The market knows that and is waiting for the Europeans to acknowledge it.”
The renewed concerns about Europe’s debt problems pushed the euro down to $1.32 versus the dollar, a 9-month low. The stronger dollar could hurt large U.S. companies that rely on exports by making their products more expensive overseas. Coca-Cola Co. fell 3.2 percent to $65.42. Caterpillar Inc., which sells construction equipment globally, lost 4.5 percent to $70.55. Boeing, another large exporter, dropped 3.7 percent to $58.25.
“Everything that is coming out of Greece suggests that the dollar is only going to strengthen, which doesn’t bode well for the international firms,” said J.J. Kinahan, chief options strategist at T.D. Ameritrade. “It’s tough to be bullish on anything at the moment.”
The Dow briefly turned higher after 10 a.m., when the Institute of Supply Management said its gauge of U.S. manufacturing did better than Wall Street had predicted in September. The Dow and S&P turned mixed within 20 minutes, then took a sharp slide shortly after noon.
The slump started the market off on a weak note for the fourth quarter. Concerns that the U.S. economy is headed for another recession helped send the S&P 500 index, the basis for most mutual funds that invest in U.S. stocks, down 14 percent over the three months that ended in September. It was the worst quarter for the stock market since the financial crisis of 2008.
Some investors are also concerned that Friday’s jobs report will show that unemployment rose from 9.1 percent in September. “If I had to bet, I would say it’s more likely that more jobs have been lost than a surprise to the upside,” said T.D. Ameritrade’s Kinahan.
In corporate news, AMR Corp., the parent company of American Airlines, plummeted 33 percent to $1.98 as concerns flared up again that the company could be headed for bankruptcy protection. The stock hadn’t closed below $2 since 2003. American is considered the most vulnerable among U.S. carriers to an economic downturn.
Bank of America Corp. plunged 9.6 percent to $5.53, the lowest price for the stock since the financial crisis in 2008. The company has fallen 59 percent since January as investors fret that the nation’s largest bank will be hit with more settlements over mortgage securities that lost value after the housing bust.
Yahoo Inc. gained 2.7 percent, to $13.53, after the head of Chinese Internet company Alibaba Group Holdings said he would be interested in buying the company. Yahoo, which recently ousted Carol Bartz as its CEO, has been trying to decide whether to sell parts of the company.
Nine stocks fell for every one that rose on the New York Stock Exchange. Volume was heavy at 5.8 billion shares.
Toronto Councillor Adam Vaughan can tell the minute he looks at a condo building in his downtown ward if it
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