Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts

Housing, labor data provide upbeat signs on economy






WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits tumbled to a five-year low last week, a hopeful sign for the sluggish labor market.


Other data on Thursday showed a surge in residential construction last month, suggesting the housing market was now positioned to support the economy’s recovery this year.






Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said. It was the largest weekly drop since February 2010.


“This is a good sign for the January nonfarm payrolls,” said David Sloan, an economist at 4CAST in New York.


While last week’s decline ended four straight weeks of increases, it may not signal a material shift in labor market conditions as claims tend to be very volatile around this time of the year.


This is because of large swings in the model used by the department to iron out seasonal fluctuations.


U.S. stock index futures extended gains on the data, while Treasury debt prices fell. The dollar rose against the yen and pared losses against the euro.


The four-week moving average for new claims, a better measure of labor market trends, fell 6,750 to 359,250, suggesting some improvement in underlying labor market conditions.


The claims data covered the survey week for January’s nonfarm payrolls. Job growth has been gradual, with employers adding 155,000 new positions in December. The unemployment rate held steady at 7.8 percent last month.


A second report from the Commerce Department showed housing starts jumped 12.1 percent last month to a 954,000-unit annual rate, the highest level since June 2008.


Groundbreaking was boosted by a 20.3 percent surge in multi-family unit construction, with single-family starts rising 8.1 percent. Permits for future home construction rose 0.3 percent to a 903,000-unit rate, the highest since July 2008.


The housing market has regained some footing after a historic collapse that helped push the economy into its worst recession since the Great Depression. Residential construction in 2012 is expected to have contributed to growth for the first time since 2005 and is expected to be the key driver this year.


“Housing is a bright spot in the economy and we should see that continue into the end of the year,” said Yelena Shulyatyeva an economist at BNP Paribas in New York.


The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 87,000 to 3.21 million in the week ended January 5.


The four-week average of the so-called continuing claims was the lowest since July 2008.


(Additional reporting by Jason Lange in Washington and Chris Reese and Richard Leong in New York; Editing by Andrea Ricci)


Business News Headlines – Yahoo! News





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Myspace, Act II: A Whole New Tune






The moment you likely haven’t been waiting for has finally arrived: The new Myspace is here. But surprise! It looks pretty good. The troubled social networking site is hoping to relive some of those early-millennium good times with a tight focus on music discovery, a brand-new look (goodbye eye-searing profiles), tablet- and mobile-friendly navigation, and a complete reboot of its membership. The old and new sites are walled off from one another, and legacy “Myspace classic” users can take only their usernames to this brave new world.


d9490  0115 tech myspace 202inline chart Myspace, Act II: A Whole New TuneThe invitation-only beta ended Tuesday and new users now are able to sign up. But it will be a rocky return to relevance. After News Corp. (NWS) took a half-billion-dollar bath on a sale to Specific Media and Justin Timberlake, the new owners decided to reorient the site toward its core membership: musicians and their fans. In its heyday, Myspace was pretty much the only place to showcase your band and collect an online following. Fans deserted the site as clean, intuitive Facebook (FB) started to gain momentum, leaving musicians in the lurch.






The new Myspace is full-bore on the music, keeping a playlist editor glued to the footer and making the user practically trip over new songs and updates from artists already inhabiting the site. When you “connect” with someone, you get a look at his or her music and playlists. The developers thankfully banished the clutter that plagued the old Myspace, making navigation less of a chore. How’s this blank slate look? The screen shots below highlight two big differences.
6ba8b  0115 tech myspace 405inline a Myspace, Act II: A Whole New TunePhoto illustration by 731
Compare these profile photo pages from the old (above) and new (below) Myspace. White space takes the day in the redesign, but what jumps out is the complete absence of advertising. And it’s a consistent evaporation: I couldn’t find a single banner ad, text ad, or pop-up on any one of the pages. With all of Myspace’s peers monetizing through sidebar and inline advertising, I concluded that either a) Specific Media knows something Facebook doesn’t, or b) Myspace’s actual “profit” mechanism is a distant concern. The latter seems more likely.
6ba8b  0115 tech myspace 405inline b Myspace, Act II: A Whole New TunePhoto illustration by 731
Overall, the new Myspace is a lovely but not always intuitive package. The site scrolls horizontally, which feels natural on a phone or tablet but somewhat punishes the spacebar-scrolling desktop user. The interface for collecting content is novel, but not a perfect fit: Users “connect” to an artist, song, playlist, or video (pretty much any discrete piece of media on the site) in order to add it to their Pinterest-like stream. This is a jarring transition for users accustomed to the language of “friends” and “likes,” and a Venn-diagram cue that informs users how likely they are to enjoy their new connection needs some tweaking. I have “0% compatibility” with BeyoncĂ©? Rude.


Day zero is a bad time to prognosticate, so who knows if the revamped Myspace will go right back to the social network graveyard or take off into the wild blue IPO. The aesthetics, the capital, and the Justin Timberlake are in place. Now the reborn, a-little-bit-Pinterest/a-little-bit-Last.fm Myspace needs to harvest that most elusive of Internet resources: bodies.


Businessweek.com — Top News





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Wal-Mart says to buy more U.S. goods, hire veterans






NEW YORK (Reuters) – Wal-Mart Stores Inc will buy an additional $ 50 billion in U.S.-made products over the next decade in areas like sporting goods and high-end appliances in what the world’s largest retailer called a bid to help boost the U.S. economy.


Wal-Mart, the largest private employer and retailer in the United States, also said on Tuesday it plans to hire 100,000 newly discharged veterans over the next five years, at a time when the U.S. unemployment rate is at 7.8 percent.






The moves are likely to receive a cool reception from critics, who claim Wal-Mart does not pay its workers enough and should be taken to task for selling too many goods made in lower-cost countries like China. The company is also under pressure over its sourcing practices, particularly after a deadly fire at a Bangladesh factory that made Wal-Mart clothes.


But Walmart‘s U.S. unit says about two-thirds of the goods it buys to sell in its stores are made, sourced from or grown in the United States, citing data from its suppliers.


Last year, 55 percent of Walmart U.S. sales came from groceries like food and drinks as well as health and beauty products, household goods such as paper towels, and pet supplies. Many of the items are typically sourced locally.


Only 7 percent of Walmart U.S. sales were of apparel, jewelry and accessories, which retailers typically get from lower-cost countries.


The company’s Walmart U.S. and Sam’s Club warehouse chain will increase what they already buy in the United States in categories like sporting goods, basic apparel, storage containers, games and paper products.


Last week, Walmart U.S. told its employees that Michelle Gloeckler, senior vice president in the home business, will lead the new focus on U.S. sourcing and manufacturing. Greg Hall, a vice president of Walmart.com, is set to become a vice president reporting to Gloeckler. No replacement was announced for Hall’s e-commerce role.


Walmart U.S. Chief Executive Bill Simon laid out the spending and hiring plan at the National Retail Federation’s (NRF) annual conference in New York.


JOBS FOR VETERANS


Wal-Mart is not a member of the NRF, a major industry trade association that has promoted the importance of retail jobs in the United States. The NRF asserts that 25 percent of American jobs are supported by the retail industry.


Along that line, the company said starting on Memorial Day in May, it plans to hire 100,000 U.S. veterans over five years, a move supported by First Lady Michelle Obama.


“We’ve developed a national paralysis that’s driven by all of us waiting for someone else to do something,” Simon said in prepared remarks for the NRF. “But if we’re waiting on government, we’re waiting on a process that can’t act with the same speed as business.”


Veterans’ issues are a personal topic for Simon, who served 25 years in the U.S. Navy and Naval Reserves. The company said it will offer a job to any honorably discharged veteran in the first year after active duty.


Depending on the time of year, there are anywhere from 15,000 to 50,000 job postings at Walmart. The company said it promotes about 170,000 people each year to jobs with more responsibility and higher pay.


About 75 percent of its store management started as hourly associates, and now earn an average of $ 50,000 to $ 170,000 a year. The highest earning store manager last year made more than $ 250,000. Wal-Mart has repeatedly claimed its pay and benefits are in the top half of the retail industry.


Starting wages for Walmart U.S. store employees vary by market. Simon noted that in his first job as a dishwasher in a restaurant, he made $ 2.10 an hour.


Walmart U.S. also said it would give part-time workers the first shot at full-time positions. It also plans to make scheduling more transparent, giving part-time workers the ability to choose more of their own hours.


Sales for Walmart U.S. rose 1.5 percent to $ 264.19 billion in fiscal 2012, which ended in February 2012, and accounted for 59.5 percent of the company’s total sales.


The unit is still by far Wal-Mart’s largest business, but its percentage as a part of the company’s overall sales has fallen from 62.1 percent in 2011 and 64.2 percent in 2010 as Walmart International and Sam’s Club have grown their sales at a faster pace.


Walmart shares dipped 0.1 percent to $ 68.24 in morning trading, in line with a little changed S&P retail index.


(Editing by Jeffrey Benkoe)


Economy News Headlines – Yahoo! News





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Wall Street sags as demand worries hit Apple






NEW YORK (Reuters) – Wall Street fell on Monday as shares of Apple were hit by demand concerns, while investors faced a busy week for earnings in what is expected to be a lackluster quarter.


Apple slid more than 3 percent after a report that the tech company has cut orders for LCD screens and other parts for the iPhone 5 this quarter due to weak demand. The stock was down 3.5 percent at $ 502.30. [ID:nL2N0AJ14E] It was the biggest drag on the S&P 500 and Nasdaq composite indexes.






“They’ve had great growth, but the growth is going to slow because we have some formidable competitors we didn’t have when the iPhone first came out,” said Alan Lancz, president at Alan B. Lancz & Associates Inc in Toledo, Ohio


Apple suppliers Cirrus Logic tumbled 4.8 percent to $ 30.04 and Qualcomm lost 1.4 percent to $ 64. The S&P tech sector gave up 0.9 percent.


Earnings season picks up the pace this week with reports expected from companies including Goldman Sachs, Bank of America, Intel and General Electric.


Overall earnings are expected to grow by just 1.9 percent in this reporting period, according to Thomson Reuters data. Thirty-eight S&P 500 companies are due to report results this week.


“Expectations have been lowered from where they were a few weeks ago. Whether they’re low enough is going to be the key question,” said Lancz.


Analysts say the focus will be on what kind of guidance companies offer now that a deal has been reached on the “fiscal cliff.”


Investors will be watching a news conference from President Barack Obama, scheduled for 11:15 a.m. (1615 GMT). Obama is expected to focus on looming budget and borrowing due dates, White House officials said.


Separately, Federal Reserve Chairman Ben Bernanke will be speaking on monetary policy, recovery from the global financial crisis and long-term challenges facing the American economy at 4 p.m. (2100 GMT).


The Dow Jones industrial average slipped 23.01 points, or 0.17 percent, to 13,465.42. The Standard & Poor’s 500 Index fell 4.80 points, or 0.33 percent, to 1,467.25. The Nasdaq Composite Index gave up 15.57 points, or 0.50 percent, at 3,110.06.


Appliance and electronics retailer Hhgregg Inc cut its same-store sales forecast for the full year, sending its shares down 11 percent at $ 7.02.


Transocean Ltd has disclosed that billionaire activist investor Carl Icahn has acquired a 1.56 percent stake in the offshore rig contractor and is looking to increase that holding. Its shares rose 3.4 percent to $ 55.92.


The Dow fared better than the other two indexes as Hewlett-Packard rose 1.6 percent to $ 16.42 after JPMorgan raised its price target to $ 21 from $ 15.


(Editing by Kenneth Barry)


Business News Headlines – Yahoo! News





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CBS Puts CNET on Mute Over Dish DVR Lawsuit






CNET, one of the more widely read tech-review sites, just got kneecapped by its corporate parent, CBS (CBS).


See, if you’re CNET, then you’re surely interested in Dish Network’s (DISH) latest offerings at CES. The satellite TV provider recently showed off some significant upgrades to its Hopper DVR, which allows viewers to automatically skip commercials in prime-time network programming. What’s new for 2013 is that EchoStar (SATS), which makes the hardware that runs on Dish’s network, has incorporated the TV gadget Slingbox (which EchoStar bought in 2007) into the device, now called Hopper with Sling. The combination lets you stream live or recorded programs to an Internet-connected mobile device. And with the new Hopper Transfers feature, you can also download shows that are on your DVR to your iPad for later offline viewing.






That’s a pretty hefty set of features. But you might see where this is going: If you’re offering commercial-skipping and the ability to watch live or recorded content wherever you like, you can be sure that entrenched interests in the TV industry might get a little colicky. After all, companies like ABC (DIS), CBS, NBC (CMCSA), and cable operators have an incentive to keep things as they are, and allow remote viewing only through consortiums like Hulu.


And so, you sue Dish. Which is your right. But if you’re CBS, you also instruct your CNET division to lay off any further reviews of their products. On Jan. 7, CNET published a very positive review of the Hopper with Sling. In it, the tech-review site praised the product, calling it “an impressive, very full-featured DVR system that borders on having almost everything you could possibly want.”


But when it came time for CNET to reveal its annual Best of CES winners, this legalese was found at the bottom of the list:


The Dish Hopper with Sling was removed from consideration due to active litigation involving our parent company CBS Corp. We will no longer be reviewing products manufactured by companies with which we are in litigation with respect to such product.


Earlier this month, this magazine called Dish “the meanest company in America.” That may still be true, but in this case, the company’s meanness is in service of consumers. As FDR is alleged to have said about Nicaraguan dictator Anastasio Somoza Garcia, “He’s a son of a bitch, but he’s our son of a bitch.”


Oh, and with its heavy-handed squashing of further CNET coverage, CBS appears to be gunning for the No. 2 spot on that list.


Businessweek.com — Top News





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This Man Knows Exactly How Many Friends You Should Have






A little more than 10 years ago, the evolutionary psychologist Robin Dunbar began a study of the Christmas-card-sending habits of the English. This was in the days before online social networks made friends and “likes” as countable as miles on an odometer, and Dunbar wanted a proxy for meaningful social connection. He was curious to see not only how many people a person knew, but also how many people he or she cared about. The best way to find those connections, he decided, was to follow holiday cards. After all, sending them is an investment: You either have to know the address or get it; you have to buy the card or have it made from exactly the right collage of adorable family photos; you have to write something, buy a stamp, and put the envelope in the mail. These are not huge costs, but most people won’t incur them for just anybody.


Working with the anthropologist Russell Hill, Dunbar pieced together the average English household’s network of yuletide cheer. The researchers were able to report, for example, that about a quarter of cards went to relatives, nearly two-thirds to friends, and 8 percent to colleagues. The primary finding of the study, however, was a single number: the total population of the households each set of cards went out to. That number was 153.5, or roughly 150.






This was exactly the number that Dunbar expected. Over the past two decades, he and other like-minded researchers have discovered groupings of 150 nearly everywhere they looked. Anthropologists studying the world’s remaining hunter-gatherer societies have found that clans tend to have 150 members. Throughout Western military history, the size of the company—the smallest autonomous military unit—has hovered around 150. The self-governing communes of the Hutterites, an Anabaptist sect similar to the Amish and the Mennonites, always split when they grow larger than 150. So do the offices of W.L. Gore & Associates, the materials firm famous for innovative products such as Gore-Tex and for its radically nonhierarchical management structure. When a branch exceeds 150 employees, the company breaks it in two and builds a new office.


For Dunbar, there’s a simple explanation for this: In the same way that human beings can’t breathe underwater or run the 100-meter dash in 2.5 seconds or see microwaves with the naked eye, most cannot maintain many more than 150 meaningful relationships. Cognitively, we’re just not built for it. As with any human trait, there are outliers in either direction—shut-ins on the one hand, Bill Clinton on the other. But in general, once a group grows larger than 150, its members begin to lose their sense of connection. We live on an increasingly urban, crowded planet, but we have Stone Age social capabilities. “The figure of 150 seems to represent the maximum number of individuals with whom we can have a genuinely social relationship, the kind of relationship that goes with knowing who they are and how they relate to us,” Dunbar has written. “Putting it another way, it’s the number of people you would not feel embarrassed about joining uninvited for a drink if you happened to bump into them in a bar.”


While Dunbar has long been an influential scholar, today he is enjoying newfound popularity with a particular crowd: the Silicon Valley programmers who build online social networks. At Facebook (FB) and at startups such as Asana and Path, Dunbar’s ideas are regularly invoked in the attempt to replicate and enhance the social dynamics of the face-to-face world. Software engineers and designers are basing their thinking on what has come to be called Dunbar’s Number. Path, a mobile photo-sharing and messaging service founded in 2010, is built explicitly on the theory—it limits its users to 150 friends.


“What Dunbar’s research represents is that no matter how the march of technology goes on, fundamentally we’re all human, and being human has limits,” says Dave Morin, one of Path’s co-founders. To developers such as Morin, Dunbar’s insistence that the human capacity for connection has boundaries is a challenge to the ethos of Facebook, where one can stockpile friends by the thousands. Dunbar’s work has helped to crystallize a debate among social media architects over whether even the most cleverly designed technologies can expand the dimensions of a person’s social world. As he puts it, “The question is, ‘Does digital technology in general allow you to retain the old friends as well as the new ones and therefore increase the size of your social circle?’ The answer seems to be a resounding no, at least for the moment.”


At 65, Dunbar is thickening slightly, with a scholar’s slouch, although he tends to take stairs two at a time. A professor at the University of Oxford, he lunches regularly in the senior common room of Magdalen College, where he’s a fellow. The cozy space, with oil portraits of long-dead scholars in robes and wigs, looks out on a baize-like lawn. In November, over thin, gray lamb chops, he told a bit of his story. He grew up in Tanzania, where his father was an electrical engineer, and as a teenager he’d dive and sail off the coast and drive into the bush to shoot elephants. When he was at graduate school in the early 1970s, his original research interest was not human friendship but the social life of the gelada, a monkey found only in the Ethiopian highlands and closely related to the baboon.


Dunbar has a quick, ironic smile and speaks sleepily, in long, fluent dilations. What attracted him to the gelada, he says, were “the peculiarities of their social system, which is based around small family groups which come together into large herds. It’s kind of vaguely similar to what you see in modern hunter-gatherers. It’s called a fission-fusion social system, and it only occurs in two monkeys out of all the 300-odd primates—aside from humans.”


It was the monkeys’ grooming habits that really interested him. For geladas, as for many other primates, grooming is only partly about cleanliness. It’s also a form of bonding. Gelada life is rife with intrigue—there are cabals and coups and uneasy alliances—and the monkeys cement friendships by picking through each other’s fur for parasites and kneading the skin beneath. In an early paper, Dunbar showed that the amount of time geladas spend grooming is not a function of body size, which would suggest a solely hygienic purpose, as bigger bodies take longer to pick over. Instead, it’s a function of group size. The bigger the troop, the more time its members spend trying to curry favor with each other through massage. Dunbar began to wonder what other characteristics might correlate with group size.


In 1992, Dunbar published his answer: brain size. Scientists have long been intrigued by the question of why primates have such big brains. It’s nice to be smart, of course, but big brains demand an enormous amount of energy and require years to grow to full size, and the larger skulls that protect them make childbirth much more dangerous. Plenty of species have thrived on this planet without much of a brain at all.


Dunbar’s argument, laid out in the Journal of Human Evolution, was that big brains evolved to solve the problem of social life. Living in large groups confers significant advantages, chief among them better protection against predators. But living together is also difficult. Members compete for food and access to mates. They have to guard against bullies and cheats—and pick their own spots to bully or cheat. “For very social species, and this applies particularly to primates, the group is an adaptation to solve particular ecological problems,” Dunbar explains. “But the group itself triggers a whole series of problems at the individual level. It’s essentially the social contract problem: People tread on your toes; they steal your food just as you’ve unearthed it.”


As group size grows, a dizzying amount of data must be processed. A group of five has a total of 10 bilateral relationships between its members; a group of 20 has 190; a group of 50 has 1,225. Such a social life requires a big neocortex, the layers of neurons on the surface of the brain, where conscious thought takes place. In his 1992 paper, Dunbar plotted the size of the neocortex of each type of primate against the size of the group it lived in: The bigger the neocortex, the larger the group a primate could handle. At the same time, even the smartest primate—us—doesn’t have the processing power to live in an infinitely large group. To come up with a predicted human group size, Dunbar plugged our neocortex ratio into his graph and got 147.8.


931a6  feature dunbar03  01  405inline This Man Knows Exactly How Many Friends You Should Have


Dunbar was not the first to suggest that social dynamics explained the evolution of higher intelligence, but the simple arithmetic of his argument—bigger brains equal bigger groups—gave it resonance, and he’s now seen as the father of what’s known as the social brain hypothesis. “It’s been very influential,” says Simon Reader, an evolutionary biologist at McGill University. “It has been the dominant hypothesis.”


The Dunbar Number has made its namesake an intellectual celebrity. Much of his recent writing has been for popular audiences. For a while he contributed regularly to the New Scientist magazine and the Scotsman newspaper. He has spoken at TED and written books for lay readers; the most recent of them, The Science of Love, was published in the U.S. in November. Although he’s an engaging writer, his more recent books give the impression of having been written quickly. In The Science of Love there’s an amusing page-long description of the erotic effects of the steroid androstadienone. That description also appears, almost word for word, in his previous book. Asked about this, he says, “You tend to slip into these sorts of standard formulations, I think. I don’t think there’s anything that’s directly cut and pasted.”


In person Dunbar retains a certain remove, not exactly aloof and not exactly shy. Sitting and speaking in his cinder-block-walled office at Oxford’s department of experimental psychology, he twists metronomically in his swivel chair, leaning back and running his eyes over the spines of the books on his bookshelves. He gives the impression of someone not actively looking to increase his number of bilateral relationships. Asked whether as a scholar of social behavior he thinks of himself as a particularly social person, he says, “I guess I’m sort of about average. I’m certainly not hypersocial, that’s for sure.” Over the course of one afternoon, he is interrupted twice by phone calls. The first is a major book festival asking him to be a guest speaker. The second is BBC News asking him to come on that evening. He says no to both, the first one with a trace of annoyance—he’d already declined by e-mail, he explains later.


His professional network spans an array of disciplines. He’s collaborating on projects with linguists, computer scientists, physicists, classicists, economists, archeologists, anthropologists, and literary scholars. All the projects are related to the social brain hypothesis. One study looks at laughter, its physiological effects, and the role it might play in cementing social bonds. Another considers, in a similar way, dancing. His collaborators universally praise him. “For me, Robin is the sort of person you can’t help liking within about five minutes of meeting him,” says Felix Reed-Tsochas, a theoretical physicist at Oxford who’s collaborated with him. “He’s full of really, really interesting ideas and insights, which just kind of gives you a buzz.”


In the fall of 2010, Dunbar got a phone call from Morin, who had been the executive in charge of Facebook’s app platform and co-invented Facebook’s Connect feature. Earlier that year he’d left the company to help found Path. He had discovered Dunbar’s work years earlier as a freshman economics major at the University of Colorado.


Morin, now 32, grew up in Helena, Mont., a town of 28,000 people, and he talks about small-town life in the key of John Mellencamp. “America was built on the backs of these small communities,” he says, sitting in a conference room at Path’s offices in a downtown San Francisco skyscraper with a view of the Bay. Although Morin has spent his adult life in cities, he’s used online networks to create communities with the closeness of his hometown.


Path, he says, provides a way for anybody to be able to do that. The service allows people to post photos from their smartphones. Users can message each other and comment on and search through the material others have posted. One of its more intimate features allows someone to tell everyone in his network when he’s going to sleep and when he’s woken up. But that network cannot be larger than 150 people. Path, in essence, is for clans.


“People feel like they can put things on Path they can’t put anywhere else,” Morin says. “Fundamentally, once you go beyond this number of people you can keep in your head, you begin to filter yourself, you change what you share and how much, you put on your public face.” The service recently passed 5 million users, and Morin says keeping its network size small has rewarded the company with a remarkably engaged user base.


Morin and Dunbar’s first conversation lasted a couple of hours. Among other things, they talked about Dunbar’s research on how long the average friendship can survive in the absence of face-to-face contact (6 to 12 months), and about how, according to Dunbar, a woman can have two best friends (including her romantic partner), but a man only one. Since then the two have spoken every few months. The search algorithm Path uses to find a user’s closest friends is based on Dunbar’s work. Morin says the service is launching several features this year that grow out of the psychologist’s ideas, although he declines to describe them.


Morin likes to point out that it’s misleading to talk about a single Dunbar Number. Dunbar actually describes a scale of numbers, delimiting ever-widening circles of connection. The innermost is a group of three to five, our very closest friends. Then there is a circle of 12 to 15, those whose death would be devastating to us. (This is also, Dunbar points out, the size of a jury.) Then comes 50, “the typical overnight camp size among traditional hunter-gatherers like the Australian Aboriginals or the San Bushmen of southern Africa,” Dunbar writes in his book How Many Friends Does One Person Need? Beyond 150 there are further rings: Fifteen hundred, for example, is the average tribe size in hunter-gatherer societies, the number of people who speak the same language or dialect. These numbers, which Dunbar has teased out of surveys and ethnographies, grow by a factor of roughly three. Why, he isn’t sure.


The venture capitalist Jerry Murdock is one of Path’s investors; his firm, Insight Venture Partners, also invested in Twitter and Tumblr. Murdock, who has a numerological streak, sees Dunbar’s Number as a sort of social Fibonacci sequence, a simple mathematical relationship revealing a deeper truth about the workings of the universe. He believes the two sets of numbers may be related. “What Dunbar’s theory does, like all good theories, is it explains constraints, constraints in nature,” he says. “And it’s the constraints that make great architecture. It’s the constraints that make great companies.”


Just as simplicity has popularized Dunbar’s ideas, it has opened him up to the charge of reductionism. “We want to apply this single monolithic idea that reduces all the complexity of the world to just one dimension and just one number,” says Duncan Watts, a network theorist and research scientist at Microsoft (MSFT). As he sees it, Dunbar’s model of friendship, as a series of circles of intimacy, is a massive oversimplification: In real life, people don’t have better friends and worse friends, they have different sorts of friends they go to for different things. “If you’re saying there’s only 150 people who matter, my response is, ‘Matter to what?’ ” he says. “Depending on what you’re trying to do, the people who matter may be your co-workers, they may be your old high school friends, they may be your current social circle, they may be your family. The challenge for social networking sites is to solve that problem.”


Others, anthropologists and brain scientists in particular, challenge the evolutionary story Dunbar tells, arguing that it discounts other factors that might have driven the development of the big human brain—the pressure to figure out more efficient ways to forage, or the need to surmount the defense mechanisms of the plants and animals our ancestors wanted to eat. “Ecological pressures like avoiding predators, finding food and shelter, choosing habitats—all these kinds of decisions. I think they played a role” in brain growth, says Reader, the biologist.


Researchers who’ve used different methods to measure the size of a person’s social circle have come up with numbers that don’t match Dunbar’s. One set of studies by the anthropologist Russell Bernard and the network scientist Peter Killworth found a mean social network size of 291. Another paper, published this month in the Journal of the American Statistical Association, came up with 611.


Among social network architects, there are those who see the Dunbar Number less as a wall and more as a hurdle. When Morin was at Facebook, he used to discuss behavioral science with Dustin Moskovitz, one of its co-founders. In 2008, Moskovitz, along with the programmer Justin Rosenstein, left Facebook to found Asana, a company that offers task-management software meant to improve how work teams collaborate. Whereas Path fits itself to the contours of the social limits Dunbar describes, Asana seeks to explode them.


To Moskovitz and Rosenstein, a tool such as Asana—or Facebook, for that matter—is like a telescope. It’s a technology that extends the range of our abilities. “It gives us more capacity for keeping track of these relationships, for annotating them, knowing what people are doing, developing an understanding of their strengths and weaknesses, without necessarily having a bunch of one-on-one conversations,” says Moskovitz. Rosenstein adds: “Certainly that’s one of our semisecret sub-missions: to increase Dunbar’s Number.”


At Facebook itself, Dunbar still comes up often. “We do talk about it. In a lot of contexts it’s a compelling framing of some of the data that we have about people’s relationships,” says Cameron Marlow, a sociologist and the head of the company’s data science team.


Dunbar is familiar with the critiques of his work, and he has responses to them. He agrees with Watts, for example, that people have different social networks for different purposes, but that doesn’t mean there isn’t some basic emotional bond we reserve for some people, independent of their utility to us: “Someone like your boss, or the person you borrow $ 50 from to pay the drug dealer, these people are meaningful in your life, but they’re not meaningful to you as relationships.” He also continues to find his number popping up all around him. A paper published in 2011 found that on Twitter the average number of other people a user regularly interacts with falls between 100 and 200. And though the limit on how many Facebook friends one can have is a generous 5,000, the average user has 190—more than 150, but within what Dunbar sees as the margin of error.


Dunbar himself has zero Facebook friends. He occasionally peers over his wife’s shoulder when she logs on at home, but he isn’t on the social network. He has a LinkedIn (LNKD) account, he says, “by mistake.” He opened a Path account but never uses it.


Dunbar does not rule out the possibility that human beings might be able to reset the cognitive limits on our social lives—we’ve done it before. The reason we’re able to function in so much larger groupings than our primate cousins, Dunbar argues, is because, tens of thousands of years ago, we taught ourselves to talk. Whereas baboons bond by taking turns picking each others’ nits, we have rhetoric and gossip and half-time speeches, not to mention singing and storytelling and jokes, to bring and hold us together. Language, he says, is how humans used their big brains to get to 150. And until something as revolutionary as that comes along, 150 is where he thinks we’ll stay.


Businessweek.com — Top News





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9 More Crazy Ways We Probably Won’t Fix the National Debt






There are at least nine ways the U.S. can avoid crashing into the debt ceiling besides the one everybody’s talking about lately, namely minting a trillion-dollar platinum coin. Not necessarily nine better ways, to be sure. The coin gambit, rich in numismatic strangeness, deserves every bit of hype it’s getting. It could probably feature in a sequel to Nicolas Cage’s National Treasure franchise. White House spokesman Jay Carney refused to rule out a trillion-dollar coin in a press briefing Jan. 9, keeping the blogosphere buzzing.


But if for some reason the trillion-dollar coin idea doesn’t pan out–say, because the U.S. Mint can’t find a way to squeeze 12 zeroes into such a small space–there are lots of alternatives that range from intriguing to bonkers. Here we go:






1. Not one coin, but many. A trillion-dollar coin is so valuable that only the Federal Reserve could conceivably buy it from the Treasury Dept. But let’s say the government mints a whole bunch of $ 50 million coins. Say, 20,000 of them, which would add up to a trillion dollars. Greg Ip of the Economist says Yale University economist Gary Gorton has bruited this idea about. Treasury could sell the coins to chief financial officers of companies that want “a risk-free, liquid way to store cash with no risk of negative yields,” writes Ip. The coins would probably be kept in a vault at the Fed, Ip says, because “if the CFO lost one down a sewer grate, it would be a disaster.”


2. The “exploding option”: The government sells the Federal Reserve an option to purchase government property for $ 1 trillion or so. The Fed would credit the money to the government’s account. This is a close cousin to the coin idea, except involving real property and using an option that would expire, or “explode,” after Congress got around to raising the debt ceiling. Jack Walsh, a constitutional scholar at Yale Law School, floated this one in a piece for CNN Opinion. (What is it with these Yale professors, anyway?)


3. Pay expenses with IOUs: The federal government could pay IOUs (“scrip”) instead of cash to “federal employees, defense contractors, Medicare service providers, Social Security recipients and others,” University of Southern California law professor Edward Kleinbard wrote in a Jan. 10 op-ed in the New York Times. That would save precious dollars for interest payments on the debt. Banks could buy the scrip from holders for cash, though presumably less than 100 cents on the dollar. One small problem: This is illegal under the federal Anti-Assignment Act. But Kleinbard is confident that the president “could waive the act’s application.” As Richard Nixon once said: “When the president does it, that means that it is not illegal.”


4. The 14th Amendment to the rescue: The people who pushed this strategy in the last debt-ceiling go-round in 2011 are back. This famous amendment, ratified in 1868, guarantees due process and equal protection. But it’s the little-known Section 4 that has hearts aflutter. It says, “The validity of the public debt … shall not be questioned.” Paraphrasing President Teddy Roosevelt in Slate, University of Chicago Law School professor Eric Posner–yes, another law professor–writes that the president “should not twiddle his thumbs waiting for lawmakers to get their act together.”


5. Sell the gold: The United States has 5,000 tons of gold in Fort Knox. That should cover expenses for awhile. The good thing about gold is that it’s “liquid”–there’s a ready market for it. Same with mortgage-backed securities and student loans. Treasury hates the idea. “A family that is struggling to make its monthly mortgage payment could try to sell all of its possessions within a week at a garage sale or on the Internet,” but when the next payment rolled around, “all of its possessions would be gone,” the department warns. Bummer.


6. Sell the Statute of Liberty: Even if liquid assets like gold run out, think of all the illiquid assets the federal government owns and underutilizes. Imagine display advertising on Yosemite National Park’s Half Dome, or Lady Liberty dressed in the latest from Ralph Lauren or Balenciaga. The Heritage Foundation’s Saving the Dream plan [PDF] is modest by comparison to these visions: asset sales of “approximately $ 260 billion over 15 years,” including “real estate, mineral rights, the electromagnetic spectrum, and energy-generation facilities.”


7. Copy Greece: The Greeks “restructured” their debt last year. That’s the nice way to put it. The not-nice way is that they crammed a partial default down the throats of their creditors. Memo to Jack Lew: You don’t hit the debt ceiling if you don’t owe the money anymore.


8. Jubilee!: The world’s poorest countries don’t even have to negotiate debt forgiveness. Their plight is so hopeless that the International Monetary Fund, the World Bank, and other official lenders simply write off their loans. It’s called the Heavily Indebted Poor Countries Initiative. If the U.S. applies and is accepted, it will join the ranks of Afghanistan, Ethiopia, Haiti, and Zambia, among others.


9. Balance the budget: The U.S. doesn’t hit the debt ceiling if it cuts spending to the level of income. The Republican Party has been advocating a Balanced Budget Amendment for years. Granted, that’s more of a medium-term goal. Economists say that abruptly balancing the budget by the end of February would shut down much of the government and throw the economy into a severe recession. Not an ideal outcome.


There’s actually a 10th option, which is that Congress will vote to raise the debt ceiling sometime in the next few weeks, instantly making all these speculations irrelevant. But that’s way too ridiculous to contemplate.


Businessweek.com — Top News





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RBS braced for hefty Libor fines







The Royal Bank of Scotland is in negotiations with UK and US regulators over fines to be paid for its Libor transgressions, the BBC has learned.






BBC business editor Robert Peston says the talks include “other necessary remediation, including a possible senior resignation”.


He says the fines will run to several hundred million pounds, more than the £290m fines paid by Barclays.


Last month, UBS paid £940m in fines for attempted Libor rate manipulations.


Libor tracks the average rate at which the major international banks based in London lend money to each other.


RBS traders tried to manipulate the Libor interest-rate benchmarks for dollars, Swiss francs and yen, among others, according to a source.


“My understanding is that RBS believes its fines will be less than UBS’s,” says our editor.


Continue reading the main story

I understand the FSA is looking for personal responsibility to be taken”



End Quote



“RBS is braced for substantial humiliation as and when the announcement is finally made. Emails from traders cited as evidence for the Libor rigging are particularly lurid, according to sources.”


He added: “Also, the market manipulation continued well into 2010, or long after RBS’s management was replaced at the end of 2008 following the collapse of the bank and its partial nationalisation. RBS’s board did not become aware of it till notified by regulators, in 2011.”


But our business editor says the bank’s board does not believe chief executive Stephen Hester needs to resign.


“No evidence has been found indicating that he knew about the attempt to make unfair profits by fixing the Libor rates; and he was fully occupied at the time trying to rebuild the banks’ shattered finances.”


It is understood that the FSA is arguing that some bonuses earned by executives and investment bankers should be repaid or clawed back.


But, says Robert Peston, this can only happen in relation to bonuses that were deferred.


“So at risk are those who were promised bonuses in 2009 and 2010, but haven’t yet received all their entitlement,” he added.


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Peugeot hit by slump in EU sales







Peugeot Citroen saw its global sales fall sharply last year, which it blamed on “the crisis affecting the European automobile market”.






Sales worldwide were down 16.5%, the French company said.


The company’s sales in Europe were down 8.6%, with big falls in the recession-hit southern European states.


Sales in Spain were down 14.9% last year, while in Italy they dropped by 20.9%. In France, Peugeot’s sales were down by 13.3%.


Peugeot also said it had been affected by pulling out of Iran.


The company sold 2.97 million vehicles globally in 2012, down from 3.55 million in 2011.


Peugeot Citroen brands chief Frederic Saint-Geours said: “PSA Peugeot Citroen has felt the full force of the sustained decline in Europe’s automobile markets.”


However, its sales did rise in some markets. In Russia they were up by 10.1%, in China they rose 7.2%, and in Latin America they were 5.6% higher.


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Wall Street dips as earnings season begins






NEW YORK (Reuters) – Stocks were little changed at the open on Tuesday as an earnings season expected to show sluggish corporate growth gets under way.


Profits in the fourth quarter are seen above the previous quarter’s lackluster results, but analysts’ current estimates are down sharply from where they were in October. Quarterly earnings are expected to grow by 2.8 percent, according to Thomson Reuters data.






If earnings growth appears to be “less bad” than expected that would translate into a near-term uptick in the market, according to Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management in New York.


“But I think there’s still ample areas for concern,” he said, listing policy worries in Washington and uneven economic activity as a result of Superstorm Sandy during last quarter.


The Dow Jones industrial average <.dji> fell 40.65 points, or 0.30 percent, to 13,343.64. The S&P 500 <.spx> lost 4.28 points, or 0.29 percent, to 1,457.61. The Nasdaq Composite Index <.ixic> dropped 5.04 points, or 0.16 percent, to 3,093.78.</.ixic></.spx></.dji>


German data showed industrial orders fell more than forecast in November due to a sharp drop in demand from abroad, reinforcing concerns that Europe’s largest economy may have contracted in the fourth quarter of 2012.


Monsanto Co shares rose 3.2 percent to $ 99.05 after hitting a more than four-year high at $ 99.99. The world’s largest seed company raised its earnings outlook for fiscal 2013 and posted strong first-quarter results.


Education provider Apollo Group and Dow component Alcoa Inc , the largest U.S. aluminum producer, round out the start of earnings season after the closing bell.


Shares of restaurant-chain operator Yum Brands Inc fell 4.6 percent to $ 64.78 a day after the KFC parent warned sales in China, its largest market, shrank more than expected in the fourth quarter.


London-traded Vodafone shares rose almost 2 percent after its partner in U.S. joint venture Verizon Wireless said it would be “feasible” to buy out the British group. U.S.-traded Vodafone stock fell 1.5 percent.


Sears Holdings shares fell 1.4 percent to $ 42.31 a day after the company said its chief executive will step down for family health reasons. The U.S. retailer also reported a 1.8 percent decline in quarter-to-date sales at stores open at least a year.


GameStop shares fell 7.1 percent to $ 23 after it reported sales for the holiday season and cut its guidance.


(Reporting by Rodrigo Campos; Editing by Nick Zieminski)


Business News Headlines – Yahoo! News





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Canada’s Ivey PMI beats expectations with December rise









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IMF cuts Malawi 2013 growth forecast on inflation, drought






LILONGWE (Reuters) – The International Monetary Fund expects Malawi‘s economy to grow by 5.5 percent this year, more than double the rate estimated for 2012, but slightly lower than the 5.7 percent the IMF had previously projected.


IMF head Christine Lagarde said a spike in inflation, lower-than-expected foreign exchange earnings and a drought that has cut into farm production have hurt the economy. But she was optimistic reforms would restore financial stability.






“Malawi has already made significant progress in addressing the serious imbalances that were hampering economic growth just a few months ago,” she said at the weekend, wrapping up a two-day visit to the country.


Malawi President Joyce Banda, who took office less than a year ago, has been trying to rebuild an economy sent into a tailspin by her predecessor, but prices have soared since she devalued the currency on International Monetary Fund advice.


Lagarde said investors were set to return and inflation, running at about 33 percent in December, was poised to drop this year because of Banda’s economic policies.


“Following these reforms, the economic wheels started spinning again,” Lagarde said, urging the country to stay on course.


But many economists do not share her optimism, saying the drought has severely damaged the maize crop while earnings from tobacco, a major source of hard currency for the destitute country, have dropped by more than 50 percent since 2010.


The economy of the aid-dependent country had been teetering under former President Bingu wa Mutharika, who picked fights with donors. The cut in aid, which has traditionally accounted for 40 percent of the budget, coincided with a steady decline in tobacco sales.


Banda, who took office in April 2012 after Mutharika died of a heart attack, has restored aid flows, but soaring commodity prices have made her unpopular, pushing inflation to 33.3 percent in December, far higher than the forecast of around 18 percent for 2012.


Economy News Headlines – Yahoo! News





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SAP CEO says China to become as important as U.S.: paper






FRANKFURT (Reuters) – German business software maker SAP sees potential for one million new customers in China, five times the number it currently has world-wide, German weekly paper Frankfurter Allgemeine Sonntagszeitung said.


“China will be as important for us as the United States,” SAP’s co-Chief Executive Jim Hagemann Snabe told the paper, according to an advance extract.






Snabe said SAP wants to open the Chinese market by securing a deal with authorities to allow cloud computing services.


“We want to find a solution with Chinese authorities this year if possible,” Snabe told the paper.


As part of SAP’s growth strategy, it plans to invest around $ 2 billion in China by 2015.


(Reporting by Edward Taylor; Editing by Ruth Pitchford)


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Christmas updates to shine light on UK retail prospects






LONDON (Reuters) – The prospects for consumer spending and the broader British economy will be in focus next week when a host of retailers, including Marks & Spencer and Tesco, report Christmas sales figures.


Many store groups found the going tough last year as consumers fretted over job security and a squeeze on incomes.






With wage rises failing to match inflation and another round of government spending cuts slated for 2013, retailers were expected to strike a downbeat tone on the outlook and say growth will be reliant on internal initiatives.


While grocers traditionally cope better in tough times thanks to their focus on essential goods, they are finding growth hard to come by even as they expand their offering into homewares and other non-food offerings.


Analysts think No. 4 grocer Wm Morrison Supermarkets will, on Monday, post the worst of the Christmas figures out of the food retailers reporting next week.


Sales at Morrison stores open over a year, excluding fuel, were seen down about 2 percent. That would follow a fiscal third-quarter fall of 2.1 percent and partly reflect the lack of an online presence and minimal convenience store presence.


Indeed, the retail sector’s best Christmas performers – all helped by a strong online presence – may have reported already.


John Lewis – Britain‘s biggest department store group, and sister company Waitrose – an upmarket grocer, have both reported record Christmas sales, while clothing retailer Next posted a solid outcome and raised profit guidance.


MARKET LEADER


For retail market leader Tesco, which updates on Thursday, analysts forecast like-for-like sales, excluding fuel and VAT sales tax, to grow 0.5-1.5 percent in its home market, having fallen 0.6 percent in its third quarter.


That said, Tesco is up against a weak comparative – a dismal Christmas performance in 2011 resulted in its first profit warning in 20 years and a move to spend 1 billion pounds ($ 1.6 billion) on a recovery plan.


While the world’s No. 3 retailer may show some progress in its home market, its overseas problems are mounting. Though the group has flagged an exit from the United States, in South Korea – its biggest overseas market, legislation allowing local governments to impose shorter trading hours is hurting. Also, trade in eastern Europe is being hit by euro zone instability.


Sainsbury, Britain’s No. 3 grocer, has guided to second-half like-for-like sales growth similar to the 1.7 percent in its first half. For its third-quarter update, expected Wednesday, analysts forecast like-for-like growth of about 0.9 percent.


DISCIPLINED


Though pre-Christmas promotional activity among clothing groups was widespread it appears to have been less severe than in 2011.


“Anecdotally, it was hugely more disciplined than last year,” Simon Wolfson, chief executive of Next – Britain’s second-biggest clothing retailer, told Reuters on Thursday.


That should bode well for margins at Marks & Spencer, Britain’s largest clothing retailer, which updates on Thursday.


Analysts expected M&S to report a 1.5 percent drop in fiscal third-quarter general merchandise sales from British stores open at least a year. That would be a small improvement on a second-quarter decline of 1.8 percent.


However, like-for-like food sales were seen up 0.5 percent, less than the 1.5 percent rise in the previous period.


(Editing by Dan Lalor)


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Weak December sales show shoppers under pressure






(Reuters) – Some major U.S. retailers had a tough December, with chains like Target and Family Dollar feeling the pinch as consumers were cautious in their holiday spending.


The economy took a toll on shoppers in the most important quarter of the year for retailers. The holiday season was never expected to be stellar, but even the single-digit growth anticipated by chains and analysts came under pressure as Superstorm Sandy, the ever-present headlines about the “fiscal cliff” and the Connecticut school shootings affected consumers’ moods.






“The consumers’ confidence is off a bit, and I don’t think you can point to a single individual thing. It’s a culmination of things that hit their psyche,” said Madison Riley, managing director of retail consulting firm Kurt Salmon.


Among the chains reporting December sales at stores open at least a year on Thursday, Costco Wholesale Corp stood out with growth that topped expectations. Limited Brands Inc’s sales rose less than anticipated, marking a rare miss for the owner of the Victoria’s Secret chain.


Target Corp’s same-store sales were essentially flat, while analysts anticipated a 0.8 percent increase, according to Thomson Reuters I/B/E/S.


Target said fourth-quarter earnings should meet or somewhat exceed the low end of its forecast. It said the number of transactions at existing stores slipped in the quarter, while the average transaction size increased. Food was its best seller.


Overall, analysts looked for 3.3 percent same-store sales growth for December across 17 chains, down from 4.2 percent growth in December 2011, according to Thomson Reuters I/B/E/S.


Chains also had a somewhat rough November, with same-store sales up a disappointing 1.6 percent.


Still, Kurt Salmon’s Riley predicted that if the upcoming debt ceiling debate goes better than the Washington wrangling to avoid the cliff, there could be a bigger uptick in consumer spending in 2013.


HITS AND MISSES


Macy’s Inc’s same-store sales were up 4.1 percent, just above the 4 percent analysts expected. But the department store chain lowered its fourth-quarter sales and profit forecasts because the rate of growth in November and December was “somewhat” less than it expected.


Family Dollar Stores Inc‘s same-store sales rose about 2.5 percent in December after increasing 6.6 percent in the preceding quarter.


“The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty,” said Family Dollar Chairman and Chief Executive Howard Levine.


Limited’s same-store sales rose 3 percent versus expectations of a 4.5 percent increase, hurt by flat results at its Victoria’s Secret chain. Limited said its merchandise profit margin came in below its own forecast.


Wet Seal Inc said it expects a fourth-quarter loss at or near the bottom of its prior forecast. Wet Seal, which caters to teens, said same-store sales fell 9.7 percent. Analysts predicted the chain would have the weakest sales of any of the 17 chains reporting, but only anticipated a 5 percent decline.


Costco posted a 9 percent rise in December same-store sales, topping estimates for a 6.5 percent increase, boosted by an additional sales day in the reporting period. Higher fuel prices and a weaker dollar also helped.


(Reporting by Jessica Wohl in Chicago; Additional reporting by Phil Wahba in New York and Sakthi Prasad in Bangalore; Editing by Jeffrey Benkoe)


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Markets rally on US fiscal deal







Continue reading the main story






Global stock markets have rallied after a short-term deal to stave off the US “fiscal cliff” was reached.


The Dow Jones gained 1.8% at the open on Wall Street, while European shares were up by more than 2% for the day.


Failure to agree a deal would have triggered spending cuts and tax rises worth $ 600bn (£370bn), expected to throw the US back into recession.


However, the deal has only postponed by two months negotiations over spending cuts and the government debt ceiling.


Just before the New Year, the US Treasury Secretary Tim Geithner indicated that the federal government would run up against the debt ceiling – a legal cap on its total borrowing set by Congress – by the end of February.


The fiscal cliff deal does not include an increase in the debt ceiling. It also postpones by two months steep automatic spending cuts to federal government spending on things like defence and education.


The fiscal cliff measures – immediate tax rises worth $ 536bn, as well as spending cuts of $ 109bn from benefit payments and domestic and military programmes – were due to come into effect automatically at midnight on Monday.


Tax rises


The deal has averted most of these measures, including:


Continue reading the main story

Start Quote



This week’s deal lifts the risk of an accidental recession – at least for a while”



End Quote



  • making permanent tax cuts dating back to George W Bush’s presidency, for individuals earning less than $ 400,000

  • postponing the $ 65bn of automatic spending cuts for two months

  • keeping benefits available for the long-term unemployed, worth $ 26bn, for another year

  • postponing for another year an $ 11bn cut in Medicare payments

However, the deal did also allow some tax rises to go ahead, namely:


  • the expiry of a payroll tax holiday, expected to raise $ 95bn in additional annual revenue

  • allowing the Bush-era income tax cuts for individuals earning over $ 400,000 to come to an end, with the top rate increasing from 35% to 40%

  • higher taxes on dividend income, capital gains and inheritance for these same top earners

  • phasing out certain income tax deductions for individuals earning more than $ 200,000

The increase in payroll taxes is likely to be the most significant of these measures, in terms of how much it raises in revenue for the government, the number of taxpayers affected, and its impact on the economy.


Payroll tax is paid by all employees. The tax holiday – which cut the rate from 6.2% to 4.2% – was introduced by President Barack Obama three years ago to help stimulate the lethargic economy by putting more money in the pockets of ordinary American workers, who were most likely to go out and spend it.


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The battle [over spending cuts] has just been shoved two months down the road”



End Quote



Economists suggest that its expiry is likely to have the biggest impact on spending – particularly consumer spending – in the US.


Jan Hatzius, chief economist at Goldman Sachs, has said it would reduce US economy growth by 0.6%.


‘Disappointment’


The deal has postponed the hardest decisions that Republican and Democratic politicians must still reach agreement on – over spending cuts and the debt ceiling.


Both issues will need to be addressed at the end of February, with Republicans likely to demand deep cuts, particularly to entitlement programmes such as social security, in return for an increase in the legal cap on government borrowing.


President Obama’s Democrats would prefer to reduce the government’s deficit via further tax rises.


“In the most immediate sense, they took their feet of the cliff, but once again they have taken the hard work and pushed it down the street,” said Daniel Costello, a US economics commentator.


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Fiscal cliff explained


  • On 1 January 2013, tax increases and huge spending cuts were due to come into force – the so-called fiscal cliff

  • The deadline was put in place in 2011 to force the president and Congress to agree ways to save money over the next 10 years

  • The fear was that raising taxes while massively cutting spending would have huge impact on households and businesses

  • Experts believed it could have pushed the US into recession, and had a global impact on growth

  • A deal has been reached delaying some of the tax rises and all of the spending cuts by at least two months


“It’s a huge disappointment. The Republicans deeply wanted spending cuts. Their long-term goal is to finally start chipping away at some of the entitlement spending [on welfare payments] that is just getting out of control.”


Entitlement payments are expected to rise sharply in the coming decades as the post-World War II baby-boom generation retires and enters old age, entailing more government-funded medical care.


“Two-thirds of all federal spending comes from entitlement spending – that means when you wake up in the morning, two-thirds of the money is already spent. By 2020, that goes up to 90%.”


When President Obama last faced off against the largely Republican-controlled Congress over the debt ceiling in 2011, negotiations went to the wire before agreement was reached to increase the ceiling from $ 14.3tn to $ 14.7tn.


Markets fell sharply at the time on fears that, legally barred from borrowing any more, the government might be forced to default on some of its payment obligations, with unknown but potentially significant legal consequences.


The political wrangling also prompted ratings agency Standard and Poor’s to deprive the US of its top AAA credit rating.


Temporary lift


Despite the deal’s shortcomings, markets took cheer from the fact that agreement had been reached on how to postpone and moderate the process of bringing the government’s overspending back under control.




Richard Hunter, Hargreaves Lansdown: “This points the market in the right direction”



The FTSE 100 index rose 145 points to 6,043 points, the first time it has been above the 6,000 level in 17 months, with mining shares leading the way.


The UK market was also boosted by a survey of production and new orders in the manufacturing sector, which showed activity at a 15-month high in December.


Shares worldwide had been hurt in November and December by fears that the US would not be able to reach any kind of agreement and would go off the cliff.


Analysts said the relief would not last.


Mike McCudden, head of derivatives at stockbroker Interactive Investor said: “There will no doubt be a few more twists and turns in the days ahead… but for now, investors have the concrete news they were hoping for.”


Joe Rundle, head of trading at ETX Capital, said: “Today’s bullish tone may continue as we head toward the weekend. but the euphoria will most certainly evaporate, as the deal voted through does not include raising the debt ceiling and longer-term budget cuts.


“It’s only a matter of time before market participants lose their buzz as US lawmakers will have to reconvene to address the remainder of unresolved issues.”


BBC News – Business





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UK assumes presidency of G8 group







The UK is assuming its year-long presidency of the G8 group of nations.






The presidency – which rotates through the G8 members – means it will host the annual leaders’ summit and choose the global priorities that are discussed.


June’s summit is to be held at Lough Erne, in County Fermanagh, while topics discussed will include tax havens.


The G8 is made up countries who have, historically, been the richest in the world – France, the US, Russia, Japan, Germany, Italy, Canada and the UK.


As prime minister of the presidency holding nation, David Cameron has said he wants to focus on combating trade protectionism, cracking down on tax havens and promoting greater government transparency.


These topics will be discussed in ministerial meetings ahead of the summit along with urgent issues like the crisis in Syria.


Although G8 summits are renowned for fine communiques, the group increasingly suffers from a credibility problem – some of the world’s largest economies like China, India and Brazil are not members, says BBC world affairs correspondent Emily Buchanan.


Our correspondent also adds that organisers will at least be hoping the June summit will be trouble-free.


The last time the UK was the host in 2005, in Gleneagles, more than 200,000 people marched against world poverty.


The proceedings were then overshadowed by the 7/7 bus and underground bombings in London.


Mr Cameron announced in November that the G8 summit would be held at the Lough Erne golf resort near Enniskillen.


It is the first time an event of this size has been held in Northern Ireland.


Speaking at the time, the prime minister said: “I want the world to see just what a fantastic place Northern Ireland is – a great place for business, a great place for investment, a place with an incredibly educated and trained workforce ready to work for international business.


BBC News – Business





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Commissions banned on new sales







Financial advisers and sales staff can no longer be paid commissions by the firms whose policies they are selling.






New rules, aimed at eradicating the long-standing practice, are being imposed by the Financial Services Authority (FSA) from now.


The aim is to stop policies – such as private pensions and investments – being mis-sold by sales staff, motivated by commission payments.


Instead, customers must be quoted up-front fees, and be told about charges.


Sales staff or financial advisers will also have to state if they are really independent, or restricted to just selling the policies of particular financial groups.


The reforms form part of a series of changes in the financial services industry called the Retail Distribution Review, and which were first proposed by the FSA back in early 2010.


Linda Woodall at the FSA said: “The changes will improve customer confidence – we want people to feel that they are getting a service from their financial adviser that is relevant to their circumstances and in their best interests.


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d86d0   65017715 tadcaster Commissions banned on new sales


The danger here is that quality financial advice becomes something only for the wealthy”



End Quote Keith Tadhunter Independent Financial Adviser


“These changes are about making the cost of advice clearer, where else would you buy something without knowing in advance how much it costs?


“Customers will now know how much advice is costing them, the service that they are receiving and be reassured that their adviser is qualified.”


Mis-selling scandals


The changes should ensure that independent financial advisers no longer receive payment for their advice by taking a regular cut of their clients funds via commission payments, something the clients may not be aware of at all.


The new policy will apply to the sale of investments such as pensions, annuities and unit trusts, but not to some mortgages and insurance policies.


Alan Higham, an expert on annuities – a pension income for life – believes that there is also a loophole with sales of annuities.


He said that “limited pension advice” – which provides guidance, quotes and explains terms and accounts for about a third of annuity sales – is not covered by the new rules.


This is because the client has made the decision without recommended pension advice from an adviser. If anything is wrong with the choice, then it is the client’s responsibility, rather than the adviser’s.


Commission-driven sales are thought to have been at the heart of the huge mis-selling scandals of the past few decades, affecting the sale of endowment policies, personal pensions and most recently payment protection insurance (PPI).


Even apart from those scandals, the FSA estimated in 2010 that mis-selling in general was costing UK financial consumers about half a billion pounds a year.


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Suggested questions to IFAs


  • How much will your advice cost me and how is this calculated?

  • Can you explain the different ways I can pay for advice?

  • Can you explain what products you can advise me on and any areas you cannot help me with?

  • How often will you review my investments?

  • Can you show me proof that you are qualified to give advice?

Source: Financial Services Authority



A recent survey for the FSA found that 17% of adults currently take advice from a professional financial adviser and another 32% would consider doing so.


But a third of the respondents thought, wrongly, that the advice was free and that they did not have to pay a charge.


‘Danger’


Financial advisers have said that some operators in their industry have given it a bad name. However, some argue that the change in the rules could create issues for those who may not actively seek financial products, such as a pension.


“The danger here is that quality financial advice becomes something only for the wealthy, when in reality, most people need it to some degree – as poor rates of saving across the population only go to show,” said Keith Tadhunter, an independent financial adviser at Future Financial in Bath.


But Martin Wheatley, the chief executive designate of the Financial Conduct Authority, said that – although there was a savings gap in the UK – people had not trusted financial services.


“This is part of getting trust back into finance,” he said.


He expected the industry to change, with many more options explained through websites for people looking to save or invest in the long-term.


The new policies will also stop, from the end of 2013, the practice of businesses such as fund supermarkets or online discount stockbrokers accepting payments from some of the investment funds whose policies they are selling.


This is also thought to lead to biased sales, which may not be in the best interests of private investors.


Part of these payments has sometimes found its way back to the personal investor in the form of a cash rebate, but they are also used to cross-subsidise the provision of other services, such as stock and shares Isas.


BBC News – Business





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