BOSTON -- Last week, the Securities and Exchange Commission adopted a new rule "designed to preserve investor confidence and promote market efficiency." Sadly, the rule does neither. Mostly it serves to make politicians and regulators feel like they are doing something.

The "alternative uptick rule" is regulators' new twist on limiting short sales -- attempts by investors to bet against securities and to profit when they fall in price -- which was deemed necessary because a previous version that had stood for 70 years was eliminated in 2007.

Trading rules always sound like inside baseball because the logic behind both the rules and stock trading can be hard to follow. But short-selling is a controversial subject, with many market observers suggesting that the betting against the market artificially depresses stock prices and keeps the market chained down, accelerating the effect of bad news and heightening volatility.

A short sale is a bet against a stock; it typically involves borrowing shares, selling them, and waiting for the stock's price to decline before "covering" the trade and buying the shares back on the open market. The short-seller keeps the difference between the higher selling price and the lower repurchase price.

The original uptick rule, put in place in the late 1930s, required an upward move before a short sale was allowed; it made short sales more difficult by easing some of the downward pressure that builds when a market is in freefall. Eliminating the rule was like cutting the bars out of the cage and letting the bears run free.

That said, critics noted that traders and market sharpies never worried much about the uptick rule, knowing that plenty of stocks that are dropping will take a momentary pause for a quick upside trade. Moreover, short-sellers and their trading partners would sometimes create those upside trades just so they could implement the short sale they really wanted to do.

Armed with several economic studies showing the rule had little effect in stabilizing the market, the SEC scuttled the uptick rule.

This is much different than the agency's crackdown on naked short-selling, which involves betting against a stock without ever securing the shares, a practice that can have truly dangerous consequences for a stock being attacked. Efforts to curb naked shorting have been well received and should continue to be stepped up.

Stop signs

Ever since the uptick rule was repealed, both sides on this issue have taken opposite approaches; each has its points.

Proponents of the uptick rule argue that eliminating the rule made it easier for short-sellers to gang up on a stock and cheaper for them to bet against a company, because they did not have to execute at the higher, upticked price. This is how market bears get into a feeding frenzy; the first bear takes a bite and the others quickly follow. Since short-sellers thrive on tips and rumors, whispered actions were much more likely to instigate an attack on a stock.

Studies by Birinyi Associates have traced the rise in volatility in U fast payday loan.S. stocks back to mid-July 2007, coinciding with the repeal of the uptick rule.

The anti-uptick crowd argues that selling frenzies are more coincidental than a result of the rules change. They point out that the worst of the market's meltdown in 2008 occurred at a time when most short-selling was banned completely, an extreme measure that hardly slowed the free-fall. Moreover, short-covering -- a short-seller cashing out and taking the profits -- actually helps to slow a stock's decline. And having the uptick rule in place didn't stop the bear-market declines from 2000-2002 or Black Monday from 1987, and so on.

About the one thing that is clear is that the politicians and regulators approached this situation backwards. They should have left uptick in place and tinkered with it, rather than eliminating it and then trying to put on collars.

The alternative uptick rule enacted in late February triggers a circuit breaker with respect to a stock if the stock's price declines by 10% or more from the prior day's closing price. At that threshold, short selling in the security is permitted only if its price is above the current national best bid; the safety measure remains in effect for the remainder of the day and the entire following day.

Now, apparently, the idea is to limit the damage at 10% in a day. Considering that most investors would be happy making 10% on a stock in a year, waiting to slow a bear-driven frenzy until the stock has moved 10% seems a bit like closing the cage after the bears have looted the kitchen.

"The new rule has no teeth," said David Brady of Brady Investment Counsel in Chicago. "The uptick rule protected us, the same way stop signs protect us. The stop sign becomes really important when a two-year-old stumbles into an intersection or when two cars come to the same point at the same time. The stop signs in the market -- the upticks -- become really important when your financial system is collapsing.

"It's a great rule to have when the market is under extreme stress. The rest of the time, no one even notices it," he added, "but this new rule is pretty much the same as having no rule at all."

"It's a compromise," said John Standerfer of S3, an Austin, Texas firm that analyzes market data. "They needed to do enough to show to Congress and the American public that they have put rules in place to protect against a perceived threat. I'm not sure it's a valid threat but, even if it is, this isn't really strong enough to stop it."

The next logical move in this saga won't come until the market takes a tumble, at which point someone on Capitol Hill will recommend reinstituting the uptick rule and starting the reform process over.

Maybe then they will get it right, because this time -- for all parties involved -- it feels all wrong.

New 'uptick Rule' For Stocks Lets Investors Down

WASHINGTON – More than a year after Lehman Brothers' collapse set off a financial panic, Senate negotiators appear close to resolving a narrow dispute that was holding up broad legislation to set new rules for Wall Street.

At issue was whether a government consumer watchdog should be free from bank regulators to write rules that govern everything from credit card and overdraft fees to payday loans and mortgages.

After a flurry of offers and counterproposals over the past three days, the Senate Banking Committee was closing in on a deal that would house a government consumer entity inside the Federal Reserve but give it autonomous power to write regulations, three people familiar with the talks told the Associated Press Monday night.

The sources spoke on the condition on anonymity because they were not authorized to discuss the evolving talks publicly.

The idea, proposed by Republican Sen. Bob Corker of Tennessee, could break the logjam that has prevented a bipartisan bill from emerging in the Senate. While the sources said the Banking Committee's chairman, Democrat Christopher Dodd of Connecticut, was seriously entertaining the plan, it was unclear whether the committee's top Republican, Sen. Richard Shelby of Alabama, was receptive to it. Dodd would also need to persuade fellow Democrats to accept the compromise.

"Senator Dodd is keeping members informed on how things are progressing — as he has throughout this process," Dodd spokeswoman Kirstin Brost said. "We do not have an agreement yet. He hopes to have a consensus bill in the coming days."

While the political world has focused on attempts to revive health care legislation, tougher Wall Street regulations could end up being this year's biggest legislative accomplishment. The House passed its version of the bill in December. And President Barack Obama has made new regulations a priority in his response to the recession business cards.

Still, a Fed-housed consumer entity would fall short of Obama's initial demand for a stand-alone Consumer Financial Protection Agency that would replace the consumer oversight now assigned to bank regulators. The House-passed version would create a separate agency.

The White House, eager to give Dodd room to negotiate, had backed off its insistence on a stand-alone agency. On Monday, White House spokesman Robert Gibbs said the agency still would have to have "strong independent authority, an independent head, an independent budget, independent authority to do what it needs to do."

The banking industry has opposed an independent agency, arguing that regulators should retain authority over consumer protections.

If the latest Senate plan were to hold, it would represent a remarkable turnaround for the Fed, which has been criticized for failing to adequately protect consumers as part of its regulation of state-chartered banks and bank holding companies.

Consumer advocates prefer the House-passed financial regulation bill. They criticized a plan that Dodd floated Friday to place the agency inside the Treasury Department because it would give bank regulators the right to appeal consumer regulations. Shelby and Corker also opposed it.

The consumer agency has been the final obstacle in Dodd's effort to get bipartisan support for the bill. The legislation also would create a council of regulators that would determine which financial institutions deserve special supervision because their size and breadth could pose a threat to the economy. The legislation also would provide a mechanism to dismantle large failing institutions, with the cost borne by their banking peers.

Senate talks close in on deal for Wall Street regs

ARMONK, N.Y. – MBIA Inc. said Monday that its loss narrowed in the fourth quarter, although losses from mortgage-related securities continued to hammer the bond insurer.

For the final three months of 2009, MBIA lost $242 million, or $1.16 per share. That's less than one-fourth its loss of $1.2 billion, or $5.21 per share, a year earlier.

But it's worse than Wall Street expected. On average, analysts polled by Thomson Reuters expected MBIA to report a loss of $1.11 per share.

Its shares nonetheless rose 11 cents to $4.91 in after-hours trading, after slipping 2 cents during the regular session.

MBIA's quarterly revenue was $652.7 million, compared with a loss of $1.59 billion last year. The fourth quarter of 2008 included a $1.67 billion loss on insured derivatives.

In the latest quarter, MBIA said it recorded $661 million in losses related to its insurance of second-lien mortgage loan securitizations no fax payday loan. The company recorded another $199.6 million in pretax realized losses and other settlements on insured derivatives.

Premiums earned during the quarter totaled $158.5 million, down from $227 million in 2008.

Net investment income sank to $130.5 million from $264.5 million in the same quarter of 2008. Fees and reimbursements were $90.2 million, down from $10.6 million last year.

For the year, the company earned $623.2 million, or $2.99 per share. That compares with a loss of $2.7 billion, or $12.11 per share in 2008.

MBIA narrows 4Q loss to $242 million

TOKYO – Japan's exports in January jumped 40.9 percent from a year earlier, fueled by robust demand for vehicles and high-tech goods in Asia, the finance ministry said Wednesday.

Exports grew to 4.9 trillion yen ($54.4 billion), marking the second consecutive month of year-on-year rise, the ministry said. Vehicle exports in January rose 59.2 percent with auto parts shipments surging 89.6 percent in the month, it said.

Japan's exports of semiconductor products also increased 83.1 percent.

Among key regions, Asia-bound exports jumped 68.1 percent year-on-year to 2.7 trillion yen.

The figure underscored the rising importance of Asian markets in Japan's economic recovery. Asia-bound shipments alone account for 55 percent of Japan's total exports room air conditioners.

Japanese exports to China soared 79.9 percent year-on-year to 920 billion yen on the back of booming demand for vehicles, semiconductor products and plastic goods, the ministry said.

Exports to the United States expanded 24.2 percent to 710.4 billion yen and those to the European Union grew 11.1 percent to 580 billion yen.

Overall imports in January increased 8.6 percent to 4.8 trillion yen, resulting in a trade surplus of 85.2 billion yen in the month, the ministry said.

Japan exports in January jump; Asia demand booms

Hot News: Rent vs. Buy: 8 Essential Questions

Making homes suitable for elderly occupants is easy to describe, but it can be very expensive to do. The cheapest solution is to make homes senior-friendly when they are built, rather than trying to retrofit them. Some of the most elegant and cost-effective solutions are recognized each year by AARP and the National Association of Home Builders. The winning designs employ imaginative solutions that reduce energy consumption and use smart communications tools for home security and health-related "telemedical" applications. It will be some time before these "early adapter" designs are widely available. But they point the way toward solutions that older residents should explore for their existing homes or in new housing if they are considering such a move.

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[Slide Show: Design Awards Enable Aging in Place.]

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Universal design is the broader and official term that encompasses senior-friendly housing. Stripped of high-tech and innovative green solutions, universal design boils down to making housing spaces and commonly used features more accessible to the broadest range of occupants. If you have trouble grasping what this means, imagine trying to navigate your home in a wheelchair. Could you even get into your home without someone else's help? Could you use the bathroom? Navigate hallways and living areas? Fix a meal in your kitchen?

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[See America's Most Affordable Places to Retire.]

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Here are some of the features in the recently announced AARP-NAHB awards that enable these activities and much more.

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Eskaton Senior Residences in Roseville, Calif., won a builder's award for homes of less than 2,500 square feet. The house was developed as a demonstration home for Eskaton, which offers a range of senior support services to more than 14,000 people in northern California. It includes easy-access features and, like other winners, enables future accessibility modifications by, for example, including extra wiring in the walls and reinforcing key areas of the home for future installation of railings and grab bars. Since it's a demonstration model, this home is packed with more bells and whistles than you might ever need, or could afford, including:

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--A telemonitoring system, which has screen-based controls that work with a network of installed sensors. Beyond surveillance, the system can tell when no one is in a room and turn off lights. Motion sensors activate lighting pathways to bathrooms when it's dark. The sensors can even identify the locations of family members in the house.

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--Health monitoring systems that let residents take basic medical readings and upload them to remote caregivers cash advance today. The system includes touch-screen games to enhance brain fitness.

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--Lowered kitchen work surfaces and imaginative pull-down and pull-out drawers to make appliances and cooking aides more accessible. The stove's burners are cool to the touch and heat only what's being cooked. They also turn off automatically if left on too long.

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--A solar power system and a tankless water heater.

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[See Functional Design Solutions for Aging Homeowners.]

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Yorkshire Enterprises in Atlanta won an award for residences exceeding 2,500 square feet. Its four-story home has a ground-floor master suite with a bathroom that has a waterproof floor, roll-in shower, and wheelchair-accessible sink. The home's levels can be accessed by an elevator. Like other winning designs, the home minimizes entry elevations and has very wide hallways and doorways. The kitchen features easily accessible appliances, including a microwave in a drawer.

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ZAI in Seattle won an award for architectural home design. While single-floor home layouts provide easy access solutions for older residents, they tend to beexpansive and therefore may not be feasible in more densely populated areas and older neighborhoods. ZAI's multistory design includes a separate ground-floor living unit with its own kitchen and bathroom for use by a senior or a caregiver. It includes an elevator shaft that is currently filled with closets and nooks on three living levels but which could be cost-effectively converted into an elevator if the need arises. Stairways are broken into smaller runs of a few stairs to minimize the impact of falls. Level doorway thresholds and curbless showers are included, and doorknobs are replaced with lever handles. A base cabinet under the bathroom sink is on lockable rollers and can be removed if the occupants need wheelchair access to the sink.

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The Lakota Group in Chicago won the fourth award for developing the NorthCenter Senior Campus. The three residential buildings include many attractive common-area social, health, and recreational features for occupants of the 282 living units. But perhaps the greatest accomplishment of the affordable housing complex is that it was built at all. Pulling together the 8-acre former hospital site on Chicago's congested North Side required an extensive partnership of government and private interests. One of the existing medical buildings was saved and can provide accessible healthcare services to residents and other citizens.

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Design Awards Enable Aging in Place

Hot News: G7 to complain, shiver in Great White North

A jury ruled on Friday in favor of shareholders who said the French media group Vivendi lied to the public about its shaky finances, setting the stage for a possible distribution of billions of dollars in damages to investors.

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The company was found liable, but not its executives, according to the verdict in United States District Court in Manhattan.

The jury deliberated for 14 days before reaching its verdict. Vivendi said it would appeal.

Lawyers for the investors said that the potential payout could total $9.3 billion. Arthur Abbey, one shareholders’ lawyer, said he believed the award was the largest securities class-action jury verdict in history, measured by the number of people affected and the dollars involved.

A lawyer for Vivendi said it was impossible at this stage to estimate actual damages because it was not clear how many investors were in the class and who would seek payouts.

Lawyers on both sides said any potential payment was more than a year away.

Thousands of investors from the United States, France, Britain and the Netherlands said Vivendi covered up its troubles in 2001 and 2002 as the onetime public water company grew into a media and communications empire. The company flirted with bankruptcy before reorganizing successfully.

Jean-Marie Messier, who took over the company’s top post in 1996, was forced out as chief executive in July 2002, when the company was known as Vivendi Universal.

Defendants in the trial were Vivendi, Mr. Messier and the former chief financial officer, Guillaume Hannezo.

The jury concluded on 57 separate claims that Vivendi was 100 percent responsible for misstatements or omissions that misled shareholders no fax pay day loan. It concluded that Mr. Messier and Mr. Hannezo were not responsible.

It found that Vivendi acted recklessly rather than knowingly in causing the damages. It also concluded that at times the misstatements or omissions inflated the company’s stock by as much as $11 a share.

The amount of money plaintiffs will receive if the verdict stands is based on the jury’s calculation of how much the shares were inflated as a result of Vivendi’s alleged misdeeds.

Outside court, a Vivendi attorney, Paul Saunders, said the company was disappointed and was focused on its appeal, which he said “we expect to win.”

“We feel very good about the appeal,” he said, adding that the company would ask the judge within a month to toss out the case entirely.

He said the company was pleased that the jury gave the plaintiffs only half of the rate per share that they were requesting.

“To that extent, this is a partial victory for us,” he said.

He said that if the case was not thrown out, it would take at least a year to determine how many people deserved compensation and how much money was at stake.

“We have just really begun to fight,” he said. “We are going to challenge everything we can challenge.”

Mr. Saunders said the company would challenge on appeal whether the court had proper jurisdiction over a foreign company, whether it was proper to calculate damages by estimating the amount of inflation that resulted to share prices and whether the judge’s rulings were wrong during the trial.

Court Finds Vivendi Liable For Misleading Investors

DAVOS, Switzerland (MarketWatch) -- The world's bankers are paying for the sins of a relative few to the potential detriment of an economic recovery, Deutsche Bank CEO Josef Ackerman said Friday at the World Economic Forum's annual meeting.

Bankers who gathered in this Swiss ski resort for the annual gathering of top CEOs, world leaders and government officials feel that "seldom have so few done so much damage to the many," said Ackermann, who chairs the World Economic Forum's financial services panel. See full coverage of Davos.

Most bankers managed the crisis "remarkably well," he said, and have increased profits and market share. An ongoing "blame game" and uncertainty over future regulatory changes threaten to weaken the financial sector, potentially inhibiting a recovery, he said, in delivering a summary of the Davos bankers' deliberations.

Critics charge that many of the bankers that have boosted profits and market share have done so only because of massive government intervention, particularly in the United States and Britain.

Deutsche Bank's Ackermann said bankers favor increased capital requirements, better liquidity management and improved market infrastructure, as well as a framework that would allow failed banks to be wound up without bringing down the system pay day loan lenders. Measures should be coordinated across the globe to ensure a level playing field, he said.

Bankers here have pushed back against U.S. President Barack Obama's calls to limit the size of banks and to restrict them from a range of activities, including a bar on trading for their own account and operating hedge funds and private-equity funds. Read about the debate over bank regulations.

U.S. Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, earlier Friday predicted that a version of Obama's plan would be passed later this year.

"A majority of the institutions will be unhappy with the product," Frank told a Davos audience, saying that would be a measure of its success.

Deutsche Bank chief: Stop blame game

Oil prices rebounded to over $74 a barrel Thursday amid renewed hopes about economic recovery after the Fed said the world's biggest economy was improving and President Barack Obama vowed to boost jobs.

By early afternoon in Europe, benchmark crude for March delivery was up 51 cents to $74.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.04 to settle at $73.67 on Wednesday, the lowest since Dec. 14 when crude dipped to $73.46.

Obama, fighting to recharge his embattled presidency, pledged Wednesday in his first State of the Union address to get millions of Americans back to work even as he tackles the soaring U.S. deficit.

He also prodded Congress to enact a second stimulus package to help small businesses and funding for infrastructure projects, after bailing out big banks in the past.

The Federal Reserve, meanwhile, promised Wednesday to hold interest rates at near zero to nurture the economic recovery and reduce unemployment. It also said American economic activity "continued to strengthen," a modest upgrade from its previous take on the economy.

The news cheered Wall Street which ended higher Wednesday. Asian and European stock markets are also up Thursday, helping oil prices to reverse their slide.

Oil fell the previous day, dampened by an Energy Information Administration report that demand for crude products had dropped even further from the weak levels of a year ago when the recession's grip on the economy was strongest.

The EIA report showed demand for gasoline fell 0.8 percent over the four weeks ended Friday compared with a year earlier and that demand for distillates used for heating oil and diesel fuel was off 8.1 percent payday loans in 1 hour.

Oil prices are about double what they were a year ago and hit a 15-month high earlier this month even though consumption has been awful. Valero, the biggest U.S. refiner, reported Wednesday that it lost almost $2 billion in 2009 as it struggled to pass on higher oil prices to consumers.

Analysts said a quick recovery was unlikely.

"While we are not calling for prices to be sustained at the 1994 levels (about $45 per barrel for the Nymex contract), we still do not see the ingredients that would justify a rapid return to the price levels of 2008," said Olivier Jakob of Petromatrix in Switzerland. "Demand is still a lacking input and both the upstream and downstream spare capacity will not be tested this year or next year."

On a longer term, however, oil prices were seen rising again on increasing demand in the developing world and a renewed flow of investment funds into commodities.

"Prices should not fall that much further," said an energy overview by Mike Fitzpatrick from MF Global in New York. "We still hold that the range will be confined to $67-$72, a base from which a long rally should ensue."

In other Nymex trading in February contracts, heating oil rose 1.52 cents to $1.9320 a gallon, while gasoline added 1.32 cents to $1.9524 a gallon. March natural gas futures slid by 1.7 cents to $5.207 per 1,000 cubic feet.

In London, Brent crude for March delivery rose 56 cents to $72.80 a barrel on the ICE Futures exchange.

___

Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

Oil above $74 on renewed US growth optimism

NEW YORK – Newspaper publisher McClatchy Co. said Wednesday that most of its lenders have agreed to refinance its debt and that it cut enough costs to turn a profit in the fourth quarter, even as advertising continued to slide.

McClatchy shares jumped 19 percent ahead of regular trading.

The company, which owns The Miami Herald, The Sacramento Bee, The Kansas City Star and 27 other dailies, said it earned $25.8 million, or 30 cents per share, in the last three months of 2009. That reversed a loss of $27 million, or 33 cents per share, in the same period of 2008, when it booked a hefty charge to account for the falling value of its newspapers.

Overall revenue fell 17 percent to $393 million.

Advertising revenue was down 20.5 percent in the fourth quarter, compared with a 28.1 percent decline in the third. Citing continued progress in January, the company says it expects ad revenue to decline this quarter by a percentage in the low to mid-teens.

That fits with comments last week from Lee Enterprises Inc., another big newspaper publisher that has reported fourth-quarter results. Lee's ad revenue dropped 16.4 percent in the fourth quarter from the same period a year earlier, compared with a third-quarter decline of 20 percent.

"We're seeing some evidence of a recovery in classified advertising," said Gary Pruitt, McClatchy's chairman and chief executive, in a statement no fax needed payday loans. "It's typically the first area of our business to suffer in a downturn — and also the first to rebound when the economy improves."

Like many publishers, McClatchy took big steps to reduce expenses as the recession and competition from the Web drained ad revenue. McClatchy has cut roughly a third of its work force in the last year and a half.

McClatchy, which took on the bulk of its $1.95 billion in debt in its 2006 acquisition of the Knight Ridder newspaper company, said it will buy back bonds that would have come due in 2011 and 2014 and sell $875 million worth of new notes due in 2017. It also said lenders have agreed to ease restrictions on how much debt the company can carry.

The refinancing should give McClatchy more room to operate as it navigates changes in the industry. Earlier this month, Fitch Ratings said it may upgrade McClatchy's credit rating if refinancing goes well.

McClatchy shares were up 94 cents at $5.90 in pre-market trading, above their 52-week high of $5.43. The shares have traded as low as 35 cents in the past year, as investors worried about McClatchy's ability to manage its debt.

McClatchy has debt deal; cost cuts lead to profit

Hot News:

NEW YORK (MarketWatch) -- Treasury prices turned higher on Thursday, pushing yields down, as benchmark stock indexes dropped more than 1% and analysts parsed details of the Philadelphia Federal Reserve's manufacturing index, noting weakness in new orders.

Also weighing on stocks and benefiting bonds: Traders noted President Barack Obama's proposals new limits on the size of "too-big-to-fail" banks and the risks they may take. See more on Obama's plan.

Yields on 10-year notes fell 6 basis points to 3.60%, after touching 3.68% earlier. A basis point is 0.01 percentage point and yields move inversely to prices.

Yields on two-year notes declined 4 basis points to 0.84%.

S&P 500 (1 YEAR)

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First-time claims for state unemployment benefits jumped by the largest amount in eight months to a higher-than-predicted 482,000, the Labor Department reported. An official said there were more estimates this week because of the holiday on Monday. In addition, some of the increase may be due to administrative delays in reporting claims since the Christmas and New Year holidays. See more on jobless claims.

"This does not make the claims figures strong, as in economically strong, but just a caution on taking too pessimistic a read," said strategists at CRT Capital Group.

For Obama and Dems, All May Not be Lost

After the debacle in Massachusetts, much of President Obama's domestic agenda is in turmoil. But WSJ's David Wessel says at least one card remains on the table: getting tough with banks bad credit pay day loans.

The index of manufacturing activity in the Philadelphia region diffusion index fell to 15.2 in January from 22.5 in December, the Federal Reserve Bank of Philadelphia said. The decline was sharper than many economists predicted. Read more on Philly Fed.

"The economy continues to show signs of losing its upside momentum," said Steven Ricchiuto, chief economist at Mizuho Securities.

Leading U.S. economic indicators increased 1.1% in December, stronger than the 0.7% increase expected by economists surveyed by MarketWatch. See more on leading indicators.

Traders also pointed to news overseas as risks for U.S. stocks, including new concerns China will curb economic growth. Also, risks regarding Greece's debt load have brought Portugal, Spain Italy and Ireland back into the spotlight. Read more on China. See more on Greece.

"The stock market was priced for perfection and finally realized that China intends on tightening until demand slows down, Greece and other PIIGS [countries] could lead to another round of risk aversion and oh yes, we still don't have a job machine," in the U.S., said Michael Cheah, a senior fixed-income portfolio manager at SunAmerica Asset Management.

U.S. debt remained higher after the Treasury Department said it will sell $44 billion in 2-year notes on Tuesday, followed by $42 billion in five-year debt the next day. It will also auction $32 billion in seven-year notes on Thursday.

Those amounts are unchanged from last month's sales of the securities and match analysts' expectations.

Bond Report: Treasurys gain as stocks head south

NEW YORK (Reuters) – Wall Street's confidence in the nascent U.S. economic recovery is about to be tested as fourth-quarter earnings season gets under way next week.

The horrid fourth quarter of 2008 means year-over-year comparisons will be stellar for most companies. But investors will scrutinize whether outlooks point to sustainable growth.

The last two periods of earnings were driven by cost-cutting, but analysts expect to see stronger revenues, or top-line growth. They are also eager for 2010 prospects to validate the bullishness that has propelled the S&P 500 (.SPX) and the Dow Jones industrial average (.DJI) to 15-month highs and the Nasdaq (.IXIC) to 16-month highs.

"What we want to hear is that the employment situation has stabilized and that companies are beginning to consider or have already begun to incrementally increase fixed capital spending programs," said Frederic Dickson, market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "Investment spending was cut to the bone in 2009."

Dow component Alcoa Inc (AA.N) is set to post quarterly results on Monday, marking the unofficial kickoff to earnings announcements, though several companies have reported this week.

S&P 500 companies are expected to post earnings of $15.81 a share for the fourth quarter after losing money for the same period a year ago.

ECONOMY ON THE MEND?

A positive fourth quarter would mark the first quarter that S&P 500 company earnings grew year-over-year since the second quarter of 2007. The 2008 fourth quarter was the worst earnings quarter in the history of the S&P 500 index.

Sectors set to lead are materials companies, seen posting a 161.2 percent rise in earnings; consumer discretionaries, seen posting 113.5 percent in earnings growth; telecoms, with a 51.6 percent run-up in earnings and technology, seen posting a 30.2 percent rise in profit growth.

But in order for stocks to sustain momentum, investors would have to see signs that reinforce data suggesting the economy is on the mend, analysts said.

On Friday, all eyes will be on the government's December non-farm payrolls report.

"Investors are looking for more top line (growth), even more so than the last quarter, that we start to see sequential improvement in topline growth either during the quarter or companies project it out into 2010," said Owen Fitzpatrick, head of Deutsche Bank Private Wealth Management's U.S. equity group in New York.

CORPORATE OUTLOOKS

Companies issuing positive comments in recent days include home furnishings chain Bed Bath & Beyond Inc (BBBY payday loan lenders.O), which reported a higher-than-expected quarterly profit on Wednesday and forecast full-year results above Wall Street expectations.

On a conference call, the company said it was "cautiously optimistic" about the rest of the year. Homebuilder Lennar Corp (LEN.N), which reported results on Thursday, said it was "positioned" to return to profitability in 2010.

The extensive cost-cutting last year should make income statements "more taut in that a minor boost to the top line trickles down much faster to the bottom line," said John Lynch, managing director and chief market analyst at Charlotte, North Carolina-based Evergreen Investments.

Corporate outlooks, he said, will be more important. So far, the ratio of negative fourth-quarter earnings outlooks to positive is about the same as the third quarter, according to Reuters data. The ratio for both quarters is 1.5, though there have been more announcements in this quarter overall.

Investors will also be on the lookout for anything said about likely demand and when companies plan to resume capital investment to rebuild inventories after the worst recession since the 1930s.

They will also be alert for any comment about curbing layoffs.

More signs of renewed vigor in profitability, analysts say, should provide further fuel for equities and possibly lift the S&P 500 toward 1,200. The benchmark index has risen 68.6 percent since U.S. stocks hit bottom in early March.

The current expectation for 2010 earnings per share for the S&P is $77.59, according to Thomson Reuters data. At an average multiple of 15 times earnings, that would put the S&P at about 1,163, so if the pace of growth improves, it would justify a higher level for the stock market.

Per-share earnings of $77.59 would represent earnings growth of 30 percent in 2010; the estimate for 2011 is for growth of 21.6 percent. But should analysts start to see those forecasts as too lofty based on poor company outlooks, the market will feel it.

"I just think expectations are too high for 2010," said Lynch, whose firm is an investment management arm of Wells Fargo & Co (WFC.N) and has more than $150 billion under management. "I don't see the leadership coming from the consumer, financials, housing and from leverage which enabled us to peak in profitability at the last cycle."

(Editing by Kenneth Barry)

Earnings to test Wall St's bet on recovery

ZAGREB (AFP) – Ivo Josipovic of Croatia's main opposition Social Democrats and independent Zagreb mayor Milan Bandic will contest a presidential election run-off, exit polls showed after a first round Sunday.

Josipovic took 32.7 percent of the vote and his former party colleague Bandic just over 14 percent, according to exit polls by RTL and Nova television stations at the close of voting Sunday evening.

The run-off vote will be held January 10.

Bandic edged out third-placed Andrija Hebrang of the governing conservative Croatian Democratic Union (HDZ), who polled just over 12 percent, the exit polls showed.

The first official results were expected at midnight (2300 GMT). However, analysts warned that both Hebrang and fourth-placed Nadan Vidosevic, a businessman and former HDZ veteran, could still catch Bandic.

All three candidates were largely counting on Croat voters living abroad, mostly in neighbouring Bosnia. Hebrang and Vidosevic because they are traditional HDZ supporters, and Bandic because he is Bosnian-born. Exit polls did not include these voters.

Some 4.4 million people, including more than 400,000 living abroad, were eligible to vote in Sunday's election to choose a president to steer the Balkans country into the European Union amid a deepening economic crisis and concerns over high-level corruption.

The incumbent, popular centrist Stipe Mesic, stands down in February after serving the maximum two five-year terms.

The 75-year-old is credited with helping transform the former Yugoslav republic from a nationalist autocracy -- the legacy of late strongman Franjo Tudjman -- into a parliamentary democracy, curbing the president's powers.

Josipovic's score came as no surprise as opinion polls gave him an average lead of 15 percentage points over his opponents.

"Josipovic is the only one who represents values I believe this country should strive for," lawyer Nenad Vezic told AFP as he cast his ballot in the capital.

Josipovic has run his campaign under the slogan "Justice for Croatia," insisting on the need to fight corruption.

The 52-year-old legal expert and classical music composer has an untarnished political career but analysts warn he lacks charisma.

Bandic, his likely rival in the January 10 run-off, is a former SDP veteran who largely avoided confrontation during the campaign, arguing he was a "man of deeds and not of words."

Like some of the other candidates the 54-year-old, who has been mayor of Zabreb since 2000, has been the target of questions about his involvement in alleged corruption in the capital.

Croatian authorities in recent months have launched investigations into several state-run companies and police have arrested dozen of officials.

The issue of high-level corruption became one of the hot topics in the run-up to the election and it has long been a concern of the European Union.

The economy, which is set to contract by more than five percent this year as experts warn the crisis will likely worsen in 2010, was also a major campaign issue.

Mesic, the outgoing president, expressed regret that he had failed to get his country into the European club.

"I regret that during my mandate we did not enter the EU. It will be the task for the next president and the government," Mesic said after he voted in Zagreb.

The country's EU ambitions were delayed by a border dispute with neighbouring Slovenia and the former Yugoslav republic is now unlikely to join the 27-member bloc before 2012.

But Mesic did succeed in gaining Croatia's entry into the NATO military alliance earlier this year.

At 4:00 pm (1500 GMT), three hours before polling stations were to close, turnout was 33.8 percent, the electoral commission said -- about seven percent down on the January 2005 vote.

Social Democrat and independent in Croatia run-off: exit polls

Filed at 6:15 a.m. ET

SEOUL (Reuters) - South Korea said on Sunday it had won a $20 billion deal from the United Arab Emirates (UAE) to build four nuclear reactors, one of the world's biggest nuclear power contracts.

A South Korean consortium expects to earn another $20 billion by jointly operating the reactors for 60 years.

The figures are in line with what industry sources told Reuters in the UAE earlier on Sunday.

The first reactor will be completed in 2017 to produce power and the others will be completed by 2020, the Korean presidential Blue House also said in a statement 500 fast cash payday loan.

The Korean consortium includes Korea Electric Power Corp. (KEPCO) <015760.KS>, Hyundai Engineering and Construction <000720.KS>, Samsung C&T Corp <000830.KS> and Doosan Heavy Industries <034020.KS>.

(Reporting by Cho Mee-young; Editing by Jerry Norton, John Stonestreet)

S. Korea Wins U.A.E. Nuclear Deal

CORPORATIONS raise money by issuing both debt and equity, the latter giving investors an implicit share in future profits. Governments should do something like this, too, and not just rely on debt.

Borrowing a concept from corporate finance, governments could sell a new type of security that commits them to paying shares in national “profit,” as measured by gross domestic product.

Historically, one impediment to such a move was the difficulty in accounting on a national scale: governments didn’t even try to measure G.D.P. until well into the 20th century.

Although G.D.P. numbers still aren’t perfect — they are subject to periodic revisions, for example — the basic problem has been largely solved. So why not issue shares in G.D.P. now?

Such securities might help assuage doubts that governments can sustain the deficit spending required to keep sagging economies stimulated and protected from the threat of a truly serious recession. In a recent pair of papers, my Canadian colleague Mark Kamstra at York University and I have proposed a solution. We’d like our countries to issue securities that we call “trills,” short for trillionths.

Let me explain: Each trill would represent one-trillionth of the country’s G.D.P. And each would pay in perpetuity, and in domestic currency, a quarterly dividend equal to a trillionth of the nation’s quarterly nominal G.D.P.

If substantial markets could be established for them, trills would be a major new source of government funding. Trills would be issued with the full faith and credit of the respective governments. That means investors could trust that governments would pay out shares of G.D.P. as promised, or buy back the trills at market prices.

If trills were issued by Canada, for example, they would pay about 1.50 Canadian dollars in dividends this year, one trillionth of the annual cash flow. The value of the security is derived from the dividend, and might be priced very highly in the market — perhaps at around 150 Canadian dollars — given that country’s strong prospects for growth. Trills issued by the United States Treasury would pay about $14 in dividends this year and might fetch $1,400 a trill or more.

The Standard & Poor’s 500-stock index now has a dividend yield of 2.3 percent. The dividend yield on trills might be much lower, reflecting the substantially higher long-term growth rate of G.D.P. relative to S.& P. dividends — in real terms, 3.1 percent versus 1.1 percent a year, respectively, since 1957.

The market price of trills would fluctuate, reflecting the changing prospects for future G.D.P. growth, just as the market price of stocks reflects the changing prospects for future earnings growth. There is no complexity here. It is all plain-vanilla financing, though unconventional by today’s standards.

There are indications that officials in China are starting to worry about threats to their huge investment in United States debt from a possible outbreak of high inflation. The trills, tied to nominal G.D.P., would protect them. Right now TIPS, or Treasury Inflation-Protected Securities, are offering disappointingly low yields, which may have to be raised to attract more investment payday loan. Trills, even at an ultralow dividend yield, would seem more exciting as an inflation-protected prospect, because they represent a share in future economic growth.

The United States government is highly unlikely to default on its debt, but even this remote possibility would be virtually eliminated by trills, because the government’s dividend burden would automatically decline in tough times, when G.D.P. declined.

The final statement of the Group of 20 economic meeting in Pittsburgh in September pledged to “establish a pattern of growth across countries that is more sustainable and balanced, and reduce development imbalances.” These imbalances — exemplified by the massive Chinese holdings of United States government debt — might not be so worrisome if the investments were financed better.

In fact, issuing shares in G.D.P. might even be viewed as a policy that systematically rectifies a wide array of imbalances in capital flows. People who expect strong economic growth in a country would bid up the price of a claim on its G.D.P., creating a cheap source of funding for the issuing government. So a country with good investment prospects gets the resources at a low current cost. There would be no need for central bank machinations to try to correct global imbalances.

We already have international equity markets that allow international investments in private firms within countries. But these do not represent the entire economy. Corporate stocks represent implicit claims on after-tax corporate profits, which typically amount to no more than 10 percent of G.D.P. Moreover, after-tax corporate profits are a much more slippery concept than G.D.P., affected as they are by many domestic policies, including taxes, government involvement in labor disputes and even government bailouts — as we now know very well.

Someday, China might issue shares in its G.D.P., too, and international investors who would love to participate in its economic miracle might put a very high price on them. That could help secure international financing of future growth without relying on the enormous government and enterprise saving that is now suppressing China’s standard of living.

PROPOSALS for securities like trills have been aired many times over the years. I argued for them in “Macro Markets,” my 1993 book. The Nobel laureate Robert Merton has had similar proposals. Other ideas for G.D.P.-linked securities have been advanced by John Williamson at the Peterson Institute, by a group at the United Nations Development Program, by Kristin Forbes of the Council of Economic Advisers under George W. Bush, and by Eduardo Borensztein of the Inter-American Development Bank and Paulo Mauro of the International Monetary Fund.

So far, these proposals have gone unheeded. But the current environment may be more suitable for them.

Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC.

Economic View: A Way to Share in a Nation’s Growth

MOSCOW — Russia’s central bank Friday unveiled its 10th interest rate cut of the year, with economists expecting more gradual trims in the coming months as policymakers try to stimulate the country’s blighted economy.

The central bank said it is reducing its benchmark refinancing rate to 8.75 percent effective from Monday, from 9 percent. The minimum one-day repo rate will be cut to 6 percent from 6.25 percent.

“The decision to cut rates is expected to soften the factors restraining economic revival and will secure the stability of the growing trend” of gross domestic product,” the regulator said in a statement.

The Russian economy shrank by 10 percent in the first half of the year in the country’s worst recession in a decade.

There have been incipient signs of recovery, aided by rising oil prices and improving global economic outlook, but the revival has been slow and uneven.

Domestic demand — a major contributor to Russia’s robust growth for most of the decade — is not picking up and unemployment still claims 8.1 percent of its labor force.

And the 10 gradual rate cuts, which brought down the refinancing rate by a total of 425 basis points since April, have failed to achieve its main goal: spurring lending to business.

The central bank said in its statement that even the small gains in industrial output in November came unsupported by lending.

“We have not seen a significant improvement in credit activity among Russian banks,” the regulator said.

The central bank is also counting on the cut to limit the inflow of short-term speculative capital that has been increasingly flooding Russia in recent months, from investors seeking fast gains from carry-trade operations — where investors borrow in countries with low interest rates to speculate in markets where the rate of return is higher 500 fast cash payday loan.

However, the rates in Russia will still remain significantly higher than the 1 percent or smaller rates among the other Group of Eight economies.

“I do not think that the cut will have an essential impact on carry trade,” said Dmitry Kharlampiev, analyst at Petrocommerce Bank.

The central bank said that it is expecting that volatility on the foreign exchange market will continue, warning of risks related to the exchange rate.

The ruble traded virtually unchanged from previous session at 36.48 against a dollar-euro basket that the central bank uses for guiding the currency’s nominal exchange rate.

The lower-than-expected inflation rate has allowed the regulator to move with the gradual rate reductions.

The central bank also said that the risks that inflation next year will exceed the official forecast are “insignificantly” small. The Ministry for Economic Development sees next year’s inflation at 6.5 to 7.5 percent.

Economists said that the good inflation outlook will likely encourage the central bank to administer a few further rate cuts.

“We expect that cuts will continue in the beginning of next year,” said Artyom Arkhipov, chief macroeconomic analyst at Gazprombank. He added that he sees a 25 basis points cut in the first quarter of 2010 and a 50 basis points cut in the second.

Reuters

Russia Cuts Interest Rates for 10th Time This Year

COPENHAGEN — President Obama announced here on Friday night that five major nations, including the United States, had together forged a climate deal. He called it “an unprecedented breakthrough” but acknowledged that it still fell short of what was required to combat global warming.

The agreement addresses many of the issues that leaders came here to settle. But it has left many of the participants in the climate talks unhappy, from the Europeans, who now have the only binding carbon control regime in the world, to the delegates from the poorest nations, who objected to being left out of the critical negotiations.

By the early hours of Saturday, representatives of the 193 countries who have negotiated here for nearly two weeks had not yet approved the deal and there were signs they might not. But Mr. Obama, who left before the conference considered the accord because of a major storm descending on Washington, noted that the agreement was merely a political statement and not a legally binding treaty and might not need ratification by the entire conference.

The three-page accord that Mr. Obama negotiated with the leaders of China, India, Brazil and South Africa and then presented to the conference did not meet even the modest expectations that leaders set for this meeting, notably by failing to set a 2010 goal for reaching a binding international treaty to seal the provisions of the accord.

Nor does the plan firmly commit the industrialized nations or the developing nations to firm targets for midterm or longterm greenhouse gas emissions reductions.

The accord is nonetheless significant in that it codifies the commitments of individual nations to act on their own to tackle global warming.

“For the first time in history,” Mr. Obama said, “all major economies have come together to accept their responsibility to take action to confront the threat of climate change.”

The accord provides a system for monitoring and reporting progress toward those national pollution-reduction goals, a compromise on an issue over which China bargained hard. It calls for hundreds of billions of dollars of to flow from wealthy nations to those countries most vulnerable to a changing climate. And it sets a goal of limiting the global temperature rise to 2 degrees Celsius by 2050, implying deep cuts in climate-altering emissions over the next four decades.

But it was an equivocal agreement that was, to many, a disappointing conclusion to a two-year process that had the goal of producing a comprehensive and enforceable action plan for addressing dangerous changes to the global climate. The messy compromise mirrored the chaotic nature of the conference, which virtually all participants said had been badly organized and run.

In a news conference, Mr. Obama said the accord was only a tentative start down a long road.

“This progress did not come easily,” he said, “and we know that this progress alone is not enough.”

The accord sets no goal for concluding a binding international treaty, which leaves the implementation of its provisions uncertain. It is likely to undergo many months, perhaps years, of additional negotiations before it emerges in any internationally enforceable form.

Mr. Obama said before he left Copenhagen that he was confident that a final accord would be reached here. He looked weary and his eyes were bloodshot as he left the conference center for his motorcade to the airport.

Some environmental groups gave a cautious nod of approval to the agreement as a good start.

“The world’s nations have come together and concluded a historic — if incomplete — agreement to begin tackling global warming,” said Carl Pope, executive director of the Sierra Club. “Tonight’s announcement is but a first step and much work remains to be done in the days and months ahead in order to seal a final international climate deal that is fair, binding, and ambitious. It is imperative that negotiations resume as soon as possible.”

Senator John Kerry, Democrat of Massachusetts, chairman of the Foreign Relations Committee and lead author of the Senate’s climate change bill, said the accord would drive the Congress to pass climate change legislation early next year.

“This can be a catalyzing moment,” he said. “President Obama’s hands-on engagement broke through the bickering and sets the stage for a final deal and for Senate passage this spring of major legislation at home."

But there were serious rumblings of discontent that could yet scuttle the deal.

Lumumba Stanislaus Di-Aping, a Sudanese diplomat who has been representing the Group of 77 developing countries, denounced the accord quartz infrared heaters.

“The developed countries have decided that damage to developing countries is acceptable,” he told reporters, noting that the 2-degree target “will result in massive devastation to Africa and small island states.” He and many other representatives of the most vulnerable countries wanted a 1.5 degree target.

“Today’s events, which really are a continuation of the history of the negotiations for the last two years, represent the worst development in climate change negotiations in history,” Mr. Lumumba said.

Mr. Obama’s announcement came late in a day that began with his 11-minute address to world leaders shortly after noon, and that was filled with brinksmanship and 11th-hour negotiations. Mr. Obama, whose speech included remarks that appeared pointed at China’s resistance to mechanisms for monitoring emissions reductions, met privately with Prime Minister Wen Jiabao afterward. But Mr. Wen did not attend two smaller, impromptu meetings during the day that Mr. Obama and United States officials conducted with the leaders of other world powers, an apparent snub that infuriated administration officials and their European counterparts.

The deal eventually came together after a dramatic moment in which Mr. Obama and Secretary of State Hillary Rodham Clinton burst into a meeting of the Chinese, Indian and Brazilian leaders, according to senior administration officials. Mr. Obama said he did not want them negotiating in secret.

The intrusion led to new talks that cemented central terms of the deal, American officials said.

Sergio Serra, Brazil’s senior climate negotiator here, confirmed that Mr. Obama had joined a meeting of Brazilian, Indian, Chinese and other officials, although he did not say that Mr. Obama walked in uninvited.

“After several discussions had taken place they were joined by President Barack Obama,” Mr. Serra said. “Several important decisions were taken — not a few due to Brazilian mediation — that we hope will bring a result, if not what we expected, that may be a way of salvaging something and pave the way to another meeting or series of meetings to get the full result of this proceeding.”

Jian Xiaoyan, a press officer with the Chinese government, said that there was no one available to comment Friday night.

The agreement apparently grew out of a document that was being edited by high-ranking officials from some two dozen countries throughout the day. But many specifics that were included in earlier versions were excised in the document left on the table when Mr. Obama made his announcement, and many parties considered it at best a work in progress. The agreement contains several enumerated points asserting a general commitment to the idea that “climate change is one of the greatest challenges of our time” and asserted that “deep cuts” in global emissions were required.

In at least one earlier version, the deal included a collective agreement among nations to reduce greenhouse gas emissions by 50 percent by 2050 — with developed nations pledging as a bloc to reduce emissions by 80 percent over the same time period. Those numbers were no longer in the version circulated after Mr. Obama’s announcement.

Also dropped from earlier drafts was language calling for a binding accord “as soon as possible,” and no later than at the next meeting of the parties, in Mexico City in November 2010. The deal presented Friday evening said only that the agreement should be reviewed and put in place by 2015.

The document does lay out a framework for verification of emissions commitments by developing countries and to establish a “high-level panel” to assess financial contributions by rich nations to help poor countries adapt to climate change and limit their emissions.

Many of the specifics remained to be negotiated, however.

Mr. Serra, the Brazilian diplomat, said that the process left many alienated, particularly the smaller countries who have little influence in a major international negotiation. Many involved in the process here suggested this would be the last time that 193 nations would gather in this way to negotiate such a complex accord.

“Certain groups like G-77 are not happy when a few people make decisions,” Mr. Serra said. “It’s not an inclusive exercise. Perhaps it can’t be.”

Reporting was contributed by Andrew C. Revkin, Elisabeth Rosenthal, Tom Zeller Jr., James Kanter and Helene Cooper.

Climate Deal Announced, but Falls Short of Expectations

RICHMOND, Va. – The state's hated local car tax would be replaced with a $2 billion-a-year income tax increase under the new budget Gov. Timothy M. Kaine presented Friday.

The departing Democratic governor's tax proposal accompanied a budget that prescribes about $1.2 billion in spending cuts in a bid to reconcile a $3.6 billion state revenue shortfall for 2010 through 2012.

The plan was on an immediate collision course with incoming Republican Gov. Bob McDonnell, who has pledged to reject any general tax increase, and an anti-tax GOP House majority strengthened by last month's elections.

Besides a budget bill that deeply cuts funding for state-supported colleges, mental health services and public safety, Kaine is preparing a separate bill that would phase in a 1 percent income tax increase over two years.

The massive income tax increase generates about $400 million a year more than the $1.6 billion the car tax now raises for localities. Local governments would also receive additional revenue the income tax generates.

As the state's costs soared, Virginia capped total reimbursements at $950 million a year.

Kaine's budget eliminates all money for reimbursements, but his independent tax measure would provide local governments all of that money, perhaps more.

The cuts reduce the biennial general fund budget to about $30 billion, about the size of the six years earlier. Kaine had already been forced to cut $7 billion from the budget since July 2008.

The cuts are scattered throughout the budget payday loan.

Funding for state-supported institutions of higher education would be cut by 26 percent over the next few years, a move certain to provoke sharp increases in tuition.

The state would cut about $12 million for mental health crisis services. The cuts would come just two years after mental health budgets were increased by $42 million in response to the April 2007 shooting deaths of 32 people at Virginia Tech by a disturbed student.

Sheriffs and other local constitutional officers would lose about $270.5 million over the two years, and local police department funding would be cut by about $73 million.

State employees would forgo pay raises for two years and be required to make payments toward their own pensions for the first time since 1983. The retirement age for new hires would jump from age 50 to 55, and the state would eliminate 664 jobs.

The tax increase is not the only effort to increase revenue. Kaine proposed ending the dealer discount, a sliver of the state sales tax retailers keep for collecting and remitting the tax, adding $60 million to $70 million annually.

He proposed leasing 1,000 state prison beds to house out-of-state inmates to raise $19.8 million.

And, if approved, the price of a bottle of liquor will increase by 2 percent at Virginia's state-owned liquor stores.

Va. gov: End car tax, raise income tax 1 percent

Hot News: House prices rose 0.2 percent in 3rd quarter: survey

WASHINGTON/NEW YORK (Reuters) – The U.S. pay czar on Friday expanded a crackdown on pay packages at four companies rescued with taxpayer money, limiting most cash salaries at $500,000 for a second tier of top earners.

The Treasury Department's Kenneth Feinberg issued the new limits amid outcries from some companies on a government lifeline that they cannot retain or attract key employees, sending the firms racing for a bailout exit.

He set the compensation structures for the 26th through 100th highest-paid employees at four firms: Citigroup Inc, American International Group, General Motors Co, and GMAC.

Chrysler and Chrysler Financial were exempted during this round of rulings because total pay for their second-tier executives is already under $500,000.

Feinberg, a Washington lawyer appointed by President Barack Obama in June after public anger exploded over high pay at bailout firms, said he granted less than a dozen special exemptions from the cash salary cap.

"In a very few cases, we did recognize there was an individual who, based on company input, was deemed to be truly essential," he told reporters.

Those exempted from the new pay caps included several at insurer AIG. The exempted executives were not identified and generally were allowed cash pay up to $950,000, although one was granted $1.5 million, Feinberg said.

The pay czar's control has caused significant friction with AIG, where top executives, including new chief executive Robert Benmosche, have reportedly considered quitting because of the pay constraints. AIG has received pledges of up to $180 billion in taxpayer aid.

The pay restrictions also have prompted Citi to race to repay its $45 billion in bailout funds. The bank remains locked in negotiations with the government over repayment terms.

Feinberg, in his latest rulings, also targeted bonus pay. He insisted that incentive pay be limited to a "fixed pool" of funds to be negotiated with Feinberg, which would require companies to carefully choose who to reward.

"There cannot be runaway bonuses," Feinberg said. All incentive pay can be clawed back if results prove illusory.

When asked by reporters about GM, which is scrambling to find a new chief executive who can retool the giant automaker, Feinberg indicated the firm may get a break online pay day loans. He said he was willing to take a "fresh look" at proposed pay for GM's new CEO, adding it was "vital" that GM, majority owned by the government, be competitive.

CALMING THE PUBLIC, PRESERVING TALENT

Feinberg earlier this year slashed the pay of the top 25 employees at the same companies, gaining cheers from shareholder activists but sending fears through bailed-out firms trying to hang on to key workers.

Executive pay at all big banks remains a sensitive issue.

The United Kingdom this week slapped a 50 percent tax on bank bonuses and France is considering a similar move. On Thursday, Goldman Sachs -- which already repaid its bailout funds -- announced its top executives will not receive cash bonuses for 2009.

Feinberg lauded Goldman's compensation changes, which also mandated that managers receive all discretionary pay in stock that must be held for five years and is subject to a clawback provision.

"That is precisely the type of impact that we at Treasury and the administration are hoping to have," he said.

Feinberg's latest pay caps were met with some skepticism.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said setting an arbitrary pay limit is ineffective.

"Either people will leave or there will be people who evade it and find clever ways around it, or people will move up to the cap inappropriately," Elson said.

Feinberg's pay cap applies only to the final weeks of 2009 and he will not claw back money already paid. The limits will affect the large bonuses typically paid at the end of the year. Also, the rulings will be the baseline for 2010 compensation.

The new plan also mandated that a majority of total compensation will not be released to an executive for three years. In most cases, at least 50 percent of compensation must be long-term stock awards, according to Feinberg.

Further, overall cash is limited in most cases to 45 percent of the total and all other pay must be in company stock.

(Additional reporting by David Lawder; Editing by Neil Stempleman)

Pay czar caps more salaries at bailed out firms

BAGHDAD, Dec. 11 (Xinhua) -- The world's leading energy companies won rights to develop two major oil fields in Iraq at an auction on Friday.

Royal Dutch Shell and Malaysia's Petronas were awarded the contract to exploit the Majnoon oil field in southern Iraq, one of the world's largest untapped oil fields with more than 12 billion barrels of proven reserves.

They accepted a fee of 1.39 U.S. dollars per barrel. Iraq's Oil Minister Hussein al-Shahristani delivers a speech at the second bidding round for Iraqi oil fields in Baghdad, capital of Iraq, Dec. 11, 2009. More than 40 campanies attended the bidding on Friday.
(Xinhua Photo)
Photo Gallery>>>

Meanwhile, a consortium led by China National Petroleum Corporation (CNPC), China's largest oil and gas producer, together with Petronas and France's Total, won the contract for the Halfaya oil field, also in the south.

It offered a remuneration fee of 1 guaranteed approval payday loans.40 dollars per barrel in the deal for the Halfaya oil field, which has estimated reserves of 4.1 billion barrels of oil.

A CNPC staff told Xinhua that the competition was fierce, and that the final contract is likely to be signed within a month.

More than 40 world oil companies from 23 countries, including BP and Total, are seeking investment in 10 Iraqi oil fields over two days in Iraq's second round of bidding since 2003.

The first auction round was held in June this year, in which the CNPC joined hands with BP to win the Rumaila oilfield service contract.

Estimated at 115 billion barrels, Iraq holds the world's third largest proven oil reserves, only after Saudi Arabia and Iran.

Global energy giants win contracts for 2 Iraqi oil fields

NEW YORK -- Energy stocks fell ahead of weekly petroleum supply data due out on Wednesday. The NYSE Arca Oil Index dipped 0.1% to 1,088. The NYSE Arca Natural Gas Index traded fractionally lower at 510. The Philadelphia Oil Service Index subtracted 0.1% to 193.

Energy Stocks Mostly Lower Ahead Of Supply Data

Hot News: Upper-income Consumers Gloomy On Economy: Survey