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DAILY 03-09-10 MD SU A12 CMYK
A12 S KLMNO TUESDAY, MARCH 9, 2010
ECONOMY BUSINESS&
DOW 10,552.52 NASDAQ 2332.21 S&P 500 1138.50 GOLD $1,124.00 CRUDE OIL $81.87 10-YEAR TREASURY CURRENCIES
DOWN 13.68, 0.1% UP 5.86, 0.3% DOWN 0.20, 0.02% DOWN $11.20, 1.0% UP $0.37, 0.5% DOWN $2.50 PER $1,000, 3.71% YIELD $1 = 90.25 YEN; 1 EURO = $1.363
Greece seeks U.S. help with traders
DIGEST
BRAZIL
U.S. cotton subsidies spur trade sanctions
‘ENOUGH IS
What is a
credit default swap?
Brazil announced trade sanc- long as the practice continues,
ENOUGH’
tions Monday on a range of Brazil said.
That’s part of what Greece’s prime American goods, affecting prod- The Office of the U.S. Trade
minister, George Papandreou, ucts from Heinz ketchup to Ford Representative said that it was
Prime minister wants
blames for his country’s financial automobiles, retaliating for bil- “disappointed” and that Wash-
crisis. A credit default swap is a form lions of dollars that the United ington prefers continued negotia-
curbs on speculators
of insurance on bonds that investors States pours into domestic cotton tions.
buy and sell. When it looks like a subsidies. Brazil says the United States
bond issuer might have trouble The World Trade Organization has been able to remain the
by Anthony Faiola paying, its CDS prices soar because last year authorized Brazil to set world’s second-largest cotton
and Steven Mufson the bonds are more risky. But since $829.3 million in annual penal- producer by paying some $3 bil-
there are relatively few investors in ties against the United States for lion to American farmers each
Greek Prime Minister George this area, Papandreou and others say anticompetitive subsidies. The year. China is the largest export-
Papandreou will seek President CDS prices can be easily sanctions will remain in place as er; Brazil is fifth.
Obama’s support at the White manipulated, driving up a country’s — Associated Press
House on Tuesday for a European borrowing costs. Papandreou, who
campaign to crack down on global wants U.S. and European officials to REGULATORS
financial speculation that critics
PETROS GIANNAKOURIS/ASSOCIATED PRESS
regulate credit default swaps,
say has exacerbated Europe’s Members of the PAME union, affiliated with the Communist Party, compared them to home insurance:
Kaplan branches under SEC review
worst debt crisis in decades. protest in Athens against the government’s austerity program.
“It is common sense,
Several segments of Kaplan, routinely conducts program re-
The U.S.-born Papandreou, who
enforced by insurance
the education company owned by views as part of its oversight of
assumed Greece’s highest office in
The Washington Post Co., are the educational institutions,” Kaplan
October, is pushing a plan in Eu-
regulators, that a
subject of reviews by the U.S. De- spokesman Ron Iori said in a
rope that would impose new lim-
person is not allowed
partment of Education, the com- statement. “We have no indica-
its and stricter monitoring on
pany said in its annual filing with tion that specific concerns
complex and largely unregulated
to buy fire insurance
the Securities and Exchange prompted this review and any
financial bets. Officials in Europe
on his neighbor’s
Commission last week. suggestion otherwise would be
have blamed investors for manip-
house — and then burn
Cities with campuses under re- misleading.”
ulating the price of Greek bonds,
view include Pittsburgh, Balti- Kaplan is one of several subsid-
fueling higher borrowing rates
it down to collect on
more, Atlanta and Fort Lauder- iaries owned by The Post Co. and
across Europe and accelerating
that insurance. Yet
dale, Fla. its biggest revenue generator,
the euro’s fall against the dollar
“The Department of Education contributing 58 percent in 2009.
and other currencies.
that is exactly what is
— Frank Ahrens
“Together with my European
partners, we have taken a com-
done in the market for
mon initiative to strengthen fi-
credit default swaps.”
nancial regulation, particularly
EMPLOYMENT
vis-á-vis speculation,” Papandre-
State jobs decline for eighth straight month
ou said Monday at the Brookings
Institution, where he urged the
HARAZ N. GHANBARI/ASSOCIATED PRESS
Greek public finances.”
Employment by U.S. state and local governments has
United States to join in “decisive Secretary of State Hillary Rodham Clinton and Greek Prime “The concern over speculation
declined each month since last July. That’s the longest
and collective action.” Minister George Papandreou hold a joint news conference. is obscuring the underlying issue
In arriving in Washington, Pa- that Greece and other nations
downward streak since the early 1980s.
pandreou left behind massive la- tent of resisting the traditional in- your neighbor’s house just to de- have very precarious fiscal posi-
Employment by state and local governments in the U.S.,
bor strikes and other turmoil volvement of the IMF,” said Mo- stroy it and make money from it, tions,” said Simon Tilford, chief
monthly year-over-year change
sparked by his effort to slash the hamed El-Erian, chief executive that’s exactly what we have to economist at the Center for Euro-
government’s budget deficit from of bond investment giant Pimco curb.” pean Reform.
10%
12.7 to 8 percent of gross domestic and a former IMF official. Yet many observers have ar-
product. Many investors who bet gued that investors merely have
Monitoring finances
against Greece, by contrast, are
Europeans vow to help
been differentiating between European governments are
profiting. In recent days, Germany and those nations that are good risks scrambling to come up with a
5
“The same financial institu- France have vowed to pursue and those that are not. plan for a European Monetary
tions that were bailed out with fresh regulations in Europe. A Eu- Greece’s problems, critics ar- Fund that could monitor national
taxpayers’ money are now making ropean official familiar with the gue, have more to do with errone- finances and step in to shore up fi-
a fortune from Greece’s misfor- plan said that officials are consid- ous economic data, a broken tax nancially besieged members of 0
tune,” the prime minister said. ering curbs on transactions such system and runaway government the 16-nation bloc that uses the
“Europe and America must say as “naked” credit default swaps, spending. Papandreou makes no euro. When Asian countries pro-
‘enough is enough’ to these specu- which allow speculators to bet on apologies for his nation’s predica- posed such a fund after their 1997
lators who only place value on im- the value of bonds they don’t actu- ment; he said Monday that the financial crisis, U.S. officials op-
-5
mediate returns, with utter dis- ally hold. deficit is twice as big as estimated posed the plan, but the Obama ad- 1960s 1970s 1980s 1990s 2000s
regard for the consequences on U.S. and European regulators and that tax evasion is so wide- ministration is not expected to
SOURCE: U.S. Labor Department BLOOMBERG NEWS
the larger economic system — not are already probing deals involv- spread that fewer than 5,000 object to Europe’s proposal.
to mention the human conse- ing Greek government bonds and Greeks declare incomes equal to Creating such an agency, how-
quences of lost jobs, foreclosed the euro by hedge funds and other $136,000 at recent exchange ever, could take months. Greece
homes and decimated pensions.” institutions. The U.S. Justice De- rates. Similar problems in other must raise more than $30 billion ALSO IN BUSINESS
The campaign to regulate partment has ordered several big European nations, analysts say, by the end of May to keep the gov-
a71 CCMP bids for database provid- a71 Blackboard to buy child safety
opaque financial devices dates to U.S. hedge funds to retain records have made the region’s currency ernment operating.
er: Private-equity firm CCMP firm: Educational software maker
the collapse of Lehman Brothers of recent trades of the euro to vulnerable to credit default swaps Papandreou said he would not
Capital Advisors said Monday Blackboard said Monday that it
in September 2008. While the check for irregularities. and short sellers. seek financial aid from Obama on
that it plans to buy database pro- will purchase Saf-T-Net, which
Greek crisis has recently added After meeting with Papandreou El-Erian wrote in an e-mail that Tuesday. A Greek official called
vider InfoGroup, which has faced produces an alert system that
new urgency to the drive, it re- on Friday, German Chancellor An- “while not major drivers, these in- the nation’s debt problem “strictly
an SEC probe and the removal of sends out emergency messages
mains unclear whether American gela Merkel forcefully backed new struments can amplify the impact a European issue.”
its founder in recent years, for for parents and others caring for
officials will take concrete action. rules against speculation and of fundamental dislocations in In fact, there have been some
roughly $460 million in cash. children via phone calls, e-mail
Unlike in past currency crises in called for U.S. cooperation. Her economic and financial condi- grumblings in Europe that Pa-
The $8 per share investors would and text messages. Blackboard, of
Asia and Mexico, during which calls were echoed by French Presi- tions occasioned by high budget pandreou, known as “the Amer-
receive is less than the opening the District, expects the $33 mil-
U.S. and International Monetary dent Nicolas Sarkozy after his Sat- deficits and a rapidly ballooning ican,” is in the United States at all.
price of InfoGroup’s stock on lion deal to close in late March.
Fund officials played leading urday meeting with Papandreou. debt stock.” faiolaa@washpost.com
Monday, $8.16. — From news services
roles, the Greek debt crisis has “We must succeed at putting a John Chambers, chairman of mufsons@washpost.com
been handled almost entirely by stop to the speculators’ game with the sovereign rating committee at
European leaders. sovereign states,” Merkel told re- Standard & Poor’s, said, “I think Faiola reported from London.
“Europe is jealously guarding porters in Berlin on Friday. “Cred- that the problems with Greek Correspondent Edward Cody in Paris
the front seat here, even to the ex- it default swaps, where you insure public finances are specific to contributed to this report.
Faster Forward
ROB PEGORARO
Northrop halts pursuit of tanker contract
Excerpt from voices.washingtonpost.com/fasterforward
Cablevision-Disney fight leaves subscribers trapped
scandal. In 2008, Northrop won petition and accountability for
Decision expected
the contract, but Boeing fought cost overruns. Cablevision subscribers in New York, New Jersey and Connecticut
back and had the award nullified. “It shows how acquisition re- got WABC back just in time to watch the Oscars last night. But the
to pave way The Pentagon started another form can backfire,” said Loren cease-fire in the battle over how much the cable operator should pay
for Boeing deal
attempt to rebid the deal last Sep- Thompson, a defense industry for the right to retransmit the Walt Disney Co.-owned station’s
tember, but the Northrop team consultant at the Lexington In- programming came too late to leave subscribers feeling comfortable.
threatened in December that it stitute. “If you push a contractor There’s much to dislike about this corporate slap fight. Cablevision
by Dana Hedgpeth would walk away unless the Air too far, they don’t have any in- subscribers lost programming for which they pay ever-increasing
Force changed its proposal. Nor- centive to bid because they don’t sums — and did so on one of the biggest viewing nights of the year.
Defense giant Northrop Grum- throp said the Air Force’s require- expect to make any money. The Some subscribers worked around the disruption by watching WABC
man said Monday that it is pull-
JOHN DAVID MERCER/ASSOCIATED PRESS
ments favored Boeing’s smaller lesson is, if you push contractors over the air, while others took advantage of timely promotions to
ing out of the $40 billion compe- Northrop chief Wes Bush cited 767 plane, instead of its larger too far they’ll lose interest.” switch to Verizon’s Fios service.
tition to build aerial refueling fiduciary responsibility. Airbus A330. Many defense analysts say it is Viewers can and should be irate at being used as human shields in
tankers for the Air Force, a move Bush said Monday the com- unlikely that EADS would be able this manner. But if they can’t change to a competing service — or if
that defense analysts and pro- ther resources to submit a bid pany would not protest the con- to put together a bid by the early-termination fees make it financially painful to switch — what
curement specialists say leaves would not be acting responsibly.” tract, in effect handing a win to May 10 deadline and that it can they do on their own to resolve these hostage situations?
its rival Boeing as the likely win- Deputy Secretary of Defense Boeing. Bush said that although would be hard for the European I have to wonder if these carriage disputes don’t expose a broader
ner. William Lynn said in a statement Northrop thinks it had grounds defense giant to gain enough po- flaw in the pay-TV business model. When networks and stations can
Northrop’s decision marked that the Pentagon was “disap- to successfully protest the con- litical support over Boeing. demand greater payments from subscription services — but the
the latest twist in the nearly dec- pointed” that Northrop had tract proposal, it would have led For those who had pushed for a people who ultimately pay for higher retransmission fees don’t see
ade-long fight over one of the pulled out of the competition, to another lengthy delay. Boeing plane, Northrop’s exit is those exact costs, much less get a chance to vote with their wallets for
Pentagon’s biggest and most con- noting that it “competed well on “America’s servicemen and considered a win. or against companies seeking these fee increases — you have a
troversial contracts and raised both price” and other factors. women have been forced to wait “Northrop made a good deci- situation that can look like a case of market failure.
questions about the impact of “We strongly believe that the cur- too long for new tankers,” he said. sion,” said Rep. Norm Dicks (D-
procurement reforms proposed rent competition is structured “Taking actions that would fur- Wash.). “We can now go forward.”
by the Obama administration. fairly and that both companies ther delay the introduction of But others were dismayed. Sen.
washingtonpost.com/leadership
In announcing its withdrawal, could compete effectively,” Lynn this urgent capability would also Richard C. Shelby (R-Ala.), in
Northrop said that the govern- said. not be acting responsibly.” whose state Northrop had ‘Hurt Locker’ leadership?
ment’s requirements did not rec- The government has been try- Northrop executives and de- planned to build an assembly
ognize the value of the larger re- ing for years to award a contract fense industry analysts have plant for the tanker if it won the “The Hurt Locker,” Kathryn Bigelow’s Iraq
fueling platform it had proposed to replace the Air Force’s aging questioned how profitable the contract, said the Air Force “had war movie, won great reviews and the
and instead favored Boeing’s pro- fleet of planes used for refueling tanker contract would be, given a chance to deliver the most ca- Oscar for Best Picture but has failed to
posal to build a smaller tanker us- military aircraft midflight, but the Pentagon’s push for setting a pable tanker possible to our war draw large audiences, as have other
ing a prototype of its 767 aircraft. the effort to build 179 new tank- fixed price for the contract before fighters and blew it.” critically acclaimed films from 2009, such
Wes Bush, chief executive of ers has been marred by contro- design and testing of the aircraft He said that the “so-called as “The Messenger.” What are the
Los Angeles-based Northrop, said versy. are completed. competition” was “structured to challenges for artists who try to use their
that under those conditions, it no Northrop had partnered with Contracting and defense ex- produce the best outcome for art to lead the public on a divisive political
longer made financial sense to Airbus, which is owned by Paris- perts said Tuesday that Nor- Boeing” and that the Air Force’s issue? Read what our panelists say and
stay in the competition. based European Aeronautic De- throp’s withdrawal raises ques- “refusal to make substantive post your own responses at
“We have a fiduciary responsi- fence & Space (EADS), to com- tions about how far the Obama changes to level the playing field washingtonpost.com/leadership.
bility to our shareholders to pru- pete against Chicago-based Boe- administration will be able to go shows that once again politics
dently invest our corporate re- ing. In 2004, Boeing lost the deal with plans to reform procure- trumps the needs of our military.”
DANNY MOLOSHOK/REUTERS
sources,” he said. “Investing fur- to build the tanker after an ethics ment by pushing for more com- hedgpethd@washpost.com
Director Kathryn Bigelow
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