News & Current Affairs

July 15, 2009

Price of habit chokes US smoker

Filed under: Business News, Latest, Politics News — Tags: , , , , , , , , , , , , , — expressyoureself @ 6:06 pm

Price of habit chokes US smoker

Josh Muszynski

Josh Muszynski: ‘I thought someone had bought Europe’

A man in the United States popped out to his local petrol station to buy a pack of cigarettes – only to find his card charged $23,148,855,308,184,500.

That is $23 quadrillion (£14 quadrillion) – many times the US national debt.

“I thought somebody had bought Europe with my credit card,” said Josh Muszynski, from New Hampshire.

He says his appeals to his bank first met with little understanding, though it eventually corrected the error.

It also waived the usual $15 overdraft fee.

“It was all back to normal,” Mr Muszynski told his local television station, WMUR. “They reversed the negative balance fee, which was nice.”

Debt crisis

His nightmare began when he checked his online bank account a few hours after buying the cigarettes.

He thought he would be a couple of hundred dollars in the black. But his overdraft had pushed him into the red – by an amount equivalent to many times the entire US national debt.

“It is a lot of money in the negative,” he said. “Something I could never, ever, afford to pay back.

A copy of Josh Muszynski's bill

The 17-digit amount on his online bill shocked Mr Muszynski

“My children could not afford it, grandchildren, nothing like that.”

In panic, Mr Muszynski rushed back to the petrol station, but they were unable to help. He says he then spent two hours on the phone with the Bank of America.

Eventually, it assured him it would be fixed – and the next morning, it had been.

But no-one has yet explained to Mr Muszynski how such a astonishing error could have been made.

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November 25, 2008

US Fed unveils new $800bn rescue

US Fed unveils new $800bn rescue

A US home that has been repossessed

The Fed’s aim is to prevent a deep economic slump

The Federal Reserve is to pump $800bn (£526.8bn) into the markets in another bid to deal with the financial crisis.

The US central bank said it would use $600bn to buy-up mortgage-backed securities to help encourage lending.

Separately the Fed also unveiled a $200bn plan to help unfreeze the consumer credit market.

As the credit crisis has deepened, banks and other financial institutions have been reluctant to lend, deepening the economic slowdown.

Under this new rescue plan – which is in addition to the already-announced $700bn bank bail-out – the Fed is to buy up to $100bn in debt from the troubled mortgage giants Fannie Mae and Freddie Mac.

The central bank said it would also buy another $500bn in mortgage-backed securities – pools of mortgages that are bundled together and sold to investors.

New bail-out

The $600bn effort on mortgages came as the Fed also unveiled a separate program to help unfreeze the consumer debt market.

The central bank said it would lend up to $200bn to the holders of securities backed by various types of consumer loans, such as credit cards and student loans.

The Fed said that the $600 billion effort to support the mortgage market was being taken to reduce the cost of home mortgages and increase their availability.

It said the purchases of the mortgages and mortgage-backed securities would take place over a number of months.

The severe financial crisis that is rocking global markets at the moment began more than a year ago with rising defaults on subprime mortgages, loans provided to borrowers with weak credit histories.

‘Unblocking credit’

Recently, Treasury secretary Henry Paulson had indicated that the government was working on this new program, which will be supported by $20bn of credit protection provided by the existing $700bn bank bail-out fund.

The news of this latest massive financial rescue plan was generally welcomed.

“They are getting to the heart of the problem, it’s clean, it’s quick, it’s direct. It’s a good way to bring down mortgage rates, because at the end of the day they have to stabilise the housing market,” said Todd Abraham of Federated Investors, Pittsburgh.

Robert Macintosh, chief economist with Eaton Vance, Boston, said: “If they can pull it off it’ll make some people happy, but I don’t know how effective it’ll actually be.”

Scott Brown, chief economist at Raymond James Associates, Florida, said: “Here is the Fed taking a bunch of debt out of the market, which doesn’t hurt. I think it should it should help unblock the credit markets.”

October 15, 2008

Bank crisis to dominate EU talks

Bank crisis to dominate EU talks

the curve of the German stock index DAX at the stock market in Frankfurt

There are fears of a recession in Germany, the EU’s biggest economy

EU leaders are meeting in Brussels to discuss a multi-billion-euro rescue scheme for Europe’s ailing banks.

The 27-member bloc is expected to rally behind plans agreed on Sunday by officials from the 15-nation eurozone.

Stocks markets appear to have stabilised since then, but are expected to remain nervous because of worries over a recession in the US and Germany.

Green groups are fearful that the economic crisis will derail EU plans to tackle climate change.

‘Common sense’

European leaders at the meeting are expected to try to keep the emphasis on joint action to unfreeze bank lending and restore confidence in the markets.

“I am sure… there will be a common position,” said European Commission chief Jose Manuel Barroso.

“I have boundless faith in the sense of responsibility and common sense of our heads of government and states.”

However, Germany, the continent’s biggest economy, is on the verge of recession, a report said on Tuesday.

Leaders will meet under the chair of the French, who hold the current presidency, and have a packed agenda that includes:

Bank bail-outs

Europe’s largest economies have announced hundreds of billions of euros in state support for their struggling banks. France, Germany, the Netherlands, Spain and Austria are planning to guarantee bank lending, provide short-term liquidity and partly nationalise some banks, in schemes modelled on the UK’s £500bn (640bn-euro) bail-out package.

Other members of the 15-nation eurozone are expected to brief their colleagues on similar rescue plans. French President Nicolas Sarkozy, chairing proceedings, has urged European governments to act together in the crisis, to avoid damaging splits.

In a departure from the norm, European Central Bank President Jean-Claude Trichet will address the summit on Wednesday.

The commission now has the task of scrutinising each country’s plan to ensure they do not disadvantage other EU member states or violate EU competition laws.

Immigration

Leaders are expected to sign an immigration pact, committing their countries to common principles for handling immigrants, and trying to achieve a better match between immigrants’ skills and jobs in the EU labour market, which is facing certain skills shortages and an ageing workforce.

An EU “return directive” sets out common rules for processing illegal immigrants, while the EU also has plans a “Blue Card” scheme to attract more high-skilled immigrants.

Energy

France is anxious to get agreement on a package of environmental measures before its EU presidency ends in December. President Sarkozy has stressed that, despite the economic strains caused by the credit crunch, the EU must become “a low-carbon economy”.

Politicians in Germany, Italy and Poland have argued that existing targets for reducing greenhouse gas emissions would impose extra burdens on electricity generators and carmakers, as an economic recession looms. In the case of the UK, similar resistance has arisen over including aviation in the CO2 targets.

Lisbon treaty

EU leaders are waiting for the Irish government to come up with a “roadmap” – a way forward – after Irish voters rejected the Lisbon Treaty in June. The treaty, aimed at streamlining EU institutions to cope with enlargement, has to be ratified by all 27 member states to take effect. Most have now ratified it, but no big breakthrough is expected at this summit.

Relations with Russia

The EU has postponed talks on a new EU-Russia partnership treaty, amid continuing concern about Russia’s military presence in Georgia. EU monitors verified a Russian withdrawal from buffer zones around the breakaway regions of South Ossetia and Abkhazia, but the situation remains very tense. There are divisions in the EU about when to resume partnership talks.

September 15, 2008

Lehman set to go into insolvency

Lehman set to go into insolvency

Graph

Preparations are being made for Lehman Brothers, the fourth-largest investment bank in the US, to file for bankruptcy.

The two strongest potential buyers appear to have pulled out of talks to rescue Lehman – the latest victim of the American credit crisis.

If no new financing comes before Wall Street opens, it will have to seek “Chapter 11” bankruptcy protection.

This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman.

Late on Sunday the US central bank, the Federal Reserve, announced new moves to ease access to emergency credit for struggling financial companies.

The Fed said the step – which broadens the types of securities financial institutions can use to obtain emergency loans – was designed to mitigate the potential risks and disruptions to markets.

In a related move, a consortium of 10 investment banks announced a $70bn (£39bn) loan program that troubled financial companies can use to help ease the credit shortage.

The banks – Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS – each agreed to provide $7bn (£4bn) to the pool.

On Monday, Asian stock markets fell amid concerns over the fate of Lehman Brothers.

Singapore stocks dropped 2.26% in morning trading and shares in Taiwan fell 1.83%.

Markets in Tokyo, Hong Kong, Shanghai and Seoul were closed for public holidays.

Lehman employs about 25,000 worldwide, including 5,000 in the UK.

Accountancy firm PWC has already been lined up to run the British operations of Lehman should the firm go into administration.

BBC business editor Robert Peston says UK bank Barclays’ decision to walk away from a Lehman deal was a huge setback for the effort to rescue the Lehman.

Barclays terminated the negotiations because it was unable to obtain guarantees in relation to financial commitments faced by Lehman when markets open on Monday.

Bad bank, good bank

The rescue effort for Lehman was being co-ordinated by the US Treasury and the New York Federal Reserve.

No other large firm should buy Lehman whole – its toxic real estate and securities are too difficult to value
Peter Morici
University of Maryland

The US government had hoped to arrange a bailout under which other US investment banks would finance a “bad bank” that would hold the most “toxic” investments of Lehman in the property and mortgage market.

The “good bank” or rest of the firm, including its investment and wealth management arms, would then be sold to another financial institution, for example Bank of America or the UK’s Barclays.

Although such a deal would have cost the other investment banks millions, it might have restored confidence in the sector and avoided a sharp drop in the share price of all banks.

However, it appears that this plan is falling apart.

“The only thing that can prevent Lehman collapsing would be a huge injection of taxpayers’ money,” a banker close to the talks told the BBC, but added that US Treasury Secretary “Hank Paulson has made it clear he doesn’t want to do that”.

Hard choices

Bank of America, meanwhile, is said to be unconvinced that buying Lehman would be in the interest of its shareholders.

Instead, according to a report in the New York Times, Bank of America is in “advanced talks” to buy investment bank Merrill Lynch for more than $38bn.

HAVE YOUR SAY

It’s amazing that companies which charge high interest to cover risk still need to be bailed out by the taxpayer.

Jack, Canada

Like other US investment banks Merrill has suffered losses of tens of billions of dollars in the subprime crisis, and has seen its share price plummet during recent months.

“No other large firm should buy Lehman whole – its toxic real estate and securities are too difficult to value,” said Peter Morici of the business school of the University of Maryland.

Lehman is up for sale after it reported a $3.9bn (£2.2bn) quarterly loss last week amid concerns over its long term financial viability.

The firm’s share price has plummeted as fears over its future have mounted.

Former Federal Reserve boss Alan Greenspan said the US government faced “very difficult decisions” over Lehman if it could not secure a rescue deal that did not involve public funds.

Yet Mr Greenspan said it would be “unsustainable” for the government to bail out every US bank that got itself into difficulty.

Predicting that Lehman would not be the last to require rescuing, Mr Greenspan added that this would not necessarily pose a problem.

“The ordinary course of financial change has winners and losers,” he said.

September 10, 2008

Lehman reports third quarter loss

Lehman reports third quarter loss

Lehman Brothers office

Lehman has suffered heavy losses from the credit crunch

Troubled US bank Lehman Brothers has reported a third quarter net loss of $3.9bn as it unveils radical restructuring plans.

The losses were at the top end of analysts’ expectations.

The bank’s shares on Tuesday plunged 45% on fears about the state of its financial health.

Korea Development Bank (KDB) has said talks with Lehman Brothers have ended for now with regard to possible investment in the US bank.

KDB said in a statement: “We are announcing that we ended talks at this point in time because of a disagreement over conditions of a transaction and considering domestic and foreign financial market conditions.”

State-run KDB said the decision came because of disagreement over terms and current financial market conditions.

Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing its third-quarter earnings.

A Wall Street Journal report said Lehman might be considering selling UK property assets to BlackRock.

September 6, 2008

Police: Gunman kills self after standoff in bank

Police: Gunman kills self after standoff in bank

WHEATON, Illinois (AP) — A gunman who took a dozen hostages in a suburban Chicago bank after wresting a gun from a police officer Friday died after shooting himself in the head, police said.

Hostages were released Friday after a gunman killed himself in suburban Chicago, police say.

Hostages were released Friday after a gunman killed himself in suburban Chicago, police say.

The standoff began around 1:30 p.m., after a Wheaton police officer responded to a call of a hit-and-run accident near the bank.

When the officer arrived, the suspect grabbed the officer from behind, held a knife to his throat and demanded his gun, Deputy Chief Thomas Meloni said.

During an ensuing struggle, the officer was cut on a forearm and the suspect was able to take the gun and run the lobby of the Wheaton Bank & Trust, where he ordered everyone to the floor, Meloni said.

Police in Wheaton, about 20 miles west of Chicago, did not immediately release the gunman’s identity.

As officers evacuated nearby businesses and homes and shut down streets and rail service, hostage negotiators talked to the gunman by phone. They were able to persuade him to release 10 hostages, leaving two behind, Meloni said.

“At one point the suspect began to close the blinds from inside the bank and he disconnected the phone contact with the hostage negotiators,” Meloni said.

Shortly afterward, about 4:15 p.m., officers heard a single gunshot and they rushed in, Meloni said. He said the man was dead of a single gunshot wound to the head.

A spokeswoman for Central DuPage Hospital, Amy Steinbruecker, said the hospital treated and released the police officer who scuffled with the suspect for minor injuries.

Television footage showed dozens of people running from the four-story bank building, which includes other businesses, with their hands above their heads.

“We locked our office door, turned off the lights, drew the blinds,” said Donna Price, 52, of McHenry, who works in the office building. “Then we heard a knock on the door and it was a SWAT guy. He told us to get out right now.

“I said, ‘Let me get my purse.’ He said, ‘No, now.”‘

Price said police held people in a stairwell of the building before ordering them out.

“We all had to put our hands up on the back of our heads and run,” Price said from a convenience store across the street where more than 100 people were crowded.

August 26, 2008

Bank customer data sold on eBay

Bank customer data sold on eBay

EBay sign

eBay was first launched as Auction Web in 1995

An investigation is under way into how a computer containing bank customers’ personal data was sold on an internet auction site.

The PC, which was reportedly sold for £35 on eBay, had sensitive information on the hard drive.

The Royal Bank of Scotland (RBS) and its subsidiary, Natwest, have confirmed their customers’ details were involved.

RBS says an archiving firm told it the PC had apparently been “inappropriately sold on via a third party”.

It said historical information relating to credit card applications for their bank and others had been on the machine.

The information is said to include account details and in some cases customers’ signatures, mobile phone numbers and mothers’ maiden names.

RBS and Natwest – two of the three businesses involved – said they are taking the issue very seriously and are working to resolve it “as a matter of urgency”.

A spokeswoman for data processing company Mail Source, which is part of the archiving firm Graphic Data, said it was investigating how the computer equipment had been removed from a secure location.

“The IT equipment that appeared on eBay was neither planned nor instructed by the company to be disposed.”

Clearly such details should never have been included in the hard drive of the computer offered for sale on eBay
eBay spokesman

When financial data goes missing

She said the incident was extremely regrettable and the firm was “taking every possible step” to retrieve the data and ensure it was an isolated incident.

It is thought the problem came to light when Andrew Chapman, an IT manager from Oxford, bought the computer, noticed the data and raised the alarm.

The Daily Mail said the computer, containing a million bank customers’ personal data, had been sold for £35.

A spokesman for eBay said they were currently looking into what had happened.

“Clearly such details should never have been included in the hard drive of the computer offered for sale on eBay. We fully expect Mr Chapman to hand it back to Graphic Data as soon as possible. We will of course work with Graphic Data to establish how it came to be available for sale on our site.”

Banks have an obligation under the Data Protection Act to keep all personal information secure.

Last year the Financial Services Authority fined the Nationwide Building Society £980,000 for a security breach, after a laptop containing customer data was stolen from an employee’s home.

August 24, 2008

Blast demolishes landmark towers

Two iconic concrete cooling towers in South Yorkshire have been demolished in a controlled explosion.

Millions of drivers passed the 250ft (76m) towers by the Tinsley viaduct on the M1 at Sheffield over the decades.

At 0300 BST the blast to reduce the “salt and pepper pots” to rubble left part of the north tower still standing but it has since collapsed.

The Highways Agency said the motorway remains closed as planned while safety checks are carried out.

How is a cooling tower demolished?

The blast was watched by several thousand people and the M1 motorway had to be closed from midnight on Saturday, between junctions 32 and 35. It is thought the motorway may reopen on Sunday afternoon.

The towers stood only feet away from the twin-deck Tinsley viaduct, which carries the motorway on the top deck and the A631 on its lower deck.

A joint statement from tower owner E.ON and the Highways Agency said: “The demolition has now been successfully completed.

“The viaduct remains closed and the exclusion zone remains in place as planned to allow safety checks to continue.”

Tinsley towers

Only part of the north tower fell initially

After the dust settled, about a third of the north tower was still standing but a BBC reporter at the scene said the pile of rubble left after the explosion gradually fell in on itself and reduced significantly in height.

Paul Scriven, leader of Sheffield City Council, said the focus was now on getting traffic moving.

“We need to get the M1 opened as soon as possible,” he said. “We have a Bank Holiday where people will be moving around the country, coming back home, going to see relatives or going to see places.”

Despite campaigns to save the towers, which were the only remnants of the Blackburn Meadows power station, E.ON said it was destroying them as the 70-year-old structures had deteriorated.

Emily Highmore, from E.ON, said preserving the towers would have been very expensive.

“They would require a very, very significant investment and fundamentally speaking we are an energy company and our job is to keep people’s lights on.”

Nowhere else in the world has anyone sought to bring down similar structures that sit so close to a major highway viaduct
Arthur Ashburner, Highways Agency

The firm has been given permission to build a £60m biomass power station at the site.

Arthur Ashburner, from the Highways Agency, said: “This demolition is a unique situation and as far as we are aware, nowhere else in the world has anyone sought to bring down similar structures that sit so close to a major highway viaduct.

“We will carry out a series of checks to ensure that there has been no damage to the viaduct, which in itself may take several hours.

“We will reopen the road only when we are entirely satisfied that it is safe to do so.”

Some locals had tried to save the cooling towers and have them turned into art.

Campaigner Tom Keeley said: “You see very few cooling towers that are in quite such a visible position, they’re 12 metres from the M1, and they kind of symbolise not only a gateway to Sheffield and Yorkshire but they also symbolise a gateway to the North.”


Were you at the blast? Has the failed demolition affected your journey on the M1? Send us your comments

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