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Treasury Secretary Henry Paulson said he's confident several countries will take steps comparable to the $700 billion plan he proposed to buy bad mortgage-related securities to address the global financial crisis.

“We are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will,'' Paulson said on ABC News' “This Week'' program.

Paulson yesterday asked Congress for unfettered authority to buy devalued mortgage-related securities from investment firms in an effort to keep the financial system from coming to a standstill. The proposal would prevent courts from reviewing the Treasury's actions while raising the nation's debt ceiling.

German Finance Ministry spokesman Stefan Olbermann said members of the Group of Seven industrial nations are in “ongoing talks about the situation on financial markets worldwide.'' Finance ministers from the G-7 countries meet in Washington on Oct. 10.

Asked about the U.S. plan, Olbermann said, “We have to see if and to what extent those measures make sense for Germany.''

The U.K. currently has no plans to set up such a fund, a British Treasury official said.

Prime Minister Gordon Brown today said “in relative terms, we've done a huge amount'' by giving banks access to more than 100 billion pounds ($183 billion) under a Bank of England program that allows them to swap bonds hurt by the collapse of the subprime mortgage market payday loans.

While a French finance ministry spokesman declined to comment on Paulson's latest remarks, Finance Minister Christine Lagarde spoke with U.S. officials during the week and told Europe 1 radio today that the U.S. response had “allowed us to avoid a systemic crisis.''

Treasury's Plan

“We have obstacles to overcome,'' Lagarde said.

The U.S. Treasury late yesterday modified its proposal to allow for purchases from institutions outside of the U.S., a step Paulson today said was needed to mute the impact of the credit crisis in the U.S.

“As you think about this, if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institutions,'' he told ABC News.

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Westar Energy Inc. and BP Alternative Energy North America Inc. will break ground Tuesday on a new wind farm.

The Flat Ridge Wind Farm site is located in Nashville, Kan., about 60 miles southwest of Wichita.

The 100-megawatt project was developed by BP. Westar will own half of the farm and purchase energy from BP, under a purchase power agreement. Flat Ridge is expected to go online by the end of 2008 payday loans.

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Sales at U.S. retailers probably rose in May as Americans started spending their tax-rebate checks, and record gasoline prices inflated receipts at service stations, economists said before a report today.

Purchases rose 0.5 percent, following a 0.2 percent drop the prior month, according to the median estimate in a Bloomberg News survey before the Commerce Department's report. Figures from the Labor Department may show the cost of imported goods surged 2.5 percent last month, led by climbing fuel expenses.

Wal-Mart Stores Inc. is among retailers benefiting from about $50 billion in stimulus checks the government sent out through May as the increase in prices drove consumers to discount chains. The boost may be short-lived as tighter credit, plummeting property values and a weakening labor market signal Americans will retrench once the extra cash is spent.

“The rebates should provide some boost to consumer spending, but the stimulus checks won't provide the economic lift policy makers had hoped for,'' said Ryan Sweet, an economist at Moody's Economy.com in West Chester, Pennsylvania. “The surge in gasoline prices is diluting the benefit.''

The Commerce Department's report is due at 8:30 a.m. in Washington. Forecasts ranged from a decline of 0.3 percent to a 1.2 percent gain. Excluding autos, sales probably rose 0.7 percent, the most since November, according to the survey.

The Labor Department's figures on import prices, due at the same time, will probably show costs accelerated after a 1.8 percent increase in April. Predictions ranged from gains of 0.5 percent to 4 percent.

$4 Gasoline

The cost of gasoline has risen 33 percent so far this year, reaching a record exceeding $4 a gallon this week for regular unleaded, according to AAA. Food prices have also surged, prompting shoppers to hunt for bargains at discounters payday loans in one hour.

Wal-Mart, the world's largest retailer, had a 3.9 percent jump in same-store sales last month as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.

“Many of our customers need to live from paycheck to paycheck,'' Wal-Mart Chief Financial Officer Thomas Schoewe told reporters last week. “The amount they're spending on basics is a big portion of the total basket.''

Consumers cashed $350 million in rebate checks at Wal-Mart stores, Schoewe said. The retailer doesn't know how much of that was spent at the chain.

Rebates Spent

Households will spend about $90 billion more this year on gasoline if prices remain around current levels, according to a forecast by economists at Credit Suisse Holdings in New York. That will consume about 80 percent of the more than $110 billion in rebate checks the government will eventually send out.

“Consumers should start to respond to the additional cash by increasing spending,'' said Michael Hanson, an economist at Lehman Brothers Holdings Inc. in New York. “The rebate will act like a shot of caffeine,'' even as the effects “will be temporary.''

Consumers aren't buying big-ticket items such as automobiles, reflecting slumping confidence and weakening household finances. Cars and light trucks sold at a 14.3 million annual pace in May, the fewest since July 1998, according to industry data.

Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month.

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Japan's factory production probably fell in April for a second month as the U.S. slowdown crimped world demand and higher energy costs cut into corporate profits. Inflation stayed near a decade high, economists said.

Output declined 0.5 percent from March, when it slid 3.4 percent, the biggest drop in five years, according to the median estimate of 35 economists surveyed by Bloomberg News. The Trade Ministry will release the report on May 30 at 8:50 a.m. in Tokyo.

Record oil and commodity prices are squeezing businesses and consumers in Asia, where demand has helped Japanese exporters withstand the U.S. slump. Higher costs and fewer sales may cause profits to fall this year for the first time since 2001, prompting companies to pare spending and restrain wages.

“The global economy is slowing but commodity prices are still going up. It's really damaging,'' said Hiroshi Shiraishi, an economist at Lehman Brothers in Tokyo. “Japan's biggest market is Asia. They're big importers of commodities, so they're getting hit just like Japan.''

Analysts will look for clues about Japan's economic outlook in companies' forecasts for production in May and June. The Trade Ministry asks manufacturers about their production plans in the two months ahead. Companies said last month they expect May output to rise 3.4 percent.

“I think the projection is over-optimistic because the global environment is getting worse and worse,'' said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo.

BOJ's Shirakawa

Bank of Japan Governor Masaaki Shirakawa said yesterday that the outlook for the world's second-largest economy is “extremely uncertain'' because costlier oil and raw materials could squeeze companies and consumers as well as fan inflation.

Consumer-price inflation probably eased from the steepest rate in 10 years as the temporary expiry of a gasoline tax provided relief to consumers facing rising prices of bread, milk and beer payday loan.

Core prices, which exclude fresh fruit, fish and vegetables, climbed 1 percent in April from a year earlier, according to the median estimate of 35 economists surveyed. Prices rose 1.2 percent in March, the fastest pace since 1998. The statistics bureau will release the figures on May 30 at 8:30 a.m. in Tokyo.

The expiration of the gasoline tax lowered the average price of the fuel nationwide by about 17 percent in April, according to the Bank of Japan. The levy was reinstated this month, bringing regular gasoline prices to a record 160.1 yen a liter ($5.84 a gallon).

Oil Prices

“The gasoline tax temporarily dragged down core prices, but the effect of recent oil gains will defiantly appear in consumer-price data from May,'' said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo.

Crude oil exceeded $135 a barrel for the first time last week. Japanese companies' pretax profits will fall 5 percent in the year ending March 2009, ending seven years of growth, according to the Shinko Research Institute.

Higher commodity costs aren't all bad news for Japan's exporters. They're increasing the wealth of emerging and resource-producing countries, spurring demand for Japanese goods in those markets, Governor Shirakawa said. Export growth accelerated last month as demand in emerging markets made up for a slump in shipments to the U.S., Japan's largest market.

“We're not looking for a collapse in exports. We're basically expecting them to be held up by commodity-exporting countries,'' said Lehman's Shiraishi. “The economy's path is dependant on this balance between commodity prices and global growth. That balance isn't going in a favorable direction.''

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Downtown developers Hank Cowles and Barbara Cowles cleared the last hurdles to reopen The Corkscrew at 511 S. Front.

The Center City Development Corp. board voted unanimously to subordinate its loan to the Cowleses, who own the building where the liquor and wine store is locating, to the Bank of Bartlett, which is also extending a loan.

The CCDC's $35,500 loan originated in March 2000.

The couple still owes $22,000 on that loan.

Bank of Bartlett is extending them $250,000, contingent on the CCDC subordinating its loan freecreditscore.

This clears the couple to open The Corkscrew later this week in one bay of the building.

The Blue Monkey is set to open in the remaining two bays, which formerly held Blue Sky Couriers and Alice's Urban Market.

aashby@bizjournals.com | 259-1732

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Colorado’s insurance sector lost another political battle Thursday as the House Business Affairs and Labor Committee approved a bill that dramatically raises fines and penalties the state Division of Insurance can impose on insurers that "unreasonably" deny claims.

Sponsored by Rep. Andrew Romanoff, D-Denver, House Bill 1407 was approved in a party-line vote of 6-4 — following a sometimes-testy exchange between Democratic legislators and business leaders.

The bill applies to all forms of insurance including health, life and auto. It increases maximum penalties by up to 500 percent against insurers who unfairly deny claims. It also allows people whose claims are denied to collect up to two times the actual damages sustained.

Romanoff, who is the House Speaker, said the bill gives individuals a chance to recover their losses without resorting to costly and time-consuming litigation.

The legislation also changes the standard that the insurance commissioner needs to evaluate when weighing whether or not claims were inappropriately denied.

Under current law, the insurance commissioner needs to determine that insurers engaged in "willful, wrongful and reckless" behavior when denying a claim — a standard that Romanoff said is "hard to define."

Under HB 1407, the commissioner will only need to determine that insurers acted in an "unreasonable" manner no teletrak payday loans. Romanoff said the new standard included in the bill gives the commissioner "a bigger stick to deter" unscrupulous insurers.

Supporters of the bill recounted heartbreaking stories of tragic circumstances, of denied claims and prolonged lawsuits against insurance companies that nearly resulted in bankruptcy — even after the courts ruled against the insurers.

The proponents maintained that HB 1407 would have spared them from what Romanoff described as "a Kafkaesque Hell."

But representatives of the insurance industry argued that the bill establishes a lower standard of guilt and force insurers to pay more claims — resulting in higher premiums.

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The global economy can cope with rising crude prices, which may climb to as high as $120 a barrel in the coming week, Libya's top oil official said.

“For years we've been saying the era of cheap oil is over,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said today in Rome before the International Energy Forum, which starts tomorrow. “None of us thought it would reach $115 a barrel so quickly, so it could reach $120'' this week.

The world economy “has not reached the tipping point where it can't accept higher prices,'' Ghanem said.

Crude oil futures have doubled in three years, touching a record $116.97 a barrel yesterday in New York. Member states of the Organization of Petroleum Exporting Countries have said there's enough supply in the market and price gains are the result of speculation and a weak dollar.

“OPEC is not pricing oil, it's the futures markets,'' Ghanem said. “We think supply is adequate.''

Customers aren't asking for more crude, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said as he arrived in Rome today, blaming the plunging dollar for record prices. “The oil price rises as the dollar gets weaker.''

The U.S. currency sank 8.3 percent against the euro to $1.5983, an all-time low, on April 17.

Oil as Hedge

Saudi Arabia Oil Minister Ali al-Naimi said the rising price of crude is “absolutely'' unrelated to supply and demand fundamentals and is caused by investors using it as a hedge against falling currencies, according to a report in Argus.

Saudi Arabia, facing calls from oil-consuming nations to pump more crude, has no plans to raise output because increased supply wouldn't damp prices, Argus said, citing al-Naimi guaranteed cash advance loan. The minister didn't comment as he arrived in Rome today.

Adding the country's spare supplies would “destabilize'' the market by flooding it with oil that isn't needed, al-Naimi said, according to Argus. Pressure to raise output is “probably politically driven.''

Saudi Arabia, the world's largest oil exporter and the only member of OPEC to have spare output capacity, can add more than 1.6 million barrels a day to production. The country pumped 9.2 million barrels a day in March, according to Bloomberg estimates. The other 12 members are close to capacity, Bloomberg data show.

Saudi Output Plans

The nation has no plans to raise output to more than 12.5 million barrels a day, which will be achieved by 2009, al-Naimi said. Projected oil consumption to 2020 doesn't require more crude from the country and estimates for demand are decreasing, he said. Saudi Arabia's King Abdullah said earlier this month that the nation's new oil discoveries must be saved for the benefit of future generations.

Bringing new oil capacity on-stream is becoming more expensive, at around $5,000 to $8,000 per barrel a day from $2,000 per barrel a day “in the past,'' al-Naimi said, according to Argus. The depletion rate of Saudi fields is 2 percent to 3 percent at most, he said, Argus reported.

United Arab Emirates Oil Minister Mohamed Al-Hamli also said in Rome today that the oil market is “adequately supplied.''

The International Energy Forum takes place every two years and is the largest gathering of energy ministers from oil- producing and consuming countries at a single event.

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The days of gas-guzzlers would soon be over if the majority of the responders to last week’s Business Pulse survey had their way.

We asked, "What impact will record gas prices have on your next car purchase?" Forty-eight percent of respondents said they’d buy a hybrid, 16 percent said they were interested in electric cars, 10 percent said they would take the bus and 26 percent said, none, they love their gas-guzzler.

Some of your comments:

• "Who can afford to buy a new car now? My next one may literally fly at the rate the economy and the dollar are tanking!"
• "All bad answer options! Prices will have an affect, but not to the extreme of a hybrid or electric car."
• "I was planning to purchase a hybrid for environmental reasons — if electric were a true option I’d be there — so that purchase isn’t gas price driven although it’s a motivator to do so sooner."
• "The problem is, we have a society built around the car payday loan. Do I sacrifice my career or uproot my life just to be green?"
• "You should have included an option for switching to a more fuel-efficient gas vehicle. We plan to give up one of our work vans and purchase a compact car, which we’ll use for errands and client meetings."

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European Central Bank governing council member Axel Weber said the impact of the global credit squeeze on the euro-area economy has been limited.

Even though “we don't see an end to the U.S. housing crisis, the impact on German and European growth has been limited,'' Weber said in Ljubljana, Slovenia, today.

Weber, who also heads Germany's Bundesbank, said he doesn't share the International Monetary Fund's “pessimistic'' outlook for the German economy. The IMF cut its forecast for 2008 expansion there to 1.4 percent from 1.5 percent cash advances.

“These would be very much at the lower end of our own projections,'' Weber said. He said first-quarter growth in Europe's largest economy was “strong,'' fuelled by strong orders and a rebound in construction.

He said he sees “no reason'' to revise the Bundesbank's prediction for a 1.9 percent economic expansion.

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Electronic Arts Inc. said Friday it extended its $2 billion offer for Take-Two Interactive Software Inc. by a week, but added the provision that a "poison pill" adopted earlier in the week by Take-Two be cancelled.

Redwood City-based EA (NASDAQ: ERTS) said it would at least need a promise that the poison pill won’t apply to its current takeover attempt. The attempt to counter a hostile takeover could mean new shares were issued, thus driving up the costs of a takeover.

"The actions of the Take-Two board may increase the risk for their stockholders by delaying a potential transaction," Owen Mahoney, EA’s senior vice president of corporate development, said in a statement. "We continue to believe that our $26 per share offer price is full and fair, and that a transaction between Take-Two and EA is the most compelling combination financially, strategically and operationally for all parties."

EA’s offer for New York-based Take-Two (NASDAQ: TTWO) is now set to expire on April 18 payday loan cash advance loan. About 5,000 shares of Take-Two had been tendered to EA by the end of Thursday, the company said.

Earlier in the week, Take-Two — which publishes the popular "Grand Theft Auto" franchise — urged shareholders to reject EA’s offer but said it would be open to discussion after the fourth version of the game is released.

Take-Two Chairman Strauss Zelnick said the poison pill would "ensure that the Take-Two board has adequate time to consider all strategic alternatives for maximizing value for Take-Two stockholders. The agreement will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all stockholders."

Silicon Valley / San Jose Business Journal

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