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Lee Sachs, a counselor to Treasury Secretary Timothy F. Geithner, plans to step down this year as the banking crisis wanes and the Obama administration winds down its emergency programs.

As an adviser on domestic finance, Sachs helped conduct stress tests on the biggest banks and reshape the $700 billion bailout. He also helped manage trillions of dollars in additional government borrowing and advised Geithner on the market implications of issues from the Greek budget crisis to housing finance.

Sachs says he’s leaving now that markets have stabilized and Geithner has had time to set up a permanent team. “I came back down here to help the president and secretary to design and execute their response to the financial crisis,” he said in an interview. “The financial system is in a much stronger position today than it was a year ago.”

His departure comes as the crisis-response team he established becomes a permanent part of the Treasury Department. A former senior managing director at Bear Stearns Cos., the New York-based investment bank bought by JPMorgan Chase & Co. in 2008, Sachs will be one of the most senior of Geithner’s advisers to step down.

“I am likely going to head back to the private sector at some point in the next couple of months,” said Sachs, 46. He says he’ll take some time off before deciding on his next move, to recover from “running 100 miles-an-hour around the clock to stabilize the financial system” alongside regulators and White House officials.

Sperling May Follow

Another Geithner counselor, Gene Sperling, may also be leaving the Treasury soon. Sperling is under consideration for the post of deputy director of the Office of Management and Budget, according to a person familiar with the matter.

Geithner, 48, yesterday credited Sachs with showing “great judgment and skill in helping the president navigate the greatest financial crisis since the Great Depression.”

One of Sachs’ legacies will be the Office of Capital Markets and Housing Finance, successor to an informal crisis- response team he helped establish in the Treasury’s domestic finance division. Led by Matthew Kabaker, a former executive at Blackstone Group LP, the unit fulfilled one of Geithner’s goals at the start of the new administration.

“In transition, we recognized that the Treasury Department did not have a staff capability to deal with capital markets and finance-related issues,” Sachs said. “We need this team.”

Fannie, Freddie

The Treasury is moving into a long-term planning phase after 18 months of primarily managing the aftermath of the financial crisis. Priorities this year include pressing for an overhaul of financial regulation and starting to design plans for the future structures of mortgage finance companies Fannie Mae and Freddie Mac to bring to Congress in 2011.

Since taking office, the Obama administration has tried to change the $700 billion Troubled Asset Relief Program from a bank rescue into a financial-stability plan. TARP, enacted in October 2008, expires in October.

Geithner’s department last year set up the Public-Private Investment Program with the goal of removing as much as $1 trillion in troubled assets from bank balance sheets. The program has moved forward on a much smaller scale, committing as much as $30 billion in government money for participating funds.

The Treasury also held several additional rounds of capital injections for small banks. Those programs drew few applicants, as banks feared customers and investors would shun firms that accepted money from the TARP.

Clinton Years

Other regulators say Sachs’ strength has been his ability to understand the government’s role in the crisis, which allowed him to start work immediately after the 2008 presidential election. He was already known on Wall Street and in Washington from his early career, which spanned 13 years at Bear Stearns followed by a tour in the Clinton administration under former secretaries Robert Rubin and Lawrence Summers.

“When he called me in November, right away we were communicating, I knew I could trust him, I knew I was working with somebody who knew what they were talking about,” Federal Reserve Vice Chairman Donald Kohn said in an interview. “He’s really knowledgeable about financial markets and financial institutions. He’s seen that world from both sides.”

Kohn, who will step down in June after a 40-year central bank career, described Sachs as “even-tempered,” with a sense of “quiet authority creditreport.” He says they worked closely together when Sachs served in the Clinton administration and spoke daily, sometimes more often, during the height of the financial crisis.

“I have found him an important ally for the Federal Reserve,” Kohn said. “He was very sensitive to the issue of Federal Reserve independence.”

Capital Injections

One example of Sachs’ influence came when regulators were debating how big banks should repay capital injections they received in 2008 at the height of the crisis. Sachs advised regulators on how quickly banks could be expected to raise private capital, as well as how markets might react.

Sachs forged ties to his current boss during the Clinton administration, when Geithner worked in the Treasury’s international affairs division. With Sachs in domestic finance, the two worked on debt crises in Russia and Asia, while also competing on the tennis court and in triathlons.

Geithner is faster. “I think he called me from home as I was crossing the finish line,” Sachs said of one shared racing experience.

Wall Street Resume

Critics said Sachs’ financial-market experience isn’t an automatic advantage. His ties to Rubin, who hired Sachs in 1998, could be seen as a liability after the country’s biggest banks required bailouts, said William Black, a law professor at the University of Missouri-Kansas City.

“‘Market experience’ from individuals that screwed up the markets is an interesting concept,” said Black, who served as a federal bank regulator during the savings-and-loan crisis of the late 1980s and early 1990s.

The post-crisis stigma attached to Wall Street resumes accompanied Sachs to the Obama administration: Since joining the team in late 2008, he was never nominated for a Treasury position that required Senate confirmation.

Instead, Sachs was one several counselors serving Geithner in the first months of the administration, when the Treasury Department had no Senate-confirmed senior officials other than the secretary. Congress has since confirmed Deputy Secretary Neal Wolin and a number of assistant secretaries, without approving the administration’s picks to lead the Treasury’s international affairs and domestic finance divisions.

Nominations Weighed

As a result, nominees Jeffrey Goldstein and Lael Brainard have been serving alongside Sachs, Jake Siewert and Gene Sperling as counselors, while the Senate weighs their nominations. Goldstein, a former private equity executive, has been tapped as the undersecretary of domestic finance. Brainard, who served as Clinton’s deputy director of the White House National Economic Council, has been nominated as the undersecretary for international affairs.

The lack of Senate-confirmed Treasury officials came as the White House fended off criticism from lawmakers including Senator Maria Cantwell, a Democrat from Washington state who has repeatedly faulted Obama administration proposals as being too soft on the financial industry without doing enough to close regulatory loopholes.

In the Clinton administration, market experience was viewed as an asset and not a handicap. Gary Gensler, chairman of the Commodity Futures Trading Commission and Clinton-era Treasury official, said he remembers being “delighted that somebody of Lee Sachs’ caliber and values was willing to join the team.”

Mariner Investment

After Clinton left office, Sachs was a partner at New York- based Mariner Investment Group, which owned a stake in at least one company that specialized in collateralized debt obligations — a type of investment that fueled the crisis.

Before joining President Barack Obama’s transition team after the 2008 election, Sachs earned more than $3 million in salary and partnership income at Mariner in 2008, according to his financial-disclosure forms.

In the 1980s and 1990s, Sachs rose to head of global capital markets and the board of directors at Bear Stearns after graduating from Ohio’s Denison College. Sachs is married to Whitney Sachs, a former attorney, and they have two 14-year-old daughters.

“You can work for the secretary of the Treasury of the United States,” said Michael Berman, president of the Duberstein Group, a Sachs family friend who helped him link up with Rubin’s Treasury. “But when it comes right down to it, the twins are in charge.”

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Investors scored big Sunday when the New York Jets lost to the Indianapolis Colts — at least according to the Super Bowl stock indicator.

Here’s how it works. If a team that had its roots in the National Football League wins, the Dow Jones industrial average should go up. If a team from the upstart American Football League wins, stocks should go down.

The AFL merged with the NFL soon after Super Bowl III, when the AFL Jets upset the then-NFL Baltimore Colts.

In the 43 years the Super Bowl has been played, the indicator has been correct 81% of the time. That includes last year’s game, when the win by the Pittsburgh Steelers correctly predicted the rebound in stocks before many investing professionals were willing to go out on that limb.

The two NFC teams playing this Sunday — the Minnesota Vikings and the New Orleans Saints — both have NFL roots. So the stock market had to dodge only a Jets win.

Of course basing investment decisions on the outcome of a game makes as much sense as playing football without a helmet. But according to a study by George Kester, a business professor at Washington & Lee University in Lexington, Va., an investment strategy driven by Super Bowl results has done quite well.

If you’d moved into Treasury bonds following wins by former AFL teams, and back into stocks following victories by teams from the old NFL, you would have performed more than twice as well as buying-and-holding an S&P 500 index fund over the same period payday loans guaranteed no fax.

Kester said while he doesn’t believe the indicator is a wise way to make investment decisions, the better return on the Super Bowl-driven fund was "a result that would be the envy of many portfolio managers."

Of course, the Super Bowl indicator has been wrong eight times, often spectacularly so.

The New York Giants’ upset win in 2008 over the New England Patriots was supposed to bring about a bull run for stocks. Instead the Dow crashed 33.8% that year as the credit markets and banking sector imploded.

Similarly, the back-to-back wins by the Denver Broncos, formerly of the AFL, in 1998 and 1999 did little to slow the rising bubble in tech stocks. The market didn’t cool off until 2000 — after the St. Louis Rams, a team with its origin in the NFL, won the Super Bowl.

So only the most superstitious of investors should really have been cheering against Gang Green. The Super Bowl indicator is fun to talk about, but not something to be taken too seriously. 

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A federal judge has appointed a receiver, Atec Inc., to run the Golf Discount store chain, Mid-Rivers Golf Links and other properties associated with entrepreneur and former golf pro Ned Story.

Centrue Bank claims the companies defaulted on $20 million in loans, which came due early this month.

In asking for a receiver, the bank said the borrowers lack the money to keep the business operating until golfing picks up with warmer weather. The bank said it is "legitimately fearful that its collateral has been, is and will continue to be consumed, used or dissipated," according to documents filed with the U.S. district court in St. Louis. Judge Terry Adelman is hearing the case.

In court papers, the bank said it would fund the receiver, which should allow the businesses to continue operating. Golf Discount stores were open for business this week.

The default is another blow to Centrue. The bank lost $22 million in the first nine months of this year and 8 percent of its loans were behind in payments as of September, more than twice the level at similar banks.

The Federal Reserve last month banned the bank from paying dividends to shareholders and told it to clean up bad loans and improve its lending practices cash advance. The bank has $1.3 billion in assets.

Golf Discount, based in St. Peters, has 18 stores in seven states, including stores in Mehlville, Chesterfield, Ballwin and St. Peters. The bank said its loans are also secured by property at Old Hickory Golf Club and Mid-Rivers Golf Links, both in St. Peters, and golf properties near Kansas City and in Kansas, Arizona and Tennessee.

Story and officials of the golfing companies did not return phone calls.

It’s been a rough go for golf clubs in general, says Scott Hovis, executive director of the Missouri Golf Association. An association survey showed that golf club memberships fell 10 to 15 percent in 2008 in the state. Figures for last year are not yet available, but Hovis feels the business has "flattened," with little growth or shrinkage.

"Golf courses throughout America are struggling," he said, as the economy forces customers to cut back on luxuries. Still, club failures in Missouri have been few, said Hovis.

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Miami developer Asi Cymbal is buying property in Miami’s Design District with immediate plans for more restaurants and retail.

Cymbal is managing partner of the Michelle Bernstein restaurant Sra. Martinez and head of his own construction company.

At a steep discount, Cymbal scooped up the former site of a planned town home project – a little more than one acre (49,500 square feet) at the corner of Northeast First Avenue and 41st Street.

Cymbal paid $2 million for the $10.5 million mortgage with Compass Bank on the property on Dec. 30.

The prior owner was Jeremy Green of Nexus Development Group, who once had a slate of residential proposals for the area.

Cymbal, president of Miami-based Cymbal Development, said in an interview the project would involve retail and restaurants, but he declined to be more specific. He also said he might develop retail at some point in the future.

Cymbal owns the 25,000 square foot Midtown Center at North Miami Avenue and 34th Street. He did new construction at Midtown Center and rehabbed an existing warehouse, which is now home to Bardot bar and EQ3 furniture.

Cymbal also has plans to build a 100,000-square-foot structure at 112-130 NE 41st Street. About half of the building will serve as parking, with retail on the bottom and another use on the top of the building.

One of Cymbal’s partners on the future development projects is Amir Ben-Zion, who is a partner in Miss Yip Chinese Café and the Townhouse Hotel, both on Miami Beach.

Cymbal and Ben-Zion are familiar names in local real estate development circles fast payday loans. In March 2005, the pair were part of a partnership that paid $14 million for the flat-iron parcel one block west of Brickell Avenue.

The site was slated for a mixed-use office building, but the project never got off the ground. In July 2007, it was on the market for $32.5 million.

The pair sold their interest in the project and are no longer associated with it, Cymbal said.

In July of the same year, the pair were part of a partnership that paid $18 million for about an acre of land on Biscayne Boulevard near the Arsht Center for the Performing Arts, where it considered building condominiums. The project never started and the pair also sold their interest in that project, Cymbal said.

At the time, the area around the arts center was inspiring real estate dreams, with Terra Group planning a massive mixed-use development next door.

Cymbal was a vice president and general counsel for the Manhattan projects of Leviev Boymelgreen. He had no connection to the Boymelgreen’s Miami projects, most of which stalled.

As for the Design District, Cymbal said there is great demand for mixed-use projects in the growing Design District, which has become a focal point of activity for the annual Art Basel art event.

“Our intent is to bring the Design District to the next level,” Cymbal said.

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Kate Hanni was involuntarily bumped off US Airways flights in Phoenix not once, but twice, because those flights were oversold.

It took her nearly 36 hours to get from one end of the country to the other — without weather delays — and in the wake of that ordeal, she put her foot down.

“I haven’t flown with US Airways since,” said Hanni, founder of FlyersRights.org, a nonprofit that represents airline passengers. She also canceled her frequent flyer membership with the carrier.

Stories like Hanni’s have become increasingly familiar among travelers, and Tempe-based US Airways isn’t the only one taking heat from disgruntled customers.

The industry has been hit particularly hard by the recession and customer service has been on the backburner as airlines struggle for survival. The industry saw all-time lows in 2007 for on-time performance, mishandled baggage, denied boardings and customer complaints.

But for the past several years, US Airways in particular has found a home toward or at the bottom for customer service satisfaction ratings among the major domestic air carriers.

The airline now has some of the highest baggage check-in and in-flight service fees and its employees are some of the lowest paid in the industry, according to FareCompare.com. Experts say more layoffs and fewer flights coming early next year likely won’t improve staff morale.

After surveying 12,900 domestic travelers, the J.D. Power & Associate’s 2009 North American Airline Satisfaction Study concluded that US Airways ranked last in customer satisfaction among the traditional networks.

“US Airways’ overall customer satisfaction has been steadily declining for the past four years,” said Dale Haines, senior director of travel and hospitality practices at J.D. Power.

That’s about the same time the airline officially merged with America West in 2005, which some critics say hasn’t been completely successful.

“Management values trickle down into every aspect of these businesses,” said Dean Headley, associate professor of marketing at Wichita State University in Kansas, who has conducted the Airline Quality Rating report since 1991.

“The blending of two philosophies is very hard,” he said.

Despite the criticism, the U easy to get unsecured personal loans.S. Department of Transportation’s Air Travel Consumer Report indicates the airline has improved this year. The report measures monthly data from airlines as well as the number of complaints the DOT receives from consumers.

In its third-quarter report, US Airways boasted about ranking first in on-time arrivals for August, with an 81.4 percent on-time arrival rate among the six big domestic carriers as measured by the DOT. The carrier improved to 87.9 percent in September.

The company also reported September was its lowest mishandled baggage rate, at 2.14 per 1,000 passengers, since January 2002. Its overall number of complaints also dropped nearly 50 percent in the third quarter compared with the same period last year, according to the report.

Numerous requests to speak to top-level US Airways executives for this story were denied. US Air spokesman Andrew Christie said a renewed commitment to listening to customer feedback through a committee of senior-level employees largely has contributed to the improvements.

WSU’s Headley said US Airway’s improvements shouldn’t be glorified because the industry as a whole has improved this year. Data compiled by the Airline Quality Rating also show that leading air carriers’ performance improved in 2009 for the first time in five years.

Haines said the consumer report is a poor representation of what consumers really think. At the same time the DOT reported industry improvements in 2009, J.D. Power found that overall airline customer satisfaction declined for a third consecutive year to a four-year low.

“Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cut-backs on in-flight services, increases in fees and issues with helpfulness and courtesy of flight crews,” Haines said in a press release.

But Headley is more optimistic about the future. With less traveler volume, airlines like US Airways can focus more on improving customer service, among other things, which will hopefully continue when the economy begins to recover.

“It’s clear from the rankings that now is the time to invest in new infrastructure and upgrade technology. Now is the time to innovate,” he said in a press release.

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WASHINGTON–The U.S. economy flashed a warning sign of inflation Tuesday, but the recovery is so fragile that experts say a scenario of runaway prices and higher interest rates is a long way off, if it happens at all.

Overall wholesale prices jumped 1.8 per cent in November, the department of labour said, more than double the gain expected. Core inflation, which excludes energy and food, rose 0.5 per cent, the sharpest increase in more than a year.

The U.S. government will release its look at consumer prices on Wednesday instant payday loan. Economists predict a more moderate gain of 0.4 per cent, with core consumer prices expected to rise 0.1 per cent.

U.S. auto sales, meanwhile, will rise 20 per cent in 2010 as the industry starts recovering from its worst year in almost three decades, according to a forecast Tuesday from the Michigan-based Center for Automotive Research.

From the Star’s wire services

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Gary Rodrigues, the former longtime Hawaii director of the United Public Workers Local 646, has paid the labor union $378,103 in restitution as part of a court order resulting from his 2002 embezzlement conviction, the U.S. Attorney’s office said Monday.

A federal jury convicted Rodrigues and his daughter, Robin Haunani Rodrigues Sabatini, of embezzling money from the union and taking kickbacks in connection with an employee welfare benefit plan in November 2002.

Both were also found guilty of mail fraud, health-care fraud, money laundering and conspiracy.

In 2003, Rodrigues was sentenced to more than five years in prison and Sabatini was sentenced to nearly four years but both remained free on bail while they appealed their convictions guaranteed payday loan.

Their appeals were denied by the 9th Circuit Court of Appeals in San Francisco in 2007. They tried to appeal to the U.S. Supreme Court but the appeals were declined in 2008.

Rodrigues is serving his sentence in a federal prison in Taft, Calif. and his daughter is imprisoned at a federal facility in Dublin, Calif.

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Visa and MasterCard now have prepaid cards, which provide enhanced security for online shopping. They’re issued by Canadian financial institutions and sold in large retail chains, such as Shoppers Drug Mart.

But when buying prepaid cards, you have to beware of hidden baggage they carry – such as monthly fees, activation fees and expiry dates.

Mary Vandersteen ran into problems trying to use her Vanilla Prepaid MasterCard with her PayPal account.

"I only use prepaid cards for online transactions with companies I don’t know," she says, "because once the funds have been used up, the companies cannot add any more service fees or charges without my knowledge."

Needing help with a severance package, she did a Google search and found FairSeverancePay.ca. She agreed to make three deposits of $100 each with the prepaid MasterCard, which she linked to her PayPal account.

PayPal rejected the first deposit, but later accepted it when she found a staff member to help her. Then it rejected her other attempts to make a $100 payment using the same card.

"So far, I have paid $4.36 to PayPal and I can’t complete the transaction," she says.

The problem is that prepaid Visa and MasterCard gift cards can be purchased anonymously, says Darrell MacMullin, general manager of PayPal Canada.

"Whenever you add a financial instrument to PayPal, we like to make sure you are who you say you are. In this case, there was no user information associated with the prepaid card. When we check and no information comes back, it throws up a red flag in our system."

PayPal charges $1 for each attempt to authorize a payment card and refunds the fees once the card is authorized. (Vandersteen got a refund once I contacted the company.) But PayPal won’t authorize a card unless it can identify the user, MacMullin emphasizes.

Hal Whitcomb ran into problems trying to use his My Treat Visa prepaid cards, issued by Citizens Bank in Vancouver.

"These were gifts from the parents of the softball team I coach. They are advertised as just like cash," he says. "However, there’s an activation fee. There’s also a monthly administration fee after a few months. I’ve also found they have expiry dates, despite the laws that prevent expiry dates on gift cards."

Citizens Bank spokesman David Chong said Visa and MasterCard gift cards can be used anywhere that Visa and MasterCard credit cards are accepted.

"They are what we call `open network’ cards. As a result, issuers like us have to give 24/7 access to cardholders. There are significant costs to ensuring this occurs flawlessly."

Activation fees are a common industry practice to cover the expense of printing and packaging the cards, as well as to reimburse merchants, he explains.

The monthly administration fee kicks in after the first few months of ownership. However, most cardholders use up their entire card balances in one transaction or within a month or two after receiving their cards, Chong says.

As for expiry dates, Ontario and other provinces do have laws banning expiry dates on gift cards. But Visa and MasterCard fall under federal law and don’t have to abide by the provincial rules.

So, if you get a prepaid Visa or MasterCard card, try to make a major purchase right away. Don’t let them linger in your wallet, piling up fees.

Next week, we’ll dig into those online offers of "free samples," which end up enrolling you in expensive monthly plans.

eroseman@thestar.ca

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Chevron Corp.’s $40 billion Australian natural gas project will drive a global hunt for construction workers and has prompted calls to ease immigration rules to prevent labor shortages and cost overruns at energy and mining projects fueling the country’s economy.

Contractors for Chevron and partners Exxon Mobil Corp. and Royal Dutch Shell Plc in the Gorgon liquefied natural gas plant plan to pay premiums of as much as 40 percent for welders, pipe fitters, project managers and engineers, recruiters said. They expect to hire in the Middle East, Latin America and Europe.

Gorgon is the largest of more than a dozen LNG ventures in Australia targeting Asian demand for cleaner-burning fuels. It will compete for staff with Woodside Petroleum Ltd., which said Nov. 20 the cost of its $12 billion Pluto LNG project may surge by as much as $1 billion, partly because of labor expenses.

“This doesn’t bode well for Australia’s mega projects,” Woodside Chief Executive Officer Don Voelte said in a Nov. 25 interview at the Perth headquarters of the country’s second- largest oil and gas producer. “It’s going to be a stretch when more than one company is trying to build these things.”

The Chevron and Woodside investments are among more than $90 billion of resources projects expected to generate about 40,000 construction jobs in Western Australia alone, a state government report shows. Voelte wants the federal government to relax immigration regulations for overseas workers and has started an equity incentive plan to retain staff.

Labor ‘Race’

“For Woodside we believe it is a race to capture or not lose the workforce to Chevron, a significant risk for Woodside’s growth plans,” JPMorgan Chase & Co. analyst Mark Greenwood wrote in a Nov. 25 report.

About 80 natural resource ventures to be built in the next decade may increase demand for skilled workers by as much as 70 percent, Energy Minister Martin Ferguson said in a Nov. 30 speech in Perth to mark the start of construction of Gorgon on Barrow Island, a nature reserve about 50 kilometers (31 miles) off the northwestern coast.

Prime Minister Kevin Rudd has tasked a group of government, immigration and industry officials to help companies such as Chevron and BHP Billiton Ltd. find 70,000 workers in the next decade, making Gorgon its top priority.

“A series of cost overruns could discourage future investments,” Gary Gray, chairman of the Rudd-appointed group and Parliamentary Secretary for Western and Northern Australia, said by phone. “The urgency is to ensure as best as we can the adequacy of labor to deliver projects on time and on budget.”

Wage ‘Premium’

About 80 percent of oil and gas industry employers in Australia said in a survey they intend to increase salaries in the next 12 months, Matt Underhill, managing director at recruiting firm Hays, said from Sydney. Professionals in the pipeline industry currently earn $191,000 annually on average in Australia, he said.

“The expertise is specialized, so there’s going to be a premium paid for that type of labor,” said John Hirjee, an analyst at Deutsche Bank AG in Melbourne same day payday loans. Labor may account for 10 to 20 percent of costs at Australian LNG projects, he said.

Contractors may offer workers as much as 40 percent more than they could earn in Sydney to entice them to Barrow Island, said John Downing of Downing Teal Pty. The company and other recruiting firms hiring for ventures including Gorgon will extend their search to the Middle East and Latin America, he said.

Serbian Sparks

Leighton Holdings Ltd., whose units have won A$1.3 billion of Gorgon work, has in the past hired electricians in Serbia and welders in South Korea, said spokesman Justin Grogan.

Officials with Western Australia’s Department of Training and Workforce Development have met with Chevron to discuss labor needs, Simon Walker, an executive director at the department, said in e-mailed comments.

The department is working on a proposal to tackle the looming shortage and “strategic immigration will be a key consideration factored into the plan,” he wrote.

“Capacity constraints can lead to escalating labor costs, increasing prices and ultimately, they can threaten the viability of enterprises, which negatively affects economic growth and the well-being of the population,” Walker said.

A Chevron advertising campaign to tout Gorgon includes a television commercial with the line “creating thousands of jobs and providing opportunities for generations to come.”

‘Sexy’ Gorgon

It’s a “sexy project” that should have an advantage in securing labor, Colin Beckett, the venture’s general manager, said on Barrow Island in October. A thousand applicants have chased 30 or 40 positions in some cases, he said. Welders and instrument technicians will prove harder to find.

Conditions for those living on Barrow Island, where average temperatures reach as high as 34 degrees Celsius (93 Fahrenheit), will be improved by access to the Internet, cable television, gyms, swimming pools and a golf driving range.

“We think Barrow Island will be attractive to a lot of people,” Beckett said.

One Gorgon contractor is offering A$300,000 ($280,000) for a manager to assess risk and as much as A$135,000 for a contracts administrator, according to advertisements placed by Downing Teal. Engineers will earn “well into six figures,” John Downing said.

A labor shortage that confronted Australian mining and energy during a previous boom is set to return BHP Chief Executive Officer Marius Kloppers said last month. “Just two short years ago there was a massive talent gap in the resources industry,” he said in a Nov. 18 speech. “I believe this gap will return along with demand.”

Gas project developers have built the risk of rising labor bills into their plans and are having LNG processing units built in lower-cost Asian countries and reassembled in Australia to cut expenses, Deutsche Bank’s Hirjee said.

“That’s not to say these cost blow-outs may not happen,” he said. “They could.”

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The economy expanded or improved “modestly” across the U.S. from October to mid-November as consumer spending rose in a majority of Federal Reserve districts, the central bank said.

Eight regions “indicated some pickup in activity or improvement in conditions,” while the other four said conditions were little changed or mixed, the Fed said today in its Beige Book business survey, published two weeks before officials meet to set monetary policy. The labor and commercial real estate markets remained “weak,” the report said.

Policy makers last month repeated their pledge to keep interest rates low for an “extended period” to bring down unemployment that’s forecast to remain above 10 percent even as the economy emerges from recession. A government report Dec. 4 is likely to show that companies reduced payrolls for a 23rd straight month, according to a Bloomberg survey of economists.

“Economic conditions have generally improved modestly since the last report,” the Fed said. “Financial institutions generally reported steady to weaker loan demand, continued tight credit standards, and steady or deteriorating loan quality.”

Today’s Beige Book reflects information collected through Nov. 20 and summarized by staffers at the New York Fed. The four districts that didn’t report an improved economy were Atlanta, Cleveland, Philadelphia and Richmond.

Fed Chairman Ben S. Bernanke testifies tomorrow before the Senate Banking Committee in a confirmation hearing for a second term that would begin Feb. 1. The Fed’s policy-setting Open Market Committee next meets Dec. 15-16 in Washington.

Stocks Rise

Stocks erased losses following the release of the Beige Book. The Standard & Poor’s 500 Index added less than 0.1 percent to 1,109.24 at 4:05 p.m. in New York. The index has jumped more than 63 percent from its 2009 low on March 9 on prospects for a recovery from recession.

“This report is a little more upbeat than the previous one,” said former Fed Governor Lyle Gramley, who is now a senior economic adviser with New York-based Soleil Securities Corp. “Most districts are seeing the economy pick up just a little.”

The world’s largest economy grew at a 2.8 percent annual pace in the third quarter, the first expansion after four quarters of contraction and the fastest rate in two years.

Consumer spending, excluding autos, rose in seven districts, was “steady or mixed” in four and declined in one, St. Louis, the Fed said. Vehicle sales increased in six districts. Some regional banks said retailers had “recently become more optimistic about the holiday-season outlook.”

Consumer Spending

A report last month showed that consumer spending, which accounts for about 70 percent of the economy, rebounded in October more than anticipated by economists. Incomes climbed 0.2 percent, also exceeding expectations.

Richmond Fed President Jeffrey Lacker said today that the U.S. economy “has hit bottom” and a recovery is “solidly under way,” with housing and consumer purchases of autos no longer a drag on growth.

While the labor market “remained weak since the last report, with further layoffs, sluggish hiring and high levels of unemployment in most districts,” the report said three districts had a slower pace of job cuts. In the Boston district, some businesses said they were starting to hire and reverse pay cuts or freezes.

The economy has lost 7.3 million jobs since the recession began in December 2007. The unemployment rate may exceed 10 percent through the first half of 2010, a Bloomberg survey showed.

Commercial Real Estate

Commercial real estate remained a problem area for the economy, with markets and construction “depicted as very weak and, in many cases, deteriorating,” the Fed said.

The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4 percent in the third quarter from a year earlier as vacancies rose and rents declined, according to a report by Real Estate Econometrics LLC.

Bernanke said in a Nov. 16 speech that “fallout” for banks from commercial real estate could slow the country’s economic recovery.

While most regions reported increased home sales, new construction was “generally characterized as weak.” Three districts showed “some pickup” in home building, two reported declines and three said it was “flat or stabilizing.” The lower end of the market has been doing better than the higher end, the Fed said.

Home Sales

The number of contracts to buy U.S. previously owned homes unexpectedly rose in October, a report yesterday showed, as consumers rushed to take advantage of a tax credit that was due to expire. President Barack Obama on Nov. 6 extended the $8,000 tax credit for first-time buyers until April 30 from Nov. 30, and expanded it to include some current owners.

Sales of new homes increased 6.2 percent in October to a 430,000 annual rate, the fastest since September 2008.

In manufacturing, conditions were “on balance, steady to moderately improving across most of the country,” the Fed said. A report yesterday showed manufacturing in the U.S. expanded in November for a fourth consecutive month.

Fed regions “generally reported little or no upward wage pressures,” with most showing “stable selling prices.” Some districts “noted upward pressure in commodity prices,” the report said.

The Federal Open Market Committee repeated in its Nov. 4 statement that “with substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the committee expects that inflation will remain subdued for some time.”

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