Americans earned more and spent more last month, a hopeful sign for the economy ahead of the holiday buying season.
The government says consumers boosted their spending 0.4 percent in October. That was up from a 0.3 percent increase in September.
People showed a slightly bigger appetite to spend because their incomes rose 0.5 percent, reflecting a slowly healing jobs market. Incomes didn’t grow at all the month before pay day advance. The increases in both income and spending last month were the most since August.
Even with the pickup, consumers are still shying away from the type of spending needed to dramatically lower the 9.6 unemployment rate.
The economy grew slightly faster last summer than first thought, benefiting from stronger spending by U.S. shoppers and improved overseas sales of U.S. goods.
The Commerce Department reports that gross domestic product increased at a 2.5 percent annual rate in the July-September quarter. That was better than the 2 percent pace initially estimated last month.
More brisk spending by American consumers, especially on autos and other big-ticket goods, and stronger sales of U fast payday loans.S. exports to foreign customers were the main reasons for the upgrade.
Still, the modest improvement isn’t enough to drive down the 9.6 percent unemployment rate.
It all started with a scratch on a minivan in a Guelph parking lot.
Then came a trip to a body shop, a Toronto law firm, some time off work collecting accident benefits and weeks of hands-on care at a clinic.
The Hamilton driver and two of his three passengers squeezed all they could out of his insurer, before it investigated.
But now ??? a decade after the incident ??? they have a $150,000 bill to pay.
A photo of the nine-inch scratch and a chat with the owner of the red 1999 Dodge Caravan minivan brushed by the Hamilton car persuaded the insurer that it had been duped. The woman in the van said her baby didn’t even wake up, and cups of coffee in the claimant’s Pontiac did not spill.
Faking and defrauding is hardly new. Auto insurers consider Ontario’s Golden Horseshoe the insurance fraud capital of Canada ??? a dubious distinction that helps to explain why drivers in the region pay such high auto insurance premiums.
What’s new is how determined little Waterloo Insurance Co. was to recover the costs for its other policyholders.
Rather than shrug off the loss as just another cost of doing business, like shoplifting, the arm of the larger Economical Group launched a civil suit against Van Tuan Doan and his passengers, Thuy Nhan Ai Le and Quang Dat Nguyen.
Waterloo asked a jury to award it all the money it paid to the claimants, plus the cost of their treatments and its cost of handling and investigating their claims ??? more than $62,000 in total.
It also claimed a similar amount in legal fees, plus interest charges that bring the total to about $150,000.
???So far as I know it was the first time in Canada that an insurer went after people who had made claims and said: ???Give us the money back, you cheated us,’??? says lawyer Ian Kirby, a former president of the Ontario Bar Association.
The jury sat through a seven-day trial in Guelph in 2008, and ruled in Waterloo’s favour. Only recently have appeals of that ruling been exhausted or abandoned.
The tenth anniversary of the Nov. 13, 2000, incident in the parking lot of a doughnut store has just passed.
Rocco Neglia, Economical’s determined vice-president of claims, says the doctor who saw the three claimants found them ???credible, straightforward; (and that) their injuries were consistent with the nature of the motor vehicle accident.???
Neglia’s colleagues did not think so, and neither did the jury.
Kirby represented Waterloo in court.
He says he held up a photo of the scratch, and he called the driver of the van to describe what she saw and felt. (She declined to be interviewed for this story.)
Consulting engineer Sam Kodsi concluded in a report filed in court that the scratch on the van was so minor that contact between the two vehicles would have felt no more jarring than ???hopping a step, plopping into a chair or looking over the shoulder.???
A doctor testified that such a low-speed impact could not have caused the injuries alleged by the three claimants.
???In insurance law there is the doctrine of good faith,??? says Kirby. (The insurer must accept what a claimant says is true, unless it later finds evidence to the contrary guaranteed cash advance.)
???But that is a two-way street,??? he adds. ???If you try to get something for nothing, this case stands for the proposition that the insurance company can get it back.???
It won’t be the last time Waterloo and Economical fight back. The insurance group is seeking the return of income and supplementary medical benefits paid in two other cases, and is preparing to sue medical clinics as well.
Insurers are rarely able to persuade busy police detectives to investigate and press criminal charges in cases of suspected fraud involving a few thousand dollars each. Criminal charges must be proven beyond a reasonable doubt. But civil courts only look at the balance of probabilities. So the chances of an insurer winning an award for damages are better.
While only a minority of consumers are suspected of submitting fraudulent or exaggerated claims, many think insurers have deep pockets. But the money comes from other consumers, and in the case of Economical, the profits it retains would legally belong to its participating policyholders if it were ever to become a stockholder company.
Neglia of Economical says Ontario regulations passed in 1996 limited the ability to deny or limit medical treatments that seem excessive.
A three-day deadline was imposed on insurers to respond to medical assessments proposing treatments eligible for coverage under policy accident benefits. Before Sept. 1, 2010, insurers could not deny proposals for treatment, no matter how extensive, without the backing of one or more independent medical examinations.
A new $3,500 cap and treatment protocols now apply to the sort of minor sprains and strains that the three Hamilton residents complained about. Insurers may deny treatment plans that seem excessive after a medical review of the plans, but without paying for a full medical assessment.
???Having controls in place that at least give us a fighting chance has been good,??? says Neglia, adding: ???If people are going to engage in fraudulent activity, we are going to go after them.???
Collecting on court awards will be another matter.
Property records show Doan sold a three-storey home in 2002, the month after he was sued, for 38 per cent less than he paid in 1998. The buyer has the same family name. Last year she used the house to secure a $164,000 loan, more than triple what she had paid, at the prime interest rate plus 6 percentage points, an unusually high rate.
The passenger Le declared bankruptcy in 2007, before the jury award. She declared she owed nearly $73,000 but had only $700 of her own, a search of records by the Toronto Star revealed.
But Kirby points out that debts resulting from fraud are not extinguished by a bankruptcy. The three claimants will owe money until the award is paid in full.
???What (Le) did was wipe all (of her) other debts and left us as the only debtor,??? says Kirby, adding: ???Some days are better than others.???
Harrah’s Entertainment canceled its initial public offering, citing market conditions.
The casino operator was expected to price the offering on Thursday and begin trading on the Nasdaq this week. Harrah’s had said it would raise as much as $531 million for casino projects and to help with its heavy debt burden.
A Harrah’s spokeswoman said the company is not commenting beyond Friday’s brief statement announcing the cancellation.
But the company had planned its IPO in what has been a rough time for the casino business, as people cut back on gambling in the tough economy and opted to save their money instead cash until payday loan. Harrah’s reported a loss of $634.4 million during the nine months that ended Sept. 30.
The IPO would have helped ease the company’s heavy debt burden. Harrah’s has nearly $20 billion in debt, and Francis Gaskins, president of IPOdesktop, estimates the company is spending as much as 22 percent of its revenue on interest payments. This would put interest payments at about $1.47 billion for the first nine months of the year.
Much of the company’s debt was piled on by the two private equity companies, Apollo Management Group and Texas Pacific Group, who took Harrah’s private three years ago. Apollo and TPG planned to keep majority control of it after the IPO. They paid $30.7 billion in 2007 in what was one of the biggest leveraged buyouts ever. But that was before the financial crisis hit.
The company’s revenue, which peaked the year of the buyout at $10.8 billion, tumbled 6 percent to $10.1 billion in 2008. Recently, Harrah’s business has started to stabilize, and the company had planned to use the IPO to expand its business california payday loans.
Harrah’s, which has planned to change its name to Caesars Entertainment Corp., owns or manages more than 50 casinos in 12 states and seven countries.
Harrah’s shelved its offering a day after General Motors returned to Wall Street with its IPO.
The governor of the Central Bank of Ireland said Thursday he expects his debt-crippled country to accept a loan worth tens of billions of euros (dollars) soon from the European Union and International Monetary Fund.
Patrick Honohan made his frank assessment as forensic accountants and financial specialists from the EU and IMF landed in Dublin to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won’t default on debts.
Those doubts have risen since September when Finance Minister Brian Lenihan raised the government’s estimated cost of bailing out five Irish banks to at least euro45 billion ($62 billion). That gargantuan bill has driven Ireland’s 2010 deficit to 32 percent of GDP, a post-war European record. Ireland is planning a four-year austerity plan, including a 2011 budget with euro4.5 billion in cuts and euro1.5 billion in new taxes, in response.
Honohan, speaking in Frankfurt where was attending a meeting of the European Central Bank board, said he expected the EU-IMF loan _ if approved by the Irish government _ to provide a financial “buffer” for Irish banks that would not be used. He compared it to similar U.S. moves in 2008 to inject banks with cash that reassured investors and was eventually repaid.
“It’s true that our banks need additional confidence. … There have been substantial outflows of capital from Irish banks since April,” Honohan said in an interview with Irish state broadcasters RTE.
As foreign investors have withdrawn or failed to renew deposits in Dublin banks, the ECB and Irish Central Bank have filled the gap with loans estimated to total euro130 billion. The ECB’s lending to Ireland has grown in recent months to represent nearly a quarter of the Frankfurt bank’s total lending in the 16-nation eurozone. An EU-IMF cash injection would be designed to reverse the foreign outflow of capital.
Honohan said it was “desirable that the (Irish) banks should have more capital available to show to the markets: Look, this is beyond question.”
The governor, who is independent of the government, said he expected Ireland and the EU-IMF delegation to agree terms and conditions on a loan worth “tens of billions” that “will be made available and drawn down as necessary.”
“The capital is probably not required at all,” he said, adding it would most likely be “shown but not used.” It “goes in as buffer and comes out again when it’s not needed.”
The talks in Dublin could last days and will be held with Ireland’s Department of Finance, Central Bank, National Treasury Management Agency and other agencies.
Construction of new homes fell sharply in October, fresh evidence that the housing industry remains under duress.
The Commerce Department says construction of new homes and apartments sank 11.7 percent last month to a seasonally adjusted annual rate of 519,000 units.
The decline marked the poorest showing since April 2009, when construction dropped to 477,000 units _ the lowest level on records dating back to 1959. Construction of new homes and apartments is 77 percent below its peak during the housing boom of 2.27 million units in January 2006.
Reserve Bank of Australia policy makers said they raised interest rates this month to counter an expected rise in inflation as strengthening mining investment, employment and trade propel the nation’s economy.
“The board judged that the balance of risks had shifted to the point where a modest tightening of monetary policy was prudent,” the RBA said in minutes of its Nov. 2 meeting released in Sydney today. The RBA increased its benchmark interest rate at that meeting to 4.75 percent after a five-month pause.
Surging shipments of iron ore, coal and energy to China are boosting Australia’s growth, prompting companies such as BG Group Plc to increase investment and hiring. A report last week showed the nation’s employers added workers in October for an eighth consecutive month and the participation rate in the labor force surged to a record.
“A gradual upward trend in inflation remained likely over the medium term,” policy makers said in the minutes. “If monetary policy was to be conducted in a forward-looking way, these developments meant there was a case for increasing interest rates at the current meeting.”
Governor Glenn Stevens has raised the RBA’s overnight cash rate target seven times since October 2009, in contrast with the U.S. Federal Reserve’s policy of a benchmark rate near zero since December 2008. That divergence has contributed to a 9.7 percent increase in the local dollar versus the U.S. currency this year, the second-best performer among the 16 major currencies.
The Australian dollar surged this month to the highest level since exchange controls were removed in 1983, reaching $1.0183 on Nov. 5.
Policy makers said that while the stronger currency was affecting industries including tourism, surveys indicated that conditions for the nation’s manufacturers were “around average.” That partly reflected the benefits of cheaper imported capital equipment and components, according to the minutes.
In the minutes, the central bank said that while this month’s decision to increase rates was also “finely balanced,” some of the uncertainties that were a reason to keep borrowing costs steady, including risks to the global economy, “had lessened recently.”
Policy makers noted the possibility that the nation’s banks would boost rates on loans by more than the move in the benchmark rate, while saying that “this tendency would not be lessened by delaying a change in the cash rate,” the minutes showed.
Westpac Banking Corp. and National Australia Bank Ltd. last week announced increases to their standard variable home-loan rates, following Australia & New Zealand Banking Group Ltd. and Commonwealth Bank of Australia. All boosted borrowing costs by more than the quarter percentage-point rise in the RBA cash rate.
RBA policy makers aim to keep inflation within a target range of 2 percent to 3 percent. While the rate slowed to 2.8 percent in the third quarter, a monthly gauge compiled by TD Securities Ltd. and released Nov. 1 showed an annual jump in consumer prices of 3.8 percent for October.
“While inflation had moderated, it was likely that the decline was now largely complete,” the minutes said today. “Inflation was expected to remain around the current level for several quarters, but was likely to move higher thereafter.”
The RBA, in a quarterly report on Nov. 5, reiterated its forecast that economic growth will strengthen to 3.75 percent by the end of 2011, climbing to 4 percent by the end of 2012. Consumer prices will rise 2.75 percent through June 2012; previously, the RBA had estimated inflation of 3.25 percent through mid-2011.
A report last week showed Australian employers added 29,700 workers from September, almost 50 percent more than the median forecast for a 20,000 increase in a Bloomberg News survey of 24 economists. The unemployment rate rose to 5.4 percent in October, a six-month high as the participation rate in the labor force surged to a record.
BG Group, a U.K.-based energy company, said last month it will begin work on a $15 billion liquefied natural gas venture in Queensland, generating 5,000 construction jobs.
Even so, policy makers said in the minutes that Australian consumers, whose spending accounts for more than half of gross domestic product, remained cautious.
Home-building approvals and retail sales were weaker than economists forecast in September, and house-price gains decelerated in the third quarter, reports published this month showed. Consumer confidence declined in November to a five-month low, according to a survey released last week.
Traders in futures contracts are betting on a 6 percent chance the RBA will boost its key rate by a quarter point to 5 percent next month, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange before the minutes were released.
MONTREAL ??? Green packaging manufacturer Cascades Inc. is hoping that efforts in China to expand recycling in small cities will eventually provide some relief provide from the cost pressures it faces because of growing demand for recycled fibre.
The Montreal-based boxboard, containerboard and tissue maker said higher Chinese demand is expected to support higher raw material costs over the next few months.
???Short-term, obviously, there will be pressure on pricing because China???s structure for collection is not good at the moment,??? Mario Plourde, president and chief operating officer of Cascades Specialty Products Group, said Friday during a conference call.???But we know as well that the Chinese government is putting pressure to increase the collection rate in China.???
He said Chinese legislation expected to be enacted by the end of 2011 or in 2012 to expand collection of recyclable materials should ease the pressure on North American and European fibre.
Recycled materials costs, which increased by 15 to 20 per cent in October, could increase by $25 (U.S.) per ton over the next few months as Chinese demand fills containers of product waiting at western ports.
Paul Quinn of RBC Capital Markets said Cascades could face an additional $20 million in fibre costs in the coming quarter payday lenders.
???Overall they???ve got a lot of cost pressure and it has not been offset by prices at this point,??? he said in an interview.
Quinn, however, is skeptical that China will substantially increase its already very high recycling rates.
While export volume is strong, Cascades said the volume of recyclable materials is improving as retail stores generate more waste from improving economic activity.
High recycled fibre costs and the strong Canadian dollar put pressure on Cascades during the third quarter.
It earned $30 million, or 30 cents per share, during the period ended Sept. 30 ??? in line with analyst expectations as higher selling prices drove up revenue.
That compares with net earnings of $34 million, or 34 cents per share, in the same period a year ago.
Sales grew to $1.03 billion from $974 million.
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. It has close to 12,500 employees in more than 100 locations in North America and Europe.
Leaders of all the main Iraqi political blocs met Monday for the first time since March elections in a new push to break the eight-month deadlock over forming a new government. Car bombs struck the country’s two holiest cities and killed 14 people, a reminder that insurgents remain determined to destabilize Iraq.
The 90-minute meeting of political leaders in the northern town of Irbil kicked off three days of negotiations that could signal the deeply divided political blocs are close to a power-sharing agreement. However, officials said there are still major obstacles to overcome.
Since inconclusive March 7 elections, insurgents have tried to exploit political uncertainty over the new government with periodic violence. Monday’s blasts were the third major attacks since last week, following the slaughter of more than 50 Christians in a Baghdad church and a string of 13 coordinated bombings across Baghdad that killed more than 70 people.
Prime Minister Nouri al-Maliki, who is fighting to keep his job, was among the leaders who attended the meeting in Irbil. His main rival, Ayad Allawi, was also there. Allawi heads the Sunni-backed Iraqiya coalition that won 91 seats, more than any other party, in the parliamentary election. Al-Maliki’s bloc took second with 89 seats.
But no party won an outright majority in the 325-seat parliament and the blocs have spent the past eight months haggling to form alliances that could lead to a government inclusive enough so that it will not trigger a new outbreak of sectarian strife that just a few years ago brought Iraq to the brink of civil war.
Al-Maliki described the meeting as a new push forward by the political blocs to reach an agreement.
“We need to open a new page and leave the past behind,” he said.
Others who attended pointed to difficulties in forging an agreement between political parties that have in the past fought their battles on the streets and still view each other with deep suspicion.
Vice President Tareq al-Hashimi, a Sunni from the Iraqiya alliance, warned that negotiating committees who have been meeting for weeks before the Irbil summit had left many of the most contentious issues to the leaders to work out.
“Based on that, I do not think that the leaders will be able to solve these sticking points because they need a lot of discussion and study,” he said. “I do not know how the leaders, today and tomorrow, will be able to discuss this list of sensitive and strategic issues during this short period of time.”
After the nationally televised meeting concluded, the political leaders agreed to meet again in Baghdad the following day before flying out of Irbil.
Massoud Barzani, president of the Kurdish Autonomous Region in northern Iraq, lobbied for the meeting to be held in Irbil, seat of the Kurdish government. Also in attendance in the large auditorium were Ammar al-Hakim, who heads the Iranian-backed Supreme Islamic Iraqi Council, followers of anti-American cleric Muqtada al-Sadr, Iraqi President Jalal Talabani, and Iraq’s other vice president, who is a Shiite, Adel Abdul-Mahdi.
Two separate car bombings struck Iraq’s two holiest cities, Karbala and Najaf, the sites of important shrines revered by the country’s Shiite majority.
Hours before the political leaders met, seven pilgrims were killed in a car bomb blast in the holy Shiite city of Karbala, 50 miles (80 kilometers) south of the Iraqi capital.
Police and hospital officials said dead included six Iranians and one Iraqi and that at least 35 others were wounded in the blast, including Iranian and Pakistani nationals.
The car bomb exploded at a parking lot in central Karbala that is used by pilgrims traveling between Iraq’s holy sites. Such parking lots have often been targeted by Sunni militants unable to get close to the holy shrines due to beefed up security.
Later Monday a suicide bomber blew himself up just 500 yards from the shrine of Imam Ali, one of the most revered Shiite saints and a cousin of the Prophet Muhammad, killing seven people including two Iranian pilgrims, according to police and hospital officials.
The officials spoke on condition of anonymity because they were not authorized to speak to the media.
Claims for unemployment benefits fell more than expected and a moving average fell to a two-year low, pointing to some relief in the weak jobs market, a government report showed on Wednesday.
Initial claims for state unemployment benefits fell to a seasonally adjusted 435,000 in the week to November 6 from a revised 459,000, the Labor Department said. Analysts were expecting claims to slip to 450,000 from an initially reported 457,000.
The four-week moving average of claims, considered a better measure of underlying market trends, eased to 446,500, the lowest since September 2008.
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