Fort Myers & Naples Insurance | Site For Lease

By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — Compared against year-earlier sales declines, retailers will likely report a pick-up in August sales, driven by back-to-school shopping for apparel and electronics and the addition of tax-free holidays in states including Florida and Illinois.

Still, plenty of worries trail the expected headline numbers.

Analysts’ descriptions of how the month may have turned out included “It’s going to be ugly,” “A mixed bag” and “Mediocrity remains in focus.”

Many cited concerns about the persistently high unemployment rate, the still fragile housing market, a volatile stock market, and the unusually hot weather on the East Coast that likely led to a pause in spending or delays in purchases of jeans and other fall-weather merchandise.

A Discover U.S. Spending Monitor survey released Wednesday showed while more consumers feel the economy is getting better, the number of consumers rating their personal finances as poor reached a six-month high in August.

Retailers from J.C. Penney Co.
/quotes/comstock/13*!jcp/quotes/nls/jcp
(JCP
20.59,
+0.61,
+3.07%)
and Kohl’s Corp. to Aeropostale Inc.
/quotes/comstock/13*!aro/quotes/nls/aro
(ARO
21.80,
+0.50,
+2.35%)
and American Eagle Outfitters Inc.
/quotes/comstock/13*!aeo/quotes/nls/aeo
(AEO
12.91,
+0.27,
+2.14%)
have cut their third-quarter forecasts or given a projection that may fall short of Wall Street expectations. Caution was echoed by retailers across the board.

So far, most eyes are on September to better gauge the consumer mood and how back-to-school selling season, the industry’s second-biggest period and a barometer for the following holiday season sales, will turn out after weather returns to a more normal pattern, analysts said. According to Weather Trends International, August was the hottest in 15 years and driest in 4 years, denting back-to-school and early fall merchandise sales.
Retailers’ new focus: what you want to wear now.

“The days leading up to and after Labor Day will be crucial to the season,” said BMO Capital Markets analyst Wayne Hood.

He said he’s keeping a “watchful eye” on the inventory of retailers including J. C. Penney., Nordstrom Inc.
/quotes/comstock/13*!jwn/quotes/nls/jwn
(JWN
30.01,
+1.09,
+3.77%)
, Wal-Mart Stores Inc.
/quotes/comstock/13*!wmt/quotes/nls/wmt
(WMT
51.30,
+1.16,
+2.31%)
and J. Crew Group Inc.
/quotes/comstock/13*!jcg/quotes/nls/jcg
(JCG
31.86,
+1.37,
+4.49%)
after their stock level coming out of the second quarter has increased at a faster rate than their sales growth. Excess inventory leads to profit-eroding discounts.

“August results will not be strong enough to build investor confidence in the consumer,” said Deutsche Bank analyst Bill Dreher. “Until we get clarity — it’s an expectations game. Inventory risk builds.”

Winners and losers

Overall, retailers are expected to post a 2.8% increase in August, compared with a 2.3% decline a year earlier, according to Retail Metrics. Discounters, excluding Wal-Mart, will likely outpace with a 3.7% increase with consumers seeking bargains in one-stop shopping , analysts said. Department stores also are expected to outperform with a 3.2% gain.

Lagging the industry performance, apparel retailers are estimated to post a 2.3% increase, followed by teen apparel retailers’ 1.7% gain, Retail Metrics data showed.

Among expected winners in different segments, Limited Brands Inc.
/quotes/comstock/13*!ltd/quotes/nls/ltd
(LTD
24.32,
+0.72,
+3.03%)
, parent of Victoria’s Secret, likely outperformed in the apparel segment with a 7% increase. Teen retailer Abercrombie & Fitch Co.
/quotes/comstock/13*!anf/quotes/nls/anf
(ANF
36.69,
+2.09,
+6.04%)
is expected to be a bright spot in its group with a 5.8% estimated gain.

In the department-store sector, Nordstrom, Saks Inc.
/quotes/comstock/13*!sks/quotes/nls/sks
(SKS
7.34,
-0.56,
-7.06%)
and Macy’s Inc.
/quotes/comstock/13*!m/quotes/nls/m
(M
20.11,
+0.70,
+3.61%)
are expected to outperform their lower-priced rivals J.C. Penney, Sears Holdings Corp.
/quotes/comstock/15*!shld/quotes/nls/shld
(SHLD
64.40,
+2.44,
+3.94%)
and Kohl’s ., Retail Metrics data showed. Costco Wholesale Corp.
/quotes/comstock/15*!cost/quotes/nls/cost
(COST
57.74,
+1.24,
+2.19%)
, in the discount sector, is expected to be among the standouts with a 4.4% increase.

Wal-Mart no longer reports monthly sales.

As an indicator of how sales may have turned out, MasterCard Advisors’ SpendingPulse, which estimates total U.S. retail sales across all payment forms including cards, cash and checks, said on Wednesday that sales trends for August have been more towards “remaining stable and flat rather than towards growth.”

Consumer electronics rose 2.3% while appliances category jumped 9.4%, the MasterCard data indicated. While those categories have been helped by the back-to-school shopping, the data showed some clothing spending could be pushed into September as parents delay buying colder weather merchandise until the weather gets cooler.

The MasterCard data also showed the luxury sector’s momentum may be slowing down as it was hurt by the continued volatile financial markets. J.P. Morgan analyst Charles Grom on Wednesday cut his rating on Saks in part on concern that volatility in the equity market and any Wall Street payroll cuts will hurt demand from the high-end shopping group.

Even online sales have seen some slowdown. Their sales rose 7.2% in August, their smallest growth this year, MasterCard said.

Andria Cheng is a MarketWatch reporter based in New York.

Jitters behind likely pick-up in August sales

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — Consumer confidence rose slightly in August but still remains weak, according to a report released Friday.

Consumer confidence as measured by a Reuters/University of Michigan final poll improved to 68.9 in August from 67.8 in July. Economists polled by MarketWatch expected an increase to 69.0.

Yet the closely watched Michigan survey stands well below June’s reading of 76.0. David Rosenberg, chief economist at Gluskin Sheff, has calculated that the average reading during recessions is about 74, with the average during expansions around 91.

A slew of data over the past month indicates that the U.S. recovery has slowed after a brief surge earlier in the year.

On Friday, for example, the federal government reported the economy grew just 1.6% in the second quarter, down from an original reading of 2.4%. The economy expanded at a much faster 3.75 clip in the first quarter.

The unemployment rate, meanwhile, remains near a 27-year high at 9.5%, further depressing consumer confidence about the future.

The University of Michigan’s consumer expectations index finished at 62.9 in August, up slightly from 62.3 in July. The index is 3.2% lower compared to a year earlier.

“Optimism has been the primary characteristic of American consumers during the past half century,” said economist Richard Curtin, who’s in charge of the survey. “Now economic uncertainty reigns.”

The current conditions index, on the other hand, was a much healthier 78.3, compared to 76.5 in July, suggesting little deterioration in the condition of most consumers.

Jeffry Bartash is a reporter for MarketWatch in Washington.

Economic Report: Consumer confidence inches up in August

By MarketWatch

HONG KONG (MarketWatch) — Chinese data for July, released Wednesday, showed an easing in growth for much of the economy, even though a flood-related jump in food price sent consumer inflation to its fastest pace in more than a year.

The producer price index for the month were 4.8% higher than a year earlier, easing from the prior month’s 6.4%, while the consumer price index was up 3.3%, accelerating from June’s 2.9% rise, according to data released by the National Bureau of Statistics.

Economists said the spike in consumer inflation to a 21-month high was no cause for alarm, as Chinese authorities were likely to dismiss the data as tied to food-price rises after severe floods that have affected many area of the country.

While the rise breached the upper limit of the government’s 3% CPI target band, some analysts said the inflation result won’t necessarily result in the policy tightening that many market participants have been watching for.

“We are sure the maturing People’s Bank of China won’t react to this flood-driven inflation spike at all,” wrote Bank of America-Merrill Lynch’s China Economist, Ting Lu, in a note.

He said that China’s six-month stockpile of wheat and barley will protect against the recent surge in prices.

The CPI’s gain was below an expected rise of 3.4%, while the PPI missed forecasts for a 5.4% gain, according to a Dow Jones Newswires survey.

But strategists at RBC said it was too early for complacency on inflation, adding that a persistently high CPI could be a growing worry for Chinese authorities in the months ahead.

“There are a number of other factors that could push it [CPI] higher still in the next few months, including big wage increases earlier this year and liquidity conditions that are still very loose,” RBC strategist Brian Jackson wrote in a note.

He said the worries over the CPI could push China towards normalizing interest rates soon, with an initial rate hike coming potentially in the fourth quarter.

Cooling but not tumbling

Other data released Wednesday added to concerns China’s economy is beginning to cool, though the numbers indicated more of a softening than a hard landing, strategists said.

Industrial output for the month was up 13.4% year-on-year, below June’s 13.7% increase but above expectations for a 13.2% rise forecast in separate surveys by Dow Jones Newswires and Reuters.

“Chinese growth is easing from the fast pace set at the start of the year, but the key activity data so far point to a moderate slowdown rather than a sharp downturn,” wrote RBC’s Jackson.

Retail sales rose 17.9% year-on-year, slowing from June’s 18.3% rise and well below Reuters’ surveyed forecast of 18.4%.

Urban fixed-asset investment growth for the January-July period was up 24.9%, easing from the 25.5% growth reported last month for January-June.

Some economists said July’s figure, when viewed in context of the 2.6 percentage point slowing in wholesale inflation, essentially means there is little evidence of a significant deceleration in investment.

“We believe FAI growth will remain robust on public housing investment, though in the short term, producers might cut production and run down inventories on weak sentiment, even final demand is still stable,” Merrill’s Lu said.

Merrill estimated monthly FAI growth will remain above 15% throughout the year.

Lending mellows

Other data showed Chinese banks issued 533 billion yuan ($78 billion) in new loans during the month, down from the 603 billion yuan in June.

Though below expectations, the July lending brings the cumulative loan issuance $5.2 trillion this year, or about two-thirds of the government’s $7.5 trillion target for the full year.

Mortgage related lending, indicated by medium- to long-term loans, fell to 126 billion yuan for the month, down from 142 billion in June and 192 billion in May.

Economic Report: China data show cooling, though inflation jumps

By MarketWatch

Don’t miss these top stories:

• Rich Americans want the estate tax

• Watch out for bank-reform loopholes

• Say goodbye to free checking

• Tax-sensitive bonds are costly, risky

• Consumer-sentiment drop isn’t kiss of death

With all the action first on health reform and then on bank reform — not to mention the recession and the millions of unemployed workers, and etc. — tax law has taken a bit of a back burner in the Capitol Hill cafeteria.

But you can be sure lawmakers aren’t ignoring the tax code, because come Dec. 31 the Bush tax cuts will expire.

Related to those tax cuts, today a few wealthy Americans stood tall to say they’re eager, ready and willing for Congress to reinstate the estate tax. Read our story today for more on that.

Under current law, there’s no estate tax in 2010, and if you die in 2011, you’ll face a 55% tax on your estate worth more than $1 million. That’s a high tax rate, and a low exemption threshold. (Back in 2001, the president and Congress apparently assumed that lawmakers would tweak the law before a decade had passed. So much for that assumption.)

Seems unlikely Congress will let us slide into 2011 without some change to estate-tax law. But, in this tough economic climate, what will lawmakers do with regard to the expiration lower income-tax rates? I’m sure we shall find out not long after their August recess.

Meanwhile, don’t miss our stories today on how two big loopholes in the bank-reform will affect you, and on why that new law may well delete “free” in front of the words “checking account.”

– Andrea Coombes, Personal Finance editor

TAXES

Bring back the estate tax, some rich Americans say

What do Disney heir Abigail Disney, hedge-fund billionaire Julian Robertson and former Treasury secretary Robert Rubin have in common? They want rich people to pay estate taxes and they say they’re willing to pay those taxes themselves.


See story on bring back the estate tax, some rich Americans say.

BANK REFORM

Watch out for two big bank-reform loopholes

For all the consumer protections that the sweeping and historic financial-regulations bill puts in place, there are two major loopholes that should serve as a warning to consumers that predatory lending will not disappear.


See Jennifer Waters’s Consumer Confidential.

Personal Finance Daily: Tax-law changes are coming

By MarketWatch

LONDON (MarketWatch) — J.P. Morgan Chase said Thursday that its second-quarter profit jumped 76% as results were boosted by a $1.5 billion reduction in the group’s loan loss reserves.

The Wall Street giant posted earnings of $4.8 billion, or $1.09 cents a share for the quarter, compared to $2.7 billion, or 28 cents in the same period last year.

Excluding the reserve release and a $550 million charge to cover the U.K. tax on banker bonuses, J.P. Morgan
/quotes/comstock/13*!jpm/quotes/nls/jpm
(JPM
40.35,
-0.13,
-0.32%)
earned 87 cents a share in the latest quarter.

Analysts polled by FactSet Research had, on average, been expecting earnings of 74 cents a share. Net revenue on a managed basis fell 8% to $25.61 billion. Analysts had expected the group to report revenue of $25.81 billion.

Shares of the bulge-bracket bank gained 0.7% in pre-market trade. The stock is up 21% over the last twelve months, from the height of the financial crisis, but down 2.5% year-to-date.

Total provisions for credit losses declined 65% on a managed basis to $3.36 billion from $9.7 billion.

“Although we are gratified to see consumer-lending net charge-offs and delinquencies decline, they remain at extremely high levels and therefore returns in our consumer-lending businesses are still unacceptable,” said Chairman and CEO Jamie Dimon.

As a result, these businesses did not meet expectations nor generate satisfactory returns on capital for our shareholders. It is too early to say how much improvement we will see from here,” he added.

Provisions were down 55% in retail financial services and 52% in the group’s card services division.

Dimon said the story was better in the wholesale business, where loss reserves shrank and customers are in an “increasingly healthy condition.”

Net income for the investment banking business, however, fell 6% to $1.4 billion, reflecting a sharp drop in fees and higher noninterest expenses.

J.P. Morgan ranked second among bookrunners in global equity offerings for the quarter, but collected the most fees for its services during the first half of the year, according to Dealogic, an independent research firm. The bank also came in second in debt underwriting for the quarter.

In the three months, the bank was hired to underwrite key deals such as Essar Energy’s
/quotes/comstock/23s!e:essr
(UK:ESSR
443.80,
+14.80,
+3.45%)
$1.9 billion initial public offering in the U.K. and Synovus Financial Corp.’s
/quotes/comstock/13*!snv/quotes/nls/snv
(SNV
2.71,
-0.07,
-2.52%)
$806 million follow-on.

Still, the group said equity underwriting fees fell 68% and debt underwriting fees dropped 6%.

J.P. Morgan was one of several big Wall Street banks that received government funds during the financial crisis, but repaid taxpayers ahead of its major rivals.

The bank’s tier 1 ratio, a measure of the its capital cushion, improved to 12.1% at the end of June from 11.5% at the end of March.

J.P. Morgan Chase earnings surge 76%

By Jeff Reeves

ROCKVILLE, Md. (MarketWatch) — A recent survey lends some hard proof to the trend many consumers and investors have already noticed — the BlackBerry is dying.

Why? Because the iPhone is killing it — and because the Google
/quotes/comstock/15*!goog/quotes/nls/goog
(GOOG
488.90,
-0.30,
-0.06%)
Android operating system is driving strong sales for HTC and other manufacturers.

According to a survey conducted by ChangeWave Research at the end of June (just before the Apple iPhone 4 release), Research in Motion
/quotes/comstock/15*!rimm/quotes/nls/rimm
(RIMM
54.87,
-0.72,
-1.30%)
and its Blackberry line of products is barely hanging on to its top spot in smart phone market share, and a wave of big demand for Apple Inc.’s
/quotes/comstock/15*!aapl/quotes/nls/aapl
(AAPL
255.38,
+3.58,
+1.42%)
iPhone looks like it will soon knock RIM from its perch.

Additionally, there is growing dissatisfaction among consumers with their BlackBerry devices and resounding enthusiasm for the iPhone — indicating that BlackBerry’s fall from grace isn’t going to slow down anytime soon.

Specifically, Apple gained another point in smart phone market share compared with an earlier ChangeWave survey in March — up to an all-time high of 34%. Meanwhile RIM saw yet another decline, slumping to 34% from 38% just 90 days ago. That means that once-dominant BlackBerry smart phones have now fallen into a tie with iPhones, and are poised to fall from the No. 1 spot shortly if the downward trend for RIM continues.

Of course, it’s worth noting that the survey was conducted before the recent dustup over the iPhone antenna problems — including reports of “death grip” dropping calls and a poor review by Consumer Reports that included using duct tape to fix reception problems. Apple has thrown gasoline on this PR wildfire this week by arrogantly staying mum on the issue and even going so far as deleting negative comments and links to the Consumer Reports article from its forum pages.

But even when you take into account the recent bad press, it’s hard to argue that the iPhone 4 is a hot commodity after moving 1.7 million units in its first three days. With an army of rabid gadget fanboys sticking up for their beloved Apple, it’s unlikely the iPhone will see permanent damage to its popularity even if the antenna problems are making headlines right now.

As for Research in Motion and its BlackBerry, fading popularity has been a persistent problem. A mere 6% of future buyers have said they would pick up a RIM handset — the lowest level of future buyers ever recorded by ChangeWave. That’s in contrast to Apple, which is the clear leader among future buyers, with over half of those who plan to buy a new smart phone looking to pick up an iPhone handset. That’s a tremendous 21-point leap over the previous ChangeWave survey, which was taken 90 days ago and before the iPhone 4 made its debut.

Android-powered HTC smart phones also saw big gains, up to 19% of future buyers compared with 12% three months ago.

It’s no secret as to why the iPhone is trouncing RIM and the Blackberry. According to ChangeWave, just 30% of Blackberry users report they are “very satisfied” with their smart phone, less than half of the 73% reporting they are “very satisfied” with their iPhone. What’s more, RIM satisfaction has been declining for seven consecutive surveys — dating back to fall of 2008. Again, the recent antenna woes were revealed after this June survey, but Apple can still cede a lot of ground before it has to consider RIM a serious competitor when it comes to customer satisfaction.

In short, the iPhone continues to see big sales growth and high satisfaction with consumers as do smart phones running on the Android operating system, while fewer folks are buying BlackBerry devices — and those that do are not nearly as happy with them.

This double whammy of slumping sales and poor customer satisfaction quantifies what many have guessed all along — that the BlackBerry is steadily losing ground to the iPhone and Android-powered handsets.

The ChangeWave Research survey was completed June 24, and involved more than 4,000 consumers.

Jeff Reeves is editor of InvestorPlace. He does not own a position in any of the stocks named here. ChangeWave Research is the consumer polling and investment research branch of InvestorPlace.com.

Outside the Box: IPhone may have squashed BlackBerry for good

By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — A late omission from the financial-reform bill could impose $1 trillion of extra costs on U.S. companies, according to a group representing big banks that dominate trading in the derivatives market — but lawmakers late Tuesday vowed to restore the missing provision.

The Dodd-Frank Wall Street Reform and Consumer Protection Act crystallized on Friday, setting the stage for the biggest shake-up of financial regulation since the Great Depression. Derivatives regulation is one of the most important parts of the legislation.
Read about the new rules.

Lawmakers were forced to amend the bill on Tuesday to change its funding source to meet objections by a few key Republican senators whose votes are crucial to overcoming filibusters.
See story on the amended Dodd-Frank bill.

The International Swaps and Derivatives Association said Tuesday that the bill could lead to a requirement to post collateral for all over-the-counter derivatives that are not cleared, including those involving an end-user.

An earlier version of the legislation exempted corporate end-users from margin requirements on such transactions, but this is no longer in the bill, ISDA said.

Sen. Saxby Chambliss, a Georgia Republican, attempted to amend the bill on Tuesday to restore the end-user exemption, but failed because the Democratic leaders didn’t want to open up the entire bill to fresh amendments.

However, Rep. Barney Frank and Sen. Chris Dodd vowed to restore the end-user exemption in a coming technical corrections bill.

“If the bill is passed without this [end-user] exemption, regulators could significantly increase the costs of hedging exposures,” ISDA said.

ISDA estimated that about $400 billion would be needed as collateral that corporations could be required to post with their dealer counterparties to cover the current exposure of their over-the-counter derivatives transactions.

The group also estimated $370 billion of additional credit capacity that companies may need to cover potential future exposure of those transactions.

“If markets return to levels prevailing at the end of 2008, additional collateral needs would bring the total to $1 trillion,” ISDA said.

“The margining requirements for corporate end-users as currently drafted in the bill runs the risk of imposing a significant cost on U.S. companies and could impede their ability to manage their business and financial risks,” ISDA Chief Executive Conrad Voldstad said in a statement.

ISDA represents major dealers in over-the-counter derivatives markets. This has been a lucrative business for the big banks that dominate the market. But since American International Group
/quotes/comstock/13*!aig/quotes/nls/aig
(AIG
34.52,
-1.86,
-5.11%)
almost collapsed from derivatives exposures it couldn’t handle, there have been calls for more regulation.

Alistair Barr is a reporter for MarketWatch in San Francisco.

Derivatives group sees $1 trillion regulatory hit

By Sarah Turner
, MarketWatch

LONDON (MarketWatch) — British shares were lower on Tuesday with banks under pressure from two directions — the upcoming emergency budget and a ratings agency downgrade of a Continental rival.

The U.K. FTSE 100 index
/quotes/comstock/23i!i:ukx
(UK:UKX
5,226,
-73.22,
-1.38%)

declined 0.6% to 5,265.77. Shares trading elsewhere in Europe were in the red while U.S. stock futures were flat.

Banks traded lower overall, with Barclays
/quotes/comstock/23s!a:barc
(UK:BARC
306.75,
-10.35,
-3.26%)

/quotes/comstock/13*!bcs/quotes/nls/bcs
(BCS
18.43,
-0.12,
-0.65%)

shares down 1.5% and domestic lenders Lloyds Banking Group
/quotes/comstock/23s!a:lloy
(UK:LLOY
56.21,
-0.45,
-0.79%)

/quotes/comstock/13*!lyg/quotes/nls/lyg
(LYG
3.34,
-0.03,
-0.89%)

down 0.6% and Royal Bank of Scotland
/quotes/comstock/23s!a:rbs
(UK:RBS
46.02,
-0.75,
-1.60%)

shares down 0.2%

Fitch downgraded its rating on French bank BNP Paribas by one notch to AA- late Monday. The ratings agency said that it made the move due to structural issues related to its business mix which relies heavily on corporate and investment banking. Fitch also blamed asset quality deterioration in 2009 for the downgrade.

All eyes are on the sector Tuesday ahead of the new U.K. government’s emergency budget where plans for billions of pounds of spending cuts and tax increases are expected to be laid out.

Reports over the weekend suggested that a planned levy on banks is intended to raise around 3 billion pounds and will be structured as a tax on banks’ balance sheets, rather than on profits.

As well, miners were paring some gains from the previous session when China’s decision to allow the yuan more flexibility to move against the U.S. dollar sparked gains for the sector.

Shares of Rio Tinto
/quotes/comstock/23s!a:rio
(UK:RIO
3,417,
-73.50,
-2.11%)

/quotes/comstock/13*!rtp/quotes/nls/rtp
(RTP
50.71,
+1.24,
+2.51%)

lost 1.5% and Kazakhmys
/quotes/comstock/23s!e:kaz
(UK:KAZ
1,189,
-46.00,
-3.72%)

shares were down 2.1%.

BG Group
/quotes/comstock/23s!a:bg.
(UK:BG.
1,082,
-43.00,
-3.82%)

shares fell 2.1%. The natural-gas firm was downgraded at Goldman Sachs to neutral from buy, with the broker saying that after recent relative strong price performance, BG offered only 21% upside to its target price, in line with the average for the sector.

Top-index gainers included hotel and restaurant operator Whitbread
/quotes/comstock/23s! e:wtb
(UK:WTB
1,482,
+5.16,
+0.35%)

, up 3.6%.

The firm said that comparable sales for the 13 weeks to June 3 rose 7.6%, while total sales for the period increased 13.5%. The group said growth was strongest at its Premier Inn division, with comparable sales up 10.5%.

The group said comparable sales figures will get more challenging as the year progresses and that it isn’t planning on the consumer climate becoming any easier. It added that it is currently planning to be broadly cash-flow neutral this year.

British Airways
/quotes/comstock/23s!a:bay
(UK:BAY
213.90,
+0.10,
+0.05%)

shares were up 0.4%.

The firm has agreed a recovery plan with the trustees of its pension schemes to address its pension deficits. The recovery plan maintains British Airways’ annual contributions at the current level of around 330 million pounds, plus agreed annual increases in line with inflation expectations averaging 3%.

British Airways will make additional deficit contributions if its year-end cash balance exceeds 1.8 billion pounds.

Sarah Turner is a markets reporter for MarketWatch in London.

London Markets: U.K. shares lower ahead of emergency budget

By Howard Gold

NEW YORK (MarketWatch) — In one of the most dramatic moments in the global financial crisis, former Federal Reserve Chairman Alan Greenspan testified before Congress in October 2008, just weeks after the collapse of Lehman Brothers spread fear and panic around the world.

Rep. Henry Waxman (D-Calif.) bluntly asked him, “Were you wrong?”

“Partially,” replied the humbled Greenspan, who once sat at the commanding heights of the world’s economy.

“Yes, I found a flaw…, [a] flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.”

“That’s precisely the reason I was shocked,” he continued, “because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Reuters

Former Federal Reserve Chairman Alan Greenspan.

More than three decades earlier, when Greenspan had been sworn in as chairman of President Gerald R. Ford’s Council of Economic Advisers, Ayn Rand herself witnessed the ceremony in the Oval Office with her husband, Frank O’Connor, and Greenspan’s mother.

Rand brushed aside concerns Greenspan was “selling out” her anti-statist principles by taking such a high government position.

“Alan is my disciple,” she declared. “He’s my man in Washington.”

Somewhere, the Matriarch of Objectivism must be spinning in her grave.

Almost since his retirement as Fed chairman in 2006, Greenspan has faced intense criticism that his actions helped cause the worst financial crisis since the 1930s.

And his own longstanding ties to Rand have stirred new controversy over what role her ideas might have played in the crisis, showing ironically how important a thinker she remains, nearly three decades after her death. Read Moneyshow.com commentary on Ayn Rand.

Greenspan’s involvement with Objectivism dated back to the mid-1940s, when he was enthralled by Rand’s novel, “The Fountainhead.” He later became a regular at her Saturday night soirees in Manhattan and even sat in on Rand’s readings of chapters from the still-unpublished “Atlas Shrugged.”

Rand dubbed Greenspan “the undertaker” for his somber mien. And he remained aloof, harboring skepticism about her philosophy for quite a while.

She had doubts about him, too. “Rand worried that Greenspan was an opportunist or social climber,” wrote Jerome Tuccille in his 2002 biography, “Alan Shrugged.” But as a successful businessman (he co-founded his economic consulting firm in the 1950s), “Alan was their only link to the real world outside Rand’s living room — outside their own imagination,” Tuccille observed. It turned out to be a Faustian bargain.

In his 2007 autobiography, “The Age of Turbulence,” Greenspan called Rand “a stabilizing force in my life…She introduced me to a vast realm from which I’d shut myself off.”

He showed his loyalty when he and three other prominent Objectivists signed an open letter endorsing the expulsion of Nathaniel Branden and his wife Barbara from the group in 1968. (Branden had been the much-older Rand’s lover years before, but was excommunicated after she learned of his extramarital affair with another woman.)

Greenspan also spelled out his evolving thoughts on free markets and the economy in several articles he wrote in the 1960s (three of which are reprinted in Rand’s book, “Capitalism: The Unknown Ideal”).

Outside the Box: Greenspan and Ayn Rand: Disciple or traitor?