Goldman Chief To Stay In Job At Least Two More Years (NYP)
Lloyd Blankfein, approaching his fifth anniversary running Goldman amid some Wall Street speculation that recent regulatory tussles have left him burned out and looking to step down, is likely to stay put at the helm of Goldman Sachs for at least two years, sources tell The Post.

Morgan Aligned With Commodities Bulls As Goldman Says Sell (Bloomberg)
The surge in everything from oil to corn to gold has yet to crimp demand, inventories are still tight, and getting out now would be “premature,” Hussein Allidina, the head of commodity research at Morgan Stanley in New York, said on April 29. Prices may no longer reflect supply and demand, and they are likely to drop in the next three to six months before rebounding, Goldman said in reports April 11 and April 15.

U.S. Business Has High Tax Rates but Pays Less (NYT)
Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it. But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

Buffett Lets The Facts Bury Sokol (Dealbook)
Sorkin: A close friend of Mr. Buffett’s explained his thinking this way. “Warren knew that the second that press release hit the wires, Sokol’s professional career was over. Done. Forever. Sokol was finished. He didn’t need to brag about being ‘ruthless.’ ”

Frank Bill Would Cut Regional Fed Presidents From Rate Votes (Bloomberg)
U.S. Representative Barney Frank, the senior Democrat on the House Financial Services Committee, is pushing to remove the power regional Federal Reserve Bank presidents have to weigh in on interest-rate decisions.

India Raises Interest Rates to Battle Inflation (NYT)
In a bid to rein in persistently high inflation, India’s central bank raised interest rates Tuesday more than analysts had expected and signaled that it would be willing to raise borrowing costs even further. The action, which caused the country’s stock market to close 2.4 percent lower, will make it harder for India to achieve the 9 percent growth target set by the government for the current financial year, which ends in March 2012.

Man Group launches $1.5bn Japan fund (Telegraph)
The computer-driven Nomura Global Trend fund was the first onshore Japanese fund to be launched by Man’s AHL unit and will invest in a mixture of assets via three currency baskets, one of which includes the Chinese Yuan.

Greece To Name And Shame Tax Evaders (CNBC)
For those not paying their taxes in full the warning is stark; the Greek government plans to make an example of someone by the “identification and exemplary punishment of large-scale tax evasion.”

Banks Said to Be Quizzed by European Union Over Libor Rates (Bloomberg)
European antitrust regulators, who last week opened probes into 16 banks over credit derivatives, are also examining whether lenders manipulated the daily London interbank offered rate, according to two people familiar with the investigation…“This case will be difficult to prove — and the construction of Libor is such that it is difficult to manipulate as extreme pricing is smoothed out of the calculation,” said Simon Maughan, co-head of European equities at MF Global Ltd. in London.

Nasdaq, NYSE Arca Cancel Trades in Over 50 Stocks (CNBC)
More than 50 companies including pharmaceutical giants Pfizer and Merck & Co. were hit with a flurry of bad trades on Monday that later had to be canceled. Most of the trades that were canceled involved companies in the healthcare industry. Many trades occurred at prices far from their closing price. NYSE Arca and Nasdaq decided to cancel all trades 30 percent away from the prior consolidated price, the exchanges said. The trades were made in a purchase of an entire portfolio of shares that were sold together, like in a basket, according to a source familiar with the matter.

North Korea behind cyber attack on S.Korea bank-prosecutors (Reuters)
North Korean computer hackers were responsible for bringing down the network of a South Korean bank last month, prosecutors in Seoul said on Tuesday, in the latest of a string of cyber attacks thought to have originated from the secretive state.

Chase Scuttles Test Of $5 ATM Fees (Tribune)
JPMorgan Chase says it has finished testing $4 and $5 ATM fees for noncustomers in two states, and it is going back to the $3 fees it previously charged.

Bin Laden kill may reopen CIA interrogation debate (Reuters)
One of the key sources for initial information about an al Qaeda “courier” who led U.S. authorities to bin Laden’s Pakistani hide-out was Khalid Sheikh Mohammed, the al Qaeda operative said to have masterminded the September 11, 2001 attacks, a former U.S. national security official said. KSM, as he was known to U.S. officials, was subjected to “waterboarding” 183 times, the U.S. government has acknowledged.

Hustler Club Charges $2 For Ice And $2 For No Ice (Eater)
“Thought you would enjoy this image of our receipt from Hustler Club. $2 for putting our drink on the rocks, and also $2 for taking it neat without rocks.”

Overheard (WSJ)
The death of Osama bin Laden just made President George W. Bush’s appearance as keynote at next week’s SALT hedge-fund gathering in Sin City a much hotter ticket.

Article courtesy of Dealbreaker

As you may have heard, because he’s said it a bunch of times, were Donald Trump to be elected President of the United States, his first order of business would be to “deal” with this China situation. Specifically, Trump has said he’d tell the Chinese that “If you don’t stop manipulating your currency, we’re going to put a 25 percent tax on your products that come into the US.” The Don has made the case that he’s uniquely qualified to run this country because unlike our pussy diplomats (who “went to school to learn how to be nice”), he’d “deliver to the message” to to China in away that would get them to take the threat seriously. Today during a town hall, Trump workshopped some lines and so far here’s what he’s got: “Listen you motherfuckers, we’re going to tax you 25 percent.”

And when it comes to gas prices, he’d take a similar tack with a simple “You’re not going to raise that fucking price.”

Trump to China: ‘Listen You Motherf—ers, We’re Going to Tax You 25 Percent’ [Daily Intel]

Article courtesy of Dealbreaker

Barclays, Credit Suisse Post Lower Profits (BW)
Net income at Credit Suisse fell to 1.14 billion Swiss francs ($1.31 billion) from 2.06 billion francs in the year-earlier period, the Zurich-based bank today. That compares with the 1.32 billion-franc average estimate of 16 analysts surveyed by Bloomberg…Barclays said today its first-quarter profit fell 5.2 percent to 1.01 billion pounds ($1.67 billion) as earnings at its Barclays Capital investment banking unit dropped 33 percent. Sales and trading revenue fell 17 percent from the year-earlier period.

Bernanke’s Code: A Guide To The Fed Chairman’s First Q&A (WSJ)
Balance sheet: Look for Mr. Bernanke to affirm that QE2 will end in the summer, as planned. Any deviation from that position would be major news. Listen for what Mr. Bernanke says about the future size of the balance sheet. In this new world of Fed policy, how many securities the central bank holds is the primary signal of how much support it is providing the economy; the Fed has injected more than $2 trillion into the economy since the financial crisis. It is considered unlikely, but if Mr. Bernanke hints the Fed may stop reinvesting the proceeds from its mortgage holdings, it will be seen as the first step toward actual monetary tightening. If Mr. Bernanke drops such a hint, expect the dollar to rally.

Fed’s ‘Extended Period’ May End In May 2011, Economists Say (Bloomberg)
Thirty-three of 44 economists surveyed said the central bank will remove the two-word phrase from its post-meeting statement in 2011, with 18 betting it will move by September. The Fed may wait until 2012 to announce sales of mortgage or Treasury securities it bought to reduce borrowing costs, with 26 respondents expecting a plan next year, according to the survey, conducted from April 20 to April 25.

Hedge Fund Pot Farmer Pleads Guilty (TB)
Tara A. Bryson, executive of Ridgefield-based New Stream Capital has plead guilty to drug possession charges. She was sentenced to one year in jail, which was suspended, and a year of probation. Bryson copped a last minute plea deal with the State of Connecticut. In return she had felony charges of conspiracy to cultivate a pot farm reduced to a misdemeanor–possession of a controlled substance under four ounces and possession of drug paraphernalia. Bryson’s arrest report shows Connecticut State police found over 203 marijuana plants in her million dollar Newtown home so the charges being subbed out from cultivation of marijuana to only possession less than four ounces appears to be a lucky break.

Banks Warn Obama On Soaring Debt (FT)
“Any delay in making an interest or principal payment by Treasury even for a very short period of time would put the US Treasury and overall financial markets in uncharted territory and could trigger another catastrophic financial crisis,” said Matthew Zames, a JPMorgan executive, in a letter to Tim Geithner, the Treasury secretary, this week.

Robot Stock Picker Beats Human Managers After Japan Quake (Bloomberg)
Six computer programs, making all the investment decisions for T&D Asset Management’s Kabu-Robo Fund, generated returns of 1.9 percent in March. The average actively traded fund that invests in Japan lost 6.9 percent during the month, according to Tokyo-based Rating and Investment Information Inc. The benchmark Nikkei 225 (NKY) Stock Average dropped 8.2 percent in the period. “People tend to go with the herd when there’s a panic,” said Kazuhiro Kunisada, chief executive officer of Trade Science Corp., which designed the programs for T&D’s Kabu-Robo Fund. “Robots just follow the rules.”

NYPD Admits It Provided Diddy With A Police Escort (NYP)
The NYPD admitted today that it provided Sean “Diddy” Combs with a police escort following a concert last week, a decision slammed by Mayor Bloomberg. “The bottom line is the police department should treat everybody exactly the same. If you don’t get a police escort, P. Diddy shouldn’t,” Bloomberg said.

Does Corporate America Kowtow To China? (Reuters)
“I don’t blame the Chinese, they’re just pursuing their national interest,” said Patrick Mulloy, a member of the Congressional U.S.-China Economic and Security Review Commission. “I blame us for not realizing what’s happening to us and for doing nothing about it.”

White House Distributes Copies Of Obama’s Birth Certificate (BW)
Today’s release was made because “the president believes it was becoming a distraction,” White House communications director Dan Pfeiffer said.

S&P’s Japan Outlook Goes Negative (WSJ)
In a statement Wednesday, the credit-rating firm said it estimated reconstruction costs owing to the quake and subsequent tsunami and nuclear disaster at ¥20 trillion to ¥50 trillion ($245 billion to $613 billion), with a central forecast of ¥30 trillion.

PIMCO Says Greece Needs To Restructure Its Debt (Reuters)
“So far none of the solutions for the Greek debt crisis have worked. And a lot of people – including me – don’t believe that they will work in the future,” Mohamed El-Erian, chief executive of PIMCO, wrote. Greece will need “a preferably voluntary and orderly restructuring” to relieve itself of its debt burden, the PIMCO CEO said.

I handed over £6.2m to gigolo out of love for him: Heiress tells how conman turned blackmailer (Daily Mail)
Married mother of three Ms Klatten, who is said to be worth more than £6 billion through holdings in car giants BMW and chemical firm Altana, fell for conman Helg Sgarbi, 46, after meeting him in a luxury hotel. The Swiss born former investment banker had told her he was a ‘special adviser for the Swiss government’ and fed her a string of lies, winning her over and within weeks they had become lovers. He wooed her with his charm but it later emerged that it was all part of an elaborate plot hatched by mystical faith healer Ernani Barretta, 63, whose trial began in Pescara today.

Article courtesy of Dealbreaker

As you may recall, last fall, Appaloosa founder David Tepper told New York that it would be fair to interpret the fact that he bought the $50 million beach house belonging to the ex-wife of Jon Corzine, the man who passed him over for a Goldman partnership, with the intent of demolishing it and building a bigger, better house in its place as his way of rubbing his success in Corzine’s face. “You could say there was a little justice in the world,” Tepper, who left Goldman to found his hedge fund and become a multi-billionaire, said with a smile on his face. Today brings word that Tepper’s dream will be seen to completion- Sagaponak has approved the demolition of the home, as well as Tepp’s request to build a much more luxurious house (large enough to accommodate his noted balls), where the hovel once stood.

Architect Jaquelin Robertson of Cooper Robertson Architects told the Sagaponack architectural and historic review board that the new home would be a cedar-shingled two-story Georgian Colonial-style house and compared the mahogany window trim to renovations at President Thomas Jefferson’s Monticello, according to minutes from the board’s March meeting.

The design outlined at that meeting includes large, octagonal windows that will run across the second floor dining room “in order to accommodate his client’s request to be able to see the sunset,” Robertson said in the minutes. The plan also features a sunken tennis court, three-car garage, a widow’s walk, second-floor decks including one with a Jacuzzi, and a covered porch. The new house would be 21 feet farther from the beach.

[Newsday via Curbed]

Article courtesy of Dealbreaker

Financiers Switch To GOP (WSJ)
Daniel Loeb, founder of Third Point LLC, was one of the biggest Obama fund-raisers in 2008, rounding up $200,000 for him, according to campaign-finance records. In the decade prior, Mr. Loeb and his wife donated $250,000 to Democrats and less than $10,000 to Republicans. But since Mr. Obama’s inauguration, Mr. Loeb has given $468,000 to Republican candidates and the GOP, and just $8,000 to Democrats. Hedge-fund kings have feelings, too, and the president appears to have hurt them…Mr. Loeb is part of a shift in political allegiance within the world of hedge funds that also includes such big names as Steven Cohen’s SAC Capital Advisors and Kenneth Griffin’s Citadel Investment Group. Managers and employees of hedge funds directed a majority of their contributions to the GOP in the 2009-2010 election season, a pattern not seen since 1996, when the industry was much smaller.

UBS Attracts Highest Inflows Since 2007 as Profit Tops Estimates (Bloomberg)
UBS rose as much as 6.1 percent in Swiss trading, the biggest gain since July, after wealth management and retail clients added a net 16.7 billion francs ($19 billion), more than double the estimate of analysts surveyed by Bloomberg. Net income was 1.81 billion francs, topping the 1.69 billion-franc forecast of analysts…“The main thing is they’re having inflows again, and that’s good,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets. “The investment bank will remain a construction site for UBS for a while.”

Qaddafi’s Money Man in Vienna Loses Funds With London Friends (Bloomberg)
As Muammar Qaddafi’s forces strafed crowds of protesters in Tripoli with automatic gunfire on Feb. 21, the dictator’s money manager fled the city in a car to the airport to escape the violence. With phone lines and Internet connections down, Mustafa Zarti, vice chairman of Libya’s $65 billion sovereign-wealth fund, couldn’t buy an airline ticket in advance. As mobs of travelers at the airport jostled for seats on packed flights, Zarti scored a spot in business class on Austrian Airlines and flew to Vienna, Bloomberg Markets magazine reports in its June issue. “It was catastrophic that day,” Zarti says. “I’m very sad for Libya.”

Boehner opens door to cutting U.S. oil tax breaks (Reuters)
“It’s certainly something we should be looking at,” Boehner said in an ABC News interview. “We’re in a time when the federal government’s short on revenues. They ought to be paying their fair share.” “Everybody wants to go after the oil companies and frankly, they’ve got some part of this to blame,” he said.

Biggest Banks Beating Estimates Can’t Hide 13% Drop in Revenue (Bloomberg)
“Loans still make up half of bank revenues and loan growth is negative,” Brian Foran and Glenn Schorr, analysts at Nomura Holdings Inc. in New York, wrote in an April 14 note. “We have spent the last few weeks on the road visiting investors. The overwhelming feedback on banks has been ‘Why bother?’”

NY Jurors Can’t See Graphics Again In Insider Case (BusinessWeek)
The jurors at the trial of Raj Rajaratnam began working at midday Monday after a federal judge in Manhattan described the law they must follow. They ended four hours later and will resume Tuesday. They asked to see defense exhibits they didn’t know they already had in binders and graphs prosecutors showed during closings but they can’t see again because they’re not exhibits.

NYSE Merger Plan Tunes Out Big Board Rules (Dealbook)
Without so much as having a brief meeting or discussion with Nasdaq and ICE on their bid — which offered over 13 percent more than Deutsche Börse’s bid — the board of NYSE Euronext declared the offer “clearly not in the best interests of our shareholders.” How could the board determine that without even having a conversation?

HSBC to close retail operations in Russia (FT)
“It’s a difficult market in Russia. You can’t just come in and say, ‘I’m HSBC’, ” said an executive at a rival Russian bank.

Fight Heats Up For Lehman Remains (WSJ)
A three-way battle over the remnants of Lehman Brothers Holdings Inc. is coming to a head, as the defunct investment bank’s estate fights with big-name hedge funds like Paulson & Co and Lehman’s former archrival Goldman Sachs. over how to divvy up $61 billion in assets.

If Greece Acts Quickly, Crisis Could Be Averted (CNBC)
”The longer Greece waits before, the more the plan will cost…and the greater the odds of a haircut for bondholders,” Carl Weinberg explained.

Madoff Said Picower May Have Suspected Fraud, Henriques Writes (Bloomberg)
Madoff, serving a 150-year term for the largest Ponzi scheme in history, said in a prison interview that Picower could have figured out the fraud at Bernard L. Madoff Investment Securities LLC, according to the book. Picower invested $620 million and withdrew $7.8 billion before Madoff confessed to his brother and two sons in December 2008. Henriques asked Madoff who knew of the fraud. “Picower was the only one that might have,” Madoff said. “I mean how could he not?”

Human Cannonball Dies After Safety Net Fails (Sky News)
The accident happened during a show put on by Scott May’s Daredevil Stunt Show at the Kent County Showground in Detling at about 3.30pm on Monday.
The 23-year-old man was flown by air ambulance to Maidstone Hospital, but later died from his injuries.

Article courtesy of Dealbreaker

Morgan Stanley Profit Drops, Beats Estimates as Trading Revenue Jumps (Bloomberg)
Net income fell 45 percent to $968 million, or 50 cents a share, from $1.78 billion, or 99 cents, a year earlier, the bank said today in a statement. Earnings from continuing operations, excluding a 26-cent loss tied to a Japanese joint venture and a 30-cent tax gain, were 46 cents a share. That compared with the 40-cent average estimate of 14 analysts surveyed by Bloomberg.

Ex-Goldman Sachs Banker Starts Hedge Fund Analyzing Japanese Blog Traffic (Bloomberg)
Former Goldman Sachs Group banker Hideki Furusho and a University of Tokyo professor have teamed up to create a hedge fund that invests in Nikkei 225 futures based on a computer model that analyzes Japanese blogs.

At Facebook Townhall, Obama Goes On Offensive (WSJ)
“The Republican budget that was put forward I would say is fairly radical. I wouldn’t call it particularly courageous,” Mr. Obama said. Mr. Obama offered a dire description of the budget drafted by Republican Rep. Paul Ryan of Wisconsin. He said it would reduce taxes for corporations and the wealthy by cutting funds to clean energy programs and transportation. “I guess you could call that bold. I would call it shortsighted,” Mr. Obama said to applause from an audience of mostly young people. “I do think Mr. Ryan is serious,” Mr. Obama added. “He’s a patriot.”

BlackRock First Quarter Profit Gets Boost From Popular ETFs (Reuters)
The New York-based firm earned $819 million, or $2.96 per share, excluding some expenses, compared with $727 million, or $2.40 per share, a year earlier, BlackRock said on Thursday.

Weil: Geithner Downgrades His Own Credibility To Junk (BusinessWeek)
Fox Business reporter Peter Barnes began his televised interview with Treasury Secretary Tim Geithner two days ago with this question: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?” Geithner’s response: “No risk of that.” “No risk?” Barnes asked. “No risk,” Geithner said.

GE Profit, Revenue Beat Street View (Reuters)
The world’s biggest maker of jet engines and electric turbines said earnings attributable to common shareholders came to $3.36 billion, or 31 cents per share, up from $1.87 billion, or 17 cents per share, a year earlier. Revenue rose 6 percent to $38.45 billion.

Bernanke Plans To Make Voice Heard (WSJ)
Next Wednesday, Federal Reserve Chairman Ben Bernanke will do something no Fed chief has done before: Stand before a room full of journalists after officials conclude a policy meeting and answer questions about the central bank’s decisions…”You can argue that the chairman of the Fed is more important than the president of the United States, but very few Americans understand what the Fed does,” says Sen. Bernie Sanders, a Vermont independent who successfully pushed for the Fed to disclose more about its secretive bank lending. Addressing the press, Mr. Sanders says, will be “a step forward.”

Greece Seeks Probe Into Debt Restructuring Rumor (Reuters)
Greek bank stocks fell 4.58 percent on Wednesday and the broader Athens bourse index lost 2.62 percent, underperforming pan-European indices on what traders said where rumors, spread by email, that the country would soon restructure its debt…”The ministry urgently requested the prosecutor’s office to launch a criminal investigation regarding the move in the Athens Stock Exchange and the bond market,” the ministry said in a statement.

Taco Bell Demands Apology After Lawsuit Is Withdrawn (CT)
On Wednesday, the fast-food chain decided to trumpet that good news with full-page ads in 10 major U.S. newspapers, including the Chicago Tribune, Los Angeles Times, New York Times, USA Today and The Wall Street Journal, demanding an apology. The company pegged the ads at a total cost of between $3 million and $4 million. “Would it kill you to say you’re sorry?” the ad exclaimed. “Sure, they could have just asked us if our recipe uses real beef. Even easier, they could have gone to our Web site where the ingredients in every one of our products are listed for everyone to see,” the ad read. “But that’s not what they chose to do.

New Swiss Tax Rules Signal Big Changes for Private Banks (NYT)
Switzerland aims to sign new treaties by the summer with Germany and Britain under which their citizens would pay taxes on more of their undeclared assets in Swiss banks. France and Italy are expected to follow suit.

Business Group Vows Support for U.S. Lawmakers to Cut Deficits (Bloomberg)
“The business community strongly supports a comprehensive deficit-reduction plan and will support members of Congress who help get it enacted,” according to a statement from the Committee for Economic Development released today in Washington. “Serious deficit reduction cannot be painless, and no one should expect or demand that the spending and revenue provisions they care most about will not be touched.”

Regulators Serve Up Alphabet Soup (WSJ)
Banks that decide they don’t want to belong to this exclusive, heavily regulated club should beware the “Hotel California.” This provision of Dodd-Frank, named in homage to the Eagles lyric that “you can check out any time you like but you can never leave,” ensures a taxpayer-aided bank can’t “de-SIFI” simply by shrinking its assets. Jargon purists, who prefer acronyms to Eagles songs, can find particularly rich pickings in the dozens of new rules affecting swaps, futures and options. A round-table event held by regulators last fall invited the public—”seating on a first-come, first-served basis”—to discuss DCOs, DCMs, SDs, MSPs, SEFs and SB SEFs. Such acronyms “remain strictly for the Dodd-Frank cognoscenti,” says Margaret Tahyar, a partner at law firm Davis Polk. Some of these terms will remain obscure. But some will enter the corporate lexicon, perhaps graduating to be the SECs and FDICs of their day.

Article courtesy of Dealbreaker

My colleague Mark Veverka managed to sit it at the townhall meeting President Obama held at Facebook today, and filed this report. Thanks, Mark!

The social media president made his first stop on his California campaign swing at the headquarters of Facebook in Palo Alto, just down the street from Hewlett-Packard. The heavily-staged “town hall” event went down as scripted, with billionaire Facebook CEO Mark Zuckerberg asking the questions that were submitted in advance and over the Web.

Zuckerberg, sans hoodie, was a little nervous from the get-go being in the presence of President Obama on the big Internet stage.

The event was streamed live over Facebook, demonstrating the media power of a college experiment gone so viral that traditional television networks are nervous – and they should be.

Facebook is a privately held pre-IPO technology-media company that just hosted the president of the United States for a global chat. Talk about a road show.

You can watch the video here, in case you missed it.

Article courtesy of Tech Trader Daily

Sayeth the ratings agency:

Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable. Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy. It is backed by a strong track record of prudent and credible monetary policy, evidenced to us by its ability to support growth while containing inflationary pressures. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.

“Although we believe these strengths currently outweigh what we consider to be the U.S.’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level,” said Standard & Poor’s credit analyst Nikola G. Swann. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” Mr. Swann added.

In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.

On April 13, President Barack Obama laid out his Administration’s medium-term fiscal consolidation plan, aimed at reducing the cumulative unified federal deficit by US$4 trillion in 12 years or less. A key component of the Administration’s strategy is to work with Congressional leaders over the next two months to develop a commonly agreed upon program to reach this target. The President’s proposals envision reducing the deficit via both spending cuts and revenue increases.

Key members in the U.S. House of Representatives have also advocated fiscal tightening of a similar magnitude, US$4.4 trillion, during the coming 10 years, but via different methods. House Budget Committee Chairman Paul Ryan’s plan seeks to balance the federal budget by 2040, in part by cutting non-defense spending. The plan also includes significantly reducing the scope of Medicare and Medicaid, while bringing top individual and corporate tax rates lower than those under the 2001 and 2003 tax cuts.

We view President Obama’s and Congressman Ryan’s proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Standard & Poor’s takes no position on the mix of spending and revenue measures the Congress and the Administration might conclude are appropriate.

But for any plan to be credible, we believe that it would need to secure support from a cross-section of leaders in both political parties. If U.S. policymakers do agree on a fiscal consolidation strategy, we believe the experience of other countries highlights that implementation could take time. It could also generate significant political controversy, not just within Congress or between Congress and the Administration, but throughout the country. We therefore think that, assuming an agreement between Congress and the President, there is a reasonable chance that it would still take a number of years before the government reaches a fiscal position that stabilizes its debt burden. In addition, even if such measures are eventually put in place, the initiating policymakers or subsequently elected ones could decide to at least partially reverse fiscal consolidation.

In our baseline macroeconomic scenario of near 3% annual real growth, we expect the general government deficit to decline gradually but remain slightly higher than 6% of GDP in 2013. As a result, net general government debt would reach 84% of GDP by 2013. In our macroeconomic forecast’s optimistic scenario (assuming near 4% annual real growth), the fiscal deficit would fall to 4.6% of GDP by 2013, but the U.S.’s net general government debt would still rise to almost 80% of GDP by 2013. In our pessimistic scenario (a mild, one-year double-dip recession in 2012), the deficit would be 9.1%, while net debt would surpass 90% by 2013. Even in our optimistic scenario, we believe the U.S.’s fiscal profile would be less robust than those of other ‘AAA’ rated sovereigns by 2013. (For all of the assumptions underpinning our three forecast scenarios, see “U.S. Risks To The Forecast: Oil We Have to Fear Is…,” March 15, 2011, RatingsDirect.

“Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” Mr. Swann said. “The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.”

Some compromise that achieves agreement on a comprehensive budgetary consolidation program–containing deficit-reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013–is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

[via MarketWatch]

Article courtesy of Dealbreaker

Citi Profit Falls 32 Percent (Reuters, Citi)
Citigroup’s first-quarter profit fell 32 percent as the bank lost less money on bad loans but struggled to grow its business. The bank said this morning it earned $3.0 billion, or 10 cents per share. That compared with $4.4 billion, or 15 cents per share, a year earlier.

Geithner Says GOP Prepared To Lift Debt Limit (WSJ)
In interviews aired on the Sunday talk shows, Mr. Geithner said House Speaker John Boehner and other senior Republicans told President Barack Obama in discussions last week that they were aware of the risk of a credit default and were open to lifting the limit even in the absence of a comprehensive deal to slash the country’s debt load.

Greenspan Says US Should Let Bush-Era Tax Cuts Expire (Bloomberg)
We should “allow the Bush tax cuts to expire,” Greenspan said on NBC’s “Meet the Press” today, calling the economic crisis “imminent and dire.” We should “put the rates back to where they were during the Clinton administration,” he said.

Hedge Funds Bounce Back (WSJ)
Total hedge-fund assets are approaching $2 trillion and are soon expected to surpass their peak in early 2008, according to industry analysts. Even start-ups and smaller funds, which were shunned by many investors in the wake of the crisis, are benefiting.

Emerging Nations Reject Capital Plan (WSJ)
The IMF’s plan would have encouraged nations to treat capital controls as a last resort, after they had first tried use other tools, such as policies on interest rates, currency values and government budgets. But ministers of developing economies resisted vehemently, viewing the proposal as an effort by advanced economies to hamstring their policies. Brazil, Turkey, South Korea and several other developing countries have adopted capital controls over the past year to limit surging inflows. “We oppose any guidelines, frameworks or ‘codes of conduct’ that attempt to constrain, directly or indirectly, policy responses of countries facing surges in volatile capital inflows,” Brazil’s finance minister, Guido Mantega, told the IMF’s steering-committee meeting.

Robot Does Hazardous Duty At Nuclear Plant (WSJ)
The plant’s operator, Tokyo Electric Power Co., said Sunday that the PackBot, a small robot that scoots around on tank-like treads, would monitor radiation and oxygen levels to find out whether conditions were safe enough to allow human workers to go in to try to bring the nuclear crisis at the plant under control.

FDIC Eyes Tougher Rules For Big Banks (FT)
Sheila Bair warned that regulators now had the authority to demand that US banks break themselves into smaller parts — and it “could and should be used.”

Is Sitting Lethal? (NYT)
Over a lifetime, the unhealthful effects of sitting add up. Alpa Patel, an epidemiologist at the American Cancer Society, tracked the health of 123,000 Americans between 1992 and 2006. The men in the study who spent six hours or more per day of their leisure time sitting had an overall death rate that was about 20 percent higher than the men who sat for three hours or less. The death rate for women who sat for more than six hours a day was about 40 percent higher. Patel estimates that on average, people who sit too much shave a few years off of their lives…Sitting, it would seem, is an independent pathology. Being sedentary for nine hours a day at the office is bad for your health whether you go home and watch television afterward or hit the gym. It is bad whether you are morbidly obese or marathon-runner thin. “Excessive sitting,” Dr. Levine says, “is a lethal activity.”

Ferrari Should Be Valued at $7.3 Billion in IPO, Marchionne Says (Bloomberg)
Fiat SpA Chief Executive Officer Sergio Marchionne said he’s told bankers pushing him to pursue an initial public offering of Ferrari that the division may be worth more than 5 billion euros ($7.3 billion).

Greece Denies Restructuring Plan As Traders Raise Bet Default (Bloomberg)
“Restructuring is not an issue we’re discussing,” Greek Finance Minister George Papaconstantinou said in an April 16 interview in Washington. “The pain and the cost” of doing so would be greater than repaying lenders, he told reporters the same day.

Greek Default Would Mean Pain All-Around (WSJ)
Economists at the Brussels think tank Bruegel calculate that roughly 20% of Greece’s debt at the end of 2010 was held by domestic banks. They are in difficult straits, and forcing losses on them may simply require the country’s rescuers to come up with more money to help.

Rep. Jesse Jackson Jr. Blames iPad For American Unemployment (HP)
On Friday, Congressman Jesse Jackson Jr. addressed the United States’s current unemployment crisis and claimed the iPad was “probably responsible for eliminating thousands of American jobs.” Jackson, himself an iPad owner, expanded on his statement by pointing to the recent bankruptcy of Borders Books. “Why do you need to go to Borders anymore? Why do you need to go to Barnes and Noble? Just buy an iPad and download your book, download your newspaper, download your magazine,” the Congressman said.

Article courtesy of Dealbreaker

Sean Parker and Shawn Fanning, the pair behind the famous music-sharing service Napster, are working together again, according to reports in TechCrunch and Forbes.

Thanks to some regulatory filings, we already knew that Fanning was working on a new company called Supyo, but those filings didn’t reveal that Parker had joined as an executive as well.

Both men have been involved in a number of other startups since their days at Napster. Most recently, Fanning was a co-founder at Path, a “personal network” for sharing photos and other media, while Parker is an investor at music startup Spotify, which he said will finish the job that Napster started. (Parker was also the president of Facebook in the company’s early days, as dramatized in the movie The Social Network.)

TechCrunch also has a few more details about what Supyo will actually do: It will offer an online video chat service that connects people with similar interests. Both men were involved in video chat site ChatRoulette, and TechCrunch describes Supyo as “like Chatroulette but without some of the problems that service faced”.

The San Francisco company has reportedly raised $10 million from the Founders Fund (where Parker is a partner) and various angel investors, including TechCrunch founder Michael Arrington. I left a voicemail at the number listed on Supyo’s regulatory filing, so maybe I’ll have more details eventually.

Update: TechCrunch now says the round is closer to $5 million.

Tags: video chat

Companies: Founders Fund, Supyo

People: Sean parker, Shawn Fanning

Article courtesy of VentureBeat » deals