THOUSANDS of farmers are receiving taxpayer-funded drought relief despite having access to $2.8 billion in savings they squirrelled away during economic good times.
And the federal Government's National Rural Advisory Council has revealed the nation's Exceptional Circumstances drought relief scheme is encouraging farmers to live on handouts instead of adapting to make their farms viable, creating a new rural welfare dependency.
The claims from the NRAC, made in a submission to a Rudd Government review on relief arrangements, were underlined by southwestern Queensland farmer Rod Back who, while living in a drought-affected region, doesn't get EC funding because he and his wife earn more than $20,000 a year from jobs outside the farm.
Mr Back, 50, works as a truck driver in Roma and his wife, Margaret, works as a nurse.
So while the Backs work, other farmers in the area sit idle on EC payments - which are equivalent to the dole.
Sources confirmed yesterday that the Government is concerned that one of the key flaws in the EC scheme was that taxpayer-funded relief was being collected by farmers who had saved money in Farm Management Deposit accounts.
The accounts, introduced by the Howard government in 1999, give farmers tax breaks if they put money aside in good times tosupplement their income in bad times.
According to figures obtained by The Weekend Australian yesterday, $2.8 billion was parked in FMDs as at June 30.
The figures show that many of the 41,355 farmers who hold the accounts live in drought-declared areas and are claiming EC assistance, including interest subsidies.
Since March, with the nation in the grip of the worst drought in its history, $555 million has been added to the FMDs.
Farmers in the electorate of Maranoa, where Mr Back lives and works, have invested $129million in FMDs, while two EC areas within the seat have received $51 million in EC drought funding.
In the western NSW federal electorate of Farrer, $86 million had been invested in FMDs as at June 30. But in the past six years, taxpayers have pumped $38 million into drought-declared properties in the area.
Farmers in the western Victorian seat of Wannon have $139million in FMDs, while the area has received $35 million in EC funding in the past 18 months.
While the figures do not show that individual account holders are receiving EC payments, government sources confirmed the practice was widespread.
The Government wanted to "frontload" EC payments to encourage farmers in drought-prone areas to change their practices to insulate themselves against dry spells expected to become more common because of climate change.
In its submission to the inquiry into the social impacts of drought on rural communities, the NRAC argues the EC scheme provides no incentive to farmers to improve their viability, as well as penalising innovators.
"NRAC has encountered examples of welfare and business assistance impeding adjustment," says NRAC chairman Keith Perrett. "Assistance can lessen self-reliance in that it can encourage communities to consider EC support as a first option for responding to drought-related farm finance pressures.
"In supporting farms that do not take steps to adjust their enterprises, and by not supporting the operators who respond well to change, government may be discouraging farmers from learning about and adopting the innovative strategies used by successful operators."
The submission says some farmers had warned that income assistance had kept unviable farms in business, creating "long-term welfare dependencies".
The NRAC says about 2000 farmers had been reliant on EC payments for more than four years, with 7000 receiving it for two years.
"While paid at the same rate as Newstart, income support has more generous income and assets tests and there is no mutual obligation requirement," Mr Perrett says.
Agriculture Minister Tony Burke declined to comment while the inquiry was under way.
The Queensland Farmers Federation's submission says existing EC frameworks "discriminate against those who successfully plan and manage for drought by ruling them ineligible because of that success".
"To meet the wider community's interest in sustaining agricultural systems even in exceptional periods of drought then we need an array of public and private activities that can deliver better climate management tools," it says.
The National Farmers Federation's submission says drought assistance programs should include help for rural families to determine whether remaining on their farm was the best option.
"This should take into account financial and non-financial considerations," says the NFF submission, which also pointed to increasing stress on families struggling against drought.
Growcom, the peak representative body for the fruit and vegetable industry, calls for a reallocation of government funding. "It is essential that individual enterprises incorporate strategies and risk-management practices that ensure their future viability without relying on government support payments or 'handouts"," itsays.
As well as missing out on EC funding, Mr Back has applied several times for an interest subsidy but was deemed ineligible.
"If people in the urban areas think all drought-affected farmers are receiving assistance, that's not true because we aren't," he said yesterday.
"We're just getting on with life without it. We have no choice."
The Backs were saving the Government money by working.
"You could sit back and draw the drought relief but you'll go backwards doing that," he said.
"We'd all much rather be at home and doing what we do, but we have to go to work because we have to go to work."
Saturday, September 20, 2008
Galaxy writes down licence by HK$8.2b as earnings dive
Macau casino operator Galaxy Entertainment Group wrote down the value of its gaming licence by HK$8.16 billion yesterday, as first-half pre-tax earnings plunged 51.6 per cent, while rival SJM Holdings surprised with a 27 per cent increase in pre-tax earnings....
A new bailout entity
After a series of ad hoc, multibillion-dollar rescues — from mortgage giants Freddie Mac and Fannie Mae to global insurance giant AIG — the panic in the credit markets has not subsided.
On Friday the Bush administration, which is now working with Congress on a more long-term solution, unveiled four new measures aimed at restoring order to financial markets:
A new bailout entity
On Friday, Treasury Secretary Paulson announced plans to form a separate entity to buy up bad mortgage-related debts, reminiscent of the Resolution Trust Corp. that cleaned up the widespread failure of savings and loans in the late 1980s. The new entity, which would require congressional approval, would buy up bad debts at a deep discount from struggling financial institutions. By providing a market for the troubled securities, the plan would allow banks and brokerages to remove the assets from their balance sheets and provide a final value on losses.
In theory, the Treasury has unlimited capital to buy up bad debts. No one knows how much money will ultimately be needed; Paulson said that “we are talking hundreds of billions of dollars.”
Details are still sketchy. Treasury and Fed officials were expected to meet with congressional leaders over the weekend to work out specifics.
One likely point of contention: Democrats want any master plan to include relief for homeowners struggling to keep up with unaffordable mortgages. One proposal, which Democrats had tried unsuccessfully to include in this summer’s housing relief bill, would let bankruptcy courts modify loans terms. So far, such modifications have been voluntary on the part of lenders.
Protection for money market funds
The Treasury announced it will guarantee money market mutual fund deposits with $50 billion tapped from the Exchange Stabilization Fund, a Depression-era agency intended to stop panics in foreign exchange markets.
Money market funds are usually among the safest of investments, with holdings in Treasury securities and other debt that is considered ultrasafe, like loans to well-financed companies. But the panic has battered the value of debt issued by even the most creditworthy borrowers.
But this week the nation's oldest money-market fund announced investors will lose money because of a bad investment in Lehman Bros. The value of shares in the Reserve Primary Fund was reduced to 97 cents for every $1 invested.
It was only the second time since money market funds were first set up in the 1970s that a money market fund "broke the buck" the pledge to keep shares steady at $1 a share.
As of Wednesday, money market mutual funds held some $3.4 trillion in deposits — down $169 billion in the last week.
Ban on short selling
The Securities and Exchange Commission issued a temporary ban on short selling of nearly 800 financial stocks. The ban is in effect for two weeks and could be extended another two weeks.
Short selling is the practice of trying to profit from an expected drop in share prices by selling borrowed shares and then buying them back after the price has fallen.
Problems at many major financial institutions have been aggravated by the drop in their stock prices. And there’s ample evidence that part of the reason for the slide in these stock prices is the heavy selling by short-sellers.
In times of panic, selling pressure feeds on itself. Some officials have accused short sellers of spreading rumors that accelerated pressure on financial stocks in the past few weeks.
Critics of the SEC say the agency has not done enough to stem the damage of short selling by strictly enforcing rules designed minimize its impact.
By temporarily banning short selling, the hope is that the stock prices of battered financial firms can recover and their capital base can be rebuilt.
Increased Fannie, Freddie portfolios
The Treasury is authorizing Fannie Mae and Freddie Mac to increase the size of their loan portfolios, allowing them to buy more mortgages. The hope is that as Freddie and Fannie buy more mortgages, new cash will be freed up to lend to new home buyers. This is intended to help revive the struggling housing market
The Treasury has the authority to make this change because it took control of the mortgage giants Sept. 7 in a bailout that could cost up to $200 billion, by some estimates.
On Friday, the Treasury said it would buy $10 billion worth of mortgage-backed securities, upping the $5 billion it pledged to buy when it took over Fannie and Freddie.
It is unclear whether the latest move will help the ailing housing market. The Federal Reserve has already slashed interest rates and flooded the financial system with cash. The concern is that mortgage lending will remain sluggish as long as lenders remain nervous about extending a loan backed by a house that’s falling in value.
Shifting more troubled loans to Fannie Mae and Freddie Mac will also increase the strain on the finances of these government-owned companies, increasing the risk that taxpayers will lose more money if more loans go bad.
On Friday the Bush administration, which is now working with Congress on a more long-term solution, unveiled four new measures aimed at restoring order to financial markets:
A new bailout entity
On Friday, Treasury Secretary Paulson announced plans to form a separate entity to buy up bad mortgage-related debts, reminiscent of the Resolution Trust Corp. that cleaned up the widespread failure of savings and loans in the late 1980s. The new entity, which would require congressional approval, would buy up bad debts at a deep discount from struggling financial institutions. By providing a market for the troubled securities, the plan would allow banks and brokerages to remove the assets from their balance sheets and provide a final value on losses.
In theory, the Treasury has unlimited capital to buy up bad debts. No one knows how much money will ultimately be needed; Paulson said that “we are talking hundreds of billions of dollars.”
Details are still sketchy. Treasury and Fed officials were expected to meet with congressional leaders over the weekend to work out specifics.
One likely point of contention: Democrats want any master plan to include relief for homeowners struggling to keep up with unaffordable mortgages. One proposal, which Democrats had tried unsuccessfully to include in this summer’s housing relief bill, would let bankruptcy courts modify loans terms. So far, such modifications have been voluntary on the part of lenders.
Protection for money market funds
The Treasury announced it will guarantee money market mutual fund deposits with $50 billion tapped from the Exchange Stabilization Fund, a Depression-era agency intended to stop panics in foreign exchange markets.
Money market funds are usually among the safest of investments, with holdings in Treasury securities and other debt that is considered ultrasafe, like loans to well-financed companies. But the panic has battered the value of debt issued by even the most creditworthy borrowers.
But this week the nation's oldest money-market fund announced investors will lose money because of a bad investment in Lehman Bros. The value of shares in the Reserve Primary Fund was reduced to 97 cents for every $1 invested.
It was only the second time since money market funds were first set up in the 1970s that a money market fund "broke the buck" the pledge to keep shares steady at $1 a share.
As of Wednesday, money market mutual funds held some $3.4 trillion in deposits — down $169 billion in the last week.
Ban on short selling
The Securities and Exchange Commission issued a temporary ban on short selling of nearly 800 financial stocks. The ban is in effect for two weeks and could be extended another two weeks.
Short selling is the practice of trying to profit from an expected drop in share prices by selling borrowed shares and then buying them back after the price has fallen.
Problems at many major financial institutions have been aggravated by the drop in their stock prices. And there’s ample evidence that part of the reason for the slide in these stock prices is the heavy selling by short-sellers.
In times of panic, selling pressure feeds on itself. Some officials have accused short sellers of spreading rumors that accelerated pressure on financial stocks in the past few weeks.
Critics of the SEC say the agency has not done enough to stem the damage of short selling by strictly enforcing rules designed minimize its impact.
By temporarily banning short selling, the hope is that the stock prices of battered financial firms can recover and their capital base can be rebuilt.
Increased Fannie, Freddie portfolios
The Treasury is authorizing Fannie Mae and Freddie Mac to increase the size of their loan portfolios, allowing them to buy more mortgages. The hope is that as Freddie and Fannie buy more mortgages, new cash will be freed up to lend to new home buyers. This is intended to help revive the struggling housing market
The Treasury has the authority to make this change because it took control of the mortgage giants Sept. 7 in a bailout that could cost up to $200 billion, by some estimates.
On Friday, the Treasury said it would buy $10 billion worth of mortgage-backed securities, upping the $5 billion it pledged to buy when it took over Fannie and Freddie.
It is unclear whether the latest move will help the ailing housing market. The Federal Reserve has already slashed interest rates and flooded the financial system with cash. The concern is that mortgage lending will remain sluggish as long as lenders remain nervous about extending a loan backed by a house that’s falling in value.
Shifting more troubled loans to Fannie Mae and Freddie Mac will also increase the strain on the finances of these government-owned companies, increasing the risk that taxpayers will lose more money if more loans go bad.
And they say the US Exported More !
The U.S. trade deficit rose to the highest level in three months, with record oil prices and a flood of toys and other imports from China swamping a solid gain in American exports.
The Commerce Department reported Wednesday that the deficit for October increased to $57.8 billion, the highest level since July and 1.2 percent above the September imbalance.
The widening deficit was slightly worse than expected and occurred even though U.S. exports of goods and services rose for an eighth consecutive month, climbing 0.9 percent to an all-time high of $141.7 billion. This gain was offset by a 1 percent rise in imports to $199.5 billion, also a record, as a surge in global oil prices sent America’s oil bill soaring.
The deficit with China jumped 9.1 percent to $25.9 billion, a record for a single month.
The rise reflected record imports from China, led by large gains in shipments of toys and games and televisions as retailers stocked their shelves for Christmas. The demand for Chinese imports is still surging despite a string of high-profile recalls of Chinese products from toys with lead paint to defective tires and tainted toothpaste.
So far this year, the trade imbalance with China is running at an annual rate of $256 billion, putting it on track to surpass last year’s $233 billion deficit, which had been the highest deficit ever recorded with a single country.
Those record deficits have triggered a backlash in Congress, with dozens of bills introduced seeking to penalize China for what critics see as unfair trade practices contributing to the loss of 3 million U.S. manufacturing jobs since 2000.
Treasury Secretary Henry Paulson and other members of President Bush’s Cabinet were meeting with their counterparts in China this week for the third round of talks aimed at defusing trade tensions. While minor agreements were expected, there was likely to be no breakthrough on the biggest point of contention, China’s undervalued currency. The currency disparity makes Chinese products cheaper in America and U.S. goods more expensive in China.
Some of the legislation in Congress seeks to impose penalty tariffs on Chinese products unless China allows its currency to rise in value against the dollar at a faster rate. But Vice Premier Wu Yi, the leader of the Chinese delegation, delivered a blunt threat of Chinese retaliation should the United States impose economic penalties on China.
“I need to be quite candid about this: If these bills are adopted, they will severely undermine U.S. business ties with China,” Wu said at the opening of the talks with Paulson on Wednesday.
The gain in exports was led by increased shipments of civilian aircraft, industrial equipment and telecommunications products. U.S. manufacturers have been benefiting from a fall in the value of the dollar against many other currencies including the European euro. The weaker dollar makes U.S. goods cheaper on overseas markets while making foreign products more expensive for U.S. consumers.
So far this year, the U.S. trade deficit is running at an annual rate of $704 billion, down by 7.1 percent from last year’s $758.5 billion, putting the country on track to see the first narrowing of the deficit after five consecutive years of record imbalances.
The import gain was led by an 8.3 percent jump in the foreign oil bill with petroleum imports setting an all-time high of $29.6 billion in October. The average price of a barrel of imported crude also set a record at $72.49 per barrel. The oil bill is expected to rise even more in coming months, reflecting the fact that prices jumped to near $100 per barrel at their peak this fall.
[Updated from Dec, 2007]
The Commerce Department reported Wednesday that the deficit for October increased to $57.8 billion, the highest level since July and 1.2 percent above the September imbalance.
The widening deficit was slightly worse than expected and occurred even though U.S. exports of goods and services rose for an eighth consecutive month, climbing 0.9 percent to an all-time high of $141.7 billion. This gain was offset by a 1 percent rise in imports to $199.5 billion, also a record, as a surge in global oil prices sent America’s oil bill soaring.
The deficit with China jumped 9.1 percent to $25.9 billion, a record for a single month.
The rise reflected record imports from China, led by large gains in shipments of toys and games and televisions as retailers stocked their shelves for Christmas. The demand for Chinese imports is still surging despite a string of high-profile recalls of Chinese products from toys with lead paint to defective tires and tainted toothpaste.
So far this year, the trade imbalance with China is running at an annual rate of $256 billion, putting it on track to surpass last year’s $233 billion deficit, which had been the highest deficit ever recorded with a single country.
Those record deficits have triggered a backlash in Congress, with dozens of bills introduced seeking to penalize China for what critics see as unfair trade practices contributing to the loss of 3 million U.S. manufacturing jobs since 2000.
Treasury Secretary Henry Paulson and other members of President Bush’s Cabinet were meeting with their counterparts in China this week for the third round of talks aimed at defusing trade tensions. While minor agreements were expected, there was likely to be no breakthrough on the biggest point of contention, China’s undervalued currency. The currency disparity makes Chinese products cheaper in America and U.S. goods more expensive in China.
Some of the legislation in Congress seeks to impose penalty tariffs on Chinese products unless China allows its currency to rise in value against the dollar at a faster rate. But Vice Premier Wu Yi, the leader of the Chinese delegation, delivered a blunt threat of Chinese retaliation should the United States impose economic penalties on China.
“I need to be quite candid about this: If these bills are adopted, they will severely undermine U.S. business ties with China,” Wu said at the opening of the talks with Paulson on Wednesday.
The gain in exports was led by increased shipments of civilian aircraft, industrial equipment and telecommunications products. U.S. manufacturers have been benefiting from a fall in the value of the dollar against many other currencies including the European euro. The weaker dollar makes U.S. goods cheaper on overseas markets while making foreign products more expensive for U.S. consumers.
So far this year, the U.S. trade deficit is running at an annual rate of $704 billion, down by 7.1 percent from last year’s $758.5 billion, putting the country on track to see the first narrowing of the deficit after five consecutive years of record imbalances.
The import gain was led by an 8.3 percent jump in the foreign oil bill with petroleum imports setting an all-time high of $29.6 billion in October. The average price of a barrel of imported crude also set a record at $72.49 per barrel. The oil bill is expected to rise even more in coming months, reflecting the fact that prices jumped to near $100 per barrel at their peak this fall.
[Updated from Dec, 2007]
Friday, September 19, 2008
World Bank gives USD.5.5bn to fight poverty in South Asia
The World Bank Group extended loans, credits, grants, equity investments, and guarantees totalling over $5.5 billion to South Asia in fiscal year 2008.
The funding supports 79 new projects designed to overcome poverty and boost growth through practical plans enhancing the business and investment environment and empowering poor people, says a statement of the bank.
Contributing to this strong support was $1.491 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products and other financial services; $2.756 billion from the International Development Association (IDA), $1.26 billion from the International Finance Corporation (IFC), and $36.6 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the group’s political risk insurance agency.
“Last year posed profound economic, political and social challenges for countries in South Asia and the world,” said Isabel M. Guerrero, World Bank vice-president for South Asia.
“The increase in world fuel and food prices, especially for rice and wheat, the two main staples in South Asia, has had a dramatic impact on poor people. Globally, the World Bank group committed $38.2 billion in fiscal year 2008, up 11 per cent from fiscal year 2007. An important contribution during the fiscal year was the bank group’s response to the food price crisis. It created a $1.2 billion rapid financing facility with the first grants approved in FY08.
More funds have subsequently been approved in the current financial year, including a $8 million grant for Afghanistan, which supports the rehabilitation of around 500 small, traditional irrigation schemes, which are critical to the recovery of the country’s agriculture sector.
“In a year that saw rising food and fuel prices become the harsh new reality, the $38.2 billion provided by the World Bank group to developing countries helps create development solutions so people can have the opportunity and means to improve their lives,” said World Bank Group President Robert B. Zoellick.
India was the largest borrower from IBRD and IDA, accounting for $2.154 billion, or nearly 10 per cent of total lending from these two institutions. Within South Asia, Bangladesh was the second largest borrower with $753 million, followed by Pakistan at $545 million, and Nepal at $380 million.
Many of the bank’s projects in the last fiscal year supported existing programmes that are delivering results. The bank extended additional financing of $75 million to the Pakistan Poverty Alleviation Fund, which has touched the lives of more than 2.5 million people in about 5,000 villages.
Looking ahead in South Asia, the bank will focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the region’s investment climate, such as weak infrastructure, red tape, and corruption. It will also deepen its engagement in states where poverty is increasingly concentrated, such as Orissa and Bihar in India and Sindh in Pakistan. IBRD lending in the past year focused on helping South Asia close its infrastructure gap, often cited as the greatest constraint to foreign investment.
IFC’s investment commitments in the South Asia region were $1.26 billion for 37 projects in FY08, and it mobilised an additional $28 million through structured and secure ties products. This year IFC enhanced its portfolio in the infrastructure sector, from 22 per cent to 30 per cent for South Asia as a whole.
The funding supports 79 new projects designed to overcome poverty and boost growth through practical plans enhancing the business and investment environment and empowering poor people, says a statement of the bank.
Contributing to this strong support was $1.491 billion from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products and other financial services; $2.756 billion from the International Development Association (IDA), $1.26 billion from the International Finance Corporation (IFC), and $36.6 million from the Multilateral Investment Guarantee Investment Agency (MIGA), the group’s political risk insurance agency.
“Last year posed profound economic, political and social challenges for countries in South Asia and the world,” said Isabel M. Guerrero, World Bank vice-president for South Asia.
“The increase in world fuel and food prices, especially for rice and wheat, the two main staples in South Asia, has had a dramatic impact on poor people. Globally, the World Bank group committed $38.2 billion in fiscal year 2008, up 11 per cent from fiscal year 2007. An important contribution during the fiscal year was the bank group’s response to the food price crisis. It created a $1.2 billion rapid financing facility with the first grants approved in FY08.
More funds have subsequently been approved in the current financial year, including a $8 million grant for Afghanistan, which supports the rehabilitation of around 500 small, traditional irrigation schemes, which are critical to the recovery of the country’s agriculture sector.
“In a year that saw rising food and fuel prices become the harsh new reality, the $38.2 billion provided by the World Bank group to developing countries helps create development solutions so people can have the opportunity and means to improve their lives,” said World Bank Group President Robert B. Zoellick.
India was the largest borrower from IBRD and IDA, accounting for $2.154 billion, or nearly 10 per cent of total lending from these two institutions. Within South Asia, Bangladesh was the second largest borrower with $753 million, followed by Pakistan at $545 million, and Nepal at $380 million.
Many of the bank’s projects in the last fiscal year supported existing programmes that are delivering results. The bank extended additional financing of $75 million to the Pakistan Poverty Alleviation Fund, which has touched the lives of more than 2.5 million people in about 5,000 villages.
Looking ahead in South Asia, the bank will focus on cross-cutting reforms such as governance and fiscal management, and continue addressing deficiencies in the region’s investment climate, such as weak infrastructure, red tape, and corruption. It will also deepen its engagement in states where poverty is increasingly concentrated, such as Orissa and Bihar in India and Sindh in Pakistan. IBRD lending in the past year focused on helping South Asia close its infrastructure gap, often cited as the greatest constraint to foreign investment.
IFC’s investment commitments in the South Asia region were $1.26 billion for 37 projects in FY08, and it mobilised an additional $28 million through structured and secure ties products. This year IFC enhanced its portfolio in the infrastructure sector, from 22 per cent to 30 per cent for South Asia as a whole.
Price war forces petrol prices down
Petrol prices fell across the UK today as a price war brought a hint of relief to motorists struggling to fill their cars.
Supermarkets led the way last night as they followed Morrisons in announcing cuts in fuel prices – and today BP and Shell say they have followed suit reducing their prices on the forecourt.
The price drop will give Morrisons customers a national average of 107.7p for unleaded and 119.2p for diesel, but no overall national figures will be available to test the price cuts until Tuesday.
The AA says that last night a national fall of just a fifth of a penny had been measured. On this day last year the average price for a litre of petrol was 95.22p. Nonetheless customers at supermarkets with aggressive price policies were surprised and delighted to see petrol back below 110p per litre today.
John Black, 25, from South Milford, North Yorkshire, said: “They’re going back down, that’s all right really. It’s still expensive but it’s better than it was.
“Because of the high prices, I haven’t been putting as much petrol in my car recently and I’ve tried not to drive as much.”
Dan Howard, 25, a traffic management operative, was buying fuel from Morrisons, in Knottingley, West Yorkshire, where the price of unleaded had fallen to 108.9p a litre.
Mr Howard, from North Yorkshire, said: “It’s better for motorists obviously. I think they’re still too expensive, they should be about 70p a litre but that’s just wishful thinking.
“Everyone will be happy. It’s got to be a good start at least.”
Mr Howard said it was not always possible to find the cheapest petrol station. “I just stop wherever I am. If you’re running out of fuel you’ve got to put it in,” he said.
The uneven nature of fuel pricing will be highlighted once again by the supermarket’s price cuts said an AA spokesman.
Any town with an Asda, Morrison’s or Tesco petrol station will see prices falling on all forecourts in the area, Shell and Esso garages in areas with less competition, however, will keep their prices relatively high.
Supermarket chain Morrisons sparked the latest price war yesterday by announcing it was cutting the price of fuel by 3p a litre across its 285 stations.
Darren Blackhurst, trading director at Asda, called on rivals to match its move in the price war.
“We are calling on other retailers to follow our lead and give drivers a fair deal at the pumps, not just those that live near an Asda,” he said.
A fall to 107.7p would bring prices back to the March level when a new high was recorded in the wake of oil pushing through the $100 per barrel barrier. The highest national petrol average price this year and indeed of all time was 119.7p recorded on July 17.
An AA spokesman predicted that prices would continue to fall in the coming months but that to see a return to last year’s figures would require a significant spike in the value of the dollar or a global recession which would force down demand.
Earlier this month, the AA said petrol prices were still too high and the drop in the price of oil was not being passed on to motorists.
AA president Edmund King said prices were 2p higher than they should be and that oil companies had been “too slow” in passing the drop in the oil price on to customers.
The price of crude oil fell below 100 US dollars a barrel earlier this week for the first time since April - down around a third from the July peak of 147 US dollars - but the Petrol Retailers’ Association (PRA) insisted this was not the only factor contributing to prices at the pump.
Ray Holloway, director of the PRA, said: “The price of fuel at the pump is influenced by a range of factors beyond just the price of a barrel of oil, but despite this, forecourt retailers have still managed to reduce the cost of fuel to the motorist at the expense of their own profit margin during recent weeks.
“Prices for crude oil and forecourt fuel are obviously linked but they do not move in tandem. Therefore they do not automatically move up or down at the same time.”
Mr Holloway said that while the price of crude oil had fallen, the wholesale price that retailers pay for petrol had remained the same.
Article Courtesy : http://www.timesonline.co.uk/tol/news/uk/article4787491.ece
Supermarkets led the way last night as they followed Morrisons in announcing cuts in fuel prices – and today BP and Shell say they have followed suit reducing their prices on the forecourt.
The price drop will give Morrisons customers a national average of 107.7p for unleaded and 119.2p for diesel, but no overall national figures will be available to test the price cuts until Tuesday.
The AA says that last night a national fall of just a fifth of a penny had been measured. On this day last year the average price for a litre of petrol was 95.22p. Nonetheless customers at supermarkets with aggressive price policies were surprised and delighted to see petrol back below 110p per litre today.
John Black, 25, from South Milford, North Yorkshire, said: “They’re going back down, that’s all right really. It’s still expensive but it’s better than it was.
“Because of the high prices, I haven’t been putting as much petrol in my car recently and I’ve tried not to drive as much.”
Dan Howard, 25, a traffic management operative, was buying fuel from Morrisons, in Knottingley, West Yorkshire, where the price of unleaded had fallen to 108.9p a litre.
Mr Howard, from North Yorkshire, said: “It’s better for motorists obviously. I think they’re still too expensive, they should be about 70p a litre but that’s just wishful thinking.
“Everyone will be happy. It’s got to be a good start at least.”
Mr Howard said it was not always possible to find the cheapest petrol station. “I just stop wherever I am. If you’re running out of fuel you’ve got to put it in,” he said.
The uneven nature of fuel pricing will be highlighted once again by the supermarket’s price cuts said an AA spokesman.
Any town with an Asda, Morrison’s or Tesco petrol station will see prices falling on all forecourts in the area, Shell and Esso garages in areas with less competition, however, will keep their prices relatively high.
Supermarket chain Morrisons sparked the latest price war yesterday by announcing it was cutting the price of fuel by 3p a litre across its 285 stations.
Darren Blackhurst, trading director at Asda, called on rivals to match its move in the price war.
“We are calling on other retailers to follow our lead and give drivers a fair deal at the pumps, not just those that live near an Asda,” he said.
A fall to 107.7p would bring prices back to the March level when a new high was recorded in the wake of oil pushing through the $100 per barrel barrier. The highest national petrol average price this year and indeed of all time was 119.7p recorded on July 17.
An AA spokesman predicted that prices would continue to fall in the coming months but that to see a return to last year’s figures would require a significant spike in the value of the dollar or a global recession which would force down demand.
Earlier this month, the AA said petrol prices were still too high and the drop in the price of oil was not being passed on to motorists.
AA president Edmund King said prices were 2p higher than they should be and that oil companies had been “too slow” in passing the drop in the oil price on to customers.
The price of crude oil fell below 100 US dollars a barrel earlier this week for the first time since April - down around a third from the July peak of 147 US dollars - but the Petrol Retailers’ Association (PRA) insisted this was not the only factor contributing to prices at the pump.
Ray Holloway, director of the PRA, said: “The price of fuel at the pump is influenced by a range of factors beyond just the price of a barrel of oil, but despite this, forecourt retailers have still managed to reduce the cost of fuel to the motorist at the expense of their own profit margin during recent weeks.
“Prices for crude oil and forecourt fuel are obviously linked but they do not move in tandem. Therefore they do not automatically move up or down at the same time.”
Mr Holloway said that while the price of crude oil had fallen, the wholesale price that retailers pay for petrol had remained the same.
Article Courtesy : http://www.timesonline.co.uk/tol/news/uk/article4787491.ece
Govt needs $100b to revive infrastructure, says ambassador
THE Ambassador of Nigeria to Germany, Mr. Abdul Bin Rimdap, has said that Nigeria needs about $100 billion investment in infrastructure development.
He said there was the great need to develop infrastructure to aid industrialisation, trade and commerce.
In a paper he presented at the fifth Trade Development Forum, organised by the Nigerian German Business Group in collaboration with Cashcraft Asset Management Limited recently in Germany, and obtained by The Guardian in Lagos, Rimdap called for the export diversification of the economy from oil and gas production, adding that the economy has the largest gas reserve in Africa.
He said with a Gross Domestic Product (GDP) of $166.8 billion in 2007, the economy has great investment prospect in such areas as telecommunication, infrastructure development, construction and agro-industries.
The envoy said the economy is the largest domestic market in Africa, the second biggest economy in sub-Saharan Africa, and economically, most important country in West Africa to German.
Speaking at the event, the Regional Director for West Africa at the German Federal Agency for Foreign Trade, Mr. Dieter Grau, adjudged Nigeria as Germany's second largest trading partner in Africa after South Africa.
Gau stated that Nigeria was the second biggest economy in sub-Saharan Africa and economically, most important country in West Africa to German.
He said that Nigeria has the largest domestic market in Africa with about 145 million inhabitants and economy dominated by oil and gas oil production.
He listed German export to Nigeria to include machineries, vehicles and parts, electrical goods, plastic, iron and steel, metal hardware, paper, measurement and control technology.
Speaking on the repellent sides of the economy, he explained that the country depend heavily on hydrocarbons.
He added: "The structure of Nigeria's foreign trade has been dominated by petroleum since the early 1970s, since then oil has generally accounted for around 95 per cent of total exports. Gas became second largest export commodity after rise in LNG shipments since October 1999. Nigeria's main export products are petroleum and related products, as well as cocoa, rubber, machinery, chemical, transport equipment, manufactured goods, food and live animals."
In his remark also at the event, the President of the Nigerian-German Business Group, Mr. Joe Femi-Dagunro, advised the German businessmen to support the growth of Nigeria business by involving themselves only in genuine and transparent businesses.
He said the report of Transparency International showed that some foreign companies have taken Nigerians for granted as a habitat for corruption and advised the Nigerian business community to create a better business attitude, encourage the development of their youths and promote grassroots political development for an accelerated and sustained business growth.
Speaking on the opportunities in the Nigerian capital market, Dagunro stated: "The outcome of the investment in the stock market in the past one year is however a mixed bag because of the market melt-down experienced by the Nigerian stock market between March and August this year. The market capitalisation, which peaked at N15.265 trillion in March dropped to N10.920 trillion in June and reached an all time low of N8.8 trillion in the last six months before the government intervened in the market in August, in line with global practices because of the linkage of the financial markets.
"By the time the government intervened, the market had dropped close to 50 per cent. I wish to assure you that the prolonged correction in the market is not unusual. Volatility is a main feature of investments in the capital market. Other emerging markets, like India and Pakistan, which witnessed such corrections recently are on the path of growth agai, just like the Nigerian stock market, which started to recover with government intervention late August."
He therefore assured that the Nigeria economy was getting stronger, as corporate performance was now improving and that government at various levels were addressing the issue of decadent infrastructure
He said there was the great need to develop infrastructure to aid industrialisation, trade and commerce.
In a paper he presented at the fifth Trade Development Forum, organised by the Nigerian German Business Group in collaboration with Cashcraft Asset Management Limited recently in Germany, and obtained by The Guardian in Lagos, Rimdap called for the export diversification of the economy from oil and gas production, adding that the economy has the largest gas reserve in Africa.
He said with a Gross Domestic Product (GDP) of $166.8 billion in 2007, the economy has great investment prospect in such areas as telecommunication, infrastructure development, construction and agro-industries.
The envoy said the economy is the largest domestic market in Africa, the second biggest economy in sub-Saharan Africa, and economically, most important country in West Africa to German.
Speaking at the event, the Regional Director for West Africa at the German Federal Agency for Foreign Trade, Mr. Dieter Grau, adjudged Nigeria as Germany's second largest trading partner in Africa after South Africa.
Gau stated that Nigeria was the second biggest economy in sub-Saharan Africa and economically, most important country in West Africa to German.
He said that Nigeria has the largest domestic market in Africa with about 145 million inhabitants and economy dominated by oil and gas oil production.
He listed German export to Nigeria to include machineries, vehicles and parts, electrical goods, plastic, iron and steel, metal hardware, paper, measurement and control technology.
Speaking on the repellent sides of the economy, he explained that the country depend heavily on hydrocarbons.
He added: "The structure of Nigeria's foreign trade has been dominated by petroleum since the early 1970s, since then oil has generally accounted for around 95 per cent of total exports. Gas became second largest export commodity after rise in LNG shipments since October 1999. Nigeria's main export products are petroleum and related products, as well as cocoa, rubber, machinery, chemical, transport equipment, manufactured goods, food and live animals."
In his remark also at the event, the President of the Nigerian-German Business Group, Mr. Joe Femi-Dagunro, advised the German businessmen to support the growth of Nigeria business by involving themselves only in genuine and transparent businesses.
He said the report of Transparency International showed that some foreign companies have taken Nigerians for granted as a habitat for corruption and advised the Nigerian business community to create a better business attitude, encourage the development of their youths and promote grassroots political development for an accelerated and sustained business growth.
Speaking on the opportunities in the Nigerian capital market, Dagunro stated: "The outcome of the investment in the stock market in the past one year is however a mixed bag because of the market melt-down experienced by the Nigerian stock market between March and August this year. The market capitalisation, which peaked at N15.265 trillion in March dropped to N10.920 trillion in June and reached an all time low of N8.8 trillion in the last six months before the government intervened in the market in August, in line with global practices because of the linkage of the financial markets.
"By the time the government intervened, the market had dropped close to 50 per cent. I wish to assure you that the prolonged correction in the market is not unusual. Volatility is a main feature of investments in the capital market. Other emerging markets, like India and Pakistan, which witnessed such corrections recently are on the path of growth agai, just like the Nigerian stock market, which started to recover with government intervention late August."
He therefore assured that the Nigeria economy was getting stronger, as corporate performance was now improving and that government at various levels were addressing the issue of decadent infrastructure
Sunday, September 07, 2008
Managing Your Money...
In Michigan, an advertisement offers this come-on to those 60 and older...
Come learn from the IRA Technician" at a seminar that more than 10,000 seniors have attended. Top sirloin steak will be served — along with tips on "how to guarantee your IRA will never run out, regardless of market fluctuations."
Just don't bring your financial adviser. Agents and brokers are not invited, the ad says.
As the first of 79 million baby boomers turn 60 this year, free-this and free-that financial seminars are thriving. Community centers and hotels have become a backdrop for what regulators see as aggressive sales pitches geared to seniors. (Chart: What to know about senior financial adviser designations)
While people 60 and older make up 15% of the U.S. population, they account for about 30% of fraud victims, estimates Consumer Action, a consumer-advocacy group.
As this gargantuan generation of boomers starts to retire, "You're going to see more of these seminars and more of these sales pitches," says James Nelson, assistant secretary of state in Mississippi. "Wherever retirees are congregated, you're going to have these people preying on them."
Older people have long been a lucrative market for the financial-services industry because of the assets they've accumulated. But the sheer number of baby boomers approaching retirement and seeking a place to park their assets is causing a frenzy of aggressive sales tactics.
Boomers have more than $8.5 trillion in investable assets. Over the next 40 years, they stand to inherit at least $7 trillion from their parents, research firm Cerulli Associates estimates
As baby boomers swell the retiree population, regulators worry not just about estate-planning seminars for seniors but also about sales of promissory notes, unregistered securities and lottery scams.
"It's the topic of the next few decades: senior investments and senior fraud," says Patricia Struck, president of the North American Securities Administrators Association, or NASAA.
"There are marketing seminars that are being held nightly and in every city," says Bryan Lantagne of the Massachusetts Securities Division. "They get you to come in and do a financial plan. Their goal is to put you in one of these products."
Senior estate-planning seminars aren't new. But they're drawing more regulatory scrutiny because they're ramping up in areas with large elderly populations. Typically, the people who attend them need advice about leaving assets to their children, managing income or minimizing taxes in retirement.
Beverly Buhs, 81, of Millbrae, Calif., attended one of these financial seminars with her husband, Art, in 1997. They bought a living trust on the spot, she says. They were told it would let them avoid probate court, the sometimes expensive process by which your assets are allocated after you die.
They also bought an equity-index annuity. That's a high-cost insurance product with returns based partly on the stock market.
After her husband died, Buhs found the trust didn't fully protect their assets from probate. And she couldn't access the money in the annuity without paying big penalties. Her complaints are part of a class-action lawsuit against the financial agents and companies involved in the seminar.
A 'major problem'
These seminars are a "major problem" in Texas, where many boomers retire, says Denise Voigt Crawford, the state securities commissioner.
North Dakota Securities Commissioner Karen Tyler calls these seminars a bait-and-switch tactic. The free seminar is the bait; the switch comes when the agents urge investors to liquidate the portfolio and put the money into other products, Tyler says.
Dan Danbom of the Society of Certified Senior Advisors — which helps train insurance agents, brokers and others to conduct senior seminars — says there's nothing "inherently dishonest about seminars, any more than there's anything inherently dishonest about advertising or direct mail."
And some agents argue that their financial seminars fill seniors' very real need for education. Theresa Bischoff, an insurance agent in Palatine, Ill., says she holds seminars because, "Baby boomers are starving for information on retirement and estate planning."
But regulators worry that seminars often serve as tools for unscrupulous salespeople. NASAA issued an alert in December cautioning investors that such seminars were sometimes being used by "bogus" senior specialists. The specialists may take only a few courses to earn their titles, then use these designations to create a "false level of comfort" about their expertise, according to NASAA.
In a typical scenario, financial agents will find out, at the seminar and in follow-up meetings, what assets seniors have, NASAA says. Then they'll recommend these assets be liquidated and put into equity-index or variable annuities. (State regulators say these recommendations could be considered investment advice, and anyone not registered as an investment adviser could face enforcement action.)
Variable and equity-index annuities are complex insurance products whose returns vary with market performance. Variable annuities' returns are tied to the stock market. Equity-index annuities' returns fluctuate with the market but also provide a minimum guarantee.
Both can be appropriate for people who want tax-advantaged savings or an income stream in retirement. But they're generally ill-suited for people in their 60s, 70s or 80s who'll need access to their money over the next decade. These costly products usually have stiff penalties for withdrawing money before the end of a surrender period that can last up to 15 years.
Louise Renne, a former San Francisco city attorney, says financial seminars often "are really fronts for (insurance) agents who want to sell annuities to seniors." Renne represents Buhs and others in three lawsuits against financial pros who conducted the seminars and companies that supplied the products.
Michael DeGeorge, general counsel for the National Association for Variable Annuities, says, "The vast majority of annuity recommendations are done appropriately."
Emotional pain
Whether scams involve inappropriate product sales or telemarketing fraud, they can be emotionally and financially devastating for victims of all ages.
Seniors, though, are particularly hard hit. Scams can wipe out an entire lifetime of savings. Unlike younger investors, seniors have few or no working years to recapture their losses.
The emotional pain of being scammed can also be magnified for seniors who keep silent about losing money. Many of them don't report suspected fraud out of shame and "fear that if the family realizes they've been ripped off, they'll be placed in an institution," seen as unfit to manage their finances and lives, says Jenefer Duane, chief executive of the Elder Financial Protection Network.
Thus, complaints about senior financial fraud are probably lower than they should be, Duane says. In 2005, consumers 50 and older filed 151,000 fraud and identity-theft-related complaints with the Federal Trade Commission. That total represented nearly one-third of total fraud and one-fifth of all identity-theft complaints among those who reported their age.
Online and telemarketing scams rank among the top complaints filed by older consumers.
Seniors who've been scammed often have to work longer than they'd planned — and harder. Take Neal Dukes, 71, of Grand Ledge, Mich. Dukes lost $250,000 a few years ago after a financial adviser persuaded him and 17 other people, mostly seniors, to put money into what the adviser said were high-interest-earning annuities.
The adviser, Daniel Neuenschwander, pleaded guilty, admitting he didn't invest the money in annuities but instead lost much of it in the commodities market or used it to support his family.
A Michigan circuit judge sentenced Neuenschwander in 2002 to up to 10 years in prison and ordered him to pay $2.2 million back to the seniors.
"It's tragic. Mr. Neuenschwander is very remorseful," says John Maurer, Neuenschwander's attorney.
Dukes says he hasn't gotten a dime back and isn't hopeful he will. He's been working eight to 10 hours a few days a week at his insecticide-spraying business to earn money.
'No golden years left'
"When you're 71 years old, you should be able to enjoy your life and your golden years," Dukes says. "But when you've been taken like this, there are no golden years left."
Financial recovery in senior scams is rare but not hopeless. Shlimoon Youkhana, 80, was one of the lucky ones. He got his money back after what had seemed to be a promising investment turned sour, draining his money with it.
A few years ago, he and his children invested $15,000 in the stock of a company that was supposed to file for an initial public offering. But the company never gave them their stock certificates. It eventually merged with another entity and changed its name.
Youkhana, of Rosemont, Ill., spent more than two years and hundreds of hours researching the company and documenting his experience, reporting his findings along the way to the Illinois Securities Department. The department did its own investigation and recovered investors' money.
Now, Youkhana offers to help other seniors in his community do research before they invest. "I'm not a Don Quixote or anything," he says. He just doesn't want others to be victims, he says.
The easiest way to avoid scams? Beware of any opportunity that sounds too good to be true. Seniors who are pressured to make a financial decision on the spot should run — not walk — away.
Robert Inman, 69, was wary about the living trust and annuity being pitched during a December free-lunch seminar he attended in Jackson, Mich.
He didn't feel the presenters adequately answered his questions — such as, what happens if the company that created the trust goes under? And he was bothered that they wanted people to sign up on the spot.
Also, a salesman called him multiple times after the seminar, stopping only after being invited to the house. "We thought that maybe this is the way to get rid of him," Inman says.
He consulted an attorney and decided to forgo the products. Inman's advice to seniors? "Don't jump into anything hastily. Take some time to do some checking."
Consumer groups act
Consumer groups are also stepping up efforts to alert seniors to potential scams. In Michigan, AARP, the advocacy group for those 50 and over, has found a way to counter "free lunch" seminars: It holds its own "free lunch" seminars.
No products are sold at the sessions. Still, "They're wildly popular," AARP's Sally Hurme says of the educational seminars, which feature such names as "What You Should Know About Living Trusts" and "How to Tell the Difference Between An Estate Plan and a Sales Pitch."
Says Anita Salustro, who leads the seminars for AARP in Michigan: "People want some consumer protection. They've been to these free lunches and want some balanced information from someone who's not selling a product."
Shlimoon Youkhana was able to get back $15,000 he and his children lost in a bad investment.
Article Courtesy : By Kathy Chu, USA TODAY
Jest a while................
Come learn from the IRA Technician" at a seminar that more than 10,000 seniors have attended. Top sirloin steak will be served — along with tips on "how to guarantee your IRA will never run out, regardless of market fluctuations."
Just don't bring your financial adviser. Agents and brokers are not invited, the ad says.
As the first of 79 million baby boomers turn 60 this year, free-this and free-that financial seminars are thriving. Community centers and hotels have become a backdrop for what regulators see as aggressive sales pitches geared to seniors. (Chart: What to know about senior financial adviser designations)
While people 60 and older make up 15% of the U.S. population, they account for about 30% of fraud victims, estimates Consumer Action, a consumer-advocacy group.
As this gargantuan generation of boomers starts to retire, "You're going to see more of these seminars and more of these sales pitches," says James Nelson, assistant secretary of state in Mississippi. "Wherever retirees are congregated, you're going to have these people preying on them."
Older people have long been a lucrative market for the financial-services industry because of the assets they've accumulated. But the sheer number of baby boomers approaching retirement and seeking a place to park their assets is causing a frenzy of aggressive sales tactics.
Boomers have more than $8.5 trillion in investable assets. Over the next 40 years, they stand to inherit at least $7 trillion from their parents, research firm Cerulli Associates estimates
As baby boomers swell the retiree population, regulators worry not just about estate-planning seminars for seniors but also about sales of promissory notes, unregistered securities and lottery scams.
"It's the topic of the next few decades: senior investments and senior fraud," says Patricia Struck, president of the North American Securities Administrators Association, or NASAA.
"There are marketing seminars that are being held nightly and in every city," says Bryan Lantagne of the Massachusetts Securities Division. "They get you to come in and do a financial plan. Their goal is to put you in one of these products."
Senior estate-planning seminars aren't new. But they're drawing more regulatory scrutiny because they're ramping up in areas with large elderly populations. Typically, the people who attend them need advice about leaving assets to their children, managing income or minimizing taxes in retirement.
Beverly Buhs, 81, of Millbrae, Calif., attended one of these financial seminars with her husband, Art, in 1997. They bought a living trust on the spot, she says. They were told it would let them avoid probate court, the sometimes expensive process by which your assets are allocated after you die.
They also bought an equity-index annuity. That's a high-cost insurance product with returns based partly on the stock market.
After her husband died, Buhs found the trust didn't fully protect their assets from probate. And she couldn't access the money in the annuity without paying big penalties. Her complaints are part of a class-action lawsuit against the financial agents and companies involved in the seminar.
A 'major problem'
These seminars are a "major problem" in Texas, where many boomers retire, says Denise Voigt Crawford, the state securities commissioner.
North Dakota Securities Commissioner Karen Tyler calls these seminars a bait-and-switch tactic. The free seminar is the bait; the switch comes when the agents urge investors to liquidate the portfolio and put the money into other products, Tyler says.
Dan Danbom of the Society of Certified Senior Advisors — which helps train insurance agents, brokers and others to conduct senior seminars — says there's nothing "inherently dishonest about seminars, any more than there's anything inherently dishonest about advertising or direct mail."
And some agents argue that their financial seminars fill seniors' very real need for education. Theresa Bischoff, an insurance agent in Palatine, Ill., says she holds seminars because, "Baby boomers are starving for information on retirement and estate planning."
But regulators worry that seminars often serve as tools for unscrupulous salespeople. NASAA issued an alert in December cautioning investors that such seminars were sometimes being used by "bogus" senior specialists. The specialists may take only a few courses to earn their titles, then use these designations to create a "false level of comfort" about their expertise, according to NASAA.
In a typical scenario, financial agents will find out, at the seminar and in follow-up meetings, what assets seniors have, NASAA says. Then they'll recommend these assets be liquidated and put into equity-index or variable annuities. (State regulators say these recommendations could be considered investment advice, and anyone not registered as an investment adviser could face enforcement action.)
Variable and equity-index annuities are complex insurance products whose returns vary with market performance. Variable annuities' returns are tied to the stock market. Equity-index annuities' returns fluctuate with the market but also provide a minimum guarantee.
Both can be appropriate for people who want tax-advantaged savings or an income stream in retirement. But they're generally ill-suited for people in their 60s, 70s or 80s who'll need access to their money over the next decade. These costly products usually have stiff penalties for withdrawing money before the end of a surrender period that can last up to 15 years.
Louise Renne, a former San Francisco city attorney, says financial seminars often "are really fronts for (insurance) agents who want to sell annuities to seniors." Renne represents Buhs and others in three lawsuits against financial pros who conducted the seminars and companies that supplied the products.
Michael DeGeorge, general counsel for the National Association for Variable Annuities, says, "The vast majority of annuity recommendations are done appropriately."
Emotional pain
Whether scams involve inappropriate product sales or telemarketing fraud, they can be emotionally and financially devastating for victims of all ages.
Seniors, though, are particularly hard hit. Scams can wipe out an entire lifetime of savings. Unlike younger investors, seniors have few or no working years to recapture their losses.
The emotional pain of being scammed can also be magnified for seniors who keep silent about losing money. Many of them don't report suspected fraud out of shame and "fear that if the family realizes they've been ripped off, they'll be placed in an institution," seen as unfit to manage their finances and lives, says Jenefer Duane, chief executive of the Elder Financial Protection Network.
Thus, complaints about senior financial fraud are probably lower than they should be, Duane says. In 2005, consumers 50 and older filed 151,000 fraud and identity-theft-related complaints with the Federal Trade Commission. That total represented nearly one-third of total fraud and one-fifth of all identity-theft complaints among those who reported their age.
Online and telemarketing scams rank among the top complaints filed by older consumers.
Seniors who've been scammed often have to work longer than they'd planned — and harder. Take Neal Dukes, 71, of Grand Ledge, Mich. Dukes lost $250,000 a few years ago after a financial adviser persuaded him and 17 other people, mostly seniors, to put money into what the adviser said were high-interest-earning annuities.
The adviser, Daniel Neuenschwander, pleaded guilty, admitting he didn't invest the money in annuities but instead lost much of it in the commodities market or used it to support his family.
A Michigan circuit judge sentenced Neuenschwander in 2002 to up to 10 years in prison and ordered him to pay $2.2 million back to the seniors.
"It's tragic. Mr. Neuenschwander is very remorseful," says John Maurer, Neuenschwander's attorney.
Dukes says he hasn't gotten a dime back and isn't hopeful he will. He's been working eight to 10 hours a few days a week at his insecticide-spraying business to earn money.
'No golden years left'
"When you're 71 years old, you should be able to enjoy your life and your golden years," Dukes says. "But when you've been taken like this, there are no golden years left."
Financial recovery in senior scams is rare but not hopeless. Shlimoon Youkhana, 80, was one of the lucky ones. He got his money back after what had seemed to be a promising investment turned sour, draining his money with it.
A few years ago, he and his children invested $15,000 in the stock of a company that was supposed to file for an initial public offering. But the company never gave them their stock certificates. It eventually merged with another entity and changed its name.
Youkhana, of Rosemont, Ill., spent more than two years and hundreds of hours researching the company and documenting his experience, reporting his findings along the way to the Illinois Securities Department. The department did its own investigation and recovered investors' money.
Now, Youkhana offers to help other seniors in his community do research before they invest. "I'm not a Don Quixote or anything," he says. He just doesn't want others to be victims, he says.
The easiest way to avoid scams? Beware of any opportunity that sounds too good to be true. Seniors who are pressured to make a financial decision on the spot should run — not walk — away.
Robert Inman, 69, was wary about the living trust and annuity being pitched during a December free-lunch seminar he attended in Jackson, Mich.
He didn't feel the presenters adequately answered his questions — such as, what happens if the company that created the trust goes under? And he was bothered that they wanted people to sign up on the spot.
Also, a salesman called him multiple times after the seminar, stopping only after being invited to the house. "We thought that maybe this is the way to get rid of him," Inman says.
He consulted an attorney and decided to forgo the products. Inman's advice to seniors? "Don't jump into anything hastily. Take some time to do some checking."
Consumer groups act
Consumer groups are also stepping up efforts to alert seniors to potential scams. In Michigan, AARP, the advocacy group for those 50 and over, has found a way to counter "free lunch" seminars: It holds its own "free lunch" seminars.
No products are sold at the sessions. Still, "They're wildly popular," AARP's Sally Hurme says of the educational seminars, which feature such names as "What You Should Know About Living Trusts" and "How to Tell the Difference Between An Estate Plan and a Sales Pitch."
Says Anita Salustro, who leads the seminars for AARP in Michigan: "People want some consumer protection. They've been to these free lunches and want some balanced information from someone who's not selling a product."
Shlimoon Youkhana was able to get back $15,000 he and his children lost in a bad investment.
Article Courtesy : By Kathy Chu, USA TODAY
Jest a while................
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