Faster than a speeding bullet ... it's ABI Man!

Cases of Interest

In re Robbie L. Oglesby (November 2005)

In re Doctors Health, Inc. (April 2005)

More companies refrain from making promises about retirement

The death knell for the traditional company pension has been tolling for some time now, the New York Times reported yesterday. Companies in ailing industries like steel, airlines and auto parts have thrown themselves into bankruptcy and turned over their ruined pension plans to the federal government. Now, with the recent announcements of pension freezes by some of the cream of corporate America—Verizon, Lockheed Martin, Motorola and, just last week, I.B.M.—the bell is tolling even louder. Even strong, stable companies with the means to operate a pension plan are facing longer worker lifespans, looming regulatory and accounting changes and, most important, heightened global competition. Some are deciding they either cannot, or will not, keep making the decades-long promises that a pension plan involves.

The days of rising interest rates may be numbered

Rarely do new years and significant changes coincide as they did this week, the New York Times reported yesterday. The year was less than a week old when it emerged that the Federal Reserve appeared to be easing off the brakes on the economy, the airline industry might be poised for revival and traditional company pensions took a significant step closer to extinction. Federal Reserve policy-makers may be close to ending 18 months of raising interest rates, according to minutes of a meeting last month of the rate-setting Federal Open Market Committee. The suggestion spurred a rally in the stock market and sent the dollar lower against European and Asian currencies. The minutes said "most members" of the committee agreed that "given the information now in hand, the number of additional firming steps (rate increases) required probably would not be large.”

For my finale: I, Alan Greenspan, will calculate the impact of globalization on inflation

Buried in the minutes of the Federal Reserve's Dec. 13 policy meeting, released last week, was this bland observation: Fed officials "noted that robust competition—including from foreign producers...[was] helping to contain cost and price pressures,” the Wall Street Journal reported yesterday. Markets largely ignored the sentence, but it's one of the most important factors guiding Fed Chairman Alan Greenspan in his final weeks at the helm of the nation's central bank. Greenspan has marveled at how inflation and wage growth have stayed low even as the economy continues to grow robustly and the jobless rate falls below 5 percent, a level that has often driven up wages and prices. Searching for an explanation, he has hit on globalization. If the Fed thinks growing imports, outsourcing and international investment are holding a lid on wages and prices, then interest rates can be lower than they otherwise would. Indeed, as the minutes show, this is one reason the Fed seems to think it can stop raising rates soon. Of course, there is no guarantee Ben Bernanke, nominated to succeed Greenspan, will be guided by the same sentiments.

Consumer credit underwhelms expectations in November 2005

Analysts at Irwin Jacobs Greene say that, according to the Fed, consumer credit fell significantly below expectations in November, NewRatings.com reported today. In a research note published this morning, the analysts mention that the Fed reported that outstanding credit had declined $649 million to $2.2 trillion in November. Consumer credit in the United States rose 3 percent over the past 12 months, the slowest pace since May 1993, the analysts added.

Late credit card payment sstill near their all-time high (Ha, ha!)

The proportion of consumers behind on their credit card bills remained near record-high levels in the July-September period as high gasoline prices and rising interest rates continued to put stress on personal budgets, the Associated Press reported today. The American Bankers Associated reported that the percentage of credit card accounts 30 or more days past due dipped slightly to 4.74 percent in the July-September quarter after having hit an all-time high of 4.81 percent in the spring. Even with the slight decline, consumer card delinquencies in the late summer and early fall were at the third-highest level on record, prompting concerns about more problems to come.