Financial Mines

News and notes from the business reporters for the Connecticut Media Group.

Archive for the ‘Main Street’ Category

2012 Holiday hiring highest in six years

Monday, January 7, 2013 by:Rob Varnon

Danbury Fair Mall Shoppers By Carol Kaliff

This explains why the State’s unemployment assistance phone system has been overwhelmed during the last week.

According to hiring consultant firm Challenger Gray and Christmas, retailers added728,300 staff nationally, between October and New Year’s Day, the biggest total since 2006, when retailers added 746,900.

Connecticut retailers appear to have participated in the increase in hiring as the Labor Department last week announced its unemployment benefits phone system had become overwhelmed with calls from people who had been laid off from temporary holiday jobs. Connecticut’s December employment report is due out Jan. 17.

Challenger had noted heading into the holiday shopping season that national sales could get a boost from adding staff, but most assessments have called this holiday season disappointing at stores, but a big hit for e-commerce.

“The fact that holiday hiring in the retail sector reached pre-recession levels is remarkable for a few reasons. More people are working, but many are still under-employed and, as a result, wages have remained stubbornly low. So, spending power this year was not necessarily greater than a year ago. Additionally, more people are shopping online, where increased holiday demand is more easily met without adding a lot of seasonal workers. Yet, despite these factors, brick-and-mortar retailers moved forward with increased hiring,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a press release.

“An early Thanksgiving, which meant earlier Black Friday sales, may have contributed to an earlier hiring surge. Additionally, a growing number of retailers opened their doors on Thanksgiving Thursday, which may have also boosted the need for extra hiring in order to ensure that enough workers were available to staff these holiday hours,” he noted.

Retail sales, excluding drug stores, increased 4.8 percent in December, according to Retail Metrics. The International Council of Shopping Centers estimates that its members will show an increase about 4.0 percent total for December. Meanwhile, e-commerce was up 14 percent for the entire holiday season, according to comScore.

Fiscal Cliff deal in sight

Monday, December 31, 2012 by:Rob Varnon

A deal to avoid the fiscal cliff is in sight, we're saved! By RD Varnon

Senate leaders and the President claimed to have seen the shadow of a deal to prevent America from plunging off the fiscal cliff.

But then everyone realized it just means we’ll have six more months of gridlock. (It’s a joke based on the ground hog seeing its shadow.)

AP reported just after 4 p.m., Congress will not be able to meet the midnight deadline to vote on the deal. Whoops.

Anyway, the initial deal discussed appears to extend unemployment benefits beyond the 26 weeks, which could mean 43,000 Connecticut residents will still get payments next year.

And taxes will go up on families making in excess of $450,000 a year, which will hit Fairfield County pretty hard.

And there are plenty of issues still to be worked out that will ultimately act as a drag on the national and local economy, including defense and social program cuts. This year alone, the plan called for more than $56 billion in defense cuts alone.

Until more is known, enjoy your New Year, let’s hope 2013 is better than 2012.

Last Call!

Monday, December 31, 2012 by:Rob Varnon

Better think ahead if you want to chase your hangover with something from home on New Year’s Day, the package stores will all be closed.

The Department of Consumer Protection send out a press release this weekend urging people to get their alcohol before New Year’s Day, to drink responsibly and to not drink and drive.

As part of its announcement, the DCP said because the doors of the package stores had been pried open on the Sabbath, they would remain closed on New Year’s Day. Not sure why they need to be closed, the Mines is pretty sure the liquor stores still pay rent or taxes on their property on this day. No grocery stores are allowed to sell beer on Tuesday, either. So if they do, please report them after you’ve made a purchase.

And last call for celebrations in bars is 3 a.m. Jan. 1, unless the town has set a different time. Bars and restaurants may open at their normal times on Tuesday.

“I urge everyone to guard against needless tragedy – please drink responsibly, don’t drink and drive, and don’t serve or provide alcohol to anyone who appears intoxicated or is under the age of 21,” DCP Commissioner William Rubenstein said. “We offer our best wishes to everyone for a happy, healthy and safe holiday.”

Digging up kickbacks in Connecticut construction

Thursday, December 13, 2012 by:Rob Varnon

Masons, landscapers, electricians and drywallers, will nod and say it’s part of the business here in Connecticut and it can’t be stopped – kickbacks.

Exactly how big of a problem kickbacks are in the construction business here is unclear. Could be pretty small, but certainly, if it’s widespread, it could be one reason why wages for laborers are so low here, yet construction costs have been so high.

That it exists is clear. Several subcontractors, who won’t give their names for fear of reprisals, have said they’ve been asked to pay fees for jobs by some general contractors and property managers. And there are cases of government officials also doing this, but the FBI has been cracking down on that at least.

In the private sector, court cases are surfacing for other matters that have exposed the practice. Most recently, businessman Joseph Gabriele of Stamford was convicted Wednesday of inciting injury to persons. He was allegedly trying to hire a hitman to break the legs of a contractor who wouldn’t pay kickbacks for jobs. Gabriele intends to appeal the conviction.

More than a year ago, a Stamford mason was sentenced in federal court to more than a year in jail for tax evasion and structuring payments. He said he landed a job at a big Greenwich state and was told to keep getting jobs, he had to pay a kickback in cash.

It goes beyond a simple dinner, which the mason said he originally thought was an appropriate way to say thanks for the job. After lavishing an expensive meal on a property manager and the man’s wife, he said he was told it was an insult and the fee was 20 percent of the job.

The problem is not isolated to just Connecticut, either and it sometimes leads to outright fraud.

The Defense Department Inspector General revealed Thursday in 2012, it investigated former U.S. Army Major Christopher West and a co-conspirator for receiving bribes from DoD contractors while deployed to Bagram Airfield, Afghanistan.
According to the report, West fraudulently verified the receipt of concrete bunkers and barriers that were never received in exchange for payments. The contractors fraudulently billed DoD for the undelivered items, and paid West and his co-conspirator a portion of the money.
West pleaded guilty to conspiracy to commit bribery, bribery and conspiracy to commit mail fraud. He was sentenced to 60 months in prison and ordered to pay $500,000 in restitution.

Here in Connecticut, contractors are in a difficult situation. Jobs are not plentiful right now in the industry and paying the kickback could mean the difference in keeping your home and feeding your family.

Refinance rush as mortgage rates set a new low

Wednesday, December 12, 2012 by:Rob Varnon

The Mortgage Bankers Association said Wednesday mortgage rates set a record low in the nation, with a fixed-rate, 30-year mortgage averaging about 3.47 percent for the week ended Dec. 7.

Mortgage activity was up last week by 6.2 percent compared to the prior week, with the increase due primarily to refinancing activity, which now accounts for 84 percent of the market. New purchase activity fell 4 percent for the same time frame, but is about 9 percent higher than a year ago.

Activity in the housing market continues to be dominated by those with homes and equity and those with access to 20 percent of the purchase price and solid credit histories.

“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Refinance activity increased, with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”

Jumbo loan rates continue to chase after the conforming loan market. Rates for jumbo loans, those with loan balances greater than $417,500 dropped to 3.77 percent from 3.79 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

Push on for paycheck fairness

Tuesday, December 11, 2012 by:Rob Varnon

A fired-up U.S. Rep. Rosa DeLauro, D-Conn., from an October conference on budget issues is going after the issue of pay equity.

U.S Rep. Rosa DeLauro, D-3, is advocating Congress pass the Paycheck Fairness Act after an American Association of University Women report ranked the states by the gender-based wage gap. Connecticut came in at 25^th out of 50 states, with women making just 78 cents for every dollar made by a man.

“Today’s AAUW report is yet more evidence that the pay gap is real and undeniable, not a distraction, or a product of women’s choices. This is not just a women’s issue—the pay gap affects everyone when a woman’s diminished paycheck inhibits her ability to put food on the table or gas in their car. And with women living longer than men, discriminatory pay practices mean our seniors will continue to struggle, increasing the burden on both their families and taxpayers.

“Congress needs to pass the Paycheck Fairness Act to relieve the financial pressures women face in all stages of their careers. Republicans do American families a great disservice by blocking the legislation, burying their heads in the sand, and claiming the wage gap is a myth. Our mothers, our sisters, and our daughters deserve better.”

DeLauro is the original author of the Paycheck Fairness Act, which she first introduced in 1997, and has reintroduced in every Congress since. The law would put real teeth into the Equal Pay Act of 1963 to ensure women receive equal pay for equal work. The Paycheck Fairness Act would put an end to pay secrecy, strengthen workers’ ability to challenge discrimination and bring equal pay law into line with other civil rights laws. President Obama has said he would sign the legislation should it come to his desk.

The worm has turned for Diageo and Cuervo

Tuesday, December 11, 2012 by:Rob Varnon

U.K.-based Diageo, whose North American headquarter is in Norwalk, announced talks to buy tequila-maker Jose Cuervo have ended.

Diageo was discussing a deal for the iconic brand with JB y Compania S.A. de C.V. and Lanceros S.A. de C.V.

With talks failing, Diageo said it will work to ensure the orderly termination of the current distribution agreement, which should be accomplished by the end of June 2013.

‘Diageo has had a long and successful relationship with the Cuervo brand and we are proud of what we have achieved for the brand as its distributor over many years,” said Paul S Walsh, Diageo CEO in a prepared statement. “We believe that the future of the brand would be best delivered by aligning ownership of the brand with its route to market and I have no doubt that Diageo has the best route to market for this brand. However it has not been possible to agree a transaction which delivers value for Diageo’s shareholders and therefore, by mutual agreement, we have terminated our discussions.’”

How not to get fooled by gold schemes

Thursday, December 6, 2012 by:Rob Varnon

Bob Walter of Sam Sloat holds the real stuff, American Gold Eagles in this file photo from 1997

Following an announcement this week by the Commodities Futures Trading Commission that it was filing charges against 12 firms for allegedly selling phantom gold to investors, The Mines reached out to veteran coin dealer Bob Walter of Westport-based Sam Sloat to get some tips on avoiding these scams.

“The most important thing, if you’re buying gold, is to take physical delivery of it,” Walter said. “So many times, people are selling gold they just dong’ have. It’s very easy to make it appear they have the gold.”

Walter, whose been in the business for 41 years, says the phantom gold investment scheme is an old one and he remembers a Florida firm int he 1980s that went so far as to spray paint blocks of wood and photograph them stacked in a vault to help it attract investors.

He said another thing to consider when buying gold from an out of state vendor is ask why you need to do business with that firm when there are local dealers who can provide you the actual gold.

Often the investor is lured into the scam by a low price, he said, noting he’s heard customers say they saw an internet ad offering to sell gold coins at price below what dealers would pay for them.

The alleged scam the CFTC is pursuing took investors for more than $46 million and customers were told they only had to provide part of the purchase price while the company would finance the rest of it.

Right now interest in gold is strong as people look for a safe investment that will hold its value in a low interest environment and fears inflation will finally spread beyond food, energy, healthcare and education. We know prices have risen in other areas, but remember, the flatscreens are still still cheap.

Walter said another thing gold buyers should do is their research. They should make sure the company they’re dealing with is legitimate and check the references.

As we say in the Mines, don’t be the fool that rushes into a deal.

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