UPI NewsTrack Business

U.S. markets mixed Wednesday

NEW YORK, Dec. 9 (UPI) -- U.S. markets were mixed Wednesday, as major boards in Asia and Europe were down for the second consecutive day.

The TAIEX index in Taiwan rose 0.37 percent, while the Bovespa index in Brazil gained 0.08 percent. But those were rare exceptions, as markets fell or were falling in China, Japan, India, Germany, France and Britain.

In Dubai, where a $59 billion debt crisis jolted markets in late November, the Dubai Financial Market's headline index dropped 6.4 percent Wednesday.

In late morning trading, the Dow Jones industrial average gained 0.15 percent, 15.19 points, to 10,301.16. The Standard & Poor's 500 rose 0.01 percent, 0.11 points, to 1,092.05. The Nasdaq composite index lost 0.09 percent, 1,86 points, to 2,171.13.

The benchmark 10-year U.S. Treasury bill rose 4/32 to yield 3.377 percent.

The euro rose to $1.4715 from Tuesday's $1.4704. Against the yen, the dollar fell to 87.76 yen from Tuesday's 88.35 yen.

In Japan, the Nikkei 225 index lost 1.34 percent, 135.75, to 10,004.72.

Madoff victims confront SIPC

WASHINGTON, Dec. 9 (UPI) -- The multi-billion-dollar Bernard Madoff Ponzi scheme fraud case has put a little-known U.S. agency at the center of a complicated debate on victim compensation.

The Securities Investors Protection Corp., is set up to compensate victims of brokerage firms that fail with advances on claims of $500,000 and a proportional amount of the assets recovered, The New York Times reported Wednesday.

The corporation's president and chief executive officer Stephen Harbeck, scheduled to testify before the House Financial Services subcommittee, has said, "nobody likes to say no to people who are, without question, victims."

He also says he is limited by law as to who qualifies as a victim.

The sometimes emotional differentiation boils down to, "a zero-sum game," he said. "A dollar we give to someone who is not eligible is a dollar we do not have for someone who is."

In the Madoff case, thousands of investors whose money went to Madoff through a pension plan or feeder fund do not qualify for SIPC help, Harbeck said.

In another argument, victims want compensation based on the $64.8 billion in losses shown on account statements before Madoff's arrest in December 2008.

But the sum of claims among victims who received less from Madoff than they invested amounts to closer to $20 billion, Harbeck said.

Japan's quarterly growth revised downward

TOKYO, Dec. 9 (UPI) -- Japan's economy, facing declining prices and lower capital spending, grew 1.3 percent in the last quarter against an earlier estimate of 4.8 percent.

The Cabinet office said the sharp downward revision from the previous preliminary figures for the quarter ended September was largely due to weaker capital investment, Kyodo News reported.

While the world's second-largest economy, recovering from its worst post-war recession, showed continued growth, the pace was slower than in the April-June quarter, the government said.

"The latest data showed anew that companies remain reluctant to make fresh capital investment," spokesman Keisuke Tsumura told reporters.

Quarterly capital investment was actually down 2.8 percent form the previous quarter against the preliminary forecast of an increase of 1.6 percent.

Consumer spending, which accounts for about two-thirds of Japan's gross domestic product, rose 0.9 percent compared with the preliminary estimate of 0.7 percent.

The government Tuesday announced an additional 7.2 trillion yen, or $81 billion, stimulus package to shore up the economy, which has been hit by a combination of deflationary trends, a strong yen that makes exports dearer, sluggish domestic spending and high unemployment.

Separately, the country's central bank last week pumped 10 trillion yen, or $115 billion, to make three-month loans to financial institutions at a fixed interest rate of 0.1 percent using collaterals such as government bonds and corporate debt to support the economy. The decision is meant to fight deflation and control the rising yen by further easing monetary conditions.

AOL: An innovator playing catch up

NEW YORK, Dec. 9 (UPI) -- U.S. Internet innovator AOL begins a new chapter Wednesday with its disconnect from Time Warner, which is spinning off its $164 billion purchase.

The company that pioneered email, chat rooms, and instant messaging -- previously known as America Online -- was quickly eclipsed by upstart Hotmail in 1996, which offered its services for free and untethered from a specific service, The Washington Post reported Wednesday.

"We didn't find it that hard to out-innovate AOL," Hotmail co-founder Jack Smith said. "With Hotmail, you didn't have to install anything and you didn't have to dial in to a particular service to get your email."

AOL, however, held on to its business model of charging a fee for email services until 2006. By then, millions had switched to other services.

In contrast, AOL spent $40 per user to market its service, while Hotmail simply put a banner that said "Get your free email at Hotmail," at the bottom of every email that was sent, the Post said.

As it is spun off, AOL is reinventing itself, concentrating on publishing Web content, the Post said.