By Krista Braun
Who is to blame for the housing-bubble bust that led to the worst financial crisis in U.S. history since the Great Depression?
Stanford economist and former Treasury Undersecretary John Taylor said former Federal Reserve Chairman Alan Greenspan kept rates too low for too long.
Alan Greenspan said Taylor's wrong.
It's a debate the two famed economists have carried out in print since Taylor presented his theory at a 2007 Jackson Hole conference. Greenspan and Taylor met to debate in person for the first time Tuesday night on CNBC's "The Kudlow Report."
In late 2001, Greenspan lowered the federal-funds rate to 1.75 percent from 6.5 percent and lowered the rate again to 1 percent in mid-2003, where it held for a year. The Federal Reserve began raising the fed-funds rate incrementally for the next two years before beginning to lower them again in 2007.
(Read more: Get ready, here it comes: A December taper)
According to Taylor's eponymous rule, the Fed would have moved rates up earlier and by a larger amount. Greenspan's then-unconventional policy exacerbated the housing bubble that saw home prices "going through the roof," Taylor said. "You can see the bubble started to increase at a more rapid rate around that time."
Taylor also said rising inflation was another sign the funds rate was being held too low: "The funds rate was 1 percent when the inflation rate was already 2 [percent]. In 1997, Alan was also the chair, the funds rate was about 5 percent when the inflation rate was 2 percent. You don't have to have a Taylor Rule to see it was too low by that time."
(Read more: Cantor: Budget deal 'maintains savings')
Greenspan said it was exactly the right thing to do and if he had to do it over again, he wouldn't change a thing.
"There is no evidence that the actual price levels of homes was significantly affected by the action which we took," Greenspan said. "Human nature being what it is, if you have very successful policy of stabilizing the economy, you are invariably rewarded with a bubble."
The former Fed chairman said that, prior to 2003, there was a high correlation between short-term rates determined by the Fed and the long-term rates that effectively determine home prices. However, he said the correlation since then is zero.
"There's been a complete disconnect between what the Federal Reserve is doing in monetary policy, and the long- and short-term rates," Greenspan said.
(Read more: DC squabbling could still wreck the economy in 2014)
But Taylor said there's really no evidence that suggests there is a disconnect between long-term rates and the Fed's short-term target.
"If there was any disconnect, it was because of the policy of these very low rates, so unusual, so different than the policy that worked well in the '80s and '90s," Taylor said.
On one point, the two economists agree: It's time to unwind the current Fed's policy of bond buying, known as quantitative easing.
"I think they should slow down," Taylor said. "This is a good opportunity. I don't think it's been much good, so it's time to get back as quickly as possible to normal policy."
"I think it's about time," Greenspan agreed. But, he said, the policy's full economic impact will only be known in time: "Overall, it's going to be history's evaluation as to whether this particular, very innovative procedure has worked," Greenspan said.
For David Sheff, there is nothing worse than the sheer terror of witnessing your own child slip away into a life of drug abuse.
The San Francisco writer felt helpless as his son Nic became addicted to substances like methamphetamine and heroin over the course of a decade, beginning in 1997 when Nic was around 15.
Nic eventually triumphed, and has now been clean for more than five years, to his parents' great joy and relief. But his lengthy struggles with addiction had another long-term victim: Their family budget.
"Credit cards would disappear, checks would disappear, stuff would go missing," remembers Sheff, who wrote the 2008 book "Beautiful Boy" about his family's experiences. "Eventually he even broke into his little brother's piggy bank; that's how bad it got," he said in an interview.
"Then he would disappear, and we would be terrified for him, and just send more money," he says. "I did that until someone told me that sending money to a drug addict is like giving a loaded gun to someone who is suicidal."
But even when his son began to turn a corner, it wasn't the end of the family's financial challenges. Next came the rehabilitation programs, which can cost $25,000 or more every month, and be required multiple times when relapses occur.
Sheff's son went through six such programs, and Sheff's insurance ran out early, leaving him with towering bills. He spent $60,000 on his son's care, $28,000 of that in installments that he only recently finished paying.
Having an addict in the family presents a deeply troubling dilemma for spouses and parents. How do you help those you love, while protecting your own financial future?
After all, a serious substance abuser is likely to do whatever it takes to feed an addiction. That might include tapping a partner's savings account, home equity, 401(k) or individual retirement accounts, or even the college savings—and piggy banks—of their kids.
(Read more: Have you reviewed your 401(k) plan lately?)
Even if the addict isn't sneaking money, relatives might spend every penny they have willingly to help fund a successful recovery.
"I've heard of relatives literally selling everything, mortgaging everything," says Sheff. "Then you're not only dealing with the terror of losing a child, but with being broke as well, with no idea of what's going to happen in the future.
"And since relapses are part of the deal, what if you sell everything to help, and then you're faced with the same crisis all over again? Then you have no options left."
It's an alarmingly common problem. According to the 2012 National Survey on Drug Use and Health, almost 22.2 million Americans had abused or been dependent on drugs or alcohol within the previous year.
So what is a loving spouse, parent or child to do in such a situation? Here are some pointers.
(Read more: Budget or bust: How to avoid empty pockets at 80)
Check your financial accounts carefully to get a handle on exactly what is going on. "Addicts are very skilled at hiding transactions and siphoning cash away," says Brent Neiser, the Denver-based senior director of the National Endowment for Financial Education. "That's why you need to be hyperaware of your personal finances."
Some red flags that an addict is at work, according to Neiser: Savings accounts being depleted more rapidly than usual, regular payments going to organizations you're unfamiliar with and home equity lines of credit being tapped.
Keep an eye out for cash advances, evidence of payday lending, credit card or bank statements being rerouted to different addresses and changes to credit reports, he says.
Keep them separated
If you suspect something is up, couples should establish separate financial accounts in each spouse's name. That doesn't mean spouses necessarily have to give up anything—the usual state rules would apply to splitting up marital property in the event of a divorce, for example, says Matt McClintock, vice president of education at WealthCounsel, a membership organization for estate planners.
But it would act as a barrier to any short-term raiding by the addict, who might have more trouble getting to money in an account that didn't have his or her name on it.
In the absence of trust, use a trust
In some situations, it might be worth setting up a trust. You could arrange for large assets like a home or planned inheritance to be housed in the trust and have it administrated by a spouse or a third party such as an attorney. That would help prevent a user from tapping those sources to fuel addictions.
"It can be sensible to have a third party as a co-trustee, since spouses can sometimes be bullied, or throw up their hands in frustration," says Bill Conway, a tax attorney specializing in wealth preservation with Conway & Pannell in McLean, Va.
A trust could also help if a parent is planning an estate with concerns for a drug-addicted child. "A trust could buy a home for the person to live in, or always provide money for food, while making sure those funds aren't being converted to pay for drugs," he says.
(Read more: Year-end a good time to ponder your pension plans)
When to say, enough?
The key question: Do you use up your own financial resources to keep a roof over your child's or partner's head? Or do you practice tough love and cut them off, which would restrict their cash but could precipitate a crisis?
These are questions with no easy answers, and should be handled case-by-case, likely with the help of addiction specialists.
Sheff recommends targeted assistance aimed at keeping the person off the streets.
"You want to do everything you can to help them get well," says Sheff. "But you don't want to lose your house or spend every penny you have, because that's not going to do anybody any good."
Caribbean medical schools would have a harder time accessing federal loans for their U.S. students under a bill U.S. Senator Richard Durbin plans to propose tomorrow.
The Illinois Democrat and Senate majority whip aims to eliminate exemptions to loan rules to ensure U.S. taxpayers aren’t financing foreign for-profit medical schools that saddle many students with mountains of debt and questionable outcomes.
Durbin wrote to Education Secretary Arne Duncan after a September Bloomberg Markets report, asking whether the schools have access to millions of dollars in federal funds “with little to no oversight or accountability.” From 1998 to 2008, U.S. students borrowed $1.5 billion to study medicine at 21 standalone foreign medical institutions, according to a government report. About 90 percent of that money went to three for-profit schools in the Caribbean.
“Many of these students get the very worst outcome: deeply in debt, no completion of course that leads to becoming a licensed doctor,” Durbin said in an interview. “These schools have been given special treatment under the law, and that has to come to a stop.”
Under the bill, U.S. students would only be able to get federal loans for foreign medical schools that maintain a 75 percent pass rate on the U.S. Medical Licensing Exam and whose student bodies are made up of at least 60 percent non-U.S. citizens.
Three schools exempt from those rules are St. George’s School of Medicine in Grenada and DeVry Education Group Inc. (DV)’s Ross University School of Medicine in Dominica and American University of the Caribbean School of Medicine in St. Maarten. They gained the exemptions by having long-standing clinical programs approved by a state. Their students received about $470 million in U.S. government loans in the year ended June 2012.
About 70 percent of St. George’s students are from the U.S., as are 91 percent at Ross and 86 percent at AUC, according to the schools.
Two other schools that would be affected only by the citizenship exemption are Universidad Iberoamericana, known as Unibe, a private, non-profit school in the Dominican Republic, and Saba University School of Medicine, owned by Equinox Capital, a private equity firm based in Greenwich, Connecticut. Saba became the fourth for-profit Caribbean school to gain U.S. loan access in July.
Thousands of U.S. students who didn’t get into medical schools at home attend Caribbean colleges. They take on more debt and drop out at a higher rate compared with their counterparts stateside. The median federal loan debt of graduating students at St. George’s, Ross and AUC was at least $232,000 in the year ended June 2012. That compares with $170,000 for U.S. students, according to the Association of American Medical Colleges.
Many DeVry students quit in the first two semesters, leading to an attrition rate about eight times that of U.S. medical schools.
The Durbin bill could affect enrollments, a measure of revenue at for-profit schools, said Jeff Silber, a managing director at BMO Capital Markets, who follows the industry.
“If this law goes through, it would be something that likely would adversely impact enrollments,” Silber said in an interview. The schools “would have to ramp up marketing expenses to ensure they get a strong pipeline of non-U.S. citizens.”
In the year ended June 2011, 81 percent of revenue at DeVry’s two medical schools came from U.S. student loans, according to federal data. The company derived 34 percent of its $1.96 billion in fiscal 2013 revenue from medical and health-care education, including a chain of U.S.-based nursing schools. Silber said he expects the segment to make up about 40 percent of revenue for 2014.
“Senator Durbin seems intent on denying U.S. citizens the ability to pursue their medical education,” Sharon Thomas Parrott, a spokeswoman for Downers Grove, Illinois-based DeVry, said in an e-mailed statement, adding that the bill would “leave thousands of highly qualified U.S. college graduates without an option for medical school.”
Durbin’s bill also proposes repealing exemptions to the pass rate, which was increased to 75 percent from 60 percent in 2010. The measure isn’t likely to be as effective as the citizenship rule because some schools inflate pass rates by kicking out underperforming students before they have a chance to take the test, said Glenn Tung, associate dean for clinical affairs at Brown University’s Warren Alpert Medical School, who has studied for-profit medical schools.
“If they set high enough benchmarks to even take the USMLE part 1, then their pass rate will be exaggerated,” Tung said. “What is the percent of matriculants who never get to take the test? All of our students are required to take the test.”
St. George’s had a 97 percent pass rate in 2012 for Step 1 of the exam, taken after the first two years of medical school, while DeVry’s Ross and AUC had a 96 percent rate, according to data provided to the Education Department. All three schools reported rates for the three sections of the exam above 75 percent.
The percent of students and where they come from is irrelevant at St. George’s when its students exceeded the U.S. pass rate, the school’s chancellor, Charles Modica, said in an interview. He called the proposed bill “misguided.”
Ross students can take Step 1 of the test only after passing all courses in the basic science curriculum in the first four semesters, passing a fifth semester course and passing a pre-test, Dean Enrique Fernandez said in a 2011 affidavit filed in federal court. The school’s handbook also includes the requirements.
Ross students “are required to take and pass a comprehensive exam before taking USMLE Step 1 and proceeding to clinical training,” Thomas Parrott said. “This is in line with common practices used by U.S. medical schools.”
Syed Husain said he was dismissed from Ross in 2009 and wasn’t allowed to take the test. He said he didn’t even qualify to take a pre-test because he didn’t complete all the required courses in the time allotment.
Now in his 40s, he has $230,000 in federal debt and $12,000 in private loans for his time at Ross. The former Chicago resident who works in a non-health related field said he won’t earn a doctor’s salary to pay his loan balance, which is increasing as interest on deferred loans accrues.
“Because of my age, if I don’t pay down this debt, everything I pay to Social Security is down the tubes,” he said.
You probably have some gift cards on your holiday shopping list. Once again, this year they're the most-requested present. Here are seven simple ways to get more for your gift-card dollars.
1. Buy discounted cards
You shop the sales for your holiday gifts, right? So, why pay full price for those gift cards?
"You'll pay less than face value, so you're actually getting free money on each purchase," said Marc Ackerman, co-founder of CardCash.com.
Right now, the discounts offered by CardCash range from 1 to 35 percent, based on supply and demand. For example, a Wal-Mart gift card is only discounted 2 percent, while a card for Patagonia is 20 percent off. Ackerman said the average savings is about 12 percent.
2. Shop with reward points
Reward points can be used to buy all sorts of things, including gift cards. And right now, some credit card issuers are selling them at a sizeable discount.
(Read more: 10 tips for shipping holiday gifts)
For example, Chase Ultimate Rewards members can buy certain gift cards for 10 to 20 percent fewer points than typically required. And these are cards from well-known stores, such as Bloomingdale's, Kohl's, Lands' End, Macy's, Neiman Marcus and Old Navy.
"This is a great untapped resource for savings," said Janna Herron, credit card analyst at Bankrate.com. "It's an easy way to stretch your rewards and your holiday budget, and maybe use up points or miles that are about to expire."
3. Look for special discounts from local retailers
Gift cards are good for business. They boost sales and create loyal customers. That's why many merchants, especially restaurants, run holiday gift card promotions.
For example, buy a $100 gift card at Salty's Waterfront Seafood Grills in Seattle right now and they'll give you a $20 promotional gift card. The cards are sent to the gift recipient in special packaging and there's no shipping charge.
(Read more: Holiday tips: 20% is the new 15%)
You'd be smart to go online and see if any of your favorite restaurants or stores have holiday specials on their gift cards.
4. Watch out for fees
There are two types of gift cards: Store-specific cards can only be used at one merchant—you can only use a Staples gift card at Staples. General purpose gift cards, sold by banks and credit card companies, can be used at any retailer that accepts that credit card.
Surveys show most people prefer to get the general purpose cards because they're so convenient, but they're more expensive for the person who buys them.
"While store-specific cards almost never have a fee, general purpose gift cards always charge an upfront purchase fee, which averages $3.95," said Ben Woolsey, director of marketing and consumer research at CreditCards.com. "General use gift cards can also charge dormancy fees on the back end for the recipient in case they are not used for a year or longer."
5. Don't pay for shipping
Order a gift card via the Web and you could get dinged for shipping. A survey by CardHub found that a third of the cards sold online have a shipping charge.
"The average shipping charge is $4.44," said CardHub CEO Odysseas Papadimitriou. "Don't waste your money on that."
See if you can find a store that your recipient will like that doesn't have a shipping charge. Or send an electronic gift card, if the company offers it. There's no shipping charge for that. A lot of young people actually prefer a digital gift card because it's so easy to use it to shop online.
6. Regift your unwanted cards
Chances are you have a few unused gift cards in your purse or wallet or sitting in a drawer just collecting dust. Why not regift them? You might be able to do it without getting caught.
Don't be discouraged if the plastic is dirty or looks old. Just use the money loaded on that card to buy a new one from that same merchant. Do this online and they may gift wrap the card and send it in a nice box.
(Read more: Tips for snagging luxury gifts at deep discounts)
If there's an odd amount of money left on the card, add a little bit more. You can also take a big card and have it divided into several smaller ones to give to different people.
7. Sell unwanted cards
It's easy to turn that plastic into cash. The sites that resell gift cards also buy them.
"If you have a gift card that you don't plan to use, and you can turn that into cash, why not? It's a no-brainer," said Kendal Perez, marketing manager with Gift Card Granny.
The average payout is about 75 percent of the card's value. It's higher (about 92 percent) on popular cards, like Target and Amazon, and lower (about 40 percent) on cards for boutique shops or restaurants with just a few locations.
The sites that buy gift cards typically offer several ways to get your money, such as check and PayPal. There's often a bonus if you take payment in the form of an Amazon gift card. At Gift Card Granny, you get an extra 4.5 to 5 percent.
There's been a lot of fraud associated with gift cards. A stolen card can be used like cash, no ID required. ID thieves create bogus websites that offer huge discounts on preowned cards. They hope to use that lure to steal your personal information. My advice: Be safe and stick to well-known reputable sites.
To reduce your risk of fraud, don't buy gift cards from online classified websites, such as craigslist. There's no way for you to know if that card is a counterfeit or has been stolen. And there's no way to know for sure how much money is really stored on that card. If you get burned, there may be no recourse.
The big resale sites, like CardHub, CardCash and Gift Card Granny, all offer a money-back guarantee should there be a problem after the sale. Stick with them.
If you get a gift card, treat it like cash. Only 69 percent of the companies surveyed by Bankrate.com for its 2013 Gift Card study will replace the money on a lost or stolen card. And typically, you must have registered the card ahead of time or have certain information on hand, such as the PIN or sales receipt.
"We've reached out to 22,000 of our patients," said Marian Morrow, Parkland's patient financial service manager, in the crowded enrollment office.
In 2012, Parkland provided $685 million in uncompensated care for its mostly uninsured patient population and for those who are underinsured. Yet under the Affordable Care Act, the hospital could still find itself in the red next year.
"About a third of our revenue comes from federal payments," said Ted Shaw, Parkland's interim chief financial officer. "If we don't have those revenues, we can't fund the programs they support."
Under the ACA, federal payments to hospitals will be cut starting in 2014 on the expectation that more of their patients will be covered by insurance. That may be the case in states that have opted for the Medicaid expansion program, which extends Medicaid coverage for individuals and families earning up to 138 percent of the federal poverty level, roughly $15,856 for a single adult and $26,951 for a family of three.
Texas is among two dozen Republican-led states that have rejected Medicaid expansion, after the Supreme Court ruled that the Obama administration could not force states to adopt the program.
"By not expanding Medicaid, I estimate that it is costing Parkland about $30 million a year, starting next year," said Shaw, due to lower federal reimbursement and the likelihood the hospital will continue to see patients who don't earn enough to pay for insurance.
A study by the nonpartisan Commonwealth Fund estimates that by 2022, taxpayers and providers in states that opt out of Medicaid expansion will lose out on billions in federal funding.
(Read more: Oklahoma lawsuit to derail Obamacare?)
The researchers calculated the move would cost Texas more than $9.2 billion. Florida, where Dade County has the nation's highest rate of uninsured patients, would see a net loss of $5 billion by not adopting Medicaid expansion.
Obamacare plan limitations
For patients who would otherwise qualify for the Medicaid expansion coverage, the lowest-priced plans on HealthCare.gov could still prove costly, even with federal subsidies that in some cases fully cover the cost of monthly premiums.
Private physicians like Dr. Roger Khetan worry that many of those low-premium plans will leave patients underinsured, because they come with high out-of-pocket costs for things like lab tests and MRI screenings.
"Once you give them their preventive care, if there's an abnormal lab, an abnormal finding, what is the follow up?" Khetan asked. "Is it going to be covered by that insurance company?"
(Read more: Fixed Obamacare site still not secure, says hacker)
At the Mission East Dallas clinic in nearby Mesquite, staffers have been helping their mostly uninsured patients learn how to enroll in Obamacare plans, but they have found that the most affordable plans on the exchange don't include the clinic in their networks.
The clinic is now lobbying the insurers to be included in the plans that its patients are most likely to choose.
"We are trying to get enrolled into those networks, so we'll be able to take care of the patients," said Dr. Chris Berry, a family physician at Mission East Dallas.
Berry admits this is not traditionally the way doctors' offices work.
"This is a unique moment where we haven't had to think that way before," he said.
Obamacare: Not a federal health program?
Parkland Memorial was studying a way to help its patients maintain their Obamacare coverage, by providing premium assistance to those who may have trouble making their insurance payments. It is something the hospital has done in the past with patients covered under COBRA plans.
"When patients come in and their insurance is lapsed, ... if we pay the premium for them then we actually get paid for delivering care, which tends to be more expensive than just paying the premiums.," said Parkland's Shaw. "So we recover costs that way."
They can't pay patient costs for federal health programs like Medicare. But while the Affordable Care Act is considered President Barack Obama's signature initiative, Obamacare plans are not considered a strictly federal health program.
Health and Human Services Secretary Kathleen Sebelius has determined that Obamacare plans sold on the health insurance exchanges should be treated like private plans. As a result, the plans do not fall under government health program anti-kickback statutes, which bar financial incentives to patients.
Yet, last month HHS officials strongly discouraged hospitals from trying to pay their patients' premiums, saying it could create an uneven playing field among providers, warning that the health department would take action against such payments. Parkland has since abandoned its premium-support plan.
Some health policy legal experts say hospitals can legally make a case for allowing the payments, despite the health department's determination.
"The secretary has said they're not subject to the statute. The statute requires a willing and knowing violation, " explained Kevin McAnaney, a health policy attorney who worked in the Office of Counsel to the Inspector General during the Clinton and Bush administrations.
"It's hard to understand how a violation could be knowing and willful if the secretary has told you it doesn't apply," he said.
Ironically, Obamacare gives hospitals in Medicaid expansion states an advantage over facilities in states that have opted out. In those states, a hospital that treats a patient who is uninsured but would otherwise qualify for Medicaid expansion, could sign the patient up for temporary Medicaid coverage and get reimbursed.
"It would be enormously better if we were part of Medicaid expansion," said Mission East's Berry.
Berry expects most states now opting out of expansion will eventually take up the program over the next couple of years, with the federal government committing to pay 100 percent of the cost through 2016. After that, the states will have to pick up 10 percent of the cost.
"It makes perfect sense from almost any way you look at it," he said.
By Ed Kiersch
Just a week ago, skeptics were laughing at Shawn "Jay Z" Carter, wannabe sports agent.
Not any more. The New York media and sports agent rivals this year derisively dubbed Jay Z the "Rookie" after he seduced Yankees second baseman Robinson Cano away from super-agent Scott Boras. Watching him make missteps, while even lesser-known agents were cashing in on $1 billion worth of new contracts this off-season, critics scoffed that Jay Z was playing out of his league.
Then last Thursday, only hours before his nine Grammy nominations were announced, the hip hop power broker (reportedly worth $500 million) found a willing suitor for Cano in the Seattle Mariners—Nintendo owns a 55 percent controlling share of the team—and landed the player $240 million for 10 years. It's the third largest free agent contract in history.
Just a week ago, when it had leaked to the New York media that Cano wanted $310 million for 10 years, rival agents were pointing out the "Rookie's" mistakes to CNBC.
(Read more: The highest paid players in major sports)
"The key is to create mystery, speculation on who's bidding. If you don't create mystery, you lose bidders immediately," said an agent who represents a prominent Dodger player and who asked not to be named.
"The Dodgers said, 'We are not in the bidding.' You must keep things like that as quiet as possible. The best thing is to say as little as possible. No one should know what's going on. A team has to be scared that they're losing a player. ... The first mistake was letting that $310 million figure out there. Being quiet is the best and only strategy in a market that's hotter than ever."
"The perception is that it's all Jay Z's victory," said Florida sports lawyer Darren Heitner, founder of the Sports Agent Blog.
"This deal takes Cano until he's 41 years old, meaning players still have leverage," Heitner said. "I thought 10-year deals were dead. Though there's a $70 million discount off that $310 figure (that Cano wanted), it's a fantastic agreement. Ripped by the media, the deal now lets Jay Z be perceived as the able negotiator."
Jay Z and Boras did not respond to requests for comment.
The Cano deal has its flaws: He had to be moved to Seattle, a full continent away from media-charged New York, where Cano could possibly garner millions in endorsements. Still, Jay Z fulfilled his primary responsibility: He showed Cano the money. It barely matters if the Mariners were only desperate to boost their lackluster brand. The Yankees adamantly refused to agree to 10 years and objected to giving their All-Star, .300-plus hitter more than a seven-year, $175 million pact.
Jay Z certainly faced challenges with Cano. Skeptics charged that his agency, Roc Nation, failed to create enough bidders for the second baseman. Teams were scared away by media reports suggesting the 31-year-old Cano demanded $310 million for 10 years after he was lured away from Boras this year.
Jay Z, who also represents basketball's Kevin Durant and football wide receiver Victor Cruz, brashly congratulated himself earlier this year after he wooed Cano away from Boras, who still holds the records for negotiating the first- and second-most valuable baseball contracts in history, both for Yankee Alex Rodriguez.
(Read more: Holiday gifts that will make a sports lover cheer)
Dissing Boras in the song "Crown," Jay Z says, "Scott Boras, you over baby, Robinson Cano, you coming with me."
Boras countered in The Wall Street Journal, "Anyone who thinks playing the game of baseball is like being an artist knows nothing about the game. … I don't worry about others. … When your agent wears a Yankee hat, how seriously are they going to take you?"
Columnist Mike Lupica, whose New York Daily News prematurely reported that the Seattle deal was dead when Jay Z demanded 10 years, still savaged the "Rookie" outsider after the Mariners contract was done.
"In this case the dumb owner is Nintendo, usually a smart corporation," wrote Lupica. "Maybe if this thing dragged on a few more weeks, Jay Z would have delivered Cano to Japan. Or the moon."
Feeling the Cano deal bolsters the rapper's aura of "invincibility," Zack O'Malley Greenburg, the author of Jay Z bio "Empire State of Mind," told CNBC: "Athletes look up to Jay Z for his business moves. This deal only strengthens his attractiveness to other players, certainly if a guy wants headlines."
It remains unclear how aggressive Jay Z will become in luring other marquee athletes to Roc Nation. He recognizes his brand only suits a select player, and would be diminished if he pursued a plethora of athletes.
But one thing is likely. Lesser sports brokers representing elite, soon-to-be free agents are looking over their shoulders.
By Karma Allen
If you are shipping holiday gifts to loved ones who are miles away, buying a present may be the easy part.
But making sure your holiday packages arrive at their destinations safely before Christmas shouldn't drain your bank account or be a big hassle, if you keep these tips in mind.
1. Pick the right gift: Not only do you want to buy gift that they will like, you need to buy something you can mail easily. Even with the right packing precautions, it's always safer to buy items you know can survive a bumpy trip through the mail. Apparel, shoes and most toys are a safe bet.
Also, remember some states restrict what items you can send in the mail. Pay attention to these rules, especially if you are shipping fruits and veggies. Also, certain batteries, liquids and plants may be restricted depending on the package's destination, so be sure to ask about prohibited items before you ship your gifts.
2. Pay attention to the box: Make sure to use a box that's in good condition. "Use a new, sturdy box that's a few inches larger than your gift on all sides to allow for plenty of cushioning," FedEx spokesperson Bonny Harrison said.
(Read more: What NOT to buy your boss this holiday)
In an attempt to save money, "many inexperienced shippers—people who ship one or two packages a year—often make the mistake of using the wrong size box, or an old box, which can easily result in damaged gifts," said Scott Harkins, senior vice president of global marketing at FedEx.
Using an old box can cause problems down the line. Make sure it's free of torn flaps, holes, corner dents, or water-damage. UPS said a crease can reduce a box's strength by as much as 70 percent.
"The more times a box is used, the more it loses its strength and protective quality," UPS spokesperson Natalie Black said.
Leftover shipping labels also can cause a lot confusion about a package's destination, so if you need to reuse a box be sure to completely remove the old label. Simply placing the new label over the old one will not suffice.
3. Splurge on high-quality cushioning: UPS said it's better to spend a bit more and use higher-performing cushioning materials made of polyethylene or polyurethane, because the most basic polystyrene cushion can endure only one impact.
Using stronger, but thinner cushioning is better because you can use a smaller box and save on shipping costs if the price is based on the package's dimensions and weight.
4. Take the shake test: Be sure to pack it right. Use at least 1 inch of cushioning around the item—top, bottom and all four sides—to fill in any air spaces. There should be very little movement when you shake the box.
Watch the newspaper. It's not a good choice for cushioning, since it may flatten while the box is in transit, but it's great for wrapping fragile items.
"When you've got a super-breakable item to ship, use two boxes," Harrison said. "Then cushion around [the second box] with at least 3 inches of packing peanuts or other cushioning material."
The key point is to keep the gift items as far away from the box's walls as possible.
5. Mind these deadlines: Ship your gifts by the dates below to get them there on, or before Christmas.
6. Don't forget flat-rate boxes: Flat-rate boxes come in a variety of sizes and can be a money-saver when shipping small, but heavy gifts.
(Read more: A peek inside the Black Friday numbers)
FedEx and the U.S. Postal Service both offer this option, which allows you to pack as much as you can into a box and pay one price. Weight doesn't matter.
7. Know when to call for help: If you're shipping an odd-shaped item and you're not sure of how to pack it, you may want to consider talking to a shipping expert. USPS, FedEx and UPS offer packing services for a fee.
The service cost varies and restrictions may apply, but if FedEx or UPS packs and ships your item, you will be automatically protected if the package is lost in transit or damaged.
(Slideshow: Six wearable tech gift ideas)
One thing to watch is that your maximum reimbursement may be limited unless you pay extra to declare the value of your items ahead of time.
8. Consider insurance: There is always a chance that your package might get lost or damaged. Ask your shipper about insurance or a declared-value option.
FedEx does not offer insurance, but you can pay extra to declare a value on your package—up to $1,000—before you ship it. With UPS, liability for loss or damaged is limited to $100 unless a higher value is declared and paid for. UPS' declared value limit is $50,000.
Ask plenty of questions before declaring the value of your package. If your package ends up being damaged in transit, but the shipping company determines that you packed it improperly, or did not follow proper packing procedures, they may have grounds to deny your claim.
9. Look for deals: Bargain-hunting shouldn't end when you buy your gift. If you have time try to shop around, you could find a cheaper shipping rate.
If you're near one of the 800 or so PostNet locations you can stop in and have them compare shipping prices from USPS, FedEx, UPS and DHL free of charge. Otherwise, USPS, FedEx and UPS have tools on their websites to estimate shipping costs.
10. Avoid missed packages: If package recipients miss delivery more than once, they may be forced to pick up the package at a shipping hub. To avoid the potential inconvenience, consider sending the gift to their place of employment. This also helps avoid unwanted snooping from children, or even neighbors.
(Read more: Wal-Mart's hottest Black Friday item: A towel)
Also, keep your tracking numbers handy. This makes it easier to pinpoint the package's destination and lets its recipients know when to look out for it.
By Diana Olick
While 203,000 jobs added to the U.S. economy in November is welcome news, it will push interest rates higher—specifically, residential mortgage rates. Those rising rates, along with tighter underwriting and fast-rising home prices, are pushing borrowers away from larger lenders.
"If you're buying a house, our advice is to find a local lender that's reputable," said Eric Egenhoefer, president of Waterstone Mortgage, a subsidiary of Milwaukee-based WaterStone Bank, an independent with reported assets of more than $1.6 billion. "An independent company in general is more nimble, can get to a closing faster and provides better service."
An increasing number of borrowers are doing precisely that.
Smaller bank and nonbank lenders' share of the mortgage market rose to 60 percent in the third quarter, versus 39 percent in 2009, according to Inside Mortgage Finance. Those outside of the top 25 largest lenders rose to 35 percent of the market from 13 percent in 2009.
What's more, the big banks are pulling out in a big way—just five of the top 20 single-family mortgage originators in 2006 remain active in the market, according to a recent Fannie Mae report.
"If Wells Fargo wanted to gain market share, they would," said Brian Simon, chief operating officer at New Penn Financial, a nonbank lender owned by specialty finance firm Shellpoint Partners.
Wells Fargo, the largest lender in the U.S. with a 22 percent market share, has changed its website to make the experience for consumers more like one they would have with a smaller bank.
"The lending space for Wells Fargo mortgage feels much more like a local community bank than a giant bank with a call center," said Franklin Codel, head of Wells' mortgage production, in a September interview. "Most consumers are looking for a personal relationship with someone who can help them through the process and not just looking for the lowest rate if it doesn't come with a reasonable amount of service."
But with refinance volume down more than 60 percent from a year ago, the company has laid off hundreds of workers, as have other large lenders. In addition, historically low rates and higher fees charged by Fannie Mae and Freddie Mac are squeezing lending margins, so big banks are focusing on more lucrative businesses.
"Even though the big guys came back, they never came back the way they were in the Countrywide days," said Guy Cecala, CEO and publisher of Inside Mortgage Finance. "They never got aggressive on the prices, so it was very easy for Acme community bank to compete."
(Read more: Mortgage rates on the rise again)
Small lenders are not only competing but becoming more aggressive.
"There are a lot of opportunities in play," said Simon at New Penn, speaking this week from the Mortgage Bankers Association's Independent Mortgage Bankers Conference in Miami. He said he has been talking to smaller colleagues with the aim of making acquisitions.
"There is a lot of angst in general," he said. "When there's angst, there's opportunity for guys like me to make a pitch for why New Penn is a great place for people or groups to work."
But smaller and community lenders are not necessarily going to offer the absolutely lowest rates, especially for savvy online rate seekers—most of whom are looking to refinance a home, which generally requires less hand-holding than a purchase.
(Read more: Why mortgage rates are taking a holiday)
Brian Del Terzo shopped online when he was buying his first home outside Minneapolis but ended up on a call list getting dozens of offers and rates. Instead, he went with a local lender, Waterstone.
"It seemed easier because I can get in touch with the loan officer more easily," he said. "There is not as much red tape, especially if something unusual pops up."
Though Del Terzo acknowledged that he may not be getting the lowest rate possible, he said he would happily trade that for better service.
"At the end of the day if I'm getting the home for the price I want, and the mortgage process is smooth, and I'm getting a rate that's fair, I'm completely satisfied," he said.
Small-to-midsize local banks—many of them publicly traded companies—were hit hard during the credit crash, with hundreds going out of business. But recent increases in their mortgage business are helping to boost balance sheets. Nonbank lenders, which often compete online, are also seeing big gains, and more of them are going public to raise more cash.
While new mortgage regulations going into effect next year may throw another wrench into the already tight lending landscape, smaller lenders seem poised to profit. Fewer loan products may be available today than during the housing boom, but borrowers have a growing number of options for getting a loan—and new competition among more lenders can't hurt.
By Rick Lyman
Before Detroit filed for bankruptcy, there was Stockton.
Battered by a collapse in real estate prices, a spike in pension and retiree health care costs, and unmanageable debt, this struggling city in the Central Valley has labored for months to find a way out of Chapter 9. Now having renegotiated its debt with most creditors, cobbled together layoffs and service cuts and raised the sales tax to 9 percent from 8.25 percent, Stockton is nearly ready to leave court protection.
But what Stockton, along with pretty much every other city in California that has gone into bankruptcy in recent years, has not done is address the skyrocketing public pensions that are at the heart of many of these cases.
"No city wants to take on the state pension system by itself," said Stockton's new mayor, Anthony Silva, referring to the California Public Employees' Retirement System, or Calpers. "Every city thinks some other city will take care of it."
While a federal bankruptcy judge ruled this week that Detroit could reduce public pensions to help shed its debts, Stockton has become an experiment of whether a municipality can successfully come out of bankruptcy and stabilize its finances without touching pensions. It is an effort that has come at great cost to city services and one that some critics say will simply not work once the city starts trying to restore services and hire 120 police officers it promised to get the sales-tax increase passed.
"They wanted to get out of bankruptcy in the worst possible way, and that's just what they did," said Dean Andal of the San Joaquin County Taxpayers Association, which fought the sales-tax increase. "If they go ahead and hire those new police officers, the city will be back in insolvency in four years."
Stockton declared fiscal emergencies in 2010 and 2011, giving it the power to renege on annual pay increases for city workers. City services were slashed. Hundreds of municipal workers were laid off. And many retirees who had been promised health coverage for life learned that they would have to begin paying for it.
"That was the hardest part," Councilman Elbert Holman said, "looking people in the eye and telling them sorry, you are losing your health care, but it's absolutely necessary."
By the time the judge found Stockton eligible for Chapter 9 bankruptcy on April 1, the city had about $147 million in unfunded pension obligations and about $250 million in debt from various bond issues.
The years of fiscal emergency and bankruptcy have left their mark, including a skyrocketing crime rate, which city officials and many residents attribute to staffing and service cuts in the Police Department.
"I suddenly realized a few years ago that, just in my tiny, two-block neighborhood, there had been 11 residential burglaries in the previous nine months," said Marci Walker, an emergency room nurse.
Cities go bankrupt for many reasons: a collapse in real estate prices, a spike in pension and retiree health care costs, a burden of debt from expensive city projects. Stockton has experienced all three.
When real estate prices shot up in Silicon Valley in the last decade, many commuters decided that Stockton's cheaper housing was worth the long commute to the Bay Area. That drove up local housing prices, so when the bubble burst it had a bigger impact, giving Stockton one of the nation's highest foreclosure rates.
City leaders had also gone on a construction spree during the flush years, building a new sports arena, a minor-league baseball stadium and a marina. Citizens still bitterly mention the 2006 concert that opened the arena, where Neil Diamond was paid $1 million to perform.
And through it all, the pension costs for city workers — particularly for police officers and firefighters, who can retire early and draw on those pensions for decades — kept going up.
(Slideshow: Budget tricks of America's big cities)
No part of the city has been left unscathed. Ms. Walker's comfortable neighborhood near the University of the Pacific campus was hit with rising crime almost immediately after the police layoffs. "When the economy got bad and we lost police officers, it all started," she said.
So she started the Regent Street Neighborhood Watch, the first of more than 100 such organizations to sprout up in the city in the last few years.
"We don't confront anybody, we just let them know that we know they're there," Ms. Walker said. She added, "Criminals do not like eyeballs on them."
While the rising crime rate had the biggest effect on the city, other service cuts were also felt, including deteriorating streets and closed libraries and community centers. The other consequences of the downturn — shuttered storefronts, crumbling infrastructure, empty downtown sidewalks — only added to the sense of decline.
"There was just this perception that the city was not safe," Police Chief Eric Jones said. "Downtown was impacted. Many people were reluctant to go down there."
The crime problem is a big reason Stockton chose to keep paying into the Calpers system even as it pared other costs, including its payments to bondholders. Officials say that if the city cuts the rate at which its workers build up their pensions, workers will leave — especially police officers who were recruited with the promise of large, early pensions.
Last year, Stockton asked Calpers for a "hardship exemption," allowing it to slow its contributions. The huge state pension system said no, fearing that if Stockton fell behind, it might never catch up.
Now, even before the ink is dry on Stockton's proposed blueprint for getting out of bankruptcy, skeptics are worried that the plan is not comprehensive enough to solve its problems and that city leaders will not fulfill their promise to use some of that money to hire police officers.
City officials insist their plan will work. "We got the tax, and thank God it passed," Councilman Holman said. "I have confidence that the numbers line up."
Nor does the Detroit ruling this week make Stockton want to revisit pension reductions. Connie Cochran, a city spokeswoman, said that city workers had already seen their pay and retiree health benefits cut. In addition, she said, Calpers told the city that its only option was to pay a $970 million termination fee to leave the system, and Stockton could not afford it.
Mayor Silva said the city's plan would help it out of bankruptcy sometime late next spring, if all goes well, after the judge hearing the case has time to rule on its fairness and viability and negotiations can be completed with one final bondholding creditor.
"We will lose the stigma of bankruptcy, and it will buy us time," he said.
One of three new members elected to the City Council in November, Michael Tubbs, said he was convinced that the bankruptcy plan would work, providing $28 million to $30 million in revenue each year for the next decade and allowing the city to pay down its debt while still hiring police officers.
"I am incredibly optimistic," said Mr. Tubbs, 23, who grew up in Stockton.
Chief Jones said he was counting on the 120 new officers and planned to hire 40 a year for the next three years. In 2008, Stockton had 441 police officers. By this year, the force had fallen to 350, the second-lowest per capita staffing level in the country. The result, he said, is that all violent crimes rose in the city, which had 58 homicides in 2011 and 71 in 2012, both records.
Even before the sales-tax increase passed, Chief Jones said he had decided to reinstate some of the community outreach programs that were curtailed during the budget crunch, even if that meant slower response times for nonviolent crimes.
"We had to tell the community to be patient, we're going to focus on violent crime," he said.
The impact was immediate. As of mid-November, there had been only 28 homicides this year.
Still, bondholders complain that Calpers will get 100 cents on the dollar for its city debt, while they must make do with much less. Following months of negotiations, most of Stockton's bondholders said they would not try to block the city's plan, but Franklin Templeton Investments was girding for a fight, possibly strengthened by the Detroit ruling that federal bankruptcy law trumps state pension guarantees.
Two Franklin funds hold about $35 million of bonds that Stockton issued in 2009 and are now in default. Stockton is proposing to pay the two Franklin funds just $95,000 to discharge all the remaining debt on those bonds, amounting to less than a penny on the dollar.
Douglass Wilhoit Jr., chief executive of the Stockton Chamber of Commerce, agreed that "the elephant in the room is the pension stuff." But he said that he was confident this plan would ease the city out of bankruptcy and start a process that would inevitably come to include some sort of pension changes. "Over all, honestly, I think the bankruptcy process has been a positive experience for Stockton," he said. "We are going to come out of it stronger and better."
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