Stock market's bull run creates many skeptics

By Reuters

When it comes to the stock market, either you're a believer - or you're not. Right now, the market has its fair share of both.
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The S&P 500 is up 12 percent so for this year. Through July, it had its best first seven months since 2003 and its second- best seven-month run since 1998. That sounds like a bull market.
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But there is clearly a disconnect between the way markets have performed and the high level of caution among many investors. That is mainly due to the perception that things have the potential to go horribly wrong - incredibly fast.
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The danger for investors is that they focus too much on the potential risks, such as the breakup of the euro zone, and end up getting left on the sidelines when markets move higher as they have done since the start of June, said Doug Cote, chief market strategist at ING Investment Management, in New York.
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"We are in a bull market," he said. "The mistake investors have made is too much attention on global risk, and not enough attention on fundamentals that are very resilient."
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Cote believes that record high aggregate earnings for S&P 500 companies this year and signs of improvement in the labor market mean investors should be taking on more risk rather than fretting about the dangers stemming from Europe's debt crisis.

But for the more equivocal souls, the market is presenting a difficult dilemma, and strong convictions either way are elusive.
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David Joy, chief market strategist at Ameriprise Financial in Boston, says it's an uncomfortable time for many investors, who are caught between missing a rally and getting blindsided by some nasty event that sends markets into a tailspin.
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"It's a dilemma that is uncomfortable to watch and to function in," said Joy, who helps oversee $571 billion in assets.
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Joy says the rally is being driven by the hope of more "easy money" policies from central banks in the United States, Europe and China.
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He has had doubts about the strength of the economy for months and has been worried by the recent spate of cautious outlooks from corporate managers. But he also knows what investors ignore at their peril: "You can't fight the Fed."
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"I don't like the fundamentals, I don't like what I'm seeing economically, I don't like what I'm seeing in terms of earnings forecasts going forward, but I recognize that central banks can trump all of those things," Joy said. "You may be right on the fundamentals, but wrong on the price action of the market."
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Both the European Central Bank and the Federal Reserve are due to meet in the first half of September. Investors are hoping the ECB will buy bonds of troubled European nations in a bid to ease the debt crisis.

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But Joy is cautious about what many are describing as early signs of stabilization in the U.S. economy after a soft patch earlier in the spring and summer.
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The July payrolls report, which showed U.S. employers had done the most hiring in five months, is not enough to convince investors like Joy who want to see more confirmation before unwinding their defensive stance and getting more aggressive.
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That cautious view that led him to cut his bond-equity allocation and lean more toward defensive areas of the stock market, such as consumer staples, healthcare and utilities, helps explain an oddity of the market's rally since June.
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Much of the money heading into U.S. equity markets over the last two months has been heading into defensive sectors, some of it in a flight to safety from overseas markets, especially Europe.
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Of two classically defensive sectors - utilities and telecoms - the utilities sector is trading at a 24 percent premium to the S&P 500, compared with an average 5 percent discount over the last 10 years, while the telecom sector is trading at a 50 percent premium compared with the usual 5 percent, according to data cited by UBS Wealth Management.?

For Jeremy Zirin, UBS Wealth Management's New York-based head of U.S. equities and chief U.S. equity strategist, that is both a red flag highlighting the market's misgivings and a potential opportunity, should that differential start to narrow.
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"We have a bit of a pro-cyclical tilt in our sector strategy within U.S. equity markets, largely because the market seems to be positioned so defensively," Zirin said. "We have seen this flood of flows going into defensive safe havens with high yield, and we just think they are very highly priced.

CNBC's Maria Bartiromo discusses the day's top business and financial stories.

"Cyclical sectors seem to be pricing in something of a more dire economic scenario than we envision," he said. "Cyclical sectors are trading at a nearly two-decade valuation low relative to defensive sectors."
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Of course, the market could also be setting itself up for a fall. Betting on what central bankers will and won't do is a risky game.
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"Investors who have been hopeful that policymakers will take stronger action through this entire sovereign debt crisis have been consistently disappointed," Zirin said. "The notion that someone with very deep pockets will come along and pay the bills without conditionality is likely to be a foolish one."
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That is why many are still erring on the side of caution.
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Harris Private Bank in Chicago has been using the U.S. stock market's rally to cut its remaining exposure to stock markets in developed European economies.
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They have repatriated the money to the United States where they have invested in U.S. equity positions, cautiously hedged with options. They now have higher-than-normal exposure to both U.S. and emerging market equities.
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"We are certainly well overexposed to dollar assets," said Harris Private Bank's chief investment officer Jack Ablin. "We are sanguine on equities in general, but still very concerned about the outcomes in Europe."

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Source: http://marketday.nbcnews.com/_news/2012/08/12/13243588-stock-markets-bull-run-creates-many-skeptics?lite

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Zakaria suspended for copying other writer's work

NEW YORK (AP) ? Time editor-at-large and CNN host Fareed Zakaria has been suspended by both the magazine and the network for lifting several paragraphs by another writer for his use in a recent Time column.

Zakaria apologized Friday, declaring in a statement he made "a terrible mistake," adding, "It is a serious lapse and one that is entirely my fault."

In a separate statement, Time spokesman Ali Zelenko said the magazine accepts Zakaria's apology, but would suspend his column for one month, "pending further review."

"What he did violates our own standards for our columnists, which is that their work must not only be factual but original; their views must not only be their own but their words as well," Zelenko said.

Shortly afterward, CNN said it had removed from the network's website a blog post that "included similar unattributed excerpts," and taken Zakaria off the air indefinitely.

"CNN has suspended Fareed Zakaria while this matter is under review," said CNN spokeswoman Jennifer Dargan. She said Zakaria's Sunday foreign-affairs program, "GPS," will have its time slots filled in the interim by "Your Money with Ali Veshi" and "The Situation Room with Wolf Blitzer."

Earlier Friday, media reporters had called attention to similarities between passages in Zakaria's column about gun control that appeared in Time's Aug. 20 issue, and paragraphs from an article on the same subject by Harvard University history professor Jill Lepore published in April in The New Yorker magazine.

In Zakaria's column, titled "The Case for Gun Control," he began one paragraph with the sentences: "Adam Winkler, a professor of constitutional law at UCLA, documents the actual history in 'Gunfight: The Battle Over the Right to Bear Arms in America.' Guns were regulated in the U.S. from the earliest years of the Republic."

A corresponding passage in Lepore's New Yorker essay, titled "Battleground America," begins: "As Adam Winkler, a constitutional-law scholar at U.C.L.A., demonstrates in a remarkably nuanced new book, 'Gunfight: The Battle Over the Right to Bear Arms in America,' firearms have been regulated in the United States from the start."

In Zakaria's statement, he apologized "unreservedly" to Lepore, as well as to his editors and readers.

Source: http://news.yahoo.com/zakaria-suspended-copying-other-writers-205723178.html

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Behind Auriemma, women's bball team plays for gold

USA coach Geno Auriemma signals to players during a semifinal women's basketball game against Australia at the 2012 Summer Olympics, Thursday, Aug. 9, 2012, in London. (AP Photo/Eric Gay)

USA coach Geno Auriemma signals to players during a semifinal women's basketball game against Australia at the 2012 Summer Olympics, Thursday, Aug. 9, 2012, in London. (AP Photo/Eric Gay)

USA's Diana Taurasi smiles as she runs up court during a semifinal women's basketball game against Australia at the 2012 Summer Olympics, Thursday, Aug. 9, 2012, in London. (AP Photo/Eric Gay)

LONDON (AP) ? Geno Auriemma never thought he'd have a chance to coach the U.S. women's Olympic basketball team.

He had heard the talk: He was too abrasive, too politically incorrect.

None of that mattered to USA Basketball and when Auriemma was offered the job he 2009, he jumped at it. Now he has the U.S. women's basketball team one victory away from a fifth straight gold medal.

The Americans will play France on Saturday night in the Olympic final.

"Being able to coach this team, there are no other opportunities you could possibly hope for," Auriemma said. "For me, winning the gold medal is something that I probably won't be able to talk about or fully express until it actually happens, cause I'm sure you can't prepare for it, how you're going to feel or what it means to you personally."

For all his perceived faults, Auriemma has proven to be the right choice.

He is used to the pressure of being expected to win and knowing that anything less than a title is considered a failure. He has guided UConn to seven national championships, including four perfect seasons and an NCAA record 90 straight victories.

The U.S. team, which has won an unprecedented four straight gold medals and hasn't lost a game in 16 years, hasn't missed a beat under Auriemma.

It helps that half the players on the Olympic team are UConn alums, used to his system and his personality.

"Coach really hasn't changed much," said Diana Taurasi, who helped Auriemma win three NCAA titles in college. "He's the same guy, just gives us a little more freedom now that we're older and pros. He listens to us more. Everyone knows what coach has done for women's basketball. He brought a different point of view to things.

"It's not all flowery, flowery women's basketball. It's not just skirts and cupcakes. Sometimes there's some steak and cussing. That's life, it's not all that pretty."

Taurasi fully supports Auriemma and said if the Americans win the gold medal the first thing she'll do is "put it around his neck. That's how much he means to me."

Before that can happen, the Americans have to deal with upstart France, which is playing well in only its second Olympic appearance.

"They're a team nobody really talked about heading into the tournament, but personally I knew that was going to be a team we might have to face," said U.S. point guard Sue Bird.

France is undefeated in the tournament like the U.S. although the Americans have beaten teams by 34 points a game, France just eight.

Nonetheless, Bird knows a win won't be automatic.

"I've played with all their girls and know how talented they are," she said.

Both teams are assured of walking away with at least the silver medal, but anything less than gold for the Americans would be considered a monumental failure.

The Americans have cruised through the Olympics during their remarkable run. Only one team has come within single digits of them since the streak started in 1996. They've won by nearly 30 points a game. The Americans have only lost once in major international competitions since 1996 with the lone blemish coming against Russia in the semifinals of the 2006 world championship.

The U.S. faced its first challenge of the London Games when Australia took a four-point halftime lead. It was the first time in 12 years that the Americans had been trailing at the half. There was no panic or worry. They just stepped up their defense and vanquished the Aussies, winning by 13 points.

The players are very aware of the legacy.

"This is USA Basketball's streak," Candace Parker said. "We're just trying not to be the people that end it. I want a second gold medal. There are people that want a third. And some are looking for their first. So all of us are fighting for something in our own way."

First order of business is winning the gold ? which would extend the streak.

"We've been taking it one game at a time all along, so this is just the next one," Bird said. "Obviously there is a lot more at stake, but we really aren't thinking that way."

France already has made great strides ? clinching its first medal ever in women's basketball.

The victory over Russia in the semifinals set off a wild celebration for the unbeaten French, who have been on the rise in women's basketball over the past few years. They won the European Championship in 2009 and qualified for the Olympics for the first time since the 2000 Sydney Games where they finished fifth. In this tournament France has already defeated Australia in an overtime thriller and now topped Russia twice.

A win over the Americans would be incredible.

"Nobody talks about us. We don't exist in the Olympic Village," said French coach Pierre Vincent. "The only way to exist is to win. I told the girls in the locker room, if we win, we will exist."

The French have been led by flashy point guard Celine Dumerc. She has been the catalyst for this remarkable run. Her 3-pointer with 0.2 seconds remaining in overtime helped beat Britain in the preliminary round. She also hit a big 3-pointer against Australia and two clinching free throws in the team's four-point win over Canada.

"She's having a tournament for the ages," U.S. coach Geno Auriemma said of Dumerc. "She's definitely been the MVP."

Bird wasn't surprised at France's incredible run to the championship game. After all, the French had been her sleeper team all along.

It will be the first time the two teams have played in the Olympics. France isn't scared of the world's top team.

"They are a very good basketball nation. I play against them the whole year round," French forward Sandrine Gruda said. "It's going to be good. We're not going to give up because it USA. We're competitors."

___

Follow Doug Feinberg on Twitter at http://www.twitter.com/dougfeinberg

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2012-08-11-OLY-BKW-Women's-Final/id-7b064ec325c14fb2ad0c8539c144f000

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Study of fruit fly chromosomes improves understanding of evolution and fertility

ScienceDaily (Aug. 10, 2012) ? The propagation of every animal on the planet is the result of sexual activity between males and females of a given species. But how did things get this way? Why two sexes instead of one? Why are sperm necessary for reproduction and how did they evolve?

These as-yet-unresolved issues fascinate Timothy Karr, a developmental geneticist and evolutionary biologist at Arizona State University's Biodesign Institute. To probe them, he uses a common fruit fly, Drosophila melanogaster -- an organism that has provided science with an enormous treasure-trove of genetic information.

"My research focuses on the evolution of sex and in gamete function," Karr says. "I focus primarily on the sperm side of the sexual equation. I'm interested in how they originated and how they are maintained in populations."

Karr's current study, in collaboration with researchers at the University of Chicago, recently appeared in the journal BMC Biology. The study reexamines an earlier paper that analyzed the sex chromosomes of fruit flies during spermatogenesis -- the process that produces mature sperm from germ cells.

While the previous paper, by Lyudmila M Mikhaylova and Dmitry I Nurminsky, argued against the silencing of sex-linked genes on the X chromosome in Drosophila during meiosis -- a process referred to as Meiotic Sex Chromosome Inactivation (MSCI) -- the reanalysis presented by Karr suggests MSCI is indeed occurring.

The work sheds new light on the evolution of sperm structure and function, through an analysis of Drosophila genes and gene products. As Karr explains, the research has important implications for humans as well: "The more direct, biomedical aspect is that when we learn about the function of a gene that encodes a protein in Drosophila sperm, we can immediately see if there's a relationship between these genes and their functions and known problems with fertility in humans."

Super Fly

Perhaps no other model organism has yielded more insights into human genetics than the tiny fruit fly Drosophila melanogaster. In 1906, Thomas Hunt Morgan of Columbia University began work on D. melanogaster, (one of over 1500 species contained in the Drosophila genus) capitalizing on the species' ease of breeding, rapid generation time and ability to readily produce genetic mutants for study. Morgan's efforts with Drosophila led to the identification of chromosomes as the vector of inheritance for genes, and earned him the 1933 Nobel Prize in Medicine.

Drosophila are yellow-brown in color, have reddish eyes and transverse black rings across their abdomen. Females are about 2.5 millimeters long, while males are slightly smaller and may be easily identified by their darker color.

Most importantly, the similarity in the genetic systems of fruit flies and other eukaryotic organisms including humans makes these model organisms extremely useful analogues for the study of common genetic processes including transcription and translation.

Roughly 75 percent of known human disease genes have recognizable correlates in the fruit fly genome and 50 percent of fly protein sequences have mammalian homologs. (The complete genome of D. melanogaster was completed in 2000.)

Chromosomes: genetic storehouses

Humans have 23 pairs of chromosomes, or 46 chromosomes in all. Of these, 44 are known as autosomes and consist of matched pairs of chromosomes, known as homologous chromosomes. Each homologous chromosome contains the same set of genes in the same locations along the chromosome, though they may appear in differing alleles, which can affect the passing of genetic traits.

The current study however, focuses not on the autosomes but on the remaining pair of chromosomes, known as sex chromosomes. Females contain two X chromosomes, which are homologous, as in the case of the autosomes. By contrast, males are identified as having one X chromosome and one (much smaller) Y chromosome.

While drosophila only have a total of 4 chromosomes, they too display sexual dimorphism, with females carrying the double X chromosomes and males carrying XY. The two X chromosomes in female fruit flies, as in mammals, make them a homozygous sex as compared with the XY condition in males, known as heterozygous.

"There are certain aspects to the composition of these sex chromosomes that have intrigued evolutionary biologists for a long time," Karr notes. One such issue involves an apparent reduction in the number or the level of expression of sex-linked genes on the X chromosome during spermatogenesis. It is believed that this reduction or silencing of genes on the X chromosome may have profound implications for the evolution of sex chromosomes.

During meiotic development of a sperm cell, nature attempts to compensate for the fact that females have two X chromosomes and therefore enjoy a numbers advantage in terms of genes, compared with males. To overcome the bias for female X-linked genes, the X chromosome undergoes inactivation during meiotic sexual differentiation of male gametes, resulting in an underrepresentation of sex-specific genes on the X chromosome. Some of these genes, which may be beneficial to males, are moved from the X chromosome, to the autosomes, where they may be expressed.

The relocation of male-biased genes to the autosomes may be due to a selective advantage favoring genes that move off the X chromosome and therefore avoid X-inactivation during meiosis. Such theories remain controversial however, as statistical analyses are used to evaluate gene frequencies and expression levels, making the proper categorization of genes particularly challenging. "The data we create and generate to support our ideas and hypotheses are messy, there's noise in them," Karr says. "Such noise is inherent in the history of evolution."

In addition to the steady stream of insights into chromosome evolution, Drosophila are being used as a genetic model for a variety of human diseases including Alzheimer's, neurodegenerative disorders, Parkinson's, Huntington's, as well as extending knowledge of the underlying mechanisms involved in aging, oxidative stress, immunity, diabetes, and cancer.

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Story Source:

The above story is reprinted from materials provided by Arizona State University. The original article was written by Richard Harth.

Note: Materials may be edited for content and length. For further information, please contact the source cited above.

---

Journal Reference:

1. Maria D Vibranovski, Yong E Zhang, Claus Kemkemer, Hedibert F Lopes, Timothy L Karr, Manyuan Long. Re-analysis of the larval testis data on meiotic sex chromosome inactivation revealed evidence for tissue-specific gene expression related to the drosophila X chromosome. BMC Biology, 2012; 10 (1): 49 DOI: 10.1186/1741-7007-10-49

Note: If no author is given, the source is cited instead.

Disclaimer: This article is not intended to provide medical advice, diagnosis or treatment. Views expressed here do not necessarily reflect those of ScienceDaily or its staff.

Source: http://feeds.sciencedaily.com/~r/sciencedaily/most_popular/~3/BXSAUyGZoLI/120810144715.htm

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(LGC) Approval of Contracts, Leases, and Other (Non-Debt) Financing

Which of the following proposed transactions requires that the unit first seek approval from the State?s Local Government Commission?

1. The Town of Blowing Rocks borrows $1 million from a local credit union to make repairs to several of its administrative buildings that were damaged in a recent storm. The town grants a security interest in the buildings to the credit union and agrees to repay the loan, with interest, over 59 months.

2. A developer borrows funds from a bank to construct a large office building in Trump Village?s downtown. The village enters into a 20-year lease with the developer to use a large portion of the building to house its police department. The lease payments roughly correlate to the debt service paid by the developer on the borrowed funds. Trump Village is in no way obligated to guarantee or repay the developer?s loan. The lease does not include an option to purchase or renew at the end of the lease term. The estimated total payments over the term of the lease are $4.9 million.

3. The City of Broke Springs owns and operates a water system. The city enters into an interlocal agreement with Flush County (the county in which the city is located), whereby the county agrees to loan the city $14.5 million to fund an expansion of the city?s water lines into several unincorporated areas in the county. The city grants the county a security interest in the water lines and agrees to repay the loan, with interest, over a period of 15 years.

4. Shadow City?s governing board establishes a non-profit (501(c)(3)) organization in order to qualify for certain private grants that the city is not eligible to receive. The city?s governing board appoints the non-profit?s board and approves the non-profit?s budget each year. The non-profit uses the grant proceeds to jointly run a recreation program with the city targeted to at-risk youths in the city. The non-profit leverages a private building that was donated to it by a wealthy citizen by pledging the building as security for a $500,000 loan from a local bank to fund an outdoor adventure course, which will serve as the core infrastructure for the new recreation programs. The loan will be repaid by the non-profit over a 10-year period, with interest. The city?s governing board approves the loan as part of its budget approval authority over the non-profit, but the city is in no way obligated to guarantee or repay the loan. The non-profit will donate the adventure course to the city as soon as the loan is repaid.

The answer is that all of the proposed transactions are subject to Local Government Commission approval. Established in 1931, the Local Government Commission or LGC is a nine-member body which provides assistance to local governments and public authorities in North Carolina. See G.S. 159-3. The LGC is responsible for monitoring and ensuring the fiscal health of local entities, and it approves (and sells) most local government debt.

The LGC?s authority extends beyond approving debt issuances, though. The LGC also must approve several other types of contracts involving capital assets. The following? summarizes the eight categories of transactions that (at least may) require LGC approval.

?Group 1: LGC Approval Always Required

1. Unit issues General Obligation Bonds

2. Unit issues Revenue Bonds

3. Unit issues Special Obligation Bonds

4. Unit issues Project Developmetn Financing Bonds

Group 2: LGC Approval Sometimes Required

5. Unit enters into Installment Finance Agreement(s) (including issuing certificates of participation (COPs) or limited obligation bonds (LOBs))

6. Unit enters into Contract(s), Agreement(s), or MOU(s) involving the lease, acquisition, or construction of a capital asset

7. Another entity borrows money or enters into similar financing arrangement on behalf of the unit or on behalf of a public body, agency, or similar entity created by the unit

8. Unit enters into financing arrangement that is ?similar? to borrowing money

The transactions listed in the first?group always must be approved by the LGC, whereas those listed in the second?group must be approved by the LGC only if certain additional criteria are satisfied.

It is crucial that a unit seek and obtain LGC approval of a transaction if such approval is statutorily required because otherwise the entire transaction is void. Thus, as a threshold issue, a unit should determine whether a proposed transaction fits into one of these eight categories and, if so, whether it is listed in the first?group or the second group. If the transaction falls in the second group, the unit must then determine whether or not the additional criteria are satisfied. Click on these links for a series of flowcharts that navigate through the various additional criteria and exemptions for each of the eight categories:?Master Flowchart;?Flowchart A; Flowchart B; Flowchart C; Flowchart D.

The remainder of this post fleshes out the requirements and exemptions for the transactions in the second column.

5.? Installment Finance Agreements

An installment finance agreement is a type of debt financing whereby a local unit finances or refinances the purchase, construction, or repair of a capital asset. The unit takes title to the capital asset and grants a security interest to the lender in all or a portion of the capital asset until the full amount due under the contract is paid. The authority for most installment finance agreements is G.S. 160A-20. This statute provides the legal authority both for simple installment financing contracts and for more complicated financing arrangements, such as when a unit issues certificates of participation (COPs) or limited obligation bonds (LOBs). (For more information on installment financing agreements, click here.)

The statute requires that installment financing agreements, COPs, and LOBs be approved by the LGC only if the transactions meet certain criteria set forth in G.S. 160A-20(e) and G.S. 159-148(a)(1), (a)(2), and (a)(3), and only if the transactions are not exempted by G.S. 159-148(b)(1), (b)(2), or (b)(3).

Flowchart A?provides an easy reference guide to the criteria and exemptions. Be sure to ask and answer the questions in the order in which they are presented in the flowchart.

Proposed transactions (1.) and (3.) above are examples of installment financing contracts. As you can verify by working your way through the flowchart, both transactions satisfy the additional criteria and are not exempted from LGC approval. Note particularly that, as illustrated by (3.), there is no exemption for transactions between local government entities. As discussed in a previous post, local governments are sometimes authorized to loan and borrow money from each other through interlocal agreements. Such agreements must follow all the same statutory provisions as if the funds were being borrowed from the private sector.

6.? Contract(s), Agreement(s), or Memorandum of Understanding(s) Involving the Lease, Acquisition, or Construction of a Capital Asset

This category of transactions is the most overlooked by local governments. Anytime a unit enters into a lease of a capital asset (such as leasing equipment or leasing space in a building) or any other contract or agreement involving the acquisition or construction of a capital asset, it must first determine if LGC approval is required pursuant to G.S. 159-148. Specifically, the transaction must meet all the criteria set forth in G.S. 159-148(a)(1), (a)(2), (a)(3), and (a)(4), and the transaction must not be exempted by the provisions in G.S. 159-148(b)(1), (b)(2), or (b)(3).

Flowchart B?provides an easy reference guide to the criteria and exemptions. Be sure to ask and answer the questions in the order in which they are presented in the flowchart.

Questions often arise about how to interpret G.S. 159-148(a)(4) (the fourth criterion in the flowchart). It requires that the lease, contract, agreement, or MOU ?obligate[] the unit, expressly or by implication, to exercise its power to levy taxes either to make payments falling due under the contract, or to pay any judgment entered against the unit as a result of the unit?s breach of the contract.? This provision should be read in conjunction with G.S. 159-13, which requires a local government to appropriate monies each year to pay obligations arising under continuing contracts unless the governing board expressly reserves the right not to make the appropriations. The criterion will be satisfied unless (1) the unit?s governing board reserves the right not to make any payments under the lease, contract, agreement, or MOU and the unit has no financial liability for breach; or (2) the unit?s financial liability under the contract and for breach is limited to specific existing cash reserves or to specific non-tax revenue sources.

Proposed transaction (2.) is an example of a lease involving a capital asset that satisfies the criteria for LGC approval under G.S. 159-148.

7.? Another Entity Borrows Money or Enters into Similar Financing Arrangement on behalf of the Unit or on behalf of a Public Body, Agency, or Similar Entity Created by the Unit

In 1998 the General Assembly made an additional category of transactions subject to LGC approval. It enacted G.S. 159-153 which, among other things, requires LGC approval of certain transactions whereby a local government entity approves or otherwise participates in the incurrence of indebtedness (or a similar financing arrangement) by another entity on the local government entity?s behalf.

A primary purpose of the statute was to require LGC approval of what are commonly referred to as 63-20 financings. Under this form of financing (which gets its name from IRS Revenue Ruling 63-20), a nonprofit corporation borrows money to construct a facility. If the corporation agrees to convey the facility, at no cost, to a government once the debt is repaid, and if that government formally approves the financing, then the interest on the debt may be exempt from federal income tax. Under the Internal Revenue Code, the debt is considered to have been incurred on behalf of the local government.

Even if the transaction does not constitute a 63-20 financing, if another entity borrows funds on behalf of a local government or on behalf of a public entity created by a local government and the local government approves or otherwise participates in the borrowing, the transaction may need to be approved by the LGC. ?There are certain additional criteria for LGC approval?namely the transaction must satisfy G.S. 159-148(a)(1) and (a)(3), and the transaction must not be exempted by G.S. 159-148(b)(1), (b)(2), or (b)(3).

Flowchart C?provides an easy reference guide to the criteria and exemptions. Be sure to ask and answer the questions in the order in which they are presented in the flowchart.

Proposed transaction (4.) is an example of a transaction that likely satisfies the criteria for LGC approval under G.S. 159-153.

8.? Financing Arrangement that is ?Similar? to Borrowing Money

When the General Assembly enacted G.S. 159-153 it also included a catch-all provision to cover any future types of transactions that might be akin to a local unit borrowing money but might not technically fall into any of the other listed categories. Specifically, the statute requires LGC approval before a local government (or local government-created entity) ?[e]nter[s] into any similar type of financing arrangement? to incurring indebtedness, if certain other criteria are met. The transaction must satisfy G.S. 159-148(a)(1) and (a)(3), and the transaction must not be exempted by G.S. 159-148(b)(1), (b)(2), or (b)(3).

Flowchart D?provides an easy reference guide to the criteria and exemptions. Be sure to ask and answer the questions in the order in which they are presented in the flowchart.

Tags: agreements, contracts, debt approval, financial agreements, leases, LGC, LGC approval of financial agreements, local government commission

This entry was posted on Thursday, August 9th, 2012 at 1:29 PM and is filed under Finance & Tax. You can follow any responses to this entry through the RSS 2.0 feed.

Source: http://canons.sog.unc.edu/?p=6786

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Doublewide + land purchace + Building our own foundation - Zillow ...

To install a basement, the double-wide must first be lifted up and slid onto beams 4 to 6 feet off the ground.? The utilities must be disconnected, & the house will stay on these beams while the basement is being constructed.? A contractor will then dig out an area for your basement, then pour the concrete and construct the basement. The cost of this project will depend on the rates in your area.? If you are borrowing money to finance the project, your lender will tell you if installing a basement is a financially practical & workable option.

Before adding a basement, check with the home's manufacturer to determine how to anchor the home to the foundation.? If your home does not already have a place to install basement stairs, determine where you will be able to install them.

If you have owned your home for quite some time or if you put down a good amount of cash when purchasing ,you may be able to use the equity in your home to secure a home equity line of credit (HELOC), ?& the advantage to taking out an HELOC for home improvements is that generally the interest on the loan is completely tax-deductible as long as it is used solely to make the home improvements.

Another type method of obtaining funding for home improvements is through mortgage refinancing.?? With interest rates near all-time lows, homeowners with higher fixed-rate or adjustable-rate mortgages are refinancing at lower rates and taking some of the cash out from the principal balance to increase their home's living appeal.?? Rather than "trading up" to a newer or larger home, refinancing enables homeowners to improve their existing home to their liking.

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A home improvement loan may also be secured through a personal loan but most reputable lenders require the borrower to have very good credit, and is based on the borrower's likelihood of being able to repay the loan.

Also, many states and the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD) also offer grants for home improvement to low-income individuals or to borrowers who purchase/refurbish homes in areas designated for community development or to provide housing for low-income residents.

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Source: http://www.zillow.com/advice-thread/Doublewide-land-purchace-Building-our-own-foundation/454678/

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Investing in Gold Royalty Companies

by Mike Kapsch, Investment U Research
Tuesday, August 7, 2012

I know, you?ve probably heard it a thousand times by now?

Investing in gold 10 years ago would?ve been one of the greatest decisions you could?ve ever made.

And it?s true.

Since August 2002, gold prices have exploded as much as 418%.

However, momentum has certainly slowed.

Over the last two years, gold prices have climbed 35%. Per year, that?s almost 7% slower than its average growth rate over the last decade. Still not horrible.

But the slowing growth has been tragic for gold mining companies

If you had simply invested in the two largest gold producing companies ? Barrick Gold Corp. (NYSE: ABX) and Newmont Mining Corp. (NYSE: NEM) ? over the last two years, you?d actually be down by an average of 20%.

There are a litany of likely reasons for the declines in mining companies over the last few years. Among them are higher energy prices, along with the mass exodus by investors from using gold mining companies as a proxy for precious metals. Ever since ETFs exploded on the scene, they?ve become the preferred gold proxy.

It has been a frustrating ride for many gold enthusiasts. But I?m writing you because there is an alternative gold investment that has flat-out blown away the returns of the top gold mining stocks and even the price of gold itself.

I?m talking about gold royalty companies.

More Gold Exposure, Less Risk

No, we?re not talking about royalty in the sense of kings and queens. Rather, these companies earn royalties on mines, sort of like musicians earn on sales of their hit songs.

Gold royalty firms provide financing to gold miners in exchange for payment in the future. You can think of them kind of like a bank, but for mining companies.

And these future payments can come in one of two ways:

1. The royalty company finances a mining exploration project in exchange for a royalty on any future sales produced from any discovery.
2. The royalty company helps finance a mine?s construction and receives a royalty payment called a ?stream.? Streams commit the company getting the financing to either give away a certain number of ounces of the metal per year to the royalty company or a certain percentage of the ounces produced each year from the mine.

You?ll find royalty streams are more commonly preferred for mining companies. And royalty firms also provide financing for miners involved in a number of commodities including zinc, silver, copper, nickel and platinum.

In short, gold royalty companies are a great way to gain exposure to gold miners and producers without necessarily taking on all the risks that come with them.

That?s because the best-run royalty companies will typically have themselves vested in anywhere from 10 to 50 different mines that are paying them royalties and streams.

If one of their mining investments goes sour, they still have a number of other deals that can offset their downside exposure. Also, because they?re simply collecting ?tolls,? their value is much less sensitive to drops in the precious metal?s value.

Even Better Than Gold

So what are some of the biggest gold royalty companies today?

Well, the two largest are Franco Nevada Corp. (NYSE: FNV) (TSX: FNV) and Royal Gold, Inc. (Nasdaq: RGLD) (TSX: RGL).

And you may be surprised at just how well they?ve performed.

Franco Nevada made its initial public offering in December 2007 and shares have increased 234% since then.

But even though Franco has only traded on the NYSE for the last four and a half years, don?t be fooled, it didn?t just come on the mining scene.

It?s actually been in business for over 25 years. And today it holds the crown as the world?s largest gold royalty company.

Meanwhile, Royal Gold is the second-largest gold royalty company in the world today.

Astonishingly, as gold prices have increased as much as 418% in the last 10 years, Royal Gold popped even higher? a whopping 457%.

In addition, the company is involved in a few large properties that it expects will pay off for decades.

Now, would it have been best to get in on the companies years ago before real estate fell apart and the global financial crisis hit?

Of course.

But there?s no point reveling in what might have been. And as long as gold prices head higher, you can expect Franco Nevada and Royal Gold to head that way, too? perhaps even much higher if history is any indication.

Good investing,

Mike

P.S. More interested in finding out about silver royalty companies than gold? Check out this article by Investment U Executive Editor Justin Dove. It also covers some of the tax advantages of using royalty mining companies as a proxy for the metals.

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Source: http://www.investmentu.com/2012/August/gold-royalty-companies.html

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