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New Study Sets Off Federal Reserve Debate
A new study by three respected economists has jump-started a debate
within the Federal Reserve that seeks to resolve the issue of how long
unemployment can go without setting off inflation, according to The
Wall Street Journal. Several members of the Fed's Open Market
Committee, which will wrap up its policy-setting meeting in Washington
today, say they worry that the nation's tight labor market could soon
bring about an unabated spiral of rising prices and wages, and they
continue to push for rate increases this summer. However, the
soon-to-be-released paper by the three economists paints a different
picture, concluding that the jobless rate could go as low as 4.5 percent
without a surge of price increases, a figure that is higher than the
current jobless rate of 4.1 percent but far below the the 5 percent that
mainstream analysts say is the cutoff point for the jobless rate before
it would trigger inflation.
Economist George Ackerlof of the University of California-Berkeley,
Senior Economist George Perry of the Kennedy Administration's Council of
Economic Advisors and currently of the Brookings Institution, and
William Dickens, former member of the Council of Economic Advisors under
the Clinton administration and currently also at Brookings, say in their
paper that a long-term unemployment rate of 4.5 percent would push
inflation somewhat above its current levels with consumer prices rising
at about 3.4 percent a year, compared with the current 3.1 annual rate,
but say that prices would then stabilize at that level without
accelerating, contrary to what most economists have predicted. 'We're
saying that there's a sweet spot of low but positive inflation that
allows you to minimize unemployment,' said Dickens. Fed Governor
Laurence Meyer has stongly disagreed with the paper's findings, and has
publicly estimated that the jobless rate cannot fall below 5.2 percent
without setting off rising inflationan estimate that concurs with
the findings of the Congressional Budget Office and the White House
Office of Management and Budget. Yet other Fed officials have called the
paper a possible academic justification for plotting a more moderate
interest-rate strategy. 'What we've seen in the economy in the last few
years isn't a fluke,' said Perry.
Shaquille O'Neal Joins Planet Hollywood, Hopes to Boost
Restaurant
Planet Hollywood announced yesterday that Los Angeles Lakers center
Shaquille O'Neal has become the company's latest celebrity shareholder,
according to the Associated Press. O'Neal, the NBA's regular season and
finals MVP, will make personal appearances at restaurants in his new
role. In addition, the restaurant company is adding 'The Shaq Shake' to
its menu. 'I plan to do for Planet Hollywood as I have done for the
Lakers,' O'Neal said. The Orlando-based company filed for chapter 11
last year and closed nine of its 32 U.S. locations. In addition, former
president William Baumhauer resigned, and Keith Barish, who started the
venture with chairman and CEO Robert Earl and actors Sylvester Stallone,
Demi Moore, Arnold Schwarzenegger and Bruce Willis, also left the
company. Earlier this year, Schwarzenegger announced he was leaving the
company; Earl said that he is planning to add more celebrity investors
in the near future.
Dynacore Holdings Reaches Agreement with Unsecured Creditors'
Committee
Dynacore Holdings Corp., formerly San Antonio-based Datapoint Corp.,
announced yesterday that an agreement had been reached with the
unsecured creditors' committee appointed in the company's pending
chapter 11, according to a newswire report. The agreement, which is
subject to the filing of its reorganization plan, creditor vote and
bankruptcy court approval, provides for the distribution of
approximately $34.8 million in cash to debenture holders and other
unsecured creditors from the proceeds of the previously approved sale of
Dynacore's European operations and certain U.S. assets to Datapoint
NewCo I Ltd. Once the reorganization plan is confirmed, which is
expected to be filed within 30 days, Dynacore is expected to have
remaining working capital of approximately $4 million and no debt.
Experian Introduces Tool to Help Retailers Assess Credit
Risks
Experian, an information solutions company based in Orange, Calif.,
announced yesterday the launch of its Retail Risk Model, according to a
newswire report. Designed specifically for the retail industry, this new
statistically based risk assessment tool can be used in the evaluation
of both new and existing customers in all phases of the account life
cycle. The Retail Risk Model can be strategically combined with
Experian's Bankruptcy Watch, a bankruptcy tool that identifies
high-bankruptcy-risk applicants. Using the tools together allows
retailers to identify and approve more low-risk accounts and reduce
potential bankruptcy in the same process. For more information, visit
the company's web site at
TARGET='window2'>www.experian.com.
Court Allows ContiFinancial Sale of Servicing Platform
ContiFinancial Corp. said Tuesday it received approval from the U.S.
Bankruptcy Court for the Southern District of New York to sell its
mortgage servicing platform and rights to Fairbanks Capital Corp. in a
deal that is expected to be completed in 30-45 days, according to a
newswire report. ContiFinancial, based in New York, specialized in
lending to less credit-worthy consumers but said it had trouble funding
loans because investors opted for investments such as U.S. Treasuries
rather than loan-backed securities. ContiFinancial said that it agreed
to sell its unit to Fairbanks in early May 2001 with the stipulation
that court approval would be needed under §363 of the Bankruptcy
Code. Fairbanks, based in Salt Lake City, is a high-rated specialty
servicer in the U.S. and has more than 10 years of residential real
estate loss mitigation experience.
Martin Color-Fi Reorganization Plan Confirmed
Martin Color-Fi Inc. announced yesterday that its reorganization plan
was confirmed Monday by the U.S. Bankruptcy Court for the District of
South Carolina, according to a newswire report. The plan provides for a
merger between MCF and an affiliate of Dimeling, Schreiber & Park, a
Philadelphia-based investment partnership that specializes in private
equity investments (primarily in the form of chapter 11
reorganizations). Martin Color-Fi, Edgefield, S.C., produces polyester
fibers and pellets from recycled plastic materials such as soft drink
bottles, off-class packaging resins, polyester fiber waste and film
waste, materials it uses to produce polyester fibers for such markets as
automotive fabrics, carpeting, apparel, home furnishings, industrial
fabrics and construction reinforcement materials.
Stage Stores Announces Final Court Approval of DIP
Financing
Stage Stores Inc. announced yesterday that its three-year, $450 million
debtor-in-possession (DIP) credit agreement with Citicorp USA Inc. as
agent was given full and final approval by the U.S. Bankruptcy Court for
the Southern District of Texas, according to a newswire report. Jack
Wiesner, chairman, interim chief executive officer and president, said,
'We are pleased to receive final court approval for the full amount of
the DIP financing. This financing will help ensure that the company has
significant liquidity to meet our financial obligations in the ordinary
course of business.' The Houston-based company currently operates more
than 600 stores in 33 states, primarily under the Stage, Bealls and
Palais Royal names.
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