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French President Nicolas Sarkozy said the euro region is ready to rescue Greece should the government struggle to fund its budget deficit, arguing that the country is “under attack” from so-called speculators.

“I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” he said in Paris yesterday after a meeting with Greek Prime Minister George Papandreou. “There can be no doubt in this regard.” While Greece doesn’t need assistance right now, “we have measures, we are ready, we are determined,” he said.

Sarkozy’s comments are among the strongest by an EU leader to signal the bloc would bail out Greece as they try to warn investors off making further bets against the euro and Greek bonds. Papandreou’s government last week passed a further round of austerity measures and sold 5 billion euros ($6.8 billion) in government debt. Europe’s single currency has dropped 8 percent in the past three months.

“Speculators and the markets should know that solidarity means something and that, if there’s a problem, we are there,” said Sarkozy. “The sooner we say that and the more firmly we say that, the more rapidly we settle the problem.”

The spread between the yield on Greek 10-year bonds and their German counterparts fell to the lowest in three weeks on March 3. Papandreou, who meets President Barack Obama in Washington tomorrow, said he wants a “normalization” in Greek market interest rates after the deficit-cutting steps.

Greece faces more than 20 billion euros in debt redemptions in April and May.

Green Light

Sarkozy wouldn’t say what steps the EU would take and German Chancellor Angela Merkel, who runs Europe’s largest economy, has so far refused to give the green light to any aid package. Merkel said after meeting Papandreou on March 5 that the question of a bailout “‘absolutely doesn’t arise.” Her coalition partner, Guido Westerwelle, said he won’t sign a “blank check” for Greece.

“Nobody can doubt how reluctant the Germans are, and I am starting to think that if official money is needed in May, then there may first be a major discussion between the Germans and the French how to do this,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc. in London, in an e-mailed note. “It really comes down to some very fundamental issues of how the euro-zone will function going forward.”

European Monetary Fund

German Finance Minister Wolfgang Schaeuble indicated that his government is already thinking about how another Greek crisis can be avoided, saying that the euro region should consider creating an institution similar to the International Monetary Fund.

“We shouldn’t rule anything out, including the creation of a European Monetary Fund,” he said in an interview with the Welt am Sonntag newspaper published yesterday.

The comments come after proposals for a European Monetary Fund were put forward last month by Deutsche Bank AG Chief Economist Thomas Mayer and Daniel Gros, director of the Centre for European Policy Studies in Brussels.

The EMF could ease the disruption caused by the failure of a euro member to pay its bills by offering investors new EMF bonds in exchange for the defaulted securities, they said. Investors would be required to take a “haircut.”

“Setting up a European Monetary Fund is superior to the option of either calling in the IMF or muddling through on the basis of ad hoc interventions,” Mayer and Gros wrote in an article in the Economist last month.

Flaws in the euro region’s governance were also indentified by former Federal Reserve Chairman Paul Volcker, who said in an interview on March 6 that the lack of a political union to back up the European Central Bank is a “structural crack.”

“Maybe fortunately it’s tested with a country as small as Greece, which doesn’t present an insuperable financing problem,” he said.

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Oracle Corp. President Charles Phillips admitted Friday to an affair first exposed on pricey billboards plastered throughout New York’s Times Square, San Francisco and Atlanta.

The supersize ads feature him and his mistress, beaming and canoodling. A Web address listed on the billboards, charlesphillipsandyavaughniewilkins.com, directed viewers to a site, which is no longer running, filled with photos and notes documenting a romance dating back to 2001.

"I had an 8½-year serious relationship with YaVaughnie Wilkins," Phillips said in a statement released Friday by Oracle’s public relations team. "My divorce proceedings began in 2008. The relationship with Ms. Wilkins has since ended, and we both wish each other well."

Phillips, 50, is reportedly still married to his wife Karen, and the two have a son together.

Wilkins declined to speak directly to the media, instead fielding requests through her cousin Misha Davila, who told CNN that Wilkins thought Phillips’ divorce was finalized in 2003.

Last summer, Davila said Wilkins received an anonymous e-mail tip about Phillips’ marital status. She hired and private investigator, and after learning Phillips was still married, ended the relationship last October payday loans in one hour.

Davila said Wilkins created the Web site, which apparently launched in October, as a gift from Wilkins for Phillips’ 50th birthday. She said the billboards were an attempt by Wilkins to reclaim her version of her relationship with Phillips– not an act of revenge.

Phillips, who has served on President Obama’s economic recovery advisory board since last February, joined Oracle (ORCL, Fortune 500) in 2003. Prior to joining the business software giant, he worked as a tech industry analyst at Morgan Stanley and served as a captain in the U.S. Marine Corps.

Often talked of as a potential successor to Oracle founder and CEO Larry Ellison, Phillips is one of the software company’s most senior — and highly paid — excecutives. On top of an $800,000 salary for 2009, he took home stock options and other compensation valued by Oracle at more than $18 million.

–CNN’s Mythili Rao contributed to this article. 

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Gov. Arnold Schwarzenegger’s proposed $82.9 billion state budget replaces furloughs with pay cuts, slashes health care and social services for the poor and relies on $4.5 billion in fund shifting to back-fill government programs.

The proposed spending plan mostly protects education at the currently level of funding.

It also looks to the federal government for $6.9 billion in additional funding — and includes an ominous list of programs that will be axed completely if the money doesn’t come through. Some tax hits will be extended to fill the gap, too.

The state is facing a $19.9 billion budget deficit over the next 18 months. That amount includes a $6.6 billion shortfall in the current fiscal year, a $12.3 billion projected shortfall for 2010-11 and money needed for a $1 billion reserve.

Assuming the feds come up with the money — a premise many think is iffy, at best — major cuts include:

• $1.4 billion in compensation for state workers
• $2.4 billion cuts in health and human services, including cuts in Medi-Cal services, wages for In-Home Supportive Services workers and new restrictions on eligibility for CalWorks, the state welfare program and
• $1.2 billion in cuts in prison funding.

The current furlough program for state workers would end June 30, replaced by a 5 percent cut in all salaries. Department directors are ordered to cut their payrolls by 5 percent by July 1, when employees’ monthly retirement contribution will increase by 5 percent.

The change in pension contribution and pay reduction will require collective bargaining and statute changes.

“I know many of these cuts are painful,” Schwarzenegger said at a press conference Friday morning on the budget proposal. “Believe me, these are the hardest decisions a governor can make.”

It could get much worse.

Schwarzenegger and legislative leaders will travel to Washington later this month to demand $6.9 billion to the federal share of the cost of health care services to the poor, federal education mandates and incarceration of undocumented immigrants payday loans guaranteed no fax.

“We are not looking for a federal payout; we are looking for federal fairness,” Schwarzenegger said.

The proposed budget has a trigger mechanism to backfill for every dollar the state is unable to squeeze out of the feds. It includes up to $4.6 billion in program cuts and $2.4 billion in tax adjustments on business.

Major program cuts include:

• $1 billion from elimination of CalWorks
• $847 million by using Proposition 63 funding to finance existing mental health services
• $532 million by reducing Medi-Cal eligibility to the minimum allowed under federal law and axing most of the remaining optional benefits
• $495 million from elimination of the In-Home Supportive Services Program
• $280 million from elimination of non-court required inmate rehabilitation programs, moving some felons from prisons to jails and increasing parole agents’ caseloads
• $126 million from elimination of the Healthy Families Program
• $115 million from elimination of various health services programs funded by Proposition 99
• $111.9 million from elimination of funding for enrollment growth at the University of California and California State University and
• $100 million from an unallocated reduction in funding for trial courts.

Major programs to enhance revenue include $1.2 billion from suspension of a business’s ability to reduce taxable income by applying net operating losses from prior years and $504 million from cutting tax credits for dependents to $102 from $319.

Schwarzenegger declared another fiscal emergency and called for another special session of the Legislature.

“California is resilient,” he said. “We will … get through this challenge.”

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As Porter Airlines breezes into its fourth year of operations, president Robert Deluce says the upstart airline will unveil a new, five-year business plan in 2010.

"(The new plan) is likely to see some significant growth attached to it," Deluce told the Star. "I think we’ve got lots of growth potential in the next several years."

Deluce was coy about details for his updated business plan, but conceded the original blueprint for his company has evolved somewhat since the airline set up shop in 2006. Originally, Deluce’s business plan outlined a vision of 17 flight destinations for Porter in Canada and the United States.

"A couple of the destinations that we’re already serving, Halifax and (Mont) Tremblant, weren’t even on our original business plan," Deluce said.

"I think at some point in time we’ll be serving at least 17 destinations, and maybe more."

The airline has already announced a number of changes for the first quarter of 2010. Its fleet will grow from 17 turboprop airplanes to 20 and flights will increase from an average of 110 per day to 120. The airline will also begin operations at its new $45 million terminal, where the first phase of construction should be completed by the spring.

Porter plans to expand domestic and transborder service early next year, Deluce said. He won’t say what Porter destinations are on the horizon, only that Washington and Philadelphia "continue to be of interest," as well as "other places in eastern Canada within roughly an hour and a half of Toronto."

Because Porter is privately held, it does not report financial results. But Deluce said the airline turned a profit this year.

"By any account, (Porter had) at least 300-per-cent growth during a year that arguably was one of the worst aviation years on record," Deluce said.

Porter has also been good business for the Toronto Island airport, which has been humming with activity since the airline moved in.

On Christmas Eve, the Toronto Port Authority announced it received preliminary results from a new capacity assessment study, and now anticipates an increase of between 42 and 92 daily flights at the airport by the second half of next year. The TPA also said it will begin accepting proposals in early 2010 from other commercial carriers that hope to begin using the island airport.

Before Porter came along, the island airport – recently renamed the Billy Bishop Toronto City Airport – handled 25,000 passengers annually. By the end of 2009, that number was forecast to hit 750,000, and Deluce estimates that 2010 will see more than a million passengers passing through the airport.

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The economic recovery gained traction in late fall as shoppers spent a bit more and factories bumped up production. That assessment Wednesday by the Federal Reserve marked its most upbeat view since the economy tumbled into recession two years ago.

The Fed’s new snapshot of business barometers found that conditions generally have improved since the last report in late October.

Eight of the Fed’s 12 regions surveyed reported some pickup in activity or improved conditions, the Fed said. Those regions were: Boston, New York, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco payday loans. The new report adds to evidence that the economy is rebounding after the worst recession since the 1930s.

The main challenge for Fed Chairman Ben Bernanke, who will be on Capitol Hill today seeking a second term, is to sustain the fledgling rebound, especially after benefits of government support fade next year. To that end, the Fed is expected to hold a key bank lending rate at a record low near zero when its meets on Dec. 15-16.

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With sales slow and credit tight, small merchants are scrambling to stock their shelves for the year’s biggest shopping season.

Retailers traditionally borrow money to buy holiday inventory. But credit for small businesses has dried up this year, and with the recession slowing sales, few merchants have cash on hand. The crunch is forcing business owners to find new ways to keep running.

For a handful of New York City retailers in one hard-hit stretch of Brooklyn, a small community lender is playing the role of Santa Claus. Lesia Bates Moss, president of Seedco Financial Services, noticed an ever-increasing number of vacant storefronts along Atlantic Avenue. In response, she hosted a meeting with a dozen area retailers to find out how her organization could help.

One common problem the merchants cited was getting enough credit to buy sufficient holiday inventory. So Seedco Financial, a nonprofit that specializes in financing for underserved communities, launched a streamlined holiday program: Retailers who could provide a marketing plan for spending the money and driving foot traffic would get fast loans.

On Monday, Seedco staffers started delivering checks. A typical loan request is for around $20,000, to be repaid over the next year at interest rates of 6% to 10%.

"It doesn’t take a lot in the way of capital access to help these businesses," Moss said. "We really needed to get money into the hands of these merchants before Black Friday, so they could stock their stores."

Toys and beer glasses: Karen Zebulon, the owner of toy and clothing retailer Gumbo on Atlantic Ave., is one of Seedco Financial’s borrowers.

"Especially this year, because we have had such hard times, we really need a boost," she said. "If I can really strategize and plan and buy the right merchandise, I think it can be a turning point for me."

Zebulon plans to ramp up her inventory of toys, because even in tight times, customers continue to spend on kids. She’s impressed at how quickly Seedco Financial got cash into her hands.

"This was — you could say — a godsend," she said. "It is saving me and saving a lot of other merchants that are receiving the loans." Without the financing, she would have been pulling a string of all-nighters trying to handcraft toys to stock her shelves.

Artez’n Gift and Gallery, which sells products made by local Brooklyn artisans, also got a loan from Seedco. Owner Jessica Furst got her check on Monday and "ran to the bank." She plans to use the cash to stock up on one of her best-selling items: pint glasses with illustrations of Brooklyn landmarks on them. They’re a proven customer lure, drawing in tourists and others who make a special trip to Artez’n for the glasses.

With sales slow this year, Furst wouldn’t have been able to afford to produce the Brooklyn beer glasses without the last-minute loan. "I would have been without them again, which would have been a loss of income for me, and possibly a loss of customer base," she said.

She will also use some of the loan money to fix the high-end printer she uses for her graphic design business. The small loan will make a big difference for Furst: "It will enable me to get back on my feet."

The big challenge for merchants will come over the next month. The National Retail Federation forecasts that this year’s holiday sales will decline 1%, to $437.6 billion.

"The real concern is, can you sell stuff?" said Bill Dunkelberg, chief economist of the National Federation of Independent Businesses. "I am sure inventory accumulation has been cautious. It doesn’t look like it is going to be much better than last year, which was terrible."

Squeezing by: Not every retailer is lucky enough to have a community lending program to turn to.

Clark Kepler’s dad opened Kepler’s Books in 1955. Like so many other independent bookstores, Kepler’s Books is fighting for sales in an industry now dominated by Big Box discount retailers and Internet book sellers. Four years ago, with the shop on the brink of closure, 25 members of the Silicon Valley community voluntarily donated $1 million to save the neighborhood bookstore.

The recession has further ravaged the business, which saw a double-digit sales decline. "We had the most difficult time this last several months with the cash-flow issues," Kepler said. "We managed to get through it, but we were robbing Peter to pay Paul every step of the way."

One way the shop is coping is by churning inventory faster than it typically would. Bookstores can return unsold goods to publishers, and Kepler is shuffling fast to fine-tune his holiday lineup.

"It is a mad scramble much of the time," he said. "We have needed to scrutinize our inventory more and more to be sure that we have books that are selling." A book that languishes is "like money sitting on the shelf that we are not utilizing."

Kepler could use additional financing to give his bookstore more breathing room, but he’s had little luck with the banks. He talked with one lender about a Small Business Administration-backed loan, but pulled out after deciding that the loan available for his shop wouldn’t be big enough to justify all the effort involved in the application process.

Kevin Stein, co-owner of the Montana Fish Company in Bozeman, Mont., is also frustrated with the banks. "We have been to every bank in town," he said. "If we could expand into a bigger facility, we could take on more business, we could hire more people — it is a win-win."

But so far, with no expansion loan yet available, Stein’s seafood and wine market isn’t doing its usual seasonal hiring. "We didn’t lay anyone off, but it was a combination of not rehiring and not hiring for the holiday season," Stein said. To make up for the staffing decrease, Stein and his co-owner have upped their own hours.

"As employees filtered out, we just simply didn’t rehire, which means I spent a lot less time at home," he said.

Like the merchants that borrowed from Seedco Financial, Stein is now looking outside the banking industry for help. He’s trying to get a loan directly from the Small Business Administration, through its disaster lending program. A natural glass explosion one block away from Montana Fish may make the company eligible.

Stein and his business partner, Travis Byerly, have been pulling together mountains of documentation.

"It is a little mind-boggling," Stein said of application process. "But it is a great loan if we can get it. It could be a game changer." 

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The International Monetary Fund said it will have access to a credit line of up to $600 billion to make loans during financial crises after contributing countries agreed to fold commitments into one pool.

The agreement, yet to be approved by the IMF board, adds as many as 13 members from the current 26 to the so-called New Arrangements to Borrow, including emerging nations China, Russia, Brazil and India, the IMF said in an e-mailed statement.

The decision “marks an important moment for multilateralism and the fund, which will help the IMF’s effectiveness in its response to crises,” Managing Director Dominique Strauss-Kahn said in yesterday’s statement.

The deal goes beyond a pledge by leaders of the Group of 20 nations to contribute up to $500 billion to a credit arrangement that’s currently worth $54 billion, the IMF said. The worst financial crisis since the Great Depression prompted more nations to seek aid from the fund, created after World War II to help ensure the stability of the global monetary system.

The agreement, which merges existing commitments into one facility, makes it easier for the IMF to tap into its supplemental resources. The credit line will be “an effective tool of crisis management as a backstop for the international monetary system,” the IMF statement said cash advance loans.

While a general agreement on the NAB was reached at the G- 20 meeting in Pittsburgh in September, talks on the specifics stalled over divisions between some emerging and developed nations over voting rights relating to the credit facility.

Borrowed From Members

The IMF has estimated that its current credit line was insufficient when the financial crisis boosted demand for loans. It then started to borrow from individual members, such as Japan, to continue lending to countries in difficulty.

To ensure the institution would continue shoring up economies around the world, G-20 leaders in April pledged to add $500 billion to the IMF’s resources.

Some of these contributions were bilateral loans, while China agreed to participate by buying the first IMF notes. Some countries, like the U.S., made theirs directly to the NAB.

When the new credit-line agreement is activated, all the bilateral loans will fall into it, Andrew Tweedie, who heads the IMF Finance Department, said in a Nov. 20 interview. It won’t come into effect before next year, he said.

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Stapleton and NorthSide, by the numbers

Stapleton NorthSide

Land area 7.5 sq. miles 2.3 sq. miles

Projected new homes 10,000 10,000

Projected new jobs 30,000 22,000

Tax increment financing $280 million (so far) $390 million (projected)

Construction start 2001 2010

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The Walt Disney Co’s breakthrough deal to build one of its signature theme parks in Shanghai marks a major advance for Western media and entertainment firms trying to crack a tough China market.

Wednesday’s government approval for the theme park caps years of on-off talks between Disney and Chinese authorities, who are wary of too much foreign influence in the highly sensitive sectors of media and popular culture.

The new park planned for the Pudong new district of China’s financial capital will take years to contribute to a company that rakes in more than $30 billion in annual revenue.

But analysts see the move as an important step forward for Disney and other Western media firms to make inroads into the vast and untapped Chinese media and entertainment market.

“They’ve been laying the groundwork for a park for many years by exposing the population to Disney properties, film, TV and merchandising,” said Christopher Marangi, senior analyst with Gabelli and Co in New York.

“Adding a physical presence in the form of a park would really complete and add to the value chain in China.”

The breakthrough comes just two weeks ahead of a scheduled trip to China by U.S. President Barack Obama, a visit analysts had expected to help spur a decision on the park.

The deal has been seen by some as a feel-good bilateral story, highlighting U.S. cultural influence and an investment that does not entail U.S. manufacturing job losses, while China gets a boost to its leisure sector and to domestic demand as it tries to trim its dependence on exports.

For Shanghai, China’s financial hub, Disneyland could keep tourists coming after the curtain falls on the 2010 World Expo.

And Disney will hope the park, with an estimated price tag of $3.6 billion, will fare better than its Hong Kong property, which has struggled with lower-than-expected attendance and financial losses since it opened in 2005.

SMALL STEP FORWARD

Disney, Time Warner and News Corp have surprisingly little to show for their years of effort and extensive investments in China.

“I wouldn’t say this is a one-off gain,” said Vivek Couto, executive director of Media Partners Asia, on the deal’s broader significance for foreign media’s drive for a foothold in China.

“But it’s in a non-sensitive space. It’s a theme park. It’s got nothing to do with television content that can be politically sensitive or competitive with other major Chinese companies in the space.”

Even privately held domestic media can find the going tough, as leading Internet portal Sina found recently when it scrapped a merger with Focus Media due to government stonewalling over a deal that would have created a major new domestic media player. 

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