3 reasons interest rates will stay low for years

New York Fed President Bill Dudley predicts interest rates will remain historically low for the long-term.

NEW YORK (CNNMoney)

In a speech Tuesday, Federal Reserve Bank of New York President William Dudley laid out three key reasons why the Fed may keep its short-term interest rate -- the federal funds rate -- below historic averages for the long haul. That rate is important, because it impacts rates for mortgages and loans.

Listen up, because Dudley is a top decision maker at the central bank and closely aligned with current Fed Chair Janet Yellen.

1) The economy remains weak: Like it or not, the economy is still disappointing on several fronts, and that may not change anytime soon.

"Economic headwinds seem likely to persist for several more years," Dudley said in a speech to the New York Association of Business Economics.

He notes that the Great Recession "scarred households and businesses," which is likely to dampen their spending and investment for a long time.

Meanwhile, the housing sector is facing "several significant headwinds," he said.

Related: Janet Yellen's big concern is a housing slowdown

Take these three, for example: Mortgages are still hard to come by for homebuyers with all but the most pristine credit histories. High levels of student debt are delaying young people from becoming first-time home buyers. Finally, housing supply remains limited.

2) Our future potential is declining: Remember the economic good times? Say, the Clinton years or the mid-2000s? In the future, the U.S. economy has lower potential to grow at the strong rates it did in the 1990s and 2000s, mainly because a huge portion of the population is retiring. (Yes, we're talking about you, baby boomers!)

Lower economic potential implies interest rates will have to remain low, even after the economy starts revving up again, Dudley said.

3) Bank regulation: Following the massive crash in 2008, banks these days are required to hold a larger cushion of cash on the sidelines for emergencies. While these higher capital requirements are "essential in order to make the financial system more robust," Dudley said, this is likely to cause the Fed to keep low interest rates in place in the future.

Why? Traditionally, banks make their money by taking in your deposits and paying you a certain interest rate, but then lending that money out to someone else at a higher rate. If banks are forced to hold more cash on the sidelines, they may become less profitable and may slow their lending.

If the Fed wants to continue stimulating the economy, this means it may have to keep interest rates lower than usual, to achieve its desired impact on the economy.

Just how low are we talking about?

Okay, so you may have missed the boat on locking in a 3.4% 30-year mortgage last year, but even so, rates on mortgages and other loans will probably stay near their historic lows for years to come.

Since 2008, the Fed has kept the federal funds rate near zero, but in better economic times, that rate averaged 4.25%. Going forward, Fed officials have said they expect to start raising rates sometime next year, but even so, Dudley expects it to remain "well below" the 4.25% level for the long run.

"Precisely how much lower is difficult to say at this point in time," he said.

First Published: May 20, 2014: 1:47 PM ET

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Koch brothers' group fights Detroit bankruptcy aid

NEW YORK (CNNMoney)

A political group backed by the Koch brothers wants to stop the state from providing $195 million in aid. The money would be used to limit deep cuts to retirees' pensions and avoid selling off the artwork in the city-owned museum.

If the state chapter of Americans for Prosperity (AFP) is successful, it would derail a series of deals that would allow Detroit to emerge from the nation's largest municipal bankruptcy case later this year.

The group is writing letters to legislators vowing to campaign against those who vote yes. A vote on the package could come as soon as this week or early next week.

Scott Hagerstrom, Michigan director of Americans for Prosperity (AFP), said his group wants Detroit to sell its artwork and other assets, and dump traditional defined benefit pension plans in favor of 401(k) type of plans.

"Detroit has behaved like this for 30 years," Hagerstrom said. "Politicians there won't change their behavior if they keep getting bailouts from the hardworking taxpayers of Michigan."

Related: Detroit bankruptcy vote - Key to comeback

The package of bills has the support of leadership of the Republican-controlled Michigan legislature, as well as Republican Gov. Rick Snyder.

"This is a settlement. This not a bailout," said Snyder. "And I want to be very, very clear about that."

Snyder and other supporters insist that Michigan would be better off with the legislation because it reduces the risk that the state could eventually be on the hook for billions in benefits promised by Detroit's underfunded pension plans.

Related: Democrats vs. the Koch brothers

"Drawn-out bankruptcy litigation would have dire consequences for Michigan taxpayers, from years of costly, prolonged lawsuits to uncertainty on the part of investors and job providers," Jase Bolger, speaker of the Michigan House, said earlier this month when the legislation was introduced.

The Koch brothers have become major forces in American politics. An official with AFP's national office told CNN that it is on course to spend $125 million in this year's mid-term congressional, state and local elections.

Hagerstrom said his group will look at the full range of ways to take targeted action against supporters of the package, including television, radio and billboard ads as well as direct mail campaigns.

"You have people on the record for smaller government," he said about the Republican support for the package. "The people in Michigan and this country just want to hold their legislators accountable and have them do what they say they're going to do."

Bill Nowling, spokesman for Detroit Emergency Manager Kevyn Orr, the man overseeing the city's bankruptcy reorganization, had no comment on the Koch brothers' efforts to derail the state's rescue package.

Ari Adler, Bolger's spokesman, said that the leadership is still confident it can find the votes to pass the package despite the AFP threat .But he admits it will be a close vote.

"We have Democrats on the far left and Republicans on the far right who are opposed for very different reasons," he said. "But we have a growing majority of members in both caucuses that understand how doing nothing now could cost Michigan taxpayers dearly later."

First Published: May 20, 2014: 1:58 PM ET

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McDonald's scary Happy Meal mascot

Meet "Happy," McDonald's new ambassador for Happy Meals.

NEW YORK (CNNMoney)

But within hours, the new square-faced red and yellow mascot with big white teeth was scaring away people on Twitter and had become the butt of jokes.

@DrZombield said: THAT! Is scary!

@CraigGrannell warned: "HE WILL EAT YOU ALIVE! RUN!"

@Naive_Steve came up with his own tag-line: "Happy", "It's the meal that eats you."

And @jrichardmiller said: "Happy" looks happy bc he just finished off a family of six #RIP #HappyMeal."

Related: McDonald's prepares for melee

"We are not un-happy about" the response, said Julie Wenger, senior director of U.S. marketing for McDonald's (MCD, Fortune 500). "Happy is not for everyone. He's about having fun. Really for kids and families."

Wenger said: "Happy is promoting healthy choices through fun and lightheartedness."

But not everyone was on board with McDonald's message, especially given the fast food chain's reputation for peddling calorie-laden fare.

@samkamani said, "In order to fight obesity in kids, McDonalds introduces its new mascot to scare children."

@erikbransteen said, "Congrats #McDonalds, first you fatten our kids, then you haunt their nightmares."

The Happy Meal mascot launches this Friday.

First Published: May 20, 2014: 3:58 PM ET

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What were China's hacker spies after?

NEW YORK (CNNMoney)

That's what Chinese hackers were looking for, according to federal prosecutors who have charged members of the Chinese military with cyber theft and more.

The 31-count indictment, revealed Monday, marks a dramatic escalation of U.S. government efforts to combat Chinese state-sponsored corporate espionage.

"The Chinese are going after every single economic advantage they can obtain," said former federal prosecutor Thomas Brown, now a cybersecurity expert with FTI Consulting. "Decades of time spent developing technologies are being ripped off and stolen everyday."

Here's what the feds say the Chinese hackers did:

• Stole the secret specs of Westinghouse AP1000 power plants, the most high-tech nuclear power plants in the world. Westinghouse is currently building four of them in China.
• Ransacked SolarWorld (SRWRF) computers, swiping information about the solar panel maker's cash flow, manufacturing plans and costs.
• Broke into PCs at U.S. Steel installed malware and identified computers that control physical access to buildings.
• Looted the network credentials for nearly every single employee at steelmaker Allegheny Technologies Incorporated (ATI, Fortune 500).
• Spied on emails at steel manufacturer Alcoa (AA, Fortune 500) a few weeks after it partnered with a Chinese state-owned enterprise.
• Eavesdropped on emails at the United Steelworkers union during a trade dispute in China.

China has denied the allegations, saying it has never engaged in the cyber theft of trade secrets.

Related story: Chinese hackers spied on U.S. companies

The kind of spying China is accused of can yield valuable information and give the country's businesses a much-needed boost. Westinghouse spent a significant amount of money designing the special pipes that are the defining feature of its AP1000 pressurized water reactor. Stealing those plans means that a Chinese nuclear plant builder might be able to skip costly research and development.

"How much money is spent on failures? The Chinese can avoid all that," said Christopher Tarbell, a former member of the FBI's cybercrime squad.

This is a particularly critical issue in the solar power industry, where Chinese manufacturers have flooded the global market with cheap solar panels and undercut U.S. firms. SolarWorld issued a statement thanking the U.S. Justice Department for stepping in.

"It's yet another example of the Chinese government's systematic campaign to seek unfair advantage in the U.S and global solar industry. Already, dozens of U.S. companies have closed operations, and thousands of U.S. employees have lost their jobs," SolarWorld said.

Related story: Leaked Snowden documents show NSA hacked Chinese telecom company

Why all the attention paid to steel? American metal is consistently better quality. It's not enough to melt iron ore, coal and limestone. Forging it is an art with highly-guarded secrets. Chinese manufacturers are good at making low-cost steel used in bridges, but American firms are better at making the lightweight versions used in fuel-efficient cars.

The steelworkers union called the revelation "troubling." Alcoa downplayed the news, saying "no material information was compromised." Westinghouse and U.S. Steel declined to comment.

In total, secretive economic attacks cost U.S. firms billions in lost profits and destroyed jobs, said cybersecurity expert David Kennedy, whose TrustedSec firm advises companies that have been attacked this way.

And once the hackers have breached a company's defenses, it's much easier to make the leap from data theft to outright sabotage. Hackers with access to the computers that control a factory's machines, for example, might be able to disrupt the production process just before a pivotal delivery deadline.

"That's not farfetched at all," warned Jonathan Pollet, a hacker who founded Red Tiger Security and advises energy companies.

First Published: May 19, 2014: 10:59 PM ET

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Sprint hit with largest-ever 'Do Not Call' fine

This man either received an unwanted marketing call from Sprint or is seeing a photo of his sideburns for the first time.

NEW YORK (CNNMoney)

The Federal Communications Commission announced Monday that the wireless carrier will pay a $7.5 million fine for failing to honor requests from consumers to opt out of phone and text-message marketing campaigns. As part of the settlement, Sprint (S, Fortune 500) has to set up a compliance program and provide regular reports to regulators for the next two years.

The fine comes after Sprint reached a similar settlement over "Do Not Call" violations with regulators back in 2011, paying a $400,000 fine.

"When a consumer tells a company to stop calling or texting with promotional pitches, that request must be honored," FCC enforcement chief Travis LeBlanc said in a statement.

Related: Republican robocall firm slapped with $3 million fine

Sprint said the settlement "relates to issues resulting from technical and inadvertent human errors, which Sprint reported to the FCC."

"We have conducted a thorough, top-to-bottom evaluation of our Do Not Call data management systems, and significant capital investments have been made to improve our Do Not Call/SMS Message architecture, oversight and compliance," the company said.

The fine is the largest ever from the FCC in a "Do Not Call" case, though it's safe to say Sprint's not sweating it -- the company brought in $8.9 billion in sales in the first three months of this year alone.

Americans can opt out of telemarketing communications thanks to a 2003 law that set up the national "Do Not Call" registry. You can sign up for the registry online at www.donotcall.gov.

First Published: May 19, 2014: 3:53 PM ET

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Extreme IPO! GoPro plans $100 million offering

GoPro rose to fame with its action cams - small, weatherproof, mountable video cameras that offer excellent video quality and battery life.

NEW YORK (CNNMoney)

The camera maker revealed plans Monday to raise $100 million in an initial public offering, as well as financial results showing several years of surging growth.

GoPro made its IPO plans known earlier this year but, because it filed confidentially, hasn't opened its books until now. The company's sales reached $986 million last year, more than four times its 2012 total, while profits hit $60.6 million, nearly doubling.

That pace has moderated a bit in 2014. GoPro recorded $236 million in sales for the first quarter, down from $255 million a year prior, while profits dropped to $11 million from $23 million in 2013.

The company plans to trade on the Nasdaq under the symbol "GPRO." That's a small victory for the exchange, which, despite its tech focus, has lost out to the New York Stock Exchange on offerings from companies like Twitter and Box.

GoPro rose to fame with its action cams -- small, weatherproof, mountable video cameras that offer excellent video quality and battery life considering their size. Thrill seeker Felix Baumgartner famously used a GoPro camera to record his free fall from space in 2012.

The cameras were initially marketed for extreme sports, but other hobbyists have been quick to find new uses for them. Drone enthusiasts, for example, have found the GoPro ideal for mounting on their flying vehicles and capturing footage from the skies.

But GoPro is also facing increased competition from some unlikely places. As companies like Google (GOOGL) and Samsung push technologies like Glass and the Galaxy Gear watch, more people will be donning wearable cameras -- a market GoPro has largely cornered thus far.

Foxconn -- the Chinese manufacturer best known for assembling iPhones and iPads -- invested $200 million in the company in late 2012, giving it a 9% stake. At the time, the investment valued GoPro at about $2.25 billion.

First Published: May 19, 2014: 6:18 PM ET

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Fired Times editor to give commencement speech

Jill Abramson, pictured at an event in April, is set to break her silence Monday in a speech at Wake Forest University..

WASHINGTON (CNNMoney)

But she is set to break her silence Monday with a commencement address at Wake Forest University.

It isn't clear if or how she'll address her abrupt dismissal from the paper, the causes of which are now the subject of rampant speculation.

New York Times (NYT) publisher Arthur Sulzberger Jr. has explained his version of events. But Abramson's silence has left her friends and confidants -- many speaking anonymously -- to make her case.

She was announced as the commencement speaker at the North Carolina university in mid-March.

The school affirmed Sunday morning that she remained on the event's program.

Related: Why did the New York Times really sack its editor?

Sulzberger said the reasons for her dismissal involved her management of the paper's newsroom.

But some have raised questions of sexism following reports that Abramson -- appointed in 2011 as the paper's first female executive editor -- was paid less than her male predecessor.

Sulzberger denied that was the case. He said Abramson's total compensation was "was comparable with (predecessor) Bill Keller's; in fact, by her last full year as executive editor, it was more than 10% higher than his."

While Abramson has stayed quiet, her daughter has been more outspoken in online postings. On Friday, she wrote, "The story isn't over, not even close."

--CNN Senior Media Correspondent Brian Stelter contributed to this report.

First Published: May 18, 2014: 8:23 PM ET

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Kraft recalls cottage cheese citing illness risk

Kraft is recalling 1.2 million cases of cottage cheese that could spoil prematurely and cause illness.

WASHINGTON (CNNMoney)

The recall, announced Saturday, includes the Knudsen, Breakstone, Simply Kraft and Daily Chef brands.

Ingredients used in nearly three-dozen cottage cheese products weren't properly stored in a California facility, Kraft Foods Group said.

Since the discovery, officials halted production of those products at that plant and began working to fix the issue, Kraft said.

Kraft called the recall precautionary. Spokesman Russ Dyer said the company was investigating one complaint of illness stemming from a batch of cheese that was not recalled and is now expired.

Related: Red Lobster chain sells for $2.1 billion

Many of the varieties recalled are tubs between 4 and 16 ounces. The products were stamped with dates between May 9 and July 23.

Each case includes between six and twelve tubs of cottage cheese.

First Published: May 18, 2014: 4:58 PM ET

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Pfizer sweetens offer in final bid for AstraZeneca

Pfizer's efforts to merge with British rival AstraZeneca has attracted significant political opposition.

HONG KONG (CNNMoney)

Pfizer's new offer of £55.00 ($95.52) per share values AstraZeneca at nearly $120 billion, and is a 45% premium over the company's share price in mid-April. AstraZeneca's board has rejected three previous proposals from Pfizer, saying they undervalued the company.

AstraZeneca (AZN) alone accounts for about 2% of British exports, and the deal would represent the biggest foreign takeover of a British company.

The potential takeover has attracted significant political attention, including calls in Britain for new powers that would allow the government to prevent takeovers by foreign firms in the interest of national security.

Pfizer (PFE, Fortune 500) said the offer made late Sunday would be its final overture. The company said it would not make a hostile bid for AstraZeneca, and will only proceed with the blessing of AstraZeneca's board.

It now appears a merger is unlikely, and Pfizer might be forced to walk away. The company said a third takeover offer made Friday -- at £53.50 ($90) per share -- had been rejected by AstraZeneca.

"We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies," said Pfizer CEO Ian Read. "Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price."

Related: Health care M&A hits record high

In addition to an expanded drug portfolio -- particularly in cancer treatments -- a deal would provide a use for some of the billions in profits Pfizer holds overseas.

Pfizer has amassed an offshore cash pile totaling more than $60 billion from profits generated outside the U.S. Buying AstraZeneca and basing the new combined group in the U.K. would allow it to make use of those funds -- for M&A, buybacks, dividends or other purposes -- without paying U.S. tax on them.

Related: Pfizer banking on big tax savings in U.K.

In addition, Pfizer is also attracted by recent changes in U.K. law that critics say are turning the country into a tax haven.

While its headquarters would remain in New York, a Pfizer-AstraZeneca combination would be domiciled for tax purposes in the U.K.

The U.K. has been steadily cutting its rate of corporate tax. It now stands at 21% and is due to fall to 20% starting in April 2015. That compares with 26% back in 2011.

The government also offers financial incentives to encourage investment in scientific research and development. Big companies such as AstraZeneca qualify for tax relief worth 130% on their research budgets. That means for each £100 it spends, it can reduce the amount of profit liable to corporate tax by £130.

Companies involved in innovative R&D can also take advantage of a new measure called "the patent box." Introduced in April 2013, it will reduce the corporate tax rate on earnings attributable to U.K. or European patents to 10% by 2017.

Related: Firms warned not to leave U.S. for lower taxes

Pressure is had been mounting on the British government to intervene in the deal. Pharmaceutical, medical biotechnology and medical technology companies employ about 175,000 people, and spend more than £5 billion a year on R&D.

Concerns about pledges made in the heat of takeover battles have been fueled by complaints that Pfizer failed to honor pledges to Sweden's Pharmacia in 2002, and Kraft's U-turn on the fate of a chocolate factory following its purchase of Cadbury in 2010.

-- Mark Thompson contributed reporting.

First Published: May 18, 2014: 10:30 PM ET

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Make your desk impress

(Money Magazine)

Appearance matters -- and in the corporate world, that applies to your desktop as much as your dress attire.

"Your space speaks to your work mentality, creativity, and organizational skills," says Sam Gosling, a psychology professor at the University of Texas at Austin and the author of Snoop: What Your Stuff Says About You.

Related: 5 ways to reduce your financial anxiety

And with 70% of American employees now working in open-plan offices, as the International Facility Management Association reports, desktops are more in the public eye than ever. Ensure that yours sends the right message.

1. Show some of your colors

Research has found that employees tend to be more productive when they can express their personalities, Gosling says. So make your area your own. But be wary of over-personalizing—lining the walls with team pennants or your kid's artwork, for example—as this can tarnish your professional image. Limit yourself to seven personal items, suggests Washington, D.C., career counselor Karen Chopra.

2. Minimize paper ...

A messy desk could make your manager question your attention to detail or efficiency, says Julie Morgenstern, author of Organizing From the Inside Out. Worse yet if your mess keeps you from quickly producing documents upon request.

To help reduce the paper you keep, make a cheat sheet defining "trash" vs. "save" items -- simply writing that list can be instructive -- and post it up as a reminder.

Next, create a system to organize "saves." Not a filer? At least put them in themed piles in labeled bins.

3. ... But leave a little clutter

While untidiness is unbecoming, there's also a downside to being too neat. "People will wonder when you do any work," says Chopra.

Related: How we feel about our finances

Plus, you may impede your creativity: A recent study at the University of Minnesota found that a disorderly environment stimulates innovative thinking.

The right balance? Make sure at least two-thirds of your desk is visible, says Morgenstern.

4. Have a talking piece

Being able to click with your boss determines your ability to leverage the relationship. So display something that could start a nonwork conversation, suggests Alan Hedge, a Cornell professor who studies the effects of office design on workers.

Related: How to get in trouble in your 401(k)

That may be an interactive or interesting object (like your Google Glass) or a photo showing a shared interest (you on the slopes if the boss skis).

5. Hide evidence of lunch

Six in 10 Americans regularly eat at their desks, the American Dietetic Association found. Sound familiar? Keep cleaning spray handy. And trash takeout containers promptly.

When clients visit the office, Hedge says, "your boss wants it to look like a work area, not a cafeteria."

First Published: May 16, 2014: 7:03 PM ET

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