Remembering Milton Friedman

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Ninety-seven years ago today, Milton Friedman was born in Brooklyn to Jewish immigrants.

By the time he died in 2006, Friedman was a world-renown economist who was celebrated as the man who made free markets popular again.

The South Carolina Policy Council has a nice piece on Friedman in its Week in Review, including this highlight:

We can learn a lot from the lessons that Friedman taught us about economic growth and government actions. In his book Capitalism and Freedom, Friedman wrote:

“The Great Depression in the United States, far from being a sign of the inherent instability of the private enterprise system, is a testament to how much harm can be done by mistakes on the part of a few men when they wield vast power over the monetary system of a country.”

One of the major reasons for the severity of today’s recession are the Fed’s actions that artificially stimulated the boom period. During the recession of 2001, the Federal Reserve continued to lower interest rates to encourage more investment – from around 6 percent in 2001 to nearly zero in 2004. This helped boost prices, which led to a massive bubble.  

When government entities begin to believe they can dictate economic directions, the path is set for more extreme downturns. South Carolina’s Legislature can learn from Friedman and end its ongoing effort to control the state economy. If we allow individual incentives and motivations to lead, recovery will come about at a faster pace.

Nelson Mullins gets more Canadian work

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Former US Ambassador to Canada David Wilkin’s affiliation with Nelson Mullins Riley & Scarborough continues to reap benefits for the Columbia, SC-based law firm.

The Canadian province of Saskatchewan recently announced that it had signed a contract with Nelson Mullins for media relations services in the US. Nelson Mullins already provides Saskatchewan with strategic and legal advice.

The new contract, signed by Wilkins, a partner with Nelson Mullins, runs from Aug. 1, 2009, to Aug. 1, 2010. It’s valued at $144,000.

Wilkins, the former speaker of SC House of Representatives, stepped down as US Ambassador to Canada earlier this year.

In addition to his work with Nelson Mullins, Wilkins is active with Clemson University. Earlier this month, he was unanimously elected chairman of the Clemson board of trustees, beginning a two-year term.

First National okays massive stock dilution

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Shareholders of First National Bancshares have approved increasing the number of authorized common shares from 10 million to 100 million.

The move was taken to help the bank raise additional capital to absorb the potential losses associated with the disposition of subsidiary First National Bank of the South’s nonperforming assets and to increase capital levels to meet the standards set forth by the Office of the Comptroller of the Currency.

According to a June 15 filing with the US Securities and Exchange Commission, “Additional common shares may be issued by the company in connection with equity financing to raise capital, current or future equity compensation plans for the company’s directors, officers, and employees, and other corporate purposes.”

First National is struggling to keep its head above water. The Spartanburg, SC-based company lost $44.8 million last year and another $1.36 million during the first three months of 2009.

First Nationla has yet to release its earnings report for the most recent quarter.

As of March 31, 2009, First National reported nonperforming assets of $73.9 million, compared to $25.6 million year earlier.

Stock in First National is trading for around 75 cents a share.

First Community shows profit

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First Community Corp. continues to be one the few South Carolina community bank companies showing a profit. during the current economic downturn

The Lexington, SC-based parent of First Community Bank earned $249,000 during the quarter ended June 30 and has earned more than $400,000 through the first six months of 2009.

A year earlier, First Community’s bottom line showed a loss of $3.5 million during the second quarter, thanks to a one-time charge of $6.2 million related to an investment in Freddie Mac preferred stock.

Total nonperforming assets rose to $7.5 million during the three months ended June 30, compared to $1.6 million a year earlier, according to information filed with the US Securities and Exchange Commission.

Stock in First Community 29 cents to $7.24 a share Thursday.

Advance America CEO subject of probe

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The chief executive officer of Advance America Inc. is the subject of an ongoing insider trading investigation by US Securities and Exchange Commission, according to a report in The Spartanburg Herald-Journal.

Ken Compton, who is also president of the Spartanburg-based payday lender, has denied making any improper trades or engaging in any wrongdoing or “other improper activity,” the paper reported.

In a filing with the SEC on Wednesday, Advance America said it was informed on July 22 that Compton, and “certain individuals who are not officers, directors or employees” of Advance America received Wells Notices from the SEC, according to The Herald-Journal.

A Wells Notice is a notification from a regulator that it intends to recommend that enforcement proceedings be commenced against the prospective respondent.

According to the filing, the company did not receive a Wells Notice and does not believe it is the subject of this investigation.

The company said it understands SEC staff plans to recommend civil action alleging insider trading involving about $20,000 in losses avoided by third parties selling company stock during 2007, the paper added.

Peoples extends executives’ contracts

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Peoples Bancorporation of Easley, SC, announced that it has extended its employment agreement with William B. West and subsidiary Peoples National Bank has extended the contract of Andrew Westbrook III, both for an additional year.

West is executive vice president and a director of Peoples Bancorporation while Westbrook is president and chief executive of Peoples National Bank and executive vice president of retail banking and a director of Peoples Bancorporation.

The pair originally had rolling three-year employment terms, but on Aug. 1, 2008, Peoples notified several top executives, including West and Westbrook, that their employment agreements would cease, as of that date, to automatically extend, and would terminate on Aug. 2, 2011, according to information filed with the US Securities and Exchange Commission.

Peoples offered to replace each of the existing agreements with a new agreement that provided for a one-year term that could be extended for an additional year each year at the discretion of the board, and provided somewhat different benefits from those provided by the original agreements.

West and Westbrook accepted the offer of substitute employment agreements and on Sept. 2, 2008, Peoples entered into a substitute agreement with West, and Peoples National Bank entered into a substitute agreement with Westbrook.

Peoples lost more than $8 million in 2008, but managed to post a $558,000 profit during the first three months of this year. Earlier this year, the company was approved by the US Treasury for $12.66 million under the Treasury Capital Purchase Program.

Stock in Peoples is currently trading for $2.70 a share.

Cotton crop falling short of estimates

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Halfway through the 2009 US cotton season, analysts say the crop is shaping up to be between 12.42 million and 12.56 million bales, which is about 750,000 bales less than the USDA’s July 10 estimate, according to Southeast Farm Press.

There remains considerable uncertainty about the crop in Texas — which depends largely on adequate moisture falling on its dryland crop, the publication reported.

“Over 3 million acres of the 4.9 million acres planted in Texas is dryland, said Carl Anderson, extension specialist emeritus, Texas A&M University. “Because of dry planting conditions and extremely hot temperatures in early July, blowing sand and hail, I’m estimating that at least 1.35 million acres, or 27 percent of the 4.9 million acres planted, is apt to be abandoned.”

In the Southeast, Georgia is projected to be the region’s largest producer at 1.6 million bales, with North Carolina second, at a projected 600,000 bales. Overall, the Southeast is projected to produce about 3.1 million bales.

“For most Southeast and Mid-South states, we’re in a little bit better shape than we were a year ago at this time,” said O.A. Cleveland, an economist and professor emeritus, Mississippi State University.