Month: June 2013


Stocks Jump as Data Top Expectations

June 30, 2013

Business

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FOX Business: Capitalism Lives Here

The markets zipped higher Tuesday as strong data and dovish commentary from global central banks bolstered traders confidence in the economy.

Todays Markets

As of 3:15 pm ET, the Dow Jones Industrial Average climbed 118 points, or 0.81%, to 14778, the SP 500 gained 16 points, or 1%, to 1589 and the Nasdaq Composite rose 24.4 points, or 0.74%, to 3345.

The markets have taken a pounding in recent weeks, with the Dow and SP 500 selling off to their lowest levels since April 22 on Monday. Still, both market barometers are up more than 10% for the year. The latest leg lower has been driven by continued fears about an end to the Federal Reserves massive bond-buying program and new concerns about a credit crunch in China.

It seems that the rush for the exits has come to a halt for now, but, like the proverbial parrot, this bout of risk aversion may not be dead, but just resting, said Rupert Osborne, a futures dealer at IG in London. It is still a struggle to work out the real outlook for markets, since the dust kicked up by last week’s Fed meeting will take weeks to settle.

Commentary suggesting central bankers wont be ending the easy-money policies too soon helped sooth investors nerves on the day. In particular, The Wall Street Journal reported a Peoples Bank of China official as saying the countrys central bank will guide interest rates in a reasonable range.

Several Fed members also suggested asset purchases wont be ending too soon.

Several economic reports also helped lighten Wall Streets mood.

The Commerce Department said orders for long-lasting goods jumped 3.6% in May from April, topping expectations of a 3% gain. Excluding the transportation segment, orders rose 0.7% compared to expectations it would hold steady.

The SP/Case-Shiller report showed home prices in 20 major US metropolitan areas climbed 2.5% in April from March, on a non-seasonally adjusted basis, topping expectations of a 1.1% gain. Prices were up 12.1% from the year prior, beating forecasts of a 10.6% jump.

The report is a lagging indicator but is seen as a critical gauge of activity in the US housing sector.

Another important housing report slated for release at 10:00 am ET is expected to show sales of new, single-family homes having increased to an annual pace of 462,000 units in May from 454,000 the month before.

A separate report from Commerce showed sales of new, single-family homes rose 2.1% in May from April to an annual rate of 476,000 units. Wall Street expected sales to come in at an annual rate of 462,000 units. The reading was the highest since July 2008.

Meanwhile, the Conference Boards gauge of consumer confidence rose to 81.4 in June from 74.3 in May – beating estimates of 75.4.

On the corporate front, Walgreen (WAG) revealed quarterly profits and sales that missed Wall Streets expectations. Lennar (LEN), the homebuilder, posted results that topped analysts forecasts.

Meanwhile, Google (GOOG) was dealt a victory, with an adviser to the European Unions top court saying the search giant doesnt need to remove sensitive results from its search engine.

Commodities were broadly higher. Gold climbed $8.10, or 0.63%, to $1,285 a troy ounce. Oil was up 46 cents, or 0.49%, to $95.65 a barrel. Wholesale New York Harbor gasoline climbed 0.49% to $2.751 a gallon. In Treasury markets, the benchmark 10-year yield fell 0.034 percentage point to 2.505%.

Foreign Markets

The Euro Stoxx 50 rallied 1.4% to 2545, the English FTSE 100 jumped 0.93% to 6085 and the German DAX soared 1.6% to 6085.

In Asia, the Japanese Nikkei 225 slumped 0.72% to 12969 and the Chinese Hang Seng edged up 0.21% to 19856.

Follow Adam Samson on Twitter @adamsamson.


Bankruptcy Won’t Help These Money Woes

June 29, 2013

Chapter 7 Bankruptcy

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Dear Bankruptcy Adviser,

I am debating whether to file bankruptcy. I am 28 years old and have an eviction that is ruining my chances of getting a decent apartment. I previously paid off a broken lease with another company. When I was 18, I opened some credit card accounts, never paid them off, and the accounts were closed. I also co-signed on a car that was repossessed.

Along with this, I have broken contracts with three cellphone providers, and I have a hospital bill that has not been paid.

Any help here would be great. Which type of bankruptcy would I need to file — Chapter 7 or Chapter 13? I am just tired of not being able to get my own place, and the places that will take me are not so pleasant.

-Richard

Dear Richard,

Bankruptcy may not be the solution for you. You need to understand why you keep getting into financial trouble before making any major decisions such as filing for bankruptcy protection. A bankruptcy today will solve past issues only. For you, avoiding future financial pitfalls is just as important. You need to first get control of what appears to be a series of bad financial decisions.

That being said, there are two accounts that you could potentially file for, but hopefully you can avoid bankruptcy. Lets look at each account.

Broken lease: A broken lease may show up on your credit report. It depends if the landlord actually did evict you through the courts. If the landlord formally evicted you, the eviction usually gets reported to the credit bureaus. Future landlords that look at your credit will see that eviction even if you file bankruptcy. The negative mark remains on your credit for seven years, even while the bankruptcy eliminates your liability to pay.

Old credit card debt: You state you are now 28 years old. You may not be legally responsible to pay on these debts anymore, although they could still be on your credit report. Each state has a specific period of time, called the statute of limitations, in which a lender can sue you for an unpaid balance. The statute of limitations period begins from the date of late use or last payment on the account, whichever is later.

Once that time period runs out, the lender can only ask you to pay and not sue you to pay. If you cant be sued, you dont need to file bankruptcy to wipe them out. Eventually, they will fall off your credit report, but in the meantime, they are affecting your score.

Cellphone contracts: I will assume the balance is likely very small and the collection agency handling the account is unlikely to sue you to pay such a small balance. Sometimes you can settle these accounts for as little as 20% of the balance. While the settlement will not help your credit and will leave a mark on your credit report, it is better than having an open, delinquent account on there.

Repossessed vehicle: This account could force you into bankruptcy if the statute of limitations hasnt run out. Once the car is repossessed, the lender sells the car, and the remaining balance after the sale is your responsibility. The lender does not have to sue the primary borrower before coming after you. Usually, the co-signer had the better credit, so you are more likely to be sued. Hopefully, the remaining balance is outside the statute of limitations, but if it is not, you likely will be sued for failing to pay.

Medical bill: You dont state the balance owed, but most collection agencies want to settle these accounts and will usually do so for 20% of the outstanding balance. Obviously, the balance will determine whether you can afford to settle. It will also likely be on your credit report.

At the end of the day, if the statute of limitations hasnt run out on the repossessed car balance and the medical bill, you could potentially file bankruptcy for those two missteps. Know that most, if not all, of your financial troubles should be on your credit report if they are within the statute of limitations. These are likely what is making any landlord wary of renting to you. If you do end up filing, I would suggest filing Chapter 7, which is an elimination of all your debt. Try to confirm you are eligible for Chapter 7 bankruptcy before you file.

Ask the adviser

To ask a question of the Bankruptcy Adviser, go to the Ask the Expertsquot page and select quotBankruptcyquot as the topic. Read more Bankruptcy Adviser columns and more stories about debt management.

Bankrates content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrates Terms of Use.

Copyright 2013, Bankrate Inc.


Samsung denies ditching its desktop PC business

June 29, 2013

Business

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Monday, the Internet buzzed and rumbled with news that Samsung planned to drop out of the desktop PC market. Tuesday, Samsung poured cold water on the report.

We know what you’re thinking: “Samsung makes desktops?” Apparently so, though the report the Korea Times put out on Monday definitely made it feel that the traditional PC’s time is done at Samsung.

“Demand for conventional desktop PCs is going down,” an unnamed Samsung Electronics official said in that Korea Times report. “We will allocate our resources to popular connected and portable devices.”

Across the web, pitchforks were nabbed and PC doomsayers said doomy things. Which PC manufacturer would be the next to throw in the towel? several people wondered. The answer turned out to be “Not Samsung.” The electronics giant
sent the following statement to Engadget and other publications:

The rumor that Samsung is withdrawing from the PC desktop business is groundless. Samsung will continue to offer diverse products according to market needs, including our recently announced Ativ One 5 Style, a stylish all-in-one PC. We will continue to open all possibilities in PC business including our PC Tower business, to satisfy consumer’s diverse lifestyle and needs.

It was much ado about nothing–in more ways than one.

Samsung does the desktop boogie

No desktop options here.

So, Samsung’s keeping its tower PC business active, for what that’s worth. Here in the US you’d be hard-pressed to find a desktop with the Samsung logo on it. The closest thing to a desktop you’ll find on the Samsung website are all-in-ones and Chromeboxes, and they’re mere drops lost in the ocean of Samsung’s laptops, tablets, and smartphones. Even the business and gaming PC options yield solely mobile devices

Tower PCs have simply never been a major focus for Samsung. Saying you’re open to maintaining a PC tower business without offering a single tower PC is a bit disingenuous.

Regardless of whether or not Samsung’s desktop swan song was truth or tall tale, there’s no denying that PC sales have stalled while mobile sales have blossomed, and companies have been responding by shifting their focus to the devices that are selling.

Try telling Maingear that desktop PCs are dead.

Even so, rumors of the PC’s demise are greatly exaggerated. A majority of the large manufacturers–such as Dell, Lenovo, Asus, and Acer–continue to offer a plethora of desktop options. Smaller boutique gaming PC builders continue to prop up all the time as well, offering outrageous performance for the price of a small mortgage.

But make no mistake: While Samsung’s killing of the desktop may not have happened today, some manufacturer, some day, will in all likelihood carry out the vicious act. Selling computers is a cut-throat business, and with consumer attention shifting to slates, it would be surprising if some of the smaller desktop players–yes, like Samsung–didn’t dump towers to focus on the sleek and mobile.

And that’s OK. While the word of the day is diversify, the desktop PC market isn’t going to disappear any time soon. Plus, when it comes down to brass tacks, tablets are PCs, too–just like laptops, netbooks, and all-in-ones.


Should You Combine Mortgages into One Loan?

June 29, 2013

Business

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Dear Dave,

My son has a $115,000 mortgage at 5.8%. He also has a home equity line of credit of $40,000 at 9%. Currently, he can get a 30-year loan at 3.5%, or a 15-year note at 2.75%. His take-home pay is between $70,000 and $80,000 a year, and these are his only debts. Should he combine the mortgages into one loan?

Daniel

Dear Daniel,

First, I only recommend mortgages of 15 years or less. Now we’re looking at a 2.75% loan versus a 5.8% loan versus a 9% loan. I advise people to put home equity loans under Baby Step 2 of my plan, which is pay off all debt except for the house, provided that the loan is less than half of your annual income. Based on the income figures you gave, this situation is kind of on the bubble.

If I were in your son’s shoes, I’d probably combine the two loans and refinance. I’d go for a new $155,000 fixed-rate mortgage at 2.75%, with no balloons and no calls. This kid can live a good life and get the mortgage paid off pretty quickly with the kind of money he’s making.

But if it’s me, I’m getting as short a term as possible on a refinance–maybe even a 10-year note instead of 15 years. Just imagine him getting all this knocked out and still having the majority of his life ahead of him. That’s financial peace!

-Dave

Dear Dave,

My husband and I are debt-free. Recently I learned that I have a blended fund for retirement. Do you think I should switch to self-chosen funds? I have $26,000 invested at the moment.

-Marina

Dear Marina,

My advice is to move your money into self-chosen funds. The problem with blended funds is not that they are blended, but that they’ll move it around based on your age and where they perceive you to be in life. You won’t even realize it’s happening. I want you to be a lot more intentional with your money and know what’s happening every step of the way.

With self-chosen funds you can look at them and say, “Those are my funds.” Then, if down the road you decide one isn’t doing as well as you like, you can move the money to a different fund. With blended funds it’s almost like having a babysitter for your money. You’re not the one watching the kids, and to me that’s a big mistake.

There shouldn’t be a lot of fees inside your 401(k) when it comes to trading funds. There’s a good chance there won’t be any fees at all, especially if you stay within the same company. Check into it, Marina, and talk to your human resources people. They can give you all the details.

-Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.


I’m Planning To Start My Own Business, Why Bother With A College Degree?

June 29, 2013

Business

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I’ve heard this question in a number of forms, and there are more than a few articles dedicated to the subject of how valuable a college degree is for someone planning to start their own business. In full disclosure, I have two degrees, a BS in Molecular Biology from San Jose State University and Executive MBA from the Anderson Business School at the University of California Los Angeles. I have also been a successful serial entrepreneur, and often spend thought cycles mulling over what makes anentrepreneursuccessful.


The Adirondack Trust Company Named To National Top 200 Community Bank List

June 29, 2013

Personal Financial Services

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Saratoga Springs, New York: The Adirondack Trust Company announced today that it was recently named to the national Top 200 Community Bank list. The annual list was released by the American Banker Magazine and covers the year ending December 31, 2012.

Commenting on this significant accomplishment, Charles V. Wait, President and CEO of the Company noted:

We are honored to be among the best performing banks in the nation by being named to the Top 200 Community Bank list. We particularly want to thank our customers, directors and our dedicated staff for helping us to achieve this designation. This accomplishment is gratifying in that it demonstrates a continued emphasis on providing value to our shareholders by serving our customers and our communities. We are the only bank in Saratoga Springs, New York to receive this designation. We are fortunate to be in a market where the continued emphasis on economic activity remains strong and we believe this is one of the leading factors for our overall success. Since our founding in 1901 our mission continues to be managing our community bank for the benefit of our shareholders, our employees and our community.”

The ranking for best performing banks is based on the average return on equity over the past three years ending December 31, 2010, 2011 and 2012.

Founded in 1901 in Saratoga Springs, New York The Adirondack Trust Company is an independent, employee and locally owned and operated community bank offering a wide variety of business and personal financial services. The bank also offers trust, investment and insurance services and originates real estate mortgages, both residential and commercial, and commercial business loans throughout its market area. The bank has over $1 billion in assets and twelve branches. The Adirondack Trust Company is rated a 5-Star superior bank (the highest) by Bauer Financial for the period ending December 31, 2012 based on the most recent data available. The Banks website is www.adirondacktrust.com

###

For further information contact:

Charles V. Wait                                                          Jack Arnold, CPA

President amp; CEO                                                        Senior Vice President amp; Chief Financial Officer

(518) 584-5844                                                           (518) 584-5844
The Adirondack Trust Company
473 Broadway
Saratoga Springs, NY 12866
(518) 584-5844


President to Kick-Start Global Climate Agenda

June 29, 2013

Business

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President Barack Obama will attempt to kick-start a global climate agenda on Tuesday with proposals including a plan to limit carbon emissions from existing US power plants that is sure to face opposition from the coal industry, many business groups and Republican lawmakers.

Obama, whose first-term attempt to reduce greenhouse gas emissions through a cap and trade system was thwarted by Congress, promised in his second inaugural address to tackle the issue again.

Environmentalists and Obamas political base have been anxious for action, but the first months of his second term have been dominated by immigration reform, a failed attempt to pass strict gun control measures, and a series of political scandals.

Republicans, in turn, have been emboldened by Obamas stumbles. Many also question climate science and oppose regulatory actions they say could hurt the economy.

The Democratic president aims to address those concerns and make good on his inaugural promise with a speech, scheduled for 1:55 pm, that lays out a new plan to reduce emissions, boost renewable fuels, and lead the world in tackling global warming.

The key proposal involves the thousands of power plants, many of them coal-fired, which account for roughly one-third of US greenhouse gas emissions.

Obama will direct the Environmental Protection Agency to draft a plan setting carbon emission limits on existing power plants by June 2014, finalizing those rules a year later, according to senior administration officials who briefed reporters before the speech.

We already set limits for arsenic, mercury and lead, but we let power plants release as much carbon pollution as they want, one official said.

The proposals are likely to draw criticism from segments of the energy industry and some Republican lawmakers that they will cost jobs and hurt the US economic recovery. In addition, they could be tied up in court for years.

The administration officials did not give details of what the limits for existing plants would entail. Separately, the EPA would finalize overdue plans for carbon limits on new power plants by September, they said.

Environmental groups that had early word of the administrations plans cheered.

Tackling carbon pollution from power plants is the greatest opportunity and should be at the core of any serious approach to reduce US emissions. For the first time, a US president is taking such action, Andrew Steer, president of the World Resources Institute, said in a statement.

This announcement will have ripple effects that will increase the urgency of action around the globe.

KEYSTONE OVERHANG, INTERNATIONAL FOCUS

None of the presidents proposals, including plans to reduce emissions from heavy duty trucks after 2018, require congressional approval. That alone is likely to spark howls from Obamas opponents on Capitol Hill.

(Obama) made it very clear that his preference would be for Congress to act and move comprehensive energy and climate legislation forward, the official told reporters. At this point … the president is prepared to act.

Some environmentalists fear that Obama will use new climate measures to head off criticism if his administration approves the proposed Keystone XL pipeline, which would carry oil from Canada to refineries in Texas.

A senior administration official said the decision on Keystone has not been made.

Green groups want Obama to reject the pipeline. Republicans and many businesses say it will help the economy, and some unions support the project because of the jobs likely to be created during the pipelines construction.

The presidents allies abroad will be watching, too. In 2009, Obama pledged to reduce US greenhouse gas emissions by roughly 17 percent below 2005 levels by 2020 – cheering partners in Europe, who were frustrated by less ambitious promises made by Obamas Republican predecessor, George W. Bush.

Obama will stand by that pledge on Tuesday, and officials said Washington wants to take the lead in international efforts to seek a new agreement to reduce emissions after 2020.

We will be seeking an agreement that is ambitious, inclusive and flexible, the White House said in a written version of Obamas climate plan.

As part of its global efforts, the White House would propose World Trade Organization talks on free trade in environmental goods and services, officials said. The United States would also plan to end its support of public financing for new coal power plants overseas unless they used carbon capture technology. Very poor countries would still get support.

Obama and Chinese President Xi Jinping agreed this month to cooperate in fighting climate change by cutting the use of hydrofluorocarbons, or HFCs.

The White House plan includes measures to tackle HFCs as well as emissions from methane, another potent greenhouse gas.


Irish Economy 2013: Bad loans ratio at 25% in Ireland and Greece; 11% in Spain

June 28, 2013

Property Loans

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However, the Irish ratio excludes the transfers
to NAMA (National Assets Management Agency): NAMA acquired 12,000 toxic property
loans (secured by approximately 56,000 individual property units) involving
about 800 debtor connections. Par debt at acquisition was approximately EUR74bn.
It paid
the Irish banks EUR31.8bn — a discount of 57%. Last month NAMA
confirmed the sale of properties with an initial value at EUR810m to a Starwood
Capital-led consortium structured with just under 60% vendor finance provided by
NAMA over five years. It was reported that the properties were sold for around
EUR200m, which would reflect a 75.3% discount. NAMA has a 20% interest in the
consortium.

The IMFs

latest review [pdf] says that at 24.8% of total loans, nonperforming loans
are a drain on market confidence, cash flows, and a source of operational costs
that hinder capacity to lend. A lack of resolution progress also undermines the
reliability of assessments of loan values.

We

reported last April that half of all lending to Irish SME (small and
medium enterprises) business are in arrears, according to the Central Bank.
Fiona Muldoon, the director of credit institution supervision at the bank said
that of the EUR50bn lent to the sector by the domestic banks, some EUR25bn was
impaired.

The IMF said that the breadth of financial
distress is evident in 15.8% of mortgages on primary dwellings being over 90
days in arrears, and 26.9% of buy-to-let mortgages. The SME sector is
particularly hurt by domestic demand weakness with impaired loans rising to 25%
of SME and corporate loans. Banks have largely responded with a combination of
forbearance and rejections of SME loan applications — the latter is the highest
in the EU. Banks remained loss making in 2012 even before provisioning, and are
only beginning to resolve NPLs (non-performing loans), now reported at a quarter
of gross loans.


Richard Clark, of Bath-based Jones Lang LaSalle: New rules surrounding …

June 28, 2013

Property Loans

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UK banks must now comply with a new slotting regime when risk assessing commercial property loans as stipulated by the Financial Services Authority (FSA) earlier this year, sending a clear message that current models are considered inadequate.

In an aim to standardise the guidelines on how the risk of loans should be calculated, the FSA has defined a risk weighted model which will reshape property finance as we know it.

The model weights the risk as to how much capital reserve is required by the lender to cover any potential losses. The scale can range from 50-250 per cent and classifies each loan to one of four categories – strong, good, satisfactory, or weak.

By way of example, for every pound;1 secured over a commercial property asset, between pound;0.50 and pound;2.50 will need to be put aside in capital reserve. So what does this mean? For prospective borrowers the greater reserve requirements will increase the cost of financing a commercial property loan. As such, banks are only likely to lend on secure or low risk assets that are allocated as strong or good.

For existing borrowers, its a different story. A considerable amount of commercial property debt is currently secured against satisfactory or weak assets. These loans are already under water on a conventional LTV (loan to value) test and the majority of these loans are secured against secondary property assets situated in the regions.

With pound;225 billion of debt secured against commercial property in the UK – and approximately 70 per cent of this debt due to mature before 2017 – banks have been reducing balance sheet debt (deleveraging) for some time in an effort to increase capital reserves and unwind exposure to volatile property markets.

To date, the deleveraging process has been more of a gentle glide path out of loans rather than a mad scramble for the exit. The new slotting regime will force banks to deleverage at a faster rate if they want to avoid allocating significant amounts of capital in reserve to satisfactory or weak secondary assets.

An acceleration in the deleveraging process as banks step clear of these unsustainable loans could lead to a further depression in commercial property values in the regionals, including the South West.

In the short term, slotting is a force to be reckoned with. It is likely to result in an increase in the volume of secondary, regional based, commercial property assets being sold and a further decline in values.

On the flip side however, it presents an opportunity for property investors with equity or those able to raise finance via alternative sources, such as debt funds and non-bank lenders.

There are arguments for and against the new regime but regardless of your point of view, slotting will ultimately inject some much needed stability into our financial system and it will put an end to aggressive property lending.


President Obama Talks Immigration Reform with Business Leaders

June 28, 2013

Business

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This afternoon, the President met with CEOs, business owners and entrepreneurs to discuss the economic benefits of fixing our broken immigration system. The President and business representatives discussed their shared belief that achieving immigration reform holds meaningful economic promise for the United States, creating a fair playing field for employers and workers alike.

All of these business leaders recognize the degree to which immigration is a contributor to growth, a contributor to expansion, a creator of jobs, President Obama said, but they also recognize that the immigration system that we currently have is broken.

We have a system in which we bring outstanding young people from all across the world to educate them here, and unfortunately, too often, we send them right back so that they can start companies or help to grow companies somewhere else instead of here.

We have a situation in which millions of individuals are in the shadow economy, oftentimes exploited at lower wages, and that hurts those companies that are following the rules, because they end up being at a disadvantage to some of these less scrupulous companies.

And so, all of us I think recognize that now is the time to get comprehensive immigration reform done.

President Obama said that many of the business leaders at todays meeting were immigrants themselves, and are now creating opportunity all across the country, just like the generations of immigrants who came to America before them.

And if we get this done — when we get this done, President Obama said, I think every business leader here feels confident that they#39;ll be in a stronger position to continue to innovate, to continue to invest, to continue to create jobs, and ensure that this continues to be the land of opportunity for generations to come.

Watch this video on YouTube

For more information:

  • Learn more about commonsense immigration reform
  • CBO Report: Immigration Reform Will Shrink the Deficit and Grow the Economy