Power Balance slammed by ACCC, household savings rate down in December: Economy Roundup

Power Balance Australia, the manufacturer of the Power Balance bracelets worn by some of the country’s leading athletes, has been slammed by the Australian Competition and Consumer Commission.

The company brags that the wristbands enable better balance, strength and flexibility, but ACCC chairman Graeme Samuel says the products are a scam.

“Power Balance has admitted that there is no credible scientific basis for the claims and therefore no reasonable grounds for making representations about the benefits of the product.”

“Its conduct may have contravened the misleading and deceptive conduction section of the Trade Practices Act 1974…When a product is heavily promoted, sold at major sporting stores and worn by celebrities, consumers tend to give a certain legitimacy to the product and the representations being made.”

Samuel has said that anyone who felt they were misled will be entitled to a refund, and has warned other retailers that misleading advertising will not go unnoticed by the watchdog.

A survey from the Melbourne Institute has found that financial conditions deteriorated in December.

According to the household financial conditions index, the proportion of respondents nominating, “saving for a rainy day” as the motivation for saving was 46.9%, down from 49.1% in September.

“Financial conditions of Australian households declined during the global financial crisis. So far, conditions do not show signs of a rebound,” research fellow Edda Claus said in a statement.

“Overall, it appears that household financial positions have deteriorated in December compared to earlier this year and this time last year.”

Seek has said it will now take a majority stake in Hong-Kong based Jobs DB, an online employment group, for $206 million. The acquisition will be made through a partnership between Seek, Consolidated Media Holdings and Macquarie Capital, along with Tiger Global.

“The acquisition significantly enhances Seek’s investment in the highly strategic and attractive South East Asian online employment sector,” Seek said in a statement.

“Seek is delighted that CMH, Macquarie and Tiger are investing in SEEK Asia,” it said. “Seek has a long history working alongside these investors and believes that they will be extremely valuable in assisting to drive the future growth of JobsDB.”

Shares flat despite strong US leads

The Australian sharemarket has opened flat this morning despite a strong result in the US where a rally has now extended for five days.

The benchmark S&P/ASX200 index was up 12 points or 0.25% to 4790.5 at 11.45 AEST, while the Australian dollar broke through parity overnight and was at US99c this morning.

AMP shares lost 0.4% to $5.38, while Commonwealth Bank shares fell 0.3% to $51.01. Westpac gained 0.3% to $22.68 and ANZ rose 0.3% to $23.70.

Mining giant Rio Tinto has divested its holdings in US coal miner Cloud Peak Energy, the company has said in a statement.

“Gross proceeds from the over allotment were $US74.1 million, bringing the total gross proceeds from the secondary offering to $US573.3 million,” Rio Tinto said.

“Rio Tinto continues to have certain rights under the tax receivable agreement entered into with Cloud Peak at the time of the initial public offering.”

An inquiry into New South Wales’s $5.3 billion electricity asset sale will begin next Thursday, opposition leader Barry O’Farrell has said.

“I say to Kristina Keneally today, do not take action in the courts to try and close this committee down, do not send Labor members along to this committee to try and close it down today,” he told Macquarie Radio Network.

“Because the public have a right to know and in the absence of the state government being prepared to tell the public what’s happening in this deal, this inquiry should proceed.”

Economic growth gains momentum in US

The Commerce Department in the United States has said the economy grew at an annual rate of 2.6% in the third quarter, boosting confidence that the country’s recovery is gaining speed.

The National Association of Realtors has also said that existing home sales gained 5.6% in November to an annual pace of 4.68 million unites.

“We expect more economic momentum here at year end carrying over into 2011; obviously housing remains impaired,” PNC Financial Services senior economist Robert Dye told Reuters.

On Wall Street, the Dow Jones Industrial Average continued its rally, moving up 26.33 points, or 0.23%, to 11,559.49