Glenn Beck and the Oakland shooter
By Dana Milbank
Copyright by The Washington Post
Sunday, August 1, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073003254.html
Late on a Saturday night two weeks ago, an unemployed carpenter packed his mother's Toyota Tundra with guns and set off for San Francisco with a plan to kill progressives.
When California Highway Patrol officers stopped him on an interstate in Oakland for driving erratically, Byron Williams, wearing body armor, fired at police with a 9mm handgun, a shotgun and a .308-caliber rifle with armor-piercing bullets, Oakland police say. Shot and captured after injuring two officers, Williams, on parole for bank robbery, told investigators that he wanted "to start a revolution" by "killing people of importance at the Tides Foundation and the ACLU," according to a police affidavit. His mother, Janice, told the San Francisco Chronicle that her son had been watching television news and was upset by "the way Congress was railroading through all these left-wing agenda items."
But what television news show could have directed the troubled man's ire toward the obscure Tides Foundation, which sounds as if it's dedicated to oceanography, or perhaps laundry detergent, but which is in fact a nonprofit that claims to support "sustainability, better education, solutions to the AIDS epidemic and human rights"?
A week after the incident, the mystery was solved. "Tides was one of the hardest things that we ever tried to explain, and everyone told us that we couldn't," Fox News host Glenn Beck told his radio listeners on Monday. "The reason why the blackboard" -- the prop Beck uses on his TV show to trace conspiracies -- "really became what the blackboard is, is because I was trying to explain Tides and how all of this worked." Beck accuses Tides of seeking to seize power and destroy capitalism, and he suggests that a full range of his enemies on the left all have "ties to the Tides Center." On Monday, he savored the fact that "no one knew what Tides was until the blackboard."
For good measure, Beck went after Tides again on Fox that night. And Tuesday night, Wednesday night and Thursday night. That's on top of 29 other mentions of Tides on Beck's Fox show over the past 18 months (two in the week before the shootout) according to a tally by the liberal press watchdog Media Matters. Other than two mentions of Tides on the show of Beck's Fox colleague Sean Hannity, Media Matters said it was unable to find any other mention of Tides on any news broadcast by any network over that same period. Beck declined comment.
It's not fair to blame Beck for violence committed by people who watch his show. Yet Williams isn't the only such character with a seeming affinity for the Fox News host. In April 2009, a man allegedly armed with an AK-47, a .22-caliber rifle and a handgun was charged with killing three cops in Pittsburgh. The Anti-Defamation League reported that the accused killer had, as part of a pattern of activities involving far-right conspiracy theories, posted a link on a neo-Nazi Web site to a video of Beck talking about the possibility that the Federal Emergency Management Agency was operating concentration camps in Wyoming. The killings came after Beck told Fox viewers that he "can't debunk" the notion that FEMA was operating such camps -- but before he finally acknowledged that the conspiracy wasn't real.
Beck has at times spoken against violence, but he more often forecasts it, warning that "it is only a matter of time before an actual crazy person really does something stupid." Most every broadcast has some violent imagery: "The clock is ticking. . . . The war is just beginning. . . . Shoot me in the head if you try to change our government. . . . You have to be prepared to take rocks to the head. . . . The other side is attacking. . . . There is a coup going on. . . . Grab a torch! . . . Drive a stake through the heart of the bloodsuckers. . . . They are taking you to a place to be slaughtered. . . . They are putting a gun to America's head. . . . Hold these people responsible."
Beck has prophesied darkly to his millions of followers that we are reaching "a point where the people will have exhausted all their options. When that happens, look out." One night on Fox, discussing the case of a man who killed 10 people, Beck suggested such things were inevitable. "If you're a conservative, you are called a racist, you want to starve children," he said. "And every time they do speak out, they are shut down by political correctness. How do you not have those people turn into that guy?"
Here's one idea: Stop encouraging them.
danamilbank@washpost.com
Saturday, July 31, 2010
Edwin Kneedler a 'savvy' choice to argue suit against Ariz. immigration law
Edwin Kneedler a 'savvy' choice to argue suit against Ariz. immigration law
By Jerry Markon
Copyright by the Washington Post
Saturday, July 31, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073006222.html?hpid=topnews
Several years ago, Justice Department lawyer Edwin S. Kneedler argued his 100th case before the U.S. Supreme Court, a benchmark shared by fewer than 10 attorneys in U.S. history.
In a rare departure from court routine, Chief Justice John G. Roberts Jr. congratulated Kneedler from the bench. Kneedler quietly thanked him, said he was honored and walked away, according to lawyers who were there.
Now, Kneedler is bringing the same subdued style to a case that has attracted loud political voices from all sides: the Obama administration's lawsuit over Arizona's new immigration law. As the government's lead attorney, the deputy solicitor general must fight a law that President Obama has strongly condemned while not alienating Arizonans who fervently support it, all in the context of a national struggle over the divisive issue of immigration.
Kneedler has won the first battle: A federal judge in Arizona this week granted his request for a preliminary injunction blocking the most controversial portions of the law, which allows police to question those they suspect of being illegal immigrants. Arizona has appealed, and on Friday night an appellate court set arguments for November, rejecting a state request for an expedited hearing.
Friends and former colleagues of Kneedler, who declined to comment Friday, have described him as the quintessential government lawyer, a 35-year Justice Department veteran with an encyclopedic memory. He is known for burying his head in legal papers, documents that he transports in a weathered black satchel from his Washington home to his office.
Kneedler, 64, has been in the solicitor general's office, the government's advocate before the Supreme Court, since the Carter administration. He is no stranger to politically charged cases: More than a decade ago, he argued the government's position on whether young Cuban refugee Elian Gonzalez should be sent home to his father, and he worked on briefs about whether Paula Jones's sexual harassment case against President Bill Clinton should proceed with Clinton in office.
In recent years, Kneedler has been involved in other legal controversies, including the question of where terror suspects should be tried and whether white firefighters in New Haven, Conn., were unfairly denied promotions because of their race -- an issue in last year's confirmation hearings for Supreme Court Justice Sonia Sotomayor.
Kneedler is widely described as apolitical. His first government boss, when he joined the Justice Department's Office of Legal Counsel in 1975, was Antonin Scalia, the future conservative Supreme Court justice.
In the insular world of Washington Supreme Court advocates, few are willing to criticize colleagues. But former deputy solicitor general Lawrence G. Wallace, who helped hire Kneedler into the solicitor general's office in 1979, said Kneedler did make some enemies in the government over the years.
Wallace said Kneedler did not hesitate to argue with high-level political appointees from across the government who were trying to force a particular legal outcome.
"He was sometimes regarded as an obstacle by people who were trying to accomplish certain policy objectives that the law would not support," Wallace said. "Neither of us were always popular with some people in some administrations."
Some lawyers said Kneedler's apolitical reputation made him a savvy choice for the high-profile Arizona immigration case, even though it is unusual for a top official in the solicitor general's office to argue before a U.S. district judge. Kneedler is the senior career deputy -- there are four deputies in all -- and he served as acting solicitor general for several months in 2009 before Elena Kagan was confirmed as solicitor general.
"The Justice Department wanted to show they were taking this case incredibly seriously, but didn't want to send Obama's guy," said Tom Goldstein, a Washington lawyer who founded the Scotusblog Web site. "I've never seen any hint of politics in Kneedler. There really isn't a more respected advocate in the Supreme Court bar.''
At this week's hearing in Phoenix before U.S. District Judge Susan Bolton, Kneedler shook hands and chatted with Arizona's lead attorney, John J. Bouma. He then fielded pointed questions from Bolton, never raising his voice and consistently holding to his argument that the Arizona law intrudes on federal immigration enforcement.
"He's tremendous on his feet during oral argument," said Patricia A. Millett, a Washington lawyer who worked with Kneedler in the solicitor general's office for 11 years. She described Kneedler as "an incredibly hard worker" who often stays at his Justice Department office into the night and works weekends.
Kneedler, a University of Virginia Law School graduate, is married with two daughters. Unlike many colleagues who left public service to make more money in private practice, friends said he stayed because he loves his job.
That longevity means Kneedler has now argued 109 cases before the Supreme Court, 32 more than any other active lawyer, according to the court clerk's office. Wallace, who holds the 20th-century record with 157, said he is not worried about Kneedler one day eclipsing his mark.
"Records are made to be broken," said Wallace, who retired in 2003. "Ed is an extraordinary lawyer.''
By Jerry Markon
Copyright by the Washington Post
Saturday, July 31, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073006222.html?hpid=topnews
Several years ago, Justice Department lawyer Edwin S. Kneedler argued his 100th case before the U.S. Supreme Court, a benchmark shared by fewer than 10 attorneys in U.S. history.
In a rare departure from court routine, Chief Justice John G. Roberts Jr. congratulated Kneedler from the bench. Kneedler quietly thanked him, said he was honored and walked away, according to lawyers who were there.
Now, Kneedler is bringing the same subdued style to a case that has attracted loud political voices from all sides: the Obama administration's lawsuit over Arizona's new immigration law. As the government's lead attorney, the deputy solicitor general must fight a law that President Obama has strongly condemned while not alienating Arizonans who fervently support it, all in the context of a national struggle over the divisive issue of immigration.
Kneedler has won the first battle: A federal judge in Arizona this week granted his request for a preliminary injunction blocking the most controversial portions of the law, which allows police to question those they suspect of being illegal immigrants. Arizona has appealed, and on Friday night an appellate court set arguments for November, rejecting a state request for an expedited hearing.
Friends and former colleagues of Kneedler, who declined to comment Friday, have described him as the quintessential government lawyer, a 35-year Justice Department veteran with an encyclopedic memory. He is known for burying his head in legal papers, documents that he transports in a weathered black satchel from his Washington home to his office.
Kneedler, 64, has been in the solicitor general's office, the government's advocate before the Supreme Court, since the Carter administration. He is no stranger to politically charged cases: More than a decade ago, he argued the government's position on whether young Cuban refugee Elian Gonzalez should be sent home to his father, and he worked on briefs about whether Paula Jones's sexual harassment case against President Bill Clinton should proceed with Clinton in office.
In recent years, Kneedler has been involved in other legal controversies, including the question of where terror suspects should be tried and whether white firefighters in New Haven, Conn., were unfairly denied promotions because of their race -- an issue in last year's confirmation hearings for Supreme Court Justice Sonia Sotomayor.
Kneedler is widely described as apolitical. His first government boss, when he joined the Justice Department's Office of Legal Counsel in 1975, was Antonin Scalia, the future conservative Supreme Court justice.
In the insular world of Washington Supreme Court advocates, few are willing to criticize colleagues. But former deputy solicitor general Lawrence G. Wallace, who helped hire Kneedler into the solicitor general's office in 1979, said Kneedler did make some enemies in the government over the years.
Wallace said Kneedler did not hesitate to argue with high-level political appointees from across the government who were trying to force a particular legal outcome.
"He was sometimes regarded as an obstacle by people who were trying to accomplish certain policy objectives that the law would not support," Wallace said. "Neither of us were always popular with some people in some administrations."
Some lawyers said Kneedler's apolitical reputation made him a savvy choice for the high-profile Arizona immigration case, even though it is unusual for a top official in the solicitor general's office to argue before a U.S. district judge. Kneedler is the senior career deputy -- there are four deputies in all -- and he served as acting solicitor general for several months in 2009 before Elena Kagan was confirmed as solicitor general.
"The Justice Department wanted to show they were taking this case incredibly seriously, but didn't want to send Obama's guy," said Tom Goldstein, a Washington lawyer who founded the Scotusblog Web site. "I've never seen any hint of politics in Kneedler. There really isn't a more respected advocate in the Supreme Court bar.''
At this week's hearing in Phoenix before U.S. District Judge Susan Bolton, Kneedler shook hands and chatted with Arizona's lead attorney, John J. Bouma. He then fielded pointed questions from Bolton, never raising his voice and consistently holding to his argument that the Arizona law intrudes on federal immigration enforcement.
"He's tremendous on his feet during oral argument," said Patricia A. Millett, a Washington lawyer who worked with Kneedler in the solicitor general's office for 11 years. She described Kneedler as "an incredibly hard worker" who often stays at his Justice Department office into the night and works weekends.
Kneedler, a University of Virginia Law School graduate, is married with two daughters. Unlike many colleagues who left public service to make more money in private practice, friends said he stayed because he loves his job.
That longevity means Kneedler has now argued 109 cases before the Supreme Court, 32 more than any other active lawyer, according to the court clerk's office. Wallace, who holds the 20th-century record with 157, said he is not worried about Kneedler one day eclipsing his mark.
"Records are made to be broken," said Wallace, who retired in 2003. "Ed is an extraordinary lawyer.''
Editorial: The phoney war over US deficits
Editorial: The phoney war over US deficits
Copyright The Financial Times Limited 2010
Published: July 30 2010 19:22 | Last updated: July 30 2010 19:22
http://www.ft.com/cms/s/0/23f03456-9c07-11df-a7a4-00144feab49a.html
Washington’s recent trench war over two economic policy choices – extending unemployment benefits and making tax cuts for the highest earners permanent – is the latest clash in a larger debate about whether (and what sort of) deficits are good for the US economy.
Much of that debate is disingenuous. The bulk of the fiscal gap was caused not by the crisis but by Bush-era economic policy endorsed by many who now condemn deficits. Critics of last year’s fiscal stimulus gleefully point out that unemployment is now as high as the White House had warned it would be if the stimulus package had not passed – as if a forecasting blunder means that job losses would not have been even more dramatic without it.
As shown by last week’s austerity debate in the FT, a serious discussion is also under way, albeit one which illustrates that the state of knowledge in economics falls short of the degree of certainty expressed by its experts. The world’s best economists disagree on the effects of last year’s stimulus and of current and future choices about the US fiscal stance.
One cannot seriously dispute, however, that last year’s stimulus had some positive effect. The main reason why fiscal policy may be ineffective is that it can crowd out private investment by driving up interest rates. But in the depth of the crisis there was hardly any private investment left to crowd out, and interest rates hit historic lows.
Today, growth has returned, but it slowed in the last two quarters and could still peter out. There is still no sign of crowding out: the US can borrow long term at real interest rates below 2 per cent. Of course, markets are fickle and nothing is worse than a government which spends too much until suddenly forced to spend too little. So there is a case for deficit cutting even if it is true that deficits have buoyed the economy.
Given current growth rates, the administration’s plan – which cuts the deficit by 5 per cent of GDP in two years and stabilises the debt by 2012 – sets a sensible pace. But certain principles for smart deficit-cutting are worth heeding. First, tax and spending choices should be shaped to make the lingering effects of the recession less painful. Second, it is more important to target the structural parts of the deficit than the cyclical ones, which growth will take care of.
For both reasons, perpetuating the Bush tax cuts is worse for the economy and for public finances than a one-off extension of unemployment benefits. Washington should also continue to use its borrowing power to buttress credit-constrained state budgets.
Ultimately anyone serious about deficits should address long-term challenges such as health costs which continue to grow without bounds. Sadly, politicians prefer rhetorical phoney wars.
Copyright The Financial Times Limited 2010
Published: July 30 2010 19:22 | Last updated: July 30 2010 19:22
http://www.ft.com/cms/s/0/23f03456-9c07-11df-a7a4-00144feab49a.html
Washington’s recent trench war over two economic policy choices – extending unemployment benefits and making tax cuts for the highest earners permanent – is the latest clash in a larger debate about whether (and what sort of) deficits are good for the US economy.
Much of that debate is disingenuous. The bulk of the fiscal gap was caused not by the crisis but by Bush-era economic policy endorsed by many who now condemn deficits. Critics of last year’s fiscal stimulus gleefully point out that unemployment is now as high as the White House had warned it would be if the stimulus package had not passed – as if a forecasting blunder means that job losses would not have been even more dramatic without it.
As shown by last week’s austerity debate in the FT, a serious discussion is also under way, albeit one which illustrates that the state of knowledge in economics falls short of the degree of certainty expressed by its experts. The world’s best economists disagree on the effects of last year’s stimulus and of current and future choices about the US fiscal stance.
One cannot seriously dispute, however, that last year’s stimulus had some positive effect. The main reason why fiscal policy may be ineffective is that it can crowd out private investment by driving up interest rates. But in the depth of the crisis there was hardly any private investment left to crowd out, and interest rates hit historic lows.
Today, growth has returned, but it slowed in the last two quarters and could still peter out. There is still no sign of crowding out: the US can borrow long term at real interest rates below 2 per cent. Of course, markets are fickle and nothing is worse than a government which spends too much until suddenly forced to spend too little. So there is a case for deficit cutting even if it is true that deficits have buoyed the economy.
Given current growth rates, the administration’s plan – which cuts the deficit by 5 per cent of GDP in two years and stabilises the debt by 2012 – sets a sensible pace. But certain principles for smart deficit-cutting are worth heeding. First, tax and spending choices should be shaped to make the lingering effects of the recession less painful. Second, it is more important to target the structural parts of the deficit than the cyclical ones, which growth will take care of.
For both reasons, perpetuating the Bush tax cuts is worse for the economy and for public finances than a one-off extension of unemployment benefits. Washington should also continue to use its borrowing power to buttress credit-constrained state budgets.
Ultimately anyone serious about deficits should address long-term challenges such as health costs which continue to grow without bounds. Sadly, politicians prefer rhetorical phoney wars.
Today's Financial News Courtesy of the Financial Times
Today's Financial News Courtesy of the Financial Times
US growth slows in second quarter
By Robin Harding in Washington
Copyright The Financial Times Limited 2010
Published: July 30 2010 14:03 | Last updated: July 30 2010 20:25
http://www.ft.com/cms/s/0/a7b55d0a-9bd2-11df-9ebd-00144feab49a.html
US growth slowed to an annualised rate of 2.4 per cent in the second quarter but robust business demand suggested that the economy would avoid a feared “double dip” that could drag the world back into recession.
Friday’s preliminary gross domestic product estimate from the Bureau of Economic Analysis showed growth below market expectations of 2.6 per cent and down from an upwardly revised rate of 3.7 per cent in the first quarter.
Consumption growth fell to 1.6 per cent from 1.9 per cent, which reflected the lack of new jobs, and implied that the recovery still cannot sustain itself.
The weakness of growth is disappointing for this stage in a recovery. If data in the coming weeks do not show job creation fast enough to cut a 9.5 per cent unemployment rate, then the Federal Reserve will feel pressure to ease monetary policy.
President Barack Obama, noting the economy had been growing for a full year, called the GDP numbers “a welcome sign compared to where we were”. But he added: “We’ve got to keep on increasing that rate of growth and keep adding jobs so we can keep moving forward.”
The US release came on top of soft data from around the world, including higher unemployment in Spain, France and Japan, a rise in the eurozone inflation rate from 1.4 to 1.7 per cent, and a 1.5 per cent dip in Japan’s industrial production in May.
But economists said a dip back into recession was unlikely for the US.“It is not quite as bad as it looks at first glance,” said Paul Ashworth, senior US economist at Capital Economics in Toronto.
The strength of investment – up by 29 per cent annualised over the previous quarter – suggested that business confidence was not too badly shaken by the fiscal crisis in Europe.
The biggest drag on growth was a surge in imports: net trade subtracted 2.8 percentage points from the growth rate. An appetite for imports, however, suggests demand in the economy is strong rather than weak.
The BEA also increased its estimate of the depth of the US recession, making it the most severe since 1947. It cut its growth numbers by 0.2 percentage points for 2007, 0.4 percentage points for 2008 and 0.2 percentage points for 2009.
The stock market reaction was muted. The S&P 500 index edged up .01 per cent to close 1,101.60, but down 0.09 per cent for the week.
Additional reporting by Michael Mackenzie in New York
China closer to becoming second-largest economy
By Mure Dickie in Tokyo and Jamil Anderlini in Beijing
Copyright The Financial Times Limited 2010
Published: July 30 2010 18:53 | Last updated: July 30 2010 18:53
http://www.ft.com/cms/s/0/fd4430da-9bfe-11df-a7a4-00144feab49a.html
A senior Beijing official’s reference to China as the “world’s second-largest economy” has sparked excited speculation that Asia’s new powerhouse may have already reached a long-looming milestone by surpassing Japan.
China’s rapid recent growth has made it increasingly likely that its gross domestic product, in US dollar terms, will be larger this year than Japan’s. However, the vagaries of international currency movements mean such a result is far from assured.
Observers eagerly awaiting what will be a symbol of shifting global economic power on Friday seized on a remark by Yi Gang, director of the State Administration of Foreign Exchange, about China’s growth prospects.
“China is in fact already the second-biggest economy. With the expansion of the economic base, the growth rate should certainly gradually slow down,” Mr Yi, who is also deputy central bank governor, said in an interview on the Safe website.
However, Mr Yi’s comment fell far short of formal seizure of a title that Japan has held for just over four decades, especially given that he did not specify whether he was talking about China’s GDP at market prices or in purchasing power parity terms.
In PPP terms, often a more telling measure of economic weight, China has already been the second-largest economy for years.
China-based economists point out that Tokyo reports detailed and relatively accurate economic data. Beijing’s sketchier numbers potentially under-report its economy by as much as 20 per cent, meaning China may have really been number two for some time, even in dollar terms.
Even using official data, the baton is seen as likely to be decisively passed this year. In 2009, Japan’s gross domestic product was worth about $5,080bn, while Chinese GDP was initially reported to be not far behind at about $4,900bn.
“Mr Yi is stating the obvious; if China has not already overtaken Japan at this moment in time then it will very soon,” said Arthur Kroeber, managing director of Dragonomics in Beijing.
“This has news value but no economic value,” said Dong Tao, chief China economist at Credit Suisse. “At some point this year China’s economy will overtake Japan’s as world’s second-largest economy in nominal dollar terms; the only thing potentially stopping it right now is the strength of the yen.”
Despite Mr Yi’s apparently throw-away remark, Beijing is also unlikely to want to make too much of a fuss about its new status.
“China needs to adjust to its new status but it is not quite ready for it and would like to put it off as long as possible,” Mr Kroeber said.
Lloyds to lead way with £1bn in profits
By Sharlene Goff, Patrick Jenkins and Kate Burgess
Copyright The Financial Times Limited 2010
Published: July 30 2010 22:29 | Last updated: July 30 2010 22:29
http://www.ft.com/cms/s/0/331c2ea2-9c21-11df-a7a4-00144feab49a.html
The fortunes of Britain’s biggest banks have undergone a startling turnround, with profit growth at the state-backed Lloyds Banking Group set to eclipse that of the former industry star Barclays when they reveal their first-half results next week.
The resurgence of Lloyds, which is expected to post a profit of about £1bn for the first half, will bolster the position of Eric Daniels, the bank’s chief executive, who narrowly escaped a botched attempt to oust him in the spring.
Mr Daniels has since secured the backing of the bank’s board, its chairman and UK Financial Investments, which oversees the government’s 41 per cent stake, to stay in his job indefinitely. “Everyone sees that he’s a good operator,” said one person familiar with UKFI’s thinking.
Mr Daniels has come under fire since he helped engineer Lloyds’ controversial purchase of HBOS in 2008 but has refused to step aside.
Sir Win Bischoff, Lloyds’ chairman, now echoes Mr Daniels’ insistence that there is no timetable for the chief executive’s retirement. People close to Mr Daniels say he wants to stay for at least two years.
Lloyds’ return to profitability in the first half starkly contrasts with almost £4bn of losses in the same period last year. It has been driven by a forecast drop of more than 50 per cent in bad debts. Weaker competition has also allowed lenders to push through higher prices.
The trend in falling loan losses will also be evident at Royal Bank of Scotland, Barclays and HSBC, although it will be offset by a washout second quarter for investment banking.
Barclays Capital, the bank’s former growth engine, may be a big victim of the slowdown, with some analysts expecting a near halving of top-line revenues in recent months. Overall, Barclays is expected to announce underlying pre-tax profits of about £3.5bn, up from £2.75bn a year ago.
Analysts expected the difficult market conditions for investment banks to have slowed the pace of restructuring at RBS, although the bank hopes to announce the sales of its retail branch network and its payments processing business with its results, which could net in excess of £3bn.
Strikes and ash take their toll on BA
By Rose Jacobs
Copyright The Financial Times Limited 2010
Published: July 30 2010 08:01 | Last updated: July 30 2010 22:22
http://www.ft.com/cms/s/0/268c614a-9b9d-11df-9ebd-00144feab49a.html
British Airways suffered another quarter of losses as it was hit by cabin crew strikes and the volcanic ash cloud that closed large parts of European airspace for six days in April.
But the flag carrier showed strong growth in profit margins as more business-class seats were filled.
After losing almost £1bn in the past two years, the airline said pre-tax losses for the three months to the end of June had been £164m. Losses in the same period of 2009 were £148m.
Putting aside the ash cloud and industrial action, Mr Walsh said BA’s underlying financial performance had improved. Profit margins rose 13.5 per cent in the quarter from the same period last year, beating some analysts’ forecasts.
Other airlines were affected by the ash cloud, with Ryanair and EasyJet both reporting related losses in the tens of millions of pounds, but only BA had to cope with protracted strikes by flight crew. The impact of the disruptions came to £250m in the quarter – in line with the company’s previous estimates.
New talks will take place next week between BA and the Unite union in the long-running dispute over cabin crew staffing and pay. BA’s “final offer” was rejected by the union in July, but Willie Walsh, BA chief executive, said on Friday that low turnout at the vote “gives us reason to be optimistic that we’ve got the basis of a settlement”.
“Maybe yields are recovering slightly ahead of where we thought they would, but not a lot,” Mr Walsh said. He expects smaller increases later in the year, as airlines start adding routes back to their schedules.
BA said the UK pensions regulator had approved its plan to cut its pension deficit. The move should help ease the way for its merger with Spanish carrier Iberia next year. Shares in BA rose 1.7 per cent to 219.6p.
● FT Comment
If you’ve got appetite for risk, airlines – hostage to both freak events such as volcanic eruptions and more predictable economic downturns – are not a bad place to start. Yet BA is looking a less risky prospect these days. The wind seems to have gone out of the union’s sails, with less than half of Unite members voting on management’s latest offer. In the meantime, the cabin crew staffing changes have taken effect, saving the company £17m in the first quarter, annualised to almost £70m.
That could make the difference between a small profit and a small loss in 2011. Analysts put BA’s year-end enterprise value to ebitda anywhere from 4 to 6 and higher. Compared with Air France’s EV/ebitda of 6.9, that suggests BA might be undervalued.
US growth slows in second quarter
By Robin Harding in Washington
Copyright The Financial Times Limited 2010
Published: July 30 2010 14:03 | Last updated: July 30 2010 20:25
http://www.ft.com/cms/s/0/a7b55d0a-9bd2-11df-9ebd-00144feab49a.html
US growth slowed to an annualised rate of 2.4 per cent in the second quarter but robust business demand suggested that the economy would avoid a feared “double dip” that could drag the world back into recession.
Friday’s preliminary gross domestic product estimate from the Bureau of Economic Analysis showed growth below market expectations of 2.6 per cent and down from an upwardly revised rate of 3.7 per cent in the first quarter.
Consumption growth fell to 1.6 per cent from 1.9 per cent, which reflected the lack of new jobs, and implied that the recovery still cannot sustain itself.
The weakness of growth is disappointing for this stage in a recovery. If data in the coming weeks do not show job creation fast enough to cut a 9.5 per cent unemployment rate, then the Federal Reserve will feel pressure to ease monetary policy.
President Barack Obama, noting the economy had been growing for a full year, called the GDP numbers “a welcome sign compared to where we were”. But he added: “We’ve got to keep on increasing that rate of growth and keep adding jobs so we can keep moving forward.”
The US release came on top of soft data from around the world, including higher unemployment in Spain, France and Japan, a rise in the eurozone inflation rate from 1.4 to 1.7 per cent, and a 1.5 per cent dip in Japan’s industrial production in May.
But economists said a dip back into recession was unlikely for the US.“It is not quite as bad as it looks at first glance,” said Paul Ashworth, senior US economist at Capital Economics in Toronto.
The strength of investment – up by 29 per cent annualised over the previous quarter – suggested that business confidence was not too badly shaken by the fiscal crisis in Europe.
The biggest drag on growth was a surge in imports: net trade subtracted 2.8 percentage points from the growth rate. An appetite for imports, however, suggests demand in the economy is strong rather than weak.
The BEA also increased its estimate of the depth of the US recession, making it the most severe since 1947. It cut its growth numbers by 0.2 percentage points for 2007, 0.4 percentage points for 2008 and 0.2 percentage points for 2009.
The stock market reaction was muted. The S&P 500 index edged up .01 per cent to close 1,101.60, but down 0.09 per cent for the week.
Additional reporting by Michael Mackenzie in New York
China closer to becoming second-largest economy
By Mure Dickie in Tokyo and Jamil Anderlini in Beijing
Copyright The Financial Times Limited 2010
Published: July 30 2010 18:53 | Last updated: July 30 2010 18:53
http://www.ft.com/cms/s/0/fd4430da-9bfe-11df-a7a4-00144feab49a.html
A senior Beijing official’s reference to China as the “world’s second-largest economy” has sparked excited speculation that Asia’s new powerhouse may have already reached a long-looming milestone by surpassing Japan.
China’s rapid recent growth has made it increasingly likely that its gross domestic product, in US dollar terms, will be larger this year than Japan’s. However, the vagaries of international currency movements mean such a result is far from assured.
Observers eagerly awaiting what will be a symbol of shifting global economic power on Friday seized on a remark by Yi Gang, director of the State Administration of Foreign Exchange, about China’s growth prospects.
“China is in fact already the second-biggest economy. With the expansion of the economic base, the growth rate should certainly gradually slow down,” Mr Yi, who is also deputy central bank governor, said in an interview on the Safe website.
However, Mr Yi’s comment fell far short of formal seizure of a title that Japan has held for just over four decades, especially given that he did not specify whether he was talking about China’s GDP at market prices or in purchasing power parity terms.
In PPP terms, often a more telling measure of economic weight, China has already been the second-largest economy for years.
China-based economists point out that Tokyo reports detailed and relatively accurate economic data. Beijing’s sketchier numbers potentially under-report its economy by as much as 20 per cent, meaning China may have really been number two for some time, even in dollar terms.
Even using official data, the baton is seen as likely to be decisively passed this year. In 2009, Japan’s gross domestic product was worth about $5,080bn, while Chinese GDP was initially reported to be not far behind at about $4,900bn.
“Mr Yi is stating the obvious; if China has not already overtaken Japan at this moment in time then it will very soon,” said Arthur Kroeber, managing director of Dragonomics in Beijing.
“This has news value but no economic value,” said Dong Tao, chief China economist at Credit Suisse. “At some point this year China’s economy will overtake Japan’s as world’s second-largest economy in nominal dollar terms; the only thing potentially stopping it right now is the strength of the yen.”
Despite Mr Yi’s apparently throw-away remark, Beijing is also unlikely to want to make too much of a fuss about its new status.
“China needs to adjust to its new status but it is not quite ready for it and would like to put it off as long as possible,” Mr Kroeber said.
Lloyds to lead way with £1bn in profits
By Sharlene Goff, Patrick Jenkins and Kate Burgess
Copyright The Financial Times Limited 2010
Published: July 30 2010 22:29 | Last updated: July 30 2010 22:29
http://www.ft.com/cms/s/0/331c2ea2-9c21-11df-a7a4-00144feab49a.html
The fortunes of Britain’s biggest banks have undergone a startling turnround, with profit growth at the state-backed Lloyds Banking Group set to eclipse that of the former industry star Barclays when they reveal their first-half results next week.
The resurgence of Lloyds, which is expected to post a profit of about £1bn for the first half, will bolster the position of Eric Daniels, the bank’s chief executive, who narrowly escaped a botched attempt to oust him in the spring.
Mr Daniels has since secured the backing of the bank’s board, its chairman and UK Financial Investments, which oversees the government’s 41 per cent stake, to stay in his job indefinitely. “Everyone sees that he’s a good operator,” said one person familiar with UKFI’s thinking.
Mr Daniels has come under fire since he helped engineer Lloyds’ controversial purchase of HBOS in 2008 but has refused to step aside.
Sir Win Bischoff, Lloyds’ chairman, now echoes Mr Daniels’ insistence that there is no timetable for the chief executive’s retirement. People close to Mr Daniels say he wants to stay for at least two years.
Lloyds’ return to profitability in the first half starkly contrasts with almost £4bn of losses in the same period last year. It has been driven by a forecast drop of more than 50 per cent in bad debts. Weaker competition has also allowed lenders to push through higher prices.
The trend in falling loan losses will also be evident at Royal Bank of Scotland, Barclays and HSBC, although it will be offset by a washout second quarter for investment banking.
Barclays Capital, the bank’s former growth engine, may be a big victim of the slowdown, with some analysts expecting a near halving of top-line revenues in recent months. Overall, Barclays is expected to announce underlying pre-tax profits of about £3.5bn, up from £2.75bn a year ago.
Analysts expected the difficult market conditions for investment banks to have slowed the pace of restructuring at RBS, although the bank hopes to announce the sales of its retail branch network and its payments processing business with its results, which could net in excess of £3bn.
Strikes and ash take their toll on BA
By Rose Jacobs
Copyright The Financial Times Limited 2010
Published: July 30 2010 08:01 | Last updated: July 30 2010 22:22
http://www.ft.com/cms/s/0/268c614a-9b9d-11df-9ebd-00144feab49a.html
British Airways suffered another quarter of losses as it was hit by cabin crew strikes and the volcanic ash cloud that closed large parts of European airspace for six days in April.
But the flag carrier showed strong growth in profit margins as more business-class seats were filled.
After losing almost £1bn in the past two years, the airline said pre-tax losses for the three months to the end of June had been £164m. Losses in the same period of 2009 were £148m.
Putting aside the ash cloud and industrial action, Mr Walsh said BA’s underlying financial performance had improved. Profit margins rose 13.5 per cent in the quarter from the same period last year, beating some analysts’ forecasts.
Other airlines were affected by the ash cloud, with Ryanair and EasyJet both reporting related losses in the tens of millions of pounds, but only BA had to cope with protracted strikes by flight crew. The impact of the disruptions came to £250m in the quarter – in line with the company’s previous estimates.
New talks will take place next week between BA and the Unite union in the long-running dispute over cabin crew staffing and pay. BA’s “final offer” was rejected by the union in July, but Willie Walsh, BA chief executive, said on Friday that low turnout at the vote “gives us reason to be optimistic that we’ve got the basis of a settlement”.
“Maybe yields are recovering slightly ahead of where we thought they would, but not a lot,” Mr Walsh said. He expects smaller increases later in the year, as airlines start adding routes back to their schedules.
BA said the UK pensions regulator had approved its plan to cut its pension deficit. The move should help ease the way for its merger with Spanish carrier Iberia next year. Shares in BA rose 1.7 per cent to 219.6p.
● FT Comment
If you’ve got appetite for risk, airlines – hostage to both freak events such as volcanic eruptions and more predictable economic downturns – are not a bad place to start. Yet BA is looking a less risky prospect these days. The wind seems to have gone out of the union’s sails, with less than half of Unite members voting on management’s latest offer. In the meantime, the cabin crew staffing changes have taken effect, saving the company £17m in the first quarter, annualised to almost £70m.
That could make the difference between a small profit and a small loss in 2011. Analysts put BA’s year-end enterprise value to ebitda anywhere from 4 to 6 and higher. Compared with Air France’s EV/ebitda of 6.9, that suggests BA might be undervalued.
Editorial: Feckless and Cruel/Weiner enraged on House floo
Editorial: Feckless and Cruel
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/opinion/31sat4.html?th&emc=th
In a shameful bout of election-year politicking, the House has rejected badly needed help for rescue workers and residents still suffering from the Sept. 11, 2001, destruction of the World Trade Center. What should have been swift bipartisan approval of a plan for medical and economic compensation turned into an ugly political brawl.
The House action was an insult, especially to the tens of thousands of ordinary citizens who pitched in selflessly for weeks in the cleanup, and have since developed grave illnesses from the toxic dust and debris of ground zero. Their needs were pushed aside as lawmaking degenerated into a game of election-year chicken.
The Democratic leadership, cowed by the Republicans’ relentless campaign-focused bluster no matter what the bill, foolishly ordered limited debate. That meant they had to accept an impossible two-thirds vote for approval. Republicans then voted no in near lock step. Mayor Michael Bloomberg was correct in pronouncing a pox on all as the bill fell short, 255 to 159.
The measure, which calls for $3.2 billion in medical aid over eight years and $4.2 billion in economic compensation, should have been put to a simple majority vote. If Republicans chose to oppose it with campaign boilerplate, the blame for failure would undeniably be theirs.
The House leadership needs to bring the measure back for a second vote requiring a simple majority. A small window remains after the summer recess. Lawmakers will have a chance to show that, beyond the fear and loathing that’s driving vicious House partisanship, a shred of comity can still be managed, especially when it comes to the victims of Sept. 11.
The main sponsors, Representatives Carolyn Maloney and Jerrold Nadler, Democrats of New York, and Representative Peter King, Republican of New York, are rightly still pressing to get the bill passed this year. This September marks the ninth anniversary of the Sept. 11 attacks. The country must not forget any of its victims.
Weiner enraged on House floor
By Jeff Simon
Copyright by CNN News
Posted: July 30th, 2010 10:15 AM ET
http://politicalticker.blogs.cnn.com/2010/07/30/weiner-enraged-on-house-floor/?hpt=T2&fbid=0pTUhm8cc-B
(CNN) – Democratic Rep. Anthony Weiner was raging Thursday night on the House floor after it became clear that Republicans had enough votes to defeat a bill that provided health care to 9/11 first responders.
Democratic leaders made a motion to suspend the rules, a maneuver that prevented Republicans from offering amendments to the widely popular James Zadroga 9/11 Health and Compensation Act.
In a dramatic one-and-a-half minute speech, the New York congressman excoriated Republicans for mounting their opposition to the bill's passage on their inability to offer amendments to it.
"It's Republicans wrapping their arms around Republicans rather than doing the right thing on behalf of the heroes," Weiner said. "It is a shame. A shame! If you believe this is a bad idea to provide health care–then vote no! But don't give me the cowardly view that 'Oh if it was a different procedure'…"
Republican Rep. Peter King, also of New York, drew fire from Weiner when he tried to interject midway through the Democrat's tirade.
"The gentleman gets up and yells, trying to intimidate people into believing he's right–he is wrong!" Weiner shouted. "The gentleman is wrong! The gentleman is providing cover for his colleagues rather than doing the right thing!"
And later: "The gentleman will observe regular order and sit down!"
–CNN's Charles Riley contributed to this report
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/opinion/31sat4.html?th&emc=th
In a shameful bout of election-year politicking, the House has rejected badly needed help for rescue workers and residents still suffering from the Sept. 11, 2001, destruction of the World Trade Center. What should have been swift bipartisan approval of a plan for medical and economic compensation turned into an ugly political brawl.
The House action was an insult, especially to the tens of thousands of ordinary citizens who pitched in selflessly for weeks in the cleanup, and have since developed grave illnesses from the toxic dust and debris of ground zero. Their needs were pushed aside as lawmaking degenerated into a game of election-year chicken.
The Democratic leadership, cowed by the Republicans’ relentless campaign-focused bluster no matter what the bill, foolishly ordered limited debate. That meant they had to accept an impossible two-thirds vote for approval. Republicans then voted no in near lock step. Mayor Michael Bloomberg was correct in pronouncing a pox on all as the bill fell short, 255 to 159.
The measure, which calls for $3.2 billion in medical aid over eight years and $4.2 billion in economic compensation, should have been put to a simple majority vote. If Republicans chose to oppose it with campaign boilerplate, the blame for failure would undeniably be theirs.
The House leadership needs to bring the measure back for a second vote requiring a simple majority. A small window remains after the summer recess. Lawmakers will have a chance to show that, beyond the fear and loathing that’s driving vicious House partisanship, a shred of comity can still be managed, especially when it comes to the victims of Sept. 11.
The main sponsors, Representatives Carolyn Maloney and Jerrold Nadler, Democrats of New York, and Representative Peter King, Republican of New York, are rightly still pressing to get the bill passed this year. This September marks the ninth anniversary of the Sept. 11 attacks. The country must not forget any of its victims.
Weiner enraged on House floor
By Jeff Simon
Copyright by CNN News
Posted: July 30th, 2010 10:15 AM ET
http://politicalticker.blogs.cnn.com/2010/07/30/weiner-enraged-on-house-floor/?hpt=T2&fbid=0pTUhm8cc-B
(CNN) – Democratic Rep. Anthony Weiner was raging Thursday night on the House floor after it became clear that Republicans had enough votes to defeat a bill that provided health care to 9/11 first responders.
Democratic leaders made a motion to suspend the rules, a maneuver that prevented Republicans from offering amendments to the widely popular James Zadroga 9/11 Health and Compensation Act.
In a dramatic one-and-a-half minute speech, the New York congressman excoriated Republicans for mounting their opposition to the bill's passage on their inability to offer amendments to it.
"It's Republicans wrapping their arms around Republicans rather than doing the right thing on behalf of the heroes," Weiner said. "It is a shame. A shame! If you believe this is a bad idea to provide health care–then vote no! But don't give me the cowardly view that 'Oh if it was a different procedure'…"
Republican Rep. Peter King, also of New York, drew fire from Weiner when he tried to interject midway through the Democrat's tirade.
"The gentleman gets up and yells, trying to intimidate people into believing he's right–he is wrong!" Weiner shouted. "The gentleman is wrong! The gentleman is providing cover for his colleagues rather than doing the right thing!"
And later: "The gentleman will observe regular order and sit down!"
–CNN's Charles Riley contributed to this report
Attacks on Mexicans Leave Neighborhood in Turmoil
Attacks on Mexicans Leave Neighborhood in Turmoil
By KIRK SEMPLE
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/nyregion/31staten.html?th&emc=th
Police officers patrolling by foot, car and helicopter have turned Port Richmond Avenue, a busy commercial strip on Staten Island, into something like an armed encampment. Reporters have descended en masse. Community leaders dash from crisis meeting to crisis meeting.
A spate of attacks in the past four months on Mexican immigrants has upended Port Richmond, a working-class neighborhood on the borough’s north shore that is more accustomed to being ignored.
But amid the show of force by the Police Department, which deployed teams of officers to the area this week in what it described as a temporary move to protect residents and defuse tensions, local leaders are taking a longer view.
“The question is, what happens when everybody pulls up the tents and leaves?” said the Rev. Terry Troia, an activist and Staten Island native who has been at the center of the hour-by-hour civic response to the unrest.
This is not the first time Latinos in Port Richmond have been victimized in bias attacks. Ms. Troia, executive director of Project Hospitality, an interfaith organization that serves the poor of Staten Island, said the violence dates back to 2003. In one attack, a Mexican immigrant who worked as a cook at an IHOP restaurant was killed by three assailants in 2006, according to local activists and the Mexican Consulate in New York.
Some of those earlier episodes attracted news coverage, but then the neighborhood fell back into its usual fraught rhythms. Now its Mexican population, Ms. Troia said, is particularly concerned about what might happen next. “They’re worried that as soon as the police leave, they’re going to be set upon,” she said.
The Rev. Dr. Tony Baker, pastor of St. Philip’s Baptist Church in the neighborhood’s heart, said the attacks pointed to deep-seated problems. “I think we’ve gone to sleep on the conditions we find ourselves in,” he said. “And we woke up in the midst of a racial war.”
The police said Friday that nine men — all of them Mexican immigrants — had been attacked since early April, all by young black men. Six suspects have been arrested in connection with three of the beatings, but a grand jury turned down prosecutors’ requests to indict them on hate-crime charges. Two men have pleaded guilty to robbery in two of the cases; the third case is pending.
The most recent attack was on July 23. Fidel González, a 31-year-old Mexican immigrant walking home after playing soccer in a park, was set upon by several men yelling anti-Mexican epithets, the police said. The men punched Mr. González and hit him with a scooter, breaking his jaw and cutting open his head, then stole his backpack, which contained an iPod and two cellphones, the police said.
On Tuesday night, after appeals by the consulate and local leaders, Police Commissioner Raymond W. Kelly announced he was sending an emergency contingent to Port Richmond, including about 130 additional officers, a 15-member hate crimes investigative team, horse patrols, helicopter flyovers and mobile observation towers at key intersections.
Mexico’s consul general, Rúben Beltrán, sent a representative on Monday to set up a neighborhood office and directly assist the Mexican population. The representative drives around in a car emblazoned with the phone number for a 24-hour, toll-free hot line and a message in Spanish that begins, “Mexican, know your rights.”
Since the representative arrived, several more Mexicans have told consulate officials that they, too, were victims of attacks but had been too fearful of deportation or retribution to come forward sooner, consulate officials said.
“There are all kinds of beatings that aren’t recorded,” Ms. Troia said. “People talk casually about this: ‘Oh, I got a dislocated shoulder’; ‘I lost my eye.’ ”
Civic leaders and police officials say they are exploring many possible reasons for the violence: anti-immigrant fervor, racism, gangs, the boredom of idle youth during the summer, joblessness, overcrowding and even the notion that attacking Latinos acquired a cachet in the neighborhood this year, prompting copycat assaults. But in the past few days, all conversations about motive have eventually turned to a dynamic familiar to many neighborhoods in New York: demographic change.
In the mid-20th century, Port Richmond was heavily populated with Eastern European Jews and Irish immigrants, who owned many of the businesses along Port Richmond Avenue. But after the Staten Island Mall opened in 1973, stores closed, property values fell and many longtime residents moved away.
Blacks became the dominant population in the 1980s and ’90s, but the number of Latinos also grew. After 9/11 and the imposition of tougher immigration and travel rules that impeded the flow of migrant laborers around the country and across borders, the Mexican population planted deeper roots in Port Richmond and grew quickly.
In 1990, according to census statistics, 950 people of Mexican descent lived in the 120th Police Precinct, which includes Port Richmond. By 2008, that number had grown to 8,400. Before 9/11, there were only three Mexican-owned businesses in Port Richmond, Ms. Troia said; now there are more than 50.
The student body of Public School 20, once mostly black, is now nearly all Latino and predominantly Mexican.
That growth among Mexicans has unsettled members of some other minority groups, including Puerto Ricans and Dominicans, and especially blacks, many residents say. Black religious leaders and community activists say they often hear constituents complain that Mexicans and other Latinos have taken jobs that should have been theirs. “That’s a conversation that’s been going on,” Dr. Baker said. But, he added, some who have complained “are not going out to get jobs.”
Rogelio Vasquez, 48, the victim in one case that has been resolved, said he feared that he might be attacked again for cooperating with the authorities. Still, he said he harbored no ill will toward his assailants; the attacks, he said, were “the errors of young people.”
Port Richmond’s leaders are searching for solutions. Some want to address the lack of community resources, including jobs, housing and recreation. Others are looking for ways to bridge racial, cultural and even generational divides through initiatives like a gathering of mothers from different ethnic groups, or a midnight basketball league.
“What it calls for is work,” Dr. Baker said. “The Latino community, the African-American community, the Caucasian community, coming together and saying, ‘Enough is enough.’ ”
Al Baker contributed reporting.
By KIRK SEMPLE
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/nyregion/31staten.html?th&emc=th
Police officers patrolling by foot, car and helicopter have turned Port Richmond Avenue, a busy commercial strip on Staten Island, into something like an armed encampment. Reporters have descended en masse. Community leaders dash from crisis meeting to crisis meeting.
A spate of attacks in the past four months on Mexican immigrants has upended Port Richmond, a working-class neighborhood on the borough’s north shore that is more accustomed to being ignored.
But amid the show of force by the Police Department, which deployed teams of officers to the area this week in what it described as a temporary move to protect residents and defuse tensions, local leaders are taking a longer view.
“The question is, what happens when everybody pulls up the tents and leaves?” said the Rev. Terry Troia, an activist and Staten Island native who has been at the center of the hour-by-hour civic response to the unrest.
This is not the first time Latinos in Port Richmond have been victimized in bias attacks. Ms. Troia, executive director of Project Hospitality, an interfaith organization that serves the poor of Staten Island, said the violence dates back to 2003. In one attack, a Mexican immigrant who worked as a cook at an IHOP restaurant was killed by three assailants in 2006, according to local activists and the Mexican Consulate in New York.
Some of those earlier episodes attracted news coverage, but then the neighborhood fell back into its usual fraught rhythms. Now its Mexican population, Ms. Troia said, is particularly concerned about what might happen next. “They’re worried that as soon as the police leave, they’re going to be set upon,” she said.
The Rev. Dr. Tony Baker, pastor of St. Philip’s Baptist Church in the neighborhood’s heart, said the attacks pointed to deep-seated problems. “I think we’ve gone to sleep on the conditions we find ourselves in,” he said. “And we woke up in the midst of a racial war.”
The police said Friday that nine men — all of them Mexican immigrants — had been attacked since early April, all by young black men. Six suspects have been arrested in connection with three of the beatings, but a grand jury turned down prosecutors’ requests to indict them on hate-crime charges. Two men have pleaded guilty to robbery in two of the cases; the third case is pending.
The most recent attack was on July 23. Fidel González, a 31-year-old Mexican immigrant walking home after playing soccer in a park, was set upon by several men yelling anti-Mexican epithets, the police said. The men punched Mr. González and hit him with a scooter, breaking his jaw and cutting open his head, then stole his backpack, which contained an iPod and two cellphones, the police said.
On Tuesday night, after appeals by the consulate and local leaders, Police Commissioner Raymond W. Kelly announced he was sending an emergency contingent to Port Richmond, including about 130 additional officers, a 15-member hate crimes investigative team, horse patrols, helicopter flyovers and mobile observation towers at key intersections.
Mexico’s consul general, Rúben Beltrán, sent a representative on Monday to set up a neighborhood office and directly assist the Mexican population. The representative drives around in a car emblazoned with the phone number for a 24-hour, toll-free hot line and a message in Spanish that begins, “Mexican, know your rights.”
Since the representative arrived, several more Mexicans have told consulate officials that they, too, were victims of attacks but had been too fearful of deportation or retribution to come forward sooner, consulate officials said.
“There are all kinds of beatings that aren’t recorded,” Ms. Troia said. “People talk casually about this: ‘Oh, I got a dislocated shoulder’; ‘I lost my eye.’ ”
Civic leaders and police officials say they are exploring many possible reasons for the violence: anti-immigrant fervor, racism, gangs, the boredom of idle youth during the summer, joblessness, overcrowding and even the notion that attacking Latinos acquired a cachet in the neighborhood this year, prompting copycat assaults. But in the past few days, all conversations about motive have eventually turned to a dynamic familiar to many neighborhoods in New York: demographic change.
In the mid-20th century, Port Richmond was heavily populated with Eastern European Jews and Irish immigrants, who owned many of the businesses along Port Richmond Avenue. But after the Staten Island Mall opened in 1973, stores closed, property values fell and many longtime residents moved away.
Blacks became the dominant population in the 1980s and ’90s, but the number of Latinos also grew. After 9/11 and the imposition of tougher immigration and travel rules that impeded the flow of migrant laborers around the country and across borders, the Mexican population planted deeper roots in Port Richmond and grew quickly.
In 1990, according to census statistics, 950 people of Mexican descent lived in the 120th Police Precinct, which includes Port Richmond. By 2008, that number had grown to 8,400. Before 9/11, there were only three Mexican-owned businesses in Port Richmond, Ms. Troia said; now there are more than 50.
The student body of Public School 20, once mostly black, is now nearly all Latino and predominantly Mexican.
That growth among Mexicans has unsettled members of some other minority groups, including Puerto Ricans and Dominicans, and especially blacks, many residents say. Black religious leaders and community activists say they often hear constituents complain that Mexicans and other Latinos have taken jobs that should have been theirs. “That’s a conversation that’s been going on,” Dr. Baker said. But, he added, some who have complained “are not going out to get jobs.”
Rogelio Vasquez, 48, the victim in one case that has been resolved, said he feared that he might be attacked again for cooperating with the authorities. Still, he said he harbored no ill will toward his assailants; the attacks, he said, were “the errors of young people.”
Port Richmond’s leaders are searching for solutions. Some want to address the lack of community resources, including jobs, housing and recreation. Others are looking for ways to bridge racial, cultural and even generational divides through initiatives like a gathering of mothers from different ethnic groups, or a midnight basketball league.
“What it calls for is work,” Dr. Baker said. “The Latino community, the African-American community, the Caucasian community, coming together and saying, ‘Enough is enough.’ ”
Al Baker contributed reporting.
Social Security Jitters? Better Prepare Now
Social Security Jitters? Better Prepare Now
By TARA SIEGEL BERNARD
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/your-money/31money.html?th&emc=th
If you are worried about the future of Social Security, join the crowd.
With the nation’s debt swelling, the pressure on Washington to cut spending will only rise. Social Security may not be the first place lawmakers look. But the program, which has provided a significant financial cushion for retirees and others since the first checks were mailed in 1937, will surely be part of the discussion.
The program, which has its own dedicated stream of income, is projected to pay out more this year than it is taking in, but that is a function of the weak economy. Social Security will, according to the last annual report from its trustees, be able to pay full benefits through 2037. Then, if there are no changes in the program in the meantime, the taxes collected will be enough to pay out only about 75 percent of benefits through 2083.
So while Social Security’s finances are stable in the short term, most experts agree that the program needs to be bolstered for the long term. Among the proposals circulating is one from Representative John Boehner of Ohio, the House Republican leader, who recently suggested raising the retirement age to 70 for people at least 20 years from retirement.
Other options include increasing Social Security payroll taxes, subjecting more income to the tax, reducing initial benefit payments or cutting cost-of-living increases (which would affect current retirees).
But even if it’s not clear yet what, if anything, will be done to Social Security and when, we thought it would be useful to look at a worst-case possibility — to assume that benefits will not continue to be as generous. This is especially important as pensions continue to fade away.
So what are the financial implications of pushing back the full retirement age? What happens if the government reduces benefits for future retirees? What will that mean to people in the middle of their careers, beyond the rote response that they’re going to have to work longer and save more?
Yes, it means fewer dinners out and driving a more economical car. But it also may mean that people in their 20s, 30s or even older have to put aside a lot more money to partly make up for any cut to benefits. Otherwise, people may risk a sudden drop in their living standard when they retire.
And while lawmakers may, in the end, not decide to make drastic changes in Social Security, many of the financial advisers and other experts we talked to said they were erring on the side of caution and were already recommending that their clients start saving more now.
“People 50 and below should change their planning now to incorporate a benefit cut,” said Laurence J. Kotlikoff, an economics professor at Boston University who ran some numbers for us to see what life would be like if the retirement age were immediately raised to 70. That change would translate into a nearly 20 percent cut in benefits, because you would have to wait an extra three years to get the same amount of money, he added.
Several financial planners told us they were assuming that clients in their 30s and 40s might receive just 50 to 80 percent of their full benefits. Or, the advisers say, they may figure that the cost-of-living adjustments applied to benefits won’t keep pace with inflation, or some other combination of adjustments. (For the record, executives from AARP said their polls had long shown that younger people were skeptical about receiving full benefits.)
“It’s better to be conservative now than risk being underfunded for retirement,” said Jorie Johnson, a financial planner in New Jersey.
Mr. Kotlikoff’s calculations looked at how a couple’s spending and saving patterns might have to change if the government raised the full retirement age to 70 (we assumed it was imposed right away, though such a change would probably be phased in over many years). That would essentially translate to a 19 percent cut in monthly benefits, according to Mr. Kotlikoff. He performed the calculations using his company’s retirement planning software, ESPlanner, which shows what people need to save to ensure a consistent standard of living over the course of their lives.
Our examples illustrate how a cut in benefits might feel if you had longer to plan for it — say, you were 35 years old when the system changed. We also looked at the repercussions for a 45-year-old or a 55-year-old.
In all cases, we based our assumptions on a married couple with two children and a $350,000 mortgage on a house in New York State. They save 10 to 15 percent of their income during their careers (the rate rises as they age) as well as an additional $100,000 for their children’s college education. They earn a conservative 2 percent above inflation on their retirement savings and retire at 65 but take Social Security benefits at 67, three years before full retirement age.
Some people may not have the wherewithal to save a whole lot more. Indeed, about half of all recipients start collecting benefits as soon as they’re eligible, at age 62, because in some cases Social Security is their main income.
But here’s how a family with more flexibility might fare:
AT 35 YEARS OLD At this stage, our couple are earning $120,000 ($60,000 each) and they have $75,000 in total retirement savings. But to make up for the decline in Social Security benefits, they need to save about $84,474 above and beyond what they are already saving before they retire. We assume they save the extra money in a taxable account that allows for easy access, because they are already saving 10 percent or more of their total income in a 401(k). That extra money saved is equivalent to about a 7.8 percent increase in total retirement savings, across all accounts. This also means they’ll have less discretionary income — about 9.4 percent less to be exact — to spend each year, over the course of their lives.
AT 45 YEARS OLD Our couple now earn $140,000 and has amassed about $255,000 in a 401(k) account. But if they learn their Social Security benefits are going to be cut by nearly 20 percent, they will need to save nearly an extra $90,000 — which is about 8.3 percent more in their taxable and tax-deferred accounts — by the time they retire. To do that, they need to cut their discretionary spending by about 9.7 percent a year for the rest of their lives.
“They have a larger permanent reduction in their living standard than the 35-year-olds because they have fewer years to adjust,” Professor Kotlikoff said. “They can’t spread out the loss in spending power over as many years.”
AT 55 YEARS OLD Informing people a mere decade from retirement that their Social Security payments will be cut or that the retirement age will rise, is not likely, experts said. Even so, let’s assume the worst for a moment.
At 55, our couple are earning about $175,000, and has nearly $525,000 in total retirement savings. But to help offset the lost Social Security money, they will need to save $82,900 more — or nearly 7.7 percent across all accounts — over the next decade. To do that, they will have to spend 10.4 percent less each year.
“Increases in Social Security’s retirement age is another way to say Social Security benefit cut,” Professor Kotlikoff said. “And big benefit cuts, like those being contemplated, will mean big hits to the spending power of the affected generations. Younger cohorts would suffer less pain, but for a longer time, while older cohorts experience more pain for a shorter time. Either way you cut it, it hurts.”
One financial planner, who has dual citizenship in the United States and Greece, said he was not taking chances. “Having seen what happened in Greece, I feel even more strongly today that I should not count on any Social Security for me and my younger clients,” said the planner, George Papadopoulos, 43, of Novi, Mich. “I will continue to tell clients not to highly rely on Social Security and think of any money coming their way as gravy.”
By TARA SIEGEL BERNARD
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/your-money/31money.html?th&emc=th
If you are worried about the future of Social Security, join the crowd.
With the nation’s debt swelling, the pressure on Washington to cut spending will only rise. Social Security may not be the first place lawmakers look. But the program, which has provided a significant financial cushion for retirees and others since the first checks were mailed in 1937, will surely be part of the discussion.
The program, which has its own dedicated stream of income, is projected to pay out more this year than it is taking in, but that is a function of the weak economy. Social Security will, according to the last annual report from its trustees, be able to pay full benefits through 2037. Then, if there are no changes in the program in the meantime, the taxes collected will be enough to pay out only about 75 percent of benefits through 2083.
So while Social Security’s finances are stable in the short term, most experts agree that the program needs to be bolstered for the long term. Among the proposals circulating is one from Representative John Boehner of Ohio, the House Republican leader, who recently suggested raising the retirement age to 70 for people at least 20 years from retirement.
Other options include increasing Social Security payroll taxes, subjecting more income to the tax, reducing initial benefit payments or cutting cost-of-living increases (which would affect current retirees).
But even if it’s not clear yet what, if anything, will be done to Social Security and when, we thought it would be useful to look at a worst-case possibility — to assume that benefits will not continue to be as generous. This is especially important as pensions continue to fade away.
So what are the financial implications of pushing back the full retirement age? What happens if the government reduces benefits for future retirees? What will that mean to people in the middle of their careers, beyond the rote response that they’re going to have to work longer and save more?
Yes, it means fewer dinners out and driving a more economical car. But it also may mean that people in their 20s, 30s or even older have to put aside a lot more money to partly make up for any cut to benefits. Otherwise, people may risk a sudden drop in their living standard when they retire.
And while lawmakers may, in the end, not decide to make drastic changes in Social Security, many of the financial advisers and other experts we talked to said they were erring on the side of caution and were already recommending that their clients start saving more now.
“People 50 and below should change their planning now to incorporate a benefit cut,” said Laurence J. Kotlikoff, an economics professor at Boston University who ran some numbers for us to see what life would be like if the retirement age were immediately raised to 70. That change would translate into a nearly 20 percent cut in benefits, because you would have to wait an extra three years to get the same amount of money, he added.
Several financial planners told us they were assuming that clients in their 30s and 40s might receive just 50 to 80 percent of their full benefits. Or, the advisers say, they may figure that the cost-of-living adjustments applied to benefits won’t keep pace with inflation, or some other combination of adjustments. (For the record, executives from AARP said their polls had long shown that younger people were skeptical about receiving full benefits.)
“It’s better to be conservative now than risk being underfunded for retirement,” said Jorie Johnson, a financial planner in New Jersey.
Mr. Kotlikoff’s calculations looked at how a couple’s spending and saving patterns might have to change if the government raised the full retirement age to 70 (we assumed it was imposed right away, though such a change would probably be phased in over many years). That would essentially translate to a 19 percent cut in monthly benefits, according to Mr. Kotlikoff. He performed the calculations using his company’s retirement planning software, ESPlanner, which shows what people need to save to ensure a consistent standard of living over the course of their lives.
Our examples illustrate how a cut in benefits might feel if you had longer to plan for it — say, you were 35 years old when the system changed. We also looked at the repercussions for a 45-year-old or a 55-year-old.
In all cases, we based our assumptions on a married couple with two children and a $350,000 mortgage on a house in New York State. They save 10 to 15 percent of their income during their careers (the rate rises as they age) as well as an additional $100,000 for their children’s college education. They earn a conservative 2 percent above inflation on their retirement savings and retire at 65 but take Social Security benefits at 67, three years before full retirement age.
Some people may not have the wherewithal to save a whole lot more. Indeed, about half of all recipients start collecting benefits as soon as they’re eligible, at age 62, because in some cases Social Security is their main income.
But here’s how a family with more flexibility might fare:
AT 35 YEARS OLD At this stage, our couple are earning $120,000 ($60,000 each) and they have $75,000 in total retirement savings. But to make up for the decline in Social Security benefits, they need to save about $84,474 above and beyond what they are already saving before they retire. We assume they save the extra money in a taxable account that allows for easy access, because they are already saving 10 percent or more of their total income in a 401(k). That extra money saved is equivalent to about a 7.8 percent increase in total retirement savings, across all accounts. This also means they’ll have less discretionary income — about 9.4 percent less to be exact — to spend each year, over the course of their lives.
AT 45 YEARS OLD Our couple now earn $140,000 and has amassed about $255,000 in a 401(k) account. But if they learn their Social Security benefits are going to be cut by nearly 20 percent, they will need to save nearly an extra $90,000 — which is about 8.3 percent more in their taxable and tax-deferred accounts — by the time they retire. To do that, they need to cut their discretionary spending by about 9.7 percent a year for the rest of their lives.
“They have a larger permanent reduction in their living standard than the 35-year-olds because they have fewer years to adjust,” Professor Kotlikoff said. “They can’t spread out the loss in spending power over as many years.”
AT 55 YEARS OLD Informing people a mere decade from retirement that their Social Security payments will be cut or that the retirement age will rise, is not likely, experts said. Even so, let’s assume the worst for a moment.
At 55, our couple are earning about $175,000, and has nearly $525,000 in total retirement savings. But to help offset the lost Social Security money, they will need to save $82,900 more — or nearly 7.7 percent across all accounts — over the next decade. To do that, they will have to spend 10.4 percent less each year.
“Increases in Social Security’s retirement age is another way to say Social Security benefit cut,” Professor Kotlikoff said. “And big benefit cuts, like those being contemplated, will mean big hits to the spending power of the affected generations. Younger cohorts would suffer less pain, but for a longer time, while older cohorts experience more pain for a shorter time. Either way you cut it, it hurts.”
One financial planner, who has dual citizenship in the United States and Greece, said he was not taking chances. “Having seen what happened in Greece, I feel even more strongly today that I should not count on any Social Security for me and my younger clients,” said the planner, George Papadopoulos, 43, of Novi, Mich. “I will continue to tell clients not to highly rely on Social Security and think of any money coming their way as gravy.”
Stem Cell Trial Wins Approval of F.D.A.
Stem Cell Trial Wins Approval of F.D.A.
By ANDREW POLLACK
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/health/research/31stem.html?th&emc=th
The world’s first authorized test in people of a therapy derived from human embryonic stem cells has been cleared by the Food and Drug Administration.
The clinical trial could offer the first glimpse of the safety and possible effectiveness of a technology that has been hailed for its vast medical promise but also embroiled in political and ethical controversy.
The trial will test cells developed by the Geron Corporation and the University of California, Irvine in patients with new spinal cord injuries.
The F.D.A. had initially cleared the clinical trial in January 2009. But before any patients could be treated, the agency suspended the trial after cysts were discovered in some rats injected with the cells. Geron had to do another rat study and develop better ways to check cell purity.
On Friday, the company announced that the F.D.A. had lifted the hold. Geron’s shares rose 17 percent, to $5.63.
Embryonic stem cells can turn into any type of cell in the body. Scientists envision one day making replacements for injured or diseased tissues to treat a wide variety of illnesses.
“I think it’s a very important milestone for the whole industry,” Alan Trounson, the president of California’s stem cell agency, said Friday, adding that the hold on the trial had been a cloud over the field. “It’s very important that they get on and treat the patients and demonstrate the safety” of the therapy.
But the cells have been controversial because their creation has involved the destruction of human embryos, though some researchers claim they can now avoid that.
The politics of embryonic stem cell research has shifted from one presidential administration to another, set in sharp relief by religious conservatives who opposed destroying or using human embryos.
President George W. Bush limited federal funding for research to certain colonies, or existing lines of cells. President Obama lifted those restrictions and is gradually approving more lines to qualify for federal funding.
Geron, based in Menlo Park, Calif., turns embryonic stem cells into precursors of neural support cells called oligodendrocytes. The precursor cells would be injected into the spinal cord at the site of the injury.
The hope is that the cells will repair the insulation, known as myelin, around nerve cells, restoring the ability of some nerves to carry signals. While this is not expected to allow people to rise from their wheelchairs, it may conceivably restore some movement or sensation.
The first trial, a so-called Phase 1 study, will have up to 10 patients and is mainly aimed at testing the safety of the therapy. Years of further testing will be required before the therapy would be proven and ready for widespread use, assuming it works.
Dr. Thomas B. Okarma, the chief executive of Geron, said that the ethical review boards at two of the seven proposed trial sites had already approved the trial, so that it was possible the first patient might be treated in the next few months.
Dr. Okarma would not identify the trial sites, saying the privacy of the patients must be protected from what could be intense interest from the media.
“We can’t let that happen to disrupt the integrity of the trial,” he said in an interview. “The bright lights are going to be on this.”
That concerns some experts, who say that Geron’s therapy does not have that good a chance of working and that a failure or a safety problem could set back the whole field. The biggest safety concern is that if there are any embryonic stem cells left in the mixture that is injected into patients, they could possibly form tumors.
Dr. Okarma said critics had not seen the 28,000 pages of data that Geron had submitted to the F.D.A. “The degree of heavy lifting and turning over every possible stone is not appreciated,” he said.
Patients in the initial trial will have a so-called complete injury, with virtually no chance of spontaneous recovery, Dr. Okarma said. That way, if there is any improvement in their movement or sensation it could be attributed to the treatment.
Another company, Advanced Cell Technology, is trying to win approval from the F.D.A. to test retinal cells derived from human embryonic stem cells as a treatment for Stargardt disease, an eye condition that causes severe vision loss.
In the last few years scientists have become excited about so-called induced pluripotent stem cells as an alternative to embryonic stem cells.
Those cells can be made from an adult skin or blood cells, doing away with the need for human embryos. And if a patient’s own cell could be turned into new tissue it would eliminate the chance the transplanted cells would be rejected by the patient’s immune system. (Geron’s trial will involve temporary use of an immune-suppressing drug.)
Still, some recent laboratory studies have suggested that the induced pluripotent cells might not be quite as versatile as the embryonic cells in turning into different types of tissues.
By ANDREW POLLACK
Copyright by The New York Times
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/health/research/31stem.html?th&emc=th
The world’s first authorized test in people of a therapy derived from human embryonic stem cells has been cleared by the Food and Drug Administration.
The clinical trial could offer the first glimpse of the safety and possible effectiveness of a technology that has been hailed for its vast medical promise but also embroiled in political and ethical controversy.
The trial will test cells developed by the Geron Corporation and the University of California, Irvine in patients with new spinal cord injuries.
The F.D.A. had initially cleared the clinical trial in January 2009. But before any patients could be treated, the agency suspended the trial after cysts were discovered in some rats injected with the cells. Geron had to do another rat study and develop better ways to check cell purity.
On Friday, the company announced that the F.D.A. had lifted the hold. Geron’s shares rose 17 percent, to $5.63.
Embryonic stem cells can turn into any type of cell in the body. Scientists envision one day making replacements for injured or diseased tissues to treat a wide variety of illnesses.
“I think it’s a very important milestone for the whole industry,” Alan Trounson, the president of California’s stem cell agency, said Friday, adding that the hold on the trial had been a cloud over the field. “It’s very important that they get on and treat the patients and demonstrate the safety” of the therapy.
But the cells have been controversial because their creation has involved the destruction of human embryos, though some researchers claim they can now avoid that.
The politics of embryonic stem cell research has shifted from one presidential administration to another, set in sharp relief by religious conservatives who opposed destroying or using human embryos.
President George W. Bush limited federal funding for research to certain colonies, or existing lines of cells. President Obama lifted those restrictions and is gradually approving more lines to qualify for federal funding.
Geron, based in Menlo Park, Calif., turns embryonic stem cells into precursors of neural support cells called oligodendrocytes. The precursor cells would be injected into the spinal cord at the site of the injury.
The hope is that the cells will repair the insulation, known as myelin, around nerve cells, restoring the ability of some nerves to carry signals. While this is not expected to allow people to rise from their wheelchairs, it may conceivably restore some movement or sensation.
The first trial, a so-called Phase 1 study, will have up to 10 patients and is mainly aimed at testing the safety of the therapy. Years of further testing will be required before the therapy would be proven and ready for widespread use, assuming it works.
Dr. Thomas B. Okarma, the chief executive of Geron, said that the ethical review boards at two of the seven proposed trial sites had already approved the trial, so that it was possible the first patient might be treated in the next few months.
Dr. Okarma would not identify the trial sites, saying the privacy of the patients must be protected from what could be intense interest from the media.
“We can’t let that happen to disrupt the integrity of the trial,” he said in an interview. “The bright lights are going to be on this.”
That concerns some experts, who say that Geron’s therapy does not have that good a chance of working and that a failure or a safety problem could set back the whole field. The biggest safety concern is that if there are any embryonic stem cells left in the mixture that is injected into patients, they could possibly form tumors.
Dr. Okarma said critics had not seen the 28,000 pages of data that Geron had submitted to the F.D.A. “The degree of heavy lifting and turning over every possible stone is not appreciated,” he said.
Patients in the initial trial will have a so-called complete injury, with virtually no chance of spontaneous recovery, Dr. Okarma said. That way, if there is any improvement in their movement or sensation it could be attributed to the treatment.
Another company, Advanced Cell Technology, is trying to win approval from the F.D.A. to test retinal cells derived from human embryonic stem cells as a treatment for Stargardt disease, an eye condition that causes severe vision loss.
In the last few years scientists have become excited about so-called induced pluripotent stem cells as an alternative to embryonic stem cells.
Those cells can be made from an adult skin or blood cells, doing away with the need for human embryos. And if a patient’s own cell could be turned into new tissue it would eliminate the chance the transplanted cells would be rejected by the patient’s immune system. (Geron’s trial will involve temporary use of an immune-suppressing drug.)
Still, some recent laboratory studies have suggested that the induced pluripotent cells might not be quite as versatile as the embryonic cells in turning into different types of tissues.
Obama Sees Auto Revival as a Success
Obama Sees Auto Revival as a Success
By JACKIE CALMES
Copyright by The Associated Press
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/business/economy/31obama.html?th&emc=th
DETROIT — President Obama came here on Friday to promote an economic success story, but even before he could get out of Washington, he was handed new evidence of the continued challenge he faces from the sputtering recovery.
Mr. Obama was fired up at Chrysler and General Motors plants before enthusiastic autoworkers as he related the good news that the companies had returned to profitability and added jobs since their unpopular taxpayer bailout over a year ago. His remarks, however, competed with the news that the economy’s growth had slowed in the second quarter of the year, reinforcing the widespread view that unemployment was likely to remain high for some time.
The news that the country’s gross domestic product slowed to 2.4 percent in the second quarter, from 3.7 percent in the first quarter, is likely to complicate matters substantively and politically for Mr. Obama and Congressional Democrats.
The government has all but run out of tools to fix things. The boost from Mr. Obama’s two-year stimulus package is waning, and Republicans have worked hard to convince many voters that the tax cuts and spending did not work in the first place — a contention that many economists dispute. Senate Republicans have blocked Mr. Obama’s additional stimulus initiatives, including aid to the states and the long-term unemployed and, on Thursday, a package expanding tax cuts and lending assistance for small businesses.
Moreover, the economic slowdown is certain to embolden Republicans in arguing against letting the Bush income tax cuts for the wealthy expire as scheduled by law after this year, as Mr. Obama wants, to help reduce the federal debt.
Given that debt, other actors in the government can do little either, although Ben S. Bernanke, the chairman of the Federal Reserve, said last week that the central bank might take further actions to stimulate growth. But it is not clear that any fiscal or monetary policy proposals under consideration can invigorate the economy enough to make rapid headway in replacing the more than eight million jobs lost since 2007.
This is the backdrop at summer’s midpoint, just as voters’ views about the two parties are starting to harden and November draws nearer.
In Detroit, Mr. Obama enthusiastically accentuated the positive and got a rousing reception from autoworkers whose jobs were recently in jeopardy. He emphasized that the economy had grown in the last quarter, making for a full year of growth; it had been shrinking at the rate of about 6 percent a quarter when he took office. And he told an estimated 1,500 union workers at each of the auto plants that they had “vindicated” his belief that the widely unpopular bailout would work.
The president — showing energy reminiscent of his campaign rallies — brought the workers at both plants to their feet, applauding and cheering, when he concluded: “Don’t bet against the American worker. Don’t bet against the American people.”
The administration is planning to make much of the success story at G.M. and Chrysler in the run-up to the midterm elections, citing estimates that without the government’s intervention one million jobs would have been lost, hurting suppliers, dealers and whole communities as well. The president travels next week to a Ford plant in Chicago; Ford did not accept a bailout but its executives have acknowledged indirect benefits from the other two companies’ rescue because it helped keep the network of auto supply companies intact.
The Chrysler plant that Mr. Obama visited assembles the 2011 Jeep Grand Cherokee and since last summer has added 1,100 workers, bringing its work force to more than 2,800. Mr. Obama and the employees got more good news after his arrival with the announcement by the Chrysler chief executive, Sergio Marchionne, that a nearby assembly plant that was slated to close in 2012 would instead stay open and add 900 jobs on a second shift, with 500 more jobs for suppliers.
Mr. Obama recalled that a year ago, with G.M. and Chrysler “on the brink of liquidation,” he could either have provided another bailout without strings attached as the Bush administration did, or he could have given no help at all. The latter is what the “leaders of the ‘just say no’ crowd in Washington” wanted, he added — though polls showed that many Americans, already fatigued by the financial bailout, also were willing to say no to the auto companies.
“I refused to let that happen so we came up with a third way,” Mr. Obama said, and officials forced the firms and unions in exchange for $60 billion to overhaul their operations and to require sacrifices from all parties.
Skeptics opposed a government takeover, Mr. Obama said, but he added to some laughter, “I didn’t want government to get into the auto business. I have enough to do.”
“I want you to remember, though, that if some folks had their way, none of this would have been happening,” he said. “This plant and your jobs might not exist.”
Afterward, workers were happy to tell reporters their stories of newfound hope, even some who had not supported Mr. Obama.
“There’s still a little fear here,” said Peter Orlando, 46, a Chrysler worker who identified himself as a political independent. “But a little fear is a good thing” to motivate people, he said. Naming Southern senators who opposed the bailout, he added, “The people that nay-sayed us, I’d like them to come and work in our shoes for eight hours.”
By JACKIE CALMES
Copyright by The Associated Press
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/business/economy/31obama.html?th&emc=th
DETROIT — President Obama came here on Friday to promote an economic success story, but even before he could get out of Washington, he was handed new evidence of the continued challenge he faces from the sputtering recovery.
Mr. Obama was fired up at Chrysler and General Motors plants before enthusiastic autoworkers as he related the good news that the companies had returned to profitability and added jobs since their unpopular taxpayer bailout over a year ago. His remarks, however, competed with the news that the economy’s growth had slowed in the second quarter of the year, reinforcing the widespread view that unemployment was likely to remain high for some time.
The news that the country’s gross domestic product slowed to 2.4 percent in the second quarter, from 3.7 percent in the first quarter, is likely to complicate matters substantively and politically for Mr. Obama and Congressional Democrats.
The government has all but run out of tools to fix things. The boost from Mr. Obama’s two-year stimulus package is waning, and Republicans have worked hard to convince many voters that the tax cuts and spending did not work in the first place — a contention that many economists dispute. Senate Republicans have blocked Mr. Obama’s additional stimulus initiatives, including aid to the states and the long-term unemployed and, on Thursday, a package expanding tax cuts and lending assistance for small businesses.
Moreover, the economic slowdown is certain to embolden Republicans in arguing against letting the Bush income tax cuts for the wealthy expire as scheduled by law after this year, as Mr. Obama wants, to help reduce the federal debt.
Given that debt, other actors in the government can do little either, although Ben S. Bernanke, the chairman of the Federal Reserve, said last week that the central bank might take further actions to stimulate growth. But it is not clear that any fiscal or monetary policy proposals under consideration can invigorate the economy enough to make rapid headway in replacing the more than eight million jobs lost since 2007.
This is the backdrop at summer’s midpoint, just as voters’ views about the two parties are starting to harden and November draws nearer.
In Detroit, Mr. Obama enthusiastically accentuated the positive and got a rousing reception from autoworkers whose jobs were recently in jeopardy. He emphasized that the economy had grown in the last quarter, making for a full year of growth; it had been shrinking at the rate of about 6 percent a quarter when he took office. And he told an estimated 1,500 union workers at each of the auto plants that they had “vindicated” his belief that the widely unpopular bailout would work.
The president — showing energy reminiscent of his campaign rallies — brought the workers at both plants to their feet, applauding and cheering, when he concluded: “Don’t bet against the American worker. Don’t bet against the American people.”
The administration is planning to make much of the success story at G.M. and Chrysler in the run-up to the midterm elections, citing estimates that without the government’s intervention one million jobs would have been lost, hurting suppliers, dealers and whole communities as well. The president travels next week to a Ford plant in Chicago; Ford did not accept a bailout but its executives have acknowledged indirect benefits from the other two companies’ rescue because it helped keep the network of auto supply companies intact.
The Chrysler plant that Mr. Obama visited assembles the 2011 Jeep Grand Cherokee and since last summer has added 1,100 workers, bringing its work force to more than 2,800. Mr. Obama and the employees got more good news after his arrival with the announcement by the Chrysler chief executive, Sergio Marchionne, that a nearby assembly plant that was slated to close in 2012 would instead stay open and add 900 jobs on a second shift, with 500 more jobs for suppliers.
Mr. Obama recalled that a year ago, with G.M. and Chrysler “on the brink of liquidation,” he could either have provided another bailout without strings attached as the Bush administration did, or he could have given no help at all. The latter is what the “leaders of the ‘just say no’ crowd in Washington” wanted, he added — though polls showed that many Americans, already fatigued by the financial bailout, also were willing to say no to the auto companies.
“I refused to let that happen so we came up with a third way,” Mr. Obama said, and officials forced the firms and unions in exchange for $60 billion to overhaul their operations and to require sacrifices from all parties.
Skeptics opposed a government takeover, Mr. Obama said, but he added to some laughter, “I didn’t want government to get into the auto business. I have enough to do.”
“I want you to remember, though, that if some folks had their way, none of this would have been happening,” he said. “This plant and your jobs might not exist.”
Afterward, workers were happy to tell reporters their stories of newfound hope, even some who had not supported Mr. Obama.
“There’s still a little fear here,” said Peter Orlando, 46, a Chrysler worker who identified himself as a political independent. “But a little fear is a good thing” to motivate people, he said. Naming Southern senators who opposed the bailout, he added, “The people that nay-sayed us, I’d like them to come and work in our shoes for eight hours.”
Advice by Panel Is to Reprimand, Not Oust, Rangel
Advice by Panel Is to Reprimand, Not Oust, Rangel
By DAVID KOCIENIEWSKI
Copyright by The Associated Press
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/nyregion/31rangel.html?_r=1&th&emc=th
The panel that oversaw a two-year ethics inquiry into Representative Charles B. Rangel’s conduct recommended that the Harlem congressman be punished with a reprimand, rather than a more serious censure or expulsion from office, the chairman of the panel said Friday.
The recommendation appears to be carrying significant weight with the full 10-member House ethics committee, which will decide Mr. Rangel’s fate. On Friday, the full committee spent hours behind closed doors debating whether to agree to a settlement that would require the congressman, a Democrat, to admit to wrongdoing in exchange for receiving a reprimand and avoiding a public trial on his conduct.
A reprimand is considered a moderate punishment, more serious than the minor sanction of admonishment but not especially severe: members including Newt Gingrich, the former House speaker, and Barney Frank have received reprimands.
Word of the panel’s recommendation came on the same day that Congressional officials said that Representative Maxine Waters, Democrat of California, would face ethics charges that are expected to be announced next week.
On Thursday, the ethics committee released a report detailing 13 charges against Mr. Rangel, including his improper use of his office to solicit donations for a City University of New York center to be named in his honor; his failure to report rental income from his villa in the Dominican Republic and to pay taxes on it; his omission of some $600,000 in assets on his House financial disclosure forms; and his acceptance from a Manhattan developer of four rent-stabilized apartments, one of which he used as a campaign office.
The report said Mr. Rangel had shown “a pattern of indifference or disregard for the laws, rules and regulations of the United States and the House of Representatives.” It also documented the major charges.
Representative Gene Green, the Texas Democrat who was chairman of the investigative subcommittee, told reporters on Friday that Mr. Rangel had previously been offered the settlement that included the reprimand.
But negotiations stalled on the question of how much wrongdoing Mr. Rangel would admit to, causing the talks to break down and prompting the ethics committee to take the rare step of preparing for the public hearing — the Congressional equivalent of a trial.
“If we could have reached a settlement we would have recommended that to the full committee,” Mr. Green said, adding, “But that didn’t happen.”
Asked if Mr. Rangel had put a settlement on the table, Mr. Green replied: “At different times there were offers from both sides.” He said there was never a vote on a proposed deal.
Mr. Green’s comments added fresh drama to what has become a chaotic story on Capitol Hill.
The ethics committee is among the most secretive bodies in Washington, and after speaking to reporters, Mr. Green quickly issued an apology for his comments — saying he had erred by piercing that confidentiality.
Then, adding more confusion to the picture, Mr. Rangel reacted angrily when reporters asked his response to Mr. Green’s statement, saying it was “absolutely untrue” that he had been offered a reprimand. Hours later, his lawyer amended that statement, saying Mr. Rangel “misspoke” and acknowledging that Mr. Green’s comments were accurate.
“The appropriate sanction, including reprimand, was one of a number of issues addressed in settlement discussions,” said Leslie Kiernan, the lawyer representing Mr. Rangel before the committee. She declined to elaborate on any continuing discussions.
Predicting what punishment a House member will receive after ethics infractions is difficult; factors including the member’s contrition, level of knowledge of the misdeeds and relationships with colleagues can play a role. And given how high profile the case involving Mr. Rangel has become, especially after the public detailing of the charges, it is possible that Republicans on the committee will now face pressure to reject any settlement.
Even some Democrats seemed to grow more uncomfortable with Mr. Rangel’s continued presence in the House. Since the charges were detailed, three Democratic members have called for him to step down, joining three members who had previously asked him to leave the House.
“Too many politicians, both Democrats and Republicans, have fallen victim to the idea that they are ‘different’ than regular folks, and nothing could be further from the truth,” Representative Ann Kirkpatrick, Democrat of Arizona, said in a statement released on Friday.
“It is our job as members of Congress to hold each other accountable to a higher standard regardless of party,” she said, adding that if the charges against Mr. Rangel are accurate, “he needs to resign.”
The chairwoman of the ethics committee, Zoe Lofgren, Democrat of California, declined to comment on the committee’s discussions. As reporters waited outside the meeting room where the committee had huddled, a committee spokesman read a statement saying there would be no announcements on Friday.
Some government ethics groups said a reprimand seemed too lenient and would do little to insulate Democrats from Republicans’ charges that they had failed to deliver on Speaker Nancy Pelosi’s promise to “drain the swamp” of Washington’s murky ethical culture.
“Now that he’s put the committee through all this, to issue something as mild as a reprimand would look terrible,” said Melanie Sloan, a former federal prosecutor who is executive director of Citizens for Responsibility and Ethics in Washington.
“Some of the conduct alleged here could be a felony. If the committee lets him off that easily, it won’t do a lot to restore the public faith in Congress.”
From 1966, when the House Committee on Standards and Conduct was established, to 2008, 83 members have received some kind of ethics sanction. Mr. Gingrich, Republican of Georgia, was reprimanded for accepting improper gifts and using charitable donations for political purposes. Mr. Frank, Democrat of Massachusetts, received his reprimand for helping a male prostitute who lived in his home fix parking tickets.
Last year, the House voted against reprimanding Representative Joe Wilson, Republican of South Carolina, for shouting “You lie” during an address to Congress by President Obama.
On Friday, President Obama publicly weighed in on the matter for the first time, saying in an interview on the "CBS Evening News With Katie Couric" that the charges against Mr. Rangel were "very troubling." Mr. Obama said he believed Mr. Rangel had served his constituents well and deserved to end his career on a better note.
"He's somebody who's at the end of his career," he said. "I'm sure that what he wants is to be able to end his career with dignity, and my hope is that it happens."
By DAVID KOCIENIEWSKI
Copyright by The Associated Press
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/nyregion/31rangel.html?_r=1&th&emc=th
The panel that oversaw a two-year ethics inquiry into Representative Charles B. Rangel’s conduct recommended that the Harlem congressman be punished with a reprimand, rather than a more serious censure or expulsion from office, the chairman of the panel said Friday.
The recommendation appears to be carrying significant weight with the full 10-member House ethics committee, which will decide Mr. Rangel’s fate. On Friday, the full committee spent hours behind closed doors debating whether to agree to a settlement that would require the congressman, a Democrat, to admit to wrongdoing in exchange for receiving a reprimand and avoiding a public trial on his conduct.
A reprimand is considered a moderate punishment, more serious than the minor sanction of admonishment but not especially severe: members including Newt Gingrich, the former House speaker, and Barney Frank have received reprimands.
Word of the panel’s recommendation came on the same day that Congressional officials said that Representative Maxine Waters, Democrat of California, would face ethics charges that are expected to be announced next week.
On Thursday, the ethics committee released a report detailing 13 charges against Mr. Rangel, including his improper use of his office to solicit donations for a City University of New York center to be named in his honor; his failure to report rental income from his villa in the Dominican Republic and to pay taxes on it; his omission of some $600,000 in assets on his House financial disclosure forms; and his acceptance from a Manhattan developer of four rent-stabilized apartments, one of which he used as a campaign office.
The report said Mr. Rangel had shown “a pattern of indifference or disregard for the laws, rules and regulations of the United States and the House of Representatives.” It also documented the major charges.
Representative Gene Green, the Texas Democrat who was chairman of the investigative subcommittee, told reporters on Friday that Mr. Rangel had previously been offered the settlement that included the reprimand.
But negotiations stalled on the question of how much wrongdoing Mr. Rangel would admit to, causing the talks to break down and prompting the ethics committee to take the rare step of preparing for the public hearing — the Congressional equivalent of a trial.
“If we could have reached a settlement we would have recommended that to the full committee,” Mr. Green said, adding, “But that didn’t happen.”
Asked if Mr. Rangel had put a settlement on the table, Mr. Green replied: “At different times there were offers from both sides.” He said there was never a vote on a proposed deal.
Mr. Green’s comments added fresh drama to what has become a chaotic story on Capitol Hill.
The ethics committee is among the most secretive bodies in Washington, and after speaking to reporters, Mr. Green quickly issued an apology for his comments — saying he had erred by piercing that confidentiality.
Then, adding more confusion to the picture, Mr. Rangel reacted angrily when reporters asked his response to Mr. Green’s statement, saying it was “absolutely untrue” that he had been offered a reprimand. Hours later, his lawyer amended that statement, saying Mr. Rangel “misspoke” and acknowledging that Mr. Green’s comments were accurate.
“The appropriate sanction, including reprimand, was one of a number of issues addressed in settlement discussions,” said Leslie Kiernan, the lawyer representing Mr. Rangel before the committee. She declined to elaborate on any continuing discussions.
Predicting what punishment a House member will receive after ethics infractions is difficult; factors including the member’s contrition, level of knowledge of the misdeeds and relationships with colleagues can play a role. And given how high profile the case involving Mr. Rangel has become, especially after the public detailing of the charges, it is possible that Republicans on the committee will now face pressure to reject any settlement.
Even some Democrats seemed to grow more uncomfortable with Mr. Rangel’s continued presence in the House. Since the charges were detailed, three Democratic members have called for him to step down, joining three members who had previously asked him to leave the House.
“Too many politicians, both Democrats and Republicans, have fallen victim to the idea that they are ‘different’ than regular folks, and nothing could be further from the truth,” Representative Ann Kirkpatrick, Democrat of Arizona, said in a statement released on Friday.
“It is our job as members of Congress to hold each other accountable to a higher standard regardless of party,” she said, adding that if the charges against Mr. Rangel are accurate, “he needs to resign.”
The chairwoman of the ethics committee, Zoe Lofgren, Democrat of California, declined to comment on the committee’s discussions. As reporters waited outside the meeting room where the committee had huddled, a committee spokesman read a statement saying there would be no announcements on Friday.
Some government ethics groups said a reprimand seemed too lenient and would do little to insulate Democrats from Republicans’ charges that they had failed to deliver on Speaker Nancy Pelosi’s promise to “drain the swamp” of Washington’s murky ethical culture.
“Now that he’s put the committee through all this, to issue something as mild as a reprimand would look terrible,” said Melanie Sloan, a former federal prosecutor who is executive director of Citizens for Responsibility and Ethics in Washington.
“Some of the conduct alleged here could be a felony. If the committee lets him off that easily, it won’t do a lot to restore the public faith in Congress.”
From 1966, when the House Committee on Standards and Conduct was established, to 2008, 83 members have received some kind of ethics sanction. Mr. Gingrich, Republican of Georgia, was reprimanded for accepting improper gifts and using charitable donations for political purposes. Mr. Frank, Democrat of Massachusetts, received his reprimand for helping a male prostitute who lived in his home fix parking tickets.
Last year, the House voted against reprimanding Representative Joe Wilson, Republican of South Carolina, for shouting “You lie” during an address to Congress by President Obama.
On Friday, President Obama publicly weighed in on the matter for the first time, saying in an interview on the "CBS Evening News With Katie Couric" that the charges against Mr. Rangel were "very troubling." Mr. Obama said he believed Mr. Rangel had served his constituents well and deserved to end his career on a better note.
"He's somebody who's at the end of his career," he said. "I'm sure that what he wants is to be able to end his career with dignity, and my hope is that it happens."
Friday, July 30, 2010
Anne Rice leaves Christianity
Anne Rice leaves Christianity
Copyright by CNN News
July 30th, 2010
http://marquee.blogs.cnn.com/2010/07/30/anne-rice-leaves-christianity/?hpt=T2
Legendary author Anne Rice has announced that she’s quitting Christianity.
The “Interview with a Vampire” author, who wrote a book about her spirituality titled "Called Out of Darkness: A Spiritual Confession" in 2008, said Wednesday that she refuses to be “anti-gay,” “anti-feminist," “anti-science” and “anti-Democrat.”
Rice wrote, “For those who care, and I understand if you don't: Today I quit being a Christian ... It's simply impossible for me to ‘belong’ to this quarrelsome, hostile, disputatious, and deservedly infamous group. For ten years, I've tried. I've failed. I'm an outsider. My conscience will allow nothing else.”
Rice then added another post explaining her decision on Thursday:
“My faith in Christ is central to my life. My conversion from a pessimistic atheist lost in a world I didn't understand, to an optimistic believer in a universe created and sustained by a loving God is crucial to me," Rice wrote. "But following Christ does not mean following His followers. Christ is infinitely more important than Christianity and always will be, no matter what Christianity is, has been or might become.”
Copyright by CNN News
July 30th, 2010
http://marquee.blogs.cnn.com/2010/07/30/anne-rice-leaves-christianity/?hpt=T2
Legendary author Anne Rice has announced that she’s quitting Christianity.
The “Interview with a Vampire” author, who wrote a book about her spirituality titled "Called Out of Darkness: A Spiritual Confession" in 2008, said Wednesday that she refuses to be “anti-gay,” “anti-feminist," “anti-science” and “anti-Democrat.”
Rice wrote, “For those who care, and I understand if you don't: Today I quit being a Christian ... It's simply impossible for me to ‘belong’ to this quarrelsome, hostile, disputatious, and deservedly infamous group. For ten years, I've tried. I've failed. I'm an outsider. My conscience will allow nothing else.”
Rice then added another post explaining her decision on Thursday:
“My faith in Christ is central to my life. My conversion from a pessimistic atheist lost in a world I didn't understand, to an optimistic believer in a universe created and sustained by a loving God is crucial to me," Rice wrote. "But following Christ does not mean following His followers. Christ is infinitely more important than Christianity and always will be, no matter what Christianity is, has been or might become.”
Editorial: Midwest oil mess
Editorial: Midwest oil mess
Copyright © 2010, Chicago Tribune
5:47 p.m. CDT, July 29, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-oil-20100729,0,1046343.story
This sounds awfully familiar. An oil spill catches a company flat-footed. Initial reports downplay the seriousness of the hazard.
The response starts slowly. Oil spreads, and as the scope of the damage comes into focus, the company's stock price takes a hit. Politicians cry out for more help. Wildlife gets soaked in oil. There's fear of a massive disaster.
It's not happening in the Gulf of Mexico, but in southwestern Michigan, where a pipeline leak is fouling local waterways and threatens to reach Lake Michigan.
It may not be BP revisited, but it's too close for comfort.
How did a leak that started days ago at a river 80 miles upstream spread halfway to the lake — our lake? As of Thursday afternoon, cleanup crews said they had stopped the smelly mess short of a dam described as "a last-line of defense." A U.S. Environmental Protection Agency official said he no longer considers Lake Michigan "at risk."
He'd better be right. If we learned anything from the Gulf disaster, it's to trust, but verify. And in this incident, there's plenty of reason for doubts.
The spill supposedly occurred on Monday when a 30-inch pipeline carrying oil between Canada and Indiana burst near a pumping station in Marshall, Mich., run by an affiliate of Calgary-based Enbridge Inc. Oil poured into a tributary of the Kalamazoo River, which leads to the lake. The company said it learned of the spill Monday morning, and reported it as soon as regulations permitted.
But records show the report came hours after the company had confirmed the spill, and as long as 12 hours after area residents started making emergency calls about noxious fumes. Enbridge officials said they were unaware of a problem Sunday night.
Enbridge estimated that 819,000 gallons of oil had spilled, and stuck by that number publicly amid reports that it had provided a slightly higher estimate to state officials. On Wednesday, the EPA said more than a million gallons had been lost.
The cause of the spill remains undetermined, but poor maintenance is suspected. The company has a record of federal safety and compliance violations, and reportedly received at least two warnings this year about corrosion on the 40-year-old pipeline. The company said it has an active maintenance program, but no work was scheduled for the location where the leak occurred.
On Wednesday and Thursday, Enbridge sharply expanded the manpower and equipment deployed in the cleanup — suggesting it could have responded more aggressively at the outset. You have to wonder what took so long.
Enbridge executives have apologized for making a mess, and promised to continue cleaning up until residents are satisfied, no matter the cost. Those are words, promises. We learned from BP that promises aren't enough.
The No. 1 priority: Keep that oil from reaching any closer to Lake Michigan. The many outstanding questions about the spill require trustworthy answers. Meantime, the environmental disaster unfolding so close to Chicago serves as another reminder of the price we pay for our dependence on oil, and the advantages of conservation at every possible opportunity.
Copyright © 2010, Chicago Tribune
5:47 p.m. CDT, July 29, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-oil-20100729,0,1046343.story
This sounds awfully familiar. An oil spill catches a company flat-footed. Initial reports downplay the seriousness of the hazard.
The response starts slowly. Oil spreads, and as the scope of the damage comes into focus, the company's stock price takes a hit. Politicians cry out for more help. Wildlife gets soaked in oil. There's fear of a massive disaster.
It's not happening in the Gulf of Mexico, but in southwestern Michigan, where a pipeline leak is fouling local waterways and threatens to reach Lake Michigan.
It may not be BP revisited, but it's too close for comfort.
How did a leak that started days ago at a river 80 miles upstream spread halfway to the lake — our lake? As of Thursday afternoon, cleanup crews said they had stopped the smelly mess short of a dam described as "a last-line of defense." A U.S. Environmental Protection Agency official said he no longer considers Lake Michigan "at risk."
He'd better be right. If we learned anything from the Gulf disaster, it's to trust, but verify. And in this incident, there's plenty of reason for doubts.
The spill supposedly occurred on Monday when a 30-inch pipeline carrying oil between Canada and Indiana burst near a pumping station in Marshall, Mich., run by an affiliate of Calgary-based Enbridge Inc. Oil poured into a tributary of the Kalamazoo River, which leads to the lake. The company said it learned of the spill Monday morning, and reported it as soon as regulations permitted.
But records show the report came hours after the company had confirmed the spill, and as long as 12 hours after area residents started making emergency calls about noxious fumes. Enbridge officials said they were unaware of a problem Sunday night.
Enbridge estimated that 819,000 gallons of oil had spilled, and stuck by that number publicly amid reports that it had provided a slightly higher estimate to state officials. On Wednesday, the EPA said more than a million gallons had been lost.
The cause of the spill remains undetermined, but poor maintenance is suspected. The company has a record of federal safety and compliance violations, and reportedly received at least two warnings this year about corrosion on the 40-year-old pipeline. The company said it has an active maintenance program, but no work was scheduled for the location where the leak occurred.
On Wednesday and Thursday, Enbridge sharply expanded the manpower and equipment deployed in the cleanup — suggesting it could have responded more aggressively at the outset. You have to wonder what took so long.
Enbridge executives have apologized for making a mess, and promised to continue cleaning up until residents are satisfied, no matter the cost. Those are words, promises. We learned from BP that promises aren't enough.
The No. 1 priority: Keep that oil from reaching any closer to Lake Michigan. The many outstanding questions about the spill require trustworthy answers. Meantime, the environmental disaster unfolding so close to Chicago serves as another reminder of the price we pay for our dependence on oil, and the advantages of conservation at every possible opportunity.
Dr. Ricardo Arze and sex abuse cases shows disconnect between law enforcement, state regulators of doctors
Dr. Ricardo Arze and sex abuse cases shows disconnect between law enforcement, state regulators of doctors - In 2003, doctor's patient said he assaulted her, but it took four years and more complaints by women before he was charged or reviewed by state regulators
By Megan Twohey
Copyright © 2010, Chicago Tribune
10:17 p.m. CDT, July 29, 2010
http://www.chicagotribune.com/health/ct-met-doctor-sex-charges-20100729,0,78308,full.story
A 17-year-old girl reported to Berwyn police in 2003 that her doctor, Ricardo Arze, had pulled off her clothes and sexually assaulted her in his exam room, state records show.
Two years later, another patient reported to Berwyn police that Arze had placed his hands on her breasts, breathed heavily on her neck and tried to touch her genitals, claiming it would help treat depression, according to a police report.
Not until 2007 — after at least four women had filed complaints — did police launch the investigation that led to Arze being charged with sexually assaulting patients and having his license suspended, records show.
Register with Chicago Tribune and receive free newsletters and alerts >>
By that time, the family physician had allegedly assaulted at least 21 women and girls at his Arze Doctors Center in Berwyn, according to criminal and civil complaints that outline attacks stretching at least to 2000.
The Cook County state's attorney's office said it lacked enough evidence to prosecute Arze on the 2003 allegation and wasn't informed of the 2005 complaint until years later.
The women who made the reports said law enforcement officials brushed them aside at the time.
"If they had listened to me back then, all of this could have been avoided," said the woman who alleged assault in 2003, her eyes filling with tears. Prosecutors did charge Arze in the 2003 complaint five years later.
The case is the latest in a series of Tribune reports in which female patients have alleged that the system — law enforcement and state regulators — failed to protect them from dangerous doctors.
On Trib Nation, an essay on the common human themes at the heart of this story: Abuse of power and voiceless victims.
The newspaper has uncovered other cases in which physicians were allowed to continue practicing in spite of allegations of serious misconduct — and even convictions. Among them was Bruce Smith, a gynecologist who was not disciplined or prosecuted for years even as complaints of rape and sexual abuse multiplied against him. He was charged with sexual assault following a Tribune report in April.
The Arze case also reveals a disconnect between the criminal justice system and the state agency in charge of policing doctors. The Illinois Department of Financial and Professional Regulation and its medical disciplinary board did not learn of the 2003 and 2005 allegations against Arze until 2007, said Sue Hofer, the department's spokeswoman. State law does not require the department and police to share such complaints with each other, she said.
"It's inexcusable that the medical disciplinary board and police aren't sharing these allegations right away," said Sidney Wolfe, a director at the Washington-based watchdog group Public Citizen, which has examined the handling of sex-offending doctors nationwide.
"They should be working much more closely and much more quickly," Wolfe said. "People who engage in these behaviors are a menace to society, and it's worse when they wear the white coat and have an ethical duty to do no harm. This is a classic example of how in the absence of early intervention more people get harmed."
Berwyn police contacted state regulators in 2007 after additional complaints were made against Arze.
The Dallas-based Federation of State Medical Boards has issued guidelines instructing boards to "place a high priority on the investigation of complaints of sexual misconduct due to patient vulnerability" and making clear a single case is sufficient to proceed with a formal hearing, with or without corroborating evidence.
The guidelines support the use of undercover investigations, which were eventually used in the Arze case.
After his release on bond last year, Arze was rearrested and charged with practicing medicine without a license and aggravated fraud. After posting $1.5 million bail, he was released again and is awaiting trial on all charges.
Reached by phone at his Berwyn home, Arze denied he had resumed practicing and declined to comment on criminal charges of sexual assault, battery and unlawful restraint involving 14 patients. In court and state records, he has denied wrongdoing.
"I'm in the process of trying to survive," he said.
A native of Bolivia, Arze was granted a physician's license by the state in 1989. In addition to running his private practice, he served on the staff of Berwyn's MacNeal Hospital from 1994 until his initial arrest in September 2007.
He said in court records he was treating more than 6,000 patients at Arze Doctors Center at the time of his arrest and that his practice had a "great emphasis on mental health" — including treatment for depression and other mood disorders.
The Chicago woman who made the 2003 report said she turned to Arze as a high school senior at the suggestion of her parents, who were already his patients. She was seeking help with depression that stemmed from sexual abuse by a relative, she said. (The Tribune does not generally publish the names of alleged sexual assault victims without their consent.)
Her mother said she always accompanied the teen into the exam room but that during an April 2003 visit Arze told the parents to wait outside.
"He said he wanted to talk to her one-on-one," the mother said.
Once they were alone, Arze told the girl that he would try to stimulate her in order to help clarify her sexual orientation and determine the level of depression, she said.
He pulled off her clothes, tried to force her to masturbate, placed his fingers inside her and pressed his body against hers, according to court and state records.
"I didn't know what to do," she said. "I got mad at myself like, 'How did I let this happen again?' I froze. … I could feel my blood boil."
The teen immediately told a friend about the incident but swore her to secrecy, fearing no one would believe her word against a doctor's, she said.
But weeks later, she confided in her parents and then in a high school counselor, who called the state Department of Children and Family Services. She said she worried the doctor would hurt other patients if she didn't report him.
The school counselor and a DCFS official accompanied the family to the Berwyn police station, where everyone was separately interviewed about the allegations, said the woman and her mother.
They said police gave them a chilly reception.
"They were rude — like, 'Why did you let this happen?'" said the woman, now married with children and working as a receptionist. "They didn't show any compassion."
An investigator later interviewed the girl's friend, but the family was unaware of any other actions by police.
An assistant Cook County prosecutor decided not to file charges against Arze because the doctor denied the allegations and there were no witnesses or physical evidence, said Sally Daly, spokeswoman for State's Attorney Anita Alvarez.
"I called one time, and they said we need to wait," the mother said. "But nobody ever called us back."
In March 2005, Berwyn police received a similar report about Arze from a 20-year-old Brookfield woman.
The woman alleged that during treatment for depression, Arze removed her bra, placed his hands on her breasts and tried to touch her genitals, according to a copy of the incident report and a complaint filed by the Illinois Department of Financial and Professional Regulation. The woman told the doctor his actions made her uncomfortable.
"(She) asked how his actions would help her depression. Dr. Arze related that he was trying to see if she would get sexually aroused and if so, she was not depressed," the police report said.
The woman, who came forward two days after the alleged incident, said doing so was difficult because, like the teen in the 2003 case and many of Arze's other patients, she is from an immigrant family.
"In the Hispanic community we don't like to make a big deal out of things," she said. "Opening up about something like that is one of the hardest things you can do."
The officer told the woman an investigator would contact her, but months turned into years with no word.
Police did not share the allegation with the state's attorney's office at the time, Daly said.
Jim Ritz, chief of Berwyn police, declined to answer questions about the cases.
There was no contact until fall 2007, when police arrested Arze on charges of sexually assaulting and battering patients. The state simultaneously suspended his license.
William Kushner, then chief of police, told reporters at the time the initial charges were the result of a two-month investigation by detectives and state investigators.
Patient complaints lodged with police in June and July 2007 were among the original battery charges, records show. In August and September, a Cook County sheriff's officer posed as a patient at Arze's private practice and encountered sexual advances from him, said sheriff's spokesman Steve Patterson.
After Arze's arrest made news, the charges against him multiplied — in court and with the state, painting a picture of a chronic sex abuser who allegedly preyed on vulnerable patients suffering from depression.
Among the allegations in court and state records:
•Starting in November 2004, Arze allegedly fondled the breasts of a recently divorced patient seeking treatment for depression, forced his fingers inside her and kissed her neck. She screamed, but no one came.
•In March 2005, he allegedly asked a patient to remove her clothes without providing a gown, fondled her, pushed her onto the exam table and instructed her to keep quiet while he raped her.
•In September 2007, he pulled down his pants and exposed himself to a patient, asked her to touch him and made lewd comments as she left the room, according to court records.
The 2003 allegation resulted in a 2008 felony sexual assault charge against Arze. It and the 2005 allegation also were included in a 2007 complaint filed by the state.
The women said police gave no explanation for why they did not act on their complaints sooner.
"The detective was very apologetic about it," said the woman who made the 2005 report, now 26 and living in Oak Brook. "It's not something you just file away."
That police had received allegations against Arze as early as 2003 came as a shock to one of the women who reported being abused by him in 2007.
"I am disgusted," she said of law enforcement. "They should investigate why they didn't do anything. They were accomplices."
The women said they continue to suffer trauma from the incidents. They cannot see male doctors. One has recurring dreams about her alleged attack.
Arze, who is scheduled to be in court Aug. 16, won't lose his medical license for good even if convicted of all the sexual assault and battery of patient charges.
The Illinois Department of Financial and Professional Regulation has interpreted the state Medical Practice Act to mean that it cannot permanently revoke a physician's license unless a doctor has been twice convicted of felonies involving controlled substances or public aid offenses.
A Tribune review uncovered 16 convicted sex offenders who have held Illinois medical licenses within the past 15 years. Not one had his license permanently revoked. One doctor convicted of sexually abusing a patient was never disciplined by the state in any way.
mtwohey@tribune.com
If you have a complaint about a doctor, contact the police department nearest the doctor's office and the Illinois Department of Financial and Professional Regulation at http://www.idfpr.com/dpr/FILING/Complaint.asp or 312-814-6910.
By Megan Twohey
Copyright © 2010, Chicago Tribune
10:17 p.m. CDT, July 29, 2010
http://www.chicagotribune.com/health/ct-met-doctor-sex-charges-20100729,0,78308,full.story
A 17-year-old girl reported to Berwyn police in 2003 that her doctor, Ricardo Arze, had pulled off her clothes and sexually assaulted her in his exam room, state records show.
Two years later, another patient reported to Berwyn police that Arze had placed his hands on her breasts, breathed heavily on her neck and tried to touch her genitals, claiming it would help treat depression, according to a police report.
Not until 2007 — after at least four women had filed complaints — did police launch the investigation that led to Arze being charged with sexually assaulting patients and having his license suspended, records show.
Register with Chicago Tribune and receive free newsletters and alerts >>
By that time, the family physician had allegedly assaulted at least 21 women and girls at his Arze Doctors Center in Berwyn, according to criminal and civil complaints that outline attacks stretching at least to 2000.
The Cook County state's attorney's office said it lacked enough evidence to prosecute Arze on the 2003 allegation and wasn't informed of the 2005 complaint until years later.
The women who made the reports said law enforcement officials brushed them aside at the time.
"If they had listened to me back then, all of this could have been avoided," said the woman who alleged assault in 2003, her eyes filling with tears. Prosecutors did charge Arze in the 2003 complaint five years later.
The case is the latest in a series of Tribune reports in which female patients have alleged that the system — law enforcement and state regulators — failed to protect them from dangerous doctors.
On Trib Nation, an essay on the common human themes at the heart of this story: Abuse of power and voiceless victims.
The newspaper has uncovered other cases in which physicians were allowed to continue practicing in spite of allegations of serious misconduct — and even convictions. Among them was Bruce Smith, a gynecologist who was not disciplined or prosecuted for years even as complaints of rape and sexual abuse multiplied against him. He was charged with sexual assault following a Tribune report in April.
The Arze case also reveals a disconnect between the criminal justice system and the state agency in charge of policing doctors. The Illinois Department of Financial and Professional Regulation and its medical disciplinary board did not learn of the 2003 and 2005 allegations against Arze until 2007, said Sue Hofer, the department's spokeswoman. State law does not require the department and police to share such complaints with each other, she said.
"It's inexcusable that the medical disciplinary board and police aren't sharing these allegations right away," said Sidney Wolfe, a director at the Washington-based watchdog group Public Citizen, which has examined the handling of sex-offending doctors nationwide.
"They should be working much more closely and much more quickly," Wolfe said. "People who engage in these behaviors are a menace to society, and it's worse when they wear the white coat and have an ethical duty to do no harm. This is a classic example of how in the absence of early intervention more people get harmed."
Berwyn police contacted state regulators in 2007 after additional complaints were made against Arze.
The Dallas-based Federation of State Medical Boards has issued guidelines instructing boards to "place a high priority on the investigation of complaints of sexual misconduct due to patient vulnerability" and making clear a single case is sufficient to proceed with a formal hearing, with or without corroborating evidence.
The guidelines support the use of undercover investigations, which were eventually used in the Arze case.
After his release on bond last year, Arze was rearrested and charged with practicing medicine without a license and aggravated fraud. After posting $1.5 million bail, he was released again and is awaiting trial on all charges.
Reached by phone at his Berwyn home, Arze denied he had resumed practicing and declined to comment on criminal charges of sexual assault, battery and unlawful restraint involving 14 patients. In court and state records, he has denied wrongdoing.
"I'm in the process of trying to survive," he said.
A native of Bolivia, Arze was granted a physician's license by the state in 1989. In addition to running his private practice, he served on the staff of Berwyn's MacNeal Hospital from 1994 until his initial arrest in September 2007.
He said in court records he was treating more than 6,000 patients at Arze Doctors Center at the time of his arrest and that his practice had a "great emphasis on mental health" — including treatment for depression and other mood disorders.
The Chicago woman who made the 2003 report said she turned to Arze as a high school senior at the suggestion of her parents, who were already his patients. She was seeking help with depression that stemmed from sexual abuse by a relative, she said. (The Tribune does not generally publish the names of alleged sexual assault victims without their consent.)
Her mother said she always accompanied the teen into the exam room but that during an April 2003 visit Arze told the parents to wait outside.
"He said he wanted to talk to her one-on-one," the mother said.
Once they were alone, Arze told the girl that he would try to stimulate her in order to help clarify her sexual orientation and determine the level of depression, she said.
He pulled off her clothes, tried to force her to masturbate, placed his fingers inside her and pressed his body against hers, according to court and state records.
"I didn't know what to do," she said. "I got mad at myself like, 'How did I let this happen again?' I froze. … I could feel my blood boil."
The teen immediately told a friend about the incident but swore her to secrecy, fearing no one would believe her word against a doctor's, she said.
But weeks later, she confided in her parents and then in a high school counselor, who called the state Department of Children and Family Services. She said she worried the doctor would hurt other patients if she didn't report him.
The school counselor and a DCFS official accompanied the family to the Berwyn police station, where everyone was separately interviewed about the allegations, said the woman and her mother.
They said police gave them a chilly reception.
"They were rude — like, 'Why did you let this happen?'" said the woman, now married with children and working as a receptionist. "They didn't show any compassion."
An investigator later interviewed the girl's friend, but the family was unaware of any other actions by police.
An assistant Cook County prosecutor decided not to file charges against Arze because the doctor denied the allegations and there were no witnesses or physical evidence, said Sally Daly, spokeswoman for State's Attorney Anita Alvarez.
"I called one time, and they said we need to wait," the mother said. "But nobody ever called us back."
In March 2005, Berwyn police received a similar report about Arze from a 20-year-old Brookfield woman.
The woman alleged that during treatment for depression, Arze removed her bra, placed his hands on her breasts and tried to touch her genitals, according to a copy of the incident report and a complaint filed by the Illinois Department of Financial and Professional Regulation. The woman told the doctor his actions made her uncomfortable.
"(She) asked how his actions would help her depression. Dr. Arze related that he was trying to see if she would get sexually aroused and if so, she was not depressed," the police report said.
The woman, who came forward two days after the alleged incident, said doing so was difficult because, like the teen in the 2003 case and many of Arze's other patients, she is from an immigrant family.
"In the Hispanic community we don't like to make a big deal out of things," she said. "Opening up about something like that is one of the hardest things you can do."
The officer told the woman an investigator would contact her, but months turned into years with no word.
Police did not share the allegation with the state's attorney's office at the time, Daly said.
Jim Ritz, chief of Berwyn police, declined to answer questions about the cases.
There was no contact until fall 2007, when police arrested Arze on charges of sexually assaulting and battering patients. The state simultaneously suspended his license.
William Kushner, then chief of police, told reporters at the time the initial charges were the result of a two-month investigation by detectives and state investigators.
Patient complaints lodged with police in June and July 2007 were among the original battery charges, records show. In August and September, a Cook County sheriff's officer posed as a patient at Arze's private practice and encountered sexual advances from him, said sheriff's spokesman Steve Patterson.
After Arze's arrest made news, the charges against him multiplied — in court and with the state, painting a picture of a chronic sex abuser who allegedly preyed on vulnerable patients suffering from depression.
Among the allegations in court and state records:
•Starting in November 2004, Arze allegedly fondled the breasts of a recently divorced patient seeking treatment for depression, forced his fingers inside her and kissed her neck. She screamed, but no one came.
•In March 2005, he allegedly asked a patient to remove her clothes without providing a gown, fondled her, pushed her onto the exam table and instructed her to keep quiet while he raped her.
•In September 2007, he pulled down his pants and exposed himself to a patient, asked her to touch him and made lewd comments as she left the room, according to court records.
The 2003 allegation resulted in a 2008 felony sexual assault charge against Arze. It and the 2005 allegation also were included in a 2007 complaint filed by the state.
The women said police gave no explanation for why they did not act on their complaints sooner.
"The detective was very apologetic about it," said the woman who made the 2005 report, now 26 and living in Oak Brook. "It's not something you just file away."
That police had received allegations against Arze as early as 2003 came as a shock to one of the women who reported being abused by him in 2007.
"I am disgusted," she said of law enforcement. "They should investigate why they didn't do anything. They were accomplices."
The women said they continue to suffer trauma from the incidents. They cannot see male doctors. One has recurring dreams about her alleged attack.
Arze, who is scheduled to be in court Aug. 16, won't lose his medical license for good even if convicted of all the sexual assault and battery of patient charges.
The Illinois Department of Financial and Professional Regulation has interpreted the state Medical Practice Act to mean that it cannot permanently revoke a physician's license unless a doctor has been twice convicted of felonies involving controlled substances or public aid offenses.
A Tribune review uncovered 16 convicted sex offenders who have held Illinois medical licenses within the past 15 years. Not one had his license permanently revoked. One doctor convicted of sexually abusing a patient was never disciplined by the state in any way.
mtwohey@tribune.com
If you have a complaint about a doctor, contact the police department nearest the doctor's office and the Illinois Department of Financial and Professional Regulation at http://www.idfpr.com/dpr/FILING/Complaint.asp or 312-814-6910.
Citi to pay $75m to settle SEC charges
Citi to pay $75m to settle SEC charges
By Suzanne Kapner, Justin Baer and Brooke Masters in New York
Copyright The Financial Times Limited 2010
Published: July 29 2010 22:05 | Last updated: July 29 2010 22:05
http://www.ft.com/cms/s/0/2e668780-9b50-11df-baaf-00144feab49a.html
Citigroup has agreed to pay $75m to settle Securities and Exchange Commission charges that it failed to disclose to investors more than $40bn in exposure to subprime mortgages.
Thursday’s deal comes two weeks after the SEC levied a record $550m fine against Goldman Sachs to settle allegations the bank defrauded investors in a collateralised debt obligation that was based on subprime mortgages.
Citi did not admit wrongdoing but the settlement includes information that could prove useful in investor lawsuits filed against it.
“The SEC complaint confirms our core allegations and we can use the documents that they cite,” said Steven Singer, lead attorney in a suit filed by investors in Citi bonds.
The SEC said Citi stated four times in July and October 2007 that it had reduced its subprime exposure from $24bn to $13bn at the end of 2006. Yet the bank failed to inform investors until November 2007 that it held more than $40bn in “super senior” tranches of CDOs backed by subprime mortgages and related instruments called “liquidity puts”, the SEC claimed.
Citi executives did not initially classify those assets as subprime because they believed there was little chance of default, the SEC said. By the time Citi disclosed the full extent of its subprime holdings in November, the value of the securities had plunged, helping to cost former chief executive Chuck Prince his job. Mr Prince was not charged with any wrongdoing in this case.
The SEC alleged that Gary Crittenden, former Citi chief financial officer, and Arthur Tildesley, former investor relations director, helped to draft and approve misleading statements.
Mr Crittenden agreed to pay $100,000 and Mr Tildesley, now head of cross marketing for the bank, agreed to pay $80,000. A spokesman for Mr Crittenden said he was pleased to resolve the matter. Mr Tildesley’s lawyer declined to comment.
Like both executives, Citi has neither admitted nor denied wrongdoing, but pointed out that the SEC did not charge anyone with reckless misconduct.
By Suzanne Kapner, Justin Baer and Brooke Masters in New York
Copyright The Financial Times Limited 2010
Published: July 29 2010 22:05 | Last updated: July 29 2010 22:05
http://www.ft.com/cms/s/0/2e668780-9b50-11df-baaf-00144feab49a.html
Citigroup has agreed to pay $75m to settle Securities and Exchange Commission charges that it failed to disclose to investors more than $40bn in exposure to subprime mortgages.
Thursday’s deal comes two weeks after the SEC levied a record $550m fine against Goldman Sachs to settle allegations the bank defrauded investors in a collateralised debt obligation that was based on subprime mortgages.
Citi did not admit wrongdoing but the settlement includes information that could prove useful in investor lawsuits filed against it.
“The SEC complaint confirms our core allegations and we can use the documents that they cite,” said Steven Singer, lead attorney in a suit filed by investors in Citi bonds.
The SEC said Citi stated four times in July and October 2007 that it had reduced its subprime exposure from $24bn to $13bn at the end of 2006. Yet the bank failed to inform investors until November 2007 that it held more than $40bn in “super senior” tranches of CDOs backed by subprime mortgages and related instruments called “liquidity puts”, the SEC claimed.
Citi executives did not initially classify those assets as subprime because they believed there was little chance of default, the SEC said. By the time Citi disclosed the full extent of its subprime holdings in November, the value of the securities had plunged, helping to cost former chief executive Chuck Prince his job. Mr Prince was not charged with any wrongdoing in this case.
The SEC alleged that Gary Crittenden, former Citi chief financial officer, and Arthur Tildesley, former investor relations director, helped to draft and approve misleading statements.
Mr Crittenden agreed to pay $100,000 and Mr Tildesley, now head of cross marketing for the bank, agreed to pay $80,000. A spokesman for Mr Crittenden said he was pleased to resolve the matter. Mr Tildesley’s lawyer declined to comment.
Like both executives, Citi has neither admitted nor denied wrongdoing, but pointed out that the SEC did not charge anyone with reckless misconduct.
Today's Financial News Courtesy of the Financial Times
Today's Financial News Courtesy of the Financial Times
Investors drop risk after US GDP data
ByTelis Demos in London
Copyright The Financial Times Limited 2010
Published: July 30 2010 08:45 | Last updated: July 30 2010 14:50
http://www.ft.com/cms/s/0/810e448e-9ba3-11df-9ebd-00144feab49a.html
Friday 14:45 BST. Markets are quickening the sale of risk after US GDP growth in the second quarter came in lower than expected.
The FTSE All-World index is down 0.8 per cent, with the S&P 500 index opened down 0.7 per cent, on track for its a fourth successive day of losses. Benchmark US Treasury bonds yields are several basis points lower, and the yen saw new highs for the year.
Economists had forecast second-quarter GDP growth in the US of 2.5 per cent, but it was revealed today to be 2.4 per cent. The US also revised its first-quarter growth upwards, from 2.7 per cent to 3.7 per cent.
“The details suggest growth may have been weakening more than expected from a higher base,” said Sebastien Galy, currency strategist at BNP Paribas in New York. He said the yen could rise to its 2009 post-crisis high below Y85 to the dollar.
European markets are also down following the continent’s own mixed economic data, a turnround from recent trends, including slower German retail sales. The Eurofirst 300 index of big companies is 0.7 per cent lower, and “peripheral” European debts are being sold off.
The euro, however, is paring losses against the dollar following the GDP data, as investors bet on likelier interest rate increases in Europe. The yen is again in demand as a haven, gaining against higher-yielding currencies in Australia and Europe and reaching the highest level since November against the dollar.
The slowing economy was not entirely unexpected. On Thursday James Bullard, a regional Fed president, warned that the US risked a “Japanese-style outcome” if it did not consider using measures beyond the Fed funds rate to inject liquidity into the economy, including quantitative easing. Earlier in the week, the Fed’s Beige Book survey said that some regions were seeing slowing manufacturing activity.
Though earnings season has seen strong headline expectation-beating profit reports, and banks globally have enjoyed an uptick in confidence following the European stress tests, investors have been hesitant to buy shares and other risky assets without some sense that the world’s largest importer is on solid footing. Japan’s Nikkei, heavily reliant on exporting companies, has nosedived in the past two sessions as businesses warned of a third-quarter slowdown.
Even in Europe, where economic news has been surprisingly good of late, traders are keenly aware that it is exports – thanks in large part to a cheap euro – that have led German manufacturing activity into an expansion phase and unemployment to its lowest level since 2008.
“Germany and Europe’s other big economies are export-driven. We acknowledge that if there were to be a big problem in the US, it would have an impact on the eurozone,” said Astrid Schilo, an economist at HSBC.
• Europe. A bit of economic data weakness knocked markets at their open. Spanish unemployment ticked up higher than forecast and German retail sales were reported to have fallen more than forecast in June. Eurozone unemployment and inflation both matched expectations exactly – at 10 per cent and 1.7 per cent respectively.
In notable earnings, French construction giant Lafarge beat analysts’ profit projections but lowered its forecast. Renault and Michelin also came in well, with the carmaker’s sales rising and the tyre maker’s margins at record levels. France’s Cac 40 index is down 0.4 per cent, while the the UK’s FTSE 100 index is down 0.8 per cent and Germany’s Dax is 0.6 per cent lower.
• Asia. Regional bellwether Samsung joined Nissan and Hyundai on Thursday, reporting a strong second quarter but warning that second-half profits would not be as strong. Japan’s Nikkei 225 index was down 1.6 per cent as the yen strengthened, making Japan’s exports more expensive. Japanese industrial production and inflation figures also came in lower than expected.
The FTSE Asia-Pacific was down 0.4 per cent, with across-the-board losses. The Hang Seng index in Hong Kong slipped 0.3 per cent and the Shanghai Composite index dropped 0.4 per cent, coming off a two-month high. Australia’s S&P/ASX 200 was lower by 0.7 per cent.
• Currencies. Traders are selling risky currencies against the safe-haven yen. The New Zealand dollar is down 0.7 per cent against the yen, and the South African rand is also down 0.7 per cent. The yen is up 0.6 per cent against the US dollar, at Y86.39.
The euro is down 1 per cent against the yen, tumbling in the afternoon in spite of expected unemployment and inflation figures for the eurozone. The euro is down 0.4 per cent to $1.3019 against the US dollar, paring losses as traders flee the dollar post-GDP figures. The pound is near-flat against the buck at $1.5600.
• Debt. US Treasuries are seeing their heaviest demand in several sessions, with the 10-year yield down 6 basis points to 2.93 per cent. Japanese 10-years are down 3 basis points to yield 1.06 per cent, matching their post-crisis low.
Core German 10-year Bund yields are down 5 basis points as European investors embrace safer assets, at 2.67 per cent. Credit default swap spreads are widening in Greece, Portugal and Ireland. Greek two-year bond yields are up 24 basis points, and
Portuguese debt is also being sold off.
• Commodities. US crude oil is down 1.5 per cent to $77.18 a barrel after a week of inventory expansion has driven up supply. The US has reported a growing excess in its markets, a sign of a moderating economy, and Opec on Thursday said its production had continued to increase.
Gold is up 0.7 per cent to $1,168 an ounce. Deflationary fears in the US have counteracted the declining view of lending and currency risk in Europe and bullion has risen as the week has worn on. Also affecting the price, as the FT reported, was a swap between the Bank for International Settlements and big European banks.
Following the Global Market Overview on Twitter at @telisdemos
US growth slows in second quarter
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 14:03 | Last updated: July 30 2010 15:05
http://www.ft.com/cms/s/0/a7b55d0a-9bd2-11df-9ebd-00144feab49a.html
US economic growth slowed in the second quarter of the year as a swelling trade deficit and weaker consumer spending dragged on the recovery.
Gross domestic product increased at an annualised rate of 2.4 per cent in the second quarter after growing by a revised 3.7 per cent in the first, according to official figures released on Friday. Output was slightly weaker than Wall Street analysts had projected, although the revision added a full percentage point to first-quarter growth.
The second quarter was the fourth consecutive period that the US economy expanded after four quarters of contraction, which had marked the longest recession since the Great Depression. However, the slowing rate of growth and stubborn unemployment have raised anxiety that the recovery is losing steam.
The disappointing data rattled US investors on Friday morning. The S&P 500 fell 1.2 per cent to 1088.31 in early trading with all 10 main sectors down and six dropping more than 1 per cent.
A surge in imports, which far outpaced exports, was the biggest drag on output. Meanwhile, the swing in inventories that had fuelled growth at the end of 2009 failed to provide much of a boost.
Consumer spending also slowed in the second quarter of the year, rising at a rate of 1.6 per cent following a 1.9 per cent rise in the first quarter. Consumers have been holding back amid uncertainty about employment and the housing market.
However, there were some positive signs within the report. Residential investment soared at a rate of almost 28 per cent after declining at the start of the year, and real final sales, which factor out inventories, rose at a rate of 1.3 per cent after a 1.1 per cent in the first quarter.
Also supporting growth was a jump in business investment in equipment and software, which grew at a rate of 21.9 per cent. Signs of capital spending are welcome because they signal that businesses are gaining confidence and could begin to ramp up hiring.
“Investment spending by businesses appears to be ramping up at a faster pace than we expected and, judging by the orders data for the second quarter,” said John Ryding and Conrad DeQuadros, of RDQ Economics.
The commerce department figures were released a week after Ben Bernanke, chairman of the Federal Reserve, told Congress that the economic outlook was “unusually uncertain”.
The Fed has said that it will take action if the economic recovery begins to stall. Fears of a slowdown have grown in recent weeks, with signs emerging of a double dip in the housing market and jobless claims remaining stubbornly high.
A separate report on Friday confirmed that consumer confidence is continuing to wane. The Thomson Reuters/University of Michigan survey of consumer sentiment fell to 67.8 in July from 76 in June.
Richard Curtin, they survey’s chief economist, said that “scarce jobs and stagnating incomes” are weighing upon the minds of consumers.
Fed reports paper profit on Bear and AIG bail-outs
By Francesco Guerrera in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 00:27 | Last updated: July 30 2010 00:27
http://www.ft.com/cms/s/0/309310ce-9b68-11df-8239-00144feab49a.html
The US public’s hope of getting repaid for the bail-outs of Bear Stearns and AIG in the financial crisis increased on Thursday after the Federal Reserve reported a paper profit for the first time on all the holdings of securities bought from the companies.
A rise in the value of the mortgage-related securities that caused Bear’s demise and AIG’s near-collapse enabled the Fed to report unrealised gains on all three vehicles it set up to hold assets from the two stricken financial groups.
The Fed’s paper profit on the three vehicles, known as Maiden Lane I, II and III, highlights the recovery in the value of securities that were once considered toxic, and could allay criticism of the federal bail-outs of large companies.
Ben Bernanke, Fed chairman, has repeatedly expressed confidence that the central bank will be repaid for its aid to the financial system.
As of Wednesday, the Maiden Lane portfolios’ unrealised gains – the difference between the market value of their securities and the outstanding amount of the authorities’ loans to the vehicles – stood at $10.8bn, official documents showed.
The two vehicles created to unburden AIG’s balance sheet of billions of dollars of troubled assets – Maiden Lane II and III – had been showing a paper profit for some time.
This week, Maiden Lane I – a $30bn vehicle that took on Bear’s worst assets, enabling JPMorgan Chase to buy the investment bank in March 2008 – also swung into the black. The improvement was driven by a rise in the value of residential mortgage-backed securities and commercial property loans, according to people familiar with the situation.
The paper profit means that, in theory, the Fed could sell all its holdings in the market and repay the loans, which have maturities of between six and 10 years. In practice, the securities are complex and illiquid and a rapid sale is unlikely.
At the height of the crisis, the Fed extended loans of more than $72bn to the three Maiden Lane vehicles to buy troubled securities from Bear and AIG.
Although the securities had suffered sharp falls in values during the credit crunch, most continued to pay interest and dividends to the authorities.
The Fed used the cash to reduce the outstanding amount of the loans, increasing its potential profits on the increase in the value of the securities.
Disney sells Miramax studio for $660m
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 10:24 | Last updated: July 30 2010 13:12
http://www.ft.com/cms/s/0/79d354c0-9bb7-11df-9ebd-00144feab49a.html
Walt Disney said on Friday that it would sell Mirimax, the movie studio, to a group of investors for $660m as it focuses on its other film production brands.
The group acquiring Mirimax is Filmyard Holdings, and includes Ron Tutor, a construction executive, Tom Barrack, and his real estate investment firm Colony Capital.Through the acquisition, they will gain the rights to more than 700 movie titles, including Chicago, Shakespeare in Love and No Country for Old Men.
“Although we are very proud of Miramax’s many accomplishments, our current strategy for Walt Disney Studios is to focus on the development of great motion pictures under the Disney, Pixar and Marvel brands,” Robert Iger, Disney’s chief executive, said in a statement.
Filmyard will also receive the rights to certain books, development projects and will have the rights to the name “Mirimax”.
Disney has been in a deal-making mood lately, agreeing on Tuesday to buy Playdom, a two-year old company that makes social games for Facebook. It paid $563m to acquire the company, which will provide a new stage for Mickey Mouse and Iron Man.
The deal for Mirimax, which was founded by Bob and Harvey Weinstein and acquired by Disney in 1993, requires regulatory approval regulators but is expected to close by the end of the year.
Shares of Disney fell 0.97 per cent to $33.71 in pre-market trading in New York on Friday.
US banks in rush for cheap finance
By Francesco Guerrera and Aline van Duyn in New York and David Oakley in London
Copyright The Financial Times Limited 2010
Published: July 29 2010 22:39 | Last updated: July 29 2010 22:39
http://www.ft.com/cms/s/0/4c68466e-9b3d-11df-baaf-00144feab49a.html
US banks are taking advantage of improving earnings and growing investor demand to raise billions of dollars in debt at historically low interest rates, a move that could boost the sector’s profits in coming years.
The burst of fundraising in the US is in stark contrast to Europe where banks have struggled to issue debt as the eurozone crisis and worries about the financial industry have undermined market confidence.
The cheap finance locked in by big institutions such as JPMorgan Chase, US Bancorp, Goldman Sachs and Morgan Stanley in recent days marks a remarkable comeback for a sector that was shunned by investors during the financial crisis.
Less than two years after the government was forced to intervene to ease a dramatic credit crunch, US banks sold more than $7bn in debt last week – the largest weekly total since September 2009, says Dealogic.
US Bancorp, a Minneapolis-based lender, raised $1bn in five-year bonds at an interest rate of 2.45 per cent – one of the lowest ever paid by a bank.
Lower funding costs boost profits because they increase the margins earned by banks on their loans to consumers, companies and investors.
Wall Street executives say recent debt issues were triggered by “reverse inquiries” – informal approaches by fund managers seeking to raise their exposure to a sector they had largely avoided since the crisis.
“There is a bit of a food-fight among investors to get hold of paper from US banks,” an executive at a big bank said. “After leaving the sector alone for so long, there is renewed appetite.”
With US Treasury yields at record lows, investors seek alternatives that offer higher returns. Expectations that the Federal Reserve will keep rates at near-zero have further raised demand for bonds, as a low-interest, low-growth environment is best for such investments.
Recent earnings and the passage of financial rules also contributed to the surge in debt issuance. Goldman, Morgan Stanley and JPMorgan each issued $3bn bonds this month.
The spike in fundraising is enabling US banks to replace existing bonds with new, cheaper ones. Jean-Francois Tremblay, a Moody’s analyst, estimates that US banks have refinanced $200bn of the $372bn of debt coming due in 2010.
In Europe, analysts say banks have raised only 40 per cent of the €450bn they need this year.
But since publication of the stress tests there have been signs of improvement. This week BBVA, Spain’s second-biggest bank, sold the first bond by a Spanish lender since April.
Gregory Peters, at Morgan Stanley, said: “The banks that don’t need funding can do it, the smaller banks that do need funding probably can’t.”
Coffee hits 12-year high on Colombia shortage
By Javier Blas in London
Copyright The Financial Times Limited 2010
Published: July 30 2010 11:45 | Last updated: July 30 2010 13:12
http://www.ft.com/cms/s/0/c26406ce-9bc3-11df-9ebd-00144feab49a.html
Coffee prices on Friday hit their highest level in 12 years on the back of low availability of premium Arabica coffee from key producer Colombia, after a string of disappointing crops in the Latin American country.
In New York, ICE September Arabica coffee jumped 3.2 per cent to 178.75 cents a pound, the highest since February 1998. In London, Liffe September lower quality robusta coffee rose 3 per cent to $1,810 a tonne.
Industry executives believe prices could rise towards 200 cents a pound in New York before the arrival of the new Brazilian crop later this year. “Until October, it is going to be tight on high-quality coffee,” said one.
Colombia coffee production last year plunged to a 33-year low of 7.8m bags, each of 60kg, down nearly a third from 11.1m bags in 2008.
After a meeting with Brazilian officials, the London-based International Coffee Organisation said on Friday that the “current tight demand-supply situation” in the coffee market was “likely to persist in the near- to medium term.”
Executives said, nonetheless, that after the arrival of the Brazilian crop – which is expected to be the largest ever – prices should decline in early 2011.
Elsewhere in commodities markets on Friday, global wheat prices surged further, propelled by fears of lower production from Russia, Kazakhstan and Ukraine – three of the world’s top 10 exporters – because of a drought in the region.
In Paris, Liffe November European milling wheat hit €194.50 a tonne, the highest level in 22 months. The contract was later up 2.3 per cent at €192.30 a tonne.
In Chicago CBOT September soft winter wheat rose to a fresh 13-month high of $6.37 a bushel, up 1.5 per cent on the day. Wheat prices in Chicago, the global benchmark, have jumped 36.7 per cent per cent so far this month.
The International Grain Organisation on Thursday said wheat production would drop to 651m tonnes in 2010-11. That projection was down from the 664m tonnes it forecast last month and sharply lower than the 677m tonnes harvested in the 2009-10 season. The IGC said consumption would hover around 655m tonnes in 2010-11.
Industry executives fear that Russia could impose export limits if the drought damage is worse than currently expected, tightening supplies for importers in North Africa and the Middle East. Executives said bread price rises were likely.
Traders are also concerned about supplies from Canada, which exports the bulk of the world’s top quality, high-protein wheat. Planting in Canada’s prairies was delayed this year by unusually heavy rains and officials said output was expected to decline by at least 25 per compared with 2009.
Meanwhile, oil prices moved lower, but remained anchored within the trading range of $70-$80 a barrel that has been in place for most of the year. Nymex September West Texas Intermediate dropped 54 cents to $77.82 a barrel while ICE September Brent fell 48 cents to $77.11 a barrel.
Investors drop risk after US GDP data
ByTelis Demos in London
Copyright The Financial Times Limited 2010
Published: July 30 2010 08:45 | Last updated: July 30 2010 14:50
http://www.ft.com/cms/s/0/810e448e-9ba3-11df-9ebd-00144feab49a.html
Friday 14:45 BST. Markets are quickening the sale of risk after US GDP growth in the second quarter came in lower than expected.
The FTSE All-World index is down 0.8 per cent, with the S&P 500 index opened down 0.7 per cent, on track for its a fourth successive day of losses. Benchmark US Treasury bonds yields are several basis points lower, and the yen saw new highs for the year.
Economists had forecast second-quarter GDP growth in the US of 2.5 per cent, but it was revealed today to be 2.4 per cent. The US also revised its first-quarter growth upwards, from 2.7 per cent to 3.7 per cent.
“The details suggest growth may have been weakening more than expected from a higher base,” said Sebastien Galy, currency strategist at BNP Paribas in New York. He said the yen could rise to its 2009 post-crisis high below Y85 to the dollar.
European markets are also down following the continent’s own mixed economic data, a turnround from recent trends, including slower German retail sales. The Eurofirst 300 index of big companies is 0.7 per cent lower, and “peripheral” European debts are being sold off.
The euro, however, is paring losses against the dollar following the GDP data, as investors bet on likelier interest rate increases in Europe. The yen is again in demand as a haven, gaining against higher-yielding currencies in Australia and Europe and reaching the highest level since November against the dollar.
The slowing economy was not entirely unexpected. On Thursday James Bullard, a regional Fed president, warned that the US risked a “Japanese-style outcome” if it did not consider using measures beyond the Fed funds rate to inject liquidity into the economy, including quantitative easing. Earlier in the week, the Fed’s Beige Book survey said that some regions were seeing slowing manufacturing activity.
Though earnings season has seen strong headline expectation-beating profit reports, and banks globally have enjoyed an uptick in confidence following the European stress tests, investors have been hesitant to buy shares and other risky assets without some sense that the world’s largest importer is on solid footing. Japan’s Nikkei, heavily reliant on exporting companies, has nosedived in the past two sessions as businesses warned of a third-quarter slowdown.
Even in Europe, where economic news has been surprisingly good of late, traders are keenly aware that it is exports – thanks in large part to a cheap euro – that have led German manufacturing activity into an expansion phase and unemployment to its lowest level since 2008.
“Germany and Europe’s other big economies are export-driven. We acknowledge that if there were to be a big problem in the US, it would have an impact on the eurozone,” said Astrid Schilo, an economist at HSBC.
• Europe. A bit of economic data weakness knocked markets at their open. Spanish unemployment ticked up higher than forecast and German retail sales were reported to have fallen more than forecast in June. Eurozone unemployment and inflation both matched expectations exactly – at 10 per cent and 1.7 per cent respectively.
In notable earnings, French construction giant Lafarge beat analysts’ profit projections but lowered its forecast. Renault and Michelin also came in well, with the carmaker’s sales rising and the tyre maker’s margins at record levels. France’s Cac 40 index is down 0.4 per cent, while the the UK’s FTSE 100 index is down 0.8 per cent and Germany’s Dax is 0.6 per cent lower.
• Asia. Regional bellwether Samsung joined Nissan and Hyundai on Thursday, reporting a strong second quarter but warning that second-half profits would not be as strong. Japan’s Nikkei 225 index was down 1.6 per cent as the yen strengthened, making Japan’s exports more expensive. Japanese industrial production and inflation figures also came in lower than expected.
The FTSE Asia-Pacific was down 0.4 per cent, with across-the-board losses. The Hang Seng index in Hong Kong slipped 0.3 per cent and the Shanghai Composite index dropped 0.4 per cent, coming off a two-month high. Australia’s S&P/ASX 200 was lower by 0.7 per cent.
• Currencies. Traders are selling risky currencies against the safe-haven yen. The New Zealand dollar is down 0.7 per cent against the yen, and the South African rand is also down 0.7 per cent. The yen is up 0.6 per cent against the US dollar, at Y86.39.
The euro is down 1 per cent against the yen, tumbling in the afternoon in spite of expected unemployment and inflation figures for the eurozone. The euro is down 0.4 per cent to $1.3019 against the US dollar, paring losses as traders flee the dollar post-GDP figures. The pound is near-flat against the buck at $1.5600.
• Debt. US Treasuries are seeing their heaviest demand in several sessions, with the 10-year yield down 6 basis points to 2.93 per cent. Japanese 10-years are down 3 basis points to yield 1.06 per cent, matching their post-crisis low.
Core German 10-year Bund yields are down 5 basis points as European investors embrace safer assets, at 2.67 per cent. Credit default swap spreads are widening in Greece, Portugal and Ireland. Greek two-year bond yields are up 24 basis points, and
Portuguese debt is also being sold off.
• Commodities. US crude oil is down 1.5 per cent to $77.18 a barrel after a week of inventory expansion has driven up supply. The US has reported a growing excess in its markets, a sign of a moderating economy, and Opec on Thursday said its production had continued to increase.
Gold is up 0.7 per cent to $1,168 an ounce. Deflationary fears in the US have counteracted the declining view of lending and currency risk in Europe and bullion has risen as the week has worn on. Also affecting the price, as the FT reported, was a swap between the Bank for International Settlements and big European banks.
Following the Global Market Overview on Twitter at @telisdemos
US growth slows in second quarter
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 14:03 | Last updated: July 30 2010 15:05
http://www.ft.com/cms/s/0/a7b55d0a-9bd2-11df-9ebd-00144feab49a.html
US economic growth slowed in the second quarter of the year as a swelling trade deficit and weaker consumer spending dragged on the recovery.
Gross domestic product increased at an annualised rate of 2.4 per cent in the second quarter after growing by a revised 3.7 per cent in the first, according to official figures released on Friday. Output was slightly weaker than Wall Street analysts had projected, although the revision added a full percentage point to first-quarter growth.
The second quarter was the fourth consecutive period that the US economy expanded after four quarters of contraction, which had marked the longest recession since the Great Depression. However, the slowing rate of growth and stubborn unemployment have raised anxiety that the recovery is losing steam.
The disappointing data rattled US investors on Friday morning. The S&P 500 fell 1.2 per cent to 1088.31 in early trading with all 10 main sectors down and six dropping more than 1 per cent.
A surge in imports, which far outpaced exports, was the biggest drag on output. Meanwhile, the swing in inventories that had fuelled growth at the end of 2009 failed to provide much of a boost.
Consumer spending also slowed in the second quarter of the year, rising at a rate of 1.6 per cent following a 1.9 per cent rise in the first quarter. Consumers have been holding back amid uncertainty about employment and the housing market.
However, there were some positive signs within the report. Residential investment soared at a rate of almost 28 per cent after declining at the start of the year, and real final sales, which factor out inventories, rose at a rate of 1.3 per cent after a 1.1 per cent in the first quarter.
Also supporting growth was a jump in business investment in equipment and software, which grew at a rate of 21.9 per cent. Signs of capital spending are welcome because they signal that businesses are gaining confidence and could begin to ramp up hiring.
“Investment spending by businesses appears to be ramping up at a faster pace than we expected and, judging by the orders data for the second quarter,” said John Ryding and Conrad DeQuadros, of RDQ Economics.
The commerce department figures were released a week after Ben Bernanke, chairman of the Federal Reserve, told Congress that the economic outlook was “unusually uncertain”.
The Fed has said that it will take action if the economic recovery begins to stall. Fears of a slowdown have grown in recent weeks, with signs emerging of a double dip in the housing market and jobless claims remaining stubbornly high.
A separate report on Friday confirmed that consumer confidence is continuing to wane. The Thomson Reuters/University of Michigan survey of consumer sentiment fell to 67.8 in July from 76 in June.
Richard Curtin, they survey’s chief economist, said that “scarce jobs and stagnating incomes” are weighing upon the minds of consumers.
Fed reports paper profit on Bear and AIG bail-outs
By Francesco Guerrera in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 00:27 | Last updated: July 30 2010 00:27
http://www.ft.com/cms/s/0/309310ce-9b68-11df-8239-00144feab49a.html
The US public’s hope of getting repaid for the bail-outs of Bear Stearns and AIG in the financial crisis increased on Thursday after the Federal Reserve reported a paper profit for the first time on all the holdings of securities bought from the companies.
A rise in the value of the mortgage-related securities that caused Bear’s demise and AIG’s near-collapse enabled the Fed to report unrealised gains on all three vehicles it set up to hold assets from the two stricken financial groups.
The Fed’s paper profit on the three vehicles, known as Maiden Lane I, II and III, highlights the recovery in the value of securities that were once considered toxic, and could allay criticism of the federal bail-outs of large companies.
Ben Bernanke, Fed chairman, has repeatedly expressed confidence that the central bank will be repaid for its aid to the financial system.
As of Wednesday, the Maiden Lane portfolios’ unrealised gains – the difference between the market value of their securities and the outstanding amount of the authorities’ loans to the vehicles – stood at $10.8bn, official documents showed.
The two vehicles created to unburden AIG’s balance sheet of billions of dollars of troubled assets – Maiden Lane II and III – had been showing a paper profit for some time.
This week, Maiden Lane I – a $30bn vehicle that took on Bear’s worst assets, enabling JPMorgan Chase to buy the investment bank in March 2008 – also swung into the black. The improvement was driven by a rise in the value of residential mortgage-backed securities and commercial property loans, according to people familiar with the situation.
The paper profit means that, in theory, the Fed could sell all its holdings in the market and repay the loans, which have maturities of between six and 10 years. In practice, the securities are complex and illiquid and a rapid sale is unlikely.
At the height of the crisis, the Fed extended loans of more than $72bn to the three Maiden Lane vehicles to buy troubled securities from Bear and AIG.
Although the securities had suffered sharp falls in values during the credit crunch, most continued to pay interest and dividends to the authorities.
The Fed used the cash to reduce the outstanding amount of the loans, increasing its potential profits on the increase in the value of the securities.
Disney sells Miramax studio for $660m
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: July 30 2010 10:24 | Last updated: July 30 2010 13:12
http://www.ft.com/cms/s/0/79d354c0-9bb7-11df-9ebd-00144feab49a.html
Walt Disney said on Friday that it would sell Mirimax, the movie studio, to a group of investors for $660m as it focuses on its other film production brands.
The group acquiring Mirimax is Filmyard Holdings, and includes Ron Tutor, a construction executive, Tom Barrack, and his real estate investment firm Colony Capital.Through the acquisition, they will gain the rights to more than 700 movie titles, including Chicago, Shakespeare in Love and No Country for Old Men.
“Although we are very proud of Miramax’s many accomplishments, our current strategy for Walt Disney Studios is to focus on the development of great motion pictures under the Disney, Pixar and Marvel brands,” Robert Iger, Disney’s chief executive, said in a statement.
Filmyard will also receive the rights to certain books, development projects and will have the rights to the name “Mirimax”.
Disney has been in a deal-making mood lately, agreeing on Tuesday to buy Playdom, a two-year old company that makes social games for Facebook. It paid $563m to acquire the company, which will provide a new stage for Mickey Mouse and Iron Man.
The deal for Mirimax, which was founded by Bob and Harvey Weinstein and acquired by Disney in 1993, requires regulatory approval regulators but is expected to close by the end of the year.
Shares of Disney fell 0.97 per cent to $33.71 in pre-market trading in New York on Friday.
US banks in rush for cheap finance
By Francesco Guerrera and Aline van Duyn in New York and David Oakley in London
Copyright The Financial Times Limited 2010
Published: July 29 2010 22:39 | Last updated: July 29 2010 22:39
http://www.ft.com/cms/s/0/4c68466e-9b3d-11df-baaf-00144feab49a.html
US banks are taking advantage of improving earnings and growing investor demand to raise billions of dollars in debt at historically low interest rates, a move that could boost the sector’s profits in coming years.
The burst of fundraising in the US is in stark contrast to Europe where banks have struggled to issue debt as the eurozone crisis and worries about the financial industry have undermined market confidence.
The cheap finance locked in by big institutions such as JPMorgan Chase, US Bancorp, Goldman Sachs and Morgan Stanley in recent days marks a remarkable comeback for a sector that was shunned by investors during the financial crisis.
Less than two years after the government was forced to intervene to ease a dramatic credit crunch, US banks sold more than $7bn in debt last week – the largest weekly total since September 2009, says Dealogic.
US Bancorp, a Minneapolis-based lender, raised $1bn in five-year bonds at an interest rate of 2.45 per cent – one of the lowest ever paid by a bank.
Lower funding costs boost profits because they increase the margins earned by banks on their loans to consumers, companies and investors.
Wall Street executives say recent debt issues were triggered by “reverse inquiries” – informal approaches by fund managers seeking to raise their exposure to a sector they had largely avoided since the crisis.
“There is a bit of a food-fight among investors to get hold of paper from US banks,” an executive at a big bank said. “After leaving the sector alone for so long, there is renewed appetite.”
With US Treasury yields at record lows, investors seek alternatives that offer higher returns. Expectations that the Federal Reserve will keep rates at near-zero have further raised demand for bonds, as a low-interest, low-growth environment is best for such investments.
Recent earnings and the passage of financial rules also contributed to the surge in debt issuance. Goldman, Morgan Stanley and JPMorgan each issued $3bn bonds this month.
The spike in fundraising is enabling US banks to replace existing bonds with new, cheaper ones. Jean-Francois Tremblay, a Moody’s analyst, estimates that US banks have refinanced $200bn of the $372bn of debt coming due in 2010.
In Europe, analysts say banks have raised only 40 per cent of the €450bn they need this year.
But since publication of the stress tests there have been signs of improvement. This week BBVA, Spain’s second-biggest bank, sold the first bond by a Spanish lender since April.
Gregory Peters, at Morgan Stanley, said: “The banks that don’t need funding can do it, the smaller banks that do need funding probably can’t.”
Coffee hits 12-year high on Colombia shortage
By Javier Blas in London
Copyright The Financial Times Limited 2010
Published: July 30 2010 11:45 | Last updated: July 30 2010 13:12
http://www.ft.com/cms/s/0/c26406ce-9bc3-11df-9ebd-00144feab49a.html
Coffee prices on Friday hit their highest level in 12 years on the back of low availability of premium Arabica coffee from key producer Colombia, after a string of disappointing crops in the Latin American country.
In New York, ICE September Arabica coffee jumped 3.2 per cent to 178.75 cents a pound, the highest since February 1998. In London, Liffe September lower quality robusta coffee rose 3 per cent to $1,810 a tonne.
Industry executives believe prices could rise towards 200 cents a pound in New York before the arrival of the new Brazilian crop later this year. “Until October, it is going to be tight on high-quality coffee,” said one.
Colombia coffee production last year plunged to a 33-year low of 7.8m bags, each of 60kg, down nearly a third from 11.1m bags in 2008.
After a meeting with Brazilian officials, the London-based International Coffee Organisation said on Friday that the “current tight demand-supply situation” in the coffee market was “likely to persist in the near- to medium term.”
Executives said, nonetheless, that after the arrival of the Brazilian crop – which is expected to be the largest ever – prices should decline in early 2011.
Elsewhere in commodities markets on Friday, global wheat prices surged further, propelled by fears of lower production from Russia, Kazakhstan and Ukraine – three of the world’s top 10 exporters – because of a drought in the region.
In Paris, Liffe November European milling wheat hit €194.50 a tonne, the highest level in 22 months. The contract was later up 2.3 per cent at €192.30 a tonne.
In Chicago CBOT September soft winter wheat rose to a fresh 13-month high of $6.37 a bushel, up 1.5 per cent on the day. Wheat prices in Chicago, the global benchmark, have jumped 36.7 per cent per cent so far this month.
The International Grain Organisation on Thursday said wheat production would drop to 651m tonnes in 2010-11. That projection was down from the 664m tonnes it forecast last month and sharply lower than the 677m tonnes harvested in the 2009-10 season. The IGC said consumption would hover around 655m tonnes in 2010-11.
Industry executives fear that Russia could impose export limits if the drought damage is worse than currently expected, tightening supplies for importers in North Africa and the Middle East. Executives said bread price rises were likely.
Traders are also concerned about supplies from Canada, which exports the bulk of the world’s top quality, high-protein wheat. Planting in Canada’s prairies was delayed this year by unusually heavy rains and officials said output was expected to decline by at least 25 per compared with 2009.
Meanwhile, oil prices moved lower, but remained anchored within the trading range of $70-$80 a barrel that has been in place for most of the year. Nymex September West Texas Intermediate dropped 54 cents to $77.82 a barrel while ICE September Brent fell 48 cents to $77.11 a barrel.
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