Subject: First Flight From: Terri To: All Date Posted: Sun, Jul 03, 2005 at 21:43:49 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4529&u=182|144|... Adult Baltimore Oriole Looks on as Chick Takes First Flight New York City--Central Park, North Woods.

Subject: A Livable Shade of Green From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 19:47:12 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/opinion/03kristof.html?incamp=article_popular_1 A Livable Shade of Green By NICHOLAS D. KRISTOF PORTLAND, Ore. When President Bush travels to the Group of 8 summit meeting this week, he'll stiff Tony Blair and other leaders who are appealing for firm action on global warming. 'Kyoto would have wrecked our economy,' Mr. Bush told a Danish interviewer recently, referring to the accord to curb carbon emissions. Maybe that was a plausible argument a few years ago, but now the city of Portland is proving it flat wrong. Newly released data show that Portland, America's environmental laboratory, has achieved stunning reductions in carbon emissions. It has reduced emissions below the levels of 1990, the benchmark for the Kyoto accord, while booming economically. What's more, officials in Portland insist that the campaign to cut carbon emissions has entailed no significant economic price, and on the contrary has brought the city huge benefits: less tax money spent on energy, more convenient transportation, a greener city, and expertise in energy efficiency that is helping local businesses win contracts worldwide. 'People have looked at it the wrong way, as a drain,' said Mayor Tom Potter, who himself drives a Prius hybrid. 'Actually it's something that attracts people. ... It's economical; it makes sense in dollars.' I've been torn about what to do about global warming. But the evidence is growing that climate change is a real threat: I was bowled over when I visited the Arctic and talked to Eskimos who described sea ice disappearing, permafrost melting and visits by robins, for which they have no word in the local language. In the past, economic models tended to discourage aggressive action on greenhouse gases, because they indicated that the cost of curbing carbon emissions could be extraordinarily high, amounting to perhaps 3 percent of G.N.P. That's where Portland's experience is so crucial. It confirms the suggestions of some economists that we can take initial steps against global warming without economic disruptions. Then in a decade or two, we can decide whether to proceed with other, costlier steps. In 1993, Portland became the first local government in the United States to adopt a strategy to deal with climate change. The latest data, released a few weeks ago, show the results: Greenhouse gas emissions last year in Multnomah County, which includes Portland, dropped below the level of 1990, and per capita emissions were down 13 percent. This was achieved partly by a major increase in public transit, including two light rail lines and a streetcar system. The city has also built 750 miles of bicycle paths, and the number of people commuting by foot or on bicycle has increased 10 percent. Portland offers all city employees either a $25-per-month bus pass or car pool parking. Private businesses are told that if they provide employees with subsidized parking, they should also subsidize bus commutes. The city has also offered financial incentives and technical assistance to anyone constructing a 'green building' with built-in energy efficiency. Then there are innumerable little steps, such as encouraging people to weatherize their homes. Portland also replaced the bulbs in the city's traffic lights with light-emitting diodes, which reduce electricity use by 80 percent and save the city almost $500,000 a year. 'Portland's efforts refute the thesis that you can't make progress without huge economic harm,' says Erik Sten, a city commissioner. 'It actually goes all the other way - to the extent Portland has been successful, the things that we were doing that happened to reduce emissions were the things that made our city livable and hence desirable.' Mr. Sten added that Portland's officials were able to curb carbon emissions only because the steps they took were intrinsically popular and cheap, serving other purposes like reducing traffic congestion or saving on electrical costs. 'I haven't seen that much willingness even among our environmentalists,' he said, 'to do huge masochistic things to save the planet.' So as he heads to the summit meeting, Mr. Bush should get a briefing on Portland's experience (a full report is at www.sustainableportland.org) and accept that we don't need to surrender to global warming. Perhaps eventually we will face hard trade-offs. But for now Portland shows that we can help our planet without 'wrecking' our economy - indeed, at no significant cost at all. At the Group of 8, that should be a no-brainer.

Subject: Note for Dear Bobby From: Terri To: All Date Posted: Sun, Jul 03, 2005 at 19:42:59 (EDT) Email Address: Not Provided Message: Dear Bobby, Please try to leave the last 50 or so posts for us when you clean the message board. Thank you so much.

Subject: A Cautious Outlook From: Terri To: All Date Posted: Sun, Jul 03, 2005 at 19:40:55 (EDT) Email Address: Not Provided Message: This theme for me these coming months will be increasing caution for the year has gone well so far, but we can not know whether to expect a slowing is economic growth now that the Federal Reserve has been raising short term interest rates for a full year. There is no other major central bank that is raising rates and several are lowering. The most important aspect then of growth will be low long term interest rates. The danger as everyone knows, would be a failing housing market. The idea then is a cautious value emphasis, and a watch on bonds. The most positive aspect is that every major stock market but our is positive in domestic currency for the year so far, many making fine gains. As for the Vanguard GNMA Bond Fund as a defense, remember as I finally understand the duration will increase if long term interest rates increase but this will not happen with other investment-grade bond funds.

Subject: 'Three Billion New Capitalists' From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 19:21:55 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/books/review/03BLODGET.html?pagewanted=all 'Three Billion New Capitalists': Consider the Outsource By HENRY BLODGET IF you've managed to ignore the alarm bells on the outlook for American economic leadership -- and you enjoy dreaming -- don't read Clyde Prestowitz's ''Three Billion New Capitalists: The Great Shift of Wealth and Power to the East.'' It argues that the United States faces such serious fiscal and competitive challenges that we may be headed not only for a declining standard of living but for a 1930's-style depression with a capital D. Here's the story. In the golden age, 1950-73, we had it all -- low-cost manufacturing, rising wages, technological dominance, a highly educated and motivated work force, a trade surplus. Until 1971, our reserve currency was backed by gold, forcing us to be responsible. We had control over our economic destiny. Since then, bit by bit, we've lost much of our strength and are in danger of losing the rest. Our first problem is the surge in competitiveness on the part of the rest of the world, especially China and India, a trend Thomas L. Friedman analyzes in detail in ''The World Is Flat.'' Even if the playing field were level -- which it isn't -- we would not be able to compete with the combination of low-cost labor, talent and fire in the belly of these two behemoths. Our second problem is that we still think we're living in the golden age. In fact, we suffer from a misguided sense of superiority, profligate spending habits, a weak education system, mammoth debts, a ballooning trade deficit and a religious devotion to free-trade theories developed before the Industrial Revolution. Each of these issues could consume a book, but Prestowitz, president of the Economic Strategy Institute and a trade negotiator in the Reagan administration, packs them into one. The heart of the question, as he sees it, is that we are not defending the jewel in our economic crown -- our technology and manufacturing capabilities -- but are instead waxing poetic about the virtues of free trade while more practical countries walk off with our loot. This, he contends, will lead to the gutting of our economy, with well-paid skilled jobs replaced by low-paid menial ones, and an America in hock to the world's next economic leaders. Globalization, of course, is nothing new. The ''hollowing out'' debate hinges on whether the United States can replace the jobs it loses with equal or better ones. Capitalism is fueled by Schumpeter's creative destruction -- new forever displacing old -- and this country has thrived through transitions from agriculture to manufacturing to automation to outsourcing to services. Free-trade advocates argue that globalization is just the latest phase of a continuing evolution. Trade hawks like Prestowitz argue that now is different because of the sheer size of India and China and our inadequate response to the new situation. Globalization has always been a touchy subject (after all, Americans lose jobs when companies move production and services overseas) -- so touchy that most popular discussion of it is inflammatory or inane or both. Last year, John Kerry branded corporations and executives who send jobs offshore ''Benedict Arnold companies and C.E.O.'s,'' and a White House adviser, N. Gregory Mankiw, provoked many a storm by suggesting that offshoring was actually beneficial because, among other things, it lowers prices and makes labor available for new opportunities. Mankiw may have been impolitic, but Kerry was just pandering. If the choice is go offshore or go out of business, a chief executive doesn't have a choice. Prestowitz acknowledges that many companies can't survive today without offshoring, but argues that we often abandon industries we could continue to dominate and so lose the ability to lead the next wave of innovation. He lays the blame on government, not the private sector. ''Whether it recognizes the fact or not,'' he declares, ''the United States has a de facto economic strategy, and right now it is to send the country's most important industries overseas.'' He observes, moreover, that the benefits of offshoring go beyond cost: ''You do save money,'' a senior manager at the semiconductor equipment maker KLA-Tencor says about sending work to India. ''But pretty soon, you realize the work is getting done faster and better, and you start sending more and more of it. You also start sending more advanced work and then have to figure out what, if anything, you really don't want to send.'' The work is getting done faster and better, Prestowitz argues, because Indians are not only hungrier than we are, but better educated. China, India, Japan and Europe all churn out more science and engineering degrees than we do. Worse -- and downright embarrassing -- is the state of American education. Globally, our 12th-graders rank only in the 10th percentile in math (that's 10th percentile, not 10th). Our students also rank first in their assessment of their own performance: we're not only poorly prepared, we have delusions of grandeur. One common argument against the hollowing-out theory is that we can afford to lose jobs in low-tech manufacturing because we retain our high-tech design and manufacturing capabilities. Prestowitz counters that China's and India's incentives and resources are so compelling that the high-tech work is leaving, too. Another argument is that a revaluation of the yuan will curb imports and stimulate exports, thus repairing the trade deficit. In fact, Prestowitz asserts, our manufacturing capacity has been so gutted that we can't export our way out, even if the dollar's value drops to zero. The only path is to cut spending. But Prestowitz risks sounding like Chicken Little when he pronounces the globalization of today more than just another ''gale of creative destruction'' to which our economy will eventually adapt. Manufacturing has long been declining as a percentage of the United States economy, but the jobs lost have been more than offset by growth in services (in health care, financial services, law, retailing, and so on). Prestowitz points out that services are now being offshored, too, but not (yet) at a rate threatening our main growth industries. The McKinsey Global Institute, for example, reports that while 24 million Americans switch jobs each year, only 3 million jobs are estimated to go offshore by 2015. The critical question, still to be satisfactorily answered, is whether offshoring produces net economic gain or loss. Prestowitz deconstructs an oft-cited McKinsey study concluding that each $1 of spending sent offshore results in an overall gain in the gross domestic product of $1.12 to $1.14. He points out the study relies on data suggesting that 69 percent of displaced workers found jobs at an average of 97 percent of their former pay. This leaves 31 percent who didn't find new jobs. Not only that, ''if employers took McKinsey's advice to increase their offshoring,'' he says, the gain would quickly become a loss. In America's boom time, government-business cooperation was considered anathema to free-market principles -- ''Politicians shouldn't pick winners and losers!'' In Prestowitz's view, the laissez-faire trade theories of the 19th century have no place in 2005; since he holds that many of our successes have resulted from public-private collaboration, most of his proposals for maintaining American competitiveness boil down to government taking a more active role. Pay teachers more. Help workers move between jobs by offering wage insurance and portable health coverage. Reduce oil consumption by providing incentives for efficient cars (and include S.U.V.'s in mileage regulations). Tax spending, not saving. Help strategic industries with federal loan guarantees and grants. Call ''a new Bretton Woods Conference'' to set steps for reducing the role of the dollar in the world economy and so defuse the trade-deficit bomb. Whatever you think about offshoring, most of these ideas are no-brainers.

Subject: Blockbuster Drugs Are So Last Century From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 16:57:47 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/business/yourmoney/03drug.html?pagewanted=all Blockbuster Drugs Are So Last Century By ALEX BERENSON INDIANAPOLIS DRUG companies do an awful job of finding new medicines. They rely too much on billion-dollar blockbuster drugs that are both overmarketed and overprescribed. And they have been too slow to disclose side effects of popular medicines. Typical complaints from drug industry critics, right? Well, yes. Only this time they come from executives at Eli Lilly, the sixth-largest American drug maker and the company that invented Prozac. From this placid Midwestern city, well removed from the Boston-to-Washington corridor that is the core of the pharmaceutical industry, Lilly is ambitiously rethinking the way drugs are discovered and sold. In a speech to shareholders in April, Sidney Taurel, Lilly's chief executive, presented the company's new strategy in a pithy phrase: 'the right dose of the right drug to the right patient at the right time.' In other words, Lilly sees its future not in blockbuster medicines like Prozac that are meant for tens of millions of patients, but rather in drugs that are aimed at smaller groups and can be developed more quickly and cheaply, possibly with fewer side effects. There is no guarantee, of course, that Lilly will succeed. And some Wall Street analysts complain about the recent track record of the company, saying that it has habitually overpromised the potential of its drugs and taken one-time charges that distort its reported profits. In the last year, Lilly's stock has fallen 21 percent, while shares in the average big drug maker have been flat. Still, since late 2001, Lilly's labs have produced five truly new drugs, including treatments for osteoporosis, depression and lung cancer. The total exceeds that of many of its much-larger competitors. And at a time when the drug industry seems adrift, that Lilly has any vision at all for the future is striking. 'The challenge for us as an industry, as a company, is to move more from a blockbuster model to a targeted model,' Mr. Taurel said at Lilly's headquarters here recently. 'We need a better value proposition than today.' For five years, drug companies have struggled to bring new medicines to market. But Lilly executives say they believe that the drought is not permanent. Advances in understanding the ways that cells and genes work will soon lead to important new drugs, said Peter Johnson, executive director of corporate strategy. Moreover, Lilly expects that drug makers without breakthrough medicines that are either the first or the best in their categories will face increasing pressure from insurers to cut prices or lose coverage. If that vision is correct, the industry's winners will be companies that invest heavily in research and differentiate themselves by focusing on a few diseases instead of on building size and cutting costs through mergers, as Pfizer has done. Lilly, which spends nearly 20 percent of its sales on research, compared with about 16 percent for the average drug company, may be well positioned for the future. 'We do not believe that size pays off for anybody, especially size acquired in an acquisition,' Mr. Taurel said. But if Lilly is wrong about the industry's direction, or if its research efforts fail, it could wind up like Merck, the third-biggest American drug company, which has also adamantly opposed mergers and bet instead on its labs. After its own eight-year drought of major new drugs, Merck has had a 65 percent decline in its stock price since 2000, and its chief executive was forced out in May. Mr. Johnson acknowledges that Lilly's strategy is risky. 'You can't make a discovery operation invent what you want them to invent,' he said. So Lilly is seeking to improve its odds and to cut research costs by changing the way it develops drugs, said Dr. Steven M. Paul, president of the company's laboratories. Bringing a drug to market cost more than $900 million on average in 2003, compared with $230 million in 1987, according to estimates from Lilly and industry groups. But the public's willingness to accept side effects is shrinking, and some drug-safety experts and lawmakers want even larger and longer clinical trials for new drugs, increasing development costs. If nothing changes, Lilly expects that by 2010, the cost of finding a single new drug may reach $2 billion by 2010, an unsustainable amount, Dr. Paul said. 'We've got to do something to reduce the costs,' he added. The biggest expense in drug development comes not from early-stage research, he said, but from the failure of drugs after they have left the labs and been tested in humans. A drug that has moved into first-stage human clinical trials now has only about an 8 percent chance of reaching the market. Even in late-stage trials, about half of all drugs fail, often because they do not prove better than existing treatments. To change that, Lilly is focusing its research efforts on finding biomarkers - genes or other cellular signals that will indicate which patients are most likely to respond to a given drug. Other drug makers are also searching for biomarkers, but Lilly executives are the most vocal in expressing their belief that this area of research will fundamentally change the way drugs are developed. Using biomarkers should make drugs more effective and reduce side effects, Dr. Paul said. If all goes as planned, the company will know sooner whether its drugs are working, and will develop fewer drugs that fail in clinical trials. The company may even be able to use shorter, smaller clinical trials because its drugs will demonstrate their effectiveness more quickly. To improve its chances further, Lilly has focused its research efforts on four types of diseases: diabetes, cancer, mental illness and some heart ailments. In each category, it has had a history of successful drugs. The company hopes to reduce the cost of new development to about $700 million a drug by 2010. Because Lilly now spends about $2.7 billion annually on research, that figure would imply that the company could develop as many as four new drugs a year, compared with just one a year if current trends do not change. Among the company's most promising drugs in development are ruboxistaurin, for diabetes complications; arzoxifene, for the prevention of osteoporosis and breast cancer; and enzastaurin, for brain tumors and other cancers. The flip side of Lilly's plan is that drugs it develops may be used more narrowly than current treatments. For example, the company may find that a diabetes drug works best in patients under 40 with a specific genetic marker, and enroll only those patients in its clinical trials. While doctors can legally prescribe any medicine for any reason once it is on the market, insurers would probably balk at covering the drug for diabetics over 40 or for patients without the genetic marker. 'The old model was, one size fits a whole lot of people,' said Mr. Johnson, Lilly's strategist. Last month, Lilly's vision of targeted therapies gained some ground - albeit at another company. The Food and Drug Administration approved BiDil, a heart drug from NitroMed that is intended for use by African-Americans. The approval, based on a clinical trial that enrolled only black patients, was the first ever for a drug meant for one racial group. While race can be a crude characterization of groups, it can serve as an effective biomarker, scientists said. Lilly's road map may look appealing. But some analysts question whether the company is as different from the rest of the industry as it would like to believe. While it professes to see a future of narrowly marketed medicines, Lilly is more dependent than any other major drug maker on a single blockbuster drug: Zyprexa, its treatment for schizophrenia and manic depression. Zyprexa accounted for about $4.4 billion in sales last year, 30 percent of the company's total sales. And while Lilly executives say they want to avoid marketing its drugs too heavily or in anything less than a forthright way, federal prosecutors in Philadelphia are investigating its marketing practices for Zyprexa and Prozac. Last month, Lilly said it would pay $690 million to settle 8,000 lawsuits that contended that Zyprexa could cause obesity and diabetes and that the company had not properly disclosed that risk. Lilly says that it acted properly in marketing Zyprexa and that is cooperating with the federal investigation. Still, the controversy has hurt Zyprexa sales, which fell 8 percent in the United States last year. Some of Lilly's newest drugs have been commercial disappointments. The company and analysts hoped that annual sales of Xigris, a treatment introduced in late 2001 for a blood infection called sepsis, could reach $1 billion; Xigris's sales were $200 million last year. Sales of Strattera, for attention deficit disorder, slowed after a report in December that the drug can cause a rare but serious form of liver damage. Michael Krensavage, an analyst at Raymond James & Associates who rates Lilly shares as underperform, said that Lilly's emphasis on targeted therapies might be a defensive response to the industry's recent inability to produce blockbusters. Rather than targeted treatments, 'drug companies would hope to produce a medicine that works for everybody,' Mr. Krensavage said. 'That's certainly the goal.' Mr. Krensavage also criticized Lilly's accounting, noting that the company has taken one-time charges in each of the last three years that have muddied its financial results. Lilly said its accounting complied with all federal rules. Despite the company's recent stumbles with Zyprexa, other analysts say Lilly is well positioned, and they praise Mr. Taurel for looking for innovative ways to lower the cost of drug development. 'Sidney has a better concept of what's happening outside his four walls and is far better in reflecting that in how the company runs on a day-to-day basis than any of his peers,' said Richard Evans, an analyst at Sanford C. Bernstein & Company. Mr. Taurel acknowledged Lilly's dependence on Zyprexa and the fact that some new drugs had not met expectations. But he said the transition to targeted therapies would take years, if not decades. With earnings last year of $3.1 billion, before one-time charges, and no major patent expirations before 2011, Lilly can afford to make long-term bets, he said. 'Our model needs to evolve,' he said. 'For the industry and for Lilly.'

Subject: A Stock Market Riddle From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 14:51:58 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/business/yourmoney/03stra.html A Stock Market Riddle May Have an Easy Answer By MARK HULBERT IT is hard to argue with the notion that investors often price some stocks too high and others too low. But if new research is correct, this seemingly banal truth may also explain a long-running mystery: why small-capitalization value stocks tend to beat large-cap growth stocks. There is a long record of such outperformance. Since 1926, researchers have found, the closer a stock is to the small end of the size spectrum, the better its performance, on average. The same is true for stocks on the value end of the value-versus-growth spectrum, as measured by the ratio of price to book value. For years, researchers haven't been able to agree on why these factors have had such a big effect on returns. Some theorists argue that small-cap stocks and value stocks must be riskier than large-cap and growth shares. The greater risk, they say, accounts for the long-term outperformance. Others find this argument hard to swallow, saying the typical value stock is less risky than the typical growth issue. Still others say the performance differences are essentially accidental - so there is nothing to explain. The debate should be of interest to investors outside the academic world. After all, unless the basis for the long-term advantages of small-cap and value stocks is clear, investing in them may be especially dangerous. Those involved in the new research say they have found at least a partial answer to the puzzle in something so basic that past studies all but overlooked it. All that is needed for the size and value advantages to exist, they contend, is for some stocks to be overpriced and others to be priced too cheaply. Several researchers have been involved in this line of study. One is Robert D. Arnott, editor of the Financial Analysts Journal and chairman of Research Affiliates, a research and asset management firm based in Pasadena, Calif. An article by Mr. Arnott outlining this research appeared in the March-April issue of that journal. His argument is based largely on simple logic: By definition, an overvalued stock has a larger market capitalization than would otherwise be the case. Its price-to-book ratio is also higher, and thus it is closer to the growth end of the growth-value spectrum. Portfolios of large growth stocks will contain a disproportionate number of overvalued issues, and should, on average, lag behind the market. The opposite is the case for undervalued stocks. So small-cap value portfolios will have more than their share of them and should beat the market in the long term. Notice that this argument does not depend on anyone being able to identify the particular undervalued or overvalued companies. Nor does it depend on a specific definition of fair value. All that is required is that some stocks are overvalued and some undervalued. Only the most diehard believer in market efficiency would deny this precondition. In addition to showing that investors should favor small-cap and value stocks, this new research also suggests that index funds could improve long-term performance by changing the ways they divide their assets. Currently, almost all index funds use an allocation method known as cap weighting, in which a stock's weight in an index is a function of its market capitalization. The Standard & Poor's 500-stock index, for example, uses such a system. According to Jack Treynor, a father of modern portfolio theory and a veteran of more than two dozen mutual fund families' boards, 'an index fund that is cap-weighted inherently invests more money in overpriced stocks than it does in underpriced stocks.' That, in turn, cuts long-term returns. So how should an index fund divide its assets? One way is to give equal weight to each stock. Consider again the S.& P. 500. According to S.& P. data, an equal-weighted 500 index would have outperformed the cap-weighted version by 1.3 percentage points a year, on average, since the beginning of 1990. One index fund that uses the equal-weighted system is Rydex S.& P. Equal Weight, an exchange-traded fund. Mr. Arnott has created a method that, in back testing, has performed even better than equal weighting. In this approach, called fundamental indexing, a stock's weight is a function of variables like income, sales, dividends and book value. A new fund, Pimco Fundamental Index TR Plus, is based on one of Mr. Arnott's fundamental indexes. These alternative weighting methods have their detractors. One is George U. Sauter, chief investment officer at the Vanguard Group. He contends that if the market is defined as the total value of all stocks, only a cap-weighted index can be a true reflection of it, and equal-weighted and fundamental indexes will be skewed toward the small-cap and value ends of the spectrum. And that, he said, could lead the performance of such indexes to diverge significantly from the market as a whole, a problem often called tracking error. Mr. Arnott says the tracking-error argument isn't a good reason to avoid fundamental indexes. Because 'cap-weighted indexes have significantly lower returns than they should,' he said, investors may welcome a method that achieves better results From his perspective, 'tracking error relative to cap-weighted indexes is a good thing.'

Subject: Moonlighting Sure Pays Off at A.I.G. From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 14:50:31 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/business/yourmoney/03gret.html Moonlighting Sure Pays Off at A.I.G. By Gretchen Morgenson EVEN the most jaded observer of outsized executive pay may have been amazed when the American International Group, the embattled insurance giant, drew back the curtain on what its top managers received from their association with C. V. Starr, a private offshore company that sells insurance policies for A.I.G. And all that, mind you, came on top of what they were paid for their A.I.G. day jobs. C. V. Starr mostly sells and services policies underwritten by A.I.G. It began operations in 1970 when what is now A.I.G. decided to place several small, not very profitable insurance agencies into a separate company. A.I.G. pays commissions to C. V. Starr for placing business with it, and over the years the little agency has grown into a profit machine. More recently, however, the company has become a governance nightmare for A.I.G. That's because it has been run by a raft of A.I.G. executives who also invested in it, creating the potential for major conflicts. A.I.G. now says that it is unwinding relationships with C. V. Starr and Starr International, another offshore company set up by A.I.G., and that its executives are no longer officers or directors of the companies. Last week, investors learned for the first time just how big the benefits of the C. V. Starr association have been for A.I.G. executives. Maurice R. Greenberg, the former A.I.G. chief executive, received a salary of $380,000 and directors' fees of $100,000 in 2004 from C. V. Starr, and a bonus of $2.6 million, which was at least partially paid by C. V. Starr. He also received $2.8 million last year in cash dividends generated by his investment in C. V. Starr shares. That investment grew in value last year by $8.8 million; the total value of his stake in C. V. Starr was $121.4 million as of the end of 2004. He paid $1.2 million for this stake, according to the proxy. This was on top of what A.I.G. gave him: $9 million in salary and bonus, 375,000 stock options and perks valued at $300,000. And from Starr International last year, he received $10.1 million in long-term compensation and $50,000 in directors' fees. Altogether in 2004, he received a total of $34.1 million from A.I.G., C. V. Starr and Starr International. Almost half of that - 43 percent - was disclosed for the first time last week. Mr. Greenberg, through a spokesman, declined to comment. Other A.I.G. executives also received nice chunks of C. V. Starr change last year. Martin J. Sullivan, A.I.G.'s chief executive, received salary, bonus and long-term compensation of $5.8 million. Wearing his C. V. Starr hat, he earned as much as $300,000 in salary, bonus and directors' fees and $400,000 more in cash dividends. His C. V. Starr shares, for which he paid $337,500, rose in value by $2.5 million last year, to a total value of $10.1 million. Nice work if you can get it. And part time, apparently. The services to C. V. Starr and Starr International rendered by A.I.G. executives 'are not considered to detract materially from the business time of these individuals available for A.I.G. matters,' last year's proxy said. Brian Foley, a specialist in executive compensation in White Plains, said: 'Given that the individuals named were supposedly full time at A.I.G. and were in fact very well paid by A.I.G., one would have to conclude that with respect to the Starr entities, they had one of the best part-time gigs there's ever been.' Ed Matthews, president of C. V. Starr and a former vice chairman of A.I.G., said that C. V. Starr's results reflect earnings from its agency business (it booked revenue of approximately $400 million last year), gains and dividends on its 40 million A.I.G. shares and profits from a large portfolio that invests in hedge funds, real estate and private companies. He said the relationship with Starr was very profitable to A.I.G. Asked why the C. V. Starr pay to A.I.G. executives was not disclosed to shareholders, Mr. Matthews said it was not deemed material. 'It was a private investment company,' he said, 'and it was hard to segregate the exact amount that came from the insurance agency, from A.I.G. shares and from private investments.' Why did directors make so much money if they did so little? 'It wasn't always this way,' he said. C. V. Starr's relationship with A.I.G. is the subject of a lawsuit by the Louisiana pension fund contending that C. V. Starr and its investors and officers benefited from the company's affiliation with A.I.G. at the expense of A.I.G. shareholders. Current A.I.G. executives received salaries, bonuses and directors' fees from C. V. Starr of as much as $3.7 million last year. They also received $4.4 million in dividends from C. V. Starr and saw their stakes rise by $29 million, to a total value of $176 million at the end of 2004. WHILE investors are just learning about these numbers, A.I.G. said the compensation committee of its board was told about the pay in the past. Interestingly, A.I.G.'s outside directors earn base pay of $40,000 a year while most of the A.I.G. executives on the Starr boards received $150,000 in directors' fees last year. A.I.G. directors do earn an additional $1,500 for each meeting they attend. A.I.G.'s spokesman, Chris Winans, said shareholders were not hurt by the executives' association with C. V. Starr. In fact, the shareholders benefited, he said; the pay received by A.I.G. executives from the Starr companies did not cost A.I.G. anything. But now it will. Mr. Matthews said that he is in the process of selling C. V. Starr's agencies to A.I.G. and that C. V. Starr plans to buy A.I.G. executives' stakes. If it does not, A.I.G. has guaranteed that it will pay the value of those C. V. Starr stakes - $176 million at last count. Mr. Winans said that such a payout was unlikely. He also said A.I.G. would probably start paying these executives what C. V. Starr had been giving them - proving again how good it is to be king.

Subject: Profits, Not Jobs, on the Rebound From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 13:31:35 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/business/03valley.html?pagewanted=all Profits, Not Jobs, on the Rebound in Silicon Valley By JOHN MARKOFF and MATT RICHTEL SAN JOSE, Calif. - Things are looking up at Wyse Technology, a venerable maker of computer terminals. Unless, that is, you happen to want to work for the company here in Silicon Valley. Responding to booming demand in Asia and in Europe, Wyse is adding new development teams in India and China and expanding its worldwide work force to about 380, from 260. Its profits are recorded here - but almost none of its new jobs. Amid widespread signs of economic recovery in the region, Wyse is emblematic of its economy, in which demand, sales and profits are rising quickly while job growth continues to stagnate. In the last three years, profits at the seven largest companies in Silicon Valley by market value have increased by an average of more than 500 percent while Santa Clara County employment has declined to 767,600, from 787,200. During the previous economic recovery, between 1995 and 1997, the county, which is the heart of Silicon Valley, added more than 82,800 jobs. Changes in technology and business strategy are raising fundamental questions about the future of the valley, the nation's high technology heartland. In part, the change is driven by the very automation that Silicon Valley has largely made possible, allowing companies to create more value with fewer workers. Some economists are wondering if a larger transformation is at work - accelerating a trend in which the region's big employers keep a brain trust of creative people and engineers here but hire workers for lower-level tasks elsewhere. 'What has changed is that Silicon Valley has continued to move up the value chain,' said AnnaLee Saxenian, dean of the School of Information Management and Systems and professor of city and regional planning at the University of California, Berkeley. That has meant that just as low-skilled manufacturing jobs fled the region starting in the 1970's, now software jobs are also leaving. The phenomenon is only the latest twist in the region's boom-and-bust history, marked by repeated cycles of innovation and renewal over the last five decades. Industries based on personal computing, hand-held devices and electronic commerce have emerged and thrived here, and each brought waves of new jobs. Now, almost everyone agrees that Silicon Valley is coming back, and employment there grew from March to May, but the area still has about 10,000 fewer jobs than there were a year ago. The increase in profits 'has been very dramatic, but there's no job growth,' said Doug Henton, president of Collaborative Economics, a regional consulting company. Some former technology workers have given up on the sector - or moved out of the Bay Area altogether. Catherine Haley, 32, went to work in 1997 as a project manager and a Web designer for technology companies in the area, but after quitting the consulting firm KPMG in 2002, she found it extremely difficult to find a full-time job. In 2004, after working in piecemeal assignments for two years, she gave up on the job market and nearly moved back to Boston. Instead, she decided to pursue her passion - art - and is now majority owner of a gallery in San Francisco. She does not miss fighting for work, she said, partly because the high-tech economy has lost its charm. 'Unfortunately, the number of interesting projects and companies out there has really come down,' she said. In some cases, as at Wyse, the job growth in the sector is taking place elsewhere - in lower-cost, higher-growth markets. A new management team, installed as part of a buyout of the company that was completed in April, is leading a restructuring that includes adding 100 workers in India and 35 in Beijing so far this year. At the start of the year the company had 90 percent of its work force in Silicon Valley; now the figure is 48 percent, and only 15 percent of its engineering talent remains here, largely because of the technology development teams it is building in India and China. 'It was pretty clear that growth was going to come first in Asia,' said John Kish, Wyse's chief executive. 'We had the desire to get engineering teams to those markets as quickly as we could.' Stephen Levy, director for the Center for the Continuing Study of the California Economy, said the growth of employment outside Silicon Valley was 'not a nefarious plot,' but a logical development. 'Companies are going where there are customers and, in some cases, where it's cheaper to produce,' he said. Hoping to keep costs low, Electronic Arts, the video game maker based just north of here in Redwood City, already has development studios in Vancouver, Montreal, London, Chicago and Orlando, Fla. It is debating how much of its work in the future it can move to lower-cost regions, said Jeff Brown, a company spokesman. 'We will always have a presence here because there is a core of talent,' he said. 'But there is strong pressure to figure out exactly which jobs it is essential to keep in California.' The issue is not just outsourcing, though, but also big leaps in productivity. Cisco, the behemoth maker of Internet equipment, now has annual sales of $680,000 per employee, compared to $480,000 in 2001. One key measure, known as value added per employee, rose 3.7 percent in 2004, to $222,000 in economic value per worker. That compares with $85,000 per worker in the rest of the country, according to data reported by Joint Venture Silicon Valley, a regional economic research group. By a number of other measures, companies are watching profits and sales rise. An analysis published in April by The San Jose Mercury News found that the top 100 public companies in the region had revenues of $336 billion in 2004, an increase of 14 percent from the previous year. Mr. Henton said that measure, while not entirely indicative of what is going on because it includes worldwide sales, gives a good sense of the growth here. 'It's a clear recovery,' Mr. Levy said. 'It's a high-productivity jobless recovery.' In the past, much of the job growth has come from investment by venture capitalists in start-up companies. That engine is starting to rev up again, with venture capitalists putting $7.4 billion into 724 Silicon Valley companies in 2004, according to the National Venture Capital Association. That is up 17 percent from 2003, but still far below the $34 billion invested in 2000, at the peak of the phenomenon. Also, newer start-ups are under pressure from their venture-capital investors to outsource work to lower-cost regions, said Cynthia Kroll, a senior regional economist at the Haas School of Business at the University of California, Berkeley. She added that the venture capitalists, burned as the last cycle turned downward, are much more closely watching how start-ups spend money, including how they hire. 'That would be slowing growth of employment,' Ms. Kroll said. The venture capitalists are being highly selective, said Margot Heiligman, 39, who is doing consulting work for technology companies but is in the market for a full-time job. Ms. Heiligman moved to San Francisco last November when her husband took a trumpeter position with the city's symphony orchestra. Ms. Heiligman previously oversaw the internal technology department for the New York law firm of Proskauer Rose and spent six years as director of business development for Swisscom, a telecommunications company in Bern, Switzerland. She is eager to find work at a start-up company, but has found that the venture backers of such companies are very selective, hiring acquaintances or people who have worked at companies they know well. 'I'm finding it pretty closed,' she said of the job market. 'It's making New York look like an easy place' to find a job.

Subject: Were the Good Old Days That Good? From: Emma To: All Date Posted: Sun, Jul 03, 2005 at 13:25:42 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/03/business/yourmoney/03standard.html?pagewanted=all Were the Good Old Days That Good? By LOUIS UCHITELLE TOM RATH, the protagonist in Sloan Wilson's 1955 novel, 'The Man in the Gray Flannel Suit,' certainly had his share of troubles: the stressful conformity, the constant striving for success, the superficial suburban friendships, the war experiences he kept hidden from his wife. It all ate away at him. But Tom, like most Americans in the first three decades after World War II, took a rising standard of living for granted. When he needed more income to make ends meet, he simply landed a better-paying job. Indeed, at parties throughout suburbia, Mr. Wilson wrote, 'the public celebration of increases in salary was common.' And Tom didn't fret about medical bills, job security or the quality of public schools for his three children. Fast forward to Tom and Marie DeSisto in 2005. They are real people in their early 50's, living in a three-bedroom condominium in Newton, Mass. Ask them if their standard of living is rising and they say yes, indeed, it is - but not in the Rath family's sense of the word. The DeSistos' income made a U-turn last year, but they manage to live within its limits, even eking out money for extras. And that success lifts their spirits. 'We are not really into boats and cars,' Mrs. DeSisto said, 'but we are traveling more.' Pushed into early retirement last year by his employer, Verizon, Mr. DeSisto's salary plummeted from more than $100,000 as a manager to $36,000 as a first-year math teacher at Newton High School. His wife, on the other hand, has just been promoted to director of nursing in the Framingham public schools. Her salary rose by nearly $4,000, to $67,000 a year, but she is also adding eight working days a year to handle the additional responsibilities. While the Raths moved up in income, home size and leisure time, the DeSistos sold their four-bedroom colonial home in Newton, pocketing a profit while cutting their property taxes and maintenance costs. 'We planned carefully,' Mrs. DeSisto said, 'and we downsized successfully.' So, did the Raths, that quintessential 1950's family, enjoy a higher standard of living than middle-class families like the DeSistos do today? In other words, can it be that living standards are actually slipping in America? No economist, demographer or historian would make that case. Living standards, after all, almost never go backward, at least not in a material sense. Indeed, the economy today is growing, consumer spending is plentiful and new technologies - from the Internet to laparoscopic surgery - make life better than ever, as they do in every generation. BUT for the DeSistos and their contemporaries, the trajectory is no longer the steadily upward line that the Rath family enjoyed. Instead, the line appears to be climbing erratically. That is certainly true of the traditional measures of standard of living. After 20 years of very small gains, the rate of improvement surged from 1995 to 2000 - only to fall back toward zero over the last four years, a reversal that puzzles analysts. 'When you talk about living standards, you have to focus on people in the middle,' said Robert Gordon, an economist at Northwestern University. 'A lot of the goodies that we think of as raising living standards have gone to the people at the top at the expense of the broad mass of Americans in the middle.' Kevin Hassett, director of economic policy studies at the American Enterprise Institute, argues that federal subsidies in the form of tax credits, mainly the earned income tax credit, are raising living standards for low-income families by more than many people realize. Those subsidies have risen by about $2,000 since President Bush took office in 2001, to just over $3,000 a year for a married couple with two children and a family income of $27,300, Mr. Hassett estimates. 'The standard income numbers don't capture what is happening to people at the bottom,' he said. 'So you have to look at their consumption, not their income, to gauge standard of living. And consumption has significantly outperformed income.' While income and consumption are the chief measures of a nation's standard of living, other, more subtle indicators also play an important role - and several of them are not doing so well. Life expectancy in the United States, while still rising, has fallen behind that in France, Germany and Japan. Home ownership is at a record high for the population as a whole, but it has dropped since the 1970's for some groups - working families with children, for example, according to the Center for Housing Policy. In overwhelming numbers, Americans say they are satisfied with their standard of living, a Gallup poll reports. But 25 percent of the nation's families also worry all or most of time that they won't be able to pay their bills. That is up from 21 percent in the late 1990's. And in many cases, public services are not holding their own. 'Thirty years ago a lot of public goods were free, and now they are fee-based,' said Michael Hout, a sociologist at the University of California, Berkeley. 'Even the Grand Canyon charges, and many public schools are engaged in fund-raising. So public goods that contribute to living standards are more dependent today on family income.' The good news for the nation is that productivity - a measure of output per worker that is the bedrock on which income and living standards are built - is rising. When it goes up, so does the revenue from the sale of the additional goods and services that each worker produces. In theory, some of that revenue feeds back into the income of the workers, financing improvements in their standard of living. That symbiotic relationship worked very well for Tom Rath. From the late 1940's through 1973, productivity grew at an annual rate of nearly 3 percent, and incomes rose almost as briskly. Then came a horrific slowdown: productivity fell back to an annual growth rate of less than 1.5 percent from the mid-1970's to the mid-90's, and median income hardly rose at all. The revival that started in 1995 brought productivity growth back to its old rate of increase, and for five years incomes also rose smartly. What happened next is tough for economists to explain. The productivity growth rate has stayed strong - rising at an average annual rate of just under 3 percent since 1995, according to the Bureau of Labor Statistics. But starting in 2000, median income, adjusted for inflation, has grown more slowly every year - and this year the increase is almost imperceptible. 'There is no question that a huge gap has opened up between productivity and living standards,' said Jared Bernstein, a senior labor economist at the Economic Policy Institute. Not since World War II have productivity and income diverged so sharply, yet that phenomenon barely registers in public opinion surveys. Nearly 9 in 10 people surveyed by Gallup say they are satisfied with their standard of living, a higher proportion than in the 1960's. In answering that question, however, those surveyed make no comparisons with the past, said Lydia Saad, a senior editor at Gallup, 'so they don't know whether they are falling behind on some treadmill of life.' Richard A. Easterlin, an economic historian at the University of Southern California, has a different take. Satisfaction is always relative, he says. If a family's debt rises, that is not a negative as long as other people's debt is increasing at roughly the same pace. The parity helps to explain why consumption has risen 40 percent faster than income since 2001, and why people are able to focus on the amenities they acquire - the cellphones, the bigger homes, the cars and the digital cameras - without feeling weighed down by rising debt or by income that is rising more slowly. TOM RATH'S generation, having experienced the Depression, expected more hard times after World War II. When the economy boomed instead, the aspirations of his generation rose and so, eventually, did their sense of well-being. All of that changed in the 1980's, when globalization infected public attitudes and people told pollsters that they expected their children's living standards to decline. That shift in expectations soon gave way to a new norm. In the age of layoffs, tens of thousands of families have done what the DeSistos have done: adjusted to a decline in income after a job loss. The DeSisto family's income is still more than twice the national median of nearly $53,000, and Mrs. DeSisto's eight additional days of work are not really eight additional days, as she sees it. 'I always worked those extra days,' she said. 'I just didn't get paid for them in my old job as supervisor of nurses.' While the glass may be half full in the eyes of many beholders, living standards certainly are not improving for everyone. Productivity, as it rises, throws off more and more income, which is then distributed to capital in the form of profits, and to labor in higher wages, more paid hours and benefits. Labor's share, which has historically represented 60 to 65 percent of the total, has fallen in the last five years to the low end of that range. But for Mr. Gordon at Northwestern, that is only part of the story. Capital's share, he says, has increasingly found its way to upper-income families as stock options, dividends, special bonuses and the like. 'We had much less income inequality in the first couple of decades after World War II because of strong unions, restricted trade and a decline in immigration,' Mr. Gordon said. 'Then all three reversed, which means that the income from productivity falls to the bottom line and for the time being stays there.' To him and others, living standards cannot be truly rising if the improvement is so unevenly distributed; in addition, they say, earning a living has become increasingly stressful. Job security, which Tom Rath took for granted, has deteriorated. 'People talk of the new economy and of reinventing themselves in the workplace, and in that sense most of us are less secure,' said Daniel Kahneman, a Princeton University economist who shared a Nobel in economics for his contributions to behavioral economics. People approaching the age of 65 face a different uncertainty: smaller retirement incomes than their parents enjoyed. That is happening as the nation shifts from a system of fixed monthly pensions to 401(k)-type accounts, in which people save what they can for their own retirement. In the process, retirement income is falling from 93 percent of preretirement pay for today's retirees to 80 percent, on average, for the next generation, according to an Urban Institute projection. Some retirees cannot afford the pension hit, and they continue to work. The portion of the 65-and-over population that is employed has risen to 14 percent from less than 12 percent in 1995, the Bureau of Labor Statistics reports. The option to retire is slipping away, and that damages living standards. 'People who have a choice experience a greater standard of living,' said Richard T. Curtin, director of the University of Michigan's Surveys of Consumers. 'They are not constrained from choosing what they prefer.' Choosing not to work is no longer an option for many families who need two incomes to pay what they consider basic expenses. Two of those expenses - health care and education - have risen faster than incomes, says Elizabeth Warren, a bankruptcy specialist at Harvard Law School and co-author of 'The Two-Income Trap.' 'Half of all people who file for personal bankruptcy do so in the aftermath of a serious medical problem,' she said, noting that the number of Americans without health insurance has increased in recent years. As for education, the rising cost is mostly in the purchase of expensive homes in upscale areas known to have good public schools. 'A generation ago,' Ms. Warren said, 'the majority of American parents believed they could buy whatever home they could afford and send their kids to a good school down the street.' There is a problem with this argument. The quality of public school education, measured by test scores, is in fact holding up quite well, on average. The National Assessment of Education Progress, a federally sponsored testing program that started in the 1960's, periodically measures the skills and achievements of students at the ages of 9, 13 and 17. Scores have risen slightly since the early 1980's, on average, but so, too, has the disparity in school performance. 'The variation is extraordinary across school districts and even across schools in the same district,' said Richard Murnane, an economist at Harvard's Graduate School of Education, 'so when you ask about how good the schools are, the measure of central tendency is less interesting than the variation around the average.' HEALTH problems also undermine living standards. Life expectancy at birth is one symptom. At 69.7 years in the late 1950's, life expectancy in the United States was slightly ahead of that of Germany and France, and well ahead of Japan's. Now Japan is far ahead at 80.5 years, compared with 78.5 in France, 77.5 in Germany and 76.5 in the United States. Infant mortality, at more than six deaths per thousand live births, similarly trails the rates in France, Germany and Japan, according to the Organization for Economic Cooperation and Development. Height, too, is no longer an American hallmark. Average height has been stuck at less than 6 feet for a decade or more while Europeans have grown passed that mark, suggesting that they are somehow healthier. Obesity is now a distinguishing feature. The percentage of obese American adults has doubled in the last 15 years, to 30 percent, said Kenneth E. Thorpe, chairman of the department of health policy management at Emory University's School of Public Health. The way we live makes that happen, he argues: the lack of exercise, the marketing of foods high in sugar and fat, the over-large portions. As a result, weight-related illnesses - diabetes, heart disease, hypertension, asthma - have risen sharply. 'Once you are sick, we are doing a better job in treatment,' Dr. Thorpe said. 'The pace of technological development has probably accelerated since 1980 more than in previous generations. That's the good news. The bad news is that we have larger shares of the population who are sick.' For Dr. Thorpe, the much better treatment is clearly a big improvement in standard of living - offset, however, by the big increase in the incidence of illness. He estimated that the additional health care cost resulting from the decline in healthiness would total $70 billion this year. 'You can't have a rising standard of living,' he said, 'if you have people getting less healthy.' The Rath family had no such misfortune. In Sloan Wilson's hands, the man in the gray flannel suit enjoyed an ever more prosperous life - a happy ending that many middle-class families can't seem to match today.

Subject: Interest rate increases From: Poyetas To: All Date Posted: Sun, Jul 03, 2005 at 11:17:17 (EDT) Email Address: Not Provided Message: How sensitive is the housing bubble to interest rate changes? If the fed keeps raising interest rates, when will the bubble burst? Bond yields are already being pushed lower due to liability matching on behalf of the credit institutions. Interest rate increases will push these yields even further down. If the housing bubble does not drop, there will be a double effect on bond yields.

Subject: Re: Interest rate increases From: Terri To: Poyetas Date Posted: Sun, Jul 03, 2005 at 12:38:53 (EDT) Email Address: Not Provided Message: The Federal Reserve will be most sensitive to the housing market and likely stop raising short term interest rates if housing prices show signs of a decline. But, obviously the Fed is not worried just now so rates are likely to slowly climb again. If long term rates continue to remain low however, there may be no danger to the housing market other than flat pricing for a time.

Subject: Sho Yano and nature v nurture From: Johnny5 To: All Date Posted: Sun, Jul 03, 2005 at 06:28:03 (EDT) Email Address: johnny5@yahoo.com Message: Chopin by age 3 - gives strong weight to nature. http://www.absoluteastronomy.com/encyclopedia/s/sh/sho_yano.htm Sho Yano (born c. 1990, is a Japanese American and Korean American boy who at the age of 12 held the title of world's highest recorded IQ with a figure so high that it was unmeasurable. He reportedly played Chopin on the piano at age 3. After scoring 1500 out of 1600 on the SAT at age 8, he entered Loyola University at age 9, graduating summa cum laude at age 12, and now attends the Pritzker School of Medicine at the University of Chicago in the MSTP (Medical Scientist Training Program) program designed to earn a combined MD and PhD.

Subject: How Marilyn Vos Savant Invests? From: Johnny5 To: All Date Posted: Sun, Jul 03, 2005 at 05:52:41 (EDT) Email Address: johnny5@yahoo.com Message: Now Terri, if she went from pennies to millions in five years trading stocks, she was not indexing but definitely market timing at very risky levels. Do you have any more information about her investment career or current financial investment decisions? http://www.bookrags.com/biography-marilyn-vos-savant/ Bored with college, vos Savant left Washington University after two years and launched a career in stocks, real estate, and investment. Her real interest had always been in becoming a writer, but she realized that she first needed to establish a financial base with which to support herself. Within five years her personal investments afforded her....

Subject: About Despair and Hope in South Africa From: Emma To: All Date Posted: Sat, Jul 02, 2005 at 15:44:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/movies/MoviesFeatures/02eber.html Film About Despair in South Africa, and School That Offers Hope By RICHARD SANDOMIR Charlie Ebersol's need to tell the story of the Ithuteng Trust school in Soweto - where traumatized and violent teenagers learn to overcome their young lives' horrors - began with a visit to the South African township two years ago and has produced a new documentary, 'Ithuteng (Never Stop Learning).' 'I have a great life, and I felt I had a responsibility to tell this story,' said Mr. Ebersol, 22, who was a film major at the University of Notre Dame and graduated in May. The documentary, which was honored in May as best humanitarian film at the MountainFilm festival in Telluride, Colo., is a raw but inspiring journey into the lives of teenagers ravaged by abuse, crime and AIDS. All were recruited by Jacqueline Maarohanye, a fiercely devoted teacher known as 'Mama Jackey' who set up the school in 1999. Although some students board there, most come from their own schools around Johannesburg for after-hours and Saturday programs that combine academics, culture, sports, peer counseling, therapeutic dramatizations of the teenagers' own lives and outings to a maximum-security prison. Mr. Ebersol, who now lives in Los Angeles and recently completed a stint as a production assistant on the film 'Yours, Mine and Ours,' produced the documentary with a friend, Kip Kroeger, also 22, with whom he had made music videos. They hired Mr. Ebersol's brother, Willie, 18 and a student at the University of Southern California, to direct a 17-day shooting schedule in the summer of 2003 because they admired a short student film he had made on a classmate's dating problems. 'I should have been intimidated, but I wasn't,' Willie Ebersol said. 'He came back from South Africa, gave me a blanket as a gift and asked me to direct.' The students provided brutally candid narratives of their lives to the young American filmmakers, none more than Lebo, a girl who described being raped twice and contracting H.I.V. 'They poured out their lives and didn't hold back,' Mr. Kroeger, a North Carolina State University graduate, said in a telephone interview. 'It sears right into you. Here's a girl you met two hours and ago she's telling us about being raped? How can she sit there and tell us that?' In another scene from the film, an orphan named Dineo, who is described as having been sexually abused by her foster father, the head of an anti-abuse charity, confronts an older girl whose behavior toward her had made her want to give up the program. 'I thought you were a bad person,' Dineo says to the older girl. 'I hated you so much, but now I'm going to be your mother and you're going to be my mother.' While they embraced, Mama Jackey tried to hold back her tears. 'Here are these kids, who are not taught about love, teaching each other to love,' Charlie Ebersol said in an interview. 'They will learn to love and share it because Mama said you have a chance now, you have a way to dream.' Although the film does not yet have a distributor, it is winning notice beyond the award. Oprah Winfrey had already known about Ithuteng (pronounced IT-uh-teng) and Mama Jackey, but it was watching a DVD of the documentary during a flight to Johannesburg in June that prompted her to donate a total of $1.14 million to the school, said Gayle King, editor at large of O, the Oprah Magazine. When Ms. King told Charlie Ebersol of the donation, she said: 'He was incoherent with joy. He said, 'Oh, my God, Gayle, I was just trying to raise $10,000 to keep Mama's electricity on.' 'Ms. Winfrey's gift was the largest to the school so far, but it has received support from numerous groups, including the National Basketball Association, which built a reading center there, and from Dikembe Mutombo, the Congolese player for the Houston Rockets, who donated $150,000 to build two dormitories. Kathy Behrens, a senior vice president of the N.B.A., said: 'I was with Charlie when he first showed the film to Mama. It was very emotional for her. It was very hard for her to watch Lebo, who had died of AIDS.' The lessons of Ithuteng resonated with unexpected power for the Ebersol brothers. Until last year, theirs had been a charmed life, as the older sons of Dick Ebersol, the chairman of NBC Universal Sports and the retired actress Susan Saint James. Dick Ebersol bankrolled the film for about $90,000, after Charlie Ebersol and Mr. Kroeger began raising money on their own. Their father gave them guidance on the documentary and helped find film veterans to help his sons in Soweto. Their mother helped edit the film. But last Nov. 28, a private jet carrying Dick, Charlie and the youngest Ebersol son, Teddy, crashed after takeoff in Montrose, Colo., near the family's winter home in Telluride. Teddy, 14, was killed; Charlie suffered a broken wrist, and eye and back injuries; Dick broke several ribs, his sternum, his pelvis, his coccyx and several vertebrae. 'I walked off the plane with my father in my arms, and my brother behind me,' Charlie Ebersol recalled. 'I said, 'Oh, God, how can I get through this without my father, and then I had to find Ted. In talking to God, I said: 'How can you empower me, and take away my father's power? I need him.' ' He said the openness of the students at Ithuteng helped him deal with his grief. 'Mama believes you must cry yourself dry,' he said of Ms. Maarohanye, 'and that people shouldn't prevent you from crying. Willie and I employed what Mama taught us in the context of real tragedy.' Willie Ebersol said: 'South Africa taught me that I can talk about what's eating me up inside. We learned from the kids that it's O.K. to be sad. If you've been raped, it's O.K. to say you've been raped. You don't bury your grief if you speak about it. You open up.' The film also underwent a transformation after the crash, becoming more overtly emotional with additional music to underscore the painful pasts and altered lives of the students. 'We had a fear of exploiting the emotion,' Mr. Kroeger said of their initial framing of the material. 'But after the crash, we realized we weren't tapping into our emotions. We had to make changes.' Now, Charlie Ebersol said, the film 'represents our trying to find hope in the face of loss.'

Subject: Oriole Gathering Material for Nest From: Terri To: All Date Posted: Sat, Jul 02, 2005 at 14:55:55 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5414&u=4|74|... Baltimore Oriole Gathering Material for Nest New York City--Central Park, Belvedere Castle.

Subject: The Next Heavyweight Champion of Banks From: Emma To: All Date Posted: Sat, Jul 02, 2005 at 13:54:34 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/business/02bank.html The Next Heavyweight Champion of Banks By JULIE CRESWELL This is a tale of two really, really big banks. Both are heavyweights in financial services with trillions of dollars in assets and billions in market capitalizations. Both offer a cornucopia of products and services to consumers and large corporate customers. Both have exhibited voracious appetites in recent years, gobbling up competitors to establish themselves as megabanks with coast-to-coast and even international reach. On the surface, the two financial giants, Citigroup and Bank of America, have business models that appear to be very similar. But there are significant differences. While Citigroup chased after the higher-fee businesses from corporations in the late 1990's, Bank of America focused on the more staid, boring business of serving retail customers. That bet seems to have paid off. Today, Bank of America's operating margins, return on capital and sales growth are all better than Citigroup's. Investors have taken notice, helping to send Bank of America's shares up 11.4 percent in the last year while Citigroup's shares have climbed 4 percent. While it is still the nation's largest bank with $1.48 trillion in assets and a $240 billion market value, Citigroup these days seems stuck. Since taking the reins in 2002, Citigroup's chief executive, Charles O. Prince, has spent a great deal of his time apologizing to regulators around the world and settling lawsuits relating to Citigroup's dealings with corporate highfliers like Enron and WorldCom. He is also undoing some of what his predecessor, the Wall Street swashbuckler Sanford I. Weill, cobbled together. This year, Citigroup sold its Travelers Life and Annuity business to MetLife for $11.5 billion, and last week, it unloaded its asset management unit to Legg Mason in an asset swap valued at $3.7 billion. Citigroup declined to comment for this article. Bank of America, from its base in North Carolina, is acting like the Citigroup of old. In the last week or so, it made a $2.5 billion investment to take a 9 percent stake in one of China's biggest banks and, on Thursday, further bolstered its retail presence by agreeing to buy the MBNA Corporation in a $35 billion deal that would make it the nation's largest issuer of credit cards. When the deal closes later this year, Bank of America's assets will top $1.27 trillion and its market cap could reach $213.6 billion. Some on Wall Street are fascinated by the role reversal. 'Citigroup has been so traumatized by the events of the last five years that it is no more the wild-eyed risk taker,' said Richard X. Bove, an analyst at Punk Ziegel & Company. 'We're seeing one company shrink while the other expands. It's only a matter of time before Bank of America is bigger than Citigroup.' The current woes at Citigroup can be attributed in part to the kill-or-be-killed culture it encouraged among its troops along with the strategic path it chose years ago. At no time was that culture more evident than when Mr. Weill orchestrated the $70 billion takeover of Citicorp in 1998 by the Travelers Group, well before the law preventing such a move was formally repealed. Without a doubt, Citigroup is a powerhouse in credit cards and home lending. But not so long ago, a great deal of its focus centered on bolstering growth by seeking closer relationships with large corporations. In exchange for cheap loans, Citigroup hoped to earn higher fees from companies for equity underwriting and advisory work. But in the aftermath of the stock market collapse in 2001, Citigroup, more so than any other bank, has faced greater regulatory scrutiny and investor wrath. It has agreed to the multibillion-dollar fines and settlements to end regulatory investigations and shareholder lawsuits. Even if Mr. Prince wanted to make an acquisition, he probably could not. Earlier this year the Federal Reserve warned the bank against deal-making until it institutes improved internal control systems. And even though Citigroup continues to win underwriting or advisory work, it is not as if investors are rewarding the bank. As its earnings momentum has slowed, its stock has lagged investment banks like Goldman Sachs as well as retail banks like Wachovia and Wells Fargo. 'The market has begun to recognize that Citigroup's business model as it was articulated under Sandy Weill simply doesn't do it,' said Roy Smith, a professor at the Stern School of Business at New York University. 'It exposes the bank to too much risk of litigation and prosecution and volatility in trading.' By contrast, Bank of America's focus on the retail customer is looking pretty smart these days. It, too, grew out of a series of acquisitions orchestrated by its strong-willed former chief executive, Hugh McColl Jr. Among the most notable was the $60 billion combination in 1998 of NationsBank and BankAmerica. Many analysts speculated that Mr. McColl's successor, Kenneth D. Lewis, would take the bank more in the direction of investment banking when he took over in 2001. Many thought he would go after Merrill Lynch, or more recently, Morgan Stanley. Instead, Mr. Lewis further entrenched the bank, making bigger and bigger bets on the consumer. In 2003, Bank of America bought FleetBoston for $47 billion, giving it a huge branch network in the Northeast. Mr. Lewis surprised investors again with Thursday's decision to buy MBNA, the big credit card company. In an interview after announcing the MBNA deal, Mr. Lewis noted that consumer and small-business activities would now make up about 55 percent of Bank of America's pretax earnings. 'But that's not to say we don't like the investment banking business either. Late last year we started to invest about $675 million to build up our global investment bank. The difference between us and others is that we're not acquiring an investment bank.' The MBNA deal will make Bank of America the largest credit card issuer with a 20 percent market share. The bank hopes to cross-sell other financial products like mortgages or home-equity lines to MBNA's customers. That is not to say that Bank of America does not face risks in growing on the backs of consumers. While home lending and credit cards have been highly profitable for banks in recent years, rising interest rates could start to curb investor appetite for debt. The battle between these behemoths is far from over. Certain Wall Street investment banking businesses are picking up nicely and a lean and mean Citigroup could certainly be in a position to take advantage of that. Once it finishes atoning for its past, Citigroup could yet come back swinging.

Subject: Schools That Train Real Estate Agents From: Emma To: All Date Posted: Sat, Jul 02, 2005 at 13:35:25 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/realestate/02school.html?pagewanted=all Schools That Train Real Estate Agents Are Booming, Too By LOUISE STORY The Institute of Florida Real Estate Careers, based in Orlando, has 11 centers around the state but has still had to place students on its waiting list this year. 'The numbers are off the charts because of the really aggressive real estate market,' the school's president, Richard Fryer, said. As the real estate market booms, there has been a parallel boom in the real estate education industry. Hundreds of thousands of people have entered real estate in the last four years, hoping to grab a share of the big money moving in the industry. All of them had to take real estate courses to obtain state licenses. About $800 million was spent last year on real estate education, estimated Stefan Swanepoel, chief executive of RealtyU, a private company that provides course materials for the schools. Although he did not have specific figures from prior years, he said spending on real estate courses had risen significantly in the last few years. 'It is one of the few industries out there where you can be almost guaranteed that if you pass the license exam, you'll get a job,' said Ginny Shipe, chief executive of the Council of Real Estate Brokerage Managers, an industry association based in Chicago. But even as the schools are making money, not all agents are finding real estate an easy path. While the number of properties on the market has soared, the most experienced brokers, with the deepest roots in their communities, are getting the majority of the listings. Many new agents drop out within a year of entering the field, state real estate commissioners said. In Florida, Mr. Fryer said, about half of all people who obtain their real estate licenses do not renew them. Mr. Fryer and officials at other schools say they warn their students that real estate requires long hours and hard work, often with low base salaries to start. New agents say they found they had much to learn about the practical aspects of selling a house once on the job. 'People think it's easy to sell real estate,' said Jone R. Sienkiewicz, executive director of the Real Estate Educators Association, a trade group of real estate schools. But, she said, 'You have to put a lot of time into it, and have a big Rolodex.' State real estate commissions report that they have been seeing steadily increasing numbers of people taking the license exams. In California, about 3,000 people a month took the sales agent license test from 1997 to 2000. Numbers began to climb in 2001, and, in May of this year, 14,662 people took the exam. Only about half of those who take the test pass it, said Tom Pool, a spokesman for the California Department of Real Estate. 'There's no indication that the trend's going to slow down,' Mr. Pool said. From May 2004 to this May, California data shows, the number of licensed agents climbed by 39,831. That is just over 3,300 a month. The Association of Real Estate License Law Officials, a group of officials from state real estate commissions, found that in 2004 there were at least 1.26 million sales agents, the typical starting position in real estate, with active licenses in the United States up from at least 980,000 four years ago. In New York State, there are currently about 80,000 active sales agents, up from about 57,000 in 2000, roughly a 42 percent increase, according to an annual survey by the licensing association. Rural states are also seeing a steep rise in real estate licenses. From 2000 to 2004, the number of active licensed sales agents in Idaho climbed about 46 percent. For schools that offer real estate classes, the upturn is good news. The sales agent courses at Mr. Fryer's schools in Florida cost $399, an amount typical for such classes. The course is 63 hours - the number of hours required by Florida - and covers basic real estate principles. Students can also take an additional exam-preparation course over a weekend for $169 and a math review for $49, the school's Web site says. Enrollment in prelicense courses is up 30 percent from last year, Mr. Fryer said, and the school is adding two more class locations to accommodate its 15,000 students. In many states, schools that did not already offer introductory real estate courses have applied for state licenses to teach the courses. In the last two years, California has licensed 34 additional schools to offer real estate classes, bringing the total to 115 programs, not including colleges and community colleges in the state, Mr. Poole said. Web sites for schools and online programs emphasize their pass rates for state exams, often offering money back if a student fails. Joe McClary, who manages online and correspondent course education certification for the real estate licensing association, said that the largest online real estate schools were increasing revenue by 40 percent to 60 percent a year. Real estate school officials said students only demand courses that meet the minimum requirement for hours set by the states. Some said state legislatures should make the requirements steeper. 'We only train what the requirements are,' Mr. Swanepoel of RealtyU said. 'The skill which an agent needs to sell a house is definitely much more than a license.' Several new sales agents agreed that their real estate courses should have been more in depth. The course 'does not teach you how to go to work,' said Kim Galloway, 47, a new sales agent in Winter Park, Fla., who took a course at a local real estate school. 'I didn't know how to write a contract, do the paperwork.' Some universities offer real estate courses as part of degree programs, as well as in continuing education programs. But those courses often center more on the practice of real estate than on the material needed to pass the state exams. 'The fact is that the licensing exam has virtually nothing to do with the practice of real estate,' said Susanne E. Cannon, an associate professor of finance and director of the Real Estate Center at DePaul University in Chicago. The exam, Ms. Cannon said, focuses on real estate laws and ethics rules. 'If you think about it from the state's perspective, this is the one chance they get to kind of put you on notice,' she said. 'The bad news is that they really aren't testing on all the things that might be useful in the business.' Some states have raised the standards for obtaining licenses. Connecticut doubled the length of required courses to 60 hours from 30 last fall, because a lot of students were not passing the licensing exam, said Richard M. Hurlburt, the director of the licensing division in the Connecticut Department of Consumer Protection. Vermont, the one state that traditionally has not required agents to take real estate courses, will require those entering the field to take 40 hours of classes, beginning next year. Many legislatures are hesitant to increase requirements because it could make it more difficult for minorities and less-wealthy people to enter real estate, said Wayne J. Thorburn, president of the licensing association and administrator of the Texas Real Estate Commission. Schools and real estate commissioners predicted that the number of new agents - and courses being offered - would fall when the housing market slows. 'When the market adjusts, the numbers are going to adjust,' Mr. Fryer said. 'The people who are on the bottom half of the earning scale are going to suffer, and they'll find something else to do. But that's a normal ebb and tide in our business.'

Subject: Flaws in Heart Devices Pose High Risks From: ///emma To: All Date Posted: Sat, Jul 02, 2005 at 11:57:00 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/business/02device.html F.D.A. Says Flaws in Heart Devices Pose High Risks By BARRY MEIER The Food and Drug Administration said yesterday that potential electrical flaws in some heart devices made by the Guidant Corporation, including one flaw that the company did not tell doctors about for years, posed a risk of serious injury or death to patients. In its announcement, the F.D.A. designated three models recently recalled by Guidant as 'Class I' actions, the highest risk level. It also designated eight other models as 'Class II' recalls, or those posing a less serious risk. F.D.A. officials also said the agency was continuing its investigation into how the company assessed and disclosed those product dangers. In the past, such inquiries have led, in some cases, to actions ranging from consent decrees to civil fines to criminal inquiries. Effectively, yesterday's decision by the F.D.A. is a rebuke to Guidant. The F.D.A.'s review of Guidant's actions will likely last several weeks, an agency official said. But the inquiry may inject another element of uncertainty into Johnson & Johnson's planned $25.4 billion merger with Guidant, the nation's second-largest maker of implantable heart devices. Yesterday, a spokesman for Johnson & Johnson, which is based in New Brunswick, N.J., said the company had nothing to add to a statement it had made two weeks ago about the Guidant merger. At that time, Johnson & Johnson said it planned to complete the deal in the third quarter but described the product problems reported by Guidant as 'serious matters.' In a statement, Guidant, based in Indianapolis, said it believed that F.D.A. actions to classify its previously announced recalls would help doctors and patients get more information about the affected devices. 'Guidant works diligently to create the most reliable products and services, enhance patient outcomes and limit adverse events to patients,' Ronald W. Dollens, the chief executive, said in a statement. In interviews in May, another Guidant executive had defended the company's decision not to alert physicians earlier that one defibrillator model could abruptly short-circuit, saying that Guidant had not viewed the risk as significant enough to merit such communication. In recent weeks, Guidant has recalled or issued alerts about 11 models of defibrillators, which are devices that emit an electrical shock intended to jolt a chaotically beating heart back into normal rhythm. In a Class I recall, there is a reasonable probability that a malfunctioning medical device will cause serious health consequences or death. In a Class II recall, the probability of a device's flaw causing a serious health risk is remote. The F.D.A. designated as Class I recalls recent Guidant actions involving three models - the Ventak Prizm 2 DR Model 1861, the Contak Renewal and the Contak Renewal 2. Some units, because of manufacturing flaws, have unexpectedly short-circuited, rendering them useless. In two known cases, patient deaths have been associated with the flaw. The affected Prizm 2 DR units are those made on or before April 16, 2002. The affected Contak Renewal and Contak Renewal 2 units are those made on or before August 26, 2004. In each case, Guidant made changes to correct the electrical flaw in newer units. But in the case of the Prizm 2 DR units, Guidant did not tell doctors for years that the unit had repeatedly short-circuited and kept selling potentially flawed units out of inventory after it had started selling an improved version. The agency did not issue recommendations about whether heart patients should undergo surgery to have devices replaced, but instead urged all patients who have not yet done so to contact their doctors to discuss the benefits and risks. 'Malfunctions in these devices can lead to serious consequences, and it's important for patients to call their doctor,' said Dr. Daniel G. Schultz, the director of the F.D.A.'s Center for Devices and Radiological Health, in a statement. 'However, it's also important to understand that in most cases, these defibrillators work well and save lives.' In trading on the New York Stock Exchange yesterday, Guidant closed at $65.73 a share, down $1.57, or 2.33 percent. From a practical standpoint, Guidant had already treated its recent recalls of the three models as a Class I action by issuing news releases about the problem and sending letters to doctors with lists of patients who received the device. A manufacturer conducting a Class I recall must attempt to alert as many affected parties as possible. But a former associate F.D.A. chief counsel in the 1970's, William W. Vodra, said that the agency's continuing review of how Guidant treated patient risks posed by devices like the Prizm 2 DR could have a far more significant impact than how a recall is classified. Such reviews can potentially lead to consent orders, fines or even criminal investigations, said Mr. Vodra, who is now a lawyer in private practice in Washington, D.C. A Guidant spokesman, Steven Tragash, declined to comment when asked whether Guidant had received any subpoenas or information requests from any governmental agency related to the company's defibrillators. Tim Ulatowski, the compliance director at the agency's device center, said yesterday that the F.D.A. is examining both the circumstances and timing surrounding Guidant's disclosures of flaws in the affected Prizm DR 2 and Contak Renewal units. He said the inquiry is likely to be completed in weeks rather than months. In March, a 21-year-old college student with a genetic heart disease died of cardiac arrest, and it was later determined that the Prizm 2 DR implanted in him had short-circuited at some point. His doctors subsequently learned from Guidant officials that the model had repeatedly failed. They said they were told by a top Guidant medical officer that the company did not plan to issue an alert. Guidant eventually issued that alert in late May as the device's problem was being publicized in other forums. The agency is also likely to look at how Guidant presented the risks posed by the device when it did so. Along with the three Class I recalls, the F.D.A. classified Guidant actions involving eight other company models as Class II recalls. The models affected by that action are Ventak Prizm AVT, the Vitality AVT, the Renewal AVT, the Contak Renewal 3, the Contak Renewal 4, the Renewal 3 AVT, the Renewal 4 AVT and the Renewal RF.

Subject: Drug Lobby Got a Victory in Trade Pact From: Emma To: All Date Posted: Sat, Jul 02, 2005 at 11:47:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/business/worldbusiness/02drug.html?pagewanted=all Drug Lobby Got a Victory in Trade Pact Vote By STEPHANIE SAUL The sidewalk between the drug industry's headquarters in Washington and the United States trade representative's office has been taking a pounding from the wingtips of industry lobbyists. The work of these drug industry courtiers, who represent what is arguably Washington's biggest and wealthiest lobby, appears to have succeeded in the Central American Free Trade Agreement. The agreement would extend the monopolies of drug makers and, critics say, lead to higher drug prices for the mostly impoverished people of the six Latin American countries it covers. The accord cleared the Senate on Thursday but faces a difficult floor vote in the House of Representatives this month. The agreement's pharmaceutical provisions are a sideshow in the Congressional debate, eclipsed by concerns of the textile and sugar industries and the labor unions that their interests would not be protected. In contrast, the agreement's pharmaceutical provisions, which provide five years of market exclusivity to brand-name drugs, have been front and center in Guatemala, where poor AIDS patients have marched in the streets to protest. The six countries affected by the pact 'understand that the net effect of these pharmaceutical provisions will be to raise the price of medicine,' said Frederick M. Abbott, a professor of international law at Florida State University. 'The way they have to view it is that they're getting something out of the agreement that will give them a net trade benefit.' The problem with such an analysis, Professor Abbott said, is that the textile employers and agricultural producers gain, but the economic benefits may never flow down to the people who cannot afford medicines. According to Representative Sherrod Brown, Democrat of Ohio, the trade agreement is an example of how the pharmaceutical lobby rarely loses on trade issues, often by quietly working behind the scenes. 'A voter walking down the street would never think of the pharmaceutical industry's influence in another country through the U.S. trade representative,' said Mr. Brown, who has criticized how the industry and other corporate interests shaped the trade accord. The Pharmaceutical Research and Manufacturers of America, the drug industry association, is the single biggest influence group at the trade office, according to a new analysis by the Center for Public Integrity, a government watchdog group. The analysis is based on the sheer number of reports, 59, filed by lobbyists for the group since 1998. The reports do not have to disclose how many individual contacts the lobbyists made. The industry's primary interest at the trade office is protecting its intellectual property, which Peter R. Dolan, the chief executive of Bristol-Myers Squibb, recently called the 'lifeblood' of the industry. Like movies and software, pharmaceuticals require a lot of time, money and creativity to develop, yet they are fairly simple to replicate. The industry association estimates that intellectual property infringement in 21 countries costs its members $7 billion a year. Therein lies the problem for drug makers, and the reason they are fighting a global war to protect their patents. In defending their efforts to extend intellectual property protection abroad, industry officials point out that pharmaceutical companies subsidize treatment for millions of people in developing countries. Bristol-Myers, for example, has invested $150 million to set up AIDS clinics and other charitable programs in Africa, a figure that does not include the low-cost drugs the company distributes there. The industry association also argues that extending its patent protections worldwide will result in greater access to medications by encouraging drug makers to enter those markets. 'It provides certainty for companies to be able to market and sell their medicines in those particular markets,' said Mark Grayson, a spokesman for the trade association. The certainty, according to Professor Abbott of Florida State, results from the agreement's 'highly restrictive market exclusivity rules which allow the originator companies to block any registration.' One of the most contentious provisions in the trade pact is a requirement that gives brand-name manufacturers market exclusivity for five years after a drug is registered in the countries, even if the 20-year patent has expired. A similar five-year period exists in the United States, but the trade agreement would require countries to enforce the five-year period even if the exclusivity period in the United States has already expired. During that period, manufacturers who ultimately wanted to register a generic equivalent to the drug in that country would be barred from using the animal and human test data submitted for the drug's approval, a provision that critics say could delay the approval of generics beyond the five-year period. By protecting marketing exclusivity, the industry says, the trade agreement would also spur innovation and encourage pharmaceutical companies to register drugs in the small countries, ultimately helping deliver those drugs to the needy. It is a philosophical argument that the United States trade representative's office has embraced. 'Trade rules that protect innovation and research foster a system that produces the types of medicines American health consumers and health consumers around the world use and need to fight diseases,' said Richard Mills, a spokesman for the trade office. Former Representative Rob Portman, an Ohio Republican, was sworn in to the cabinet-level trade post that runs the trade office in May. The issue of intellectual property protection for pharmaceuticals has been highlighted in the last week with the Brazilian government's threat to break Abbott Laboratories' patent for the AIDS drug Kaletra by authorizing one of its domestic drug manufacturers to make a copy at roughly half the cost. The Brazilian government currently buys Kaletra for about 180,000 citizens with AIDS. Abbott Laboratories charges Brazil $2,500 a patient annually. That represents a special price break from the company, which charges $6,000 to $7,000 for the drug in other developed countries, according to figures supplied by the company. Despite the special deal his government is getting, Brazil's president, Luiz Inácio Lula da Silva, wants the drug cheaper. If President Lula goes through with his threat, he would invoke rarely used 'compulsory licensing' provisions of a 1994 World Trade Organization agreement on intellectual property. The agreement forced countries to adopt American-style patent rules for pharmaceuticals, but allowed flexibility in cases of overriding public health issues by giving countries the right to order compulsory licenses. Citing the Brazilian example, Representative Pete Stark, a California Democrat, referring to the industry trade group, said, 'My guess is that Pharma's worry is that one of these countries will say, ' To hell with you,' and start making their own drugs.' Critics of the trade agreement say it sets up barriers to compulsory licensing in the countries it covers - the Dominican Republic as well as Nicaragua, Guatemala, El Salvador, Honduras and Costa Rica. The combined gross domestic product of the six countries amounts to a third of the annual revenues of major drug makers. The pharmaceutical industry has also been successful in influencing trade 'priority lists' and 'watch lists' issued by the trade representative in recent years, according to the Center for Public Integrity analysis, released this week. Inclusion on the trade watch lists constitutes the first salvo in a trade war. Last year, the pharmaceutical trade group requested action against 38 countries for infringing on American patents, producing counterfeit drugs and releasing confidential test data. Of those, 31 found their way onto some level of the trade watch list, according to the center's analysis. The report for 2005, released in May, again showed the extent of the industry's influence. Of 41 companies recommended for inclusion by the industry, 32 made it onto one of the trade lists, the center said. The trade representative's office disputes the analysis, however, saying the office complies with exact pharmaceutical industry requests involving the priority and watch lists only about half the time. The 59 reports filed by lobbyists for the pharmaceutical association do not count dozens of reports filed by individual companies. The analysis revealed that Pfizer lobbyists had filed reports about lobbying the trade office 32 times during the same period; Bristol-Myers, 27 times; and Wyeth, 19 times. Over all, the various representatives of the pharmaceutical association and its individual companies filed 289 reports of lobbying at the trade representative's office since 1998, making pharmaceuticals the fourth-largest lobbying interest group, behind miscellaneous manufacturing, business associations and agriculture, according to the center's analysis. Mr. Grayson said extensive lobbying efforts by his industry were a good sign. 'If we're not doing a lot, we're not doing our job,' Mr. Grayson said.

Subject: Bond Maven Consults His Crystal Ball From: Emma To: All Date Posted: Sat, Jul 02, 2005 at 10:20:23 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/02/business/02interview.html A Bond Maven Consults His Crystal Ball By RIVA D. ATLAS WILLIAM H. GROSS, the chief investment officer at the Pacific Investment Management Company, known as Pimco, is probably the biggest single influence on the direction of bond prices after Alan Greenspan, the Federal Reserve chairman. Mr. Gross manages the $85 billion Pimco Total Return bond fund, the third-largest mutual fund in America. He has a hand in investing more than $500 billion in bond portfolios managed by Pimco, which is based in Newport Beach, Calif. Mr. Gross had been bearish on the prospects for government bonds until March of this year, when he reversed course and started buying Treasuries after concluding that the growth of the economy was slowing. Even with the Federal Reserve's quarter-point increase in interest rates on Thursday, Mr. Gross said that he was convinced the Fed could begin lowering rates as early as next year. Last week, over breakfast at the Morningstar investment conference in Chicago, Mr. Gross discussed what a continuation of low interest rates means for investors. Following are excerpts from that conversation: Q. Your forecast is for yields on 10-year Treasury notes to be in the range of 3 percent to 4.5 percent. A. Believe it or not, that's a three-to-five-year forecast. We are expecting inflation at 1 to 2 percent, down from 2.8 percent. That ultimately is positive for bonds. There are two dominant reasons. Asian labor has been arbitraged by U.S. corporations hoping to contain wages here at home. The next big piece is the expectation that Asians will continue to buy into our markets. The Chinese and Japanese have been huge buyers of Treasuries and the demand from them is partly responsible for the artificially depressed yields we see today. Q. If your forecast is right, what would burst the housing bubble? A. If interest rates stay low, there's no reason there has to be a disaster in housing. But if housing prices stop going up, which would be my forecast, that makes a substantial difference. Individuals have banked on that appreciation every year. You should come to a point where owners of houses realize we're in never-never land and stop buying on a speculative basis. Markets many times fall of their own weight. That's what happened with the Nasdaq in 2000. Q. What does your forecast mean for investors? A. In this new world in which inflation is 1 to 2 percent, returns on all assets, from stocks to bonds to hedge funds and private equity, will be low. A lot of investors will throw up their hands and say, why are we pursuing this seemingly endless struggle to produce double-digit returns when it can't be done? We might as well buy Treasuries and sleep well. If yields are going lower, today's 4 percent rate on Treasuries will look attractive 12 months from now. Q: What is the outlook for corporate bonds? A: If inflation comes down it means that profits will come down, too, and corporate cash flow may not be as plentiful. That is not an ideal environment to own a corporate bond. That doesn't mean there can't be an attractive situation. In May we were buyers of three to four billion dollars of auto finance bonds. Q. You run the largest bond mutual fund. A. You pin a little badge of pride to your chest. Q. Is it a problem for you to invest that much money? A. It's not. The bond market is $24 trillion, so our $500 billion in total assets is about 2 percent of the whole pie. There have been innovations in derivatives. The mortgage market is so large, and then there's international markets. The European bond market is probably 4 to 5 times deeper than the U.S. Treasury market. I will say this. One reason why rates are doing what they are doing has to be in part self-reinforcing behavior on the part of Pimco. When Pimco at $500 billion turns from bearish to bullish, even if we move in a measured way, we probably move that market 10 basis points. You look in the mirror and say, Can that be true? Q. I hear you do yoga to relax from the pressures of managing money. A. I get in around 5:30. After three hours on the trading desk, I walk across the street and do an hour's worth of yoga. It's not a meditative thing, but more of an exercise thing. It does clear the cobwebs, and that's what you need in this business.

Subject: Black-throated Blue Warbler From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 21:58:45 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4785&u=133|11|... Black-throated Blue Warbler New York City--Central Park, Hallet Sanctuary.

Subject: Baltimore Oriole Perching From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 21:56:09 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4428&u=75|42|... Baltimore Oriole New York City--Central Park, North Woods.

Subject: Where are the savings? From: Johnny5 To: All Date Posted: Fri, Jul 01, 2005 at 19:11:34 (EDT) Email Address: johnny5@yahoo.com Message: These numbers are VERY concerning to me Terri - that the average household with two working adults in thier 50's has around only 30K is very troubling to me. Notice how they try to sugar coat it at the end saying workers who were at the same job for 30 years have 150K - but most people I know have changed jobs 3 times at least. Some 4 or 5. http://www.sptimes.com/2005/07/01/news_pf/Business/Boomers__gift__Penalt.shtml ....In the Employee Benefits Research Institute's annual retirement confidence survey this year, about 40 percent of workers 45 and older reported they had saved less than $25,000. The institute's statistics show about 10 percent of workers 21 to 64 have an IRA as their only retirement savings plan, 22 percent have only a workplace account such as a 401(k) and 9 percent have both. The rest have neither. Other retirement research produces similarly grim numbers. Fidelity Investments says the typical working household of adults 41 to 54 (prime boomer years) has saved $30,000 toward retirement and 14 percent haven't saved anything. Of course, some boomers do have substantial IRAs and 401(k)s. Workers in their 50s who had spent 20 to 30 years at the same company had an average 401(k) balance of about $157,000 at the end of 2003, according to the research institute.

Subject: Re: Where are the savings? From: Terri To: Johnny5 Date Posted: Fri, Jul 01, 2005 at 20:43:10 (EDT) Email Address: Not Provided Message: The lack of saving in baby boom households will either be largely made up by accumulated home equity or retirement accounts or social security will be the sole recourse. I do not know how worrisome the problem may be, for demographic issues in economics are hard to clearly discern. We will follow the matter.

Subject: Energy Companies From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 19:04:08 (EDT) Email Address: Not Provided Message: ExxonMobil and Chevron and ConocoPhillips by the way are so large and powerful that they in effect can become proxies for the entire Vanguard Energy Index. The top 3 companies will often have such weight in sector indexes.

Subject: Costs MATTER! From: Johnny5 To: Terri Date Posted: Fri, Jul 01, 2005 at 19:08:17 (EDT) Email Address: johnny5@yahoo.com Message: XOM has a ZERO expense ratio and gets you the same returns as VDE it seems.

Subject: Effectiveness MATTERS! From: Pancho Villa To: Johnny5 Date Posted: Fri, Jul 01, 2005 at 20:26:24 (EDT) Email Address: nma@hotmail.com Message: Total Real Effectiveness of an Economy = x * millions of tons of carbon equivalent / GDP '(GDP = f(population))'

Subject: Re: Effectiveness MATTERS! From: Jennifer To: Pancho Villa Date Posted: Sat, Jul 02, 2005 at 06:34:55 (EDT) Email Address: Not Provided Message: Well done as always. We can continue to wish for more conservation and efficiency, but we may have to wait a while for a friendlier political environment.

Subject: Protecting Asset Values From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 18:58:33 (EDT) Email Address: Not Provided Message: Thinking of resilience and protection, Alan Greenspan according to Alan Blinder has spoken at times at Fed meetings of protecting asset values, not manipulating asset value just protecting against shocks or the effects of shocks. So, I would guess the Fed will try to raise a few more times but will be cautious not just of slowing growth but of signs the housing market has cooled. What the Fed will wish for when it finally happens is only a levelling of housing or real estate prices rather than a decline. Families will have to find another asset to build wealth with if housing prices level off for an extended period. The alternative again will be stocks, so I am thinking Siegel has the edge on stocks if the Fed is protective of asset values. Notice Britain is my advice to myself.

Subject: Are We More Shock Resistant? From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 18:57:41 (EDT) Email Address: Not Provided Message: Alan Greenspan has been arguing for some time that our economy in particular had grown increasingly shock resistant or resilient since 1980. Investors seem to believe the same and have bid up asset prices correspondingly. Jeremy Siegel makes just this case for stock market investors, while his buddy Robert Shiller argues it is not so. Then, what of Alan Greenspan's sense that modern economies become more resilient to shocks? Inflation was controlled roughly but from then on from 1981. We managed a strong dollar to 1985 and a weak dollar after. We managed 1987 without a recession or even a negative stock market year. What of 1990, 1994, 1998, 1999, 2000...? Do resources move faster in the wake of economic shocks? Of course, if America is resilient who is Japan not? The strong Yen from 1985 may have hurt the Japanese economy for the last 15 years. How could that be?

Subject: A Japanese Master Enlightened the West From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 15:37:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/arts/design/01john.html?pagewanted=all How a Japanese Master Enlightened the West By KEN JOHNSON WASHINGTON — Legend has it that mid-19th century French artists discovered the wonders of the Japanese woodcut when they examined papers used to wrap imported Japanese ceramics. Today, looking at the prints of Utagawa Hiroshige and Katsushika Hokusai, the greatest of Japanese woodcut printmakers, it is hard to fathom that their works could have been viewed as the equivalents of our funny pages. And it is easy to see how Modernists from Manet to Bonnard could find in the lucidity and technical and formal economy of those Japanese artists inspirational guides for escaping the suffocating conventions of Beaux Arts and Victorian painting. Now an exhibition at the Phillips Collection here illustrates the influence of Japanese prints on early European and American Modernists. 'East Meets West: Hiroshige at the Phillips Collection' interweaves the print series that made Hiroshige famous - 'The Fifty-Three Stations of the Tokaido' - with paintings from the museum's collection by famous artists like Cézanne, Whistler and Braque, as well as by artists of less sturdy repute like Augustus Tack, Ernest Lawson and Maurice Prendergast. It is not a great show as a whole because many of the European and American paintings are of indifferent quality, especially seen next to Hiroshige's work. But it is, nevertheless, an instructive and illuminating one. And it does offer a rare chance to see a complete set of 'The Fifty-Three Stations' in pristine condition. It is on loan from a private Japanese collection. Published around 1833-34, the series is made up of 55 views along the Tokaido Road, the eastern coastal highway that connected Edo - now Tokyo - and Kyoto. There is one print for each of 53 established post-stops and villages along the way and one each depicting bridges at the start and at the end of the journey. Going by the works drawn from the Phillips Collection, it appears that what Western artists took from Hiroshige and other Japanese printmakers was mainly formal: compositions that appear cropped or leave much empty space in central areas, that emphasize flat design rather than illusory depth and that simplify detail in favor of clear shapes, patterns and linear rhythms. For the Impressionists, these qualities served the realization of the canvas as a kind of hypersensitve retinal screen that registered visual sensation with an almost photographic lack of visual and compositional discrimination. With Post-Impressionists like van Gogh and Cézanne, there is a shift from the rendering of visual sensation to a self-reflexive interest in the grammar of picture-making. This is not contrary to Japanese tradition, which evolved not by increasing its ability to imitate nature but by the increasing refinement of traditional conventions of representation. Part of what is so wonderful in Hiroshige is how he gently nudged the schematic abstraction of his fine, prehensile cartoon outlining and flat colors in the direction of naturalism, achieving with pellucid economy naturalistic effects of light and weather and specific descriptions of natural features of the landscape. In a sense East and West met as they were going in opposite directions: the East toward greater naturalism and the West toward greater abstraction. Hiroshige's work was a last great flowering of traditional Japanese printmaking. When Japan was forced to open itself to trade with the West in 1853, an influx of Western art and photography rendered Japanese styles of representation obsolete. Meanwhile, Western Modernism took what it needed from the East and sailed on into uncharted realms of abstraction. Because the Western works in the Phillips Collection are collectively so dull by comparision, the exhibition's main effect is simply to highlight how great Hiroshige is. The experience is visceral: each time you shift your gaze from one of the Western paintings - whether it is a Bonnard, a Prendergast or a Kokoschka - back to one of Hiroshige's perfect, glowing jewels, you feel a kind of physical relief and a rush of pleasure. It would be different had the West been better represented - Manet, Cassatt, van Gogh and Vuillard are among the missing - but in the presence of inferior competition, the Hiroshiges really shine. In focusing on the Hiroshige prints, you discover something that the Modernist preoccupation with form and abstraction overlooks: how terrifically entertaining they are. Hiroshige was not a mandarin composing pictures for purely aesthetic contemplation by the cultivated few. He was an enormously popular artist. Images from the Tokaido were produced and sold in such numbers - over 10,000 in some cases - that many of the blocks wore out and had to be recut to keep up with demand. Reasons for that popularity are easy to see. Hiroshige was a wonderfully skillful, witty and generous caricaturist. Almost all the tiny people that populate his landscapes are delightfully particularized in their bodies and their gestures; and though the series features no main protagonists, as illustrations for a novel would, he gives each of his little people a vivid sense of purposeful humanity: the man running after his hat that was blown off by the wind; the women trying to drag prospective customers off the street and into the inns where they work; the men lounging in tea houses; the travelers struggling up and down a mountain slope under a driving rain. Moreover, Hiroshige conjures the feelings of going on journeys. His prints literally depict all kinds of people in transit and they describe all kinds of places along the way, but they are more than just 19th-century scenic postcards. In almost every print, Hiroshige uses formal devices to enhance a sense of movement through and into space. As paths zigzag from near to far, the eye follows where they lead and the mind wonders where they go beyond the frame of the picture. In many images, bridges sweep across the space of the picture making you think about where the people crossing came from and where they are going. And bridges often lead into villages so that you feel what the weary traveler feels upon arriving at his destination: anticipation of warmth, food and relaxation. Sometimes destinations are far away, like the castle town at the foot of a distant mountain range that beckons the party of travelers resting in the foreground after crossing a river. There is nothing religious about Hiroshige's imagery, but there is a subliminal sense of travel as a kind of spiritual pilgrimage. Hardly any of the Western paintings in the Phillips Collection show convey that adventurous feeling of traveling through or into the picture. Ernest Lawson made Impressionist-style pictures of bridges, but leading as they do only into illegible accretions of paint, they are not bridges you feel an urge to cross. Nor does Cézanne's view of Mont Sainte-Victoire inspire a desire to hike into his world; his patchy brushwork blocks imaginative entry like a wall and directs our attention rather to the construction of the picture. An exception among the Western pictures is a wonderful early painting by Paul Gauguin in which we look down from a high grassy knoll to bathers at the edge of a river and a fisherman farther away on a spit of land. You feel as though you could climb down there yourself to go for a swim or spend a few hours loafing with your own rod and reel. That dimension of pictorial and psychic travel was left undeveloped by Western Modernist painting, which has tended to try to arrest the eye and the mind in the empirical here and now. But Hiroshige's kind of narrative did not die out. It flourishes in comic books, graphic novels and animated films that Eastern and Western artists continue to churn out in great volumes, transporting minds all over the world.

Subject: The Mao Myth Thrives From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 14:35:11 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/international/asia/01yenan.html The Mao Myth Thrives, but Don't Mention Its Dark Side By HOWARD W. FRENCH YENAN, China - Horribly outnumbered, poorly armed and constantly under attack, 80,000 Communist fighters set out on foot from a base in China's southeastern Jiangxi Province in October 1934 hoping above all to avoid getting wiped out by their Nationalist enemies. One year and 5,000 miles later, after countless acts of extraordinary courage along the way, the 6,000 survivors of the Long March, led by Mao Zedong, limped into this dusty town in the arid yellow hills of northern Shaanxi Province. Last year, nearly four million Chinese, from backpacking college students to busloads of middle-aged workers on company excursions, followed in their wake - as tourists, not revolutionaries. Without much else to work with, this modest city, all but bypassed by the industrial revolution sweeping China, enthusiastically promotes some of the most resonant founding myths of the country's Communist republic. These days, eager visitors crowd the revolutionary museum here to look admiringly at large black and white photographs of the last stages of the Long March, to buy Mao trinkets or to pose for pictures in front of the rustic cave dwellings that served as residences for Mao and other top leaders from 1935 to 1947, when this city was the Communists' main base. Marxist ideology is said to have little relevance in today's China. But all over this city, people can be overheard trading admiring stories about the heroism of Mao's army or celebrating the spirit of Yenan, as much a name for that 12-year period as for the city itself. Whether they lived through it, or more likely know of it through popular culture, many Chinese still recall the era fondly as a time of great idealism, of selfless volunteers arriving by the tens of thousands to join the movement, and of Mao's supposedly enlightened leadership before such well-known and monumental tragedies as the Great Leap Forward and the Cultural Revolution, which killed tens of millions of people. 'We have always loved Mao,' said Zhao Shiwei, 43, a provincial trade official who had come from far away Guangdong Province and was posing merrily with a group of colleagues in gray People's Liberation Army uniforms from the era. 'He led the nation to success and founded the new China, and he will always occupy a great place in our hearts.' Chinese historians in the academy, like their counterparts abroad, have steadily chipped away at Mao's myth, and the falling chunks have inevitably included many details about Yenan. Far from the idyll celebrated here, the historians say, Mao waged a campaign of political terror against youthful dissenters, perfecting methods of purging real and imagined foes that would be used on a vast scale later. He sold opium to raise money for his army, and it was here that he created his suffocating cult of personality. 'Mao: The Unknown Story,' a heavily researched book published recently by Jung Chang, a Chinese writer who lives in Britain, goes so far as to say that the most legendary act of bravery of the entire Long March, the crossing of the Dadu bridge, while enemy gunners took aim from the opposite bank, was fiction. In China, that is the equivalent of saying Washington never led his troops across the Delaware. That is not all. Far from committed Communists, Ms. Chang writes, many of the marchers were press-ganged captives, and Mao is said to have been carried throughout much of the Long March on a litter by porters, as he read at his leisure. And although Mao's troops were decimated, not a single senior party member was killed or even seriously wounded. 'You can't say the Long March was a military victory,' said Yang Kuisong, a historian at Beijing University. 'It was not about fighting battles. It was a process of running away.' Ordinary Chinese have been carefully shielded from views like this of their late leader, however. Mao's importance to the party he founded remains paramount, even as the founding ideology, Marxism, fades. For ordinary Chinese, history textbooks emphasize the devotion to the common man and heroism of the early Communists, even teaching that Mao's armies, not the Americans, defeated the Japanese invaders. The television and film industries have cranked out hundreds of movies reinforcing the Mao legend. Writing that strongly challenges the chairman or his place in history simply cannot be published in China. Sitting outside the town's Revolutionary Museum, where a huge bronze of Mao looms over a parking lot filling with tour buses, a 33-year-old man named Chen affected boredom when approached by a stranger, saying Mao's history was most relevant to people over 40. 'We didn't have to suffer the same difficulties that they did,' Mr. Chen said. 'You always hear about the great sacrifices that Mao's generation made in all the movies and TV shows. It's got to be true, right?' In the date tree garden by the old Revolutionary Headquarters, where Mao presided over early meetings of the Central Committee, a group of fresh college graduates from Xian were curious about a foreigner's impression of Mao. 'In China, nobody hates Mao Zedong,' one of the students said in prelude. 'This trip is like a souvenir for us. We could have gone anywhere, but we chose here.' Told of the dark side of Mao's record known to historians but not to most Chinese, some of the students grew defensive. 'What do you expect us to do, drag him from his grave and flog him,' one asked. 'The emperors of the past are regarded as great if they moved the country forward, no matter how much the people suffered. With Mao it is the same.' Others, however, grew pensive. 'You might say that China is a very different country in the way it deals with history,' said one young woman. 'But you must understand, foreigners have much more information than we do. There's no real freedom to discuss these kinds of things here.'

Subject: Labor Standards in Central America From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 14:33:56 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/business/worldbusiness/01labor.html Report Criticizes Labor Standards in Central America By JUAN FORERO BOGOTÁ, Colombia - As the White House lobbied Congress to win support for a Central American trade pact, the United States Labor Department tried for more than a year to block the release of reports that harshly criticized labor standards in the region. The reports, by a labor advocacy group, the International Labor Rights Fund, were commissioned by the Labor Department, and concluded that working conditions in five Central American nations and the Dominican Republic were dismal, and that enforcement of labor laws was weak. In a statement Thursday, the Labor Department called the findings biased and flawed. Dirk Fillpot, a spokesman for the department's Bureau of International Labor Affairs, said the study was 'rife with unsubstantiated and unverifiable claims, questionable statistical data, and biased statements of findings and conclusions.' The Labor Department's condemnation drew a quick rebuke from Senator Byron L. Dorgan, a North Dakota Democrat. 'The reports describe labor conditions that would be harmful, not helpful, for passage of Cafta,' he said, referring to the Central American Free Trade Agreement. 'So they decided to deep-six it.' The Associated Press first reported the developments Wednesday. The Senate voted to approve the trade pact on Thursday. Representative Sander Levin, a Michigan Democrat, said the Labor Department should have permitted lawmakers to review the reports and make up their own minds. The Labor Rights Fund concluded in nearly 400 pages that while there were some adequate labor laws in Central America, there were systematic barriers to enforcing those laws. Recordkeeping is shoddy, giving workers little chance to make claims against employers, the reports said, and sanctions for violations are weak. The fund also found problems ranging from discrimination against labor organizers to inadequate measures against child labor. El Salvador, for instance, the study found that it was not uncommon for foreign companies to close shop and leave without paying workers. The study also noted a failure to maintain safety, citing two accidents at a textile plant in 2002 in which 560 workers were overcome by fumes in chlorine spills. The ensuing investigations were shoddy, the study found. Though the Labor Rights Fund has been critical of labor standards in developing countries, the Labor Department nonetheless chose it to conduct the studies. The contract was worth $937,000. 'We transparently and in good faith put in a proposal,' said Bama Athreya, deputy director of the Labor Rights Fund. But after the reports were submitted in early 2004, the Labor Department held them in secrecy, preventing their release to Congress and forbidding the fund to publish them, Mr. Levin, the Michigan representative, said. Mr. Levin repeatedly requested that the reports be released, and the Labor Department released them in April. A central argument in the reports - that enforcement of labor standards in Central America is often nonexistent - is an important point of contention. Opponents of Cafta say the United States should not trade with countries where worker rights are violated, while supporters say Cafta will help put teeth into enforcement efforts.

Subject: Amending Duration From: Terri To: All Date Posted: Fri, Jul 01, 2005 at 13:56:59 (EDT) Email Address: Not Provided Message: There is an addition to the duration discussion that I had missed. Though I noticed that the Vanguard GNMA Bond Fund has duration swings, I had not considered the swings significant. But, they are significant. GNMA duration will fall as mortgage rates fall and rise as rates rise. So, a 2 year duration with a rise in mortgage rates could be a 4 year duration. People tend to refinance when rates fall and pay mortgages for the full term when rates rise. This is the reason for the extra yield of GNMA bonds which are government insured.

Subject: Germany Looks Forward to World Cup From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 13:44:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/business/worldbusiness/01soccer.html Germany Looks Forward to World Cup and Fans' Money By MARK LANDLER FRANKFURT - There was drama both on and off the soccer field here Wednesday night as Brazil trounced Argentina, 4 to 1, in the final game of the Confederations Cup, a warm-up for the World Cup. Moments after the match began, a sudden thunderstorm dropped heavy rain on Frankfurt's newly completed stadium, tearing a hole in its retractable roof and showering the grass with water. It was a rare glitch in an otherwise smooth tournament, and Germans did not let it temper their excitement for the World Cup, which is to be played here next summer. Germany is well ahead of schedule in its preparations, prompting economists to forecast that the tournament, the world's largest sporting event, will deliver an invigorating kick to one of Europe's most torpid economies. With one million foreign tourists and two million Germans expected at the games, the World Cup could generate 4 billion euros ($4.8 billion) in additional consumer spending in 2006, according to economists. That would be good news for hotels, restaurants, shops, airlines and taxis - which have all struggled in recent years as Germans have reduced their consumption. 'The spending comes at the right time,' said Marco Bargel, the chief economist of Deutsche Postbank, one of Germany's leading retail banks. 'Unlike with the Olympics, where it is highly concentrated, the impact will be felt all over the country.' Germany is investing about 6 billion euros ($7.2 billion) to build or refurbish 12 stadiums in Berlin, Munich and other cities, as well as fixing roads, train stations and other transportation links. Among the showcase projects is an ultramodern train station in Berlin, just north of the German Parliament and Chancellery. Munich's new stadium - with its futuristic translucent roof that looks like a quilted eggshell - has won lavish praise from architecture critics. All told, the $12 billion in World Cup-related spending could raise the growth of Germany's gross domestic product by three-tenths of a percentage point next year, according to Mr. Bargel. That is significant in an economy that grows at barely 1 percent a year. It is also projected to create more than 30,000 jobs. Then there is the potential impact of a successful tournament on the mood of German consumers. While that is notoriously difficult to measure, some economists say that a good World Cup - especially one in which the German team plays well - could be a tonic for the country. 'It's a way to say to the German people, 'You're not as badly off as you think you are,' ' said Markus Kurscheidt, an expert in sports economics at Ruhr University in Bochum. 'If that happens, and consumer sentiment rises, then the World Cup could have a major impact.' France, he said, benefited from an economic afterglow in 1998, when it played host to, and won, the World Cup. Such intangible factors aside, Mr. Kurscheidt is skeptical of grand claims about the long-term benefits of these events. The Dentsu Institute in Japan forecast that the 2002 World Cup tournament, which was split between Japan and South Korea, would generate $25 billion in cumulative economic benefits over time. The real figure, he said, is probably a fraction of that. Mammoth sporting events also have a way of saddling their organizers with debt. Greece is struggling with a persistent state deficit, thanks in part to the huge cost overruns of the Athens Olympics. German cities like Leipzig may also end up with a hangover. Leipzig spent $100 million on a new stadium, but does not have a big-league soccer club to use the arena afterward. Berlin's 1930's-era Olympic Stadium was overhauled for close to $300 million, a sum the state will almost certainly not recoup. For all the excitement, German companies have been slow to attach their names to the World Cup. There are only 3 of them among the 15 major sponsors: Adidas-Salomon, the athletic-shoe maker with longstanding ties to soccer; Deutsche Telekom; and Continental, a tire manufacturer. Frankfurt's arena has been plastered with billboards for Emirates, the carrier in Dubai that is the official airline of the World Cup, and Hyundai of Korea, the official car. Anheuser-Busch of St. Louis has claimed the beer concession, rankling many in this beer-loving country. Germans also complain that they have not been able to buy tickets for the games; more than half of the three million tickets have been put aside by FIFA, soccer's governing body, for sponsors. Still, the postgame mood in Frankfurt was upbeat. Anheuser-Busch handed out bottles of 'Bud' - not using its full name, Budweiser, because of a trademark dispute with another Budweiser beer, made in the Czech Republic. The fans were even philosophical about the leaky roof. 'I don't mean to sound Panglossian,' said one, Thomas Schwingeler, referring to the foolishly optimistic Dr. Pangloss in Voltaire's 'Candide.' 'But I'm glad it happened today and not next year, when the world will be watching.'

Subject: Follow the Leapin' Leprechaun From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 13:29:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/opinion/01friedman.html Follow the Leapin' Leprechaun By THOMAS L. FRIEDMAN Dublin There is a huge debate roiling in Europe today over which economic model to follow: the Franco-German shorter-workweek-six-weeks'-vacation-never-fire-anyone-but-high-unemployment social model or the less protected but more innovative, high-employment Anglo-Saxon model preferred by Britain, Ireland and Eastern Europe. It is obvious to me that the Irish-British model is the way of the future, and the only question is when Germany and France will face reality: either they become Ireland or they become museums. That is their real choice over the next few years - it's either the leprechaun way or the Louvre. Because I am convinced of that, I am also convinced that the German and French political systems will experience real shocks in the coming years as both nations are asked to work harder and embrace either more outsourcing or more young Muslim and Eastern European immigrants to remain competitive. As an Irish public relations executive in Dublin remarked to me: 'How would you like to be the French leader who tells the French people they have to follow Ireland?' Or even worse, Tony Blair! Just how ugly things could get was demonstrated the other day when Mr. Blair told his E.U. colleagues at the European Parliament that they had to modernize or perish. 'Pro-Chirac French [parliamentarians] skulked at the back of the hall,' The Times of London reported. But Jean Quatremer, the veteran Brussels correspondent for the French left-wing newspaper Libération, was quoted by The Times as saying: 'For a long time we have been talking about the French social model, as opposed to the horrible Anglo-Saxon model, but we now see that it is our model that is a horror.' Given that Ireland received more foreign direct investment from the U.S. in 2003 than China received from the U.S., the Germans and French may want to take a few tips from the Celtic Tiger. One of the first reforms Ireland instituted was to make it easier to fire people, without having to pay years of severance. Sounds brutal, I know. But the easier it is to fire people, the more willing companies are to hire people. Harry Kraemer Jr., the former C.E.O. of Baxter International, a medical equipment maker that has made several investments in Ireland, explained that 'the energy level, the work ethic, the tax optimization and the flexibility of the labor supply' all made Ireland infinitely more attractive to invest in than France or Germany, where it was enormously costly to let go even one worker. The Irish, he added, had the self-confidence that if they kept their labor laws flexible some jobs would go, but new jobs would keep coming - and that is exactly what has happened. Ireland is 'playing offense,' Mr. Kraemer said, while Germany and France are 'playing defense,' and the more they try to protect every old job, the fewer new ones they attract. But Ireland has started to play offense in a lot of other ways as well. It initially focused on attracting investments from U.S. high-tech companies by offering them a flexible, educated work force and low corporate taxes. But now, explained Ireland's minister of education, Mary Hanafin, the country has started a campaign to double the number of Ph.D.'s it graduates in science and engineering by 2010, and it has set up various funds to get global companies, and just brainy people, to come to Ireland to do research. Ireland is now actively recruiting Chinese scientists in particular. 'It is good for our own quality students to be mixing with quality students from abroad,' Ms. Hanafin said. 'Industry will go where the major research goes.' The goal, added the minister for enterprise and trade, Micheal Martin, is to generate more homegrown Irish companies and not just work for others. His ministry recently set up an Enterprise Ireland fund to identify 'high-potential Irish start-up companies and give them mentoring and support,' and to also nurture mid-size Irish companies into multinationals. And by the way, because of all the tax revenue and employment the global companies are generating in Ireland, Dublin has been able to increase spending on health care, schools and infrastructure. 'You can only do this if you have the income to do it,' Deputy Prime Minister Mary Harney said. 'You can't have social inclusion without economic success. ... This is how you create the real social Europe.' Germany and France are trying to protect their welfare capitalism with defense. Ireland is generating its own sustainable model of social capitalism by playing offense. I'll bet on the offense.

Subject: Foreign Suitors Nothing New in U.S. Oil From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 10:31:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/business/worldbusiness/01unocal.html?pagewanted=all Foreign Suitors Nothing New in U.S. Oil Patch By ALEXEI BARRIONUEVO Members of Congress opposed to a Chinese bid to take over the California-based energy company Unocal built broader support yesterday for their campaign to block the deal on the ground that it could threaten national and energy security in the United States. But China is not the first foreign country to seek American energy assets. Indeed, oil industry analysts say that the effort by the China National Offshore Oil Corporation to outbid Chevron for Unocal appears to pose less risk of generating domestic shortages or other energy-security headaches than other foreign acquisitions that have been approved by the government. For more than two decades, the United States has not blocked acquisitions of energy properties by Saudi Arabia, Venezuela, Russia, France, Norway and Brazil, among others. Some of those deals, particularly Venezuela's purchase of Citgo, involve access to oil supplies vulnerable to disruption because they feed refineries and thousands of American gasoline stations. By contrast, Unocal has few strategic oil assets in the United States. The company, based in El Segundo, Calif., does not have refineries or gasoline stations, having sold them eight years ago. In fact, the real prizes - more than half of Unocal's production and reserves - that Chevron and the Chinese are after lie in Asia, particularly in Indonesia and Thailand. 'The assets involved in the Unocal transaction are not of the scale or geographic location to make them of critical importance to U.S. energy security,' said Amy Myers Jaffe, an energy fellow at the James A. Baker III Institute for Public Policy in Houston. 'Many of the important Unocal assets are actually located in Asia, and the energy produced there would never flow to the United States.' Still, the bid has prompted strong debate in Washington. Yesterday, Representative Carolyn Cheeks Kilpatrick, a Democrat of Michigan, won House passage of her amendment to the annual appropriations bill prohibiting the Treasury Department from recommending the sale of Unocal to Cnooc. And last night, the House approved, by a vote of 398 to 15, a resolution stating that Chinese ownership of Unocal would 'threaten to impair the national security of the United States' and that approval by Unocal's board of the bid should result in a 'thorough review' by President Bush. The resolution was presented by Representative Richard W. Pombo, Republican of California, whose district includes Unocal's headquarters. In his resolution, Mr. Pombo cited concerns about oil exploration technologies that have 'dual use' in commercial and military applications. 'We cannot afford to have a major U.S. energy supplier controlled by the Communist Chinese,' Mr. Pombo said on the House floor. 'If we allow this sale to go forward we are taking a huge risk.' But Representative Jim Moran, a Virginia Republican, said blocking the Chinese bid was a dangerous move. 'They are holding a financial guillotine over the neck of our economy, and they will drop that if we do things like this that are not well considered,' Mr. Moran said on the House floor. 'If we don't let them invest in western firms, what are they going to do? They are going to invest in Iran or Sudan and make those governments much stronger than they are today.' Earlier this week, 41 members of Congress signed a letter to President Bush expressing their concern about the Cnooc bid. The Congressional debate so far seems to neglect the fact that only one-third of Unocal's production and one-quarter of its reserves are in the United States. And its combined oil and natural gas production is only 1 percent of total United States consumption of the two fuels. It has modest production in Texas and Alaska and is involved in costly and tough-to-develop oil projects in the Gulf of Mexico. Foreign companies in the United States, however, currently own 28 percent of American refining capacity, up from 15 percent in 1983, according to the Energy Information Administration, a part of the Energy Department. Nearly 14 percent of American crude oil was produced by foreign companies in 2003, up from 13 percent 20 years ago. Foreign firms doubled their share of natural gas production in that period, to 12 percent, the Energy Department said. United States securities regulators on Wednesday gave final clearance to Chevron's offer, leaving Cnooc just six weeks to convince Unocal's board that its own bid for Unocal is superior. Chevron says it will move to call a shareholder vote in August. Peter J. Robertson, Chevron's vice chairman, said in an interview last week that Chevron believed that Cnooc might 'strategically focus' Unocal's oil and natural gas assets toward China, potentially restricting supply to the rest of Asia. Since oil prices are determined by global supply and demand, China's acute needs could affect prices everywhere. But analysts say any lost Unocal production would be too small to shift prices much - or cause any global oil shock. Unocal's production and reserves in the United States could not be easily redirected. For decades the United States government has restricted exports of crude oil from the 48 continental states, since the United States must import well over half of its oil from abroad. Then, from 1973 to 1995, it restricted exports of Alaskan crude oil. Declining production on the North Slope of Alaska and a public outcry against exporting any American oil have discouraged oil companies, including the British giant BP, from sending much Alaskan crude abroad since then, Energy Department officials said. Some of those opposed to a Cnooc deal, including executives at Chevron, have said China should be prevented from buying the American company because the Chinese do not 'play fair' on oil deals and because the Chinese government is backing Cnooc's bid with low-interest loans. 'You don't enter China unless it is on terms favorable to the Chinese,' said Robin West, chairman of PFC Energy, an energy consultancy in Washington. 'Chinese companies are clearly advantaged.' While potential for oil in China is not on the world scale of countries in the Middle East or around the Caspian Sea, several companies, including Chevron, have been operating in China for many years. According to BizChina, a Chinese newspaper, China's oil industry has attracted more than $7 billion in foreign investments since 1982. Indeed, Chevron is a partner with the Chinese in two medium-size deals with Cnooc. Buying a majority stake in a Chinese company, however, would be difficult, if not impossible. While no major oil company has tried, Cnooc is 70 percent owned by the Chinese government, which has shown no interest in selling. Some of the United States' long-time energy partners have more restrictive access to their markets than China does. Mexico's state-owned oil company, Petróleos de Mexico, or Pemex, does not allow outside foreign investment in Mexico's oil sector. Despite that, Shell Oil's American subsidiary was allowed to sell 50 percent of its 215,900-barrel-a-day refinery in Deer Park, Tex., to Pemex in 1993. Shell still operates the facility with Mexican involvement. One of the most delicate links in the energy chain right now are the refineries. A fire, accident or government decision to restrict supply to an American-based refinery could affect gasoline or other fuel prices fairly quickly. One of the biggest foreign owners of refining assets is Petróleos de Venezuela, the state oil company of Venezuela, which acquired the American oil company Citgo in the 1980's. Today it owns six American refineries and sells gasoline at more than 13,000 gasoline stations, making it the fourth-largest supplier of gasoline in the United States. Since early last century, Venezuela had been one of the United States' most reliable energy suppliers, though those ties have frayed since Hugo Chávez was elected president of Venezuela in 1998. Mr. Chávez's anti-American politics and close ties to the Cuban leader Fidel Castro have irked the Bush administration, and Mr. Chávez has been steadily making investment terms worse in Venezuela for foreign companies. Three years ago, oil workers staged a strike trying to force Mr. Chávez from office. Citgo struggled for several weeks to obtain the crude oil it needed from Venezuela to feed its American refineries. Creditors lowered Citgo's credit ratings, creating a cash squeeze for the company. The uncertainty contributed to soaring gasoline prices, which rose 37 cents a gallon in the United States during the three-month strike, according to government figures. 'When it comes to national security, exploration and production assets are immaterial compared to refining assets,' said Fadel Gheit, an oil analyst with Oppenheimer & Company, a brokerage firm that recommends both Unocal and Chevron stock, which Mr. Gheit also owns in his account. 'If anything happened to refining capacity anywhere, the impact would be global and almost immediate.' The reason is that refining capacity is tight, especially in the United States, which does not have enough capacity to meet domestic gasoline demand and has no plans to build any large new plants despite increasing gasoline demand. Saudi Refining, a unit of Saudi Arabia's state-owned oil company, formed a 50-50 joint venture in 1988 with three Texaco refineries called Star Enterprises, later renamed Motiva Enterprises. Today, the Saudis still control half of the venture, which includes Texaco gasoline stations in the Eastern United States. Despite restrictions on foreign investment at home, the Russian company Lukoil bought Getty Petroleum Marketing's 1,300 gasoline stations in 2000 on the East Coast, including some in the New York area. Lukoil executives have said that Lukoil might eventually buy an American oil refinery.

Subject: Re: Foreign Suitors Nothing New in U.S. Oil From: P Krugman To: Emma Date Posted: Fri, Jul 01, 2005 at 12:17:05 (EDT) Email Address: krugman@nytimes.com Message: Just because you read it in the NYT does not, repeat, NOT, make it true.

Subject: Conventional Wisdom Not Always Right From: Emma To: All Date Posted: Fri, Jul 01, 2005 at 10:22:21 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/07/01/business/01norris.html Conventional Wisdom Not Always Right By Floyd Norris WITH the year half over, the world's financial markets appear to be well on the way to demonstrating a great investment truth: When virtually everyone expects something to happen, it won't. This year's conventional wisdom concerned the dollar. It would fall under the weight of fiscal irresponsibility and rising trade deficits. So where are we now? The dollar is up against every major currency in 2005. At the end of 2003, the sure bet was supposed to be that long-term interest rates would rise in 2004. They did not, and this year they are down in Japan and Europe as well as the United States. Alas, successful investing is not as easy as taking a poll and then betting against the majority. It may turn out that both the interest rate and currency forecasts were just premature, not wrong. Still, with that kind of record, it is worth asking what is the current conventional wisdom. There are, I think, two main parts. But in this case, they may be mutually exclusive. The question may be which will prove false first. The first area of growing consensus among the chattering class is that there is a housing bubble in the United States, or at least in many areas, and that it is going to burst. Even the bulls see signs of excess. Robert Toll, the chief executive of Toll Brothers, a home builder, says 'the speculating investor will be blown away from the market and then we'll continue on the trend' of steadily rising home prices. The second area of consensus is that China is a growth engine that is on its way to dominating the world in virtually everything as this becomes the Chinese century. China's success these days is intimately tied to the American housing boom. It takes in dollars from selling stuff cheap, and recycles them into Treasuries, holding down interest rates and stimulating American consumption, which gives China more dollars to invest. It is quite true that house prices are higher relative to income than they used to be, but it is not clear what will change that. If China stays strong, the housing bubble may get bigger. On the other hand, if the bubble bursts, that could damage the American economy and slow growth in China. The odds may be that little will change for some time to come. China will keep growing and will keep its currency pegged to the dollar, despite pressure from Washington. If so, those who think the American housing market is about to tumble may look as foolish a year from now as the dollar bears look now. Just because something is overpriced does not mean it will correct anytime soon.

Subject: Re: Conventional Wisdom Not Always Right From: j9 To: Emma Date Posted: Fri, Jul 01, 2005 at 22:40:34 (EDT) Email Address: Not Provided Message: And just because there is a cyclical bull, it does not mean we are out of a secular bear. I think the fundamentals are weak and must correct sometime. The only question is when and how much. The only protection is diversification, and even that may not help much.

Subject: Re: Conventional Wisdom Not Always Right From: Emma To: j9 Date Posted: Sat, Jul 02, 2005 at 13:33:57 (EDT) Email Address: Not Provided Message: I keep all of the notes I find here on Vanguard bond funds in mind, for these funds can be quite valuable diversifiers.

Subject: Chapters 6 and 7... From: Yann To: All Date Posted: Fri, Jul 01, 2005 at 04:12:03 (EDT) Email Address: Not Provided Message: by Krugman and Wells (macroeconomics textbook) are available at http://www.worthpublishers.com/krugmanwellsnew/pdf/KRUGMAN_WELLS_MACRO_CHAPTER06.pdf and http://www.worthpublishers.com/krugmanwellsnew/pdf/KRUGMAN_WELLS_MACRO_CHAPTER07.pdf Don't find them in the 'Economic theory' section...

Subject: Re: Chapters 6 and 7... From: Bobby To: Yann Date Posted: Fri, Jul 01, 2005 at 13:01:52 (EDT) Email Address: robert@pkarchive.org Message: Thanks, Yann!

Subject: Arithmetic of Mutual Fund Investing From: Terri To: All Date Posted: Thurs, Jun 30, 2005 at 21:54:24 (EDT) Email Address: Not Provided Message: http://www.vanguard.com/bogle_site/sp20050524.htm Indeed, this is a fine speech by John Bogle and well worth reading and I will read it again this evening. I can never imagine being let down by Bogle's wisodm in investing, and I agree with him completely on the insulating effect of bond funds on a portfolio in the worst of times. These days I hear people mention using CDs, but have no idea why. Understand how to use constant duration bond funds and there will never be a reason for a CD. It is fine to be cautious in investing, but we need to be sensible, and as I am forever telling friends knowing bond funds is what caution can be about.

Subject: Sector Investing From: Johnny5 To: Terri Date Posted: Fri, Jul 01, 2005 at 07:40:53 (EDT) Email Address: johnny5@yahoo.com Message: Utilities and Energy have the best gains of the vangaurd funds YTD - will these sectors have the momentum to carry them through the next 6 months Terri? Or are you eyeing other sectors for these next 6 months? AS always I have my core in XOM which tracks vangaurd energy VDE almost perfectly.

Subject: Re: Sector Investing From: Terri To: Johnny5 Date Posted: Fri, Jul 01, 2005 at 17:25:04 (EDT) Email Address: Not Provided Message: Traders, especially those who work in teams, are only concerned with sector and market movement and try to follow as they can. Investors who do not trade, or do not index only, have little other choice than to ask where there is relative value and buy there. Who can possibly know whether energy or utility indexes will be strong these 6 months? But, we can ask are they decent relative values? Health care? Finance?

Subject: Buffet looking to buy utilities From: Johnny5 To: Terri Date Posted: Fri, Jul 01, 2005 at 19:12:39 (EDT) Email Address: johnny5@yahoo.com Message: Thanks so much dear sweet Terri. Buffet who is down this year on betting against the dollar but I believe still up long term since he shorted in 2002 has said he will be buying utilities and energy - so he must see value there. VPU is vangaurds utility index and VDE their energy one. Buffet did buy cable companies and I see recently that monopoly type power has been extended through legal means care of the recent supreme court decision on cable companies - however: http://www.usnews.com/usnews/biztech/articles/050701/01commerce.htm Arnold Kling, former economist at the Federal Reserve and Freddie Mac, coauthor of the EconLog blog: 'The cable TV decision does not change my view of the technology, which is that the last-mile fight is going to be won by wireless. I don't know of any Vanguard ETF that tracks wireless - do you? Yes indeed no one can predict the timing of when things will move, so to rephrase my question - what sectors do you see as the most undervalued? Utility like Buffet? As always I am long XOM.

Subject: Re: Buffet looking to buy utilities From: Terri To: Johnny5 Date Posted: Fri, Jul 01, 2005 at 21:46:01 (EDT) Email Address: Not Provided Message: Interesting. Vanguard has only an Information Technology fund. Wireless to my understanding will generally be controlled by the telephone companies, largely Verizon. But, I will read and ask. I am thinking for a while.

Subject: Re: Buffet looking to buy utilities From: Terri To: Terri Date Posted: Fri, Jul 01, 2005 at 21:52:11 (EDT) Email Address: Not Provided Message: Oh, of course, there is a Telecommunications fund.

Subject: Vanguard Returns From: Terri To: All Date Posted: Thurs, Jun 30, 2005 at 18:23:05 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 6/30/05 S&P Index is -0.9 Large Cap Growth Index is -1.5 Large Cap Value Index is 1.3 Mid Cap Index is 4.0 Small Cap Index is 0.9 Small Cap Value Index is 1.7 Europe Index is -0.7 Pacific Index is -3.4 Energy is 22.7 Health Care is 5.4 Precious Metals 5.6 REIT Index is 6.2 High Yield Corporate Bond Fund is 0.8 Long Term Corporate Bond Fund is 7.7

Subject: Sector Stock Index Returns From: Terri To: Terri Date Posted: Thurs, Jun 30, 2005 at 18:27:24 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 6/30/05 Energy 21.7 Financials -1.6 Health Care 4.2 Info Tech -5.8 Materials -7.5 REITs 6.3 Telecoms -2.1 Utilities 14.2

Subject: India and China From: Terri To: All Date Posted: Thurs, Jun 30, 2005 at 17:42:28 (EDT) Email Address: Not Provided Message: Should we question the stability of growth in China, we have a fine check in India. Both economies are growing similarly, with China somewhat fater becasue there is a better infrastructure base in China. Right now India is robust which might give us confidence about China.

Subject: 'If only....' From: Pete Weis To: All Date Posted: Thurs, Jun 30, 2005 at 15:39:23 (EDT) Email Address: Not Provided Message: If only ... By Tom Engelhardt The price of a barrel of crude oil has broken the $60 mark; a Chinese state-controlled oil company has made an $18.5 billion bid for American oil firm Unocal - the company that fought to put a projected $1.9 billion natural gas pipeline through Taliban Afghanistan and hired as its consultant Zalmay Khalilzad, the outgoing Afghan ambassador and soon to be envoy to Iraq; world energy consumption, according to last week's British Financial Times, surged 4.3% last year (the biggest rise since 1984), oil use by 3.4% (the biggest rise since 1978). In the meantime, Exxon - which just had the impudence to hire Philip Cooney after he was accused of doctoring government reports on climate change and resigned as chief of staff of the White House Council on Environmental Quality ('The cynical way to look at this,' commented Kert Davies, US research director for Greenpeace, 'is that ExxonMobil has removed its sleeper cell from the White House and extracted him back to the mother ship.') - has quietly issued a report, The Outlook for Energy: A 2030 View, predicting that the moment of 'peak oil' is only a five-year hop-skip-and-a-pump away; 'Oil Shockwave,' a 'war game' recently conducted by top ex-government officials in Washington, including two former directors of the Central Intelligence Agency, found the US 'all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets', which was all too easy for them to imagine ('The participants concluded almost unanimously they must press the president to invest quickly in promising technologies to reduce dependence on overseas oil ...'); and oil tycoon Boone Pickens, chairman of the billion-dollar hedge fund BP Capital Management, is having the time of his life. Over the past five years, he claims, his bet that oil prices would rise has 'made him more money ... than he earned in the preceding half century hunting for riches in petroleum deposits and companies', and he is predicting that prices will only go higher with much more 'pain at the pump'. Ah, the good life. And if you don't quite recognize the new look of this fast-shifting energy landscape, then how are you going to feel if the Age of Petroleum turns out to be drawing - more rapidly than most people imagine - to a close? Imagine where we might be today, energy-wise, if Americans - and American legislators - had taken then-president Jimmy Carter's famed 1979 'moral equivalent of war' speech on energy conservation seriously, but rejected his Carter Doctrine and the Rapid Deployment Joint Task Force that went with it - both of which set us on our present path to war(s) in the Middle East. Here's part of what Carter said to the American people on television that long-ago night: 'Beginning this moment, this nation will never use more foreign oil than we did in 1977 - never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. 'The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s, for I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade - a saving of over 4-1/2 million barrels of imported oil per day ... To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation's history to develop America's own alternative sources of fuel - from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun ... I'm proposing a bold conservation program to involve every state, county, and city and every average American in our energy battle. 'This effort will permit you to build conservation into your homes and your lives at a cost you can afford ...' Well, it never happened. Tom Engelhardt is editor of Tomdispatch and the author of The End of Victory Cultur

Subject: Noticing Britain From: Terri To: All Date Posted: Thurs, Jun 30, 2005 at 14:27:42 (EDT) Email Address: Not Provided Message: The country of most interest to me at this time is Britain, for the British economy is slowing as housing has slowed. Britain is lowering short term interest rates and we will find if that supports demand. I am optimistic. Also, we should not the British stock market is up 8.0% in Pounds and 1.5% in dollars. I believe our asset values will selectively hold even if the economy begins to slow convincingly, but right now we are growing nicely. The sense I have is that value stocks and bonds will hold if an American growth slowdown.

Subject: Bergy Bits in the Fog From: Pete Weis To: All Date Posted: Thurs, Jun 30, 2005 at 12:21:20 (EDT) Email Address: Not Provided Message: Found at: http://www.rismedia.com/index.php/article/articleprint/10818/-1/1/ Global Analysis: The Trouble with Bubbles is that the Economy Suffers When They Pop Publishing date: 06/29/05 By Allister Heath The Business, London RISMEDIA, June 29 – (KRT) – Even in America, a country where every man and his dog seem to have caught the property bug and become part-time real estate speculators, paying $90m (Ł49.5m, E73.8m) for a modest three-bedroom farmhouse seems a little over the top. But that is exactly what a wealthy industrialist is believed to have done last week, setting a new record for an American home. Admittedly, also included in the price is a two-bedroom caretaker's house, two guest houses, a fully stocked man-made pond and a lap pool, and a 40-acre estate right in the middle of the Hamptons with ocean views, but it is still an astonishingly steep price for a house. It is not surprising, therefore, that a growing number of economists are convinced that many large cities in the US are in the midst of an irrational property bubble of which last week's transaction was just the most egregious example. They fear that the entire global economy could grind to a halt if and when it finally bursts. Charles Kindleberger, of the Massachusetts Institute of Technology, author of Manias, Panics, and Crashes: A History of Financial Crises, defined a financial bubble as a series of price increases that are so large as to make an asset loose all relationship to fundamentals before ultimately suffering a price implosion. That is a description which seems all too appropriate for the property markets of many of America's big cities, as well as of many other European, Asian and Latin American markets; British and Australian homeowners, whose bubble is at a more advanced stage, are praying that the dreaded implosion doesn't materialise. The ever-louder warning would be ominous enough if housing were the only sector where prices have soared ahead of fundamentals. But in an important report out this weekend, Bear Stearns is warning that China, hedge funds and nanotechnology are three other areas which are already or may soon succumb to bubbleonomics and where a meltdown is likely to occur. What is most surprising about this is that it comes barely five years after the collapse of the previous bubble, that of internet stocks, and after investors and commentators promised themselves never again to fall for overvalued, faddish assets. Investors with short memories should recall what happened to TheStreet.com share index, an equally weighted index of 20 active internet stocks. The index was set at 200 on its founding on September 30, 1998. It rose to 1350.16 on March 10, 2000 before plunging to 121.74 on May 31, 2002 and even lower subsequently. Jeremy Siegel, a professor at Wharton, calculates that there was a nearly seven fold rise followed by a greater than 90 percent fall in the index; that the market value of these stocks exceeded $1 trillion at the market high; and that over this time period, seven of the 20 stocks fell more than 99 percent from their peak price. And as the box below explains, there have been plenty of similar bubbles in history, from tulips in the 17th century to the shares of bowling companies in the 19th. 'Five years ago, it was the equity bubble. Today, it's the property bubble. For America, these are not isolated events. As night follows day, one bubble has spawned the next -- with profound implications for the US economy and financial markets', says Stephen Roach, chief economist at Morgan Stanley. One central reason for the US property bubble is that Alan Greenspan, chairman of the Federal Reserve, was desperate to cushion the blow from the fallout of the previous, dot.com bubble and to prevent a Japanese-style deflation. The Fed slashed interest rates by 5.5 points and ensured that the real federal funds was lower than inflation for three years, between 2002 and 2004, allowing over-leveraged individuals and companies to mend their balance sheets by remortgaging; even today, under some measures, real interest rates are little different from zero, even though they have gradually increased from 1 percent to 3 percent today and are likely to rise again on Thursday. With the cost of borrowing overnight almost free in real terms, investors were able to buy longer-term bonds, which pay higher yields, and make huge amounts of money. The result was an artificially high demand for fixed income securities, a bubble in the bond market and long-term interest rates that have remained far too low (yields and bond prices are inversely related). It also spawned a massive remortgaging binge and a surge in the demand for property, triggering yet another bubble, as well as a huge increase in debt. The problem now, says Roach, is that the consequences of normalising interest rates become more and more severe as the property bubble gets ever worse. The resulting moral hazard dilemma -- the assumption that the Fed will not dare hike rates too high because of the dire consequences that would result -- reinforces the belief that low interest rates are here to stay, further fuelling the bubble until a random event triggers an implosion. This analysis of the domestic causes of the US bubble is reinforced by Bear Stearns this weekend by its London economists David Brown and Steve Barrow, who emphasise Asia's role. 'There has been a wall of money piling into assets such as real estate, fixed income and commodities. The link between the downward pressure on the dollar, fast reserve growth in Asia and asset price inflation is a pretty irresistible one', they argue. The dollar has recovered against many western currencies but remains under pressure against the renminbi, which is hugely under-valued in its 8.28 to the greenback peg. As long as pressure of an imminent revaluation remains, and that Asian countries want to prevent the dollar from falling again, local central banks will continue buying greenbacks and accumulating ever larger stocks of foreign exchange reserves. Because these reserves are then either recycled directly into government bonds, which pushes down long-term interest rates and hence fuels mortgage lending; or deposited with banks, who then lend to hedge funds, the end result is once again higher asset prices. Part of the problem, Bear Stearns believes, is that traditional loan demand has remained depressed, in Europe and Japan because of weak growth and in the US because firms have been busy rebuilding balance sheets -- with the exception of housing-related loans. Much bank lending has gone instead to hedge funds, many of which are based in the Caribbean, helping to inflate prices of government bonds, corporate credit and commodities. 'Ironically, some policymakers, especially in Europe, blame the hedge funds for inflating the bubbles, but it is excessive liquidity driven by central banks that is really to blame', Bear Stearns argues. Francois Trahan, Kurt Walters and Caroline Portny, also of Bear Stearns, argue that the typical bubble follows a standard pattern. The first phase is characterised by ample financial liquidity with the amount of money in circulation reaching a peak three years before the speculative peak. The excess liquidity boosts consumer and business spending and hence economic growth, as well as personal wealth. Usually, price pressures start to build at this stage, though some argue that globalisation means that modern inflation tends to be visible more in asset markets or commodities, rather than consumer prices, at least as long as it remains relatively modest. All of this is accompanied by a bull market. Short-term interest rates (such as those on commercial paper) tend to hit their cycle lows about 10 months before the start of recession before starting an upwards march. The first sign that things are going sour is a widening of yield spreads, with the rates payable on riskier bonds rising relative to the safer ones, signaling that investors' tolerance for risk is waning. At the same time, liquidity is squeezed by a flattening of the yield curve as the difference between short-term and long-term rates narrows. Wholesale price rises typically peak a few months past the start of the bubble-induced recession. The subsequent pattern is deflation as wholesale prices fall; for the first few months after the start of the recession, short-term interest rates continue to increase before they eventually plummet. About a month or two before the start of the recession, business activity starts to slow; eventually, this slowdown turns into a sharp drop. There are four different types of bubble depending on the assets involved, according to Trahan, Walters and Portny: life-changing innovations (such as railways or the internet); scarcity-driven (such as tulips or rare commodities); theme-driven (at various times junk bonds, conglomerates or property); and government-caused (such as the South Sea Bubble monopoly). Of course, bubbles tend to be triggered by excess liquidity, which is always the fault of the monetary authorities. There are strong similarities between US-Chinese trade and the dot.com explosion of the last 1990s. 'If you think of China as a corporation, the current operating environment bears an eerie resemblance to that which surrounded many technology and telecommunications companies during the US technology bubble of the late 1990s', the Bear Stearns economists say. Dot.com companies emerged from nowhere, booking huge revenues by selling products to businesses on credit and enjoying a huge rise in profits, net worth and share prices. This induced financial institutions and the markets to provide funding to the dot.coms, allowing them to continue to offer their customers the means to buy even more on credit. Eventually, people began to notice that the smaller companies at the end of the chain would never make any money, and hence that the sums they owed the dot.com giants would never be paid back. The dot.com giants began to see their customers fail; they were soon faced with an avalanche of defaults, forcing them to take massive write-offs; those stupid enough to have invested in the dot.coms were wiped out. It was a classic Ponzi scheme. Today, Chinese companies are selling their goods to the US but -- just as during the 1990s dot.com era -- the only way America is able to afford to buy them is because China is simultaneously lending the US economy the means to do so. China's massive forex intervention and accumulation of government bonds is having the side-effect of financing the US current account deficit, which has hit an annualised 6.4 percent of GDP. In other words, America is trading IOUs for Chinese goods. Meanwhile, China's banks are providing cheap money for companies to boost capacity to satisfy foreign demand; but this demand only exists because China created in the first place. Because of government intervention, a false market has been created which is distorting the workings of the global economy and preventing a market led-readjustment. The mother of all bubbles remains the US housing market, however. Prices have increased by over 50 percent in the past 5 years, and by 12.5 percent in the past year alone; 42 percent of first-time buyers and 25 percent of all buyers made no deposit on their purchase last year. Floating rate mortgages, which are much cheaper that the traditional, 30-year fixed rates, account for roughly 35 percent of all new mortgages, compared to just 15 percent a year ago. Most worrying is the rise of interest-only loans, which accounted for 31 percent of new mortgages in 2004, up from only 1.5 percent in 2001. Unlike in the UK, this is going hand in hand with an over-supply of new homes: new household formation is running at roughly 1.3m a year while housing starts are over 2m a year, so the boom is not due to population growth, says Paul Ashworth of Capital Economics. David Rosenberg, economist at Merrill Lynch, says more than half of the 52 largest US cities are overheating, defined as housing prices significantly outstripping personal income gains. Almost one-third of the cities are deemed white hot: prices in Miami have jumped 85 percent since the start of 2001 and 21 percent in the first quarter of 2005, the Merrill report found. The problem is that the overheated 'metro bubbles' make up such a large chunk of America's GDP that a house price collapse -- even if limited to those areas -- could prove very damaging. Rosenberg believes a drop in house price inflation to 0 percent would cut GDP growth by 0.4 points this year and by 1.1 points next year; boost the savings ratio from 1.8 percent to 2.4 percent and cut corporate earnings. A 10 percent collapse would trigger a recession. There have been plenty of bubbles over the past five centuries, but with the exception of the equity boom of the 1920s, none that could wreak as much devastation as the current three -- if they pop. Bubblenomics has always been a mad science; but the huge sums involved today are truly frightening. It is lucky for Greenspan that he will be retiring next year: if the housing, hedge funds and Chinese bubbles turn nasty, his reputation will take a battering. Copyright © 2005, The Business, London Distributed by Knight Ridder/Tribune Business News.

Subject: Brazilians Streaming Into U.S. From: Emma To: All Date Posted: Thurs, Jun 30, 2005 at 11:47:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/30/international/americas/30brazil.html?pagewanted=all Brazilians Streaming Into U.S. Through Mexican Border By LARRY ROHTER BRAÚNAS, Brazil - For years, Jaider de Andrade, a 35-year-old farm worker, talked about going to the United States to look for work, and early in March he finally agreed to a trafficker's offer to fly him to Mexico and have him guided across the border there. By month's end, though, he was back home here again, in a coffin. 'His dream had always been for us to have a little house of our own, but he never could make enough here to get ahead,' his widow, Nilce Aparecida Moreira da Silva, said at the couple's homestead. 'He knew there was some risk, but he wasn't nervous, because he saw that so many other people from around here had gone and done well in the United States.' Encouraged by highly organized groups of smugglers offering relatively cheap packages, Brazilians recently have been migrating in record numbers to the United States. With direct entry to the United States tougher than in the past, more often than not their route of choice is through Mexico, which in recent years has stopped requiring entry visas of Brazilians. During just two days in late April, Border Patrol agents in south Texas detained 232 Brazilians who had entered the United States illegally. All told, more than 12,000 Brazilians have been apprehended trying to cross the United States-Mexican border this year, exceeding the number detained in all of 2004 and pushing Brazilians to the top of the category known as 'other than Mexicans.' Mexico, facing growing complaints from Washington, is now contemplating restoring visa formalities for Brazilians. That in turn has led to a fever among potential migrants here in the vast heartland of south-central Brazil to obtain a passport and head for Mexico before the door there starts swinging shut. At the Federal Police office in Governador Valadares, the main city in this fertile region of rolling hills, the line of people seeking passports each day stretches around the block. Those waiting one afternoon did not want to talk with a reporter about their travel plans, but the Federal Police delegate for the region, Rui Antônio da Silva, estimated that 90 percent were headed for the United States via the Mexican route. 'We believe that just in this region there are about 30 gangs that offer this service to people,' he said. 'It's a very lucrative business, and a lot of people are involved.' Mr. da Silva said that last year his office issued an average of about 45 passports a day. Since January the number has jumped to a daily average of 140. A few minutes later, an assistant came into his office. 'The numbers just don't stop growing,' she said. 'We hit a new record today, more than 200 passports.' American authorities say that many of the trafficking gangs use travel agencies as fronts. Governador Valadares, a pleasant city of 250,000 in the sprawling inland state of Minas Gerais, which is the source of the majority of the Brazilians apprehended on the Mexican border, now has more than 100 such firms, up from 40 just a couple of years ago. People here who have been approached by trafficking rings said that the going rate at the moment for door-to-door transport to Boston, the preferred destination of illegal Brazilian immigrants, is about $10,500. That is more than two years' income for the average Brazilian, but effectively 30 percent less than a year ago, because the American dollar is weaker now. Brazilian officials and residents of this region said that unlike smuggling situations in many places, migrants do not pay in advance and do not pay at all if they fail to reach the United States, which greatly reduces the financial risk to potential migrants. Mr. de Andrade's widow said her husband had offered a small parcel of land he owned as collateral. After he died, in an automobile accident in northern Mexico, the smuggler returned the land. The accelerating outflow of people has come as a surprise to Brazilians and a blow to their self-image. This nation of 180 million has, after all, traditionally attracted millions of immigrants from Europe and Asia and prides itself on its social mobility. 'Just look at who our president is,' Teresa Sales, the author of 'Brazilians Far From Home' and a professor of sociology at the University of Campinas, said, referring to Luiz Inácio Lula da Silva, a former lathe operator. 'In the past, even when things were going badly no one would have imagined leaving the country, because of the expectation of rising socially.' Not only that, but Brazil's economy has been doing well recently. Furthermore, many of those leaving are not poor peasants, but young people more educated than the general population, including architects, engineers and other professionals. 'What we have to accept that this flow has to do with lack of opportunity, not with poverty or unemployment,' said Ana Cristina Braga Martes, a specialist in immigration issues at the Getúlio Vargas Foundation, a leading research institution. 'It's mainly the lower middle class from prosperous states, not the poor, who are going, and it's because they can't earn a fair wage here and have bought into the idea of the American dream.' One sure sign that 'making America' has entered the popular imagination is that in March, Brazil's largest television network began broadcasting a soap opera called 'America,' which follows a young woman's efforts to get to the United States through Mexico and to adjust to life in Florida. Experts disagree about whether it is encouraging Brazilians to head north, but more than 40 million people are watching nightly. In an effort to discourage the flow, Brazilian priests in Massachusetts have recently published a letter on the Internet alerting illegal immigrants to the dangers they may confront on their way to the United States. 'When they don't die, the migrants are subjected to violence or raped, and experience humiliating situations like sleeping in cemeteries, walking for miles and miles through the desert or drinking water from sewers,' their document warns. Since the 1960's, Governador Valadares has sent a stream of immigrants to Boston and nearby cities, but the stream has been growing larger. Mayor José Bonifácio Mourăo estimates that 40,000 people from his city have emigrated to the United States. 'Almost every family, including mine, has relatives in the United States,' he said. But American authorities report increases in illegal immigration from all of Brazil's southern, more prosperous states. 'It is as if we have infected other regions with the migratory virus,' said Weber Soares, a research specialist in immigration issues at the Vale do Rio Doce University in Governador Valadares. The Brazilian government estimates that between 1.5 million and three million Brazilians are living abroad, most in the United States or Japan. Last year, according to a congressional estimate, the emigrants sent nearly $6 billion in remittances back to Brazil, or about the same amount earned by Brazil's leading export product, soybeans. Until a few years ago most Brazilians living illegally in the United State went as tourists and simply overstayed their visas. But that changed when the United States tightened visa requirements after the Sept. 11, 2001, attacks and Mexico changed its visa policy. 'We started because it was something the business community asked for and to deter the mafia falsifying visas around our consulates,' the Mexican ambassador to Brazil, Cecília Soto, said in a telephone interview from Brasília. 'But it has become a problem these last couple of years, and we have seen that the mafias of human traffickers in both countries are clearly working together.' She said Mexico planned to send an official delegation soon to discuss immigration problems. Many here maintain that any effort to crack down on trafficking schemes is bound to fail. The smuggling rings will not be eliminated, the argument goes, but only be driven deeper underground. 'Nothing indicates that this flow will diminish, despite the efforts to scare people into not going,' Mayor Mourăo said. 'The incentives to go up there to the U.S. are still high. If anything, the tendency is for the flow to increase.'

Subject: G.M. Retirees, a Growing Sense of Unease From: Emma To: All Date Posted: Thurs, Jun 30, 2005 at 09:59:31 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/30/business/30auto.html For G.M. Retirees, a Growing Sense of Unease By DANNY HAKIM and JEREMY W. PETERS DETROIT - The Buick plant in Flint, Mich., where Elvia Reeves used to work has been demolished, but her health care benefits are as strong as ever. For now, that is. She and many of the nearly half million American retirees of General Motors are increasingly worried about the future of their medical benefits as the automaker presses the United Automobile Workers union to agree to deep cuts in health care benefits. At the same time, the legal rights of G.M. - or that of any other company - to cut benefits for retirees as well as the rights of the retirees' former union to negotiate for them are a matter of debate. 'Everything we worked to build up, they're trying to tear down,' said Ms. Reeves, 72, whose seven different prescription drugs, for high blood pressure and arthritis, cost her only $35. On Wednesday, she and other Flint-area retirees gathered at their old union local, No. 599, to buy tickets for a pig roast next month, but the possible cuts in benefits were on everyone's mind. As a U.A.W. cookbook came up for sale to raise money for the local, one of nearly 100 attendees yelled, 'Is there a recipe in there for how to roast a C.E.O. of G.M?' The outcome of the unusual talks this summer between G.M. and the U.A.W., coming at the halfway point of their four-year labor pact, remains to be seen. The talks, prompted by a sharp decline in G.M.'s earnings, are expected to continue into July. In a meeting in early June, a top U.A.W. official in Detroit told local union leaders that the company had threatened to cut health care benefits with or without the union's approval today, to coincide with a teleconference of G.M.'s board. But people close to the talks said they did not expect G.M. to hold to its ultimatum; G.M. officials have recently dismissed talk of a deadline. 'We're not on deadlines,' Edd Snyder, a G.M. spokesman, said this week. 'We're not dealing with deadlines, if you will. We're not talking about deadlines, we're talking about talking and having discussions.' The U.A.W.'s president, Ron Gettelfinger, said in a recent interview that he would not be pushed into a corner by G.M., but was willing to give some modest ground within the terms of the contract. He has also said that he will not accept an unchecked assault on retiree benefits. G.M. is seeking steep cuts in health care benefits and has focused on retirees because they generate the majority of its costs. In 2004, retirees accounted for about 70 percent of G.M.'s total health care bill, or $3.6 billion of its $5.2 billion health care costs. G.M.'s hourly workers and retirees pay no monthly premiums or deductibles. Retirees make co-payments for visits to the doctor and a $5 co-payment for each prescription, with total payments far below the norm. Unlike G.M., about 40 percent of United States companies with more than 5,000 employees offer no retiree health benefits, according to a recent report by the Sanford C. Bernstein & Company, an investment research and management adviser. The burden of retiree benefits will grow for G.M. as its work force continues to shrink, G.M. says. The company, which had half a million active workers in the late 1970's, has 111,000 today and is striving to cut another 25,000 hourly jobs by the end of 2008. That has left G.M. with two and a half retirees for every active worker, a ratio that continues to rise. Earlier this month, Rick Wagoner, G.M.'s chairman and chief executive, threatened to cut the company's health spending with or without the union's support. Mr. Gettelfinger, however, has said the union will not reopen its contract, which does not expire until 2007. Brian Johnson, an analyst at Sanford C. Bernstein, said in another recent report that G.M. had wiggle room within its U.A.W. contract to cut benefits for retirees. He also noted that unions had been limited by courts in their ability to negotiate for retirees, and that workers could not legally strike over cuts in the health benefits for retired workers. But Leonard Page, a former legal counsel for the National Labor Relations Board who also served for 30 years on the U.A.W.'s legal staff, said the retirees would have a solid legal claim to pursue against G.M. 'The retirees, a group of them, would obviously sue and claim that this is a lifetime benefit,' he said. Mr. Johnson, who has a law degree but is not a practicing lawyer, said circuit courts had split on the rights of retirees. 'If it goes to the Supreme Court, it would likely be resolved against the retirees,' he said. In Flint on Wednesday, Stan Marshall, a 76-year-old retiree, said: 'I'll work with the devil if it protects our benefits. If they think they're just going to take our benefits we've fought for over the years, they're going to have one hell of a fight.' When Floyd Laetz started as an office manager in 1929, he was making 35 cents an hour. Those were the days before he had a union-backed job and health insurance. Now, at age 92, his five prescriptions, mainly for his heart, cost him $25 every three months. He has been retired since 1971. 'Darn it, we've got good benefits here at General Motors,' he said, adding that he could stand some cuts but was worried about the effect of cuts on retirees not as financially secure as he is. Frank Molina, 76, worked for G.M. for nearly 34 years before retiring in 1981. His first job was putting tires on 1947 Buicks for 97 cents an hour. 'Back then, it was beautiful,' he said. 'We had a good union in there, good company people. Everyone got along. You did your work, they did theirs.' He worked for the Buick division of G.M. at a plant outside the Local 599 union hall in Flint back when there were so many Buick plants in the area, it was called Buick City. Now, 'I don't think Buick will be here much longer,' Mr. Molina said. 'I'd give it another three to six years.'

Subject: G8 debt write-off: Who pays? From: Setanta To: All Date Posted: Thurs, Jun 30, 2005 at 09:30:25 (EDT) Email Address: Not Provided Message: Last night, U2 were amazing. The band proved again why they are the world's greatest live act and Bono, the consummate showman, was extraordinary. As usual, he spoke of the poor, the third world and debt. Whether you like that part of his personality or not, is it not better that a rock star uses his fame to focus attention on something meaningful, rather than simply hanging out in his crib, buying Ferraris? As Bono knows, the story of third world debt is a complex one and is more a tale of international finance than simply one of old-style exploitation. It begins at a time when, like today, the prices of oil and gold were soaring. Just to put today's price increases in context, the price of oil is up nearly 30 per cent in the past four weeks, while the price of gold has increased by $10.80 or 2.53 per cent to $437.70 per ounce in the past ten days. The saga begins back in the mid-1970s when Walter Wriston, longtime chief executive of Citibank - the bank that was most involved in lending to the third world - was asked whether lending to the third world was risky. He responded that “countries never go bust'‘. Around the same time, the American comedienne Bette Midler demanded that she be paid $600,000 for a European tour in South African gold krugerrands because she felt that in a time of uncertainty, gold was the only asset worth holding. As things turned out, the banker was wrong, the joker was right. Had Midler held on to her gold, she would have seen the price rocket to $653,000 in January 1980,up from $43 per ounce in 1973. In contrast, countries did go bust. In 1982, Mexico defaulted. Brazil and Argentina followed and by 1984, the third world was stuck in the debt quagmire that it remains in to this day. The common factor between Midler's gold and Wriston's third-world debt was oil. On October 3, 1973, the decision of Opec leaders to restrict oil production changed everything. The price of a barrel of oil rose from $2 per barrel to $10.50, inflation in Europe and the US took off and the price of gold rose dramatically as people went back to hoarding the precious metal as a hedge. By the mid-1980s, gold prices had fallen back steeply as inflation abated. However, the impact of the other great monetary shock (third world debt) that was sparked by the 1973 oil shock remains with us to this day. One of the main themes of the global economic story from 1945-1973 was the rapid accumulation of wealth in the US and Europe. Trade, investment and growth rates all soared, people's savings grew and Harold McMillan's “you've never had it so good'‘ comments would have been as apt in the early 1970s as they were in the late 1950s. This all changed in October 1973 when the music stopped, the feel good factor disappeared and the world plunged into recession. More than anything else, the oil shock constituted the largest single peace time transfer of wealth ever seen. Rich, oil-consuming countries transferred billions of dollars literally overnight to relatively poor oil-producing Arab countries. One of the biggest problems for the Arabs was what to do with all the cash. They had little choice but to put billions of dollars on deposit with the world's biggest banks. The headache then for the banks was what to do with all the money. The mid-1970s recession in the US and western Europe meant nobody in the ‘rich world' wanted to spend or invest, so the international banking system's biggest and most reliable clients weren't interested. Japan was hurting and the Asian Tigers were still very much developing countries. Traditional investment banking business had dried up and, unlike today, there was no global housing bubble to fund. The only place the cash could possibly be put to work was in the third world. Within a matter of months, Brazil, Argentina, Honduras and Mexico were awash with Arab dollars. By 1975, African countries such as Ivory Coast, Liberia, Mozambique and Tanzania had easy access to what appeared to be cheap credit. Another huge lender was Russia which, as an oil producer, benefited enormously from Opec's actions and, as a superpower, lent money to prop up communist countries around the globe. The assumption that “countries don't go bust'' was based on the understanding that the World Bank and IMF would not let their darlings in the third world go under. Private investment bankers believed that, if the worst came to pass, the IMF, financed by western taxpayers' money, would bail out the likes of Congo, Uganda and Angola. Bankers turned a blind eye to the sort of ludicrous projects that were often financed by this African credit bonanza. A mountain of debt built up. Typically, poor countries based their ability to pay on revenue from the sale of commodities such as sugar, rubber, diamonds, wood etc. Therefore, countries had to increase production of commodities in order to service their debts. The more supply, the lower the price. So when the world went into its second oil-inspired recession in 1980-81, there were far too many commodities out there that nobody wanted to buy. The price of rubber, cocoa, sugar etc collapsed while at the same time - due to huge budget deficits in the US associated with the doctrine of Reaganomics - American interest rates and the dollar skyrocketed. Third-world countries couldn't pay their bills and began to default, led by Mexico in 1982. The banks, particularly Citibank, took huge hits because most of these loans had to be written off, yet the Arabs still had to be paid interest on their deposits. So the banks refused to have anything more to do with the African and Latin American delinquents. By 1988, without as much as a cent flowing into the developing countries, the situation was precarious. Democratic movements in Latin America were in jeopardy due to lack of cash and American commercial interests were threatened. Nicholas Brady, Ronald Reagan's finance adviser, came up with an ingenious rescue plan. The old loans were re-examined. Part of the banks' original principle would be written off and the remainder would be paid by the issue of new 30-year bonds called Brady bonds. The countries would have a five-year grace period to get back on their feet and those countries that started paying off some of the old interest would be allowed borrow again. Initially, because of the risk associated with former defaulters, the interest on the bonds was very high. However, as the country adopted economic policies sanctioned by the IMF and monitored by investment banks, the risk fell and consequently so did the interest rate. The price of the bond would rise accordingly. Investors bought these new bonds. This solved the banks' dilemma because, despite losing huge amounts on their initial loans, at least the books were now clean and the developing world's debts became someone else's problem. The investors were happy as long as the countries did what the IMF said, and the countries were happy because they now had access to new finance. It is assumed that, even in the event of debt forgiveness for some of the poorest countries, the Brady bond blueprint will be used inmost places. This assumption has created its own market in pre-Brady deal debts. For example, Sudan has $30 billion of outstanding debt that has yet to be renegotiated. Today an investor can buy $1 of Sudanese debt for 2 cents - a 98 per cent discount. If Sudan begins to pay back its debts, the investor is sure to see the price of Sudanese debt jump to at least ten cents. This is a huge killing. Similarly, the debts of Liberia, Congo, Sudan, Chad, Cuba and Mozambique and many more are all being traded despite still being technically in default. Thousands of investors have taken this bet and are owners of third-world debt. This scattered ownership structure makes Bono's job very difficult because it is no longer in the gift of the G8 leaders, meeting in Edinburgh next week, alone to solve the third world's debt problem. The debt holders believe that it is their right, based on international law, to be repaid. Therefore, the G8 cannot just write off debts without cutting a deal with debt holders, in the main, powerful investment banks. Bono has to persuade the G8 to cough up the billions of dollars to repay the investors. By coughing up, George W is going to have to persuade US taxpayers to dip into their pockets to bail out African countries. With the US in a selfish mood, Bono has his work cut out. If he pulls this off, he deserves our thanks and admiration.

Subject: Re: G8 debt write-off: Who pays? From: Jennifer To: Setanta Date Posted: Thurs, Jun 30, 2005 at 12:44:37 (EDT) Email Address: Not Provided Message: http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=DAVID MACWILLAMS-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.2.0.0-qqqn=1-qqqx=1.asp June 26, 2005 G8 debt write-off: Who pays? By David McWilliams Reference to article....

Subject: Re: G8 debt write-off: Who pays? From: Mik To: Jennifer Date Posted: Thurs, Jun 30, 2005 at 13:13:01 (EDT) Email Address: Not Provided Message: Hmm I think there is a few bits of confusion about the types of debt, who gave loans and who pays. When we talk of private banks making loans in foreign countries, those loans are not held against government and even where government gives guarantees, those guarantees are not looked upon as solid. Debt write-off refers to the issue of developed governments giving loans to developing governments. Whether through the IMF or direct. There was an age where giving out these loans had actually less to do with development and more to do with allegiance. Don't forget we come out of an era where there was a cold war to rule full continents. As a classic example, the USA loaned over 7 billion dollars to Ethiopia in the 70's at a time when neighbouring Somalia had just turned communist and Ethiopia was being courted by the Soviets. The investment went bad and the Soviets got Ethiopia's allegiance. Ethiopia turned to full communism and America's loans went bad. Now that the world has changed, Ethiopia's new government still faces that loan. We can state that many of these loans should not have been given to dictators or brutal governments in the first place, but the times were different and we were fighting a very real war that cost a tremendous amount of money.

Subject: Re: G8 debt write-off: Who pays? From: Jennifer To: Mik Date Posted: Thurs, Jun 30, 2005 at 14:35:05 (EDT) Email Address: Not Provided Message: I thought that the debt write-off was for government rather than private loans. Thank you.

Subject: Investing From: Terri To: All Date Posted: Thurs, Jun 30, 2005 at 07:31:32 (EDT) Email Address: Not Provided Message: The most reliable and simple way to invest is to use the ideas of John Bogle and index and save and buy more shares forever. For the large majority of investors this puts other methods or lack of method to shame. Nonetheless knowledge and intelligence can help in investing and there are those minority who are successful beyond indexing. What I do find however is that the moment investment ideas come up that are wildly expensive and complex, we should turn elsewhere.

Subject: Promoting democracy with CAFTA From: Johnny5 To: All Date Posted: Thurs, Jun 30, 2005 at 04:35:46 (EDT) Email Address: johnny5@yahoo.com Message: Big Business just gets more and more powerful under this administration it seems. http://www.project-syndicate.org/commentary/shaiken1 As the United States Congress begins to debate the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), a titanic struggle between the forces of free trade and protectionism promises to unfold. But that debate should not be allowed to mask the truth behind this treaty: the DR-CAFTA is more a pleading of special interests than a free-trade deal. It manages simultaneously to fleece the people of six poor countries and to put US workers in harm’s way. To be sure, expanded trade holds great promise for promoting development and democracy. But the trade rules inscribed in DR-CAFTA promote profits for a few at the expense of the well being of the many. Ironically, the pact even limits market competition to protect powerful special interests, undercutting the core principles of free trade. Consider pharmaceuticals. For American drug companies, this agreement extends the time period during which brand-name pharmaceuticals have exclusive access to markets, postponing the entry of generic drugs and thus limiting competition. For Central Americans, the cost of drugs will soar, straining budgets and gutting health care. The result may be a death sentence for many. In agriculture, small farmers would be placed on a collision course with US agro-business and their heavily subsidized farm exports. The US exported paddy rice, for example, at a price almost 20% lower than the cost of production in 2003, making it impossible for Central Americans to compete. As for labor rights, the agreement makes a devil’s bargain: it opens trade while locking in a status quo that is appalling. Workers face everything from rampant discrimination against older people (those over 35) to physical abuse, lack of bathroom breaks, no overtime pay, and poverty wages. In principle, workers can seek remedies by joining a union and bargaining collectively. But this option is all but foreclosed, because union membership or organizing can lead to dismissal, blacklisting, violence, or worse. In Guatemala, the largest economy, less than 3% of workers are unionized and their unions are marginal. The DR-CAFTA pays lip service to international labor standards as enshrined in the International Labor Organization’s core labor rights, but promptly throws them overboard. Instead, countries are committed only to enforcing their own labor laws, which often seem designed to prevent workers from joining a union. Moreover, enforcement of the rights that do exist is trapped somewhere between ineptitude and corruption. As if this were not bad enough, the agreement jettisons everything we’ve learned over the last 30 years or so about international pressure and labor law reform. The stronger provisions of previous trade agreements, such as the Generalized System of Preferences (GSP) and the Caribbean Basin Initiative (CBI), have been dumped. Although trade with Central America represents only about 1.5% of total US trade, the outcome of the debate on DR-CAFTA will shape US trade policy – which sets the tone for other rich countries’ stance in trade talks – for years to come. A trade agreement such as this puts US and Central American workers in the same labor market. If the whip is cracked in Tegucigalpa today, workers in Charlotte will feel it tomorrow. If Salvadorans’ wages are squeezed, they won’t be buying many products made in Los Angeles — unless, of course, they wind up moving there. The anemic labor standards enshrined in this agreement encourage firms to compete by taking the low road, a route that puts them on a collision course with China’s rock-bottom wages. They could just as easily take the high road: much evidence indicates that workers who are rewarded rather than victimized can contribute to greater competitiveness for firms in the long run. It is hypocritical to promote democracy and then sign a trade agreement that denies workers the basic democratic right to organize and join unions. Without this right, elections may not add up to democracy. The checks and balances that unions provide are essential in the workplace, but they are even more important in sustaining fledgling democratic regimes. The issue is not free trade versus protectionism, but “smart trade” versus “polarizing trade.” Smart trade creates balanced development, while polarizing trade rewards a small circle of winners at the expense of the many. Smart trade requires two key provisions: core labor rights, backed up by tough enforcement, and a development fund targeting infrastructure and education to boost competitiveness. DR-CAFTA does neither. Instead, it condemns Central America to carry its dismal past far into the future. Rejecting it opens the possibility for freer markets and faster income growth in Central America, as well as healthier democracies.

Subject: Quenching America’s Thirst for Oil From: Pancho Villa alias Norm To: All Date Posted: Wed, Jun 29, 2005 at 11:53:09 (EDT) Email Address: nma@hotmail.com Message: Quenching America’s Thirst for Oil The United States consumes a quarter of the world’s oil, compared to 8% for China. Even with high Chinese growth expected in coming years, the world will not run out of oil anytime soon. Over a trillion barrels of proven reserves exist, and more is likely to be found. But two-thirds of those proven reserves are in the Persian Gulf, and are thus vulnerable to disruption. In the past, rising prices had a strong effect on US oil consumption. Since the price spikes of the 1970’s, US oil consumption per dollar of GDP has fallen by half, which also reflects the general economic shift away from industrial manufacturing to less energy-intensive production. After all, it requires a lot less energy to create a software program than it does to produce a ton of steel. In the early 1980’s, energy costs accounted for 14% of America’s economy. Today, they account for 7%. Adjusted for inflation, oil prices would have to reach $80 per barrel (or $3.12 per gallon of gasoline) to reach the real level recorded in March 1981. According to the US government, if there are no supply disruptions, and the American economy grows at an annual rate of 3%, the price of a barrel of oil will decline to $25 (in 2003 dollars) in 2010 and then rise to $30 in 2025. The energy intensiveness of the economy will continue to decline at an average annual rate of 1.6%, as efficiency gains and structural shifts offset part of the overall growth in demand. Nonetheless, dependency on oil will grow at an annual rate of 1.5%, from 20 million barrels per day in 2003 to 27.9 million in 2025. The American political system has difficulty in agreeing on a coherent energy policy. But over the next decade, the politics of energy in the US may gradually change. Some observers detect a new “Geo-Green” coalition of conservative foreign-policy hawks, who worry about America’s dependence on Persian Gulf oil, and liberal environmentalists. In the hawks’ view, the real energy problem is not the absence of petroleum reserves, but the fact that they are concentrated in a vulnerable area. The answer is to curb America’s thirst for oil rather than increasing imports. Greens argue that even if energy supplies are abundant, the ability of the environment to support current rates of consumption is limited. The middle of the range of scenarios considered by the Intergovernmental Panel on Climate Change projects that atmospheric CO2 concentrations will reach nearly three times their pre-industrial level in 2100. While the Bush Administration remains skeptical about the science behind such projections, some state and local governments are enacting measures to cut CO2 emissions. More importantly, companies such as General Electric are committing to green goals that go well beyond government regulations. A recent report by the bipartisan National Commission on Energy Policy exemplifies the new coalition. While President Bush argues that technological advances in hydrogen fuels and fuel cells will curb oil imports in the long run, such measures require major changes in transportation infrastructure that will require decades to complete. The commission suggests policies that could be implemented sooner. For example, in recent testimony before Congress, James Woolsey, a commission member and former CIA director, urged the use of hybrid gasoline/electric vehicles that could charge their batteries overnight with cheap off-peak electricity; energy efficient ethanol made from cellulose; and a ten-mile-per-gallon increase in fuel-efficiency requirements. He argued that this agenda could cut gasoline consumption significantly in a matter of years rather than decades. It would also avoid the need for dramatic increases in gasoline or carbon taxes, which are broadly accepted in Europe and Japan, but remain the kiss of death for American politicians. But US government policies are unlikely to change Americans’ energy consumption significantly in the next few years. Even if a new administration were to enact new policies after Bush leaves office in 2008, there would still be a lag prior to any effect on actual consumption. In the next few years, market forces are likely to be more important than government policies in influencing consumption patterns. But over the next decade, the combination of markets and policies could make a big difference. For example, between 1978 and 1987, government regulations produced an improvement of 40% in the fuel efficiency of new American-made cars. In a surprise-free world, the Bush administration is probably right that America’s thirst for oil will grow by 1.5% annually over the next two decades. But political disruption in the Persian Gulf or a new terrorist attack in the US would drive up oil prices rapidly, and the political climate in America might also change quickly. The probability of such events is not negligible. Energy independence may be impossible for a country that consumes a quarter of the world’s oil but has only 3% of its reserves. Even so, a major decline in America’s thirst for oil is not out of the question in the longer term. Joseph S. Nye is a professor at Harvard and author of Soft Power: The Means of Success in World Politics. http://www.freerepublic.com/focus/f-news/1429353/posts

Subject: Re: Quenching America’s Thirst for Oil From: Jennifer To: Pancho Villa alias Norm Date Posted: Wed, Jun 29, 2005 at 14:20:53 (EDT) Email Address: Not Provided Message: Pancho, how do you read or interpret this essay? Does the relative optimism I find here seem warranted? Am I reading porperly to be optimistic?

Subject: Re: Quenching the world From: Pete Weis To: Jennifer Date Posted: Wed, Jun 29, 2005 at 17:49:08 (EDT) Email Address: Not Provided Message: The following in the Wall Street Journal article seems to agree with recent articles quoting geologists now at universities who worked for years in the oil industry who state that we have reached or are about to reach in the next five years peak global oil production. If one were trying to get a handle on oil production in the near future, I can't think of a better source than the geologists who have looked at the data and have run the numbers and who understand how the proven oil reserves are reported by those who own the reserves. A Cartel and Its Snakeoil The Saudis claim to have huge oil reserves. Do they really? BY WILLIAM TUCKER Tuesday, June 28, 2005 12:01 a.m. In 1956, Shell Oil geologist M. King Hubbert discovered a grand illusion in the American oil industry. For tax purposes, he noted, American oil companies regularly delayed the declaration of new oil reserves by years and even decades. The result was a false impression that new oil was being found all the time. In fact, discoveries had peaked in 1936. Based on this observation, Mr. Hubbert predicted that American oil production would peak in 1969. He was wrong by one year. We briefly produced 10 million barrels a day in 1970 but have never hit that level since. Even with the addition of Prudhoe Bay, Alaska, American production has slipped to eight million barrels a day--which is why we import 60% of our oil. Across the oil industry, the uneasy feeling is growing that world production may be approaching its own 'Hubbert's Peak.' The last major field yielding more than a million barrels a day was found in Mexico in 1976. New discoveries peaked in 1960, and production outside the Middle East reached its high point in 1997. Meanwhile world demand continues to accelerate by 3% a year. Indonesia, once a major exporter, now imports its oil. Before an uneasy feeling grows into full-blown pessimism, however, one must consider the supposedly vast oil resources lying beneath Saudi Arabia. The Saudis possess 25% of the world's proven reserves. They routinely proclaim that, for at least the next 50 years, they could easily double their current output of 10 million barrels a day. But is this true? Matthew R. Simmons, a Texas investment banker with a Harvard Business School degree and 20 years' experience in oil, has his doubts. In 'Twilight in the Desert,' Mr. Simmons argues that the Saudis may be deceiving the world and themselves. If only half of his claims prove to be true, we could be in for some nasty surprises. First, Mr. Simmons notes, all Saudi claims exist behind a veil of secrecy. In 1982, the Saudi government took complete control of Aramco (the Arabian American Oil Co.) after four decades of co-ownership with a consortium of major oil companies. Since then Aramco has never released field-by-field figures for its oil production. In fact, no OPEC member is very forthcoming. The cartel sets production quotas according to a country's reserves, so each member has reason to exaggerate. Meanwhile, OPEC nations are constantly cheating one another by overproducing, so none wants to publish official statistics. As a result, the world's most reliable source for OPEC production is a little company called Petrologistics, located over a grocery store in Geneva. Conrad Gerber, the principal, claims to have spies in every OPEC port. For all we know, Mr. Gerber is making up his numbers, but everyone--including the Paris-based International Energy Agency--takes him seriously, since OPEC produces nothing better. The Saudis, for their part, obviously enjoy their role as producer of last resort and feel content to let everyone think that they have things under control. Yet as Mr. Simmons observes: 'History has frequently shown that once secrecy envelops the culture of either a company or a country, those most surprised when the truth comes out are often the insiders who created the secrets in the first place.' Mr. Simmons became suspicious of Saudi claims after taking a guided tour of Aramco facilities in 2003. To penetrate the veil, he turned to the electronic library of the Society of Petroleum Engineers, which regularly publishes technical papers by field geologists. After downloading and studying more than 200 reports by Aramco personnel, Mr. Simmons came up with his own portrait of Saudi Arabia's oil resources. It is not a pretty picture. Almost 90% of Saudi production comes from six giant fields, all of them discovered before 1967. The 'king' of this grouping--the 2000-square-mile Ghawar field near the Persian Gulf--is the largest oil field in the world. But if Saudi geology follows the pattern found elsewhere, it is unlikely that any new fields lie nearby. Indeed, Aramco has prospected extensively outside the Ghawar region but found nothing of significance. In particular, the Arab D stratum--the source rock of the Ghawar field--has long since eroded in other parts of the Arabian Peninsula. The six major fields, having all produced at or near capacity for almost 40 years, are showing signs of age. All require extensive water injection to maintain their current flow. Based on these observations, Mr. Simmons doubts that Aramco can increase its output to anywhere near the level it claims. In fact, he believes that Saudi production may have already peaked. Is he right? Mr. Simmons's critics say that, by relying on technical papers, he has biased his survey, since geologists like to concentrate on problem wells the way that doctors focus on sick patients. Still, the experience in America and the rest of the world shows that oil fields don't last forever. Prudhoe Bay, which was producing 1.2 million barrels a day five years after being brought on line in 1976, is now down to less than 400,000. The mystery of Saudi oil capacity bears an eerie resemblance to Saddam Hussein's apparent belief that his scientists had developed weapons of mass destruction. Who are the deceivers and who is the deceived? No one yet knows the answers. But at least Matthew Simmons is asking the questions. Mr. Tucker is an associate at the American Enterprise Institute. You can buy 'Twilight in the Desert' from the OpinionJournal bookstore.

Subject: Re: Quenching the world From: Terri To: Pete Weis Date Posted: Wed, Jun 29, 2005 at 19:43:46 (EDT) Email Address: Not Provided Message: Though I can not know how severe an oil problem might develop in the coming decades, especially since we do not appear to be attending enough to conservation and efficiency, I have been using energy and utility companies as prime investments. I do not however have a sense from reading whether we are not in much better energy shape than might be supposed.

Subject: Stay the course From: Johnny5 To: Terri Date Posted: Thurs, Jun 30, 2005 at 04:32:29 (EDT) Email Address: johnny5@yahoo.com Message: Terri are you holding VDE or VGENX? Bogle's recent speech just posted to his page: http://www.vanguard.com/bogle_site/sp20050524.htm No matter what happens with OIL - investors should stay the course no? It seems you are sector investing with utilities and reits and energy Terri - isn't this market timing? Buy the total stock and total bond funds and just sit back and stay the course no?

Subject: Re: Stay the course From: Terri To: Johnny5 Date Posted: Thurs, Jun 30, 2005 at 05:59:28 (EDT) Email Address: Not Provided Message: Thank you so much. I will read the John Bogle speech this morning. I could not admire Bogle more, but I do not follow his advice completely, and do time markets thinking I am not bad at it. But, Bogle always has my thoughts and I do not wish to be arrogant ever in investing. Holding the total stock and bond market indexes for decades has been superb as a strategy, so when I depart I do so with considerable care but I have done so at times. I never use initials in investing, only names, so later I will look up VDE and VGENX.

Subject: Re: Stay the course From: Terri To: Terri Date Posted: Thurs, Jun 30, 2005 at 15:43:28 (EDT) Email Address: Not Provided Message: VDE = Vanguard Energy Index, VGENX = Vanguard Energy Fund.

Subject: Name Goods in China, Brand X Elsewhere From: Emma To: All Date Posted: Wed, Jun 29, 2005 at 09:47:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/29/business/worldbusiness/29brands.html?pagewanted=all Name Goods in China but Brand X Elsewhere By DAVID BARBOZA SHANGHAI - Never heard of brand names like Great Wall, Hisense, Konka, Amoi and Panda? Outside China, few have. That may change someday, but in the meantime, some Chinese companies are taking a shortcut and adopting widely known names to make their presence felt abroad. China's leaders have been quietly encouraging Chinese companies for years to set up overseas operations, acquire foreign assets and transform themselves into multinational corporations - in other words, to make themselves more competitive in a world increasingly dominated by Wal-Mart, Microsoft and Coca-Cola. Now, it seems, Chinese companies have gotten the message. This year, Lenovo - the Chinese computer maker - acquired I.B.M.'s personal computer business. Haier, one of China's biggest companies, made a bid last week for the Maytag Corporation. And in the same week, in the biggest move of all, one of China's state-owned oil giants made a hostile $18.5 billion bid for the Unocal Corporation, one of the world's largest oil companies. Yet many of the companies seem to be acting partly out of desperation, as more foreign brands line the shelves of retailers in China. 'Chinese companies are now facing serious foreign competition at home,' said Marshall W. Meyers, a professor of management at the Wharton School at the University of Pennsylvania. 'So they have to do something. They've got to grow to global scale.' The fact is, despite restrictions on foreign competition here, few powerful brands have emerged in China over the last two decades. And now that some of those restrictions are being lifted as part of China's ascension into the World Trade Organization, some of China's biggest companies are being forced to adopt global strategies. With its I.B.M. computer purchase, Lenovo, a major Chinese computer maker but virtually unknown outside of China, is suddenly the world's third-largest computer maker after Dell and Hewlett-Packard. TCL, another Chinese company, became the world's biggest television set maker last year after it acquired the television set business of Thomson of France, which also owned the old RCA brand. And then there was the bid last week by the China National Offshore Oil Corporation for Unocal, an offer that touched off a Wall Street-style takeover battle with the American oil company Chevron. Experts say that whether these deals succeed or not, they are symbolic of China's rapid economic rise, and its global ambitions. 'The Chinese government has been preparing the top 100 to 150 companies to go overseas and expand,' said Jack J. T. Huang, a chairman of the China practice at the law firm of Jones Day. 'The government wants to use this as a testing ground, to see how well the companies stand up to international competition.' Dozens of Chinese companies stand in waiting, and are not shy about their global ambitions. 'The future goal of the company is to make the name Great Wall known across the world,' said Liu Rengang, a spokesman for the state-controlled Great Wall Computer Group. A spokesman for Ningbo Bird, a big cellphone maker, sounded equally ambitious: 'Our future goal is to become one of the top three cellphone manufacturers in the world.' Earlier this month, the Ministry of Commerce issued a report that said that even though China's exports were dominated by consumer products, there were few famous Chinese brands involved in the export trade. Most goods are being shipped abroad with foreign brand labels. To rectify the situation, the ministry called on Chinese companies to start exporting their own 'famous brands.' Every region was ordered to produce its own famous brands. 'We need to cultivate a group of independent famous brands that have international influence,' the report stated. 'Each industry needs to have its own famous brand for export.' The memo reads like a Communist Party document from a state planning commission. But the thinking behind the effort seems to be simple: imitate the foreigners. Japanese and Korean companies like Toyota, Sony and Samsung made the moves from national to global brands successfully. But it took years. Analysts say Chinese companies do not have that luxury because the rapid pace of globalization means that markets are now quickly won and lost. 'Chinese companies don't have that much choice but to acquire overseas companies,' said Joe Chang, a China specialist at McKinsey & Company. 'Very few companies can build organically any more. If they wait 10 to 15 years, they could be dead.' By acquiring well-known brand names, experts say, Chinese companies are hoping to get access to global distribution networks, sophisticated research and development and recognizable brand names. 'What these companies are looking for is to build up capabilities,' said Oded Shenkar, a professor of management at Ohio State University and author of 'The Chinese Century.' 'This is a shortcut. They don't have billions of dollars to invest in the growth. But here in one fell swoop, you're acquiring a venerable brand name.' One advantage some Chinese companies have is that they have worked for years as joint venture partners or suppliers for some of the world's biggest corporations, giving the Chinese an eye into the process of making premium-priced products. And the amount of manufacturing done in China is astounding. According to C.L.S.A., an investment bank, 80 percent of the world's clocks and watches, 50 percent of its cameras, 30 percent of its microwave ovens, a quarter of its washing machines, and a fifth of the world's refrigerators are now 'Made in China.' 'Japanese and Korean companies initially came to the U.S. with a low-end product image,' said Douglas Beal, a partner at the Boston Consulting Group. 'It took a long time to take Japanese brand names and turn them into high-end products. Sony now commands a premium because it's Sony. But 20 years ago they couldn't do that.' The hurdles, however, are steep. The most serious problem facing Chinese companies, analysts say, is a lack of international experience and weak marketing and management structures. That, experts say, is precisely why some big Chinese companies are bidding for Western icons like I.B.M., Maytag, RCA and even MG Rover, the English carmaker that has been pursued by at least three Chinese automakers in the last year. And this is why after acquiring I.B.M.'s personal computer business this year, Lenovo asked the I.B.M. managers to stay on and run the entire company from New York. 'The most valuable asset we have acquired through I.B.M.'s PC business is its world-class management team and their extensive international experience,' Liu Chuanzhi, the chairman of Lenovo said in an interview last December. But can Lenovo run I.B.M.'s PC business? Can Haier, the appliance giant, manage Maytag? Analysts are skeptical because, they say, most mergers fail. 'It's very difficult to make overseas acquisitions,' said Gavin Geminder, a partner at KPMG, the global advisory firm. 'Chinese companies have the same issues, and they probably have less-qualified management teams.' Chan Chun, a professor of finance at the China Europe International Business School in Shanghai, said Chinese companies had also struggled to manage their finances in a corporate environment. 'In terms of managing for shareholder value, they are weak,' he said. 'They lack international experience and have poor financial controls.' But no one expects that to slow China deal making. In fact, largely unnoticed earlier this month was a $1.4 billion bid by China Mobile, one of the giant state-owned telecom companies, for control of a Pakistani telecom company. China Mobile lost out on the deal, but its bid is notable. And many of the Chinese companies are sparing no expense to hire Western lawyers and advisers. Lenovo used McKinsey and Weil Gotshal & Manges. Haier is teaming up with the Blackstone Group and Bain Capital to acquire Maytag. And Cnooc has hired Goldman Sachs, J. P. Morgan, Skadden, Arps, Slate, Meagher & Flom and a team of lobbyists to make its pitch for Unocal. The Chinese companies are also backed by state-owned banks, private equity funds and company war chests. Cnooc's bid for Unocal, for instance, is backed by a $6 billion loan from the Industrial and Commercial Bank of China, the largest Chinese state-owned bank, and another $7 billion in loans is coming from its parent company at rates considerably below what market financing costs. 'There's probably a lot more deals to come,' said Robert Morse, the chief executive for Citigroup corporate and investment banking in Asia. 'Liquidity is at an all-time high for Chinese companies looking to fund overseas acquisitions.' And being the world's low-cost factory floor is no longer the country's singular ambition, analysts say. That is perhaps why China Entrepreneur Magazine recently devoted a cover story to the question, 'Should China Buy Wal-Mart?' Xiang Bing, the dean of the Cheung Kong Graduate School of Business in Beijing, wrote that if Chinese investors could pool their resources, they could acquire a controlling stake in the ultimate global retail brand: Wal-Mart Stores. That, he surmised, was one way a country with few global brands but lots of goods could move up the value chain.

Subject: Robust Growth and Low Inflation From: Terri To: All Date Posted: Wed, Jun 29, 2005 at 09:32:00 (EDT) Email Address: Not Provided Message: Notice that our growth for the first quarter was 3.8% which is quite healthy, especially coming with a core inflation rate of 2%.There are worries all over, but the American economy is growing well with little inflation. The Federal Reserve has room to tighten and prepare to reverse policy when needed. We should be well pleased.

Subject: Ireland: The End of the Rainbow From: Emma To: All Date Posted: Wed, Jun 29, 2005 at 09:24:08 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/29/opinion/29friedman.html The End of the Rainbow By THOMAS L. FRIEDMAN Dublin Here's something you probably didn't know: Ireland today is the richest country in the European Union after Luxembourg. Yes, the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than that of Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. It tells you a lot about Europe today: all the innovation is happening on the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high unemployment and low growth. Ireland's turnaround began in the late 1960's when the government made secondary education free, enabling a lot more working-class kids to get a high school or technical degree. As a result, when Ireland joined the E.U. in 1973, it was able to draw on a much more educated work force. By the mid-1980's, though, Ireland had reaped the initial benefits of E.U. membership - subsidies to build better infrastructure and a big market to sell into. But it still did not have enough competitive products to sell, because of years of protectionism and fiscal mismanagement. The country was going broke, and most college grads were emigrating. 'We went on a borrowing, spending and taxing spree, and that nearly drove us under,' said Deputy Prime Minister Mary Harney. 'It was because we nearly went under that we got the courage to change.' And change Ireland did. In a quite unusual development, the government, the main trade unions, farmers and industrialists came together and agreed on a program of fiscal austerity, slashing corporate taxes to 12.5 percent, far below the rest of Europe, moderating wages and prices, and aggressively courting foreign investment. In 1996, Ireland made college education basically free, creating an even more educated work force. The results have been phenomenal. Today, 9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers. Last year, Ireland got more foreign direct investment from America than from China. And overall government tax receipts are way up. 'We set up in Ireland in 1990,' Michael Dell, founder of Dell Computer, explained to me via e-mail. 'What attracted us? [A] well-educated work force - and good universities close by. [Also,] Ireland has an industrial and tax policy which is consistently very supportive of businesses, independent of which political party is in power. I believe this is because there are enough people who remember the very bad times to de-politicize economic development. [Ireland also has] very good transportation and logistics and a good location - easy to move products to major markets in Europe quickly.' Finally, added Mr. Dell, 'they're competitive, want to succeed, hungry and know how to win. ... Our factory is in Limerick, but we also have several thousand sales and technical people outside of Dublin. The talent in Ireland has proven to be a wonderful resource for us. ... Fun fact: We are Ireland's largest exporter.' Intel opened its first chip factory in Ireland in 1993. James Jarrett, an Intel vice president, said Intel was attracted by Ireland's large pool of young educated men and women, low corporate taxes and other incentives that saved Intel roughly a billion dollars over 10 years. National health care didn't hurt, either. 'We have 4,700 employees there now in four factories, and we are even doing some high-end chip designing in Shannon with Irish engineers,' he said. In 1990, Ireland's total work force was 1.1 million. This year it will hit two million, with no unemployment and 200,000 foreign workers (including 50,000 Chinese). Others are taking notes. Prime Minister Bertie Ahern said: 'I've met the premier of China five times in the last two years.' Ireland's advice is very simple: Make high school and college education free; make your corporate taxes low, simple and transparent; actively seek out global companies; open your economy to competition; speak English; keep your fiscal house in order; and build a consensus around the whole package with labor and management - then hang in there, because there will be bumps in the road - and you, too, can become one of the richest countries in Europe. 'It wasn't a miracle, we didn't find gold,' said Mary Harney. 'It was the right domestic policies and embracing globalization.'

Subject: Male Baltimore Oriole Feeding Chick From: Terri To: All Date Posted: Wed, Jun 29, 2005 at 09:20:47 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5487&u=4|25|... Male Baltimore Oriole Feeding Chick New York City-Central Park.

Subject: Looking Back From: Terri To: All Date Posted: Wed, Jun 29, 2005 at 07:30:29 (EDT) Email Address: Not Provided Message: These months of a flat overall American stock market have given valuations a chance to improve since earnings are positive. I take this as a helpful period, and am rather pleased with how selected value sectors have done and of course there are long term bond funds which have been terrific.

Subject: China's and India's Development From: Terri To: All Date Posted: Tues, Jun 28, 2005 at 17:45:17 (EDT) Email Address: Not Provided Message: China is accomplishing what not long ago economists first corrected lamented and then recognized and brightened, China is developing a remarkable better life for 1.4 billion people. Why development did not close the gulf between richer and poorer economies for almost the entire 20th century was not clear, but then China and India began to show the most hopeful development. Life for 2.4 billion people could be more promising than imagined only 15 years ago. With no exception African friends iterate that they look in hope to the development pattern set in Asia, and I do as well.

Subject: Re: China's and India's Development From: Mik To: Terri Date Posted: Wed, Jun 29, 2005 at 11:52:35 (EDT) Email Address: Not Provided Message: Ahh but do you know that as a proportion of population size, both China and India see 4 and 5 times more 'Aid' money than Africa? A disproportionally higher amount of assistance goes to China and India than to Africa. Let me give you the example: Just recently the US and UK were proude to anounce 25 billion US$ in aid money to Africa.... over 10 years. That would make it approximately 2.5 billion US$ per year. In India the transport sector sees more than 2.5 billion US$ in aid per year. In other words, the aid money dedicated to building roads in India is more than the entire African continent gets. The same story goes for China. So why is India and China so lucky to receive all this money? Is it perhaps because African governments can't get their act together? But China has a communist government with dictatorship style management. Oh but China shows excellent economic growth, yet in 2003 the fastest growing countries in the world were Mozambique and Uganda at 12% and 10% GDP growth respectively. In essence, Africa has already been showing good governance, good economic management and even good growth. So whay does India and China still receive 4 to 5 times more aid money that the entire African continent?

Subject: Siyofika nini la' siyakhona From: Pancho Villa To: Mik Date Posted: Wed, Jun 29, 2005 at 19:47:08 (EDT) Email Address: nma@hotmail.com Message:

Subject: When will we arrive at our destination? From: Jennifer To: Pancho Villa Date Posted: Wed, Jun 29, 2005 at 20:40:25 (EDT) Email Address: Not Provided Message:

Subject: Re: China's and India's Development From: Terri To: Mik Date Posted: Wed, Jun 29, 2005 at 13:59:16 (EDT) Email Address: Not Provided Message: Thank you, I will look at the question of how foreign aid is allocated. I did not know and am surprised that we have extended any foreign aid to China in particular. That we extend aid to India is less surprising, but I was not aware of this either. Time to look at the issue.

Subject: Re: China's and India's Development From: Terri To: Terri Date Posted: Wed, Jun 29, 2005 at 19:24:11 (EDT) Email Address: Not Provided Message: Interesting questions which I simply can not answer, unless foreign aid is tied to trade potential and there is thought to be more trade potential in China and India than Africa. But, I do not know any of the answers.

Subject: Re: China's and India's Development From: Mik To: Terri Date Posted: Thurs, Jun 30, 2005 at 12:56:52 (EDT) Email Address: Not Provided Message: There is an interesting document by the OECD about 'tied aid'. And although aid should not be tied, the document found that it is indeed very tied. Also there is a problem with the definition of 'aid'. The International Development Association (IDA) is a section of the World Bank that funds most of the world bank's projects. As the name states - it is not a bank nor a loaning organization, but rather an association of funders working primarily in aid. However, they often do look for some sort of repayment (normally 3% over 90 years) where a country can repay. So perhaps the IDA favours countries that can do some sort of repayment, yet even those repayment terms should be regarded as 'aid' money. As you can see the issue is a whole lot more complicated. I personally believe that aid is being tied to investment opportunities. If a country shows great promise for investors, they get their respective governments to provide some 'aid' money as a sweetener to the overall deal. Kind of like 'We'll provide some aid money uplifting the nearby community and you in turn allow us to operate under favourable conditions.' Under that premise, I can now understand how China and India receive so much aid.

Subject: Re: China's and India's Development From: Terri To: Mik Date Posted: Thurs, Jun 30, 2005 at 14:19:08 (EDT) Email Address: Not Provided Message: All you write is sensible, but I can find no evidence that America has extended aid to China for a decade. We do however give export credit to American exporters to China. The point you make is nonetheless sound. The major aid receivers are Egypt and Israel by the way.

Subject: America and China From: Terri To: All Date Posted: Tues, Jun 28, 2005 at 17:12:32 (EDT) Email Address: Not Provided Message: Interesting that the price for Unocal is 18 billion dollars, while the market value of Google is 84 billion. That we are dependent on China is no more than saying China is dependent on us, and I find this mutual need, mutual relationship quite promising. I do not know whether China should be allowed to buy Unocal, but I find the ever increasing strategic, economic and cultural ties between the countries benign.

Subject: Unlikely Hero: The 'Polish Plumber' From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 16:43:10 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/26/international/europe/26poland.html?pagewanted=all Unlikely Hero in Europe's Spat: The 'Polish Plumber' By ELAINE SCIOLINO PARIS - Blond, buffed and blow-dried, a come-hither half-smile on his face, the man in the travel ad grips the tools of his trade as he beckons visitors to Poland. 'I'm staying in Poland,' the man says, a set of strategically placed pipes in one hand, a metal-cutter in the other. 'Lots of you should come.' He is the 'Polish plumber,' a mythical figure who became a central actor in the debate in France over the European Union constitution, which was roundly rejected by French voters last month. Portrayed as a predator who would move to France and steal jobs by working for less pay, this 'plumber' has come to personify French fears about the future. Now the Polish Tourism Bureau is using the character to try to allay French fears and attract visitors at the same time. 'With all the bad publicity about the 'Polish plumber,' we thought why not have a sense of humor and make him work for us?' Krzysztof Turowski, the creator of an ad on the bureau's Web site, said in a telephone interview from Warsaw. 'We picked someone handsome and clean with a sexy look in his eyes - to get the French to come to our beautiful country.' Next week the tourist office will offer Paris a firsthand look at Piotr Adamski, the 21-year-old model, who will also pose at the Eiffel Tower in the same green overalls and Stanley Kowalski T-shirt he wore in the ad. Mr. Adamski has become such an overnight sensation that even Poland's former president, Lech Walesa, the Nobel Peace Prize winner and founder of the Solidarity labor movement, offered him advice for his Paris trip. 'I suggest that he ask the French why the heck for so many years they encouraged Poles to build capitalism when as it turns out they are Communists themselves,' Mr. Walesa, an electrician by trade, said in an interview published Friday in the Polish daily Gazeta Wyborcza. He added, 'Piotr probably won't have the chance to say this, so he should at least publicize Poland well in Paris.' The ad campaign blends humor with a more serious message. At a moment when France is suffering from an unemployment rate of more than 10 percent, and Prime Minister Dominique de Villepin is waging what he calls a 100-day battle to combat it, it is an effort to assure the French that Polish workers have no intention of stealing their jobs. Even if they wanted to, they could not. Under the treaty that allowed Poland and nine other countries to join the European Union last year, older members of the union can restrict access to their labor markets for up to seven years. Only Britain, Ireland and Sweden have allowed in workers from the new members. But labor has always been one of Poland's most important exports. In a sense, the 'Polish plumber' is much more than that, because in most cases he is also an electrician and sometimes even a mason, carpenter, painter and roofer as well. 'It's ridiculous, truly bizarre to say Polish plumbers are dangerous for France,' said Wieslaw Zieba, 55, who has worked in France as a plumber and electrician for 25 years. 'Some of the things that have been said by political figures border on the xenophobic. This is a country that desperately needs more plumbers. But it's not a noble profession that everyone wants to follow. You have to clean up after flooding and unblock toilets.' Indeed, according to the French plumbing union, there is a shortage of 6,000 plumbers, and there are only about 150 Polish plumbers in France. When Mr. Zieba first came to Paris, he said, he had no friends, knew no French and slept in the Metro. He now has dual Polish-French citizenship and runs a thriving business that also does masonry, carpentry, plumbing and electrical work. But the fear of cheap imported labor in France is so profound that it has dominated the discourse about the troubled French economy. The term 'Polish plumber' was coined in March by Philippe de Villiers, the head of the right-wing Movement for France party, in response to a European Union proposal known as the Bolkestein directive, which would make it easier for workers to live in other member countries and receive the same salaries and benefits as if they had never left home. The thinking behind the directive was that if goods could move freely across the borders of European Union countries, why not services? The directive 'will permit a Polish plumber to come to work in France with a salary and social protection of his country of origin,' Mr. de Villiers said. He also expressed worries about the 'Latvian mason' and the 'Estonian gardener.' At a news conference in April, Frits Bolkestein, a former Dutch member of the European Commission, used the term himself, saying he was looking forward to the arrival of 'Polish plumbers to do work, because it is difficult to find an electrician or a plumber where I live in the north of France.' He said he hoped that 'Czech nannies' and 'Slovenian accountants' would find work in France as well. The next week, a band of rogue electricians from the state-owned utility EDF cut off the power supply to his country home in the village of Ramousies (population 248). Opponents of the European Union constitution, meanwhile, urged voters to reject the document, arguing falsely that it would facilitate the invasion of the Polish plumber. The issue became so serious that Poland's president, Aleksander Kwasniewski, brought it up during an official visit to France just days before the referendum. 'I know that the argument about the Polish plumber is very often used, or exploited, in France, but I must tell you that this is really exaggerated,' he said. 'It's not true that low-wage workers from the new members of the European Union have flooded the other countries.' Meanwhile, Mr. Adamski, the model, is getting used to his newfound fame, boasting that he spent several days installing the hot and cold water faucets in his Warsaw apartment. 'I'm very pleased to be the postcard for my country,' he said in a telephone interview from Warsaw. But for a real-life Polish plumber like Mr. Zieba, who is 5 feet 4, wears old jeans and hides his belly under a multipocketed work vest, plumbers just do not look like that. Mr. Zieba noted that in the ad, Mr. Adamski is carrying the wrong cutter for the plastic and metal pipes he is holding. 'He's too lacquered, too handsome and too clean to be on a work site,' Mr. Zieba said of Mr. Adamski. 'He looks like something out of an X-rated fantasy film about women who are waiting for the plumber to come.' But then, he added, 'I wasn't so bad when I was his age.'

Subject: Yesterday's Special: Good, Cheap Dining From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 16:00:52 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/26/nyregion/26restaurant.html?pagewanted=all Yesterday's Special: Good, Cheap Dining By JENNIFER STEINHAUER and JO CRAVEN McGINTY There was a restaurant in Greenwich Village called Le Zoo, and it was good, and it was cheap, and now, like so many others of its kind, it is gone. It was not the sort of place that drew tourists clutching their Zagats, but it swelled each night with young hipsters and people from the neighborhood, who sipped red wine at the bar and ate $6.50 trout salad and $13 salmon at the crammed-together tables, and yes, smoked. But last year a new restaurant, the Spotted Pig, arose in Le Zoo's spot on West 11th Street, and it quickly became a destination for patrons with deeper pockets and expense accounts. Pub classics like sautéed veal kidneys are $18, and desserts are $6, not $4. The average bottle of wine is $30. Restaurants like Le Zoo - small, with a decent and inexpensive wine list, a memorable special, a total bill for two of $50 - used to be easy to recognize, the high-quality neighborhood places that were one of New York's pleasures. But now, in Manhattan, they are increasingly becoming a memory. In interviews, several restaurateurs confirmed what many New York diners have long suspected: it is becoming impossible to serve innovative and high-quality food at reasonable prices in Manhattan. Melissa O'Donnell, formerly one of the chefs at Le Zoo and now the owner of Salt in SoHo - where the entrées are 30 percent higher than at Le Zoo - said one more rent increase could be the end of her restaurant. 'I'm from Manhattan, my client base is here, I have been working in downtown Manhattan since I went to cooking school,' she said. 'This is my home. But I think my type of place here is going to be a thing of the past.' To get a rough gauge of how much more diners now have to pay, The New York Times compared the average price of a 1994 meal in Manhattan restaurants given one star in the newspaper's restaurant reviews with last year's average. In 1994, the average one-star meal cost $33; it now costs a little more than $50, pushing it outside many people's weekend budgets. That is a 51 percent increase, and even after adjusting for inflation, it represents an 18 percent increase. Prices, which provide a snapshot of city dining, were taken from the Zagat Guides for 1994 and 2004. The analysis of prices did not try to measure Greek diners, corner Chinese restaurants or chicken spots, no matter how sublime their wings. There remain many satisfying and inexpensive restaurants in what is arguably the nation's greatest food city - restaurants filled with patrons who are not seeking a memorable dining experience each and every night that they disdain their stoves. But the high-quality bistros, trattorias and American comfort-food outposts, where diners flocked for a good meal, quite possibly served on a tablecloth, have greatly increased their prices, or moved outside Manhattan. The new hotbeds of affordable innovative cuisine are increasingly in places like Park Slope and Carroll Gardens in Brooklyn, or Astoria in Queens, having been pushed out by higher rents in Greenwich Village and Chelsea. Increasingly rare in Manhattan are places like Mary's, which a few years ago sold fillet of striped bass for $13.50 in a noisy, happy spot on Bedford Street, and is now a private townhouse. Or Spartina on Greenwich Street, where locals filled the tables, dined on $11.50 plates of black linguine with calamari, and dreaded uptown interlopers. Reflecting the endless transformation of Lower Manhattan, Spartina was replaced with the Harrison, a far more expensive hot spot where the peeky toe crab salad alone is $15 and local denizens press up against Upper East Side investment bankers and Upper West Side moms in search of a big night out. Order a salad, an entrée, a glass of wine or two and dessert, and by the time you've paid the check, you have easily spent $150 for two. Even at the restaurants reviewed in The Times's '$25 and Under' column, the analysis showed, a couple that does not choose carefully may, together, spend well over $50 for an appetizer, entrée and dessert - and that is if they drink only tap water. Last year, Times critics searching for meals of distinction for the $25 column traveled to Brooklyn more than twice as often as they did in 1994. Ethnic fare that even 10 years ago was generally considered inexpensive if seductive has also gone upscale in Manhattan. Consider Devi, an Indian place on East 18th Street where the cheapest entree hovers around $15, and Onera, ostensibly an Upper West Side neighborhood Greek spot were appetizers range from $8 to $11. To some degree, the price increases reflect Manhattan's increasingly concentrated wealth, and the food fetishes of those who are willing to spend it. The higher checks often include a $10 bottle of water, frothy cocktails and organic produce, driven by both their availability and the consumer's demand for them. But more significant, restaurateurs have been forced to pass on the costs of the febrile real estate market. Restaurant leases have more than tripled in many neighborhoods, which has greatly raised prices on even the most prosaic of hash. 'You can't just be a neighborhood restaurant anymore,' said Robert K. Futterman, who owns his own real estate firm. 'You have to be a destination for people from other neighborhoods if you are going to make the rents.' Price increases in the Times analysis were most extreme in the high and lower end of the fine dining scale, which suggest that increased food costs alone do not drive the increases. At two-star restaurants, price increases matched the rate of inflation, and at three-star restaurants, increases were below the rate of inflation, suggesting that their owners had less flexibility to raise their prices. Menu prices also seem to be holding steady among the great middle, those restaurants that serve decent but forgettable food, get scant attention from the food press and stick to basic food without flair. Such restaurants have always lined the main avenues on the Upper East Side and Columbus Avenue, and their numbers are growing, according to Tim Zagat, the guidebook publisher. Mr. Zagat estimated that only about 10 or 15 restaurants north of 50th Street on the East and West Sides rise above that crowd. The affordable high-quality restaurants that were once so common in Manhattan are not quite dodos, but rather like kakapos, ground parrots that are endangered on the island of their birth. Like the kakapo, they have been transported from their natural habitat to other terrain. In the restaurants' case, that place is Brooklyn. In 2003, this dawned on the chef Frank Falcinelli, of Moomba fame, when he scoured his own neighborhood, Greenwich Village, for a spot to open an Italian restaurant. He knew the lease was up at Grange Hall, his neighbor on Commerce Street, but said the landlord demanded $23,000 a month. Next, he looked in the East Village, searching in vain for 1,000 square feet for $3,500 a month. 'I was like, where can I get space, light and a basement and all the clientele I want?' he said. 'People that are my age, 39, and really smart 30-year-olds, and the I-have-no-choice artists and producers and directors. The choices were Park Slope and Carroll Gardens.' Carroll Gardens it was, and for less than half the price of the East Village, he said, he found an old blacksmith shop to serve up inventive Italian food for $2 to $14. It is called Frankies 457 Court Street Spuntino, and he compares its cuisine to Bar Patti in Greenwich Village, where three courses run well over $50. 'The quality of the one-star restaurants in Manhattan are going down to the ground because they can't afford it anymore,' Mr. Falcinelli said. 'The average restaurant profit is 10 cents on the dollar. And when too many paper towels get wasted, it is four cents. I don't have any regrets.'

Subject: Selasphorus Hummingbird From: Terri To: All Date Posted: Tues, Jun 28, 2005 at 15:57:57 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4925&exhibition=11&pass=public&size=default&lang=eng Selasphorus Hummingbird New York City--Central Park, Strawberry Fields.

Subject: An Energy Producer Utility Consumer Bill From: Terri To: All Date Posted: Tues, Jun 28, 2005 at 15:41:57 (EDT) Email Address: Not Provided Message: There will soon be an energy bill passed, and close attention should be given to the provisions of the bill for investment purposes, both energy producers and utility consumers will be much effected. A rule I always follow in investing is know what is coming from Congress.

Subject: Scrushy & friends bleeding middle-class From: Pete Weis To: All Date Posted: Tues, Jun 28, 2005 at 13:37:46 (EDT) Email Address: Not Provided Message: HealthSouth CEO was just found 'not guilty' of a $3 billion dollar stock fraud case. Investment banking giant UBS figured heavily in helping HealthSouth hide its troubles and continued to recommend HealthSouth stock as it did Enron stock up until troubles at these two companies finally made front page news. Not that this had much to do with the jury finding Scrushy not guilty, but for UBS and many others it certainly seems to have made a difference (with regard to enforcement and prosecution) how you handle your political contributions and who you hire for influential effect. Bush Donor Profile Joseph J. Grano Occupation: Chair & CEO Employer: UBS Wealth Management USA Home: New York, NY Ex-Green Berets Captain Joseph Grano worked 16 years at Merrill Lynch (see Stanley O’Neal) before becoming president of PaineWebber in 1994. After Switzerland’s UBS Warburg acquired PaineWebber in 2000, it named Grano head of its new UBS Wealth Management USA arm (see James MacGilvray). UBS’ trans-Atlantic acquisition was made possible by then-Senate Banking Committee Chair Phil Gramm, who pushed through legislation to repeal a post-Depression ban on combining banking, brokerage and insurance operations. UBS then took care of Gramm, naming him a vice chair after he left the Senate in 2002. Gramm, who gave $612,000 of his Senate war chest to Texas Governor Rick Perry in 2002, has promoted a complex UBS deal in which the Texas state pension fund would take out life insurance policies on state workers. UBS’ relations with George W. Bush date back to 1987, when investment bank Stephens, Inc. (see Warren Stephens) convinced UBS to invest $25 million to keep Bush’s Harken Energy afloat. UBS has weathered many recent corporate scandals. UBS broker Chung Wu was fired hours after he advised clients to sell Enron stock in August 2001, with management quickly notifying clients that, “Mr. Wu’s statements are contrary to UBS PaineWebber’s current recommendation concerning Enron.” After Enron collapsed, UBS bought up its energy trading unit and twin skyscrapers. UBS and nine other big Wall Street firms agreed in 2002 to pay a record $1.4 billion to settle charges that their researchers promoted stocks of companies that kicked back lucrative underwriting contracts. UBS fired two brokers and disciplined nine others in 2003 for “market-timing” violations, when they allowed big investors to conduct rapid-fire mutual fund trades at the expense of regular investors. Congress is probing UBS’s role at HealthSouth, which committed a $4.6 billion accounting fraud. UBS advised HealthSouth on $2 billion worth of deals and heavily promoted its stock after the accounting scandal broke. A lawsuit by HealthSouth investors alleged in 2004 that the company had told UBS bankers about its fraud as early as 1999. The U.S. Federal Reserve fined UBS $100 million in 2004 for violating a currency-exchange contract that prohibited providing U.S. currency to such U.S.-sanctioned countries as Cuba, Libya, and Iran. George W. Bush’s administration reportedly considered Grano for a top economic post in 2002, when it axed Treasury Secretary Paul O’Neill and Economic Advisor Lawrence Lindsey. President Bush appointed Grano in 2002 as chair of the Homeland Security Advisory Council (see Tom Ridge). Four other Pioneers (see Richard Davidson, Archie Dunham, Erle Nye and Steven Burd) sit on advisory councils for the Department of Homeland Security, which has a $30 billion budget. Grano was one of the investors who sold a majority stake in the Maryland Jockey Club racetrack in 2002. The terms of sale entitle Grano and other influential sellers to a cut of any future track earnings from slot machines, the Baltimore Sun reported, if Maryland legalizes slots.

Subject: Roll Over, Godzilla: Korea Rules From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 11:53:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/28/international/asia/28wave.html?pagewanted=all Roll Over, Godzilla: Korea Rules By NORIMITSU ONISHI TAIPEI, Taiwan - Here in one of the first corners of Asia hit by the 'Korean Wave' of cultural exports, a television series about a royal cook, 'A Jewel in the Palace,' proved so popular that it is now used to advertise South Korea on the Taipei subway. A huge hit in Mongolia, the drama also fueled a boom in tourists from Hong Kong visiting South Korea. A weepy love story, 'Winter Sonata,' became the rage in Uzbekistan after driving the Japanese into a frenzy last year. In Thailand and Malaysia, people devoured 'A Tale of Autumn,' and Vietnamese were glued to 'Lovers in Paris.' In China, South Korean dramas are sold, and pirated, everywhere, and the young adopt the clothing and hairstyles made cool by South Korean stars. South Korea, historically more worried about fending off cultural domination by China and Japan than spreading its own culture abroad, is emerging as the pop culture leader of Asia. From well-packaged television dramas to slick movies, from pop music to online games, South Korean companies and stars are increasingly defining what the disparate people in East Asia watch, listen to and play. The size of South Korea's entertainment industry, which began attracting heavy government investment only in the late 1990's, jumped from $8.5 billion in 1999 to $43.5 billion in 2003. In 2003, South Korea exported $650 million in cultural products; the amount was so insignificant before 1998 that the government could not provide figures. But the figures tell only part of the story. The booming South Korean presence on television and in the movies has spurred Asians to buy up South Korean goods and to travel to South Korea, traditionally not a popular tourist destination. The images that Asians traditionally have associated with the country - violent student marches, the demilitarized zone, division - have given way to trendy entertainers and cutting-edge technology. Candy Hsieh, 22, who was browsing through shelves of South Korean dramas at a video store here, said her parents became fans and visited South Korea last year. 'I used to think that Korea was a feudalistic, male-centered society,' Ms. Hsieh said. 'Now I don't have the same image as I had before. It seems like an open society, democratic.' South Korea's entertainment industry was born for business and political reasons in the late 1990's. Increasingly rich Asians were thought to be receptive to new sources of entertainment. What is more, South Korea, which long banned cultural imports from Japan, its former colonial ruler, was preparing to lift restrictions starting in 1998. Seoul was worried about the onslaught of Japanese music, videos and dramas, already popular on the black market. So in 1998 the Culture Ministry, armed with a substantial budget increase, carried out its first five-year plan to build up the domestic industry. The ministry encouraged colleges to open culture industry departments, providing equipment and scholarships. The number of such departments has risen from almost zero to more than 300. In 2002, the ministry opened the Korea Culture and Content Agency to encourage exports. By the time almost all restrictions on Japanese culture were lifted in January 2004, the Korean Wave - a term coined in China - had washed across Asia. To South Koreans like Kim Hyun Kyung, a director at Cheil Communications, an advertising agency in Seoul, feeling the reach of their culture for the first time was surprising. In 2001, during a trip to Los Angeles, she met a Chinese woman who brightened up when she learned that she was Korean. 'She was a big fan of Kim Hee Sun,' Ms. Kim said, referring to a South Korean actress who is now more popular in China than at home. 'She was happy that I had the same last name as she did. We were meeting for the first time, but she had a favorable image of Korea.' South Korean dramas and music have started edging out American and Japanese ones in Taiwan, which caught the Korean Wave early this decade. Five years ago, Gala TV here paid $1,000 for one hour of a South Korean drama, compared with $15,000 to $20,000 for a Japanese one, said the network's vice president, Lai Tsung Pi. Now, a South Korean drama commands $7,000 to $15,000; a Japanese, $6,000 to $12,000. 'Korean dramas are considered more emotionally powerful, and their actors are willing to come here to promote them,' Mr. Lai said. 'Because of the Korean dramas, Taiwanese people have become more willing to buy their products.' Sales of South Korean consumer goods and cars have risen sharply here in the last five years as well. The number of Taiwanese going to South Korea rose from 108,831 in 2000 to 298,325 last year, even though the overall number of Taiwanese traveling abroad fell during that period. South Korea has also begun wielding the non-economic side of its new soft power. The official Korean Overseas Information Service last year gave 'Winter Sonata' to Egyptian television, paying for the Arabic subtitles. The goal was to generate positive feelings in the Arab world toward the 3,200 South Korean soldiers stationed in northern Iraq. There have been unintended effects too. Copies of South Korean dramas and music are being increasingly smuggled from China into North Korea. One popular drama in the Communist North was 'All In,' the true story of a South Korean gambler who went to Las Vegas with only $18 and became a millionaire. North Korean women began copying the hairstyle of its lead actress, Song Hae Kyo, prompting the authorities there to crack down on 'untidy' hair, said Kim Yang Rae, director general of the Korean Foundation for Asian Culture Exchange. In mid-June, a 20-year-old North Korean soldier, Yi Yong Su, defected across the demilitarized zone into the town of Chorwon in central South Korea. The private said he had grown to admire and yearn for South Korea after watching its television programs, South Korean military officials told reporters. But the worry of a possible backlash - Taiwan, for instance, is considering levying a 20 percent tariff on Korean programs - impelled the Culture Ministry two years ago to form the cultural exchange foundation, to prevent Southeast Asian countries from feeling that they are regarded only as markets. 'We've never had this experience of seeing our culture spread outside our country,' Mr. Kim said about Korea's modern history. 'I'm very proud, but also very cautious.' At the New Fantasy Travel agency here, about 80 percent of travelers to South Korea pick television theme tours, visiting spots where their favorites dramas were filmed, said the general manager, Louis Wang. Mr. Wang himself is not a huge fan. But his children, who are, now feel closer to South Korea than to the country that considers Taiwan a renegade province. 'They've been learning the lifestyle of Koreans, their fashion and their food,' Mr. Wang said. 'So now they're more familiar with Korea's lifestyle than China's.'

Subject: Know Your Numbers, Improve Your Odds From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 10:51:17 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/28/health/nutrition/28brod.html?pagewanted=all Know Your Numbers and Improve Your Odds By JANE E. BRODY Over the last 40 years, heart specialists have learned a lot about the way cholesterol behaves in the body, much to the benefit of Americans destined to suffer heart attacks or strokes - at least half of the population. As knowledge has grown, the goals of treatment have changed, with lifesaving effects. And now they are changing again. At first, pioneers bent on preventing cardiovascular disease focused only on a person's total blood cholesterol level. A level of 240 milligrams per deciliter of blood serum was considered 'normal' just a few decades ago. Then research, like the Framingham Heart Study in Massachusetts, showed that at least half of heart attack victims had cholesterol levels of 240 or below. Today, the goal for total cholesterol is 200 or less, preferably 180 if you want to remain heart-healthy. Cholesterol is not soluble in water and thus requires substances called lipoproteins to carry it in blood. As the chemistry and physiology of cholesterol became better understood through the work of scientists like Dr. Michael S. Brown and Dr. Joseph L. Goldstein, who shared a Nobel Prize in Medicine in 1985, attention shifted to low density lipoprotein cholesterol, or L.D.L., the so-called bad cholesterol. When L.D.L. is oxidized, it becomes glued to the lining of arteries that feed the heart, brain and tissues throughout the body, setting the stage for a heart attack, stroke or peripheral vascular disease. A Sliding Scale of Safety Based on current recommendations, people otherwise at low risk for heart disease should have an L.D.L. level of less than 130. For someone known to be at high risk or who already has heart disease, the desirable level of L.D.L. is much lower, well below 100. The statin drugs have revolutionized the treatment of elevated L.D.L. These drugs are especially effective combined with a heart-healthy diet and regular exercise. But the statins don't do much for the newest, and perhaps more important, focus of concern about cholesterol. It is the level of high-density lipoproteins, or H.D.L., a reverse carrier of cholesterol. H.D.L., often referred to as the good cholesterol, acts like an arterial Roto-Rooter, clearing cholesterol from blood vessels and routing it to the liver for elimination from the body. Unlike L.D.L., which should be a low as possible, the higher the blood level of H.D.L., the better, even if it means raising your total cholesterol level above 200. Low levels of H.D.L. - below about 40 milligrams for men and 50 for women - are associated with an increased risk of cardiovascular disease. People with 'longevity syndrome,' who live into their 90's without evidence of heart disease, typically have very high levels of H.D.L. There is considerable evidence linking an increased risk of heart disease and stroke more strongly to low H.D.L. levels than to high L.D.L. levels. For every one-milligram rise in H.D.L., the risk for developing cardiovascular disease falls by 2 to 3 percent. An H.D.L. level of 60 milligrams or higher helps to protect against this major killer. In addition to enabling the body to get rid of unwanted cholesterol, H.D.L. acts in several other protective ways: as an antioxidant deterring the harmful oxidation of L.D.L., and as an anti-inflammatory agent, helping to repair what is now considered a major player in blood vessel disease. And it has anticlotting properties, which can help keep blood clots from blocking arteries. Dr. Mark E. McGovern, chief medical officer at Kos Pharmaceuticals, regards H.D.L. as the most important new lipid treatment target. 'The need for drugs to increase H.D.L. is compelling and urgent,' Dr. McGovern wrote in the April issue of Postgraduate Medicine. Raising Good Cholesterol Statins do raise H.D.L. levels a little, perhaps 5 to 10 percent, but rarely enough to protect someone with low H.D.L. Other drugs now in use do a better job. Most effective are the niacin-based medications (but not niacin sold as a vitamin). These high-dose prescriptions come in immediate-release form to be taken two to four times a day and in extended-release form taken once a day. Niacin can raise H.D.L. levels by 15 to 30 percent, and it is especially effective at increasing the larger H.D.L. particles that do the best job of cleansing arteries. The other prescription drugs that can raise H.D.L.'s are fibrates, most often used to lower blood levels of artery-damaging fats called triglycerides. The fibrates, including gemfibrozil (Lopid) and fenofibrate (Tricor and Lofibra), raise H.D.L. by 10 to 15 percent. Developing more effective drugs to raise H.D.L. is an important goal. Meanwhile, some doctors are prescribing statins in combination with a niacin or fibrate. This is not ideal, since combining statins with fibrates greatly increases the risk of muscle damage, a rare but potentially serious complication of statins. Statins with niacin may cause liver problems. But you do not have to wait for the development of safer drugs to improve your cholesterol profile. Changes in the way you live can help to raise H.D.L. Regular aerobic exercise is a good place to start. But for it to result in a significant benefit in H.D.L., about 1,200 calories a week should be expended on activities like brisk walking, jogging, cycling or lap swimming. For most people, that means walking briskly for three miles four times a week. Duration of exercise, not intensity, confers the greatest benefit. If you are overweight, losing weight can raise your H.D.L. level. And if you are a smoker, quitting all forms of tobacco can increase your H.D.L. by 15 to 20 percent. Dr. Peter P. Toth of the University of Illinois School of Medicine at Peoria says certain dietary measures also help. A Mediterranean-style diet, rich in fruits, vegetables, whole grains, olive oil and legumes, is strongly linked to high blood levels of H.D.L. So is eating more fish (and taking fish oil supplements) and consuming fewer refined carbohydrates. A low-fat diet is not necessarily helpful. It may even lower H.D.L. levels if carbohydrates fill in the caloric gap. But the kinds of fats consumed can make a big difference. Most helpful are the monounsaturated fats found in canola, olive, avocado, nut and seed oils; nuts and avocados. These can improve H.D.L. without raising L.D.L. But if you replace saturated fats with polyunsaturates like corn, safflower and soybean oils, both L.D.L. and H.D.L. levels are likely to fall. Avoiding trans fats, formed when unsaturated oils are partly hydrogenated, is also important. These are found in many processed foods, especially snacks and packaged bakery items that contain added fats. Trans fats raise harmful L.D.L. and lower beneficial H.D.L. Another helpful dietary measure is to increase the soluble fiber in your diet. Soluble fiber is found in fruits, vegetables, legumes and oats. In addition, alcohol consumed in moderation, helps to raise H.D.L.'s. Consuming one or two drinks a day can increase H.D.L. levels significantly. Beyond that amount, alcohol can have harmful effects on the heart and increase cancer risk.

Subject: China's Debut as Auto Exporter From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 09:25:56 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/28/business/worldbusiness/28yuan.html?pagewanted=all China's Debut as Auto Exporter Signals Growing Challenge to U.S. By KEITH BRADSHER GUANGZHOU, China - A line of Chinese-made cars began rolling onto a ship here Friday, bound for Europe. The cars, made at a gleaming new Honda factory on the outskirts of this sprawling city near Hong Kong, signal the latest move by China to follow Japan and South Korea in building itself into a global competitor in one of the cornerstones of the industrial economy. China's debut as an auto exporter, small as it may be for now, foretells a broader challenge to a half-century of American economic and political ascendance. The nation's manufacturing companies are building wealth at a remarkable rate, using some of that money to buy assets abroad. And China has been scouring the world to acquire energy resources, with the bid to buy an American oil company only the latest overture. Indeed, fierce domestic competition and a faster accumulation of financial assets are laying the groundwork for the arc of China's rise to be far greater than Japan's. 'It's going to be like the Arabs in the 70's and the Japanese in the 80's - we were worried they'd buy everything,' said William Belchere, the chief Asia economist for Macquarie Securities in Hong Kong. But unlike those previous challenges, which soon faded, 'longer term,' he added, China will 'be a much bigger force.' China's economy has risen rapidly with foreign expertise and investment. The Guangzhou airport here has a terminal designed by an American company, boarding gates supplied by a Danish company, and an air traffic control tower engineered by a company from Singapore. The resulting bilateral corporate tango - in contrast to the confrontations reminiscent of the 1980's and early 1990's when Japanese capital poured into the United States - means that China has many American corporate comrades, who have a stake in helping generate its growth. China, economists and Asia experts say, does not face some of the inherent limitations that ultimately stymied Japan and led to economic stagnation there over the last 14 years. With its giant population, China is developing a large and diverse economy, creating an almost Darwinian competition for a domestic market that has extremely low-cost companies ready to export inexpensive goods around the globe. 'The economy is much more flexible, adaptable than Japan's,' said Liang Hong, an economist in Hong Kong for Goldman Sachs. 'Being a continental economy is an advantage because it has competition within.' To be sure, China is still at an earlier stage of development than was Japan when its economic rise became a national obsession in the United States. In the 1980's and early 1990's, Japanese companies claimed a sizable chunk of the American car market and purchased Rockefeller Center and the Pebble Beach golf course. The bid by the China National Offshore Oil Corporation for Unocal has raised worries among some politicians in Washington. That $18.5 billion bid comes as America's trade deficit with China is ratcheting ever higher and the dollar is getting support from rising inflows of Chinese capital, which also helps support low interest rates. More disconcerting to others in Washington is China's growing ability to finance any political and military ambitions. China has missiles with nuclear weapons that intelligence experts describe as already able to hit not just Hawaii but probably California. Beijing also remains chilly toward American entreaties to put more pressure on North Korea to abandon its nuclear weapons program. In contrast, Japan's military dependence on the United States made it more willing to accept a steep appreciation in the yen in 1985 that hobbled Japanese exporters. So far, China has put off Bush administration demands to let its yuan appreciate. But China's economic rise also faces many obstacles. Its banks have huge portfolios of nonperforming loans that have not yet become a crippling problem because of rapid growth, but that could, as in Japan, make a recession someday even harder to combat. Banks suffering from fraud and political pressures have frequently made poor decisions on which borrowers should receive loans, so that China requires more investment for each dollar of economic growth than many rivals. Xu Xiaonian, an economist at the China Europe International Business School in Shanghai, said that China and Japan shared weak traditions of corporate governance, shareholder rights and the rule of law, and this has hurt efficiency. 'Efficiency rules the game and will decide who wins the game, and not how fast a country grows,' he said. China also has a one-party political system that has not changed nearly as quickly as its economy over the last quarter-century, and a population that will soon start to age rapidly because of the 'one child' policy. The Asian Development Bank forecasts that from 2015 to 2030, China's labor force will drop to 813 million from 842 million, as India's rises. The big question is how smoothly China will make the transition from central planning to capitalism. One of the best places to see the scope of China's challenge to the West, including China's economic strengths and its political weaknesses, is here in Guangzhou, a city of 12.2 million that is often compared to Los Angeles. At the new Honda factory, a tall fence of yellow wire mesh encloses a long section of the assembly line, where white robots poke and crane their long, vulture-like heads into gray, half-completed car bodies to perform 2,100 of the 3,000 welds needed to assemble each car. Workers in white uniforms and gray caps complete the rest of the welds, working as quickly as workers in American factories - but earning roughly $1.50 an hour in wages and benefits, compared with $55 an hour for General Motors and Ford factories in the United States. 'Our export activities are based on the synergy of China's competitive advantage and Honda's global network,' said Atsuyoshi Hyogo, the chairman of the Honda subsidiary here. As G.M. and Ford struggle with high health care costs for unionized work forces with an average age of nearly 50 in the United States, most of the Honda workers here appear to be in their 20's. They are unlikely to go to the doctor very often and when they do, doctors here charge less than $5 for an office visit and administering a few stitches. At a long hall in downtown Guangzhou, it quickly becomes apparent why the Honda workers are young and the pay is low. Rows of young men and women sit in plastic chairs watching two huge television screens covered with Chinese characters and numbers. While it resembles an off-track betting parlor in Hong Kong, 100 miles down the Pearl River, this is really the city's main government-run employment center. Some of the employers are hiring dozens of workers at a time, but one of the columns on each screen shows a requirement that would be illegal to list in the United States: the age range for acceptable applicants, most often 20 to 35. The official average unemployment rate in China's cities is 4.2 percent. But that excludes China's vast army of rural adults with little or no work to do, an army estimated as high as 150 million people. Millions move to the cities each year, an immense migration that slowed increases in Chinese industrial wages until the last year or two, when the Chinese economy has grown so rapidly that employers have begun bidding up workers' wages anyway. The plight of these migrants seems to be improving, and as it improves they may become even more attractive job applicants for multinationals looking for workers. 'People who came here looking for jobs used to be dirty and wearing bad clothes, but now they are coming in suits and ties,' said Zhang Jieming, the director of the Guangzhou Bureau of Labor and Social Security. One question is how China can retain the political stability it has shown for most of the last three decades while moving toward more democratic processes that the Communist Party has long claimed as its goal. A neighborhood election here on Saturday suggested that the path to political pluralism may be long. Gathered in a junior high school classroom were 45 representatives elected by 5,400 neighborhood residents. Only the representatives, not the general public, were allowed to vote for the next level of government, a seven-member council. Liu Yonghong, the director of the council and a Communist Party member, was re-elected, 44 to 1, defeating a nonparty member. Chen Xuangu, the deputy director and also a party member, turned back his opponent, also not a party member, by 40 to 5. The winners may not be in a hurry for change. 'If we have stability,' said Li Weijie, the director general of the municipal bureau of civil affairs, 'we can have successful development.'

Subject: Re: China's Debut as Auto Exporter From: Free Trade or Faire Trade? To: Emma Date Posted: Tues, Jun 28, 2005 at 11:07:07 (EDT) Email Address: Not Provided Message: It is all fine and well to trade with anyone, but what happens when we are fueling a communist system that just doesn't seem to become more open and seems to undermine our economic growth? Are we not shooting ourselves in the foot? If China was showing good signs towards a free market system with all the attributes such as unions and free speech I would not argue what is going on. But China's idea of unions is a farce and the people cannot uplift their incomes and are destined to remain under paid workers driving the great Chinese machine into the international arena AND we are paying for this. The US needs to charge a duty on all Chinese goods. Perhaps start off with a minimal duty of say 2% and incrementally raise the duty with every political impasse. If China shows positive signs towards fair trade, then lower the duty. I am outraged that Microsoft is working with the Chinese government on specialised software for controlling freedom of speech on the internet. How low will a company go to ensure they stay in a market? It is ridiculous that we are being shafted by the Chinese and they are not letting up. What is the real economic cost of cheap Chinese goods when we are fueling a communist regime that just won't shows signs of fairness. Whether it is fairness to their own people or fairness in the market.

Subject: Re: China's Debut as Auto Exporter From: Pancho Villa To: Free Trade or Faire Trade? Date Posted: Tues, Jun 28, 2005 at 11:47:33 (EDT) Email Address: nma@hotmail.com Message: Free Trade! Fair Trade? That depends on you, it's your wallet

Subject: Re: China's Debut as Auto Exporter From: So easy To: Pancho Villa Date Posted: Wed, Jun 29, 2005 at 11:38:32 (EDT) Email Address: Not Provided Message: Ahh yes the easy cop-out - 'well it's your wallet.' My wallet will dictate that I will always tend to go for what is cheaper. So I fuel the race to the bottom. But using the same argument why does government implement environmental restrictions that cause prices to go up? If it was up to 'my wallet', the environmental impact would not even feature as a decision, it would be price, price, price. Government implements those environmental restrictions because it is a responsible thing to do. And the same goes for fair trade. Government does have a role in ensuring responsible progress and avoiding the race to the bottom.

Subject: Re: China's Debut as Auto Exporter From: Pancho Villa alias Easy like a Sunday... To: So easy Date Posted: Wed, Jun 29, 2005 at 12:37:40 (EDT) Email Address: nma@hotmail.com Message: Guy de Jonquičres FT Tuesday June 28 2005 '...While China's regime is clearly authoritarian, so is Saudi Arabia's. The latter is governed by a repressive feudal monarchy with an appalling human rights record. It is linked to the export of terrorism. It is so far from being a free market economy that it has still not qualified to join the WTO. Yet Washington not only tolerates Saudi leaders, it cossets them. The US needs to keep the Saudi regime sweet because of its oil. But to assume, as American Chine-bashers implicitly do, that the US does not need China and can bend it to its own will is self-delusion. The two countries are deeply interdependent(!). China's need for US exports and inward investment is mirrored by its importance as a prime source of funding for the US budget and CA deficits....'

Subject: Google at $300 a Share From: Emma To: All Date Posted: Tues, Jun 28, 2005 at 05:59:19 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/28/technology/28google.html At $300 a Share, Google Looks Pricey and Still Irresistible By GARY RIVLIN SAN FRANCISCO - David Edwards, a financial analyst with American Technology Research, wants to believe in Google. But how do you embrace a stock that has more than tripled in 10 months and cracked the $300-a-share barrier so quickly since going public that much of its growth potential seems already built into the price? In early May, when Google was trading for $236, Mr. Edwards sent a note to clients of his firm, a group that includes wealthy individuals and money managers, recommending that they buy Google stock. But Mr. Edwards, who has been analyzing publicly traded stocks for seven years, acknowledges that Google has him flummoxed now that it has sprinted past $300, to close at $304.10 on Monday, up $6.85. As the stock continues to climb as if it is 1999 all over again, many of his counterparts, including those working for more prominent investment banks, continue to recommend the stock. Heath P. Terry, for instance, an analyst with Credit Suisse First Boston, predicted back in February, when Google was trading at just over $200 a share, that the stock would hit $275 within the year. When three months later the stock crossed $277, Mr. Terry raised his target price to $350, prompting several others to follow suit in the Wall Street equivalent of 'can you top this?' Mr. Edwards, too, says he believes in Google's long-term prospects, but he describes himself as stumped about the advice he should give clients in the short term. 'It seems like everyone has jumped on the price-raising bandwagon, which has left me sitting here and scratching my head,' he said. He does not have the conviction to advise clients to buy the stock, nor is he pessimistic enough to advise them to sell. 'Let's just say if I was owning Google stock right now, I'd be selling some,' he said. Few if any are suggesting that the torrid rise in Google's share price signals an industrywide bubble as in the late 1990's. Google, based in Mountain View, Calif., had more than $3 billion in revenue last year, almost all from its advertising business, and its profits have increased more than sevenfold since July 2004. By contrast, most of the dot-coms that flamed out so spectacularly in 2000 and 2001 never turned a profit, if they even had much in the way of revenue. Yet even some of those who were bullish on Google when it went public in August, at $85 a share, wonder if investors have forgotten some of the lessons of the 1990's. Until recently, John Tinker, an analyst with ThinkEquity, a San Francisco-based investment bank specializing in growth companies, had set the highest price target on Google. Yet even Mr. Tinker uses the 'B' word - bubble - when describing the market's giddy embrace of Google, even as he has a price target of $330 on Google. 'The good news is this is a one-stock bubble,' Mr. Tinker said. 'Remember, in 1998, everything went up. That's a huge difference this time.' At the close of trading on Monday, the cumulative worth of all shares of Google stock added up to $84.47 billion. That gives Google a market capitalization of nearly the combined worth of the other two publicly traded giants created by the Internet: eBay, worth $45.37 billion, and Yahoo, worth $49.83 billion. Comparisons are also being made between Google and Time Warner, another company deriving the bulk of its revenue from advertising. Time Warner had a market capitalization of $79.19 billion at the close of the market on Monday, below Google's though it posted first-quarter revenue eight times that of Google, and profits about three times as large. The increase in the share price has been good for Google's two founders, Sergey Brin and Larry Page. They each have about 36 million shares, according to a proxy filed in early April and updated Yahoo Finance data. At Monday's closing price, that would give each about $11 billion in stock, excluding options. In addition, they have each made more than $500 million by selling a fraction of their shares (about 4.5 percent apiece) since Google went public. Any number of theories might explain the most recent run-up in Google's stock, which has risen 67 percent since April 1. Those range from data suggesting that Internet advertising revenue is rising by as much as 40 percent a year - a trend sure to benefit Google - to a herd mentality among mutual fund managers ready to declare that resistance is futile: to post the kind of returns that would put them in the upper echelons of performance tables, they need to own shares in Google. 'This is where you can say this is like 1998,' Mr. Tinker said. 'Institutions realize they can't afford not to be in, whatever the price.' Google executives, especially its two founders, were outspoken before its public offering in insisting that the company would not play by established Wall Street rules, unnerving any number of institutional investors. But, according to Vickers Stock Research, 38 percent of Google's shares were held by mutual funds and other professionally run pools of money in May, compared with 35 percent one month earlier. 'There's been a waving of the white flag,' Mr. Tinker said. 'People felt left behind.' Still, by comparison, 72 percent of mutual funds and other professional pools own Yahoo shares. Mr. Terry of Credit Suisse thinks that even at its current price, Google is still worth buying, noting the company's aggressive moves to extend its core search business. On Monday, for example, it announced a new bit of software called the Google Video Viewer, complementing its effort to encourage users to submit their own video to its database and adding a 'search within the video' feature. John Battelle, the author of a book on Google called 'The Search,' to be published in September by Portfolio Hardcover, says it is only natural that people want to believe in Google. Those who wanted to believe that the Internet could make them rich might have learned a hard lesson in 2000 and 2001, but that did not mean the dream entirely died. 'If you really believe in something, you're looking for a place where you can prove you were right the first time,' he said. 'And Google is such a place.'

Subject: Scarlet Tanager Feeding From: Terri To: All Date Posted: Mon, Jun 27, 2005 at 20:12:16 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3268&u=75|309|... Scarlet Tanager Feeding New York City--Inwood Park.

Subject: Relative Value From: Terri To: All Date Posted: Mon, Jun 27, 2005 at 12:55:59 (EDT) Email Address: Not Provided Message: The question I always ask myself when reading Shiller is not whether there is logic to the arguments, for there always is, but how to find relative value in assets no matter the projected return. There is a reason regulated public utilities have performed so well these last 5 years. There was where relative value could be found among other sectors.

Subject: Shiller is getting shriller... From: Pancho Villa To: All Date Posted: Mon, Jun 27, 2005 at 10:48:23 (EDT) Email Address: nma@hotmail.com Message: On stock market fantasies of governments Plans that rely on high returns, as even governments seem to be making, are not advisable ROBERT J SHILLER Historically, the stock market has performed well. In his celebrated 2002 book, Stocks for the Long Run, Jeremy Siegel shows that the American stock market returned 6.9% a year in real terms between 1802 and 2001. Though the return varied by decade, even turning negative in some decades, it performed fairly consistently on the whole. This 6.9% annual average return has since been referred to as ‘Siegel’s constant,’ as if Siegel had discovered a new law of nature. The idea that stocks will perform well in the future has many promoters today, especially among those trying to sell investments in stocks. In the United States, President George W Bush’s Commission to Strengthen Social Security cited Siegel for its claim that the government should encourage people to invest in stocks. Bush has been travelling the country, promoting a plan to introduce personal retirement accounts invested in stocks and bonds. The plan assumes a 6.5% real return for stocks—only slightly below Siegel’s constant—in future decades. But most people don’t believe the stock market will perform so well in the future. Siegel himself recently projected only a 6% average real return for US stocks over the next four decades. Others have lower expectations. I have been conducting surveys of US investors under the auspices of the Yale School of Management, asking what percentage change they expect for the Dow Jones Industrial Average. The expected one-year increase in the Dow for 2005 averages 4.8% for institutional investors and 4.3% for individual investors. • The Bush government is promoting a market-based personal retirement plan • Its assumption of an annual real 6.5% yield in the future appears suspect • Statistics on past stock market performance mislead due to selection bias On closer inspection, the idea that the market will yield a real 6.9% a year in the future appears suspect. Think about it: investing in the stock market at 6.9% a year and reinvesting any dividends means that, in a tax-free account, the real value of the investment will double every 10 years. At that rate, a 20-year-old who, in 1960, invested $4,000 a year in a tax-free account in the US stock market, would have one million dollars today, at age 65. Should we expect to be able to do that in the future? Obviously, most people didn’t invest this way in 1960. But could most people have? If so, how would the economy, with the labour and material resources at its disposal, provide the large houses, luxury cars and high-end services that millionaires expect? It is natural to suppose that it could not. In fact, statistics on past stock market performance mislead because of what statisticians call “selection bias.” This occurs when the sample from which a statistic is derived is not representative of all the data. Several kinds of selection bias must be considered when we look at Siegel’s constant. The most fundamental problem is that, in examining stock market investments, we are selecting an economic activity because it was a consistent success in the past. We are trying to extrapolate the past experience of a small fraction of the world population that we have chosen to examine because they made a lot of money. Of course, if one looks at many different investment strategies and many different countries, one can find something that performed spectacularly in the past, even if there is no strategy that can be expected to do so well in the future. The US had one of the world’s most successful stock markets in the 20th century. Elroy Dimson, Paul Marsh, and Mike Staunton wrote in their book, Triumph of the Optimists, that of 15 countries that have advanced economies today, the US stock market ranked fourth in its rate of return between 1900 and 2000, behind Australia, Sweden and South Africa. The geometric average real return of the US stock market was 6.7%, but the median geometric real return for the other countries was only 4.7%. But even this comparison involves a selection bias. Countries with more successful markets are more likely to have complete data on both, prices and dividends, for 100 years. A study by Philippe Jorion and William Goetzmann found 39 countries with reliable stock price data—though not dividend data—for a good part of the 20th century. Their sample included countries in Latin America and Asian countries beyond Japan. They found that the median real stock price appreciation from 1920 to 1996 for all these countries was only 0.8%, compared to 4.3% for the US. The US was actually ranked first among the 39 countries. Of course, even looking at these countries entails selection bias, for it excludes countries without price data for much of the 20th century, notably China and Russia, where communist revolutions terminated the stock markets, resulting in -100% returns for investors. The particular problems that prevented us from observing the returns on these stock markets will never be repeated, but it is wrong to assume problems of that scale will not recur. There is also the selection bias that we infer from looking at the 20th century, the most successful in terms of economic growth in human history. The 21st century will be different in ways that we cannot fathom today. Of course, investing in stocks is not a bad thing. Indeed, the stock market is an important component of any modern economy. But we should not make plans that rely on high returns, as many (including some governments) appear to be doing. The writer is professor of economics at Yale University. http://www.financialexpress.com/fe_full_story.php?content_id=93442

Subject: China's Quest for Energy Control From: Emma To: All Date Posted: Mon, Jun 27, 2005 at 10:13:44 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/27/business/worldbusiness/27energy.html?pagewanted=all China's Costly Quest for Energy Control By JOSEPH KAHN BEIJING - From the dusty plains of East Africa to the shores of the Caspian Sea, China is seeking to loosen the grip of the United States on world energy resources and secure the fuel it needs to keep its economy in overdrive. Its energy deal-making has cost tens of billions of dollars and has dominated China's foreign policymaking for the past two years. At times it has put China in direct competition with American policy goals, especially in Iran and Sudan, whose leaderships are among the least favored by the United States government. Now Washington has the chance to shape China's frenetic quest. The China National Offshore Oil Corporation, known as CNOOC, has offered $18.5 billion for the American oil company Unocal. If its bid is successful, Beijing will have a greater stake in the global oil markets, in the same way that Japanese and European oil companies work closely with major American companies around the world. If the bid were rejected by the United States on national security grounds, as some members of Congress have publicly advocated, China could be motivated to build more ties to rogue states and step up its courtship of major oil producers in Africa and Latin America that in the past have looked mainly to the United States market. 'Like other big countries, China naturally wants to share proven oil reserves,' said He Jun, an energy consultant in Beijing who advises Chinese oil companies. 'But if the West treats China as a threat, it will inevitably have to find its own path to meet its energy needs.' The energy issue touches all of the hot buttons in China's realm, from its need to modernize its economy to its tensions with Japan, Taiwan and the West. Already, Beijing is leaving few holes untapped. Since becoming China's top leader in late 2002, President Hu Jintao has traveled to Latin America, Southeast Asia and Africa on missions focused largely on securing energy supplies that will not pass through American or European companies before reaching China. Later this month, he will make his third trip to Russia as president to continue a lobbying campaign for a pipeline to ferry Siberian crude to Daqing, China's northeastern oil hub. China hopes the pipeline will reduce its reliance on American-dominated markets for Middle East oil. As was the case with Japan in the 1930's, China's relations with the outside world are being transformed by energy needs, generating fears that it will compete with the United States for resources. Chinese analysts say the United States should approve the Unocal deal and work with China to make energy a common cause, before it becomes a source of tension. 'Relations between China and the United States are mostly stable, but the energy problem is the most serious threat,' said Chen Fengying, a senior strategist at the government-backed China Contemporary International Relations Institute in Beijing. 'We talk about terrorism and Taiwan,' Ms. Chen said, 'but there is nowhere near enough attention to energy.' Just a decade ago China exported more oil than it imported, but last year it passed Japan to become the world's second-largest importer, after the United States. Its booming but grossly inefficient economy consumes three times as much energy per dollar of output than the world average, and oil use has surged along with the country's auto industry, sprawling cities and new network of superhighways built on the American model. Unlike Japan and European nations, which are also big oil importers, China does not have a strategic alliance with the United States. Beijing has grown increasingly wary of depending heavily on imports when its companies do not control major reserves abroad and its navy does not patrol the sea lanes through which those supplies must pass to reach Chinese ports. Some foreign economists have criticized China for paying a hefty premium to control energy reserves abroad when it could pay market prices and have oil delivered to its door. But China's leaders are wary of entrusting their economic growth, and perhaps the longevity of the Communist Party, to American oil companies and the Pentagon. 'A popular saying abroad is that oil is just a commodity that anyone who has money can buy,' Mr. He said. 'But this saying is most popular in the countries that already control the supplies.' Shortages of imported oil could threaten China in the event of a conflict with Taiwan. The United States, which has said it would defend Taiwan if the Chinese were to attack it, could potentially block shipping in the East China Sea, crippling Chinese trade. Partly for that reason, China has scrambled to diversify its oil and gas imports and transport routes, pursuing oil deals with Russia and Central Asian nations and signing a preliminary, $70 billion commitment to buy Iranian oil and natural gas. All of these supplies could be delivered overland if expensive pipelines that Beijing favors are built. More generally, China has sent CNOOC and its two bigger state-controlled oil companies, Sinopec and PetroChina, on a worldwide shopping spree to secure rights to proven reserves. This effort has already created diplomatic complications for Washington. For example, China opposed moves to punish its oil partner Sudan for atrocities in Darfur and blocked efforts to bring the issue of Iran's nuclear weapons program before the United Nations Security Council. Determined to improve ties with Russia, China recently settled a long-festering border dispute on terms widely seen as favorable to Moscow. Russia, in turn, has promised to greatly increase oil shipments to China by rail and has revived discussion of a pipeline to Daqing after earlier arguing that the project made little economic sense. Oil is one factor that has plagued relations between China and Japan, which have jostled for control of natural gas deposits in disputed waters of the East China Sea. Talks about the issue have stalled, and a Chinese submarine incursion in that area contributed to a downward spiral in diplomatic ties this spring. In public, Chinese officials portray their country as a relatively minor player in global energy markets that seeks cooperative ventures with any country or major company on commercial terms. But privately, Chinese officials and analysts say oil is treated as a strategic crisis. They have sounded the alarm about Western and particularly American domination of oil supplies and influence over the major oil-exporting nations, including Saudi Arabia and now Iraq, which has made China dependent on what many here refer to as American economic and military hegemony. Beijing this year began construction of a American-style strategic oil reserve on the coast of Zhejiang province. The first phase includes 52 tanks that can each hold 25 million gallons of gasoline. Ultimately, officials aim to create a reserve large enough to allow China's economy and military to function for at least three months without imported oil. It has also imposed tough new fuel-economy standards on cars, put some industries on notice that they will have to become less wasteful users of energy, and backed an aggressive search for new coal, oil and gas supplies on Chinese territory to slow the growth in imports. Ma Kai, China's top economic and energy planner, told officials in a closed conference recently that the United States was better positioned to withstand the current rise in oil prices because its major oil companies make enormous profits to offset the losses to the American economy. Importing countries with a smaller stake in global energy trading, like China, have nothing to soften the blow of the huge losses they suffer when prices rise, Mr. Ma said, according to a Chinese energy expert who attended the session and asked to remain anonymous. This expert said Chinese leaders were well aware that they are paying inflated prices for foreign assets. Proposed pipelines connecting China to Iran, Kazakhstan and Russia and a Chinese-backed pipeline project in Brazil will cost the country dearly, pushing the price of oil from those sources to double or triple spot-market prices. CNOOC's bid for Unocal, which would be financed primarily by loans from state-run banks and the company's state-owned parent, offers a substantial premium for the company's assets. But the extra cost is worth it for the sake of political security, many Chinese argue. In that sense, the CNOOC offer might be seen in a different light than some other high-profile overseas acquisitions by leading Chinese companies. TCL's purchase of Thompson's television unit, Lenovo's takeover of I.B.M.'s laptop computer line and Haier's proposed purchase of Maytag are all driven primarily by commercial concerns. Whether Chinese companies paid a good price for those assets has been debated, but the motivations for purchasing consumer product lines stem mainly from a desire for global brand names and marketing skills, rather than politics, local analysts said. That may be less true of CNOOC's bid. 'The CNOOC arrangement has both commercial and political factors involved,' said Mr. He, the energy consultant. 'Some of the commercial terms, frankly speaking, are questionable. But the political factors are very clear and straightforward.' Wenran Jiang, an expert in Chinese foreign policy at the University of Alberta, said many in the West viewed the Unocal offer as part of China's coordinated assault on foreign markets, a sign of economic vigor. In China, he said, the energy quest is seen as a belated, disorganized, even desperate rush to meet basic security needs. 'They feel threatened, with their back in a corner, forced to pay high prices to Western companies,' Mr. Jiang said. 'For them, this is a matter of the survival of the regime.'

Subject: China's Brawn Unsettles Japanese From: Emma To: All Date Posted: Mon, Jun 27, 2005 at 10:12:17 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/27/business/worldbusiness/27rivals.html?pagewanted=all China's Economic Brawn Unsettles Japanese By JAMES BROOKE TOKYO - As politicians in Washington watch the Chinese bid for a big American oil and gas company play out, the reaction in Japan to the swelling economic muscle of China provides an early warning sign of the mixed emotions that China evokes as it rises on the global stage. In the last five years, the Chinese economic boom overshadowed the political risks for the Japanese. But in May, export growth to China stalled. New polls of Japanese investors show a growing reluctance to make further investments in China. The immediate catalyst for the changed attitude was a wave of anti-Japanese protests in Chinese cities in April. But those protests, tolerated by China's leaders, sent out a broader message: China would not object if its people, or its business executives, demonstrated their nationalism on the streets or in corporate boardrooms. It was a stark reminder to investors and politicians around the world of China's willingness to play the nationalist card. And it amounted to a bucket of cold water for many Japanese investors who had assumed that they were secure in China because they were providing jobs and quality products. The protests involving the two Asian powers had been fueled by deep disputes over World War II narratives in Japanese textbooks, territorial arguments and Prime Minister Junichiro Koizumi's visits to a shrine to Japanese war dead. Robert A. Feldman, managing director of Morgan Stanley Japan, echoing fears that executives of Japanese companies rarely express publicly, said: 'People are scared; they don't know where the Chinese are going with this.' . The Japanese, Mr. Feldman said, 'don't see a way out of the political mess,' adding, 'They are looking for alternatives.' In two surveys, separated by six months, the percentage of Japanese companies planning to expand operations in China dropped sharply, to just under 55 percent in late May, from 86 percent last December, according to the Japan External Trade Organization, the country's trade and investment promotion agency. The agency polled 414 Japanese companies operating in China last month, and a similar number late last year. Although only 10 percent of the companies said that business had suffered from the protests, largely in reduced sales and tarnished brands, 36 percent said they were worried about future effects, and 45 percent said the business risk of operating in China had increased. 'The psychological impact the anti-Japan movement had on Japanese firms was far from small,' Osamu Watanabe, chairman of the agency, said at a China-Japan investment conference in Beijing recently. Reassuring Japanese investors will be crucial for China to invigorate the economy and create jobs in less prosperous areas that are inland from the booming coastline. As China grows, Japan, the world's second-largest economy, will need powerful friends. In 2050, according to a new Goldman Sachs forecast, the Japanese economy will not be much larger than it is today, but China's is expected to be 30 times as large as now, or 6 times the size of Japan's. The forecast said that the world ranking of economies in 2050 would start with China, followed by the United States, then India. For some Japanese investors, the anti-Japanese protests catalyzed sentiment to diversify away from China to Southeast Asia. 'It was a trigger,' said Hiroyuki Maeda, executive vice president of the Uniden Corporation, a leading maker of cordless phones. After a strike with nationalist overtones halted production for three days in mid-April at its plant in Shenzhen, officials of Uniden decided to accelerate a plan to open a factory in the Philippines this summer. In coming years, the Shenzhen payroll is planned to drop to 10,000, from 17,000 today, and China's share of Uniden's production to fall to about a third from 100 percent today. The shift is prompted by a variety of reasons. Labor costs on the Chinese coast are no longer lower than in the Philippines. Uniden, which exports more than 80 percent of its phones to the United States, selling largely to Wal-Mart, Best Buy and Circuit City, is worried about calls in Congress to impose retaliatory tariffs on Chinese goods if Beijing does now allow an upward revaluation of its currency. 'Personally, I am much more worried about the U.S.-China relationship than the Japan-China relationship,' Mr. Maeda said. 'The case of a new tariff against Chinese imports is most scary for us.' In the United States, the unsolicited bid on Wednesday by the China National Offshore Oil Corporation, a state-controlled company, for Unocal raised new concerns about China's economic power as it continues its shift toward a market economy. In Japan, though, some say that it is only the small fish who are nervous. 'Most big companies are not worried about this situation,' said Hiroshi Kadota, China director for the Keidanren, Japan's powerful business association. Referring to the chilliness between the leaders of China and Japan, he added: 'In the political sphere, there are many problems. But I don't think the economic relationship will be harmed.' Japanese carmakers have $5 billion invested in China, about 20 percent of the total invested by foreign automakers. Honda's joint-venture auto company in China announced Friday that it had started exporting cars made there to Europe, a first for a Japanese auto brand. Other big companies, though, have begun to hedge their bets in China, balancing their investments there with others elsewhere in Asia. For example, Canon, the world's largest copier maker, is planning to spend about $45 million to build a factory in Vietnam. 'It is necessary for Japan to pursue a China-plus-one policy,' Mr. Watanabe told reporters here on Thursday. 'A company should invest not only in China but also one other place. I think the latest demonstrations gave a very good lesson to the companies as to the importance of a China-plus-one policy.' And to the Japanese, India represents an ever more fashionable business destination. 'Visa requests have gone up since political relations between Japan and China have worsened,' Atul Razdan, spokesman for India's embassy here, said. 'They are looking at India as an option. We welcome them.' Mixing business with geopolitics, Prime Minister Koizumi visited India late in April. 'Investment is increasing into India,' Yoriko Kawaguchi, the prime minister's assistant for foreign affairs, said in an interview after meeting with Japanese business leaders in Shanghai. 'Politically, as China grows more, we look to India more.' With China now Japan's largest trading partner and destination for foreign investment, Chinese authorities are eager to reassure Japanese investors, Ms. Kawaguchi said. 'Chinese authorities are interested in keeping Japanese business in China,' she said, adding that she did not think Japanese executives were stopping their investments in China. Holding out the prospect of another olive branch, the Japanese are expected to ease travel policies soon, making China's entire population of 1.3 billion potentially eligible for Japan tourist visas. This would more than triple the size of the previous pool, which was restricted to several large cities and coastal provinces. But from the Japanese side, the boom in cross-China Sea tourism has halted. Japan Airlines is planning to increase flights to China by 5 percent. But after watching traffic on its China routes jump by 52 percent in the first quarter of this year, the carrier said that growth slowed in April to a 12.5 percent pace. In May, traffic fell 12 percent, as 15,000 Japanese tourists canceled their China trips. 'In the July-through-September period,' said Geoffrey Tudor, Japan Airlines' international spokesman, 'we think that tourism to China from Japan will be 50 percent below previous estimates.. People who may have been thinking about traveling to China are planning trips to other destinations.' Along with tourism, the growth in Japanese exports to China is slowing. Last year, these exports recorded the sixth straight year of growth, jumping 29 percent, to $74 billion. But in the first five months of this year, exports were up only 5.9 percent, compared with the similar period last year. In April, exports of Japanese steel were down 18 percent, and exports of construction machinery down 47 percent. In May, exports over all fell, by 0.1 percent. Some market watchers speculate that Chinese companies are holding back on making purchases overseas, gambling that the Beijing authorities will strengthen the currency, the yuan, later this summer. A slowdown with China could spell an overall economic slowdown this year for Japan, whose economy is only expected to grow about 1.5 percent in 2005. 'We were once Asia's growth engine,' Ms. Kawaguchi said, harking back to the 1970's and 80's. 'Now it is China. One day it will be India.'

Subject: Low Rates Could Be Around Long Term From: Emma To: All Date Posted: Mon, Jun 27, 2005 at 09:23:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/27/business/27fed.html Low Rates Could Be Around for Long Term By EDMUND L. ANDREWS WASHINGTON - Federal Reserve officials, who meet this week, are beginning to suspect that the perplexing decline in long-term interest rates is more than a temporary aberration. The possibility has major implications for the economy, and it creates new puzzles for Fed officials on how they should respond. On Thursday, the Fed is all but certain to raise the federal funds rate on overnight loans between banks by another quarter point, to 3.25 percent. That would be the ninth increase in the last year, and the central bank is expected to signal that it will continue to raise overnight rates at a 'measured' pace. But the real debate at the meeting is expected to be about the unexpected decline of long-term interest rates, which have kept mortgage rates at their lowest level in decades and fueled what many analysts fear is a bubble in housing prices. Alan Greenspan, chairman of the Federal Reserve, said in February that the low long-term rates were a 'conundrum' but might simply be a 'short-term aberration.' But Mr. Greenspan and other senior officials are now suggesting that the change is more enduring. The debate is over why the change has occurred, and different theories lead to sharply disparate conclusions about the best way to respond. 'My sense is that people think this could be the new reality, that this could be fundamental, that it could be long-lasting,' said Laurence H. Meyer, a former Fed governor and now vice chairman of Macroeconomic Advisers, a forecasting firm. Mr. Greenspan, testifying before Congress earlier this month, described the trend as profoundly important and 'clearly international in origin.' 'How we integrate it into the basic underlying monetary policy structure is something we're spending a considerable amount of time on,' he added. The term premium - the added payment that investors demand to cover the uncertainty of holding long-term bonds - has shrunk to almost nothing. Investors appear to assume that the overnight rate will be about 3.75 percent by the end of this year. But the yield on 10-year Treasury bonds remains about 4 percent. One school of thought holds that low bond yields are a harbinger of slowing economic growth, which would reduce demand for credit in the future. Another school holds that global investors have lower inflation expectations than in the past, which reduces the risk of holding long-term bonds. If either theory is correct, the Federal Reserve would have less need to fend off inflation and could stop raising short-term rates at a much lower level than in the past - perhaps below 4 percent. But yet another theory holds that long-term interest rates may have been depressed by other factors, including a 'savings glut' around the world and efforts by Asian central banks to keep the value of their currencies down by buying United States Treasury securities. If that is true, the flood of foreign money into the country could be diluting the Fed's effort to prevent inflation. That would imply that the Fed needs to raise rates more than many investors are expecting. Mr. Greenspan, testifying before Congress on June 20, was skeptical about theories based on low inflation expectations or on an impending slowdown. 'A narrow gap between short- and long-term rates is often misread as though we're about to tilt into a recession,' he said. 'If that is the case, then the hypothesis that it is a weak economy which has been driving down interest rates is probably not correct.' He also expressed concern that low long-term rates had contributed to 'froth' and might be feeding inflationary pressures. 'And that's something which, needless to say, we are focusing on very extensively.' Other officials have been more optimistic. William Poole, president of the Federal Reserve Bank of St. Louis, has argued several times that long-term rates are mostly driven by investors' expectations of long-term inflation. Even though the Fed has raised short-term rates, Mr. Poole said in a speech on June 14, investors have had no reason over the last year to expect higher long-term inflation. 'Economic surprises have been minimal over the past year, and there has been no reason for significant revision in expected future short-term interest rates,' Mr. Poole said. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, suggested on June 20 that there may be less uncertainty about inflation than in the past. 'It's important to keep in mind that the term premium shouldn't be expected to behave in the way it's behaved in postwar cycles in which inflation was unsteady,' Mr. Lacker said. 'The most likely explanation for the low rates,' he said, is that 'inflation is low and that inflation expectations are low.' Wall Street economists are as divided as Fed officials about the proper interpretation. James Glassman, a senior economist at J.P. Morgan, contends that long-term interest rates reflect the deflationary effects of globalization. 'If you think of this in economic terms, East Asia and Nafta have been annexed to the United States. It looks like an economy that has far more excess capacity. Overnight, decisions by the Chinese government are releasing huge numbers of Chinese laborers. That means more excess capacity and a longer time to get back to full employment.' By that interpretation, the Fed could stop raising short-term rates once they reach 3.75 percent. But others predict that the Fed will continue to worry about inflationary pressures, the United States' soaring level of foreign indebtedness and the dangers of a housing bubble. Mr. Greenspan, asked by lawmakers to specify a 'neutral' Fed funds rate - one that would try to neither speed nor slow the economy - has periodically remarked that people would know it when they saw it. But in his most recent testimony, he added a twist: people would know it because 'we will observe a certain degree of balance which we have not seen before' in the economy.

Subject: False Data on Student Performance From: Emma To: All Date Posted: Mon, Jun 27, 2005 at 09:01:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/27/opinion/27mon4.html False Data on Student Performance Americans often can't find reliable information about how the schools in their state compare with schools elsewhere. The No Child Left Behind Act was supposed to change that by requiring states to file clear and accurate statistical information with the Education Department. The news so far is less than encouraging. Many states have chosen to manipulate data to provide overly optimistic appraisals of their schools' performance. A distressing example emerged last week in a study of graduation rates by the Education Trust, a nonpartisan foundation in Washington. For the second year in a row, the Education Trust has found that many states are cooking the books on graduation rates - using unorthodox calculation methods or ignoring students who drop out. Some states submitted no graduation data at all. The generally accepted way to calculate graduation rates is to track students from the day they enter high school until the day they receive a regular diploma, as opposed to passing the G.E.D. Under this system, students who leave without graduating are reasonably counted as nongraduates. But many of the states are using other, deceptive techniques. Some calculate the percentage of dropouts based on the number of students in a given senior class who graduate. Those who left school in grades 9, 10 or 11 disappear, and the graduation rates reported by many of the states are grossly inflated. The secretary of education, Margaret Spellings, says she is concerned about accuracy. But Congress itself needs to take up this issue and force the states to use accurate methods of calculation when it reauthorizes No Child Left Behind in 2007. Until changes are made at the federal level, student performance data in the United States won't be worth the paper it's printed on.

Subject: America Giveth, America Taketh Away From: Emma To: All Date Posted: Mon, Jun 27, 2005 at 08:58:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/27/opinion/27mon3.html America Giveth, America Taketh Away In the battle against AIDS, the Bush administration is both savior and scoundrel. Washington is the single largest financier of AIDS programs in poor countries. But the administration uses its muscle to extinguish necessary and successful programs it finds politically objectionable, and to carry out ineffective ideological crusades. First the good news. Washington's financing for AIDS treatment does not go as far as it could because American programs have been buying only expensive brand-name drugs, a sop to the pharmaceutical lobby. Administration officials have said that without approval from the Food and Drug Administration, they can't be sure that generics are safe and effective, even though the World Health Organization has endorsed many of them and AIDS programs around the world use them with excellent results. It's not a question of science: the drugs cannot be used in the United States because they would violate patents, so the F.D.A. never examined them. Until now. Last week, the F.D.A. approved for overseas use two Indian-made generic versions of nevirapine, a standard ingredient in the triple cocktail, and a generic version of efavirenz, another widely used antiretroviral. That brings the number of approved generic antiretrovirals to seven. While none are yet in use in Washington's overseas programs, the approvals will eventually allow four times as many lives to be saved for the same amount of money. Also last week, however, the administration was on a moral crusade that could lead to a significant rise in AIDS cases in Russia, China, elsewhere in Asia and in the former East bloc. In these places, drug users who inject are a prime risk group for AIDS, and the gateway through which the epidemic will spread into the general population. As many as a third of new AIDS infections outside sub-Saharan Africa are in drug users; in Russia, Unaids estimates that injecting drug users are 80 percent of the infected. Needle exchange programs can help control this part of the epidemic. But at a Unaids policy meeting this month, a Bush administration official asked that all references to needle exchange be dropped from the group's governing policy paper. Unaids doesn't control much money, but it sets world policy on how to fight AIDS, and usually operates by consensus to give its recommendations more force. Although America is virtually alone in its opposition to needle exchange, its clout as the largest Unaids donor means it might be able to win a vote this week in the group's program coordination board. If Unaids could no longer work on needle exchange, nations would lose a valuable source of technical help. And a lack of consensus could keep countries from starting needle exchanges. American law already forbids United States money from financing needle exchange programs. For Washington to decide that it wants to stop everyone else from doing that as well is a breathtakingly dangerous step.

Subject: Yellow-breasted Chat From: Terri To: All Date Posted: Mon, Jun 27, 2005 at 07:49:48 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4964&exhibition=4&pass=public&size=default&lang=eng Yellow-breasted Chat New York City, Central Park--Strawberry Fields.

Subject: Interest Rate Cycles From: Terri To: All Date Posted: Mon, Jun 27, 2005 at 07:39:13 (EDT) Email Address: Not Provided Message: The Federal Reserve will raise short term interest rates another 25 basis points this week, while the European Central Bank considers lowering rates during the summer. The Bank of England and central banks of Canada and Sweden are in an interest rate lowering cycle. So, the dollar which is strong and has made up more than a year of relative declines is likely to stay strong at least until the interest rate cycle changes in America.

Subject: The big squeeze From: Pete Weis To: All Date Posted: Mon, Jun 27, 2005 at 01:40:32 (EDT) Email Address: Not Provided Message: Industry feels pinch from rising oil prices >By Dan Roberts in New York, Bertrand Benoit in Berlin and David Turner in Tokyo >Published: June 26 2005 22:48 | Last updated: June 26 2005 22:48 >> Energy prices appear to have reached a tipping point for many industrial users as the hectic pace of energy inflation outstrips the capacity of companies to pass on higher costs to consumers. US, European and Asian stock markets all fell last week as oil reached $60 per barrel and corporate leaders around the world issued a series of high-profile profit warnings. Shares in energy-intensive companies such as manufacturing and transport were hardest hit. Yet even those companies that have previously minimised the pain by passing on price increases to their customers are finding it harder to do so. FedEx, for example, the US delivery group that has been a leading beneficiary of booming global trade, broke its winning streak by warning that this quarter's earnings would be hit by jet fuel costs despite an automatic surcharge for customers. And the metals industry, enjoying its best growth for years, is squeezed between the high cost of energy-related inputs such as electricity and coal and slowing demand from leading customers. Complaints from US industry will have a particular urgency this week as Congress considers an energy bill that many claim should help ease pressure on oil, electricity and natural gas prices. John Engler, president of the National Association of Manufacturers, is leading the lobbying by arguing that current problems will get far worse if policymakers do not respond soon. Andrew Liveris, chief executive of Dow Chemical, is particularly concerned that high energy costs in the US are making its manufacturing industries permanently uncompetitive. “In the past two years, the chemical industry's natural gas costs, alone, have increased by over $10bn at a cost of $50bn in sales lost to foreign competition,” he said. “And, since the first natural gas spike in 2000, more than 100,000 jobs one-tenth of the US chemical industry workforce have disappeared.” But across the Pacific few rival Japanese companies are immune from energy problems either. Asahi Kasei, one of Japan's largest chemical manufacturers, warned its variable costs were increasing by Y3bn ($27.5m) for every Y1,000 per kl rise in the price of naphtha, an oil product. Despite this, it has no plans to reduce the capacity of its plants or move them to China perhaps because many of the same cost pressures exist across Asia. Few companies, wherever they are, can escape rising energy prices entirely, and most will eventually look to pass costs on. Vimal Shah, chief executive officer of Bidco, a Kenyan manufacturer of cooking oils and soaps, has seen its energy and transport costs rise 20 per cent. He says: “You cannot scale back, it's not only our company that is affected, everyone is affected across the board, so in terms of competitiveness we are not better or worse off. Ultimately, it's the consumer who pays, and the consumer is going to have to spend more money.”

Subject: New ways to wager the dollar From: Johnny5 To: All Date Posted: Sun, Jun 26, 2005 at 23:04:06 (EDT) Email Address: johnny5@yahoo.com Message: Holding XOM and VTRIX. But if Pete and Warren are right - these currency funds may be a good investment soon. Why do they wait to open these funds after all the big moves have been made - reactionary? http://online.wsj.com/public/article_print/0,,SB111973826050669598,00.html New Ways to Wager on the Dollar By CRAIG KARMIN Staff Reporter of THE WALL STREET JOURNAL June 26, 2005 Mutual funds have never been a particularly good way for small investors to play the foreign-exchange markets. Perhaps that was just as well -- currency movements can be notoriously unpredictable. But the fund companies' thinking has changed. The dollar's big drop since early 2002 has attracted fresh attention to currency markets at a time when existing alternatives for benefiting from strengthening foreign currencies -- mainly international stock or bond funds -- offer only indirect plays on the dollar. In the past few months, three mutual fund companies have introduced funds that allow investors to benefit from gains in foreign currencies against the dollar, including the Merk Hard Currency Fund. Two of these fund companies -- Rydex Investments and ProFund Advisors -- also offer products that reward investors when the dollar rallies, as it has been doing for most of this year. The U.S. Dollar Index, which tracks the dollar against a trade-weighted basket of six major currencies, is up nearly 10% this year, while the euro has fallen 11% this year against the greenback. The new currency funds join Franklin Templeton's Hard Currency Fund, an actively managed fund that was established in 1989 and, until recently, was essentially the only game in town. 'Currency is one of the most traded investments out there,' says Michael Sapir, chairman and chief executive of ProFund Advisors. 'But it's been low profile for most investors.' Other fund companies may soon enter the currency arena. Goldman Sachs Asset Management is in the early stages of launching the Goldman Sachs Global Currency Fund, according to a filing with the Securities and Exchange Commission. It will also be an actively managed fund and require an minimum initial investment of $1,000. Managers of these funds maintain that even if currency movements are difficult to predict in the short term, the long-term picture is clearer because major currencies tend to move in multiyear cycles. 'History shows the dollar moves in long-term trends relative to its economic fundamentals,' says David Reilly, director of portfolio strategy at Rydex. The dollar, for instance, enjoyed a broad rally from 1995 to 2001, and then saw declines from 2002 to 2004. The dollar's recent rally has split the currency analyst community: some see it as merely an extended pause in a longer-term bear market, while others think the dollar's worst days may be behind it. For Andrew Clark, a senior research analyst at Lipper, these conflicting views among professional analysts underscore why currency funds are not appropriate as a core holding. 'They're too speculative,' he says. That doesn't mean these funds can't be beneficial as a means to diversify a portfolio. Studies show that rises and falls in currency funds have little or no correlation with the movements of major stock and bond indexes. That means currency funds are less likely to move consistently in the same direction as other funds, which means foreign-currency funds should lower an overall portfolio's risk. Currency funds, Mr. Clark adds, charge about the same fees as international stock and bond funds and less than many emerging market funds. Although some analysts say an international bond fund that does not hedge its currency position can provide similar diversification, Mr. Clark has his doubts. For one thing, most funds don't reveal how much they hedge, so the funds' exposure to foreign currency movements is unclear. Moreover, bond funds respond in large part to interest rates. 'So if interest rates are going up,' says Mr. Clark, 'the bond fund could fall and undermine any gain from currency movements.' Currency funds held little appeal in the late 1990s when the dollar was strong and the stock market was booming. In 1997, Fidelity Investments shut down its currency funds. Things changed this year as the dollar's three-year slump -- it fell more than 50% against the euro at one point -- was grabbing headlines and encouraged some fund companies to test the waters with currency funds. Merk Hard Currency Fund is for investors who think the dollar has further to fall in the years ahead. The fund requires a $2,500 minimum to invest directly and currently holds just four currencies: the euro, Swiss franc, Australian dollar and British pound. It also keeps 20% of its assets in gold, which typically moves in the opposite direction of the dollar. Axel Merk, president of Merk Investments, argues that the record U.S. trade deficit will balloon further, and over time this will reassert pressure on the dollar. His fund will hold only currencies from countries that do not regularly intervene to weaken their currency versus the dollar, which means he excludes the Japanese yen as well as most other Asian currencies. This puts him at odds with Templeton's fund, where the portfolio managers reason that because the U.S. trade imbalances are largely with Asia, these currencies are poised for the biggest gains versus the dollar. Their recent track record has been solid, with a five-year cumulative total return of 36%. But Templeton was caught off guard by the strength of the dollar's recent rebound, joining many currency speculators who have lost money this year. The fund, which requires a minimum investment of $1,000, is down 4.5% year to date. ProFund Advisors, by contrast, offers investors the choice of betting whether a basket of currencies will rise or fall versus the dollar. While the funds were launched in February at a time when few analysts were predicting a dollar rebound, the Rising U.S. Dollar Fund has attracted assets of $82 million, compared with only $12 million in the Falling U.S. Dollar Fund. A $15,000 minimum investment is needed to open a ProFund account directly. But that money can be invested in either currency fund or any of the other dozens of mutual funds. Rydex's Strengthening Dollar Fund and Weakening Dollar Fund both employ the same premise of investing in a basket of currencies but with a twist: the funds offer double the return of the dollar indexes on a daily basis by using derivatives. So if an investor has $1,000 in the fund and the index rises 5% for the day, the investor enjoys a gain of 10%, or in this case $100. This also means double the losses when the indexes fall. Rydex also requires a minimum of $25,000 to open an account with the fund company, though that money can be invested in any of Rydex's nearly 50 mutual funds, not only in the currency funds.

Subject: Ruby-crowned Kinglet in Flight From: Terri To: All Date Posted: Sun, Jun 26, 2005 at 19:44:45 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4811&u=17|29|... Ruby-crowned Kinglet in Flight New York City--Central Park--Wildflower Meadow.

Subject: Race to Alaska Before It Melts From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 16:32:21 (EDT) Email Address: Not Provided Message: http://travel2.nytimes.com/2005/06/26/travel/26alaska.html?pagewanted=all The Race to Alaska Before It Melts By TIMOTHY EGAN THEY stood and gawked at the great blue mass of shrinking ice. Behold: a frozen landscape giving it up to a midnight sunset. The scene at the receding edge of the Exit Glacier in Kenai Fjords National Park in Alaska was part festive gathering, part nature tour with an apocalyptic edge. Dressed in tank tops and shorts - beachwear, in fact - on this freakishly warm day in early June, people moved ever closer to the rope line near the glacier as it shied away, practically groaning and melting before their eyes. A product of the late ice age, the glacier looked old and tired on this hot day. There was a sense of loss, some people said, at watching this giant recoil. There were oohs and aahs but also more hushed tones, expressions of fear that the big land was somehow diminished, a little less wild. Just a few years ago, the spot where these tourists stood, on dry ground marked by Park Service signs, had been under ice. Alaska is changing by the hour. From the far north, where higher seas are swamping native villages, to the tundra around Fairbanks, where melting permafrost is forcing some roads and structures to buckle in what looks like a cartoon version of a hangover, to the rivers of ice receding from inlets, warmer temperatures are remaking the Last Frontier State. That transformation was particularly apparent at the visitor center here, where rangers were putting the finishing touches on a display that sought to explain the changing landscape of the country's northernmost state. The sign said, 'Glimpses of an Ice Age past. Laboratory of climate change today,' and it explained how the Exit Glacier has been shrinking over the years, and what scientists are learning as the state heats up. Out in the fjords, kayakers paddled into bays newly opened by other receding glaciers. They came to see the ice, a tour guide explained, to paddle around something that had been moving toward a tidewater destiny for thousands of years. And many of them were in a hurry. Glacial pace, in Alaska, no longer means slow. 'Things are melting pretty fast around here,' said Jim Ireland, the chief ranger for Kenai Fjords. Climate change, he said, 'has become one of the major new themes for this park.' In ambition, in the scale of its scenic extremes, in the pure size and wonder of its fish and wildlife, Alaska has never been anything less than flamboyant. It is, after all, more than two times the size of Texas, with a shoreline, more than 33,000 miles, that exceeds that of all other states combined. And as Alaska morphs through a period of warmer weather, it is doing so with characteristic extravagance. The old Alaska, the Alaska of forbidden expanses and adrenaline-surging encounters with brawnier ends of the food chain, still exists of course. But a larger drama - of this land losing some of its icy inheritance - is playing out as well. The sea-level edge of the Exit Glacier, just outside the town of Seward and one of the most visited bodies of ice in the north, has receded by nearly 1,000 feet over the last 10 years, park rangers say. In Prince William Sound and farther south in Glacier Bay National Park, where the cruise ship industry does a thriving business based on active walls of ice, many glaciers have pulled their toes out of the water and shriveled up the valleys. This process has created another attraction: the instant landscape. Take away the ice, add rain and sunshine to the debris left behind and, presto, Stage 1 of creation. To some visitors who fear that global warming is to blame for the accelerated pace of change, there is a sense of urgency in their travel planning. They seem to be fearful that if they don't get to Alaska soon, they will never see the full glory of the state's frozen magnificence. 'One of the things we hear a lot from people is that they want to see Alaska before it's gone,' said Hugh Rose, a tour guide, geologist and photographer who lives in Fairbanks. 'The melting, the warmer temperatures, the changing patterns of wildlife and the land - they've become huge topics of conversation among guides and our clients.' Of course, Alaska is not going anywhere, at least not right away. About 4 percent of the state is ice. One glacier, the Malaspina, is larger than Rhode Island, and another, the Harding Icefield, which feeds the Exit Glacier, is nearly half that size. If all of Alaska's glaciers were joined in one mass, it would be bigger than 10 of the states. But the Great Land is definitely getting warmer. Last year was abnormally hot in the usually wet and cool southeastern part of the state, where cruise ships ply the Inside Passage. Anchorage, Fairbanks, Nome and Juneau all posted their warmest summers on record. More wildfires burned in 2004 than any other year on file. And by early May of this year, the woods were ablaze on the Kenai Peninsula, and the preternaturally quirky residents of Homer were gardening in cutoffs - at a time when snow was still falling in Detroit and Boston. This year, Mr. Rose noticed something odd during the annual spring birding trek he leads to the Copper River Delta, famous for its rich, high-priced wild salmon runs. He takes people to the delta to watch masses of western sandpipers that have migrated north from winter havens in Central and South America. The birds, and people who pay to watch them, have brought an infusion of tourism cash to the fishing village of Cordova, which highlights the migration with an annual shorebird festival. The event has traditionally been held on the second weekend in May; last year it was moved to the first weekend of the month. 'There used to be 100,000 birds on the second weekend in May,' said Mr. Rose. 'Now you'll miss most of them if you don't arrive earlier.' The question of exactly how much warmer Alaska is than 'normal' - and whether it is part of human-caused changes in the temperature brought on by increased greenhouse gases or something natural and cyclical - can start a decent bar fight in any fishing harbor. 'It is probable the last decade was warmer than any other' since records have been kept, the Arctic Climate Impact Assessment reported on Nov. 24, 2004. The study is a project of nations including Denmark, Canada and the United States. The Bush Administration, which has been cautious about blaming global warming for any Alaskan changes, cites rising spring temperatures, loss of sea and glacial ice, melting permafrost and conversion of some parts of the soggy tundra into brushy wetlands among the changes taking place. But to many Alaskans, global warming is not an abstraction or a theory. At least four native villages in the far north may have to move inland or to higher ground to avoid being swept away by erosion from the sea - a consequence, the villagers say, of early-melting sea ice that contributes to shore erosion. The melting ice may also affect polar bears, and whales, who live off the sea life beneath the ice. None of this has deterred people from coming to Alaska. If anything, say many guides and tour operators, warming temperatures have brought more people, and the Alaska Travel Industry Association is projecting a strong year, surpassing last year's 1.45 million visitors. And while travel industry officials say they are not exactly marketing the warmer temperatures around a 'See Alaska Now' campaign, they say some travelers are driven by concern about the fate of the Great Land in a warmer world. 'Our clients are really interested in this,' said John Page, who runs Sunny Cove Sea Kayaking Company in Seward. 'Everyone wants to know: Is the ice retreating because of global warming? How's this going to change Alaska?' For tourists, it can mean a thrill at seeing a landscape more dynamic than any place on earth - global warming on hyperspeed! - or disappointment that something so wild and massive is, well, shrinking. Both reactions were evident at Portage Lake, about 50 miles south of Anchorage. Tour buses packed the parking lot of the big, well-staffed Begich, Boggs Visitor Center. This is where people come by the thousands to see Portage Glacier, one of the most accessible of Alaska's frozen attractions. Except, you can no longer see Portage Glacier from the visitor center. It has disappeared. The most persistent question to rangers at the station was: Dude, where did Portage Glacier go? A display inside showed that just 11 years ago, the glacier descended down to the end of the lake. But now it is around a distant corner and at the back of the lake, completely out of sight from the center. A video featured a Forest Service scientist, Kristine Crossen, who explained that the glacier had been retreating about 165 feet a year. 'We have good evidence that the climate is warming in Alaska,' she says. Visitors were perplexed. Gordon Middleton drove up to Portage Lake in his camper, from his home in Anacortes, Wash. He is retired from a life on factory floors and fishing boats. For him, ice is the draw. 'I've been watching glaciers so long I'm called the Ice Man by some of my friends,' said Mr. Middleton. He aimed his camera across the lake from a roadside perch and zoomed in, looking for Portage Glacier. 'It's supposed to be ... there,' he said, pointing to a shoreline of rocky moraine, the detritus left behind by retreating ice. 'But I don't see anything.' Virtually every visitor center built around a glacier or a blue wall hugging a mountain cliff has its landmarks to warmer temperatures. Just outside of Juneau, the Mendenhall Glacier, which is about 12 miles in length, has gradually pulled away from near the parking lot and up the lake. It is still a prime visitor site for people who are bused from cruise ships in port. But for some cruise passengers who have seen the glacier before, the changes are stunning. 'I saw the Mendenhall Glacier 25 years ago, and it has really pulled back since then,' said Mark Stringer, who is from Arizona and was visiting Alaska by cruise ship. 'But you know, this is a dynamic process. It's a blip in time. We don't know what's going to happen.' In Glacier Bay National Park, the ice has been shrinking since at least the time of Capt. George Vancouver's visit, more than 200 years ago. What are now bays filled with whale-watching kayakers and iceberg-viewing cruise passengers were full of glaciers in the late 1700's, officials say. And what was once bare rock at the edge of the ice to Captain Vancouver's crew is now part of a lush rain forest. But the pace of ice age retreat has greatly accelerated in recent years. Government photos show that Muir Glacier, one of the park's prime attractions, has receded by more than five miles in the last 30 years. 'The big story around here is the retreat of Muir Glacier,' said Dave Nemeth, the park's chief of concessions. 'But all around the park, there are constant changes going on.' For many amateur photographers on a first visit to Alaska, the money shot is a glacier calving into the water. And with these tidewater glaciers disappearing from places like Prince William Sound and Kenai Fjords, it has prompted some urgent travel advisories for people to hurry before those shots disappear. 'If you ever wanted to take an Alaskan cruise to see glaciers, do it sooner rather than later for the best views,' wrote Bob Martin, who runs a Web site called the Inquisitive Traveler. But people in the cruise ship industry say it is hard to gauge exactly how many visitors are coming to Alaska now out of a sense of concern that Alaska is melting away. 'We know glaciers are one of the top five reasons why people travel to Alaska,' said Noel DeChambeau, a marketing director at Holland America, the cruise line company. 'They want to see natural wonders. And I don't get a sense that the natural wonders are going away any time soon.' But Mr. DeChambeau did note that Holland America's overland trip to the Arctic National Wildlife Refuge, which Congress and President Bush plan to open to oil drilling, sold out early this year. Other tour operators also report a surge of interest in travel within the Arctic Circle. 'Some people are clueless or they say, 'Cool - your summers are getting longer,' ' said Mr. Rose, the Fairbanks guide who leads tours to the Arctic. 'But for every one of them, we get a client genuinely concerned that Alaska is changing too quickly, and they want to see it while they can.' In the town of Seward, which seems to have a disproportionate number of people who dine with baseball hats emblazoned with a fishing hook and the slogan 'Bite Me,' residents are of two minds about the warming weather. Up at Exit Glacier, a man who told everyone his name was Pete and said he lived in Seward was holding forth, telling people that just five years ago he could reach out and touch the glacier from where he stood, a good 300 yards from the edge of the ice now. Meanwhile, back in town, tour guides were doing a brisk business during a week when people were wearing Hawaiian shirts and lathering on the sunscreen. 'I've lived here 22 years, and the changes I've seen are tremendous,' said Mr. Page, the Seward kayaking guide. 'The summers are much warmer and sunnier. We see things like white-sided dolphins, which don't normally appear in these waters. It certainly has not hurt business. But on a planetary level, I'm concerned.' Other Alaskans are trying to take the long view - enjoying the rush of visitors to see a land shaking off much of its frozen past. 'I'm 64 years old so I'm not too worried it's all going to melt in my time,' said Charlie Clements, who runs the Blue Heron B & B, in Gustavus, just outside Glacier Bay National Park. 'But I have noticed a lot of changes. We aren't getting as much snow. And the summers, they've been really warm.' His bed-and-breakfast, which is planted in one of the wettest places on the planet, within miles of some of the world's biggest glaciers, now has an added feature: a sunroom. It is no longer a joke.

Subject: Emma - why the fed model is not reliable From: Johnny5 To: All Date Posted: Sun, Jun 26, 2005 at 16:17:29 (EDT) Email Address: johnny5@yahoo.com Message: SHAME SHAME on the NYTIMES for promoting warm fuzzies at the cost of investor losses. http://www.gold-eagle.com/editorials_02/gharris091302.html Then I realized all of the analyst like to look at predicted earnings yield. And whose earnings predictions are they counting on? Usually they rely on a company called First Call to make the earnings estimates. First Call merely averages together all of the predictions of the sell-side analysts who cover each stock. Then the earnings for all of those companies are added up to get the indices earnings estimates. The problem is that the estimates have been higher than the actual earnings for every quarter since I can remember! Of course they are, people like Henry Blodget were making the estimates! Just getting rid of Henry Blodget doesn't change the incentive structures, the incentives haven't changed. Are people going to make important capital allocation decisions based on these liars? This is completely irresponsible. The Fed Model is really just an elaborate way to say 'look the analysts are collectively predicting 15% earnings growth in perpetuity so you should buy into this great investment known as the S&P 500.' http://www.inv.com/6v54.htm The illogical nominal/real comparison of bond yields/stock earnings yields, according to the paper, leads to a major statistical problem. The econometric Ordinary Least Squares (OLS) model will fail to falsify the null hypothesis of no difference from random effects. This is, indeed, what the paper shows on Table 2. Using the Fed Model and (1955-2001) 10 year rolling average real earnings to forecast future 10 year rolling average real S&P 500 returns – the study found that the model has an adjusted R-Squared of only .014 and no statistical significance in the independent variables. Compare this with the alternative low P/E model, where the adjusted R-Squared is .296; and the independent P/E variable is statistically significant. An R-Squared of one means the model fits the data perfectly. The reason for the low performance of the Fed model is not the problem nominal/real, as we have shown, but the model’s specification. The study tests the statement, in difference form: future real stock market returns = f(E/P -Interest Rates). In all but extreme cases, there is no reason to suppose that future stock market returns should depend on present interest rates in any form, whether real or nominal. The equivalent bond market statement would be that future bond market returns depend on present interest rates. The Random Walk model is not a long-term model. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=381480 The 'Fed Model' has become a very popular yardstick for judging whether the U.S. stock market is fairly valued. The Fed Model compares the stock market's earnings yield (E/P) to the yield on long-term government bonds. In contrast, traditional methods evaluate the stock market purely on its own without regard to the level of interest rates. My goal is to examine the theoretical soundness, and empirical power for forecasting stock returns, of both the 'Fed Model' and the 'Traditional Model'. The logic most often cited in support of the Fed Model is that stocks should yield less and cost more when bond yields are low, as stocks and bonds are competing assets. Unfortunately, this reasoning compares a real number to a nominal number, ignoring the fact that over the long-term companies' nominal earnings should, and generally do, move in tandem with inflation. In other words, while it is a very popular metric, there are serious theoretical flaws in the Fed Model. Empirical results support this conclusion. The crucible for testing a valuation indicator is how well it forecasts long-term returns, and the Fed Model fails this test, while the Traditional Model has strong forecasting power. Long-term expected real stock returns are low when starting P/Es are high and vice versa, regardless of starting nominal interest rates. I also examine the usefulness of the Fed Model for explaining how investors set stock market P/Es. That is, does the market contemporaneously set P/Es higher when interest rates are lower? Note the difference between testing whether the Fed Model makes economic sense, and thus forecasts future long-term returns, versus testing whether it explains how investors set current P/Es. If investors consistently confuse the real and nominal, high P/Es will indeed be contemporaneously explained by low nominal interest rates, but these high P/Es lead to low future returns regardless. I confirm that investors have indeed historically required a higher stock market P/E when nominal interest rates have been lower and vice versa. In addition, I show that this relationship is somewhat more complicated than described by the simple Fed Model, varying systematically with perceptions of long-term stock and bond market risk. This addition of perceived risk to the Fed Model also fully explains the previously puzzling fact that stocks 'out yielded' bonds for the first half of the 20th century, but have 'under yielded' bonds for the last 40 years. Finally, I note that as of the writing of this paper, the stock market's P/E (based on trend earnings) is still very high versus history. A major underpinning of bullish pundits' defense of this high valuation is the Fed Model I discredit. Sadly, the Fed Model perhaps offers a contemporaneous explanation of why P/Es are high, but no true solace for long-term investors.

Subject: Beijing: The Olympics Haven't Begun From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 16:04:22 (EDT) Email Address: Not Provided Message: http://travel2.nytimes.com/2005/06/26/travel/26beijing.html?n=Top/Features/Travel/Destinations/Asia/China/Beijing&pagewanted=all The Olympics Haven't Begun, but the Party Has By ANDREW YANG IN the last decade - and especially since 2001, when Beijing was announced as the host of the 2008 Summer Olympics - growth in the Chinese capital has taken off at warp speed. Today, Beijing seems light-years away from the days when armies of workers in Communist garb rode the streets in throngs of bicycles. These days, the prevailing image of the city seems to be rush-hour gridlock on wide boulevards clogged with jet-black Audis. Cranes are scattered in clusters around the city, at huge construction sites where buildings by world-class architects like Rem Koolhaas and Swiss firm of Herzog & de Meuron - as well as drab, high-rise towers - will eventually rise amid a gray palette of sky. 'I was there when China won the bid,' said Francis Acquarone, 31, a Montreal native who has lived in the city for nearly seven years. 'Everyone was text-messaging each other, and talking about going down to Tiananmen. People were like, 'I love China.' ' An unplanned rally by more than 100,000 people formed in Tiananmen Square, the first spontaneous gathering of people since the protests of 1989. 'All the leaders come out onto the balcony of Tiananmen and saluted the crowd,' Mr. Acquarone said. 'And it was all just unbelievable.' The rush to get the city ready for the Olympic Games is creating not just stadiums and new housing. Nightclubs, bars and art galleries have also begun to spring up - some in the very shadow of proposed developments, and thus with a decidedly limited life span. Some of the more popular destinations include Houhai Lake, a bit north of the Forbidden City; Factory 798, an art district in a converted compound of industrial buildings in the northeast Dashanzi area; and the Sanlitun neighborhood of the Chaoyang district, home to a row of rowdy bars that have been popular since the late 1990's. These areas have largely been developed without state control, and with a surprising amount of freedom from government interference. The development of Houhai (pronounced ho high) has been particularly striking in recent years, since the opening of a bar called No Name, for its lack of a proper title. 'I remember one summer, 20 or 30 bars all opened up in Houhai,' Mr. Acquarone said. He was sitting in Alfa, 6 Xingfu Yicun, Chaoyang, (86-10) 6413-0086, a lounge with a modern décor and a cool minimalist patio, having icy mojitos with his girlfriend, Elissa Park, 30, and Henry Wood, 31, a business partner in an event promotions company, 010 Productions. Alfa is just a few blocks away from Sanlitun, which over the last few years has begun to resemble the Sunset Strip in Los Angeles, or the meatpacking district in New York, though with a more aggressive cast to its night life. In fact, patrons are often practically dragged into the bars by street peddlers employed by the bar owners to bring in customers. Sanlitun, named for the main street of the area, used to be divided into north and south sections. Last summer, the southern side of the street was demolished to make way for apartment units - or at least that's the official explanation. 'I think the narrow alleys and outdoor tables got kind of rowdy,' Mr. Acquarone said. 'And I don't think the authorities liked it much, so they just tore it down. They said they were building apartments, but now there's nothing.' Lately, more discreet places have started popping up in adjacent alleys and streets. Among them is Alfa and Club Mix, inside North Gate of Workers' Stadium, Gongti North Road, (86-10) 6530-2889, which attracts a crowd that is more chic. It comes to dance to the different D.J.'s and drink cocktails like Chivas Regal with green tea. Mr. Acquarone's company often organize rowdy parties, like a twice-yearly fetish party - partygoers come dressed in suggestive costumes - and raves at the Great Wall of China, in collaboration with other promoters. 'Despite the conditions, people are fairly respectful of the environment,' said Mr. Wood, who is British and has lived in Beijing for six years. For the last few years, most of 010 Productions' parties have taken place in the Factory 798 district, which is fast becoming a internationally recognized art district. In the 1950's, large factory buildings were built in this rather rough industrial area, designed by East German architects with a Bauhaus influence. The main spaces have been turned into sprawling art galleries and social clubs. Smaller adjacent houses, which were once used as a cafeteria or barracks, have now been taken over as cafes and bookstores. The complex began housing artists' studios as early as 2000. By 2002 to 2003, it had slowly become discovered, and galleries and clubs began to open, renting space directly from the state-owned company that controls the complex. Within the main building of Factory 798, at 4 Jiuxianqiao Road, Chaoyang, there are such galleries as the Factory 798 Space, (86-10) 6438-4862, the Beijing-Tokyo Art Project, (86-10) 8457-3245, as well as restaurants and clubs like Vibes, (86-10) 6437-8082 and the At Café, (86-10) 6438-7264. Recently, White Space Beijing, a gallery, (86-10) 8456 2054, and As One, (86-10) 8456-0437, a cavernous bar with bright orange chairs, have opened in the adjacent Factory 797. The area, also called the Dashanzi art district, is the first cultural district in Beijing to have commercial galleries. But it was slow to ferment. Shortly after the area gained momentum, the SARS epidemic of 2003 led to a drop in public gatherings. For Zhao Ying, 34, who had opened Vibes in April 2003, one of the first clubs in Factory 798, the start was not fortuitous. 'We closed down for nearly two months, and then we started again,' she said one night this spring as she played host to an Indian-themed party. 'It was really difficult.' Once the area gained momentum, early meetings between the local government and local artists led to a proposal submitted by Ms. Zhao and some of the factory's artists to permit the factory to remain - at least for the time being. 'We let the government understand that in order for Beijing to be an international city, they need an area for art,' said Ms. Zhao, as women in Indian garb filled the bilevel space. From a caged D.J. booth, Aqua's 'Barbie Girl' thumped through the space. The day before I met Ms. Zhao at Vibes, I strolled through the grounds of the complex, which is now home to more than 50 galleries, not including the fashion and design studios that have popped up. One could wander the complex for days, lost in its almost labyrinthine network of courtyards, side streets and main corridors. There were small pockets of buzzing activity all over. Several young girls had assembled for a photo shoot on a side street along a row of old brick houses. A group of girls held a blanket while another changed her clothes. 'It's for a Beijing fashion magazine,' said one of the assistants. At the Yan Club, 4 Jiuxianqiao Road, Chaoyang, (86-10) 8457-3506, another popular spot in the complex that's has its own building, a French art buyer was completing a transaction as I arrived. The large space, filled with white walls and black furniture, functions as an art gallery during the day and a nightclub during the evenings. 'Last week, we hosted a party for Mercedes-Benz,' explained Sunny Dong, 31, a petite, fashionable woman who is the project manager for the club. 'But during the days, it's mostly foreigners who come in to buy art.' Looking through the windows of the many buildings in Factory 798, all sorts of production could be seen. Perhaps, in the original spirit of the factory space, people were busy making and creating things, though no longer motivated by industry, but by culture. The plight of Factory 798, and its uncertain future, is just one variable that promotes its growth - an attitude that seems to be, 'We never know what will happen tomorrow, so let's do it today.' After all, the complex came to be populated because of the migration of the city's Central Academy of Fine Art from the center of the city - its campus was demolished to make way for a retail center - to a location near Dashanzi in 2001. Artists flocked to Factory 798 for its cheap spaces and proximity to the campus. 'In the city, every day it seems like a new place is opening up,' Ms. Zhao said. 'The rhythm of things is moving much quickly - everything is moving much faster.'

Subject: Why housing matters more than the stock markets From: Johnny5 To: All Date Posted: Sun, Jun 26, 2005 at 15:47:01 (EDT) Email Address: johnny5@yahoo.com Message: Pete, How long can the american CONSUMER buoy the world after thier HOME ATM quits? I have read on diehards.org board that publicaly traded REIT companies are using Interest Only to buy rental properties!! http://www.freddiemac.com/news/finance/commentary/sp-comm_082203.html While home equity gains have been significant, the loss in stock market wealth has also been substantial. The Wilshire 5000, a broad measure of U.S. stock values, fell from its March 2000 peak of $14.3 trillion to $7.8 trillion by September 2002, a loss of $6.5 trillion. Why have the gains in home equity wealth had a more powerful effect on consumer spending than the loss of stock market wealth? The answer lies in two facts. First, families view gains in home equity wealth as more 'permanent,' whereas gains (or losses) in stock market wealth are seen as more 'transitory.' ....Second, home equity wealth is more broadly held across the United States than is stock market wealth. The U.S. homeownership rate stood at 68 percent in the second quarter of 2003, while only 52 percent of American families hold stock either directly or indirectly. Further, homeowners comprised a wide cross section of demographic groups. Thus, when a rise in home values generates home equity wealth, both lower- and higher-income families gain. In fact, about three-quarters of all stock market wealth is held by the highest decile (top 10 percent) of income earners in the United States, and almost none by families whose earnings fall in the lowest third of the income distribution. Home equity wealth is more evenly distributed, with lower-, middle- and higher-income families benefiting from a general rise in home equity, as shown in Exhibit 2 ....Empirical research has verified that the home equity 'wealth effect' has a greater effect on consumption than do stock market moves. Based on estimates for 1984-2000 for the United States, an International Monetary Fund (IMF) study found that each one-dollar increase in housing wealth led to a 7-cent increase in consumption, whereas a one — dollar increase in stock wealth only caused a 4.5-cent increase. Research staff at the Board of Governors of the Federal Reserve System has also found stronger marginal propensities to consume arising from housing wealth. As reported by Fed Chairman Alan Greenspan, the effect on personal consumption expenditures generated from realized capital gains on home sales to be about 10 to 15 cents on the dollar, compared with a general 'wealth effect' of 3 to 5 cents incorporating all components of household wealth. The IMF's latest World Economic Outlook has also reported larger wealth effects from home value changes than from comparable stock equity movements.

Subject: Welcome back Johnny5 From: Pete Weis To: Johnny5 Date Posted: Sun, Jun 26, 2005 at 18:26:30 (EDT) Email Address: Not Provided Message: 'How long can the american CONSUMER buoy the world after thier HOME ATM quits?' Answer - a New York minute.

Subject: Endangered Species Act Faces Challenges From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 13:54:04 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/26/politics/26species.html?pagewanted=all Endangered Species Act Faces Broad New Challenges By FELICITY BARRINGER WASHINGTON - More than three decades after the Endangered Species Act gave the federal government tools and a mandate to protect animals, insects and plants threatened with extinction, the landmark law is facing the most intense efforts ever by the White House, Congress, landowners and industry to limit its reach. More than any time in the law's 32-year history, the obligations it imposes on government and, indirectly, on landowners are being challenged in the courts, reworked in the agencies responsible for enforcing it and re-examined in Congress. In some cases, the challenges are broad and sweeping, as when the Bush administration, in a legal battle over the best way to protect endangered salmon, declared Western dams to be as much a part of the landscape as the rivers they control. In others, the actions are deep in the realm of regulatory bureaucracy, as when a White House appointee at the Interior Department sought to influence scientific recommendations involving the sage grouse, a bird whose habitat includes areas of likely oil and gas deposits. Some environmentalists readily concede that the law has long overemphasized the stick and provided fewer carrots for private interests than it might. But some of them also fear that the law's defects will be used as a justification for a wholesale evisceration. 'There's an alignment of the planets of people against the Endangered Species Act in Congress, in the White House and in the agencies,' said Jamie Rappaport Clark, executive vice president of Defenders of Wildlife, a lobbying group based in Washington. On the opposite side, Robert D. Thornton, a lawyer for developers and Indian tribes in Southern California, has argued for years that the government goes too far to protect threatened species and curtails people's ability to use their own land. 'I've raised a child and sent him through college waiting for Congress to amend the Endangered Species Act,' he said. 'But I do think that a lot of forces are joining now.' The Endangered Species Act of 1973 set out a goal that, polls show, is still widely admired: ensuring that species facing extinction be saved and robust populations be restored. Currently 1,264 species are considered threatened or endangered. Some, like the bighorn sheep of the Southern California mountains, have obvious popular appeal and a constituency, while others, like the Kretschmarr Cave mold beetle in South Texas, are an acquired taste. But in the past 30 years lawsuits from all sides have proliferated. And more private land, particularly in the West, has been designated critical habitat for species, potentially subjecting it to federal controls that could limit construction, logging, fishing and other activities. A 'critical habitat' designation gives the federal government no direct authority to regulate private land use, but it does require federal agencies to take the issue into account when making regulatory decisions about private development. The conflicts are becoming sharper as the needs of newly recognized endangered species are interfering more often with the demands of exurban development. Western governors, who convened in San Diego last year in a mini-summit on the act, are also weighing in with Congress, for the most part seeking to explore new means of species conservation while clarifying - or limiting - local and state government obligations under the law. And Representative Richard W. Pombo, the Republican chairman of the House Resources Committee, whose district near the Central Valley of California was the epicenter of a battle over the delta smelt, is preparing legislation that is likely to curb how much land or water can be defined as critical habitat. Mr. Pombo, who attended the gathering in San Diego, said in an interview that there was some common ground on the critical-habitat issue. But, he added, consensus will be harder to find on proposals he is considering that would change how the agencies weigh available science. Even without Congressional rewriting, the federal agencies involved have taken a different attitude in the past four years, sometimes raising the bar of scientific proof and giving more weight than before to the economic impact of Endangered Species Act decisions. In one instance, a top aide to Craig Manson, the assistant interior secretary who oversees the Fish and Wildlife Service, edited the scientific assessment of the sage grouse's status, playing down accounts of its range and population declines. The edited assessment and the original document prepared by scientists were sent to an expert panel, which recommended against listing the grouse as endangered; the Interior Department did not list it. In the case of the salmon, a federal district judge in Portland, Ore., last month rejected the Bush administration's interpretation of its obligation to endangered fish, including its argument that dams should be considered part of the landscape. Noah Greenwald, a biologist with the Center for Biological Diversity, said the Interior Department under President Bush has been much less aggressive than under President Bill Clinton in putting species on the endangered list. Under Mr. Clinton, he said, the Interior Department agreed to place a species on the list in 88 percent of the instances in which it made a decision. Under Mr. Bush, the figure is 52 percent, according to Mr. Greenwald's analysis of federal data. The Bush administration has expanded on the Clinton administration's reluctance to delineate critical habitat. The administration includes a statement in all documents on the subject saying that the designation of critical habitat 'provides little real conservation benefit, is driven by litigation rather than biology, forces designations to be made before complete scientific information is available' and 'imposes huge social and economic costs.' Economic analyses, which the law allows for in decisions on territory, are now the leading reason for reducing the size of species' critical habitat, according to a report by the National Wildlife Federation. In 2003, the report says, lands proposed as critical habitat by biologists were reduced by one-third; 69 percent of those reductions were based on economic factors, up from fewer than 1 percent in 2001. Territory can also be removed from proposed critical habitat if higher-ranking officials believe a species does not need it. Mr. Manson, the assistant interior secretary, said in an interview that the interior secretary has discretion to make such decisions, and that guidelines from the Office of Management and Budget are followed in performing economic analyses. The National Wildlife Federation argues that the administration assigns little economic benefit to habitat designations, to which Mr. Manson responded: 'The National Wildlife Federation and other groups have a different view of what ought to count as benefits. That's a legitimate policy difference.' Environmental groups argue that the land-use provisions of the law have been working, because federal data shows that 68 percent of listed species whose statuses are known have stable or recovering populations. Even so, some environmentalists indicate gingerly that some of their number may have overreached or, more precisely, over-sued. 'Litigation is a hammer, but not every problem is a nail,' said Michael Bean, a co-director of the Center for Conservation Incentives at Environmental Defense. 'The good news about litigation has been that it has forced the government to take seriously its obligations.' Environmentalists have had considerable success in the courts, most memorably in 1978, when the Supreme Court blocked - temporarily - construction of the Tellico Dam in Tennessee to preserve a tiny fish, the snail darter. This month, the Supreme Court refused to hear a case challenging enforcement of the law, in a dispute involving six endangered species of small insects that live in caves in Texas, including the Kretschmarr Cave mold beetle. Developers said the property would be worth $60 million if development were not limited by the Endangered Species Act. And in the desert around Palm Springs, Calif., the Agua Caliente Band of Cahuilla Indians is suing the government because more than half the tribe's 31,000 acres fall into an area the Fish and Wildlife Service says is critical to the conservation of the endangered bighorn sheep. The sheep's numbers in the area were down to about 280 when they were listed as endangered in 1998. A recent count put the number above 700. The tribe says the designation creates 'an economic impact of hundreds of millions of dollars' by complicating plans to develop resort condominiums and a golf course near tribal land. There have been compromises on habitats. In hundreds of areas, the various groups with an interest have cooperated on 'habitat conservation plans' to help species on the brink. Such plans, like one around Tucson regarding the endangered pygmy owl, have been promoted by the Clinton and Bush administrations. But the plans do not tend to flourish where litigation is rife. And Steven P. Quarles, an industry lawyer with the Washington firm of Crowell & Moring, said that until there was a legislative compromise that Senate moderates could support, 'what we'll see is a chipping away at the act by federal rules and guidances from the executive branch, and litigation from both sides.'

Subject: Home Prices are Hot but Inflation Cool From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 13:01:26 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/26/business/yourmoney/26view.html?ex=1277438400&en=a2f81e2f687108da&ei=5090&partner=rssuserland&emc=rss How Home Prices Can Be Hot but Inflation Cool By DANIEL GROSS ANYBODY who has bought or sold a home recently - or who has picked up a newspaper - knows that housing prices are rising rapidly. The National Association of Realtors projects that the median sales price of an existing home will rise 8.8 percent this year, after climbing 8.3 percent in 2004. Yet the Bureau of Labor Statistics, the government agency that collects, mixes and distills data into the Consumer Price Index, says the increase in housing costs has been muted. The index, the broadest measure of inflation for consumer activity, shows that housing costs rose just 0.1 percent in May and 3 percent in the last 12 months. That begs a question: When housing is the biggest single expenditure for most Americans, and when half of the nation is fretting about a housing bubble and the other half is logging on to CondoFlip.com, how can inflation remain tame? The answer has to do with the occasionally strange way the government produces the numbers that define our economic life - numbers on which vast sums are wagered every day. Until 1983, the bureau measured housing inflation by looking at what it cost to buy and own homes, considering factors like house prices, mortgage interest costs and property taxes. But given the shifts in interest rates and housing prices, those measures could show big bounces from month to month. Besides, homes are a strange hybrid of a consumable good and a long-term investment. As part of a long-running evaluation, the bureau wanted to 'separate out the investment component from the consumption component' of the housing market, said Patrick C. Jackman, an economist at the bureau. In other words, a home isn't just where you hang your hat or an investment in the future (or, in the case of visitors to CondoFlip.com, for two days). It's something that is consumed, the way potato chips, gasoline or a barber's skills are. So the bureau decided to track a measure that represents only the consumption of housing: rent. And rents had much to recommend themselves as a long-term inflationary yardstick - they don't jump significantly from month to month - and as a proxy for home prices. Over time, after all, rents correlated very closely to home prices. 'It's important to separate the decision that people make about housing as an investment and housing as a consumption of services,' said Ted Wieseman, an economist at Morgan Stanley. Especially when you're trying to measure inflation. Consider the Standard & Poor's 500-stock index: it cost three times as much to buy it in 2000 than it did in 1992. But that climb didn't signify rampant inflation in the United States. The Bureau of Labor Statistics is trying to measure consumer price inflation, not asset price inflation. So, for the past 22 years, it has measured inflation in the cost of housing in a rather indirect way. As part of its Consumer Expenditure Survey, the bureau collects information from thousands of Americans about how much they pay for rent. But because renters are only a small part of the population, it also tries to measure how much homeowners are essentially paying themselves in rent. To determine the so-called owners' equivalent rent, it asks homeowners how much they would have to pay to rent the house in which they live. That figure constitutes about 23.2 percent of the Consumer Price Index, by far its largest component. Food is 14.3 percent and transportation is 17.4 percent, for example. But there are a few problems with using owners' equivalent rent as a measure of inflation for shelter costs. First, rent and home prices have become decoupled over the last several years, as Richard J. Rosen, an economist who is an adviser to the Chicago Federal Reserve, has observed. In the last 12 months, owners' equivalent rent has risen only by 2.3 percent, while housing prices have risen by a much larger amount. 'Of course, some of this decoupling has been a response to the low mortgage rates,' Mr. Rosen said, adding that it was an open question whether it signaled an enduring disconnection between rents and home prices. Second, years of falling interest rates and the vast expansion of the mortgage industry have changed the historical dynamics between renting and owning. From 1994 to 2004, the percentage of home-owning households rose to 69.2 percent from 64.2 percent, according to the Census Bureau. What's the point of measuring rents if fewer and fewer people are actually renting? Finally, shifts in Americans' relative desire to own rather than rent can play havoc with inflation measures. Rising home prices - and rising interest in owning homes - have helped to keep housing rents in check in recent years. So even though the rampant housing market is forcing home buyers to cough up more of their income for the same amount of shelter, the comparatively soft rental market is holding down inflation as measured by the Consumer Price Index. CONVERSELY, when housing prices fall, a trend that most people would deem anti-inflationary, and renting becomes more attractive than owning, the index might process the information as evidence that inflation is on the rise. 'We got a great deal of criticism that we were overstating inflation in the early 1990's, because housing prices were declining and rents were going up steadily,' Mr. Jackman said. The housing market today is a polarizing force. On one side are those who are convinced that the market is a bubble about to pop. On the other side are those who believe that we are in the midst of a long-term boom. But at the Bureau of Labor Statistics, Mr. Jackman notes, 'We're pretty much conditioned to be in the middle.'

Subject: Blast from the past From: Pete Weis To: All Date Posted: Sun, Jun 26, 2005 at 12:08:14 (EDT) Email Address: Not Provided Message: In a world of Dow 36,000, where should NASDAQ be? By James K. Glassman Published 03/06/2000 Ever since Kevin Hassett and I wrote our book on stock-valuation, Dow 36,000 (Times Books), people have been asking me, 'Okay, but what about the NASDAQ?' Tech investors want to know how to apply our valuation methods to Internet high-fliers. In Dow 36,000, we argue that traditional analysis has undervalued stocks -- dramatically. In fact, given historic corporate earnings growth of 5.5 percent and long-term Treasury interest rates in the 6-percent range, we think that the PRP (Perfectly Reasonable Price) for the 30 stocks of the Dow Jones Industrial Average is 100 times earnings. That's right: a P/E ratio of 100, or more than three times the current level. (By the way, a P/E ratio is the number of dollars it takes to buy a dollar's worth of a company's earnings. In the past, P/E ratios have averaged about 17.) Thanks to the work of Wharton Professor Jeremy Siegel and others, we now know that over the long-term - 15 years or more - stocks are not riskier than bonds. Therefore, we conclude that stocks should not carry a 'risk premium' - that is, an extra return beyond the return of the Treasury bond. Our calculations show that, with a zero risk premium, the Dow should be priced at 36,000, with a P/E of about 100. That means that bargains abound not just among the blue-chip stocks of the New York Stock Exchange but among the companies listed on the tech-heavy NASDAQ as well. For example, Microsoft may already be the world's most valuable corporation, but it looks to me like a bargain at 60 times earnings. Biotech behemoth Amgen doesn't look too shabby at a P/E ratio of 72. Now, what about companies with P/E ratios above 100? Should investors avoid them? Not at all. When we were writing our book, Cisco Systems, the Internet infrastructure giant, was trading at $64 a share and carried a P/E ratio of 85. Recently, it traded at $125 with a P/E well above 100. With some fairly modest growth assumptions, we calculated that the PRP for Cisco is $291 - or more than twice its current price. Still, while I love Cisco and have no hesitation owning it at today's prices, it is generally a good idea to shy away from companies with triple-digit P/E ratios - especially now, with so many terrific companies carrying P/Es far lower. One of many examples is Hewlett-Packard (like Cisco, a member of the Glassman Technology Top Thirty, or GTTT), at a P/E of 40. What about companies that have yet to make a profit? Again, proceed with caution, but don't toss such firms out entirely. Another GTTT stock that I love (and, by the way, own myself) is Digex, with no earnings but fabulous growth prospects as an applications service provider, offering a platform with a wide variety of software to corporations. As for the NASDAQ Composite Index itself: It's risen by a factor of four in barely two years. Can it continue to rise at a rapid pace? Yes, indeed - though ultimately NASDAQ shares and the market as a whole (as represented by the Dow) will probably rise at roughly the same rate over the next five years. Don't expect NASDAQ 36,000 before Dow 36,000.

Subject: Re: Blast from the past From: Pete Weis To: Pete Weis Date Posted: Sun, Jun 26, 2005 at 13:52:02 (EDT) Email Address: Not Provided Message: It's sad that so many people bought into this Dow 36,000 stuff. Microsoft as we know roughly halved and has remained at that level since. Cisco dropped over 90% and has rebounded to less than a third of its peak in March of 2000 (haven't checked its stock price in a while). As for his favorite, Digex (which he owned), we have the following from Richards Asset Management, LLC 4th qtr 2003 report: 'Last quarter I mentioned that we had two arbitrage positions waiting to close. Both did so during the quarter. For one, our annualized return was a profitable if uninspiring 12.55%. Typically I would like to see 20 % annualized returns on these transactions. Much more interesting was our second arbitrage position. We made a substantial investment in Digex, a nearly bankrupt Internet service company, which was being acquired by MCI, a bankrupt communications company. With all this bankruptcy in the air, one might wonder where the money was coming from to fund the deal – or indeed why any deal was taking place at all. MCI already owned roughly 66% of Digex, so it was looking to purchase the portion it did not already own. The two companies had been both customer and vendor to each other, and each had monetary claims against the other. Given the precarious financial condition of both parties, it made sense for MCI simply to purchase the remainder of Digex, extinguishing any remaining issues. In order to conduct this acquisition at the least cost to itself via a “short-form” merger, MCI had to purchase enough stock to raise its ownership of Digex to 90%. This meant that about 18 million of the 24 or so million shares still outstanding had to be tendered to MCI. According to the SEC filings, one large shareholder owned 6 million shares of Digex. I assumed that MCI would not have gone forward with this offer if it had not already secured the blessing of that shareholder. MCI also had had to go to the bankruptcy court for permission to spend money on the deal, which was granted. The deal, it seemed to me, was certain to go through. Accordingly, we purchased a large amount of Digex stock. The offer price was 80 cents a share, and most of our stock was purchased at about 77.5 cents. This was going to give us a 3% return in roughly a month, or 36% annualized (uncompounded), well above my 20% threshold.'

Subject: Blast from the present From: Pete Weis To: Pete Weis Date Posted: Sun, Jun 26, 2005 at 13:01:56 (EDT) Email Address: Not Provided Message: From Realty Times: March 3, 2005 Why NAR's David Lereah Believes The Housing Boom Is Far From Over Housing is going strong at least through the end of the decade, predicts David Lereah, chief economist for the National Association of Realtors, and his infectious enthusiasm is as strong as his theory. He believes it so strongly he wrote a book about it. While promoting his new book Are You Missing The Real Estate Boom?: Why Home Values And Other Real Estate Investments Will Climb Through The End Of The Decade - And How To Profit From Them, Doubleday, on a recent nationwide tour, Lereah is aware of the real estate bubble theorists who predict that what comes up must eventually come down. Real estate has been on a bull run the last five years, particularly when interest rates hit a 40-year low several times. Relaxed credit terms allowed more people to buy. Baby boomers reached their economic success point, enabling them to drive second home purchases to new levels. These are a few reasons real estate homeownership has reached the 68 percentile, an all-time record. But nothing lasts. New home sales tumbled 9.2 percent in a colder-than-normal January, says the National Association of Home Builders. U.S. home prices increased 11 percent last year, says the Office of Federal Housing Enterprise Oversight, but the last quarter slowed to an annualized rate of 6.77 percent, showing a slowdown. A Gallup poll for Experian recently found that 21 percent of consumers reported reducing their spending in response to rising interest rates. And so on..... Lereah is unshaken, and says it is natural for real estate to take a rest stop, but that doesn't mean it won't continue to climb, just not at perhaps the same frantic rate. 'I believe that in years to come,' he says, 'historians will see the beginning of the 21st century as the 'golden age' of real estate.' Like other experts, Lereah wants to start any discussion of real estate booms and busts by redefining what a boom is. 'It's a healthy real estate expansion,' he says. 'You can have a downturn and still be in a boom period. A three percent drop in home sales is still the second best year on record.' So what makes Lereah so confident the boom is far from over? Six reasons: There's a lean supply of homes -- a 4.3-month supply when the benchmark is 6.0 months. Mortgage rates are still low and will continue to be low for the next several years. Even as they rise, they won't rise high enough or fast enough, to kill a real estate expansion. Demographics are creating demand. Retirees are staying in their homes, which creates demand. Boomers are buying second homes, bigger homes, or scaling down to more luxurious smaller homes. Immigration is at record levels creating demand from resident aliens who have now earned enough to put down on a home. Echo boomers, the next largest population wave are entering the homebuying market as first-time home buyers. 'All the stars are in alignment for population growth and demand for housing,' says Lereah. Technology has lowered the cost of homebuying, including improving the approval process through automated underwriting, the range of loan products offered, and the search process for homes via the Internet. Minority assistance programs started in 1992 by HUD and Fannie Mae, etc., have improved the moral-suasion of purchasing a home instead of renting. The uncertainty created by the terrorist attacks on Sept.11, 2001, has changed the flow of funds from stocks into real estate, creating unprecedented property liquidity. 'A home is no longer a place to live,' notes Lereah, 'but a place to invest.' Written by Blanche Evans

Subject: Housing boom or bubble? From: Mik To: Pete Weis Date Posted: Tues, Jun 28, 2005 at 10:02:43 (EDT) Email Address: Not Provided Message: I'm concerned about all these repeated statements about a 'housing boom', it is in my mind a blast from the past in that it sounds so much like the same kind of flawed excitement over IT stocks before the bubble burst. The previous article even make the statement, 'Retirees are staying in their homes, which creates demand.' How in the hell does it create demand when retirees stay at home? I can imagine it decreasing supply but not increasing demand. Also the statement about how the interest rates are low is very stale now. That is more like an excuse for house prices to go up (and make up for any gains on decreased interest rates). How about we look at some fundamentals: in San Diego (and many US cities) the repayment of the average house is 4 times more than what is affordable by the average income. It is all nice and well to say, 'invest, invest' - but look at how the perceived supply and demand has risen so far beyond basic cost and affordability - this is definately a sign of a bubble - not a healthy boom. What is fueling this bubble when housing is actually not becoming affordable to the avergae Joe? Well the article correctly pointed out quite a few concepts: richer investors who got their fingers burnt in the stock markets may prefer to invest in something they can see and touch; foreigners who come in with money. The article talks about how Immigration is at record levels, yes but thanks to the latest restrictions on immigration, that will change dramatically. Perhaps immigration may well be the one factor that results in a large slump in house purchasing and finally burst this bubble.

Subject: Oil or US treasuries, oil or US...... From: Pete Weis To: All Date Posted: Sun, Jun 26, 2005 at 11:43:29 (EDT) Email Address: Not Provided Message: From The San Francisco Chronicle: China on global hunt to quench its thirst for oil - Robert Collier, Chronicle Staff Writer Sunday, June 26, 2005 Move over, Big Oil. There's a new oilman on the world stage -- China. China's takeover bid for Unocal Corp. makes clear to sticker-shocked Americans that the 1.3 billion Chinese people are demanding an ever-larger supply of the world's energy to fuel their booming economy and are willing to get it wherever necessary. From Central Asia to Latin America, Africa, the Middle East and even Canada, Chinese firms are pumping oil and natural gas in many areas that the United States was counting on to meet its own record-high demand. 'We need to supply our people, and like every country we need to buy oil from around the world,' said Zhou Dadi, director general of the Energy Research Institute, the central government's main policy agency on the subject. 'This is part of globalization. It is a strategy of sustainable development. It is part of a historical process.' While China's supply network does not yet rival the global clout of U.S.- based oil corporations, the shift raises concerns of politicians and analysts in the United States and Southeast Asia who see China as a future global giant motivated by the same powerful self-interest as American Big Oil. China's thirst for energy has been a major factor driving up the international price of oil. Light, sweet crude closed at $59.84 a barrel Friday, the fourth record-high day in a row and a sign that American motorists will feel increasing pain at the pump in coming months. Chinese petroleum imports are expected to rise by about 8 percent this year -- accounting for about one-third the total worldwide consumption increase, as it has in recent years. Because China's domestic oil production is in a long-term decline, its imports are expected to surpass the U.S. import levels within two decades. U.S. officials have been increasingly uneasy as China has signed major deals with Iran, Sudan, Burma and Venezuela, all countries that have strained relations with the United States. While the Bush administration tries to build international pressure against Iran over its nuclear aspirations, China has signed a $70 billion long- term oil and gas supply deal with the Tehran government. China has also signed agreements to develop heavy oil reserves in Venezuela, where President Hugo Chavez has emerged as one of Washington's most vocal opponents. Even in Canada, the top U.S. oil supplier, Chinese firms have signed three deals this year to tap Alberta's vast oil-sands reserves and to join a pipeline venture to bring crude to the Pacific coast, where it can be shipped to China. In many of these new deals, the webs of alliances and rivalries are overlapping. CNOOC Ltd., the 70 percent state-owned company that last week offered $18.5 billion for Unocal, is scheduled to begin imports of liquefied natural gas next year from Australia, in a project that CNOOC co-owns with Chevron, its rival suitor for Unocal. CNOOC also is involved with Chevron in offshore oil production in the Bohai Bay of northeast China. Western energy analysts in Beijing say that as the government-owned Chinese oil firms scour the globe for deals, they often have a leg up on the likes of Chevron and ExxonMobil, which are privately owned. Because about 80 percent of the world's oil reserves are in the hands of governments, which usually prefer to deal with other state-owned enterprises, Chinese firms can gain favor, said Gavin Thompson, China country manager for Wood Mackenzie, a British energy consulting firm. Although Chinese companies cannot offer the same high-tech methods for exploration, drilling and extraction as the U.S. majors, they gain a negotiating edge by being willing to assume unprofitable side deals that function basically as development aid. In 2003 and 2004, for example, the Chinese firm Sinopec signed a series of deals with Saudi Arabia to develop natural gas fields. Sinopec's investment, which ultimately could be worth $4 billion, commits the firm to a wide variety of welfare-state activities, such as building sewage treatment plants and schools. Some analysts say this broad brush has served Beijing's foreign policy needs rather than the companies' bottom line. 'China's acquisition strategy is that it can go anywhere and buy almost anything,' Thompson said. 'But as a consequence, its asset portfolio has become quite random and scattered.' Throughout East Asia, even close allies of Beijing show nervousness about its energy appetites. China has been wrangling with Japan over natural gas reserves in the East China Sea, and with Vietnam over suspected oil deposits near the Spratly Islands in the South China Sea, setting off worries that such conflicts could turn violent. 'Throughout all of East Asia, there is a rising new concern about energy security,' said Chin Kin Wah, deputy director of the Institute of Southeast Asian Studies, a government-backed think tank in Singapore. 'From Russia to China down to Indonesia, there is a new generation of possible conflicts.' Malaysia's Prime Minister Abdullah Ahmad Badawi sounded a warning at a Kuala Lumpur energy conference June 14: 'As governments and companies continue to pour in more and more money to secure additional oil and gas assets, some of these assets may also, unfortunately, lead to various geopolitical maneuverings, disputes and conflicts.' Chinese officials say that no matter how rich and powerful their country becomes, their need for oil will never turn into U.S.-style gunboat diplomacy. 'You must realize that China will never be expansionist for the reason of oil,' said Xie Feng, a deputy director-general for China's Ministry of Foreign Affairs who is in charge of North American relations. 'It will never act like a superpower. 'It might become a regional power. In all its history over the past thousands of years, China has never sent troops abroad, to have colonies, to seize resources. This is not part of the Chinese character. You must understand our culture. We are not like that.' --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- China's expanding oil interests Chinese energy firms CNPC, Sinopec, CNOOC and PetroChina have spent billions of dollars on oil and gas production deals around the world during the past two years. Examples include: Angola: China made wide-ranging aid and trade deals, including Sinopec's purchase of a 50 percent interest in offshore oil fields. Sudan: CNPC expanded oil production in southern oil fields, where Chinese production is scheduled to reach 500,000 barrels per day in August. Iran: Chinese firms signed numerous contracts to co-produce oil and natural gas. Iran is China's largest single source of foreign oil, providing 13 percent of China's total annual imports. Saudi Arabia: Sinopec reached agreement to explore and develop natural gas and oil in the Rub al-Khali desert and to build and operate social-welfare projects for the population of nearby cities. Central Asia: CNPC and Sinopec purchased major shares in oil ventures in Uzbekistan, Kazakhstan and Azerbaijan. Construction is under way on a 1,860- mile oil pipeline from the Caspian Sea to western China. Burma: CNOOC and Sinopec started large-scale oil development, following in the footsteps of CNPC, which had entered natural gas production a decade ago. Chinese and Burmese officials are negotiating to build oil and natural gas pipelines from northern Burma into southwest China. Indonesia: PetroChina and CNOOC purchased large stakes in Indonesian oil and gas fields. Liquefied natural gas shipments from the Tangguh field to southern China are expected to start in 2007. Australia: CNOOC purchased a stake in the North West Shelf liquefied natural gas project, co-operated by Chevron. CNOOC is in talks with Chevron for a share of the huge Gorgon LNG project. Venezuela: The two countries signed wide-ranging agreements for production of heavy oil in Venezuela's Orinoco Basin. Brazil: CNPC signed a deal with state oil firm Petrobras to cooperate on refining, pipelines and exploration and oil production projects. Sinopec Corp signed a preliminary deal to build a $1.3 billion gas pipeline. Canada: PetroChina, Sinopec and CNOOC signed deals for shares of Alberta's oil sands and for a pipeline to export crude oil extracted from there to the Pacific coast and then via tanker to China. United States: CNOOC is bidding $18.5 billion to buy Unocal.

Subject: Grounded in the Dust of Rural India From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 10:36:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/international/asia/25kumar.html?ei=5070&en=c37152cd19286da5&ex=1119844800&pagewanted=all A Vision of Stars, Grounded in the Dust of Rural India By SOMINI SENGUPTA PATNA, India ANUPAM KUMAR, 17, is the eldest son of a scooter-rickshaw driver. He lives in a three-room house made of bricks and mortar and a hot tin roof, where water rarely comes out of the tap and the electricity is off more than on, along a narrow unpaved alley here in one of India's most destitute corners. Anupam is good at math. He has taught himself practically everything he knows, and when he grows up he wants to investigate whether there is life in outer space. He wants to work at NASA. 'It's becoming very important to explore other planets because this planet is becoming too polluted,' he said with deadly seriousness. Next door to his house, pigs rifled through a pile of garbage on an empty lot. His mother, Sudha Devi, a savvy woman with a 6th-grade education, cooled him with a palm-frond fan. His father, Srikrishna Jaiswal, who made it through 10th grade, flashed a bemused smile. 'He has high-level aims,' he said. 'I'm not so concerned about reaching the peak,' Anupam clarified. 'I'm more interested in doing something good for the world.' For now, Anupam's sole obsession is to gain admission to the Indian Institutes of Technology, or I.I.T., a network of seven elite colleges established shortly after Indian independence in 1947 that produces an annual crop of tech wizards and corporate titans. It is difficult to overstate the difficulty of getting in. Of 198,059 Indians who took the rigorous admissions tests in 2005, 3,890 got in, an acceptance rate of under 2 percent. (Harvard accepts 10 percent.) Anupam does not know anyone who has attended the institutes, nor do his parents. But they all know this: If he makes it, it would change his family's fortunes forever. 'I feel a lot of pressure,' he said. 'It's from inside.' A VOICE in his head, he says, tells him he must do something to rescue his family from want, and that he must do it very soon. No wonder, then, that Anupam's mother forces him to wash his hair with henna, a traditional Indian hair-dying technique: At 17, Anupam is going gray. In Anupam's story lies a glimpse of the aspirations of boys and girls in India today, a country that arguably offers greater opportunities than it did for their parents, but one that is also more competitive and a great deal more stressful. More than half of India's one billion people are under 25, and for all but the most privileged, adolescence in this country can be a Darwinian juggernaut. To be average, or even slightly above average, is to be left behind. Nowhere is that more true than here in Bihar, India's iconic left-behind state, making the drive to get out all the more fierce. 'For average students, they have no scope,' said Anand Kumar, 33, who runs a one-man I.I.T.-preparatory academy here. 'The new generation feels more pressure than my generation.' At 7 on a recent morning, with the sun already blistering, Mr. Kumar, drenched in sweat, drilled a gaggle of nearly 600 students, almost all boys, in calculus. 'Find the domain of the following function,' he repeated into a scratchy microphone. His young charges, packed tightly under a tin-roofed compound, furiously scribbled in their notebooks. He resembled a revival tent preacher in a small American town. Every week Mr. Kumar, who is not related to Anupam, tutors more than 2,000 youngsters, each paying just under $100 for a yearlong math session. Thirty others, the most gifted and neediest, he teaches free in an intensive seven-month course that includes room and board. He has received death threats - he suspects from competitors who resent his low fees - and on a recent day two policemen and two private guards stood sentry. The intensity of competition can reveal itself in extreme ways. Mr. Kumar recalls how a neighbor, under enormous pressure from his family, failed the entrance exam and took his own life; he was 18. A former student, the son of a poor peasant, sank into a crippling depression after failing the exam last year. Moni Kumari Gupta, 17, is one of the rare girls in Mr. Kumar's program. She, too, wants to do space research, also at NASA. The I.I.T. exam that Moni plans to take is still 10 months away, and yet she rises at 4:30 a.m. and studies 13 hours a day, seven days a week, with short breaks only for meals and a brisk morning walk. Her father, Sunil Kumar, gives her pep talks: 'Face the competition,' he tells her. 'Don't be demoralized.' Disappointment stems from the depth of desire, piled on this generation by those with even fewer opportunities in the past. Before Anupam was born, his father had wanted to teach. His mother had wanted her husband to do anything other than ply a rickshaw, become a rickshaw-wallah. But Patna offered few options, and the children came quickly, two boys and a girl. Sudha Devi told her husband, ' 'At least our children will do something big.' ' At home, the television could be blaring, the music could be on, the lights could have gone out, but Anupam would be studying, his father said. 'How he concentrates, how he focuses his mind, I really don't know,' Mr. Jaiswal mused. At family parties, Anupam would be found in a quiet corner, his head in a book. Relatives warned Sudha Devi, 'He will go mad.' Anupam's education has been spotty, as it is for many in a country where public education is often in disarray. He enrolled in a small neighborhood private school, then a government school in ninth grade. But most days, like many children, he skipped school and studied at home because he figured it would be more rigorous. Every now and then, a math tutor, impressed by his gumption, gave him tips. Anupam says he was first drawn to the mysteries of space at 9 because of a television serial, 'Captain Vyom,' in which an astronaut ranges across outer space in pursuit of bad guys. He recalls telling his mother about his interest in life in outer space, and he remembers her matter-of-fact encouragement: They haven't discovered it yet, he recalls her saying, but you can explore. 'He says there's something called research,' is how his mother describes it today. 'He wants to be a research-wallah.' IN the spring of 2004, studying by himself, Anupam failed the I.I.T. entrance exam; it is virtually unheard of for anyone to make it on his own. Then, under Mr. Kumar's tutelage, he devoted himself with the intensity of a monk. On May 22, Anupam took the exam again, a grueling six hours of math, chemistry, and physics. He was not nervous either before or after, his mother said. The week before results were published, Anupam bubbled with optimism. He was sure he would be among the top scorers, he said. His mother beamed at this. To a visitor, she referred to her son as Anupam-ji, an honorific usually reserved for elders. Buoyed by his optimism, Anupam said that after graduation, he would install a proper roof, then dig a borehole so water could be drawn right at home. As soon as possible, he would like his father to stop driving a rickshaw. [On June 16, sitting at his tutor's house, Anupam learned the results. He made it into the institutes, with a rank of 2,299. Classes start in mid-July.]

Subject: How a Painter Found Inspiration in Cloth From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 09:58:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/arts/design/24smit.html?pagewanted=all How a Renowned Painter Found Inspiration in Cloth By ROBERTA SMITH 'Matisse: The Fabric of Dreams - His Art and His Textiles,' the languidly titled, often patchy, yet vision-altering exhibition at the Metropolitan Museum of Art, has some great moments, and not all are due to the art of Henri Matisse. Quite a few of the show's visual fireworks are ignited by the splendid assortment of textiles and garments from around the world that Matisse collected and kept close by throughout his long, prolific life. In a phrase evoking gratitude and heavy use, he called his collection 'my working library.' This show, which originated at the Royal Academy in London last winter, displays parts of Matisse's library for the first time, along with examples of Matisse's art. Textiles had been visible in photographs of Matisse's casbahlike apartments and studios, and in the backgrounds of his paintings, especially those made in Nice in the 1920's and 30's. But until the British writer Hilary Spurling started researching her monumental Matisse biography in the early 1990's, few people knew that any survived. As she interviewed Matisse's descendants, they came to light, sometimes out of trunks unopened since the artist's death in Nice in 1954. Ms. Spurling convinced Ann Dumas, an independent art historian associated with the Royal Academy, that the textiles merited an exhibition. The Met collaborated, along with the Matisse Museum in Le Cateau-Cambrésis, the small village in northern France where the artist was born in 1869 in a two-room weaver's cottage belonging to his grandmother. The rest, as they say, is history, but one that is only beginning to be written. The chance to examine the raw data before it is digested may reshape your notions of Matisse's art and its sources. It forces the backgrounds of his paintings to the foreground and exposes what has been hiding in plain sight. It argues persuasively that textiles were fundamental to Matisse's formidably decorative art, with its saturated colors, positive-negative ambiguities, pulsating patterns, distillations from nature and the sense of folded structure and ironed-out space that was his answer to Cubism. And some of the most interesting fruits of Ms. Spurling's research, condensed into one of the catalog's accessible, to-the-point essays, reveal the crucial role of textiles in Matisse's early years. In nine galleries, 80 of the artist's paintings, prints, drawings and painted paper cutouts, plus one monumental white felt robe designed for a Diaghilev ballet, skim the years from 1890 to 1952. Juxtaposed with these works are about 25 textiles and garments that Matisse once owned: European cottons; Javanese, Moroccan and Japanese silks; African Kuba cloths, with geometric designs and pile surfaces, which Matisse called 'my velvets'; and several North African pierced cotton window coverings that are in effect reverse cutouts. The displays also include a kind of glorious high altar of 16 silks and printed cottons, layered and reaching to the ceiling. More space and more extensive labels for these textiles would have been nice, but the concentration of colors and patterns provides visceral evidence of Matisse's debt. He achieved this kind of unadulterated visual power only during his most radical phases: in the big, flat paintings of 1911-17, none of which are represented here, and in the colored-paper cutouts that along with the 'velvets' dominate the show's final gallery. The show is missing several important works, and to compensate, the Met has nearly doubled its size with additions of paintings and so many prints and drawings that they feel like filler. It takes only a few notebook sketches of models in Romanian blouses, along with three examples of the actual garments, to get the idea. But nearby are two relatively unknown paintings of Romanian blouse-wearers. One, titled 'The Dream,' shows a curled-up, slumbering figure and may be a response to Picasso's painting of the same name. But dreams had little to do with it. Matisse's interest in textiles didn't begin during his 1906 trip to Morocco as a typical European attraction to the exotic. It was hard-wired into him as a descendent of generations of weavers, who was raised among weavers in Bohain-en-Vermandois, which in the 1880's and 90's was a center of production of fancy silks for the Parisian fashion houses. His hard-working parents ran a thriving hardware store, with his mother in charge of the house-paints counter. Bohain was a competitive environment. The weavers were self-employed craftsmen. Innovations of pattern, design and color were matters of pride and survival. In many ways their aesthetic ideas were more advanced than those of the academy in nearby St. Quentin, where Matisse first studied art. Proof positive of this comes in the show's fifth gallery in an 1890's sample book of Bohain silk. An elegant, Mondrianesque design of wide vertical stripes and thin horizontal bands executed in six different color combinations, known to weavers as 'color ways,' emits a searing radiance. Matisse may have referred to Cézanne as 'a god,' but he first encountered some of the salient characteristics of his own art in textile form. He was rendering, interpolating or transforming things he saw, and to see these things for ourselves is like watching his mind work. In the first gallery, we watch him learn from an indigo resist-dyed English cotton that he bought in 1903 and, judging from photographs, rarely let out of his sight. The fabric and its blue-on-white motif of repeating flower baskets and garlanded arabesques permutate through four still life paintings from 1903 to 1916. The textile appears as a roughly sketched background detail in the 1903 'Guitarist,' and as part of a diaphanous Impressionist-Fauvist reverie in the unfinished 'Still Life With Blue Tablecloth' of 1905-6, where it seems to have been more powdered than painted across a darker ground. But an identically titled work from 1909 gets to the point: the cloth dominates the picture plane and overwhelms the shrinking still life with its wavelike turbulence. The denouement here should be Matisse's breakthrough 'Harmony in Red' of 1908, in which the flower baskets and arabesques hang like a hallucinated veil in front of a red dining room. The Hermitage declined to lend this painting, but it is well worth looking up. Yet the resist-dyed fabric itself exerts a force that the paintings lack, especially in the flurry of light blue brush strokes (created by applying resist midway in the dyeing process) on top of the original darker blue, more realistic motifs. Once more the fabric seems to hold the key to the most radical parts of Matisse's future. It is almost possible to think that Matisse spent much of his career trying to make something as casually great as this talisman, and only rarely succeeded. In this context, the mustier, more realistic odalisques of the 1920's suggest that Matisse was simply zeroing in on his fabrics to get a closer look. If so, the scrutiny worked. As reproductions in the catalog reveal, the Egyptian cotton-appliquéd curtain, which depicts a rosette with framing leaves in tones of red and brown on a pale ground, is quoted almost verbatim in Matisse's 1948 painting 'Window With Egyptian Curtain,' owned by the Phillips Collection in Washington. Unfortunately, it is not in the show, but the curtain triggers a larger thought about works that are: the late cutouts are appliqués made of paper. This is not a definitive show, but maybe it doesn't have to be. Part of its achievement may be to remind us that exhaustiveness is not as important as a bold new idea. And ultimately, the show is less about art than about the artistic process, the way artists scour their environments and hoard motifs and inspiration even before they are artists. Matisse's textiles were basic to his development of painting as a unified, all-over, forward-pressing surface. They functioned as a kind of multipurpose emblem of the artificial nature of painting - a pliant, portable picture plane that could be used to close off real space while intimating abstraction. They were almost always ahead of him. At the end of his career, he said, 'Even if I could have done, when I was young, what I am doing now - and it is what I dreamed of then - I wouldn't have dared.' We can only take him at his word.

Subject: Innovative Cézanne and Pissarro From: Emma To: All Date Posted: Sun, Jun 26, 2005 at 09:39:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/arts/design/24cott.html?pagewanted=all The Innovative Odd Couple of Cézanne and Pissarro By HOLLAND COTTER Wedding bells are ringing again at the Museum of Modern Art. Two years ago, Matisse and Picasso got hitched there; Picasso and Braque before that. And on Sunday, when 'Pioneering Modern Painting: Cézanne and Pissarro' opens, a third, less conspicuously glamorous couple will begin a summerlong honeymoon on the museum's sixth floor. The exhibition isn't an instant grabber, a full-choir-and-orchestra affair, the way 'Matisse Picasso' was. It's a lieder recital, not an opera. It's as much about subtleties of language - how artists work out, inflect and share ideas - as it is about sonority. And once you have adjusted your sense of scale and remembered how to concentrate, deep-running Schubertian pleasures will start to flow. Matisse and Picasso are protean figures; we admire them as we admire obviously great things. But of all the early French modernist stars, Paul Cézanne and Camille Pissarro are the ones I love, which is a different emotion: sharp and personal, not public or history-bound. I leave the museum and find myself seeking them out in my head. I love Cézanne for his crankiness, which guarded an isolated soul; I love Pissarro for his kindness, which seems to have been completely unguarded and unconditional. I love both for being workaholic rebels with high causes - revolution, simplicity - and for being rebels to the end, the very end. I love their art: Cézanne's transparent palisades of stained-glass green and blue; Pissarro's woods and fields, light-dusted and virginal. Maybe more than anything, I love how they loved each other, with an affection alternately paternal, brotherly and collegial, competitive but protective. Thanks to Pissarro, a hazardously high-flying young Cézanne made it to earth without a crash. Thanks to Cézanne, Pissarro took flight in ways he might otherwise not have. For a decade or so in the mid-19th century, they often worked side by side, exchanging telepathic vibes, the way close couples can. Those years are the focus of the exhibition - humanly scaled at 80 paintings - organized by Joachim Pissarro, a curator in the department of painting and sculpture at the Modern, and a great-grandson of Camille Pissarro. Both artists had origins outside the French cultural mainstream. Pissarro, born on the Caribbean island of St. Thomas, was the child of an émigré Jewish businessman. He was educated in France; but only after returning to St. Thomas, then spending two years in Venezuela, did he settle in Europe for good to become, against his father's wishes, a painter. Cézanne was from Provence in the south of France, and he also chafed under family expectations. Packed off to Paris to study law, he took painting classes instead at a walk-in studio school, where the other students mocked his provincial gaucheries. There he met Pissarro, who was nine years his senior and did not mock him, and they became friends. They made a striking odd couple. Cézanne was a furious misfit with the face of a hobbit, the mind of a scholar and the mouth of a stevedore. Pissarro was grave, patient, but radically anti-authoritarian. When asked what he thought was the best way to advance French art, he said, 'Burn down the Louvre.' He wasn't kidding. He was a yippie who happened to look like a monk. What they shared was ambition and elevation of purpose. As unorthodox painters, they had little chance of success in the state-sponsored salons. So they did what they wanted to do: they followed the path of greatest resistance. They turned exclusion into independence, and independence into a moral imperative that they could not, would not shirk. Paradoxically, the biggest initial difference between them was their art, as demonstrated by two amazing 1866 paintings in the show's first gallery, where the installation feels a bit jumpy. (It soon settles down.) Pissarro's 'Banks of the Marne in Winter' may not look so daring now, but it was a breakthrough for him. It pulled him out of a soft-focus Corot bag and put him somewhere else, where the paint handling is cool, the composition stripped down to field, hill, and sky. The plein air plainness of Daubigny is here; so is the future geometry of Mondrian. The corresponding 1866 painting by Cézanne, a near-life-size portrait of his father, is a world away: spookily claustrophobic, its paint buttered on with a knife. Cézanne pčre perches on an unstable chintz-covered chair made of what looks like melting wax mixed with blood. A politically conservative banker, he is shown holding a leftist newspaper that he would ordinarily not have been caught dead reading. A still life by his errant son hangs above his head. This is portraiture as a passive-aggressive act of revenge. The artists learned from their dissimilarities. Cézanne began to do more landscapes and to experiment with geometry. Pissarro took up a painting knife and went a little wild. They became a kind of two-man collective, exchanging information and rotating roles. In 1871, in Louveciennes, Cézanne borrowed an Impressionist-style landscape that Pissarro, one of the founders of Impressionism, had recently completed. He copied it, but with significant alterations. The basic image, of autumn trees lining a road, is intact. But Pissarro's fine-grained paint handling is simplified, and his naturalistic details - leaves on trees, ruts in roads - ignored. On Cézanne's part, there's a major boiling-down process going on. It continues into the decade, with the years around 1875 marking the culmination of their effort to define an innovative, increasingly conceptual form of painting, in which a traditional grammar of drawn outlines, tonal volumes and perspectival depth - in a word, realism - gives way to a new logic of color and light. A gallery of landscape paintings at the center of the show is devoted to this high moment, their own private Woodstock. It's a room of rigorous, fanatically concentrated beauty. Paintings of woodland scenes line one wall, with alternating pictures by each artist. They are like windows onto a sun-dappled Eden, an unbroken curtain of green seen by two sets of eyes that have become one. And yet not one. At this point of apparent mutual absorption, the painters also assert their individuality, which has never disappeared. Pissarro's 'Climbing Path, L'Hermitage, Pontoise' (1875) is a spinach-and-watercress cloud of stippled foliage, with village rooftops half hidden behind. It's Impressionistic. Cézanne's 'Landscape, Auvers-sur-Oise' of a year earlier is not. It's virtually the same scene, but with trees cut back and the buildings brought into sharp focus and stacked up like blocks. Two 1877 paintings of an orchard in the village of Pontoise present further contrasts. Pissarro's grove of trees is a mirage, dotted into existence with all-over flicks of paint, while Cézanne's is made of large chunks of color puttied into place. The exhibition is installed in a way that lets you examine this surface activity fairly closely, as the artists might have done, looking over each other's shoulders. So you can really see what's happening: Pissarro's embroidery, Cézanne's brick-and-mortar. In the late 1870's, the bond between the artists began to loosen. And when Pissarro had a short but serious fling with Neo-Impressionism, Cézanne, ever ready to feel betrayed, shut the door on the friendship, without, however, shutting the door on Pissarro's early art, from which he continued to learn. His interest is documented in a magnificent pairing of pictures at the end of the show. They are woodland scenes. One is by Pissarro - 'Die Schoene Muellerin' in paint - and dates from 1879; the other is by Cézanne from 1894. Together they are absorbed in a spousal conversation, one that needs few words. Everything the artists have given each other, and love about each other, is right there, visible. Such linkings of paintings across time in the show will give art historians lots to mull over and disagree with. And some visitors will doubtless complain about the very pairing of Cézanne and Pissarro, see it as an opportunistic upgrading of a lesser, I would say badly undervalued reputation - Pissarro's - on the back of a greater. Well, we're all addicted to the ranking game. But where 'Matisse Picasso' exploited it, this exhibition does not. That final pairing pretty clearly says: Here is the past; it is Pissarro. Here is the future; it is Cézanne. At the same time, the story leading up to this is more nuanced. At certain places along the way, Pissarro was the future, and we have Cézanne because of him. This thinking reflects a modern scholarship that understands history, not as a lineup of singular events and personalities, but as patterns of relationships that persist over time, strengthening and weakening and strengthening again. The relationships can feel distant and chilly: Matisse and Picasso eyeing each other gigantically from afar. Or they can feel immediate, in-the-now as the wedding of toughness and gentleness, impetuosity and restraint that was the Cézanne-Pissarro alliance. For a few years two artists put idea over ego, experiment over truth, said 'I do' and 'I don't know' in the same breath, and I love them for all of that.

Subject: Harvard Nutrition Source From: Jennifer To: All Date Posted: Sun, Jun 26, 2005 at 09:17:30 (EDT) Email Address: Not Provided Message: http://www.hsph.harvard.edu/nutritionsource/ Harvard Nutrition Source is excellent.

Subject: Precious Metals From: Jennifer To: All Date Posted: Sun, Jun 26, 2005 at 09:13:22 (EDT) Email Address: Not Provided Message: The market for gold or gold stocks as an investment is quite small, so sharp swings in price can be readily generated. I doubt the value of all gold stocks is equal to that of Pfizer, or much more than half Pfizer. I would not be surprised if gold prices were to surge or not surge, but that there will be any fundamental reason such as properly hedging against inflation is doubtful. There is an awful lot of oil money floating about, and a fair portion of this has to be in hedge funds. A later hedge against a weaker dollar? Inflation however will not likely be the issue. In any event, the Vanguard Precious Metals Fund is worth paying attention to now and again.

Subject: Yellow-breasted Chat From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 16:57:13 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4964&exhibition=4&pass=public&size=default&lang=eng Yellow-breasted Chat New York City, Central Park--Strawberry Fields.

Subject: As Serious as a Heart Attack From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 16:49:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/opinion/25sat3.html?ex=1119844800&en=9918f028d93f1b6c&ei=5070 As Serious as a Heart Attack Most people who pay attention to their diets know that partially hydrogenated oil contains trans fat that clogs the arteries and reduces the 'good' cholesterol that helps unclog them. Beginning next year, companies must disclose trans-fat amounts on food labels. But it is already clear that the Food and Drug Administration is going to have to do more to protect the public from heart-threatening fats. One problem, detailed in a report from the Center for Science in the Public Interest, is that some companies that don't use trans fat nevertheless use other dangerous oils. Other companies, searching for trans-fat alternatives, are turning to unhealthy fats. The most popular is palm oil, a saturated fat that is widely believed to promote heart disease and whose main distinction is that it is less harmful than trans fat. Some companies that make products with palm oil, including Newman's Own Organics popcorn and cookies, emphasize on their packages that their products are trans-fat free and note the relative advantage of palm oil over trans fat. But all this does is create the false impression that palm oil is good for you. The F.D.A. should act quickly to stop labels that could mislead consumers. The agency should also encourage the use of healthier alternatives like certain safflower and sunflower oils and promising new blends. The ultimate aim, however, should be to end the widespread use of partially hydrogenated oils. As things now stand, the F.D.A. acknowledges that trans fats are unhealthy at any level, and yet maintains that the partially hydrogenated oils that contain them are basically safe. The agency can't have it both ways. Public health would be greatly improved if the F.D.A. prohibited their use.

Subject: Are saturated fats really bad? From: David E.. To: Emma Date Posted: Sat, Jun 25, 2005 at 17:12:09 (EDT) Email Address: Not Provided Message: This article has only one uncontroverted point. Everybody agrees that partially hydrogentated oils are very bad. Many, myself included, believe that saturated fats are OK, especially if the other choice is polyunsaturated oil. Polyunsaturated oils are prone to oxidation, plus many of them are unbalanced sources of Omega6. Excess omega6 will offset omega3's putting the body's eicosanoid balance into a inflamation mode. Which happens to be the most current explanation of the cause of heart disease.

Subject: Chevron Criticizes Rival Suitor From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 16:47:46 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/worldbusiness/25unocal.html Chevron Criticizes Rival Suitor By ALEXEI BARRIONUEVO and ANDREW ROSS SORKIN A top executive at Chevron yesterday sharply criticized the $18.5 billion bid by the China National Offshore Oil Corporation for Unocal, calling it an inferior combination that would end up producing less oil and natural gas than a Chevron acquisition and would turn Unocal into a company 'strategically focused on China.' The executive, Peter Robertson, Chevron's vice chairman, also accused the Chinese of not competing fairly. 'Clearly, this is not a commercial competition,' Mr. Robertson said. 'We are competing with the Chinese government, and I think that is wrong.' Even so, Chevron - despite an ostensibly lower bid - may well hold a stronger position than the Chinese company in the unfolding takeover battle. Mr. Robertson said yesterday that Chevron believes that it is under no immediate pressure to improve its offer, even though the bid by the Chinese company is sharply higher than Chevron's offer and is all cash. The Chinese offer 'is not a knock-out blow,' Mr. Robertson said. 'We are going to win this one. I am convinced of it.' On Wednesday, the Chinese company, that nation's third-largest state-owned oil company, known as CNOOC, made an audacious move to woo Unocal away from Chevron. On the heels of other moves by Chinese companies to take over American companies, the struggle for Unocal has quickly been elevated into a test of Chinese-American strategic and economic relations far beyond a standard corporate deal. Already, more than 40 members of Congress have signed a joint letter to President Bush, urging the administration to conduct a thorough review of the Chinese bid. Meanwhile, some prominent industry executives have warned against political meddling in a commercial deal. Lee R. Raymond, the chief executive of Exxon Mobil, said on Thursday that it would be a 'big mistake' for Congress to interfere with a bid by CNOOC, saying intervention could backfire on American companies seeking to do business abroad. But for all the political attention the bid by CNOOC is receiving, it may never overcome a number of basic business obstacles that stand in the way. Chevron's ability to hold the line rests in large part on a provision in the merger agreement it signed with Unocal in April that gives Chevron the right to call a shareholder vote on its offer before Unocal can allow its shareholders to consider any other deal. Chevron is expected to call such a vote of Unocal shareholders in August. A spokesman for CNOOC said the company made its decision to bid for Unocal 'based solely on shareholder- value considerations.' Analysts agreed with Mr. Robertson that the Chinese bid was not high enough to dissuade Chevron. 'The Chinese could have discouraged Chevron from chasing them, but they kept their bid within striking distance,' said Fadel Gheit, an analyst at Oppenheimer & Company, a brokerage firm. Mr. Gheit owns both Unocal and Chevron shares and the firm is recommending both stocks. Indeed, CNOOC is more likely to be pressed to raise its offer at least once to try to derail approval of Chevron's offer. The other factor in Chevron's favor is time. Chevron could complete a deal almost immediately after approval from shareholders. The Chinese company, on the other hand, could not hope to complete a deal until at least six months after Unocal shareholders rejected the Chevron offer. And even that time frame might be considered optimistic, given the prospect of a government review over national security issues that have been raised by this deal. Unocal shareholders would also have to face the risk that if they voted down the Chevron deal, at that point there would technically be no other deal on the table. CNOOC is under no legal obligation to make its bid. As a result, some expect that CNOOC might, as a gesture of good faith and transparency, put $18.5 million in an escrow account as a sign that it will guarantee to come through with an offer. Unocal said on Thursday that it would begin talks with CNOOC. Executives briefed on the discussions said that while Unocal's executives would prefer to do a deal with Chevron, they hope to play off one competitor against the other, thereby securing an even higher price for the company. Bankers have also been trying to rustle up other energy companies that could put Unocal at the center of a full-blown bidding war. Yet while Eni of Italy had been interested in Unocal in the spring, it ultimately did not make a bid. New bidders like Total of France, which has nearly $10 billion in cash, are not likely to emerge, those close to the negotiations said. Chevron is offering Unocal shareholders a combination of 0.7725 share of Chevron stock and $16.25 in cash. Based on Chevron's closing price yesterday of $56.69, that offer is currently worth about $60 a share. CNOOC's offer is $67 a share in cash. In explaining their reasons for putting the company up for sale earlier this year, Unocal executives explained that the company had reached the limits of its ability to develop large-scale energy assets on its own. Yesterday, Mr. Robertson contended that Chevron had more technology to develop those assets. He said Chevron and Unocal were currently jointly producing complicated discoveries in the Caspian Sea and others in the deep waters of the Gulf of Mexico that would bear more fruit if the technical skill of the two companies were combined. CNOOC has no deepwater operations. Mr. Robertson also said that the Chinese company might choose to steer natural gas produced in Unocal fields in Indonesia to the Chinese market as liquefied natural gas, rather than into the broader Asian liquefied gas market. A spokesman for CNOOC said the company planned to develop the oil and gas properties in the Gulf of Mexico fully and to increase production there and elsewhere. The spokesman, who also reiterated the company's vow to maintain energy supplies to the United States, said that it would retain more Unocal employees than Chevron would. Mr. Robertson rejected that claim. 'I will not sit here and tell you there will be no job cuts,' he said. 'But not much of the synergy in this merger comes from cutting people.' He noted that Unocal had a very small headquarters in El Segundo, Calif., and that most of Unocal's employees in the United States worked in Houston, where Chevron has a large operation. 'We need all of those people,' he said.

Subject: Educating Girls From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 16:37:47 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/opinion/25sat2.html Educating Girls The wish list of the world's poorest families is long. They need to grow more crops and start more businesses. They need to have smaller families, healthier and better educated children and safer pregnancies and births. They need to fight AIDS and protect women and children from domestic violence. There is one program that will help achieve these goals and more: educating girls. When officials of the richest countries meet next month at the Group of 8 summit, they should strongly consider a large investment in schooling for girls. Worldwide, 58 million school-age girls are deprived of education. In rural Africa, about 70 percent of girls do not finish primary school. In some countries, a girl is 20 percent less likely to start school than her brother is. Girls benefit tremendously from education, and so do the societies around them. But, especially in rural or traditional societies, parents need daughters to help in the house. They are often afraid to send girls on unsafe walks to faraway schools. Perhaps most important, in many places girls become part of their husband's family when they marry, so parents of an educated girl do not reap the benefits of her higher income and skills. These cultures have a saying: educating your daughter is like watering your neighbor's garden. Since parents in many places must pay for school fees, books and uniforms, they often send only their boys. But countries have begun to notice that educating women provides amazing social benefits, from better health to a better economy. They have begun programs to encourage girls to start and stay in school. The most direct way is to make education cheaper - nations that have eliminated school fees have had their schools flooded with girls. In Uganda, attendance soared from 2.5 million to 6.5 million children, most of them girls, after fees were abolished in 1997. Other nations give cash payments or bags of wheat to families for attending school. In other places, building schools in each community so students can travel less is the solution. The Save the Children charity recently ranked Bolivia as the country that has made the most improvement in girls' education. In 1995, Bolivia instituted sweeping reforms, with special attention to rural girls. Families received cash incentives. Schools got more teachers who speak indigenous languages, and revamped schedules to provide vacations during harvests. Bolivia has since closed the gender gap and the number of students completing primary school rose to 78 percent from 10 percent. Three years ago, rich countries and organizations promised countries with similarly thoughtful and transparent plans that money would be no obstacle. Nearly 40 countries have such plans, but sadly, the money hasn't materialized. Since attracting girls means hiring more teachers, poor governments are unwilling to get started until they know they can rely on the money to pay salaries. Next month's meeting of the G-8 can fix this. Some $5 billion in new money a year is needed to help meet the goal of universal education. So far, the Bush administration has been resisting calls to commit more money to Africa. But Laura Bush is a passionate advocate of girls' education. She should convince her husband that there are few better bargains.

Subject: An Oil Exploration and Refining Puzzle From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 15:52:14 (EDT) Email Address: Not Provided Message: American oil producers are acting surprisingly as though price increases are too temporary to warrant meaningful investment in exploration or refining. Thus, I am wondering about the possibility of a different regulatory balance and investment incentives though investment incentives would appear absurd given current astonishing profitability.

Subject: Re: An Oil Exploration and Refining Puzzle From: Pete Weis To: Terri Date Posted: Sat, Jun 25, 2005 at 16:49:31 (EDT) Email Address: Not Provided Message: As Emma's post 'Life $ Energy after Enron' stated - there isn't much out their in expected exploration finds. This is something a number of geologists who have worked in the oil industry (one of them now a Princeton geologist who was featured in a NYT's article recently) have been saying. These geologists are telling us that all of the major oil fields to be found throughout the world are known and are being tapped. The field in the Alaskan wildlife reserve which may open by 2008 if they get going now won't actually make much difference in the overall global demand for oil out there. I have seen a number of reports by geologists from the oil industry and at universities that state we will see peak global oil production between now and 2010. I have yet to see a report by any geologist who refutes this although I have read statements by so called transportation experts and energy investment 'experts' who refute this. I don't know about others, but I'm paying more attention to the geologists who have run the numbers and have looked at the data. We each can make our own conclusions about the reasons why these other more removed 'experts' claim that oil is 'overpriced' and will eventually settle out at around $35-$40 per barrel. Certainly bullish outlooks for the stock markets are counting on cheaper oil or at least oil which does not go much higher. From what I'm reading I believe in 5 years or so we will probably look back at $60 per barrel as amazingly cheap oil. Without a doubt there is a very feverish scramble to lock up the rights to what is left of global oil. If oil companies believed there were any major oil deposits out there untapped and undiscovered they would be using plenty of their large profits to explore. The fact that they aren't is very revealing.

Subject: Reason to be Bullish From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 14:06:37 (EDT) Email Address: Not Provided Message: The yield on the long term Treasury bond is 3.91%, while the dividend on the Vanguard Value Index is 2.45%. That means if capital gains on value stocks are 1.5% a year for the coming decade, an investor would be better served with stocks. Remember too that stocks are tax advantaged. Dividends are completely stable in a downward direction but will surely increase; capital gains on the index of less than 1% a year then would be enough for stocks to be the choice. There is reason to be bullish.

Subject: Shifting Gears, and Funds, Into Equities From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 13:51:45 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/25values.html Shifting Gears, and Funds, Into Equities By CONRADE de AENLLE ALAN GREENSPAN says he does not understand why yields on government bonds are so low. He is not alone. Market watchers who try to determine the relative valuations of stocks and bonds are puzzled, too. When they crunch the numbers, many find that with yields near the lowest point in more than a year, bonds are at one of their most overvalued extremes in decades. The discrepancy is compelling tactical allocators - fund managers who shift assets between equities and bonds to try to outperform more static balanced portfolios - to shovel money aggressively into stocks. There is little nuance in the way Mellon Capital Management has positioned the $40 billion it has in tactical asset allocation portfolios; it is 100 percent in equities, said Thomas F. Loeb, the firm's chief executive. Mr. Loeb, who also manages the Vanguard Asset Allocation fund, has been moving money in one direction, then back again, since 1973. He said he found this to be one of only seven occasions in which the stock market has been so cheap, relative to bonds. Several of the others were near the ends of bear markets - December 1974, May 1980, December 2002 - and all produced double-digit gains over the next 12 months, with an average return of 24.9 percent. Mr. Loeb is confident of a similar result this time. 'We expect quite a gain in equities,' he said. 'When pricing gets out of whack, as it is now, you get a windfall gain - if you're positioned correctly - when things snap back.' He does not care why valuations get out of whack, he added, only that they do. And he is not interested in picking the right securities, either. He loads up on futures contracts, liquid instruments that allow big stakes to be taken cheaply and quickly. Mellon's analysts value stocks using a formula that assigns a theoretical present value to all future corporate dividends, then they compare the result with the yield on corporate bonds, Mr. Loeb said. He noted - while declining to be specific - that other numbers are plugged in, mainly relating to accounting for risk. Mellon's method is a conceptual cousin of the so-called Fed model, which compares the yield on 10-year Treasury bonds with the earnings yield - the inverse of the price-earnings ratio - of the Standard & Poor's 500-stock index. Using the Fed model, stocks are deemed undervalued when the earnings yield, calculated using analysts' estimates of operating earnings over the next 12 months, is above the bond yield. The reasoning is that it costs less to buy the same chunk of returns. Where does the Fed model - which, incidentally, has only a tenuous relationship with the Federal Reserve - say we stand now? With an estimated forward price-earnings ratio of about 15, the S.& P. 500's earnings yield is 6.7 percent, far greater than the 4.1 percent yield on the 10-year bond. By the reckoning of Thomson Financial, the stock market has been undervalued by 20 percent or more since late 2001 and is about 35 percent undervalued now. Contrast that with the spring of 2000, when the model showed stocks more than 70 percent overvalued - just about right, as it turned out. The Fed model and other allocation tools have their critics, who say earnings estimates do not always pan out, and sometimes they are off by a wide margin. Another drawback is that it is difficult to know, except in hindsight, how much at variance valuations can become. Before stocks become 70 percent overvalued, they are 40, 50, 60 percent overvalued. But investors who shift money too early - something Mr. Loeb concedes he does - can be secure that the day of reckoning for the overvalued market has only been postponed, not canceled. At least it has worked that way for 30-plus years. There is no way to be certain how asset allocation formulas will respond to rare events, like a threat to the financial system. Still, the Fed model probably would have yanked investors out of equities before the 1929 crash. While it probably would have moved them back in too early - stocks went from cheap to very cheap to ridiculously cheap before recovering in the mid-1930's - many investors broken by the crash waited a generation before trying stocks again. Investors could do worse than to employ a system that is easy to use, demands discipline, forces them to put fear and greed aside, and buy low and sell high.

Subject: Ruby-crowned Kinglet in Flight From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 11:27:06 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4811&u=17|29|... Ruby-crowned Kinglet in Flight New York City--Central Park--Wildflower Meadow.

Subject: Brazil to Copy AIDS Drug From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 11:22:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/health/25drug.html Brazil to Copy AIDS Drug Made by Abbott By TODD BENSON SĂO PAULO, Brazil - Brazil announced late Friday that it would start copying an AIDS drug made by the American pharmaceutical company Abbott Laboratories to provide a cheaper version for its AIDS treatment program, becoming the first country to break the patent of an antiretroviral medicine. The Brazilian government, which provides free AIDS treatment to all who need it, estimates that it will save about 130 million reais a year, or about $55 million, by making a generic version of the drug, called Kaletra. The government contends that it can make the drug for 68 cents a pill, almost half the $1.17 that it is paying Abbott for the medication. The country's health minister, Humberto Costa, said late Friday that the government decided to break the patent after Abbott refused to lower its price voluntarily or allow Brazil to make a cheaper version of the drug. Abbott, which is based in Abbott Park, Ill., now has 10 days to present a counteroffer before Brazil officially breaks the patent. If it does not, Mr. Costa said Brazil would pay the company a 3 percent royalty on the generic version of the drug, as required by the World Trade Organization. Abbott criticized the move, arguing that Brazil already receives the drug at the lowest price in the world outside of humanitarian programs in Africa. 'The Brazilian government does not have a legal basis to issue a compulsory license for Kaletra on the grounds of public interest or national emergency,' it said. Still, the company did not say how it would respond to Brazil's decision, saying only that it remained willing to work with the government to find a 'mutually agreeable solution.' The decision could strain relations between the left-leaning government of President Luiz Inácio Lula da Silva and the Bush administration, which has been pressing Brazil in trade talks to step up its protection of intellectual property rights. Several members of Congress have already asked the United States trade representative, Rob Portman, to retaliate by applying trade sanctions. Brazil is also negotiating with two other pharmaceutical giants, Gilead Sciences and Merck, to get them to lower the price on two widely used antiretroviral drugs, Tenofovir and Efavirenz. Brazil already legally makes copycat versions of several AIDS drugs, and has successfully forced international pharmaceutical companies to lower prices in the past by threatening to break patents. But the government argues that the high cost of newer antiretroviral medicines like those made by Abbott threatens to jeopardize its widely praised AIDS program.

Subject: Teenagers and Their Plastic From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 11:21:01 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/25credit.html?pagewanted=all Teenagers and Their Plastic, the Rites of Passage By JENNIFER ALSEVER Teenagers are a fickle bunch: first they wanted credit cards of their own and now it seems they don't. That is not to say they avoid all plastic. These days, their wallets are full of other cards, including debit cards, which draw money from banking accounts, and a wealth of prepaid cards that store a certain cash value that can be tapped with a swipe of the card. Just 15 percent of teenagers surveyed this spring said that they were interested in obtaining a credit card in their own name, down from 34 percent surveyed in 2000, according to a survey of 2,000 teenagers conducted by Teenage Research Unlimited, a market research firm in Northbrook, Ill. The portion who have credit cards in their name also declined, to 9 percent of teenagers from 11 percent in 2000. Children under the age of 18 cannot legally apply for their own credit cards, but parents can co-sign for them. The lack of enthusiasm may stem in part from these new forms of plastic as well as from the influx of financial planning classes geared toward youth and the well-publicized stories of college students drowning in debt, said Rob Callender, trends director for Teenage Research Unlimited. The average college undergraduate has $2,169 in credit card debt, according to a 2005 report by the student lender Nellie Mae. 'I wouldn't be surprised if this data shows they've learned from mistakes of the past and they aren't willing to make the same mistakes in the future,' Mr. Callender said. 'This group of teens has a great head on their shoulders. They're driven. They're motivated. They're savvy.' They are also experienced shoppers who wield increasing influence in America's discretionary spending. In 2004, the nation's 33 million teenagers, ages 12 to 19, accounted for $169 billion in spending - not including spending on their behalf or family purchases they may have influenced, according to Teenage Research Unlimited. Much of that money bought clothing, snacks, shoes, CD's, video games, MP3 players, computer equipment and cellphones. The spending has not gone unnoticed by card companies and banks. MasterCard has recently introduced a prepaid card called MyPlash, a reloadable debit card that can be stocked with a limited amount of cash. The card has pictures of music celebrities like Clay Aiken, appealing to young consumers. Visa also has prepaid cards, including a Hilary Duff Visa and the Visa Buxx card tailored to preteenagers. Card companies emphasize that the cards are not credit cards and so can better prepare youth for the day they sign up for their own credit card. 'It requires teens to live within a budget,' said Rhonda Bentz, spokeswoman for Visa USA in San Francisco. She said parents could limit spending and easily monitor where money goes, while still ensuring that their children have money when traveling or in case of emergencies. 'Doling out cash is more antiquated,' said Jenifer Lippincott of Weston, Mass., who automatically transfers weekly allowances into checking accounts for her two daughters, ages 14 and 16, who pay for most entertainment with their debit cards. Ms. Lippincott said the system required her children to keep track of their balances and left a neat audit trail of spending. And, given the current climate of repeated data corruption and fears of identity theft, she is happy her teenagers are opting for alternatives to credit cards. 'When I hear about these things, my immediate reaction is phew,' said Ms. Lippincott, who also wrote the book, 'Seven Things Your Teenager Won't Tell You (And How to Talk About Them Anyway)' published by Ballantine Books this year. 'With debit cards, you are really getting the best of both worlds. The teen can have the experience of having a credit card without the liability.' She said her 16-year-old, Anabel, got her debit card at age 15, and her youngest daughter, Tess, got her card even younger, at 13. Tess, now 14, said she liked her card because her money was always easily accessible for movies or eating out. Plus, she said, 'it makes me feel more grown up.' Not everyone views prepaid and debit cards for teenagers so positively. 'It's the last frontier for credit card companies trying to expand their markets,' said Jim Tehan, spokesman for Myvesta.org, a Rockville, Md., nonprofit consumer education organization. 'They're looking younger and younger because if they can get that first card in their hands, they're a customer for life.' A MasterCard spokeswoman, Barbara Coleman, disputed that assertion. 'We don't market to kids,' she said, adding that MYplash was aimed at fans of the celebrity pictured on the front of the card. Still, she said, parents could use the cards to teach children about managing finances. Critics, however, worry about teenagers developing bad habits, especially when it comes to accumulating debt. 'The money is just abstract,' said James A. Roberts, a marketing professor at Baylor University in Waco, Tex., who has spent 10 years studying credit card behavior. People who use credit cards tend to spend more, are less price-sensitive and overestimate their wealth, he said. For years, card companies have been criticized for aggressive pitches to college students and offers of free T-shirts and other perks for opening accounts. Some colleges banned card companies from campuses because of concern that students would pile up heavy debts. Ben Martin saw the college credit card problem firsthand, as media manager at the College of Saint Rose in Albany. He decided then that at his household, credit cards would be forbidden entirely. His two daughters, now 18 and 25, can qualify on their own for credit, but they still do not have cards. 'They needed to learn that money isn't ephemeral. It's real,' Mr. Marvin said. 'They needed to get the feel of money going into their hands and out of their hands. With credit cards, it's too easy.' Mr. Marvin's youngest daughter, Johanna, now a freshman at Butler University in Indianapolis, said she did not mind her parents' rule. 'I would not be responsible enough to handle it, knowing when to use it, when to not, paying the bills,' she said. 'I try to keep cash on me. You never know when you're going to need it.' Credit cards have not disappeared from teenage life entirely. At 15, Emily Merkel of Portland, Ore., was not old enough to drive a car, but she was charging clothes, dinners and online music to her own credit card, a birthday gift from her parents with few spending restrictions beyond the card's $1,000 limit. 'There aren't many rules, I guess,' said Ms. Merkel, now 16. 'Just don't spend money you don't have. Pay your bill every month.' Ms. Merkel sometimes keeps a note in her purse with her card balance, so she knows what she is spending. The monthly bill arrives addressed to her mother, who hands it to Ms. Merkel to pay with her allowance from a checking account. She said she was glad to have the early training before going off to college. She said that credit card payments were easy to make using the Internet. 'I have never overspent,' Ms. Merkel said. 'There are people I know who have abused a credit card. But I find it really helpful. I'm not a big cash person. If I have cash, I'm tempted to spend it.' And at some high schools, credit cards still remain cool. 'Having a credit card in high school was about proving yourself, your image,' said Jessie Evangelista of Cherrytown, N.Y., who obtained her own card in ninth grade as a reward for earning good grades. Now 19, she is a freshman at Middlebury College in Middlebury, Vt.

Subject: Following Markets From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 10:39:07 (EDT) Email Address: Not Provided Message: Markets can seldom be predicted with any of the accuracy analysts like to regularly claim but there are patterns to markets that can help us prepare portfolios intelligently. What Vanguard and Morgan Stanley funds and indexes allow us to do is follow broad world markets and sectors, and look for patterns. Markets change in character with time, but historical patterns given us present confidence and help us identify what may come. I find these data sources superb.

Subject: Next Wave From China: Exporting Cars From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 10:17:23 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/worldbusiness/25honda.html?pagewanted=all Next Wave From China: Exporting Cars to the West By KEITH BRADSHER XINSHA, China - Honda Motor began loading cars onto a ship here on Friday for export to Europe in China's debut as a volume exporter of cars to the industrialized world. The shipment follows DaimlerChrysler's disclosure two months ago at the Shanghai Auto Show that it was negotiating to build a factory near Beijing to make small cars for export to North America. It comes at the end of a week when the Haier Group's bid for Maytag and the China National Offshore Oil Corporation's bid for Unocal have fed Western concerns about China's rapid economic rise. Automakers from around the globe, including General Motors, Ford Motor and Toyota Motor, are racing to build factories in China even as the rest of the world faces severe overcapacity in car manufacturing, raising the prospect that more factories may someday have to close in Western countries as Chinese exports grow. China's swift development has already alarmed leaders of the United Automobile Workers and other Western labor unions, who say their members cannot compete with workers earning $100 a month in coastal Chinese provinces and who would earn half that at auto factories being built in inland provinces. Following a path already blazed by Korea and Japan, China has built a large auto industry with increasingly high quality over the last decade while protecting its home market behind steep trade barriers. China still imposes a tariff of close to 30 percent on imported family vehicles, compared with American tariffs of 2.5 percent on imported cars, minivans and sport utility vehicles and 25 percent on pickup trucks. What distinguishes China from its Asian rivals, however, is that China decided much earlier in its automotive development to welcome multinational companies - although only through joint ventures with Chinese manufacturers, who are rapidly learning the latest manufacturing and engineering techniques from their partners. Particularly impressive, auto analysts said, has been the swift improvement in the quality of cars produced in China. Hironori Kanayama, president of the Honda subsidiary producing the cars here, exhorted employees at a ship-loading ceremony here to improve quality further. 'Our market is overseas,' he said. 'Our competitors are strong international automakers; we have to exceed them. Our only way out is to make products equal to or exceeding those made in Japan.' During a brief interview, Mr. Kanayama conceded that the quality of cars assembled here was slightly worse than that of identical models made in Japan, but said that the difference was quite small and narrowing. Honda tried to play up Friday's shipment for Chinese audiences without feeding fears overseas of China's economic might. Honda paid to fly in scores of Chinese journalists for the ceremony but did little to alert Western journalists, and only three showed up. Honda employees began driving 150 Jazz wagons onto the Panamanian-registered Liberty Ace on Friday at a dock on the outskirts of Guangzhou, 80 miles northwest of Hong Kong. The ship was already carrying 5,000 cars from manufacturers in Japan, and will carry all of the cars to Ghent, Belgium. The first batch of Chinese-built Jazzes will then be trucked to German showrooms. Chinese-made and Japanese-made Jazzes will be sold interchangeably and for the same price at Honda dealerships, first in Germany, then in Italy, and eventually across Europe as Honda tests customer reaction. Slightly smaller than a Civic, the Jazz is sold in Asia and Europe but not the United States, where the market for small cars is limited. Honda executives said they had no immediate plans to start building any larger models for export. The cars being exported were assembled at a new Honda factory here that was built just to supply the European market. By agreeing to export all the cars, Honda won the right to own 65 percent of the factory while its local partners own the rest. China has a 50 percent cap on foreign investment in car factories that supply the domestic market. During a short press tour of the factory on Friday, it was apparent that Honda had invested in robots where they were needed for quality and safety reasons, in the welding of the automobile bodies. But the factory otherwise relied heavily on manual labor, which is very cheap, with workers pushing carts bearing partly completed bodies and auto parts in places where a larger factory in a Western country would probably have a conveyor belt. At Honda's huge factory in Marysville, Ohio, nearby suppliers deliver seats and other parts to the assembly line every few minutes, minimizing the need to keep costly inventory on hand. But briefly visible during the press tour here was a large hall full of stacks of spare parts and a couple of hundred gray car seats wrapped in plastic. Honda is still importing many of the parts used here, as was evident from stacks of wooden boxes stamped 'Made in Japan' near the welding line. Atsuyoshi Hyogo, the chairman of the Honda subsidiary here, said the company was rapidly increasing its reliance on locally made parts. The world's biggest auto parts companies have all built factories in China and plan to build more, initially to supply the local market but increasingly to supply assembly plants in industrialized countries as well. The journey from the factory to the port captures the swift and continuing industrialization of China. Close to the factory, the road passes miles of banana plantations, together with rows of single-story concrete barracks with corrugated steel roofs for the workers. Farther along are huge factories producing concrete and other industrial materials, with workers in hard hats clambering over the rising steel skeletons of more factories not yet completed. The Liberty Ace had tied up between a modern dock, with the latest giant cranes using steel talons to load 40-foot steel containers onto a barge, and an aging bulk cargo dock, the cranes equipped with steel buckets for unloading coal, but standing idle and with some rust showing Friday afternoon. Chinese and multinational automakers in China already export, but until now these shipments have been made on an extremely small scale. A Ford joint venture in China ships 1,000 vans a year to the Philippines. A G.M. joint venture ships up to 2,000 very small cars to Southeast Asia. Purely domestic Chinese automakers are starting to export. Brilliance Automotive has announced plans to export up to 2,000 Zhonghua sedans to Germany later this year, and Chery is laying plans to try to start selling cars in the United States in 2007 or 2008. But Honda's effort is much greater: its factory here is scheduled to export 10,000 cars during the rest of this year and reach 50,000 a year within five years. Robert A. Lutz, G.M.'s vice chairman, predicted at the Shanghai Auto Show that Chinese manufacturers would learn to export in large quantities on their own. 'We're rapidly approaching that point - I wouldn't venture to say which one it will be,' he told several journalists, later adding, 'One or more Chinese brands exported to other regions of the globe and selling successfully I would describe as a sure thing in the next five years.'

Subject: Life in Energy, After Enron From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 10:14:52 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/25interview.html Life in Energy, After Enron By JAD MOUAWAD Bruce A. Williamson joined Dynegy as president and chief executive in 2002 at the worst possible time. The previous year, Dynegy, which is based in Houston, had scrapped plans to buy Enron, shortly before Enron sought bankruptcy protection. Mr. Williamson was brought in from Duke Energy to overhaul Dynegy, sell unprofitable assets and settle shareholder suits as well as government investigations. Dynegy recently hired Credit Suisse First Boston to find a buyer for its $3 billion natural gas transmission business. The next step may be a sale of what is left. During a recent visit to New York, he discussed the company's future. Following are excerpts from that conversation. Q. How is the sale of the natural gas business going? A. We're running a standard process - strategic alternatives is the euphemism for that. We are well along the process and we'll probably have a conclusion ... let's say the first week of July or the last week of June. Q. What's the selling point? A. When I joined Dynegy in October of '02 - I tease myself, when I was crazy enough to walk through the door - a lot of people focused on where the stock price was. It had fallen to less than $1. Our debt was trading at 20 cents on the dollar. If you owned the sovereign debt of Saddam Hussein right now, you'd get 20 cents on the dollar. Q. You're in good company! A. Today, almost all the debt is back at par. We had businesses in trading, in marketing, in broadband communications, in Europe, in communications as far as China. What we have done is very systematically sell those off, shut down offices and concentrate on the two businesses that looked like we had a competitive advantage. Q. There is speculation that NRG Energy was interested in buying Dynegy. Have they approached you? A. Well, we don't comment every time there's a speculation in the trade press. But NRG and Dynegy are partners in California. We have a 50-50 joint venture in all our California assets, so we talk a lot to each other and we have a good relation. Q. Do you think there will still be an independent Dynegy by the end of the year? A. We don't need to do anything. But now we can consider strategic opportunities. Now there are things we can do if they are right for our investors. Q. Do you have a timetable for that? A. No timetable, other than we think it's the right thing to do for the sector. Q. Being in Houston, four years after Enron, is the energy business regaining confidence? A. I guess your question is, broadly, the reaction to Enron? Q. Yes. What's the mood like? A. If you're in the oil upstream exploration and production, there's a lot of money coming in. The biggest concern the upstream companies have is where to go from there. What do they do with the money? They're running out of places they want to go to explore. The power merchants, and that includes ourselves and Reliant, El Paso, Calpine, Duke, are all recovering and have all been inwardly focused for the past two and a half years. I think broadly in the community in Houston, it goes in waves. Enron sort of dies down and then something rears its head up and washes it back in the news. The Enron movie came out at the River Oaks Theater, literally a few blocks from where Ken Lay lives, and that was quite an event. One person - a board member that I will keep nameless - told me he hadn't been to a movie like this since he was 12 and went to see 'Hopalong Cassidy.' Someone would come on the screen and people would boo and hiss and throw popcorn.

Subject: Running out of places From: Pete Weis To: Emma Date Posted: Sat, Jun 25, 2005 at 13:03:26 (EDT) Email Address: Not Provided Message: 'They're running out of places they want to go to explore.' Jimmy Carter was a President uniquely equipped to get us through the energy crisis which is developing. We are now heading down a road with a dead end.

Subject: Another Flaw is Found in Heart Units From: Emma To: All Date Posted: Sat, Jun 25, 2005 at 10:13:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/25/business/25guidant.html?pagewanted=all Guidant Says Flaw Is Found in More Types of Heart Units By BARRY MEIER The Guidant Corporation, already under scrutiny for delaying disclosures about flawed products, urged doctors yesterday to stop implanting its most sophisticated heart devices because of a fault that might cause some of the 40,000 units already implanted not to work properly. The move could have significant financial consequences for Guidant because it affects, for now, sales of many of the company's heart devices in the fastest-growing part of the market: advanced defibrillators that also act as pacemakers for both sides of the heart. Yesterday, the company's stock fell $4.70, or 6.85 percent, to $63.90 as investors grew nervous over the fate of Johnson & Johnson's plan to acquire Guidant for $25.4 billion. Analysts said they thought Johnson & Johnson would probably cut that price. They also said the deal's planned closing in the third quarter of this year might be delayed. They added that the products involved in yesterday's move appeared to account for a substantial percentage of Guidant's defibrillator sales. Both Johnson & Johnson and Guidant had no comment and declined to make their top executives available for interviews. The flaw at issue in yesterday's announcement involves a magnetic switch that becomes stuck in the off position. For patients, the flaw poses less of a risk than some defects affecting other Guidant devices, doctors said. However, they said users would have to see physicians so they could disable the problem component. As proposed partners, Johnson & Johnson and Guidant have provided very different case studies of corporate responses to product problems. Johnson & Johnson, based in New Brunswick, N.J., withdrew all bottles of its pain reliever, Tylenol, from store shelves in 1982 after reports of product tampering. The company won praise at the time for its quick response. Guidant's problems began in late May, when it was disclosed that the company, based in Indianapolis, had not told doctors for three years that one type of its defibrillators had repeatedly failed because of an electrical defect. A defibrillator emits an electrical jolt that shocks a chaotically beating heart back into rhythm. Since then, the device maker has been buffeted by bad publicity because it has been forced to make repeated announcements about other device-related defects. Late last week, under pressure from the Food and Drug Administration, Guidant recalled 50,000 defibrillators, with thousands of them at risk of potentially short-circuiting just when needed to produce a life-saving shock. 'One thing that distinguishes this recall from others is the time gap from when it was discovered and when it was disclosed,' said Alexander Arrow, an industry analyst with Lazard. 'It points to a corporate response that looks inappropriate, so that it potentially has more staying power on the reputational level.' Yesterday's announcement by Guidant affects several models: the Contak Renewal 3; Contak Renewal 4; Contak Renewal 3 and 4 AVT; and the Renewal RF. The company said it had received four reports of flawed switches among the 40,000 units implanted. However, the financial impact on Guidant could be substantial, at least in the short term, because the affected models appear to involve many of the company's advanced defibrillators. The use of such devices, which cost about $25,000 each, is growing rapidly in part because Medicare has greatly increased the number of older patients for whom it will pay for such devices. The units are used in patients who are at risk of cardiac arrest and have other heart problems. Dr. Eric N. Prystowsky, a heart specialist at St. Vincent Hospital in Indianapolis and a Guidant consultant, said company officials alerted him late Thursday about yesterday's announcement and told him they would pull back all affected units that had not been implanted, a number the company put at 6,000. As a result, he said, he would be using other companies' units for the moment. The company did not say how it planned to fix the problem, when it expected to do so or how it would fix units already implanted in patients. If a significant change must be made in the way units are made, the change could require F.D.A. approval before Guidant could make new units. Dr. Prystowsky said that until the problem was fixed, Guidant technicians might have to be on hand when patients were prepared for surgery so the technicians could deal with the affected magnetic switch. Guidant does not break out its sales by model types, but last year, defibrillator sales accounted for nearly 50 percent of its revenue of $3.8 billion. Analysts said they thought the types of models involved in yesterday's alert, which are known as cardiac resynchronization therapy, or C.R.T., devices, made up 40 percent to 50 percent of its defibrillator sales. C.R.T. devices are the fastest-growing part of the defibrillator market, which is expanding 20 percent annually. Guidant's heart device division was a major attraction to Johnson & Johnson, which wants to expand its presence in the device business. Joanne Wuensch, an industry analyst with Harris Nesbitt, said she believed that the financial effect of the latest alert on Guidant would be relatively short-lived. But she said she thought Johnson & Johnson would soon cut the price it was offering for Guidant. As it stands, that deal is valued at $76 a share to Guidant holders. 'We estimate it is going to be about $68 a share, or about 10 percent down,' she said. Mr. Arrow, the Lazard analyst, also downgraded Guidant on Monday. Johnson & Johnson did not respond to a request to interview its chief executive, William C. Weldon. Guidant declined a request to interview its chief executive, Ronald W. Dollens. Guidant also would not say what percentage of its defibrillator sales were affected by the faulty switch. While Guidant's shares sank yesterday, shares of its two rivals, Medtronic and St. Jude Medical, both rose, apparently in anticipation that their market share would increase, at least in the short term. A Guidant spokeswoman said the company was 'ramping up' manufacture of two other C.R.T. models, the Contak Renewal 1 and Contak Renewal 2. Dr. Prystowsky said he thought the company had moved quickly yesterday to halt implants of any further devices with the flawed switch, given the controversy after it did not alert doctors to an electrical flaw in one model. In that case, a college student who had been implanted with one of the flawed units died in March, three years after Guidant discovered and fixed the problem. 'They said we have heard everyone loud and clear,' he said. 'We are willing to take the economic hit.'

Subject: House Wren Feeding Mate From: Terri To: All Date Posted: Sat, Jun 25, 2005 at 07:08:16 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5508&u=4|1|... House Wren Feeding Mate New York City--Central Park, Maintenance Field.

Subject: Bush energy policy to kill hermit thrush From: Pete Weis To: All Date Posted: Fri, Jun 24, 2005 at 20:59:20 (EDT) Email Address: Not Provided Message: Bush energy plan: Policy or payback? Houston is home to some Bush's biggest financial supporters By Greg Palast in Houston A new power plant every week for 20 years, new nukes, drilling in the Arctic Wildlife Refuge - is this an energy policy, or a payback for President Bush's big campaign contributors? From the moment George W Bush announced he was running for president, $50m came in from Texas-based energy companies. But they are hundreds of millions of dollars better off from his time as governor of Texas - and because of decisions taken in the first months of his presidency. Worst polluter When it comes to pollution, Texas is champ, the number one state in emissions of greenhouse gases and toxic chemicals. A visit to the city of Houston is enough to confirm that status. A 24 km (15 mile) wide forest of smokestacks stands on the edge of Houston, a place famous for pumping out pollution, profits and the political donations which put George Bush into the White House. Power traders are accused of profiteering during the California energy crisis There a mile long cloud of black smoke, with flames 60 metres (200 ft) high erupts out of a Houston cracking plant as a ruined batch of ethylene and other toxic chemicals is burned off after a hydrogen line snapped. Such accidents are common on this side of Houston, where poisonous smoke rains on local neighbourhoods. And it is not just visible emissions locals have to worry about. Suspicions aroused LaNell Anderson lived in the shadow of the Houston smoke stacks - her mother and father both died young, victims of bone cancer and lung disease, which made Ms Anderson suspicious. She started taking air samples after an ethylene leak caused the local high school running team to collapse on the track. Lab analysis of her bucket samples has found carcinogens in the air that are way above legal limits. She has since found that local cancer cases are twice the normal rate. Against regulations Driving around the area it is possible to smell hydrogen sulphide in the air, a contravention of regulations. 'They're not supposed to be releasing anything, these are outside chemical impacts, that's not supposed to happen its supposed to stop at the fence,' she says. So how do the polluters get away with it? Ms Anderson has her own theory about 'vending machine governance, where the lobbyists put the money in and out comes slacker regulation.' Centre for petrochemicals Texas is the centre of America's petrochemical industry - home to the nation's biggest refinery, Exxon's plant in Baytown. Mr Bush is axing funding for anti-pollution enforcement Ms Anderson has Exxon in her sights, 'they're the largest emitter in Harris County and they have the worst attitude of any corporation I've ever witnessed,' she said. Exxon would not accept her assessment and neither would George W Bush. As Texas governor, Mr Bush quietly set up a committee led by Exxon, with other big oil and chemical companies, to advise him what to do about the state's deadly air pollution. Regulators wanted compulsory cuts in emissions of up to 50% - this 'secret' committee instead proposed making the cuts voluntary. Mr Bush duly steered the polluters plan through the state legislature. Huge donations Texas anti-corruption law made it illegal to donate money to Mr Bush as governor whilst such legislation was under consideration. But that month, Mr Bush declared for his candidacy for president - making the $150,000 donated by committee members and their representatives completely legal. The bill passed and pollution did go down - by just 3% - saving the companies hundreds of millions of dollars compared to the compulsory cut. And there has been a bonus for chemical industry donors since Mr Bush became president. The BBC's Newsnight programme learnt he is quietly restricting public access to estimates of the number of people who will burn or die in the event of a catastrophic explosion near these plants. Biggest funders A walk through downtown Houston takes you past the headquarters of some of Mr Bush's biggest campaign fund donors. The El Paso Corporation, which gave $750,000 to the Republican campaign, is now under investigation for manipulating the California power market. Other big contributors include Dynegy, which gave $300,000 and Reliant, which gave $600,000. And the Enron Corporation, America's number one power trading company, has given more money than any other to Mr Bush's political campaigns. William S Farish, president of W S Farish and Co, gave $140,000. Mr Bush subsequently made him ambassador to Great Britain. Under investigation Investigations are proceeding into profiteering by power traders during the California energy crisis and blackouts. Biggest industry donators to Bush campaign Enron $1.8m Exxon $1.2m Koch Industries $970,000 Southern $900,000 BP Amoco $800,000 El Paso Energy $787,000 Chevron Oil Corp $780,000 Reliant Energy $642,000 Texas Utilities $635,000 The state of California has accused the El Paso Corporation and Dynegy of deliberately restricting the flow of natural gas through the pipeline from Texas creating an artificial shortage which caused prices to go up ten-fold. President Clinton ordered an end to speculation in energy prices in California, which bit into the profits of El Paso, Reliant, Enron and Dynegy. Between them the four companies gave $3.5m to Mr Bush and the Republicans. Three days after his inauguration Mr Bush swept away Mr Clinton's anti-speculation orders. Profits for these four power traders are now up $220m in the first quarter. And protection against pollution is set to weaken further, the BBC's Newsnight programme has discovered that deep in Mr Bush's new budget, the million-dollar fund for civil enforcement to deter pollution will be axed. In the future law enforcement will be left to locals.

Subject: Energy Policy From: Terri To: Pete Weis Date Posted: Sat, Jun 25, 2005 at 07:12:01 (EDT) Email Address: Not Provided Message: Thank you for these important articles. I read each several times. You know much about the energy field, and I am learning from you.

Subject: Above article from BBC From: Pete Weis To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 21:01:04 (EDT) Email Address: Not Provided Message:

Subject: Our last energy policy From: Pete Weis To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 21:24:48 (EDT) Email Address: Not Provided Message: Published on Tuesday, May 3, 2005 by CommonDreams.org Carter Tried To Stop Bush's Energy Disasters - 28 Years Ago by Thom Hartmann In his recent news conference, George Bush Jr. suggested that our nation's 'problem' with high gasoline prices was caused by the lack of a national energy policy, and tried to blame it all on Bill Clinton. First, Junior said, 'This is a problem that's been a long time in coming. We haven't had an energy policy in this country.' This was followed by, 'That's exactly what I've been saying to the American people -- 10 years ago if we'd had an energy strategy, we would be able to diversify away from foreign dependence. And -- but we haven't done that. And now we find ourselves in the fix we're in.' As is so often the case, Bush was lying. Consider President Jimmy Carter's April 18, 1977 speech. Since it was given nearly three decades ago, when many of the reporters in Bush's White House were children, it's understandable that they don't remember it. But it's inexcusable that Bush and the mainstream media (which, after all, has the ability to do research) would completely ignore it. It was the speech that established the strategic petroleum reserve, birthed the modern solar power industry, led to the insulation of millions of American homes, and established America's first national energy policy. 'With the exception of preventing war,' said Jimmy Carter, a man of peace, 'this is the greatest challenge our country will face during our lifetimes.' He added: 'It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century. 'We must not be selfish or timid if we hope to have a decent world for our children and grandchildren. 'We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us.' Carter bluntly pointed out that: 'The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation.' He called the new energy policy he was proposing, '[T]he 'moral equivalent of war' -- except that we will be uniting our efforts to build and not destroy.' When Carter had become president three months earlier, the nation was still recovering from the 'oil shock' of the 1973 Arab oil embargo, and scientists were realizing our nation was just then hitting the point of domestic peak oil production predicted more than a decade earlier by scientist M. King Hubbert. (The rest of the world is hitting the Hubbert Peak right now.) As Carter noted in his speech, 'The oil and natural gas we rely on for 75 percent of our energy are running out. In spite of increased effort, domestic production has been dropping steadily at about six percent a year. Imports have doubled in the last five years. Our nation's independence of economic and political action is becoming increasingly constrained.' Hubbert had predicted that the peak of oil production for the USA would come in the 1970s, and it did, hitting us with a shock. 'The world has not prepared for the future,' said Jimmy Carter. 'During the 1950s, people used twice as much oil as during the 1940s. During the 1960s, we used twice as much as during the 1950s. And in each of those decades, more oil was consumed than in all of mankind's previous history.' Hubbert said we must begin to conserve. Carter agreed. 'Ours is the most wasteful nation on earth,' he said, a point that is still true. 'We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan and Sweden.' Carter directly challenged the fossil fuel and automobile industries. 'One choice,' he said, 'is to continue doing what we have been doing before. We can drift along for a few more years. 'Our consumption of oil would keep going up every year. Our cars would continue to be too large and inefficient. Three-quarters of them would continue to carry only one person -- the driver -- while our public transportation system continues to decline. We can delay insulating our houses, and they will continue to lose about 50 percent of their heat in waste. 'We can continue using scarce oil and natural gas to generate electricity, and continue wasting two-thirds of their fuel value in the process.' But that would be unpatriotic, anti-American, and essentially wrong. Who but a traitor sold out to special interests, or an idiot, would countenance such insanity? The year 1977 was a turning point for America. If we didn't make clear and rapid progress, we would face painful times ahead. The Saudis would have their fingers around our necks. We'd face war in the Middle East to secure future oil supplies. 'Now we have a choice,' Carter said. 'But if we wait, we will live in fear of embargoes. We could endanger our freedom as a sovereign nation to act in foreign affairs.' Failure to act in the 1970s and 1980s would inevitably lead to a time when the only way to maintain our lifestyle would be to rape our planet and seize control of oil-rich nations in the Middle East. If we didn't begin to develop alternatives like solar power, and dramatically reduce our consumption of fossil fuels, then, Carter said, even our cherished personal freedoms would be at risk. If we continued to simply follow past policies that enriched the oil industry and the Saudis, instead of becoming energy independent, Carter said, 'We will feel mounting pressure to plunder the environment.' If we failed to develop alternative sources of renewable energy and conserve what we have, the alternative could be nasty. As Carter pointed out: 'We will have a crash program to build more nuclear plants, strip-mine and burn more coal, and drill more offshore wells than we will need if we begin to conserve now. Inflation will soar, production will go down, people will lose their jobs. Intense competition will build up among nations and among the different regions within our own country. 'If we fail to act soon, we will face an economic, social and political crisis that will threaten our free institutions.' Carter's speech drew a strong reaction from the Saudis and the oil industry. Think tanks soon emerged - many whose names are today familiar - to suggest there was really no energy problem, and they led the charge to establish a permanent right-wing media in the US. Within two years, Saudi citizen and oil baron Salem bin Laden's sole US representative, James Bath, would funnel cash into the failing business of the son of the CIA's former director, political up-and-comer George H. W. Bush. With that money from the representative of Osama Bin Laden's half-brother, George Bush Jr. was able to keep afloat his Arbusto ('shrub' in Spanish) Oil Company. And he would be in the pocket of the bin Laden and Saudi interests for the rest of his life. But Carter was incorruptible. 'We can be sure that all the special interest groups in the country will attack the part of this plan that affects them directly,' he said. 'They will say that sacrifice is fine, as long as other people do it, but that their sacrifice is unreasonable, or unfair, or harmful to the country. If they succeed, then the burden on the ordinary citizen, who is not organized into an interest group, would be crushing.' But that would be wrong. It would be un-American. It would lead to future oil shocks, and the probable death of American soldiers in Middle Eastern oil wars. Instead of caving in to the Saudis and the oil industry, Carter said: 'There should be only one test for this program: whether it will help our country.' Two years later, as the bin Laden family's sole US representative was bailing out George Bush Junior's failing oil business, Jimmy Carter gave another speech on energy, further refining his national energy policy. He had already started the national strategic petroleum reserve, birthed the gasohol and solar power industries, and helped insulate millions of homes and offices. But he wanted to go a step further. 'I am tonight setting a clear goal for the energy policy of the United States,' Carter said on July 15, 1979. 'Beginning this moment, this nation will never use more foreign oil than we did in 1977 -- never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s...' In addition, we needed to immediately begin to develop a long-range strategy to move beyond fossil fuel. Therefore, Carter said, 'I will soon submit legislation to Congress calling for the creation of this nation's first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000.' But then came the Iran/Contra October Surprise, when the Reagan/Bush campaign allegedly promised the oil-rich mullahs of Iran that they'd sell them missiles and other weapons if only they'd keep our hostages until after the 1980 Carter/Reagan presidential election campaign was over. The result was that Carter, who had been leading in the polls over Reagan/Bush, steadily dropped in popularity as the hostage crisis dragged out, and lost the election. The hostages were released the very minute that Reagan put his hand on the Bible to take his oath of office. The hostages freed, the Reagan/Bush administration quickly began illegally delivering missiles to Iran. And Ronald Reagan's first official acts of office included removing Jimmy Carter's solar panels from the roof of the White House, and reversing most of Carter's conservation and alternative energy policies. Today, despite the best efforts of the Bushies, the bin Ladens, and the rest of the oil industry, Carter's few surviving initiatives have borne fruit. It is now more economical to build power generating stations using wind than using coal, oil, gas, or nuclear. When amortized over the life of a typical mortgage, installing solar power in a house in most parts of the US is cheaper than drawing power from the grid. (Shell and British Petroleum are among the world's largest manufacturers of solar photovoltaic panels, which can now even be used as roofing shingles.) And hybrid cars that get 50-70 miles to the gallon are increasingly commonplace on our nation's highways. Instead of taking a strong stand to make America energy independent, Bush kisses a Saudi crown prince, then holds hands with him as they walk into Bush's hobby ranch in Texas. Our young men and women are daily dying in Iraq - a country with the world's second largest store of underground oil. And we live in fear that another 15 Saudis may hijack more planes to fly into our nation's capitol or into nuclear power plants. Meanwhile, Bush brings us an energy bill that includes eight billion dollars in welfare payments to the oil business, just as the nation's oil companies report the highest profits in the entire history of the industry. Americans struggle to pay for gasoline, while the Bush administration refuses to increase fleet efficiency standards, stop the $100,000 tax break for buying Hummers, or maintain and build Amtrak. George Bush Jr. is arguably right that gas prices are spiking because we don't have an energy policy. But instead of blaming Clinton, he should be pointing to the Reagan/Bush administration, and to his own abysmal failures over the past four years. Thom Hartmann's bestselling book on peak oil is titled 'The Last Hours of Ancient Sunlight, published by Random House/Three Rivers Press. His articles archive is at www.thomhartmann.com/commondreams.shtml.

Subject: Blowing smoke From: Pete Weis To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 21:41:48 (EDT) Email Address: Not Provided Message: From Business Week: Bush Is Blowing Smoke on Energy Hitting all the points in a noted GOP pollster's playbook, the President's plan is driven by politics not policy. Worse, it won't cut oil dependency • Oil: Small Biz Takes a Big Hit On Apr. 27, President Bush made an impassioned plea for an energy plan that would wean the U.S. from imported fuels. 'Our dependence on foreign energy is like a foreign tax on the American people,' he declared in a speech to a gathering of small-business owners and entrepreneurs in Washington. What the country needs is 'a national strategy,' Bush said. 'And the most important component of our strategy is to recognize the transformational power of technology. By harnessing the power of technology, we're going to be able to grow our economy, protect our environment, and achieve greater energy independence.' Powerful sentiments, indeed. But the words are largely hollow. Sadly, the plan Bush proposed would do little to increase existing supplies of oil, gas, or electricity, or decrease domestic demand for energy -- the two steps that would really make a difference. Charges Frank O'Donnell, head of Clean Air Watch, a Washington-based environmental group: 'The new Presidential energy plan seems mainly to be a public-relations stunt aimed at trying to reverse some of the latest polls, which show a growing public discontent with high gas prices -- and the President.' LOW PRIORITY. Of course, environmentalists such as O'Donnell can usually be counted on to bash GOP policies. But in this case the criticism is deserved. Plenty of evidence indicates that the White House's sudden interest in energy policy is driven far more by politics than substantive policymaking. To understand why, recall the last Presidential election. Democratic candidate John Kerry struck a nerve when he called for reducing American dependence on Middle Eastern oil, saying that 'we should rely in American ingenuity and not the Saudi Royal family.' Yet, Kerry failed to turn energy into a significant policy issue in the race. And the White House learned a lesson: You can score political points by talking about energy policy -- without ever needing to follow through. It has been widely reported that Vice-President Dick Cheney privately told top Washington energy-policy wonks after the 2004 election that the Administration would put the issue low on its priority list for 2005. 'RETAKE THIS ISSUE.' That was before oil prices soared, however, and the Republicans started taking a beating, as higher gasoline and home-heating costs made Americans angry and anxious. President Bush's approval ratings dropped, and GOP strategists cited rising fuel costs as the primary rub. In a strongly worded report to his party in late winter, Republican pollster Frank Luntz warned: 'Right now, the Democrats are exhibiting perfect pitch when it come to their energy message.... You need to retake this issue now before the next spike at the pump and before the next surge in our home-heating bills.' Luntz recommended that Republicans hammer hard on four themes: energy independence, national security, the power of innovation and new technology, and the importance of balancing new supplies with conservation. 'The energy debate is ripe for partisan picking,' he wrote. 'Americans loathe the idea of being reliant on the Middle East for our energy needs -- and they were waiting for someone to tell them so.' LAUNDRY LIST. Kerry's remark about not relying on the Saudis was his 'single best line at the convention, and it continues to resonate even today,' Luntz observed. And in a recent interview with BusinessWeek, Luntz added that if the Administration 'stays silent [on energy], it loses.' Luntz's memo is a powerful political document, and the White House took his advice to heart. On Mar. 9, Bush gave a speech hitting all of Luntz's themes. The President called for new technology to reduce America's dependence on imported oil and to increase conservation, and, along the way, to boost national security. Then in his Apr. 27 speech, he repeated the grand ideals -- and offered concrete initiatives. 'For the sake of this country, for the sake of a growing economy, and for the sake of national security, we've got to do what it takes to expand our independence,' the President said. Here's what Bush offered as policies needed to meet this ambitious goal: • Provide federal risk insurance for nuclear plant builders, so that they don't bear the costs of delays in licensing new plants. • Encourage building of new refineries on closed military bases and ease regulatory 'burdens' to speed construction. • Drill for more oil and gas at home, including in the Arctic National Wildlife Refuge (ANWR). • Spend $1.7 billion over five years to develop hydrogen-powered cars. • Expand the tax credits for hybrid cars to clean-diesel vehicles as well. • Give the feds more power to site new liquefied natural gas terminals (LNG). • Promote clean coal and nuclear power around the world. Nothing is wrong with any of these ideas, although there's widespread -- and legitimate -- opposition to drilling in the ANWR. Even many environmental groups now reluctantly agree that clean-coal plants and advanced nuclear reactors are part of the solution to tomorrow's energy problems. Additional refining capacity would prevent the spot shortages that, in the past, have sent gasoline prices soaring in parts of the country. REALITY AVOIDANCE. More LNG ports would bring additional natural gas to the nation. Clean-diesel cars would increase the average mileage of America's cars. And if anyone ever figures out how to actually produce enough hydrogen, fuel-cell cars do offer advantages. But while the speech's rhetoric was lofty and inspiring, the President's proposals don't match up with the problems they purport to solve. They carefully avoid the politically difficult steps that actually would take America farther down the path of energy independence. Take nuclear power. Safer new designs promise a reliable, relatively inexpensive source of electricity that doesn't contribute to global warming. But potential licensing delays aren't the big hurdle. In fact, the industry is already preparing applications seeking approval for new designs, so that when a good business case for new plants exists, utilities will be ready to go. MORE MILEAGE NEEDED. A much bigger problem: not having a place to put the radioactive waste. 'We won't have a new generation of nuclear plants unless the government keeps its 50-year old promise of waste disposal,' said John W. Rowe, chairman and CEO of Exelon (EXC ), a major nuclear utility, in a recent speech. But the waste issue is a political hot potato, so Bush steered clear of it. The truth is, what he did propose will do little to spur the development of new nuclear plants. Similarly, Bush avoided the politically difficult -- but crucial -- steps on all the other issues, too. For example, energy experts agree the single-most effective way to cut oil dependency is to make cars and trucks -- which account for more than 60% of America's oil consumption -- more fuel-efficient. 'You have to start with higher miles per gallon,' says Robert E. Ebel, chairman of the energy program at the Center for Strategic & International Studies, a Washington (D.C.) think tank. That means mandating higher fuel economy standards or taking similar politically courageous steps. Extending tax credits for diesel cars is mere tinkering around the edges. And hydrogen-powered fuel-cell cars are largely a pipedream for now. FOLLOWING A SCRIPT? Want to take a real step to prevent gasoline shortages and keep a lid on energy prices? Easing regulations on refineries may sound good. But the Administration could make things truly easier for refineries by requiring that the nation use just one blend of fuel, instead of the current dozens that various states require. Of course, that wouldn't be a hit in many of the red states, which currently don't use the cleanest-burning fuels. It would be a bold step that would make a real difference, however. Want to increase supplies of oil and gas? Instead of drilling in the ANWR or adding a few LNG ports, Bush could open up areas like the Gulf coast of Florida or the Rocky Mountains, which has a 60-year supply of natural gas, to exploration and drilling. But that wouldn't be popular in Florida, where his brother Jeb is governor, or in some of the Western states that are strong Bush country. The President's failure to propose any meaningful solutions, while claiming to 'do the right thing for America' makes it hard not to conclude that the Administration's main goal is not energy independence, but rather improving its standing the polls. Indeed, what's most striking about Bush's Apr. 27 speech is how closely it follows the script written by Luntz earlier this year. A few examples: • The pollster recommended emphasizing that the nation's energy problem 'has been years in the making, and it will take years to solve.' On Apr. 27, Bush said: 'This problem did not develop overnight, and it's not going to be fixed overnight.' • Luntz wrote that in advocating drilling in the ANWR, the Administration should say that 'using modern techniques, only a very small area will actually be impacted by the development.' In his speech, Bush echoed that, saying: 'Because of the advances in technology, we can reach the oil deposits with almost no impact on land or local wildlife.' • The pollster stressed that Republicans should have a positive message, appealing 'to American ideals of invention and innovation' and tapping 'into feelings of American exceptionalism and ingenuity to seal the deal with the swing voters.' Any surprise, then, that Bush emphasized in his address that 'technology has radically changed the way we live and work'? He added: 'Our country is on the doorstep of incredible technological advances that will make energy more abundant and more affordable for our citizens.' Stirring words. Americans can only hope the President is right. But the goals of energy efficiency and independence won't be spurred by anything this Administration is currently proposing.

Subject: Hermit Thrush From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 20:10:45 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3798&u=85|254|... Hermit Thrush New York City--Central Park, Azalea Pond.

Subject: Vanguard Returns From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 19:41:09 (EDT) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 6/24/05 S&P Index is -0.9 Large Cap Growth Index is -1.6 Large Cap Value Index is 1.3 Mid Cap Index is 2.9 Small Cap Index is -0.7 Small Cap Value Index is 0.2 Europe Index is -0.7 Pacific Index is -2.9 Energy is 23.0 Health Care is 5.3 REIT Index is 5.3 High Yield Corporate Bond Fund is 0.6 Long Term Corporate Bond Fund is 7.6

Subject: Market Patterns From: Terri To: Terri Date Posted: Sat, Jun 25, 2005 at 08:47:57 (EDT) Email Address: Not Provided Message: Studying market patterns even a little teaches us how to invest with considerable success. Bullish or bearish, the idea is to save and invest for the future and that is what I do. Knowing Vanguard has helped my family and me wonderfully, so I study Vanguard returns.

Subject: Re: Huh? From: Pancho Villa To: Terri Date Posted: Fri, Jun 24, 2005 at 19:48:13 (EDT) Email Address: nma@hotmail.com Message: What do all these numbers mean?

Subject: Re: Huh? From: Terri To: Pancho Villa Date Posted: Fri, Jun 24, 2005 at 19:55:03 (EDT) Email Address: Not Provided Message: They give a quick glance at how the markets have fared so far, Pancho. They tell us what to expect to an extent, but especially how to read the economy more clearly. I find them especially useful, as all your articles are useful and appreciated. We are passing through a difficult period to understand economically. Thanks, Pancho.

Subject: Re: Huh? From: Pancho Villa To: Terri Date Posted: Fri, Jun 24, 2005 at 20:19:34 (EDT) Email Address: nma@hotmail.com Message: Dear Terry, Whom do you trust more? a) Humans that make and have the ability to'plastify' 'numbers' or b) (in a very simplified manner) 'numbers'?

Subject: Re: Huh I? From: Pancho Villa To: Pancho Villa Date Posted: Fri, Jun 24, 2005 at 19:52:28 (EDT) Email Address: nma@hotmail.com Message: But first af all, what is the 'essence' of all the 'numbers'?

Subject: Re: Huh I? From: Terri To: Pancho Villa Date Posted: Fri, Jun 24, 2005 at 19:56:42 (EDT) Email Address: Not Provided Message: The numbers are as snapshots, though a little more cloudy in telling us what has happened.

Subject: Re: Huh I? From: Pancho Villa To: Terri Date Posted: Fri, Jun 24, 2005 at 20:28:41 (EDT) Email Address: nma@hotmail.com Message: Who made the snapshots? (Because there obvisously has to be someone behind the camera, right?)

Subject: Re: Huh I? From: Terri To: Pancho Villa Date Posted: Sat, Jun 25, 2005 at 06:59:37 (EDT) Email Address: Not Provided Message: Vanguard sets out a history of market performance for us that is easy to access and can be clearly understood. Morgan Stanley also presents a history of market performance that is useful. I read the New York Times and gain many ideas on the global economy and on specific sectors and companies. This has helped my family and me invest through the years with lovely results.

Subject: My house, my rules, my business? From: Pancho Villa To: All Date Posted: Fri, Jun 24, 2005 at 19:05:39 (EDT) Email Address: nma@hotmail.com Message: China's currency is its own business SAMUEL BRITTA(I)N Western statesmen have every duty to remind Chinese leaders of their still appalling human rights record - from the Tiananmen Square massacre to the occupation of Tibet and the continued veneration of Chairman Mao, who has been exposed as a killer on the level of Hitler and Stalin. Unfortunately, they have gone quiet on these issues and have instead lectured the Chinese on the need to revalue the renminbi. It is not as if China were making a mess of its economy. On the contrary, it has a higher growth rate than any country in the Organisation for Economic Co-operation and Development. And, far from appealing for handouts from the west, it is one of the main sources of the financial inflows sustaining the US economy. My 'hands off the renminbi' view rests on general political economy grounds. Chinese economic policymakers may or may not be right in pegging their currency against the dollar and accumulating massive reserves. Some China watchers can find technical grounds to justify it, while others regard it as a diversion of resources that should be used to boost the living standards of ordinary Chinese. There is, in fact, a strong general case for allowing major currencies to float. But until the Chinese feel ready for this leap into freedom, any currency change would probably do more harm than good. There is a high chance that a moderate increase in the renminbi parity would sooner or later be felt to be inadequate; and if the markets had seen the renminbi soar once they would know that it could soar again. A compromise sometimes suggested is a widening of the margins around the present or a new parity. This would not help if the margins were modest. For it would not take long for the market rates to come up against the ceiling or floor. But if the margins were extremely wide - like the 15 per cent on either side that surrounds the European Exchange Rate Mechanism, which theoretically still exists - the system would be a farce. The history of the international currency system since the breakdown of Bretton Woods, when US President Richard Nixon severed the dollar's link with gold in 1971, provides a mine of evidence. After a period of unwilling floating, the main western countries tried to rebuild a system of 'fixed but adjustable' exchange rates in the Smithsonian Agreement of 1973. But it did not take long before the dykes fell in, following another shift of sentiment against the dollar. Since then, critics of US policy have switched between arguing that the dollar is too strong and too weak -and indeed it has shown large fluctuations. What the critics have not discussed is whether the movement of the dollar has been a safety valve that prevented far worse ills from besetting the world economy. The view that the dollar was too high led to the Plaza Accord of 1985, which was associated with a fall in the US currency. Whether this was due to the Plaza or the continuation of a trend, is still disputed by monetary historians. In any case, within a year and a half the worry changed to one that the dollar was falling too much and the Louvre Accord tried to shore it up. Around that time we saw the rebirth of schemes for target exchange rates with wider margins and easier parity revisions. But these were all swept away, following the Wall Street crash of 1987 and subsequent bickering among the summit countries. The currency crises that affected sterling in its period inside the ERM, and the euro strains now apparent, should be a caution about setting up another fixed rate system. The renminbi issue is one aspect of the imbalances that are claimed to exist in the world economy. There is an international surplus of attempted savings that accounts for the supposed 'puzzle' of low long-term bond rates. But within this overall savings glut, the English speaking countries, and especially the US and UK, save very little by historical standards, while east Asian countries and perhaps the eurozone save too much. A resolution of these imbalances would involve currency changes but who knows what they should be? Who would have thought that the British economy would have prospered for so long with a rate for sterling regarded as too high by most currency economists? If the savings behaviour at the root of these imbalances were to change, the currency corrections would take care of themselves. But if a partial stab were attempted - for instance, a move by the US and the UK alone to increase savings - then the results would all too likely be a depressive influence in the world economy too severe to be handled by bond rate changes. Meanwhile, the Chinese should be left to continue liberalising their financial system until they feel able to float the currency. www.samuelbrittan.co.uk

Subject: Yes Alan...'Never tears us apart ' From: Pancho Villa alias 'inXS' To: All Date Posted: Fri, Jun 24, 2005 at 18:33:57 (EDT) Email Address: nma@hotmail.com Message: SENATE FINANCE COMMITTEE Greenspan and Snow warn on China trade bars By Andrew Balls and Scott Heiser in Washington Alan Greenspan, Federal Reserve chairman, and John Snow, Treasury secretary, yesterday warned Congress against erecting barriers to trade with China, saying this would do nothing to help US manufacturers but would hurt US consumers. Imposing a tariff on Chinese imports would simply mean that the US imported the same goods from other low-cost economies in Asia and elsewhere, Mr Greenspan said. 'Few, if any, American jobs would be protected,' he told the Senate finance committee. But, he said, tariffs would raise the overall cost of goods for US households and risked setting off protectionist reactions abroad. 'A return to protectionism would threaten the continuation of much of the extraordinary growth in living standards worldwide, but especially in the United States, that is due importantly to the post-world war two opening of global markets,' he said. Policy should instead aim to help people who lost jobs in declining US industries, through retraining and unemployment insurance. Mr Greenspan and Mr Snow, the US government's top economic policymakers, appeared at a combative session of the committee, at which lawmakers from both parties expressed frustration at China's failure to adjust its currency and at what they said was the administration's inaction. Senators cited complaints from US manufacturers about the currency peg, as well as concern about China's poor enforcement of intellectual property rights. Mr Greenspan and Mr Snow both said greater currency flexibility was in China's own interests, to allow it to use monetary policy to manage its economy rather than keep the peg. The Treasury has privately told Beijing it must revalue its currency by at least 10 per cent, to help the administration resist Congress's demands for tariffs. Mr Snow repeated the administration's call for an immediate revaluation, as part of a global effort to reduce trade imbalances that would require other Asian economies to allow their currencies to rise against the dollar. 'I cannot overstate my firm belief that resorting to isolationist trade policies would be ineffective, disruptive to markets and damaging to America's special role as the world's leading advocate for open markets and fair trade,' he said. Mr Greenspan said the focus on the US's bilateral trade deficit with China was wrong-headed. 'Some observers mistakenly believe that a marked increase in the exchange value of the Chinese renmiribi relative to the US dollar would significantly increase manufacturing activity and jobs in the United States,' he said. 'I am aware of no credible evidence that supports such a conclusion.'

Subject: Re: Yes Alan...'Never tears us apart ' From: Pete Weis To: Pancho Villa alias 'inXS' Date Posted: Fri, Jun 24, 2005 at 20:35:16 (EDT) Email Address: Not Provided Message: I have been very critical of our present fed chairman, but in this regard (tariffs on Chinese goods) he is right on. Can't imagine any fed chairman who wouldn't see it this way. However, kudo's to Kerry for hammering Greenspan for his support for Bush's tax cuts and fiscal policies.

Subject: Re: Yes Alan...'Never tears us apart ' From: Pancho Villa To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 21:01:15 (EDT) Email Address: nma@hotmail.com Message: My dearest Pete, 'However, kudo's to Kerry for hammering Greenspan for his support for Bush's tax cuts and fiscal policies.' May say is 'No comment'? (He, he)

Subject: Re: Yes Alan...'Never tears us apart ' From: Pete Weis To: Pancho Villa Date Posted: Sat, Jun 25, 2005 at 00:44:58 (EDT) Email Address: Not Provided Message: No. Just an unrelated observation.

Subject: Re: Yes Alan...'Never tears us apart ' From: Pancho Villa To: Pancho Villa Date Posted: Fri, Jun 24, 2005 at 21:07:38 (EDT) Email Address: nma@hotmail.com Message: Sorry to have forgotten the 'I' between the 'may' and 'say'

Subject: Vanguard Sector Stock Indexes From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 18:14:42 (EDT) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 6/24/05 Energy 22.5 Financials -2.4 Health Care 4.3 Info Tech -5.5 Materials -7.5 REITs 5.3 Telecoms -3.3 Utilities 12.5

Subject: Poland's Plea to Europe: Get Along From: Emma To: All Date Posted: Fri, Jun 24, 2005 at 14:29:19 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/international/europe/24poland.html?pagewanted=all Poland's Plea to Europe: Can We All Get Along? By RICHARD BERNSTEIN WARSAW - The quip making the rounds of Warsaw in these days of European crisis is that joining the European Union was good for Poland, but it does not seem to have been very good for the European Union. Indeed, Poland has become a symbol of the risks that many in the richer countries to the west of here believe to be posed by an ever bigger and more integrated Europe - Polish plumbers driving down wages, a ruthlessly competitive Europe stripped of its social welfare benefits. Poland in this sense falls on one side of a new European divide, between the rich countries beginning to see an ever-expanding Europe as a danger to their well-being and still enthusiastic poorer countries wondering if the club they were invited to join is still willing to live up to its vision. 'The unification of Europe still faces the challenge of a kind of Rio Grande, between rich and poor countries, and if we want to build a unified Europe, we have to get rid of that border,' said Bronislaw Geremek, a former Polish foreign minister who is now a member of the European Parliament. He said he was astonished that the richer countries would be so avidly pinching pennies just at the time that eight poorer new members have joined the club. As if to demonstrate the country's European commitment, the Polish press has widely reported an 11th-hour effort to save the failed Brussels summit meeting a week ago. Prime Minister Marek Belka, who was soon joined by the seven other former East Bloc members, offered to cut some of Poland's subsidies in exchange for an overall budget agreement, an effort that was rejected by the British and the French. 'It was very embarrassing for them,' Poland's current foreign minister, Adam Daniel Rotfeld, said in an interview, meaning the countries whose arguments about money caused the collapse of the summit. 'Suddenly they realized that the new countries are much more attached to the E.U.'s values than the old founders of the E.U.' 'For Poland, political union and the very existence of the E.U. as a new political entity is more important than money,' Mr. Rotfeld said. From the point of view of the Poles, the rich countries have engaged in a narrow-minded, defeatist act of national selfishness, and they have done so just when the European Union's enlargement to 25 members last year promised to complete the revolution that began with the collapse of the Soviet bloc in 1991. 'National egoism won,' President Aleksander Kwasniewski said in the wake of the collapse of the Brussels summit meeting. To be sure, Poland has many practical reasons to like the European Union, which gives the nation status, infrastructure investment funds and agricultural subsidies - though lower than those received by the older members. That does not mean that the union is universally popular. Critics include right-wing populist parties that portray the organization as sapping Polish independence and eroding its identity. The mayor of Warsaw, Lech Kaczynski, who is a leading candidate for president, echoed some of the arguments made by French and Dutch voters against the European constitution, contending that it would bring about what he has called 'de facto liquidation of national states.' Still, polls showed 70 percent of Poles in favor of the constitution and strong majorities generally favoring the European project. With their long history of wars, division and conquest from outside, Poles have come to see European Union membership as a kind of guarantee of national security. In many ways the Polish attitude shows how much this country has embraced Europe since formally becoming a member of the European Union a bit more than a year ago. Earlier than that, voting in a national referendum, the Poles came within a whisker of rejecting membership altogether. Polish farmers, who are about 30 percent of the population, were worried that they would not be able to compete with more modern farms in the West whose products would be able to enter the Polish market duty-free, and they were upset that the agricultural subsidies they would receive would start out at only 25 percent of those given to farmers in the West, with parity to be achieved only after a decade. But as things have turned out, Polish farm exports have risen nearly 40 percent in the first year of membership even as Polish business has proved competitive in general. The Polish growth rate in 2004 was 5.3 percent, one of the highest in the European Union, according to the Polish Central Statistical Office. A year after membership, the Poles have not forgotten that after 50 years of Soviet domination, the main promise of their revolution of 1989, which was the first major blow in the collapse of the Soviet Union, was to re-establish the country's historic identity as a part of Europe. A major event in this sense was the prominent role Poland played in the democratic revolution in Ukraine half a year ago. 'Imposing a European interest in Ukraine was a great success of Polish foreign policy,' said Aleksander Smolar, president of the Batory Foundation, a private group that promotes democratic development in Eastern Europe. 'That represented a change of the perception that Ukraine was an internal affair of Russia. Poland from right to left was very proud that they were speaking on behalf of Europe.' Poland is inclined to support closer Europe-wide cooperation in foreign and security policy, as France and Germany, but not Britain, have long advocated, 'We do not consider Europe to be a common market only,' Mr. Rotfeld said. While enjoying their new farm subsidies, the Poles favor opening the European Union to the free movement of service industries, from plumbing contractors to advertising agencies. Unlike most of the countries of Western Europe, Poland also ardently wants the European Union's enlargement to continue, especially to include this country's eastern neighbors, Ukraine and, eventually, Belarus. Blair Issues a Warning International Herald Tribune BRUSSELS, June 23 - The European Union can escape its budget and constitutional crises only if it embraces new members through enlargement and modernizes its economies to confront the challenges of globalization, Prime Minister Tony Blair of Britain said Thursday. Mr. Blair sent a stark warning in a speech at the European Parliament that European Union member countries, if they act otherwise, faced failure on a grand scale, risking deep economic stagnation and a retreat into nationalism and xenophobia. 'We have to renew,' he said, as he urged the union to welcome new members like Turkey and Croatia and to modernize economically to confront the competitive challenges of China and India. Mr. Blair used his speech, marking the start of Britain's term in the European union's rotating presidency, to respond to critics like President Jacques Chirac of France and Chancellor Gerhard Schröder of Germany, who blame Mr. Blair for the rancorous collapse of the European Union's summit meeting last week.

Subject: Cutting Here, but Hiring Over There From: Emma To: All Date Posted: Fri, Jun 24, 2005 at 12:23:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/technology/24blue.html Cutting Here, but Hiring Over There By STEVE LOHR Even as it proceeds with layoffs of up to 13,000 workers in Europe and the United States, I.B.M. plans to increase its payroll in India this year by more than 14,000 workers, according to an internal company document. Those numbers are telling evidence of the continuing globalization of work and the migration of some skilled jobs to low-wage countries like India. And I.B.M., the world's largest information technology company, is something of a corporate laboratory that highlights the trend. Its actions inform the worries and policy debate that surround the rise of a global labor force in science, engineering and other fields that require advanced education. To critics, I.B.M. is a leading example of the corporate strategy of shopping the globe for the cheapest labor in a single-minded pursuit of profits, to the detriment of wages, benefits and job security here and in other developed countries. The company announced last month that it would cut 10,000 to 13,000 jobs, about a quarter of them in the United States and the bulk of the rest in Western Europe. 'I.B.M. is really pushing this offshore outsourcing to relentlessly cut costs and to export skilled jobs abroad,' said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, a group that seeks to unionize such workers. 'The winners are the richest corporations in the world, and American workers lose.' WashTech, based in Washington State, gave the I.B.M. document on Indian employment to The New York Times. It is labeled 'I.B.M. Confidential' and dated April 2005. An I.B.M. employee concerned about the shifting of jobs abroad provided the document to WashTech. I.B.M. declined to comment on the document or the numbers in it, other than to say that there are many documents, charts and projections generated within the company. But in an interview, Robert W. Moffat, an I.B.M. senior vice president, explained that the buildup in India was attributable to surging demand for technology services in the thriving Indian economy and the opportunity to tap the many skilled Indian software engineers to work on projects around the world. Lower trade barriers and cheaper telecommunications and computing ability help allow a distant labor force to work on technology projects, he said. Mr. Moffat said I.B.M. was making the shift from a classic multinational corporation with separate businesses in many different countries to a truly worldwide company whose work can be divided and parceled out to the most efficient locations. Cost is part of the calculation, Mr. Moffat noted, but typically not the most important consideration. 'People who say this is simply labor arbitrage don't get it,' he said. 'It's mostly about skills.' And Mr. Moffat said that I.B.M. was hiring people around the world, including many in the United States, in new businesses that the company has marked for growth, even as it trims elsewhere. The company's overall employment in the United States has held steady for the last few years, at about 130,000. To foster growth, I.B.M. is increasingly trying to help its client companies use information technology rather than just selling them the hardware and software. So I.B.M. researchers and programmers are more and more being put to work for customers, redesigning and automating tasks like procurement, accounting and customer service. Yet those advanced services projects will be broken into pieces, with different experts in different countries handling a slice. This emerging globalization of operations, Mr. Moffat noted, does lead to a global labor market in certain fields. 'You are no longer competing just with the guy down the street, but also with people around the world,' he said. Such competition, however, can become particularly harsh for workers in the West when they are competing against well-educated workers in low-wage countries like India. An experienced software programmer in the United States earning $75,000 a year can often be replaced by an Indian programmer who earns $15,000 or so. Most economic studies, including one last week by the McKinsey Global Institute, a research group, have concluded that the offshore outsourcing of work will not have a huge effect on American jobs as a whole. But looking at job numbers alone, said Joseph E. Stiglitz, a Nobel Prize-winning economist and a professor at Columbia University, understates the potential problem. 'What worries me is that it could have an enormous effect on wages, and that could have a wrenching impact on society,' said Professor Stiglitz, a former chief economist of the World Bank. The fact that globalization anxiety about jobs and wages does not extend to executive ranks has stirred resentment among workers. 'Maybe the shareholders should look offshore for competitive executives who would collect less pay and fewer benefits,' said Lee Conrad, national coordinator of the Alliance@IBM, a union-affiliated group that has 6,500 dues-paying members at I.B.M. 'In all this talk of global competitiveness, the burden all falls on the workers.' Education and retraining, most experts agree, is a major part of the answer for helping skilled workers adjust and find new jobs to replace those lost to global competition. For its part, I.B.M. says it spends more than $700 million on training its employees for new jobs within the company, and for those laid off it offers severance packages that include career counseling and reimbursement for retraining. Even some champions of globalization say the corporate winners should do more to ease the transition of the losers. 'The wealth creation clearly has some fallout, and there is a responsibility for it,' said Diana Farrell, director of the McKinsey Global Institute. By one calculation, the cost of softening the blow might not be all that high. For every dollar invested offshore, American companies save 58 cents, McKinsey estimates. And 4 or 5 percent of those savings could pay for a theoretical wage insurance program that would cover 70 percent of the income lost between an old job and a new one, as well as subsidized health care coverage, McKinsey said.

Subject: Hermit Thrush From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 12:16:26 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3798&u=85|254|... Hermit Thrush New York City--Central Park, Azalea Pond.

Subject: 'From Bubble to Bubble' From: Pete Weis To: All Date Posted: Fri, Jun 24, 2005 at 12:07:05 (EDT) Email Address: Not Provided Message: Global: From Bubble to Bubble Stephen Roach (New York) It seems like yesterday. But it’s only been a little over five years since we were going through the same drill that is playing out today -- bemoaning the excesses of an asset bubble and hunkering down for the inevitable post-bubble shakeout. Five years ago, it was the equity bubble. Today, it’s the property bubble. These are not isolated events. As night follows day, one bubble has spawned the next. And we have the Federal Reserve to thank for this grand continuum and the cumulative toll it is taking on the US economy. Sadly, as America lurches from bubble to bubble, the endgame is looking all the more treacherous. The debate has an eerie sense of déjŕ vu. Today, there are those who dispute the very existence of a US property bubble. Similarly, five years ago, there were many who argued that US equities were not over-valued -- that, in fact, they were fairly valued on the basis of the powerful earnings potential of a high-productivity growth New Economy. Today, we hear tales of a “fundamentally-driven” housing boom -- supported by increased homeownership, immigration, low unemployment, and, of course, low interest rates. And there are those who repeatedly caution against characterizing property as a broad asset class -- especially in the context of fragmented real estate markets that are always distinguished by their “local” idiosyncrasies. This is rubbish -- five years ago and, again, today. In March 2000, not all stocks had risen to dot-com excesses. But enough of them did to take the overall S&P 500 index down by 49% in the bubble carnage that followed over the next two and a half years. Today, nationwide US house-price inflation is at a 25-year high in real terms. That doesn’t mean every home in the country has hit bubble-like valuations. But in the first quarter of 2005, double-digit house-price inflation was evident in 23 states plus the District of Columbia. In 25 of the top 100 metropolitan areas, the rate of home price appreciation was at least 20%. Investors -- not owners -- are currently accounting for 11.5% of newly-originated conventional mortgage loans; that’s up from a 2% low in late 1995. And mortgage financing has shifted dramatically in recent years into exotic and risky floating rate obligations such as interest-only and negative-amortization loans; moreover, as Tom Lawler of Fannie Mae notes, this shift into floating-rate borrowing cannot be explained by the factors that traditionally drive such trends -- the level of mortgage rates and yield curve spreads. Something else must at work. That something else is a bubble. Residential property has become the asset of choice for investors in a low-return world awash in liquidity. As The Economist has long stressed, this property bubble is global in scope -- by their reckoning, “the biggest financial bubble in history” (see the Special Report in their 18 June 2005 issue, “The Global Housing Boom”). The worldwide scope of this asset bubble makes it tempting to dismiss America’s problem as part of a broader, more powerful trend. Again, I would argue this is nonsense. The US is very much in control of its own destiny insofar as coping with the excesses in asset markets. In that important respect, America’s equity and property bubbles have one key ingredient in common: The principal blame for both bubbles, in my view, lies with the Federal Reserve. Unlike most other major central banks, the Greenspan Fed has long maintained that asset markets are not within the purview of its policy mandate. The Bank of England, the Reserve Bank of Australia, and, belatedly, the Bank of Japan all believe differently. Ottmar Issing of the European Central Bank has argued that asset markets pose one of the greatest challenges for modern-day monetary policy -- that central banks must now weigh “the risks associated with asset-price inflation and subsequent deflation (see Issing’s 18 February 2004 editorial feature in the Wall Street Journal, “Money and Credit”). America’s Federal Reserve sees it differently. But it wasn’t always that way. Long ago, when America’s Asset Economy was in its infancy, Alan Greenspan worried about “irrational exuberance.” But he quickly changed his mind and went on to champion the equity culture spawned by the New Economy. In my view, that was a policy blunder of monumental proportions. The rest is history -- and a sad history at that. By electing to condone the greatest equity bubble since the late 1920s, the Fed has been snared in a low real interest rate trap -- in effect, locking itself in to a serial bubble-blowing strategy. To counter post-equity bubble aftershocks, the Fed slashed its policy rate by 550 basis points to 1% -- vowing that it had learned the tough lessons of Japan (see the now-seminal research report by the Fed’s research staff, “Preventing Deflation: Lessons From Japan's Experience in the 1990s” by Alan Ahearne; Joseph Gagnon; Jane Haltmaier; Steve Kamin, et. al., June 2002). And then in the face of a full-blown deflation scare -- a classic and predictable symptom of a post-bubble shakeout -- the Fed maintained an uber-accomodative policy stance that is still in place today. It pushed the real federal funds rate into negative territory for three years (2002-04) before finally taking it up to the zero threshold, where it remains today. Bubble after bubble has since percolated to the surface during this period of extraordinary monetary accommodation -- especially in a multitude of fixed income products (i.e., Treasuries, investment-grade corporates, high-yield bonds, emerging market debt, and a host of credit instruments). With overnight money basically free in real terms, the “carry trade” was a no-brainer -- investors and speculators alike could pocket the spread anywhere on the yield curve. This created an artificial demand for fixed income securities that was quick to take on bubble-like implications of its own. Out of this same mania, the property bubble was borne. Behavioral economics tells us the American consumer should have been decimated once the equity bubble popped in 2000 -- the pain of loss should have been far greater than the ecstasy of gain. But US households never skipped a beat. House price inflation took over where the equity bubble left off, and the Fed’s post-bubble rescue plan facilitated the greatest bonanza of them all -- a massive wave of home mortgage refinancing that became a powerful supplement for an income-short US consumer. The home became the cash machine -- the manna from heaven that drew its sustenance from rock-bottom interest rates. And it became contagious -- as most bubbles do. The more consumers succeeded in extracting purchasing power from their assets, the greater the demand for the asset. Once borne out of a legitimate effort at post-bubble life-style defense, the asset-based consumption mindset took on a life of its own. Like the carry trade in fixed income, this phenomenon created an artificial demand for the underlying asset. We now call it a property bubble. Dangers cumulate as one bubble follows another. That’s because debt invariably enters the equation. And that has certainly been the case in recent years. Not only does the outstanding volume of household sector indebtedness now stand at a record of nearly 90% of GDP, but this ratio has soared by 20 percentage points over the past five years (2000-04) -- equal to the rise that took place over the preceding 15 years (1985-99). Moreover, household sector debt-service burdens are at historic highs when scaled by disposable personal income -- truly astonishing in a climate of rock-bottom interest rates. That means it wouldn’t take much of a back-up in rates to put a real squeeze on the over-extended American consumer. Moreover, given the low “teaser” rates that have lured increasingly large numbers of homeowners into floating rate mortgages in recent years -- the ARM share of newly originated mortgage loans recently hit 40% -- there are new risks to this debt binge; it is quite conceivable that “automatic resets” will push mortgage interest payments up sharply in the not-so-distant future, even if market interest rates don’t budge. (Note: The increasingly popular option ARMs -- basically negative amortization loans -- are especially vulnerable to payment shock; see the 20 June 2005 Fitch Ratings report, “Option ARM Risks and Criteria”). Here as well, history screams out the warning that has gone unheeded -- debt bubbles and asset bubbles go hand in hand. The exit strategy has always been the most problematic aspect of this scenario. Not only is that true of overly-indebted borrowers, but it’s also true of central banks. The Fed prides itself in having learned the lessons of Japan. But, in fact, the game-plan is woefully incomplete. Yes, the US central bank learned that it pays to move quickly once a bubble bursts. But then what? Unfortunately, there was nothing further to learn from the Bank of Japan other than it’s very tough to wean a post-bubble, deflation-prone economy from low nominal interest rates. Some 16 years after the Japanese bubble popped, the BOJ is still stuck with its policy rate at zero. Five years after the US equity bubble popped and the Fed is not a whole lot better off, with its policy rate still hovering around zero in real terms. As bubble follows bubble, the consequences of normalizing interest rates become more and more severe -- not just for the US but also for a US-centric world that now believes the American consumer is “too big to fail.” The resulting moral hazard dilemma only reinforces the belief that low interest rates are here to stay. In the meantime, asset and debt bubbles keep feeding on themselves. This is a sad and depressing tale -- especially for the world’s unquestioned economic leader. Alas, bubbles and imbalances are one and the same. Even Alan Greenspan has finally admitted that the property-based equity extraction of an asset economy pushes income-based saving rates lower and lower -- thereby reducing national saving and resulting in an ever-wider current account deficit (see his 4 February 2005 speech, “Current Account”). One of the great mysteries of asset bubbles is what causes them to pop. Yale professor Robert Shiller has long argued that asset bubbles invariably implode under their own weight (see Irrational Exuberance, Princeton University Press, first edition, 2000). Another possibility in the current climate is the inevitability of a US current account adjustment -- a rebalancing that entails mounting pressure on the dollar and US real interest rates. Such an outcome could very well put the US on a collision course with ever-expanding asset bubbles. We all hope for the benign endgame. But the bigger the bubble and its associated imbalances, the less likely that becomes. Don’t kid yourself. America’s property bubble didn’t just appear out of thin air. It is traceable directly to the equity bubble of the Roaring 1990s -- and to a central bank that remains steeped in denial. The real lesson of Japan is that there may well be no easy way out.

Subject: Bonds and Stocks From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 11:12:03 (EDT) Email Address: Not Provided Message: We should notice closely the relation between bonds and stocks when there are sharp short term movements. This may help us anticipate longer term relations during market swings. Bonds have tended to strengthen when stocks weaken for quite a while. This is encouraging.

Subject: Unocal Deal: A Lot More Than Money From: Emma To: All Date Posted: Fri, Jun 24, 2005 at 09:39:52 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/business/worldbusiness/24china.html?pagewanted=all Unocal Deal: A Lot More Than Money Is at Issue By LESLIE WAYNE and DAVID BARBOZA The battle for Unocal, the large independent American oil company, is shaping into as much a test of Chinese-American strategic and economic relations as it is a boardroom showdown. Most takeover battles can be settled by price - the highest bidder wins. But judging by the sharp reaction yesterday in Washington, that may not be the case with Unocal. Just a day after the China National Offshore Oil Corporation, or CNOOC, one of China's largest state-controlled oil companies, made an unsolicited bid of $18.5 billion for Unocal, senators and representatives, as well as lawyers, bankers and lobbyists, are taking jabs at what may become one of the thorniest strategic business challenges facing the administration. At issue is whether CNOOC can buy Unocal, which in April agreed to a $16.4 billion merger deal with Chevron, the American energy giant. The unexpected foreign bid for Unocal comes at a time when oil prices are hitting $60 a barrel, energy reserves are gaining more value, and the United States is concerned about its own oil and gas resources. At the same time, the administration needs to work with China on trade and currency issues, even as concerns are increasing about the growing economic power of China. 'It does raise questions about how much of the country we are willing to sell to a Communist country that we might be fighting someday,' said Michael O'Hanlon, an international military specialist at the Brookings Institution. But he added, 'I'd be surprised if we really fall on our sword to prevent the sale.' CNOOC's bid is also forcing Unocal shareholders to weigh the higher price that the Chinese are willing to pay against the risks that the deal faces in Washington. On top of that, there is the possible backlash that might arise from selling a potentially strategic American asset to China. Unocal said that it had received permission from Chevron to hold discussions with CNOOC. The question is how - if Unocal decides to switch from Chevron to CNOOC - the politics will play out in Washington, where critics are already speaking out and where the deal would be subject to approval by the Committee on Foreign Investments in the United States. The panel, a federal multiagency group, can prevent any foreign investment on the grounds of national security. For years, the government has placed restrictions on the extent of foreign ownership in a variety of industries, from airlines to the media to military contractors. In the past, these restrictions have mostly affected developed countries like Japan and Britain. 'This is a remarkable arrival of China into the world of global big business deals and international investing,' said Clyde V. Prestowitz Jr., a former trade negotiator in the Reagan administration and president of the Economic Strategy Institute in Washington. 'And it does raise the issue of whether this gives influence or some kind of potential importance to a government that may not always be friendly to us.' In Washington, CNOOC is already laying the groundwork. It has hired Public Strategies, a public relations firm whose vice chairman, Mark McKinnon, led President Bush's media campaign in the 2004 election. The company has also lined up some of the nation's savviest financial advisers - among them Goldman Sachs and J. P. Morgan - as well as such well-connected legal and lobbying firms as Akin Gump Strauss Hauer & Feld and Davis Polk & Wardell. Many in Washington said that the deal, on its merits, might gain approval from the foreign investment committee. In any case, the committee would not review the case until a formal deal is completed. In recent deals involving China, the committee's responses have been mixed. In 2003, a negative review by the foreign investment committee caused Hutchison Whampoa, which is based in Hong Kong, to withdraw a bid for Global Crossing, the telecommunications carrier that later filed for bankruptcy. But this year, the committee permitted the $1.75 billion sale of I.B.M.'s personal computer business to Lenovo of China. 'The national security argument is a fair one,' said William A. Reinsch, president of the National Foreign Trade Council and a former trade official in the Clinton administration. 'When you talk about energy supplies, and the market is tight, there is a national security issue. You are going to have a lot of people pounding the table.' CNOOC is already trying to play down any concerns that the transaction could hurt the American oil and gas markets. It is stressing that 70 percent of Unocal's oil and gas reserves are in Asia and that its American reserves amount to only about 1 percent of America's oil consumption, with none of it now supplying the military. Unocal also has a pipeline hooked up to American strategic oil reserves, as well as a rare-earth mine, the only one in the United States. CNOOC has said it will consider selling these assets, if that is necessary to close the deal. In addition, CNOOC has promised not to take supplies from Unocal's oil and gas reserves in the United States and sell them outside the country. It also said it would retain 'substantially all' of the American employees. In Washington, two Republican congressmen, Richard W. Pombo, chairman of the House Committee on Resources, and Duncan Hunter, chairman of the House Armed Services Committee, wrote to President Bush last week, saying that 'such an acquisition raises many concerns about U.S. jobs, energy production and energy security.' 'We fear that American companies will find it increasingly difficult to compete against China's state-owned and/or controlled energy companies, given their mandates to supply China's ever-growing demand for energy, which will increasingly need to come from foreign sources,' the letter said. For China, which is scouring the world for oil, gas and minerals to help power its economy, the deal is important. That puts the administration in an awkward position as it tries to negotiate a variety of trade frictions and geopolitical debates. 'The deal has got the administration over a barrel,' said Michael R. Wessel, a member of the United States-China Economic and Security Review Commission, a group established by Congress. Not only is the administration trying to work out trade issues with China over textiles, currency and a number of other matters, it is also increasingly relying on China to play a more aggressive role in containing North Korea. 'We want the Chinese to invest part of their dollars in our economic system,' Mr. Wessel said, 'yet we have to worry about the impact of this transaction on our national security. Everyone is concerned about the migration of jobs and research and development to China. Now we have oil hitting $60 a barrel. China is going to be on the center of our radar screen.' For CNOOC, an offshore oil company, Unocal offers huge gas reserves in 14 countries. It has Asia's largest storehouse of liquefied natural gas. A combined company would go from a Chinese offshore oil producer with high expenses, as it searches for oil around China, to a diversified oil and gas company with global reserves. Oil industry analysts offered mixed views about a potential deal. 'There are a lot of people in Washington who are really torn,' said Robin West, chairman of PFC Energy, an oil consultant in Washington. 'They believe in open markets and don't want to exacerbate matters with China. Yet, do you want a Chinese company that doesn't play by American rules to take advantage of American rules and get an American company?'

Subject: No, No, No, No, No!!! From: Pete Weis To: Emma Date Posted: Fri, Jun 24, 2005 at 11:10:05 (EDT) Email Address: Not Provided Message: China needs to behave and buy only our treasuries with their surplus dollars - nothing more!!! Miami condo investors demand nothing less!!!

Subject: Re: No, No, No, No, No!!! From: Terri To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 15:17:44 (EDT) Email Address: Not Provided Message: Well said :)

Subject: We Are All French Now? From: Emma To: All Date Posted: Fri, Jun 24, 2005 at 09:29:28 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/24/opinion/24friedman.html We Are All French Now? By THOMAS L. FRIEDMAN Ah, those French. How silly can they be? The European Union wants to consolidate its integration and France, trying to protect its own 35-hour workweek and other welfare benefits, rejects the E.U. constitution. What a bunch of antiglobalist Gaullist Luddites! Yo, Jacques, what world do you think you're livin' in, pal? Get with the program! It's called Anglo-American capitalism, mon ami. Lordy, it is fun poking fun at France. But wait ...wait ... what is that noise I hear coming from the U.S. Congress? Is that ... is that members of the U.S. Congress - many of them Democrats - threatening to reject Cafta, the Central American Free Trade Agreement? Is that members of the U.S. Congress afraid to endorse a free-trade agreement, signed over a year ago, with El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua and the Dominican Republic? Mon Dieu! I am afraid it is. And for many of the same reasons France has resisted more integration: a protectionist fear of competition in a world without walls. Yes, we are all Frenchmen now. Well, not quite. But that is where we are heading in the U.S. if we let the combination of the sugar lobby, which wants to block more imports from Central America; the A.F.L.-C.I.O., which doesn't like any free trade agreements; and Democrats who just want to defeat Cafta so they can make President Bush a lame duck have their way and block Cafta ratification. I understand Democrats want to stick it to Mr. Bush, but could they please defeat him on a policy he is wrong about (there are plenty) and not on expanding free trade in this hemisphere, which he is right about. The French economic instinct is not one we want to start emulating now, just as the global playing field is being flattened, bringing in more competitors from Poland to China to India. This is a time to play to our strengths of openness, flexibility and willingness to embrace creative destruction, and lead on free trade. The McKinsey Global Institute just published a study of how both Germany and France have suffered, compared with the U.S., by trying to put up walls against outsourcing and offshoring. It noted: 'A new competitive dynamic is emerging: early movers in offshoring improve their cost position and boost their market share, creating new jobs in the process. Companies who resist the trend will see increasingly unfavorable cost positions that erode market share and eventually end in job destruction. This is why adopting protectionist policies to stop companies from offshoring would be a mistake. Offshoring is a powerful way for companies to reduce their costs and improve the quality and kinds of products they offer consumers, allowing them to invest in the next generation of technology and create the jobs of tomorrow.' Cafta is critical for enabling U.S. and Central American textile firms to compete with China. U.S. firms specialize in the more sophisticated work of making dyes, designing patterns and manufacturing specialized yarns, threads and fabrics, and the Cafta countries specialize in the labor-intensive sewing. Because the Cafta countries are right next door, U.S. retailers can respond quickly to changes in the marketplace, which far-off Chinese factories cannot do as easily. That's also why, explains Deputy Secretary of State Robert Zoellick, that a shirt that says 'Made in Honduras' might contain 60 percent U.S. content, while a similar shirt that says 'Made in China' most likely would have none. Finally, there is geopolitics. In the 1980's, we were worried Central America was going to go communist. Now we are worried it is going to go capitalist? We spent billions fighting communism there. Now we have a chance to help consolidate these fragile democracies by locking in a trading relationship with the U.S. that is critical for their development. Shame on us if we balk. But President Bush needs to spend some political capital and sell this deal in these terms. 'The administration has to get out and connect the dots for people,' said Richard Haass, president of the Council on Foreign Relations and author of a thoughtful new book on foreign policy, 'The Opportunity: America's Moment to Alter History's Course.' 'Otherwise the vocal minority will trump the interests of the majority. We should not assume that this backlash [against free trade] that is going around is just a French malaise or Dutch elm disease. It could happen here.' But if we think we can indulge protectionism and not worry about the geopolitical spillovers in our own backyard, that is a real illusion. 'The world is not Las Vegas,' added Mr. Haass. 'What happens there will not stay there.'

Subject: Black Swan Vocalizing From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 07:24:38 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3550&u=207|266|... Black Swan Vocalizing Jamaica Bay NWR East Pond, New York.

Subject: Bond Fund Safety From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 07:23:09 (EDT) Email Address: Not Provided Message: Remember that the beauty of a bond fund with a fairly constant duration is that the portfolio is always being structured anew during a time of rising interest rates, so a 2 year duration portfolio will make up a 2% loss in price from a 1 percentage point increase in interest rates in less than 2 years. There is actually more safety than I need, so I opt for higher yields or dividends from stocks.

Subject: Durations From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 06:00:11 (EDT) Email Address: Not Provided Message: Remember that a Vanguard short term bond fund will have a duration about 2 years, intermediate bond funds have about a 5 years duration, while long term is about 10 years. These durations are generally highly stable. A 1 percentage point change in interest rates will change the price of a short term bond fund by about 2%, while the yield of the fund will slowly increase by 1 percentage point, which is highly conservative for any portfolio.

Subject: House Wren Feeding Mate From: Terri To: All Date Posted: Fri, Jun 24, 2005 at 05:49:23 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5508&u=4|1|... House Wren Feeding Mate New York City--Central Park, Maintenance Field.

Subject: Moderate Duration Bond Funds From: Jennifer To: All Date Posted: Fri, Jun 24, 2005 at 05:48:41 (EDT) Email Address: Not Provided Message: What I plan to do is increase the proportion of my portfolio in Vanguard moderate duration investment-grade bond funds as I judge conditions warrant. There will be my increasingly additional protection as necessary. I do not believe bond funds will be a problem in a housing price slump, but I am not worried about bond funds as a protection to any economic slowing. So far the international bull market in value stocks however continues.

Subject: Housing and Portfolio Protection From: Jennifer To: All Date Posted: Fri, Jun 24, 2005 at 05:34:59 (EDT) Email Address: Not Provided Message: Again, if Robert Shiller is correct and housing prices can readily fall from 10% to 30% in nominal terms, we must focus on portfolio security. A decline in housing prices in more than just a local market or so will pressure growth and cause the Federal Reserve to try to compensate by lowering short term interest rates. This process is what can be followed in Australia, Britain and Sweden. What we find so far is that value stocks and bond funds will be protective. So far.

Subject: Re: Housing and Portfolio Protection From: Pete Weis To: Jennifer Date Posted: Fri, Jun 24, 2005 at 11:15:34 (EDT) Email Address: Not Provided Message: How can a large drop in housing not impact consumer spending when so much spending is supported by the housing market? How can this not affect the profits of global companies when we have a global consumer so dependent on the global housing boom?

Subject: Re: Housing and Portfolio Protection From: Jennifer To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 13:56:10 (EDT) Email Address: Not Provided Message: Those countries where there has been a slowing of housing have not yet had stock market problems. We must watch.

Subject: Interest Rates and Housing Prices From: Terri To: All Date Posted: Thurs, Jun 23, 2005 at 15:21:52 (EDT) Email Address: Not Provided Message: Though there may be a housing bubble that is extensive in America and extends to several other countries, there is no reason to suppose an end to the bubble will result in sharp price declines. Prices in housing may prove to be more dependent on long term interest rate changes than on any absolute level. So, if interest rates were to stay low there might be a sustained period of flat housing prices rather than a deflation. Housing prices do not seem to have nearly the same potential volatility as technology stock prices in 2000, if interest rates stay low.

Subject: Good article in Barrons From: Pete Weis To: Terri Date Posted: Thurs, Jun 23, 2005 at 17:52:18 (EDT) Email Address: Not Provided Message: 'The Bubble's New Home' by Jonathan Laing is a summary of Robert's Shiller's extensive work on the housing markets. The article was in a format which I could not copy and paste, but a search in google will find it. 'In Shiller's view, a real price decline of 50% in US home prices over the next decade isn't beyond the realm of possibility' is a quote from the article. He says this is not as 'catastrophic' as it might seem because this also includes inflation. Paul Krugman while in Asia recently, said he expected something like a 50% overall real estate drop in the US, although I don't remember that he gave a timetable for it. Sir John Templeton (Templeton Funds) who lived through the 30's real estate bust has said he expects a similar downturn in the coming years to the 30's - he's certainly on the extreme low end of real estate bust predictions. The thing to remember is that since the largest boom has occured in the Northeast, Washington DC area, Florida and West Coast, those areas would be expected to have a greater than average downturn. Warren Buffet when asked on CNBC today whether he thought there was a real estate bubble and, if he did, is it a danger to the economy, stated 'probably' to both questions. Remember Buffet is the master of understatements - when asked in the late 90's why he didn't invest in hightech, he stated 'I don't understand it'. We know now that he understood it much better than the so called hightech investing 'experts' and knew it was heavily overvalued. Terri, my own experience has seen housing prices in the Northeast drop 20-30% in just 2-3 years (late 80's). The early 90's saw similar drops in California. Remember Trump going bankrupt and all the savings and loans which went under? 'Shiller's data show a housing bubble of extraordinary dimension' is another quote from this article. What really concerns me are these incredibly easy lending standards and proliferation of interest only loans and Shiller is quoted about this in the article. Finally as Paul Krugman as well as a federal reserve official (forgot his name) pointed out - what else is out there to replace the housing boost to the economy? How can the end to the housing boom not have a significant negative effect on the economy when it is presently providing the primary support?

Subject: Re: Good article in Barrons From: Terri To: Pete Weis Date Posted: Thurs, Jun 23, 2005 at 17:59:04 (EDT) Email Address: Not Provided Message: Pete, I hope you are using Gmail. With Gmail we have endless storage space and the use of Google to search for back articles. So we can build libraries by mailing what we wish to ourselves. I love Gmail. Soon, I will walk over to the library a few yards away and read the article on the views of Shiller.

Subject: Re: Good article in Barrons From: Peter Weis To: Terri Date Posted: Thurs, Jun 23, 2005 at 20:21:30 (EDT) Email Address: Not Provided Message: It's a pdf file. There is probably a way to save it to word and then convert or renanme to allow a copy and paste. But the web location is www.leavittbrothers.com/pdfs/housingbubble.pdf

Subject: Re: Good article in Barrons From: Terri To: Peter Weis Date Posted: Thurs, Jun 23, 2005 at 21:19:30 (EDT) Email Address: Not Provided Message: Then Shiller is arguing that interest rates will in the end make no difference if there is a housing bubble, and he also argues that it was not the key factor to the current increase in housing prices. Well, I can agree with his argument for pronounced housing price changes have in the past seemed poorly correlated with interest rates. Back to thinking....

Subject: Re: Good article in Barrons From: Pete Weis To: Terri Date Posted: Fri, Jun 24, 2005 at 00:25:40 (EDT) Email Address: Not Provided Message: I don't believe Shiller is saying that mortgage rates if they were to increase would not have a downward impact on housing - certainly no one would say that. Higher mortgage rates clearly reduce the number of buyers for any given house. What Shiller is saying - mortgage rates don't HAVE to increase to set off a housing decline. He is saying that a booming housing market can begin to decline simply 'from its own weight'. he points to the popularity of interest only loans as a demonstration of how house prices have become unaffordable utilizing traditional lending instruments and of the high level of speculation in the housing market. Moreover, Shiller is saying that there is much more to the housing boom than simply low interest rates and those other factors can disappear even if interest rates remain low.

Subject: Re: Good article in Barrons From: Terri To: Pete Weis Date Posted: Fri, Jun 24, 2005 at 16:19:28 (EDT) Email Address: Not Provided Message: Agreed with all. So, we keep thinking safety safety safety.

Subject: Finding Value in a Bubbly Period From: Terri To: All Date Posted: Thurs, Jun 23, 2005 at 13:23:23 (EDT) Email Address: Not Provided Message: There is discussion of a housing bubble in America each day and has been for months; indeed there is much agreement that there is a housing bubble. The problem may be limited to local markets or national, and may even be international. Also, since housing provides for many jobs in an economy an end to a robust housing market could easily cause a recession. Still, I am willing to concede there is a housing bubble and go right on investing. What matters in investing is finding assets that are properly priced, and that was possible in 1999 and is possible in 2005.

Subject: In Paris, Romancing the Deal From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 11:59:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/garden/23paris.html?pagewanted=all In Paris, Romancing the Deal By DEBORAH BALDWIN ROBYNN ROCKSTAD-REX had a large house in Seattle. But after her husband died two years ago she ached for a little piece of Paris. 'It's the one city,' she said, 'where I could smile again.' She found herself hunched over the computer scouring real estate listings until all hours. 'It was an obsession for a while,' she said. A place of one's own in the city of light: it may sound like one of those impossible dreams, brought down to earth by the rude realities of doing business in a country where notoriously slow-moving bureaucracies can give apartment hunting a nightmarish hue. But this quest ended happily. Working with a firm called Paris Real Estate Finders - one of several such services to have sprung up in recent years - Ms. Rockstad-Rex located a pied-ŕ-terre near Montmartre within two weeks. Taking possession took several months, but Finders held her hand the whole time, and Ms. Rockstad-Rex suggested it was actually kind of fun. Paris, that fantasy destination for so many expats and luxury goods connoisseurs, has become an unlikely destination for Americans hoping to acquire second homes. The prospective buyers are so plentiful, in fact, that they have spawned a cottage industry of local fixers who specialize in ushering Americans through the 7 percent transfer fee, codified inheritance rules, requisite 'notaire' and other bewildering rituals of French real estate. A strong euro has scared away some buyers, but others have clearly decided that it's a sign to buy in. Though the euro has sagged a bit in recent months, many economists see it bouncing back, indicating that now may be the time to buy. Some buyers are also motivated by prices below those in New York and a conviction that they can only go up. 'Let's say there are worse investments you can make,' said Ms. Rockstad-Rex, asserting that her apartment has appreciated 50 percent since she bought it in 2003. Of course, when the alternative is investing in municipal bonds, who wouldn't prefer a private hideaway stocked with French armoires and raw-milk Camembert? Douglas C. Gaddis, and his partner, Dr. Gary Begin, found themselves lusting over photographs in real estate agency windows during regular trips to Paris. Last year, armed with listings from Paris Real Estate Finders' electronic database, they zeroed in on a one-bedroom in an 1890's building designed by Charles Plumet, and bought it based on photographs alone, like a mail-order bride. The couple, who live outside Washington, flew to Paris to renovate, hiring a contractor 'who came up the stairs with an air-powered jackhammer,' Mr. Gaddis said with awe. The investment all told was about $340,000, he said. That's not so bad considering where prices sit in Washington and New York. The average cost of a square foot in an older building in the fashionable Sixth Arrondissement in the third quarter of 2004 was 655 euros, or about $800, compared with $942 in Greenwich Village, an equivalent New York neighborhood. For those with the means, renovation ŕ l'Americaine can be a fait accompli. Alon and Betsy Kasha, an American couple who develop and sell properties (abkasha.com), put their pieds-ŕ-terre on the market as finished luxury products complete with two-year warranties. Along with such authentic touches as herringbone parquet, they note, Americans want creature comforts like shower stalls and washer-dryers. Ms. Kasha, formerly in the marketing department at Cartier, supplies décor, mixing flea-market finds and contemporary French furniture. Their turn-key apartments, situated in the fashionable Sixth and Seventh Arrondissements near monuments like the Eiffel Tower and stores like Armani, are aimed squarely at well-heeled Americans who associate the good life with France and do not worry over currency fluctuations. The apartments have asking prices of roughly $400,000 to $1 million and 'are like a collection,' Mr. Kasha said. 'We're treating this as fashion,' he explained. As he and other interested parties like to point out, Paris appears to be a more solid investment than, say, gold. In the third quarter of 2000 the average apartment in the Sixth Arrondissement was 460 euros a square foot, in contrast to the 655 four years later. 'It's a really good investment right now,' said Sharon Lagerberg, who bought a place near Montmartre in October with her husband, Dr. Steven Lagerberg. It cost 432,000 euros and has 'already gone up 50,000 euros,' she said. Bilingual and versed in currency trading, mortgage rates and property taxes, services like Paris Real Estate Finders feed the fantasies of Americans locked in their Dilbertian cubicles by sending them links to Web pages lush with descriptive prose and seductive photographs. In true American spirit, they offer efficiency, too. No more slogging from listing to listing in a city where each microneighborhood has its own microagency. No more translating phrases like 'poutres exposés' ('exposed beams'). Doing business in a foreign language is only one of the challenges. Closings are typically two-hour rituals that can include a dramatic reading of a 30-page property transfer document. It's 'a holdover from the Revolution, when people with limited education began buying houses,' explained Dr. Edward Wheatley, an American professor who bought an apartment in an Art Deco building with his wife, Mary Mackay, through Paris Real Estate Finders (parisrealestatefinders.com). There are no official French statistics on the number of Americans who buy apartments in Paris, though real estate agents said there has been an uptick this year. The average buyer, said Olivier de Ripert, a real estate agent, is a hotel-weary 50-something who visits often and longs for a retirement haven, preferably near a good pâtisserie. Mr. de Ripert, who serves what is widely considered to be the most desirable neighborhood among wealthy Americans, Île-St.-Louis, said he started seeing more American noses pressed to his window after the November elections. More recently, politics seemed less relevant to clients than a chance to move some of their money overseas, he said. Michele Imhoff, a French banker who has been helping Americans line up mortgages in Paris since 1991, said the same thing. 'Now Americans do want to diversify their portfolios and investments, and the best way to do it is buying something in Europe.' Ms. Imhoff, the manager of the United States representative office of the Banque Transatlantique in Washington, said she provides free advice - plus mortgage applications and the like translated into English - to any client with one or more accounts. For information, call (202) 429-1909. For some buyers the fluctuating euro (trading this week for about $1.20), continues to have a chilling effect, said Darrell Halverson, who runs Paris Real Estate Finders with his wife, Stephanie Freedman. But with French mortgage rates still around 3 percent and the market 'marching up steadily, 1 percent a month for 40 months,' he noted, many 'are poised and ready to leap.' Toward that end, Finders has compiled not only a sophisticated database of listings but also a rapid response mechanism that can shoot the right ones to browsers who fill out a short questionnaire at the company's Web site. The firm charges about 2.5 percent of the selling price for help with various aspects of finding and financing a property. They deal with one client at a time and say they had more business last year than they could handle. Rival services include Abodes Abroad (abodesabroad.net). Other self-taught go-betweens include Adrian Leeds, an American who publishes a subscription online newsletter (frenchpropertyinsider.com) and organizes sales seminars in Paris and the United States (a two-hour consultation is $250). Rental income sounds like easy money, but that's not always the case. Though French co-ops are more laissez-faire than their New York counterparts - no grueling interviews with board members - they don't necessarily welcome strangers coming in and out of buildings. And absentee owners often find themselves giving a hunk of the income to other fixers to safeguard the plumbing and keep track of the keys. Many buyers have an exaggerated idea of how much rental income can be generated, said Marianne Le Berre, a French architect who helps people find and fix up apartments. 'After you deduct fees and taxes on renting, it's 2 percent,' she said. But for those who have found their dream pied-ŕ-terre, economic cycles, the bureaucracy and taxes are beside the point. It's satisfying to know 'you can negotiate your way through a different legal and cultural system to make a home for yourself in another country,' Dr. Wheatley said. Right now he and his wife are busy preparing to move from Clinton, N.Y., to Chicago. But they say they are delighted to know that one day, when the rat race ends, 'the place is going to be there when we can use it more freely.'

Subject: Brazil's Right to Save Lives From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 10:40:02 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/opinion/23thu3.html Brazil's Right to Save Lives Brazil has the best anti-AIDS program of any developing country. It has a model prevention effort and was the first poor country to provide free AIDS treatment to all who need it, a program countries around the world are now beginning to emulate. It has been able to afford this because Brazilian labs make copycat versions of expensive brand-name drugs. Brazil can freely copy any drug commercialized before 1997, when the country began to respect patents on medicines, a requirement for joining the World Trade Organization. But newer AIDS medicines are still imported and are expensive, and Brazil is spending two-thirds of its antiretroviral budget on just three of these drugs. The government is now contemplating measures that would allow Brazilian labs to copy these drugs. Brazil's health ministry has asked the manufacturers of the drugs to voluntarily license Brazil to make copies. They have refused, and Brazil is threatening to break the patents and pay the holders a reasonable royalty, as W.T.O. rules require. Right-wing groups in the United States and pharmaceutical manufacturers are calling this theft, and several members of Congress have asked the United States trade representative to apply trade sanctions. American trade officials have refrained, but they have criticized Brazil's threat to seize patents. While property rights deserve respect and should not be carelessly violated, what Brazil is doing is legal and deserves Washington's support. Brazil's opponents argue that the country has no real AIDS emergency. Drug companies note that they offer Brazil drugs at deep discounts and say that Brazil can afford them. But the World Trade Organization rules are clear: they encourage all members to use the flexibilities in the intellectual property rules to promote access to medicine for all. Countries need not wait for an emergency, and Brazil isn't even a tough call. Brazil's free universal treatment program, an indispensable weapon against the AIDS epidemic, locks Brazil's government into buying lifelong daily medicines for 170,000 people, and that number is rising. Brazil has the right to make sure it can continue to meet this burden by getting medicines at the cheapest possible price. Breaking patents should be reserved for when it is clearly necessary to protect public health. But these rights have been underused. Only a handful of countries have used W.T.O. rules to break patents on medicines. Countries are intimidated, mainly by the United States. Health ministers who propose making copycat drugs are usually silenced by influential local business sectors afraid of trade retaliation. The American trade representative should make a public statement that the United States will not retaliate against Brazil for exercising its right to save lives.

Subject: Green Tinge Is Attracting Seed Money From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 10:19:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/business/22clean.html?pagewanted=all Green Tinge Is Attracting Seed Money to Ventures By GARY RIVLIN SAN FRANCISCO - Ira Ehrenpreis may be a kind of prophet advocating investments in alternative energy companies, but don't accuse him of being noble. In recent months Mr. Ehrenpreis, a venture capitalist at Technology Partners in Palo Alto, Calif., has been asked any number of times to speak to audiences about 'clean tech,' a term that encompasses such things as solar energy, water purification systems and alternative automotive fuels. He begins and ends every speech the same way: with a slide that stresses that to the extent his motivations are tinged green, it has to do with the color of money. In Silicon Valley these days, more venture capitalists are following Mr. Ehrenpreis's lead. They are driven in part by the high price of oil, which hovered around $59 a barrel on Tuesday, and the vast unmet demand for electricity in China and India. 'The reason we're allocating dollars to this sector is we think we can deliver attractive returns,' said Mr. Ehrenpreis, who also serves as co-chairman of the advisory board of the Cleantech Venture Network. 'It's not because we want to do great things for the environment or great things for the world,' though he adds that that is a 'great byproduct.' That message is resonating with venture capitalists and individual investors in the Valley, where growing rich through doing good is considered the ideal. Top venture firms on Sand Hill Road in Menlo Park, Calif., are beginning to show serious interest in the alternative energy sector, though that typically means venturing outside their core expertise. They hope to capitalize on the growing worldwide demand for energy at a time of rising energy costs, and they see potential for huge profits in technology that can address challenges like climate change and dwindling natural resources. 'This is an area where we've been seeing a lot of quiet investing going on,' said Mark G. Heesen, president of the National Venture Capital Association. 'People are saying so far it's more talk than action, but I think there's been a lot of sub rosa action.' This month two of the area's top firms, Kleiner, Perkins, Caufield & Byers and Mohr Davidow Ventures, made large investments in solar energy companies. One, Miasolé, based in San Jose, raised $16 million in a fund-raising round led by Kleiner Perkins. The other, Nanosolar of Palo Alto, raised $20 million from investors led by Mohr Davidow. On Tuesday, Energy Innovations, a company building advanced solar panels that use mirrors to track the sun and capture energy on storage cells, announced that it raised $16.5 million in venture capital in a round also led by Mohr Davidow. Energy Innovations, based in Pasadena, Calif., was founded five years ago by Bill Gross, a pioneer of Internet advertising in the mid-1990's. Mr. Gross gained fame in the dot-com era when the company he founded, Idealab, a privately held 'incubator' of Internet start-ups, burned through $800 million in eight months. 'I've had four years of conversations with V.C.'s on both coasts,' said Andrew Beebe, president of Energy Innovations, 'and I think we've seen a real change in terms of interest level and an understanding of this area.' He said that in recent months he had spoken with roughly a dozen venture capitalists, and half of them proved willing to talk deal terms. The field is 'starting to get big and grow rapidly,' said Sunil Paul, a founder of Brightmail, an antispam company that was acquired by Symantec last June for $370 million. Mr. Paul, an active investor in start-ups, has used his personal fortune to help finance three alternative energy companies. He was an early investor in Nanosolar, along with Sergey Brin and Larry Page, the founders of Google. In February, more than 100 venture capitalists attended a conference on clean technologies in Palm Springs, sponsored by Clean Edge Inc., a consulting group based in Oakland, Calif. And it is a poorly kept secret within venture circles that at least two venture firms are trying to raise money for new funds that will focus exclusively on energy investments. This attention by some of the Valley's highest-profile investors heartens Nancy C. Floyd, a founder partner of Nth Power, a San Francisco-based venture firm that specializes in clean-tech investments. It took Ms. Floyd and her partner more than three years to raise their first fund, a relatively modest $63 million, which they started investing in 1997. Back then, Ms. Floyd said, it was very difficult to find a venture firm willing to invest with her firm on a deal, as venture capitalists tend to do on deals larger than a few million dollars. 'Energy had always had a very small core audience among venture capitalists,' Ms. Floyd said. 'It's only the last six months to a year we're seeing some of the generalist firms form teams around this and write checks in this area.' Interest from a broad array of companies, she believes, will help the entire sector. For one thing, big companies with expertise in, say, networking design or nanotechnology could provide invaluable expertise if they work with the right energy start-up. Still, clean energy's share of the total venture pool remains tiny, according to data provided by Ms. Floyd's firm and Clean Edge, though it has doubled over the last four years. Mr. Paul, for one, noted that clean tech might need a success like a Yahoo or a Netscape 'before every venture firm decides they need to be in this sector.' Clean tech represented a 1.2 percent share of the total dollar amount of venture capital invested in 2000. In 2004, the $520 million that venture capitalists invested accounted for a 2.6 percent share of the overall venture pie. 'We're in a situation where we still have more deals than capital,' Ms. Floyd said. Mr. Ehrenpreis and Technology Partners, considered trailblazers in clean tech, began to focus more closely on these start-ups starting about five years ago. One reason was their reluctance to follow the rest of the venture capital industry, which at the time was shoveling tens of billions of dollars into dot-coms and telecommunications companies. A second was what they saw as the underfinancing of innovation in energy, given the potential markets. 'When you're talking about energy, when you're talking about water, you're talking about the largest markets in the world,' Mr. Ehrenpreis said. His firm now devotes roughly half its resources to alternative energy start-ups. The rest is being invested in life sciences companies. Similarly, Erik Straser, a partner at Mohr Davidow, spotted the great size of those potential markets and over the last three years decided to devote a large share of his time to exploring the clean-tech field. In addition to investing in Nanosolar and Energy Innovations, he and his partners have put money into a start-up that is using fuel-cell technologies to develop a portable, self-sustaining power plant. 'You look at all the development that's going on in China and India right now, and you realize that two-fifths of the world's population is going through the kind of industrialization that one-fifth the world's population experienced in the 20th century,' Mr. Straser said. 'The size of the opportunity here is immeasurable.' He pointed to Energy Innovations as an example of a company with a huge potential market. 'If they can execute on their vision, they'll be a cash register stuck on open,' Mr. Straser said. Not every venture capitalist, though, is convinced that the energy sector is thick with companies with huge money-making potential. Vinod Khosla, the prominent Kleiner Perkins partner, is bullish on the clean-tech field - so much so that he stepped down as a full partner at Kleiner last year in part to devote more time to investing his own money in alternative energy companies. While he has already made four such investments over the last four years, he also doubts that very many clean-tech firms have huge payout potential. 'I have the sense that there are a lot more niche-sized start-ups out there than big ones,' Mr. Khosla said, 'but some great opportunities do exist.' While the federal government has scaled back investment in clean technologies, states are playing an increasingly important role, said Ron Pernick, co-founder of Clean Edge, the consulting group. Nearly 20 states have set goals for the percentage of energy supply that must come from clean sources, Mr. Pernick said, and some states, including California and Connecticut, are setting aside money to be invested in promising alternative energy companies. Not since the days of the Carter administration, when the federal government was more involved, have venture capitalists been this excited about alternative energy, said Mr. Heesen of the venture capital association. And that time, he said, it 'proved to be disastrous.' Today's landscape is radically different from that of the late 1970's, of course. Years of experimentation in fuel cells and solar energy as well as breakthroughs in other fields, from nanotechnology to semiconductors, have been great boons to innovation in clean tech. But on the other hand, many firms just venturing into this field have no more experience today than they did 30 years ago.

Subject: Changes in Lung Cancer Treatments From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 10:17:01 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/health/23cancer.html?pagewanted=all Studies Lead to Big Changes in Lung Cancer Treatments By DENISE GRADY For the first time in decades, doctors have begun making major changes in the treatment of lung cancer, based on research proving that chemotherapy can significantly lengthen life for many patients for whom it was previously thought to be useless. The shift in care applies to about 50,000 people a year in the United States who have early cases of the most common form of the disease, non-small-cell lung cancer, and whose tumors are removed by surgery. Many of these patients, who just a few years ago would have been treated with surgery alone, are now being given chemotherapy as well, just as it is routinely given after surgery for breast or colon cancer. The new approach has brightened a picture that was often bleak. 'The benefit is at least as good, and maybe better than in the other cancers,' said Dr. John Minna, a lung cancer expert and research director at the University of Texas Southwestern Medical Center in Dallas. He said new discoveries were helping to eliminate doctors' 'nihilistic' attitudes about chemotherapy for lung cancer. 'The standard of care has changed,' said Dr. Christopher G. Azzoli, a lung cancer specialist at Memorial Sloan-Kettering Cancer Center in New York. A major impetus for the change came a year ago, when two studies presented at a cancer conference showed marked increases in survival in patients who received adjuvant chemotherapy, meaning the drugs were given after surgery. In one study of 482 patients in Canada and the United States, led by Dr. Timothy Winton, a surgeon from the University of Alberta, 69 percent of patients who had surgery and chemotherapy were still alive five years later, as compared with 54 percent who had just surgery. The patients were given a combination of two drugs, cisplatin and vinorelbine, once a week for 16 weeks. In the world of lung cancer research, a survival difference of 15 percentage points is enormous. Over all, the patients given chemotherapy lived 94 months, versus 73 months in those who had only surgery - also a huge difference in a field in which a treatment is hailed as a success if it gives patients even three or four extra months. A second study, also announced at the conference last year, had similar findings, and so did a third, presented just a month ago at the annual meeting of the same cancer group, the American Society of Clinical Oncology. At major medical centers, doctors quickly began to put the results into practice. 'The findings were so stunning from these studies a year ago that they began to change the standard of care,' said Dr. Pasi Janne, a lung cancer specialist at the Dana Farber Cancer Institute in Boston. 'Over the last year, the number of patients we've had referred here for adjuvant chemotherapy has gone up steadily.' But some doctors hesitated to make changes, Dr. Winton said, wanting first to see the studies published in a medical journal, which would mean the data had stood up to the scrutiny of editors and expert reviewers. Now, his study has become the first of the three to pass that test. It is being published today in The New England Journal of Medicine, along with an editorial by Dr. Katherine M. S. Pisters, a lung cancer specialist at the M. D. Anderson Cancer Center in Houston. Dr. Pisters wrote that Dr. Winton's results were 'astonishing,' had 'tremendous implications' and would end the controversy that had existed about whether chemotherapy could help people with lung cancer. 'There was a remarkable improvement in survival,' she said in a telephone interview, adding that lung cancer experts had never seen anything like it before. 'No question, the debate is over.' Patients in the study did suffer from side effects, including lowered blood counts, fatigue, nausea, vomiting, nerve damage and constipation. Generally, the reactions were not severe, though two patients (0.8 percent) died from toxic effects - not an unexpected finding with the powerful drugs used to treat cancer. Dr. Pisters said that the oncology society and the American College of Chest Physicians were both rewriting their formal guidelines to say chemotherapy should be given after surgery for early-stage lung tumors like the ones in the studies. She and Dr. Azzoli said that although medical oncologists, the cancer doctors who prescribe chemotherapy, knew about the lung-cancer findings, surgeons and internists may not have heard about or accepted them. Dr. Azzoli said: 'We also want the surgeons to be aware of this data, because they are the ones who need to refer patients to the medical oncologists. Until this point, they would not necessarily refer people. Now, they have to.' Worldwide, lung cancer is the most common cancer and the leading cause of cancer death, with more than a million new cases and a million deaths every year. In the United States, it is expected to kill 163,510 people this year - more than breast, prostate and colon cancer and leukemia combined. Nearly all the cases are caused by smoking. From 80 percent to 85 percent of lung cancers are the type that Dr. Winton studied, non-small-cell cancers. His findings apply to 25 percent to 30 percent of newly diagnosed cases, those that can be removed surgically and are at an early point in the disease classified as Stage IB or Stage II. With surgery alone, five-year survival ranges from 23 percent to 67 percent, depending on the size of the tumor and how much it has begun to spread, according to Dr. Pisters. From the 1960's through the mid-1990's, efforts to better the odds with chemotherapy failed. Not only did the drugs not help, they sometimes hurt, actually shortening patients' lives instead of extending them. And so for many years, patients with early tumors were advised to have surgery and no other treatment. Many relapsed and died. Chemotherapy for advanced lung cancer cannot cure it. But new chemotherapy drugs were being introduced, along with better medicines for side effects like nausea and low blood counts. Dr. Winton began his study in 1994. It was paid for by the governments of Canada and the United States, and by GlaxoSmithKline, which makes vinorelbine. Dr. Winton said the company did not control the data in any way. The two drugs fight cancer in different ways. Dr. Winton said, 'It's a collective attack on two different components of cell division and growth that has made this doublet effective in this disease.' Thomas Blowers, 69, a retired research director for public schools in Edmonton, Alberta, had surgery to remove two-thirds of his right lung five years ago, followed by chemotherapy as part of the study. He suspected the treatment helped him, because he knew other people with lung cancer who did not enter the study and, he said, 'they don't live very long at all.' 'I'm still alive,' Mr. Blowers said. 'I say any day you're breathing in and out is a good day.' Other drug combinations can also be used, Dr. Pisters said, as long as one is a platinum-based drug like cisplatin or carboplatin.

Subject: A Choice for the Heart From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 10:13:02 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/business/23device.html?pagewanted=all A Choice for the Heart By BARRY MEIER It seemed like a good idea to both doctors and federal officials. Since the government was paying hundreds of millions of dollars a year for hip and knee replacements for Medicare patients, why not create a database showing how competing products performed, a group of orthopedic surgeons suggested last year. To do so, just a few pieces of information - the make and model of the device - would need to be added to the claim forms that doctors or hospitals file with Medicare. Such a database would also serve as an early warning system to show when a device is repeatedly failing. But a top Medicare official, Dr. Steve Phurrough, said the surgeons' proposal had not gone far. One reason is that it would require an overhaul of Medicare forms and computer software. But there is an even more significant roadblock: Congress, while allowing Medicare to spend billions of tax dollars on medical devices, effectively bars it from collecting data showing how well competing products work. 'We would like to have the authority to collect that data,' said Dr. Phurrough, who is the director of the coverage and analysis group at the Centers for Medicare and Medicaid Services. 'But that data is not necessary for payment.' The incident underscores an issue at the heart of the recent recall of tens of thousands of defibrillators by the Guidant Corporation. Even as the use of expensive devices like artificial knees and defibrillators expands rapidly, patients and doctors get less information about products that are implanted in bodies than consumers get on the safety and performance of cars. Medical experts have long complained about the lack of data showing how competing drugs compare in both safety and effectiveness. But the amount of information available on prescription drugs is impressive when compared with the murky world of medical devices. The data vacuum, experts said, reflects the scattershot methods used by both government and industry to collect basic information about device failures. Manufacturers do not regularly disclose why products are failing and there is no way to tell accurately how many implanted devices break down while in use. In addition, both regulators and manufacturers do not disclose all the data they do gather. The Food and Drug Administration requires makers of defibrillators and pacemakers, for example, to report detailed product performance annually, but it does not make those reports public. A doctor's decision to use a particular manufacturer's artificial hip or pacemaker is often based on subjective factors. Often, physicians will choose the makers' devices on which they were trained or ones they are used to using. 'Frankly, we have little information on which one of these devices perform better than others,' said Dr. Robert H. Haralson III, a top official of the American Academy of Orthopaedic Surgeons, a group whose members met last year with Medicare officials. Dr. Robert Hauser, a cardiologist at Abbott Northwestern Hospital in Minneapolis, agreed. 'We are flying blind,' said Dr. Hauser, who voluntarily maintains a database where several hospitals report problems with pacemakers and defibrillators. The overriding problem with gauging device performance is that few studies are conducted that follow patients over time to learn how long a product lasts or what flaws show up repeatedly. Doctors and hospitals place in patient records the name of each prescribed drug, enabling researchers to analyze records and detect if a medication is causing problems. Such reviews helped bring to light the heart problems associated with the drug Vioxx. But implants of devices like hips and defibrillators are recorded as procedures. Because they do not include the make or model of the device, such reviews are all but impossible. As a result, doctors often rely on reports issued by manufacturers called product performance reviews to assess devices. In such reports, data about a model of defibrillator, say, is presented in terms of its 'survival' rate. That number is derived from the number of units implanted, reduced by the number removed for any reason. A defibrillator emits an electrical jolt to restore a chaotically beating heart to normal rhythm. Such reports, experts said, suffer from numerous problems. Frequently, doctors do not send failed devices back to a manufacturer unless a patient death or injury is involved, and even then they may not do so. In addition, heart devices are typically not examined after a patient dies to see if its possible failure might have contributed to the death. Such reviews do not require an autopsy. 'The weak point is the fact that this is a passive system that does not mandate that physicians return all devices or report them to F.D.A. so it is the minority of devices that are returned,' said Dr. N. A. Mark Estes, a professor of medicine at Tufts University. Manufacturers' product reports can also mask serious problems. The reason is simple: while defibrillator makers, for example, provide broad measures of device performance, most companies do not provide doctors with detailed breakdowns of the various ways in which a particular model is failing. Such detailed data, as the recent recall by Guidant shows, is critical because not all product failures are equal. Instead, different types of failures can have different consequences for patients. For example, when defibrillator batteries fail, patients are typically alerted by a beeping sound, allowing them time to see a doctor. But the type of failure affecting the recalled Guidant model, the Ventak Prizm 2 DR, involved something far more significant - a short circuit that could occur, without warning, when the unit was charging to deliver a potentially life-saving shock. Some physicians say that if manufacturers were forced to publicly disclose more of the safety data they collected, the device industry would be spurred to produce better products. 'Public reporting of malfunctions and malfunction rates would force industry to improve their safety,' said Dr. William H. Maisel, a cardiologist at Brigham and Women's Hospital in Boston. Under little-known F.D.A. requirements, however, makers of pacemakers and defibrillators must report highly detailed product performance data to the agency once a year. But most physicians do not know that the agency collects the data because the F.D.A. has chosen not to make it public. For example, under F.D.A. rules, a defibrillator producer must report to the agency not only how many of its units have failed each year, but also must describe all the failure mechanisms involved. An F.D.A. spokeswoman, Julie Zawisza, said that she believed that the reports, which manufacturers filed for each model approved, were probably available under the Freedom of Information Act but did not say why the agency did not make the data public automatically. Officials of one major device manufacturer, Medtronic Inc., said the performance data provided by the company to the F.D.A. was more detailed than it put in its reports. Unlike some manufacturers, Medtronic provides doctors with data on product failures in two broad categories: battery depletions and electrical failures. Guidant and St. Jude Medical, the third major manufacturer of heart devices, do not separate electrical failures from battery problems in their reports about product 'survival' rates. Tim Samsel, vice president for regulatory affairs at Medtronic's cardiac rhythm management division, said that the company, in its confidential F.D.A. reports, would break down the category of electrical failures even further, such as by listing the specific components that have failed or the way products are failing electrically, like short-circuiting. 'For F.D.A, we do break it down more,' Mr. Samsel said. Asked why Medtronic did not simply place that same data in its product performance reports, a company spokesman, Robert Clark, said, 'The information we provide to F.D.A. for an annual report is not the way physicians want the information presented to them.' Some doctors, however, appear to want more information. Dr. Maisel of Brigham and Women's Hospital said he thought that if Medicare collected data on the performance of defibrillators, cardiologists would know far more about the relative safety and quality of those devices. In January, Medicare expanded by one-third the number of people who could qualify for defibrillator implants, extending coverage to about 500,000 patients. As part of that initiative, the program is asking doctors and hospitals to fill out special forms to make sure that the right patients are getting the costly units and so that Medicare can tell how many people are benefiting. As part of the form, the agency is asking doctors for a raft of patient data, but the forms do not ask for the device's make or model.

Subject: Chinese Oil Giant in Takeover Bid From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 09:44:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/business/worldbusiness/23unocal.html Chinese Oil Giant in Takeover Bid for U.S. Corporation By DAVID BARBOZA and ANDREW ROSS SORKIN SHANGHAI - One of China's largest state-controlled oil companies made a $18.5 billion unsolicited bid Thursday for Unocal, signaling the first big takeover battle by a Chinese company for an American corporation. The bold bid, by the China National Offshore Oil Corporation ( CNOOC), may be a watershed in Chinese corporate behavior, and it demonstrates the increasing influence on Asia of Wall Street's bare-knuckled takeover tactics. The offer is also the latest symbol of China's growing economic power and of the soaring ambitions of its corporate giants, particularly when it comes to the energy resources it needs desperately to continue feeding its rapid growth. CNOOC's bid, which comes two months after Unocal agreed to be sold to Chevron, the American energy giant, for $16.4 billion, is expected to incite a potentially costly bidding war over the California-based Unocal, a large independent oil company. CNOOC said its offer represents a premium of about $1.5 billion over the value of Unocal's deal with Chevron after a $500 million breakup fee. Moreover, the effort is likely to provoke a fierce debate in Washington about the nation's trade policies with China and the role of the two governments in the growing trend of deal making between companies in the countries. This week, a consortium of investors led by the Haier Group, one of China's biggest companies, moved to acquire the Maytag Corporation, the American appliance maker, for about $1.3 billion, surpassing a bid from a group of American investors. Last month, Lenovo, China's largest computer maker, completed its $1.75 billion deal for I.B.M.'s personal computer business, creating the world's third-largest computer maker after Dell and Hewlett-Packard. After years of attracting billions in foreign investment and virtually turning itself into the world's largest factory floor, China appears to be nurturing the growth of its own corporate giants into beacons of capitalism. China wants to be a player on the world stage, and it is eager to have its own energy resources, its own multinational corporations and its own dazzling corporate names. And some of China's biggest companies are now on the hunt, trying to snap up global treasures. 'If there's an asset up for sale anywhere in the world, people are looking to China, particularly if there's a manufacturing element involved,' said Colin Banfield, who runs the mergers and acquisitions practice at Credit Suisse First Boston in Asia. 'And if these two deals go through this year, no one is going to doubt the credibility of the Chinese corporates when it comes to M & A.' The deal making and bidding wars are all the more remarkable because they involve Chinese companies taking on American multinationals in a series of transactions certain to be a boon for Western lawyers and investment bankers, many of whom have been betting hundreds of millions of dollars on China's rise. Indeed, CNOOC is being advised by an army of bankers from Goldman Sachs, J. P. Morgan Chase and N M Rothschild & Sons of Britain. In a response, Unocal said in a statement that its board would evaluate the offer, but that its recommendation of the deal with Chevron 'remains in effect.' CNOOC's bid faces an uphill battle, with hurdles that probably rise above those usually confronting a corporate bidder. Already, lawmakers in Washington are questioning whether the Bush administration should intervene to block the bid for Unocal, which was founded in 1890 as the Union Oil Company of California. Two Republican representatives from California, Richard W. Pombo and Duncan Hunter, wrote a letter last week to President Bush, after speculation concerning the deal arose, urging that the transaction be scrutinized on the grounds of national security. They wrote: 'As the world energy landscape shifts, we believe that it is critical to understand the implications for American interests and most especially, the threat posed by China's governmental pursuit of world energy resources. The United States increasingly needs to view meeting its energy requirements within the context of our foreign policy, national security and economic security agenda.' Energy Secretary Samuel W. Bodman said at a meeting of the National Petroleum Council late Wednesday that the government's review of the deal would be 'truly a complex matter,' according to Reuters. In Beijing, Liu Jianchao, a spokesman for the Foreign Ministry, told reporters on Tuesday that 'this is a corporate issue,' according to Bloomberg News. 'I can't comment on this individual case,' Mr. Liu said, 'but I can say we encourage the U.S. to allow normal trade relations to take place without political interference.' TCL, a Chinese company that began by making cassette tapes in 1981, is suddenly the world's biggest television set maker, after its acquisition last July of the television business of Thomson of France, which owned the old RCA brand. Chinese companies still have a long way to go to become global giants that can compete head-to-head with Toyota, Siemens or General Electric. Most of the China deals are small in value - about $1 billion to $2 billion - when compared with big American or European deals. Whether CNOOC's bid will succeed on it merits is unclear. It is interested in Unocal, once known for its 76 brand, less for its exploration and production in North America than for its huge reserves in Asia. Twenty-seven percent of Unocal's proven oil reserves and 73 percent of its proven natural gas reserves are in Asia, according to Merrill Lynch. To succeed, CNOOC will have to persuade Unocal's shareholders to vote against their deal with Chevron. The new deal would then face a shareholder vote. Even though CNOOC's offer is worth $1.5 billion more than Chevron's, some shareholders could still decide that the regulatory review process and the time required to complete a deal with CNOOC would pose too great a risk, given the size of the offer. Chevron, which could raise its bid to counter CNOOC, is racing to complete its deal and submit it to a shareholder vote as early as August. The company made no specific comment on the Chinese offer. CNOOC's all-cash offer values Unocal at $67 a share. Chevron's cash and stock offer values Unocal at $61.26 a share, based on Chevron's closing price on Wednesday of $58.27 a share. Shares of Unocal jumped 2.2 percent, to $64.85, as investors anticipated CNOOC's higher bid. In CNOOC's letter to Unocal, it went to great lengths to say that its bid was friendly, despite being unsolicited. 'This friendly, all-cash proposal is a superior offer for Unocal shareholders,' wrote CNOOC's chairman and chief executive, Fu Chengyu. Trying to assuage concerns of some in Washington, CNOOC pledged to continue Unocal's practice of selling all of the oil and gas produced in the United States back to customers in the United States. The company also said it would retain substantially all of Unocal's employees in the United States.

Subject: Are Collectibles the New Real Estate? From: Emma To: All Date Posted: Thurs, Jun 23, 2005 at 09:39:16 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/23/business/23scene.html Are Collectibles the New Real Estate? By ALAN KRUEGER EVERYDAY it seems that another collectible is sold for a record price. Consider three widely publicized sales in the last month. Babe Ruth's contract, which sent him from the Red Sox to the Yankees in 1919, went for nearly $1 million. A 1913 Liberty Head nickel went for $4.15 million, up from $3 million a year earlier. And a 1918 upside-down biplane stamp sold for $525,000, more than three times its pre-auction estimated price. Are collectibles a sound financial investment? If the past is any guide, the answer is no. Historically, collectibles have yielded a much lower return than stocks and carried more risk. Benjamin J. Burton of Lehman Brothers and Joyce P. Jacobsen of Wesleyan University conducted an exhaustive summary of studies that estimated the financial return from investing in collectibles in an article published in The Journal of Economic Perspectives in 1999. They examined the payoff from holding several kinds of collectibles, including art, wine, antiques, ceramics, coins, stamps, books and Beanie Babies. Measuring the return from investing in collectibles is difficult because the items that are sold each year are not identical and some items are rarely sold. Three methods have been used to estimate the return. One involves tracking the prices of objects sold on multiple occasions. Another follows the prices of a portfolio of similar but not identical items each year. And a third tries to adjust statistically for the characteristics of items that are sold at different times - for example, a large Picasso should sell for more than a smaller one, other things being equal. Despite the methodological differences, according to Mr. Burton and Ms. Jacobsen, the results from the various methods all support the same conclusion: 'The majority of collectibles yield lower financial returns than stocks, and studies that include a measure of variability over time uniformly find that collectibles embody more risk than most other financial assets.' For example, using information on repeat sales of paintings , William J. Baumol of New York University estimated that the compound rate of return was just 0.6 percent a year after accounting for inflation, more than 8 percentage points below the rate of return from stocks. The actual return on holding collectibles may be even lower than most studies indicate because they do not take account of storage and insurance costs, commissions on sales and the risk that it may be difficult to find a buyer. And that does not even take into consideration the products that are manufactured and sold as collectibles from the outset. To be sure, there have been periods when artwork and other collectibles yielded a higher return than stocks, but those periods tended to be brief and hard to predict. The resale price of Beanie Babies, for instance, grew at an astonishing rate of 140 percent a year from 1994 to 1999 - and has since crashed. The return on collectibles is inherently volatile because demand depends mainly on buyers' whims and current fads, not on fundamentals. For example, the fundamental value of the biplane stamp is just 24 cents, not enough to mail a letter; the rest of its value comes from consumers' tastes. And it is true that Babe Ruth was traded to the Yankees for $100,000 - which translates to $1.2 million in today's dollars - making the $1 million price tag his contract just fetched sound like a bargain. But the original contract came with Babe Ruth! Looking across all types of collectibles, Mr. Burton and Ms. Jacobsen find that collectibles tend to yield a higher return when the stock market does poorly (Beanie Babies notwithstanding). Still, collectibles do not provide as good a hedge against stock market risk as bonds or money market accounts, which probably explains why virtually all hedge funds and mutual funds have shied away from investing in collectibles. So why has the price of some prestigious collectibles surged lately? One possibility is that the news media has just played up some extreme, eye-catching cases. Given the high price volatility and wide variety of collectibles, it would be surprising if some prominent items did not rise sharply in value every year. Another possibility, however, is that we are in one of those infrequent periods when the price of collectibles is surging. Scott Mitchell, a numismatist at Stack's Coins in New York, said that over the last five years there has been an increase in both the sales volume and price of rare coins, because of publicity about some high-profile sales like the Liberty Head nickel and a desire by investors to move funds from stocks to rare coins. Still, the average collector and investor would be wise to recognize that collectibles have historically been a poor investment but a good hobby. 'The most important thing I have found out,' said William Gunn of Lawton-Wellington Collectibles Inc. in West Palm Beach, Fla., who has sold sports memorabilia for 27 years, 'is that many people are more interested in the sizzle than the steak when they buy collectibles; they like the story more than the item.' Presumably the joy that buyers derive from owning and displaying collectibles is why people buy them despite their poor financial return. This is unlikely to change. Mr. Gunn added that he advises customers, 'Buy stocks and bonds to make money; buy memorabilia for the pride and pleasure of ownership.' That sounds like sound advice to me, despite the hype given to a few recent record-breaking sales. Alan B. Krueger (www.krueger.princeton.edu) is the Bendheim professor of economics and public affairs at Princeton University.

Subject: Green Heron Landing From: Terri To: All Date Posted: Thurs, Jun 23, 2005 at 09:29:57 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5496&u=4|1|... Green Heron Landing New York City--Central Park, Turtle Pond.

Subject: Stock Market Valuations From: Jennifer To: All Date Posted: Thurs, Jun 23, 2005 at 07:30:15 (EDT) Email Address: Not Provided Message: What gives me most encouragement is the broad strength of international stock markets and the gradual increase in prices that allows for valuations to remain reasonable. I am most cautious in portfolio but pleased.

Subject: International Bull Market From: Jennifer To: All Date Posted: Thurs, Jun 23, 2005 at 06:11:18 (EDT) Email Address: Not Provided Message: When domestic stock markets are viewed internationally, there is much to be encouraged about. There is a gradual stable continuation of the bull market that began in October 2002. I am encouraged.

Subject: Re: International Bull Market From: Pete Weis To: Jennifer Date Posted: Thurs, Jun 23, 2005 at 12:31:26 (EDT) Email Address: Not Provided Message: Whether stock market investors realize it or not, like it or not, the global economy is strongly tied to the global housing market. World consumption is strongly tied to the global housing markets. Employment is strongly tied to the global housing markets. Corporate profits are strongly tied to the global housing markets. IMO, this means the global stock markets are strongly tied to the global housing markets. In addition, at this moment (6/23 AM) Congress is grilling Greenspan and Snow on pressuring China to unpeg its currency from the US dollar. For once, I agree with Greenspan. Placing 27-28% across-the-board tariffs on Chinese goods would be a dangerous step. I can't think of a more likely scenario (short of a nuclear incident on US soil which I hope is extremely unlikely) which would tank world markets steeply and suddenly. It could create havoc in financial markets and cause a stampede for the exits in both the stock and bond markets. Let's hope sanity rules. If our economy is as healthy as Greenspan and others are saying, why do we have so many members of Congress, from both sides of the aisle, pressing for global trading armegedon? I can go into the global competion for natural resources such as oil and natural gas. The Chinese move to purchase Unocal is a precursor of a feverish competition for natural resources growing by the day. The rising costs of energy and raw materials will have a long term negative affect on the profits of S&P corporations and the discretionary portion of consumer paychecks. Although others here are more trustful of Wall Street and corporate accounting, I don't believe much has changed with regard to this since the late 90's. Now I realize most folks don't agree with me on this. But my first three points are difficult to disagree with. I just see the last two and a half years as a bull rally in the midst of a much longer bear market. In fact, the slowdown in the rally over the last year, set against global economic difficulties, seems to lend support for this view.

Subject: International Stock Price Adjustment From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 19:49:08 (EDT) Email Address: Not Provided Message: Notice that every major international market is positive in domestic currency terms, and many are already above 10% returns for the years so far. International returns in dollars are mostly positive even with the strong dollar run. What is happening is that stocks in international markets are adjusting to changes in currency values.

Subject: National Index Returns From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 19:38:15 (EDT) Email Address: Not Provided Message: http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 6/22/05 Australia 8.4 Canada 7.1 Denmark 9.4 France 1.2 Germany -2.7 Hong Kong 2.6 Japan -4.5 Netherlands 2.2 Norway 10.6 Sweden -0.5 Switzerland 0.6 UK 1.3

Subject: National Index Returns - Domestic From: Terri To: Terri Date Posted: Wed, Jun 22, 2005 at 19:44:35 (EDT) Email Address: Not Provided Message: http://www.msci.com/equity/index2.html National Index Returns [Domestic Currency] 12/31/04 - 6/22/05 Australia 9.0 Canada 10.4 Denmark 22.7 France 13.3 Germany 9.0 Hong Kong 2.6 Japan 1.4 Netherlands 14.5 Norway 18.6 Sweden 14.7 Switzerland 12.5 UK 7.9

Subject: Europeans Clash With Tony Blair From: Emma To: All Date Posted: Wed, Jun 22, 2005 at 17:49:35 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/international/europe/22cnd-europe.html Europeans Clash With Tony Blair Over Union's Future By GRAHAM BOWLEY - International Herald Tribune BRUSSELS - The president of the European Commission, José Manuel Barroso, put himself on collision course with Prime Minister Tony Blair of Britain today by casting doubt on whether the European Union could move forward with changes in the budget process or further expansion. As Mr. Blair prepared to address the European Parliament in Brussels on Thursday, when he will propose a way out of the European Union's current crisis, Mr. Barroso and other European leaders made new accusations against Mr. Blair, saying he was responsible for the breakdown of the European Union summit meeting last week. Mr. Blair, who has become increasingly isolated since the summit meeting, assumes the six-month rotating presidency of the European Union on July 1, and he is expected to use his speech on Thursday to outline his priorities for the European Union, including stewarding the opening of membership negotiations with Turkey on Oct. 3. But speaking after the 25-member commission had met to come up with its own proposals for lifting the European Union out of its current gloom, Mr. Barroso made his most cautious remarks to date about the prospects for Turkey gaining membership. Referring to referendums in France and the Netherlands in which voters rejected the European constitution, he said the European Union could not ignore 'the signal that was sent by the electorate regarding Turkey.' The comments reflect similar sentiments expressed by European governments since the referendums, but they are the strongest to date from the commission in Brussels. He also rejected Mr. Blair's call for an immediate fundamental rethinking of how the European Union spends its money, including reductions in farm subsidies, which largely benefit France, as a condition for striking a deal on a new financial package for 2007-13. Instead, he called for an immediate agreement before any debate to avoid 'paralysis' in the union. He said Britain should respect an agreement struck in 2002 by all European Union leaders, including Mr. Blair, which fixes farm spending until 2012. In France today, President Jacques Chirac said at his weekly cabinet meeting: 'France did everything, with its partners, to arrive at an agreement. Unfortunately, British intransigence did not allow one to be reached.' Jean-Claude Juncker, Luxembourg's prime minister and the departing European Union president, used a speech to the European Parliament today to outline the ways in which Britain, in his view, had blocked a budget compromise. 'The disagreement at the summit has meant that after the uncertainty regarding the constitution there is a deep crisis, one not exclusively budgetary or financial in nature,' he said. 'Britain wasn't prepared to adjust sufficiently its rebate and lighten the burden on Sweden, Germany and the Netherlands.' Mr. Barroso, offering some room for compromise to Mr. Blair, said European governments could agree a review clause in the budget to reappraise spending, including farm spending, in 2008. But the British government has made clear that it will only accept a clause that explicitly refers to spending on agriculture, and to the deal struck in 2002, a step France is likely to resist. In an attempt to close the gap between the European Union and European citizens that is also blamed for the referendum defeats, Mr. Barroso said the commission would begin a grand tour of European nations to talk to national parliaments and people about the future of the union.

Subject: Re: Blair's Gods? From: Pancho Villa alias Vil. Pre-Pareto To: Emma Date Posted: Wed, Jun 22, 2005 at 18:54:27 (EDT) Email Address: nma@hotmail.com Message: 'For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still.' John Maynard Keynes

Subject: Bond Market Stability From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 14:09:03 (EDT) Email Address: Not Provided Message: Notice how again and again the long term Treasury bond settles at 4% in yield. The stability of long term bonds month after month has been as startling as the low interest rates.

Subject: Writing Is Only the Beginning From: Emma To: All Date Posted: Wed, Jun 22, 2005 at 13:49:22 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/books/22jane.html?pagewanted=all For This Author, Writing Is Only the Beginning By EDWARD WYATT ETNA, N.H. - Slouched on a sofa in a faded T-shirt and jeans, a tousle of dyed-auburn hair trending gray at the roots, Janet Evanovich looks less like the chief of a budding media empire than a mother trying hard to be her daughter's best friend. And there, next to her, is the daughter, Alexandra, whose dyed platinum-blond hair befits her stint as a freelance graphics designer for a heavy-metal band's fan site and her love for her red Ducati motorcycle, looking nothing like a corporate marketing guru. Yet the two women are all of those things - best friends, metalheads and meticulous businesswomen. Together with Janet's son and husband, both named Peter, who handle everything from investments to the packing of signed books for shipment to stores, they make up the family enterprise known as Evanovich Inc. And they have transformed Ms. Evanovich, 62, from a failing romance writer who once burned a box of rejection letters on her curb into a mini-industry whose success is beginning to emulate the sprawling domains of authorial heavyweights like James Patterson. Last year, she sold an estimated one million books in hardcover and three million more paperbacks, earning more than $3 million in royalties from the paperbacks and several million more in advances and royalties on the hardcovers. The empire now includes two continuing mystery series: one featuring the sharp-elbowed bounty hunter Stephanie Plum, published by St. Martin's Press, whose latest installment, 'Eleven on Top' went on sale June 21, and a second, published by HarperCollins, which began last fall with 'Metro Girl.' While her success speaks to her tenacity and devotion to family, it owes as much to marketing prowess. When fans, impatient for her next novel, began asking her to recommend other writers like her, Ms. Evanovich hired one instead. Thus began a separate line of paperback romance-thrillers with Charlotte Hughes as co-author and St. Martin's as publisher. Four books in that series became best sellers. And rather than risk having a previous publisher reissue her romance novels from more than a decade ago, Ms. Evanovich bought back the rights from Bantam, an imprint of Random House Inc., and resold them to HarperCollins, which has begun publishing them in a revised and updated format. Ms. Evanovich acknowledges that her strategy is little different than it might be for selling toothpaste. 'When you're trying to expand your business, it's about real estate in the stores,' she said in an interview at her hilltop home in rural western New Hampshire, and more products in more categories mean more shelf space. But while her relentless self-promotion has attracted more fans, it has also created some tensions. Michael Morrison, the president of HarperMorrow, the HarperCollins division that published 'Metro Girl,' said the interplay of multiple publishers and product lines is not ideal. 'I'm a believer that a publisher and an author should have one primary relationship,' he said. The sales of 'Metro Girl' did not match Ms. Evanovich's previous best sellers, but Mr. Morrison said that over all he was pleased with her work. 'It's much easier to work with an author and orchestrate a publishing career if you have all of the books under one house,' he said. But Ms. Evanovich does not apologize for flooding the market with a new book every two to three months, nor for her calculated efforts to send her new novels straight to the top of the best-seller lists. It has now become a rite of summer: each of the last five books in the numerical series featuring Stephanie Plum - from 'Hot Six' in 2000 through 'Ten Big Ones' last year - was No. 1 on The New York Times's hardcover best-seller list its first week on sale. Last fall, 'Metro Girl' also had its debut at No. 1. To put that feat in perspective, long-running series by James Patterson and Sue Grafton cannot match that current streak of immediate No. 1's. Ms. Evanovich plots her first week of promotion to include book signings at big stores that report their sales to publications that publish best-seller lists. As in past years, the publication of the new Stephanie Plum novel will include a Stephanie Plum Daze festival in Trenton, the setting for the novels. Featuring live music, food, a character dress-up contest and historical-society tours of Trenton sites mentioned in the series, a festival on June 25 is expected to attract several thousand fans. Barnes & Noble will be there selling books. She does not simply plan an event and expect people to show up, however. Evanovich Inc. constantly reminds its audience of a coming book, using its Internet site and a snail-mail newsletter, television commercials and radio spots. Ms. Evanovich oversees the design of book covers and the production of advertisements; she recently fired the agency that was devising commercials for 'Eleven on Top' and enlisted her family and publisher to come up with a new pitch. Behind the marketing machinations is Alexandra, 32, who writes the newsletter and illustrates both it and the Web site, www.evanovich.com. Until recently, she also managed the online store that sells hats, mugs and other paraphernalia, but its growth forced the family to outsource the job to a company in Florida. The task of running Evanovich Inc. has grown so rapidly that last year the family decided it needed office space away from their hilltop home, where all four family members live at least some of the time. Ms. Evanovich's son, Peter, 35, who manages the finances, oversaw the purchase of a $480,000 fixer-upper ranch-style house in Hanover near the Dartmouth campus for office space. Other recent family acquisitions include a $6.2 million waterside estate in Naples, Fla., and twin $1.6 million Boston condominiums - one for Mom, one for daughter - overlooking Boston Common. Ms. Evanovich's husband of 40 years, the elder Peter, applies his Ph.D. in mathematics to the study of her contracts and the sales and distribution information generated by publishers and bookstores. 'I feel like I never would have been a success and gotten published without my family,' Ms. Evanovich said. Throughout the years collecting rejection slips, and even as she began to earn a few thousand dollars per book for her early romances, 'they never said, 'Why don't we go on vacation like other families?' ' She added, 'They just told me, 'You take your time and write.' ' The fans clearly love it. According to Nielsen BookScan, they bought nearly 300,000 copies of 'Ten Big Ones' and 175,000 copies of 'Metro Girl' from traditional book outlets. Ms. Evanovich's publishers say the numbers are far higher, perhaps twice as much, because a large portion her fans buy their books at Wal-Mart, Sam's Club and other stores that are not counted by BookScan. Clearly, her sales are big, though still well short of the levels reached by the likes of Nora Roberts, Mr. Patterson and John Grisham. The critics have sometimes been less than enthusiastic. Writing in The New York Times, Janet Maslin said Ms. Evanovich's works were 'the mystery-novel equivalent of comfort food.' And more than once, her writing has been called formulaic. Ms. Evanovich does not deny that; she simply wonders what is wrong with it. 'I'm a writer, but this is a business,' she said. 'You have to look at it in the way you would look at any business. You have to have honesty to the product. You have to meet consumer expectations. You give them value for their money and give them a product that they need. I don't see anything wrong with all these things. And I don't think it's a bad thing to meet consumers' expectations.'

Subject: Black Swan Vocalizing From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 12:04:38 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3550&u=207|266|... Black Swan Vocalizing Jamaica Bay NWR East Pond, New York.

Subject: Hot 2005 for New York Offices From: Emma To: All Date Posted: Wed, Jun 22, 2005 at 10:50:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/business/22prop.html?pagewanted=all A Hot 2005 for Offices So Far By JOHN HOLUSHA The demand by investors seeking to acquire office space in Manhattan remains intense, especially for properties in Midtown. With the first half of the year almost over, the dollar value of sales of commercial property is on a pace for the best year ever, exceeding even the record level of 2004, when $15.1 billion worth of buildings changed hands. A majority of commercial property in Manhattan is office space. 'A banner year used to be in the $10 billion range,' said Scott Latham, an executive director of Cushman & Wakefield, a brokerage and services company. 'Last year, we were 50 percent above that.' The company estimates that $12.67 billion of property was sold through mid-June. If current trends continue, 2005 will far exceed last year's total. Office rents in Midtown Manhattan have recovered almost to the peak levels of early 2001, providing some rationale for the lofty sales prices. In recent years, real estate executives have talked about the incongruity of the exceptionally high sales prices for office buildings and the soft rental rates for space within such buildings. Leasing income would seem to be the fundamental economic underpinning for purchases. 'The leasing market started to turn in November 2003, and 2004 was a very strong year,' said John Powers, co-chairman for the tristate region at CB Richard Ellis. 'For the year to date, we are still ahead of the five-year average' of square feet leased, he said. Although the pace of office leasing has slowed in recent weeks, some brokers describe this as a period of adjustment after the hot market of last year and the first quarter of this one. 'The market is pausing to digest,' said Mitchell S. Steir, the chief executive of Studley, a brokerage company that mostly represents tenants. 'It is the rational follow-up to a period of peak activity.' Real estate executives say low interest rates and an increased appetite for real estate among institutional investors like pension funds are driving the demand for commercial and residential properties in crucial markets like Manhattan and Washington. 'Ten years ago, real estate was a stepchild for institutional investors, who were mostly interested in stock and bonds,' said Paul E. Pariser, a founder of Taconic Investment Partners, which owns, among other properties, 111 Eighth Avenue, which covers the block between 15th and 16th Streets. 'Now funds that allocated 3 percent to real estate have moved to 8 percent, and those that were at 5 percent have moved to 12 percent,' Mr. Pariser said. 'Those are big dollars. When you add three percentage points at a $100 billion institution, that's $3 billion.' Peter Hauspurg, the chairman of Eastern Consolidated Properties, a sales brokerage firm, said: 'There is a tremendous amount of capital chasing real estate assets. History says that we are three years overdue for a correction in pricing, but there is no sign of it.' Indeed, in April, a group of pension funds and Tishman Speyer Properties agreed to pay $1.72 billion for the MetLife Building, the 2.8-million-square-foot tower that rises above Grand Central Terminal. It is said to be the highest price ever paid for a single building. Even though institutions have become an important factor in real estate investing, many executives say private investors with access to cheap debt still dominate in Manhattan. 'Last year, 68 percent of the sales volume went to private investors,' Mr. Latham said. Part of the reason, he said, is that private investors are willing to take on more debt to make a purchase than are institutions, which tend to have stricter rules about financing acquisitions. 'A private investor can finance 80 percent of a deal, compared to 60 to 65 percent for institutions,' Mr. Latham said. At the Toy Center, the connected buildings at 200 Fifth Avenue and 1107 Broadway that have housed offices and showrooms for toy manufacturers, the competition to acquire the property was fierce. 'When we went to sell the Toy Center, we had over 20 real bids, which is a remarkable number by historic criteria,' said Anthony E. Malkin, president of W&M Properties, a large investor. Mr. Malkin said most of the bidders were individuals based in New York. 'This market is being driven by entrepreneurial capital with access to high levels of debt,' he said. The Toy Center was sold for $355 million to the Chetrit Group. There has been speculation that the buildings, which face Madison Square Park, will be converted into residential condominiums, but Chetrit has declined to disclose its intentions. Leasing brokers say that in Midtown, concessions packages - periods of free rent and contributions toward interior construction - shrank as the vacancy rate dropped to 10.3 percent in May from 12.3 percent a year earlier, increasing the effective rent. According to a Studley study, the average effective rent in Midtown by the end of last year was $66.27 a square foot, which was still 11 percent below the high of $74.54 set in early 2001. The effective rent as calculated by Studley includes operating expenses, real estate taxes and the cost of electrical power, making it higher than the nominal base rent. Barry M. Gosin, the chief executive of Newmark & Company Real Estate, said, 'The market is being pulled up from the top,' with some prospective tenants willing to pay very high prices for space that meets their needs. 'Financial institutions like hedge funds have set the bar very high in prime buildings in the Plaza District,' an area north of Grand Central. Because these companies were willing to pay high rents for the space they wanted, other landlords lifted their asking prices as well. But if the Midtown leasing market is finally recovering from the slump after the Sept. 11 attacks, the downtown market is not. The vacancy rate there was 16.3 percent in May, compared with 15.2 percent a year earlier, according to CB Richard Ellis. The rebuilding of 7 World Trade Center is expected to be completed early next year, but no tenants have yet signed up for its 1.7 million square feet. 'Downtown is basically stagnant, although the conversion of office buildings to residential use will eventually be good for the area,' Mr. Gosin said. He noted that the gap between the Midtown rental rates and those downtown has widened, as few office tenants have taken space downtown. 'The difference used to be something like $15 to $20 a square foot,' he said. 'Now, it is more like $30 a square foot.' Some real estate executives said the decision by the investment banking company Goldman Sachs, the only firm that had committed to building a new office tower near Ground Zero, to suspend its plans was discouraging other tenants from looking for space downtown. 'Unfortunately for the city, the impact of Goldman will be far-reaching,' Mr. Steir of Studley said.

Subject: Foreign Auto Makers, Settled in South From: Emma To: All Date Posted: Wed, Jun 22, 2005 at 10:40:00 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/automobiles/22auto.html?pagewanted=all Foreign Makers, Settled in South, Pace Car Industry By MICHELINE MAYNARD HUNTSVILLE, Ala. - By most accounts, the United States auto industry is in deep trouble. But don't tell that to the newest workers here in Alabama, where foreign carmakers are redefining the auto industry in America. Automakers from overseas first began building manufacturing plants in this country in the 1970's, largely as a defensive response to protectionist threats. But even as General Motors and Ford have been announcing thousands of job cuts, the foreign automakers are aggressively building new factories and expanding plants they opened not long ago. In Alabama alone, Mercedes-Benz has doubled the size of its plant outside Tuscaloosa in the last year, while Honda has done the same at its factory in Lincoln. A new plant from the Korean automaker, Hyundai, opened just last month in Montgomery. And Toyota is adding 300 more workers here at its two-year-old plant in Huntsville to produce powerful engines for the big pickup trucks that will be made in a factory opening next year in Texas. In other industries, American manufacturers have been some of the most avid investors abroad. But in the case of the auto industry, the competition has been brought right to Detroit's doorstep as the strongest foreign companies are moving to states eager for their investments, most of them in the Deep South, and hiring workers seeking the stability that home-grown companies can no longer offer. As a result, a quarter of all cars and trucks built in the United States are now made in factories owned by foreign automakers producing foreign brands, up from 18 percent in 2000. The assembly plants alone employ nearly 60,000 people, and that number continues to grow. The employment at the American companies still dwarfs that of the newcomers. Automakers in Detroit employ four times the hourly workers - 250,000 - but that number is continuing to fall. Already, G.M. has announced that it plans to cut 25,000 of those workers by 2008. Union jobs at the Big Three plants pay a dollar or two more an hour - about $26 an hour compared with $24 or $25 an hour for the nonunion jobs at the foreign plants. But compensation at the American automakers swells to an average of $55 an hour when health care, cost of living and other benefits are counted, compared with $48 an hour, on average, at Toyota. Toyota gets more out of its workers. Its plants operate at about 107 percent of the manufacturing capacity, meaning that they are constantly running on overtime, according to Harbour & Associates, a consulting firm that tracks manufacturing. By contrast, G.M.'s plants are operating at only 75 percent of their capacity, Harbour found. For David Herring, who grew up in Pontiac, Mich., outside of Detroit, his new job at Toyota's engine plant in Huntsville is a return to the industry that employed his uncle and other family members, but that he had originally decided to avoid. He earned a football scholarship to the University of North Alabama and then became a social worker. The job wore him down, he said, and he saw opportunity and stability at Toyota. 'Basically, auto country is moving down south,' said Mr. Herring, 29, who met Toyota's president on his first day on the job. He added, 'Fate brought me here.' For the most part, the first wave of foreign-owned plants were farther north, in places like Ohio and Kentucky, while the newest factories are concentrated in the Deep South. The state of Alabama has been particularly generous in wooing auto companies. In 1993, it provided $258 million in incentives and tax breaks to land its first foreign automaker, Mercedes. The state has spent hundreds of millions since to attract the Honda, Hyundai and Toyota plants. But what may have clinched the deals was the state's laws - similar to those on the books throughout much of the South - that do not require workers to join unions even if their plants are organized. 'The auto industry has found a welcome down here,' said Johnny L. Mathis, a business development manager with Qore Property Sciences, a company that has prepared the construction sites for many of the new auto factories and parts plants. Since 2000, the Big Three automakers have lost eight points of market share just to their Japanese competition. Detroit now holds 57 percent of the American car market, while foreign automakers have 43 percent. Among the companies adding jobs, no company is courted more than Toyota, the world's richest car company, which is gaining strength even as G.M. falters. Beyond expanding its engine plant here, where its ultimate investment will be $450 million, Toyota is building a $1 billion factory in San Antonio - set to open next year with 4,000 workers. And company officials are looking at even more places, including Arkansas, to build additional factories. Toyota's impact on the nation's economy has been powerful. A study by the Center for Automotive Research, which has yet to be published, estimates that Toyota's investments in the United States had led to 386,600 American jobs as of last year - including jobs at suppliers and in surrounding communities. That includes the 29,000 assembly workers at Toyota's plants, plus another 74,000 people employed by the automaker in its California headquarters, design and engineering centers and at its dealerships. And those figures do not include Toyota's expansion plans. In Texas alone, the study estimates, Toyota will help create another 9,000 jobs. The impact helps explain why 'states are falling all over themselves to land a car company,' said James T. Bolte, a Toyota vice president in charge of the Alabama plant. In a state where the average wage is $31,000 a year, according to the Commerce Department, Toyota's workers earn $45,000 on average, with overtime, plus a benefits package valued by the company at $10,000. Workers receive medical, dental and life insurance coverage; a traditional pension plan and a 401(k) plan; an allowance for child care; and an annual cash bonus, which was $3,850 a worker last year. Prospective employees are lining up to apply for jobs at the new factories. About 30,000 people vied for the 2,000 additional jobs at the gleaming white Mercedes plant west of Birmingham, where its workers dress in royal blue shirts that bear the company's three-pointed star logo on the right shoulder and their names on the left. For Tammy Young, 36, the sprawling Mercedes factory was a prize after being laid off at U.S. Steel's big Birmingham operation, where she worked for nine years. In between, she held a temporary job at the Honda plant and worked at a dairy store. The factory has just begun building the new R-class, a luxury station wagon, which will sell for about $50,000. It joins a new version of the M-class sport utility, the original vehicle produced here, whose sales are up 66 percent since it was updated last spring. Toyota, which opened its plant with 150 workers in 2003, had 9,000 applications for those positions, even though jobs in an engine plant lack the allure and glamour of building cars at places like Mercedes. The process of getting a job at Toyota is rigorous, meant to weed out those not meant for the repetitive, sometimes hot work inside the plant, which sits on 200 acres surrounded by cotton fields. After interviews, job seekers had to complete five weeks of pre-employment training at a center, which is run and paid for by the state, across the road from Alabama A&M University. The drill included exercises to see if they could work on teams and hours spent on a practice assembly line. None of the applicants were paid. Anyone who was late or missed a training session was instantly cut. The few successful applicants went through nine weeks more training inside the engine plant, including two hours a day in a fully equipped gym where they ran on treadmills and lifted weights to build endurance. Unlike plants run by Detroit automakers, where a worker can spend 30 years screwing on the same parts, everyone on the Toyota line is taught to do every type of assembly job, so they can switch positions when needed to keep production flowing. 'It was hard,' Mr. Herring said, 'but it all had a purpose.' To many, the purpose is the stability of a job at Toyota, which earned $4.8 billion in 2004, as the Detroit companies struggled. Jewal Fossett II, 31, was encouraged to apply by his father, who had bounced from one Ford job to another. The younger Mr. Fossett, who previously worked for MCI, said he had one reason for applying: 'I have my own family to raise.' Noralyn Lassiter, 22, said she gave up her job as a customer service representative at DirecTV, where she spent days at a desk 'on a headset.' Now, she will stand for hours a day at a workstation, redolent with the faintly acrid smell of engine coolant. But, she said, 'It's hard to find a job that you can stick with a long time.' Lately, at least some Toyota officials in Japan have expressed concern that the automaker's rapid growth could cause political problems, with one senior executive proposing that the company might raise prices or temper its expansion to give G.M. and Ford a break. But, Mr. Bolte, the Toyota executive, is doubtful that the company is planning to retreat. 'I haven't heard anybody say, 'Slow down,' ' he said.

Subject: China Bids for Maytag and Status From: Emma To: All Date Posted: Wed, Jun 22, 2005 at 10:24:18 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/22/business/worldbusiness/22maytag.html From China, a New Bid for Maytag and Status By DAVID BARBOZA SHANGHAI - The move by the Haier Group, a Chinese manufacturing colossus, to acquire the Maytag Corporation could transform Haier into one of the world's most powerful appliance makers and give the company a greater foothold in America and Europe. In addition, analysts say, the purchase would be another big step in China's transition to capitalism. A consortium of investors led by Haier, China's biggest appliance company, offered about $1.3 billion for Maytag, the troubled home appliance maker. The bid, announced by Maytag officials late Monday, comes a month after the company agreed to be acquired by another investor group, led by Ripplewood Holdings of New York, for $1.13 billion. The move by Haier and a group of investors that includes the Blackstone Group and Bain Capital could touch off a fierce battle for Maytag. The takeover bid also comes as the Chinese government is pushing big companies here to make bold overseas acquisitions in the hope of turning them into multinational corporations with global brands. For instance, the Lenovo Group's purchase of I.B.M.'s personal computer division closed just last month. The acquisition, for $1.75 billion, was one of the largest by a Chinese company of a foreign entity so far. And CNOOC, the Chinese offshore oil and gas producer, will consider making an $18 billion bid for Unocal at a board meeting Wednesday. Unocal agreed in April to be acquired by Chevron for $16.4 billion, and a bid from CNOOC might ignite a takeover war. 'Chinese companies are growing bigger, and their managers have such great ambitions that they want to take a big step and jump to the next level,' said Hu Zuohao, a professor of marketing at Tsinghua University in Beijing. 'They're no longer satisfied with the domestic market.' A takeover of Maytag, the third-biggest American appliance maker behind Whirlpool and G.E., would unite an American household name with a rising power in the world of washing machines, refrigerators, dishwashers and oven ranges. But such an acquisition would not be without challenges: the companies sought by Chinese corporations tend to have well-known brand names that are slipping into decline, like Maytag. The maker of Hoover vacuum cleaners, Amana appliances and Magic Chef ovens, Maytag is entertaining takeover bids as it struggles with higher costs and lower profit in recent years. Representatives of Maytag, based in Newton, Iowa, were not immediately available for comment Tuesday. A spokesman for Haier, based in the northeastern Chinese city of Qingdao, declined to comment. In 1999, Maytag's stock hovered around $70 a share on strong profit. On Tuesday, Maytag traded at $16.06 a share, and that price reflects sharp recent gains on takeover speculation. Maytag, which has more than 20,000 employees and had sales of about $4.7 billion last year, is still one of the world's biggest appliance makers, after Electrolux, based in Sweden, Whirlpool and G.E. Haier is also a consumer goods goliath. The company is still largely government-owned, but has a publicly listed division. It has branched out in recent years to computers, home furnishing and cellphones. Last year, Haier had $12 billion in revenue and 30 overseas factories, including a refrigerator factory in its own industrial park in Camden, S.C., according to the company's Web site. The company, which has about 50,000 employees, is also a favorite of the Beijing government. In 1997, the government named Haier one of six companies it hoped to transform into one of the world's top 500 companies by 2010. Its longtime chief executive, Zhang Ruimin, has even fashioned himself as a Chinese version of John F. Welch Jr., the hard-driving former chief of G.E. Mr. Zhang is the first businessman named to the Communist Party's elite ruling committee, the Central Committee. While Haier's ownership structure and finances are opaque, its status as one of China's few brand-name companies is clear. The air-conditioners, refrigerators and other goods it makes are in millions of homes here. Haier's profit margins, however, have recently thinned in some areas, analysts say. If its takeover bid succeeds, Haier could face big challenges in combining its operations with those of the struggling Maytag, whose first-quarter earnings fell 80 percent, to $7.7 million. 'The companies that are sold to Chinese buyers are usually those who have been in financial trouble for a long period, meaning the managers in their own countries can't fix the problems,' Mr. Hu at Tsinghua University said. 'At this point, Chinese managers might not be experienced enough to tackle these kinds of problems.' For its part, Maytag shareholders face a new decision, after the company agreed last week to be acquired by Ripplewood for $14 a share. Late Monday, Maytag said in a news release that a group led by Haier had offered shareholders $16 a share. In the statement, Maytag's lead director, Howard Clark, said: 'We continue to support the Ripplewood transaction; however, we also believe that it is incumbent on us to pursue this possibility of achieving a higher price for our stockholders.'

Subject: Portfolio Comparisons From: Jennifer To: All Date Posted: Wed, Jun 22, 2005 at 09:48:43 (EDT) Email Address: Not Provided Message: Holding long term bonds could well be tricky, but there is no reason, holding an immediately liquid long term bond fund with a 10 year duration is far less of a problem. A bond fund with an intermediate 5 year duration should offer no difficulty no matter the movement of interest rates. Again, there are comparisons worth making. If the long term Treasury yield is 4.05%, the Vanguard Utility Index has a dividend yield of 3.31% and has been relatively attractive for quite a while though a little pricey now. Still matching a 3.3% dividend against a 4.05% interest rate for 10 years when we might expect capital gains from the stock basket is interesting at least.

Subject: Transparent and Simple Investing From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 07:31:02 (EDT) Email Address: Not Provided Message: For the older investor there are constant important warnings about the housing market, and I would include real estate in general, warnings about bonds, and a stock maket not recovered from the bear market begun more than 5 years ago. But, saving must be invested. What a difficult time to properly protect a portfolio. But, we must keep in mind transparent and simple investing is critical so I still find Vanguard an important even critical choice.

Subject: Dollar and Euro From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 07:24:24 (EDT) Email Address: Not Provided Message: Unless the Euro is again found an alternative value store to the dollar diversification of assets in terms of currency becomes quite a bit more difficult. I am puzzled about the alternatives, especially for central bankers in Asia.

Subject: Conservative Bond Funds From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 05:58:44 (EDT) Email Address: Not Provided Message: There has never been a time when a diversified conservative portfolio strikes me as so important, with the emphasis on conservative. So, I can find no reason to avoid moderate controlled duration investment-grade bond funds. But, I find nonetheless considerable suspicion of the bond market and of bond funds.

Subject: Portfolio Diversification is a Success From: Terri To: All Date Posted: Wed, Jun 22, 2005 at 05:47:44 (EDT) Email Address: Not Provided Message: Since January 2000, the Vanguard Long Term Investment-Grade Bond Fund has returned more than 11% annually. The duration of the Vanguard fund is steadily about 10 years. We are in the midst of one of the strongest bull markets in long term bonds since 1945. The extent to which bonds have been a superior investment to stocks since January 2000 is without equal since 1945. The S&P Stock Index has lost about about 2% annually since January 2000.

Subject: Vanguard Returns From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 19:04:33 (EDT) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 6/21/05 S&P Index is 0.9 Large Cap Growth Index is 0.2 Large Cap Value Index is 2.9 Mid Cap Index is 4.2 Small Cap Index is 1.6 Small Cap Value Index is 1.9 Europe Index is 0.2 Pacific Index is -1.8 Energy is 22.9 Health Care is 6.6 REIT Index is 6.0 High Yield Corporate Bond Fund is 0.3 Long Term Corporate Bond Fund is 6.1

Subject: Sector Stock Indexes From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 18:56:40 (EDT) Email Address: Not Provided Message: http://flagship3.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 6/21/05 Energy 23.1 Financials -1.5 Health Care 5.7 Info Tech -3.5 Materials -4.3 REITs 6.0 Telecoms -2.3 Utilities 12.3

Subject: Public Broadcasting Monitoring From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 17:16:18 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/politics/21broadcast.html?ex=1119499200&en=af89120270895e61&ei=5070 Public Broadcasting Monitor Had Worked at Center Founded by Conservatives By STEPHEN LABATON WASHINGTON - A researcher retained secretly by the chairman of the Corporation for Public Broadcasting, to monitor the 'Now' program with Bill Moyers for political objectivity last year, worked for 20 years at a journalism center founded by the American Conservative Union and a conservative columnist, an official at the journalism center said on Monday. The decision by the chairman, Kenneth Y. Tomlinson, to retain the researcher, Fred Mann, without the knowledge of the corporation's board, to report on the political leanings of the guests of 'Now' is one of several issues under investigation by the corporation's inspector general. At the request of two Democratic lawmakers, investigators are examining whether Mr. Tomlinson has violated any rules as he has sought, he says, to ensure that public television and radio provide greater program balance. His critics, including some lawmakers and executives of public broadcasting, say he has sought to tilt the corporation, which provides $400 million to radio and television stations and producers, toward a conservative agenda. One of Mr. Tomlinson's Democratic critics, Senator Frank R. Lautenberg of New Jersey, called on him to resign on Monday. 'As a result of your recent attempts to inject partisan politics into the Corporation for Public Broadcasting, I am writing to urge you to step down as chairman,' Mr. Lautenberg wrote. 'Your conduct has undermined the C.P.B. and its mission of quality public broadcasting free of political interference. Under current circumstances, with investigations of your conduct pending, it is hardly possible for you to effectively carry out your duties as chairman of the C.P.B.' Mr. Tomlinson issued a statement saying he would not resign. 'While I respect Senator Lautenberg's strongly held views on this subject, I see no reason to step down from the chairmanship,' he said. 'I am confident that the inspector general's report will conclude that all of my actions were taken in accordance with the relevant rules and regulations.' On Monday the board interviewed candidates for the position of president. The vacancy was created by the resignation of Kathleen Cox, who stepped down in April after the board did not renew her contract. Mr. Tomlinson has said his top choice for the job is Patricia Harrison, an assistant secretary of state and a former co-chairwoman of the Republican National Committee. He has said that Ms. Harrison would have strong credibility with the White House and with Republicans in Congress, some of whom are threatening to cut the corporation's budget substantially. Public television and radio stations have opposed that choice, saying it would further inject politics into public broadcasting at precisely the wrong time. The three Democratic and independent members of the board oppose her selection, board members said, as do some Congressional Democrats. Until last year, Mr. Mann worked at the National Journalism Center, which for the last few years has been run by the Young America's Foundation. The foundation describes itself on its Web site as 'the principal outreach organization of the conservative movement' and as being committed to the ideas of 'individual freedom, a strong national defense, free enterprise and traditional values.' The Young America's Foundation shares some top officials with its politically active counterpart, Young Americans for Freedom, although the two are separate entities. The National Journalism Center was founded in 1977 by the American Conservative Union and M. Stanton Evans, a syndicated columnist. Mark LaRochelle, a top official at the National Journalism Center, said Mr. Mann told him last year that he was working on the Moyers project for the broadcasting corporation. He said Mr. Mann had run the alumni relations, job bank and internship program at the center, where he got to know Mr. Tomlinson. While Mr. Mann worked at the National Journalism Center, he helped place interns in the Washington bureau of Reader's Digest. The editor in chief of Reader's Digest at the time was Mr. Tomlinson, and its top editor in its Washington bureau was a friend of Mr. Tomlinson's, William Schulz. In April, Mr. Tomlinson persuaded the board of the corporation to appoint Mr. Schulz to be one of two ombudsmen to monitor public radio and television for objectivity. There was no response on Monday to voice messages and e-mail messages left for Mr. Mann. Mr. Moyers has been a source of agitation for Mr. Tomlinson and other conservatives. They say that 'Now' under Mr. Moyers (who left the show last year and was replaced by David Brancaccio) was consistently critical of Republicans and the Bush administration. Last week Senator Byron L. Dorgan, Democrat of North Dakota, said that in response to a request, Mr. Tomlinson sent data from Mr. Mann's reports. Mr. Dorgan said that data concluded in one episode of 'Now' that Senator Chuck Hagel, Republican of Nebraska, was a 'liberal' because he questioned the White House policy on Iraq and that a second 'Now' segment on financial waste at the Pentagon was 'anti-Defense.' Mr. Hagel is known as a mainstream conservative member of the Senate and a maverick who has at times been critical of the Bush administration. The inspector general at the corporation is now looking at steps taken by Mr. Tomlinson to ensure what he calls greater balance in programming, including his decision to approve $14,170 in payments to Mr. Mann without the knowledge of the corporation's board.

Subject: Re: Public Broadcasting Monitoring From: byron To: Emma Date Posted: Tues, Jun 21, 2005 at 23:24:12 (EDT) Email Address: Not Provided Message: This bunch in this Administration is doing just what they accuse other countries of doing. pitiful

Subject: Re: Public Broadcasting Monitoring From: Sid Bachrach To: byron Date Posted: Wed, Jun 22, 2005 at 23:22:34 (EDT) Email Address: sidbc26@juno.com Message: PBS and NPR have operated much like Pravda and Tass during the Soviet years. On both PBS and NPR, only the antiAmerican voice can be heard. Usually NPR and PBS promote the views of loonies like Bill Moyers and the dry as dust Charlie Rose. Charlie Rose could put a raging fire to sleep in about one minute. On domestic issues, NPR and PBS promote the nonsense that America is still stuck in the great depression and we could solve out problems if only we let the Washington Post editorial board rule the country.

Subject: Conjuring an Imaginary Friend From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 16:44:27 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/books/21icar.html Conjuring an Imaginary Friend in the Search for an Authentic Self By FELICIA R. LEE Talk about a good day. At the age of 18, Helen Oyeyemi signed the contract for her first novel, 'The Icarus Girl,' the same August day two years ago that she was accepted at Cambridge University. The book, about an 8-year-old girl with an eerie imaginary friend, attracted gleaming reviews and buzz in Britain after its initial publication in January. Ms. Oyeyemi was called 'astonishing' in a review in The London Sunday Telegraph and 'extraordinary' by The Financial Times, which said she could claim a place among Amos Tutuola, Chinua Achebe and Ben Okri, all English-language Nigerian-born writers. Now, the soft-spoken 20-year-old Ms. Oyeyemi is looking forward to the American release of 'The Icarus Girl,' which is being released today in the United States by Nan A. Talese/Doubleday. 'I guess I don't really believe it's happening,' she said of her splashy debut during a recent interview in New York. She recalled obsessively writing 'The Icarus Girl' at her parent's computer on weekends, after school and in the middle of the night. She likened it to being in love. She rushed the first 20 pages off to an agent whose name she plucked from a directory of agents. A native Nigerian who moved with her family to London when she was 4, Ms. Oyeyemi is the youngest writer ever signed by Alexandra Pringle, the editor in chief at her British publisher, Bloomsbury. Ms. Oyeyemi's age is on the far side of tender even for a first-time novelist, but both Ms. Pringle and Ms. Talese insisted that it was her talent, not her age, that got her published. Ms. Oyeyemi is currently a political and social science major at Cambridge. 'It came really, really easily,' she said of her story, which tells of Jessamy Harrison, the troubled, precocious daughter of a Nigerian mother and a British father in London. Imaginative and lonely, Jess conjures up a nasty little invisible friend named TillyTilly while on a trip to Nigeria. 'But I think it came easy because I didn't think it was a novel,' said Ms. Oyeyemi, a tall woman with huge eyes, a shy manner and long dark braids. 'It was just kind of a story that kept getting longer,' she continued, 'so I didn't get scared or anything.' A book project was also a handy way to duck studying for her final exams and homework before getting into Cambridge, she joked. Without giving away too much of the plot, TillyTilly soon lands Jess in big trouble. The result is a dark novel that plays with magic realism, African myth and that strange mix of innocence and intuition about the adult world that is the province of the very young, especially a child like Jess who straddles the boundaries of two societies. Ms. Oyeyemi, who says she was a literary, smart, smart-mouthed child with an imaginary friend named Chimmy, is confronting the usual first-novel speculation about how much of 'The Icarus Girl' is autobiographical. She insists it sprang mostly from her head, with its genesis in a story about TillyTilly that she wrote at 13. But like Jess, Ms. Oyeyemi said she knows well what it feels like to be an outsider, to fight despair, to seek an authentic self. She attempted suicide at 15 by mixing pills, she said, and despite attending multicultural schools, for a long time, she never read black writers, and all the characters in her stories were white. The default cultural category was white, she said. 'We didn't understand that we could be in the stories,' she said of herself and her other classmates of color. 'Or that people like us could be in the stories.' 'I never got particularly good marks for the stories I wrote,' she continued. 'And I read them over. And I started to see that in a fundamental sense they weren't true. Not only were they just not very good technically in terms of the writing, but there was something missing.' Only when Nigeria came into her stories did things ring true, she recalled. She met Nigeria, so to speak, through the novel 'Yoruba Girl Dancing,' by Simi Bedford, about a Nigerian girl in London dealing with assimilation issues. Ms. Oyeyemi, the eldest of three children, came with her parents to London because her father, now a special education teacher, was studying social sciences at Middlesex University. The family returned to Nigeria every summer. Jess, she said, 'represents this kind of new-breed kid, the immigrant diasporic kid of any race who is painfully conscious of a need for some name that she can call herself with some authority.' 'The Icarus Girl' has sold 20,000 copies in Britain, where sales of over 3,000 are considered respectable for a first-time novelist, Ms. Pringle said. Doubleday's first run is 35,000 copies, a measure of the publisher's high expectations. Ms. Oyeyemi said she was working on a second novel, about Afro-Cuban mythology and the pantheon of gods that African slaves brought to the new world. Two plays that she wrote and staged while at Cambridge, 'Juniper's Whitening' and 'Victimese,' published by Methuen, will be released in the United States in September. Heady stuff. But Ms. Oyeyemi said she intended to keep studying political science, both because she is intrigued by politics and because it seems a good fallback position. 'It's quite good to have a separate arena, I think, because I could quite easily get a bit weird about writing,' she said in her earnest way. 'It's quite easy with this one to keep it in perspective,' she added. 'I'll just try to get better.'

Subject: Europe and America From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 15:50:45 (EDT) Email Address: Not Provided Message: With Sweden acting to cut interest rates to stimulate demand, there is little reason to expect interest rates through Europe to rise any time soon and there may be cuts in other currencies as well. Sweden has weak employment growth, but France is also weak and Germany has weaker employment growth and Italy weaker still. Low interest rates in Europe should limit any further loss in value of the dollar for some time. So, I still can not argue myself out of thinking bond funds will hold through a downturn in the American economy. Bond funds of fairly constant duration seem to be a fine portfolio protector still.

Subject: House Wren in Nest Hole From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 15:42:37 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5494&u=4|0|... House Wren in Nest Hole New York City--Central Park, Maintenance Field.

Subject: Green Heron Landing From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 15:27:49 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5496&u=4|1|... Green Heron Landing New York City--Central Park, Turtle Pond.

Subject: Cardinal Jaime Sin of the Philippines From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 14:42:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/obituaries/21sin.html Cardinal Jaime Sin, a Champion of the Poor in the Philippines, Is Dead at 76 By MICHELLE O'DONNELL Cardinal Jaime L. Sin, the powerful Roman Catholic archbishop of Manila who used his influence to champion the rights of the poor and rally the widespread popular resistance that brought down the presidencies of Ferdinand E. Marcos and Joseph Estrada, died early today in Manila, a spokesman for the cardinal said. He was 76. A brother, Dr. Ramon Sin, said that the cardinal, who stepped down from the archdiocese in 2003 in poor health, died of renal failure, he told a television station in Manila. Cardinal Sin led the nearly 40 million Catholics in the Philippines for almost three decades, through political upheaval that brought martial law, repressive dictatorship and democratic rule. A round-faced, bespectacled man, he was known for his sense of humor that included poking fun of his own name. But it was through his withering and unwavering public criticism of the Marcos regime in the 1980's that Cardinal Sin became an international figure. At a time when reform-minded clergy in other developing countries were targets of assassination, Cardinal Sin tirelessly used his pulpit first as bishop, then archbishop, to attack Mr. Marcos' martial law, corruption and policies that oppressed the poor. Yet unlike Archbishop Oscar Romero of El Salvador, a contemporary who also worked to empower the poor and was fatally shot as he delivered a homily in 1980, Cardinal Sin seemed insulated from personal harm. 'If you compare him to Romero, he spoke out as much as Romero did,' said the Rev. Paul L. Locatelli, the president of Santa Clara University. 'He saw justice as making sure that the poor had a voice.' Beginning in the 1970's, Cardinal Sin, a moderate, was among the leaders who publicly pressured Mr. Marcos to end the martial law that he had imposed in 1972 out of concern that leftist radicals would overthrow the government. For his part, Cardinal Sin had pledged to rein in Marxist priests and nuns in the ranks of the clergy. They had angered the government for, among other things, reporting to Amnesty International the military's systematic killing of villagers, and they concerned Cardinal Sin because they preached the gospel in Marxist terms. At first, he was careful not to attack the First Family as he assailed the regime's policies. As the Marcos regime wore on, his opposition became more strident, despite the lifting of martial law in 1981. Often, he used his famous sense of humor to deliver thinly veiled jokes that devastated the Marcos's power and style. In a joke he told about the 'mining industry,' a wealthy and powerful woman - not unlike Imelda R. Marcos, the country's flamboyant first lady - pointed to things and proclaimed: 'That's mine! And that's mine!' But after senator Benigno S. Aquino, Mr. Marcos's leading political opponent was assassinated in 1983, it was the cardinal's unwavering support of the senator's widow, Corazon Aquino, in her campaign to overthrow Mr. Marcos, that showed his power as a popular kingmaker. After Mrs. Aquino returned to the Philippines from self-imposed exile to mount her campaign, she was barred from equal access to the media. Cardinal Sin's regular radio addresses on the Catholic radio station calling for the people to support her became a critical tool to rally millions to her side. After her election in 1986, he became known in Manila as the 'unseen general' who handed down on earth orders from above. Jaime Lachica Sin was born on Aug. 31, 1928 on the Philippine island of Panay to Chinese parents. The 14th of 16 children, he was sent away at a young age to become a priest. Over his long career, he said his actions in the public sphere were not driven by politics, but 'a moral dimension.' In 1986, he he called on Filipinos to surround the police and military headquarters in Manila to protect then-military Vice Chief of Staff Fidel Ramos, who had broken with Mr. Marcos, and they did. The mostly peaceful revolt that followed, ousting Mr. Marcos, who was accused of corruption and rights violations, became known as the 'people power' revolution. He stepped down as head of the Manila Archdiocese, which he served for nearly three decades, after reaching retirement age of 75. Declining health forced him to curtail his appearances. During his long career, the cardinal was not without his critics. He staunchly opposed artificial means of birth control, which some critics said left the country overpopulated and mired in poverty. The nation is among the world's poorest. In 2003, it was estimated that 40 percent of the population survives on less than $1 a day. Under the cardinal's tenure, the church was shaken by accusations of sexual misconduct by some of its priests, according to The Associated Press. Two years ago, Catholic bishops apologized for grave cases of sexual misconduct by priests and pledged to act on complaints. The cardinal was a popular figure at protests throughout his career. He directed street protests that ledto Mr. Estrada's ouster in January 2001, and spoke forcefully at them. 'Mr. President, how could have done this to us?' he asked. 'The poor trusted you and you betrayed them, the businessmen trusted you and you lied to them. The first lady married you and you have betrayed that vow and used many women.' After Mr. Estrada's ousters, his followers, many of them impoverished, denounced the cardinal and other politicians who forced Mr. Estrada from power, and stormed the presidential palace in May 2001 in riots that killed six people . Cardinal Sin apologized to the poor shortly thereafter,The A.P. reported. He said that the church had neglected them and made them easy prey for selfish and powerful politicians. 'You and I lived dangerously together through five presidents now,' he told Filipinos when he resigned in 2003, according to Japanese news agency. 'Honestly, I was always a reluctant political archbishop.'

Subject: Dial-Up Internet Going Going Going From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 13:14:34 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/technology/21broad.html Dial-Up Internet Going the Way of Rotary Phones By KEN BELSON For years, Michelle Phillips, a real estate agent in Indianapolis, drove to her office at odd hours just to check her e-mail messages and search Web sites on her company's high-speed Internet lines because her dial-up connection at home was too slow. 'At home, I can do laundry, take a shower and wash dishes while the computer is logging onto the Internet,' she said with a laugh. Now she can pocket the gas money. This month, she signed up for a promotional offer from SBC Communications: introductory broadband service for $14.95 a month, or nearly $10 less than what she paid for a dial-up account with AOL. To qualify, she had to sign a one-year contract and have an SBC phone line. Ms. Phillips is among the seven million Americans expected to drop their slow Internet connections this year for high-speed lines, which are as much as 100 times as fast and are always on. As recently as six months ago, a majority of Americans were using dial-up connections at home. In the first quarter of this year, broadband connections for the first time overtook dial-up. SBC's deep discount - $5 below its lowest previous offer, and among the cheapest on the market - is just the latest strategy in the broadband wars. More people are dropping dial-up connections from services like AOL, MSN and EarthLink because so much Internet content - music, videos, retail sites - now requires high-speed connections for performance. A record 630,000 Internet viewers, for instance, visited MSNBC.com to watch NBC's coverage of the Michael Jackson verdict last week. For broadband sellers, getting those users as they convert to either a digital subscriber line or cable modem connection is crucial because they are harder to recruit once they sign up with a broadband provider and they are likely to order new services, like television plans. 'If I'm a dial-up person and I'm a moderate-to-heavy user of the Internet, I'm going to look at the aggravation,' said Jim Andrew, a consultant at Adventis, which advises telecommunications firms. 'Now, everyone wants to have faster performance.' Last year, 36 million American homes, or 52 percent of all households with Internet access, used dial-up services, according to SG Cowen, the brokerage firm. That percentage is expected to drop to 40 percent at the end of this year. At the same time, cable and phone companies are expected to add 8 million broadband subscribers this year, bringing their total to 38.7 million. In grabbing new subscribers, the competitors are taking different tacks. Cable providers are chasing customers by making broadband service part of package deals with their traditional TV plans and new digital phone services. Phone companies like SBC and Verizon are hoping lower prices and extra services will drive in converts. SBC also offers its broadband subscribers commercial-free Internet radio, music videos and premium television and movie clips, as well as online security software. The company also plans to start selling television programming over its broadband lines this year. Cable companies, of course, offer a similar array of free services to woo customers. They say their broadband customers get faster and more reliable connections and that those features justify the higher prices they typically charge. They do offer some discounts if subscribers also order TV and digital phone services. But those discounts cannot beat the prices offered by phone companies like SBC and Verizon for their digital subscriber lines, or D.S.L., services. They also market satellite television services that are generally cheaper than comparable cable television packages, and sell discounted wireless phone plans, too. The strategy is paying off. Though cable companies provide nearly 60 percent of all home broadband connections, the phone companies are catching up. In the first quarter of this year, D.S.L. providers signed up a record 1.38 million subscribers, while cable companies added 1.19 million new broadband customers, according to the Leichtman Research Group. Price is a significant factor in the shift. According to a survey by Goldman Sachs, when broadband connections are priced below $29 a month - closer to the average cost of dial-up service which is around $20 - twice as many consumers sign up. Verizon currently sells its broadband service for $29.95 a month, $10 to $15 cheaper than broadband from Comcast, Time Warner and other cable companies. BellSouth, Qwest Communications and smaller D.S.L. providers are not far behind. But it is unclear whether the phone companies can make money selling deeply discounted broadband lines and, if prices continue falling, how dial-up providers can withstand the assault. Edward M. Cholerton, vice president in charge of consumer broadband marketing at SBC, says his company can afford to sell broadband for $14.95 a month because applications are processed online, not through call centers or retail outlets. Customers also install their own D.S.L. modems; those who want a technician to visit pay up to $200. SBC's super-low offer is temporary; the company has not said how long it will last. But Mr. Cholerton said it was unlikely that SBC or any other broadband provider could afford to cut prices much further. 'The real reason you have to get down to the $15 range is to attract more price-sensitive consumers,' he said. But 'we're probably running out of room' to make deeper cuts. Besides, if prices were lowered too far, he said, existing SBC customers who pay more would get upset. The price cuts have made waves at dial-up providers. EarthLink, the second-largest dial-up provider after AOL, says its premium dial-up business is shrinking by about as much as 15 percent a year, and SBC's discounts may accelerate that decline. Still, the company's own cut-rate dial-up service called PeoplePC has been growing briskly. At the same time, EarthLink is trying to persuade its customers to upgrade to its broadband lines, which are leased from phone and cable companies. EarthLink has 1.5 million broadband subscribers, representing nearly 30 percent of its customers. Prompted by SBC, it has unveiled promotional discounts, too. 'You will see EarthLink try and get the dial-up folks to fall off the fence and get broadband,' said Garry Betty, EarthLink's chief executive. Despite compelling reasons to switch to broadband, dial-up lines will always have a place in American homes, Mr. Betty said. Customers in rural areas where broadband is not available will continue to log on via a dial-up connection; other people may prefer the simplicity of dial-up. 'Some analysts predict our demise,' he said. But for some pockets of the country, 'dial-up is going to be the only offer around for some time.'

Subject: Euro Tumbles Into Void of Rifts From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 13:10:24 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/business/worldbusiness/21euro.html Euro Tumbles Into Void Left by Continent's Rifts By MARK LANDLER FRANKFURT - As European leaders bicker over money and the future of their union, the main victim is proving to be the euro, their sturdy but still sensitive young progeny. The six-year-old currency fell sharply in trading against the dollar on Monday in the aftermath of the failure of the European Union summit meeting Friday. It was the latest tumble for the euro, which has swooned since France voted against the European constitution last month, throwing Europe into political turmoil and raising questions about the long-term stability of its monetary union. The euro has fallen 3 percent against the dollar since the French referendum, and more than 10 percent from its peak at the end of 2004. On Monday, it traded at $1.214 in New York, a decline of 1.1 percent from Friday. Monday's decline was hastened by new rumors that the European Central Bank was considering a cut in interest rates to try to resuscitate the Continent's languishing economies. In this jittery environment, analysts said, traders are seizing on anything as further evidence of the euro's weakness. 'We're in the eye of a storm,' said Nicolas Sobczak, senior European economist at Goldman Sachs in Paris. The convergence of negative factors has shifted the dynamics of the currency market. The euro usually trades up and down in response to the dollar and the American economy, analysts say. Its rise over the last year is generally viewed as a barometer of the dollar's weakness, rather than the euro's intrinsic strength. Now, however, the euro is being driven mainly by European events - few of them positive. It rose slightly on Friday when the United States reported its current-account deficit, but promptly resumed its slide after the summit meeting's attempt to hammer out a budget ended in acrimony on Friday. 'We're in a very pessimistic mood,' said Michael Schubert, a currency analyst at Commerzbank in Frankfurt. 'It's a herd instinct. Everybody is looking for factors against the euro and in favor of the dollar.' He and other analysts expect the euro to regain traction eventually, and make up some of the ground lost against the dollar, which remains burdened by an enormous current- account deficit in the United States, $195 billion in the first quarter. Mr. Sobczak of Goldman predicted that after a further decline to $1.15, the euro would rebound to somewhere between $1.25 and $1.30. Still, he said, the fallout from Europe's political strife had been more severe than analysts expected. 'We didn't think it would affect the euro that much, and that sentiment would turn so bad.' Adding to the uncertainty are strident voices in Europe declaring that the euro is a failure, and should be scrapped. While those calls have so far been limited to populist leaders in Italy, perhaps the most economically fragile country in the euro zone, they are sowing unrest about the currency's stability. With 10 new countries in Central Europe applying to adopt the euro, analysts said the currency was at a delicate moment in its development. These countries remain generally enthusiastic about the euro, but a drumbeat of negative publicity could weaken their resolve, particularly in places like the Czech Republic, which has already said it was in no hurry to convert its currency. 'If the 'no' vote, and the rancor over the budget, starts to undermine this vision of Europe and the euro, you could see the new countries reappraising the process,' said David Abramson, the head of European research at BCA Research in Montreal. 'Then what does the euro become?' Mr. Abramson said he was particularly concerned about Italy, which has diverged radically from its neighbors in economic performance. With a damaging loss of competitiveness against Asian and even European countries, its exports have dried up and its economy has fallen into recession. Historically, Italy would have reacted by devaluing its old currency, the lira. Deprived of that opportunity by its membership in the euro zone, Italy faces a painful adjustment that some analysts fear could stir political unrest and turn even more people against the euro. Greece and Spain face similar losses of competitiveness, which could hobble their future growth. Europe's generally anemic performance has enormously complicated the task of the European Central Bank. It faces mounting political pressure to cut interest rates. And though its president, Jean-Claude Trichet, insists it will hold the line, bank watchers sense a weakening in its resolve. 'You can't separate the political crisis from the rumors about a rate cut,' said Jörg Krämer, chief economist at the HVB Group in Munich. 'A rate cut is perceived as something that would help the political crisis. It may ease the situation.' To currency traders, rumors of a cut are yet more evidence of Europe's - and therefore the euro's - weakness. But to European exporters, a weaker euro would be a welcome reprieve, even if fleeting, because it would reduce the cost of their goods in the United States and other markets. Indeed, far from lamenting the recent decline in the euro, politicians in France and Germany seem comforted by it. 'The exchange rate has reached a level that is more in line with reality,' Prime Minister Dominique de Villepin of France said in a speech last week in Paris.

Subject: Notice to Krugman: Do Research From: Marko To: All Date Posted: Tues, Jun 21, 2005 at 11:57:49 (EDT) Email Address: Not Provided Message: Paul Krugmans oped in the NYTimes about Ohio's 'republican' scandal is funny... since everyone he mentioned are DEMOCRATS.

Subject: Sweden Lowers Interest Rates From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 10:59:33 (EDT) Email Address: Not Provided Message: Well, well. Sweden just cut short term interest rates by 50 basis points to 1.5%, and indicated she may well go lower. Though Sweden has grown well for several years, there has been a slowing recently and employment growth has become a problem. I am much encouraged by this reversal of central bank policy.

Subject: Noticing Sweden From: Terri To: Terri Date Posted: Tues, Jun 21, 2005 at 12:05:20 (EDT) Email Address: Not Provided Message: Sweden has had intelligent fiscal and monetary policy, and an openness to trade, for the last 15 years, and the effects on living standards, the look of country, and the markets have been encouraging. Sweden has a generous public pension system that is partly state invested and partly private, and an enviable inclusive health care system.

Subject: Chug Milk, Shed Pounds? Not So Fast From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 10:53:11 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/business/media/21adco.html?pagewanted=all Chug Milk, Shed Pounds? Not So Fast By MELANIE WARNER WANT to lose weight? Eat more dairy products. That is the message the milk industry and sellers of yogurt and cheese have been promoting recently in TV and print ads. But now a group of physicians is challenging the scientific validity of the claim, arguing that it is based primarily on the clinical research of one scientist who is financed by the Dairy Council, the nutrition marketing arm of the dairy industry, and General Mills, which makes Yoplait yogurt. The group, the Physicians Committee for Responsible Medicine, has filed petitions with the Federal Trade Commission and the Food and Drug Administration claiming that the association between dairy products and weight loss is false and misleading. Michelle Rusk, a senior staff lawyer in the commission's division of advertising practices, said she could not comment on possible investigations, but she noted that national ads featuring health or weight loss claims are of particular interest to the agency. The International Dairy Foods Association, a trade group for dairy companies, says it has full confidence in the science supporting its claims. 'We are extremely conservative and careful in the claims we suggest,' said Susan Ruland, a spokeswoman for the International Dairy Foods Association. 'We spent years looking at what was going on in the science and what was fair to say.' Mary Beth Thorsgard, a spokeswoman at General Mills, said an advertising industry self-regulatory body - the national advertising division of the Council of Better Business Bureaus - approved Yoplait's weight loss claim last year. In Yoplait television commercials, consumers are told that eating three servings a day of Yoplait Light yogurt may help them squeeze into that 'itsy bitsy, teeny weeney, yellow polka- dot bikini.' 'We feel solid on the science behind our claim,' Ms. Thorsgard said. Ms. Ruland called the Physicians Committee for Responsible Medicine, which filed the complaint, a 'radical, fringe organization that promotes vegetarianism.' Dr. Neal Barnard, president of the physicians committee, says his group does advocate 'a plant-based diet' and has long believed that milk is not healthy, but he says these facts should not detract from the substance of the group's petition. Other groups also share concerns about the milk industry's ad campaigns. Science cited by General Mills includes an eight-page roster of research studies, which is listed on the National Dairy Council's Web site. But most of the studies have either been done on animals or are observational studies in which scientists take data that has been collected from a large and uncontrolled group of people and try to draw conclusions. Most scientists say that these types of studies are less reliable than clinical trials where control groups are used. Many of these observational studies seem to suggest that people who eat high levels of dairy gain less weight than people who eat little of it. But Dr. Barnard says that the findings can be subject to what is known in science as a 'confounding effect.' 'People who are health-conscious think they should be drinking milk and eating yogurt, whereas people who are not health-conscious might be drinking Dr Pepper and Mountain Dew,' he said. 'It's because people are health-conscious that they weigh less, not because they're drinking milk.' Dr. Barnard points out that this was the case in many of the observational studies that seemed to reveal that women who were on hormone replacement therapy had fewer heart attacks. 'When you did randomized clinical trials, the women on H.R.T. did not have lower heart disease risk,' he said. The two published clinical trials listed on the Dairy Council's Web site were led by Michael B. Zemel, the director of the Nutrition Institute at the University of Tennessee. Dr. Zemel has disclosed that these studies were financed either by the National Dairy Council or General Mills, but he says they had no say over the results. 'I will take money for my research from anyone who wants to give it to me, with only one caveat: they can't control the outcome, what I say or the publication of the research,' Dr. Zemel said. According to the physicians committee, Dr. Zemel has received $1.68 million in research grants from the National Dairy Council and at least $275,000 from General Mills for research on yogurt and calcium-fortified cereals. Dr. Zemel does not dispute the figures. Dr. Zemel also acknowledges that he receives royalties from General Mills and Dairy Management Inc., a trade group for dairy farmers, for the license to use his findings, which were patented in 2002, and link dairy consumption and weight control. Dr. Zemel says he receives approximately $50,000 a year in license fees from General Mills and Dairy Management, with additional fees going to the university's Nutrition Institute. 'It's a nice amount of money to have, but it hasn't changed my life in any way,' he said. 'I'm still driving a '99 Miata.' Dr. Zemel's studies do not say that simply chugging more milk will help a person shed pounds. His research has been done on people eating 500 fewer calories a day than they would normally and his conclusion is that dairy can aid in weight loss and body fat reduction if someone is already cutting calories. This caveat can be found in the fine print of ads for Dannon's Light 'n Fit nonfat yogurt ('Slim down with yogurt') and Kraft's various cheese products ('Burn more fat'), but David Schardt, a senior nutritionist at the Center for Science in the Public Interest, a food advocacy group that is also critical of the dairy-weight loss ads, says such nuances are often lost on consumers. 'The TV ads for Yoplait depict thin models and the message that's conveyed is that milk is helping to keep them slim,' Mr. Schardt said. 'I think that's sending the wrong message.' Additionally, Dr. Zemel says that if you are already getting enough calcium, anywhere from 900 to 1,200 milligrams, adding more dairy will probably not do anything for weight loss. This detail is not mentioned in the ads. The physicians committee petitions illustrate the perils of promoting the health benefits of products. In a recent settlement with the trade commission, PepsiCo agreed to stop making claims that drinking Tropicana orange juice could significantly lower blood pressure and bad cholesterol, thereby reducing the risk of heart disease and stroke. For several years, Tropicana ran a series of ads under its 'Heart Healthy' campaign telling consumers that drinking two or three cups of orange juice a day could lower blood pressure by 10 points, raise HDL cholesterol by 21 percent and improve the HDL to LDL cholesterol ratio by 16 percent. In its ruling, the agency concluded that the claims were not supported by 'competent and reliable scientific evidence.' Unlike the physicians committee, many scientists do consider milk and other dairy products to be nutritious foods, at least for people who are not lactose intolerant and they encourage people to work them into a healthy diet. But whether they help with weight is another matter. Susan Barr, a professor of nutrition at the University of British Columbia and a member of the International Dairy Foods Association scientific advisory board, says the jury is still out. 'More studies need to be done to try and confirm this,' Professor Barr said.

Subject: Outsourced All the Way From: Emma To: All Date Posted: Tues, Jun 21, 2005 at 10:41:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/21/business/worldbusiness/21outsource.html?pagewanted=all Outsourced All the Way By MATT RICHTEL SAN FRANCISCO - Philip Chigos and Mary Domenico are busy building a children's pajama business. They are refining patterns, picking fabrics and turning the basement of their two-bedroom apartment into an office. Then there is the critical step of finding the right seamstresses in China. Instead of looking for garment workers in this city, they plan to have their wares manufactured by low-cost workers overseas. In doing so, they've become micro-outsourcers, adopting a tactic of major American corporations, which are increasingly sending production work abroad. A growing number of mom-and-pop operations, outsourcing experts say, are braving a host of potential complications and turning to places like Sri Lanka, China, Mexico and Eastern Europe to make clothes, jewelry, trinkets and even software programs. 'We'd love it to say 'made in the U.S.A.' and use American textiles and production,' Mr. Chigos said of his product. But, he said, the cost of that would be 4 to 10 times what was planned. 'We didn't want to sell our pajamas for $120.' The ability of Mr. Chigos, 26, and Ms. Domenico, 25, to reach across borders has as much to do with technology as it does with the globalization of the labor market. Computers, the Internet and modern telecommunications already make it possible for start-ups to market their goods to customers anywhere in the country. That infrastructure also enables even the smallest entrepreneurs to find workers tens of thousands of miles away in countries they will never visit and in factories they will never inspect. They can communicate with those factories cheaply via e-mail and phone, transmit images and design specifications and track inventory. 'It's easier to find people out there on the other side, to monitor them and keep in touch with them,' said Ashok Deo Bardhan, an economist at the Haas School of Business at the University of California, Berkeley, whose field is outsourcing. One result of easy access to cheap manufacturing, he said, is that more American entrepreneurs may be able to turn an idea into a product. The situation 'vastly increases the scope of inventors and designers in the West,' Mr. Bardhan said. Just how much work American companies, big and small, send offshore is difficult to measure, and experts have differing views of the effect of outsourcing on economic growth and job loss. But even as that debate simmers, many of the smallest entrepreneurs are quickly turning to low-cost labor abroad to get their businesses off the ground. Thousands of Web sites have sprung up recently hawking factories in places like Bursa, Turkey, to potential customers like Mr. Chigos. Outsourcing is 'happening at every level, from manufacturing of steel to make cars to software to computer chips to a little lady who make scarves,' said Ally Young, who researches outsourcing trends for Gartner, a market research firm. Any job can be sent overseas, she added, 'if it can be digitized and you don't need face-to-face interaction, like a haircut.' Even that constraint may be disappearing. Ben Trowbridge, a Dallas consultant to major American companies that hire offshore labor, said that he recently received a request from a psychologist who wanted to hire counselors in India to make follow-up phone calls to his patients. Offshoring for small entrepreneurs, however, can be rough. Taking advantage of cheap labor means having to navigate language and time-zone differences, complex import regulations and shipping fees and unanticipated problems like the Asian bird flu. And, of course, there are always nagging worries about workmanship and anxiety among some entrepreneurs that the factory they engaged may be a brutal sweatshop. Beverly A. Lengquist, a real estate agent in Santa Cruz, Calif., ran into many of those problems when she hired a factory in Sri Lanka in 2004 to sew 8,000 decorative cloth covers for water bottles. After encouragement from friends who liked her cute designs, Ms. Lengquist, 42, turned to the Internet to find a manufacturer. She searched on Google for terms like 'overseas fulfillment' and 'manufacturing' and quickly found many prospective partners in Indonesia, Bali and Sri Lanka. She settled on a Sri Lankan company, she said, because it worked with big American textile firms and came highly recommended by an acquaintance with manufacturing experience. She initially negotiated with the factory owner by e-mail and then met him when he was visiting New York; he promised that he could fill the order quickly. Ms. Lengquist, a horse owner, needed to have the 8,000 bottle holders (which she calls 'Bcozies') to sell at the Kentucky Derby in May 2004. But unexpected problems quickly arose. For instance, the holders were decorated with marabou feathers. But United States customs would not allow feathers originating in Asia to be imported because of the Avian flu. So Ms. Lengquist had to buy the feathers in the United States and ship them to Sri Lanka. To pay her Sri Lankan manufacturer, she wired the company $13,000, an amount she thought covered shipping costs as well as manufacturing. Then the shipper demanded $4,000 more, which she ultimately paid, but that was not the only problem. When she opened the shipment of holders on her kitchen floor, she found that half of them were too small to fit around water bottles. Frustrated by the problems, Ms. Lengquist has since decided to use a manufacturing company in Ohio instead. The Sri Lankan company could not be reached for comment. 'The problem had to do with language and culture,' Ms. Lengquist said. The manufacturer, she said, did try hard to accommodate her requests, but 'just didn't understand the water bottle concept.' She has sold nearly all the holders, which are priced from $10 to $20, through her Web site, bcozy.com, or through retailers. Demand remains strong. She said she recently received an order for 150,000, but she said she could not fulfill an order of that size and the purchaser - whom she declined to name - could not agree on a price. For some small entrepreneurs like Todd J. Collins, 32, the operator of Irealtymanager.com, a Web site that focuses on property management, outsourcing has been relatively easy. In 2001, Mr. Collins, who is based in Washington, came up with an idea to sell software that would help apartment owners manage their properties. He turned to Macrotech, a company in Bridgeport, Conn., that hires computer scientists and engineers in Bucharest, Romania, and in Pune, India, a city near Mumbai. The head of the Bucharest office, Alex Anitei, 27, said that for three years he had worked for many entrepreneurs like Mr. Collins, doing piecemeal software work, including projects as small as building online address books. E-mail, instant messaging and Internet-based phone services, Mr. Anitei said, allow him to stay in constant contact with clients on other continents. He said he and his staff of six programmers, who work in a three-room apartment in Bucharest, charge hourly rates of $15 to $25 - one-third to one-15th the cost of American software counterparts. Still, Manish Chowdhary, the president of Macrotech, said the use of offshore labor was not always efficient for the smallest businesses. The big cost savings from outsourcing, he said, are realized over time and by placing large manufacturing orders; if the project is very small, the time and expense of finding an overseas contractor and setting up communications simply may not be justifiable. Mr. Chigos and Ms. Domenico, though, see foreign workers as crucial to their nascent enterprise. Without them, they said, they would not be able to sell their pajamas for less than $50. Mr. Chigos, a former commercial real estate agent, found information on the Internet about a trade show for overseas manufacturers that took place in Las Vegas in February. At that conference, he found eight prospective manufacturers, seven in China and one in Mexico, that could make the pajamas designed by Ms. Domenico, a 2001 graduate of the Rhode Island School of Design. He and Ms. Domenico have sent designs to six of the companies, including the Suqian Pajama Clothes-making Company and the China Worldbest Group Company, and are waiting to receive samples and final price quotes. Ms. Domenico said she was not sure of the location of Suqian City, which is in Jiangsu Province. 'I feel like I'm supposed to know that,' she said, laughing. Once the business is up and running, they hope to hire a freight management company in Richmond, Calif., to receive the shipments, check the merchandise's quality, then send it along to customers. Their business is a virtual one; they have no manufacturing, storefront or warehouse. They plan to market the clothes on the Internet and through boutique retailers. 'With the technology available today, we'll never touch the product,' Mr. Chigos said. Both, however, are concerned about the pitfalls of dealing with a far-flung manufacturer. In her youth, Ms. Domenico did volunteer work for Amnesty International, and she worries that the couple may wind up working with a sweatshop. 'It's my biggest fear,' she said. 'People in the U.S. won't work for 50 cents an hour,' Mr. Chigos countered. 'We also recognize that there are people around the world who are happy to work for 50 cents.'

Subject: Bearishness and Simple Investing From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 10:17:20 (EDT) Email Address: Not Provided Message: The problem with bears, even when they happen to be correct, is they spread fear but never allow for a reasonable recourse. Since American markets have been bullish for most of the last century, bears have generally been wrong. Now being wrong is fine, but not offering sensible investment ideas becomes simply fear-mongering. There may be a bubble in housing, even a global bubble, and the deflating of any such bubble will be a distinct problem for housing is such a prime creator of economic demand, but there have to be simple ways for investors to take account of such possible bubbles and still invest responsibility without having to place blind faith in exotic market hedges which few can afford.

Subject: Female Belted Kingfisher From: Terri To: All Date Posted: Tues, Jun 21, 2005 at 05:48:23 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3661&u=87|267|... Female Belted Kingfisher New York City--Central Park, The Pool.

Subject: Interest Rates Up or Down From: Terri To: All Date Posted: Mon, Jun 20, 2005 at 18:42:58 (EDT) Email Address: Not Provided Message: There will be in time a slowdown in housing demand, how serious a slowdown I can not tell, but I find no reason to believe even a housing caused recession will change the principles of economics. A marked decline in economic growth will result in a decline in long term interest rates no matter what the Federal Reserve does, but the Fed would respond by lowering short term rates. There is ample room for short term rates to be lowered, and there will soon be more room, so the Fed is not without recourse to stimulating the economy. Suppose however as housing demand slows, there is a fall in international demand for dollar securities. Well, the dollar would fall but what about long term interest rates? The question becomes, will a fall in international demand for American securities raise interest rates while the economy is slowing so forcing up long term interest rates? The answer, I argue, is no. Long term interest rates are driven by expectations of inflation, and as such expectations are lower there will be significant demand for American bonds if only from domestic sources. A slowing of domestic growth or recession would then add to the attractiveness of bonds.

Subject: Humans confound economists From: Pete Weis To: All Date Posted: Mon, Jun 20, 2005 at 14:03:30 (EDT) Email Address: Not Provided Message: From the Independent Online: Stephen King: Regime change happens in economies, too - and it's human beings who are to blame 20 June 2005 Every so often, economists and policy makers think they've found out how to conduct macroeconomic policy correctly. At the end of the 19th century, the Gold Standard proved to be rather popular. There are those who still dream of its return. But there are also those that believe that the reintroduction of the Gold Standard after the First World War was an unmitigated disaster. The UK's decision to return to the Standard in 1925 certainly didn't help Winston Churchill's reputation. And America's decision to loosen monetary policy at the time in order to prevent the dollar and gold from rising against a profoundly weak sterling helped fuel the run up in stock prices that gave way to the Wall Street Crash. In the 1950s and 1960s, the Gold Standard was re-born in a different guise: the Bretton Woods exchange rate system. This time, the dollar was the anchor of the system although, because the dollar was still convertible into gold at a fixed rate, the Gold Standard philosophy was still, implicitly, being embraced. But policy makers in the 1950s and 1960s thought they had learnt from the mistakes of earlier decades. They had their new tools of Keynesian demand management - particularly fiscal policy - that could be used to regulate the domestic economic cycle and ensure that unemployment would never again get out of hand. And, unlike the Gold Standard, the Bretton Woods system was designed to allow the occasional realignment of exchange rates. In reality, though, the system was, to say the least, a little inflexible. Countries didn't mind the occasional revaluation - that was a sign of virility - but they certainly didn't like the idea of a sudden devaluation. Devaluation was an indignity. It indicated a lack of economic potency that doubtless brought back to leaders' minds their first few humiliating fumblings with the opposite sex when, even if the mind was willing, the body was limply less than able. As a result, currency adjustments didn't happen very often and countries simply protected their economic interests through the copious use of capital controls. Eventually, balance of payments disequilibria blew the system apart, leaving countries cast adrift without any kind of nominal anchor against inflation. And so monetarism was born. As Bretton Woods reached its natural, if somewhat painful, conclusion, policy makers were already searching for other options. The proponents of monetarism launched a blistering attack on the conventional wisdoms that grew up in the 1950s and 1960s. Using the 'fooling all the people all of the time' adage, they argued that policy makers simply couldn't lift output permanently above its long-term, supply-constrained, ceiling and that attempts to do so would lead only to higher inflation. It didn't take long before the monetarists ended up with the strangest of bedfellows. As the late Lord Callaghan famously said in 1976: 'We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy.' Of course, not everyone was seduced by monetarism - at least, not directly. Continental Europe preferred to construct a European version of Bretton Woods, with the Exchange Rate Mechanism being formed in 1979 following the earlier failure of the European Monetary Snake. Nevertheless, European countries eventually found themselves pursuing a 'monetarism by proxy' policy via the Bundesbank, which emerged as the natural forerunner of the European Central Bank. Monetarism itself eventually proved to be a disappointment. No one quite knew how to control the money supply and, even if they did, any confidence to be had in a predictable relationship between money supply and, say, nominal GDP was swiftly undermined. The truth is that monetarism over-simplified the ways in which an economy operated and, by doing so, allowed its own credibility slowly to be diminished. Yet the legacy of monetarism is still with us. And so, for that matter, are the legacies of the Gold Standard and of Bretton Woods. All three approaches attempt to stabilise some sort of nominal objective - either the domestic rate of inflation or, via the exchange rate, the external rate of inflation. And most countries these days run their macroeconomic policies with either the internal or external price objective in mind. If it's the Bank of England or the European Central Bank, it's explicitly the internal objective, through the use of an inflation target. If it's the Federal Reserve, it's implicitly the internal objective: there's no specific inflation target but the control of inflation takes priority over the Federal Reserve's other objectives. And if it's the Chinese or other countries within a modern day dollar bloc, it's the external objective that matters. The lesson from these earlier periods, though, is that regimes designed to achieve economic stability don't last. But why do they go wrong? Too often, it's because we refuse to behave in the manner the regime requires of us. In the 1920s, countries simply didn't - or couldn't - accept the rigours associated with a fixed currency: in the UK, the 1926 General Strike was a sign that the population simply didn't support the regime. In the 1960s, the full employment 'guarantee' led to a belief that wages and prices could be set at any level: the government could always hit its full employment target through the use of fiscal policy or, if push came to shove, devaluation. And, in the 1980s, the belief that monetarism worked led, in some cases, to a serious mis-reading of economic conditions: the most obvious example was Nigel Lawson's failure to spot the overheating of the UK economy at a time when inflation itself was, by earlier standards, relatively low. So if economic regimes fail, what are the risks associated with today's arrangements? If there's a problem with inflation targeting, it lies with the inevitable loss of focus on the balance sheet positions of different sectors within an economy. I've often argued that the need to hit a precise inflation target will sometimes lead a central bank to cut interest rates to levels which encourage excessive borrowing in certain parts of an economy. In recent years, for example, unusually high levels of corporate saving both in the UK and the US (see charts) have led to excessive consumer borrowing, encouraged by low interest rates and rapid house price gains. Without that consumer borrowing, inflation might have been too low. This approach leads to inconsistencies that simply cannot be sustained. Consumers borrow not only because interest rates are low but also because the anticipated gains on their main asset - their house - are high. If either of these changes, the willingness to borrow may be sharply curtailed. In the process, the economy as a whole simply runs out of puff. And, by doing so, once again inflation is in danger of being too low rather than too high. I'm not sure what will replace inflation targeting. History, though, suggests that the search for successful macroeconomic regimes is seemingly endless. All regimes break down because we collectively seem to spot their weaknesses and behave in ways that undermine the ambitions of our policymakers. In the 1920s, it was resistance to real exchange rate adjustment. In the 1960s and 1970s, it was a willingness to negotiate silly wage increases. And, at the turn of the century, it may be our willingness to take on absurd amounts of debt, in the false belief that inflation targeting regimes have made our assets - dare I say it - as safe as houses. Stephen King is managing director of economics at HSBC

Subject: Projecting Projecting From: Terri To: All Date Posted: Mon, Jun 20, 2005 at 11:23:20 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/19/business/yourmoney/19stra.html Well, if the difficulty is projecting for 5 years then the difficulty can be readily simplified. When information technology stocks were doubling in value in 1999, while medical technology stocks were flat though valuations on health care issues were far more favorable, there was a simple choice for an investor who had chosen not to try to freely trade markets. The problem can be simplified even further. Why decide whether Pfizer or Roche is a preferred technology holding when a health care index can be bought or the Vanguard Health Care Fund? So too, I do not find energy or public utility issues to have been difficult choices in 2000. Nor do I find even long term bonds to have been a difficult choice in 2000. Always the matter of choice can be simplified by indexing.

Subject: Flawed Implants: Disclosure and Delay From: Emma To: All Date Posted: Mon, Jun 20, 2005 at 10:01:16 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/14/business/14device.html?fta=y&pagewanted=all Flawed Implants: Disclosure and Delay By BARRY MEIER Even as sales of pacemakers and other widely used heart devices soar, exceeding $8 billion a year, uniform standards do not exist among manufacturers about when, or even if, to notify doctors and patients when the devices have flaws. The recent death of a 21-year-old student with an implanted defibrillator made by the Guidant Corporation has thrown a spotlight on the issue, increasing calls that device makers adopt such guidelines. Guidant did not tell doctors for three years that the device might short-circuit when needed. This year, Medtronic alerted doctors about a problem in a defibrillator. Such devices shock a chaotically beating heart back into normal rhythm. Cardiologists and other experts said the episodes underscored a broader issue - that each maker of critical heart devices decides on its own whether to disclose a product flaw. Along with patient safety issues, manufacturers may also consider potential loss of business to competitors and legal liability. 'Having this being an entirely in-house decision by a manufacturer is not the way to go,' said Dr. Anne B. Curtis, the president of the Heart Rhythm Society, a group that represents doctors who treat heart problems. Dr. Curtis, who is the chief of the division of cardiology at the University of South Florida, said the organization was likely to set up a task force soon to try to develop industrywide guidelines on physician alerts. An executive from Medtronic acknowledged that each manufacturer decided when to publicize a problem. 'You have to make judgment calls, and there is no hard-and-fast rule,' said Dr. Susan Alpert, the chief quality and regulatory officer at Medtronic, which is based in Minneapolis. 'Different companies might come out differently.' Several medical experts said it was difficult to monitor how heart devices performed because the Food and Drug Administration, which regulates such products, does not adequately collect data about them after they are approved. In addition, doctors and hospitals, for a variety of reasons, do not notify the F.D.A. about all device-related problems. A similar push a decade ago by physicians for notification standards failed because of a lack of industry and government support, said one doctor involved. But since then, both the use of implanted heart devices and public financing of them have rapidly expanded. Last year, combined sales of pacemakers and defibrillators exceeded $8.3 billion, according to one estimate. In January, Medicare expanded by one-third the number of people who could qualify for defibrillator implants, extending coverage to about 500,000 patients. Under F.D.A. rules, producers of medical devices must report product problems and inform the agency when they decide to recall a product or alert physicians about an issue. But the agency gives manufacturers discretion over how to judge the seriousness of a problem. Different companies - as the recent incidents involving Guidant and Medtronic suggest - may come to different conclusions about what needs to be disclosed to doctors. Guidant, which is based in Indianapolis, has come under fire from physicians and others for its decision not to tell doctors that one of its defibrillator models had a design flaw that made it prone to short-circuiting. The company said it had made all the required reports to the F.D.A.; the agency is now reviewing how Guidant handled the episode. Guidant discovered the design flaw in early 2002 after it received two reports of failures and moved to fix it in new copies of the device, the Ventak Prizm 2 Model 1861. The company has said it received 25 reports of short-circuiting in 37,000 units with the older design. But even after Guidant executives learned in March about another case, one involving the death of the 21-year-old college student in whom the device failed, they did not inform doctors. Executives of Guidant, which agreed in December to be purchased by Johnson & Johnson for $25.4 billion, have defended their actions, saying that the model is highly reliable and that replacing it would unnecessarily expose patients to surgical risks. Two of the company's outside medical consultants said in recent interviews that Guidant executives did not alert them about the problem until the executives realized it was going to be publicized. One of the consultants, Dr. Eric N. Prystowsky of St. Vincent Hospital in Indianapolis, said that while the risks posed by the Guidant unit are low, they represent the type of risk that doctors need to know about. And while he said he understood a company's concerns about causing unnecessary operations, a decision about surgery was really one to be made by a doctor and a patient, not a manufacturer. 'You are not my father,' he said. 'You are not my mother. You are just a company selling products. You have to let me make those decisions.' In the case of Medtronic, it discovered in early 2003 through internal testing that the type of battery used to power a popular defibrillator model might deplete faster than the five to six years it was expected to last. The company changed the battery's design and began producing new units with it, said Rob Clark, a Medtronic spokesman. By then, Medtronic had produced some 87,000 units, known as the Marquis, with the old battery. In April 2004 the first depleted one came back to the company, Mr. Clark said. By last January, eight other devices were returned. Additional testing showed that the problem would accelerate during the second half of the battery's life and affect 0.2 percent to 1.5 percent of the units. In February, Medtronic both contacted the F.D.A. and issued an alert to physicians. An F.D.A. filing in March reported that a hospital notified Medtronic about a patient death involving the device's possible failure. Mr. Clark, the company spokesman, said that Medtronic was aware of the report but stood by its position that the battery problem had not caused any patient harm. He declined to elaborate. Whatever the case, several doctors said in recent interviews that they were pleased with how Medtronic handled the issue. Doctors and others first called for guidelines on physician alerts in the mid-1990's, after an episode involving a pacemaker wire or 'lead' made by a company called Telectronics Pacing Systems. The lead is the part of a pacemaker that is threaded into the heart and carries the electrical signal that regulates its beating. In some patients, however, the Telectronic lead, because of its shape, ended up puncturing the heart. Several patients died and dozens were seriously injured. But several patients also died during replacement surgery in the rush to remove the devices after the problem became known. In the wake of the problem, a conference of doctors, hospital executives and others held in 1995 in Canada recommended the creation of a national advisory board of medical experts for manufacturers to consult about which problems to publicize. Under the proposal, the group would also help doctors better determine which patients were most at risk, thus limiting the number of unnecessary surgeries, said Dr. Bernard S. Goldman, a professor of surgery at Sunnybrook and Women's College Health Sciences Center in Toronto, who was involved in the effort. The conference also called for increased postmarket studies of heart devices. 'We suggested that there be a national advisory committee to whom manufacturers could go to get the best possible advice instead of hiding behind their statistics, their lawyers and their shareholders,' Dr. Goldman said. Although companies and regulators were initially enthusiastic about the idea, that interest soon faded, he added. For his part, Dr. Prystowsky, the Guidant consultant, said he believed that any voluntary new initiatives on guidelines would work only if companies understood that a failure to play by them carried a price. 'If this is going to have any effect, it has to have some teeth in it,' Dr. Prystowsky said. 'It is not like they are breaking the law. But they have to understand that you will lose the trust of your customers and basically lose your customer.'

Subject: Defective Heart Devices From: Emma To: All Date Posted: Mon, Jun 20, 2005 at 09:32:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/20/business/20device.html?pagewanted=all Defective Heart Devices Force Some Scary Medical Decisions By BARRY MEIER For Pam Alexson, the decision whether to have a potentially defective heart device removed and replaced was easy. Ms. Alexson, a former nurse in Rehoboth, Mass., who expects to undergo surgery tomorrow, has the same Guidant Corporation defibrillator that failed in a college student who died in March, as well as the same type of genetic heart disease that killed him. But another heart patient with that Guidant unit, Douglas Parsons, said he was holding back, not because he did not want the device out, but because his history of infection pointed to a bigger risk from surgery . 'I feel like I'm stuck between a rock and a hard spot,' said Mr. Parsons, a 62-year-old retired high school teacher in Oneonta, N.Y. 'I would like to have it removed but I can't take that risk.' In coming weeks, thousands of patients and their doctors will be weighing competing risks as a result of Guidant's decision last week, after urging by the Food and Drug Administration, to recall about 29,000 defibrillators that can potentially short-circuit when they are needed. Defibrillators emit an electrical jolt to restore rhythm to a chaotically beating heart. Each assessment on surgery, doctors say, will be a personal one, based on a patient's age and health, how dependent the patient is on the device and the patient's attitudes toward risk. Already, however, some patients like Ms. Alexson and Mr. Parsons are sharing a similar emotion: a sense of betrayal that Guidant did not disclose the problem earlier so that some people might have been spared the tough choice they now face. Guidant did not tell doctors for over three years about the electrical flaw in one model, the Ventak Prizm 2 DR Model 1861, that it has recalled. It also kept selling older versions of it after developing a version not prone to short-circuiting. The problems may soon take another toll on Guidant. Johnson & Johnson, which agreed in December to buy Guidant for $25.4 billion, is trying to determine, among other things, whether the issue could materially hurt Guidant's business, said several people involved in the acquisition talks. Under the terms of the deal, such a determination could allow Johnson & Johnson to pay less for Guidant or walk away, although these people said that scuttling the deal was a far less likely outcome. A spokesman for Johnson & Johnson declined to comment yesterday. Phone calls and e-mail messages to Guidant were not returned yesterday. On Friday, Guidant announced that it was recalling the Prizm 2 DR and two other models, the Contak Renewal and the Contak Renewal 2, because they could also potentially short-circuit. While problems with the Prizm 2 DR became known last month, the announcement about the Renewal models was the first indication that they had also repeatedly short-circuited. Several people with Guidant units said that when they heard about the troubled implants they reached into their wallets and pulled out a card that identifies the make and model of the device they carry inside. For those who found a match, the feeling was quick and sinking. 'My first reaction was a little bit of panic,' Mr. Parsons said. The surgery to replace a defibrillator, which is the size of a pager and is implanted under the skin of the upper chest near the shoulder, takes an hour, and many people go home immediately afterwards. Full recovery takes about 7 to 10 days. But like any surgical procedure, the surgery carries a risk of infection. About 17,000 people, 13,900 of them in the United States, are still implanted with the affected Prizm 2 DR devices, which are those made before April 2002, when Guidant fixed the problem. Another 11,900 people, 6,700 of them in this country, still have the affected Renewal devices, made before last August. The Renewal devices - more complex defibrillators intended for patients with severe heart failure - have pacemaker functions for both sides of the heart. It is not uncommon for medical devices already implanted in people - products like artificial hips, breast implants and pacemakers - to be recalled. Such recalls reflect an acknowledgement by a company and the F.D.A. that a device poses either a new type of risk or an increased level of a known one. At times, a company might issue a recommendation about what to do, but ultimately patients and doctors must decide whether or not to take them out. Doctors hardly make uniform decisions about whether to take out a problem heart device, said Dr. William H. Maisel, a cardiologist at Brigham and Women's Hospital in Boston who has studied how physicians react to recalls. And many doctors are just now sorting out what to do regarding the Guidant units. Dr. Jeffrey Rottman, a professor of cardiology at Vanderbilt University in Nashville, said that one important factor in the replacement decision is whether a patient has already experienced cardiac arrest, as opposed to receiving a defibrillator as a precautionary measure. Along with a patient's age and medical history, another important issue is how each patient views risk. 'Some people think they are going to win the lottery, and some people think they are going to be struck by lightning,' he said. Nancy Hanner, a retired real estate agent who lives in Skaneateles, N.Y., is a lottery type. Ms. Hanner, who received a Prizm 2 DR in 2001 as a precautionary measure, says she never worries about her health and does not feel like taking time off to have the unit replaced until she has to. Defibrillators need to be replaced every five or six years because their batteries drain. Her heart problem has also never caused the defibrillator to fire. 'I've just joined a golf and tennis club, and I don't want to give it up' to have an operation, she said. Ms. Alexson, the former nurse, faces a far different situation. She has a genetic heart disease called hypertrophic cardiomyopathy that can cause sudden cardiac arrest, and she received her defibrillator in 2001 to protect her against the condition. But reports about the March death of a 21-year-old college student, Joshua Oukrop, whose Prizm 2 DR failed, have been enough to destroy her trust both in the device and in Guidant, she said. While Guidant has offered patients a free replacement unit, Ms. Alexson plans to get one made by a competitor, Medtronic Inc., and battle out the financial issues later. 'I can't trust these people who sit around in their offices and decide whether I'm going to live or die,' she said In recent days, people like Ms. Alexson with the affected Guidant devices have been scrambling to get information about them from the company and from patient advocacy groups and Web sites that deal with defibrillator-related issues. (Some patients interviewed for this article were contacted through such forums.) Mr. Parsons said that after receiving a defibrillator several years ago, he developed a staph infection on the device and its electrical leads, and as a result he had to undergo emergency open-heart surgery. Since hearing about the Prizm 2 DR problem, he has been discussing the pros and cons of replacing it with his doctor. They have decided that given the last infection, the surgical risks outweigh those posed by the device. But Mr. Parsons has another problem. Along with the defibrillator's shock, he is also dependent on its pacemaker function. And if that fails, he worries that he might not get to a hospital in time for treatment. 'If it does short-circuit, I am pacemaker-dependent, so it would put me in grave distress,' he said.

Subject: Great Egret in Flight From: Terri To: All Date Posted: Mon, Jun 20, 2005 at 06:04:34 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3191&exhibition=3&u=433|11|... Great Egret in Flight New York City Central Park-Turtle Pond.

Subject: What if There is a Housing Bubble? From: Terri To: All Date Posted: Mon, Jun 20, 2005 at 05:56:09 (EDT) Email Address: Not Provided Message: There have been steady and growing series of articles and discussions on a supposed American and global housing bubble. Robert Shiller is interviewed and referred to continually, and Shiller though usually bearish on investment is always worth listening to and reading. Nonetheless we have to invest for a secure future, and bearish though we may be we have to find investments that do not involve timing markets but that will carry us through a continuation of the boom in housing or a end of the boom. I do not know why even a bubble in housing should make us shy from well valued stocks and bond funds.

Subject: Re: What if There is a Housing Bubble? From: Pete Weis To: Terri Date Posted: Mon, Jun 20, 2005 at 11:44:00 (EDT) Email Address: Not Provided Message: Here's an article by those alarmist crazies at THE ECONOMIST: After the fall Jun 16th 2005 From The Economist print edition Soaring house prices have given a huge boost to the world economy. What happens when they drop? PERHAPS the best evidence that America's house prices have reached dangerous levels is the fact that house-buying mania has been plastered on the front of virtually every American newspaper and magazine over the past month. Such bubble-talk hardly comes as a surprise to our readers. We have been warning for some time that the price of housing was rising at an alarming rate all around the globe, including in America. Now that others have noticed as well, the day of reckoning is closer at hand. It is not going to be pretty. How the current housing boom ends could decide the course of the entire world economy over the next few years. This boom is unprecedented in terms of both the number of countries involved and the record size of house-price gains. Measured by the increase in asset values over the past five years, the global housing boom is the biggest financial bubble in history (see article). The bigger the boom, the bigger the eventual bust. Throughout history, financial bubbles—whether in houses, equities or tulip bulbs—have continued to inflate for longer than rational folk believed possible. In many countries around the globe, house prices are already at record levels in relation to rents and incomes. But, as demonstrated by dotcom shares at the end of the 1990s, some prices could yet rise even higher. It is impossible to predict when prices will turn. Yet turn they will. Prices are already sliding in Australia and Britain. America's housing market may be a year or so behind. Many people protest that house prices are less vulnerable to a meltdown. Houses, they argue, are not paper wealth like shares; you can live in them. Houses cannot be sold as quickly as shares, making a price crash less likely. It is true that house prices do not plummet like a brick. They tend to drift downwards, more like a brick with a parachute attached. But when they land, it still hurts. And there is a troubling similarity between the house-price boom and the dotcom bubble: investors have been buying houses even though rents will not cover their interest payments, purely in the expectation of large capital gains—just as investors bought shares in profitless firms in the late 1990s, simply because prices were rising. Homes as cash machines One other big difference between houses and shares is more cause for concern than comfort: people are much more likely to borrow to buy a house than to buy shares. In most countries, the recent surge in house prices has gone hand-in-hand with a much larger jump in household debt than in previous booms. Not only are new buyers taking out bigger mortgages, but existing owners have increased their mortgages to turn capital gains into cash which they can spend. As a result of such borrowing, housing booms tend to be more dangerous than stockmarket bubbles, and are often followed by periods of prolonged economic weakness. A study by the IMF found that output losses after house-price busts in rich countries have, on average, been twice as large as those after stockmarket crashes, and usually result in a recession. The economic damage this time could be worse than in the past because house prices are more likely to fall in nominal, not just real terms. Not only do houses in many countries look more overvalued than at previous peaks, but with inflation so low, prices would have to stay flat for at least a decade to bring real prices back to long-run average values. Most important of all, in many countries this house-price boom has been driven far more by investors than in the past, and if prices start to dip, they are more likely to sell than owner-occupiers. In America this could mean the first fall in average house prices since the Great Depression. Owners who have been using their home like an ATM to extract cash, or who were relying on rising house prices to provide them with a comfortable pension, will suddenly realise that they need to start saving the old-fashioned way—by spending less of their income. The Fed frets The lesson from recent experience in Australia, Britain and the Netherlands is that, contrary to conventional wisdom, a big rise in interest rates is not necessary to make house prices falter. This is bad news for America. Even if prices there initially just flatten rather than fall, this will hurt consumer spending as the impulse to borrow against capital gains disappears. It is by encouraging such borrowing that rising house prices have given a bigger boost to America's economy than elsewhere. Two-fifths of all American jobs created since 2001 have been in housing-related sectors such as construction, real-estate lending and broking. If house prices actually fall, this boost will turn into a substantial drag. No wonder that the Federal Reserve is starting, belatedly, to fret about house prices. By holding interest rates low for so long after equities crashed, the Fed helped to inflate house prices. This prevented a deep recession, but it may have merely delayed the needed economic adjustments. Ideally, the Fed should have tried to cool the housing boom by raising interest rates sooner and by giving clear verbal warnings to buyers, as Britain's and Australia's central banks have done. Even now some stern words from Alan Greenspan, the Fed's chairman, could restrain more house-price inflation. Of course, by the time American prices begin to fall, probably sometime next year, they will not be Mr Greenspan's headache. He will have retired and someone else will be in his job. If weaker house prices push the economy towards recession, the awkward truth is that America's policymakers will have much less room to manoeuvre than they did after the stockmarket bubble burst. Short-term interest rates of only 3% leave less scope for cuts. In 2000, America had a budget surplus. Today it has a large deficit, ruling out big tax cuts. The whole world economy is at risk. The IMF has warned that, just as the upswing in house prices has been a global phenomenon, so any downturn is likely to be synchronised, and thus the effects of it will be shared widely. The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion.

Subject: public education From: jack To: All Date Posted: Mon, Jun 20, 2005 at 00:11:19 (EDT) Email Address: jjlwmd@yahoo.com Message: I have a request for information for an upcoming essay I'm writing for a philosophy class. I am looking for sources that address the reasons and justifications for social financing of public education. Specifically I'm looking for anything that deals with the characterization of public education as a form of investment, or forced investment through taxation, in human capital. Any book or article, or both, will do. Thanks for any help anyone can give me, Jack

Subject: Portfolios and a Housing Slowdown From: Terri To: All Date Posted: Sun, Jun 19, 2005 at 18:19:46 (EDT) Email Address: Not Provided Message: Housing has been the main growth driver of the economy from 2002. Then, asking what effect a slowing of housing growth might have on investments is obviously in order. Would a slowing in housing adversely effect stocks or bonds? Since economic growth has been so dependent on housing, we would expect a slowing in demand for housing to slow the economy significantly. The Federal Reserve would have to counter the demand decline to prevent a likely recession. This would likely mean a sharp decline in cyclical stocks and a moderate decline in defensive stocks from consumer staples to utilities, as in a typical economic slowing. Since the Fed would reverse policy and begin to lower short term interest rates and since a slowing economy would mean less inflation pressure, investment-grade bond funds would be fine protective investments. There is no reason a diversified portfolio of conservative stocks and bond funds would not hold through a housing slowdown.

Subject: Re: Portfolios and a Housing Slowdown From: Pete Weis To: Terri Date Posted: Mon, Jun 20, 2005 at 11:55:13 (EDT) Email Address: Not Provided Message: If you are talking housing decline bringing about a recession, you have to think about how this would affect the dollar. Remember we have been borrowing heavily to deal with our large, prolonged 'twin' deficits. This has flooded the world with dollars without an equal runnup in US production. A lot of the dollars have been cycled into the US housing market. Any sought of housing bust and global economic slowdown would reduce the demand for dollar denominated assets and or products. This would stagnate the flow of dollars throughout the global economy. I'm not an economist, but it seems to me that a lot of dollars 'sitting around' doing nothing is not a good thing for the dollar. So in the first place, there isn't a lot of room to lower rates from their present level and any potential collapsing of the dollar (as Paul Volker warns) would force rates higher no matter what the Fed wished to do. This of course would sink the housing market more deeply and so on.... If we have a record level of debt built up, and poor job and wage growth, and what job growth we do have is heavily related to the housing boom, then there is nothing the Fed can do to replace it at this point.

Subject: Looking Long Term? Get Your Glasses From: Emma To: All Date Posted: Sun, Jun 19, 2005 at 15:22:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/19/business/yourmoney/19stra.html Looking Long Term? Get Your Glasses By MARK HULBERT MANY investors couldn't care less about the long term and focus instead on what a stock is likely to do over the next quarter - or just the next week. But even when they do try to consider factors that will affect a company's long-term profitability, they still don't see very far. In fact, a recent academic study has found that few investors can focus on events more than five years ahead, even when those events are very predictable and almost certainly will have a big impact on a company's earnings. The study, 'Attention, Demographics and the Stock Market,' was conducted by Stefano DellaVigna, an assistant professor of economics at the University of California at Berkeley, and Joshua M. Pollet, an assistant professor of finance at the University of Illinois at Urbana-Champaign. A copy is at www.nber.org/papers/w11211. The study is attracting much interest because researchers for many years couldn't figure out how to disentangle the attention span of investors from other factors that could also explain their behaviors. How, for example, to interpret why investors are unimpressed with a company's announcement of a new research and development effort that it says will lead to higher profits in 10 years? It may be an indication that investors' horizons do not extend that far. But, just as easily, it may be evidence that investors doubt that the research will lead to higher profits. Professor DellaVigna and Professor Pollet solved this problem by focusing on industries whose profitability depends heavily on the age distribution of the population. Bicycle makers are a good example. Analyzing historical data from the Bureau of Labor Statistics, the professors found that people in their late 30's or early 40's bought bicycles at nearly twice the rate of the overall population, in large part because they were buying them for their children. By contrast, consumers under 27 or over 55 bought bicycles at rates far below the national average. The professors focused on two dozen age-sensitive industries - from toy and beer makers to nursing home operators and funeral homes - from January 1935 through December 2003. For each industry, they built a model of the year-by-year changes in demand caused by shifts in the age distribution of the population. On average, they found that when their model predicted a one percentage point increase in demand for an industry's goods or services, its profits that year were 5 to 10 percent higher. If investors conformed to the completely rational, fully informed ideal described in an economics textbook, they would immediately take into account the long-term effects of a changing population. The stock prices of age-sensitive companies would thus be bid up or down soon after major changes in the country's birth rate, for example, even if the changes' effect on companies' earnings was not felt for several decades. The professors found, however, that virtually no investors conformed to this ideal. Instead, the study found that the price of a stock began to change only about five years before shifts in age distribution started to have big effects on that company's earnings. In other words, most investors tend to ignore events that are scheduled to happen more than five years into the future. They are like drivers who ignore warning signs about slippery pavement just around the bend, and instead wait until nearly the last second to apply the brakes. Finance theorists may object to the professors' conclusion on the grounds that competition should eliminate the greater profitability of age-sensitive companies. In the bicycle industry, for example, there were many years after the end of the baby boom when new companies could have joined the fray, catering to the increased demand from middle-age baby boomers. Presumably, that new competition would take away some or all of the extra profit that existing bicycle makers would have enjoyed otherwise. But over the 68 years studied, competition did not eliminate the extra profitability in age-sensitive industries. One reason, the professors suspect, is the entry barriers to at least some of them. Pointing to the beer industry, they said that despite the opening of many microbreweries in recent years, advertising costs have made it very difficult to compete nationally with the largest companies. The professors also said that venture capitalists and corporate executives themselves might suffer from short attention spans and not anticipate the profit opportunities of more than a few years into the future. The findings may seem to contradict conclusions of other research into demographics and the stock market. As reported in this column, James M. Poterba, an economics professor at the Massachusetts Institute of Technology, recently found only modest statistical support at best for the notion that the aging of baby boomers would cause overall equity returns to be lower over the next several decades. But Professor Poterba sees no contradiction between his research and this new study, because it focuses only on specific age-sensitive industries, not on the stock market as a whole. The new research points to a potentially profitable strategy: invest in the stocks of companies that, in six or seven years, are projected to be the biggest beneficiaries of demographic trends. If the future conforms to the past, you will be able to sell those stocks profitably once more myopic investors discover the trends for themselves.

Subject: A Romp Through Fanciful Theories From: Emma To: All Date Posted: Sun, Jun 19, 2005 at 14:48:28 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/19/business/yourmoney/19shelf.html?pagewanted=all A Romp Through Theories More Fanciful Than Freaky By ROGER LOWENSTEIN THIS book has no unifying theme.' Thus do Steven D. Levitt and Stephen J. Dubner, authors of 'Freakonomics,' the talk-show host's dream best seller, appear to damn their own creation. Their modesty may be a trifle disingenuous. It would be more accurate to say that the book has no unifying subject. Indeed, their clever juxtapositions, the way they consistently mine illuminating truths by contrasting seemingly unrelated topics, is what makes 'Freakonomics' (William Morrow) a romp of a read. The authors show the dangers in the crack trade by pointing out that the fatality rate for street dealers is greater than that of inmates on death row in Texas; they demonstrate the power of information, and the way the Internet has eroded the pricing power of automobile dealers, by recounting how a quite unrelated network (the Ku Klux Klan) was done in by an infiltrator who broadcast the group's secrets. The book is only barely about economics, freakish or otherwise, and even when the authors venture into a standard tutorial, such as one about how supply and demand influence wages, they do so with delightful and unexpected curveballs. Thus, they observe, 'The typical prostitute earns more than the typical architect.' This is less surprising than it might appear. Working conditions limit the supply of prostitutes and, as for demand, the authors mischievously observe that 'an architect is more likely to hire a prostitute than vice versa.' Their protestation notwithstanding, 'Freakonomics' does have a unifying theme, which is the power of incentives to explain, and perhaps to predict, behavior. The authors clearly tilt against the one-dimensional theory, so dear to orthodox economists, that people are always motivated solely by maximizing their wealth. Rather, they side with the up-and-coming behavioralist school, which sees people's motivations as more nuanced and polydimensional. But you won't find any academic-sounding discourses here. Thus, the authors relate the experience of day-care centers in Haifa, Israel, that tried to discourage parents from picking up their children late by charging offenders the equivalent of a $3 penalty. The response was prompt: lateness increased! Apparently, parents felt less guilty if they were paying for their tardiness. Similarly, the example of a bagel distributor who tried to do business on the honor system shows that while greed surely motivates most people, it is by no means the only motivator. The book has an even more powerful leitmotif: to understand how incentives work, one has to distinguish between cause and effect. This requires more than the economics profession's favorite props - spreadsheets, computers and data. It requires someone to think, intelligently, about what the data are saying. The authors note, for instance, that the fact that cities with high murder rates have more police officers does not mean that the officers are causing murders. This prepares us for other, less intuitive examples. For instance, the presence of books in a household seems to be an effect of educated and motivated parents, and thus a good predictor of how their children will perform in school. The presence of books is not, however, a cause; therefore (alas), requiring children to read will not necessarily enhance their test scores. The authors are hard on experts in virtually every field - sociology, criminology, political analysis - for misreading data. They are equally tough on news-media aye-sayers for parroting the conventional wisdom so glibly. While all the world was congratulating Rudolph W. Giuliani for reducing violent crime, in particular by cracking down on turnstile jumpers, the authors demonstrate that Hizzoner probably had little to do with it. (Crime rates in New York and other cities had begun falling before he was elected mayor.) The experts simply missed a deeper, longer-running cause: the legalization of abortion in 1973, which led to fewer unwanted babies and, by the early 1990's, to fewer career criminals. The authors' diverse opinions are, in general, well founded, but when they write, 'The typical parenting expert, like experts in other fields, is prone to sound exceedingly sure of himself,' they run the risk of sounding, well, exceedingly sure of themselves. They also tilt the scales by paying more attention to those who err than to those who get it right. (They emphasize the many wrongheaded explanations for the drop in crime but play down the fact that newspaper articles correctly cited the rise in incarceration rates as a major factor.) Moreover, one should not forget that many if not most pieces of conventional wisdom are apt to be true. Mr. Levitt and Mr. Dubner try to demolish the common perception that money leads to success in politics by arguing that, in fact, success attracts money, not vice versa. Their evidence is that when big-spending politicians run for re-election against repeat opponents, the results usually mirror those of the previous election, even when the winning candidate spends less or when the losing candidate spends more. This is cute to a fault. It overlooks the power of money to introduce a new politician (say, Jon Corzine) to the public in the first place - money that is no longer necessary when he runs for re-election. The authors' conclusion, that 'the amount of money spent by the candidates hardly matters at all,' violates the expert wisdom, but it also violates common sense. ONE other criticism relates to the awkward co-authorship of this book, which is subtitled 'A Rogue Economist Explores the Hidden Side of Everything.' As the subtitle suggests, the material for the book is largely the fruit of the 'rogue economist' (Mr. Levitt). Mr. Dubner, who had written two previous best sellers, entered the picture when he profiled Mr. Levitt in The New York Times Magazine. So far, so good. However, each chapter begins with an italicized excerpt from the article, so 'Freakonomics' periodically switches from the first-person plural to a third-person description, in general quite laudatory, of Mr. Levitt. Given that Mr. Levitt is a co-author, it is rather jarring to read, 'Levitt is considered a demigod, one of the most creative people in economics and maybe in all social science.' These quibbles aside, 'Freakonomics' is a splendid book, full of unlikely but arresting historical details that distinguish the authors from the run of pop social scientists. Readers may even find themselves developing a dose of skepticism about the world - no bad thing.

Subject: Living With Social Security From: Emma To: All Date Posted: Sun, Jun 19, 2005 at 14:47:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/19/national/19retire.html?pagewanted=all Living With Social Security: Small Dreams and Safety Nets By JOHN LELAND and JODI WILGOREN GRAND RAPIDS, Mich. - Barbara Amberg used her Social Security checks to fly to New York and see Christo's 'Gates' in Central Park. Shirley Malone lives on hers in subsidized public housing, sometimes washing her clothes in dish detergent to save money. For Joseph Cohen, a businessman who lost his business, Social Security is the safety net he never thought he would need. 'We're talking about a fortunate guy who had assets to put away,' Mr. Cohen said. 'But without Social Security I would be in bad shape.' As Congressional Republicans struggle to break a partisan impasse over President Bush's plan to reinvent Social Security and shore up its finances, 32 million older Americans are living the realities of the nation's biggest social program. Any changes will not affect people like Mrs. Amberg, Ms. Malone or Mr. Cohen, who are already collecting their benefits. But in the details of their daily lives, set out in in-depth interviews, these Grand Rapids residents afford a nuanced working model of Social Security - the bumps it cushions and those it does not, the dreams it fosters or leaves out of reach. For many, it is the bedrock of their existence. Americans appear to overestimate how much money they will be able to put aside for retirement. A New York Times/CBS News Poll found that only 20 percent of Americans who are not yet retired expect Social Security to be their major source of income when they stop working. But 39 percent of retirees in the same survey said that Social Security was their major source of income. Nearly all Americans over 65 collect benefits. The Social Security Administration says that about a third depend on Social Security for more than 90 percent of their income; another third get half to 90 percent of their money from the program; and a third rely on it for less than half. About 13 million would fall below the poverty line without Social Security unless they found other sources. Each of these situations plays out in Grand Rapids, a riverfront city of 197,000, where mansions built by the city's Dutch industrial elite gaze across town at concrete grids of public housing. In different neighborhoods, Social Security is an antipoverty program, a middle-class pension, a widow's survivor benefit, a disability check. For some, retirement has brought trophy homes and donations to charity; for others, bathroom sinks mended with adhesive tape and prescriptions unfilled for lack of money. Two brothers, the Wards, capture the range in benefits. Norman, a former heroin addict who shuffled among low-paying jobs, gets $502 a month, while Luther and his wife, who had steady careers at the local school district, collect a combined $2,400. Reeling from layoffs and plant closings and with a strong evangelical Christian strain, Grand Rapids is tossup political territory, and opinions are varied about Mr. Bush's efforts to give Americans more say in how some of their Social Security payments are invested - with the possibility of higher rewards and higher risk. Some people, like Bill Post, who helped invent the Pop-Tart and saved dutifully, support Mr. Bush's proposals to create individual investment accounts within Social Security. 'That's not a big risk,' Mr. Post said, 'that's a good opportunity.' But others, like James Townsend, who worked as a forklift operator, defend the traditional program. 'If they hadn't had Social Security, I wouldn't have saved that money,' he said. 'If I'd had extra money, I'd have spent it. I wouldn't have anything at all.' Here as elsewhere, Social Security has paid back some more generously than others. Created to protect the most vulnerable, it redistributes money from rich people to poor people, and from men to women, who often have no pension or assets. But as family structures have evolved from the one-earner nuclear model of the 1930's, the program has not always kept up. It rewards married couples more than single people, and couples with one stay-at-home spouse more than those in which both spouses worked. Groups with shorter life expectancies, like African-Americans, receive fewer benefits than those who live longer. Economists describe retirement as a three-legged stool supported by savings, pension and Social Security. But as companies have moved away from traditional pensions, and more Americans approach retirement with inadequate savings, many, like Mr. Townsend, are adding a fourth leg: work. Just four decades ago, 3 in 10 Americans over age 65 lived in poverty; after changes in Social Security benefits, that figure is now less than 1 in 10, below the poverty rate for the general population. The Urban Institute, a policy research group, recently found that working couples earning average incomes, if they retired today, would have benefits worth the equivalent of $439,000 in a 401(k) plan, more than double what they would have had in 1960, accounting for inflation. But retirees here do not measure their benefits by such calculations. Social Security is a car payment, cable television, a tithe, the freedom to volunteer in town, the dignity of a first-ever savings account. Budgeting Down to the Penny Nearly a third of Americans collecting Social Security benefits are single women. Many, like Shirley Malone, who is divorced and lives in subsidized housing behind a shopping center here, would fall into poverty without them. A thickset woman who moves painfully from a car accident two decades ago, Ms. Malone, 69, gets $700 a month from Social Security and a $212 stipend from a volunteer program for low-income seniors helping out in the schools. She has no savings. 'When I was young, I heard all these stories about the golden years,' she said. 'What happened to them?' Each month Ms. Malone gathers her bills before the Social Security check comes. She pays $40 a month for car insurance, more than $100 for prescription drugs, $52 for basic cable television, $122 for supplemental health insurance, plus her rent, which is set at 30 percent of her income. When she is finished writing checks, she said, there is no money left. She has had to put off dental work and getting hearing aids because she cannot afford them. 'I'm contemplating every month getting rid of my cable, but what else do I have?' she said. 'There's no such thing as splurging. I even don't give my grandchildren presents.' None of this was planned. 'My head was younger than the rest of me,' she said. 'I always thought I'd be able to work.' Ms. Malone married before she turned 18 and did not work until her children were teenagers. When her marriage ended, she said, she came away with nothing but the children. She had a high school education and no work experience. She took a job as a cashier at a car wash, on her feet sometimes for 10 hours at a time. When she retired at 62, after 11 years, she felt lost. 'The worst part was that I wasn't busy enough,' she said. 'All the sudden, here I am all alone. My grandkids were all grown up; they didn't need me anymore.' She added, 'I never thought I'd feel completely worthless.' Though she still has 'blue' days, working with children has made her feel useful. Social Security has been a bureaucratic maze as well as a lifeline for Ms. Malone. For years she did not realize that she could collect before turning 65, or that she could collect on her former husband's benefits. She deals with a variety of health problems, including chronic obstructive pulmonary disease and recurring pain throughout her body, for which she can tolerate only Tylenol, which gives her no relief. Osteoporosis, she said, is shrinking her to nothing. Still, she is happier now than she has been since her children were young. The income from Social Security and the volunteer stipend are secure, if small. She feels she has earned the benefit. 'We're not getting anything we didn't work for all our lives,' she said. 'There's a lot of us like this.' But mainly, it is the children of Knapp Charter Academy, the ones who call her Grandma Shirley, that fill her life. At her hallway desk, she smiled as she dispensed stickers or helped a student with her reading exercises. 'I didn't have a lot of money to start with, so I don't feel I came down,' Ms. Malone said. At the school, she wore a bulky sweatshirt promoting the volunteer program. She has resisted entreaties from her son to live with him. 'The check is a lifesaver,' she said of the stipend that allows her to live independently. But if the program lost financing and could not pay her, she said, she would work in the school anyway. 'They're my therapy,' she said. 'There's nothing like feeling useful.' A Full Schedule, in Comfort Barbara Amberg, who was born into privilege and married pedigree, represents the other edge of Social Security. Like 1 in 10 of the program's recipients, she relies on it for less than a fifth of her income, which is $50,000 to $100,000 a year. Hers is a retirement of comfort and choices without concern for costs, shown in scrapbooks that brim with the photographs and memorabilia of a busy traveler. There is her annual summer pilgrimage to the Stratford Shakespeare Festival in Canada, and yearly visits to her children in San Antonio, Pennsylvania and Los Angeles. Group trips to art museums in Chicago and Detroit. A four-day, $1,850 package tour to see 'The Gates' in February. All courtesy of Social Security. 'It pays for extras,' Mrs. Amberg, a widow who just turned 80, said of the $924 monthly check. 'Mostly I use it for trips.' If Mrs. Amberg does not exactly need Social Security, Social Security has always needed people like her. The original architects of the Depression-era program enlisted the crucial backing of the better-off by selling it as a broad-based insurance program rather than a poor people's stipend. Indeed, when asked about shrinking benefits to richer recipients to preserve payments to the poor, Mrs. Amberg was ambivalent, saying, 'Somehow I have that feeling you have put in your amount, you should get back what you are owed.' She is open to the idea of raising the $90,000 cap on income subject to payroll taxes, or the age of eligibility. But despite her own windfall from booming stocks like Wal-Mart and Eli Lilly, she remains skeptical of Mr. Bush's desire to divert some of Social Security to individual accounts. 'I know it has to be tinkered with, I just don't think you should change the concept,' she said. 'Who knows if they can get any extra money out of the market? I just think that's such a foolish idea.' Mrs. Amberg, who had a $7-an-hour part-time job at the Pooh's Corner children's bookstore for 15 years, has always used dividends from her family trust funds to pay for routine expenses, like a weekly $20 blow-dry at the beauty shop and $45 monthly dues at the health club. While she does not spend extravagantly - 'I sort of have it in my head that I'm not going to buy a $500 dress' - neither does she worry about the price of her season tickets to Grand Rapids' symphony, opera and two major theaters. She owns a spacious condominium here and a four-bedroom cottage on Lake Michigan. She has given nearly half a million dollars in pretax bequests to her four grandchildren since 1991, and signs over at least $5,000 in stock each year to a church. And she maintains her $342-a-month membership in the Kent Country Club, where she and her daughter had wedding receptions, though three hip replacements have halted her golf game. 'I think I would feel lost without that,' she said. Mrs. Amberg and her late husband, David, a lawyer, both descended from old Grand Rapids families whose homes are among the jewels of the Heritage Hill historic district, an enclave built between 1848 and 1920 by the city's lumber barons and furniture moguls. Their nest egg was layered by inheritance, which also sent their children to Princeton, Tufts and Boston University. They never felt pressure to save. Hair coiffed, lipstick fresh, ears adorned with gold, Mrs. Amberg is a genteel visage sipping chardonnay before dinner one weeknight at the Victorian mansion of the Women's City Club, where her mother and grandmother were members before her. She grew up on a family compound - 'like the Kennedys' - with an Italianate building at its center housing a squash court and a 50-foot lap pool. Her late husband's family helped settle Grand Rapids in 1834. Mrs. Amberg's days overflow with activity: two book groups, three bridge foursomes, lectures, reading on a radio station for the blind, serving as treasurer of the local Smith College alumnae club. One week in April, she was out every night. 'I think you have to work at it when you're a woman alone,' she said. 'You just don't expect people to call you or to make up things to do, you have to make things happen.' Several widows are among her closest friends, but Mrs. Amberg is careful to keep up with couples. 'So if you want to entertain, you can still find a few men to come to your party,' she said. 'But if you have a cocktail party, they're the ones who can't stand up. The men have to sit down.' Not Mrs. Amberg. She is at the gym every Wednesday morning for senior aerobics, strutting to a Sinatra soundtrack, though she ducks out when stretching starts. 'I can't get down on the floor and then get back up again, so I leave,' she said. If she goes a little slower these days, she still goes. In May, she visited Fallingwater, Frank Lloyd Wright's masterpiece in western Pennsylvania. To celebrate her 80th birthday, her family joined her for a weekend in New York. There are Social Security checks to spend, scrapbooks yet to fill. Back on the Job at 74 Between Social Security and a small pension, James Townsend thought he had enough to retire. But 10 years after he began collecting his checks, he greeted a recent sunny spring afternoon with a familiar ritual: he put on his uniform and went to work. From 4 p.m. to midnight eight nights a month, Mr. Townsend, 74, works as a security guard at a retirement community at the edge of town. As he made his rounds that evening, Mr. Townsend poked behind the furnace and paced a solitary, hourlong circuit of the carpeted hallways, empty except for a woman leaving the exercise area. 'I've been lucky, I've never seen any strange people,' he said. Mr. Townsend had not expected to be working at this age. When he retired at 64 from his job as a forklift operator in an auto parts plant, he believed he could live on his pension of about $200 a month and his and his wife's Social Security checks, which added up to almost $1,100. The Townsends' home here, a neat ranch house in a neighborhood that he calls 'the inner city, but not the ghetto,' was paid off, and Mr. Townsend thought he could cut back on a few activities or entertainment. 'I just wanted to stop working in a factory, waking up every morning at the crack of dawn,' he said. 'I had put in a lot of hard time at the factory. It was a relief to stop working.' But for the Townsends, two small changes were enough to upset his plans. Mr. Townsend's old car gave out, and he bought a new 1999 Dodge Intrepid, with payments of $327.55 a month. At the same time, his doctor found he had high levels of cholesterol. Medication ran to $99 a month. 'That's when things really tightened on me,' he said. 'I had to cut back on everything, even my tithes and offerings at church.' So Mr. Townsend went looking for a job again. Almost five million Americans over age 65 worked last year, up from fewer than three million two decades ago. The rise counters a half-century trend toward earlier retirement. In 1950, nearly half of men over 65 were still working. By 2000, only 17 percent were. Some retirees miss the purposefulness of work; some need the money. Mr. Townsend straddled both categories. He could use the money, but he also had no hobbies to occupy his time; work, he said, has kept him active. A native of Carbondale, Ill., Mr. Townsend moved to Grand Rapids to work in the factories here, and his finances have followed the unsteady rhythms of production: good in boom years, fragile when the demand for auto parts or office furniture slowed. In his first seven years here, he was laid off for part of every year. His house, where he has lived for 40 years, sits on a block of weathered homes in a largely African-American section southeast of downtown. When he goes out at night, it is to a sports bar in a mixed neighborhood to the north. 'But my preacher don't know it,' he said. When his car payments put the crunch on him, he called his network of friends, who told him about a part-time opening at the retirement community. The added income of about $340 every two weeks covered his car payments and cholesterol medicine. With his part-time job and his pension, the Townsends earn more than $2,000 a month, about as much as they did before his retirement, and without the threat of having all their income wiped out by layoff or strike. Social Security, which supplies the biggest share of their income, provides both stability and freedom. 'I enjoy the way I work now,' he said. 'I work 4 days and then I'm off for 10. What kind of job is that? It's not like the other work I did. I hustled when I was in the factory.' With his job, he said, he has enough money to take his wife to dinner. He is looking into supplemental health insurance, which would cost $200 or more a month to protect him against medical catastrophe. He hopes that Social Security will continue as is. He doubts he could have done as well on his own managing for retirement. 'I feel it's scare tactics now,' he added. 'If the government would stop using that money for other things like this war, the thing would go on and on and on.' From the Pop-Tart, a Good Life With a $75,000 pension, Social Security, ample savings and a series of real estate investments, Bill Post could be the model for retirement planning in the pre-401(k) era. A son of immigrants from the Netherlands whom poor people called poor, Mr. Post went to work at the local Keebler plant on his 16th birthday, putting pans in ovens for 38 cents an hour, and left the company 41 years later as a senior vice president with a $92,000 salary. He then embarked on a second career as a $30,000-a-year consultant for Kellogg, the company for which he had helped develop the Pop-Tart. Now, he carves wooden Santa Claus statues in a basement workshop under an old sign that says 'Nooitgedacht' - Dutch for, as Mr. Post put it, 'Never woulda thought.' He never would have thought a cranberry Jaguar convertible would sit in his garage. Hardly could have imagined retiring at 57 to a custom-built dream home, never mind selling it later for $1.1 million. 'I would never have ever thought that we would have such a good life,' Mr. Post, 77, said. He also never considered depending on Social Security. He and his wife of 57 years, Florence, avoided debt by spending frugally with the future in mind. When his company provided executives with a financial consultant as a perk, Mr. Post recalled, 'he came back and said, 'I never met a guy like you: you're living within your income.' ' The Posts are among 7.5 million of today's retirees, 29 percent, who collect private pensions, a middle-class staple that is fast disappearing. They also have income from bonds and interest payments on two private loans, but the only stocks they own are Kellogg shares he received as bonuses. 'No gambling,' Mr. Post explained. 'I can't see the principal shrink; worked too hard for our money.' It is people like Mr. Post who in future generations, under Mr. Bush's proposals, could see their guaranteed benefits become much less generous than currently promised. 'I would be for less benefits,' Mr. Post said, if that would promote the health of the program. Likewise, he supports Mr. Bush's vision of individual accounts, saying, 'I know there are better investments than what's happening.' Mr. Post, who dropped out of college to become personnel manager of Keebler's bakery in Grand Rapids at 21, was running the plant in 1963 when Kellogg came looking for a partner to develop a toaster pastry. He quickly green-lighted the idea despite the challenge of hoisting a huge piece of machinery to create the top layer and adapting an air clutch to squirt dollops of filling. 'I was just the guy who said we'd do it,' said Mr. Post, who still stocks his pantry with his favorite flavor, frosted strawberry. As he climbed the ladder from cookie baker to corporate officer, Mr. Post's biggest boon was real estate. In 1971, the Posts bought a 100-foot parcel on Glen Lake in northern Michigan for $16,000, building an A-frame bungalow for weekend getaways. They traded up twice to bigger lake properties, and after 18 years in their dream house, sold it to buy a 5,000-square foot, $415,000 home in a Grand Rapids suburb Mr. Post grew up thinking of as 'where the big shots lived.' It is at once an homage to their affluence and their humble roots. They added a large master suite and furnished it with an antique wooden night table, bed and dresser they bought years ago for $10. Mrs. Post weaves patchwork rugs out of remnants; the couple eats off dinnerware with a French pattern by Quimper Faďence that dates from 1690 and sells for $95 a plate. 'What's enough?' Mr. Post asked one afternoon relaxing on the expansive deck. 'You know what enough is? A little more than you got.' Rather than revel in their bounty, though, the Posts, who read Scripture aloud after breakfast, glory in giving their money away: $1,400 a month to Thornapple Covenant Church (plus an extra $1,000 on Thanksgiving and Easter); $2,500 a year to Gideon's, the Bible distributors; a recent $5,000 to a school for disabled adults; $2,000 here and $2,000 there for missionaries to Thailand or India. 'He's opened up the floodgates for us,' Mr. Post said, referring to God's New Testament promise to reward those who tithe. 'We give, and he opens up floodgates, and we give more.' Without a calculator, Mrs. Post balances their three checkbooks - one for their $2,000-a-month Social Security checks, which includes her spousal benefits; the others for the pension and interest. One afternoon, she spent hours stuck on a $2,000 mistake in her favor. The next morning, a fund-raiser for an evangelical broadcaster came to pitch the Posts for contributions of as much as $10,000. Mr. Post chuckled at the numbers, noting, 'I was a cookie baker all my life.' He and his wife had agreed the night before to give $500, and upped it before breakfast to $1,000. When Mrs. Post pulled out the checkbook, though, she whispered, 'How about two?' and that is what she wrote. 'The mistake I had made,' she explained later. 'I just felt that was the Lord telling me, you have extra money in here, you should give it.' A Significant Savings Depleted Joseph Cohen, 89, was a millionaire once, with a stake in a family clothing business and the intention of working forever. When the company collapsed in 1980, Mr. Cohen, then 64, had a few outside investments, a house and an asset he never expected to need: Social Security. On a crisp Michigan morning, Mr. Cohen was having coffee and doughnuts with other retirees in the apartment complex where he now lives alone, near a cordon of strip malls and big-box retailers by the airport. He has a crown of white hair, a metallic Chicago accent and a manner that is both genial and cranky. When he had his business, he said, he never thought about Social Security or retirement. 'I assumed we'd be taking a month off and going to Florida. We used to do that.' Mr. Cohen belongs to the uncounted but substantial population of Americans who reach retirement age with less money than they planned, reliant on Social Security in ways they do not expect. 'People who end up with less assets than they thought - that's almost all of us,' said Alicia H. Munnell, director of the Center for Retirement Research at Boston College, who served in the Treasury Department during the Clinton administration. 'People have business reversals, or they lose money in the stock market, or they have medical expenses they can't afford. Anyone who ever worked for Enron or WorldCom knows how it feels to look in their retirement account and see there's nothing left.' Mr. Cohen now lives mostly on the $1,800 he receives each month from Social Security, plus income from bonds he bought after he sold his house - about $1,000 to $1,200 a month. He does not own stock, a home or life insurance. Compared with most retirees, Mr. Cohen is doing well. He flies first class to see his children in New Jersey and Seattle, still has valuable art in his living room and has contributed money toward his grandchildren's education. Because he did not have to work, he volunteered extensively in his synagogue, the public schools and the local civil rights movement. By his lights he did not retire until last year, when a small stroke forced him to stop volunteering. But last year, when one of Mr. Cohen's bonds matured, and he replaced it with one that pays dividends of about $100 less a month, he felt the loss. 'I got clobbered,' he said. 'It doesn't sound like much, but it means you have $25 a week less to spend.' Mr. Cohen opposes individual investment accounts, because of the volatility of the stock market and the cost of managing the accounts. 'We're living in a society with an age group that haven't been through the Depression and aren't cognizant of what can happen,' he said. 'How do you know that won't happen tomorrow? I often wonder what happened to all the people who used to work for me.' Mr. Cohen said he had spent a lot of his retirement savings on care for his wife, who died in 1993, and son Robert, who died of an inoperable brain lesion in 2001. His wife went from doctor to doctor - 'all stupid S.O.B.'s,' Mr. Cohen said - before amyloidosis, a plasma cell disorder, was diagnosed. She died after three years of treatment at the Mayo Clinic in Minnesota. Insurance paid for some of this care but not all. 'I've never gone back and seen how much it cost at Mayo's,' he said. 'Word of honor, you never go over expenses and think about whether to get this treatment or this. You just do it.' Lately his own health has been giving him problems. In April, while spending Passover with his daughter in New Jersey, he underwent an M.R.I. for pain in his back, and a ruptured disk was diagnosed. He has not been back to Grand Rapids. Mr. Cohen can remember when he was like many young workers now, who do not think Social Security will be around when they retire. When the program was enacted, the same year he finished high school, he put little faith in it. 'It was introduced without a lot of people knowing what it was going to do,' he said. 'If someone had said, 'Here's this program that's going to take care of you,' I'd say, 'Yeah, wait and see.' ' Now it is the anchor of a retirement that Mr. Cohen has come to accept. 'It's not as much as I'd like to have,' he said, 'but I'm not worried.' Brothers, Side by Side Again Social Security was never intended as a family reunification initiative, but Luther and Norman Ward show how far its safety net can stretch. For years, Luther, a school janitor and truant officer, hardly spoke to his brother Norman, a heroin addict, because 'when he came to see me it was with a hand out.' Now they sit side by side every Sunday in church. The Social Security check that lets Norman, for the first time in his life, keep a small savings account, also allows Luther to offer hand-me-down furniture and the occasional covered dish without worry that his brother's needs will overwhelm his own. Just as Social Security frees baby boomers from the financial - and emotional - burden of dependent parents, it has built a bridge between these formerly estranged brothers, who passed a recent afternoon feeding ducks at the Grand River like boys. 'I save every month; I refuse to get broke,' Norman, 77, said. 'I love my brother and I wouldn't want to hurt him.' The Wards, two of six sons of a steelworker and a laundress, embody Social Security's dual identity, as a return on an investment for people like Luther, 71, who play by the rules, and as an insurance policy that keeps even those who led largely unproductive lives from suffering on the street. For Luther and his wife, Diane, a retired teacher, Social Security is one component of a relaxed retirement - their monthly checks totaling about $2,400 provide 36 percent of their income, the rest coming from their solid school district pensions. Without it, Luther said, 'I'd probably have a part-time job.' For Norman, who gets $502 plus $96 in state and federal supplements for the poorest recipients, Social Security is a savior - his only other income is the occasional bounty when one of his six numbers hits in the Michigan Daily Pick Three. Without it, Norman said, 'I'd probably be dead now.' Luther did decades of double duty as a janitor and truant officer, raising five children over two marriages. He took the second school district job to cover child support for the four children from his first marriage, and ended up with combined wages of $60,000. After selling off his mutual funds a few years ago, he keeps his savings, about $14,000, in the credit union earning 2 percent, and strongly opposes Mr. Bush's proposal to turn part of Social Security into individual accounts. 'At my age, I'm not thinking about 10 years it coming back,' he said of the stock market. Norman, who never made it past 10th grade, got hooked on heroin while in the Army. Back home, slurping cough syrup when he could not afford heroin, he got and lost jobs at General Motors, Steelcase, a forklift factory, a meat warehouse and, his favorite, as a bellhop at the old Rowe Hotel downtown, for $12 a week plus tips. He did time twice, in 1961 and 1991, after pleading guilty to drug possession, and checked himself into rehab half a dozen times. He cared for his parents in their final years and inherited their house, but the $56,000 it sold for quickly disappeared into drugs. 'When I blew that money, I got scared,' Norman recalled. 'I used to take the cover and pull it over my head because I hate to see daylight come.' Nowadays, in his one-bedroom at the Ransom Towers downtown, Norman is showered and with his bed made by 7 a.m., though he spends most days watching hours of back-to-back courtroom reality shows from a raggedy lounge chair. He pays his $170 rent, $45 cable, $25 telephone, $20 church dues and $13 for air-conditioning in summer weeks in advance. Food stamps, $112 a month, fill his cupboards with canned vegetables and Special K. The nine pills he swallows daily for diabetes and high blood pressure cost him $3 for brand names, $1 for generics, under Medicaid. Magic Shaving Powder, $1.25 a can, keeps his head bald. Still he has enough extra that at times he is like an A.T.M., handing out two $20's and a $10 to various neighbors one Sunday before leaving for church. 'I don't want your reason, I just want it back,' he said of his no-interest, no-information approach. 'If they ask for it, they need it.' Across town, Luther said he and Diane 'never take out a loan we can't pay back in a year's time,' so they are setting aside $1,000 a month to cover the $11,000 home equity line of credit that pays for remodeling the kitchen this summer. They travel every other year to see her relatives in the Netherlands or his son, an Air Force officer stationed in Belgium, and the basement is lined with posters from the musicals they frequent here and in Toronto. For Luther's 70th birthday, Diane booked a suite at the Bellagio in Las Vegas. Seven or eight years ago, Norman asked Luther to pick him up on the way to Grace Christian Reformed Church. He called for a ride again the next Saturday. 'Then he said, 'I don't want to call you anymore, just pick me up every Sunday,' ' recalled Luther, who is a deacon. 'He already knew the minister because he had borrowed money from the minister.' On Tuesdays, too, Luther swings by Norman's building for their weekly run to a food warehouse to stock the church pantry. 'First time in my life I ever enjoyed it,' Norman said as he piled up potatoes and set aside a box of chocolate cookies for himself, never mind the diabetes. 'Doing something and not looking for nothing.'

Subject: Currency Value and Inflation From: Terri To: All Date Posted: Sun, Jun 19, 2005 at 13:34:10 (EDT) Email Address: Not Provided Message: The dollar has strengthened significantly against the Euro and other European currencies, and has this year held value at least against Asian and Latin American currencies. There is currently no inflation pressure from a weakening dollar. Food prices respond fairly quickly to a change in the value of the dollar, so there is no reason an increase in food prices would currently be driven by dollar weakness. There is however a limited increase in food prices driven by energy cost increases, and this bears notice.

Subject: Construction Employment From: Jennifer To: All Date Posted: Sun, Jun 19, 2005 at 10:44:44 (EDT) Email Address: Not Provided Message: What dollar support has done is provide a steady demand for American bonds from Treasury to mortgage bond packages. The demand has countered the Federal Reserve short term interest rate increases of the last year and kept construction in particular, and employment to an extent, and consumer demand robust. This Federal Reserve cycle has been quite unique, and though there are important worries about housing and real estate price increases the employment creation associated with construction has been all the more important in a difficult job creation period.

Subject: The correlated economy From: Pete Weis To: Jennifer Date Posted: Sun, Jun 19, 2005 at 13:18:16 (EDT) Email Address: Not Provided Message: There are many of us who talk about the importance of investing in uncorrelated assets and diversification. Yet we have a very correlated economy with almost total dependence on the housing sector.

Subject: Currency From: Jennifer To: All Date Posted: Sun, Jun 19, 2005 at 10:29:55 (EDT) Email Address: Not Provided Message: The dollar has largely largely been supported by foreign central banks as China, Japan, Korea, Brazil and South Africa in holding domestic currency values in place. A limited mix of currency speculation against the Euro is likely to continue as the prospects for European Union are less clear. A decline in the Euro has quickly given us a fairly robust dollar, but the domestic and trade deficits are there and growing faster than our economy can grow and there will in time be more pressure against the dollar.

Subject: The Dollar and Bonds From: Terri To: All Date Posted: Sat, Jun 18, 2005 at 17:45:16 (EDT) Email Address: Not Provided Message: What is interesting is that political events in Europe could send the dollar value higher for some while, and provoke a poorer trade balance for us. But, the political turmoil in Europe may prove to be a problem for us at the time that we were moaning about a weakening dollar. Reading currency movements is difficult. The guess then is dollar strength will continue to help the American bond market.

Subject: Re: The Dollar and Bonds From: Pete Weis To: Terri Date Posted: Sun, Jun 19, 2005 at 13:10:40 (EDT) Email Address: Not Provided Message: 'What is interesting is that political events in Europe could send the dollar value higher for some while, and provoke a poorer trade balance for us.' This is an important issue for a company like Boeing and US auto manufacturers with models that compete with Europe, etc. But the bigger issue for the dollar is how it's purhasing power of food, energy, and commodities is doing. And regardless of how it's doing vs the euro, how might the overall dollar droppage affect inflation down the road. As a consumer, I'm much less concerned with how much a vacation in Europe will cost me than what my weekly food bill is or what it costs me to fill my gas tank each week, or my winter heating bills, insurance, etc. This will affect how much I need to cut back on new purchases such as a new laptop, printer, upgrade to software, bigscreen tv, new kitchen appliance, etc. Heck, my scrimping might even affect some of those companies which make up those index funds - maybe even some with the tag of 'value'. Yet, if my paycheck doesn't quite buy me all I want, I can just put it on Visa and pay for it LATER. There's always equity loans. Trouble is - the higher visa payments or equity loan payments mean that more is taken from my paycheck. But then again I can borrow even more to make up for the additional amount which comes out of my paycheck. This could go on for quite a long time - there are lots of 'experts' who say it can and will. I can always sell my house eventually, pay off my debts and what is left over will be a small fortune to help with my retirement - ya, that's how I'll do it!!!! Sorry, didn't mean for this to sound too sarcastic, but I believe this is the way most of us (not you Terri) are thinking.

Subject: The Dollar From: Terri To: All Date Posted: Sat, Jun 18, 2005 at 15:37:10 (EDT) Email Address: Not Provided Message: For the time the dollar seems all too secure because of the lack of unity among the European Union countries and chronic political-economic wavering in Japan, but the dollar is weak according to intrinsic fundamentals and we should not forget this. Positions against the dollar have lost recently, but they will win in time for we are not settling our debt accumulation to any meaningful degree. Still, this shows why we need to think long term unless we are forever trading.

Subject: Guidant Recalls Heart Devices From: Emma To: All Date Posted: Sat, Jun 18, 2005 at 11:43:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/18/business/18guidant.html?pagewanted=all Citing Flaws, Maker Recalls Heart Devices By BARRY MEIER The Guidant Corporation said yesterday that it was recalling about 29,000 implanted heart devices because of flaws that might cause them to short-circuit when they are supposed to deliver a potentially life-saving shock. The recall, which comes at the urging of the Food and Drug Administration, involves three models of defibrillators made by Guidant. In the case of one model, the Ventak Prizm 2 DR Model 1861, Guidant did not tell doctors for more than three years that it was prone to electrical failure because of a design flaw. The company also disclosed yesterday for the first time that two other Guidant units had also repeatedly short-circuited. The company said it was aware of two recent deaths involving the units at issue. It is not clear how much the recalls may cost Guidant. While the action is technically a recall, it will be up to patients and their doctors to decide whether to undergo surgery to replace the affected devices. Such decisions are typically based on the age and health of a patient and the physician's assessment of a device's risk. The recall comes as F.D.A. officials continue their review of Guidant's handling of issues surrounding the products, particularly the Prizm 2 DR. The other models are the Contak Renewal and Contak Renewal 2, which are more complex defibrillators intended for patients with severe heart failure. The F.D.A. urged affected patients to contact their doctors but did not take a position on whether the devices should be replaced. Defibrillators are surgically implanted in the chest under the skin. If the heart is beating chaotically, the defibrillator emits an electrical jolt in an effort to restore it to normal rhythm. In a statement yesterday, Ronald W. Dollens, chief executive of Guidant, said the company was taking the actions because it wanted to share information about problems 'in a small subset of Guidant devices.' Guidant said it would provide free replacements for the devices, which can cost up to $25,000. 'We will work with physicians as they decide how best to treat their patients,' Mr. Dollens added. But yesterday's disclosure that Guidant also knew that other popular company models beside the Prizm 2 were prone to short-circuiting raises further questions about how the company handled such issues. An F.D.A. official also questioned whether Guidant had acted properly when it recently rushed out a letter to doctors notifying them that the Prizm 2 had short-circuited in over 25 known cases, including the March death of a 21-year-old student. The company took the action late last month when it became aware that problems with the device, which date back to 2002, were going to be publicized in other forums. Tim Ulatowski, the director of the agency's Center for Devices and Radiological Health, said Guidant should have treated the matter as a recall at that time. Johnson & Johnson, which announced a plan in December to acquire Guidant for $25.4 billion largely to gain its cardiac device unit, issued a statement yesterday saying that while it continued to work to complete the deal, it was concerned about the developments. Last year, Guidant had $3.8 billion in sales, about half from implantable defibrillators. 'The events reported by Guidant are serious matters, and Johnson & Johnson is engaged in discussions with Guidant to help the company understand the issues,' the statement read. In trading on the New York Stock Exchange, shares of Guidant fell 84 cents a share to close at $72.46 a share. Guidant has said it does not recommend that doctors replace the Prizm 2 model because it is reliable and because the additional surgery poses extra risks. In April 2002, the company changed the way it manufactured the device to eliminate the electrical flaw. It has said it has not received similar complaints about devices made after that date. About 17,000 devices made before April 2002 are still implanted in patients, 13,900 of them in this country. In the case of the Contak Renewal and Renewal 2 models, Guidant also urged that physicians closely follow how well the device is functioning, but did not make a recommendation one way or the other regarding replacement. Along with a defibrillator, the units have pacemaker functions that regulate beating for both sides of the heart. The company said that internal testing showed that the failure rate of Renewal products might increase over time from a current rate of 0.09 percent to a range of 0.2 percent to 0.6 percent. About 11,900 Renewal products are still implanted in patients worldwide, about 6,700 of them in this country. In February, another defibrillator maker, Medtronic, notified doctors that the battery used in one of its models was draining far faster than expected. It said the problem could become worse over time and affect 0.2 percent to 1.5 percent of its units. About 13,000, or 15 percent, of the 87,000 patients implanted with the device have had it replaced. In many respects, the issues and Guidant's actions in the cases of the Prizm 2 and Renewal models parallel each other. After the March death of a college student, Joshua Oukrop, doctors in Minnesota learned from Guidant that the Prizm 2 defibrillator they had implanted in him in 2001 had a history of electrical failures related to a design flaw. The physicians, who had been treating Mr. Oukrop for a genetic heart disease that put him at risk of sudden cardiac arrest, said they urged Guidant at that time to notify other doctors. But company officials said they did not plan to do so because they did not see the problem as significant. The company did send a letter to doctors about the device in late May just as The New York Times was publishing an article about the Prizm 2. In the aftermath, the F.D.A. began reviewing Guidant's handling of the matter. It was during that process that agency officials began to look at the Renewal devices, said Mr. Ulatowski, the F.D.A. official. 'We always inquire whether a problem caused by a design problem in one product might exist in other products,' he said. Mr. Ulatowski added that Guidant, through a filing, had notified the F.D.A. about manufacturing changes it made last August to correct a short-circuiting problem in the Renewal models. However, only during recent reviews did the agency become aware of the scope of the problem. While Guidant previously received 14 reports of electrical failures in Renewal devices produced before August, it received a report on May 30 of the death of a patient who had been implanted with a unit that failed in a similar way. It also appears that Guidant may have continued to sell older Renewal models in its inventory after improved versions were available, as it had done with the Prizm 2 defibrillator. Yesterday, Guidant officials declined to comment about the issue. Since the controversy over the Prizm 2 began, Guidant has insisted that it made all required reports to the F.D.A. about device problems. But under agency guidelines, the company was also required to undertake an internal assessment of the patient risks posed by the device's electrical problems once it discovered them. Such an analysis must include an evaluation of how frequently the flaw is likely to occur, its danger and whether doctors and patients would become aware of it as a result of mechanisms in the device, like a beep that indicates the battery is dying. Mr. Ulatowski, the F.D.A. official, said the agency was still reviewing Guidant records. 'We are taking a very careful look at the events that occurred and what decisions were made or were not made,' he said. Guidant has acknowledged that because the flaws involved a short-circuiting of a device while it was charging to deliver a high-voltage shock, it could occur unpredictably. A group that represents doctors treating heart patients, the Heart Rhythm Society, is expected to soon set up a task force to press for standards governing device makers' notifications of doctors about problems with implanted heart units. In his statement yesterday, Mr. Dollens, the Guidant chief executive, said he supported that effort. In addition to the Prizm 2 and the two Renewal models, Guidant said yesterday that it was recalling 21,000 other defibrillators that had a programming error that might affect device performance. The company said patients could have the device reprogrammed during their next regular doctor's visit. Guidant said the affected units were the Prizm AVT, Vitality AVT, Renewal 3 AVT and Renewal 4 AVT.

Subject: 'Everything Bad Is Good for You' From: Emma To: All Date Posted: Sat, Jun 18, 2005 at 11:39:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/22/books/review/22KIRNL.html?ei=5070&en=f62d6eedd50797e8&ex=1119758400&emc=eta1&pagewanted=all May 22, 2005 'Everything Bad Is Good for You': The Couch Potato Path to a Higher I.Q. By WALTER KIRN To people over a certain age the idea that popular culture is in decline is a comforting one, which may explain its deep appeal. If today's TV shows are worse than yesterday's, and if new diversions like video games are inferior to their earlier counterparts, whatever those might be (Scrabble? Monopoly?), then there's no harm in paying them no attention. To a 40-year-old who's busy with work and family, the belief that he isn't missing anything by not mastering ''SimCity'' or by letting his 10-year-old program the new iPod is a blessed solace. If the new tricks are stupid tricks, then old dogs don't need to learn them. They can go on comfortably sleeping by the fire. The old dogs won't be able to rest as easily, though, once they've read ''Everything Bad Is Good for You,'' Steven Johnson's elegant polemic about the supposed mental benefits of everything from watching reality television to whiling the night away playing ''Grand Theft Auto.'' Johnson, a cross-disciplinary thinker who has written about neuroscience, media studies and computer technology, wants to convince us that pop culture is not the intellectual tranquilizer that its sound-alike critics have made it out to be but a potent promoter of cerebral fitness. The Xbox and ''The Apprentice,'' he contends, are pumping up their audiences' brains by accustoming them to ever-increasing levels of complexity, nuance and ambiguity that work on brain cells much as crunches do on the abdominal muscles. The depressing corollary to his thesis is that if a person isn't doing these exercises -- perhaps because he's too busy raising children who engage in them compulsively -- he's getting flabby from the neck up. Johnson's argument isn't strictly scientific, relying on hypotheses and tests, but more observational and impressionistic. It's persuasive anyhow. When he compares contemporary hit crime dramas like ''The Sopranos'' and ''24'' -- with their elaborate, multilevel plotlines, teeming casts of characters and open-ended narrative structures -- with popular numbskull clunkers of yore like ''Starsky and Hutch,'' which were mostly about cool cars and pretty hair, it's almost impossible not to agree with him that television drama has grown up and perhaps even achieved a kind of brilliance that probably rubs off on its viewers. About the fact-filled dialogue on shows like ''E.R.'' and ''The West Wing,'' he writes: ''It rushes by, the words accelerating in sync with the high speed tracking shots . . . but the truly remarkable thing about the dialogue is not purely a matter of speed; it's the willingness to immerse the audience in information that most viewers won't understand.'' As a child of ''Kojak'' -- a series that taught me nothing except a peculiar, tough-sounding ethnic accent with which I could entertain my buddies -- I don't like to think that merely by watching TV today's teenagers are boosting their I.Q.'s (for that, I had to plow through ''Moby-Dick''; or so my teachers told me). I'm afraid I have to cede the point, however, because I've seen ''24'' as well, which is to ''Kojak'' what playing the video game ''Doom'' is to zoning out in front of ''Captain Kangaroo.'' Johnson posits a number of mental mechanisms that are toned and strengthened by the labor of figuring out the rules of high-end video games and parsing the story structures of subtle TV shows. Playing physiologist, he asserts that the games address the dopamine system by doling out neurochemical rewards whenever a player advances to a new level or deciphers a new puzzle. These little squirts of feel-good brain juice aggravate a craving for further challenges, until the Baby Einstein at the joystick has worked himself into an ecstasy of problem-solving that, Johnson tells us, will serve him well in later life (though he's vague about exactly how). Johnson calls the relevant intellectual skills ''probing'' and ''telescoping,'' and defines them as the ability to find order in bewildering symbolic territory. Wandering through labyrinths full of monsters keeps a person on his toes, that is, and this is good preparation for modern life -- perhaps because modern life so closely resembles a labyrinth full of monsters. So far, so good. But when Johnson purports to discern a silver lining in programs like ''Joe Millionaire'' and ''The Apprentice,'' he has to resort to trickier tactics. After reminding us that his argument doesn't depend on the content of the shows being particularly interesting but relates instead to the intricacies of their formats, he suggests that reality TV engages viewers' ''emotional intelligience'' by confronting them with a staged array of rapidly shifting social situations and densely interlocking human relationships. When an ''Apprentice'' team leader chews out an underling who is well liked by other contestants, it lights up an ancient corner of our brains responsible for assuring our survival as members of communities and tribes. Our minds run a series of lightning calculations having to do with tones of voice, facial expressions, ethical principles and psychological verities as we weigh the chances that the team leader will implode or the underling will revolt. And what will the Donald think? That's a factor, too. Though I side with Johnson in his contention that emotional intelligience is an authentic, important competency, and while I'll admit that ''The Apprentice'' delivers up enough half-baked strife and intrigue to absorb our inner office-politicians, I'm not sure why such a regimen is good for people except in the sense that it isn't actually harmful. As elsewhere in the book, Johnson's contrarian contempt for the knee-jerk vilification of pop culture seems to push him further than may be warranted into defending and elevating artifacts that are neither here nor there. My grandmother's love of lurid true-crime magazines, with their blow-by-blow re-creations of small-town rapes, roused her emotional intelligence, too, telling her to avoid dark parking lots and pockmarked men with certain styles of mustaches, but, really, what of it? Stimulation is not a virtue all by itself. Johnson seems to feel it is, though. In temperament, he's like a cerebral Jack La Lanne. He admires exertion for its own sake -- in this case, neurological exertion. The faster the synapses fire the better, no matter to what end, even if the body supporting them is growing sluggish and obese and the spirit animating them is chronically neglecting its family members in order to TiVo ''The Simpsons.'' Johnson is a cool and neutral thinker, concerned with process rather than purpose, but the provocative title of his book, by alluding to some unheralded moral dimension in the consumption of today's pop culture, is mischievously misleading -- a way to snag the attention of the squares who refuse to acknowledge the benefits of doing anything other than reading the Holy Bible by candlelight. Considered purely on its own terms, Johnson's thesis holds up despite these quibbles. Our own internal computers are indeed speeding up, and part of the credit for this must surely go to the brute sophistication of our new entertainments, which tax the brain as ''Kojak'' never did. The old dogs may grump about cultural illiteracy and the erosion of traditional values, but the new dogs have talents, aptitudes and skills that we, as we drowse by the fire, can only dream of. Their sheer agility may not bring them wisdom, but our plodding didn't either, let's be fair.

Subject: It's Getting Cheaper to Tap the Sun From: Emma To: All Date Posted: Sat, Jun 18, 2005 at 11:17:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/18/business/18solar.html?pagewanted=all It's Getting Cheaper to Tap the Sun By BARRY REHFELD Annette Benedict gave a party to celebrate the installation of solar panels on the roof of her Bronx home over a year ago. John Sunde bought three systems in three years for the two Long Island homes he owns - two for the Brentwood house he lived in and a third for a Hampton Bays home he lives in now. Susan Ferraro and her husband, Nick, featured their new network in the sales ad for their summer home on Shelter Island, N.Y., earlier this year. Excitement over residential solar energy may not be running this high everywhere, but providing homes with electricity and heat from the sun is getting more buzz than it has in decades. In the 70's it seemed that buyers of solar systems were mostly isolated tree huggers who somehow had a small fortune to spend on panels, but now urban and suburban homeowners are looking to the sun hitting their roofs for relief from rising electricity and heating costs. Higher utility bills, though, are just the stick. The carrot is the falling cost of solar systems that are lighter and more efficient and feature new designs, like solar panels that double as window awnings. Standardized installations and economies of scale for equipment production have helped drive costs lower. In moving toward the energy mainstream, solar expenses have dropped to around $8 a watt, from roughly $100 three decades ago; the cost is even less if a system is installed as part of a new home's construction. In either case, that puts the price of a system that can reduce electric bills significantly - like a three-kilowatt system - in the $20,000 range. That's still a lot of money, but buyers may be able to get a lot of it back immediately, through government incentives. And with energy prices rising, the payback period for the rest is getting steadily shorter. State programs developed in the last few years are making it possible for homeowners to cut the cost of a system by more than half, to less than $4 a watt. These programs include rebates, tax refunds and access to utility grids, enabling homeowners to sell excess electricity back to power companies. 'Oil prices give people a reason to look, but then it's all about the incentives,' says Gary Minick, president of Go Solar, in Riverhead, N.Y., who has been installing systems for 26 years. 'I get eight calls a week now. I'm all booked.' While incentives can be found across the country, New York, New Jersey and Connecticut tend to give good deals. Forty states allow selling excess power back to utilities, according to the Database of State Incentives for Renewable Energy, and 19 offer rebates. Typically, California led the charge when one of its utilities opened its grid to homeowners over a decade ago. Within a few years, New York was establishing itself as an East Coast solar beachhead. Now more than 700 New York homeowners have solar energy systems hooked up to utilities. New York has also licensed some 50 solar equipment installers. 'We've building for the long term,' said Adele Ferranti, who works for the New York State Energy Research and Development Authority, which regulates solar installations. 'We haven't had one failure for anything installed by the people we certify.' On Long Island, Mr. Sunde's systems are working smoothly, and he expects them to keep doing so over their guaranteed 25-year life. A staunch environmentalist who had dreamed of owning solar panels since he was a boy, he now has more power than he needs. He couldn't have done it without the incentives. With rebates and tax refunds, he chopped nearly 75 percent off the $115,000 bill, bringing the cost down to $30,000. With about 7.5 kilowatts for each house, he wound up paying about $2 a watt. He did so well because Long Island kicked off New York's incentive programs with rebates of up to $6 a watt. Now it's in line with the rest of the state, offering $4, while the newer New Jersey program, is the most generous in the New York metropolitan area, with incentives of $5.50 a watt. Exactly how much electricity a system provides and how long it takes for an installation to pay for itself, though, depends on many factors besides costs and incentives. Also important is the amount of shade at a house, the pitch of a roof (25 degrees is good, and typical for the Northeast except in areas that get heavy snow), and the direction the roof faces. An additional factor is the amount of sunshine received, which depends on both latitude and average number of days with cloud cover. In Mr. Sunde's case, his new home has the edge over the old because its roof faces south. Over all, he calculates the payback period at a bit over 15 years. 'It's worth it,' he said. 'There's nothing to break. No moving parts. When I've saved as much as it cost me in the first place, I'll have free electricity.' Irene Pletka has two different solar energy systems at her Sag Harbor, N.Y., summer house. Copper tubing panels are used to heat her swimming pool, while silicon panels provide all the electricity for her home. The copper panels for the pool's heating are alongside the roof deck, and the silicon modules providing electricity are attached like awnings above a bank of first-floor windows to keep out the summer sun. Copper trumps silicon for heating. For one thing, it warms water directly, where silicon panels must first convert solar energy to electricity. While there are no rebates or tax breaks for thermal heating systems in New York, her $2,500 pool system will still pay for itself in about two seasons. 'You're also not limited the way you are with oil,' she said, 'thinking about swimming too early or late in the season because of the fuel you may use up.' A big challenge for solar heating comes during the winter, for the simple reason that the sun is around the least when it is needed the most. It is also difficult to heat interior space; hot air cannot be stored the way water can. Brian Flanagan, though, had special reasons for installing a solar heating system in the Brooklyn house he bought last year. The building had a boiler with only enough capacity to heat the commercial space he rented out on the ground floor; the upstairs was too big, with too many windows, to heat in the winter. Buying a small boiler and installing a roof-top solar unit with vacuum tubes (which do not lose heat the way copper tubes do) - plus large hot water storage tanks to save heat for a cloudy day - would, he reasoned, be more economical in the long run. The package cost $33,000 compared with $20,000 for a separate large boiler for his living space. But with lower heating bills, he expects the system to pay for itself in eight years. 'I'm no longer a slave to oil prices,' he said. 'I pay a fifth of what my tenant pays.' It's still too early, though, to tell if the added expense of solar equipment makes a home more valuable. Based on Susan Ferraro's experience selling her vacation home, the answer just might be: not yet. 'We thought it very pioneering, and we put it in our ads, thinking people would think it was as exciting as we thought it was,' she said of her year-old system. 'But it never even came up, even with the people who bought the house.' Some things will never change, though, like what got everyone interested in solar energy in the first place. 'I read about it in a Sierra Club magazine,' Annette Benedict said of her decision to install solar equipment. 'It made sense. It was good for the environment.' And good for her: she bought a piano with her rebate.

Subject: Censoring 'Sesame Street' From: Emma To: All Date Posted: Sat, Jun 18, 2005 at 10:14:10 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/18/arts/television/18broa.html?pagewanted=all Official Had Aide Send Data to White House By STEPHEN LABATON WASHINGTON - E-mail messages obtained by investigators at the Corporation for Public Broadcasting show that its chairman, Kenneth Y. Tomlinson, extensively consulted a White House official shortly before she joined the corporation about creating an ombudsman's office to monitor the balance and objectivity of public television and radio programs. Mr. Tomlinson said in an interview three months ago that he did not think he had instructed a subordinate to send material on the ombudsman project to Mary C. Andrews at her White House office in her final days as director of global communications, a political appointment. But the e-mail messages show that a month before the interview, he directed Kathleen Cox, then president of the corporation, to send material to Ms. Andrews at her White House e-mail address. They show that Ms. Andrews worked on a variety of ombudsman issues before joining the corporation, while still on the White House payroll. And they show that the White House instructed the corporation on Ms. Andrews's job title in her new post. A senior corporation executive who is concerned about its direction under Mr. Tomlinson provided copies of the e-mail messages to The New York Times. Fearing retribution, the executive insisted on anonymity as a condition for providing the copies. The e-mail messages are part of the evidence being collected in a broad inquiry by the inspector general of the corporation into whether Mr. Tomlinson violated any rules that require that the corporation act as a buffer between politics and programming. Investigators are examining the role played by the White House in the creation of the ombudsman's office at the corporation, an office Mr. Tomlinson said he advanced as part of a broader effort to ensure balance and objectivity in programming. Executives in public television and radio have said his actions threatened their editorial independence. Under investigation are $14,170 in contracts signed by Mr. Tomlinson with an Indiana man who monitored the political leanings of the guests on 'Now' when Bill Moyers was its host. And the investigators are looking at $15,000 in payments to two Republican lobbyists last year at the direction of Mr. Tomlinson and his Republican predecessor, who remains a board member. Mr. Tomlinson declined to respond to questions about the investigation or anything else. 'We decline comment during the inspector general's review and await their report clarifying these and all related circumstances,' he said by e-mail on Friday. 'We are confident that the report will conclude that all of these actions were taken in accordance with the relevant rules and regulations.' In a little-noticed speech on the floor of the Senate this week, Senator Byron L. Dorgan, Democrat of North Dakota, said that in response to his request for the reports on the 'Now' program, Mr. Tomlinson provided him with the raw data from reports. Mr. Dorgan said that Senator Chuck Hagel, Republican of Nebraska, was classified in the data as a 'liberal' for an appearance on a segment of a show that questioned the Bush Administration's policies in Iraq. Mr. Hagel is considered a mainstream conservative with a maverick streak and a willingness to criticize the White House. Another segment about financial waste at the Pentagon was classified as 'anti-Defense,' Mr. Dorgan said. He criticized Mr. Tomlinson for spending taxpayer money for studies to examine programs 'to see if something is being said that might be critical about a president or Congress.' On Friday, Mr. Dorgan and two Democratic colleagues, Senator Hillary Rodham Clinton of New York and Senator Frank R. Lautenberg of New Jersey, sent Mr. Tomlinson a letter urging him to postpone his plans to urge the board to appoint Patricia Harrison, a former co-chairwoman of the Republican National Committee, to be the corporation's next president. Ms. Cox resigned in April after her contract was not renewed. 'Press reports have noted that you requested a review of the program 'Now With Bill Moyers,' made payments to Republican lobbyists, and did not disclose these actions to the board of the CPB,' the letter said. 'We are greatly troubled by these allegations, and if they prove true, we believe your conduct as chairman of the board has been highly inappropriate.' Ms. Andrews's role in the creation of the ombudsman's office and other steps taken by Mr. Tomlinson over the last few months, which he says are meant to ensure balance and objectivity in programming, have prompted criticism by public television and radio executives. They say the corporation is threatening their editorial independence. While Ms. Andrews was in her final days at her old job and had already accepted a job with the corporation, Mr. Tomlinson instructed its president, Ms. Cox, to send to Ms. Andrews's White House office 'anything you have on ombudsmen' as well as the 'bios' of the two candidates for the post, according to an e-mail message dated Thursday, March 17. 'She's promised to help me produce something by Tuesday,' Mr. Tomlinson said of Ms. Andrews. On March 22, Mr. Tomlinson sent Ms. Cox another piece of e-mail. 'By the way MC did terrific job (in my opinion) on press release and talking points on ombudsmen,' it said. 'She will give you material at lunch and don't hesitate to suggest changes.' In a third e-mail message the next day, March 23, Mr. Tomlinson told Ms. Cox that White House officials were insisting that Ms. Andrews's title would be 'senior advisor to the president' when she began working at the corporation a few days later. 'Maybe you missed but when I phoned you,' he wrote in a follow-up message, 'I specifically mentioned the title issue and if I didn't mention the white house I was trying not to drop names. I promise you she will be worth her weight in gold to you.' Ms. Andrews's first day on the corporation's payroll was March 25. In an interview in April, Mr. Tomlinson was asked if he had instructed anyone to send material to Ms. Andrews while at the White House. 'I don't think so,' he replied. Asked also if Ms. Andrews had done any work on the ombudsmen project while she was at the White House, he said, 'I don't think so.' 'She was on her way to this job,' he then added. 'Whether there was a two- or three-day period that overlapped, I don't know.' Ms. Andrews has said that she was making a transition from the White House to the corporation when she worked on a minimal amount of material on the ombudsman project, and that any work she did was out of her White House office and on her own time.

Subject: Tufted Titmouse Stashing a Seed From: Terri To: All Date Posted: Sat, Jun 18, 2005 at 07:20:22 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4962&u=347|39|... Tufted Titmouse Stashing a Seed in a Tree Cavity New York City--Central Park, The Ramble.

Subject: Re: Tufted Titmouse Stashing a Seed From: Emma To: Terri Date Posted: Sat, Jun 18, 2005 at 16:50:48 (EDT) Email Address: Not Provided Message: What a wonderful wonderful photographer, and how much I love birds.

Subject: Portfolio Planning From: Terri To: All Date Posted: Sat, Jun 18, 2005 at 06:41:27 (EDT) Email Address: Not Provided Message: There is always significant risk in a lone corporate investment, but the risk can be much reduced in a portfolio with even a few corporate differing shares held and easily an investor can mimic holding hundreds or thousand of differing shares. The beauty of indexing is the immediate ease of diversification. There is systemic risk in stock indexing, but that is hardly avoidable with bonds or real estate. The risk of not investing is what should be most troubling. Unless the American economic system breaks down, and then there is no reasonable protection, economic difficulties will be compensated in a broad stock index based portfolio with a backing of constant duration bond funds for steady income.

Subject: Common Grackle From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 20:46:15 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5426&u=4|60|... Common Grackle New York City--Central Park, Turtle Pond.

Subject: Tufted Titmouse From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 20:38:09 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5027&u=347|33|... Tufted Titmouse New York City--Central Park, The Ramble.

Subject: Hedging the Dollar From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 20:30:28 (EDT) Email Address: Not Provided Message: Notice how well European stocks have adjusted to the fall in value of the Euro and associated currencies and how little effected they are by the condition of European integration. There is reason to believe that European stocks, especially value stocks, can be a fine hedge against future declines in the value of the dollar. However, for the time the dollar appears notably strong. There is no real chance the Euro will threaten the dollar as a reserve currency unless European integration is again smoothed.

Subject: Ben Bernanke From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 16:41:55 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/business/17bernanke.html?pagewanted=all Fed Official Moves Up and Into Politics By EDMUND L. ANDREWS WASHINGTON - For years, some of his closest friends did not know that Ben S. Bernanke was a Republican. It is not that Mr. Bernanke has been shy about his views. As an economist at Princeton, he broke new ground on the causes of the Depression. And as a governor on the Federal Reserve Board since 2002, he spoke bluntly about weakness in the job market, the dangers of deflation, the impact of higher oil prices and the need for the Fed to reduce uncertainty by being more open. 'If monetary policy is like driving a car,' he mused last December, 'then the car is one that has an unreliable speedometer, a foggy windshield and a tendency to respond unpredictably.' But now Mr. Bernanke (pronounced ber-NANK-ee) is moving directly into the political arena, taking over next week as chairman of President Bush's Council of Economic Advisers. He is also on the short list of potential candidates to succeed Alan Greenspan as chairman of the Federal Reserve. The two jobs are related, if only because Mr. Bush will be looking to name a new Fed chairman that he knows well and trusts. Two other possible candidates to succeed Mr. Greenspan, who has been atop the Fed for nearly 18 years, are also former council chairmen: Martin Feldstein, who served under President Reagan; and R. Glenn Hubbard, who worked for President Bush from 2001 to 2003. Mr. Bernanke built a sterling reputation while at Princeton, and has won widespread praise for his cogent analyses while at the Fed. But he has studiously avoided partisan political issues, at least in public. He has said little about issues at the top of Mr. Bush's agenda, like Social Security and tax cuts, and his economic writing betrays few hints of political ideology. 'If you read anything he's written, you can't figure out which political party he's associated with,' said Mark L. Gertler, a professor of economics at New York University who has written more than a dozen papers with Mr. Bernanke. Mr. Gertler, who said he did not know his close friend's political affiliation until relatively recently, added: 'He's not ideological. I could imagine Ben working with economists in the Clinton administration.' Alan S. Blinder, a longtime colleague at Princeton who has advised numerous Democratic presidential candidates, also said he had worked alongside Mr. Bernanke for years without having any sense of his political views. 'We wrote articles together and sat at the same lunch table thousands of times before I knew he was a Republican,' Mr. Blinder recalled. 'We never talked politics.' Mr. Bernanke enjoys enormous credibility among economists in academia as well as on Wall Street - an advantage for him that may also pay off for Mr. Bush. 'I think Wall Street would be more comfortable with Bernanke as Fed chairman, if only because he isn't viewed as being ideological,' said William C. Dudley, chief United States economist at Goldman, Sachs. The disadvantage is that Mr. Bernanke may not be able to build up close ties in the White House, where Mr. Bush's inner circle places high priority on personal loyalty and passionate support for the White House's policy goals. Mr. Bernanke declined to be interviewed until he starts his new job. The Senate approved his nomination in a unanimous voice vote on Wednesday and he is expected to start early next week. But administration officials and people who know him said Mr. Bernanke was eager to switch from the Fed to the White House. Ben Shalom Bernanke, 51, established his academic prowess early in life. The son of a pharmacist in Dillon, S.C., he won the state spelling bee in sixth grade, only to falter in the national championship on the word 'edelweiss.' In high school, he taught himself calculus because his school did not offer it. He earned the highest SAT scores of any student in South Carolina the year he applied to college. He went on to study economic history at Harvard University and then earn a doctorate in economics at Massachusetts Institute of Technology. 'I always thought I would be an academic lifer,' Mr. Bernanke recalled in a speech to the American Economic Association in January, adding that his biggest complaint about the Fed was the need to wear a suit to work. Following on the work of Milton Friedman and Anna Schwartz, who blamed the Depression of the 1930's on misguided Fed policy, Mr. Bernanke forged his academic reputation by arguing that the problems had been made worse because the United States and many other countries clung to the gold standard. The key to economic recovery, he wrote, came when Franklin D. Roosevelt let the dollar float and then reset its value at a much lower level in relation to gold. The 'gold standard orthodoxy,' Mr. Bernanke remarked in a speech last year, led to 'disastrous consequences' and highlighted the dangers of adhering to rigid but untested economic ideas. As a professor at Princeton, Mr. Bernanke became a tireless advocate of 'inflation targeting,' which calls for a central bank to publicly establish a target for inflation - perhaps no more than 2 percent - and to set monetary policy with that target in mind. Mr. Bernanke, along with many other economists, contends that setting public targets would be a major step toward greater openness at the Federal Reserve and would make it much easier for investors to anticipate policy. It is an idea that Mr. Greenspan adamantly opposes, on the ground that it would reduce the flexibility of the Fed and be difficult to carry out in practice. But even though Mr. Bernanke openly disagreed with Mr. Greenspan, the dispute does not appear to have hampered his relations with the Fed chairman. Indeed, analysts believe Mr. Bernanke has played a significant role in making the central bank more transparent. In a major departure in 2003, the Fed began giving investors what amounted to advance guidance by declaring that it would keep interest rates low for a 'considerable period.' Over time, it gradually changed its guidance and has been telling investors for the last year that it would raise rates at a 'pace that is likely to be measured.' Though Mr. Greenspan clearly supported the advance guidance, the practice fit neatly with Mr. Bernanke's thesis that the Fed needed to communicate more clearly with the public. In moving to the White House, Mr. Bernanke appears ready to make a major career change. He recently informed Princeton, where he has been on a leave of absence, that he will officially resign his professorship at the end of this summer. That is a departure from his three most recent predecessors - Harvey S. Rosen, N. Gregory Mankiw and Mr. Hubbard - who all returned to their academic posts. Mr. Bernanke also bought a house on Capitol Hill and adopted the Washington Nationals as his hometown baseball team. His wife, Anna, is teaching Spanish at the National Cathedral School here. People who know Mr. Bernanke say he is entirely comfortable in supporting President Bush's economic policies. He has expressed little worry about the current budget deficit, which is expected to be about $350 billion this year, and he has supported Mr. Bush's call to overhaul Social Security. But that may not be enough. Lawrence B. Lindsey, director of the Mr. Bush's National Economic Council in the first term, infuriated White House officials by publicly suggesting before the war in Iraq started that it could cost $100 billion to $200 billion. He was immediately silenced, and later forced to resign. Since then, the cost of the war has exceeded his estimate. Mr. Mankiw never veered from White House policy, but came under heavy attack when he described the 'outsourcing' of jobs to other countries as a form of trade that would ultimately benefit the United States. The comment was consistent with Mr. Bush's perspective, but Mr. Mankiw was forced to apologize publicly to House Republicans anyway for his politically incorrect views. As he moves to the White House, Mr. Bernanke's most valuable political preparation may have been earned serving on the school board in Montgomery Township, N.J., where he fought to win support for the construction of new schools. Mr. Bernanke recently described that experience as 'six grueling years during which my fellow board members and I were trashed alternately by angry parents and angry taxpayers.' In the end, Mr. Bernanke and his side won the day. The last school under debate at that time was recently completed.

Subject: Re: Ben Bernanke From: Pete Weis To: Emma Date Posted: Fri, Jun 17, 2005 at 20:00:00 (EDT) Email Address: Not Provided Message: Bernanke made the famous or infamous statement about utilizing the 'printing press' to avoid deflation. As this article states, he does not worry much about budget deficits. IMO, the government will have some big bailouts in its future - more pension plans, Fannie Mae & Freddi Mac (?), Ford & GM (too big to fail?), FDIC obligations, etc. So some form of considerable dollar creation through heavy borrowing to make up for the lack of tax revenue would be in the cards - don't believe Bernanke will push for any repeal of the Bush tax reductions. Bernanke's big problem - convincing the world that the dollar won't collapse. Is he the man for the job? Personally, I'm becoming even more focused on hedging dollar droppage. Buffet, although being questioned recently for his bets against the dollar, will hang with his bet and, as usual, prove his critics wrong.

Subject: Re: Ben Bernanke From: Terri To: Pete Weis Date Posted: Fri, Jun 17, 2005 at 20:21:31 (EDT) Email Address: Not Provided Message: Since Robert Rubin will not be asked to be Federal Reserve Chair, the nomination of Ben Bernanke would be excellent. Of course, we can not expect him to involve himself in fiscal policy but that is not the job of Fed governors. Should Bernanke be nominated I will be well pleased, for he is moderate politically and respected as an economist. However, Alan Greenspan can and may well stay on beyond the coming year.

Subject: Disneyland in China and Ecology From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 14:44:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/business/worldbusiness/17shark.html?pagewanted=all Disneyland in China Offers a Soup and Lands in a Stew By KEITH BRADSHER HONG KONG - Donald Duck and friends are being drawn into an unusual showdown between Western sensitivities and Chinese tradition, setting off a debate that has this city buzzing. It all began when Hong Kong Disneyland, a new theme park scheduled to open on Sept. 12, announced that it would serve shark's fin soup - a chewy, sinewy, stringy dish that has been a Chinese favorite for two centuries. But plans for the culinary delicacy, to be served at wedding banquets, have drawn an outraged response from environmentalists. They say that so many sharks wind up floating in soup these days that there are not enough left swimming in the world's oceans. Leery of looking like the ugly American in China, the Walt Disney Company has taken great pains to show its appreciation for Chinese traditions, saying it is simply following local standards. 'The dish is considered an integral part of a Chinese wedding banquet,' a company spokeswoman, Esther Wong, said. 'Since Hong Kong Disneyland is located in Asia, we feel an obligation to offer a choice.' Even though it has yet to serve a single bowl of shark's fin soup, Disney's prominent image makes it a natural target. In this simmering shark-eat-shark dispute, one group, the Sea Shepherd Conservation Society, has printed T-shirts showing Mickey Mouse and Donald Duck brandishing knives and leering sadistically over three bleeding sharks that have lost their fins. 'They say it's cultural. Does that mean Disneyland in Japan is now going to be having whale burgers?' asked Paul Watson, the founder and president of the conservation society, in Friday Harbor, Wash. Another group, the Animals Asia Foundation, has seized upon the issue as a way to underline its concerns over how China's growing wealth has led to a growing appetite for rare species. Munching on leopard cats, exotic snakes and scaly anteaters known as pangolins, both for status and for the supposed health benefits, has become so popular that animal advocates fear entire species could be threatened. Hong Kong authorities recently intercepted 1,800 freeze-dried penguins on a beach being smuggled to mainland Chinese restaurants. Disney officials are holding their ground, saying that shark's fin soup will stay on the menu here for wedding banquets, a profitable business at the company's theme parks around the world. But acknowledging the criticism, Disney also says that anyone ordering shark's fin soup for a wedding banquet will be given a leaflet pointing out the decline in the number of sharks. Ms. Wong said Disney would suggest alternative dishes but would still serve shark's fin soup upon request. The soup at Hong Kong Disneyland will not be made with fins from three shark species covered by an international agreement restricting trade in threatened or endangered species, Ms. Wong said. Fins from the three species - great white, basking and whale sharks - cannot be traded internationally without special licenses. Such formal protection has not deterred schoolchildren here from signing pledges to boycott Hong Kong Disneyland. Environmental groups here and in the United States are organizing online petitions calling on the company to change course. Sharon Chan, a ninth grader who helped organize a Disney boycott here, says that 'if they keep on killing sharks for shark's fin soup, then sharks will become extinct and kind of die.' Marine scientists say that sharks as a whole are unlikely to disappear. But populations of some of the largest and most heavily fished species have fallen sharply. Researchers at Dalhousie University in Halifax, Nova Scotia, found an 89 percent drop in the North Atlantic population of one species favored by cartoonists, the hammerhead shark. Hong Kong's catering industry and the shark's fin merchants of Sai Ying Poon, a warren of alleys that is the hub of the global trade in shark fins, fear that the criticism of Disney is just the first wave of a broader threat to one of the restaurant industry's most profitable dishes. Alarmed by front-page articles on the controversy in local newspapers, they are accusing Disney critics of 'cultural imperialism' and disrespect for Chinese traditions. Cheung Yu-yan, a member of Hong Kong's legislature elected by the city's restaurateurs, said that chefs were only serving what the public wanted. 'It's always popular - you can't get any money out of your patrons if you don't sell shark's fin soup,' Mr. Cheung said. The soup, he said, can command up to $150 at the best restaurants, and he joked that if the sharks were not eaten, they might be prowling near swimming beaches instead. In Sai Ying Poon on a recent morning, Leung Siu-leung was rearranging blue sharks' tails drying on woven rattan mats. Mr. Leung blamed Westerners for stirring up objections to the consumption of shark fins. 'It's a cultural difference,' he said. 'They don't eat it, so they feel differently.' Despite the vigorous defense, there are some signs of shifting standards here. A Hong Kong shark cartoon character, James Fin H2O, is a mascot for Ocean Park, an amusement and marine conservation park that urges respect for sharks. Ocean Park bans shark's fin soup at wedding banquets held there. But Ocean Park is fighting longstanding tradition. Ho Pui-yin, an associate professor of history at the Chinese University of Hong Kong, said that coastal peoples in China have had a tradition for centuries of serving a valuable fish at wedding banquets and on other important occasions. Shark fins, associated with danger and youthfulness, became popular in the late 18th and early 19th centuries as standards of living began to improve. Demand soared in the late 20th century along with incomes. In the last five years, there have been early signs of environmental concerns about shark fin consumption in Hong Kong, Taiwan and even China, Professor Ho said. The president of Taiwan, Chen Shui-bian, announced nearly four years ago that shark's fin would not be served at his daughter's wedding. Local delicacies were served instead, like chicken testicles, which resemble slightly yellow grains of rice and are cooked in wine for a dish believed to improve virility. Alan Lee, the owner of the Kwan Yi Trading Company, where the smell of dried fish drifted recently from large white sacks full of fins, complained that many upscale restaurants now buy less than a tenth of the shark's fin they did in the early 1980's. The oddest part of the shark fin controversy is that even aficionados acknowledge that the fins themselves have practically no taste. The taste comes from the soup, while the fins are prized for their texture. 'If it's very slippery in your mouth and on your tongue,' Mr. Lee said, 'then it's good.'

Subject: The two-'armed' but one-handed country From: Pancho Villa To: All Date Posted: Fri, Jun 17, 2005 at 14:19:07 (EDT) Email Address: nma@hotmail.com Message: Isolation hides a European opportunity for Tony Blair PHILIP STEPHENS The headlines proclaim him isolated, instead he gives every impression of a politician who has woken up on the right side of history. The arithmetic of his week's Brussels summit says that fellow European leaders have lined up 24:1 against Tony Blair, Britain's prime minister, in the argument about the European Union's finances. But the dispute over Britain's budget rebate is a diversion. On the issue that matters - how to recover from ie popular rejection in France and the Netherlands of the Union's institutional treaty - an opportunity is emerged for Mr Blair to shape Europe's debate. We should not expect much of the immit. Agreement on the budget - possible if unlikely - would rid the union of a distraction. But the sismic shock of the treaty's demise has yet to be fully absorbed. Even the plucky Luxembourgers have abandoned the idea that the ratification could o simply continue as if nothing had happened. But not all have grasped the extent to which the rules of the ropean game have changed forever. It was only after the terrorist attacks on America in September 2001 that we saw clearly the new geopolitical realities of the post-cold war world. Now, the votes against the treaty in two founder states have exposed the irreversible shifts in the poitical geometry of an EU of 25. In Blair's blunt assessment during a visit to Paris this week: 'It's got to be run on a different basis.' As we have seen many times in recent years, not least over Iraq, the Franco-German alliance can no longer set the direction of the Union. Equally important, the pace of globalisation has rewritten the terms of Europe's engagement with the world. A decade ago, the comfortable assumption was that everyone else would defer to Europe's economic power. Today's truth is that the EU must adapt. Appearances in politics sometimes speak to realities. Mr Blair's Paris trip was one such occasion. Jacques Chirac decreed that there would be no joint press conference after their talks. This was not the calculated snub to Mr Blair some imagined. The French president saw nothing to be gained from answering questions from a hostile British press. With Mr Blair, the president was charm personified. For his part, Mr Blair invited the media instead to the British embassy. He was polite about Mr Chirac and self-deprecatory in calling for a rethink of how the EU connects with voters. The event, though, caught the political facts. Here was a British prime minister talking confidently about Europe while France's broken president hid behind the arras. I have heard European politicians say that Mr Blair has luck to thank for his good fortune. Maybe so. Certainly it is only weeks since the British political classes were speculating that a No vote in the UK would signal the end of his premiership. That said, a re-elected Mr Blair was always going to profit from the comparison with troubled European colleagues. The imminent demise of Germany's Gerhard Schroder is another example. Mr Blair used to count the German chancellor as a political friend. Now, the relationship is viewed in Downing Street quite simply as 'bad'. I am told Mr Schroder suggested a public display of unity when he met Mr Blair in Berlin this week; and a few minutes later attacked his guest at a joint press conference. In any event, the electoral clock is ticking for Mr Schroder. His old friend Mr Chirac has already been making overtures to Angela Merkel, the CDU leader and expected winner of a September election. Mr Blair too was at pains to meet her during his Berlin trip. Elsewhere, Jose Luis Rodriguez Zapatero, the Spanish prime minister, has failed to make an impact, in spite of, or perhaps because of, his close alliance with France and Germany. 'He's simply not a player' is the judgment on Mr Zapatero of one Eurocrat. Italy's Silvio Berlusconi counts himself an ally of Mr Blair but he is weak politically at home. In fact, Mr Blair has more allies than are prepared to admit it. Scratch below the surface and politicians and policymakers will tell you that Britain's economic success speaks for itself. Mr Blair's insistence that governments must redesign their economic and social systems to meet the competitive challenges of globalisation strikes a chord in the unlikeliest of places. Nicholas Sarkozy, at once Mr Chirac's interior minister and arch-rival, is one of many French admirers. One prominent French socialist has remarked that Mr Blair, alone among Europe's big five, has real political credibility. Germans and Italians have been heard to say the same. This does not imply that the rest of Europe must adopt what Mr Chirac calls Britain's ultra-liberalism. The reviled Anglo-Saxon model is a figment of fevered imaginations on Europe's nationalist right and anti-globalisation left. Public spending - much of it on social welfare - has risen faster in Britain than anywhere else. In any event, there is no one formula to combine economic flexibility with decent social standards. Denmark and Sweden have taken different routes but arrived at a similar destination. The EU has a supporting role but only national governments can make these sort of choices. Meanwhile, the political opportunity for Mr Blair is far from unalloyed. Temperamentally, he might feel more comfortable with Mrs Merkel in Berlin and Mr Sarkozy in Paris. But both of these leaders-in-waiting oppose Turkey's eventual membership of the EU - a key strategic objective of British foreign policy. Here as elsewhere, Mr Blair faces the abiding suspicion in much of the EU that his real loyalties lie with America rather than Europe. Then there is the question of style. If Mr Blair wants to be heard, his government will have to abandon the hectoring that has so often defined Britain's relations with the rest of Europe. The point was well made by Peter Mandelson, the EU's external affairs commissioner and a close political ally of the prime minister, earlier this week in a lecture to Britain's Fabian Society. It is a lesson that the British Treasury and Foreign Office are reluctant to learn. It was Mr Blair who remarked that the events of September 11 2001 had left the global system in flux. Europe now feels similarly inchoate. For the first time in decades Britain may have the opportunity to shape the contours of Europe. Is it just the pessimist in me that says it is likely to miss it? FT FRIDAY JUNE 17 2005

Subject: World Stock and Bond Markets From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 13:45:04 (EDT) Email Address: Not Provided Message: Almost every stock market in the world is now positive in domestic currency terms for the year. A number of world markets have already gained more than 10%. Since the dollar is so strong however there are several markets that are mildly negative in dollars. The indication is that currency weakness in country after country is compensated by increased stocks market values. Sweden is up 13% in domestic currency and down 2% in dollars. Such compensation is promising. World stock and bond markets are especially stable in historical terms. The dollar has gained value persistently since the beginning of January. Then, the bull market in stocks which began in October 2002 continues while the pace of gains is moderate enough to leave reasonable valuations. The bull market in long term bonds begun in January 2000 continues as well.

Subject: Globalization: It's Not Just Wages From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 12:19:52 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/business/worldbusiness/17whirlpool.html?pagewanted=all Globalization: It's Not Just Wages By LOUIS UCHITELLE BENTON HARBOR, Mich. - Who is the biggest exporter of German-made washing machines to the United States? Not Miele or Bosch-Siemens, or any other German manufacturer. It is the American appliance maker, Whirlpool, the company proudly reports. Never mind the higher labor cost - $32 an hour, including benefits, versus $23 in the United States. The necessary technology existed in Germany when Whirlpool decided to sell front-loading washers to Americans. So did a trained work force and a Whirlpool factory already making a European version of the front loader. 'We were able to expand the capacity in Germany at a very incremental investment,' said Jeff M. Fettig, Whirlpool's chairman and chief executive. 'It was the fastest way to the American market.' Globalization is often viewed as a rootless process of constantly moving jobs to low-wage countries. But the issue is more complex, as illustrated by Whirlpool's worldwide operations. What attracts Mr. Fettig and other chief executives is a relatively new form of globalization that emphasizes first-rate centers of production and design in various countries - including the United States. Whirlpool's global network, a work in progress, includes microwave ovens engineered in Sweden and made in China for American consumers; stoves designed in America and made in Tulsa, Okla., for American consumers; refrigerators assembled in Brazil and exported to Europe; and top-loading washers made at a sprawling factory in Clyde, Ohio, for American consumers, although some are sold in Mexico. 'The really sophisticated multinationals,' said Diana Farrell, director of the Global Institute at McKinsey & Company, the management consulting firm, 'are taking advantage of the different locations in their global networks without worrying about whether they also sell in the countries where they produce.' The advantage of Whirlpool's approach to globalization is that it allows the company to put the earnings of overseas affiliates to their best use anywhere in the world, Ms. Farrell argues. The larger consequence, she adds, is that parent companies 'invest in new technologies and business opportunities that will eventually create new jobs at home and abroad.' At the moment, the job growth and the expansion are mainly abroad. As its turns out, more than 40 percent of the nation's imports are from the overseas subsidiaries of American companies, contributing to the lopsided trade deficit, but also making companies more competitive. Whirlpool is a typical example: its employment in the United States has not risen in years while it has tripled abroad. The 'global production footprints,' as Ms. Farrell calls them, draw on a growing network of first-rate suppliers in Mexico, China and elsewhere that allow manufacturers to go beyond mere assembly overseas into complex production. And the investment, once made, becomes an anchor; a sunk cost, as economists put it. Sunk cost figured in Whirlpool's decision to ship front-loader washing machines to the United States from its factory in Schorndorf, Germany, which Whirlpool acquired in 1991 with the purchase of the appliance operations of Philips N.V. for more than $1 billion. Almost two million of the front loaders have been sold in the United States since 2001, at $1,200 apiece, and as demand rises, so do the shipments across the Atlantic. The German-made washers load laundry from a door on the front that opens into a basket that spins at high speeds. Front loaders, long popular in Europe, in part because they use less water and electricity, are gaining ground among American consumers, who have traditionally favored top loaders that circulate the laundry and water using an agitator fitted with fins. The Maytag Corporation got into the front loader market first, in the 1990's, but soon stumbled. Its Neptune model, engineered and made in the United States, suffered from a high repair rate. That gave Whirlpool's Duet front loader an advantage, Mr. Fettig said; his company avoided the pitfalls by adopting the already kink-free German technology. Maytag, in a statement, said that it, too, has now resorted to globalization to get back into the game. The newest model 'is made in South Korea through a technology and manufacturing partnership with Samsung,' Maytag said. Whirlpool's executives take issue with analysts who declare that low foreign wages, particularly in China and elsewhere in Asia, combined with generous subsidies from those countries, will keep the global production networks mobile. Company executives say the manpower required to make its appliances is declining, diluting the drawing power of lower wages. One hour of labor, for example, goes into each of the 20,000 top-loaders coming off the line daily at Clyde, down from 2.5 hours five years ago. 'We may pay $23 an hour in Clyde, including benefits, versus $3 in Mexico versus $1 in China,' Mr. Fettig said. 'But for one hour of labor, the difference won't begin to cover the shipping costs, let alone the investment it would take to build a new factory in Mexico or a new factory in China.' The Clyde factory, which employs 2,000 people, is billed as a jewel in Whirlpool's production network - an efficient, partly automated operation whose experienced workers possess a 'tribal knowledge' of their product that pays off in quality and cost saving. But if the Clyde factory did not already exist, Mr. Fettig would not put it there. 'I'd probably put it in Mexico,' he said. Whirlpool's total of 23,000 employees in this country has not changed in a decade, while the overseas work force has tripled, to 45,000. Yet, American consumers, not foreigners, account for two-thirds of Whirlpool's annual revenue, which was $13.2 billion last year, up from $10.3 billion in 2000. Parts suppliers - the small companies that mold plastic parts or machine metal ones, for example - play a big role in determining where new factories are put, or existing ones are expanded. In the last 15 years, suppliers have set up shop in growing numbers near the new production centers in China, India, Southeast Asia and Latin America. Without their presence, Whirlpool says, it would not have been able to concentrate the manufacture of microwave ovens in southern China. 'It is much more difficult to operate outside of an industrial country without that supplier base,' said Mark Brown, senior vice president at Whirlpool for global sourcing. The concentration of suppliers in northern Mexico helps explain why Whirlpool has decided to produce a less-costly front-loading washing machine at its existing manufacturing complex in Monterrey. The high-end, $1,200 model will continue to come from Schorndorf. The smaller Mexican front loaders, on the other hand, will be for the majority of American consumers and will be priced several hundred dollars less, too low to absorb the $50 in freight to cross the Atlantic, the company says. 'We looked at making them in the United States,' said David L. Swift, Whirlpool's executive vice president for North America, 'but since we did not already manufacture any front loaders here, this country did not have an advantaged position. Because of the shipping cost, we knew we had to make them in Mexico or America, and since the suppliers were already in Mexico, we thought we might as well go there.' Using Mexican workers, Whirlpool could have matched the efficiency of Schorndorf's labor force, said Roy Armes, Whirlpool's vice president for Mexico. Indeed, Mexican engineers, foremen and supervisors have gone to the German plant for 18 months of training, and line workers are also getting special instruction. But Whirlpool calculated that it could afford more workers at Mexican wages, so it did not purchase the most advanced automated machinery for Monterrey. 'When you have lower labor costs, it is hard to justify that higher investment,' Mr. Armes said. Companies like Whirlpool differentiate between skills that can be taught in a few weeks or months, and those that take longer to acquire. The harder-to-acquire skills anchor the one last Whirlpool factory in Benton Harbor, where the company got its start in 1911 and still has its headquarters. The company closed a washing machine plant in Benton Harbor in the mid-1980's, consolidating production in Clyde, but kept open a parts factory that makes the steel gears that are the heart of the washing machine's agitation mechanism. The machining to make the gears, and the nickel plating to prevent corrosion require a skill level not easily duplicated. 'You can find lots of machine shops and some plating operations, but you rarely find the two together,' Jim F. Spicer, the plant manager, said. 'And when you do find them together, you almost never find the volumes that we require.' The gears are trucked to the Clyde plant, four hours away. The 208 hourly workers (many of them long-termers; there has not been a layoff in more than 15 years) earn $14 to $20 an hour. At the low end of the scale are the 178 operators of the automated machining equipment, a skill that can take up to a year to master. The remaining 30 employees are mechanics and electricians who repair the machinery, having acquired these skills during a four-year apprenticeship that costs $200,000, a sum that Whirlpool pays, Mr. Spicer said, when it cannot find people already trained. One apprentice is in training; three recently graduated. 'In my opinion, the reason we are here and not outsourced,' Mr. Spicer said, 'is that we do excellent quality work. If we don't have that, we don't have anything.'

Subject: Thailand Relies Heavily on a Pickup From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 11:58:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/16/business/worldbusiness/16thaicars.html In a World of Car Builders, Thailand Relies Heavily on a Pickup By WAYNE ARNOLD Since starting Able Autopart Industries nearly 20 years ago, Yeap Swee Chuan has ridden the success of Thailand's bid to become the Detroit of the East. Now, after building a $176-million-a-year company that supplies every major carmaker from DaimlerChrysler to Toyota, Mr. Yeap has seen the future of Thailand's automotive industry. And, he says, it is in China. 'The Thai market will plateau in two to three years,' Mr. Yeap said. Last year his company, now called Aapico Hitech, shifted with the trend, buying an auto parts company near Shanghai. Others agree that Thailand's automobile industry is at a turning point. Using a blend of investment incentives and tariffs, Thailand lured the biggest names in automobiles to became Southeast Asia's largest vehicle producer, 15th in the world. Its industry employs 300,000 and has doubled production since 2001, with exports rising 40 percent last year. Central to that success has been the one-ton pickup truck. Promoting this vehicle as the workhorse of its developing economy has helped Thailand become the world's second-largest market for pickups after the United States. Its factories also export all over the world, from Britain and Africa to the Middle East and Australia. But the world needs only so many pickups, experts say, so even though Thailand may never lose its edge in one-ton trucks to China, its output will probably peak with global demand in five years. 'Thailand needs another product,' said Kosaku Hosokawa, president of Nissan Motor's Thai subsidiary. Just how to find a niche product sheltered from China's juggernaut in a world of falling trade barriers is a riddle that faces manufacturers everywhere. In Thailand, it has also become a source of friction with Japan, whose carmakers account for as much as 95 percent of the Thai auto market - friction that is threatening to derail bilateral free-trade talks between the countries. Japan's automakers have had a long relationship with Thailand, one that stretches back to the 1960's. Thailand offered the Japanese companies not only cheap labor and raw materials, but also a crossroads location with a relatively stable government and good roads and ports. The Thai government quickly singled out the one-ton pickup as ideal for its largely rural population, a vehicle able to haul sacks of rice and large families with equal ease. To encourage Japanese automakers to produce the trucks in Thailand, the government offered tax holidays of up to eight years and virtually eliminated excise taxes on domestic pickup sales. It then sheltered its market behind steep import tariffs. Most important, it did not repeat Malaysia's and Indonesia's mistake of creating a domestic carmaker that would compete with the Japanese. 'Not only did they have volume, but they could basically run their own show,' said John Bonnell, executive director of Automotive Resources Asia, a consulting firm in Bangkok. A big catalyst behind Thailand's growth was, curiously, the Asian financial crisis of 1997-98. When the crisis hit, domestic auto sales collapsed, leaving automakers with unused capacity. 'Carmakers here had no choice; they had to turn to export markets,' said Thitithep Nophaket, an analyst at Phatra Securities in Bangkok. While Ford, General Motors, DaimlerChrysler and BMW have made big Thai investments in the last decade, Japan's automakers have gone even further, making Thailand their global base for pickup production. Isuzu, which makes one-ton pickups for G.M.; Mazda, which manufactures for Ford; and Toyota have all relocated pickup production to Thailand. The troubled Mitsubishi Motors now exports its Thai pickups to 139 countries, accounting for 21 percent of Thailand's auto exports. Honda Motors even exports pickups from Thailand to Japan. The latest transplant is Nissan, which announced in March that it would invest 29 billion baht ($709 million) in Thai pickup production. 'We're transferring all pickup truck capacity to Thailand,' Mr. Hosokawa, the Thai unit's president, said. But as trade barriers tumble all over the world, automakers are eliminating redundant factories and concentrating production where it can be done most profitably. So while Thailand remains the region's hub for truck exports, its sedan assembly industry is threatened by imports from Australia and from other Southeast Asia nations that have free trade agreements with Thailand. With most auto executives in Thailand expecting the one-ton pickup market to peak by 2010, Thailand is feeling squeezed. 'On one side are Japan and Korea, with high wages and high technology,' said Vallop Tiasiri, president of the Thailand Automotive Institute, which advises the government on automotive policy. 'And at the low end are China and India.' The solution, he said, is to convince automakers to devise new products that take advantage of Thailand's existing capacity. Japanese automakers are already adapting their pickup assembly lines in Thailand to produce sport utility and similar vehicles. Toyota announced in April that it would invest 18 billion baht ($440 million) to build a Thai factory to make a new 'international multipurpose vehicle' designed for the developing world. Thailand also wants automakers to build high-end small cars with high fuel efficiency and low emissions that could compete in Europe. One obstacle to such a move, experts say, is the Thai auto parts industry. In the industry's early years, Thailand promoted its growth by requiring that vehicles use a big proportion of locally made components to maintain their low-tariff status. Parts makers flocked to Thailand and local companies like Aapico were joined by industry giants like Denso of Japan and Delphi, which is based in Michigan. Mr. Yeap of Aapico realized the need to acquire competitive technologies. After his company went public in 2002, it bought the local parts business of the Dana Corporation of Toledo, Ohio, for $50 million. But Aapico is the exception. 'The government didn't push these guys to upgrade technologically,' said Richard F. Doner, an associate professor of Asian industrial development at Emory University in Atlanta. As a result, Japanese carmakers have viewed Thai auto parts as inferior. Since 1997, half of the Thai-owned firms that provide top-tier parts to the industry have been replaced or bought out by Japanese companies. Mr. Vallop of the Thailand Automotive Institute wants the government to invest 10 billion baht ($244 million) in upgrading the Thai auto parts industry and establish an institute for research and development. The Japanese are seeking quicker relief. As part of the free trade agreement Tokyo is negotiating with Bangkok, they want Thailand to phase out import tariffs on large-engine Japanese luxury cars. But Thai auto assemblers, and European luxury car makers like BMW and Mercedes, say Japanese luxury imports would cripple their sales. Japan also wants Thailand to phase out tariffs on high-end steel for auto bodies that cannot yet be made in Thailand. Thailand's steel makers say they need time to develop capacity to make this kind of steel, time the Japanese counter they do not have. Meanwhile, competition from China is moving fast. Two Chinese automakers, Hafei and Chery, have already begun exporting cars to the developing world. DaimlerChrysler and Honda plan to export China-made sedans to Europe. Mr. Yeap is not convinced that Thailand can move in time. While Thailand will always have pickups, he said, 'China's expansion will keep Thailand out of sedan production.'

Subject: In Come the Waves: Housing From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 10:58:17 (EDT) Email Address: Not Provided Message: http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=4079027' June 16, 2005 In come the waves From The Economist The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust? According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history. The global boom in house prices has been driven by two common factors: historically low interest rates have encouraged home buyers to borrow more money; and households have lost faith in equities after stockmarkets plunged, making property look attractive. Will prices now fall, or simply flatten off? And in either case, what will be the consequences for economies around the globe? The likely answers to all these questions are not comforting. The increasing importance of house prices in the world economy prompted The Economist to start publishing a set of global house-price indices in 2002 (see article). These now cover 20 countries, using data from lending institutions, estate agents and national statistics. Our latest quarterly update shows that home prices continue to rise by 10% or more in half of the countries (see table). America has seen one of the biggest increases in house-price inflation over the past year, with the average price of homes jumping by 12.5% in the year to the first quarter. In California, Florida, Nevada. Hawaii, Maryland and Washington, DC, they soared by more than 20%. In Europe, prices have long been at dizzy heights in Ireland and Spain, but over the past year have also spurted at rates of 9% or more in France, Italy, Belgium, Denmark and Sweden. Both France (15%) and Spain (15.5%) have faster house-price inflation than the United States. By contrast, some housing booms have now fizzled out. In Australia, according to official figures, the 12-month rate of increase in house prices slowed sharply to only 0.4% in the first quarter of this year, down from almost 20% in late 2003. Wishful thinkers call this a soft landing, but another index, calculated by the Commonwealth Bank of Australia, which is based on prices when contracts are agreed rather than at settlement, shows that average house prices have actually fallen by 7% since 2003; prices in once-hot Sydney have plunged by 16%. Britain's housing market has also cooled rapidly. The Nationwide index, which we use, rose by 5.5% in the year to May, down from 20% growth in July 2004. But once again, other surveys offer a gloomier picture. The Royal Institution of Chartered Surveyors (RICS) reports that prices have fallen for ten consecutive months, with a net balance of 49% of surveyors reporting falling prices in May, the weakest number since 1992 during Britain's previous house-price bust. The volume of sales has slumped by one-third compared with a year ago as both sellers and buyers have lost confidence in house valuations. House-price inflation has also slowed significantly in Ireland, the Netherlands and New Zealand over the past year. Since 1997, home prices in most countries have risen by much more in real terms (ie, after adjusting for inflation) than during any previous boom. (The glaring exceptions are Germany and Japan, where prices have been falling.) American prices have risen by less than those in Britain, yet this is still by far the biggest boom in American history, with real gains more than three times bigger than in previous housing booms in the 1970s or the 1980s. The most compelling evidence that home prices are over-valued in many countries is the diverging relationship between house prices and rents. The ratio of prices to rents is a sort of price/earnings ratio for the housing market. Just as the price of a share should equal the discounted present value of future dividends, so the price of a house should reflect the future benefits of ownership, either as rental income for an investor or the rent saved by an owner-occupier. Calculations by The Economist show that house prices have hit record levels in relation to rents in America, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium. This suggests that homes are even more over-valued than at previous peaks, from which prices typically fell in real terms. House prices are also at record levels in relation to incomes in these nine countries. America's ratio of prices to rents is 35% above its average level during 1975-2000. By the same gauge, property is “overvalued” by 50% or more in Britain, Australia and Spain. Rental yields have fallen to well below current mortgage rates, making it impossible for many landlords to make money. To bring the ratio of prices to rents back to some sort of fair value, either rents must rise sharply or prices must fall. After many previous house-price booms most of the adjustment came through inflation pushing up rents and incomes, while home prices stayed broadly flat. But today, with inflation much lower, a similar process would take years. For example, if rents rise by an annual 2.5%, house prices would need to remain flat for 12 years to bring America's ratio of house prices to rents back to its long-term norm. Elsewhere it would take even longer. It seems more likely, then, that prices will fall. A common objection to this analysis is that low interest rates make buying a home cheaper and so justify higher prices in relation to rents. But this argument is incorrectly based on nominal, not real, interest rates and so ignores the impact of inflation in eroding the real burden of mortgage debt. If real interest rates are permanently lower, this could indeed justify higher prices in relation to rents or income. For example, real rates in Ireland and Spain were reduced significantly by these countries' membership of Europe's single currency—though not by enough to explain all of the surge in house prices. But in America and Britain, real after-tax interest rates are not especially low by historical standards. Betting the house America's housing market heated up later than those in other countries, such as Britain and Australia, but it is now looking more and more similar. Even the Federal Reserve is at last starting to fret about what is happening. Prices are being driven by speculative demand. A study by the National Association of Realtors (NAR) found that 23% of all American houses bought in 2004 were for investment, not owner-occupation. Another 13% were bought as second homes. Investors are prepared to buy houses they will rent out at a loss, just because they think prices will keep rising—the very definition of a financial bubble. “Flippers” buy and sell new properties even before they are built in the hope of a large gain. In Miami, as many as half of the original buyers resell new apartments in this way. Many properties change hands two or three times before somebody finally moves in. New, riskier forms of mortgage finance also allow buyers to borrow more. According to the NAR, 42% of all first-time buyers and 25% of all buyers made no down-payment on their home purchase last year. Indeed, homebuyers can get 105% loans to cover buying costs. And, increasingly, little or no documentation of a borrower's assets, employment and income is required for a loan. Interest-only mortgages are all the rage, along with so-called “negative amortisation loans” (the buyer pays less than the interest due and the unpaid principal and interest is added on to the loan). After an initial period, payments surge as principal repayment kicks in. In California, over 60% of all new mortgages this year are interest-only or negative-amortisation, up from 8% in 2002. The national figure is one-third. The new loans are essentially a gamble that prices will continue to rise rapidly, allowing the borrower to sell the home at a profit or refinance before any principal has to be repaid. Such loans are usually adjustable-rate mortgages (ARMs), which leave the borrower additionally exposed to higher interest rates. This year, ARMs have risen to 50% of all mortgages in those states with the biggest price rises. The rapid house-price inflation of recent years is clearly unsustainable, yet most economists in most countries (even in Britain and Australia, where prices are already falling) still cling to the hope that house prices will flatten rather than collapse. It is true that, unlike share prices, house prices tend to be somewhat “sticky” downwards. People have to live somewhere and owners are loth to accept a capital loss. As long as they can afford their mortgage payments, they will stay put until conditions improve. The snag is that eventually some owners have to sell—because of relocation, or job loss—and they will be forced to accept lower prices. Indeed, a drop in nominal prices is today more likely than after previous booms for three reasons: homes are more overvalued; inflation is much lower; and many more people have been buying houses as an investment. If house prices stop rising or start to fall, owner-occupiers will largely stay put, but over-exposed investors are more likely to sell, especially if rents do not cover their interest payments. House prices will not collapse overnight like stockmarkets—a slow puncture is more likely. But over the next five years, several countries are likely to experience price falls of 20% or more. While America's housing market is still red hot, others—in Britain, Australia and the Netherlands—have already cooled. What lessons might they offer the United States? The first is that, contrary to conventional wisdom, it does not require a trigger, such as a big rise in interest rates or unemployment, for house prices to decline. British home prices started to fall in the summer of 2004 after the Bank of England raised rates by a modest one and a quarter percentage points. Since 2002, the Reserve Bank of Australia has raised rates by exactly the same amount and unemployment is at a 30-year low, yet home prices have fallen. The Federal Reserve's gradual increase in rates by two percentage-points over the past year has done little to scare away buyers, because most still have fixed-rate mortgages and long-term bond yields have remained unusually low. But as more Americans have been resorting to ARMs, so the housing market is becoming more vulnerable to rising rates. Rung at the bottom British and Australian prices have stalled mainly because first-time buyers have been priced out of the market and demand from buy-to-let investors has slumped. British first-timers now account for only 29% of buyers, down from 50% in 1999. And, according to the National Association of Estate Agents, buy-to-let purchases are running 50% lower than a year ago. As prices become more and more heady in America, the same will happen there. British experience also undermines a popular argument in America that house prices must keeping rising because there is a limited supply of land and a growing number of households. As recently as a year ago, it was similarly argued that the supply of houses in Britain could not keep up with demand. But as the expectation of rising prices has faded, demand has slumped. According to RICS, the stock of houses for sale has increased by one-third over the past year. America has faster population growth than Britain, but its supply of housing has also been rising rapidly. Economists at Goldman Sachs point out that residential investment is at a 40-year high in America, yet the number of households is growing at its slowest pace for 40 years. This will create excess supply. Another mantra of housing bulls in America is that national average house prices have never fallen for a full year since modern statistics began. Yet outside America, many countries have at some time experienced a drop in average house prices, such as Britain and Sweden in the early 1990s and Japan over the past decade. So why should America be immune? Alan Greenspan, chairman of America's Federal Reserve, accepts that there are some local bubbles, but dismisses the idea of a national housing bubble that could harm the whole economy if it bursts. America has in the past seen sharp regional price declines, for example in Boston, Manhattan and San Francisco in the early 1990s. This time, with prices looking overvalued in more states than ever in the past, average American prices may well fall for the first time since the Great Depression. But even if prices in America do dip, insist the optimists, they will quickly resume their rising trend, because real house prices always rise strongly in the long term. Robert Shiller, a Yale economist, who has just updated his book “Irrational Exuberance” (first published on the eve of the stockmarket collapse in 2000), disagrees. He estimates that house prices in America rose by an annual average of only 0.4% in real terms between 1890 and 2004. And if the current boom is stripped out of the figures, along with the period after the second world war when the government offered subsidies for returning soldiers, artificially inflating prices, real house prices have been flat or falling most of the time. Another sobering warning is that after British house prices fell in the early 1990s, it took at least a decade before they returned to their previous peak, after adjusting for inflation. Another worrying lesson from abroad for America is that even a mere levelling-off of house prices can trigger a sharp slowdown in consumer spending. Take the Netherlands. In the late 1990s, the booming Dutch economy was heralded as a model of success. At the time, both house prices and household credit were rising at double-digit rates. The rate of Dutch house-price inflation then slowed from 20% in 2000 to nearly zero by 2003. This appeared to be the perfect soft landing: prices did not drop. Yet consumer spending declined in 2003, pushing the economy into recession, from which it has still not recovered. When house prices had been rising, borrowing against capital gains on homes to finance other spending had surged. Although house prices did not fall, this housing-equity withdrawal plunged after 2001, removing a powerful stimulus to spending. Housing-equity withdrawal has also fallen sharply over the past year in Britain and Australia, denting household spending. In Australia, the 12-month rate of growth in retail sales has slowed from 8% to only 1.8% over the past year; GDP growth has halved to 1.9%. In Britain, too, a cooling of the housing market has been accompanied by an abrupt slowdown in consumer spending. If, as seems likely, home prices continue to fall in both countries, spending will be further squeezed. Even a modest weakening of house prices in America would hurt consumer spending, because homeowners have been cashing out their capital gains at a record pace. Goldman Sachs estimates that total housing-equity withdrawal rose to 7.4% of personal disposable income in 2004. If prices stop rising, this “income” from capital gains will vanish. And after the gold rush? The housing market has played such a big role in propping up America's economy that a sharp slowdown in house prices is likely to have severe consequences. Over the past four years, consumer spending and residential construction have together accounted for 90% of the total growth in GDP. And over two-fifths of all private-sector jobs created since 2001 have been in housing-related sectors, such as construction, real estate and mortgage broking. One of the best international studies of how house-price busts can hurt economies has been done by the International Monetary Fund. Analysing house prices in 14 countries during 1970-2001, it identified 20 examples of “busts”, when real prices fell by almost 30% on average (the fall in nominal prices was smaller). All but one of those housing busts led to a recession, with GDP after three years falling to an average of 8% below its previous growth trend. America was the only country to avoid a boom and bust during that period. This time it looks likely to join the club. Japan provides a nasty warning of what can happen when boom turns to bust. Japanese property prices have dropped for 14 years in a row, by 40% from their peak in 1991. Yet the rise in prices in Japan during the decade before 1991 was less than the increase over the past ten years in most of the countries that have experienced housing booms. And it is surely no coincidence that Japan and Germany, the two countries where house prices have fallen for most of the past decade, have had the weakest growth in consumer spending of all developed economies over that period. Americans who believe that house prices can only go up and pose no risk to their economy would be well advised to look overseas.

Subject: As Toyota Goes ... From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 10:00:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/opinion/17friedman.html As Toyota Goes ... By THOMAS L. FRIEDMAN So I have a question: If I am rooting for General Motors to go bankrupt and be bought out by Toyota, does that make me a bad person? It is not that I want any autoworker to lose his or her job, but I certainly would not put on a black tie if the entire management team at G.M. got sacked and was replaced by executives from Toyota. Indeed, I think the only hope for G.M.'s autoworkers, and maybe even our country, is with Toyota. Because let's face it, as Toyota goes, so goes America. Having Toyota take over General Motors - which based its business strategy on building gas-guzzling cars, including the idiot Hummer, scoffing at hybrid technology and fighting Congressional efforts to impose higher mileage standards on U.S. automakers - would not only be in America's economic interest, it would also be in America's geopolitical interest. Because Toyota has pioneered the very hybrid engine technology that can help rescue not only our economy from its oil addiction (how about 500 miles per gallon of gasoline?), but also our foreign policy from dependence on Middle Eastern oil autocrats. Diffusing Toyota's hybrid technology is one of the keys to what I call 'geo-green.' Geo-greens seek to combine into a single political movement environmentalists who want to reduce fossil fuels that cause climate change, evangelicals who want to protect God's green earth and all his creations, and geo-strategists who want to reduce our dependence on crude oil because it fuels some of the worst regimes in the world. The Bush team has been M.I.A. on energy since 9/11. Indeed, the utter indifference of the Bush team to developing a geo-green strategy - which would also strengthen the dollar, reduce our trade deficit, make America the world leader in combating climate change and stimulate U.S. companies to take the lead in producing the green technologies that the world will desperately need as China and India industrialize - is so irresponsible that it takes your breath away. This is especially true when you realize that the solutions to our problems are already here. As Gal Luft, co-chairman of the Set America Free coalition, a bipartisan alliance of national security, labor, environmental and religious groups that believe reducing oil consumption is a national priority, points out: the majority of U.S. oil imports go to fueling the transport sector - primarily cars and trucks. Therefore, the key to reducing our dependence on foreign oil is powering our cars and trucks with less petroleum. There are two ways we can do that. One is electricity. We don't import electricity. We generate all of our needs with coal, hydropower, nuclear power and natural gas. Toyota's hybrid cars, like the Prius, run on both gasoline and electricity that is generated by braking and then stored in a small battery. But, says Luft, if you had a hybrid that you could plug in at night, the battery could store up 20 miles of driving per day. So your first 20 miles would be covered by the battery. The gasoline would only kick in after that. Since 50 percent of Americans do not drive more than 20 miles a day, the battery power would cover all their driving. Even if they drove more than that, combining the battery power and the gasoline could give them 100 miles per gallon of gasoline used, Luft notes. Right now Toyota does not sell plug-in hybrids. Some enthusiasts, though, are using kits to convert their hybrids to plug-ins, but that adds several thousand dollars - and you lose your Toyota warranty. Imagine, though, if the government encouraged, through tax policy and other incentives, every automaker to offer plug-in hybrids? We would quickly move down the innovation curve and end up with better and cheaper plug-ins for all. Then add to that flexible-fuel cars, which have a special chip and fuel line that enable them to burn alcohol (ethanol or methanol), gasoline or any mixture of the two. Some four million U.S. cars already come equipped this way, including from G.M. It costs only about $100 a car to make it flex-fuel ready. Brazil hopes to have all its new cars flex-fuel ready by 2008. As Luft notes, if you combined a plug-in hybrid system with a flex-fuel system that burns 80 percent alcohol and 20 percent gasoline, you could end up stretching each gallon of gasoline up to 500 miles. In short, we don't need to reinvent the wheel or wait for sci-fi hydrogen fuel cells. The technologies we need for a stronger, more energy independent America are already here. The only thing we have a shortage of now are leaders with the imagination and will to move the country onto a geo-green path.

Subject: Aid Initiative for Poor Nations? From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 09:59:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/politics/17millenium.html?pagewanted=all Bush Aid Initiative for Poor Nations Faces Sharp Budget Cuts and Criticism of Slow Pace By CELIA W. DUGGER WASHINGTON - With the United States under heavy international pressure to double aid to poor countries, one of President Bush's signature foreign aid initiatives is facing severe cuts in its proposed budget, intense criticism from African leaders and the departure of its director after only a year in the job. On Thursday, a House subcommittee recommended almost halving the president's $3 billion request for next year, citing the pressures of a tight budget. On Wednesday, Paul V. Applegarth, who has run the fledgling agency for the last year, told his staff he would be leaving, a decision an agency official said had been in the works for weeks. Mr. Applegarth, through a spokeswoman, declined to comment on the reasons for his leaving. And on Monday, leaders of five African nations complained forcefully to the president about what they saw as the extremely slow pace of grant making. Mr. Bush, in reply, publicly promised that his administration would work harder and faster. This week's series of unfortunate events contrasts with the soaring hopes the president voiced when announcing plans for the Millennium Challenge Account more than three years ago. 'By taking the side of liberty and good government,' he declared in March 2002, 'we will liberate millions from poverty's prison.' Over the last two years, Congress has appropriated $2.5 billion for the Millennium Challenge Account, but the corporation that oversees it has approved compacts with four nations for only $610 million. To date, the agency has spent only $400,000, an amount a senior House staff member dismissively described as 'not even chump change.' But Mr. Applegarth and some of the program's champions in Congress say the agency started from scratch only 16 months ago and has accomplished a great deal in a short time, building a staff and picking eligible countries and helping them develop antipoverty strategies. Proposals from 12 more poor countries are in the pipeline, and 4 worth $860 million are expected to be approved by the end of the year. Mr. Applegarth said the agency would be $1 billion short of what it needed to finance proposals it had from 16 of the 17 countries eligible for big grants, 8 of them in sub-Saharan Africa. 'They've gotten a bit of a bum rap,' said Representative Jim Kolbe, the Arizona Republican who heads the Appropriations subcommittee on foreign operations, which on Thursday recommended an appropriation of $1.75 billion for the program, rather than the $3 billion the president requested. 'I don't think lack of speed is a fair criticism.' It has taken time to get things done in an innovative way, agency officials said. For example, instead of sending in a team of American technocrats to create a development strategy for the countries, the agency asked the nations to write their own proposals, a complex and challenging task for developing nations short of highly skilled technocrats. In effect, the Millennium Challenge Account is an experiment to test the idea that past aid has often failed because it went to corrupt, ineffective governments, while grants to nations with relatively honest governments, low trade barriers and soundly managed economies will create economic growth and reduce poverty, said Todd Moss of the Center for Global Development in Washington. The assumption was that success would be built on large grants that would make the United States the biggest, or one of the biggest, donors in a country. In Madagascar, which signed the first compact, the $108 million project makes the United States only the fifth largest donor, though Mr. Applegarth said a second, bigger grant lay ahead. Besides Madagascar's compact, the Millennium Challenge Corporation's board of directors, headed by Secretary of State Condoleezza Rice, has also approved proposals from Honduras, Cape Verde and Nicaragua. Increasing agricultural productivity and reforming the financial sector are recurrent themes in the grants. Mr. Bush initially proposed that the agency receive $10 billion in its first three years. It now looks as if it will get a good bit less than half that. Mr. Applegarth said the agency needed the full $3 billion that Mr. Bush asked for this year or risked losing credibility with the poor countries that the United States hoped would make hard decisions to improve their governing skills to qualify for grants. 'The countries are going to say, 'Where's the beef?' ' he said in a recent interview. 'The United States isn't really committed to this.' Some of its most ardent supporters worry that the Millennium Challenge Account could wind up as just another disappointing development program. Representative Henry J. Hyde, chairman of the House International Relations Committee, said the account embodied what he called 'the most important development idea in a generation.' But he added at a hearing in April, 'We see a program struggling to get off the ground and funding levels for compacts now emerging that lack the boldness necessary to break the cycle of poverty in countries prepared to take that step.' Some experts and a former government official say the White House should shoulder a good bit of the responsibility for the slow start. They note that it took the administration almost two years to set the agency up after Mr. Bush first announced his plans for it in 2002. In his 2002 speech, the president said he would get financing for the program in 2003, but the money failed to materialize. 'We had prepared the plan and greased everything to get $100 million,' said Patrick Cronin, then a senior official in the United States Agency for International Development who headed an interagency task force on the Millennium Challenge Account. 'The White House couldn't get its act together because of Iraq planning.' Mr. Cronin, now director of studies at the Center for Strategic and International Studies in Washington, said he had left the administration 'in frustration because it was taking so long.' A senior administration official, who spoke only on condition that he be quoted anonymously, said the problem was not Iraq, but concerns about piloting the approach with poor countries before Congress could help shape which nations were eligible. But, he conceded, 'in retrospect, the two-year delay was a problem.'

Subject: The Super-REIT From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 09:53:21 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/business/17insider.html The Hot Investment Flavor Now: The Super-REIT By JENNY ANDERSON FINANCE is often a fad business. The latest fad is private equity firms getting into the world of real estate investment trusts. This week, the KKR Financial Corporation and the Deerfield Triarc Capital Corporation are on the road separately seeking to raise a total of $1 billion from investors for two mortgage real estate investment trusts, or REIT's. The money raised will be added to the private money that was raised last fall, leveraged - or borrowed against - to the moon and used to buy real-estate-related securities, like residential mortgages. At first glance, these REIT's may seem like plain-vanilla investments. But these REIT's can also put about a quarter of their assets in more complex and arcane investments like collateralized debt obligations, junk bonds and mezzanine debt. In other words, the managers have the capital to play in the blazing debt markets as well as the red-hot real estate market. That's where the deal-making expertise of some of their affiliates comes in. Deerfield Triarc Capital is managed by Deerfield Capital Management, which is majority-owned by the Triarc Companies of Nelson Peltz. KKR Financial is an affiliate of Kohlberg Kravis Roberts & Company. They are super-REIT's. As befits sophisticated deal makers, KKR and Triarc may be interested in something more than playing a card in the mortgage-backed securities markets. KKR may want to be more than just a buyout fund, which has a limited, albeit profitable, life - they raise money from investors, they invest it, they distribute the profits and start over. With the super-REIT's, investors own a piece of a huge pool of capital, and sophisticated money managers, affiliated with their private equity parents, gain steady streams of income. To get there, they have to raise the public money, also known as permanent capital, and look for ways to generate returns from it. Raising money in the public market for a mortgage REIT gives managers a few advantages: they can invest in credit markets as well as real estate, but investors will not immediately withdraw their money if performance slips. In contrast, hedge funds, while possessing a tremendous freedom to trade what they like, risk losing their money and being forced to shut down if they perform badly and investors walk out. And with the REIT's, managers get their fee regardless of how well they perform. They also enjoy favorable tax status on income distributed to shareholders. An incarnation similar to the super-REIT - the business development corporation - was all the rage in private equity last year. Apollo raised $930 million last year in a fund intended to lend money to companies with revenue of $50 million to $500 million. At the time Apollo raised its fund, other big firms including KKR, Blackstone and T. H. Lee all filed documents signaling their intent to raise similar funds. But the business development corporation had astronomical fees, paying the standard 7 percent to underwriters as well as taking a 2 percent management fee and 20 percent of profits. When investors balked at the fee structure, sending the shares down, other private equity players pulled their deals. The fees for these REIT's are hefty, too, but more reasonable. They charge 1.75 percent of the equity as well as 25 percent of any proceeds above a threshold of an 8 percent return. That means the managers have to produce nearly double the return of the benchmark 10-year Treasury note before they pay themselves. There are advantages to a REIT. It is less regulated than other investments and it can leverage itself to the hilt. For example, according to KKR Financial's prospectus, assets in adjustable-rate mortgages and mortgage-backed securities can be leveraged 20 to 45 times, and corporate loans and high-yield debt can be leveraged 4 to 10 times. KKR Financial raised $755.5 million in its private offering, and the value of its portfolio as of March 31 was $6.3 billion. Other big private equity firms are also interested in REIT's. The reason is that there is still plenty of money in the market looking for returns. The Treasury market won't lift anyone's portfolio, the stock market appears to many to be fully valued, fears of a real estate bubble are reaching a feverish pitch and hedge funds returns have lagged. Still, investing in such REIT's is risky. A slump in the real estate market would have a huge impact on a $10 billion portfolio of adjustable rate mortgages. And the leverage in these entities is astounding. About a quarter of the KKR and Deerfield Triarc REIT's can be invested in less liquid, less comforting assets like junk bonds. And it remains unclear what the relationship between the REIT and its buyout fund affiliate will be. According to its prospectus, KKR Financial 'has access to the collective experience of KKR's team of investment professionals, consisting of 53 professionals at March 31, 2005, and the management teams of KKR's portfolio companies.' Access is not defined. The world of finance, which continues to be flush with capital, never ceases in finding creative ways to make money. With hedge fund managers becoming private equity players and private equity players raising hedge funds, it should be no surprise that executives from buyout giants like KKR would take a stab at another fee-based, highly leveraged investment vehicle. It's a big improvement over the business development corporation. How investors will fare remains to be seen.

Subject: U.S. Bank Buys Stake in China From: Emma To: All Date Posted: Fri, Jun 17, 2005 at 09:50:38 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/17/business/worldbusiness/17bank.html U.S. Bank Buys Stake in China By CHRIS BUCKLEY and JULIE CRESWELL BEIJING - Looking to gain access to one of the hottest economies in the world, the Bank of America Corporation said Friday that it had agreed to acquire a 9 percent stake in China Construction Bank for $2.5 billion. For Bank of America, which has made acquisitions of several financial institutions in the United States, including last year's $47 billion takeover of the FleetBoston Financial Corporation, the deal with China Construction is another indication of its plan to expand aggressively overseas. 'We've been looking for some time for a way to invest in this economy,' the chief executive of Bank of America, Kenneth D. Lewis, said Friday at the Construction Bank's headquarters in western Beijing. The Bank of Construction 'is the first to be ready for foreign investment of any size.' Despite the weak performance of China's biggest lenders, many foreign banks have expressed an interest in establishing a foothold ahead of 2007, when Beijing opens its banking sector to competition. As part of the deal, Bank of America will invest another $500 million when China Construction holds its initial public offering, which is expected later this year. Bank of America will also receive an option for five and a half years to increase its stake to 19.9 percent, the bank said. 'The biggest goal is not to absorb more capital,' the head of Construction Bank, Guo Shuqing, said during the news conference, 'but to absorb experience in management.' Mr. Guo said the American bank would help the Chinese bank to better control its risk. Bank of America is expected to play a critical role in offering the technical support and management skills that China Construction Bank needs to give it more credibility, something that will be crucial in attracting investors to its offering. The offering could be valued at more than $5 billion. Foreign investors can buy up to 20 percent of a Chinese bank. Until now, the biggest stake bought by a foreign bank was the $1.75 billion investment last year in the Bank of Communications by HSBC. At first blush, reaction to the deal was muted, with analysts saying that it was likely to have a small impact on Bank of America's earnings. Even if Bank of America eventually acquired 19.9 percent of China Construction, one analyst noted that it would be only about 5 percent of the American bank's earnings. As part of its stake in the Chinese bank, Bank of America will hold a seat on a board of 16 to 19 people. Asked if the acquisition was a vote of confidence in China's banking system, Ivan Chung, managing director for credit ratings for Xinhua Finance, said: 'Yes, it is, but it's more for the long term. I don't think anybody expects problems in the Chinese banking system will disappear soon. But foreign investors seem confident that the potential opportunities will overwhelm the structural risks, so it makes sense to acquire a foothold in the banks.' Mr. Lewis is known as an astute deal maker, and in recent months, he has been telegraphing his desire to enter the Chinese market as part of the bank's overseas strategy. In May he told investors that 'the most likely thing we would consider would be some strategic investment in Asia,' similar to the bank's 24.9 percent stake in the Mexican bank Grupo Financiero Santander Serfin, acquired for $1.6 billion in 2003. Still, doing business in China has its challenges. Several large banks, including China Construction, have struggled amid scandals and charges of corruption. In March, Zhang Enzhao, the chairman of China Construction Bank, resigned for 'personal reasons.' But the resignation came in the wake of accusations that Mr. Zhang, who had been at the bank for 40 years, had accepted a $1 million from Alltel Information Services (which has since been renamed Fidelity Information Services) to steer business toward the company. Mr. Zhang had succeeded Wang Xuebing, who resigned after charges that he had accepted bribes while serving as chairman of another large government-owned bank, the Bank of China. Mr. Wang is serving a 12-year prison sentence. In December 2003, the Chinese government gave the bank $22.5 billion to write off unrecoverable loans from its books, and last year it received a tax break worth $1.9 billion. Even so, Mr. Chung said the bank had 'done a lot recently to clean up their balance sheet and over all, they seem better managed than the others.' China Construction Bank says that 4 percent of its loans are nonperforming, down from 9 percent in 2003, making it the least burdened of China's state-owned banks.

Subject: Credit Extention and Housing From: Terri To: All Date Posted: Fri, Jun 17, 2005 at 06:04:54 (EDT) Email Address: Not Provided Message: That housing prices have risen broadly since the beginning of 2000 does not in itself seem threatening, but the extent of the increase has been driven not just by low long term interest rates but questionable extention of credit. The questionable credit extention may be a significant problem if interest rates increase meaningfully or even if the economy slows. There is the source of considerable concern, and there is a need to gauge investments in a way in which we can be insulated from an economic downturn spurred by a housing downturn.

Subject: Credit Extension and Housing From: Terri To: Terri Date Posted: Fri, Jun 17, 2005 at 07:16:39 (EDT) Email Address: Not Provided Message: Extension is not extention! Oh well, but Vanguard moderate duration investment-grade bond funds will still offer protection from a housing downturn.

Subject: Downing ST Memo From: byron To: All Date Posted: Thurs, Jun 16, 2005 at 23:20:57 (EDT) Email Address: bluefin76020@yahoo.com Message: How is it that there is no mention of the Downing St Memo on any of the news stations? Are the tv stations run completely by the conservative right or are they afraid of the backlash?

Subject: A 'conumdrum' From: Pancho Villa To: All Date Posted: Thurs, Jun 16, 2005 at 19:30:31 (EDT) Email Address: nma@hotmail.com Message: The paradox of thrift: excess savings are storing up trouble for the world economy To understand the present mix of low real interest rates, high fiscal deficits and current account imbalances we must go back to Keynesian ideas of the 1930s, writes Martin Wolf. Adjustment may hurt but cannot be delayed for much longer Strange things are happening in the world economy: falling interest rates on long-term securities, declining spreads between returns on safe and riskier assets, large fiscal deficits and huge global current account 'imbalances' should not, in normal circumstances, coincide. So what is going on? Alan Greenspan, chairman of the Federal Reserve, admits that he is puzzled. He has referred to the decline in interest rates on long-term bonds at a time of rising short-term rates as a 'conundrum'. He returned to the issue last week when he remarked that 'the unusual behaviour of long-term rates first became apparent almost a year ago.'* Markets tried to push long-term rates up early last summer and again in March this year, but in both cases 'forces came into play to make those increases short-lived. But what,' continued Mr Greenspan, 'are those forces? Clearly, they are not operating solely in the United States.' Mr Greenspan is correct. The changes are global. So, then, must be the forces at work. What are they? The answer, in a nutshell, is a global excess of desired savings against the background of weak investment, low inflation and ever more integrated economies. Mr Greenspan's former colleague, Ben Bernanke, has already referred directly to excessive savings in explaining the explosive growth in the US current account deficit.** In doing so, he took issue 'with the common view that the recent deterioration in the US current account primarily reflects economic policies and other economic developments within the United States itself. Instead, he developed what he called an 'unconventional' perspective that seeks the explanation in the emergence of a 'global savings glut'. He was right to do so. To understand the present we need to go back to the 1930s. The 'paradox of thrift' was the most counterintuitive and, to the classically trained economist, morally, theoretically and practically objectionable idea in John Maynard Keynes' General Theory of Employment, Interest and Money, published in 1936, in response to the Great Depression. It is possible, he argued, for the private sector to want to save more than it wishes to invest. That is the paradox: what is good for individuals can be bad for an economy. Today, at the beginning of a new millennium, Keynes' warning is again apposite. Unfortunately, in certain circumstances, even lower interest rates may fail to clear the market for investible funds. This is particularly likely if inflation is low - and still more likely if it is negative, as has been the case in Japan for many years. Large fiscal deficits may then be needed to mop up the excess savings, as has also been the case in Japan. Otherwise, the economy may fall into a slump. We are living once again in such a Keynesian world. How then does the argument work? What is the evidence to support it? What are the consequent dangers for the world economy? And what needs to be done? Let us start with the economic argument. One likely outcome of a world of excess desired private sector savings will be high fiscal deficits. These emerge partly in response to cyclical weaknesses and partly to 'kick start' sluggish economies. In these circumstances, however, fiscal deficits will not crowd out private spending, but rather crowd it in, by sustaining current income and expenditures. Another likely outcome will be 'reaching for yield'. High desired savings will lower real rates of interest, and so real return on capital, below 'normal' levels. In response investors are likely to move towards riskier assets. If the riskiness of previously high-risk investments is also believed to be lower, perhaps because of success in stabilising inflation at low levels this tendency will be strengthened. Again, if high desired private sector savings are not offset by monetary or fiscal policy action, current account surpluses will emerge in some economies. Attempts to keep the exchange rate down will support this outcome. These are, in the language of the 1930s, 'beggar thy neighbour' policies. Some trading partners will then need to tolerate offsetting deficits. In effect, deficit countries act as spenders of last resort in the world economy. Now turn to our second big question: how well does the evidence fit the story? Remarkably well, is the answer. We can identify only realised, rather than desired, savings. Yet we can note that the global savings rate ran at the exceptionally high level of 25 per cent of global output last year. The striking features are the extraordinarily high, and rising, savings rate of the emerging market economies and the low, and falling, savings rates of the US (and the UK). The private sectors of the eurozone and Japan, which generate one-third of world gross domestic product at market prices between them (22 per cent from the eurozone and 11 per cent from Japan), are running substantial surpluses of income over expenditure. In both, the principal offset to high private sector financial surpluses has been government deficits. Japan's fiscal deficit absorbed just over 60 per cent of the country's private sector surplus in 2004 (with the rest going into the current account), while the euro-zone's fiscal deficits absorbed over 80 per cent of the private sector surplus. Despite the fiscal deficits, rough and ready estimates suggest that real long-term interest rates are below 2 per cent in Japan and Germany. But real interest rates are low worldwide. According to the International Monetary Fund's latest World Economic Outlook, they have not been this low since the 1970s. Then, real interest rates were low because of unexpected inflation. This time, however, low real interest rates are expected: US and UK government index-linked government bonds are yielding only 1 1/2 per cent, which is less than half their level prior to the late 1990s. Moreover, inflation risk premiums have fallen since the late 1990s in both the US and UK. Default risk premiums on emerging market and riskier corporate debt have also declined. Since October 2002, spreads over US treasuries of emerging market debt have fallen by 600 basis points, according to the JPM-index. This reflects not only the reaching for yield, but also an understandable perception of greater stability in these economies: inflation is down, balance of payments positions are stronger, as we shall see, and the last worldwide emerging market financial crisis ended some six years ago. Finally, there are those notorious external imbalances. As Maurice Obstfeld of the University of California at Berkeley and Kenneth Rogoff of Harvard point out, 'incredibly, the US current account deficit is currently soaking up about 75 per cent of the combined current account surpluses of Germany, Japan, China and all the world's surplus countries'.*** Meanwhile, the rest of the world is running a surplus of savings over domestic investment of around one-eighth of its gross savings. Consider the structure of the global balance of payments in 1996 and 2004. Between these years, the US current account deficit rose by $549bn, to $666bn. A few other countries also had increases: Australia, Spain and the UK are examples. Between these years, the aggregate current account surpluses of Japan, the eurozone, Denmark, Norway and Sweden rose from $189bn to $316bn, a rise of $127bn. But the rest of the world's current account moved from a deficit of $99bn to a surplus of $329bn, an enormous swing of $428bn. Particularly striking has been the shift for the emerging market economies as a group. Prior to 1997, they ran sizeable current account deficits, financed by private capital inflows. Since then they have moved into enormous current account surpluses, combined with huge private capital inflows. Why has this turnround happened? The most important explanation was the financial crises of the late 1990s, which made everyone more cautious. Two-thirds of the Asian emerging market economies' swing from current account deficits to huge surplus occurred between 1996 and 1998 alone. The crises have cast long shadows. Also significant, however, have been the recent oil price rises: the Middle East's current account surplus jumped from $29bn in 2002 to $113bn in 2004. The US has been accommodating the excess savings of the rest of the world, while attempting to run its economy in line with potential. One way of thinking about this is that in a global economy with no global government, the most important regional power - the US - has been following the Keynesian recommendation by offsetting excess desired savings elsewhere. The US authorities did not intend to do that. But that is what they have had to do to generate a decent recovery at home. Foreign governments have, moreover, played a huge part in sustaining their domestic excess savings. According to statistics on the US balance of payments, 42 per cent of the net funding of the US current account deficits between 2002 and 2004 came from official sources. But these flows are the result of official intervention, combined with sufficiently tight monetary and fiscal policies - and direct intervention in credit markets - to sustain the domestic savings that are the counterpart of the official flows. In other words, the excess savings are in part a policy choice, except in Japan, where they are happening more naturally. Yet another way of seeing the same thing is in accumulations of foreign currency reserves. In just the three years from 2002 to 2004, foreign currency reserves rose by $l,680bn to reach a total of $3,730bn. This analysis allows us to turn to our third big question: what are the dangers of this way of managing the desired excess savings? The answer is: large. The reason for this is that the solution the world has found to the excess desired savings involves an explosive increase in US current account deficits and net external liabilities. If current trends for imports and exports continued for another 10 years (without further declines in the dollar), the current account deficit would be well over 10 per cent of GDP and net liabilities would exceed 120 per cent of US GDP, even without any adverse shift in the cost of servicing US liabilities. Even if the current account deficit were to stabilise at the current ratio to GDP (itself demanding a big improvement on recent trends), the ratio of net liabilities to GDP would rise towards 100 per cent. As Sebastian Edwards of the University of California at Los Angeles has pointed out, New Zealand - a very small economy indeed - is the only industrial country to have had a net stock of liabilities of more than 100 per cent of GDP.**** The only industrial countries to have run current account deficits of over 5 per cent of GDP for more than five years have been New Zealand and Ireland. The scale of US current account deficits and prospective liabilities is unprecedented for a large industrial country. To believe that this will be sustainable is to hope that investors are prepared to make an open-ended commitment to holding assets that are unhedged against the foreign exchange (and other) risks created by just one jurisdiction. True, the huge current account deficit gives the US the happy combination of guns and butter in the short run. Since the external deficit is bigger than the fiscal deficit and also bigger than the amount that the US is spending on its armed forces, either of these can be regarded as a free lunch, if only for the moment. But even before the market imposes a reversal, via a sharp decline in the dollar - delayed perhaps by the tide of troubles to afflict the euro - there is the danger of rising protectionism in the US. Moreover, the longer the correction is delayed the bigger it will ultimately have to be. Finally, what needs to be done? The most important conclusion of the analysis is: reduce the excess saving, particularly in emerging market economies. It cannot make sense for these relatively poor countries to devolve the task of borrowing and spending on to the vastly richer US. If the people of emerging economies' are to lend on a vast scale to any governments, it should surely be to their own governments, which should be able to find better use for the funds now being poured into foreign currency reserves. As the rest of the world starts to shrink its excess savings, the US should expand its savings as well, largely by reducing the structural fiscal deficit. In the short to medium term, the best way for surplus countries to reduce their excess savings is via fiscal expansion. In the long run, however, what is needed is financial sector reform that encourages their citizens to spend a little more enthusiastically. Large exchange rate changes will also be needed, to facilitate the adjustment process. All academic analyses of global balance of payments adjustment conclude that this will require large changes in relative prices or, to put it more precisely, in real exchange rates. Under plausible assumptions, the required adjustment is two times larger than the real depreciation of the dollar that has occurred so far. Some estimates are much larger still. Precisely how much of a depreciation will be needed depends on how large a US current account deficit and net liability position proves sustainable. To summarise, excess savings in about 60 per cent of the world economy largely explain today's low real interest rates, somewhat manic reaching for yield, persistent fiscal deficits and growing and dangerous global imbalances. The policies that are playing a part in generating such excess savings are partly a response to the pain inflicted by past financial crises. But a way out must be found. Every year additional US liabilities amount to about half its total exports. The world economy cannot be balanced indefinitely - perhaps even for very long - by pushing its borrower and spender of last resort into ever-rising liabilities on such a scale. The world must find a co-operative solution involving adjustments in spending and saving together with supportive changes in real exchange rates. Such adjustment will be both painful and risky. But it will not be nearly as painful and risky as blaming one another, while continuing to do nothing, instead. * 'Remarks by chairman Alan Greenspan to the International Monetary Conference', Beijing, People's Republic of China, June 6 2005, www.federal reserve.gov; ** 'The global saving glut and the US current account deficit', April 14 2005; *** 'Global Current Account Imbalances and Exchange Rate Adjustments', May 16 2005, http://post.economics.harvard.edu/faculty/rogoff/rogoff.html; **** 'Is the US Current Account Deficit Sustainable? And if not, how costly is adjustment likely to be?' March 2005, Brookings Papers on Economic Activity, forthcoming. FT Monday June 13 2005

Subject: Sorry, meant 'conundrum' From: Pancho Villa To: Pancho Villa Date Posted: Thurs, Jun 16, 2005 at 19:32:12 (EDT) Email Address: nma@hotmail.com Message:

Subject: Renegade Retools Retail From: Emma To: All Date Posted: Thurs, Jun 16, 2005 at 15:45:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/16/garden/16buttercup.html?pagewanted=all Renegade Retools Retail By JENNY HONTZ Los Angeles EVAN COLE may be an impresario in the home furnishings world, but he has been too busy to make a mark on his own house, which he bought in November with all the furniture and accessories intact, down to the forks and plates. 'Everything's going,' said Mr. Cole, 44, the former C.E.O. and co-founder of the home division of ABC Carpet & Home, waving his arm around the 1960's ranch house perched on a hill in the Brentwood section of Los Angeles. Last month was the grand opening of his new venture: H. D. Buttercup, housed in the Art Deco Helms Bakery building in Culver City. Along with a partner, Mr. Cole said, he is investing $10 million (not to mention his reputation) on a retail experiment, a 100,000-square-foot home furnishings mart housing 50 high-end manufacturers selling directly to consumers, a sort of farmers' market of furniture and home accessories. Mr. Cole, along with his former wife and business partner, Paulette Cole, is known for changing the way New Yorkers shopped for furnishings by creating a downtown alternative to traditional department stores at their flagship furniture emporium on lower Broadway. Ms. Cole's family opened ABC in 1897 as a carpet store. The couple reinvented it in 1985 as ABC Carpet & Home, a stylized flea market stuffed with merchandise old and new, and the business shot from $5 million in annual sales in the early 1980's to $200 million today. 'Evan is kind of a visionary,' said Ray Allegrezza, editor in chief of Furniture Today, a trade magazine. 'When he coupled with Paulette, they became the darlings of retail, the retail renegades. I don't want to compare him in print to Bart Simpson, but in a sea of school principals, he was in your face. They've been out ahead of everyone.' When his 18-year marriage to Ms. Cole ended two years ago, Mr. Cole sold his shares in ABC to her and moved west. H. D. Buttercup vendors, which Mr. Cole has dubbed 'manutailers' (a blending of manufacturer and retailer) sell everything from midcentury modern sofas to Asian antiques. Instead of rent, the vendors pay him 30 to 50 percent of their sales, depending on whether they use their own sales staff or his. Mr. Cole pays the building lease, tracks inventory and handles store operations, including cash registers and a concierge. Mr. Cole's venture is based on eliminating the middleman, so manufacturers can earn more than they make selling to chains like Pottery Barn, while consumers get a price just above wholesale. In some cases, they are vendors who could not otherwise afford to have their own stores. 'It can be a very big failure or a very big success,' said Davide Berruto, the C.E.O. of Environment Furniture Inc., which sells furniture made from reclaimed Brazilian hardwood and linen light fixtures at H. D. Buttercup under the brand Era. Part of the appeal is meant to be the setting. Mr. Cole and his partner, Wally Marks, renovated the 1930's Helms Bakery building, restoring the original hardwood floors and sawtooth roof. With a variety of styles available in everything from furniture to bedding and accessories, shoppers can make one stop and avoid driving all over Los Angeles. Joanne Medeiros, who is renovating her Hancock Park villa, recently purchased three Afghan rugs from Khyber Pass, a Buttercup vendor, for $12,000, a price she had expected to pay elsewhere for one rug. 'Rugs are usually so expensive,' she said. 'They've got to do a lot of volume because those prices are good. You don't feel like you're in a back alley getting fleeced.' In his notoriously flamboyant manner, Mr. Cole is depicting the store as nothing less than the reinvention of retail. Craig Johnson, president of Customer Growth Partners, a retail consulting group in New Canaan, Conn., said that is a stretch. Mr. Cole's concept is 'about 2,000 years old,' he said. 'It goes back to the old Middle Eastern bazaar.' ABC did something similar on a smaller scale with its Brooklyn store in a renovated brewery, Mr. Allegrezza said, but no one has ever launched an entire home furnishings mart made up exclusively of manufacturers and direct importers selling high-end goods to consumers. Mr. Johnson said that it would take a year to determine if Buttercup joins the list of innovative California retailers that includes Williams-Sonoma and Restoration Hardware. 'They've got to get traffic,' he said. 'They've got to build up an ongoing clientele or they will be folding up their tent.' Early reaction from shoppers has been mixed. 'There was some unusual, really cool furniture,' said Jan Oxenberg, a television writer who browsed the emporium over Memorial Day weekend. But, she added, 'I found it confusing. I didn't know what the concept of store was when I went in, and I still didn't understand it after I left.' Mr. Cole first moved to Los Angeles in 1979 to work in the mailroom of a talent agency, but soon he returned to New York, married Ms. Cole (with whom he has a 10-year-old daughter, Lena) and reinvented ABC. 'He built an empire for himself at ABC,' said Tony Abrahim, founder of Khyber Pass, one of the vendors to have worked with Mr. Cole in both locations. 'He did such a good job, we all followed him. He can be a little brutal on the business dealings, but that's what makes him good.' Khyber Pass has sold more than $300,000 worth of his vegetable dye rugs since Buttercup's soft opening in March. 'We're doing very well,' Mr. Abrahim said.. Sales at Era have also been strong, but some vendors report a slower start . 'Obviously it's a startup. It takes time,' says Matthew Lenoci, the founder of Teo, a line of bedding and bedroom furniture. 'It will take us awhile to get the sales up to where they are at ABC. It's a brand new brand. We still have to work out the details.' Those who work with Mr. Cole say he is more in love with ideas than minutiae. 'He's a charming and funny neurotic New Yorker,' said Kimberly Ventre, the president of H. D. Buttercup and a former marketing executive at the Gap. 'He gets so excited, like a kid, but Evan doesn't ever get bogged down in details.' In fact, spending a day with Mr. Cole is like being swept up in live improv. Infused with energy, he seems to follow his own stream of thoughts, jumping from tangent to tangent, fusing work and play into one grand adventure. 'I take A.D.D. to a new level,' he said. 'I get inspired and change everything really quickly.' Arriving earlier this month at the Brentwood home of his girlfriend, Rachel Ashwell, the founder of the brand Shabby Chic, Mr. Cole suddenly realized he had forgotten a vase she needed for a magazine photo shoot. He jumped back into his black Corvette and returned home. 'Rule No. 362 of a new relationship: never forget what you're supposed to bring,' he said. Retracing his steps, Mr. Cole walked through Ms. Ashwell's door with vase in hand, and started joking about her signature white and pink décor: 'This is like taking laughing gas,' he said. 'My mission is to get Rachel a line of paint at Home Depot: Shabby Chic white and the right pink.' Ms. Ashwell is helping Mr. Cole redecorate his home and has already contributed some white slipcovers. 'She's white-ifying me,' he said. After some lunch, Mr. Cole swung by a new gallery near H. D. Buttercup called QED, which is outfitting his Brentwood home with art. He sees the emerging local arts scene as validation of the store's location, and he's convinced his new business will drive a Culver City revival. 'This is going to be SoHo,' he said. 'It's going to happen because of Buttercup. The trick is to see what could be, not what is.' The key, he said, are the artisans and architects who have popped up along Washington Boulevard near the 10 freeway. 'See! Gallery, gallery - it's starting,' he said. 'I've studied this diligently. This is the spot. I'd bet my last dollar on it.' Of course, he's hoping he won't have to.

Subject: Fixed- and Adjusted-Rate Mortgages From: Terri To: All Date Posted: Thurs, Jun 16, 2005 at 15:30:31 (EDT) Email Address: Not Provided Message: February 23, 2004 Greenspan Says Certainty Of Fixed-Rate Mortgages May Not Be Worth Cost By GREG IP - WALL STREET JOURNAL In a rare evaluation of the interest-rate options that households face, Federal Reserve Chairman Alan Greenspan questioned whether American homeowners are well-served by popular fixed-rate long-term mortgages. 'American homeowners clearly like the certainty of fixed mortgage payments,' Mr. Greenspan said in a speech to the Credit Union National Association in Washington. Fixed-rate mortgages protect against higher rates while offering the option of refinancing should rates drop. But homeowners pay thousands of dollars a year for those benefits, he said. With a typical fixed-rate loan, a homeowner protects himself from the risk that rates will rise sharply later but pays a higher interest rate that increases his payment. A homeowner can, of course, refinance if loan rates drop sharply. But Mr. Greenspan said homeowners may pay 0.5 to 1.2 percentage points more than they otherwise would for those benefits. The Federal Reserve staff estimates that homeowners 'might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade,' Mr. Greenspan said, though not if interest rates had trended 'sharply upward.' 'American consumers might benefit if lenders provided greater mortgage-product alternatives to the traditional fixed-rate mortgage,' he said, though he didn't suggest specifics. If homeowners are worried about a sudden jump in mortgage payments but are 'willing to manage their own interest-rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.' Mr. Greenspan reiterated that U.S. households appear to be in 'good shape' and that their rising debts relative to incomes don't reflect increased 'financial stress.' He said their cost of servicing those debts has been relatively stable in the past two years, thanks to falling interest rates. Unlike homeowners, however, he said renters' increased financial obligations for things like rent, student loans and car payments 'may be of concern.' Increased bankruptcies 'are not a reliable measure' of household financial health, he said, and delinquency rates also are flawed, though they currently paint a more encouraging picture, he said. Meanwhile, credit-card debt has increased in part because it is replacing unsecured personal loans and because credit cards are used for an increasing variety of payments. About three-quarters of the millions of homeowners who took out a new mortgage or refinanced an existing one during last year's boom locked in low fixed-rate loans ranging from 15 years to 30 years. Those rates were often one to two percentage points higher than adjustable-rate loans, on which the rate is usually fixed for the first one to seven years, then adjust up or down according to rates prevailing at the time of adjustment. The Fed chairman didn't advise households to choose adjustable-rate over fixed-rate mortgages. It is almost unheard of for an official of the U.S. central bank to offer advice on interest rates, over which it has enormous influence. But his remarks did represent a rare discussion of interest-rate options for American households, and he implicitly questioned whether homeowners' preference for fixed-rate mortgages makes financial sense. Whether an adjustable-rate mortgage makes sense now depends in part on whether the Fed keeps inflation, and thus interest rates, low, for the rest of the decade. However, adjustable-rate mortgages may make sense even if rates do eventually head up. Doug Duncan, chief economist at the Mortgage Bankers Association, said the share of mortgages carrying adjustable rates has more than doubled to about 25% in the past decade, as homeowners conclude they are unlikely to stay in their home for 15 to 30 years. He said he knew of one lender that now offers 130 different mortgage products, up from about 15 a decade ago. Mr. Greenspan noted that in some other countries, adjustable-rate mortgages are far more common and that 'efforts to introduce American-type fixed-rate mortgages generally have not been successful.' That may be because homeowners in those countries believe the implicit fee for protection against rising rates and the right to refinance is too high, he said.

Subject: Re: Fixed- and Adjusted-Rate Mortgages From: Pete Weis To: Terri Date Posted: Thurs, Jun 16, 2005 at 18:53:02 (EDT) Email Address: Not Provided Message: 'American consumers might benefit if lenders provided greater mortgage-product alternatives to the traditional fixed-rate mortgage,' he said, though he didn't suggest specifics.' Certainly lenders are getting very creative and are pushing the envelope to keep up with skyrocketing housing prices. If they stopped allowing monthly housing payments up to 50% of gross income, little to no money down, and reverse interest loans than this housing boom would lose a lot of steam and the economy with it. But as they say there's no free lunch, and if the housing boom is based on little more than easy lending and low initial payments which are guaranteed to rise eventually, then you know the party will end sometime. Paul Krugman as well as others have said it's a good time to get a fixed 30yr with these low rates. Seems like a no brainer to me. But then again I paid 13.75% on my first house. Remember those days in the 70's when oil prices were heading ever higher and the dollar kept heading south? That would never happen again, would it? What do you think Terri - an ARM per Greenspan or a fixed per Krugman?

Subject: Re: Fixed- and Adjusted-Rate Mortgages From: Terri To: Pete Weis Date Posted: Thurs, Jun 16, 2005 at 21:42:47 (EDT) Email Address: Not Provided Message: Fixed, fixed, fixed. I thought carefully about this, but reject the idea. I wanted everyone however to read of the argument by Alan Greenspan. There is no reason at these interest rates not to have a fixed rate mortgage, even though long term rates may well remain low. The security of the fixed rate is too important set against the moderate saving prospect from a lower adjustable rate mortgage.

Subject: Death of a pyramid From: Pete Weis To: All Date Posted: Thurs, Jun 16, 2005 at 11:39:47 (EDT) Email Address: Not Provided Message: The difference between the irrational exuberance we experienced in the stock market and what we are experiencing in the housing market is that the housing craziness is entirely built on borrowed money. Someone will be absorbing huge losses and they will be either unwilling or unable to loan back into this black hole as it begins to collapse in on itself. With much less money to fuel the housing market and speculators completely gone, there can only result a pretty steep drop which should easily excede the late 80's 20-30% drops in the Northeast and similar drops in Southern California of the early 90's. The savings & loan debacle of the 80's was truely tiny in comparison to this giant pyramid. This has got to be the largest worldwide financial pyramid juggernaut in history. From Business Week: The Mortgage Trap Lenders are cranking out an ever-growing array of financing schemes and lowering standards to keep the housing boom going Nicki Randolph, a San Francisco real estate agent, hasn't been scared off by talk of a housing bubble. Although she already owns both a home and a condo in Palm Springs, Calif., Randolph just closed on a third property -- dropping more than $1 million on a 1,400-square-foot loft in the heart of San Francisco. How does she juggle so many properties in the overheated California market? Lots of leverage, thanks to banks all too willing to provide ever more. To finance her loft purchase, Randolph took out a mortgage that lets her pay only interest for the first five years -- a tactic that helps her ease into the hefty monthly payments. 'Fears that the market is going to crash are way overstated,' she says confidently. 'It's a seven-mile-by-seven-mile city and a premier place people want to live. You have to be more aggressive here because the prices are so high.' PRESSURE KEEPS BUILDING. Randolph's story is a familiar one -- and it shows the lengths to which buyers are willing to go to snatch up real estate as well as the extremes lenders will stretch to accommodate them (see BW Online, 6/16/05, 'What the Mortgage Next Door Means'). As prices continue to skyrocket in much of the country, banks and lenders are cranking out an ever-growing array of products ranging from no-money-down or interest-only mortgages, to special 'Payment Power' loans that allow homeowners to defer monthly payments altogether twice a year. Such creative financing is letting even marginal buyers purchase houses with price tags that used to appeal only to the rich and famous. In the process, banks and mortgage companies appear to be taking on more risk than ever before -- and if rates rise sharply or prices tumble, many of their customers could find themselves in deep trouble, too. All those innovative mortgage products are a sure sign that lenders are doing everything they can to keep the housing boom going and to capitalize on yet another round of falling interest rates that no one expected. There are plenty of other signs of frenzy as well. Home appraisers complain that mortgage originators are demanding the optimistic appraisals needed to close on loans. 'They started warning me to 'be a team player' and to 'hit the number' they needed to seal the deal,' says Robert Burnitt, an appraiser in Midlothian, Tex. SUPPORTING A STRETCH. Enticed by juicy commissions from all those deals, others are jumping into the mortgage biz. Among them are John Switzer, an 18-year-old high school grad from New Bern, N.C., who put off college so he could start work as a mortgage rep for Houston-based Franklin Bank Corp. (FBTX ). 'Right now, mortgages are a little more interesting' than college studies, he says. Yet nothing screams 'frenzy' louder than the huge popularity of innovative -- and risky -- mortgage products that allow buyers to stretch for those million-dollar studios and multimillion-dollar suburban colonials. With interest-only mortgages now offered by everyone from ditech.com to Washington Mutual (WM ), such loans now account for 20% of all new mortgages, up from under 5% two years ago. Option adjustable-rate mortgages, or 'option ARMs,' have also become all the rage in superheated markets such as California and Washington, D.C. With an option ARM, borrowers can choose among three different payment plans each month, continually changing what they fork over as their budgets shift. The options: a regular payment of both principal and interest, just the interest, or one that may not even cover the interest -- so the overall balance owed on the mortgage could continue to grow. TREND TOWARD RISK. The question is, will the proliferation of interest-only and option ARM mortgages leave many buyers strapped down the road, causing higher default rates? David Liu, a mortgage strategist for UBS in New York, notes that after similar products were introduced in the red-hot California market in the late 1980s, they ultimately incurred a default rate that was three times as high as conventional mortgages when the local economy went into recession in the early '90s. Already there are signs that current option ARM borrowers are straining to make their monthly payment: Liu notes that among a bundle of mortgages originated by Washington Mutual and securitized into the secondary market last year, fully 60% of borrowers made only the minimum payment this past March. 'That's definitely a sign that people are stretching,'says Liu. There's plenty of other evidence suggesting that homebuyers and their lenders are climbing out on a limb. According to a survey of homebuyers released last November by the National Association of Realtors, 25% of those polled were able to get a mortgage with no money down, vs. 18% in early 2003 and virtually none in the late 1990s -- a trend that could leave many of these new homeowners under water if home prices take even a small dip. 'FROTH' SPILLS OVER. At the same time, lenders are extending far more loans to borrowers who have had credit problems in the past. According to the Mortgage Bankers Assn., the share of new loans made to so-called subprime borrowers -- usually lower-income individuals with spotty credit histories -- rose to 28% in the second half of 2004, a sharp jump from the less than 5% of all lending that subprime represented back in 1994. 'I think there are going to be some blowups,' says Bert Ely, a bank consultant based in Alexandria, Va. 'These are people who are most vulnerable to job loss.' If the housing market swoons and homeowners get into trouble, the mortgage industry won't be far behind, many critics worry. 'I'm very nervous about the risk of higher foreclosures down the road,' says Stuart A. Feldstein, president of SMR Research Corp., a mortgage research firm in Hackettstown, N.J. And on June 9, Federal Reserve Chairman Alan Greenspan revealed his unease when he warned Congress that 'the apparent froth in housing markets may have spilled over into mortgage markets.' He noted that the increasing use of interest-only and other 'relatively exotic' mortgages are 'of particular concern.' TOUTING SAFEGUARDS. Lenders insist that worries about their standards are overblown. They maintain that, thanks to the advent of automated underwriting during the 1990s, their ability to analyze statistical trends in lending is far better than before, enabling them to better price loans according to risk. 'Underwriting is still more of an art than a science, but we're making it far more of a science,' says Joe Anderson, a senior managing director at Countrywide Financial Corp. (CFC ), a Calabasas (Calif.) mortgage lender. And lenders note that they've instituted more safeguards since the last housing boom in the 1980s, such as requiring that borrowers have several months of liquid assets to assure that they can keep paying their mortgages in the event of a job loss. 'On a scale of 1 to 10 -- with 10 being the worst-case scenario -- my concern level is only around a 2 right now,' says D.C. Aiken, senior vice-president for pricing and products at HomeBanc Mortgage Corp. (HMB ), a large lender in Atlanta. Still, regulators are redoubling their efforts to make sure the banks are right. The Federal Reserve and other bank regulators recently ordered lenders making home-equity loans and lines of credit to do a more in-depth analysis of borrowers' income and debt levels and their ability to repay loans -- instead of relying heavily on credit scores, as many lenders have been doing. And regulators say they're busily drafting similar guidelines for mortgage lending as well. DEPENDENT ON A ROSY SCRIPT. State regulators are also starting to rein in hyper-aggressive lenders. In Illinois, legislators passed a bill that would give a state agency the power to review mortgage applications in lower-income areas to determine whether borrowers should be required to attend loan counseling -- paid for by the loan originator -- before receiving the loan. That, lawmakers figure, will discourage brokers from extending loans to high-risk borrowers who have a high probability of ending up in foreclosure. Of course, Nicki Randolph and many more like her who have used lenders' aggressive mortgage offers to expand their fledgling real estate empires aren't normally thought of as high-risk borrowers. But if interest rates and housing prices don't follow the rosy script that Randolph and so many others are banking on, a whole lot of homeowners could be caught in a painful trap.

Subject: Re: Death of a pyramid From: Terri To: Pete Weis Date Posted: Thurs, Jun 16, 2005 at 21:44:08 (EDT) Email Address: Not Provided Message: There is the potential problem, interest rates had better stay contained.

Subject: Re: Death of a pyramid From: Pete Weis To: Terri Date Posted: Fri, Jun 17, 2005 at 11:22:46 (EDT) Email Address: Not Provided Message: Good article in THE ECONOMIST entitled 'In Come The Waves' at www.economist.com/finance/displayStory.cfm?story_id=4079027 Too long to post here.

Subject: Re: Death of a pyramid From: Dorian To: Pete Weis Date Posted: Sun, Jun 19, 2005 at 05:30:42 (EDT) Email Address: Not Provided Message: Here are what I consider the (sobering) highlights of the article: 'The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Since 1997, home prices in most countries have risen by much more in real terms (ie, after adjusting for inflation) than during any previous boom. ...The glaring exceptions are Germany and Japan, where prices have been falling.) American prices have risen by less than those in Britain, yet this is still by far the biggest boom in American history, with real gains more than three times bigger than in previous housing booms in the 1970s or the 1980s. Sobering indeed. Thanks Pete, Dorian

Subject: Whoops! From: Pete Weis To: Pete Weis Date Posted: Fri, Jun 17, 2005 at 11:24:36 (EDT) Email Address: Not Provided Message: Terri. You posted this article. Thanks.

Subject: Global Warming and ExxonMobil From: Emma To: All Date Posted: Thurs, Jun 16, 2005 at 11:05:20 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/science/14cnd-climate.html Ex-Bush Aide Who Edited Climate Reports to Join ExxonMobil By ANDREW C. REVKIN Philip A. Cooney, the White House staff member who repeatedly revised government scientific reports on global warming, will go to work for ExxonMobil in the fall, the oil company said today. Mr. Cooney resigned on Friday as chief of staff to President Bush's environmental policy council, two days after documents obtained by The New York Times showed that he had edited the reports in ways that cast doubt on the link between greenhouse-gas emissions and rising temperatures. A former lawyer and lobbyist with the American Petroleum Institute, the main lobbying group for the oil industry, Mr. Cooney has no scientific training. The White House, which said Friday that there was no connection between last week's disclosure and Mr. Cooney's resignation, repeated today that Mr. Cooney's actions were part of the normal review process for documents on environmental issues involving many government agencies. 'Phil Cooney did a great job,' said Dana Perino, a deputy White House spokeswoman, 'and we appreciate his public service and the work that he did, and we wish him well in the private sector.' An Exxon spokesman, Tom Cirigliano, declined to describe Mr. Cooney's new job. Associates of Mr. Cooney said he planned to move to Dallas. Mr. Cooney did not return e-mail or phone messages.ExxonMobil has long financed advertising and lobbying efforts that question whether human-caused warming poses sufficiently serious risks to justify curbing carbon dioxide, the main greenhouse gas emitted by smokestacks and tailpipes. Today, Mr. Cirigliano said the oil company was committed to acting responsibly on the issue. 'ExxonMobil has taken, is taking, and will continue to take tangible actions to reduce emissions in our operations as well as in customer use of our products, and to better understand and prepare for the risks of climate change,' he said. Some climate scientists and environmental campaigners said Mr. Cooney's quick shift from the White House to Exxon was evidence of a near-seamless relationship between the Bush administration and the oil industry. 'Perhaps he won't even notice he has changed jobs,' said David G. Hawkins, who directs the climate center at the Natural Resources Defense Council, a private environmental group.

Subject: The Trillion-Dollar Bet From: Emma To: All Date Posted: Thurs, Jun 16, 2005 at 10:32:24 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/16/realestate/16arm.html?pagewanted=all The Trillion-Dollar Bet By DAVID LEONHARDT and MOTOKO RICH American homeowners have made a trillion-dollar bet that mortgage rates will remain near record lows for at least a few more years. But with some interest rates already rising, economists worry that the bet could turn bad. The problem is that new types of mortgages that hold down monthly payments for families - helping many buy homes that they would not otherwise be able to afford - also require potentially far higher payments in future years. The bill will soon start to come due in a serious way, as the initial period of fixed payments, typically set at artificially low rates, expires for millions of homeowners with adjustable-rate mortgages. This year, only about $80 billion, or 1 percent, of mortgage debt will switch to an adjustable rate based largely on prevailing interest rates, according to an analysis by Deutsche Bank in New York. Next year, some $300 billion of mortgage debt will be similarly adjusted. But in 2007, the portion will soar, with $1 trillion of the nation's mortgage debt - or about 12 percent of it - switching to adjustable payments, according to the analysis. The 2007 adjustments will almost certainly be the largest such turnover that has ever occurred. The impact is not likely to derail the economy on its own, economists predict, but it will probably slow growth. For individual families, the problems could be significant. 'I'm not sure that people are being counseled on really how big of a risk they are taking,' said Amy Crews Cutts, deputy chief economist at Freddie Mac, the mortgage company. Consider a typical $300,000 interest-only mortgage with fixed payments for the first five years. The homeowner would start by paying about $1,250 a month. If interest rates rise modestly over the next few years, as many forecasters expect, the payment will jump to almost $2,100 in 2010, according to Stephen Barrett, the owner of Redmond Financial, a mortgage business near Seattle. With the help of new computer models, lenders have brought out newer and riskier mortgages to attract borrowers and increase their buying power during the long housing boom. The traditional 30-year mortgage with guaranteed payments is increasingly a loan of the past. The hot loan of 2004 - the interest-only mortgage - allowed home buyers to pay no principal for the first few years of the loan, substantially lowering their initial payments. It has remained popular this year, accounting for at least 40 percent of purchase loans over $360,000 in areas with fast-rising home prices, like San Diego, Washington, Seattle, Reno, Atlanta and much of Northern California, according to LoanPerformance, a mortgage data firm. This year's fashionable model, known as an 'option ARM,' allows borrowers to make payments with monthly rates starting as low as 1.25 percent for the first five years of the loan; the average rate on a 30-year, fixed-rate loan is about 5.6 percent. During the first quarter of 2005, 40 percent of mortgages over $360,000 issued to people with good credit were option ARM's, said David Liu, a mortgage strategy analyst with UBS in New York. Very few borrowers used option ARM's before 2003. Many borrowers stand to benefit from these creative loans. On option ARM's, buyers with variable incomes, like the self-employed, can also make smaller or larger payments depending on their take-home pay in a particular month, without incurring penalties. With the average homeowner moving every six years, any loan with lower initial payments can substantially reduce housing costs. 'As a rule, I would prefer the 30-year fixed mortgage,' said Alejandro Brown, 31, a technical trainer for Nissan, the automaker, who refinanced the mortgage on his 1,700-square-foot house in Auburn, Wash., with an adjustable-rate loan last year, reducing his monthly payments. But, he said, 'I knew I wasn't going to be in my house more than three years; I was very confident.' All of these loans come with the risk of a spike in payments sometime in the future. In particular, borrowers who have taken out an interest-only loan will see a jump in payments simply because they will start to owe principal after the interest-only period lapses. If rates rise, the payments will go even higher. Borrowers whose incomes have not risen enough or who have not planned for the higher payments could find themselves shocked. 'The apparent froth in housing markets may have spilled over into mortgage markets,' Alan Greenspan, the Federal Reserve chairman, said while testifying to Congress last week. 'The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern.' The lure of such loans is obvious. Because of the lower initial payments, buyers can purchase bigger and more expensive houses. With her daughter leaving for college this summer, Linda Thompson decided to sell her four-bedroom house in the Seattle suburbs and move to a town house in the city's Lake Union neighborhood. But prices were so high that she had to go beyond her 'level of comfort,' she said, and spend $619,000. She signed an interest-only mortgage that cut her monthly payments by about $500 compared with a conventional mortgage. Seven years from now, the bill will rise as she starts paying principal, and the size of the increase will be determined by interest rates at the time. But she may have moved by then, she said. And because the house is in an up-and-coming neighborhood, she expects the value to rise. 'The risk factor - of course it's always there,' Ms. Thompson, 49, who runs a small marketing company, said as she was preparing to watch her daughter graduate from high school yesterday. 'But to me, real estate is a better investment than the stock market.' 'Just sitting there,' she said of her new house, 'it's appreciating right now.' Still, even some mortgage brokers are concerned by how much their clients are stretching their spending power using creative mortgages. One possible warning sign is that a growing share of those taking out the aggressive loans is made up of lower-income families living in expensive areas, according to Economy.com, a research company. Another is that variable-rate mortgages have stayed popular even as long-term, fixed rates have gone down and rates on adjustable mortgages have risen. 'There are people who are buying homes that they shouldn't buy,' said Eric Appelbaum, president of the Apple Mortgage Corporation in Manhattan. 'People are saying, I can afford it on interest-only but I can't afford it' with a traditional mortgage, Mr. Appelbaum said. 'It doesn't make any sense.' Since borrowers with interest-only mortgages are not yet paying down their debt, they are hoping to build up equity through an increase in home values. If house prices fall, as they did during the early 90's in some cities, borrowers will be forced to bring money to the table when they sell. Even if home prices rise a little, borrowers who have taken out option ARM's and made only minimum payments for five years could find themselves in a hole. Such loans, which are typically based on rates that adjust monthly, give homeowners four payment options each month. In the first quarter of 2005, 70 percent of option ARM borrowers made the minimum payment, according to UBS. In doing so, those borrowers effectively added more debt to the back of their loans. On a $400,000 loan, for example, a buyer who made only minimum payments over the first five years would add more than $27,000 to the end of the loan, assuming short-term rates increase by one percentage point over the course of the loan, said Robert Binette, a mortgage broker with Hamilton Mortgage in Ridgefield, Conn. The monthly payment would jump from $1,718 in the final month of the fifth year to $2,580 after the loan was reset, a difference of more than 50 percent. Borrowers who expect to cover the larger debt by refinancing could be in trouble if rates have increased. Thirty-year fixed-mortgage rates are near their lowest level in a generation. Nationwide, the increase in monthly payments as more mortgage rates start to float will cost families about an extra $40 billion over the next two years, according to estimates by Credit Suisse First Boston. That is the rough equivalent of a 40-cent increase in gas prices over the same span, which would pinch incomes but would not be likely to create a recession. The biggest concern, many economists say, is that the new mortgages have come onto the market at a time when low interest rates and rapidly rising home prices are the only reality many people can imagine. Families might be making decisions assuming that combination will last forever. In a speech to bankers in New York, Donald L. Kohn, a Federal Reserve governor, said yesterday that he expected a strong economy over the next few years. 'My message this morning, however, is that this is not a time for complacency,' he said. There is 'significant uncertainty,' he added, because some recent financial innovations 'have not yet been rigorously stress-tested.'

Subject: Re: The Trillion-Dollar Bet From: Pete Weis To: Emma Date Posted: Thurs, Jun 16, 2005 at 18:16:26 (EDT) Email Address: Not Provided Message: 'But in 2007, the portion will soar, with $1 trillion of the nation's mortgage debt - or about 12 percent of it - switching to adjustable payments, according to the analysis.' Interesting stat.

Subject: Re: The Trillion-Dollar Bet From: Terri To: Pete Weis Date Posted: Thurs, Jun 16, 2005 at 22:32:53 (EDT) Email Address: Not Provided Message: I finally think we have a real estate bubble; beyond housing, real estate. Now I must consider each of your ideas still again and proceed.

Subject: Continuing to be Modestly Bullish From: Terri To: All Date Posted: Thurs, Jun 16, 2005 at 10:08:22 (EDT) Email Address: Not Provided Message: Through all the questions and worries the bull markets in stocks and bonds continue gently on, and this gives me increasing confidence. We are a year into a Federal Reserve tightening sequence and the markets have stayed positive. there is almost no volatility and the economy is sound. This is most encouraging, for stock market valuation have slowly improved.

Subject: China's AIDS Effort From: Emma To: All Date Posted: Thurs, Jun 16, 2005 at 09:49:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/16/international/asia/16aids.html City Emerges as Model in China's Effort to Reverse AIDS Record By JIM YARDLEY GEJIU, China - The storefront looks like just another downtown shop. But inside, health workers offer tests for H.I.V. and dispense methadone to drug users. Upstairs, a nonprofit group offers counseling and support for anyone with H.I.V. or AIDS. Not far away, another group has opened a drop-in center for parents of drug users to exchange information about how to prevent H.I.V. In another office, the city's more than 1,000 prostitutes can receive free condoms, tests for H.I.V. or advice on how to avoid becoming infected. Here in mountainous southwestern China, where heroin begat AIDS and AIDS begat death, discrimination and official denial, Gejiu is emerging as a model of how China is trying to reverse its once abysmal record on AIDS. In the last 18 months, China's top leaders have made AIDS a national priority and introduced a host of policies, some contentious even by Western standards. Not too long ago China denied it had an AIDS problem and tried to cover up a tainted blood-selling program that infected untold thousands of farmers. Even now, the police in some cities still arrest and harass advocates for AIDS patients or try to conceal the presence of the disease. But places like Gejiu are starting to carry out the central government's new policies, including needle exchanges and making condoms available in hotel rooms. And the Health Ministry is planning a nationwide expansion. China now has 8 methadone clinics but wants to reach up to 5,000 by 2010. 'There are still many countries where this is against the law,' said Dr. Peter Piot, executive director of Unaids, the United Nations program on H.I.V. and AIDS, of the needle and the methadone program. The remaining problems are daunting. China's rural public health system is in near collapse, and few health workers are properly trained in treating H.I.V. or AIDS. Only one in nine infected people know they have H.I.V. A free antiretroviral drug program hurriedly introduced by the government in 2003 has had serious problems, with roughly one in five patients dropping out. But international specialists agree that China's new response far surpasses that of India and Russia, the other regional giants, which have even more severe AIDS problems. And Beijing's newfound political will has impressed many skeptics. 'It's clear that the senior leadership at the national level and the leadership in this province are taking this problem very seriously,' said Randall Tobias, who leads the Bush administration's AIDS program, in a visit in early June with Dr. Piot here in Yunnan Province. The turning point, Dr. Piot said, came in 2003, when SARS, severe acute respiratory syndrome, showed the government that communicable diseases could pose not just a health threat but also a political one. 'It is SARS, to me, that made the most difference,' he said. 'Nothing did as much as the fear that SARS instilled in terms of the potential for destabilizing society.' The shift in attitude was signaled in December 2003 when Prime Minister Wen Jiabao met with AIDS patients, a gesture later repeated by President Hu Jintao. These symbolic steps have been accompanied by a doubling of the government's budget for AIDS and several new policies, like needle exchanges and condom promotion. (Until 2002, condom advertising was banned.) Specialists agree that China does not yet face a crisis like that in Africa, but they have predicted that more than 10 million Chinese could be infected with AIDS by 2010 if the government does not rapidly escalate its efforts. Since 2003, the Chinese government has estimated that 840,000 people are H.I.V. positive while another 80,000 have AIDS. Roughly 150,000 additional people with AIDS are believed to have died. Heroin flows into Yunnan Province from neighboring Vietnam, Laos and Myanmar, bringing with it H.I.V. The province's first cases were reported in 1989. With a population of 44 million, Yunnan now has only 200 health workers trained for the disease. Officials estimate that the province has 80,000 infected people, most of them intravenous drug users who have spread the disease by sharing needles. In Gejiu, a city of 310,000 people on a route favored by drug traffickers, initial rounds of AIDS testing in recent years found more than 1,000 people with H.I.V., nearly all drug users or prostitutes. Tong Waiyuan, a vice mayor, explained that Yunnan's new plan included needle exchanges, condom promotion, and more testing and education and counseling. 'The whole society is involved,' said Mr. Tong, wearing an AIDS pin as he briefed Dr. Piot and Mr. Tobias. Dr. Piot and Mr. Tobias spent three days in Yunnan to highlight cooperation between the United States and the United Nations on AIDS. They chose Gejiu because a handful of the projects here are being financed with international money, some of it from the United States. Unlike some other provinces, Yunnan has welcomed international nonprofit groups and support from Britain, Australia and, more recently, the United States. Nearly all of the projects in Gejiu are less than a year old, and just beginning to jell into a viable prevention and treatment network. Huge challenges remain. At the methadone clinic, paid for in part with money from the United States, Dr. Ming Xiangdong said more than 270 drug users had come for help since the clinic opened in April 2004. Demand is so high that a larger clinic opened in early June. But government regulations say that only drug users who have flunked out of official detoxification centers qualify for the methadone program - only the most hardened users. At the Geiju Women's Center, which also gets support from the United States, prostitutes receive education in H.I.V. prevention and the use of condoms, as well as counseling on changing professions. 'I know lots of women with H.I.V.,' said a woman at the center, who wore a white lace dress with a cellphone dangling from a green necklace. 'All of them are still working.' She said the center's workers were trying to get infected prostitutes out of the sex business or at least to use condoms. But prostitution, often in karaoke clubs, frequently is the highest paying work available to women, so prostitutes with H.I.V. sometimes keep their condition a secret. Just as health officials are starting to reach out to prostitutes and drug users, public security officials in Yunnan have been cracking down. AIDS workers worry that a recent provincewide sweep of drug users will drive people infected with H.I.V. underground and increase, rather than reduce, the broader risk. 'They are making a group of people become like an enemy of society,' said Yang Maobin, director of Daytops, a nonprofit program in the provincial capital of Kunming that helps drug users kick their habits. In other provinces, the situation is often far worse. A new report by Human Rights Watch found that advocates for AIDS patients are still harassed by local officials. Web sites that provide AIDS information to gay people have been shut down. And in one widely reported incident, the police burst into a treatment center in a southern city and arrested drug users meeting with health workers. Another immediate challenge for the central government is the limited availability of antiretroviral drugs. Many patients cannot tolerate the regimen offered in the free drug program, but the government does not yet have another regimen. Negotiations are under way with pharmaceutical companies, but China has resisted any steps that might infringe upon patent law. Even so, government is moving ahead. The number of methadone clinics is expected to reach 1,000 by 2007. This month, health officials in Beijing announced national plans to expand needle exchanges as well as broader outreach to prostitutes to encourage condom use. 'We have some results and achievements.' said Chen Juemin, director of the provincial health bureau. 'But it is just a first step.'

Subject: Inflation is Lessening From: Jennifer To: All Date Posted: Thurs, Jun 16, 2005 at 09:45:06 (EDT) Email Address: Not Provided Message: The statistics on inflation whether measured for the consumer price index or the GDP price deflator show inflation that is low and under control for this phase of a Federal Reserve tightening sequence. The bond market well reflects these statistics. All indexes have weaknesses, but inflation appears to be continuing a 25 year decline through this cycle. This is most promising and reflects well on Fed policy.

Subject: Re: Inflation is Lessening From: Pete Weis To: Jennifer Date Posted: Thurs, Jun 16, 2005 at 14:36:02 (EDT) Email Address: Not Provided Message: Jennifer. What's happening to discretionary income? Is it improving because inflation as measured by our government is declining? Because regardless of inflation reported by the BLS, isn't it about increasing or decreasing discretionary income? Does the government use increased energy costs, food costs or increased housing costs in their discretionary income calculations? Also if low inflation is so beneficial, why has personal debt been on such a huge increasing trajectory?

Subject: Re: Inflation is Lessening From: Jennifer To: Pete Weis Date Posted: Thurs, Jun 16, 2005 at 16:18:20 (EDT) Email Address: Not Provided Message: These are excellent questions, but changes in income distribution or debt accumulation as demographic changes are slow in developing. What is important in the near term is low inflation and low long term interest rates and we have these. I am encouraged.

Subject: Demand for Natural Gas From: Emma To: All Date Posted: Wed, Jun 15, 2005 at 18:40:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/business/15gas.html?incamp=article_popular_3&pagewanted=all Demand for Natural Gas Brings Big Import Plans, and Objections By SIMON ROMERO Just as the 19th century was shaped by coal and the 20th century by oil, people in the energy industry say, this century will belong to natural gas. But to judge by the battle over energy legislation that began yesterday in Congress, it will not happen easily. International energy companies, the Bush administration and governments in gas-rich countries are aggressively championing the creation of a global market for natural gas, with the United States at its center as the largest importer. They are promoting the fuel as more plentiful and less polluting than oil and needed to sustain economic growth. But in the same way that American oil output began to fall short in the 1960's and has steadily diminished as a source of energy, the United States is already running low on its own production of natural gas. To fill the gap, vast amounts of gas will have to be imported - in liquefied form, arriving by tanker on the coasts of the United States or elsewhere in North America. Like oil, large reserves of natural gas are found far from the big markets for the fuel, in countries like Qatar, Iran, Russia, Angola, Yemen and Algeria. Competition for gas projects in these places has prompted a frenetic race among international oil companies to meet demand for the fuel in rich industrialized countries. These ambitions in the United States face strong resistance. Officials in some states where energy companies plan to build terminals that would receive the gas tankers - including Alabama, California, Maine, Massachusetts, New Jersey, New York and Rhode Island - say they could fall victim to a catastrophic explosion, either accidental or set by terrorists. President Bush, trying to maneuver past the objectors, has endorsed legislation, which is currently being debated in the Senate, that would allow the federal government to overrule the states. 'Congress should make it clear to the Federal Energy Regulatory Commission its authority to choose sites for new terminals, so we can expand our use of liquefied natural gas,' Mr. Bush said in April. But he faces a fight in Congress too. Several senators, including Dianne Feinstein, Democrat of California, are sponsoring an amendment to oppose greater federal authority. The federal commission's chairman, Patrick Wood III, told energy industry officials in Houston in February that he expected at least eight new terminals for liquefied natural gas, or L.N.G., to be built in the United States by 2010. There are now four terminals - in Georgia, Louisiana, Maryland and Massachusetts - built during an earlier foray into L.N.G. in the 1960's and 1970's. Some Object to Terminals Energy companies want to construct more than 40 such terminals at a cost of $500 million to $1 billion each. The emerging conflict is taking place as some scientists and environmentalists say that the nation is once again placing too little emphasis on improving energy efficiency and making investments in other methods for producing power and heat, including wind, biomass and nuclear energy. Meanwhile, utilities that buy gas warn that in becoming ever more reliant on natural gas from abroad, the United States would be running the same risk it made when it came to depend on oil from unstable sources in the Middle East. Natural gas is expected to overtake coal and rival oil as the leading fossil fuel in the world by 2025 - sooner if the largest energy concerns get their way. They are pursuing more than $100 billion in projects to create a global market for gas that will be increasingly vital to generate electricity, heat and cool buildings, manufacture the fertilizers that help feed the world and even run some vehicles. Natural gas accounts for 24 percent of the nation's energy consumption. Plentiful and less polluting than oil, natural gas, whose consumption still emits greenhouse gases, has become much more popular over the last decade after it was prized as a fuel for new power plants. The rising consumption of natural gas comes with a significant cost, however. 'We're at a similar stage with natural gas as we once were with oil,' said Donald E. Felsinger, president of Sempra Energy of San Diego, which plans to import natural gas from Russia to Texas, Louisiana and northern Mexico. 'We're not self-sufficient anymore, and we're going to depend on imports to allow people to keep consuming it.' The price of natural gas has doubled in the United States in the last five years, exposing a vulnerable reliance and the possibility of higher prices if supplies are not increased. Indeed, even with the global gas market in its infancy, some nations want to act as a cartel to control the price of natural gas much as the Organization of the Petroleum Exporting Countries has at times manipulated the oil market. Efforts to import more natural gas have already touched off a political dispute in California where resistance has mounted to plans to build several L.N.G. terminals, including one in Long Beach and two off the coast, one close to Oxnard, north of Los Angeles, and the other near Camp Pendleton, north of San Diego. Energy companies, including Chevron and BHP Billiton of Australia, are financing a group called Californians for Clean Affordable Safe Energy to persuade people of the need for L.N.G. The group is part of a $1 million campaign supporting L.N.G. created by a Republican political strategist, Mike Murphy. But skepticism persists. 'If you jump-start an industry this way and bring in an abundance of natural gas, you're creating an addiction to something that wasn't there,' said Susan Jordan, director of the California Coastal Protection Network, an environmental group in Santa Barbara campaigning against L.N.G. terminals. 'This is happening without any mention of conservation and with little regard for the renewable alternatives.' Unlike oil, natural gas can be devilishly difficult and expensive to ship around the world. To create a liquid, natural gas must be cooled to 260 degrees below zero, squeezing its volume by a factor of approximately 600. Once it reaches its destination, it needs to be reheated before it can be used in the power grid. Half the Cost of Oil, or Less But natural gas has many advantages, particularly in terms of convenience and cost. A typical barrel of oil commands roughly $50 on the world market today, while 6,000 cubic feet of natural gas, its energy equivalent, is much less expensive. Even delivered from a pivotal Middle Eastern country like Qatar, it would probably cost $18 to $24, according to Bernard J. Picchi, a senior energy analyst with Foresight Research Solutions in New York. Natural gas, once scoffed at by oil companies as a nuisance when found alongside reserves of oil, is also thought to be more plentiful than oil. BP, the British energy giant, estimates global gas reserves at 67 years of supply at current production rates, compared with global crude oil reserves equal to 41 years of annual supply. Plaguing the L.N.G. boom are comparisons to the scramble for oil in the last century and the transfer of wealth and financial leverage to a handful of nations in the Middle East. The United States, for much of the 20th century, was the world's largest oil producer, easily satisfying its own needs. But, with a fast-growing economy and increased reliance on the automobile, the nation began to import more oil than it exported after World War II. In 1973, when the Arab oil embargo pushed prices sharply higher, oil imports amounted to only 36 percent of domestic oil consumption. Now they account for nearly 60 percent. As with oil, American production of natural gas is no longer enough to meet domestic demand. Reliance on natural gas in the United States increased sharply after electricity companies designed more than 90 percent of the power plants in the 1990's to run on natural gas. Meanwhile, imports from Canada, whose large natural gas fields are connected by pipeline to the United States, have started to run short as well. Strong demand for natural gas is occurring not just in the United States, but in the fast-industrializing economies of China and India, which are set to compete for supplies. The United States is expected to emerge as the world's largest L.N.G. market, with imports forecast to account for as much as 20 percent of natural gas consumption in the United States by 2015, up from only about 2 percent today. Before that happens, however, the United States will need to build the terminals able to receive L.N.G. So energy companies watched with interest in March when a small Houston company, Excelerate Energy, completed the first such project in the United States in more than 20 years, off the coast of Louisiana, near Cameron, a sleepy parish seat. The terminal is welcomed by many residents there as a source of jobs. But Cameron's embrace of L.N.G. stands in contrast to the positions in communities in California and along the east coast, where demand for natural gas is the strongest and most L.N.G. ports have been proposed. These include proposals for Long Island Sound, nine miles off Rocky Point, N.Y.; Providence, R.I.; Logan Township in southern New Jersey; and Harpswell, Me. Concern over the possibility of damage from an accident or terrorist explosion involving a terminal or tanker has prevented such projects from getting off the ground in these coastal communities. A recent report by Sandia National Laboratories concluded that terrorists blowing a hole in an L.N.G. tanker could produce a spill of liquefied natural gas that could reheat and set off a fire that would cause second-degree burns on people nearly a mile away. Industry Cites Safety Record The L.N.G. industry responds that the safety record of its tankers far exceeds any other sector of the shipping industry. Only a few relatively small accidents have occurred in the last three decades, and industry groups contend that an accidental spill or a suicide bomb attack is extremely unlikely. Japan and South Korea, currently the top L.N.G. markets, have never experienced a major accident or attack. Yet considerable apprehension persists. In an analysis in May for the attorney general of Rhode Island, Richard A. Clarke, the former counterterrorism adviser to the Clinton and Bush administrations, concluded that terrorist groups could easily attack an urban L.N.G. port or tanker, exposing the areas around Providence and Fall River, Mass., to 'a high risk of generating catastrophic damage' from explosions and fires. Responding to the energy industry's urgency, Congress included in the broad energy legislation approved this spring in the House, and given clearance in May by the Senate Energy and Natural Resources Committee, a provision that would effectively usurp the authority of states to block L.N.G. terminals. Six governors from coastal states, including Arnold Schwarzenegger of California and Mitt Romney of Massachusetts, wrote to the Senate committee, asking for states to remain on equal footing in L.N.G. reviews. Senator Charles E. Schumer, Democrat of New York, said this month that he opposed an L.N.G. terminal in Long Island Sound, citing security concerns. Those officials are opposing senators like Lamar Alexander, Republican of Tennessee, and Tim Johnson, Democrat of South Dakota, who are pushing to bolster federal authority. Meanwhile, foreign governments that are pinning their hopes on exporting L.N.G. to the United States are investing in ventures to build terminals. One West African supplier, Angola, has acquired part of a venture called Gulf LNG Clean Energy that is planning a port in Mississippi. Qatar, the Connecticut-sized nation in the Persian Gulf that is expected to become the world's largest L.N.G. exporter over the next decade, has shown keen interest in the L.N.G. provisions in the energy bill before the Senate. Qatar and 12 other gas-rich nations, including Iran, Egypt, Nigeria and Venezuela, met in April to discuss ways to keep L.N.G. prices satisfactorily high. The group, called the Gas Exporting Countries Forum, is still in its infancy and for now is incapable of modeling itself after OPEC, but its members agreed to establish a liaison office in Doha, Qatar. Daniel Yergin, an energy analyst and author of 'The Prize,' a history of the quest for oil over the last century, argues that it would be difficult for a confrontational cartel of gas producers to take hold over the next several years. He said that is because L.N.G. producers will be competing with each other for market access and relying heavily on Western energy companies to shoulder much of the multibillion-dollar risk of large L.N.G. projects. 'Managing price would be negative for an industry set to grow rapidly over the next 10 years,' Mr. Yergin said. 'There is more pronounced interdependence of consuming and producing countries for natural gas than for oil.' Others view the growing reliance on imported natural gas in the United States more ominously. 'We accept having L.N.G. as part of the energy solution, but we're very concerned about making the same mistakes we made with imported oil,' said David Schryver, vice president for Congressional affairs at the American Public Gas Association, which represents municipal gas utilities that would consume much of the imported L.N.G. 'Facing the prospect of another OPEC for natural gas is alarming.' Despite such concerns, L.N.G. imports to the handful of terminals that exist in the United States soared 29 percent last year and are set to increase rapidly throughout this decade. 'Going without L.N.G. requires making some difficult lifestyle changes in the way we consume our energy,' said Charif Souki, chief executive of Cheniere Energy, a Houston company with plans to build three L.N.G. terminals in Louisiana and Texas. 'If you have a better alternative, then please pursue it.'

Subject: National Stock Index Returns From: Terri To: All Date Posted: Wed, Jun 15, 2005 at 16:02:14 (EDT) Email Address: Not Provided Message: http://www.msci.com/equity/index2.html National Index Returns [Dollars] 12/31/04 - 6/14/05 Australia 5.0 Canada 2.7 Denmark 6.1 France -0.3 Germany -4.0 Hong Kong 0.7 Japan -6.7 Netherlands 0.1 Norway 9.0 Sweden -2.6 Switzerland -0.2 UK 0.5

Subject: Medicare Drug Benefit Choices Widen From: Emma To: All Date Posted: Wed, Jun 15, 2005 at 11:52:03 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/health/15drug.html?pagewanted=all Medicare Officials Insisting on Wider Choices in Drug Benefits By ROBERT PEAR WASHINGTON - As companies devise insurance policies for the new Medicare drug program, federal officials are pressing them to offer a surprisingly generous array of prescription drug choices, according to industry executives. As a result, experts say, the Medicare drug benefit, which begins in January, is shaping up to give beneficiaries access to a larger number and a wider variety of prescription drugs than are now available to many workers and retirees with private employer-sponsored health insurance. Medicare will rely on private health plans to deliver drug benefits to the elderly and the disabled. Insurers worry that Medicare officials' insistence on a robust drug benefit will make it hard for them to control the costs of the program. But the officials say their policies will ensure that all 41 million beneficiaries have affordable access to the drugs they need. 'Medicare officials are flexing their muscles,' said John K. Gorman, a former Medicare official who is now a consultant to many insurers. 'They are requiring prescription drug plans to cover more drugs than anyone expected. They are establishing a gold standard for access to drugs in a number of therapeutic classes.' The core of each prescription drug plan is a list of preferred drugs, known as a formulary. Insurers were required to file their proposed lists by mid-April. Since then, many have made changes to win federal approval. Medicare officials said on Tuesday that they had approved most of the formularies, but were still negotiating with some companies. In the negotiations with insurers, which were confidential, the government has been insisting that they cover not just one or two drugs to treat each disease, but most or substantially all the drugs available for certain conditions. In a directive issued last Friday, the Medicare agency reiterated its position that insurers must cover 'all or substantially all' of the drugs in six classes that are often prescribed for Medicare beneficiaries: antidepressants like Zoloft and Paxil; antipsychotics like Zyprexa, for schizophrenia and severe bipolar disorder; anticonvulsants like Neurontin, to treat epilepsy and pain; H.I.V. drugs; cancer medications; and immunosuppressants, to prevent the body from rejecting transplanted organs. Judith A. Cahill, executive director of the Academy of Managed Care Pharmacy, which represents pharmacists who work for health plans, said the federal requirements would increase costs and put 'upward pressure on premiums.' The Bush administration denies that the requirements would drive up costs. Gary R. Karr, a spokesman for the Centers for Medicare and Medicaid Services, said insurers could hold down costs by using the same techniques they used to control drug spending in the private sector. Insurers with approved plans can begin marketing them in the fall, with voluntary enrollment to start Nov. 15. The law guarantees Medicare beneficiaries a choice of at least two plans, but many more are likely to be available in some regions. The potential costs of the new program have been a political issue for some time. When Congress passed the Medicare bill late in 2003, the Congressional Budget Office estimated that it would cost $395 billion over 10 years. Lawmakers were startled when, in January 2004, the Bush administration put the cost at $534 billion. The Congressional budget agency recently increased its estimate a bit more and cited the federal formulary requirements as one factor. The expansion of Medicare to cover prescription drugs is President Bush's most significant achievement in domestic policy. He plans to emphasize it at two events this week, on Thursday in Washington and on Friday in Minnesota, where he will begin a public education campaign. Coverage for a wide range of prescription drugs could make the new benefit more attractive to retirees so that more will sign up, potentially helping insurers reduce costs through volume discounts. Dr. Mark B. McClellan, the administrator of the Centers for Medicare and Medicaid Services, said, 'Beneficiaries will have access to a broad range of medically appropriate drugs to treat all disease states.' Hundreds of insurers - more than initially expected - have filed applications with the government to provide Medicare drug coverage, which they see as a potentially profitable new line of business. With so many companies seeking a piece of this potentially vast market, Medicare officials can be more aggressive in setting terms and conditions to prevent discrimination against sick people with high drug costs. In requiring coverage for a wide range of drugs, officials said, they are following 'best practices' used in the private sector and for Medicaid and the Federal Employees Health Benefits Program. And they noted that under the 2003 Medicare law, formularies cannot discriminate against any beneficiaries. Premiums for the Medicare drug benefit will vary among plans, but are expected to average $37 a month next year. Under the standard benefit defined by Congress, the beneficiary will be responsible, as well, for a $250 annual deductible and 25 percent of drug costs from $251 to $2,250. In a still controversial wrinkle of the law, the patient is responsible for paying all of the next $2,850 in drug costs. Beyond that level - $5,100 a year and more - Medicare will pay about 95 percent. Some members of Congress worry that the new benefit will cost the Treasury still more - much more than now forecast. But if the program succeeds and most Medicare beneficiaries sign up, it would vindicate the Bush administration's contention that a private-sector approach is the best way to provide Medicare drug insurance. In reviewing prescription drug plans, federal officials have been lobbied from all sides. Beneficiaries generally want as many drugs as possible on each formulary, and the drug companies stand to benefit if more of their products are covered. But insurers and pharmacy benefit managers typically want to limit the number and types of drugs, so they can obtain large-volume discounts from manufacturers. The challenge for Medicare officials is to balance these competing goals. Babette S. Edgar, a senior pharmacist at the Centers for Medicare and Medicaid Services, said the formularies of Medicare drug plans 'look a little bit different than you normally see in the commercial population.' One reason, she said, is that Medicare serves a diverse population, including people who are in nursing homes or receiving home health care. Dr. McClellan, the Medicare administrator, noted: 'We have a unique situation with the drug benefit this year. A lot of patients with serious illnesses have been stabilized on certain combinations of drugs and will transition into Medicare for their drug coverage. We want to give them access to all medically necessary treatments.' Andrew Sperling, a lobbyist at the National Alliance for the Mentally Ill, an advocacy group, welcomed the government's decision to require coverage for many important psychiatric medications - a goal he has sought in 15 meetings with federal officials over the last year. 'These drugs are not interchangeable,' Mr. Sperling said. 'They have significantly different effects in different individuals.' Dr. Joel Owerbach, chief pharmacy officer at Excellus BlueCross BlueShield in Rochester, said Medicare beneficiaries would have access to 15 to 20 antidepressants, while many people with private insurance might have access to 10 such drugs under a typical formulary. Beckie A. Fenrick, a vice president of Innoviant, a prescription benefit administrator based in Wausau, Wis., said, 'The government told us that our formulary was fine in the commercial market, but would not fly in the Medicare program.' Medicare officials, she said, contended that the co-payments for certain drugs were too high. Dr. Fenrick said the government review was 'very detailed' and extended beyond the six high-priority categories. For example, she said, 'the government told us that we did not have enough oral contraceptives on our Medicare formulary.' (The pills might be prescribed for younger beneficiaries who qualify for Medicare because they are disabled.) The Bush administration has examined not only the drugs covered by Medicare drug plans, but also the techniques used to control access to those drugs. Insurers can require patients to obtain 'prior authorization' for a drug, or to try an older, less expensive drug before using a newer, more costly one. James E. Hartert, chief medical officer of Prime Therapeutics, a benefit manager owned by nine Blue Cross and Blue Shield plans, said Medicare was allowing less use of those expense-management techniques than was common in the private insurance market. 'There will be a cost to that,' he said, 'but we have not quantified it.' Douglas J. Holtz-Eakin, director of the Congressional Budget Office, said the agency had originally assumed that Medicare drug plans could use 'restrictive formularies' to help control spending. In fact, he said, the administration has required broader drug lists. As a result, he said, the budget office 'now expects that prescription drug plans will be slightly less effective at controlling drug spending than we had previously assumed.' Studies by insurers, accountants and the Congressional Budget Office suggest that formularies, co-payments and other cost-management tools can reduce drug spending in an insurance program by 15 percent to 30 percent. But the higher savings often require greater restrictions on patients' choices. In December, the Bush administration cited Kaiser Permanente's commercial formulary as a model for Medicare plans. But Anthony A. Barrueta, Kaiser's vice president for government relations, said the company was still haggling with Medicare officials who wanted Kaiser to include additional products on its drug list for Medicare beneficiaries. Insurers are eagerly anticipating the Medicare market. The Medicare Drug Gold Rush is the title of a conference for health care executives being held this month in New York. AARP, the lobby for older Americans, announced last week that it was joining with UnitedHealth Group, one of the nation's largest insurers, to offer a prescription drug plan to Medicare beneficiaries. Its drug benefit will be managed by a unit of the Walgreen Company. In another strategic alliance, PharmaCare, a drug benefit manager owned by CVS, has joined a big insurance company, the Universal American Financial Corporation, to offer Medicare drug coverage. Such alliances could ease the qualms of insurers who have little experience with insurance products that cover prescription drugs and nothing else. John Wardle, senior vice president of PharmaCare, said his company would 'assume some of the risk' normally borne by insurers.

Subject: G.M. Board Wants Cut in Benefits From: Emma To: All Date Posted: Wed, Jun 15, 2005 at 11:49:28 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/business/15auto.html G.M. Board Wants Cut in Benefits By DANNY HAKIM DETROIT - The board of General Motors has given the United Automobile Workers union until the end of the month to agree to cuts in its members' health care benefits, union officials said Tuesday. Many local union leaders have said they were willing to make concessions, but not to the extent that G.M. was seeking. If the union and the company cannot agree by the end of the month, G.M. is threatening to make the cuts on its own. Such a step could lead to a breakdown in G.M.'s relations with the union and possible strikes. 'I think they're making a mistake,' said Eldon J. Renaud, the president of a union local in Bowling Green, Ky., where G.M. has a plant that makes the Chevrolet Corvette. 'It's hard enough for us to agree to concessions without forcing something down our throat. It takes time to do this.' Asked if a strike was a likely response by the union to a unilateral move by G.M., Mr. Renaud said, 'I don't think it leaves us any other option.' Shares of G.M. rose 4 percent, or $1.42, to $35.87, on Tuesday after a report on the deadline appeared in The Detroit News; it was first mentioned by a local union official in a Bloomberg article on Friday. The move appears to be a more assertive step by a board that has been invisible during G.M.'s financial crisis of the last three months, while Rick Wagoner, the board's chairman and G.M.'s chief executive, has been revising his strategy. The directive appears to have come out a board meeting last Tuesday that followed a contentious annual meeting where shareholders questioned Mr. Wagoner's game plan and the qualifications of G.M.'s board. At the annual meeting, Mr. Wagoner suggested that he would press for health care cost cuts with or without the union's approval. 'Our strongly preferred approach is to do this in cooperation with the U.A.W.,' he said, adding, 'but either way, it's crystal clear that we need to achieve a significant reduction in our health care cost disadvantage and to do so promptly. We're committed to do that.' Toni Simonetti, a spokeswoman for G.M., said the board was playing a role in the health care talks but would not say whether there was a deadline or detail its involvement. 'The board would be engaged in critical issues of the company such as this particular one,' she said. 'Everyone involved in this process within the company and outside the company acknowledges that time is of the essence, but I would have no comment on the characterization of an ultimatum or a deadline.' 'I think it's safe to say that, yes, the board is engaged on this issue, as the board should be on a strategic issue like this,' she added. Paul Krell, a spokesman for the union's leadership in Detroit, said, referring to G.M., 'I'm not going to comment on their internal deadlines.' But local union leaders, who gathered in Detroit last Thursday, said they were told about the deadline. Since G.M. spends nearly $6 billion a year on health care, many investors and financial analysts see cutting back on benefits as an important step in restoring the company to financial health. G.M. covers 1.1 million Americans, including workers, retirees and family members, making it the nation's largest private provider of medical benefits. Its hourly workers and retirees pay modest co-payments for prescription drugs, but they do not pay monthly premiums or deductibles. Salaried employees pay both, and G.M. has said it would like hourly workers to have the same benefits as managers. Such a change would require reopening the company's labor contract, which does not expire until 2007. Ron Gettelfinger, the union's president, said in April he would not do so but would agree to make changes allowable within the contract. Such changes could include compelling more members to purchase drugs by mail, or taking a step similar to one the union took for Chrysler this year. Because costs of preferred provider organizations, known as P.P.O.'s, have risen sharply, Chrysler workers who use those plans will have to pay annual deductibles ranging from $100 to $1,000. 'Right now, we're doing everything possible to help G.M., because it helps us too. We don't want G.M. to go under,' said Don Swegman, president of an Indiana local whose workers build pickups. 'At the same time, we do have a labor agreement.' In a note to investors, Stephen J. Girsky, an analyst at Morgan Stanley, said, 'The fact that the U.A.W. appears to be willing to negotiate and that some type of deadline has been set is an incremental positive.' 'However, we would caution that the deadline may just be hypothetical and other deadlines have slipped in the past,' he said. Mr. Swegman said, 'They can make all the deadlines they want.' He went on: 'We have a four-year labor agreement and as long as what they want to do is laid out within our agreement, it's quite all right to do. If it's not, we're not going to be too happy about it.'

Subject: Squelching Public Broadcasting From: Emma To: All Date Posted: Wed, Jun 15, 2005 at 11:22:56 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/opinion/15wed2.html Squelching Public Broadcasting Do little boys and girls out there know how to spell 'spite'? For those who don't, the House Republicans who voted last week to gut federal support of public broadcasting - from 'Sesame Street' to well beyond - are offering a graphic demonstration as they attack one of the nation's more valued institutions. The Appropriations Committee voted not only to end taxpayers' support for next year's children's shows on public radio and television (yes, 'Clifford the Big Red Dog' and 'Postcards from Buster,' too), but also to close out entirely the $400 million in federal support of the Corporation for Public Broadcasting - the aid funnel to local stations - across the next two years. A decade ago, Newt Gingrich tried a similar stratagem to 'zero out' public broadcasting as Republicans claimed there was liberal bias in programming. The attempt failed in the face of cooler legislative heads and the proven indispensability of public broadcasting. This time, the Republicans' campaign is more threatening since it amounts to a second front in the culture war agenda identified with Kenneth Tomlinson, the Republican who is now chairman of the Corporation for Public Broadcasting. Mr. Tomlinson is intent on ramming partisan 'balance' on the airwaves - read that as dragging public broadcasting over to the right - by stocking the corporation with G.O.P. loyalists. In the next few weeks, the corporation's Republican-dominated board is expected to choose a former co-chairwoman of the Republican National Committee as president of the corporation. Mr. Tomlinson has said he is concerned about the cuts and will 'make the case' for federal support. But he is in an awkward position, with his own objectivity more in question than Big Bird's or Buster's. Federal money amounts to 15 percent of public broadcasting's budget revenues, but it plays a larger and particularly crucial role for smaller rural stations. More than government support, the public's faith and donations could be threatened if audiences sense the Republicans are succeeding with an ideological putsch. Republican lawmakers insist that the budget cuts are only one of many sacrifices required for fiscal discipline - a truly laughable contention from a Congress that has broken all records for deficit spending and borrowing. The pending highway bill alone has 3,800 pet projects (cue Porky Pig, not Oscar the Grouch). These include $2 billion-plus for two ludicrous 'bridges to nowhere' in rural Alaska, where, incidentally, station officials say public broadcasting may fade from the air unless the Senate blocks the House's spiteful cuts.

Subject: It's all about harnessing energy..... From: Pete Weis To: All Date Posted: Wed, Jun 15, 2005 at 11:13:35 (EDT) Email Address: Not Provided Message: in the long run. Can Saudi Arabia keep its promise to pump more oil? New book casts doubt on pledges to raise output By John W. Schoen Senior Producer MSNBC Updated: 10:26 a.m. ET June 15, 2005 Don’t look for big headlines out of OPEC’s regular meeting in Vienna to discuss oil production: there’s not really much to discuss. With global oil demand undeterred by a $50-a-barrel price tag, oil producers are pumping as fast as they can. So the semi-annual haggling over output quotas — ordinarily the gathering’s main event — is all but irrelevant. Leaders of the Organization of Petroleum Exporting Countries said early Wednesday they have agreed to raise their formal production limits by 500,000 barrels a day to try to lower soaring oil prices. Though widely expected, economists have dismissed the move noting that the 10 member nations bound by it are already pumping that much. They said oil markets — and drivers suffering sticker-shock at the gas pumps — are unlikely to see much of a difference. Meanwhile, the discussion about what to do about high oil prices has already been overtaken by promises from Saudi Arabia — the only oil producer seen able to boost capacity from current levels — to raise production to keep prices from rising even further. But a just-released book by veteran oil industry investment banker Matthew Simmons is raising questions about those Saudi promises. Based on research drawn from hundreds of technical papers spanning four decades, “Twilight in the Desert” argues that the kingdom's aging oil fields won't be able to sustain the higher levels of production needed to satisfy the world's growing thirst for oil. “We’ve had an illusion for the last 40 years that there was so much oil in the Middle East that it would never run out,” Simmons said in a recent interview. “What I’m offering is evidence. And all the optimists are offering is hope.” Simmons arrived at his assertions after a two-year review of hundreds of technical papers written by Saudi geologists and petroleum engineers. At the center of his argument is that the Saudis are relying heavily on just a handful of prolific oil fields that are now rapidly aging — with little evidence that new, untapped fields are waiting in the wings. To maintain production levels at those few, aging oil fields, Simmons writes, increasing amounts of water have to be pumped into the ground to force oil to the surface. “The picture that emerges,” he writes, “undermines the optimistic but unsubstantiated claims of Saudi officialdom.” Not surprisingly, Saudi officialdom has been vigorously refuting Simmons' assertions ever since word of his book and its findings first started circulating in oil industry circles last year. “The world is more likely to run out of uses for oil than Saudi Arabia is going to run out of oil,” Adel al-Jubeir, top foreign policy adviser for Saudi Arabia’s de facto ruler Crown Prince Abdullah, told the Associated Press last week. Saudi officials also have argued that refining bottlenecks — not a lack of crude supplies — is the real cause of the recent spike in gasoline and diesel fuel prices Hard data on OPEC production has been scarce for decades; one of Simmons' central arguments is that the world needs a better mechanism for verifying the production capacity of all oil producers. But the arithmetic that is driving oil prices higher is fairly simple. Despite the recent surge in prices, demand for oil continues to grow — especially from rapidly developing economies in China and India. Global demand is currently about 84 million barrels per day and growing by about 2 to 3 percent a year, which means another 2 million barrels a day or so will be needed by next year. If demand growth continues, even higher levels of daily production will be needed to meet that demand. If production fails to meet demand, oil-consuming nations face the prospect of even higher oil prices, shortages or both. So where will the added production of millions of barrels a day come from? With all other OPEC members producing at capacity, Saudi Arabia, the world's largest producer, is widely believed to be the best hope for meeting increased demand. (Russia, the world’s second-largest producer, will be able to add a few hundred thousand barrels at day at best over the next few years, according to estimates by the U.S. Energy Information Administration.) Saudi officials say they’re ready to boost production from current levels of 9.5 million barrels per day by drawing on some 1.5 million barrels per day of surplus capacity. And they’ve pledged to boost that capacity another 1.5 million — to 12.5 million barrels per day — by 2009. The kingdom’s oil minister said last month that production levels of 12.5 million to 15 million barrels per day can be sustained for up to 50 years. But Simmons says a review of technical reports written by Saudi geologists and petroleum engineers paints a very different picture. These reports, he writes, detail massive injections of water needed just to sustain current levels of production. That process eventually causes an oil field to “water up,” he writes, as the injected water bypasses oil and supplants it in producing oil wells. When that happens, he writes, overall production levels can fall rapidly. Saudi officials have countered that new technologies allow them to produce oil that was once deemed “unrecoverable.” Simmons argues that these new production techniques have become “super straws” that have increased the rate of depletion from aging wells, but won’t boost output. Simmons also writes that the Saudi’s massive Ghawar oil field — which accounts for more than half of total production — is more than 40 years old, and he argues that the most productive areas already have been tapped. The past four decades of technical papers also show little evidence of promising new oil fields, according to Simmons. And past Saudi promises to boost output haven’t been backed up by actual oil shipments, he says. “My guess is they're probably struggling to maintain 8 to 8.5 million a day of production and saying they’re doing 9.5 (million),” he said. If Simmons' assertions are correct, the world faces an energy crunch at least as significant as the oil shocks of the 1970s. Alternative energy sources are beginning to play a significant role. But most analysts and industry experts concede it will take at least a decade before renewable sources like solar, wind or bio fuels make a significant dent in global energy demand. Even then, most of these alternative sources are being used to produce electricity; oil is primarily used as a transportation fuel, for which there are no readily available substitutes. Simmons says he hopes his book will provide a “wake-up call,” at the very least pressuring oil producers to allow independent verification, oil field by oil field, of production levels and surplus capacity. “I hope I’m being overly pessimistic,” he said. If he’s not, and growing oil demand is about to overtake global production capacity, Simmons argues that governments around the world need to begin preparing for that event, which he says would amount to “the 9/11 of energy.” “I really do believe that if we understand these problems and go to a war footing,” he said, “we can actually fix this thing.” But he says doing so will take, among other things, “a scientific expedition that exceeds what we did when we created radar and the atomic bomb.” The Associated Press and Reuters contributed to this story.

Subject: China's Stock Market From: Emma To: All Date Posted: Wed, Jun 15, 2005 at 10:44:40 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/15/business/worldbusiness/15yuan.html?pagewanted=all China Is Said to Consider $15 Billion Bailout of Stock Market By DAVID BARBOZA SHANGHAI - The Chinese government is considering creating a $15 billion fund to help bail out the nation's ailing stock market, according to a senior government official and people told of the proposal. The creation of a huge fund to invest in mainland stocks would be the government's most striking effort yet to prop up share prices and try to restore confidence in a market that has fallen to its lowest level in about eight years. The proposal comes at a time when China's economy is sizzling hot, but the nation's Communist Party leadership is struggling to fix a stock market that has been broken for several years. The Shanghai and Shenzhen stock exchanges, where about 1,400 state-owned companies are listed, are each down 40 to 50 percent from the highs they reached in 2001. In recent months, struggling brokerage houses and large investors have been aggressively lobbying for a government bailout fund. Government bailouts have a weak track record, however, and the proposed support is unlikely to nurse the growth of the capital markets here. When authorities in Hong Kong and Tokyo stepped in to aid their local stock markets, the moves only provided a short psychological lift and failed to produce a sustained turnaround. Analysts say the government is considering the huge bailout proposal because the market has fallen so sharply in the last year that some government officials fear a bigger drop could seriously impede the long term development of China's financial markets. Indeed, China's weak system for raising money and putting it to profitable use is not just hurting investors and state-owned companies, experts say. At the heart of the problem is that private companies, which have a much better track record, are not allowed to list on the Chinese stock exchanges. 'China needs a healthy capital market,' said Zhou Chunsheng, a professor of finance at Guanghua School of Management at Beijing University. 'Traditionally state-owned companies found it easy to get financing from state-owned banks. But now we have more small businesses and private businesses. And they have to find ways to get financing.' Some Chinese officials say they are motivated in part from fears that huge and mounting investor losses could also create social discontent among the millions of people who began buying shares in the early to mid-1990's, when stock prices were climbing. While it is not clear whether China's leadership will ultimately approve the bailout proposal, expectations that the government is about to act helped lift share prices last week in one of the biggest one-day rallies in three years. If the $15 billion investment fund were created, the size of the fund would represent about one-tenth of the current value of the stock market's floating, tradeable shares. But some analysts say that turning to a bailout fund could make the situation worse by encouraging investors to sell more of their stocks, saddling the government with huge additional losses. 'If the government really wants to do something they should try some other measures instead of simply pouring more capital into the market,' said Qian Qimin, a senior analyst at Shenyin & Wanguo, a brokerage house based in Shanghai. The government has turned increasingly aggressive in its efforts to restore investor faith in the market. Nearly every week, regulators announce a new initiative aimed at shoring up the slumping market. On Monday, for instance, the government said that it would offer loans to two major brokerage houses. Regulators have also said they plan to reduce taxes on stock sales and give listed companies the right to engage in stock buybacks. The government has also reduced transaction costs and allowed insurance companies and the government pension fund to invest. Even more, foreign investors who need special approval to buy shares inside China have been given greater access to the domestic stock market. Regulators have also introduced new corporate governance rules, cracked down on accounting fraud and closed some corrupt and insolvent brokerage houses. Despite such efforts, stock prices have continued to slide. Last week, the Shanghai exchange index dipped below 1,000 points for the first time since 1997, crossing what many investors considered a crucial technical and psychological trading level. Then, last Wednesday, the stock exchange suddenly jumped 8.2 percent on rumors that the government might bail out state-owned brokerage houses or create the bailout fund big investors have been advocating in recent months. Trading has been flat to down slightly since then. 'It's very hard to estimate the future of the stock market because the market is often interfered with by the government,' said Mr. Qian at Shenyin & Wanguo Securities. 'How often the government will take administrative measures and how effective these measures are will decide whether the stock index will rise or fall in the future.' China opened its two stock exchanges in 1990 and 1991 as a way to help state-owned companies raise money and to create a foundation for a thriving capital market system. For several years, prices rose steadily as millions of investors bid up the shares of state-owned enterprises, raising billions of dollars for those companies and helping alleviate pressure on the already struggling state-owned banking sector. But since late 2001, the stock market has been tumbling amid allegations of accounting fraud, poor corporate governance and continued government interference in business operations. On top of that are fears that regulators might allow some of the state's huge holdings in legal, nontradeable shares (which represent more than two-thirds of the market's value) to be released into the market, further depressing prices. The market has also soured on initial public offerings. In 2002, the Shanghai Stock Exchange raised about $6 billion through such offerings, slightly more than the longer-established Hong Kong Stock Exchange. But in the two years since then, Hong Kong has raised close to $20 billion through initial public offerings compared with just $9 billion in Shanghai. And this year is expected to be no different, with all the big Chinese companies deciding to raise the bulk of their money in Hong Kong, not Shanghai. Few are optimistic about the stock markets' prospects over the next year. 'In my view the stock market is still overvalued, even after falling 50 percent,' said Joe Zhang, an analyst at UBS. 'We were paying way too much for stocks back then. And we are now beginning to realize that what we bought was not BMW, it was Xiali Automobile.'

Subject: Producer and Consumer Prices From: Terri To: All Date Posted: Wed, Jun 15, 2005 at 10:33:47 (EDT) Email Address: Not Provided Message: Notice that producer and consumer prices actually fell in May. If the Fed has set us awash in liquidity the price indexes do not reflect a danger, and I am not inclined to have a central bank expressly target asset prices.

Subject: Blue Jay Feeding Chick From: Terri To: All Date Posted: Wed, Jun 15, 2005 at 06:03:56 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5474&u=4|10|... Blue Jay Feeding Chick New York City--Central Park, The Ramble.

Subject: Market Patterns From: Terri To: All Date Posted: Wed, Jun 15, 2005 at 05:55:22 (EDT) Email Address: Not Provided Message: Stock and bond markets are finally both positive for the year in America, after an especially calm 6 months. Energy, utilities, health care, REITs and consumer staples are leading sectors. Again value leads growth, and mid cap value stocks are stongest. Though international markets are generally positive in domestic currencies, in dollar terms international makers are negative. Value as usual leads growth internationally. Price earning ratios are still high by historical standards, with the S&P Index at 18.1, while dividends are historically low. Bonds are strong when stocks are weak, and weak when they are stronger, but the long term bull market in bonds somehow persists. The dollar has regained a year of losses.

Subject: Re: Market Patterns From: Pete Weis To: Terri Date Posted: Wed, Jun 15, 2005 at 21:46:38 (EDT) Email Address: Not Provided Message: 'Bonds are strong when stocks are weak, and weak when they are stronger, but the long term bull market in bonds somehow persists.' Terri. Is this statement necessarily true? Is there ever a situation when both bond funds and stocks do poorly?

Subject: Vanguard Returns From: Terri To: All Date Posted: Tues, Jun 14, 2005 at 21:22:36 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 6/14/05 S&P Index is 0.1 Large Cap Growth Index is -0.4 Large Cap Value Index is 1.8 Mid Cap Index is 3.3 Small Cap Index is 0.2 Small Cap Value Index is 1.0 Europe Index is -1.2 Pacific Index is -3.7 Energy is 20.0 Health Care is 6.0 REIT Index is 5.8 High Yield Corporate Bond Fund is 0.2 Long Term Corporate Bond Fund is 4.9

Subject: Sector Stock Indexes From: Terri To: All Date Posted: Tues, Jun 14, 2005 at 21:17:13 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 6/14/05 Energy 20.4 Financials -2.6 Health Care 5.0 Info Tech -4.6 Materials -4.7 REITs 5.9 Telecoms -2.8 Utilities 11.5

Subject: Morgan Stanley's Choices From: Emma To: All Date Posted: Tues, Jun 14, 2005 at 16:12:40 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/14/business/14wall.html Morgan Stanley's Choices: New Direction or Better Execution? By JENNY ANDERSON On Wall Street, a world dominated by multibillion-dollar deals, seven-figure bonuses and exotic financial products like weather derivatives, the success of a firm might just rest on the most intangible and least financial element of all: culture. That is one big lesson from Morgan Stanley, where Philip J. Purcell, the battered chief executive, announced yesterday that he would leave the company after a sustained bout of 'personal attacks' from a group of former executives who waged a lengthy campaign to oust him. The question that Morgan Stanley's directors must now decide is whether the problem was chiefly Mr. Purcell, or his strategy to create a financial supermarket that served customers ranging from retirees living on fixed incomes to multinational corporations. The board's answer will determine what kind of chief executive it chooses as a replacement for Mr. Purcell and what parts, if any, of the sprawling firm it will spin off. 'The retail and institutional models are tricky to bring together and hard to execute,' said Guy Moszkowski, a brokerage analyst at Merrill Lynch. 'Sometimes culture is everything.' The firm has already decided to shed its Discover credit card. The future of other divisions, especially the Dean Witter brokerage unit, could rest on what a new chief executive believes ails Morgan Stanley. Another option could be to merge Morgan Stanley with a rival to help it recover its lost footing. Some analysts are suggesting a sale to some financial institution like Bank of America or HSBC. Miles L. Marsh, Morgan Stanley's new lead director, made clear the board would look for a successor who supported an integrated model. 'You need people who are on the same wavelength with employees and the board.' At the core of the debate about Morgan Stanley's future was whether it should continue to be an integrated financial services company, selling stocks and credit cards to individual investors while also serving high-paying institutional clients like hedge funds and corporations. Integral to that question: whether a more charismatic leader could have succeeded where Mr. Purcell failed. It was Mr. Purcell who, in 1997, sought to bring Main Street to Wall Street when he merged Dean Witter, the retail stock brokerage firm which he oversaw, with Morgan Stanley, the white-shoe investment bank. They were like oil and water, and in the end, Mr. Purcell just could not blend the two. What seems to have really hurt Morgan Stanley was that Mr. Purcell did not have the charisma to make his vision of an integrated financial services firm function effectively. 'Whether Morgan Stanley can regain its momentum or whether it eventually has to be sold is unclear,' said Peter J. Solomon of Solomon & Company and a former chairman of the advisory business at Lehman Brothers in the 1980's. 'I suspect it depends on the leadership they require, whether they can restore that.' So what may be next? Some of Mr. Purcell's detractors say his strategy of building a full-service financial services company was the fundamental flaw. They say the era of soup-to-nuts financial institutions is now officially over. 'This is the last nail in the coffin on the failed vision of the financial supermarket,' said Jeffrey A. Sonnenfeld, associate dean at the Yale School of Management. 'Dean Witter and Morgan Stanley, these pieces never fit together and stapling them together wasn't the answer.' To others, however, the problem is not the model but the execution. 'What failed here was not the vision or the strategic thrust - it was the execution,' said Richard X. Bove, an analyst at Punk, Ziegel & Company. 'He spent too much time conceptualizing, too much time ensuring his position and not enough time with his management people and his clients.' Mr. Bove compared that with two more hands-on executives, Sanford I. Weill, who created and ran what became Citigroup for more than 20 years, and Richard Fuld, who has run Lehman for 12 years and has been employed there for 36 years. 'Sandy and Dick can conceptualize, but they are salespeople and they can execute. Purcell can conceptualize but he doesn't execute; he doesn't get his hands dirty.' While Mr. Purcell's immediate legacy will be his inability to marry a group of brokers with the blue-blooded patricians of Morgan Stanley, he did respond early to the shifts by financial companies to a full-service model. But when companies kept evolving toward an open system -with brokers selling a wider array of financial products than just those their firms created, as in Merrill Lynch brokers pitching Fidelity mutual funds - he supported a system favoring Morgan Stanley products. That system also created a steady stream of enforcement cases because of the inherent conflicts when brokers sell customers investment products that, while they may capture higher fees and earn better commissions, could be inappropriate for some investors. 'He really rethought the brokerage business around a model that was brilliant in the 1980's, the captive sales force selling proprietary product,' Mr. Moszkowski said. 'In today's regulatory and customer-needs environment, that model doesn't work very well.' His intransigence with regulators was notable in an era when most chief executives embraced the concept of fighting for a reasonable settlement and moving on. He bragged about having avoided the worst of the research analysts' conflicts only to be publicly reprimanded by William H. Donaldson, chairman of the Securities and Exchange Commission. 'The problem being C.E.O. is you are responsible,' Mr. Solomon said. 'You are responsible for good things you don't do and bad things you don't do.' Mr. Purcell's run was full of surprises. He won a power struggle with the former president, John Mack, in 2001 - a battle that left Mr. Purcell running a company with a board that many saw as sympathetic to him. But in the end, Mr. Purcell's greatest shortcoming appears to be failing to integrate two different cultures, or finding a way for one to supercede the other. 'The C.E.O. has to create a single culture,' Mr. Solomon said. A top Wall Street lawyer who insisted on not being identified said that Mr. Purcell 'never really melded the company where there's an us versus them mentality; it was us against us.' It is unclear if Morgan Stanley will be able to lure back the 20 managers who resigned during the last three months of turmoil. Morgan Stanley, however, still has a deep bench of talent and deep-rooted culture, but will have to pick a new leader and perhaps a new strategic direction. To some, recapturing its glory will not be hard. 'The brand name is still a glistening brand name,' said Mr. Sonnenfeld of Yale. 'For every one of the superstars who has left, there are five great people.'

Subject: Low Long Term Interest Rates From: Terri To: All Date Posted: Tues, Jun 14, 2005 at 14:45:04 (EDT) Email Address: Not Provided Message: Notice that there was a sharp drop in both producer prices and consumers sales for May. At least part of the reason for low long term interest rates has to be little inflation pressure. Another part may be moderate economic growth. But, for all the complaints above the Federal Reserve keeping short term interest rates low for so long, the bond market as a whole seem to be telling us the Fed was right. I hope for low rates for a long while to come.

Subject: Re: Low Long Term Interest Rates From: Pete Weis To: Terri Date Posted: Wed, Jun 15, 2005 at 12:39:39 (EDT) Email Address: Not Provided Message: 'Moderate growth' or lower consumption and approaching recession?

Subject: Is HaloScan down? From: Auros To: All Date Posted: Tues, Jun 14, 2005 at 14:27:24 (EDT) Email Address: rmharman@auros.org Message: The per-article boards seem to be missing...

Subject: Re: Is HaloScan down? From: Bobby To: Auros Date Posted: Tues, Jun 14, 2005 at 17:02:37 (EDT) Email Address: robert@pkarchive.org Message: It appears to be back. All of Haloscan crashes sometimes -- it happens to all its message boards every once in a while and there's nothing anyone can do about it, unfortunately.

Subject: Bobby From: Terri To: Bobby Date Posted: Tues, Jun 14, 2005 at 20:17:15 (EDT) Email Address: Not Provided Message: Bobby, when you store messages from the board can you leave the last 50 or so for us to refer to? Thanks so much.

Subject: Re: Bobby From: Bobby To: Terri Date Posted: Tues, Jun 14, 2005 at 20:42:01 (EDT) Email Address: robert@pkarchive.org Message: I will try. I have to see if that works with Hotboards's deletion system

Subject: Wonderful From: Terri To: Bobby Date Posted: Tues, Jun 14, 2005 at 20:51:42 (EDT) Email Address: Not Provided Message: Wonderful, no matter the result.

Subject: Fashion Enclave Lets Out Its Seams From: Emma To: All Date Posted: Tues, Jun 14, 2005 at 14:09:20 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/realestate/12sqft.html?pagewanted=all A Fashion Enclave Lets Out Its Seams By LISA CHAMBERLAIN DESPITE a loss of manufacturing, fashion is still the heart of the Garment District. It hasn't been taken over by offices or condos, largely because of zoning laws. Still, it is changing. Buildings that were once half empty and run-down are being fixed up and turned into high-end showrooms. And other spaces, very affordable by Midtown standards, are attracting tenants in creative fields that thrive in light-filled loft spaces. Some of the new tenants were born in areas once considered fringe that have now been gentrified. The Lower East Side Printshop, a nonprofit organization that rents studio space and printing equipment to artists who make everything from fine-art books to silkscreens, spent 36 years on East Fourth Street. With the firm having outgrown its 1,200 square feet, Dusica Kirjakovic, the executive director of the Printshop, began looking for larger space more than a year ago. She searched all over New York - including Williamsburg, Brooklyn; the South Bronx; and Long Island City - finding the affordable neighborhoods too remote and the convenient areas too expensive. Finally, she found everything she was looking for in the Garment District: a light-filled space with high ceilings and sturdy concrete floors, a freight elevator, and good transportation. The Printshop moved into the 6,000-square-foot space on West 37th Street, between Eighth and Ninth Avenues, on April 1, paying $13 a square foot, or $7,000 a month. Its old city-owned space, $344 a month, is being sold. The arrival of nongarment-related industries does not mean that fashion has disappeared from the Garment District, but now it is more in the form of upscale showrooms that rely on clustering. A result is that while fashion-related companies still make up more than half of the businesses in the district, the industry employs fewer than a third of the people who work there, taking up less and less space, according to a study conducted in 2003 by the Fashion Center, the neighborhood's Business Improvement District. Even more telling, manufacturing accounts for only 13 percent of employment. 'We've seen a trend away from manufacturing and the consolidation of the garment industry into better quality buildings,' said Brian S. Waterman, executive vice president at Newmark & Company Real Estate. One such building is 501 Seventh Avenue, which the Warnaco Group, whose holdings include Calvin Klein Jeans, moved into a little more than a year ago, consolidating showrooms and office space scattered around Manhattan. The company has already expanded and now occupies 185,000 square feet on six floors. Brokers say 501 Seventh Avenue commands $30 a square foot or better, considerably more than the annual rent in the recent past. 'There is a migration of different kinds of tenants into the Garment District, but in terms of showrooms, that's clearly the place to be,' said Scott Pudalov, executive vice president of the real estate brokerage firm CB Richard Ellis. Not everyone is convinced that the apparel manufacturing will continue to shrink. According to Sarah Crean, executive director of the Garment Industry Development Corporation, after many years of decline, factory jobs in the Garment District have stabilized. To make sure it stays that way, the corporation, a nonprofit advocacy organization backed by labor interests, has successfully lobbied the city to reinstate enforcement of a zoning law intended to protect garment manufacturers and workers. The zoning ordinance mandates that landlords with property on side streets from West 35th to 40th Streets who want to convert garment space to office space have to set aside an equal amount of square footage for general manufacturing or garment-related businesses. Enacted in 1987, the law has not been enforced since 1993. The Bloomberg administration reinstated the funds for enforcement in February. There is disagreement about how effective the zoning law would have been in retaining manufacturing jobs even if it had been enforced. The Real Estate Board of New York believes it doesn't necessarily protect jobs and that it depresses real estate prices. 'We share the same goal' as the Garment Industry Development Corporation, said Michael Slattery, senior vice president at the board, 'to keep this area a fashion center and to retain the apparel workers that are there, but the zoning doesn't do that. There's no guarantee about the rents.' Despite their disagreement about the law, Mr. Slattery has been working with Ms. Crean and garment industry labor groups to explore other means of protection, like obtaining long-term leases for the remaining factories, or setting aside buildings to be maintained exclusively for manufacturing. Dalma Dress, a manufacturer of haute couture gowns, has been in business for 35 years and has been on West 39th Street for the last 15. The company occupies about 3,800 square feet and employs 40 people. But the lease is up in four years, which worries its manager, Michael DiPalma. 'The zoning doesn't necessarily keep the rents affordable,' he said. 'It's still whatever the market will bear, and that's what my problem is.' In fact, the zoning law does not set aside space for garment manufacturing per se. Everything from showrooms to fine-art print shops falls within its parameters. The law merely tries to keep out traditional office tenants, which were seen as the threat when the law was passed. One recently rehabbed building indicative of the changes in the Garment District is 264 West 40th Street, a 20-story, 100,000-square-foot property owned by Renaissance Properties. According to Ms. Crean, when her organization took an inventory of the area in 2000, the building had five factories, four suppliers and 12 garment-related spaces. When Kenneth Fishel, president of Renaissance Properties, bought the building in 2003, however, it was run-down and half empty, he said. After spending $5 million renovating the building and consolidating the older garment-related business on the lower floors, Mr. Fishel has begun marketing the upper floors to fashion-industry tenants. But at more than $30 a square foot, those businesses are unlikely to use the space for manufacturing. The smattering of creative industry types, from graphic designers to architects, who have moved into the Garment District might be the real beneficiaries of the zoning law if it indeed keeps real estate prices down. 'Fortunately, the district is in good shape in terms of having tenants,' said Barbara Blair Randall, executive director of the Fashion Center. 'But we're a little antiquated in terms of the zoning. I view it as a handicap for the neighborhood.'

Subject: Cox for SEC Head From: David E.. To: All Date Posted: Tues, Jun 14, 2005 at 10:31:11 (EDT) Email Address: Not Provided Message: I am sharing a column about Cox. The column is from The San Diego Reader, a San Diego local newspaper. The colunmist, Don Bauder, retired some years ago from the San Diego Union Tribune. His columns have always controversial and accurate. Here is a local knowledgeable opinion about Cox and the SEC. Cox's appointment stands out among Pres Bush's appointment. Its interesting comparing the local news & detail we get with the national news. Christopher Cox and Randy Cunningham are two recent examples. Cheers http://www.sdreader.com/php/cityshow.php?id=C060905

Subject: Re: Cox for SEC Head From: Terri To: David E.. Date Posted: Tues, Jun 14, 2005 at 15:11:07 (EDT) Email Address: Not Provided Message: A worrisome choice, where we need a rough tough SEC Chair.

Subject: A First Step on African Aid From: Emma To: All Date Posted: Tues, Jun 14, 2005 at 10:25:24 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/14/opinion/14tue2.html A First Step on African Aid The Bush administration took a modest but important step in the right direction recently when it reached agreement with six other rich countries to ease the burden of debt in Africa. The arrangement would eliminate $40 billion of debt owed by 18 of the world's poorest countries, including 14 in Africa. President Bush deserves credit for agreeing to provide additional money to make sure the World Bank does not go out of business when the payments stop coming. The bank and the International Monetary Fund are the largest creditors to poor countries. But enough patting on the back; the real mountain remains to be climbed. Mr. Bush has yet to sign on to the meat of the proposal by Prime Minister Tony Blair of Britain to increase aid to Africa by $25 billion a year. That is the amount that Britain and many development economists say is essential to achieve the United Nations' goal of halving global poverty by 2015. Indeed, the debt relief package actually comes to the relatively small sum of about $1.5 billion a year, not all for Africa. The big summit in Scotland, where the rich countries will take up Mr. Blair's Africa proposal, is in three weeks. Britain, France and Germany have already agreed to timetables for increasing their aid to poor countries to 0.7 percent of national income by 2015. America, which gives a microscopic 0.16 percent, has yet to do the same. President Bush, who played host to five democratically elected African presidents yesterday with his usual rhetoric about spreading wealth, hope and opportunity in the world's most wretched region, must move beyond platitudes and step up to the plate in a meaningful way on increased aid to Africa.

Subject: Experiments With Patented Drugs From: Emma To: All Date Posted: Tues, Jun 14, 2005 at 10:20:24 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/14/business/14bizcourt.html?pagewanted=all Justices Expand Rights to Experiment With Patented Drugs By ANDREW POLLACK The Supreme Court gave pharmaceutical companies broad latitude yesterday to study and experiment with drugs covered by other companies' patents, a decision that may help speed the development of medical treatments. The decision means drug companies can do much of the laboratory, animal and human testing needed to win approval of a drug even if the drug would infringe on the patent on another product. However, the new drug could not be sold until the patent on the other drug expired. Justice Antonin Scalia, writing for a unanimous court, said that an existing exemption from patent infringement 'provides a wide berth for the use of patented drugs' in developing other pharmaceuticals. The decision reversed a federal appeals court ruling that the exemption should be interpreted narrowly. E. Joshua Rosenkranz, the lawyer who argued for the victorious side, said the ruling gave drug companies a head start on developing medicines to be ready to sell as soon as the patents on other drugs expired. 'It gave enormous latitude to conduct the testing necessary to bring therapies to needy patients,' Mr. Rosenkranz, who is with the Heller Ehrman law firm in New York, said in an interview. Sarah Lenz Lock, a lawyer for AARP, a consumer group representing older Americans, also praised the decision, saying it would 'speed new drugs to market and lower costs of drugs to consumers.' The case pitted Integra LifeSci-ences, a New Jersey company that had patented a class of compounds, against Merck of Germany, which had paid for a scientist to test some of the compounds for potential use as drugs. Integra sued Merck in 1996. A jury ruled in 2000 that Merck had infringed on Integra's patents and ordered Merck to pay $15 million, which was later reduced to $6.4 million. The appeals court also sided with Integra. But the Supreme Court ruled for Merck, which is not related to the American drug company of the same name. The Supreme Court sent the case back to the appeals court for reconsideration in light of the new ruling. Mauricio A. Flores, a lawyer representing Integra, said the Supreme Court decision mainly reversed an interpretation of the law by a lower court but did not deal with the specific evidence in this case. He said Integra was still confident that the jury verdict that Merck had infringed would still be upheld. 'This case isn't over,' he said. 'We live to fight another day.' Mr. Rosenkranz, representing Merck, said the company expected to prevail. 'The Supreme Court pulled every one of the props out from under Integra's position,' he said. The closely watched case had split the pharmaceutical and biotechnology industries. Many big pharmaceutical and biotechnology companies submitted briefs on the side of Merck, saying that a narrow interpretation of the exemption from patent infringement would slow drug development. The drug companies were joined in their argument by the Justice Department and by some consumer groups that often find themselves on the opposite side of issues from the pharmaceutical industry. Backing Integra were many biotechnology companies that make patented equipment and chemicals used in drug research, as well as some universities, which often invent new research techniques. They argued that granting a broad exemption from patent infringement would basically put them out of business since their products, which include sophisticated chemical testing machines and enzymes that manipulate genes and proteins, have little use outside of drug research. Some lawyers for these companies also said it was hypocritical of drug companies, which constantly assert the importance of strong patent protection in spurring innovation, to argue that they should be permitted to infringe upon patents held by others. The Supreme Court said in a footnote that this case was about research using patented drugs themselves, not about tools used to study those drugs. Therefore, it did not address whether drug companies could use research tools without worrying about patents. 'Research tools were not at issue and this decision isn't a license for people to infringe research tool patents,' said Edward R. Reines, who filed a brief on behalf of two tool makers, Applera and Isis Pharmaceuticals. Robert W. Esmond, a Washington lawyer whose firm filed a brief on behalf of another research tool maker, Vaccinex, said the decision 'leads to uncertainty over whether or not those patents are enforceable.' The case revolves around a clause in the Hatch-Waxman Act of 1984, which set the ground rules for generic drugs. To enable generic drugs to reach the market as soon as the patent on the branded drug expired, the act permitted generic companies to make and test their drugs while the patent was still in force. The clause permits drug companies to infringe on patents 'solely for uses reasonably related to the development and submission of information' to the Food and Drug Administration. But it is not specifically restricted to generic drugs, so there have been questions about how far it extends. The appeals court that handles patent cases ruled in 2003 that the exemption should be very narrow, covering, in effect, clinical trials but not earlier work like test-tube experiments to determine which of several compounds might be the best drug candidate. But the Supreme Court ruled that the exemption applied to more than clinical trials. 'There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed,' Justice Scalia wrote in the 15-page decision. He also wrote that the law 'leaves adequate space for experimentation and failure on the road to regulatory approval,' so that work on compounds that do not move forward into clinical trials can still be protected from infringement. Still, the court said that basic scientific research on a compound, performed without intent to develop a drug, would not be covered. Some lawyers said that questions of what is covered may still have to be decided case by case. Sometimes, the distinction between a research tool and a drug compound, for instance, cannot easily be made. 'They are saying that this exemption goes only so far upstream,' said Stephen B. Maebius, a patent lawyer at Foley & Lardner in Washington who represents pharmaceutical and biotechnology companies but was not involved in this case. In the 1980's, a class of peptides, or small proteins, was discovered by scientists at the Burnham Institute in San Diego. Integra later obtained the patent rights to the peptides. In 1994, David Cheresh, a scientist at the Scripps Research Institute, across the street from Burnham, discovered that a particular protein was involved in building blood vessels. So a compound that blocks the protein might be useful in blocking the blood supply to tumors. It turned out that peptides similar to those discovered at Burnham did that. Merck paid Dr. Cheresh to test some of them and one is now in clinical trials to treat cancer. The patent on the peptides is expected to expire before that drug comes to market.

Subject: Genetically Altered Rice in China From: Emma To: All Date Posted: Tues, Jun 14, 2005 at 10:09:12 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/14/business/worldbusiness/14rice.html Illegal Rice Found Again in China's Food Supply By DAVID BARBOZA SHANGHAI - Genetically altered rice, which is not approved for human consumption anywhere in the world, has been found again in China's food supply, this time in one of the country's biggest cities, the environmental group Greenpeace said on Monday. Researchers for Greenpeace say bags of rice purchased in the southern city of Guangzhou were tested by an independent laboratory and found to contain genetically altered rice, which is illegal to sell on the open market in China. The findings suggest that China may have inadvertently become the first country where people are consuming genetically modified rice, even though safety testing has not yet been completed. Scientists around the world continue to debate the use of genetically altered crops, but there has been little or no evidence that genetically altered crops are harmful to human health. Two months ago, China's Ministry of Agriculture said it would investigate claims by Greenpeace that genetically altered rice was being illegally planted and sold in Hubei Province in central China. The findings have not yet been released. Now, Greenpeace asserts that rice that has been genetically altered to resist pests has spread from experimental plots in Hubei to wholesale rice markets in Guangzhou, which is about 90 miles north of Hong Kong. 'This illegal and unapproved rice has spread out of Hubei Province and it is reaching other parts of the country,' said Sze Pang Cheung, a Greenpeace researcher in Beijing. Mr. Sze said Greenpeace bought the rice from a Guangzhou wholesaler, who buys from Hubei and then resells about 60 tons of rice a day, much of it to Guangzhou restaurants. Last April, Greenpeace said a group of 'rogue scientists' in Hubei had allowed altered rice to illegally seep into a corner of the market by selling it to regular farmers.In the United States, the planting of genetically altered corn and soybeans is widespread. But since the late 1990's, European and American regulators have slowed the approval process over health and safety concerns, as well as consumer fears.

Subject: Male Baltimore Oriole Feeding Chicks From: Terri To: All Date Posted: Tues, Jun 14, 2005 at 08:02:41 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5482 Male Baltimore Oriole Feeding Chicks New York City--Central Park.

Subject: I'm 'Sen' From: Pancho Villa alias 'Norm' To: All Date Posted: Mon, Jun 13, 2005 at 20:25:12 (EDT) Email Address: nma@hotmail.com Message: AMARTYA SEN The diverse ancestry of democracy Perhaps the most important political change in the 20th century has been the widespread acceptance of democracy as the 'normal' form of government to which any nation is entitled. There remains, however, an undercurrent of scepticism about prospects for democracy in the non-western world. That scepticism has received much encouragement from the recent events in Iraq. Critiques of the Iraq intervention often move from a justified censure of an ill thought-out and counterproductive military operation to a far less justified general scepticism of any notion of a democratic Iraq. Indeed, there is a widespread assumption that democracy is a peculiarly western norm, not in tune with foundational values elsewhere, such as in Arab countries. Underlying both the approaches, the militarist and the cynical, there is a basic misunderstanding about the nature of democracy. Democracy is best seen as the opportunity of participatory reasoning and public decision making - as 'government by discussion'. Voting and balloting are, in this perspective, just part of a much larger story. The ancestry of democracy goes much beyond the strictly confined history of some narrowly designated practices. Tribute must, of course, be paid to the powerful role that modern western thinking,linked with European enlightenment, played in the development of liberal and democratic ideas. But the roots of these general ideas can be found in Asia and Africa as well as in Europe and America. The belief that democracy is a quintessentially 'western' idea is often linked to the practice of voting in ancient Greece, especially in Athens. There is certainly priority there, but the jump to the thesis of the quintessentially 'western' or 'European' nature of democracy is a leap into confusion, The most elementary problem here concerns the partitioning of the world into largely racial categories, in which ancient Greece is seen as an integral and exclusive part of an identifiable 'European' tradition. In this classificatory perspective, no great difficulty is perceived in considering the descendants of, say, Goths and Visigoths as proper inheritors of the Greek tradition ('they are all Europeans'), while there is reluctance to take note of the Greek intellectual links with ancient Egyptians, Iranians and Indians, despite the interest that the ancient Greeks themselves showed in talking to them (rather than in chatting up the ancient Visigoths). Another difficulty concerns the fact that while public reasoning flourished in ancient Greece, it did so also in several other ancient civilisations. For example, some of the earliest open general meetings aimed specifically at settling disputes took place in India, in the sixth century BC onwards, in the so-called Buddhist 'councils', where adherents of different points of view gathered to argue their differences. Emperor Ashoka, who hosted the largest of these councils in the capital city of Pataliputra (now Patna) in the third century BC, also tried to codify and promote what must have been among the earliest formulations of rules for public discussion - a primitive version of the 19th-century 'Robert's Rules of Order'. Similarly, the so-called 'constitution of 17 articles', produced by the Buddhist Prince Shotoku in Japan in 604,, insisted, much in the spirit of the Magna Carta six centuries later: 'Decisions on important matters should not be made by one person alone. They should be discussed with many.' There is a considerable history of the cultivation of public reasoning, with good use of tolerance of heterodoxy, also in Muslim countries, including in the Arab world. When Maimonides, the Jewish philosopher, was forced to emigrate from an intolerant Europe in the 12th century, he found refuge in the Arab world and was given an influential position in the court of Emperor Saladin in Cairo. To take another example, when at the turn of the 16th century, the heretic Giordano Bruno was burnt at the stake in Rome (as part of the ongoing Inquisitions), Akbar, the great Moghul emperor of India (who was born a Muslim and died a Muslim), had just finished his project of legally codifying minority rights, including religious freedom for all. Akbar also set up in Agra perhaps the earliest multi-religious discussion group, and there were regular meetings in the 1590s of Hindus, Muslims, Christians, Jains, Jews, Parsees and even atheists, to discuss where and why they differed, and how they could live together. What, then, about Iraq? It would be a mistake to try to translate the immediate problems of Iraq into a larger case for rejecting the general possibility of -and indeed the need for - democracy in Iraq or the Middle East, or anywhere else. On the other side, the narrow and mechanical interpretation of democracy is also extracting a heavy price in Iraq. For example, while the recent elections were very welcome, in the absence of adequately open and participatory dialogue, the voting process was predictably sectarian, linked with religious and ethnic denominations. There is a similar problem in Afghanistan, with its easy reliance on gatherings of tribal leaders and councils of clerics, rather than on the more exacting, but critically important, cultivation of open, general meetings. The requirements of democracy include the development of opportunities for participatory public reasoning, not least in Iraq. This calls for the promotion of civil rights, including freedom from arbitrary arrest (and, of course, from torture), facilities for public gathering and fuller media freedom. It is important to assist, rather than hinder, the development of non-sectarian identities of women and men, and restoration of the self-respect of Iraqis as Iraqis. The first step is to have a clearer understanding of the nature of government by discussion. The writer, Lamont university professor at Harvard University, was awarded the 1998 Nobel Prize for economics and has just published The Argumentative Indian (Penguin); he will speak tonight at the ICA in London on democracy FT Monday June 13 2005

Subject: 'Uninsured Nation' From: Pete Weis To: All Date Posted: Mon, Jun 13, 2005 at 19:09:00 (EDT) Email Address: Not Provided Message: Paul Krugman has been hammering away at the flaws involved in financing medicare and the lack of universal medical insurance here in America in recent editorials. In today's editorial he suggests the administrative cost savings of single payer national coverage would help to offset much of the additional costs of including the roughly 40% of the population who presently have no health insurance. Those of us who have medical insurance and are finding that our costs are rising rapidly should think about the reasons why. Certainly part of it has to do with administrative costs. But we should also realize that we are paying, to some extent, for those who don't have insurance. Health care providers pass on the costs of treating, in many cases, emergency cases of those who don't have insurance and who end up not paying for their treatment. We end up putting our healthcare workers in the immoral position of having to choose between financial solvency and providing desparate, uninsured, ailing folks with emergency treatment. Someone has to pay. We have little to no preventative medicine available for all the uninsured. It's only when we go for regular checkups that health problems which could turn into emergencies down the road can be detected, reversed and avoided. It often gets to the point where expensive quadruple by-passes and surgeries to extract extensive cancers are needed along with long term therapies, when early screenings could have eliminated the necessity of many these costly procedures. Common sense should lead us to the conclusion that a national healthcare policy which provides a level of paid coverage for all and stresses preventative health maintenance (ie. health monitoring, diet, exercise, medicines which control blood pressure, cholesterol, etc.) is the way to go. As paul Krugman points out - we need to take this burden off the backs of US employers. Because American employers will end up shedding that burden anyway. Perhaps it will only be when a majority of voters can no longer afford health insurance and no longer can get it through their employers, that they will push strongly enough for Uncle Sam to step up to the plate.

Subject: In a nutshell From: Pete Weis To: All Date Posted: Mon, Jun 13, 2005 at 14:22:57 (EDT) Email Address: Not Provided Message: Some see economy teetering on edge BY GREG IP THE WALL STREET JOURNAL Posted on Sunday, June 12, 2005 URL: http://www.nwanews.com/story/adg/119147 By many yardsticks, the Federal Reserve’s response to the bursting of the stock and tech-spending bubbles in 2000 has been a remarkable success. The 2001 recession was mild and economic growth since has been brisk. Employment is up and inflation remains within the Fed’s hallowed zone of price stability. But five years after the stock market’s peak, the economy faces other threatening imbalances: a potential housing bubble, rock-bottom personal saving rates and a gargantuan trade deficit. And the Fed’s post-bubble prescription bears some responsibility for all three. Fed officials acknowledge as much but say the alternatives were worse. By slashing short-term interest rates to 45-year lows, the Fed encouraged Americans to borrow more, gave them little reward for saving and helped ignite a surge in housing prices. President Bush and Congress joined in with steep tax cuts that boosted household purchasing power. All that spending contributed to a growing U.S. economy, a steady increase in imports and — given that Americans are so eager to borrow and foreigners so eager to lend — a mountain of foreign debt. This is pleasant for Americans as long as it lasts. But Fed officials, international financial observers and private economists say it can’t. At some point, American consumers must spend less, save more and rely less on foreigners’ savings. How that will happen puts the nation in uncharted territory: After treating a bubble, how does the Fed manage the side effects of its medicine? 'We have done what no other economy has done before, faced with an asset bubble,' Lawrence Lindsey, a former Fed governor and Bush adviser, said at a recent panel discussion. Praising both the Fed’s rate cuts and Bush’s tax cuts, he said, 'This is the first time in history the textbook economic policy... was used, and worked. The problem is, once you finish that chapter of the economic texts, you turn the page and the page is blank — because no one has gone through the process before.' The Fed is confident these imbalances will be resolved with little pain. As it raises interest rates, consumers will slow their spending and save more. Foreigners’ appetite for U.S. goods will rise. The engine of U.S. growth will shift smoothly from consumers and government to business investment and exports. Fed Chairman Alan Greenspan told the Joint Economic Committee of Congress on Thursday that the economy is on 'firm footing.' He said nothing to alter previous impressions that the U.S. benchmark interest rate will continue climbing at a measured pace. But a minority of economists warn of a more damaging scenario. Some say the Fed has simply replaced the stock-market bubble with one in housing, which could burst. That would sap the consumer spending that mortgage refinancing and homeequity loans have fueled. Or foreign investors could stop buying U.S. stocks and bonds, sending the dollar down and inflation up, prompting the Fed and bond market to jack up interest rates sharply. In either case, the U.S. economy could slow sharply or fall into recession. Faced with an asset bubble, a central bank has two choices: Prick it early or wait for it to burst and try to contain the damage. The Fed in 1929 and the Bank of Japan in 1989 tried the first route, raising interest rates in response to rapidly rising asset prices. The result in the United States in the 1930s was depression and deflation. In Japan it was stagnation and deflation that continues today. In the 1990s, Greenspan chose the second route. As long as the prices of goods and services were stable, he would leave the stock market alone. When the stock bubble finally burst, the Fed cut short-term rates aggressively beginning in 2001 and then held them at a 45-year low of 1 percent through early 2004 until the Fed was sure the threat of deflation had receded. Greenspan knew his strategy carried risks. But he saw far greater ones in responding timidly as the collapse of the biggest asset bubble in history wiped out more than $5 trillion in shareholder value, and terrorist attacks, war and corporate scandal rattled confidence. The economic expansion to date suggests he was right, and the odds are that he will retire as scheduled in January with his reputation for economic stewardship intact. But if a collapse in housing prices or a run on the dollar triggers a new recession, Greenspan’s legacy might be different. ‘ CRUCIAL EXPERIMENT ’ The Fed is conducting a 'crucial experiment' in post-bubble monetary policy, said Edward Chancellor, a financial historian. 'We don’t know what the outcome is yet.' Lower interest rates normally operate through several channels. They encourage consumers to buy things on credit today instead of saving to buy the items later. They boost stock and home prices, which makes the owners of those assets wealthier and more willing to spend. They encourage businesses to borrow and invest. And they depress the dollar, boosting exports. But after 2001, some of these channels were blocked. Businesses, burdened with a glut of unused equipment from the bubble years and cowed by geopolitical and regulatory uncertainty, didn’t borrow to invest. And the dollar didn’t fall initially, but rose because foreign economies were in even worse shape than the United States economy. This meant the economy relied disproportionately on the one channel that did respond: consumers. They bought record numbers of houses and cars, mostly on credit. They also borrowed against their houses’ appreciated values, allowing them to spend more still. To Greenspan, who had studied housing and mortgage markets all his life, this came as no surprise. 'Households have been able with increasing ease to extract equity from their homes, and this doubtless has helped support consumer spending in recent years, complementing the traditional effects of monetary policy,' he observed in August 2003. Accused by some of fostering excess, Fed officials responded that the alternative was worse: a deeper recession and the risk of deflation — a period of generally falling prices, which can worsen a downturn by making it harder for workers and companies to repay debts. In a February 2003 speech, Fed Governor Donald Kohn, one of the central bank’s principal monetary-policy strategists, agreed that low interest rates had had an outsize impact on car sales, home construction and housing prices. But that 'has kept more people employed and reduced the risk of deflation,' he said. By January 2004, the expansion seemed entrenched enough for Greenspan to declare victory: 'Our strategy of addressing the bubble’s consequences rather than the bubble itself has been successful.' While 'large residues' of household and foreign debt remained, they would not be a barrier to growth; such imbalances, he suggested, would dissipate with time. Instead, they have grown. 'The magnitude of these imbalances is increasingly moving into unfamiliar territory,' Kohn said in April. Since his February 2003 speech, house values have risen 25 percent and total mortgage debt by 28 percent, while after-tax incomes have expanded just 13 percent. The household saving rate, a low 2 percent in 2000, has fallen to 0.9 percent. A growing share of mortgages have gone to speculators and people making little or no down payment. House 'prices have gone up far enough since then — relative to interest rates, rents and incomes — to raise questions,' Kohn said in April. FOREIGN DEBT Meanwhile, the current-account deficit, the broadest measure of the shortfall on trade and investment income between the United States and the rest of the world, has moved into a zone that many economists consider dangerous. It stands today at 6 percent of gross domestic product, the nation’s total output of goods and services, up from 4 percent in 2000. To finance it, the United States now borrows about $2 billion a day from foreigners. As the foreign debt mounts, so does the risk that investors will demand a higher interest rate or lower dollar to keep on lending. To be sure, a major cause of the U.S. current account deficit is that weak European and Japanese growth reduces demand for U.S. exports. And China’s fixed exchange rate keeps the prices of Chinese goods artificially low, giving its television sets, bicycles and barbecue grills an edge in the U.S. market. But the United States saves so little that when it cuts taxes and consumers take out mortgages, the money to finance both increasingly comes from abroad, in particular, foreign central banks. Those banks purchase U.S. dollars to keep the greenback high against their own currencies, thereby supporting their exports to the United States. They then invest those dollars in U.S. bonds, in effect providing the financing for Americans to buy those exports. Since 2000, foreign-brand cars have surged to 43 percent of the U.S. market from 35 percent, according to Motorintelligence. com. In the meantime, foreign holdings of U.S. Treasury bonds and bonds backed by Americans’ home mortgages have jumped 80 percent. In the first quarter of this year, General Motors Corp. made more money on mortgages than on cars or car loans. Since the beginning of 2001, the number of Americans employed in manufacturing has fallen by 2.8 million, or 16 percent, while the number in residential construction, real estate and banking has risen by 766,000, or 14 percent. 'If I were a biologist I’d call this a perfect example of symbiosis,' former Fed Chairman Paul Volcker mused in a February speech at Stanford University. 'Contented American consumers matched against delighted foreign producers. Happy borrowers matched against willing lenders. The difficulty is, the seemingly comfortable pattern can’t go on indefinitely.' Almost every economist agrees. The debate is over how, not whether, the global economy rebalances: Will it be smooth, through some combination of declining dollar and accelerating foreign demand? Or will it be chaotic, with a dollar collapse, much higher U.S. interest rates and perhaps a global recession?

Subject: Re: In a nutshell From: Terri To: Pete Weis Date Posted: Mon, Jun 13, 2005 at 14:34:49 (EDT) Email Address: Not Provided Message: http://www.nwanews.com/story.php?paper=adg§ion=Business&storyid=119147 Interesting article. Here is the link.

Subject: Re: In a nutshell From: Pete Weis To: Pete Weis Date Posted: Mon, Jun 13, 2005 at 14:32:18 (EDT) Email Address: Not Provided Message: Contrarian Chronicles Straight talk on what the Fed has wrought Finally, the mainstream press is taking a look at the problems the Fed created with its cheap-money ways. The consequences will be very serious for all of us. By Bill Fleckenstein For once, there was a somewhat intelligent (though incomplete) discussion in the mainstream press about how the Federal Reserve bailed out the stock bubble with a real-estate bubble. I am referring to a page-one story in Thursday's Wall Street Journal headlined 'In Treating U.S. After Bubble, Fed Helped Create New Threats.' To quote its author, Greg Ip, who is thought to be plugged into the Fed: 'Five years after the stock market's peak, the economy faces other threatening imbalances: a potential housing bubble, rock-bottom personal saving rates and a gargantuan trade deficit. And the Fed's post-bubble prescription bears some responsibility for all three.' Fed officials acknowledged as much to Ip, but they insisted the alternatives were worse, including a deeper recession and the risk of deflation. The Fed's response is both true and false. True: The alternatives will be worse, because all the Fed did was to postpone them, guaranteeing that they will be more severe than they would have been then. False: We would have been far better off accepting the harsh medicine from the biggest stock mania in the history of the world, rather than creating gargantuan amounts of debt at the consumer level -- and in the financial system -- in the form of real-estate loans. A gazette gets it wrong The article and the Fed argued from a false premise to a false conclusion, by blaming the American bust of the 1930s and the one in Tokyo in the 1990s on monetary tightening: 'Faced with an asset bubble, a central bank has two choices: Prick it early or wait for it to burst and try to contain the damage. The Fed in 1929 and the Bank of Japan in 1989 tried the first route, raising interest rates in response to rapidly rising asset prices. The result in the U.S. in the 1930s was depression and deflation. In Japan it was stagnation and deflation that continues today.' That is completely untrue. The aftermaths of both were caused by the preceding asset bubbles, precipitated by reckless monetary policies. It is asset bubbles that create the damage, not the small amount of tightening that comes at the end. In fact, I would argue that the tightening didn't end those bubbles. Exhaustion ended them, and the tightening was coincident with the exhaustion phase. Policymaking is the perpetrator The trouble that ensues from a bubble is historical fact, but part of what makes the aftermath better or worse than you might expect are policy decisions. Part of what put 'Great' into the phrase 'Great Depression' were events that came after the bubble, such as 1930's Hawley-Smoot Tariff Act and the policies of the Hoover administration. I would also note that the inflexibility of the gold standard made 'printing' our way out impossible. • Lessons from Japan’s bubble – for ours • The Fed sees bubbles – and keeps them secret • GM’s woes one more blow to housing bubble • Housing mania will end in tears • If only Greenspan could be Volcker Similarly, Japan's problems were exacerbated by the failure of its brand of 'semisocialist' capitalism to allow markets to clear. Japan tried to prop up zombie companies for far too long, which, in part, has made its recovery process so slow. Bad debt in the banking system, emanating primarily from the Japanese real-estate bust, also exacerbated the country's problems. We don't know what policy mistakes we're going to make next. I would argue that we've made a policy mistake by bailing one bubble out with another, debt-inspired, bubble. And, when the fallout from these two hit, it will be made better or worse by subsequent government actions. Of course, once you know it's a government action, it's almost certain that it will make matters worse. Federal Reserve Bank of Frankenstein The Fed only postponed the pain, ensuring that it will be dramatically worse. Easy Al and the other apparatchiks at the Fed embarked on a grand experiment with the American economy and everyone's lives. Historian Edward Chancellor, author of the terrific history of financial speculation 'Devil Take the Hindmost,' makes the same point to Ip: 'The Fed is conducting a 'crucial experiment' in post-bubble monetary policy. We don't know what the outcome is yet.' I would say that we can speculate on how ugly it's liable to be. The Fed chose not to address the stock bubble, choosing instead to bail it out with a real-estate bubble. When the stock bubble was in full bloom, as I have noted many times, rather than even hint that there might be a problem or raise margin requirements, Greenspan got behind the bubble and cheered it on with all his 'new era' cooing and 'productivity' pompoms. His behavior led many to suggest that the market, in fact, had a Greenspan 'put' underneath it. One of the incorrect points of Ip's article is that, gee, this housing bubble is great because it bailed out the stock bubble. Though he raises the specter of our problems, he doesn't connect the dots as to how catastrophic the consequences are liable to be. Fed complicity gets publicity Although I have just criticized Ip and the Journal for not coming to the conclusions I would have liked, I think that getting the discussion into the mainstream press is useful. So is Ip's ability to illuminate the 'thinking' behind the Fed's bubble-management practices: 'Fed officials expect home prices to stagnate while incomes advance, bringing affordability back to historic ranges.' You can see that they're still delusional. They think that what they've done has worked; that somehow, job creation and incomes will be able to grow enough to support this tremendous increase in home prices. It isn't going to happen that way. The housing market is in a bubble. Housing prices have gone up because housing prices have been going up, i.e., rising prices create more demand from speculators. At some point, however, the market will exhaust itself. Time magazine's recent cover, 'Home $weet Home: Why We're Going Gaga Over Real Estate,' means to me that the moment of exhaustion is circa now. And we should be on red alert for signs of trouble in the housing market. Incompetence outed I believe that the more the present situation is understood, the more it's liable to foment angst and panic when, as I noted in 'GM's woes one more blow to housing bubble,' the next time down eventually unfolds. Lastly, in my personal-pet-peeve department, recognition of where we are will also hasten recognition of the irresponsible, incompetent record of the Greenspan era.

Subject: Re: In a nutshell From: Terri To: Pete Weis Date Posted: Mon, Jun 13, 2005 at 16:25:10 (EDT) Email Address: Not Provided Message: Neither link to the Greg Ip article takes you there unless you use search. No matter, for we have the entire interesting article, thanks to Pete.

Subject: Cervantes, Multicultural Dreamer From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 13:48:16 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/13/arts/13conn.html?pagewanted=all Regarding Cervantes, Multicultural Dreamer By EDWARD ROTHSTEIN Why was 'Don Quixote' originally written in Arabic? Or rather, why does Cervantes, who wrote the book in Spanish, claim that it was translated from the Arabic? Much is being said this year about 'Don Quixote,' in celebration of the 400th anniversary of its publication. And indeed, much has always been said about this extraordinary epic, narrating the misadventures of a half-mad hidalgo who seeks to re-establish the traditions of knight errantry. Faulkner reread it annually; Lionel Trilling said all prose fiction was a variation on its themes. But aside from its literary achievements, 'Don Quixote' sheds oblique light on an era when Spain's Islamic culture forcibly came to an end. Just consider Cervantes's playful account of the book's origins. One day in the Toledo marketplace, he writes, a young boy was trying to sell old notebooks and worn scraps of paper covered with Arabic script. Cervantes recounts how he acquired a book and then looked around for a Moor to translate it. 'It was not very difficult' to find such a Moor, he writes. In fact, he says, he could have even found a translator of Hebrew. The Arabic manuscript, the Moor tells him, is the 'History of Don Quixote de la Mancha, written by Cide Hamete Benengeli, an Arab historian.' Cervantes brings the Moor to the cloister of a church and commissions a translation. We know this is all a jest, as is the very name of the historian: 'Cide' is an honorific, 'Hamete' is a version of the Arab name Hamid, and 'Benengeli' means eggplant. But this eggplantish historian is no more a jest than anything else in the novel, whether it is Don Quixote tilting at windmills or Sancho Panza governing an island not surrounded by water. Benengeli is, apparently, just as earnest as Don Quixote, just as peculiar and just as important to understanding what this novel is about. At the time when Cervantes was writing this novel, nothing about this jest was possible. Neither an Arabic-speaking Moor nor a Hebrew-speaking Jew would have been readily found in the Toledo marketplace. And no Moor would have translated Arabic in the cloister of a church. The Jews had been expelled from Spain in 1492; only converts remained. Books in Arabic had been burned with all the ferocity that the priest applies to Don Quixote's library of chivalric narratives. And while the Muslims hadn't yet been expelled from Spain (that would happen in the years just after the first part of 'Don Quixote' was published), they too had to convert. So Spain was full of New Christians: converts from Islam (called moriscos) and Judaism (called conversos), some continuing to secretly practice their religion (like the Jewish marranos). One reason that pork became such a popular Spanish dish was that eating it was a way to publicly prove one was not following the dietary rules of Islam or Judaism. Eggplant, however, was associated with Muslim and Jewish tastes back when Toledo was home to a flourishing Jewish community. So Cervantes is up to a bit of mischief with these allusions. And they could not have been missed. L. P. Harvey's important new book, 'Muslims in Spain: 1500 to 1614' (University of Chicago Press), soberly recounts the ways in which Muslim culture and religion, which had been part of Spanish life for eight centuries, was forcibly suppressed, until Muslims were completely expelled from Spain, between 1609 and 1614. There was much trauma and bloodshed, much secrecy and much dissimulation. Don Quixote could hardly have wandered around La Mancha without coming upon traces of this trauma; Moors and moriscos were part of the landscape. 'A Moor she is in costume and in body,' is how one character is described, 'but in her soul she is thoroughly Christian.' And the Moors of Spain are almost catalogued: 'Tagarinos is the name given in Barbary to the Moors of Aragón, while those of Granada are called Mudéjares; but in the kingdom of Fez the Mudéjares are termed Elches.' In the novel's second part (published in 1615, after the Muslim expulsion), Sancho sees a Moorish shopkeeper from his hometown, in disguise. 'Who the devil would ever have known you, Ricote, in that clown suit you are wearing?' Sancho asks. 'Tell me, who has made a Frenchman out of you?' Ricote mentions Spain's forced exile of Muslims and its unavoidable sorrows: 'Wherever we may be it is for Spain that we weep; for, when all is said, we were born here and it is our native land.' Cervantes also had firsthand experience with such confrontations. In 1571, he fought at Lepanto, an epochal battle against the Turks and a major victory for the Christian West against Islam; he lost the use of his left arm. A few years later, returning to Spain, he was captured by Barbary pirates - Muslims who were themselves engaged in a kind of guerilla war against the Christian West - and was imprisoned for five years, surviving four escape attempts until finally, his freedom was ransomed. When Cervantes wrote 'Don Quixote' a quarter century later, this experience led to an extensive story about Moors and Christians involving kidnapping, conversion and betrayal. He wrote, though, not as warrior but as a philosopher. His empathy for the Moors is cautious but unmistakable. Recent scholarship suggests that Cervantes himself might have from a family of conversos; that could help explain why he was regularly denied the official appointments he sought. Other scholars have suggested that the novel itself is full of coded allusions to Judaism. There is no need, though, to accept that hypothesis to sense how, by the end, Spain's triumph turns ambiguous. All pieties inspire melancholy. Even Sancho is not to be fully trusted. He, too, easily dons the mantle of an Old Christian, at one point declaring that since he believes firmly in 'all that the holy Roman Catholic Church holds and believes,' and since he 'a mortal enemy of the Jews,' historians should treat him well. But Quixote rejects the notions of caste and of blood purity that characterized 16th-century Spain. Benengeli's manuscript is partly a ghost story about a lost world. Quixote is born of ideas latent in extinct, condemned texts, whether Arabic or chivalric. He has unswerving principles, but even they are inadequate to a world of disguise, enchantment, illusion and delusion. In her book 'The Ornament of the World,' the scholar María Rosa Menocal compares Quixote's mental universe with the world of the Toledo marketplace, with its conversos, marranos and moriscos: 'Who in this world ever says that he is what he seems to be? And who seems to be what he no doubt really is?' So Don Quixote's Spain, instead of displaying triumphant absolutism, is a world of shifting appearances. 'Don Quixote' is a resigned acknowledgment of a new kind of terrain that defined modernity: in it, very little is certain and much is lost. The book's power, though, also comes from Quixote's stubborn quest: he won't entirely let us accept that something else isn't possible.

Subject: Signs of a Spring Slowdown From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 13:37:19 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/realestate/12market.html?pagewanted=all Signs of a Spring Slowdown By TERI KARUSH ROGERS AFTER a torrid first quarter that spun the sales prices of Manhattan apartments to breathtaking highs, anecdotal evidence suggests that the headiness has started to dissipate. While the jig is hardly up, brokers are saying that the tempo resembles a more seasonable waltz, and that there are signs of growing price resistance among buyers. Prices are still rising, but more slowly, and the market is still strong, just not as crazy. 'It's been an overheated market for so long that it is a slowdown, but this slowdown is kind of like what we used to have all the time, which is a normal market,' said Deanna Kory, a senior vice president at the Corcoran Group, echoing the views of most of the 25 real estate brokers and executives interviewed for this article across a broad range of firms and price points. The spring slowdown - variously referred to as a correction, softening, pause, seasonal adjustment, breather and normalization - was typically discussed in tones of relief rather than alarm. 'In a way, it had to happen,' said Ms. Kory, noting that the market since 2002 'got a little out of hand - it got crazy.' 'I don't see it as a bad thing,' she said. 'It's only bad for sellers who expected to get a certain price.' Many apartments priced by tacking an extra 10 percent or more onto first-quarter comparables are lingering on the market, prompting 5 to 10 percent reductions during the last few weeks, especially among family-sized dwellings above $1.5 million, and particularly on the Upper East Side, where there is said to be a recent surplus of inventory. Brokers reported that in many cases, open-house attendance has lagged significantly behind the outsized crowds in the early part of the year. 'There are still bidding wars on certain properties - something that's unique or totally done in a way that's very outstanding in a hot area - but you're not seeing it on everything,' said Dottie Herman, president and chief executive of Prudential Douglas Elliman, who, like some others, declined to categorize the shift as a slowdown. 'People do not feel the same feeling, and that has a lot to do with the papers,' she added, referring to a mounting news media chorus about a possible housing bubble. For buyers, relief is mixed. Juggernaut competition may be easing, but prices aren't necessarily retreating below first-quarter levels. Jonathan J. Miller, president of Miller Samuel, a Manhattan-based real estate appraiser, noted that while the volume of deals appears flat, 'purchase prices are still pushing the envelope across the board' among contracts signed as recently as two weeks ago. 'Some of the sizzle might be off the steak, but the steak is still very expensive,' said Pamela Liebman, chief executive and president of Corcoran, adding, 'What tells you if prices are going up is the price per square foot.' She said that data from the firm's signed contracts show condo and co-op prices per square foot of $1,003 in March, $1,016 in April and $1,009 in May. But buyers, perhaps fueled by the bubble press, are mounting more resistance. 'Right now, buyers are daring to put offers that are under the asking price - I just got one for 8 percent under asking,' said Jacky Teplitzky, an executive vice president at Prudential Douglas Elliman, who held six open houses last weekend for family-sized apartments from $1.2 million to $1.6 million on the Upper East and West Sides, and in Murray Hill. Like her May open houses, attendance trailed by one-half to two-thirds the number typically attracted earlier in the year. 'Before, we had more volume and more offers coming to the table,' she said. 'Usually after an open house, we would get two, three or four offers. Now, we get maybe one offer after the first or second open house.' More buyers 'are offering ask or slightly over ask,' said Veronica Raehse, an executive vice president and sales manager at Bellmarc Realty's West Side office. 'Two months ago, where they were going $100,000 over ask, it's maybe only $25,000 to $30,000 now.' The loftiest end of the market is said to be showing the most strain. 'I do think we're at the end of one of our cycles,' said Kirk Henckels, a director and senior vice president of Stribling Private Brokerage, who described interest in the $4 million-and-up market as muted by 'some extraordinary overpricing lately' and a 'pitifully low' inventory. 'No one wants to go shopping in a store with nothing in it,' he said, explaining that while some well-priced properties are still going quickly, he expects price reductions of 1 to 2 percent over the summer. 'This is a very value-oriented market.' Mr. Miller, whose appraisals include dwellings in the superluxury category, agreed. 'We're not seeing the intensity, the frequency of bidding wars,' he said. 'There's a little bit longer marketing time for these properties. And that's partially because a significant portion of the inventory coming online over the past couple of years has addressed that segment, so that supply has tempered the frenzy.' Indeed, while new condo units under $2 million are selling briskly, properties above that are taking longer, said Andy Gerringer, a managing director and the head of new development projects at Prudential Douglas Elliman. The picture appears brighter, though not entirely cloudless, at the lower end of the real estate food chain. Brokers report brisk sales of properties costing less than $1 million. 'In our bread and butter, the $350,000-to-$750,000 market, things are O.K.,' said Neil J. Binder, president of Bellmarc, citing falling mortgage rates as a motivating factor. He said his firm's inventory has jumped by 25 percent recently. 'I don't see the same appreciation as last year,' Mr. Binder said, 'but I do see a strong market. Last year they opened the door and there's five offers. Today they open the door and they have to do a little song and dance.' Still, Ms. Herman of Prudential Douglas Elliman noted, 'Anything at the low end of the market is always going to sell because there's always more people at that end of the pyramid.' Two listings held by Laura Matiz, a senior vice president in Bellmarc's East Side office, illustrate the schism that many see separating the two ends of the market. Both dwellings are in postwar Upper East Side buildings. The pricier one - a two-bedroom 1,600-square-foot 'condop,' a hybrid between a co-op and a condominium, on the 40th floor in a full-service building on East 89th Street near Fifth Avenue - went for its asking price of $2.35 million on April 1, in a two-way bidding war. But both bids fell through later that month, and the apartment has garnered no further offers, despite a price drop to $2.1 million. Rather than carry it vacant, the investor-owner is considering taking it off the market and renting it out for $9,000 a month. Contrast this to the fate of a $299,000 studio on East 79th Street near York Avenue. The co-op, on the first floor of a full-service building, was sold in March near its asking price. The board rejected the buyer a few days after Memorial Day, and Ms. Matiz held an impromptu open house that weekend advertised only online. 'I got probably 12 people and three offers; it was a good crowd for a beautiful, hot summer afternoon,' said Ms. Matiz, who predicted that the apartment will go into contract above asking price. Elaine Clayman, a senior vice president at Brown Harris Stevens with 15 listings in the $475,000-to-$750,000 range, said activity in the sector had quickened just since Memorial Day. Other brokers, reporting a post-Memorial-Day rise in activity, were hopeful that the bubble coverage had worked its way through buyers' psyches. But the experience may have empowered buyers. Jerry Minsky, a senior vice president for Corcoran in Brooklyn, said that in a five-day period after Memorial Day, four buyers of properties in the $300,000-to-$700,000 range tried to lower their bids by 25 to 30 percent after signing contracts at asking price. 'The buyers all systematically came back for cuts after they negotiated their contract, on the advice of their lawyer or mortgage broker,' said Mr. Minsky, who advised his sellers to stand firm but said he could not predict whether they would. 'There is no economic reasoning behind this so-called bubble,' he said. Mr. Minsky echoed others who noted that the fundamentals supporting New York's real estate market appear solid: low inventory, low mortgage rates and a decent economy. And, like others, he said he believed the spate of media coverage of a frothy housing market stoked anxiety during what is really a natural, seasonal slowing heading into the summer months. In fact, he said: 'I never got four or five bids a week in June. So where's the bubble?' Whether one exists may be beside the point. The direction of the market is also a state of mind. 'People have to hear it from several people about how things are different now, and then they change their minds,' said Robert J. Shiller, the author of 'Irrational Exuberance' (Princeton University Press; second edition, 2005) and a professor of economics at Yale University. Mr. Shiller shared the results of a Lexis-Nexis search he conducted among major newspapers: In May, 77 articles contained the words 'housing bubble,' nearly double the 40 logged in April. 'The market is so inertial that it just keeps going in the same direction, unlike the stock market,' said Mr. Shiller, noting that real estate values have pushed northward for eight years, 'a huge trend.' But if a drumbeat of public anxiety over housing values reverses the trend, the downward momentum could prove equally implacable. 'I think there's a good chance that this is the end of the boom,' he added, 'because it can't go on forever.'

Subject: Mexico Labor Case and Mattel From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 09:57:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/international/americas/12mexico.html?pagewanted=all Mexico Labor Case Grows for Maker of Barbie Gowns By ELISABETH MALKIN MEXICO CITY - There was not much that Guadalupe Ávila Jiménez liked about her factory job making children's costumes, including flowing Barbie gowns for little girls who like to play princess. 'They shouted at us, they did not let us go to the bathroom, they gave us food that made us vomit,' said Ms. Ávila, 21, reciting a litany of indignities she said she had suffered at the factory, in Tepeji del Río. About the only thing she did like were the costumes the workers made. 'What we made was really pretty,' she said. Today the factory is facing a labor dispute that is anything but pretty. What started out as a local struggle may now shift its focus to the American toy giant Mattel, which licenses the Barbie label to the plant's owner, Rubie's Costume Company, based in Richmond Hill, Queens. Unlike other toy companies, Mattel has an eight-year-old code of conduct for subcontractors and licensees. Saying they were fed up with managers who called them names, closed factory doors to force overtime and required them to buy work equipment and even toilet paper, Ms. Ávila and 60 co-workers - most young women, some as young as 15 - voted for a new union. In April, they say, they were locked out and lost jobs that paid little more than $5 a day. Mattel and Rubie's deny allegations of verbal abuse, forced overtime, making workers buy equipment and the consistent use of child labor, and they say the workers were not dismissed but walked off the job. 'They said we chained people to sewing machines,' Marc Beige, president of Rubie's, one of the world's largest costume companies, said by telephone from New York. 'That's outlandish. There's nobody being locked in the factory.' An audit last month by Mattel of the Rubie's plant found several violations of its code of conduct, including one worker who was 15, said Lisa Marie Bongiovanni, a spokeswoman at Mattel's headquarters in El Segundo, Calif. 'Child labor is a zero-tolerance issue for us,' she said. The auditors did not speak to the workers picketing outside, she said. The dispute has revived charges of abuses in Mexico's export assembly plants, known as maquiladoras, and of obstacles to independent unions. Mexico's toy and garment industries have been hard hit in recent years as many maquiladoras have left for China in search of cheaper labor, creating more pressures on workers. The plants that remain are mostly in the interior, like the one in Tepeji del Río, a hardscrabble town 60 miles north of Mexico City, where wages are lower than on the border. 'China has served as a pretext to diminish labor conditions,' said Salim Kalkach Navarro, secretary general of the Labor Vanguard Federation of Workers, the union that Rubie's workers voted to join. It is known by its abbreviation in Spanish, F.T.V.O. At the same time, organizations that a decade ago fought poor working conditions in garment plants around the world say the toy industry has escaped similar scrutiny. Stephen Coats, executive director of the US/Labor Education in Americas Project, a Chicago labor advocacy group, charged that Mattel had not responded aggressively to the workers' complaints. 'I'm just kind of stunned they are behind the curve,' he said. He said labor advocates would continue to pressure Mattel to correct any abuses at the plant and require Rubie's to allow the workers to choose their own union. 'As long as the union is pressing forward its collective demand, Mattel is frankly a juicy target,' Mr. Coats said. Mattel's code may in fact make it more vulnerable to pressure. Lance Compa, of the School of Industrial and Labor Relations at Cornell University, said, 'Mattel actually does have a fairly advanced code of conduct and there is some evidence that they try to have it implemented in their licensees.' American labor activists and the F.T.V.O. charge that eight workers at Rubie's were younger than 16, including several who were 14 when they were hired. Mexican law permits 14- and 15-year-olds to work only a reduced day, which the union says did not happen. Mattel requires workers to be at least 16, and Mattel and Rubies acknowledge that the audit turned up one 15-year-old. Ms. Giovanni, the Mattel spokeswoman, said that as a result of Mattel's audit, Rubie's has promised to hire only employees older than 16 and set up a system to identify forged documents. It has also committed to paying overtime correctly and on time. Until the dispute is settled, Mr. Beige, Rubie's president, said the plant was accepting fewer orders. It has not made the Barbie costumes since January for reasons unrelated to the dispute, he said. He acknowledged increasing competition from China but said the plant intended to stay in Mexico. This week, Teresita de Jesús Hernández, 15, joined the workers protesting outside the plant. Until she lost her job, she said, she was the sole support for her mother, who suffers from a heart condition and diabetes. At 12, she left school and began working in another garment plant nearby. At 14, she was hired at Rubie's and was told that her age was no problem. The plant manager altered her birth certificate, she said. 'It was O.K. at first,' she said. But then, she said, workers were required to carry heavy loads. 'They gave us special belts and asked us to pay $45 for them.' Rubie's says that no worker was ever required to pay for equipment. Three other underage workers were also protesting at the plant. The union says another four, including a 13-year-old boy, have remained at home for fear of reprisals. The dispute has followed what has become almost a standard script in maquiladora labor conflicts over the past decade. Workers try to form their own union, only to find that they have been represented - often without their knowledge - by a union that is part of the Confederation of Mexican Workers, the old-line federation that was a pillar of the Institutional Revolutionary Party, or PRI, which ruled Mexico for 71 years. Labor analysts and activists here and in the United States hoped that the election of President Vicente Fox in 2000 would loosen the old federation's grip on labor. But nothing has changed, many say. 'It's clear that the old-line labor groupings have worked out a modus vivendi with the Fox government, and they've basically gone back to business as usual,' said Mr. Compa of Cornell. Harley Shaiken, director of the Center for Latin American Studies at the University of California, Berkeley, in a separate interview, agreed. 'You can count the number of independent unions in maquiladoras on one hand and still have fingers left over,' he said. Mr. Kalkach, the F.T.V.O.'s secretary general, said Rubie's initially agreed to sign a contract, which was filed and accepted with the national labor board. He produced a copy of the board's decision. But a few days later, the board rejected the contract, on the grounds that a contract already existed with another union from the Confederation of Mexican Workers. The long wait is taking its toll. About 50 of the workers accepted severance payments from Rubie's on Monday. The union is also appealing the national labor board's rejection of the contract. Suspicious of the monitoring Mattel says it has done so far, the union has asked Mattel to set up an independent monitoring system for its licensee plants in Mexico. Mr. Kalkach said, 'That's a moral demand, not a legal demand.'

Subject: What? You Don't Trust The Company? From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 09:45:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/business/yourmoney/12gret.html What? You Don't Trust The Company? By Gretchen Morgenson THE struggle to ensure fair treatment for investors is far from won. Just last week, shareholders of Pathmark Stores, a supermarket chain in the Northeast, received the equivalent of day-old bread. Last Thursday, they voted resoundingly to approve a $150 million investment in the company by the Yucaipa Companies, a privately held investment firm in Los Angeles. According to Pathmark, 83 percent of the company's shares were cast in support of the deal. The company said it would issue new shares in exchange for the investment. The approval came despite the fact that the Yucaipa offer, valued at about $7 a share, was far inferior to another offer to buy the company outright for $8.75 a share. Furthermore, the Yucaipa deal puts no money in shareholders' pockets because it is just an investment in Pathmark. Yucaipa is run by Ron Burkle, a California billionaire who is better known for his big donations to the Democratic Party. Why were shareholders willing to approve such a low-ball offer? A big reason could be that Pathmark's board urged shareholders to approve the Yucaipa deal. Stockholders, even now, are inclined to trust their directors. But another factor may have come into play. Some investors may not have learned about the higher offer until after they had mailed in their proxies. That's because Pathmark, which received the $8.75 offer on June 1, did not disclose it to shareholders until June 7, in a regulatory filing. That was two days before the vote. Pathmark's shareholders were not being asked to choose among various offers that had come in after Yucaipa made its offer; they were simply asked to vote up or down on the $7-a-share deal. Pathmark's board even agreed to what is known as a 'force the vote' provision in its purchase agreement with Yucaipa, which required that even if Pathmark's directors changed their minds and recommended that shareholders vote against the deal, the vote would still take place. As it turned out, there were other offers: one from an unidentified bidder proposing to pay $7.50 a share for the entire company, and finally the $8.75 bid from another unidentified firm; that was the offer Pathmark disclosed just before the vote. Did Pathmark receive still other bids before the vote? Harvey M. Gutman, a spokesman, would say only that 'the company is comfortable that it made the appropriate disclosures to its stockholders throughout the process.' Steven Lampe of Lampe, Conway & Company, an investment firm, said: 'We think that management and/or the board appeared to subvert the auction process as well as apparently shirking their duties as fiduciaries by selling de facto control to the Yucaipa entities without an auction. As a result, value for shareholders was left on the table, in our opinion.' His firm held just over 6 percent of Pathmark's shares before it began selling early this month, he said. The two-part structure of the Yucaipa deal may have allowed the Pathmark board to conclude that it was not technically obligated to get the highest near-term value for shareholders. Initially, Yucaipa will receive a 40 percent stake in Pathmark, but this may grow to 60 percent if Yucaipa exercises warrants purchased as part of the deal. Corporate boards, when they are negotiating to sell a controlling interest in their companies, are obligated to try to secure the best value for shareholders. But 40 percent may not be viewed as a controlling interest, even though the deal allows for a 60 percent stake later. Mr. Gutman said: 'The board's obligation is to represent the best interests of the shareholders, and we think they have done that. Our stock price prior to the Yucaipa announcement was $4.48 and immediately prior to the shareholder vote it was $8.60. After the Yucaipa vote was approved by the shareholders, the stock went up another 4.5 percent, to $8.99. So, in total, there was more than a doubling of the stock price from the day before it was announced to today.' Whether the stock holds onto that gain remains to be seen. Mr. Lampe also explained that Pathmark did not allow him or his firm's representatives to meet with the other bidders to discuss their offers. 'We sent a letter to the board of Pathmark asking to talk to the other bidders,' he said. 'But we were denied access. We can only assume they were hiding something.' Mr. Gutman said Pathmark told Lampe, Conway that it would be inappropriate to disclose information about other bids that had not been given to other stockholders or to encourage discussions between stockholders and the various bidders. The company said it believed that the Yucaipa deal was best for its shareholders because it was likely to close faster than the competing offers would and that shareholders would benefit from the improvements to its strategy and management that Yucaipa would bring. Indeed, as part of the deal, Yucaipa gains a five-year consulting contract, at $3 million a year; under the contract, it will provide its extensive expertise to Pathmark. The company, with 142 stores, could certainly use some help. For the year that ended January 2005, Pathmark generated an operating loss of $251 million, versus operating income of $101 million in 2004. Sales for the past three years have been flat at $3.9 billion. Pathmark shares hit a low of $3.50 last fall and perked up only when the Yucaipa proposal was disclosed last March. Given this dismal performance, Mr. Lampe said the shareholders were not really given a choice at all. 'The board only offered to shareholders one option, which is Yucaipa,' he said. 'The consolation prize here was going back to the horrible operating performances that present management and the board have delivered for the past two years.' Under the terms of the deal with Yucaipa, Pathmark's current management will stay on at the company, and they can cash in their stock options immediately. Yucaipa may indeed provide the push that Pathmark's management needs. But nowadays, shareholders are right to follow the rule of 'trust, but verify.' Pathmark's board asked its shareholders for their trust on the deal. But they did not allow them to verify.

Subject: Heart Drug Intended for One Race From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 09:37:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/13/business/13cardio.html?pagewanted=all U.S. to Review Heart Drug Intended for One Race By STEPHANIE SAUL In 1997, a new heart failure treatment called BiDil appeared dead on arrival. The Food and Drug Administration rejected the drug, saying that studies supporting it were inconclusive. Then, proponents of BiDil refocused their strategy. This Thursday, eight years after the drug was rejected for use in the general public, an F.D.A. panel will consider whether BiDil should become the first drug intended for one racial group, in this case, African-Americans. A study of 1,050 African-American heart failure patients showed that BiDil significantly reduced death and hospitalization, prompting the American Heart Association to call BiDil one of the top developments of 2004. BiDil increases levels of nitric oxide, which widens blood vessels. The drug's maker, NitroMed Inc., says its decision to test and market BiDil as a drug for African-Americans is based on solid science. But BiDil's application has engendered controversy, with many scientists convinced that race is too broad and ill-defined a category to be relevant in determining a drug's approval, especially since geneticists have failed to identify a biological divide separating one race from another. The drug has also raised questions about how marketing, regulatory and political considerations play a role in new drug development, with critics of NitroMed saying the company has artfully managed the regulatory system and patent law, as well as historical inequities in medical treatment for African-Americans, to drive its product to market. The idea of seeking approval of BiDil for African-Americans grew out of a study at veterans hospitals in the 1980's. The research indicated that the drug, a combination of two generic drugs, worked better in African-Americans than in whites. 'Basically, all we did was follow the data,' said Dr. Michael D. Loberg, NitroMed's chief executive. But the strategy of focusing on African-Americans carries extra benefits for NitroMed, which used the drug's racially specific indication to extend BiDil's patent protection by 13 years, to 2020. And to prove the drug works in African-Americans, NitroMed conducted narrowly focused clinical trials, which cost less than the trials required in the broader population. The Friedman, Billings, Ramsey Group, an investment bank, expects 'robust' pricing for the drug and potential annual sales of $825 million based solely on the 750,000 African-American heart failure patients in the United States. Many physicians contend that BiDil will work in other races, too. Indeed, Wall Street's enthusiasm is partly due to BiDil's expected 'off label' use in other patients. Once a drug is approved, doctors can use it any way they see fit. 'I don't believe for a second that this drug combination is only going to prove to be beneficial in African-Americans; it's just not conceivable,' said Dr. Joshua Hare, a cardiologist at the Johns Hopkins University Medical Center. Dr. Hare, who supports approval of BiDil, says that any contention that the drug works better in blacks than others remains an untested hypothesis, because NitroMed did not do the broader studies. 'My criticism of the African-American Heart Failure Study is that they only studied African-Americans,' he said. 'To really test the hypothesis is to study both populations and then show, aha, the African-Americans did respond better. They didn't do that.' Dr. Loberg said it would have been daunting and prohibitively expensive for a small company to conduct such broad trials. 'It doesn't mean that others won't benefit as well,' he said. 'We just haven't identified who those others might be.' Recognizing racial controversy as a potential deterrent to BiDil's approval, NitroMed reached out to African-American politicians and physicians, including the Association of Black Cardiologists. After considerable debate, the heart doctors agreed to be co-sponsors of BiDil's clinical trial, embracing the drug as a way to redress years of inequality in medical care, starkly symbolized by the Tuskegee syphilis study that began in the 1930's, in which black men were denied lifesaving treatment. 'By the time they got to us, they had made presentations to the Congressional Black Caucus and the N.A.A.C.P.,' said B. Waine Kong, the cardiologist group's executive director. 'I'm sure they were aware of the political fallout if they did not have African-American participation. And that was a wise decision.' NitroMed paid Dr. Kong's group $200,000 for its assistance with the BiDil trial, Dr. Kong said. The idea of a drug for one race has drawn the concern of several medical ethicists and scientists. Jonathan Kahn, a medical ethicist at Hamline University law school in St. Paul, said BiDil's approval as a black-only drug would give an official ring to the discredited idea that race is a biological category. 'It gives me great concern and pause to be going down this road, because we can't foresee all the bad consequences,' said Dr. Kahn, who wrote an analysis of BiDil last year in The Yale Journal of Health Policy, Law and Ethics. Scientists know that different people have different responses to medications, and in some cases these have been linked to race. The F.D.A., for example, has said that people of Asian ancestry are more likely than others to get serious side effects from the cholesterol-lowering drug Crestor. But research shows that the underlying genetic variations across races are small. Scientists believe that genetic markers will someday be found that explain the different reactions to drugs, but for now, race or ethnicity is an imprecise shortcut. By approving BiDil, the F.D.A. would go well beyond where it has in the past in using race as a category to evaluate which patients respond to drugs. The question before the F.D.A. panel is even more complex because people who 'self-identify' as African-American could have just one or a few black ancestors, rendering them poorly connected to the group's underlying genetics, according to Dr. Gregg Bloche, a medical ethicist at Georgetown University Law Center who raised that issue last fall in The New England Journal of Medicine. The panel review is a crucial hurdle for BiDil, because the F.D.A. usually follows the recommendations of its advisory panels when considering whether to approve a drug. The F.D.A. does not discuss drugs when their approval is pending. The heart specialist who has worked on BiDil for the last 25 years, Dr. Jay N. Cohn, said the controversy 'reflects the discomfort that has grown up in this country regarding the racial issue.' 'Unfortunately, that's taken a lot of attention away from the science,' he said. The science began in the early 1980's, when Dr. Cohn, then working at a Veterans Administration hospital in Washington, organized trials to test a combination of two drugs already available: isosorbide dinitrate and hydralazine. The trials were called V-HeFT (pronounced vee-heft) for vasodilator - heart failure trial. 'I think from a scientific level all of us who worked on V-HeFT were convinced that this drug was effective and the mortality benefit was real,' Dr. Cohn said of the V-HeFT studies, which included both white and black V.A. heart-failure patients. But Dr. Cohn, now a professor of medicine at the University of Minnesota, said he had trouble finding financial support for research, even though the combined drug, which he called BiDil, would be more convenient than taking the two generics. 'We had a drug that was not attractive to makers because these pills were generic,' Dr. Cohn said in a recent interview. Drug companies generally prefer to develop new molecules with long patent protection. With Dr. Cohn's help, the biotechnology company Medco Research filed an application with the F.D.A. for the drug's use in all patients, relying on the earlier V.A. trials to prove its benefit. During 1997 hearings, Dr. Cohn urged an F.D.A. panel to keep an open mind, because the V-HeFT trials lacked the sophistication of more modern trials. Several panel members agreed that BiDil seemed to extend the lives of patients, but the trials fell statistically short, and the panel voted down the drug. In going over the data from the first trial, which involved 630 people, 180 of them African-American, Dr. Cohn noticed that the African-Americans showed a statistically significant benefit. The reason, Dr. Cohn suspects, involves nitric oxide. Several studies have suggested that African-Americans have deficiencies of nitric oxide, a compound that occurs naturally in the human body. Based on Dr. Cohn's findings in the V.A. studies, the F.D.A. gave NitroMed, which specializes in nitric oxide therapy, an 'approvable' letter in 2001, saying that a positive study in African-American heart failure patients could be a basis for the drug's approval. Dr. Cohn said that despite any flaws in the first studies, the similar findings in the new trial suggest the original data was accurate. 'The replication gives me confidence that this combination is more likely to be effective in people who call themselves black than in people who call themselves white,' he said. 'Do I believe this drug should work in whites? Biology would tell me it should.'

Subject: Life as a Landlord From: Emma To: All Date Posted: Mon, Jun 13, 2005 at 09:21:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/business/yourmoney/12rent.html?pagewanted=all In a Real Estate Boom, Many Try Life as a Landlord By AMY ZIPKIN THREE years ago, Stacey Wunsch, 34, bought a one-bedroom apartment in Jersey City for $285,000. Its building had a health club and views of Manhattan. When she married last year and then became pregnant, she needed more space. In September, she and her husband moved to a three-bedroom ranch home in the nearby suburb of Haworth, N.J. When a golf course began taking shape next to her former apartment building, she decided to keep the unit as an investment. She refinanced from a 6 percent fixed-rate 30-year mortgage to the 'monthly Treasury average' type of adjustable mortgage, which lets her pay an interest-only rate of 1.2 percent for the first year. Although her maintenance charges are $610 a month, her expenses for the mortgage and taxes fell by $476, to $1,170.(But her monthly mortgage payment can be increased by 7.5 percent each year.) She started shopping for a tenant. With the stock market stalled, homeowners nationwide are tapping their equity and taking advantage of continued low interest rates to make the most of real estate investing. In early March, the National Association of Realtors released a study showing that last year, 23 percent of all homes were bought for investment income, while 13 percent were bought as vacation homes, which could provide investment income, too. A record 2.82 million second homes changed hands in 2004, up 16 percent from 2003. Speculators should tread carefully, though, and not only because of the unexpected expenses that pop up with ownership, say those who have taken the plunge. They warn that as so many people rush to buy, reliable tenants may be hard to find and that if the market turns, selling can take months. Indeed, Alan Greenspan, the Federal Reserve chairman, has warned that there may be 'a bubble in housing prices in the United States that will at some point implode.' In the last few years, real estate investments have come with different strategies - and challenges. Whether a property makes money, of course, can depend on location, competition for tenants and even the type of financing chosen. David Brooks, 47, a publicist from Caldwell, N.J., had owned a home for a dozen years when he and his wife decided to buy Cape Cod property in 2002. He turned to real estate after asking himself, 'Is the next stock I buy going to be the next Enron?' With a $300,000 spending limit, they settled on a four-bedroom, two-and-a-half-bath house in Harwich, Mass. Its monthly mortgage, plus taxes and insurance, is $1,650. Instead of having one year-round tenant, they chose to offer a rental for the school year and weekly rentals in the summer. The school-year tenant, from September to June, pays $1,100 a month, with a June premium of $2,200. The weekly rental charge is $1,200. Mr. Brooks finds many tenants by word of mouth, but he kept a rental agent on retainer as property manager, paying her 12.5 percent of his weekly rentals. 'I can't just jump on the New England Thruway when a light bulb blows,' he said. Recently, though, the property manager left, and his backup, his housekeeper, departed to open a bed-and-breakfast in Vermont. He considered alternatives: do-it-yourself management, hiring the housekeeper's partner or hiring another rental agent. He opted for the housekeeper's partner, whom he will pay 6 percent a week for property management during the summer in addition to a weekly cleaning fee. He said the cost of a professional agent, at 15 percent, would have been too much because he finds many of his tenants himself. His distance from his property is an anomaly, real estate specialists say. Most owners of investment property venture no more than 18 miles from their homes when they buy, and owners of vacation homes typically stay within 50 miles, according to the National Association of Realtors. Even if there is a property manager, some things can go wrong. Last summer, Mr. Brooks rented the house in Harwich to six men. During their weeklong stay, the refrigerator broke. Mr. Brooks says the unit may have been fixable, but he called a local appliance dealer instead and bought a refrigerator by phone. He says he learned two lessons: 'You have to deal with expedience, even if it costs you a few bucks' and 'you just hope for reasonableness on the part of the tenant.' He bought some beer for the men to make up for the inconvenience. Keelyn Mulvey, a fund-raiser in Rye, N.Y., owns three co-op units in White Plains and houses in Vermont and Florida. Ms. Mulvey bought the Vermont house for $240,000 in 2002, after selling another Westchester apartment for $125,000, double the price she paid in 1984. The Vermont house, in West Dover, is near a ski resort and has three bedrooms and two baths; tenants pay rent of $300 to $550 a night. She advertises for tenants on Craigslist in Boston and New York, and although she has a caretaker for the house, she describes herself as a hands-on manager. She says she travels to Vermont twice a month, often sprucing up the property. The $12,000 she received for rentals last winter is being used for improvements. In February, she installed a gas stove in the kitchen and a wood-burning stove for $6,000; she has just completed a basement renovation. The Internal Revenue Service requires an investor to report all income, but expenses for maintenance, rental management and utilities are deductible. How often an owner uses a property himself determines whether mortgage interest or taxes can be deducted. In early 2003, Ms. Mulvey paid $220,000 for a home with three bedrooms and two and a half baths in Jupiter, Fla. She knew the area and school district because her parents had lived nearby, in Juno Beach, for 30 years. She narrowed her search for a home by going somewhat inland to avoid potential hurricane damage. Last year, when Hurricane Frances and Hurricane Jeanne made landfall, the property, a mile from the Atlantic Ocean, was secure. She charges monthly rent of $1,400 to $2,300, depending on the season. Specialists say her strategy is sound. 'The people who run into trouble are the ones who don't treat it as a business,' said David Lereah, chief economist of the National Association of Realtors and author of 'Are You Missing the Real Estate Boom?' (Currency). Mr. Lereah advises homeowners to consider worst-case situations. 'If you can't afford to pay the mortgage and you're not collecting rent,' he said, 'you can't afford to be in the property.' He recommends having a three- to six-month cash reserve. Economic downturns pose their own sets of challenges for owners. David C. Ling, director of the Center for Real Estate Studies at the University of Florida at Gainesville, had to deal with such problems after he moved there from Dallas in 1989 and could not sell his Dallas home. 'People dramatically underestimate their out-of-pocket expenses' in such circumstances, he said. Real estate prices in Dallas plummeted after oil prices fell in 1985 and remained depressed after the stock market downturn of 1987. Unable to sell, he chose to rent and hired a property manager. One tenant signed a lease but did not show, Mr. Ling said, and another did not pay rent on time. 'You worry about whether the management is looking after the property and you worry whether the agent is looking out for your best interest,' he said. When he later decided to sell, he was restricted to times when a tenant's lease was expiring, and even then there were hurdles. 'How cooperative do you think a tenant is to clean up the garage or the kitchen because the broker is coming over?' Mr. Ling asked. In 1996, he sold the property for 30 percent less than he paid for it in 1985. 'People have been reading how good an asset class real estate is for a decade,' he said. 'People have pretty short memories and are overly optimistic about gains in housing stock.' AS for Ms. Wunsch, in New Jersey, she says that based on neighbors' experiences, she thought she would find a tenant for the Jersey City apartment within a month. When advertising in local newspapers did not pan out, she resorted to renting temporarily to the parents of a neighbor who was expecting a baby. Finally, she listed her apartment with another resident who had become a real estate broker. One potential tenant was a bad credit risk, she said, and another wanted a larger unit. Then the real estate agent told her that two prospective tenants thought the 1980's-era kitchen was dated, so she arranged to have new appliances and a granite counter top installed for $2,500. Her broker finally found a tenant, who signed a one-year lease and moved in two days after the kitchen renovation was completed. But Ms. Wunsch and her husband had to dip into savings to pay for the renovation and the mortgage while the apartment sat vacant. 'I thought it would be easier to find people,' she said. But she now realizes that because of the building boom along the Jersey City waterfront nearby, most people wanted to buy, not rent.

Subject: Live8 concert hijacked From: Setanta To: All Date Posted: Mon, Jun 13, 2005 at 08:56:22 (EDT) Email Address: Not Provided Message: When U2 drag their massive tour around America and Europe, punters are guaranteed several things. They know, for instance, that they will be bombarded by corporate sponsorship at every turn. They know that they can expect to pay over the odds for food and drink. And they know that they can look forward to an evening of tub-thumping entertainment from a band who, even their critics accept, are an astonishing live act. The high prices are hardly U2's fault, given the way the costs of running a tour have escalated so much in recent years. And Bono's hectoring exhortations to give more money to Africa and other worthy causes have the added benefit of giving concert-goers the sense that they were at more than just another concert, that they were somehow celebrants in a very 21st century Mass. What they probably won't know is that U2 have also thrown their lot in with Clear Channel, the American media giant which is staging the band's tour. Clear Channel is 'the 800-pound gorilla of American entertainment', according to Eric Boehlert, an American journalist who has been following the company's inexorable rise over the last few years. Bono's people would be quick to point out that you have to deal with the biggest when your own tour is that big, and music fans will remember with a wince Eddie Vedder's brave, if ill-fated, attempts to curb the power of Ticketmaster a few years ago. Clear Channel is not just a music industry behemoth, it's also a company which proudly represents the very antithesis of what Bono and the band claim to be about. In the early 1990s, Clear Channel owned 500 radio stations across America. Since then, it has acquired 1,500 stations in America, with more in Europe, and anyone working for it had better conform to the ideas and rules espoused by its overtly Republican leadership. In 1992, for instance, Clear Channel paid for billboards throughout Florida boasting a picture of George W Bush with the slogan 'Our Leader' under his face. As one local Florida politician commented at the time: 'The first thing I thought was, when was the last time I have seen a president on a billboard? Didn't Saddam Hussein have his picture up everywhere? What next, a statue?' The company first came to European prominence in the immediate aftermath of 9/11, when it issued a list of more than 150 songs which were banned across its empire. Management subsequently sacked several DJs who played prohibited tracks. Songs such as Walk Like An Egyptian and, incredibly, What A Wonderful World were banned, although Killing An Arab by The Cure wasn't mentioned. Many Americans frustrated by the increasing stranglehold Clear Channel has over both radio and live music might be forgiven for thinking that Bono's time would be better spent trying to wrestle with that corporation rather than posing for photographs with European foreign ministers. But it's not just Bono who has made strange bedfellows with the corporation - it is also staging the Live8 show in Hyde Park next month. In a depressing sign of the times, Clear Channel has decreed that the best vantage points in Hyde Park will now be taken up by 15,000 'Gold Circle' corporate guests, while people who actually pay for their ticket will be left languishing in the poorest vantage points. In what could be an interesting insight into the real control - or, rather, lack of real control - Bob Geldof actually has over the event, he is believed to have expressed concern that the television cameras will focus on what he refers to as: 'the quail's eggs and champagne brigade'. He may be uncomfortable with it, but there doesn't seem to be a lot he can do. So while Bono and Bob flounce around the world, lecturing foreign leaders and the rest of us about what to do, perhaps they should try and sort out who they do business with first, before wagging their jewel-encrusted fingers at us the next time. Leave it to the French to come up with the daftest idea of the century so far. Last week, Jacques Chirac - supported by the Germans - suggested a mandatory surcharge of up to €20 on all airline flights, to help generate aid for Africa. Anyone who knows France's disgusting record of meddling in Africa's affairs - which continues to this very day - will have been allowed a bitter laugh at the chutzpah of a French leader attempting to lecture us on this matter. As Rwandan commentator Paul Mugenzi wrote in the Kigali New Times last month: 'They (French troops) fought along Habyarimana forces from the beginning to the end. They operated artillery pieces. They commanded troops. They were seen and heard by RPF (Rwandan Patriotic Front) soldiers in Byumba. People saw them having smeared themselves with black polish camouflage during the March offensive by RPA in 1993.' Jean-Christophe Mitterrand, son of Francois, is currently being investigated for illegal arms exports to both Rwanda (who funded les genociders) and Angola. Maybe people would take their proposal for a new tax for Africa more seriously if they had suggested putting a tariff on every bottle of French wine and every block of French cheese sold. Now that would have provided some interesting scenes.

Subject: 35% of Fannie Mae loans are...... From: Pete Weis To: All Date Posted: Sun, Jun 12, 2005 at 18:49:43 (EDT) Email Address: Not Provided Message: interest only - 39% for Freddi Mac. From Business Week: Top cities for risky, interest-only mortgages Borrowers may live to regret joining the boom By Peter Coy Business Week Updated: 2:17 p.m. ET June 10, 2005 When Federal Reserve Chairman Alan Greenspan told Congress on June 9 that 'the apparent froth in housing markets may have spilled over into mortgage markets,' he was surely talking about mortgage markets like San Diego's. BusinessWeek Online has obtained the first-ever measurement by metro area of the increasing popularity of interest-only mortgages, and it shows that San Diego rates No. 1, by number of 'IOs' in 2004. In metro San Diego, 47.3 percent of all mortgages required interest payments only in their early years. The survey covered the top 50 metro areas in the U.S. and measured by the total number of mortgages issued. Atlanta, San Francisco, Denver, and Oakland, Calif., followed close behind San Diego. Milwaukee, Wis., turned in the lowest number, just 4.8 percent interest-only loans last year. Frenzied market The data comes from LoanPerformance, a San Francisco-based real estate information service. Although LoanPerformance also has statistics for the first few months of 2005, those numbers are too small to make them reliable. Greenspan isn't the only one worried about the sharp rise of interest-only mortgages, which accounted for less than 2 percent of all loans as recently as 2001. The concern: that they're helping supercharge already overheated housing markets. Because no payment of principal is due in the early years, interest-only loans offer lower monthly payments (even though the interest rate is slightly higher) than conventional ones. Based on the initial monthly payments, borrowers may be able to buy a more expensive house than they might otherwise afford. Trouble is, when borrowers do have to start making principal payments — after anywhere from 2 years to 10 years — the monthly payment could jump by up to 50 percent, or even more if the index for the adjustable rate rises as well. Under surveillance BusinessWeek Online has also obtained new data from Fannie Mae and Freddie Mac that lend credence to the LoanPerformance numbers. They show that, in April, going by dollar volume, interest-only loans accounted for 35 percent of the adjustable-rate mortgages in securities sold by Fannie Mae and 39 percent of the adjustable-rate loans in securities sold by Freddie Mac. That represents a sharp increase for both giants, which buy mortgages from lenders and then repackage them as securities for sale to investors. As recently as January, 2004, only 10 percent of adjustable-rate mortgages in securities sold by Fannie classified as interest-only. And Freddie didn't sell any securities with interest-only loans at all until last December. (Amy Crews Cutts, deputy chief economist of Freddie Mac, provided the statistics to BusinessWeek Online.) Freddie Mac — which uses a computer model to decide which mortgage loans to buy from the original lenders — says it views with skepticism the rise of interest-only loans. 'It is something that we are paying attention to very closely,' says Cutts. Arms race With mortgage rates remaining low despite Federal Reserve rate hikes, home prices keep going up. The Office of Federal Housing Enterprise Oversight says single-family home prices rose 12.5 percent from the first quarter of 2004 through the first quarter of 2005. Nevada led the nation with a 31.2 percent increase. For people worried about a bubble, the increasing popularity of so-called option ARMs look even scarier. Option ARMs have teaser rates as low as 1 percent and give borrowers four different choices of how much to pay every month. The minimum-payment option is so low that it may not even cover all the interest due. Whatever isn't paid gets added to the principal, a phenomenon called 'negative amortization' that many credit-card users know all too well. Cutts says Freddie Mac doesn't buy option ARMs from lenders — but she believes there's a 'secular shift' toward them and away from ordinary interest-only loans. Economy can take it Keith M. Schemm, a mortgage broker in Santa Clara, Calif., says option ARMs are 'pretty dangerous loans to do' for many families. 'The problem,' he says, 'is there's such a frenzy in the marketplace to buy a home.' In his testimony before the Joint Economic Committee on Capitol Hill on June 9, Fed chief Greenspan voiced his own concerns about the increased use of interest-only loans and their variants. Despite his worries about mortgages, in the end, Greenspan maintained his view that even if home prices decline from their current elevated levels, he believes the economy can withstand the fallout. Here's hopin

Subject: Musical chairs From: Pete Weis To: Pete Weis Date Posted: Sun, Jun 12, 2005 at 19:25:27 (EDT) Email Address: Not Provided Message: From the Chicago Tribune: Interest-only mortgages raise the stakes June 12, 2005 BY MICHAEL LIEDTKE Once a frustrated renter, Chris Economou is now a happy homeowner, enjoying a splendid view of San Francisco and an $80,000 increase in his property's value since he bought the 1-bedroom condominium for $435,000 a year ago. He credits his good fortune to an interest-only mortgage, an increasingly popular -- and risky -- loan that enables borrowers to lower their monthly payments enough for several years to afford rapidly escalating home prices in expensive markets like the San Francisco Bay area. Economou estimates he saves $1,000 a month by having his interest-only mortgage instead of a traditional 30-year fixed rate loan. 'I'd still be looking at renting for a long time,' if not for that mortgage, said Economou, 33. 'Home prices are so high that it's about the only way young people like me can get into the market.' Built on the assumption that home prices will continue to rise, interest-only mortgages represent a gamble that many home owners accustomed to conventional fixed-rate loans would never take. Unlike conventional 30-year mortgages, interest-only loans typically don't require payments toward the principal for three to seven years, substantially lowering the costs of entry and making it easier to qualify for the loan. But the financial firepower of interest-only mortgages is affecting all home owners. They are further elevating already lofty housing prices, a trend that's raising fears of crash that could plunge the economy into a recession. 'When this market adjusts, it's going to be painful,' said UCLA economics professor Edward Leamer, who has been warning of a California housing bubble for three years. 'Borrowers are getting in over their heads, and lenders are too,' he said. The growth of interest-only mortgages reflects a fundamental shift in the way many Americans think of their homes. Rather than places to grow old in, they see homes as part of their investment portfolios -- in fact, a much better bet than the stock market in recent years. In California alone, homeowner equity has grown by a whopping $1 trillion since 2000, according to the California Building Industry Association. Even borrowers who can afford the higher payments of a conventional mortgage are opting for interest-only loans, so they can free up more cash to invest in retirement plans, college education funds or other home purchases, said Mark Carrington, director of information products for LoanPerformance, a mortgage research firm. 'Borrowers are becoming much more educated and smarter about what a mortgage really is,' Carrington said. 'They are using it as just another investment tool in their overall financial plan.' San Francisco accountant Patrick Duffy advises his clients to use interest-only mortgages, unless they plan to live in a home for at least seven years. 'If you are only going to have it a short time, why waste your money' on the higher monthly payments required under a conventional 30-year mortgage, reasons Duffy, who financed both his homes with interest-only loans. With some of the nation's highest home prices, California has become ground zero for interest-only mortgages, especially in the San Francisco Bay area, where more than half of home buyers have financed their purchases with interest-only loans since the end of 2003, according to LoanPerformance. Large numbers of home buyers also have been relying on interest-only mortgages in hotter markets in Florida, Nevada and Arizona, according to the market research firm. The home buying frenzy reminds Yale University economics professor Robert Shiller of the mania that gripped the stock market during the Internet-driven boom of the late 1990s -- an era dissected in his book Irrational Exuberance, released in March 2000. Shiller recently released a second edition with a new chapter warning that the housing market is creating the same kind of investment bubble that led to the stock market's three-year meltdown. 'This is new territory for the real estate market,' Shiller said in an interview. 'There's been a major attitude change that's caused people to become very speculative about home prices. All the fear [of a market correction] seems to be gone.' A sharp downturn in housing prices could turn interest-only mortgages into financial albatrosses, saddling many borrowers with homes worth less than what they owe. Also risky are the adjustable rates included with many interest-only mortgages. If the prime lending rate continues to rise, these homeowners' monthly payments could soar even as home values plummet. A double whammy like that would increase the chances of borrowers falling behind on their payments or, in the most extreme cases, just walking away from their homes, raising the specter of the massive foreclosures that contributed to the taxpayer-backed bailout of the savings-and-loan industry during the late 1980s. Federal banking regulators are so concerned that they're talking openly about regional housing bubbles and considering new guidelines for lenders to guard against taking on too much risk, said Steve Fritts, acting deputy director of the FDIC's Division of Supervision. 'There are people who are pushing the envelope,' he said. Interest-only mortgages have been a boon for buyers so far because home values in most places have surged so much that borrowers are getting richer -- on paper at least -- even as the amount owed on their loans remain the same. For instance, the median sales price of an existing single-family home in the San Francisco Bay Area was $689,200 through the first three months of this year, a gain of 45 percent from $475,900 at the end of 2001, according to the National Association of Realtors. Put another way, someone who bought a mid-priced Bay Area house with an interest-only mortgage in 2001 conceivably could be sitting on a $213,300 gain in home equity -- enough to buy a house outright in many parts of the country -- before repaying a cent of the original loan. Economou, who is a commercial real estate broker, already is looking ahead to mid-2007 when his loan will start to require principal payments. By then, he hopes to have accumulated enough equity in his condo to be able to sell it and to buy a bigger home. 'Of course, I would hate to see my home's value drop significantly, but I think this is a chance worth taking,' Economou said

Subject: Re: Musical chairs From: Terri To: Pete Weis Date Posted: Sun, Jun 12, 2005 at 20:17:10 (EDT) Email Address: Not Provided Message: Warren Buffett commented on the dollar a while ago, that since everyone expected the dollar to lose value it well might not at least for a while. I have the same sense about the housing market. There are endless articles about housing risk, but there is enough demand so far to sustain the market. No analysis here, I realize, but I have never found such bearish sentiment during a rising or stable market. Curious.

Subject: Re: Musical chairs From: Pete Weis To: Terri Date Posted: Sun, Jun 12, 2005 at 22:49:30 (EDT) Email Address: Not Provided Message: There are factors regarding housing appreciation or depreciation, which are totally unaffected by sentiment. If wages are not supporting the housing runnup, then there is a limit to how long loosening lending standards and low interest rates can contribute further to more housing price appreciation. Besides few out there are buying any of the bearish stuff in the news about housing. Nine out of 10 Americans believe there is no housing bubble, at least in the region where they live - no matter where they live. So broad sentiment by the public is still wildly bullish, just as it was near the end of the dot.com boom. Besides at these soaring levels many newly minted landlords will discover the cold, hard reality of negative cash flows and rental properties which go unrented for periods of time. As I have said the end of the housing boom will likely come when speculators begin to believe that housing is not going up 10% or more per year any more and it's time to sell. And they will all, or nearly all, start selling with the same fervor as they were buying. But buying is much easier than selling when so many are heading for the exits at the same time. This is a classic pyramid which feeds on itself until it finally runs out of fuel. The dollar, however, is affected by world sentiment as well as many other factors and is a very different issue.

Subject: Re: Musical chairs From: Pancho Villa To: Pete Weis Date Posted: Mon, Jun 13, 2005 at 08:52:01 (EDT) Email Address: nma@hotmail.com Message: One very but very simplified model (scenario) could look (IMO) like this: X = f(interest rate; fiscal debt) (although i.r. is f(f.d.)) Y := inflation A := capital allocation and concentration as f(X) B = f(risk management) C = f(individual purchasing power) T0 = T of Bubble 1 (2001) T1 = T of Bubble 2 (?) A = f(B (risk -> 0; after T0) ; C (ipp -> max; from T0 to T1)) with Y = f(ponzi-loop A, pyramid feeding itself) until T1 is reached

Subject: Re: Musical chairs From: Pete Weis To: Pancho Villa Date Posted: Mon, Jun 13, 2005 at 11:44:54 (EDT) Email Address: Not Provided Message: Thanks Pancho. You put it into terms I could not.

Subject: Re: Musical chairs From: Pancho Villa To: Pete Weis Date Posted: Mon, Jun 13, 2005 at 20:32:00 (EDT) Email Address: nma@hotmail.com Message: What is my 'wisdom' compared to yours? (I'm 32)

Subject: Re: Musical chairs From: Pancho Villa To: Pancho Villa Date Posted: Mon, Jun 13, 2005 at 20:37:10 (EDT) Email Address: nma@hotmail.com Message: P.S. : Nada, nothing, niente!

Subject: correction From: Pete Weis To: Pete Weis Date Posted: Sun, Jun 12, 2005 at 19:28:45 (EDT) Email Address: Not Provided Message: Above article is from Chicago Sun-Times.

Subject: Great Egret Eating Fish From: Terri To: All Date Posted: Sun, Jun 12, 2005 at 18:29:35 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5460&u=4|14|... Great Egret Eating Fish New York City--Central Park, Turtle Pond.

Subject: Doing Nails for a Living, With a Hammer From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 16:48:34 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/jobs/12homefront.html?8dpc Doing Nails for a Living, With a Hammer By LOUISE KRAMER WHEN Veronica Session was leaving work on a recent afternoon, she noticed a picture of a naked woman freshly penciled on the wall. She was hardly surprised. Ms. Session, a carpenter who was finishing an interiors job in Manhattan, said it was common practice for construction workers to scribble suggestive drawings on unprimed walls they know will soon be painted over. As she has done many times before, rather than wait for the paint job, Ms. Session, 46, decided to grab a brush and paint over the image herself. Ms. Session, who lives in East Flatbush, Brooklyn, switched from a low-paying bank job to carpentry 16 years ago, and still finds that besides skills, it takes inner strength to succeed. 'This is good honest work and good honest money with a living wage,' she said. 'But there is an unpleasant environment involved. This would not fly in a regular office.' Operation Punch List, a group of about 250 New York City tradeswomen, including Ms. Session, is increasing efforts to get better access to jobs in the notoriously patriarchal construction field. The group's financing proposal to the City Council for the 2006 Tradeswomen's Conference said that $30 billion in construction activity is expected to flow into New York in the next decade. Advocacy organizations have been trying to improve the job picture for tradeswomen since the 1980's, with limited results. Women represent less than 2.5 percent of the city's construction work force, according to the 2000 census. That is up only slightly from 1 percent in 1993, and below the national average of 3.1 percent, according to Operation Punch List, named after the list of items to be finished or changed at the end of a construction job. 'We still have exactly the same issues,' said Kathy Rodgers, president of Legal Momentum, formerly the NOW Legal Defense and Education Fund, which is working with Operation Punch List. Women in construction face the same problems that women in other formerly male-only fields do, Ms. Rodgers said. 'Some of the women are taunted at the job and given bad assignments. There is stereotyping that it is not women's work, that they don't want to get dirty, that they are too weak physically.' Those stereotypes serve to block capable women from high-paying jobs, Ms. Rodgers said. Construction is one of the few professions in which salaries can reach six figures for workers with only a high school diploma. The hourly wage for a unionized carpenter in New York is close to $40. Forest City Ratner Companies, the development firm, strives to have members of minorities and women make up 20 percent of the workers at its projects, according to Bob Sanna, an executive vice president. 'Since the 1980's, we have seen a significant rise of minority participation on the job site, but not as much for women,' he said. Women in executive positions have fared much better, he said. To some degree, increasing women's representation in the construction trades is an orphan cause. No single group with hiring power, whether contractors, unions or developers, has embraced it. But signs of progress are emerging. In March, Mayor Michael R. Bloomberg formed the Mayor's Commission on Construction Opportunity in an effort to help members of minorities, women, returning veterans and new high school graduates get jobs. The city estimates that 260,000 construction jobs will be created in New York during the next 30 years by major development projects, including those in Downtown Brooklyn, Lower Manhattan and the Far West Side. The commission is looking at creating recruitment and retention programs and a high school for construction trades, said Ben Branham, a spokesman for the Department of Small Business Services. Operation Punch List and Legal Momentum are seeking $75,000 from the City Council for a conference on the construction industry early next year. It would bring together tradeswomen, builders, developers, contractors and unions to discuss ways that barriers to women can be overcome. But amid these meetings, the sound of jackhammers is already growing louder, and Ms. Session wants to make sure she, and younger women, get a piece of the action. 'There are still those who think I should be home baking,' she said.

Subject: Real Estate, the Global Obsession From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 16:09:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/weekinreview/12lohr.html?pagewanted=all Real Estate, the Global Obsession By STEVE LOHR THE housing market in California may look like a textbook case of superheated 'irrational exuberance,' but then how does one explain Spain? Home prices there have risen 130 percent since 1997, twice the run-up in the United States. These days, house price vertigo is more than a local or national condition. It's a worldwide phenomenon. The American housing boom in recent years is nothing compared with the price run-up in countries like France, Spain, Britain, Ireland, Sweden and Australia, even though markets in Australia and Britain have cooled in the last year. Million-dollar two-bedroom apartments are not only a fixture of New York, but of London, Paris and Hong Kong. In New Zealand, housing prices rose by more than 16 percent from 2003 to 2004. In Ireland, they rose more than 10 percent in that period. The rise in prices is worrisome, because the international housing boom is a byproduct of globalization. A house on a plot of ground is the most local of assets. But the financial markets that make it possible for people to borrow money to buy a house, or speculate, are increasingly open, international and linked. Interest rate policies in the industrialized world tend to move in lockstep, usually led by the United States. A growing community of affluent professionals around the world now buy second homes and invest in housing abroad. The economic links act as a self-reinforcing network that has fueled the global surge in house prices but would also likely magnify the pain on the way down. The ripples would extend well beyond the housing markets. A fall in American house prices, for example, would crimp consumer spending - and free-spending Americans have supported growth in many export-minded nations, notably China. 'The real concern is that the housing boom extends across so many countries this time,' said Susan M. Wachter, a professor of real estate at the Wharton School of the University of Pennsylvania. 'That just raises the stakes, and the risk, when the music stops.' The global surge in house prices is a boom by design, largely manufactured by the world's central banks, led by the Federal Reserve. And it was done for good reason. Faced with a falling stock market and the collapse of the high-tech bubble, the Fed cut interest rates sharply in 2000 to try to limit the damage to the American economy and its trading partners. Other central banks, like the European Central Bank, quickly followed the Fed's lead. Higher government spending and tax cuts were also part of the formula. Cheap credit worldwide fueled the housing market, making mortgage payments less costly. Homeowners refinanced their mortgages at lower rates, and the savings went into consumer spending. They took out home-equity loans on houses of rising value, and spent that borrowed money on cars, clothes, furniture, restaurant meals and vacations. The higher consumer spending and the soaring value of the home nest-egg have kept the global economy chugging along. 'The Fed and other central banks encouraged this boom so that the wealth lost in the stock market was replaced by housing,' said John Llewellyn, the global chief economist at Lehman Brothers in London. 'And the housing boom has stimulated demand around the world.' The biggest globalization lift in house prices has been in what urban economists call 'primate cities.' These are the places where the world's well-off want to live or visit regularly for business or culture like London, Paris, New York, Boston, Shanghai, San Francisco, Miami, Sydney and Vancouver. They are the most cosmopolitan of locales, often coastal cities and tourist hubs. They experienced the largest spikes in housing prices and pull up the national averages, while inland cities lag - the tourist coast of Spain outpaces Madrid, San Francisco outdoes Milwaukee. Hitching the world economy to the housing market has worked well for policy makers so far. But it probably can't continue. House prices in general are continuing to rise both in the United States and abroad, as speculative buying and interest-only mortgages are proliferating. 'Much of Europe is like the United States, with roaring increases in housing prices,' noted Michael Bell, a real estate economist at the University of Reading, in Britain. 'The boom must be peaking soon. It just can't keep going up.' The looming, unanswered question for the global economy is whether the housing boom will cool down in an orderly way over the next few years or end in a bust. The preferred path would be for interest rates to rise steadily but moderately, slowing the pace of house price increases and forcing consumers to save more. This is what the Federal Reserve and some other central banks, like the Bank of England and the Reserve Bank of Australia, have tried to do. The hope is that increased business investment would pick up the slack as housing markets worldwide calm down. But the European Central Bank is contemplating lowering, not raising, interest rates. It is more concerned with slow economic growth, especially in large economies, like Germany's - where housing prices aren't skyrocketing - than smaller, hot economies like Spain's. The peril is that conflicting policies could conspire against an orderly retreat. And any trouble would come at a time when policy makers, especially in the United States, have fewer options than in the past. The huge American federal deficit, trade deficit and minuscule savings rate mean the United States borrows about $5 billion a day mostly from foreigners, whose purchases of mortgage-backed bonds have helped keep mortgage rates low. If house prices drop and American consumers are forced to tighten their belts, buying fewer imports, China and other nations would have to slow their dollar investment spree, driving interest rates higher and higher. That could smack housing markets from Paris to Shanghai to Auckland. C. Fred Bergsten, director of the Institute for International Economics in Washington, says the overheated global housing market is cause for concern. Yet the larger danger, he said, would be if it combined with another economic jolt, like an abrupt rise in oil prices, which would increase inflation and interest rates. 'That would burst the housing bubble, and be a very serious hit to the world economy,' Mr. Bergsten said. In a recently published paper, Thomas F. Helbling, an economist at the International Monetary Fund, studied 75 housing price cycles in 14 industrialized countries from 1970 to 2002. He found that not every boom is followed by a bust, but booms often are signs of possible trouble. So applying Mr. Helbling's historical standard for booms to today's housing markets makes for nervous reading. The housing markets in France, Spain and New Zealand have already boomed, according to Mr. Helbling's definition - that inflation-adjusted prices have increased 19 percent or more over the last two years. And prices in the Scandinavian countries, Italy, Ireland and the United States are nearing that level. All these countries must be looking anxiously to Britain and Australia, where prices have peaked, and the question is whether they will experience a bust. History and common sense, of course, teach that sooner or later, economic gravity will return to house prices, either gradually or swiftly, soft landing or meltdown.

Subject: Social Security and Age From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 14:23:25 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/politics/12age.html?ei=5094&en=1e02cb3c41a55a38&hp=&ex=1118635200&partner=homepage&pagewanted=all In Overhaul of Social Security, Age Is the Elephant in the Room By ROBIN TONER and DAVID E. ROSENBAUM WASHINGTON - Americans turning 65 this year can expect to live, on average, until they are 83, four and a half years longer than the typical 65-year-old could expect in 1940. And government actuaries predict that American life spans will just keep growing. This demographic trend - by 2040, the average 65-year-old will live to about 85 - has major financial implications for Social Security and major political implications for the lawmakers now trying to overhaul the system. Policy experts across the political spectrum, who agree on little else, have told Congress in recent weeks that any effort to improve Social Security's long-term finances should somehow deal with this jump in life expectancy - by adjusting benefits, raising the retirement age, increasing taxes or creating new incentives to work longer. Not only are Americans living longer, these experts say, but most are also retiring earlier, and these demographic pressures will be heightened by the sheer size of the baby boom generation - 78 million strong - which will begin to retire in the next five years. Major committees in the House and Senate, struggling to produce Social Security legislation this summer, are beginning to confront the longevity issue. Senator Charles E. Grassley, Republican of Iowa, the chairman of the Finance Committee, says the retirement age will be addressed in the solvency plan he hopes to develop with his fellow party members in the coming week, and his Republican counterparts in the House are holding hearings on the issue on Tuesday. 'We've got to deal with reality,' said Senator Trent Lott, Republican of Mississippi. But the politics are treacherous, all the more so because Republicans are dealing with it alone. Democrats have refused to engage in discussions over Social Security's finances until President Bush withdraws his proposal to create private investment accounts in the program. The most direct way to deal with the financial strain of greater longevity is simply to raise the retirement age, which now stands at 65 years and 6 months and will gradually rise under current law to 67 for people born in 1960 and later. But of all the options to shore up Social Security's finances, that ranks as one of the most unpopular, pollsters say. In a New York Times/CBS News Poll earlier this year, nearly 8 out of 10 respondents said they would oppose raising the age when people are eligible for Social Security benefits. Political strategists say this issue is viewed very differently by policy experts, who may see nothing wrong with working longer, and average Americans, with jobs that may be uninteresting, stressful or physically demanding, who are often eager to retire and doubtful of their employment prospects in their mid-to-late 60's. 'In Washington, the focus is on the demographic reality that people live longer, and most of the people who are having this conversation wouldn't mind working well into their 70's and 80's,' said Geoff Garin, a Democratic pollster. 'But out in the country, most working people don't look forward to working forever.' Glen Bolger, a Republican pollster, agreed: 'Forty might be the new 30, but they don't necessarily believe that 70 is the new 65.' Lawmakers in both parties have acknowledged that many people not only want to but also need to retire at 62 or 65. Representative Bill Thomas, Republican of California, the chairman of the Ways and Means Committee, recently reflected, 'I know my father, in terms of his plumbing activities, was pretty - the phrase, I guess, would be pretty used up by the time he was 65.' Representative Earl Pomeroy, Democrat of North Dakota, a committee member, said, 'I represent a lot of people doing some pretty hard labor out there on those farms.' As a result, many analysts say any proposal to deal with increased life expectancy would probably include some protections for low-income workers in physically taxing fields. There are other potential inequities associated with raising the retirement age: on average, women live longer than men; whites live longer than blacks; the rich live longer than the poor. Another political hurdle is AARP, the lobby for older Americans, which notes that a major increase in the retirement age is already under way as a result of the last significant overhaul of Social Security, in 1983. The normal retirement age, as the Social Security Administration calls it, is to rise by about two months a year until it reaches 67 in 2027. (One proposal occasionally discussed is simply speeding up the increase to 67.) Workers can take earlier retirement at 62, as most do, but their benefit checks are reduced as a result - 20 percent or more every month for the rest of their lives, depending on how early they retire. David Certner, director of federal affairs for AARP, said, 'Just because you raise the age, doesn't mean there will be jobs out there so you can continue working, even if you want to.' Moreover, he added: 'you've got a whole group of people who are just not physically or mentally able to continue. I think a lot of people recognize that if you change the age, you just push those people onto the disability rolls,' which are financed by the same Social Security taxes as retirement benefits. Still, experts say that the system as a whole needs to reflect the new demographic realities. C. Eugene Steuerle, a senior fellow at the Urban Institute and a former official in the Reagan administration, notes that Americans already retire, on average, for close to one-third of their adult lives, and argues that Social Security 'has morphed into a middle-age retirement system.' The change in the last 60 years is striking: The average retirement age in 1940 was 68. As recently as 1965, about two-thirds of workers did not begin drawing Social Security benefits until they were 65 or older. Now, more than half retire at 62 or younger, and three-quarters receive their first benefit checks before they are 65. Edward M. Gramlich, a governor of the Federal Reserve Board and an authority on Social Security, says that if the architects of Social Security 'had known about the explosion in life expectancy, they would have put in some adjustment in the retirement age.' One way to address the problem - and the direction some lawmakers seem to be heading in - is an automatic adjustment in the retirement age or the benefits received at each age to reflect increases in life expectancy. That way, retirees' total lifetime benefits would remain more or less constant even as they lived longer. Automatic changes are already made for average wage increases and price inflation. For individuals, such a change, called indexing for longevity, would be little different from a direct increase in the retirement age or a specified reduction in benefits, said Douglas Holtz-Eakin, director of the Congressional Budget Office. But for the system, Mr. Holtz-Eakin said, it would make a big difference because the changes would be automatic and would not require new laws. It might also be politically attractive because politicians would be relieved of the responsibility of periodically voting to raise the retirement age or to cut benefits. Adjusting the system for longevity would not contribute much to solving Social Security's solvency problem over the next 30 years or so, Mr. Holtz-Eakin said. But over 75 years and longer, he said, it would have an important effect. Still, pollsters question whether even a gradual adjustment based on life expectancy will sell. 'You can call it indexing for longevity in Washington, but in America it's raising the retirement age,' said Mr. Garin, the Democratic pollster. Mr. Bolger, his Republican counterpart, said, 'There's no appetite for anything related to age among the public.'

Subject: Ignorance of '83 in the NYT Age article. From: Auros To: Emma Date Posted: Tues, Jun 14, 2005 at 14:26:45 (EDT) Email Address: rmharman@auros.org Message: I will note up front that I'm plagiarizing a comment made on Brad DeLong's journal this morning. The thought had crossed my mind when I read the relevant post, and it just turned out that 'JR' had put it into some rather snappy words before I got there: Five minutes' worth of internet research reveals that when the 1983 Social Security reforms were put into place, the Trustees had accounted for increased longevity. See Table 3 at http://www.ssa.gov/history/pdf/1983.pdf The Times article notes with alarm that 'by 2040, the average sixty-five year old will live to about 85.' In 1983, the SSA projected that the average 65-year-old male would live another 17.2 years -- that is, to 82.2; and the average 65-year-old female would live another 22.6 years -- that is, to 87.6. If you average these figures, you get 84.9 years -- and that's a slight underestimate, because women outnumber men at age 65 [and the SSA knows this]. So in 1983, SSA assumed that the average 65 year old would live to about 85; and now, in 2005, it's estimated that the average 65-year old would live to... about 85! Crisis!

Subject: Angela Whitiker's Climb From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 14:18:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/national/class/ANGELA-FINAL.html?pagewanted=all Angela Whitiker's Climb By ISABEL WILKERSON CHICAGO - Angela Whitiker arrived early and rain-soaked at a suburban school building with a carton of sugar water in her purse and a squall in her stomach. It was the small hours of the morning, when the parking lot was empty and the street lights were still on. There she was alone in the darkness for the biggest test of her life. If she passed, she could shed the last layer of her former self - the teenage girl who grew up too fast, dropped out in the 10th grade, and landed aimless and on public assistance with five children by nearly as many men. She would finally be the registered nurse she had been striving toward for years. She could get a car that wouldn't break down in the middle of the Dan Ryan Expressway. She could get an A.T.M. card and balance her checkbook and start paying down her bills and save up for that two-story colonial on Greenwood that was already hers in her dreams. She would never again have to live in that gang-run nightmare of a place, the Robert Taylor housing projects - where she packed a .38 for protection - or in Section 8 housing or in any government-subsidized anything. Her children could be proud of her and go on to make something of themselves too, once she proved it could be done. But if she didn't pass. ... She couldn't think about that. And so, as she would often tell the story later, she got up before dawn and made herself some oatmeal and a hard-boiled egg and toast and got to the testing site for the state licensing boards for registered nurses two hours before the test began. She had never been good at tests. All through nursing school, she agonized the night before an exam, overstudying the charts and graphs, termites dropping from the ceiling onto her physiology books, mice crawling at her feet, and her children tugging her leg to find out what was for dinner. She had only recently become the first woman in her family with a college degree and, if everything went well this day, would be the first nurse anybody in her family knew personally. So, she left long before she needed to that morning to avoid traffic, a missed turn, not enough gas. Once there, she sat parked in the rain trying to compose herself. She pulled out her Bible to read the 91st Psalm, the one about the Lord being her refuge. She broke out the sugar water to get glucose to the brain. In the hallway, she avoided looking anyone in the eye. She spoke to no one. She didn't want to pick up on anyone's anxiety. She had enough of her own. She took a last drag on a Newport. The testing room began to fill. The examiner checked her identification and assigned her computer No. 12. She drew in another deep breath as she walked to her place. She was about to sit down to take a $256 pass-or-fail entrance exam into the American middle class. For most of her 38 years, Angela Whitiker has been on the outside looking in at the seeming perfection of the professional classes, the people who did the college-career-wedding-house-in-the-suburbs-2.5-kids routine. Her life has been so very different from that. She was a child of the working class who, through ill-considered choices and circumstance, slipped into the welfare class and had to fight her way out. While the rest of the country has fitfully cut back welfare and continues to debate class disparities and the barriers to mobility, Ms. Whitiker has quietly traversed several classes in a single lifetime. She has gone from welfare statistic in the early 1990's to credit-card carrying member of the middle class, a woman for whom there are now few statistics, so rare has her experience been. This is the story of her 12-year slog to the middle class and of how hard it is to stay there. The third of five children, she was born to a mother who was a cook and to a laborer father whom, though the parents had married, she didn't meet until she was 10. She said it was a heartbreaking visit in which, smelling of whiskey, he promised to buy her a bicycle and didn't. She hasn't seen him since. Within a few years, she was using men as a substitute for her father and her adolescent longing for him. By 15, she was pregnant with her first child. By 23, she was the mother of five children, had been married and separated, and been a casualty of the crack epidemic of the 1980's. She had lost and would later win back custody of her children, and had worked a variety of odd jobs, from sausage vendor to picking butterbeans. At 26, she gained short-lived celebrity when she and her oldest son, Nicholas, then a 10-year-old fourth-grader with a man's obligations, were the subjects of a profile by this reporter in The New York Times, part of a 1993 series on at-risk urban young people called Children of the Shadows. She, Nicholas and her four other children were living in a second-floor walk-up in Englewood, a crime-burdened neighborhood abandoned first by the white middle class and then by the black middle class that succeeded it. For her, each day meant trying to piece together enough to take care of herself and her kids - one day petitioning the fathers for child support, the next counting what was left of her food stamps; one minute rushing to an administrator's office to get bus vouchers for school, the next bargaining with the electric company to get her lights turned back on. To keep her family out of the projects and on what might be described as the upper rung of poverty, she had taken up with a man who worked handling baggage at O'Hare International Airport. He paid the rent and was the father of her fifth child, Johnathan. His paycheck gave her breathing room to get into a pre-nursing program at Kennedy-King Community College on the South Side. But men never seemed to hang around that long, and it fell to Nicholas to be father to the younger children that the men in their lives seemed unwilling to be. He was the one who washed his and his siblings' school uniforms in the bathtub at night because they each had only one set. He was the one who pulled his brother Willie out of the line of fire by the hood of his jacket when gunshots rang out in the schoolyard. And he was the one who took the blame and the beatings if something wasn't done to his mother's boyfriend's liking. Readers responded with great outpourings of generosity after the article was published, but it was clear from the reporter's continuing contacts with the family over the years that it was not enough to materially change the basic facts of their lives. It was still a household run by a single mother with only a high school equivalency degree, no career skills, no assets and no immediate prospects for independence. In addition, the fraying relationship between Ms. Whitiker and her boyfriend fell apart after publication of the article, and, without him to pay the rent, she fell further behind. She wound up in the only place that a woman with five children, no job and no money could get in Chicago in 1994, a cellblock of an apartment in the Robert Taylor Homes, an urban no-man's land where you could move about only when the gangs that ran the place let you. The elevators, sticky with urine, didn't work, and gunshots were background music. From the start, Ms. Whitiker felt that it was beneath her. She looked down on the women who had grown accustomed to bullet holes over their dinette tables, who watched 'All My Children' and ate Doritos all day and didn't seem to want anything better. She carried the gun to protect herself and had to use it once when, having climbed nine flights of stairs, she found some strangers playing cards at her kitchen table. She fired shots into the ceiling to get them out. It was the lowest rung of the poverty class in America, lower in a way than the worst nights in a crack house in her early 20's, because now she was fully conscious of exactly where she was. She vowed from the very first night to get out. But she knew she couldn't make it out on public assistance. So she figured she'd get whatever job she could. She would have to put off her nursing studies. She worked at a fast food restaurant, rising to assistant manager but never making much more than minimum wage. She worked nights as a security guard in the projects, a job that was dangerous and equally dead-end but paid a bit more. Every day held its own kind of peril or indignity, much of it coming from her 1976 Chevrolet, which she relied on to get to and from work but was well past its natural lifespan. It had a cracked windshield and a hole rusted through the floor. It wasn't big enough for all of her children, but they piled in just the same with no thought of seatbelts, because there weren't enough anyway. When she was coming home in the rain on the expressway one night, the defroster conked out and the windshield fogged up. 'I had to stick my head out the window to drive,' she said. 'God drove that car that night.' One time the car caught fire because of a hole in the gasoline line. Flames shot out of the hood and into the air. Ms. Whitiker jumped out and told her sister, Michelle, riding in the passenger seat, to do the same. 'Get out of the car!' she screamed. 'It's gonna blow!' A fire truck came to put out the fire. The firefighters argued over which one should try to start the engine. None of them wanted to. So she had to try herself. Somehow, it started and got her home, just another day on her long climb out of the hole. The drug economy played out every day on the cracked concrete lawns of Robert Taylor, and her preteen older sons, Nicholas and Willie, could not help breathing it in. The only working men they saw were the drug dealers who were up early to meet their sales quotas, wore the latest gym shoes and got the girls. Their cars were new and didn't catch fire. The family lived at Robert Taylor for nine months. 'It was hell,' she would say later. 'I wouldn't want a dog to stay up in there.' She left there a new woman. She knew she had to get back into nursing school if she was ever going to get anywhere. Learning a New Way Then she met a man by the name of Vincent Allen. He wasn't like the other men she had known. He had a college degree. His father had been a military man, his mother a homemaker, solidly middle class. He had a nice apartment with floor-to-ceiling windows overlooking Lake Michigan. Ms. Whitiker was struck by his manners and how he spoke like the teachers and social workers she had known growing up - enunciating his words, slipping in a few she didn't know. He was a police detective. They met on the job when they were working as private security guards. He took an immediate liking to her, saw that they both wanted the same thing - in his words, a 'picket fence kind of a life.' He encouraged her to follow her dreams. Soon she and the kids were moving in with him. He took his job as the man of the house seriously and actually liked the father role. Suddenly, there was a man asking about homework and where Nicholas and Willie had been. He noticed if they had slipped on some gang colors or had their caps pushed to the left or the right as gang members did. He took it upon himself to correct the behavior of the younger children and pick them up from school. That had been Nicholas's job for all of his short life, and, as his mother recalled, he did not take displacement well. First, she said, he figured he would scare his rival away. He stole his clothes, talked back, came in late. It would only be a matter of time before this man would go the way of all the other men, Nicholas thought. But Mr. Allen did not leave. And the sweet little boy who had been the father of his family went out and found a new family in the streets. The drug dealers were more than willing to take him and put him to work. Before long, Ms. Whitiker discovered that her 12-year-old Nicholas was a lookout for the dealers. She and Mr. Allen could see the road Nicholas was on, but, streetwise though they were, could do little to stop it. The more vigilant Mr. Allen was, the more resentful and alienated Nicholas became and the worse things got. It was as if he had grown so accustomed to the chaos of his mother's previous lives that he did not know how to function when a family worked as it should. He had made himself into a wind gauge and had no purpose when the air was still. Ms. Whitiker sent Nicholas to live with his father, a laborer who had married, had other children and lived on the other side of town. She hoped that being far from his homies would put Nicholas on a straighter course. Mr. Allen started encouraging her to go back to nursing school. They figured that, with him providing a place for her to live, and with Pell grants and the other financial aid for low-income students, she could make a go of it. She enrolled at Kennedy-King College again, but it was different this time; or, rather, she was different. She was no longer the fun-loving girl looking for something to do. She had seen the bottom of the well and never wanted to go back there again. She had also seen a new way of managing one's life. The professional people she met in college and now Mr. Allen had different ways of thinking about spending and saving money and carrying oneself. They tended to plan and save for things. She had never had enough money or reason to save. They paid attention to things like late fees and interest rates; she mostly ignored them because she couldn't pay the bills anyway. They set long-term goals for themselves; she just tried to get through the day. It all rubbed off on her, and it changed her. On top of that, she had a renewed sense of time pressing against her. How long would Mr. Allen put up with her and the kids while she went to school? What if he got tired of it and left? What if he insisted she quit school and get a job to pay her share of the expenses? She didn't like the idea of owing him and couldn't bear the thought of slipping backward again. So, when it came to her studies, she would have to be more focused and efficient than she had been about anything in her life. 'I Had to Make It' There were certain points in certain years - say from 1996 to 2002 - when Angela Whitiker didn't yet know that Tupac Shakur had been killed or that President Bill Clinton had been impeached. 'If it wasn't about nursing or biology or what was on my test Friday, I wasn't interested,' she said. 'I blocked everything and everybody out. I used to be so particular about cleaning the house. I got to the point where I'd see a shoe, and I'd just kick it over.' She felt she had to work extra hard because she felt so outranked in the classroom. She endured the stares of the middle-class teacher's pets who looked down on her for the circuitous route that got her there. 'They were snobs whose moms were nurses, and they knew everything,' she said. 'I had to show them that I was somebody, that because I had five kids, that I made bad decisions, that I didn't have a father - and so what? - I was determined to show them I can do this. I had to make it. I couldn't fail.' Whenever test day came, she recalled, she would work herself into such a state of anxiety that sometimes she had to excuse herself to throw up. The professor had to go get her out of the bathroom. 'Are you O.K.?' the professor would ask. 'You're going to kill yourself.' Everybody knew when a test didn't go well. They could see it in her face, the simultaneous pouting and rolling of the eyes, and hear it in her voice, the way she snapped at the lowest registers over the littlest thing. 'Mama didn't pass her test today,' the first child to notice would say to the others. 'Don't say nothing.' Because she wasn't from a professional family, she brought a kind of na�vet� to school with her. One day in a clinical class, she recalled, the teacher went around the room asking students how their patients were doing. When the teacher got to her, Ms. Whitiker thought about the colostomy bag attached to her patient, and started crying. 'Oh my God,' the teacher said. 'Did your patient die?' 'No,' she said, still sobbing. 'But she had this hole in her stomach.' 'Well, go on in there and wash your face,' the teacher told her. Soon she was working with cadavers as if they were just another piece of office equipment, but she didn't know anyone who could give her the ins and outs of the field or tell her what to expect. 'I didn't have anybody I could go to who had a degree other than Vince,' she said. He went over her papers and marked them up - too much for her liking, sometimes - and read her papers aloud so she could hear what was wrong with them. When she made the dean's list, he celebrated. When she failed a test, he consoled her as best he could. 'Oh baby, you're going to make it,' he'd say. 'Oh shut up, you don't understand,' she'd shoot back. In May 2001, she finally finished nursing school at Kennedy-King, one of the City Colleges of Chicago. For her class picture, she wore her hair in a flip like Gidget and a nurse's cap that looked like white dove wings. It was a long way from the teenager in a jheri curl and too-tight jeans. Soon she would be driving in the rain to take the nursing boards on computer No. 12. 'It was a step to another life,' she would say years later. 'It was a do-or-die type of thing. I thought I was going to kill myself waiting for the results.' The Test Results One morning in late 2001, when Ms. Whitiker was alone and the apartment was uncharacteristically quiet, the mail arrived and, in it, an envelope from the state boards. In that moment, she came closer than at any other time of her life to upper-middle-class young people awaiting word from the Ivy League school of their dreams. The chatter among her fellow nursing students was that a thin envelope meant you passed; a thick one, presumably filled with the things you got wrong, meant you failed. She got a thin envelope. 'My heart just dropped to the floor,' she said. She took the envelope into the apartment and threw it on the bed, afraid to open it, afraid that, given the disappointments of her life, somehow the grapevine had been wrong and the thin one meant failure. She called her mother to get the courage to open it. Soon she was out in the middle of the hallway. 'I passed my boards!' she screamed to neighbors fumbling for their house keys. The family took her out to celebrate. They had dinner at Hooters and bought her a cake. Soon after, she and Mr. Allen agreed it was time they married. 'My daughter was getting to an age where I was trying to tell her to do right,' Ms. Whitiker said of Ishtar, now 17. 'I can't tell her to do right if I'm doing wrong.' They married at Faith Temple Coptic Church on June 7, 2003. She wore an ivory shift and a long white veil and carried a bouquet of white carnations. He wore a black tux. It was the groom's first marriage, the bride's second. All the kids were there except Willie, who, still on the path he learned at Robert Taylor, was in jail. The remaining kids were dressed to their mother's specifications, except Nicholas, who, having by now declared that he wanted to be a rapper, showed up in pants hanging off his body and a baseball cap turned backward. For the family wedding picture, Ms. Whitiker told him to stand in the back so nobody could see what he had on. She was already becoming class conscious, aware of appearances and decorum. And so, on this triumphant day in the family's history, all that is visible of Nicholas is his head. High-Stress Work Ms. Whitiker finished nursing school as vice president of her class and with academic awards in biology and pharmacology, but despite her hard work and potential, the reality of her life was that she could not afford to go any further than a two-year associate's degree. That limits her job prospects even in a high-demand field like nursing. She doesn't have the contacts to get a job at the teaching hospitals in Chicago where she would get better training and higher pay. She landed a job at a small inner city hospital on the South Side, known not for its groundbreaking procedures or training opportunities but as the hospital where the eight student nurses killed by Richard Speck in 1966 had worked. It's an unnerving history that is always in the back of her mind, but she needs the job and the pay is more than she could ever have imagined back when she was on food stamps. She has worked high-stress assignments in telemetry - monitoring cardiac patients - and in the intensive care unit. With all the night hours she puts in, she made $83,000 last year, more than 90 percent of all American workers. It is hard work, messy, often thankless. She has found herself in a pecking order that surprises and frustrates her. The doctors seem to expect her to work magic on their orders, she said, and the certified nursing assistants resent her place of privilege. A few years back she might have sympathized with the nursing assistants. They do what no one else wants to do, attending to the unpleasant bodily needs of the very ill. There was a time when that would have been a move up for her. But their envy and resentment only made her feel more distant. And now, she was showing the same disdain for them that the middle class might have felt for her in her other life. 'I'm like, don't be mad at me because I'm a nurse,' she said. 'If you want my job, you need to suffer and cry like I did.' She tried to find her bearings in this new class she was in. She resented the old friends who drank muscatel at the taverns late into the night and hit her up for money. And yet her past had a way of catching up with her in unexpected ways. She was out running errands once when a man recognized her from her days on the street. 'I know you,' he said. 'You're the one who stole money from me.' She feigned ignorance and walked away, even though, she would later say, she remembered taking his money and his television set, too, back when she was on drugs. She tried hanging out with the nurses from work. But some were bourgeois and uppity, had a sense of comfort and confidence she did not possess. At one party she went to, some of them started smoking marijuana. It was a fun little escape for them, but it took her back to a place she could not afford to revisit. 'I reached for my purse,' she said. 'When I got my first paycheck, that was high enough for me.' Her life was complicated as it was. For one thing she was now the mother of six (seven, if you counted Zach, her husband's 13-year-old son, who recently moved in with them). Her youngest, Christopher, had been born shortly after the uncertain time at Robert Taylor and had been with her only off and on because of a custody fight between her and Christopher's father. Both the fight over Christopher and the fact that he came after a lull in childbearing when she was a more mature 28 help explain why she is investing in him in ways she had not had the luxury of doing with her older kids. She now knows how to discipline without using a belt, and the value of grounding and timeouts. She spends her off time shuttling Christopher to and from school or to little league practice in her new Chevrolet sport utility vehicle, an early benefit of her higher paychecks. When he has a science project, she's on the floor helping sculpt the volcano with him. She's quick to hug him and expects a kiss when she drops him off. She says he has become the very embodiment of the fresh start she was seeking for herself, and onto him she has grafted all her middle-class hopes. He reminds her so much of Nicholas -- the same round face and velvet skin, the same precociousness that she saw as impudence in young Nicholas when she was barely out of her teens, but now sees as reflecting her youngest's unlimited potential. While Nicholas went to a strapped public grade school in a perilous neighborhood, Christopher is in the gifted program of a school she handpicked on the middle-class side of town. While Nicholas played a hand-me-down Nintendo on a television with a busted tube, Christopher plays 3-D chess on the family's Dell computer. Christopher is now 10, the same age as Nicholas when he appeared in The Times, but he talks like one of the sweet, smart-alecky kids on a network sitcom rather than a streetwise man-child who's seen too much too soon. Asked what it means to be in the gifted program, he had a ready answer. 'It means I'm smarter than the other kids,' he said without flinching. At that age, Nicholas's conversations were about running from bullets. Demands and Responsibilities At first, nursing was like hitting the lottery. She was making enough for the family to move into a four-bedroom apartment in a prewar building overlooking Lake Michigan. It has crown molding, a marble fireplace and grander rooms than they have furniture for. She had a contractor paint the rooms the colors of sweet peas and corn on the cob. She bought a mahogany king-size bed, propping it high with pillows for herself and her husband, and bunk beds for the kids. But she has found herself alone. She is making more money than anybody she knows. And come payday, everybody needs something, and not just the kids. Relatives need gas money, friends could use help with the rent. Even her patients, on hard times themselves, have their hands out. 'You got some money to lend me?' one of them, an older woman whose telephone had just been cut off, asked her. 'You get your check yet?' Suddenly, she is the successful star in her universe who is supposed to cover the cost of the family reunion, give career advice to the nieces and nephews, show up for their basketball games, float a loan to whoever needs it. After all, she's making $83,000 a year. She is making more than her police detective husband and has found herself tiptoeing around his ego and expectations. They have tried different ways of dividing the bills, at one point splitting the $1,475 rent and sharing the utilities, at another point, one paying the rent and the other the utilities. But after Medicare and Social Security deductions and her share of the household obligations, groceries for a family of seven, her $500 monthly car payment, the assorted expenses that come with three teenagers, loans to relatives who think she makes a fortune and the debt left over from her previous life, she finds that there is often little left over at month's end, and most months she's still in the hole. She exists in an in-between place, middle class on paper but squeezed in reality. Take her car, for instance. It's a 2002 two-door Blazer that cost $29,000. She really needed the bigger four-door, just so everybody could easily get in. But that would have cost an extra $5,000, so everybody crams into the two-door. Insufficient though it is, it still comes at a high price. She pays 17 percent interest on the car loan - with $13,000 remaining - because of bad credit from her previous life, when sometimes the choice was whether to eat or pay the light bill. The kids asked her the other day if she was getting a new car. 'No,' she said, 'you can pop the seat and duck your head and get in like everybody else.' But she winces every time Christopher and Zach have to fold themselves into the size of a bag of groceries to fit into the rear storage compartment. She says she wants a bigger car like a Lincoln Navigator, but with gas so high she shudders at what it would cost to fill the tank, and she knows she can't afford a new car anyway. So despite her income, Saks and Macy's are somebody else's world. Instead, she frequents the places she did in her previous life. She still shops at the dollar stores in Englewood, her old down-and-out neighborhood. On a recent trip to Louisiana for her family reunion she watched every nickel and checked her balance at the automated teller machine several times a day. She has become keenly aware that what middle-class comforts she does enjoy are built on uncertain scaffolding. First, her status requires two paychecks and the stability and backup she gets from being married. It requires that she work the higher-paying 12-hour night shifts that keep her away from her family for long stretches and leave her tired and irritable when she's with them. It requires that Mr. Allen work extra hours as security at an elementary school, which leaves the two of them with little overlapping time to reinforce the strong marriage they need to stay where they are. Stretching Every Dollar Her job and paycheck say she's middle class, but what does that mean? She said that when she was on the outside looking in, she never imagined it would mean working three and a half years without a vacation or having an empty dining room waiting for a table and chairs. It never would have occurred to her that she would be working this hard and still have to choose between paying the phone bill and paying for her daughter Ishtar's prom. She exhibits a mounting awareness of just how far her money will and will not go, and of how much hard work each dollar represents and how carefully she must protect it because any loss means she has to work that much harder. So she drops what she's doing when she sees a spot on the sofa because it cost four figures and it's not paid for yet. She buys in bulk and has to watch out for relatives wanting to shop in her kitchen. 'I caught my aunt going into my pantry getting her some soap,' she said. 'I told her, 'That's Dove!' ' For Ms. Whitiker, being middle class has meant working upside-down hours for so long that she's started to greet people on the street with 'Have a good evening!' It means taking on family members as unofficial patients with their edema and diabetes. 'When you're the only nurse in the family they think you're a doctor,' she says. 'Mama calls me. Mama has her friends calling me.' She has no choice but to keep up the pace because she wants to get vested in the retirement plan at the hospital. She has 18 months to go. She wants to open up a Roth retirement account, but can't seem to save enough. She wants to go back to school to get a bachelor's degree, but has neither the time nor the money. 'I feel like every corner of my body is being stretched,' she said the other day. More than anything, Ms. Whitiker wants to buy a house. Sometimes she drives by her dream house on Greenwood in the comfortably middle-class neighborhood of Chatham. It's yellow brick with a spiral staircase and a two-story foyer and vertical blinds. But she's having trouble saving anything toward that house or any other. The bad credit from her previous life still haunts her. Where she wants to live, they can't afford. And where they could afford, she doesn't dare live. 'I have to live in a decent neighborhood,' she said. 'I can't walk around the projects in my nursing uniform. They would try to take everything I got. And my husband - he's arrested half the people in Englewood. We're in danger.' Missing Pieces Ms. Whitiker's ideal of middle-class perfection, with well-educated, smartly groomed kids gathered around a big middle-class dining room table, has two missing pieces: Nicholas and Willie. Her success came too late to benefit them. They were already on a road she was unable to steer them from. Nicholas dropped out of school in the 11th grade and has been on and off the streets ever since. Willie, ever the follower looking up to Nicholas, was right behind. At 22, Nicholas is a burdened soul who saw too much too soon. His front tooth is broken from a fight he got into trying to protect Willie on the streets. His car has bullet holes from a drive-by shooting. He knows what it's like to have a pistol jammed into your chin, or to be a 12-year-old making $50 from neighborhood drug dealers for sitting on a hydrant and calling out 'Five-O!' - street slang for the police. And worse. 'I could be dead right now,' said Nicholas, his chiseled features weary, water welling in his eyes. 'I should be dead. I hurt so many people. I hurt myself.' There were times when Mr. Allen, on patrol and by then Nicholas's putative stepfather, would catch him on the street and write up a summons but then let him go. But Nicholas finally got caught and spent about six weeks in jail in 2002 for stealing two coats from a Marshall's store in the suburbs and for fighting the police when they tried to arrest him, a consequence, his mother believes, of unresolved 'anger issues' from the chaos of his childhood. She wishes she could go back and do some things differently. She thinks he needs to get into anger management and get into school to put his quick mind to good use. For now, he lives in a walk-up apartment in the suburbs with the mother of the second of his three children; she's a housekeeper at the local Y.M.C.A. He has worked part-time as a stock clerk, but he is pinning his hopes on his rap music, which his exasperated mother admits is pretty good. He closes his eyes with hands quivering and begins one of his songs: 'Going to change my ways,' he sings in a near whisper. 'Lord have mercy on me.' Willie has become a sturdily built young man with a movie star smile and a precisely trimmed goatee. Like Nicholas, he has worked low-paying service jobs when he has worked. He has two children, and a more serious criminal record that includes a felony drug conviction for selling near a schoolyard. 'I was doing some things I shouldn't have been doing,' Willie said, still sweet-faced at 21. Ms. Whitiker's two older sons are living reminders of the world she wants to put behind her. She lives in constant fear of what may happen to them. 'I go to work,' she said wearily, 'and I don't know when I'm going to get that call, that your son is dead or in jail again.' It was soon after she began working as a nurse that she got the call she had been dreading. She was in the intensive care unit bandaging a patient when she was called to the phone. Willie had been shot. It was not clear where he had been shot or how seriously hurt he was, or if he was conscious or would live. She dropped everything. It turned out he had been shot twice in the leg. She found it suspicious that he was shot on a well-known South Side drug corner that had been contested by rival dealers. But she rushed in to save her son. 'It almost killed me,' she said. 'I almost had a nervous breakdown. I'm at work bandaging up patients, and I get the call that he's been shot. He said he was robbed. So I took him in and took care of his wounds.' Last summer, she got another call. She was at home in bed this time. 'Your son Willie's been shot,' said the slurred, panicked voice on the phone. It was a call from one of Willie's acquaintances from the very corner where Willie had been shot the first time. 'They were so ghetto,' Ms. Whitiker recalled with exasperation. 'They were arguing over the phone about what they should do.' She thought quickly. The nurse in her kicked into gear. 'Where was he shot?' she asked. 'In the leg,' came the answer. 'Is he breathing?' 'Yeah.' She knew then that he would live. 'So I hung up and turned over and went to sleep,' she recalled later. 'I didn't even tell my family.' In the days and weeks that followed Willie's shooting, Ms. Whitiker made perhaps the most painful decision a mother could make in order to keep her family on the straight and narrow. She has performed a kind of emergency triage, banishing the infected to save the well. She didn't visit Willie in the hospital, didn't take him home to tend him as she had the first time. She made it clear that neither he nor Nicholas was welcome until they got themselves together, got their high school equivalency diplomas and started taking care of their kids. She has big plans for the younger ones: graduations, proms, college, professions. She doesn't want them getting shot like Willie. 'I told him you can't bring that here,' she said. 'How are his brothers supposed to feel? They're trying to do right and their brother is in the other room with a gunshot wound. I don't want him bringing that to the house and spreading it to the others. The other boys are on the right path, and I want it to stay that way.' Her plan appears to be working. The younger children rarely speak of Nicholas and Willie. When Willie showed up at the apartment one afternoon, Ishtar knew to alert her mother on her cellphone. 'Willie's here,' Ishtar said. 'What you want me to do?' Everyone knows about the quarantine, even if it's breached. When Nicholas's name comes up, there's an awkward silence and a looking away. Pushing Higher Goals Thursday was a big day for the family. It was the day Ishtar walked across the stage and became the first of Ms. Whitiker's children to get a high school diploma. It caused quite a flurry in a family with a history of more births than graduations. After the ceremony, Ms. Whitiker's sister, Michelle, took Ishtar's yellow mortarboard and said, good-naturedly: 'Let me try this on. Which way does it go? They don't give you these when you get your G.E.D.' Everyone was there, except Willie, who was looking for work in Milwaukee, and Nicholas, who was in the public library reading up on contracts and music royalties to get a record deal. The day put Ms. Whitiker in a class quandary even as she went without a telephone to pay for the commencement and the prom. While proud of Ishtar, who made it to the prom after all, Ms. Whitiker is torn between making a big deal of graduation and keeping it in perspective. 'I'm not going to do like these other mothers and brag about, 'My baby graduated from high school!' ' she said the other day. 'I'm not going to say that's good. No, that's just the beginning. I want her to go to college and have a profession. She asked me, 'What age do you think I should have sex?' I said, 'I think about 30.' ' Ms. Whitiker has made no attempt to hide her displeasure over Ishtar's wanting to join the Navy - not only because her daughter could be deployed to the Middle East but also because it does not fit the middle-class ideal Ms. Whitiker now has for her children. She sees Ishtar going into law. She is nudging 14-year-old John, who brings home A's, is a linebacker on the football squad and a squad leader in the Reserve Officers Training Corps, to consider becoming a doctor. John listens and applies himself but says he wants to go into the Army first. Before she became a nurse, the military might have been seen as a step up for her kids. Now she sees it as a detour from what they really should be doing. 'I try to talk to my kids to go into a profession,' she said. 'If you're certified and licensed, nobody can take that away from you.' To Nicholas and Willie, her advice is very different. 'Can't you see your life is going down the drain, and you're the only one who can save it?' she asks to shrugging shoulders. 'You want a quick way out. There is no quick way out. I tried that. It doesn't work.' But she still has hope. 'I'm a late bloomer,' she says, 'and I know it's not too late for them.' Real Riches What has kept Ms. Whitiker going is the knowledge that there are certain things no one can ever take away, that certain pieces of paper really do matter. That is why the letter she was afraid to open, the one announcing she had passed her nursing boards - it's folded up, crinkled in her wallet beneath a picture of her husband and her A.T.M. card. The college diploma that it took her eight years to earn - her husband keeps that in his bedroom drawer, as if it is as much his as hers. But as their second anniversary approached, the balancing act that plays out every day of their lives came down to the more immediate questions of getting by. Will they have a telephone this week or will Ishtar go to the prom? Will Ms. Whitiker be able to cut back her hours at the hospital and spend more time with her family? Can she work days instead of nights? Will she be able to find a home she can afford instead of spending five figures in rent each year? Recently, she took a second job as a visiting nurse, checking in on elderly patients on the South Side during the day. It allows her to have more control over her schedule and work fewer nights at the hospital. The earnings potential is uncertain, and she has no health benefits under this new part-time arrangement, relying instead on her husband's. But a burden has been lifted for now. So here she is on a late spring afternoon in her S.U.V. running errands in the old neighborhood. She has always felt safest with the familiar. She drops off some clothes at the dry cleaners where her sister's former husband's sister works. She buys a duffle bag at a dollar store that hired her aunt to fill in. She checks in on the niece who just had the Caesarean. 'How's the baby?' she asks. 'You know I want to come up and give her some sugar.' Her cellphone rings. 'That's the kids,' she said. She answers immediately, confident that, whatever bills are waiting in the mailbox, she's rich in the one thing that matters. 'Family is like the most important thing in life,' Ms. Whitiker said. 'Without family, I don't even see a purpose.'

Subject: looking for an answer From: poyetas To: All Date Posted: Sun, Jun 12, 2005 at 13:41:02 (EDT) Email Address: Not Provided Message: I constantly find myself debating intelligent, conservative business men on why the current state of affairs in america is a bad one. The response I always get is that anyone with the right work ethic will succeed in america. Anybody that can't make it is because they're lazy. Since I am not American and really have no practical experience, I cannot find evidence to prove them wrong. However I cannot help but feel that something seems to be wrong with their argument. Does anyone have proof to the opposite?

Subject: Ghosts from the past From: Pete Weis To: poyetas Date Posted: Mon, Jun 13, 2005 at 00:55:44 (EDT) Email Address: Not Provided Message: The farmers of the late 20's are the textile, furniture, steel and auto workers of today. The repeal of Glass-Steagall in 1999 has seen investment banking quickly warp Wall Street into a system of funneling small investor savings into the pockets of top corporate executives. Credit cards and interest only mortgages have pushed personal debt-to-GDP to record levels, surpassing the previous record in the early 30's, and GDP hasn't yet dropped significantly. The ghost of Smoot-Hartley looms on the horizon as China refuses to yield. The income gap is occuring now for the exact same reasons it reached these levels the last time in the 1920's. From MSN Encarta Online: The self-centered attitudes of the 1920s seemed to fit nicely with the needs of the economy. Modern industry had the capacity to produce vast quantities of consumer goods, but this created a fundamental problem: Prosperity could continue only if demand was made to grow as rapidly as supply. Accordingly, people had to be persuaded to abandon such traditional values as saving, postponing pleasures and purchases, and buying only what they needed. “The key to economic prosperity,” a General Motors executive declared in 1929, “is the organized creation of dissatisfaction.” Advertising methods that had been developed to build support for World War I were used to persuade people to buy such relatively new products as automobiles and such completely new ones as radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s. But there was an underlying economic problem. Income was distributed very unevenly, and the portion going to the wealthiest Americans grew larger as the decade proceeded. This was due largely to two factors: While businesses showed remarkable gains in productivity during the 1920s, workers got a relatively small share of the wealth this produced. At the same time, huge cuts were made in the top income-tax rates. Between 1923 and 1929, manufacturing output per person-hour increased by 32 percent, but workers’ wages grew by only 8 percent. Corporate profits shot up by 65 percent in the same period, and the government let the wealthy keep more of those profits. The Revenue Act of 1926 cut the taxes of those making $1 million or more by more than two-thirds. As a result of these trends, in 1929 the top 0.1 percent of American families had a total income equal to that of the bottom 42 percent. This meant that many people who were willing to listen to the advertisers and purchase new products did not have enough money to do so. To get around this difficulty, the 1920s produced another innovation—”credit,” an attractive name for consumer debt. People were allowed to “buy now, pay later.” But this only put off the day when consumers accumulated so much debt that they could not keep buying up all the products coming off assembly lines. That day came in 1929. American farmers—who represented one-quarter of the economy—were already in an economic depression during the 1920s, which made it difficult for them to take part in the consumer buying spree. Farmers had expanded their output during World War I, when demand for farm goods was high and production in Europe was cut sharply. But after the war, farmers found themselves competing in an over-supplied international market. Prices fell, and farmers were often unable to sell their products for a profit. International problems also weakened the economy. After World War I the United States became the world’s chief creditor as European countries struggled to pay war debts and reparations. Many American bankers were not ready for this new role. They lent heavily and unwisely to borrowers in Europe, especially Germany, who would have difficulty repaying the loans, particularly if there was a serious economic downturn. These huge debts made the international banking structure extremely unstable by the late 1920s. In addition, the United States maintained high tariffs on goods imported from other countries, at the same time that it was making foreign loans and trying to export products. This combination could not be sustained: If other nations could not sell their goods in the United States, they could not make enough money to buy American products or repay American loans. All major industrial countries pursued similar policies of trying to advance their own interests without regard to the international economic consequences. The rising incomes of the wealthiest Americans fueled rapid growth in the stock market, especially between 1927 and 1929. Soon the prices of stocks were rising far beyond the worth of the shares of the companies they represented. People were willing to pay inflated prices because they believed the stock prices would continue to rise and they could soon sell their stocks at a profit. The widespread belief that anyone could get rich led many less affluent Americans into the market as well. Investors bought millions of shares of stock “on margin,” a risky practice similar to buying products on credit. They paid only a small part of the price and borrowed the rest, gambling that they could sell the stock at a high enough price to repay the loan and make a profit. For a time this was true: In 1928 the price of stock in the Radio Corporation of America (RCA) multiplied by nearly five times. The Dow Jones industrial average—an index that tracks the stock prices of key industrial companies—doubled in value in less than two years. But the stock boom could not last. The great bull market of the late 1920s was a classic example of a speculative “bubble” scheme, so called because it expands until it bursts. In the fall of 1929 confidence that prices would keep rising faltered, then failed. Starting in late October the market plummeted as investors began selling stocks. On October 29, in the worst day of the panic, stocks lost $10 billion to $15 billion in value. By mid-November almost all of the gains of the previous two years had been wiped out, with losses estimated at $30 billion. The stock market crash announced the beginning of the Great Depression, but the deep economic problems of the 1920s had already converged a few months earlier to start the downward spiral. The credit of a large portion of the nation’s consumers had been exhausted, and they were spending much of their current income to pay for past, rather than new, purchases. Unsold inventories had begun to pile up in warehouses during the summer of 1929. The crash affected the economy the way exposure to cold affects the human body, lowering the body’s resistance to infectious agents that are already present. The crash reduced the ability of the economy to fight off the underlying sicknesses of unevenly distributed wealth, agricultural depression, and banking problems.

Subject: Re: looking for an answer From: Terri To: poyetas Date Posted: Sun, Jun 12, 2005 at 15:55:58 (EDT) Email Address: Not Provided Message: Anyone who works really hard anywhere might just be successful, but the question is how likely or unlikely that may be. The question is whether we wish more or fewer barriers for personal well-being, and the proof is in noting how many are successful at caring well for themselves and family.

Subject: Re: looking for an answer From: Paul G. Brown To: Terri Date Posted: Sun, Jun 12, 2005 at 20:43:39 (EDT) Email Address: Not Provided Message: I would spin it a little differently. In order to succeed, you have to work hard. But then, that isn't what made America special during its most dynamic period of economic growth. It did mean that America was a very different place for immigrants from other countries where class distinctions bound individuals to their station in society regardless of their abilities. What made America special was that people who worked hard were likely to do well. The series of NYT reports lays out the current facts and the figures. Income mobility has lessened, and the gap between what the top and bottom quintile earns has widened. Here's a Business Week piece that makes the same point. Two explainations are possible: either people are lazier, or hard work is less likely to be rewarded in the same way it was in the past. If people are lazier, it would follow that they would want to work less, and that they would want higher wages to do so. There is some evidence to support this, but not much. Looking at the charts on page 29 of that report what is striking is that hours worked have been pretty flat across all private sector industries since about 1990. I would argue that long term labor market trends aren't really changing fast enough to account for the changes in income mobility either. Which leaves us with the other idea, as Terri suggests.

Subject: Re: looking for an answer From: Poyetas To: Paul G. Brown Date Posted: Mon, Jun 13, 2005 at 11:54:19 (EDT) Email Address: Not Provided Message: This website is something of a godsend. Thanks for all of the input, its amazing the wealth of information one can share here.

Subject: Re: looking for an answer From: Emma To: Poyetas Date Posted: Mon, Jun 13, 2005 at 12:20:17 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/indexes/2005/06/12/national/class/index.html Here is the link to the series of New York Times articles on class. All the articles, about 15, have been posted on the message board.

Subject: Mr Bubble From: Pete Weis To: All Date Posted: Sun, Jun 12, 2005 at 12:18:33 (EDT) Email Address: Not Provided Message: From NYT's: Editorial Mr. Bubble Published: June 12, 2005 Alan Greenspan keeps saying that it's unclear why home mortgage rates have remained so low. After all, the Federal Reserve chairman has been doing all the things people in his position normally do to push rates up - warning about 'bubbles' in the housing market, assuring the business community that the economy is basically strong and tripling the Fed's overnight lending rate, to 3 percent. Perhaps we can help solve the mystery. Persistently low mortgage rates are symptomatic of an economy that is not doing as well as Mr. Greenspan suggests. Mortgage rates are linked to Treasury bond yields, which are unusually low. And depressed bond yields are generally the market's way of saying that the economic outlook is worrisome. In his Congressional testimony last Thursday, Mr. Greenspan called that notion 'less persuasive' than other explanations, but it looks pretty persuasive to us. By keeping rates so low for so long, the Fed not only helped to inflate housing prices, but also made it easy for homeowners to borrow against those inflated values. The ability to get cheap loans against some, or even all, of one's home equity - in addition to credit cards, auto loans and other forms of borrowing - has increasingly replaced savings from income as the source of consumers' spending money. At the same time, tax cuts have sent the federal budget deep into the red, setting the stage for slower growth. Already, the combination of paltry personal savings and government deficits has driven the national savings rate to near zero. That means there is virtually no domestic pool of money from which to make investments and pay obligations, so business and government must borrow from abroad: an astounding sum approaching $1 trillion is projected for 2005 alone. That puts the economy at risk, in part, because lending by foreigners currently puts downward pressure on United States interest rates, further inflating the bubble. The challenge now is how to deflate the housing bubble slowly without a dangerous collapse. It is hard to see how the Fed could raise its own rates enough to deflate the housing bubble without painfully squeezing heavily indebted Americans. And since bubbles are fun while they last, Congress and the administration are unlikely to change their profligate ways as long as the bubble is expanding. That 'what, me worry?' behavior increases the chances that the bubble's deflation, when it comes, will be severe, because a government already in hock cannot easily turn on the money spigot to ease a downturn. So it's hard to imagine how the housing bubble might deflate in a way that spared millions of Americans from serious financial distress. Still, a big step in the right direction would be for Congress to revert to disciplined budgeting in which tax cuts and spending increases are fully paid for, even if that means defying President Bush. Meanwhile, it is hard to take Mr. Greenspan's reassuring talk about the economy seriously when there's so much evidence to the contrary.

Subject: Re: Mr Bubble From: Terri To: Pete Weis Date Posted: Sun, Jun 12, 2005 at 16:13:22 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/opinion/12sun2.html Here is the link. Still, I do not think monetary policy has been a problem this last decade. The problem now is fiscal policy, and I surely do not wish to have higher or find a need for interest rates.

Subject: Anthony Appiah: The Great Experiment From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 09:10:01 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/books/chapters/0612-1st-appiah.html?pagewanted=all 'The Ethics of Identity' By KWAME ANTHONY APPIAH THE GREAT EXPERIMENT Depending upon how you look at it, John Stuart Mill's celebrated education was either a case study in individuality or a vigorous attempt to erase it. He himself seems to have been unable to decide which. He called his education 'the experiment,' and the account he provided in his Autobiography ensured that it would become the stuff of legend. He was learning Greek at three, and by the time he was twelve, he had read the whole of Herodotus, a fair amount of Xenophon, Virgil's Eclogues and the first six books of the Aeneid, most of Horace, and major works by Sophocles, Euripides, Polybius, Plato, and Aristotle, among others. After studying Pope's Homer, he set about composing a 'continuation of the Iliad,' at first on whim and then on command. He had also made serious forays into geometry, algebra, and differential calculus. The young Mill was kept away as much as possible from the corrupting influence of other boys ('the contagion,' as he put it, 'of vulgar modes of thought and feeling'); and so, in his fourteenth year, when John Stuart was about to meet some new people beyond the range of his father's supervision, James Mill took his son for a walk in Hyde Park to prepare him for what he might expect to encounter. If he found that he was ahead of other children, he must attribute it not to his own superiority, but to the particular rigors of his intellectual upbringing: 'it was no matter of praise to me, if I knew more than those who had not had a similar advantage, but the deepest disgrace to me if I did not.' This was the first inkling he had that he was precocious, and Mill had every reason to be astonished. 'If I thought anything about myself, it was that I was rather backward in my studies,' he recounts, 'since I always found myself so, in comparison with what my father expected from me.' But James Mill was a man with a mission, and it was his eldest son's appointed role to carry forward that mission. James, as Jeremy Bentham's foremost disciple, was molding yet another disciple-someone who, trained in accordance with Benthamite principles, would extend and promulgate the grand raisonneur's creed for a new era. He was, so to speak, the samurai's son. In the event, self-development was to be a central theme of Mill's thought and, indeed, a main element of his complaint against his intellectual patrimony. When he was twenty-four, he wrote to his friend John Sterling about the loneliness that had come to overwhelm him: 'There is now no human being (with whom I can associate on terms of equality) who acknowledges a common object with me, or with whom I can cooperate even in any practical undertaking, without feeling that I am only using a man, whose purposes are different, as an instrument for the furtherance of my own.' And his sensitivity about using another in this way surely flows from his sense that he himself had been thus used-that he had been conscripted into a master plan that was not his own. Mill memorably wrote about the great crisis in his life-a sort of midlife crisis, which, as befitted his precocity, visited when he was twenty-and the spiral of anomie into which he descended, during the winter of 1826. In this frame of mind it occurred to me to put the question directly to myself: 'Suppose that all your objects in life were realized; that all the changes in institution and opinions which you are looking forward to, could be completely effected at this very instant: would this be a great joy and happiness to you?' And an irrepressible self-consciousness distinctly answered, 'No!' At this my heart sank within me: the whole foundation on which my life was constructed fell down. He pulled out of it, stepped blinking into the light; but for a long while thereafter found himself dazed and adrift. Intent on deprogramming himself from the cult of Bentham, he plunged into an uncritical eclecticism, unwilling to exercise his perhaps overdeveloped faculties of discrimination. He was determinedly, even perversely, receptive to the arguments of those he would once have considered the embodiment of Error, whether the breathless utopianism of the Saint-Simonians or the murky Teutonic mysticisms of Coleridge and Carlyle. When intellectual direction returned to his life, it was through the agency of his new friend and soul mate, Mrs. Harriet Hardy Taylor. 'My great readiness and eagerness to learn from everybody, and to make room in my opinions for every new acquisition by adjusting the old and the new to one another, might, but for her steadying influence, have seduced me into modifying my early opinions too much,' he would write. It was a relationship that was greeted with considerable censure, not least by James Mill. So there is some irony that it was she, more than anyone, who seems to have returned the rudderless craft he had become to the tenets of the patrimonial cause. His love for her was at once rebellion and restoration-and the beginning of an intellectual partnership that spanned almost three decades. Only when Mrs. Taylor was widowed, in 1851, could she and Mill live together as man and wife, and in the mid-1850s their collaboration bore its greatest fruit: On Liberty, surely the most widely read work of political philosophy in the English language. I retell this familiar story because so many of the themes that preoccupied Mill's social and political thought wend their way through his life. It is a rare convenience. Buridan's ass did not itself tap out any contributions to decision theory before succumbing to starvation. Paul Gauguin, the emblem and avatar of Bernard Williams's famous analysis of 'moral luck,' was not himself a moral philosopher. Yet Mill's concern with self-development and experimentation was a matter of both philosophical inquiry and personal experience. On Liberty is an impasto of influences-ranging from German romanticism, by way of Wilhelm von Humboldt and Coleridge, to the sturdy, each-person-counts-for-one equality and tolerance that were Mill's intellectual birthright. But my interest in Mill's work is essentially and tendentiously presentist, for it adumbrates the main themes of this book, as it does so many topics in liberal theory. Consider his emphasis on the importance of diversity; his recognition of the irreducibly plural nature of human values; his insistence that the state has a role in promoting human flourishing, broadly construed; his effort to elaborate a notion of well-being that was at once individualist and (in ways that are sometimes overlooked) profoundly social. Finally, his robust ideal of individuality mobilizes, as we'll see, the critical notions of autonomy and identity. My focus on Mill isn't by way of argumentum ad verecundiam; I don't suppose (nor did he) that his opinions represented the last word. But none before him-and, I am inclined to add, none since-charted out the terrain as clearly and as carefully as he did. We may cultivate a different garden, but we do so on soil that he fenced in and terraced. LIBERTY AND INDIVIDUALITY 'If it were felt that the free development of individuality is one of the leading essentials of well-being; that it is not only a coordinate element with all that is designated by the terms civilization, instruction, education, culture, but is itself a necessary part and condition of all those things; there would be no danger that liberty should be undervalued, and the adjustment of the boundaries between it and social control would present no extraordinary difficulty.' So Mill wrote in the book's celebrated third chapter, 'On Individuality, as One of the Elements of Wellbeing,' and it is a powerful proposal. For it seems to suggest that individuality could be taken as prior even to the book's titular subject, liberty itself. Our capacity to use all our faculties in our individual ways was, at least in part, what made liberty valuable to us. In Mill's accounting, individuality doesn't merely conduce to, it is constitutive of, the social good. And he returns to the point, lest anyone miss it: 'Having said that Individuality is the same thing with development, and that it is only the cultivation of individuality which produces, or can produce, well-developed human beings, I might here close the argument: for what more or better can be said of any condition of human affairs, than that it brings human beings themselves nearer to the best thing they can be? or what worse can be said of any obstruction to good, than that it prevents this?' To be sure, Mill does offer conventionally consequentialist arguments for liberty-arguments that liberty is likely to have good effects. His most famous arguments for freedom of expression assume that we will find the truth more often and more easily if we allow our opinions to be tested in public debate, in what we all now call the marketplace of ideas. But he argued with especial fervor that the cultivation of one's individuality is itself a part of well-being, something good in se, and here liberty is not a means to an end but part of the end. For individuality means, among other things, choosing for myself instead of merely being shaped by the constraint of political or social sanction. It was part of Mill's view, in other words, that freedom mattered not just because it enabled other things-such as the discovery of truth-but also because without it people could not develop the individuality that is an essential element of human good. As he writes, He who lets the world, or his own portion of it, choose his plan of life for him, has no need for any other faculty than the ape-like one of imitation. He who chooses his plan for himself, employs all his faculties. He must use observation to see, reasoning and judgment to foresee, activity to gather materials for decision, discrimination to decide, and when he has decided, firmness and self-control to hold to his deliberate decision. And these qualities he requires and exercises exactly in proportion as the part of his conduct which he determines according to his own judgment and feelings is a large one. It is possible that he might be guided in some good path, and kept out of harm's way, without any of these things. But what will be his comparative worth as a human being? It really is of importance, not only what men do, but also what manner of men they are that do it. Individuality is not so much a state to be achieved as a mode of life to be pursued. Mill says that it is important that one choose one's own plan of life, and liberty consists, at least in part, in providing the conditions under which a choice among acceptable options is possible. But one must choose one's own plan of life not because one will necessarily make the wisest choices; indeed, one might make poor choices. What matters most about a plan of life (Mill's insistence on the point is especially plangent coming from the subject of James and Jeremy's great experiment) is simply that it be chosen by the person whose life it is: 'If a person possesses any tolerable amount of common sense and experience, his own mode of laying out his existence is best, not because it is the best in itself, but because it is his own mode.' Not only is exercising one's autonomy valuable in itself, but such exercise leads to self-development, to the cultivation of one's faculties of observation, reason, and judgment. Developing the capacity for autonomy is necessary for human well-being, which is why it matters not just what people choose but 'what manner of men they are that do it.' So Mill invokes 'individuality' to refer both to the precondition and to the result of such deliberative choice making. The account of individuality that Mill offers in chapter 3 of On Liberty does not distinguish consistently between the idea that it is good to be different from other people and the idea that it is good to be, in some measure, self-created, to be someone who 'chooses his plan for himself.' Still, I think it is best to read Mill as finding inherent value not in diversity-being different-but in the enterprise of self-creation. For I might choose a plan of life that was, as it happened, very like other people's and still not be merely aping them, following them blindly as a model. I wouldn't, then, be contributing to diversity (so, in one sense, I wouldn't be very individual), but I would still be constructing my own-in another sense, individual-plan of life. On Liberty defends freedom because only free people can take full command of their own lives. . . .

Subject: 'The Ethics of Identity' From: Emma To: All Date Posted: Sun, Jun 12, 2005 at 07:57:45 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/12/books/review/12FREEDMA.html?pagewanted=all 'The Ethics of Identity': A Rooted Cosmopolitan By JONATHAN FREEDMAN These may be conservative times, but liberal political theory is poised to make a comeback. And not just the chilly sort that flickers in the hearts of libertarians, but a variety that seeks to revive the traditions of tolerance, pluralism and respect for both individual and group rights that animated liberal thought for the greater part of the last two centuries. Such, at least, is the promise offered by the Princeton philosopher Kwame Anthony Appiah's suave and discerning ''Ethics of Identity.'' Appiah seeks to reorient political philosophy by returning to the example set by John Stuart Mill in ''On Liberty.'' Having in his youth rebelled against his father's dry utilitarian philosophy and solaced himself with Romantic poetry; and having loved, married and lost a brilliant woman, Harriet Taylor, Mill constructed a passionately precise argument for the rights of both individuals and minority groups in the face of ''the tyranny of the majority.'' Appiah wants to graft the branch of Millian individualism back onto the tree of political philosophy at a moment when possibilities of personhood unknown to Mill have entered public discussion -- the openly gay man or lesbian and the postcolonial subject, to name a few. Affirmative action, gay marriage, the human rights movement, even the teaching of evolution in the public schools: just about all the hot-button controversies of our moment turn on the scope and limits of individual and group rights Mill attempted to sort out more than a century ago. No wonder, then, that Mill has been claimed by both the left and the right: the N.A.A.C.P. and the Young Americans for Freedom can each trace their lineage back to ''On Liberty.'' But Mill remains a shrewd choice: pursuing his example enables Appiah to jettison a good deal of the baggage that has been piled onto the liberal project in the last hundred years, to return to first principles. Appiah uses Mill -- who, over the course of the book, becomes more its touchstone, less its subject -- to focus ethical attention on the notion of identity. This notion, he suggests, posits both a self with the freedom to create itself and a self shaped in relation to collective identities. Indeed, for Appiah these two ways of viewing the self are inseparable. I am who I am not only because I am engaged in the lifelong task of becoming the person I want to be but also because I can identify myself with groups of people engaged in similar ''life-projects'': secular Jews, people with kids, people raised in Iowa City, to mention three personal instances. Appiah stresses that the life-project I am carrying out, the story of my self that I'm struggling to tell, can't be separated from the affiliations in which that project was formed and to which it refers. The very pursuit of individualism demands the cultivation of collective identities, and the often conflicting ethical demands of each represent the poles between which Appiah's arguments swing. Although far from a firebrand, Appiah doesn't shy away from controversy. Thus, while his sympathies are clearly with social out-groups (how could an admirer of Mill, that visionary defender of women's rights, not be so inclined?) he is suspicious of many group-rights arguments. He maintains that the appeal to ''culture'' as a marker of group identity fails the test of coherence, falling into the very race-based logic it was designed to contest. He questions the expansive rhetoric, if not the ideal, of universal human rights -- its ''mission creep.'' Identity politics turn him off. Similarly, Appiah recognizes the importance, for the sake of solidarity in a hostile world, of collective identities based on race or sexual preference, but is uncomfortable with the notion that black and white or gay and straight will always and everywhere need to be parsed as Black and White or Gay and Straight. Above all, he emphasizes the category of the individual, no matter how socially enmeshed that notion may be. ''The final responsibility for each life,'' he resoundingly concludes one chapter, ''is always the responsibility of the person whose life it is.'' At the same time, Appiah is no friend of rugged individualism, American-style. He questions the siren call of autonomy, and defines a clear role for society in shaping values and educating the young. He insists that very process of having an identity involves ''soul making,'' the nurturance of the possibility of ''ethical success''; and he is clear that the state has not just the right but the obligation to undertake this task (though with the equal obligation to do so with exquisite sensitivity). For all of Appiah's philosophic precision, his writing often resembles not Mill's but that of Oscar Wilde -- to my mind, the finest prose stylist of the 19th century, and an underappreciated thinker. Like Wilde's, Appiah's prose is marked by a tendency to the epigrammatic, an appreciation of the recondite (the Ottoman Empire's semi-autonomous millet system of local governance figures as one model for multiculturalism) and a yen for the paradoxical. At times, Appiah's erudition can seem overbearing; a faint whiff of the Senior Common Room is not unknown in these pages. But -- also as in Wilde -- this is balanced by an unexpectedly earnest desire to bring together categories and qualities that seem at odds with one another. Nowhere is this impulse more eloquently displayed than in the final chapter, where Appiah argues for a ''rooted cosmopolitanism.'' The term seems oxymoronic: to have roots is to be embedded in a specific history, nation or people; to be a cosmopolitan is to declare oneself a citizen of the world. For Appiah, however, these two are inseparable. Local histories, he reminds us, have themselves been shaped by the movements of peoples and their communal practices (let's not call them cultures) as old as human history itself. And -- the point has special salience after 9/11 -- one can pledge allegiance to one's country and still conceive of oneself in terms of global identities or universal values. Appiah repeatedly invokes the example of his father, Joe Appiah, a Ghanaian and African nationalist who believed with equal fervor in internationalism. Kwame Anthony Appiah not only allows for but celebrates the contentiousness of the conversations that are to take place in a world where multiple affiliations are increasingly becoming the norm. Yet even as he does so, he remains true to the more complex forms of affinity. The son speaks along with the father who ''would have his children be cosmopolitan but -- in both senses -- partial cosmopolitans.'' Appiah asks us to remember, as we struggle to negotiate the ''global village'' of the contemporary world, that without a deeply felt commitment to the local there can be no genuine sense of obligation to the universal -- and vice versa. Appiah's ideal of rooted or partial cosmopolitanism is undeniably attractive, but its viability remains questionable. Whether the multiple demands of the rooted cosmopolitan can be so smoothly negotiated by those of us lacking Appiah's gifts is debatable. And the ideal it announces seems more than a few steps removed from the nasty, brutish and short lives in which too many people on the globe are themselves rooted. But to give Appiah his due, the superb rhetorical performance of this book offers the most persuasive evidence for his case. Indeed, his extraordinary scope of reference -- ranging from the proceedings of the Pueblo tribal council to Tolstoy's ''Anna Karenina'' to the experience of Appiah's multicontinental family -- not only exemplifies rooted cosmopolitanism, it performs it. To read ''The Ethics of Identity'' is to enter into the world it describes; it is also to imagine what it might be like to live in so urbane and expansive a place. And, as Appiah reminds us, speaking of nationalism but also for his ethical inquiry itself, what is imagined ''doesn't mean unreal: nothing could be more powerful than the human imagination'' -- or the arguments Appiah has constructed with his own. Jonathan Freedman is a professor of English and American studies at the University of Michigan.

Subject: On 'The Ethics of Identity' From: Emma To: Emma Date Posted: Sun, Jun 12, 2005 at 08:26:40 (EDT) Email Address: Not Provided Message: Dear Kwame Anthony Appiah has written a remarkably important philosophy, a sociology speaking from John Stuart Mill to John Rawls on an 'Ethics of Identity.' The review alone is of remarkable importance.

Subject: Fighting Malaria In Africa? From: Emma To: All Date Posted: Sat, Jun 11, 2005 at 15:33:00 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/11/science/11malaria.html?pagewanted=all A Program to Fight Malaria in Africa Draws Questions By DONALD G. McNEIL Jr. Though its budget for fighting malaria has risen since 1998 to $90 million from $14 million, the United States' foreign aid agency is spending 95 percent of the money on consultants and less than 5 percent on mosquito nets, drugs and insecticide spraying to fight the disease. The spending priorities have touched off an intense debate between the agency, the United States Agency for International Development and its critics, who include two of the Senate's most conservative Republicans. The agency says it has decided to concentrate on offering technical advice while others buy goods. But critics accuse it of wasting its growing budget. 'We are spending most of our money on consultants and on meetings and not on getting actual care out in the field,' said Senator Sam Brownback, a Kansas Republican who has introduced a bill to force the agency to spend half of its malaria budget on treatment. The critics also accuse the agency of concealing how it spends antimalaria money. The list of contractors on its Web site has not been updated for four years, and Mr. Brownback said the agency gave him 'vague descriptions and math that doesn't add up.' He is demanding an audit by the Government Accountability Office. Another senator, Tom Coburn, an Oklahoma Republican, has publicly suggested that the agency's malaria budget be given to the Global Fund to Fight AIDS, Tuberculosis and Malaria, the Geneva-based fund to which the United States has donated more than $1 billion. Michael Miller, the aid agency's deputy assistant administrator for global health, could not give a detailed account of its malaria spending, but he told a Senate subcommittee on May 12 that much of the agency's technical advice had been helping foreign countries qualify for grants from the Global Fund. Dr. Richard Feachem, the fund's executive director, agreed that such technical advice was often useful because the group has no field officers in the 130 countries where it makes grants. But he declined to comment on how much the Agency for International Development needed to spend providing it. Mr. Miller said many poor countries know little about fighting malaria. Judging his agency by the goods it buys, he said, 'is like judging an army based on the number of bullets it has - you have to have skills and training and know the battlefield.' The agency's spending patterns were brought to the senators' attention by Roger Bate and Benjamin Schwab, experts on third-world health at the American Enterprise Institute, and Amir Attaran, a professor of law and world health at the University of Ottawa. Giving advice without aid amounts to 'back-seat driving,' Dr. Attaran said in an interview, contrasting the spending patterns on malaria to those on famine aid, for which the United States ships many tons of food. Some of the agency's past advice has drawn sharp criticism from other malaria experts. Three years ago, as many African nations and global health charities were asking for money for a new malaria drug, artemisinin, the agency opposed them, saying cheaper, older drugs were still useful. Last year, after the Global Fund made artemisinin the backbone of its malaria programs, the aid agency endorsed it. In his testimony before the subcommittee, Dr. Attaran cited an example of what he considered wastefulness: NetMark, a $65 million, seven-year program for 'social marketing' of mosquito nets in Africa. Instead of giving away goods that prevent disease, like mosquito nets, condoms or rehydrating salts, social marketers buy advertising, conduct public education campaigns and create brands, hoping to promote the goods at low prices in the commercial marketplace. The social marketers maintain that poor people value goods more when they pay for them instead of getting them free, and that small entrepreneurs can benefit from the sales. Critics say this means that aid goes only to the 'richest of the poor' in cities that advertising reaches, not to rural villagers who bear the greatest malaria burden. NetMark is overseen by a regular contractor for the Agency for International Development, the Academy for Educational Development, a nonprofit corporation with an annual income of $225 million and 1,200 employees, most of them in Washington. Mr. Miller said the NetMark program accounted for roughly 10 percent of his agency's spending for malaria, but is 'not our only net program.' Mary Maguire, a spokeswoman for the academy, said 15 million people in four African countries were sleeping under nets because of NetMark campaigns, though she acknowledged that 5.8 million of those nets were supplied by 'NetMark partners,' several textile and chemical companies. 'We don't sell nets,' she said. 'We have promotional campaigns to educate people about mosquitoes and brand malaria control. We build networks.' David McGuire, the NetMark project manager, said that the program had spent less than $30 million of the $65 million since 1999, and that 50 percent of the money was spent in Africa on advertising, local workers and matching grants to net wholesalers. Mr. McGuire said he had no proof that malaria deaths had gone down anywhere NetMark operated 'because we have no funding to do epidemiological research.' But the project surveys households to see how many use bed nets and which brands they recognize, he said, 'and when we got into this in 1999, there were zero commercial insecticide-treated nets on the market in Africa, and now there are at least 15 brands in the countries where we work, and even pirate brands from China.' 'None of that would have happened without Usaid,' he added. The International Red Cross, another major donor in poor countries, takes a different approach: it gives free nets directly to new and expectant mothers, because infants and pregnant women have the highest risk of dying of malaria. But Mr. McGuire said 'free' nets often end up being sold by government health workers or channeled to better-off families with political connections. Also, he said, giveaways bankrupt small shop owners that sell nets. 'The winds change and funding comes and goes,' he added. 'We wanted to make something that lasts longer than the donations.' Dr. Attaran said he was 'a little shocked' to learn that NetMark did not give nets directly to people who need them. 'Do we really want to spend $65 million on advertising?' he said, suggesting that he thought it would make more sense to appeal to multinational companies 'like Coca-Cola, who do a lot of advertising in Africa,' to 'give it to us pro bono.' Intensive net giveaway programs are safer than social marketing, he said. Studies show, he said, that when only a few beds in a village have insecticide-treated nets, the repelled mosquitoes simply bite other villagers.

Subject: Poor Little Rich Country From: Emma To: All Date Posted: Sat, Jun 11, 2005 at 14:40:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/11/opinion/11powers.html Poor Little Rich Country By WILLIAM POWERS Samaipata, Bolivia MY taxi is stuck behind Indian roadblocks. Three hundred farmers, many of them Quechua in colorful ponchos, just took control of the only highway near this small town in central Bolivia, right below a jaguar-shaped Inca temple. I can escape neither east to the sweltering boomtown of Santa Cruz nor west toward the windswept Andean capital, La Paz, where tens of thousands of Aymara Indians are on the march. I get through, but only after abandoning my taxi and making my way on foot. For three weeks, the country has been paralyzed by blockades and protests; a few days after my experience at the roadblock, the uprising forced the president, Carlos Mesa, to resign. The protesters want to nationalize Bolivia's vast natural gas reserves, South America's second largest; BP has quintupled its estimate of Bolivia's proven reserves to 29 trillion cubic feet, worth a whopping $250 billion. The Indians are in a showdown with the International Monetary Fund and companies like British Gas, Repsol of Spain and Brazil's Petrobras that have already invested billions of dollars in exploration and extraction. Many are calling the remarkable past five years in Bolivia a war against globalization. In a limited way, they're right. McDonald's closed its outlets here, unable to lure Bolivians away from their saice and salteńas. Demonstrators in bowler hats forced out Bechtel and Suez water privatizers; blocked an income tax urged by the mighty I.M.F.; and ousted President Mesa's predecessor, Gonzalo Sánchez de Lozado, who spoke Spanish with a heavy American accent, over his plan to export Bolivian gas to California through Chile. But this is not about walling off a Wal-Mart-free utopia; it's more of a struggle over who has power here. An American Indian majority is standing up to the light-skinned, European elite and its corruption-fueled relationships with the world. You might say that Bolivia has colonized itself. When the Spanish Empire closed shop here in 1825, the Europeans who stayed on didn't seem to notice - and still don't. Even within Latin America, the region with the greatest wealth inequality in the world according to the World Bank, Bolivia is considered one of the most corrupt, per Transparency International's annual index of political dishonesty. It's also divided along a razor-sharp racial edge. Highland and Amazon peoples compose almost two-thirds of Bolivia's population, the highest proportion of Indians in the hemisphere. (It's as if the United States had 160 million Apaches, Hopis and Iroquois.) And while native people are no longer forcibly sprayed with DDT for bugs and are today allowed into town squares, Bolivian apartheid - a 'pigmentocracy of power' - continues. I've been here for three years as an aid official, and exclusion is part of life. Indians are barred from swimming pools at some clubs, for example; they are still 'peones' on eastern haciendas little touched by land reform. In La Paz, I was walking through the fashionable South Zone beside an Aymaran woman, Fátima, when another Bolivian viciously pushed her off the sidewalk. She wasn't shocked by the sentiment, but she was amazed that the man had been willing to touch her. Meanwhile, Bolivia's energy-rich eastern states are agitating for 'autonomy' in a thinly disguised effort to deprive the poor Indian west of oil and gas revenues. What is to be done to prevent a collapse in Bolivia? The answer, of course, must begin with Bolivians themselves. Elites here must recognize that the country's dark-skinned social movements are stronger than any political party or president and will not go away. Any lasting solution must shift real power to Bolivia's poor majority. We'll see a lot of political maneuvering in the coming days. Some of the roadblocks have been dismantled in the wake of Mr. Mesa's ouster and the installation of a new interim president, Eduardo Rodríguez, the former head of the Supreme Court. But sustained stability depends on movement toward more equality, not just cosmetic changes, starting with speedy national elections and a constituent assembly with the full power to rewrite the Constitution and decide who benefits from Bolivia's petroleum. Solving the crisis, however, depends not just on ending exclusion, but also on how the rest of the world relates to Bolivia, South America's poorest country, particularly through economic policy. The United States and the international community have a vital role. In a speech this week, Secretary of State Condoleezza Rice was right to acknowledge Bolivia's democratic deficit. But beyond lip service we must accept that democracy means, well, letting people decide what to do with their own resources. Existing contracts with foreign oil companies were signed by corrupt Bolivian leaders, without the approval of Congress. Even if nationalizing petroleum may be a growth-zapping bad idea, we need to let Bolivians themselves decide. Moreover, our own ideas for this region are not always so fabulous. Bolivia was the testing ground for the I.M.F.'s 'shock therapy' liberalization in 1985. This stringent recipe has made millions for oilmen and industrial soy farmers here (neither sector creates much employment) but has not reduced inequality; 20 years later, Bolivia's income levels are stagnant or worse, and half the population lives on less than $2 a day. BESIDES taking a respectful hands off, the world should contribute one vital thing toward a more democratic society that embraces Indians: debt relief to the reforming government. Bolivia's debt load has risen to 82 percent of gross domestic product, sucking up a mind-boggling 40 percent of fiscal expenditures. This is a recipe for more poverty and turmoil. Meanwhile, the Indians, distrusting Mr. Rodríguez's promise to call elections and talk to proponents of nationalization, are keeping some of the roadblocks in place, a tactic that costs millions of dollars in lost commerce, hurting the Indians themselves most of all. But as one Quechua told me as he crossed his arms in front of trucks here in Samaipata, vaguely evoking Tiananmen Square: 'Our cultures have been blocked for 500 years. This is our only voice.'

Subject: Tax Shelter Clients From: Emma To: All Date Posted: Sat, Jun 11, 2005 at 09:47:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/11/business/11shelter.html?pagewanted=all Court Case Gives Rare Look at Tax Shelter Clients By LYNNLEY BROWNING Promoters of tax shelters zealously guard the names of their wealthy clients. But in mounting an unusual court challenge against an Internal Revenue Service ruling that branded a certain tax shelter abusive and illegal, a promoter of the shelter has had to provide a rare glimpse of the investors who bought into it. The list of those investors, disclosed in filings in federal court in San Francisco, reads like a who's who of rich Americans, including Edward S. Lampert, the hedge fund billionaire and chairman of Sears Holdings; Paul and Maurice Marciano, the founders and co-chairmen of the Guess clothing company; Gary C. Wendt, the former General Electric and Conseco executive; and Bill Simon Jr., who ran for governor of California in 2002. The investors are clients of Presidio, a firm that sold the tax shelters to allow investors to shield billions of dollars in income and that has gone to court to defend those shelters. Presidio, which worked with the accounting firm KPMG and which maintains that the tax shelter is legal, is seeking to force the I.R.S. to disclose the internal deliberations and legal reasoning behind its decision to ban the tax shelter. The I.R.S. is normally prohibited from identifying individual taxpayers, unless it sues them in federal court. But the judge in this case, Vaughn R. Walker, required Presidio to identify those who bought tax shelters from it. Yesterday, Judge Walker denied Presidio's motion to depose I.R.S. officials, saying the request was not properly written, but he said the firm could refile its request, which it said it intended to do. The I.R.S. and the Justice Department oppose Presidio's efforts, fearing that disclosure could provide ammunition to tax shelter promoters, as well as jeopardize major criminal investigations into the promoters, including KPMG. The case will be watched closely because it could affect the campaign the I.R.S. has been waging against what it calls abusive tax shelters. The I.R.S. has successfully forced law firms and others to disclose to it - though not publicly - the names of the wealthy investors who bought a variety of abusive shelters. The aggressive moves by the I.R.S. have enabled it to collect billions of dollars in back taxes and penalties from those who used them. According to calculations from other numbers in the court documents, Presidio arranged 69 partnerships for its wealthy clients, which shielded income totaling as much as $2.4 billion from taxes. The tax shelter in question is known informally as Son of Boss, or sales option bond strategy. It uses complex partnership structures to produce artificial losses to offset capital gains. The Justice Department, in court filings, calls these tax shelters 'a sham.' The I.R.S., which has never considered the shelter valid for deductions, declared it illegal in September 2000. The agency said yesterday that more than 1,200 investors in the shelters had come forward under an unusual settlement offer and paid more than $3.7 billion in back taxes, interest and penalties. Presidio, a financial services and advisory firm based mainly in San Francisco and Houston, has been under scrutiny in the government's clampdown on abusive shelters. It is being investigated by a federal grand jury in Manhattan, which is also looking at the possible role of KPMG in tax shelter abuses. Both KPMG and the law firm now known as Sidley Austin Brown & Wood provided legal opinions to investors blessing the tax shelters. Presidio has said that it is cooperating with other government investigations of its tax shelter work. It is a defendant, along with KPMG and several prominent law firms, in at least a dozen civil lawsuits filed by disgruntled tax shelter investors. None of those challenges have stopped Presidio from testing how the tax code's ambiguities and complexity stand up in a federal court. It filed more than a dozen lawsuits against the I.R.S. in October and in March after the agency told it that its role in 1999 in creating, setting up and selling these shelters to dozens of investors had put it afoul of the tax code. Steven Bauer, a lawyer for Presidio, said Thursday, 'We're asking a court of law to rule whether the tax results were appropriate under the law as it existed at the time. ' He asserted that the shelters sold by Presidio were different from the Son of Boss shelters, in that the Presidio shelter, known as blips, 'has economic substance' regarding the foreign currency bets that the firm made through Deutsche Bank and that produced losses for investors. The I.R.S., however, considers the two types of tax shelters essentially the same. The I.R.S. declined yesterday to comment on specific litigation, but said that an additional 700 investors in Son of Boss shelters chose not to settle with the agency. The I.R.S. said that the 1,200 who settled and the 700 who did not represented all known investors in Son of Boss shelters. Barbara M. Flom, a tax lawyer with the firm of Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz in Chicago, called Presidio's lawsuit 'an unprecedented attack.' She said she thought it was unlikely to succeed in court. Through the Justice Department, the I.R.S. demanded that Presidio pay more than $2.3 million in taxes it owed on its minuscule stakes in partnerships set up to help clients avoid taxes. Presidio paid a fraction of that, then sued the I.R.S., asserting that the shelters were in fact valid for tax deductions. Other big-name investors who bought the tax shelters through Presidio include Lodwrick Cook, a founder of Global Crossing; Joseph P. Nacchio, the former chief executive of Qwest Communications International; David Saperstein of Los Angeles, a prominent investor in the Westwood One radio network; and J. Paul Reddam, the founder of Ditech, a mortgage lender with billboards up and down the East Coast. Presidio originally listed Philip F. Anschutz, the founder of Qwest Communications, as an investor in the shelter, but yesterday filed a legal document saying that he was not an investor. None of the individual investors are plaintiffs in the Presidio complaints. Two Presidio units, Presidio Growth and Presidio Resources, as well as the investment entities set up by Presidio for each investor, are suing the government. Some of the investors may not even know that Presidio has disclosed their names. Still, at least 50 of the investors named in the Presidio list participated in the I.R.S.'s settlement program, according to court papers, although the papers do not detail who did so and who instead chose to test the government's resolve. The I.R.S. in part defines an abusive tax shelter as any transaction whose 'significant purpose' is avoidance of federal income tax. While it has intensified efforts to root out promoters of questionable tax shelters and aggressively go after the investors in them, it has also suffered some legal defeats in corporate tax shelter cases, like those against Black & Decker and General Electric. The highly complex world of tax shelters is full of arcane economic and legal reasoning that is difficult to analyze. Most of the investors named in the Presidio case did not return calls for comment. Mr. Reddam and Mr. Nacchio could not be located for comment. Mr. Simon, asked about the case, replied, 'Honestly, I don't know what you're talking about.'

Subject: Pension-Shortfall Winners and Losers From: Emma To: All Date Posted: Sat, Jun 11, 2005 at 09:43:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/11/business/11pension.html Pension-Shortfall Study Finds Winners and Losers By MARY WILLIAMS WALSH If the Bush administration's proposal to shore up the pension system were already in place, some large companies would have to double or triple the amounts they are putting into their pension funds this year but other companies would not have to contribute anything, a new analysis of corporate pension data found. The study is coming out as the debate about pension fund changes in general and the administration's approach in particular is heating up. Business groups have been warning that the administration's plan would put undue pressure on companies that offer pensions, forcing some to divert needed cash from their business operations and prompting others to stop offering pensions. Members of Congress began to discuss a possible pension overhaul this week. Policy makers say the pension system needs to be repaired to prevent more big pension failures like the $10 billion one at United Airlines and an eventual taxpayer bailout of the Pension Benefit Guaranty Corporation. But some companies and labor unions are concerned about remedies that would themselves be harmful. The study, by David Zion of Credit Suisse First Boston who has made a specialty of analyzing the pension data that companies disclose in their annual financial statements, found that some companies would, indeed, be hard-pressed if the administration's proposal were already law. But he also found that many others would not feel a thing. Companies that would have to more than double their expected pension contributions this year include General Motors, Delta Air Lines, Xerox, Cigna and I.B.M., according to Mr. Zion's analysis. Representatives of some of the companies, including G.M. and Xerox, questioned the study's validity, saying that their pension funds were fully funded according to the current rules. A Delta spokeswoman said the study reinforced Delta's position that the airline would soon be in serious financial trouble if it did not get some relief from its pension obligations. But another sizable group of companies would owe nothing to their pension plans for 2005, even though they have told investors that they intend to put hundreds of millions of dollars into their plans this year. Those companies will get a tax deduction for the contributions. They include Verizon Communications, which has said it will contribute $870 million this year; United Parcel Service, which said it would contribute $730 million; Merck, which said it would contribute $415 million; and General Electric, which said it would contribute $340 million. Pension numbers have come under scrutiny as policy makers cope with the record-size failure of United Airlines' pension plans and the possibility that it could set off a chain reaction in the airline industry, eventually swamping the pension guarantor. Government officials reviewing United's plans have noted that the airline performed calculations - all in compliance with the law - that made its pension plans look robust when their true economic condition was worsening rapidly. On the basis of its measurements, United did not make any cash contributions to the plans for several years. That, too, was legal, despite a requirement that companies set aside enough money to pay all the pensions they promise. Since the federal pension rules permit all companies to do the same type of calculations United did, there are fears that many companies may have weak pension plans. The true condition of the plans would not be apparent because the companies are generating enough cash to pay all their immediate obligations. Only if they declared bankruptcy, as United has, would the hidden insolvencies become apparent. Mr. Zion set out to learn how much cash companies would have to put into their pension plans right away if the Bush administration's proposal were law. The pension numbers in corporate financial statements, calculated according to rules issued by the Financial Accounting Standards Board, are often criticized as opaque and misleading. But Mr. Zion found that even in that thicket of numbers, he could find a few that would serve as meaningful proxies for the ones the administration wants companies to base their pension contributions on. The useful numbers were in the footnotes, he said. Currently, companies base their pension contributions on an entirely different set of numbers, calculated according to rules in the Internal Revenue Code and kept on file at the Labor Department. These are the rules that Congress and the Bush administration plan to amend. The calculations for the financial statements would be unchanged. Mr. Zion said the numbers he selected from the footnotes were useful because they were not 'smoothed' - that is, they were not revised by the companies' actuarial consultants to eliminate volatility. Smoothing is a widely established practice that companies prize because it keeps activity in the pension fund from showing up suddenly in financial statements. At the moment, smoothing is coming under fire, however, because it can distort a pension fund's appearance and sometimes make corporate profits look greater or less than they really are. Once he found unsmoothed numbers, Mr. Zion was able to determine whether each pension fund had enough on hand to make good on the value of the benefits the workers and retirees had earned so far. He was also able to apply the rules the Bush administration has proposed for calculating contributions on that basis. He assumed that companies would be required to use cash. Mr. Zion said it was impossible to calculate the effect of one important feature of the administration proposal: the extra pension contributions companies would have to pay if the three major ratings agencies had cut their creditworthiness to less than investment grade. Currently, all companies base their pension contributions on the same calculations. So, if Congress enacted the full administration proposal, companies like Georgia-Pacific, Maytag, and the Goodyear Tire and Rubber Company, would have to pay even larger contributions than Mr. Zion's study showed. G.M., whose credit was recently cut to less than investment grade by two of the three main bond rating agencies, would be narrowly spared. Because of the way companies report their data, Mr. Zion also had to apply the administration's proposal to companies' pension obligations to their foreign workers who are not covered by the pension law.

Subject: Searching for a Reason to Buy Google From: Emma To: All Date Posted: Sat, Jun 11, 2005 at 09:41:06 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/11/technology/11values.html Searching for a Reason to Buy Google By CONRAD de AENLLE IN this souped-up, high-tech world, everything happens faster, even forgetting. Usually a generation passes before investors stung in a mania make the same mistake again, but anyone looking at a chart of Google's stock price might think that its shareholders don't have that kind of time. Five years after the tech bubble came and went, the search engine operator has bounded from about $180 a share in April to nearly $300. So is it different this time, or are investors partying like it's 1999? Its supporters point out that Google is no concept stock. Unlike pre-millennial Internet darlings, Google makes money. But parallels with the late 1990's should make investors wonder whether there is more room above today's price than below it. 'On a risk-reward basis, how much upside do you want to be betting on?' asked Martin Pyykkonen, an analyst at Janco Partners in Denver. His answer amounts to not much, but when it comes to Google the business, not Google the investment, he joins in the acclaim. The run-up in the stock reminds him of the Internet bubble. 'Where it is different and better,' he said, 'is that Google is profitable.' Its earnings grow at a sensationally fast clip (they more than tripled last year) and it has very high profit margins (nearly 30 cents of each dollar of revenue last year percolated down to the bottom line). The California company is the dominant provider of 'paid search' services, the key word being 'paid.' By aligning the display of advertisements with the search criteria entered by users of its Web site, it commands premium rates. Google is also an innovator, perpetually building on its technology and brand. 'It's a big, open-ended growth story,' said Jerry Jordan, a fund manager at Hellman, Jordan, a Boston money manager. He described Google as 'one of our largest positions.' What separates admirers of Google's stock from skeptics is its price. Based on its close of $282.50 a share, it trades at 88.3 times earnings in the most recent four quarters. But Mr. Jordan estimates that Google will earn $6 this year and $8 to $10 next year. He comes up with a multiple in the 30's, saying this justifies a forecast of $400 for the stock. This contrivance - make prodigious growth estimates far enough into the future to generate a less yikes!-inducing valuation - became popular during the bubble. Forecasts are just that, and in the case of Google they have been soaring as analysts outdo one another in unceasingly rosy hues. Mr. Jordan's estimates are not off the charts. Mary Meeker of Morgan Stanley, the doyenne of Internet analysts, predicts $5.20 in earnings this year. Douglas Anmuth at Lehman Brothers forecasts $5.47, and Benjamin Schachter at UBS ups the ante further, to $5.66. Forecasting good fortune seems a safe bet, given Google's margins, but here is where another late 90's phenomenon makes a return engagement: investors are betting on stability - technological, commercial, economic -in a field where change is constant. As the bubble inflated, investors grossly underestimated the ability of other companies to come along and compete with the companies they invested in. Could the same thing happen to Google? 'Tech-wise, barriers to entry are a lot lower than people think,' Mr. Pyykkonen warned. If Microsoft decided to challenge Google in paid search, he said, it could 'do it now and do it bigger than anyone expected,' eroding Google's margins. Then there's the bolt from the blue that can render forecasts obsolete. Users of Google's new Desktop Search service will surrender information about what's in their computers. What if a precocious high school kid hacks into the system? 'The privacy issue could hit' the company, Mr. Pyykkonen said, adding that 'advertisers are aware of it' and might not want to risk becoming associated with a perceived threat. As for the stock, he said, 'If you don't own it, I wouldn't buy it.' He prefers Yahoo and a small paid search company called ValueClick. He advised shareholders to stay put, but cautioned that they could take a hit when Standard & Poor's decides - either way - whether to include Google in its 500-stock index. Anticipation of its inclusion accounts for much of the recent rise, he said. 'There's no new information' to explain the stock's advance, Mr. Pyykkonen said. 'It's a classic momentum stock priced for perfection.' Is it a price worth paying? Sure, if it really is different this time.

Subject: What You Don't See Can('t) Hurt You From: Pancho Villa To: All Date Posted: Sat, Jun 11, 2005 at 08:34:34 (EDT) Email Address: nma@hotmail.com Message: Budget Magic Sometimes It's What You Don't See That Matters by John Irons May 18, 2005 Redirection is a favorite device for magicians. Your eye is drawn to the magician's left hand that is waving a colorful scarf or a magic wand, while the right hand is sneaking into a hidden pocket to snatch the pigeon that will later appear as if from nowhere. If you want to figure out what's really going on, you need to look at the hand that is not frantically waving in the air. The same has become true with our nation's economic policy. While everyone is paying attention to proposals to change Social Security, other issues are either being ignored or are being hijacked by moneyed special interests. Some of the most egregious examples of bad policy choices are embodied in the recently passed 2006 federal budget. Here's some of what you might have missed in the budget and elsewhere: * Health care for low-income families: The budget passed by Congress contained $10 billion in health care cuts. This comes despite the fact that a majority in both chambers voted to remove all Medicaid cuts. The House voted overwhelmingly (348-72) to instruct the conference to remove Medicaid cuts; and before passage, the Senate passed 52-48 an amendment to remove Medicaid cuts. Yet the final approved agreement reinstated $10 billion in cuts. * Cuts, cuts, cuts. Spending on programs that provide automatic benefits for those who qualify (so-called entitlement programs) are set to be cut by $25 billion over the next five years, over and above the Medicaid cuts. These cuts could come from agriculture programs, student loans, food stamps and/or a range of other federal investments. The coming months will tell us exactly where these cuts will happen, but under the current budget they will have to come from someplace. * And more cuts. Spending on programs that are funded through the annual appropriations process is set to be cut in real terms by $212 billion. This money is used to fund education, scientific research, veterans' health care, environmental protection and other services and investments. * More revenue reductions: The budget that Congress set for itself includes over $100 billion in lost revenue over the next five years-$70 billion of which will be fast-tracked through the reconciliation process. If the tax changes look anything like the past four years, we can expect additional windfalls for the wealthy. Republican leaders have already expressed the desire to extend rate reductions for capital gains and dividends. Over half of capital gains taxed at preferred rates are realized by people making more than $1 million per year. * Deeper deficits: The budget passed by the Congress will dig the hole deeper by an estimated $168 billion over the next five years. When combined with a modest fix for the alternative minimum tax, deficits are expected to remain in the $300 billion range for the next decade. * Drilling in ANWR: The budget contained a provision that would virtually ensure that drilling in the Arctic National Wildlife Refuge (ANWR) would be allowed. Over the past few years, this was a major issue, and it seems to have slipped under the radar this time around. * Estate tax: The House of Representatives voted to repeal the estate tax-a tax that impacts the heirs of multi-millionaires. Currently, $3 million can be passed from a married couple to their heirs tax-free. And only about 1 percent of decedents pay any tax at all. It only seems fair that the very wealthiest among us should pay their fair share, especially at a time when we are asking for sacrifices from those fighting abroad and when the middle class is struggling to get by. The Senate may take up the measure soon, and while most Americans would support reform, there will still be a big push for full repeal. The total cost over the first decade of repeal would total nearly $1 trillion. * Bankruptcy: The president recently signed into law a bankruptcy bill that wipes away people's ability to start fresh when faced with personal financial difficulty. Not surprisingly, the credit card industry strongly supported the bill. Since half of all bankruptcies are a result of medical costs, this means that people will be faced with a double whammy if they fall ill-especially if they are one of the 45 million without health coverage-by having to deal with both an illness and the financial fallout. * Unmet needs: Where is the additional funding for basic science and education? How should we meet the needs of the 45 million uninsured? Why can't we allow the Medicare drug program to negotiate prices? Will we adequately support our veterans' health care needs? What about a real energy policy? Of course, these are not the only pressing issues that need solutions and that are currently outside the political and media spotlight. Why should Social Security get all the attention? Even if nothing is done to improve the system over the next 40 years, the program would still be able to pay about 80 percent of promised benefits. The proposals coming from the administration-privatization accounts, which don't impact solvency and weaken the system; or sliding-scale benefit cuts, which simply accelerate benefit cuts for those with moderate incomes-have become a grand distraction. While the Social Security fight is indeed important and potentially represents a defining political moment for both political parties, we cannot forget other pressing issues. The waving scarf might be colorful, but sometimes the real action is going on behind the magician's back. John S. Irons, Ph.D., is the director of tax and budget policy at the Center for American Progress. http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=692327

Subject: Re: What You Don't See Can('t) Hurt You From: Pete Weis To: Pancho Villa Date Posted: Sat, Jun 11, 2005 at 11:48:15 (EDT) Email Address: Not Provided Message: While, IMO, the coming 3.5 years will likely cure much of the American electorate from it's support for these neoconservatives, they can do a lot of damage on their way out the door.

Subject: Re: What You Don't See Can('t) Hurt You From: Jennifer To: Pete Weis Date Posted: Sat, Jun 11, 2005 at 22:29:10 (EDT) Email Address: Not Provided Message: We must hope and work for better.

Subject: Nominal and Real Investment Returns From: Terri To: All Date Posted: Sat, Jun 11, 2005 at 08:28:48 (EDT) Email Address: Not Provided Message: After thinking about nominal and real investment returns, I find that nominal returns are better for me to keep in mind. The idea is to simplify investing. That is how I have been successful. I look for relative value through the year and buy accordingly. This way I can be wrong over and over about the economy as a whole but right in the assets I own. While comparing long term Treasury bonds at 4% interest and the Vanguard Utility Index with a dividend above 3%, I need only consider the price earning valuation against the stock market to determine the right asset. Several years ago there was no choice, though there are other choices now. Bonds in 1966 offered no choice against value stocks, but by 1974 the choice had narrowed and by 1978 bonds were a terrific choice for years to come.

Subject: Isn't fraud a crime? From: Pete Weis To: All Date Posted: Fri, Jun 10, 2005 at 18:50:50 (EDT) Email Address: Not Provided Message: Didn't Citigroup, JP Morgan, etc. participate in a fraud? They created sham, 'energy trading' companies in offshore locations like the Cayman Islands to funnel loans to Enron and make them look like profits from energy trading. Isn't fraud like this a crime? Many folks who worked for Enron were not allowed to sell their stock and lost everything they had saved for retirement. When this 2 billion is divided up among all those who have claims on it, you wonder how much of their life savings they will get back. Worldcom is next and who knows what other fraud may be overturned in which these giant banks had a hand. Meanwhile top executives at these banks have been awarding themselves huge stock options. What about shareholders at Citigroup? Do they give a crap about what management has been doing? Where is the SEC in this or federal agencies responsible for investigating these crimes. Why are they adamant about prosecuting folks for selling marijuana for medical purposes in states where it's legal to do so, and look the other way while investors and employees are being fraudulantly ripped off for billions. Is this part of what Howard Dean is talking about? When I think back at how consevative Republicans made such a big deal about moral values during the Clinton Presidency - where are they now? From Bloomberg: Citigroup to Pay $2 Billion to Settle Enron Investors' Claims June 10 (Bloomberg) -- Citigroup Inc., the world's biggest financial-services company, agreed to pay $2 billion to settle investor claims that the firm helped Enron Corp. inflate profit and hide debt, lawyers for Enron shareholders said. The accord, the largest Enron-related settlement so far, resolves shareholders' claims that New York-based Citigroup helped Enron executives manipulate the energy trader's finances to hide billions in debt in off-the-books partnerships, investors' lawyers said today in a release.

Subject: Re: Isn't fraud a crime? From: David E.. To: Pete Weis Date Posted: Sat, Jun 11, 2005 at 09:31:43 (EDT) Email Address: Not Provided Message: They are pirates, remember the song in the Pirates of the Caribbean 'take all you can, give none back'. And they are heroes the people that America admires. We have got trouble.

Subject: I feel better From: David E.. To: David E.. Date Posted: Sat, Jun 11, 2005 at 09:46:32 (EDT) Email Address: Not Provided Message: I just read a poll about values. Seems like the things are not as bad as I was thinking-thank goodness. First - more people agreed with democratic values than republican ones. Second, 86% of americans think poverty is a more important issue than gay marriage. Cheers http://www.tpmcafe.com/story/2005/6/10/152227/472

Subject: Re: I feel better From: Pete Weis To: David E.. Date Posted: Sat, Jun 11, 2005 at 11:23:49 (EDT) Email Address: Not Provided Message: I watched a 'Fleecing of America' segment on NBC news last night which covered a highway project (I-64) in Virginia. These segments 'shock' and create disgust for what are almost always governmental projects which go over budget or are for things which provide little usefulness. In this case the highway project was two years overdue and had ballooned from the original $64.5 million to $112 million - clearly a serious problem. However, the project created jobs and wages from it were recycled back into the economy and something is created (a highway) which can be used by the public. While watching this NBC segment, I thought of the Citigroup CEO cashing in $169 million in stock options and getting an $18 million bonus on top of a very big salary - all in one year. But you don't see many if any 'Fleecing of America' segments regarding this kind of assualt on stockholders and 401k's.

Subject: Moral Values From: Pete Weis To: Pete Weis Date Posted: Fri, Jun 10, 2005 at 20:27:50 (EDT) Email Address: Not Provided Message: In addition to the following article, an April 2001 Forbes article stated that 'during the previous 5 years Sanford Weill (Citigroup Chairman) received total compensation of $785,000,000 including $196,200,000 on top of a $18,400,000 bonus in the year 2000 alone. Are these what moral Christian values have become in America? Even televangelists and Christian talk show hosts like Pat Robertson make millions off their business selling Christianity to the masses. Robertson raises $2,000,000 from the faithfull to 'transport medical supplies to needy African's' but then uses all but one of forty logged flights to transport heavy equipment to a mining business he has in another African country. Will he get prosecuted for using money raised for a tax free charitable enterprise for a personal business enterprise - not likely gonna happen by a Republican administration to which he delivers so many votes. The stench is very strong but so many have gotten nose plugs. New York Daily News - http://www.nydailynews.com No losses for biggest bosses By DOUGLAS FEIDEN DAILY NEWS STAFF WRITER Sunday, November 3rd, 2002 Merrill Lynch axed 17,400 employees and kept a stable of analysts who allegedly misled investors. The reward for CEO David Komansky: A $42 million payday - not to mention the $110 million-plus in options he has yet to cash out. Lucent Technologies pink-slipped 56,000 workers and posted a $17 billion loss in 2001. The payoff for Chairman Henry Schacht: A $22 million package. Citigroup canned 7,600 and became the focus of massive and ongoing conflict-of-interests investigations. No matter; Citigroup handed CEO Sanford Weill a $46 million bonanza - adding $360,000 for his use of planes, helicopters and limos. AT&T cut 10,100 jobs, lost $6.8 billion, watched its stock tank and bailed out of cable TV. That didn't stop it from giving CEO Michael Armstrong $21 million, plus sweeteners such as free financial consulting and rides on corporate jets. 'They ought to take a huge cut in pay,' said Graef (Bud) Crystal, an expert on executive pay. 'Instead, they act like they just won Best in Show at the Westminster Kennel Club.' Once the gold standards of American capitalism, these local companies were admired for nurturing cultures that fostered loyalty and integrity and fueled job growth. Not anymore. Along with dozens of other blue-chip firms, they cut staff, corners and standards during the past two years. As the stock market spiraled south - and profits, investor faith and corporate credibility crashed and burned - there was one item on the books that did not immolate: CEO compensation. The typical chief of a major U.S. corporation raked in an average $15.5 million in total pay last year, a nationwide survey found. That's 428 times the $36,250 in annual salary earned by the typical American worker, a disparity 10 times greater than it was in 1980. In the New York region, the average big-company CEO pulled down $26.6 million. And a Daily News analysis of proxy data and other financial filings for 20 metro-area firms found the overall pay for CEOs who axed 2,500 workers or more hit $31.2 million in 2001. That's 668 times the $46,700-a-year salary grossed by the average New Yorker. 'It's a low point in American business history,' said Denis Hughes, president of the 2.5 million-member New York State AFL-CIO. 'It hurts workers, stockholders, consumers and corporations all at the same time.' Is the boss worth it? You be the judge: CEO pay at 896 public companies examined by the AFL-CIO jumped 7% last year - as corporate profits at those firms plunged 35%. In a separate survey of 350 companies, Mercer Human Resource Consulting concluded that execs' paychecks dipped a negligible 0.9% as net corporate income sank 17.8%. A Pearl Meyer & Partners review of 200 firms found median total CEO compensation jumped 7%, or double the 3.4% raise won by the average worker last year. 'You're supposed to pay for performance,' said Charles El-son, director of the University of Delaware's Center for Corporate Governance. 'Instead, a significant minority of American companies are paying for failure.' Big city, big difference And nowhere is the gap between CEO pay and company performance greater than it is in New York. Nationally, 1.4 million workers got pink slips during the past 12 months, bringing the U.S. jobless rate to 5.9%. But in the city, 146,000 jobs were lost, driving unemployment to 7.9%. In other words, New York City, housing 2.8% of the nation's population, absorbed 10.4% of its job loss. And as New Yorkers hit the streets, fat cats hit the links. Literally. With no disclosure to shareholders, Lucent spent $45 million developing the Hamilton Farm Golf Club for its private use in New Jersey's Somerset County. How exclusive was the spread? Putting privileges went to just 180 corporate players. Meanwhile, the telephone-equipment maker imploded: It cut 56,000 jobs last year - 110,000 over three years - purging its workforce to 45,000. Market capitalization nosedived to $2.4 billion from a $163 billion peak in 2000, erasing $160.6 billion in wealth. And its stock bottomed out at 55 cents in September, down from a high of $76 in 1999. Last year, Lucent unloaded 36-hole Hamilton Farm, putting the ultimate corporate vanity project behind it. But the company could not halt its dizzying death dance, and as a penny stock (one that trades for less than $1), it faces possible delisting from the New York Stock Exchange. It's also under investigation by the Securities and Exchange Commission for alleged earnings manipulation. For his central role in the Lucent fiasco, Chairman Schacht was awarded $22 million in pay plus add-ons: financial counseling, $26,351; chauffeur services, $35,141; tax reimbursements on fringe benefits, $57,325, and life insurance premiums, $79,047. 'A CEO ordering layoffs is like Dr. Strangelove blowing up Moscow from a safe distance,' said executive-pay analyst Crystal. 'You drop the bomb and you don't feel any heat. In fact, you get rewarded for it.' Backlash But disgust with outsize pay, unaccountable corporate culture and contempt for workers - the legacy of Enron, Tyco, WorldCom, Adelphia, ImClone, Qwest, Sunbeam, Global Crossing and Arthur Andersen - is on the rise. Four of the nation's biggest stock market investors - with $1.3 trillion in assets under management - told The News they are stepping up efforts to link wages to performance. Leading the charge is the California Public Employees' Retirement System, which leverages its $135 billion nest egg to crusade for corporate reform. 'Outlandish CEO compensation has become a critical issue for us and will be the focus of our proxy filings,' said CALPERS spokesman Brad Pacheco. New York City's four main pension funds, which control $95 billion, are drafting shareholder resolutions calling for performance-based pay. TIAA-CREF, a teacher's pension fund with $265 billion under investment, is also demanding tough performance standards in private sessions with big firms. And trustees at Fidelity Investments, the mutual-fund giant, which manages assets of $776 billion, are considering new guidelines to curb excessive pay awards. Reformers might begin with two homebred giants: Merrill Lynch, the nation's largest brokerage house, fired 25% of its workforce - 17,400 people - and saw its profits sink 85% in 2001. Accused by state Attorney General Eliot Spitzer of tainting research to win underwriting business, it allegedly duped investors by publicly touting stocks in firms its analysts privately disparaged. It paid a $100 million civil fine to settle charges without admitting wrongdoing. Separately, a Senate subcommittee accused the firm of helping mask Enron's shaky finances, a relationship that's under federal investigation. It all happened on CEO Komansky's watch, yet he bagged a $42 million pay package. It breaks down like this: Base salary, $700,000; cash bonus, $1 million; restricted stock granted, $4.1 million; 'special restricted stock' granted, $6.4 million; stock options granted, $4.1 million, options exercised, $25.7 million. Komansky has another $112 million in unexercised stock options from prior years. That amount alone will cost stockholders 12% more than Merrill's payment to Spitzer. Citigroup, the nation's No.1 bank and one of the world's largest financial services firms, dropped 7,600 workers and saw its profits, stock price and integrity battered. Under a probe by Spitzer and the SEC, its Salomon Smith Barney unit allegedly allocated shares of hot initial public offerings to execs who made millions within days, in return for lucrative investment banking business. In addition, axed Salomon star analyst Jack Grubman allegedly pumped up stock ratings for ailing clients, including AT&T, on whose board Citi CEO Weill sits. Charges of complicity And then there's Enron. 'Citi knew what Enron was doing, assisted in the deception and profited from their actions,' a congressional committee said in September. Manhattan District Attorney Robert Morgenthau and the U.S. Justice Department are examining whether Citigroup knowingly structured $4.8 billion in deals to help Enron disguise debts and hit selected numbers. As its iconic CEO, Weill personifies the modern Citi, and his $46.3 million paycheck is part of the formula. Here's how it adds up: Base salary, $1 million; cash bonus, $17 million; 'other annual compensation,' $683,684; restricted stock awards, $8 million; stock granted, $3.6 million, stock options exercised, $16 million. Yet to be collected is another $40.7 million in unexercised options from past years - an amount that, by itself, would give Sandy Weill 871.5 times the annual wages of the average New Yorker who works for a living. With research assistance from Ellen Locker

Subject: Re: Moral Values From: Emma To: Pete Weis Date Posted: Sat, Jun 11, 2005 at 02:59:40 (EDT) Email Address: Not Provided Message: Passionate comments with which I agree. These are surely moral matters. There will be more after rest. Thank you, Pete.

Subject: Blow to Canada's Health System From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 16:14:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/international/americas/10canada.html In Blow to Canada's Health System, Quebec Law Is Voided By CLIFFORD KRAUSS TORONTO - The Supreme Court on Thursday struck down a Quebec law banning private medical insurance in a decision that represents an acute blow to the publicly financed national health care system. The high court stopped short of striking down the constitutionality of the country's vaunted health care system nationwide, but specialists across the legal spectrum said they expected the decision to lead to sweeping changes in the Canadian health care system. 'The language of the ruling will encourage more and more lawsuits and those suits have a greater likelihood of success in light of this judgment,' said Lorne Sossin, acting dean of the University of Toronto law school. Patrick Monahan, dean of the Osgoode Hall Law School of York University in Toronto and a well-known critic of the national health care system, was even more emphatic about the import of the decision. 'They are going to have to change the fundamental design of the system,' he said. 'They will have to build in an element of timely care or otherwise allow the development of a private medical system.' The Canadian health care system provides free doctor's services that are paid for by taxes. The system has generally been strongly supported by the public, and is broadly identified with the Canadian national character. Canada is the only industrialized county that outlaws privately financed purchases of core medical services. But in recent years patients have been forced to wait longer for diagnostic tests and elective surgery, while the wealthy and well connected either sought care in the United States or used influence to jump medical lines. The court ruled that the waiting lists had become so long that they violated patients' 'life and personal security, inviolability and freedom' under the Quebec charter of human rights and freedoms, which covers about one-quarter of Canada's population. 'The evidence in this case shows that delays in the public health care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care,' the Supreme Court ruled. 'In sum, the prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services.' The case was brought to the Supreme Court by Jacques Chaoulli, a Montreal family doctor who argued his own case through the courts, and George Zeliotis, a chemical salesman who was forced to wait a year for a hip replacement while he was prohibited from paying privately for surgery. Dr. Chaoulli and Mr. Zeliotis lost in two Quebec provincial courts before the Supreme Court decided to take their appeal. In a news conference, Dr. Chaoulli declared a victory and predicted that the decision would eventually apply to all Canada. 'How could you imagine that Quebecers may live,' he asked, 'and the English Canadian has to die?' There was no immediate impact on the national system outside Quebec, since the justices split by a vote of 3 t0 3 on the question of whether the Quebec ban on private medical insurance violated the Canadian Charter of Rights and Freedoms, Canada's bill of rights, as the two plaintiffs contended. However, specialists predicted that the decision would have widespread importance. Margaret Somerville, professor of law and medicine at McGill University, said the ruling 'is extremely important' in large part because 'the provinces that want to run some form of a complementary private system would probably be able to do so now.' Alberta provincial officials have long suggested that they wanted to develop a private health care system, while private diagnostic and special surgery clinics have been cropping up in Quebec, British Columbia and Ontario in recent years. The federal government has threatened to hold back financial aid to provinces that pressed ahead with private health care, but Ms. Somerville said Ottawa would be less likely to do so now. Dr. Chaoulli, who was born in France, has long called for Canada to adopt a two-tier, public-private health care system similar to those in France, Germany and Switzerland. Supporters of the current system, however, have argued that a two-tier system will draw doctors away from the public system, which already has a shortage of doctors, and only lengthen waiting lists. Dr. Chaoulli has long been viewed as a gadfly in political and medical circles. He went on a hunger strike in the streets of Montreal in 1997 after he was forced to abandon a private emergency house call service. Prime Minister Paul Martin responded to the decision by saying that his government was making progress in shortening waiting times for medical services. 'What today's decision does do, however, is accentuate just how important it is to act immediately, how urgent this situation is,' he acknowledged. But he rejected the notion that the ruling would bring about fundamental change. 'We are not going to have a two-tier health care system in this country,' Mr. Martin told reporters. 'Nobody wants that. What we want to do is to strengthen the public health care system.'

Subject: 'Losing our Country' From: Pete Weis To: All Date Posted: Fri, Jun 10, 2005 at 11:52:58 (EDT) Email Address: Not Provided Message: Paul Krugman's latest op-ed gets to the core of what is weakening our economy - the erosion of our middle class. There are many threats out their including rapidly rising energy prices, housing bubble, etc. But it is really the loss of wealth (replaced by record debt) of our middle class which is the major long term problem. Our economy is rotting from the center. Paul Krugman suggests that coming op-eds will deal with the why. There are very few if any economists who seem to be willing to take on this issue, because those who do get accused, as he mentions, with fomenting 'class warfare'. But it is this administration and its financial supporters who have instigated class warfare on the American middle class. And the American middle class is and will become aware as they see their way of life continually erode. Paul Krugman has the courage to bring this ugly issue into the 'light of day'.

Subject: Re: 'Losing our Country' From: Terri To: Pete Weis Date Posted: Fri, Jun 10, 2005 at 12:15:47 (EDT) Email Address: Not Provided Message: Thank you, Paul Krugman and Pete.

Subject: Re: 'Losing our Country' From: Mik To: Terri Date Posted: Fri, Jun 10, 2005 at 14:34:58 (EDT) Email Address: Not Provided Message: To me this is a typical problem that has been around for many centuries - the rich getting richer and poor getting poorer. Heck isn't this the reason the French had their kings' heads cut off? There is one very important difference between this story and all previous stories about the growing gap between rich and poor. In this particular case, the number of people that can be considered 'rich' is significantly high. If we had a handful of rich people, say about 100 people in total, and the rest of the population were poor and only getting poorer - we would have an instant recipe for revolution. Well considering that (in America) a couple million people are 'rich', and they even walk among the poorer, it becomes a whole lot more difficult to try clarify this issue. Perhaps the rich have finally learnt one lesson: Let's make more of 'us' rich so that we are not totally out-numbered. You get the idea.

Subject: Re: 'Losing our Country' From: Pete Weis To: Mik Date Posted: Fri, Jun 10, 2005 at 17:23:40 (EDT) Email Address: Not Provided Message: 'To me this is a typical problem that has been around for many centuries - the rich getting richer and poor getting poorer.' Mik. I understand what you are saying, but remember that the industrial age has changed this significantly. With the the emergence of large middle classes has come the emergence of elected governments and considerable stability with it. But when you look back during our industrial age, you see periods of erosion in middle class wealth and it's quite severe at times. The late 20's thru the 30's were such a time. We are now back in a situation where wealth once again is very, very concentrated in the hands of a tiny few and more importantly, a great debt is spread over the many. The only other time in the last 100 years were it has reached this level of unequal distribution and massive debt was the 20's thru the 30's. As Paul Krugman pointed out in this piece, the middle class did very well from WWII until into the 70's. This is very unhealthy economically and politically. At some point when the economic outfall of middle class erosion really begins to take hold, there will be a lot of anger. If it starts during the next three-and-a-half years (I think it probably will, but who really knows), our present administration, Republicans and incumbents in general will take the brunt of the blame. However, this will be a global event and there will be those who try to take advantage of the anger for their own ajenda. A lot of historians claim that WWII was merely a continuation of WWI, but if the Great Depression never happened, would the Nazi's have risen to power? Your comment about 'maybe the rich have learned their lesson' suggests that somehow that they are different from us and that they can and would allow more of us to join their ranks. I agree with Hemmingway's rebuke of Fitzgerald's - 'the rich are different than You and I'. I believe that the 'rich' have the same foibles as Joe and Jane Sixpack. At the moment many of us who make up the middle class still feel bouyed by the housing market and the fact that the stock markets, in which many of us have 401k's, have not recently tanked as they did between 2000-2002. But at some point this growing debt will begin to go unserviced and there will be a refusal of additional debt and at that point our economy and the global economy will have to make do with very diminished discretionary aggregate income. I know many disagree with me, but I believe at some point in the not too distant future we will get both the housing and stock markets going down steeply - the record buildup of debt and lack of middle class wage growth will make it so. A house is merely an asset and it does not produce anything which can be sold in China with returning profits that end up back here in America. So pumping huge quantities of borrowed money into such an asset does nothing productive for our economy. The runnup in housing valuations is a wealth illusion which will desolve like the Nasdaq index. Unfortunately, unlike the stock market runnup, the housing runnup is built almost entirely on borrowed money. Someone at the end of the lending line is going to absorb the loss.

Subject: Mortgage Rates Defy Fed From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 10:59:46 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/business/10rates.html Mortgage Rates Defy Fed and Delight Consumers By DAVID LEONHARDT For the last year, the Federal Reserve has been conducting a relentless campaign to raise interest rates. In that same year, the rates that matter the most to many people - mortgage rates - have drifted back down, returning to near 30-year lows. Low mortgage rates have lifted the nation's long housing boom to a new level, creating jobs and wealth but also worries that some local markets have turned into bubbles. Mortgage refinancing has also taken off again, injecting cash into households at a time when incomes are growing no faster than inflation for most workers. 'It's been fantastic,' said Ed Schreyer, a 38-year-old executive in Cincinnati who has refinanced his mortgage seven times since buying his home in 2001 and refinanced the mortgage on a Colorado vacation home twice since buying it in 2003. 'It's more cash in my pocket and less money going out the door.' Testifying before Congress yesterday, Alan Greenspan, the Fed chairman, called the current situation 'clearly without recent precedent.' Even as the Fed has lifted its benchmark short-term rate eight times since last summer in an effort to choke off inflation, the average rate on a 30-year mortgage has fallen to 5.61 percent, from 6.3 percent, according to BankRate.com. Mortgage rates are now slightly higher than they were in 2003, when they were the lowest in at least three decades. In effect, the bond market - where long-term interest rates, including those for mortgages, are set - is stimulating the economy while the Fed is trying to stabilize it. In his testimony, Mr. Greenspan warned that the economy faces significant imbalances and made it clear the Fed is not finished ratcheting up interest rates. [Page C1.] The list of reasons for the falling rates is both long and controversial, taking in everything from the aging of the population to the economic growth of China. Economists generally argue that investor psychology also plays some hard-to-define role and that rates will soon rise. But they have been making the same prediction for the last year. 'Since I've been in the business in the mid-1980's, this is the biggest disconnect between the bond market and the economy I've ever seen - easily,' said Ethan S. Harris, the chief United States economist at Lehman Brothers and a former Fed staff member. 'You've got almost the exact opposite response in the bond market from the normal response.' Although they have vexed policy makers and economists, falling long-term rates have benefited Americans across the economic spectrum. Bernard Post recently locked in a low mortgage rate for the next 30 years on a house in East Hampton, N.Y., so he would not have to worry if rates finally did start rising. 'Essentially what I'm doing is buying some certainty in an uncertain world,' said Mr. Post, 62, a lawyer in Manhattan. Calvin S. Jackson, a 53-year-old college math teacher in Atlanta, decided he would start looking to buy his first house even though home prices have been rising. 'The current market makes it very, very encouraging to borrow money, to take a chance and buy a home,' Mr. Jackson said. 'This is the time to move.' In the past, a two-point increase in the Fed's benchmark rate has typically led to a one-point rise in long-term bond rates. Simple logic suggests that when the cost of borrowing money for a year goes up, as it has, so should the cost of a 30-year loan. The Fed, after keeping its benchmark rate unusually low in the wake of the 2001 recession, began raising it almost a year ago as inflation picked up. At about 3 percent, annual inflation remains lower than it has been for most of the last generation, but it has begun pinching incomes and Fed officials are concerned it might accelerate. Low interest rates, which encourage people to borrow and spend money, spur demand for goods and tend to push up their prices. Since last June, the Fed has raised its benchmark interest rate, which sets the interest banks charge each other for overnight loans, to 3 percent, from 1 percent. Other consumer interest rates, like those on credit cards and car loans, have increased during the last year, but only slightly. 'It's a conundrum,' Richard J. DeKaser, chief economist of the National City Corporation, a major mortgage lender based in Cleveland, said borrowing a word from Mr. Greenspan to describe the growing gap between long-term and short-term rates. 'It's in defiance of economic fundamentals.' Speaking by satellite on Monday to a monetary conference in Beijing, Mr. Greenspan named four widely cited causes for the mystery, but he cast doubt on each one. The most obvious explanation is that investors simply think the economy is weaker than Fed officials do. That would cause people to bid up the prices of bonds, which are a conservative investment; bond prices and interest rates always move in opposite directions. But if the decline in rates were all about the economy, pieces of good economic news would halt it, even temporarily. That has not happened, Mr. Greenspan said. He also questioned the widely held belief that foreign banks have kept rates low by buying United States Treasury bonds. Those purchases help keep foreign currencies inexpensive relative to the dollar and allow other countries to continue exporting cellphones, cars and other goods to the United States. Mr. Greenspan argued that the effect of these purchases on interest rates had been only 'modest,' though. Long-term rates in other countries, where foreign banks have not been such active buyers, have also dropped, he said. Two other factors- the fall in inflation caused by globalization and the buying of long-term bonds by pension funds trying to shore up their finances as baby boomers approach retirement - are helping keep rates low. But they do not explain the pattern of the last year, Mr. Greenspan said. 'World demographic trends are hardly news,' he said. The most similar period to the last year might be the late 1980's, when the Fed was raising its benchmark but mortgage rates stayed roughly flat, even dipping somewhat in late 1988. But rates were far higher then than they are now, making investors confident the Fed would soon take back its rate increases, which it did. Today, the Fed seems unlikely to lower its rate anytime soon. That has caused some mortgage bankers to urge homeowners to grab a 5 percent or 6 percent mortgage while they still can. 'I think people have one more moment to lock in a low rate,' said Ellen Bitton, chief executive of Park Avenue Mortgage, which has offices in New York and Palm Beach, Fla. That might end up being great advice. It is also very similar to what bankers were saying a year ago.

Subject: Lucrative Drug, Danger and the F.D.A. From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 10:57:27 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/business/10drug.html?pagewanted=all Lucrative Drug, Danger Signals and the F.D.A. By GARDINER HARRIS and ERIC KOLI Dozens had died and more than 100 patients had suffered serious heart problems by March 1998 after taking Propulsid, a popular medicine for heartburn. Infants, given the drug to treat acid reflux, seemed particularly at risk. Federal officials told Propulsid's manufacturer, Johnson & Johnson, that the drug might have to be banned for children, or even withdrawn altogether. Instead, the government and the company negotiated new warnings for the drug's label - though not nearly as tough as regulators had wanted. Propulsid had a good year anyway. Sales continued to surpass $1 billion. Johnson & Johnson continued to underwrite efforts that promoted Propulsid's use in children. A survey that year found that about 20 percent of babies in neonatal intensive care units were being given the drug. Two years later, as reports of heart injuries and deaths mounted, Johnson & Johnson continued defending the safety of Propulsid, but then pulled it from the market before a government hearing threatened to draw attention to the drug's long, largely hidden, record of trouble. That record, pieced together from newly obtained corporate and government documents, provides an in-depth view of a pharmaceutical company trying to save a lucrative drug in the face of growing evidence of harmful side effects. It is a story that has particular resonance now, as troubled arthritis painkillers - Vioxx, Celebrex and Bextra - have again focused attention on what critics say is the federal Food and Drug Administration's inability to monitor and regulate pharmaceuticals effectively once they are on the market. Documents from lawsuits against Johnson & Johnson show that the company did not conduct safety studies urged by federal regulators and their own consultants that could have revealed Propulsid's danger early on. The F.D.A., moreover, did not disclose company research that cast doubt on Propulsid's effectiveness against digestive disorders it was being used to treat, since the studies are considered trade secrets. Propulsid's history has striking parallels with the painkillers now at the center of controversy. Dozens of studies sponsored by Johnson & Johnson that might have warned doctors away were never published, just as the pharmaceutical manufacturer Pfizer failed to publish an early study of Celebrex that indicated a heart risk. And Johnson & Johnson was able to delay and soften some proposed label changes, just as Merck later did with Vioxx. An F.D.A. advisory panel concluded in February that the three painkillers increased the risk of heart attacks and strokes. In April, Pfizer, under pressure from the F.D.A., withdrew Bextra and placed severe warnings about heart risks on the label for Celebrex, a sister pill. That followed a decision in September by Merck to withdraw Vioxx after years of insisting that it was safe. Members of a federal advisory committee on those painkillers cited Propulsid as an example of how even the strongest warnings - known as black box warnings - do not stop physicians from prescribing a drug inappropriately. Dr. Alastair Wood, the chairman of the panel, said in an interview that label warnings of a drug's potentially lethal effects do not protect all patients. Eventually, Johnson & Johnson made five significant changes to Propulsid's warning label and sent five letters to doctors across the country. But Dr. Wood, an associate dean at Vanderbilt University Medical Center, said, 'The case of Propulsid proves this: When people are falling off a cliff, you don't put up more signs; you put up a fence.' Despite these public warnings about Propulsid, much of the conversation between the company and regulators remained private as the drug thrived. With evidence mounting that Propulsid could interfere with the heart's electrical system, government regulators became increasingly confrontational with Johnson & Johnson executives. But physicians were never made aware of the full depth of the agency's concerns. And even though Propulsid was never proved effective in children, the company helped finance programs that encouraged the drug's pediatric use, according to internal company documents. Johnson & Johnson agreed last year to pay up to $90 million to settle lawsuits that eventually involved claims that 300 people died and as many as 16,000 were injured from taking Propulsid. Many of the documents relating to Propulsid obtained by The New York Times were filed under seal in the lawsuits. The company declined repeated requests to make executives available to be interviewed for this article. In written responses, Johnson & Johnson defended the safety of Propulsid and said that the marketing of the pill was appropriate. The company said it removed the drug from the market because physicians continued to prescribe it inappropriately despite repeated attempts by the company to warn them against that. Jason Brodsky, an F.D.A. spokesman, said that the Propulsid case had been unique because doctors insisted on having access to the drug, despite its side effects, and because its label was unusually confusing. Although the F.D.A. has the power to declare a drug mislabeled and order it off the market, it has done so only once in the last 30 years. Short of that, any label change sought by the agency has to be negotiated with manufacturers, a process that sometimes takes more than a year. Testifying before Congress in March, Dr. Sandra Kweder, the F.D.A.'s deputy director of the office of new drugs, bemoaned such delays and said having the power to mandate label changes 'would be very helpful.' Even without that power from Congress, the F.D.A. has recently made moves to disclose concerns about drugs' adverse effects before label negotiations with drug makers are complete. The government and Johnson & Johnson negotiated for five years before the company pulled Propulsid. By then, the federal government had reports of 80 heart-related deaths and 341 injuries among patients taking Propulsid. First Signs of Trouble The first signs of trouble emerged soon after Propulsid was approved in 1993 for the treatment of nighttime heartburn in adults. By January 1995, the F.D.A. received reports of 18 Propulsid patients who had developed serious heart arrhythmias; one patient, an infant, had died. At a private meeting that month, agency officials told Johnson & Johnson executives that the drug was causing life-threatening arrhythmias, according to F.D.A. minutes of the meeting. Company executives insisted that such problems occurred only in patients who took Propulsid with other drugs or who had heart problems. The company sent two letters to doctors and added warnings to the drug's label listing drugs that should not be used with Propulsid. But by July 1996, regulators had reports of 57 Propulsid patients, including seven children, who had developed serious arrhythmias or other heart problems. In August 1997, after the company told the F.D.A. that two more children taking the drug had died, a top agency official wrote to the company that Propulsid's growing number of cardiac problems among infants and children 'suggests that pediatric patients may be at greater risk for them.' Johnson & Johnson had previously conducted pediatric studies of Propulsid that failed to demonstrate that the drug was effective. In January 1995, the F.D.A. told the company that without studies showing that the drug worked in children it would not receive approval for pediatric sales. Johnson & Johnson never applied for such approval and the label did not recommend it for use in children. But doctors are free to prescribe medicines beyond the confines of labels, and Propulsid became popular among pediatricians. By 1998, doctors were writing more than half a million prescriptions a year for children and infants, according to internal company estimates. The company has said that its cherry-flavored liquid Propulsid was developed for geriatric patients, but company documents show that as much as 90 percent of it went to children. Without approval for pediatric use, Johnson & Johnson could not directly promote Propulsid for children. But F.D.A. rules did allow the company to support educational efforts among doctors. A crucial player in that effort was Dr. Paul Hyman, a pediatric gastroenterologist who is now at the University of Kansas. Dr. Hyman said in an interview that he was the first doctor in the United States, in 1984, to treat a child experimentally with Propulsid. Dr. Hyman became a Propulsid proponent. Johnson & Johnson financed some of his work and put him on its Propulsid advisory board. When he edited a textbook about childhood digestive problems that recommended Propulsid, the company paid for the press run of 10,000 copies and distributed them to doctors. In December 1997, he also made a 15-minute presentation at a Johnson & Johnson seminar where 240 doctors were trained to speak to health care professionals about the drug. While Dr. Hyman acknowledged that Propulsid had some potentially dangerous side effects, he said they were rare. The drug was so safe, he said, that it could be used to treat 'happy spitters' - infants who frequently spit up but are not ill. 'I was fairly vocal about how silly the whole death thing was, and how it was one in a million,' he said. Although the company said educational efforts were legal, Dr. Stephen B. Fredd, who oversaw Propulsid for the F.D.A., said that he had been unaware that Johnson & Johnson was supporting programs advocating the drug's use in infants. 'I had no idea they were doing anything in any way to support off-label use in pediatrics,' said Dr. Fredd, former director of the F.D.A.'s gastrointestinal and coagulation drugs unit. Instead, he said, 'I wanted them to warn doctors that there were dangers in using the drug.' Growing Concerns Reports of patients who died while taking Propulsid were recorded in stark language on federal forms. 'Pathologist reports that a three-month-old female died while on Propulsid therapy,' reads a July 3, 1998, report on F.D.A. MedWatch, the agency's Web site for posting potential safety problems. Her parents reported that the child, who had undergone cardiac surgery, was sitting in her swing chair and was 'fussy' at 7:50 a.m., the F.D.A. form says. 'When the parents rechecked her at 8 a.m., the infant was unresponsive,' it reads. 'Attempts to revitalize her were futile.' Three weeks later, the mother of an 11-week-old premature boy who had had stomach surgery and was taking Propulsid 'noticed her son not breathing,' another report said. Attempts were made to revive him. He was declared dead at the hospital. Johnson & Johnson later concluded in both those cases that the patients had no risk factors that would have indicated not to use Propulsid. In a statement yesterday, Johnson & Johnson said analysis of the cases 'strongly suggests' other factors may have contributed to the infants' deaths. As injuries mounted, concern inside Johnson & Johnson about side effects among the youngest patients was growing. Johnson & Johnson researchers and executives made plans to ban sales for premature infants in the United States, an action it had taken in some European countries, according to documents obtained by The Times. But there was internal debate. On March 16, 1998, a Johnson & Johnson regulatory affairs director, Gaetan Rouleau, sent an e-mail message to other executives saying that Propulsid could be used for premature babies and that further discussion of its use in them be delayed until after an F.D.A. meeting that month on the drug's safety. Dirk Reyn, a Johnson & Johnson executive, wrote back to support the decision to ban Propulsid for premature babies, saying, 'We do have cases and there is a scientific rationale for this.' Mr. Rouleau, however, responded that if the company agreed to ban Propulsid in premature children, it might be forced to stop selling its cherry-flavored liquid form of the drug. Unless Johnson & Johnson could justify the use of Propulsid in premature babies, he wrote, 'We have very little to support the use of the suspension in children at this time.' Ultimately, the drug was not banned for premature babies. In the March 1998 meeting between the F.D.A. and company representatives, regulators expressed increasing concern about Propulsid's risks. During a presentation, an F.D.A. official projected a slide that asked, 'Is it acceptable for your nighttime heartburn medicine (i.e., something for which you could take Tums) to have the potential to kill you?' Johnson & Johnson's minutes of the meeting stated: 'In F.D.A.'s opinion, cisapride is only minimally efficacious therefore no safety risk is acceptable.' In May 1998, the F.D.A. proposed major changes to the label, including adding a paragraph stating, 'Despite more than 20 clinical trials in pediatric patients, safety and effectiveness of cisapride (Propulsid) have not been demonstrated in pediatric patients for any indication.' An internal company memo examined 15 of the proposed label changes and estimated that they would cost over $250 million a year in lost sales. Since federal regulators cannot order changes to labels, the F.D.A. and the company negotiated. In the end, 13 of the 15 major proposed changes were either scrapped or softened. Instead of mentioning the results of the 20 clinical trials, the F.D.A. agreed to simply state that 'safety and effectiveness in pediatric patients have not been established.' The label said some pediatric patients had been injured and others had died while taking Propulsid, 'although causality has not been established.' Financing Questions Throughout the negotiations and label changes, the company kept up its support of doctors and patient groups that were promoting the drug as safe for use in children. During the late 1980's and the 1990's, for example, Johnson & Johnson said it gave $1 million to the American Pseudo-Obstruction and Hirschsprung's Disease Society. The society began as a support group for parents of children with rare digestive diseases for which Propulsid was a treatment. By 1996, with financing from Johnson & Johnson, the group's focus had shifted to common childhood acid reflux. Dr. Hyman was the chief medical adviser to the group, which helped to train speakers who, over three years, made presentations to 6,000 to 8,000 pediatric doctors and nurses about the treatment of reflux, recommending Propulsid, said the group's founder, Andrea Anastas. Ms. Anastas said the company had no influence over the group's activities. (Some details of the company's financial support of groups promoting Propulsid were reported in a 2003 documentary 'MAMA/M.A.M.A.,' by Nonny de la Peńa.) After the June 1998 label changes, the North American Society for Pediatric Gastroenterology Hepatology and Nutrition, a medical group for pediatric gastroenterologists, announced that it was going to study whether pediatricians should continue using Propulsid. Johnson & Johnson sent the group a confidential report conceding that placebo-controlled studies, many of them never published by the company, failed to show it was effective in treating children for reflux disease. The company, which had begun financing the group before the study was announced, eventually donated $450,000 to the society. The group report, released in May 1999, concluded that Propulsid 'has a place in pediatric therapeutics.' Dr. Robert Shulman, a professor at the Baylor College of Medicine and the lead author of the report, said Johnson & Johnson's money had no influence on the group's conclusions, although he said that he regretted that its financial support was not disclosed in the paper. Asked how his group's recommendation squared with the company's admission that the drug had not been proved effective in infants and children, Dr. Shulman said his group understood acid reflux in children better. 'We treat these kids every day,' he said. By January 2000, the F.D.A. had reports of 80 deaths and 341 serious heart problems in patients taking Propulsid. The agency scheduled a meeting to discuss its concerns with a panel of outside experts. This meeting, unlike the others at which Propulsid's safety record was discussed, would be public. Preparing for the hearing, Janice Bush, a Johnson & Johnson executive, wrote a note during what a company spokesman said was a 'brainstorming' session: 'Do we want to stand in front of world and admit that we were never able to prove efficacy!' The words 'never able' were underlined. Three weeks before the scheduled hearing, Johnson & Johnson announced it would stop selling Propulsid in the United States. The hearing was canceled.

Subject: China Weighs Modest Currency Change From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 10:35:43 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/business/worldbusiness/10yuan.html?pagewanted=all China Weighs Modest Currency Change By KEITH BRADSHER HONG KONG - China's political leadership is actively considering breaking the 11-year link between the dollar and China's currency, the yuan, and tying its value instead to a group of currencies, current and former senior Chinese officials said in interviews. The proposal being weighed at almost daily meetings of the Standing Committee of the Chinese Communist Party's Politburo would use a so-called basket of currencies to set the yuan's value. The yuan would move up and down in currency markets in relation to the average values of the dollar, yen, euro and possibly other currencies like the British pound. But the initial value of the yuan under the new system could, in dollar terms, be very close to its current value of 8.277 to the dollar. The Standing Committee's members, the nine most powerful men in China, are wary of letting the yuan rise sharply in value at the same time it is linked to the basket of currencies, the current and former officials said. Linking the yuan to a basket of currencies, and not just the dollar, would make it a little more flexible and less susceptible to the swoops and swoons of the dollar in recent years. If the dollar fell against the euro, yen and any other currencies in the basket, the yuan's value would creep up in dollar terms. If the dollar rose, as it has for much of the last month, then the yuan might fall in dollar terms, making Chinese exports even cheaper in the United States than they already are. The Bush administration and many members of Congress have urged China to let its currency appreciate and are unlikely to be satisfied with a policy shift that effectively leaves it at its current value for the time being. Finance ministers from the Group of 8 - seven leading industrial nations as well as Russia - are to meet in London on Friday and Saturday. They are expected to issue a statement, possibly with greater urgency than at previous meetings, encouraging China to allow greater flexibility in the yuan. If the Beijing authorities were to push up the yuan's value, making Chinese goods more expensive in the United States and American goods cheaper in China, economic theory suggests that this would cause the American trade deficit with China to narrow somewhat. The Politburo's Standing Committee - which includes President Hu Jintao, Prime Minister Wen Jiabao and seven other top officials - has made no decision yet on when or whether to act, and may decide soon or wait as long as next year, the officials said. But the deliberations have taken on a pressing quality, with the Standing Committee meeting almost every day last week to review currency policy. Senior economic officials have been told to be on hand for consultations at any moment. In a telling instance, Yang Weizhe, the mother of Zhou Xiaochuan, the governor of the Chinese central bank, died at 6:30 a.m. on May 31, but Mr. Zhou was still required to attend a Standing Committee meeting on the currency an hour and a half later. The yuan has been linked to the dollar since 1994. After starting at a rate of 8.7 to the dollar then and gradually appreciating for nearly four years, the yuan was locked in at 8.277 to the dollar in 1998 during the Asian financial crisis and has been there ever since. Officials have allowed it to vary by only one-hundredth of 1 percent from that level above or below. Wider variations have occurred for only a few minutes or, on April 29, for 20 minutes. Alan Greenspan, the Federal Reserve chairman, warned at a conference on Monday that other low-wage countries might export more to the United States even if an appreciation of the yuan priced Chinese goods out of the American market. 'It certainly is not going to be a major impact' on the overall trade deficit, Mr. Greenspan said. Some economists in China have been calling for combining a shift to a basket of currencies with an immediate appreciation of 3 percent to 5 percent in the yuan, which would make imports cheaper and help control inflation. But it is not clear how much attention this idea is receiving in what has become an essentially political decision by China's leaders. The leadership has been deeply concerned that the yuan not rise far enough to make Chinese goods uncompetitive overseas. China's economy needs to grow at least 7 percent a year just to create jobs for all the former peasants now pouring into the cities, and exports have been the main engine of growth and job creation. China's textile and apparel industry now employs 19 million people, mostly low-wage seamstresses, compared with fewer than 50,000 in the United States, and Chinese apparel executives said in interviews that even an appreciation of 5 percent could cause some jobs to move to lower-wage countries, like Vietnam. A stronger yuan could not only cause some factories to lay off workers, but also make imported food even cheaper. This would depress prices for rice and other staples grown on Chinese farms, potentially sending more peasants into the cities even as urban unemployment rises. Well-connected advisers in Hong Kong to the Chinese government agreed with the current and former officials that the next move by the leadership was likely to be a link to a basket of currencies, though they were unsure when this might occur. Victor Fung, a Hong Kong tycoon who is chairman of one of the world's largest garment companies and heads the territory's airport authority, said, 'They recognize the need to go away from a peg and move toward a basket.' Mr. Fung said each currency's percentage in the basket should match the percentage of China's trade conducted in that currency, an approach favored by many economists. He also said that China should reveal the relative weightings of the currencies in the basket. But other advisers said Chinese officials were leaning strongly toward switching to a basket without disclosing the currency weightings. Singapore has long done this with its dollar. Such an approach would allow China's leaders more discretion in pushing the value of the currency up or down. But it could also open China to accusations from the United States and Europe that it is secretly manipulating the yuan to gain a commercial advantage for its exports. The current and former Chinese officials said the Standing Committee was conducting a very detailed review, and did not provide the currency weightings under discussion. The officials said that some in the leadership were well aware of the benefits of making the weightings clear and public. Also uncertain is whether Chinese officials would peg the yuan tightly to the basket, allowing it to vary only a tiny fraction of a percent, or whether a wider band might be tolerated. Any move by China is likely to be greeted with great attention by world financial markets. Of particular interest will be whether China continues to buy dollar-denominated assets at a brisk pace after a shift to a basket of currencies; a slowing of Chinese purchases could hurt not only the dollar's value but also American stock and bond prices. China's foreign exchange reserves increased by $200 billion last year and $49 billion in the first quarter of 2005, to $659 billion on March 31. Chinese officials have gone to great lengths to conceal how they allocate their reserves among currencies, by using accounts in London and elsewhere, but bankers say a substantial portion of the reserves is in dollars.

Subject: A Modern French Revolution Strikes Havas From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 10:34:11 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/business/media/10adco.html A Modern French Revolution Strikes Havas By ERIC PFANNER - International Herald Tribune PARIS - The investor Vincent Bolloré won a showdown with the management of Havas, the French advertising company, as shareholders defied managers Thursday during a raucous annual meeting infused with the spirit of revolt that is running through French society. Mr. Bolloré, who owns 20.7 percent of Havas, was elected to the board, along with three other executives representing his investment firm. The 18-member Havas board, led by the chief executive, Alain de Pouzilhac, had urged shareholders to reject Mr. Bolloré's bid for the board, saying he had consistently failed to express his intentions since he began accumulating shares about a year ago. While the vote was a far cry from the storming of the Bastille, Mr. Bolloré likened the outcome to the populist impulse expressed by French voters two weeks ago when they rejected a European constitution in a referendum. 'Democracy was expressed; we gained four board seats; and I am very happy,' he said after the meeting, where shareholders representing 73 percent of the stock - an unusually high proportion for an annual meeting - were present. Mr. Bolloré, who has bailed out of investments in French companies like Bouygues and Pathé once they had earned him sizable profits, insisted that he would hold his Havas shares for a long time. But the outcome of the meeting immediately raised questions about the future of Mr. Pouzilhac, a member of an aristocratic French family who has worked at Havas for three decades. The rivalry between the men has become personal, and Mr. Pouzilhac's anger was apparent Thursday as each man addressed shareholders before the vote. Mr. Pouzilhac was cryptic about his intentions after the results became clear. 'The vote decides; shareholder democracy works,' he said. 'I shall draw the necessary conclusions from that.' Analysts said Havas, parent of the advertising agency Euro RSCG, is in a difficult situation, stuck between the big four - the Omnicom, WPP, Interpublic and Publicis groups - and smaller, nimbler boutique firms. With media outlets fragmenting in a digital age, and advertisers eager to control costs, many multinational clients are consolidating their business with the largest advertising firms. Last summer, about the time Mr. Bolloré started investing in Havas, Mr. Pouzilhac joined the chase for the Grey Global Group, a New York agency that was eventually bought by the WPP Group of London. Since losing that bid, Mr. Pouzilhac has concentrated on restructuring Havas, and performance has improved. 'It's clear that the situation is very, very difficult for Mr. de Pouzilhac now that he has his enemy on the board,' Pierre Bucaille, an analyst at Fideuram Wargny, an investment firm in Paris, told Bloomberg News. During the meeting, neither protagonist made much effort to hide his animosity, and there were moments of theatrical tension. After Mr. Pouzilhac presented his case to shareholders, refusing to read the names and résumés of the four Bolloré nominees, Mr. Bolloré went to the stage where Mr. Pouzilhac was seated. Microphone in hand, he said, 'It's not the wolf or Darth Vader,' a joking reference to his sometimes forbidding reputation. He defended his record, noting the variety of blue-chip companies he has invested in - from banks to heavy industry - and complained about what he called a public relations offensive against him by associates of Mr. Pouzilhac. 'Let's be blunt; let's be open,' he said. 'We could have talked this through, but instead we have this conflictual situation where the board says it's all or nothing.' Mr. Pouzilhac, rising from his seat, said Mr. Bolloré's silence about his intentions had damaged the company's prospects by creating a feeling of uncertainty among clients. 'One small word from you would have been enough to stop it,' Mr. Pouzilhac said, 'and we have been waiting for this for 11 months.' After Mr. Bolloré won his four seats, he proposed a vote to revoke the directorship of a Pouzilhac ally, Jacques Mayoux, a vice chairman of the investment bank Goldman Sachs, and appoint another associate. Shareholders rejected the resolution. Mr. Bolloré said he might buy more shares of Havas, which fell 0.12 euro, or 2.5 percent, to 4.67 euros Thursday after rising by more than 30 percent in the last year. He said his presence on the board, as a significant shareholder, would protect the company from hostile takeover bids. In the past, Havas has been seen as a possible takeover target for Sir Martin Sorrell, the chief executive of WPP, who has built that company into one that rivals Omnicom, the biggest advertising company. Sir Martin and Mr. Bolloré have acknowledged having had contact during the bidding for Grey last year. Neither Mr. Bolloré nor Mr. Pouzilhac addressed the question of how, or whether, they would be able to work together. 'I do not want him to leave, but if he should leave, Havas will continue,' Mr. Bolloré said. Employees may also need some reassuring; a group of workers handed out leaflets outside the meeting, saying, 'Don't touch my Havas.' Didier Cornardeau, who represents a group of small shareholders, received a round of applause when he challenged Mr. Pouzilhac and Mr. Bolloré to bury the hatchet. 'What we are asking you to do,' he said, addressing Mr. Pouzilhac, 'is to grow up, to shake hands before you leave here today.' In public, at least, the handshake never happened.

Subject: Do China and U.S. Face Same Woes? From: Emma To: All Date Posted: Fri, Jun 10, 2005 at 09:54:06 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/10/business/worldbusiness/10norris.html Do China and U.S. Face Same Woes? By Floyd Norris TRADITIONAL large employers - the very foundations of the economy - are in trouble. They have debts they may not be able to pay, and are having great difficulty making any money. So they continue to borrow and look to the government for help. The government could just let them fail, saying that those who cannot make the grade in the new era of globalization should make way for those who can. But there are costs to such a strategy, over and above the fact that those companies have friends in high places. Millions of people rely on the companies for more than jobs. They have promised to provide the most basic of needs, including health care and old-age pensions. If they are allowed to fail, the costs could be large. So it is today in China - and in the United States. It is remarkable that two major economies have followed such very different paths to get to such similar problems. In China, the problem lies in the old state-owned industries. Communist China gave those companies all the social responsibilities that governments have in the West, and gave them the right to borrow what they needed at state-owned banks. Now post-Communist (in reality if not in name) China must deal with the residue. It hesitates to close those money-losing operations, and papers over the problems by forcing the banks to keep making loans. In the United States, the problems are with pensions and health care costs, both of them traditionally paid by employers. General Motors, having announced plans to cut employment by 25,000 workers, is trying to get unions to let it cut benefits, but what it really wants is to shift some of what it calls 'legacy costs' - pension and health benefits for retired workers - to the government. THE government's Pension Benefit Guaranty Corporation is deeply in the red, having insured far too many pension benefits for premiums that are far too low. The law has all kinds of strange provisions, as the Government Accountability Office detailed in a report to Congress this week, that lets companies with underfunded pensions hide that fact from workers until it is too late. The obvious solution is to let the guaranty corporation charge higher premiums and force companies to do a better job of funding their pension promises. The Bush administration has proposed such a bill, but many businesses object. It is likely that a watered-down bill will let companies put off dealing with the problem in hopes something will turn up. Sort of like China's method of dealing with some of its state-owned enterprises. Some of the companies most affected are also having trouble competing with Chinese companies, and are pushing for action to make China revalue its currency. China might be more willing if it did not fear the impact of such a move on its banks, and if it did not think it might need the money it is piling up to restructure the state-owned enterprises and provide for their workers. The problem of rising health care costs raises issues of American competitiveness as companies struggle to meet an obligation met by governments in other countries. To make matters worse, Americans pay much more for their health care, in part because they pay high prescription drug costs that offset pharmaceutical companies' research costs. Most other countries impose price controls on drugs, thereby getting what amounts to a subsidy from the companies paying the health care bills in America. There are many differences between the problems faced by China and America, of course, but perhaps one stands out. China is accumulating money that could be used to meet those obligations, while the United States is going deeper into debt.

Subject: Great Blue Heron Preening From: Terri To: All Date Posted: Fri, Jun 10, 2005 at 06:09:12 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4610&u=185|10|... Great Blue Heron Preening New York City--Central Park, The Loch.

Subject: Green Heron Fleeing Hungry Chicks From: Terri To: All Date Posted: Fri, Jun 10, 2005 at 05:48:13 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5480&u=4|7|... Green Heron Fleeing Hungry Chicks New York City--Central Park, The Ramble.

Subject: Watch For Birds From: Terri To: Terri Date Posted: Fri, Jun 10, 2005 at 05:54:23 (EDT) Email Address: Not Provided Message: Watch for wonderful spring birds :)

Subject: Being Green From: Jennifer To: Terri Date Posted: Fri, Jun 10, 2005 at 09:35:11 (EDT) Email Address: Not Provided Message: There is of course no more green than a Green Heron.

Subject: Global Green Trade From: Pancho Villa alias Green-Go! To: All Date Posted: Thurs, Jun 09, 2005 at 21:04:26 (EDT) Email Address: panchovillan@yahoo.com Message: Global Green Trade Joseph E. Stiglitz June 08, 2005 British Prime Minister Tony Blair has promised that the G-8 meeting on July 6 through 8 at Gleneagles, Scotland, which he will lead, will focus on two of the most important and longstanding global problems—Third World poverty and global warming. For a long time, these two issues seemed to be at odds. The developing world understandably does not want to sacrifice its growth for a global public good, especially when the United States, the richest country in the world, seems unwilling to sacrifice even a little of its luxurious life style. Led by Papua New Guinea and Costa Rica, a new rainforest coalition has come forward with an innovative proposal, not only offering to commit to greenhouse gas limits, but also showing how this can be done in a way that will promote their development. Developing countries have long provided a vital global public good: maintaining global environmental assets. Their rainforests are a vast storehouse of biodiversity, and forests are major carbon sinks, reducing the level of CO2 in the atmosphere. I served on the International Panel for Climate Change in the mid-1990's, reviewing the scientific evidence concerning the magnitude of increases in greenhouse gasses and their economic and social consequences. At the time, there was already overwhelming evidence of a serious problem that needed to be addressed, and data since then—concerning, for example, the rapid melting of the polar ice cap—have strongly reinforced this conclusion. About a quarter of all greenhouse gas emissions are from land-use change—mainly deforestation, an amount comparable to U.S. emissions from burning fossil fuels (the United States is the single largest contributor to greenhouse gas emissions). By maintaining their rainforests, tropical countries provide an invaluable global service, one for which they have so far failed to be compensated. But, especially after the signing of the Kyoto Protocol, we can value at least part of these environmental services: carbon sequestration (that is, if they did not maintain their forests, the level of carbon concentrations in the atmosphere would be enormously higher). The Kyoto Protocol has generated new markets for trading carbon emissions, such as the European Emissions Trading Scheme (ETS). At current carbon prices, the value of carbon sequestration by tropical rainforests likely equals or exceeds the current level of international aid being provided to developing countries. In effect, the poor are aiding the rich. Biodiversity and climatic stability are global public goods. The benefits of conservation to the world as a whole far exceed the value of exploitation to a country like Papua New Guinea. The PNG government would like to do the right thing, to maintain its natural capital for future generations. But officials there believe that that they have currently no choice. A huge mistake was made—for a variety of reasons—at Kyoto. While countries can be compensated for planting forests, they cannot be compensated for avoiding deforestation. Countries like PNG would thus be doubly better off if they cut down their ancient hardwood trees and replanted. But this makes no sense economically or socially. These countries should be given incentives to maintain their forests. (There are, as always, technical issues to be resolved, concerning monitoring and measurement, but these can be overcome easily with modern technologies.) At the very least, markets like ETS should credit emissions reductions that result from limiting deforestation. Without such a program, unfortunately, developing countries have neither the means nor incentives to underwrite conservation. There are some 2.7 billion people in more than 60 developing countries that are home to the world’s tropical forests. Cutting down the hardwood forests—even when they presently receive just 5 percent of the final price in, say, New York—is the only way people can make ends meet. Some have suggested waiting to address this issue until 2012, when a revised protocol is supposed to come into effect. But, can we wait? At currents rates of deforestation, the combined contributions to greenhouse gas concentrations from Brazil and Indonesia alone would offset nearly 80 percent of the emission reductions gained from the Kyoto Protocol. What is so impressive about the new rainforest initiative is that it comes from the developing countries themselves; it represents their creativity and social commitment. For the first time, developing countries seem willing to undertake the kinds of commitments that Europe, Japan and the other advanced industrial countries (except the United States) have made to avoid what could be a global disaster. Costa Rica, for example, has already shown that a system of paying for the provision of environmental services —like maintaining natural forests—can work in ways that preserve the environment and boost the economy. Compensating the developing countries for providing these environmental services would be one way of substantially increasing aid and at the same time, providing these countries with the right market incentives. From a global point of view, the best use of these resources is to maintain the forests, which is even possible with managed cutting. This is an initiative around which all countries can and should rally. In a world divided—between rich countries and the poor, between those focusing on environmental protection and those concentrating on growth—this initiative can unite us all. The G-8 leaders should heed the call. Joseph E. Stiglitz, a Nobel laureate in economics, is professor of economics at Columbia University and was chairman of the Council of Economic Advisers to President Clinton and chief economist and senior vice- president at the World Bank. His most recent book is The Roaring Nineties: A New History of the World’s Most Prosperous Decade. Copyright Project Syndicate 2005 http://www.tompaine.com/articles/20050608/global_green_trade.php

Subject: Re: Global Green Trade From: Bobby To: Pancho Villa alias Green-Go! Date Posted: Fri, Jun 10, 2005 at 04:13:43 (EDT) Email Address: robert@pkarchive.org Message: I found it puzzling to see that Tony Blair was making such a large issue of poverty in Africa. Does this issue loom large with the British public and in its political discourse as, say, Terri Schiavo or Howard Dean's verbal gaffes do with us? This is just a question about what is on the minds of the electorate in a foreign country in their political discourse and what their media discusses in its political coverage. Aside from the Time magazine cover a few weeks ago (which really surprised me), it doesn't seem that we in the U.S. discuss poverty in Africa or Latin America very much or even care about it (probably because a large proportion of our population says that it's their own fault).

Subject: Re: Global Green Trade From: Emma To: Bobby Date Posted: Fri, Jun 10, 2005 at 05:35:52 (EDT) Email Address: Not Provided Message: Dear Bobby and Pancho, I have been thinking and worrying similarly. Alas.

Subject: Re: Global Green Trade From: Terri To: Emma Date Posted: Fri, Jun 10, 2005 at 05:55:36 (EDT) Email Address: Not Provided Message: To the lovely 'Greens.'

Subject: Issues of Shareholder Control From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 20:49:37 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/09/business/09place.html Pathmark Vote Tests Wider Issues of Shareholder Control By GRETCHEN MORGENSON After years of investor activism, are shareholders winning or losing the struggle to be treated with the respect that company owners deserve? A vote today by investors in Pathmark Stores may provide an answer. The shareholders of Pathmark, a supermarket chain in New York, New Jersey and Philadelphia, are voting on the purchase of a potentially controlling stake in the company by the Yucaipa Companies, an investment firm based in California. Yucaipa is run by Ron Burkle, a supermarket magnate who is better known as a major Democratic contributor. The $150 million deal will initially give Mr. Burkle's company a 40 percent interest in Pathmark, if it goes through. But Yucaipa would also receive warrants to buy additional Pathmark shares that would increase the firm's stake to 60 percent. Pathmark's directors have recommended that shareholders approve the transaction. Under the proposal, Yucaipa would buy its stake for about $7 a share. None of the Yucaipa money will go to Pathmark shareholders; it will go to the company, which will use it to spruce up some of the 142 Pathmark stores, build new ones and pay down debt. Pathmark's stock closed yesterday at $8.60. If shareholders say yes to Yucaipa, Mr. Burkle's company will receive five board seats and will be in a position to prevent any future bidders from taking over the company. Yucaipa would also receive a five-year consulting contract worth $3 million a year, as well as the repayment of expenses up to $500,000 a year. Under the contract, Yucaipa would provide advice to Pathmark on corporate strategy, marketing and retail development. The Yucaipa bid is certainly a ray of sunshine for Pathmark shareholders, who have endured some bleak years. The company, which emerged from bankruptcy protection in September 2000, said last week that it lost $2.1 million in the first quarter of fiscal 2005 and that sales at stores open at least a year inched ahead just 0.1 percent from the same period in 2004. The stock hit a low of $3.50 last fall after the company repeatedly reduced its earnings projections. But some Pathmark shareholders question why the company's board continues to recommend the Yucaipa deal over competing bids that are far higher and that would actually put money in its owners' pockets. For example, one bidder, which the company has not identified, said it would pay $8.75 a share to buy Pathmark outright. This offer is backed by a financing commitment, Pathmark regulatory filings have noted. (None of the bidders have identified themselves.) Nevertheless, when they vote today, Pathmark shareholders will not be allowed to choose the better of the various offers that have been made for the company. Rather they will decide to accept or reject the Yucaipa transaction. Because they have been given so few details about competing bids for the company - such as who is making them and how they would be financed - Pathmark's shareholders are being asked to trust that their board has done the necessary due diligence to arrive at the appropriate decision on the deal. Institutional Shareholder Services, an influential investor advisory firm in Rockville, Md., has advised its clients to vote against the Yucaipa deal. The firm said that Pathmark's board had failed to provide the company's shareholders with adequate rationale for rejecting an apparently superior bid for the entire company in favor of the offer of a partial investment from Yucaipa at a lower price. 'It's never been clear to us that the board went through all the steps to ensure that they had the best bid on the table,' said Pat McGurn, special counsel at I.S.S. 'There have been filings made in the last 48 hours talking about new bids coming in. It's one of those situations where from our clients' perspective we wanted to indicate that the process should play out a little bit longer.' Harvey M. Gutman, Pathmark's spokesman, said the company was disappointed by I.S.S.'s view. 'The proxy contains full and complete information of the extensive process that we have conducted,' he said, 'and we believe that the Yucaipa transaction is in the best interests of the shareholders.' Mr. Gutman declined to make Pathmark directors available to discuss their recommendation that shareholders approve the deal. Among the reasons Pathmark's directors have given urging shareholder approval of the Yucaipa deal were the investment firm's 'generally successful record' and the promise that stockholders would participate in any upside that might result from improved performance at the company in coming years. The fairness opinion on the Yucaipa proposal, provided by Dresdner Kleinwort Wasserstein Securities, did not address the relative merits of any alternative bids for Pathmark. But Pathmark's board said that the $8.75-a-share offer was not a better deal because it was unlikely to be completed for several months, while the Yucaipa transaction could be done this month. In addition, the board said that further documentation from the bidder's lead lender was needed. Under the terms of the Yucaipa deal, Pathmark's current management will stay on. But the transaction, if it is approved by shareholders, will result in a change of control at Pathmark, allowing its executives to cash in all their stock options. The company did not disclose, however, the amounts its executives stand to receive from the options or from severance agreements that may be activated by the deal. Mr. McGurn called Pathmark's disclosure on such matters inadequate. He added that the results of today's vote could be seen as a barometer of the current state of shareholder activism. 'Ultimately, if Pathmark is forced to delay this meeting or they don't get adequate votes they will have gotten a strong message from investors that they didn't feel there was enough information upon which they could make a decision,' Mr. McGurn said. 'That would be a warning shot across the bow for companies who think that if they approve a deal, their shareholders aren't going to question it.'

Subject: For Retirees, One Home Is Not Enough From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 13:52:58 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/09/garden/09TURF.html?pagewanted=all For Retirees, One Home Is Not Enough By MOTOKO RICH THE most serendipitous move David and Penny Handorf ever made, as far as they are concerned, was buying a house 25 years ago in San Jose, Calif. Last year they sold the four-bedroom house, which they bought in 1980 for $300,000, for just under $1.4 million. With the proceeds they bought a custom-built 5,200-square-foot house in Park City, Utah, for $700,000 and a four-bedroom Tuscan-style house with a guest casita near Chandler, Ariz., for $400,000. 'Without the San Jose sale, we wouldn't have been able to have both places,' said Mr. Handorf, 61, who retired as a manager from a semiconductor manufacturer in 2003. In the Handorfs' case, at least, 'retirement has been transformed by the real estate boom,' he said. Call it the sell one, buy two plan. With the upsurge in house prices in hot markets, a growing number of retirees are cashing out and finding that they can afford to buy not one but two retirement homes. What's more, people now retiring and those preparing to have generally collected more wealth than previous generations. As affluent baby boomers in particular approach retirement, the trend toward two homes is likely to increase. According to the National Association of Realtors, 51 percent of all vacation homes sold in 2004 went to buyers 55 and older, in a year when vacation-home buying in general was up 19.8 percent, to 1.02 million units, from 2003. Of course, in retirement, the definition of a vacation home is fluid. Many retirees are splitting their time between a home near where they worked and raised families, and one in a Sun Belt locale. Although there have always been snowbirds, as retirees who migrate to follow the sun are commonly known, Greg Snyder, the division president in Central New Jersey for U.S. Home, a homebuilder, said many more retirees can afford to buy two homes now than in the past. At Greenbriar Westlake, a retirement community in Jackson, N.J., that is being developed by U.S. Home, nearly 40 percent of all homebuyers own another home in Florida or some other Sun Belt state, Mr. Snyder said, up from about 20 percent of buyers in the developer's other 55-and-over communities 10 years ago. In addition to their swollen home equity, many of today's retirees have accumulated large amounts of wealth. And the baby boomers, the oldest of whom will turn 60 next year, appear to be 'on the verge of retiring wealthier and healthier,' said Nicolas P. Retsinas, the director of the Joint Center for Housing Studies at Harvard. 'I think I'm different from my parents,' said Billy Halpern, a 53-year-old hair salon owner who, with his wife, Marjorie Halpern, 57, a Weight Watchers leader, has bought a house in a gated community in Boynton Beach, Fla., and a condominium in a retirement enclave on Long Island. When his parents retired, he said, 'they bought a condo on Long Island and that was fine; they were near their family, and that was enough for them.' Mr. Halpern, by contrast, said he didn't like the Northern winters and preferred to spend the cold months in Florida. 'I want a little more out of life than they took,' he said. In an effort to capture the growing group of retirees inclined to buy two homes, developers are building age-restricted retirement communities across the Northeast, the Atlantic Seaboard and parts of the Midwest as fast as they can. The number of so-called 'active adult' communities in 10 states in those regions, including New York, New Jersey, Connecticut, Massachusetts, Virginia and Illinois, increased by nearly 500 percent between 1995 and 2004, from 60 to 355, said William R. Parks, a consultant to homebuilders who works in Scottsdale, Ariz. In some cases - particularly in the Northeast, where real estate prices may make it harder for buyers to afford two homes - builders are selling smaller town houses and condos. 'We're trying to develop communities that have a variety of different product offerings so that somebody can come in at various price points,' said Mitchell C. Hochberg, the president for the Northeast United States region of WCI Communities, a homebuilder that develops communities for those over 55 in both the Northeast and in Florida. 'So if they want to have two homes, they have the ability to buy something smaller here rather than spending more and only having one place.' At Encore Lake Grove, WCI's new retirement community on Long Island, for example, Mr. Hochberg said the company is building 1,450-square-foot condos, which are selling for around $400,000, along with 2,400-square-foot town houses, selling in the low $600,000's. Some who buy first in the Sun Belt and discover the resortlike qualities of retirement communities there - clubhouses, golf courses and services like lawn mowing and landscaping - are now deciding to buy something similar in the North. David and Meredith Markfield bought a house in a retirement community in Poinciana, Fla., two years ago when they sold a 2,800-square-foot house in Commack, N.Y., for $410,000. At the time, since Mrs. Markfield, 54, was (and still is) working as a middle school English teacher, the couple also bought a $320,000 town house in Hauppauge, not far from Commack. But Mr. Markfield, 58, who is a retired high school principal, quickly became bored. Having grown accustomed to the leisure-oriented setting in Florida, the couple decided earlier this year to buy a new $463,000 town house in one of the new WCI communities on Long Island. Mr. Markfield said he was looking forward to swimming in the indoor pool, hitting some balls on the putting green and meeting people his age at the clubhouse. Meanwhile, Mr. Markfield said, the booming real estate market is likely to help the couple pay close to all cash for their new town house, because the value of the one in Hauppauge has appreciated greatly in the two years since they bought it. 'You get lucky once in a while,' he said. Indeed, some retirees are cashing out of their old homes earlier than they had planned, in part out of concern that sales prices are peaking (even if the new homes they buy as replacements are nearly as expensive). Carl and Barbara Natola bought a condo in a gated golf retirement community in Bonita Springs, Fla., three years ago and were happy spending three-quarters of the year in their three-bedroom colonial-style home in Saugus, Mass., where they raised two children and had lived for 31 years. But two years ago, Mr. Natola, 65, and Mrs. Natola, 64, decided that they should sell it. 'With the market being what it was, where the value of the homes were at a high and the mortgage rates were low, I felt it would be nice and easy to sell the house,' Mr. Natola said. They sold in Saugus for $415,000 and bought a $385,000, two-bedroom house in Great Island, a retirement community in Plymouth, still within driving distance of their children and grandchildren in New Hampshire and Connecticut. Nonetheless, even as the strong housing market is helping an increasing number of people spend their retirement in multiple places, some buyers have made compromises. The Handorfs, for example, had originally wanted to retire in San Diego when they first realized how much their San Jose house was worth. But they quickly realized that an oceanfront house there would be even more expensive than the home they were leaving. Since one of their daughters lives in Salt Lake City and they had previously lived in Tempe, Ariz., they decided to leave California altogether, even though their other daughter lives in San Francisco. Mr. Handorf, who recalls how his parents split their retirement between a house in Phoenix and an Airstream trailer, said he considers his own arrangement an upgrade. 'That's just a difference in the real estate,' he said. 'They didn't have the luck we did of owning a house in San Jose for 24 years.'

Subject: International Savings From: Jennifer To: All Date Posted: Thurs, Jun 09, 2005 at 12:12:29 (EDT) Email Address: Not Provided Message: Putting together all of Alan Greenspan's suppositions, there is a considerable amount of international dollar accumulation and saving relative to investment opportunities. A reasonable portion of this saving has to be coming to the American bond market, whether to buy Treasury or mortgage or corporate debt. The proportion of saving in several Asian countries is astonishing. We are capturing international saving, much to the surprise of many analysts.

Subject: Revenue and Saving from Oil Production From: Jennifer To: Jennifer Date Posted: Thurs, Jun 09, 2005 at 12:59:41 (EDT) Email Address: Not Provided Message: A year ago during the spring, oil was priced about 35 dollars a barrel. This spring oil has been 50 to 55 dollars a barrel. Hundreds of billions of dollars in oil additional revenue has accumulated. Other than in Venezuela, there is fairly little investment of the funds. Exxon Mobil has not significantly increased investment relative to earnings. Again, I imagine these funds are finding a way to American debt markets. Remember, the dollar has stabilized and climbed against other major currencies since December. Why not hold Treasury debt?

Subject: Liquidity and Bonds From: Jennifer To: All Date Posted: Thurs, Jun 09, 2005 at 11:59:35 (EDT) Email Address: Not Provided Message: Corporate savings here and in Europe are near record levels, and there must be enormous amounts of savings by international energy producers. Where is Norway's oil revenue going? Russia's? Saudi Arabia's? There is simply not much investment of oil revenue that I can find. I suspect lots of corporate money is going to buy Treasury debt. I never use a money market, but rather buy Vanguard bond funds with any money I wish to keep liquid. I adjust durations, but I never leave the bond market. Corporations are the same, so I suspect there is plenty of private liquidity to support Treasury prices.

Subject: Monetary Policy From: Terri To: All Date Posted: Thurs, Jun 09, 2005 at 11:32:22 (EDT) Email Address: Not Provided Message: Since Argentina had a currency tied to the dollar, there could be no independent monetary policy. The Federal Reserve was in effect Argentina's central bank. Interest rates in Argentina simply moved enough to keep the Peso-dollar peg. We however have an independent central bank. There were many economists who thought the Fed should not interfere with asset prices other than by talking about them now and then. I agree. That Alan Greenspan essentially supported the series of tax cuts from 2001 is most unfortunate, but that is a fiscal policy matter. So, I consider the Fed independent at least so far. Milton Friedman long ago made the foolish comment that a computer could control money supply and that would be all the central bank needed. The comment was foolish but was reversed several years ago. While I find fiscal policy a sore problem, I still do not fault monetary policy and evidently the markets do not fault monetary policy, but friends are highly critical of my stance.

Subject: Appetite for Stocks Slackening in China From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 10:18:26 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/business/worldbusiness/08yuan.html?pagewanted=all Appetite for Stocks Slackening in China By KEITH BRADSHER HONG KONG - Investors are showing signs of losing interest in Chinese stocks just as investment banks are preparing a long list of Chinese initial public offerings. That combination could make it hard to sell all the shares coming to market and could slow China's efforts to privatize its state-owned industries. Delays in Chinese initial public offerings could also set back big banks like Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS. China has become the world's second-largest generator of investment banking fees for such offerings, ahead of Europe but behind the United States. All of these banks have been successful lately in winning the right to sponsor such offerings, most of them done in Hong Kong. The world's largest initial public offering so far this year, the China Shenhua Energy Company, a big coal mining concern seeking to raise $3.6 billion, attracted lukewarm demand as bidding closed Tuesday, with lower oversubscription rates than seen on big China issues last year. It was expected to be priced toward the low end of expectations at a meeting in New York. Earlier Tuesday, the China Minsheng Banking Corporation, the largest bank in China organized by private investors, unexpectedly canceled meetings here to promote its $800 million offering to investors. The stock sale was previously planned for early July. And on Monday, the Bank of Communications, China's fifth-largest state-owned bank, disclosed a lower price range than expected for its $1.9 billion initial public offering on June 23. Even money managers at funds specializing in China stocks are expressing worry about a glut of offerings. 'I really think it's too much, particularly given that the market is not performing that well,' said Romeo Dator, the portfolio manager of the U.S. Global China Region Opportunity Fund in San Antonio. 'We're not planning to participate in any of these.' Some money managers see a broad decline in enthusiasm for China. Wary of trade disputes with the United States and possible Chinese interest rate increases, and weary of stagnant prices here and eight-year lows on the Shanghai stock market, investors are steering more money toward other emerging markets. 'By and large, the fascination with China has waned' in the last several months, said Choo Yoon-lai, the portfolio manager of the Comgest Growth Greater China Fund here. Leaders of the biggest investment banks in Asia, all based here, said in interviews over the last week that they knew the risks of bringing big initial public offerings to market now, but still thought they could find buyers. 'Investors love China. These offerings are the growth of China, and when priced appropriately, can be' completed, said Robert Morse, the chief executive of Citigroup's corporate and investment banking operations in Asia. But Mr. Morse also acknowledged that some investors, large and small, were looking at the China stakes they had accumulated after years of large initial public offerings by Chinese companies. 'Investors want to make sure they don't put too many eggs in one basket,' he said. 'Individual investors have to define what aggregate exposure they want for China relative to other Asian opportunities.' Gokul Laroia, the head of Asian capital markets for Morgan Stanley, said investors were cautious about some companies but still interested in Chinese stocks. 'It's entirely deal-specific,' he said. 'We don't sense China fatigue.' Some investment bankers say it is not new for Chinese companies to be selling a lot of shares, as the country's gradual transition from central planning to capitalism has inevitably meant putting many shares into private hands. 'There is a lot of Chinese paper, but historically there has been a lot of Chinese paper coming to the market,' said Matthew Koder, UBS's head of Asian equity capital markets. 'Is there too much paper coming? Not really.' The Shenhua Energy deal was oversubscribed by at least four times by institutional investors and by at least 15 times by retail investors, bankers said. That was easily enough to get the deal done and quite adequate by international standards, especially for a large deal for a stock in an unglamorous industry. But it was a far cry from the 60 or more times oversubscriptions by institutional investors on Chinese initial public offerings early last year, and even higher oversubscription ratios for retail investors. And with money managers leery of Chinese stocks, the fairly modest subscription rate for Shenhua means bidders for shares will have to pay for large allotments, so they will have less cash for future Chinese stock deals. Deutsche Bank, Merrill Lynch and the China International Capital Corporation were the lead advisers to Shenhua. Goldman Sachs, Citigroup and Deutsche are handling the Minsheng deal, while Goldman Sachs and HSBC are sponsoring the Bank of Communications offering. More big deals are ahead. The China Cosco Holdings Company, the country's biggest container line, is planning an initial public offering of up to $2 billion in the next month, but a recent plunge in shipping rates could make its shares harder to sell. The biggest offering of all, a $5 billion transaction by the China Construction Bank, is supposed to happen later this year, sponsored by Citigroup and Morgan Stanley. But the deal has had difficulties as China Construction has struggled to curb corruption and find a big foreign bank willing to take a strategic stake as part of the initial offering. This has prompted some investment bankers to predict that China Construction will have to reduce the number of shares sold; accept a fairly low price for the shares; delay the deal until next year; or all three. Raising money is often not the top priority of Chinese companies that hold initial public offerings. Chinese banks are famously generous with loans to large state-owned enterprises, one reason the banks have so many nonperforming loans. The biggest reason Beijing officials encourage many companies to sell stock is to improve corporate governance in China, said Rodney G. Ward, the chairman of UBS's Asian investment banking operations. 'It's only once you're in the public eye you're subject to public pressure, to analyst pressure and to investor pressure,' he said. While some investors seem to be losing their enthusiasm for placing bets on stocks in Hong Kong, others remain intrigued by the potential to buy stocks on Chinese exchanges, which may rise in dollar terms if the yuan is revalued as the Bush administration demands. This interest has persisted even though the Chinese government has strictly limited such investments; even though Chinese exchanges have reputations for listing troubled companies and tolerating irregular trading practices; and even though Chinese investors have pushed prices to eight-year lows. UBS has gathered $800 million from investors to buy stocks on the mainland, and Mr. Ward said, 'If we were given the chance to open the spigots, we could double that in as little as 24 hours.'

Subject: (White) House Party for Lobbyists From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 09:53:42 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/09/opinion/09thu2.html A (White) House Party for Lobbyists President Bush moved quickly after the 2000 election to fill many of the important environmental and energy jobs with corporate lobbyists who had spent their careers trying to weaken the laws they would then swear to protect. Most were vetted by Karl Rove and Dick Cheney. The result has been an erosion of the regulatory framework protecting the country's air, water, public lands and wildlife, combined with a chronic unwillingness by the administration to address difficult environmental issues. Anyone needing evidence of industry's influence need look no further than Andrew C. Revkin's article in Wednesday's Times involving the handiwork of one Philip Cooney, an important but heretofore obscure official who serves as chief of staff of the White House Council on Environmental Quality. Mr. Cooney spent his immediate pre-White House years as a lawyer at the American Petroleum Institute, where he helped organize the oil industry's fight against limits on greenhouse gas emissions from factories and automobiles. Mr. Revkin reported that Mr. Cooney had been fighting the same fight in his new job by sanitizing government reports in an effort to cast doubt on the link - a link accepted by mainstream scientists - between climate change and the emissions caused by burning fossil fuels. Creating uncertainty about that connection, of course, reduces the chances that anything meaningful will be done to clamp down on those emissions and thus to discomfit Mr. Bush's corporate allies. This is hardly the first time this administration has tinkered with the truth. In 2002 and 2003, about the same time Mr. Cooney was deploying his literary skills, the White House censored two Environmental Protection Agency reports that linked warming to industrial activity. It's sad to think of a White House run by people who believe that a problem can be edited out of existence.

Subject: Europe's Latest Economic Scapegoat From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 09:43:38 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/09/business/worldbusiness/09euro.html Europe's Latest Economic Scapegoat: The Euro By FLOYD NORRIS PARIS - Is the euro in danger of dying before it reaches its seventh birthday? A suggestion by Italian cabinet ministers that the country hold a referendum on withdrawing from the common currency drew denunciations from much of Europe, as finance ministers met in Luxembourg this week. But the fact that they were discussing the issue at all highlighted the notion that Europe's common currency is taking part of the blame for the Continent's economic woes. Few, if any, think the euro will stop being the legal currency of much of Europe. But after French and Dutch voters stunned the political establishment by rejecting the proposed European constitution, those opposed to other European institutions have been emboldened. 'It is just inconceivable that a country could envisage dropping out of the euro,' said Jean-Claude Juncker, the Luxembourg premier and current president of the European Union. Hans Eichel, the German finance minister, said the very idea of a country withdrawing was 'nonsense,' and Pedro Solbes, the Spanish economy minister, called the common currency 'irreversible.' The row was started when two Italian cabinet ministers from the Northern League, which is tenuously allied with Prime Minister Silvio Berlusconi, suggested a referendum on returning to the lira. Mr. Berlusconi did not endorse the idea, but neither did he denounce it. For the last year, he has said the blame for many of Italy's economic woes lies with the European Central Bank, for keeping interest rates too high and for allowing the euro to gain against the dollar. Nostalgia for national currencies has risen in the last year as European unemployment has remained stubbornly high and growth has trailed that of the United States and Asia. A poll taken late last month by the Forsa organization for Stern magazine found 56 percent of Germans preferred to return to the mark. The magazine said the margin of error was three percentage points. On one level, the euro has been a great success. Travel among the 12 countries that use it is far easier, and companies in those countries can contract with others knowing there is no currency risk involved. The euro was officially created at the beginning of 1999, but actual euro coins and bills did not become legal currency until the beginning of 2002. But economic integration of the euro zone has not come as rapidly as some had hoped and that has created stresses. 'You cannot succeed over any length of time with one monetary policy and 12 fiscal policies,' said Robert Barbera, the chief economist of ITG Inc. Europe tried to finesse that fact with an agreement that no government using the euro would allow its budget deficit to exceed more than 3 percent of gross domestic product, but in fact a number of countries have exceeded that limit. Rather than levy fines, as was envisioned, the response thus far has been to weaken the rule while encouraging countries to do better. To the extent that Europe does pursue excessively easy fiscal policies, the response would probably be a weakening of the currency, as has happened in recent weeks. That has aroused concern in Europe even though some, including Mr. Berlusconi, have been loudly calling for a weaker euro for many months. When the euro was being designed, some economists forecast that European countries would be forced to liberalize their economies because devaluation within the euro zone would be impossible. In that context, liberalization refers to making an economy more flexible, with workers easier to hire and fire. Most European governments have tried to follow that prescription in one way or another, but anger from voters and unions has forced retreats, and in some countries liberalization has become very unpopular. Before the euro was cast in stone, Italy periodically allowed its currency to depreciate against the German mark. Such devaluations were often turbulent, and were accompanied by pledges that it would not happen again. But they served to allow the Italian economy to regain competitiveness with other European economies where inflation was lower and productivity growth greater. Since the euro was introduced, those trends have continued, but devaluation is out of the question. Italy is now in recession. Blaming Europe for national problems has happened in countries besides Italy and pressure has been growing on the European Central Bank to lower its short-term interest rate, now at 2 percent. Jean-Claude Trichet, the president of the central bank, has backed away from statements ruling out a rate cut, though he has not endorsed one. Lower interest rates might help stimulate European economies, and a lower euro could help exporters, but neither would address issues of Italy's competitive position with other parts of Europe. Its position has also been hurt because some of its traditional industries, like textiles, have been damaged by Chinese competition. It is not clear how Italy, or any other country in the euro, could withdraw if it wished to do so. The Maastricht Treaty that established the currency has no withdrawal provision. If a country were to insist on withdrawing, presumably it could. But there would be the risk of higher interest rates and a greater reluctance of foreigners to invest. There would also be issues of whether debts contracted in euros could be converted to national currencies that might then depreciate against the euro. For now, it is unlikely that talk of countries getting out of the euro will advance very far. But the talk highlights that the financial unification of Europe is a work in progress, one that has not advanced as rapidly as its advocates expected. 'We are proceeding too slowly,' Mr. Trichet said this week in Beijing, where he was attending a conference of central bankers, 'but we are proceeding with unifying the market.'

Subject: Re: Europe's Latest Economic Scapegoat From: Setanta To: Emma Date Posted: Thurs, Jun 09, 2005 at 12:24:27 (EDT) Email Address: Not Provided Message: Ha...its funny to hear the economic basketcase of europe blaming its woes on others! its altogether too convenient for the government to blame (or fail to correct) someone else. before entrance into the euro Italy kept on devaluing in order to achieve some sort of trade advantage. if they continued with this policy the italian lira would be as worthless as the turkish lira and a packet of chewing gum would cost L1,000,000! there is absolutely nothing wrong with the currency and everything wrong with the italian economy. italy is not noted for its service industry, it is noted for its car manufacturers (think Fiat) and food manufacturers (think Parmalat)! there is a malaise endemic in the italian manufacturing sectors however it is much more palatable to rail against the faceless, foreign monolith that is the ECB than sort out their own house. pah...i'd place as much confidence in their pronouncements as i would with their predictions, last month, of AC Milan winning the Champions League!

Subject: Re: Europe's Latest Economic Scapegoat From: Terri To: Setanta Date Posted: Thurs, Jun 09, 2005 at 13:06:20 (EDT) Email Address: Not Provided Message: Italy is Europe's prime problem, and essentially Italy is threatening Europe with allowing a breaking of the pact on fiscal responsibility or risking rising hostility against the Euro from Italy. The Italian government is not willing to act in a responsible and long term thinking manner to facilitate transition from a manufacturing to an increasingly service producing economy.

Subject: Disappearance of James Duesenberry From: Emma To: All Date Posted: Thurs, Jun 09, 2005 at 09:40:18 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/09/business/09scene.html The Mysterious Disappearance of James Duesenberry By ROBERT H. FRANK UNLESS you are a professional economist nearing retirement, the name James S. Duesenberry is probably unfamiliar. By itself, that is unsurprising, because he wrote primarily for academic audiences while on the Harvard economics faculty from 1946 to 1989. The real surprise is that most academic economists under 50 have also never heard of Mr. Duesenberry. This is puzzling because his theory of consumer behavior clearly outperforms the alternative theories that displaced it in the 1950's - a striking reversal of the usual pattern in which theories are displaced by alternatives that better explain the evidence. His disappearance from modern economics textbooks is an intriguing cautionary tale in the sociology of knowledge. But it also has important practical implications. Unless we understand what drives consumption, which makes up two-thirds of total economic activity, we cannot predict how people will respond to policy changes like tax cuts or Social Security privatization. Any successful consumption theory must accommodate three basic patterns: the rich save at higher rates than the poor; national savings rates remain roughly constant as income grows; and national consumption is more stable than national income over short periods. The first two patterns appear contradictory: If the rich save at higher rates, savings rates should rise over time as everyone becomes richer. Yet this does not happen. Mr. Duesenberry's explanation of the discrepancy is that poverty is relative. The poor save at lower rates, he argued, because the higher spending of others kindles aspirations they find difficult to meet. This difficulty persists no matter how much national income grows, and hence the failure of national savings rates to rise over time. To explain the short-run rigidity of consumption, Mr. Duesenberry argued that families look not only to the living standards of others, but also to their own past experience. The high standard enjoyed by a formerly prosperous family thus constitutes a frame of reference that makes cutbacks difficult, which helps explain why consumption levels change little during recessions. Despite Mr. Duesenberry's apparent success, many economists felt uncomfortable with his relative-income hypothesis, which to them seemed more like sociology or psychology than economics. The profession was therefore immediately receptive to alternative theories that sidestepped those disciplines. Foremost among them was Milton Friedman's permanent-income hypothesis, which still dominates research on spending. Mr. Friedman argued that a family's current spending depends not on its current income, but rather on its long-run average, or permanent, income. Because economic theory predicts that people prefer steady consumption paths to highly variable ones, Mr. Friedman argued that people would smooth their spending - saving windfall income gains and drawing down savings to cover windfall losses. Consumption should thus be more stable than income over short periods. Mr. Friedman also argued that a family's savings rate should be independent of its income, leading him to predict the long-run stability of national savings rates. Mr. Friedman dismissed the high savings rates of the rich as a statistical artifact. Because many of those with high measured incomes in any given year will have enjoyed positive windfalls, their permanent incomes will be lower, on average, than their measured incomes for that year. So if they save windfall gains, they will save a higher proportion of their measured incomes than of their permanent incomes. The converse holds for those with low measured incomes in any given year, who will have experienced a preponderance of windfall losses that year. Although it is a tidy story, its fundamental premises are contradicted by the data. As numerous careful studies have shown, for example, savings rates rise sharply with permanent income. Mr. Friedman's defenders responded by arguing that rich consumers want to bequeath money to their children. But why should the poor lack this motive? Another problem is that people consume windfall income at almost the same rate as permanent income. To this, Mr. Friedman responded that consumers appear to have unexpectedly short planning horizons. But if so, then consumption does not really depend primarily on permanent income. Strangest of all, Mr. Friedman's theory assumes that context has absolutely no effect on judgments about living standards. It predicts, for example, that an investment banker will remain equally satisfied with his twin-engine Cessna, even after discovering that his new summer neighbor commutes to Nantucket in an intercontinental Gulfstream jet. In light of abundant evidence that context matters, it seems fair to say that Mr. Duesenberry's theory rests on a more realistic model of human nature than Mr. Friedman's. It has also been more successful in tracking actual spending. And yet, as noted, it is no longer even mentioned in leading textbooks. What is going on here? The psychologist Tom Gilovich has suggested that someone who wants to accept a hypothesis tends to ask, 'Can I believe it?' In contrast, someone who wants to reject it tends to ask, 'Must I believe it?' Most economists, it appears, just never wanted to believe the relative-income hypothesis - perhaps because it suggests the possibility of wasteful spending races. But whatever the original reason for Mr. Duesenberry's disappearance, the profession's mood seems to be changing. As evidenced by the Nobel Prize in economics having been awarded to a psychologist, Daniel Kahneman, in 2002, economists are showing new receptiveness to insights from other social sciences. Professor Duesenberry, now 86, is alive and well in Cambridge, Mass. His theory is ripe for a second look. Robert H. Frank is an economist at the Johnson School of Management at Cornell University.

Subject: Male Blackburnian Warbler From: Terri To: All Date Posted: Thurs, Jun 09, 2005 at 07:29:08 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4504&exhibition=4&u=738|48|... Male Blackburnian Warbler New York City--Central Park, Tupelo Meadow.

Subject: Howard Dean From: Pete Weis To: All Date Posted: Wed, Jun 08, 2005 at 23:50:14 (EDT) Email Address: Not Provided Message: Is he hurting the Democrats or is he just telling it like it is? Should the Democrats be more politically correct or speak their mind? Will events evolve to bring voters more in line with what Dean is saying or will American opinion go on relatively unchanged resulting in the electorate feeling offended and alienated by the Democratic Chairman? Does it matter what shape general public opinion is in presently or is it more important to speak one's honest convictions? Are Howard Dean's convictions in line with most Democrats or is he out of step?

Subject: Re: Howard Dean From: Bobby To: Pete Weis Date Posted: Thurs, Jun 09, 2005 at 07:01:52 (EDT) Email Address: robert@pkarchive.org Message: Of course the media's focus on Dean is yet another example of its liberal bias. However, in terms of defending themselves, I don't understand why Democrats can't just retort by having a ready list of outrageous comments by members of the Republican Congressional leadership or RNC chair Ken Melman (though he's so dull, I think it would be more fruitful to look at other Republicans' comments). If asked about the Dean flap in interviews, Democrats should read such a list, point out the media's outright bias by focusing only on Dean and then refuse to dignify the issue with further discussion. Democrats are asleep at the switch here in terms of responding effectively to these attacks on Dean -- that is, when they are not self-servingly stabbing him in the back, as Biden and Pelosi have done.

Subject: Interest Rates and an Economic Downturn From: Terri To: All Date Posted: Wed, Jun 08, 2005 at 20:52:34 (EDT) Email Address: Not Provided Message: The problem I have is trying to imagine both a recession and rising interest rates together. A recession might easily be set off by rising interest rates but as the recession settles in interest rates will fall and fall whether the Federal Reserve acts or not. Long term interest rates began to fall from January 2000, before the Fed had finished raising short term rates and more than a year before the recession. Then I can understand a downturn in the economy that might be set off by higher interest rates and that might in turn lead to a bear market in stocks, but I cannot imagine a bear market in bonds at the same time.

Subject: Re: Interest Rates and an Economic Downturn From: Pete Weis To: Terri Date Posted: Wed, Jun 08, 2005 at 23:38:40 (EDT) Email Address: Not Provided Message: Think 1970's thru early 80's but with a lot more dollars flooding the world because of large and persistant current account and budget deficits. Think Argentina or as Paul Krugman recently mentioned -'banana republic'.

Subject: Re: Interest Rates and an Economic Downturn From: Terri To: Pete Weis Date Posted: Thurs, Jun 09, 2005 at 05:54:40 (EDT) Email Address: Not Provided Message: The markets of 1966 to 1982 are the perfect example of what I argue. Bond funds to my initial surprise were a fine protection against weakness in stocks. The Vanguard Corporate Bond Fund begun in September 1973 was moderate in duration and performed well through 1981 for investors. But, value stocks were the preferred investment even with 1973 and 1974. A patient investor would have done well because of high and growing stock dividends through the entire period. Now, however, there is a lack of dividends. Though I appreciate each word of Paul Krugman, we are not Argentina nor will we be and the comparison is only meant to be dramatic.

Subject: Adjust for Inflation From: David E.. To: Terri Date Posted: Thurs, Jun 09, 2005 at 19:14:16 (EDT) Email Address: Not Provided Message: Did you adjust for inflation? Using nominal is misleading for this time period. Using my copy of 'triumph of the Optimists' p 75, it looks like a $1 invested in 1966 bonds didn't recover back to 100 pennies until 1987.

Subject: Re: Adjust for Inflation From: David E.. To: David E.. Date Posted: Fri, Jun 10, 2005 at 01:17:16 (EDT) Email Address: Not Provided Message: That is almost 20 years investing with no return. What has happened can happen again. Bond investors were very discouraged.

Subject: Re: Adjust for Inflation From: Terri To: David E.. Date Posted: Fri, Jun 10, 2005 at 09:33:40 (EDT) Email Address: Not Provided Message: David, all you write is important as always, but the writer is not taking to account using a constant duration bond portfolio which adjusts to interest rate changes during the duration period. Of course, the real answer from 1966 to 1982 was value value value stocks.

Subject: Re: Adjust for Inflation From: David E.. To: Terri Date Posted: Fri, Jun 10, 2005 at 10:54:50 (EDT) Email Address: Not Provided Message: Because I don't see the difference between the operation of a constant duration bond portfolio and a simple calculation of principal times current interest rate. Inflation was severe in this time period - have you corrected for inflation? If you are right I wasted my money on 'Triumph of the Optimists' because the chart is useless.

Subject: Re: Adjust for Inflation From: Terri To: David E.. Date Posted: Fri, Jun 10, 2005 at 13:43:09 (EDT) Email Address: Not Provided Message: 'Triumph of the Optimists' is a fine source for all of us, and later I will go through the bond market return chart from 1966 to 1987. We may simply have to know what bond is depicted. Are we using the 10 year Treasury to gauge returns? If we are using the 10 year Treasury, then I can easily imagine a real return of 0 through the 20 year period.

Subject: Re: Adjust for Inflation From: David E.. To: Terri Date Posted: Fri, Jun 10, 2005 at 15:40:06 (EDT) Email Address: Not Provided Message: Treasury Bills, approx 5 years bonds and approx 20 year bonds. Maybe 5 year bonds broke even by 1981-83. What killed bonds was inflation. The saving grace this time is the probability that deflation might happen. Bonds do well in deflation. So I think there is a pretty good probability that we will do OK.

Subject: Re: Adjust for Inflation From: Terri To: David E.. Date Posted: Fri, Jun 10, 2005 at 16:28:23 (EDT) Email Address: Not Provided Message: Yes; there is the data. Going 15 to 20 years with no real gains from a bond portfolio is not a pleasing prospect. Then, again, I will think through the prospects of bond funds. The situation is like 1966 in that we have a 10 year Treasury yield at a low 4.05%. Though there are projections for lower bond yields, I am only concerned with higher yields. Difficult problem.

Subject: Re: Adjust for Inflation From: Terri To: Terri Date Posted: Fri, Jun 10, 2005 at 17:17:59 (EDT) Email Address: Not Provided Message: Working in real terms, you have added a level of complexity that will take some thought to find the proper approach to. That is my project for a few days. A solution of course seems to be the Vanguard Inflation Protected Bond Fund. Hmmm....

Subject: Re: Interest Rates and an Economic Downturn From: Terri To: Terri Date Posted: Thurs, Jun 09, 2005 at 07:20:28 (EDT) Email Address: Not Provided Message: Households with saving must invest to live properly in future years. I completely believe that prudent value oriented stock and bond fund investment will tide us through a possibly difficult even extended period of economic weakness. This is not a belief in arrogance, but of as much study as I have done. Look to where the Vanguard-MSCI Utility Index was 5 years ago or even 1 year ago. There are proper investments if we look carefully and think.

Subject: Re: Interest Rates and an Economic Downturn From: Poyetas To: Terri Date Posted: Thurs, Jun 09, 2005 at 05:59:53 (EDT) Email Address: Not Provided Message: I don't think the Argentina comparison should be made from a capital market perspective. Argentina could have kept on going had it not been for two things, 1. Increasing real interest rates due to deflation caused by an overvalued fixed currency (and thus a downward pressure on prices) which contributed greatly to No.2. Continuous government deficits that led the country to borrow such great amounts that the debt was no longer servicable. Between 1993 and 1999 Argentina's debt increased by over 200% while income actually fell. The US has an independant central bank so it can easily avoid the vicous circle that Argentina found itself in, but the current administration has been just as inept in managing the bottom line. Who ever thought GM and Ford would be nothing more than junk bonds???

Subject: Re: Interest Rates and an Economic Downturn From: Pete Weis To: Poyetas Date Posted: Thurs, Jun 09, 2005 at 09:48:27 (EDT) Email Address: Not Provided Message: 'The US has an independant central bank so it can easily avoid the vicous circle that Argentina found itself in...' Is it really independent? When Greenspan talked about irrational exuberance in the mid 90's, did he yield to Wall Street and public pressure or did he take action to cool off the markets, which is just what one of his fed governors was demanding. When the Bush administration suggested its tax cuts would be a good idea he agreed. In a recent interview, Milton Friedman suggests that the Federal Reserve should be abolished in favor of some sought of computer/software controlled monetary system, which tells me he believes the Fed under Greenspan has not been 'independent'.

Subject: Re: Interest Rates and an Economic Downturn From: Terri To: Poyetas Date Posted: Thurs, Jun 09, 2005 at 07:22:01 (EDT) Email Address: Not Provided Message: Interesting comments to think about as usual.

Subject: Think Like a Neanderthal From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 20:22:58 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/science/07conv.html?pagewanted=all Sage Advice in Archaeology: Think Like a Neanderthal By CLAUDIA DREIFUS About three years ago, Dr. Ana Pinto, an archaeologist at Arizona State University, was driving past a natural outcropping in northwest Spain and - screech! - she put the brake to her car. She had just spotted a limestone cave that she sensed might have once been settled by prehistoric humans. For the next six months, she excavated the cave by hand, pushing through animal waste, bones, mud and human artifacts. By the time she had dug some nine feet deep, she knew she had hit the archaeological jackpot. 'This cave at Sopeńa is almost unique because it has signs of continuous hominid habitation for at least 60,000 years,' she said. 'This is an incredibly rare find.' Dr. Pinto, 45, who was born in Spain, came to New York City recently to receive an award from Wings WorldQuest, a foundation supporting women who make careers as explorers and scientists. For people in her field, she said, it often pays to think 'like a Neanderthal.' Q. When you were growing up in 1970's in Spain, did you want to be an archaeologist? A. I didn't want to be what my mother was. She'd stayed at home with eight children. In that time, we still had the Franco dictatorship and life was very conservative. My family, they told me, 'You can be a wife or you can be a prostitute.' I read books about archaeology like 'Gods, Graves and Scholars' by C. W. Ceram, and I said I wanted to do that. My family told me, 'No, no, you will go off to these countries and the men will want to rape you.' I was a difficult kid for my parents. At 15, I left their house. I joined the anti-Franco resistance. I worked in the factories to plant the idea of unions. Eventually, I went to university at night reading sociology, politics and archaeology. Q. Your doctorate research, what was it on? A. Cave bears. Before my research, we thought these extinct animals had been herbivorous. I showed they'd been a least partly carnivorous. In fact, they may have eaten each other. I looked at four European caves where large numbers of their bones are found. I looked systematically at thousands of bones from different dates in prehistory to see what parts were intact, what types of tooth marks the bones had on them. Using scientific methods, I showed how the tooth marks could only have come from other cave bears - a sign of cannibalism or savaging. This is important work. We need to know about how extinct animals lived because we cannot observe them. The same is true for prehistoric humans. Q. Were your cave bears studies connected to your interest in prehistoric humans? A. Absolutely. It is thought that one reason we find huge cave bear bone accumulations in European caves is that Neanderthals probably hunted them. My current research area is the extinction of Neanderthals in Europe and the spread of modern humans thought to have left Africa some 40,000 years ago. It is believed that when modern humans arrived in Europe, the Neanderthals disappeared. With this subject, you often work in caves. All prehistoric Europeans liked living in caves. The caves had to be oriented to the southwest for sun and warmth. They needed a cave high up over a river. Why? Because the animals they hunted would come to the river to drink and from above, they could make hunting plans. Plus they needed to be near a water source for themselves. Over the years, I found a few caves that met this requirement, but none were continuously inhabited. Sopeńa was rich with 16 layers of sediment, all with signs of the earliest humans. The cave's habitation spans Neanderthal times and the beginnings of modern humans in Europe. Because of this, Sopeńa is like a book that has all the pages. There are no pages missing. Q. Are there clues at Sopeńa to why the Neanderthals disappeared? A. One of prehistory's big questions is, Why did the Neanderthals become extinct at roughly the same moment that Homo sapiens arrived from Africa? At Sopeńa we may learn if there were significant differences in behaviors that gave an edge to modern humans. Could it have been diet or the way they processed food? Q. So you're studying prehistoric diets? A. Yes. We look for remains like bones, charcoals from their fires and tools. From this we can learn how their diet changed over time. It's like we're digging through prehistoric domestic waste. One thing we're learning through isotopic analysis of Neanderthal bones shows that they were almost entirely carnivores. Q. Are you saying Neanderthal man was on a variant of the Atkins diet? A. They mostly ate meat. And you need carbohydrates. We're finding that modern humans, coming from Africa, had a diet much more variable than Neanderthals. It's always been thought about the Neanderthal extinction that Homo sapiens appeared in Europe and outcompeted Neanderthals. But it's not so easy. Forty thousand years ago was the last ice age. In that time, many animals became extinct. If Neanderthals survived on mammal meat and those animals were nowhere to be found, they were in trouble. And then you had modern man coming in from Africa, where there weren't seasons. They were eating seafood and vegetables and grasses, even fat extracted from bones by boiling them. It is possible this gave them an edge. We may find out. The National Geographic Society has just given me a grant to dig at Sopeńa for another full year. Q. As we talk, one senses you're a big Neanderthal booster. What do you like about them? A. They were able to exist in a highly inhospitable environment in Europe, from approximately the years 200,000 B.C. to 40,000 B.C. They made a living in the midst of repeated glaciations. They hunted and ate big mammals, and they seem to have been healthy. So certainly they were very well adapted to their own way of life. It's unfair to think of them as brutish creatures. They deserve respect. Q. Your family lives in Oviedo, only an hour's drive from the cave. Were you visiting with them when you discovered it? A. No. The mayor of the county gave me a contract to be the county's archaeologist. There are many caves in the Asturias region because it is an area of limestone formations. My job was to find new caves. When I passed this place, it looked right. The entrance was facing the right way. I had been looking for a cave like this one for years. When I was looking at cave bear bones, I was always hoping I'd find human archaeological deposits. But I found nothing. I was so lucky at SopeńA. I could have died without ever finding it. Q. Now that you're an internationally celebrated archaeologist, what does your mother think of your life choices? A. Spanish society has changed, and so has my mother. Life, reality, changes you. When I received the Women of Discovery Award from Wings WorldQuest the other night, my mother came for the ceremony. She was proud of this once difficult kid.

Subject: Arms Fiascoes Lead to Pentagon Alarm From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 11:44:22 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/business/08weapons.html?pagewanted=all Arms Fiascoes Lead to Alarm Inside Pentagon By TIM WEINER Nine years ago, the Navy set out to build a new guided missile for its 21st-century ships. Fiascoes followed. In a test firing, the missile melted its on-board guidance system. 'Incredibly,' an Army review said, 'the Navy ruled the test a success.' Recently, the Navy rewrote the contract and put out another one, with little to show for the money it already spent. The bill has come to almost $400 million, five times the original budget. Such stories may seem old hat. But after years of failing to control cost overruns, the most powerful officials at the Pentagon are becoming increasingly alarmed that the machinery for building weapons is breaking down under its own weight. 'Something's wrong with the system,' Secretary of Defense Donald H. Rumsfeld recently told Congress. The Pentagon has more than 80 major new weapons systems under development, which is 'a lot more programs than we can afford,' a senior Air Force official, Blaise J. Durante, said. Their combined cost, already $300 billion over budget, is $1.47 trillion and climbing. In the civilian world, next-generation technologies, like cellphones and computers, rarely cost much more than their predecessors. But the Pentagon's new planes and ships are costing three, four and five times as much as the weapons they will replace. As prices soar, the number of new weapons that the American military can afford shrinks, even with the biggest budget in decades. 'We're No. 1 in the world in military capabilities,' said David M. Walker, who runs the Government Accountability Office, the budget overseer for Congress. 'But on the business side, the Defense Department gets a D - giving them the benefit of the doubt. If they were a business, they wouldn't be in business.' Neither the Pentagon nor Congress nor the weapons contractors have any prescription to cure the problem. But in interviews and public testimony, military leaders, arms makers and government auditors generally agreed on why the nation's arsenal costs so much. They said the military conjures up dream weapons, like the Extended Range Guided Munition that the Navy had such trouble with. It sets immensely expensive technological requirements that are far beyond the state of the art of war, weapons executives say. Officials at the handful of major military contractors cross their fingers and promise to fulfill those visions. Almost no one flatly rejects the wish list for weapons and requirements. The military adds new technologies to many weapons already under development. Those systems add complexity and weight, which add costs to planes, ships and tanks. Military officials routinely understate the anticipated costs of weapons, said Winslow T. Wheeler, who analyzed armaments spending as a Senate staff member advising both Republicans and Democrats for 31 years. When costs rise far beyond the promised ceilings, he said, almost no one takes responsibility. Oversight is dwindling, Pentagon officials acknowledge. While the dollar value of weapons contracts doubled over the last decade, the Pentagon halved the size of the work force that polices their costs. The government work of managing the design, development and production of weapons has been largely outsourced to the weapons contractors themselves. Technological troubles add billions to the cost of armaments, Congressional auditors said. But no one knows precisely how much, since the Pentagon often cannot keep track of the money it spends. Testing is often unrealistic, the equivalent of an open-book exam. For example, Pentagon officials overseeing the 22-year, $100 billion effort to build a missile defense say the program has not passed realistic tests. It is an example, one among many, of daunting weapons technology taking two decades or more to produce - and time is money. Finally, the costs of new weapons are sometimes concealed by secrecy and creative bookkeeping. They now total nearly $148 billion a year, and almost one in five of those dollars is hidden from public view, in the classified 'black budget.' Of that amount, research and development spending on new weapons has gone up 77 percent since 2000, and now totals $69 billion a year. The price of buying new weapons is scheduled to rise nearly 50 percent, to almost $119 billion annually in 2011, from $78 billion today. 'The Pentagon does get it right from time to time,' Mr. Walker, the Congressional auditing chief, said. 'There have been some systems where things have gone well. Unfortunately, that's tended to be the exception rather than the rule.' The military gets only a fraction of the bang for the buck it once did, the Air Force chief of staff, Gen. John P. Jumper, said. 'We have got to do something about it,' General Jumper said in an interview, calling for 'a national debate' on the costs of weapons. The Navy's top admiral, Vern Clark, echoes that view. Franklin C. Spinney, who spent three decades at the Pentagon analyzing the cost of weapons, said their growing costs constituted 'a time bomb with a slow fuse that is now going off.' 'No one has a clue what it will all cost,' Mr. Spinney added. The cost of many weapons is growing faster than the Pentagon's budget authorization of $442 billion, which has increased almost 35 percent above inflation in the last six years. 'When you add money to the budget, the contractors' costs go up just as fast as you can add it,' he said. 'As costs go up, production rates decline,' providing less value for each dollar spent. Some members of Congressional armed services and appropriations committees have raised alarms about the Army's Future Combat System, a network of 18 weapons and vehicles for about 45,000 soldiers. First advertised at $78 billion, it may cost nearly twice that. They worry aloud that the Navy's DD(X) destroyers are crushingly expensive at roughly $20 billion for as few as five ships. Navy requirements for the ships added thousands of tons of weight, and billions in costs. They asked why the Air Force needed three different new jet fighters, including the F-22. That program was first sold, more than two decades ago, as 760 planes for $35 million each. It is now planned for about 180 jets, costing at least $330 million each. Congress has continued to conduct business as usual, approving more money for more armaments programs, including some the military does not want. These include C130 transport planes, which cost 500 percent more today, adjusted for inflation, than they did in the 1980's. Lawmakers also pressed the Pentagon to spend $23 billion to lease refueling tankers from Boeing until the prosecution of senior Air Force and Boeing officials put the program on hold. Senior uniformed officers and top military contractors pointed to the 'requirements process' - the conception and birth of ideas for new weapons - as a key to the problem. General Jumper said requirements often exceeded realities. 'We have to make sure we are controlling requirements,' he said. A senior executive at a major military contractor said the Pentagon had yet to impose that self-control. The Army, Navy and Air Force 'push the technology beyond what a contractor is capable of achieving,' said the executive, a former weapons-buying official, who spoke on condition of anonymity. Yet the contractors say, 'We can do it!' the executive continued. 'Why? Because you're competing with another guy who says he can do it.' Mr. Wheeler, the longtime Senate analyst, said the requirements system served 'to feed the technological dreams of an overactive bureaucracy.' 'Nobody's saying 'no' to new weapons proposals in Congress, at the uniformed military services or at the Pentagon,' he said. 'The system is out of control because nobody's controlling it.' After a decade of mergers and acquisitions, just a handful of military-contracting giants are left to handle the bulk of the work. Only General Dynamics and Northrop Grumman now build Navy warships. Billions of dollars for that work are allocated between them, not competitively bid, Admiral Clark said. The danger, General Jumper said, is that concentration and consolidation could distort the costs and capabilities of Air Force planes and other multibillion-dollar armaments. ' The promise,' he said, 'was that the newly consolidated companies would be endowed with core competencies, and we could turn over quality control' to the contractors. 'The results have not been there,' General Jumper added, raising the question of whether 'leaving it all up to industry without the right oversight on costing and pricing' was a good idea. Several industry executives voiced similar doubts. The Pentagon dismissed its own auditors in the name of 'acquisition reform,' Mr. Wheeler said. 'They thought they were copying private-enterprise practices by removing this monitoring bureaucracy.' The old bureaucracy 'was a pain in the neck to deal with,' he added. 'But without them, things are much worse. Things are taking even longer. Cost growth has accelerated. And performance degradations have gotten worse.' When weapons finally move from the drawing board to the assembly line, the military services employ a practice Mr. Walker calls 'plug and pray.' 'They plug how many they can buy with the amount of money they have,' he said. 'Then they pray that they'll get more money in order to be able to buy more.' But by then, he warned, many weapons of the future may prove too costly to bear. 'There's no way we're going to be able to afford them,' Mr. Walker said. 'We're going to have to rationalize what people want and reconcile it against what we really need, and what we can afford, and what we can sustain.'

Subject: At Pfizer, the Isolation Increases From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 10:56:12 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/business/08rost.html At Pfizer, the Isolation Increases for a Whistle-Blower By ALEX BERENSON No man is an island. But Peter Rost is getting close. Dr. Rost, a vice president for marketing at Pfizer with a history of corporate whistle-blowing, has for the last year publicly criticized the pharmaceutical industry over the price of drugs. Along the way, Dr. Rost has become increasingly isolated at Pfizer, the world's largest drug company. First, his employees stopped reporting to him. Then his supervisors stopped returning his calls and now he does not know whom to report to. His secretary left, he said, and he was moved to an office near Pfizer's security department at a company building in Peapack, N.J. The latest blow came Monday, the morning after Dr. Rost, 46, appeared on a segment of '60 Minutes' on CBS about drug prices - a follow-up to his news conference on the subject last year with members of Congress and to the opinion pieces he has written for The New York Times and other newspapers. Ready, as always, to put in a full day at the office, Dr. Rost turned on his computer Monday and tried for the first time in almost two weeks to log into his Pfizer e-mail account. Access denied. Because his corporate cellphone also was suddenly not working, Dr. Rost was reduced to using his Hotmail account to send e-mail messages to reporters to report his electronic exile. 'This is like being in some kind of corporate twilight zone,' Dr. Rost said in an interview yesterday. 'I guess everybody's waiting for me to get fired.' Paul Fitzgerald, a spokesman for Pfizer, said that the company had not deliberately disconnected Dr. Rost's e-mail and cellphone service. 'There have been cases, through a change of vendor, where some employees have lost service for a period of time,' Mr. Fitzgerald said. Beyond that, Mr. Fitzgerald said that he could not comment on Dr. Rost's work at Pfizer. But he said that Pfizer had not changed Dr. Rost's responsibilities since April 2003, when Pfizer bought Pharmacia & Upjohn, where Dr. Rost formerly worked. At the time of that acquisition, Dr. Rost supervised Pharmacia's marketing of a growth hormone called genotropin. Mr. Fitzgerald characterized Dr. Rost's new office as nice, a description Dr. Rost did not dispute. 'He does still work at Pfizer,' Mr. Fitzgerald said. 'We continue to employ him.' By yesterday afternoon, after a reporter's inquiries with the company, Dr. Rost reported that his e-mail account was working again. 'Now I'm going to check if I can actually get in and get the name of my supervisor,' he wrote in an e-mail message. 'That should be fun.' Dr. Rost first received public attention last August, after his positive review of a book critical of the drug industry appeared on Amazon.com. The next month, in his news conference, he called for passage of legislation to allow imports of low-priced drugs from other countries. 'Every day we delay, Americans die because they cannot afford life-saving drugs,' he said. Pfizer responded at the time by saying that 'Dr. Rost has no qualifications to speak on importation.' Management specialists said that Pfizer and Dr. Rost had irreconcilable differences and called for a speedy divorce. 'In defense of Pfizer, I don't think I would want him representing me in the marketplace,' said John Putzier, president of FirStep, a human resources consulting firm based in Prospect, Pa. Dr. Rost's comments are not in Pfizer's interests, Mr. Putzier said. As a result, it may be legal for Pfizer to fire him. But a firing might make Pfizer appear vindictive or give him more publicity, Mr. Putzier said. Dr. Rost may have additional protection against being fired. In its most recent annual report, Pfizer disclosed that the Justice Department had opened an investigation into its marketing of genotropin, the growth hormone Dr. Rost was responsible for selling at Pharmacia. Dr. Rost said he could not confirm or deny whether he was involved in that investigation. But if he is, he may be protected by federal laws shielding whistle-blowers from retaliation. Mr. Fitzgerald, the Pfizer spokesman, declined to comment on the investigation. Pfizer is 'really between a rock and a hard place,' said Mr. Putzier, the consultant. 'He's a loose cannon, but he's a strategic loose cannon.' Pfizer became Dr. Rost's employer when it bought Pharmacia in 2002 for $63 billion. Dr. Rost had worked at Wyeth, another drug maker, until 2001 - the year he sued Wyeth in New Jersey state court, contending that the company had retaliated against him after he uncovered its practice of underpaying taxes to foreign governments. Dr. Rost and Wyeth settled the suit in December 2003; terms were not disclosed. Susan L. Annunzio, chief executive of the Hudson Highland Center for High Performance, a management consulting firm in Chicago, said Pfizer had evidently decided that firing Dr. Rost would cause more problems than it would solve. 'Companies are in a dilemma,' she said, 'because they don't want bad publicity, and they want to get the person to leave on his own.' Dr. Rost said that he did not enjoy being unable to work productively, but that he could not quit without another job to replace his current annual compensation of more than $600,000.'I have a family to support. There haven't been that many job offers coming through lately.' 'I'm about to reach my four-year anniversary,' Dr. Rost said. 'In another year, I'll be fully vested in the pension plan.'

Subject: Crumbs for Africa From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 10:25:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/opinion/08wed1.html Crumbs for Africa President Bush kept a remarkably straight face yesterday when he strode to the microphones with Britain's prime minister, Tony Blair, and told the world that the United States would now get around to spending $674 million in emergency aid that Congress had already approved for needy countries. That's it. Not a penny more to buy treated mosquito nets to help save the thousands of children in Sierra Leone who die every year of preventable malaria. Nothing more to train and pay teachers so 11-year-old girls in Kenya may go to school. And not a cent more to help Ghana develop the programs it needs to get legions of young boys off the streets. Mr. Blair, who will be the host when the G-8, the club of eight leading economic powers, holds its annual meeting next month, is trying to line up pledges to double overall aid for Africa over the next 10 years. That extra $25 billion a year would do all those things, and much more, to raise the continent from dire poverty. Before getting to Washington, Mr. Blair had done very well, securing pledges of large increases from European Union members. According to a poll, most Americans believe that the United States spends 24 percent of its budget on aid to poor countries; it actually spends well under a quarter of 1 percent. As Jeffrey Sachs, the Columbia University economist in charge of the United Nations' Millennium Project, put it so well, the notion that there is a flood of American aid going to Africa 'is one of our great national myths.' The United States currently gives just 0.16 percent of its national income to help poor countries, despite signing a United Nations declaration three years ago in which rich countries agreed to increase their aid to 0.7 percent by 2015. Since then, Britain, France and Germany have all announced plans for how to get to 0.7 percent; America has not. The piddling amount Mr. Bush announced yesterday is not even 0.007 percent. What is 0.7 percent of the American economy? About $80 billion. That is about the amount the Senate just approved for additional military spending, mostly in Iraq. It's not remotely close to the $140 billion corporate tax cut last year. This should not be the image Mr. Bush wants to project around a world that is intently watching American actions on this issue. At a time when rich countries are mounting a noble and worthy effort to make poverty history, the Bush administration is showing itself to be completely out of touch by offering such a miserly drop in the bucket. It's no surprise that Mr. Bush's offer was greeted with scorn in television broadcasts and newspaper headlines around the world. 'Bush Opposes U.K. Africa Debt Plan,' blared the headline on the AllAfrica news service, based in Johannesburg. 'Blair's Gambit: Shame Bush Into Paying,' chimed in The Sydney Morning Herald in Australia. The American people have a great heart. President Bush needs to stop concealing it.

Subject: Bangalore: Hot and Hotter From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 10:22:26 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/opinion/08friedman.html Bangalore: Hot and Hotter By THOMAS L. FRIEDMAN Bangalore, India Every time I visit India, Indians always ask me to compare India with China. Lately, I have responded like this: If India and China were both highways, the Chinese highway would be a six-lane, perfectly paved road, but with a huge speed bump off in the distance labeled 'Political reform: how in the world do we get from Communism to a more open society?' When 1.3 billion people going 80 miles an hour hit a speed bump, one of two things happens: Either the car flies into the air and slams down, and all the parts hold together and it keeps on moving - or the car flies into the air, slams down and all the wheels fall off. Which it will be with China, I don't know. India, by contrast, is like a highway full of potholes, with no sidewalks and half the streetlamps broken. But off in the distance, the road seems to smooth out, and if it does, this country will be a dynamo. The question is: Is that smoother road in the distance a mirage or the real thing? At first blush, coming back to Bangalore, India's Silicon Valley, that smoother road seems like a mirage. The infrastructure here is still a total mess. But looks can be deceiving. Beneath the mess, Bangalore is entering a mature new phase as a technology center by starting to produce its own high-tech products, research, venture capital firms and start-ups. 'The ecosystem for innovation is now starting to be created here,' said Nandan Nilekani, the C.E.O. of Infosys. For several years now, when venture capitalists funded companies in the U.S., they insisted that the R.&D. for the products be done in India. But now, increasingly, Western companies will come up with a new idea and then tell Infosys, Wipro or Tata, India's premier technology companies, to research, develop and produce the whole thing. As one Wipro executive put it, 'You go from solving my problem to serving my business to knowing my business to being my business.' What will be left for the Western companies is the 'ideation,' the original concept and design of a flagship product (which is a big deal), and then the sales and marketing. 'We're going from a model of doing piecework to where the entire product and entire innovation stream is done by companies here,' Mr. Nilekani added. All of this means that innovation will happen faster and cheaper, with much more global collaboration. The best indication that Bangalore is becoming hot is how many foreign techies - non-Indians - are now coming here to work. P. Anandan, an Indian-American who worked for Microsoft for 28 years in Redmond, Wash., just opened Microsoft's research center in Bangalore, which follows the ones in Redmond, Cambridge and Beijing. 'I have two non-Indians working for me here, one Japanese and one American, and they could work anywhere in the world,' Mr. Anandan said. He added that when he got his engineering degree in India 28 years ago, all the competition was to get a job abroad. Now the fiercest competition is to get an I.T. job in India: 'It is no longer, 'Well I have to stay here,' but, 'Do I get a chance to stay here?' ' In the past year, Infosys received 9,600 applications from abroad, including from China, France and Germany, for internships, and it accepted 100. I asked one of these interns, Vicki Chen, a Chinese-American business student from the Claremont Colleges, why she came. 'All the business is coming to India, and I don't see why I shouldn't follow the business,' she said. 'If this is where the center of gravity is, you should go check it out, and then you become more valuable.' Even more interesting is how Indian firms are taking the skills they learned from outsourcing and using them to develop low-cost products for the low-wage Indian market: a medical insurance plan for the poor for as little as $10 a year, a $2,000 car, a $200 laptop, supercheap cellphones, a low-fare airline ($75 one-way for the three-hour Bangalore-Delhi flight) that sells tickets from Internet kiosks in gas stations. Indian companies know that if they can make money producing low-cost technology for poor Indians, it gives them an incredible platform to then take these products global. (Imagine the profit potential if they work in the West?) China is doing the exact same thing. Indeed, I now understand why, when China's prime minister, Wen Jiabao, visited India for the first time last April, he didn't fly into the capital, New Delhi - as foreign leaders usually do. He flew directly from Beijing to Bangalore - for a tech-tour - and then went on to New Delhi. No U.S. president or vice president has ever visited Bangalore.

Subject: Greenhouse Gas Links to Global Warming From: Emma To: All Date Posted: Wed, Jun 08, 2005 at 09:42:38 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/08/politics/08climate.html?pagewanted=all Bush Aide Softened Greenhouse Gas Links to Global Warming By ANDREW C. REVKIN A White House official who once led the oil industry's fight against limits on greenhouse gases has repeatedly edited government climate reports in ways that play down links between such emissions and global warming, according to internal documents. In handwritten notes on drafts of several reports issued in 2002 and 2003, the official, Philip A. Cooney, removed or adjusted descriptions of climate research that government scientists and their supervisors, including some senior Bush administration officials, had already approved. In many cases, the changes appeared in the final reports. The dozens of changes, while sometimes as subtle as the insertion of the phrase 'significant and fundamental' before the word 'uncertainties,' tend to produce an air of doubt about findings that most climate experts say are robust. Mr. Cooney is chief of staff for the White House Council on Environmental Quality, the office that helps devise and promote administration policies on environmental issues. Before going to the White House in 2001, he was the 'climate team leader' and a lobbyist at the American Petroleum Institute, the largest trade group representing the interests of the oil industry. A lawyer with a bachelor's degree in economics, he has no scientific training. The documents were obtained by The New York Times from the Government Accountability Project, a nonprofit legal-assistance group for government whistle-blowers. The project is representing Rick S. Piltz, who resigned in March as a senior associate in the office that coordinates government climate research. That office, now called the Climate Change Science Program, issued the documents that Mr. Cooney edited. A White House spokeswoman, Michele St. Martin, said yesterday that Mr. Cooney would not be available to comment. 'We don't put Phil Cooney on the record,' Ms. St. Martin said. 'He's not a cleared spokesman.' In one instance in an October 2002 draft of a regularly published summary of government climate research, 'Our Changing Planet,' Mr. Cooney amplified the sense of uncertainty by adding the word 'extremely' to this sentence: 'The attribution of the causes of biological and ecological changes to climate change or variability is extremely difficult.' In a section on the need for research into how warming might change water availability and flooding, he crossed out a paragraph describing the projected reduction of mountain glaciers and snowpack. His note in the margins explained that this was 'straying from research strategy into speculative findings/musings.' Other White House officials said the changes made by Mr. Cooney were part of the normal interagency review that takes place on all documents related to global environmental change. Robert Hopkins, a spokesman for the White House Office of Science and Technology Policy, noted that one of the reports Mr. Cooney worked on, the administration's 10-year plan for climate research, was endorsed by the National Academy of Sciences. And Myron Ebell, who has long campaigned against limits on greenhouse gases as director of climate policy at the Competitive Enterprise Institute, a libertarian group, said such editing was necessary for 'consistency' in meshing programs with policy. But critics said that while all administrations routinely vetted government reports, scientific content in such reports should be reviewed by scientists. Climate experts and representatives of environmental groups, when shown examples of the revisions, said they illustrated the significant if largely invisible influence of Mr. Cooney and other White House officials with ties to energy industries that have long fought greenhouse-gas restrictions. In a memorandum sent last week to the top officials dealing with climate change at a dozen agencies, Mr. Piltz said the White House editing and other actions threatened to taint the government's $1.8 billion-a-year effort to clarify the causes and consequences of climate change. 'Each administration has a policy position on climate change,' Mr. Piltz wrote. 'But I have not seen a situation like the one that has developed under this administration during the past four years, in which politicization by the White House has fed back directly into the science program in such a way as to undermine the credibility and integrity of the program.' A senior Environmental Protection Agency scientist who works on climate questions said the White House environmental council, where Mr. Cooney works, had offered valuable suggestions on reports from time to time. But the scientist, who spoke on the condition of anonymity because all agency employees are forbidden to speak with reporters without clearance, said the kinds of changes made by Mr. Cooney had damaged morale. 'I have colleagues in other agencies who express the same view, that it has somewhat of a chilling effect and has created a sense of frustration,' he said. Efforts by the Bush administration to highlight uncertainties in science pointing to human-caused warming have put the United States at odds with other nations and with scientific groups at home. Prime Minister Tony Blair of Britain, who met with President Bush at the White House yesterday, has been trying to persuade him to intensify United States efforts to curb greenhouse gases. Mr. Bush has called only for voluntary measures to slow growth in emissions through 2012. Yesterday, saying their goal was to influence that meeting, the scientific academies of 11 countries, including those of the United States and Britain, released a joint letter saying, 'The scientific understanding of climate change is now sufficiently clear to justify nations taking prompt action.' The American Petroleum Institute, where Mr. Cooney worked before going to the White House, has long taken a sharply different view. Starting with the negotiations leading to the Kyoto Protocol climate treaty in 1997, it has promoted the idea that lingering uncertainties in climate science justify delaying restrictions on emissions of carbon dioxide and other heat-trapping smokestack and tailpipe gases. On learning of the White House revisions, representatives of some environmental groups said the effort to amplify uncertainties in the science was clearly intended to delay consideration of curbs on the gases, which remain an unavoidable byproduct of burning oil and coal. 'They've got three more years, and the only way to control this issue and do nothing about it is to muddy the science,' said Eileen Claussen, the president of the Pew Center on Global Climate Change, a private group that has enlisted businesses in programs cutting emissions. Mr. Cooney's alterations can cause clear shifts in meaning. For example, a sentence in the October 2002 draft of 'Our Changing Planet' originally read, 'Many scientific observations indicate that the Earth is undergoing a period of relatively rapid change.' In a neat, compact hand, Mr. Cooney modified the sentence to read, 'Many scientific observations point to the conclusion that the Earth may be undergoing a period of relatively rapid change.' A document showing a similar pattern of changes is the 2003 'Strategic Plan for the United States Climate Change Science Program,' a thick report describing the reorganization of government climate research that was requested by Mr. Bush in his first speech on the issue, in June 2001. The document was reviewed by an expert panel assembled in 2003 by the National Academy of Sciences. The scientists largely endorsed the administration's research plan, but they warned that the administration's procedures for vetting reports on climate could result in excessive political interference with science. Another political appointee who has played an influential role in adjusting language in government reports on climate science is Dr. Harlan L. Watson, the chief climate negotiator for the State Department, who has a doctorate in solid-state physics but has not done climate research. In an Oct. 4, 2002 memo to James R. Mahoney, the head of the United States Climate Change Science Program and an appointee of Mr. Bush, Mr. Watson 'strongly' recommended cutting boxes of text referring to the findings of a National Academy of Sciences panel on climate and the Intergovernmental Panel on Climate Change, a United Nations body that periodically reviews research on human-caused climate change. The boxes, he wrote, 'do not include an appropriate recognition of the underlying uncertainties and the tentative nature of a number of the assertions.' While those changes were made nearly two years ago, recent statements by Dr. Watson indicate that the admnistration's position has not changed. 'We are still not convinced of the need to move forward quite so quickly,' he told the BBC in London last month. 'There is general agreement that there is a lot known, but also there is a lot to be known.'

Subject: Re: Greenhouse Gas Links to Global Warming From: Setanta To: Emma Date Posted: Thurs, Jun 09, 2005 at 06:08:45 (EDT) Email Address: Not Provided Message: that kind of behaviour is a thundering disgrace... how can the public be apathetic to that sort of underhand and devious behaviour. if they carry out this sort of editing on a climate change document it calls into question the sanguine interpretation of the intelligence agencies information on the WMD in Iraq.

Subject: Re: Greenhouse Gas Links to Global Warming From: Terri To: Setanta Date Posted: Thurs, Jun 09, 2005 at 13:07:57 (EDT) Email Address: Not Provided Message: The Administration apparently has no respect for science, and this is indeed dangerous for policy formation.

Subject: Re: Greenhouse Gas Links to Global Warming From: Emma To: Setanta Date Posted: Thurs, Jun 09, 2005 at 08:46:52 (EDT) Email Address: Not Provided Message: Such a disgrace,

Subject: Income Distribution From: Poyetas To: All Date Posted: Wed, Jun 08, 2005 at 07:39:15 (EDT) Email Address: Not Provided Message: If we can agree that Supply Side economics is a crank doctrine, than could we also not argue that the best way to stimulate the demand side of an economy is by redistributing some of the wealth to the larger percentiles of the population. After all, if I'm wallmart, I would rather have 1000 people with 1000 dollars than 1 person with 1 million.

Subject: Re: A good start? From: Pancho Villa To: Poyetas Date Posted: Wed, Jun 08, 2005 at 08:20:55 (EDT) Email Address: Not Provided Message: By Dennis Cauchon, USA TODAY Tue May 31, 6:41 AM ET More states are raising their minimum wages, pushing hourly rates above $7 in some and shrinking the role of the federal minimum wage, which hasn't gone up in eight years. Eleven states have raised their rates since January 2004, and Wisconsin will become the 12th on Wednesday. Employers there must pay at least $5.70 an hour through June 2006, when the minimum wage rises again to $6.50 an hour. In all, 17 states and the District of Columbia - covering 45% of the U.S. population - have set minimums above the federal rate of $5.15. That has helped cut the number of workers earning the minimum or less (for those earning tips) from 4.8 million in 1997 to 2 million last year, or 2.7% of hourly earners, the Bureau of Labor Statistics says. About half of minimum-wage earners work at restaurants. Millions more have wages that are influenced by the minimum. Its buying power is at its lowest point since 1949. Congress last changed the federal minimum wage in 1997. The latest proposal to raise it died in the Senate in March. 'The federal government is not living up to its responsibility, so the states are acting,' says New Jersey state Sen. Steve Sweeney, a Democrat who sponsored a law that will raise the state's minimum. Restaurants, retailers and other businesses oppose higher minimum wages. They say the laws will raise consumer prices and ultimately cost jobs. 'A new minimum wage forces price hikes on menus,' says Simon Flynn, president of the Connecticut Restaurant Association. 'The burden not only threatens the bottom line, it threatens the survival of many restaurants.' Some states have rejected minimum wage increases. The New Hampshire Senate voted Thursday against raising the state's minimum. Other key actions: • Hawaii Gov. Linda Lingle, a Republican, will decide soon whether to veto a law that would raise the minimum wage in two steps from $6.25 to $7.25. • Maryland legislators voted to raise the wage from $5.15 to $6.15 an hour, but Republican Gov. Robert Ehrlich vetoed the bill. • Voters in Florida and Nevada approved higher minimum wages in November. Nevada voters must approve it again in 2006 for it to become law. Polls show that minimum wage increases are popular. In a Pew Research Center Poll in December, 86% supported raising the federal minimum to $6.45. Liberal activists say they're using the minimum wage to put Republicans on the defensive. They hope to put minimum wage initiatives on the ballots next year in nine states, including Ohio, Michigan and Arizona, says Kristina Wilfore, head of the liberal Ballot Strategy Initiative Center. 'This is going to take off like wildfire,' she says. 'It will pull progressive voters to the polls. The way the gay marriage amendment lured conservative voters to the polls (in November) was a wake-up call for us.' Efforts to raise the minimum wage have had most success in states that voted for 2004 Democratic presidential nominee John Kerry. Florida and Alaska are the only states that voted for President Bush last year to have minimum wages above the federal rate. http://news.yahoo.com/s/usatoday/20050531/pl_usatoday/statessay515anhourtoolittle

Subject: Re: A good start? From: Poyetas To: Pancho Villa Date Posted: Thurs, Jun 09, 2005 at 06:49:33 (EDT) Email Address: Not Provided Message: That could be good news Pancho, my only concern is that the loser here is the restaurant owner, who i'm betting is not making six figures (i could be wrong). If this can pass through somehow to people working at McDonalds, KFC and so forth, it may have the desired impact but the small restaurant owner would be left out. On the other hand, who eats at restaurants these days. People making minimum wage? I would hope not. In that case an increase in restaurant prices would not be such a bad thing. I would be very interested in looking at overall service sector wage increases relative to tradeable productivity growth in the US (Balassa Samuelsson effect). It could give some indication as too whether this is a delayed effect or a new one.

Subject: Eastern Bluebird From: Terri To: All Date Posted: Wed, Jun 08, 2005 at 07:23:47 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4865&u=347|59|... Eastern Bluebird New York City--Central Park--Wildflower Meadow.

Subject: Robin and Chicks Contemplate Statue From: Terri To: All Date Posted: Wed, Jun 08, 2005 at 07:21:30 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=3317&u=62|67|... Robin and Chicks Contemplate Statue of Romeo and Juliet New York City--Great Lawn.

Subject: Economists' new world order From: Yann To: All Date Posted: Wed, Jun 08, 2005 at 06:50:27 (EDT) Email Address: Not Provided Message: http://www.project-syndicate.org/print_commentary/delong36/English

Subject: Safe Bond Funds From: Terri To: All Date Posted: Wed, Jun 08, 2005 at 06:05:30 (EDT) Email Address: Not Provided Message: The dollar has strengthened markedly against the Euro and is strong against the Yen and Canadian and Australian dollars. Suddenly the Euro does not look as though it will rival the dollar in security in the near term. But, the dollar could easily weaken again at any time. Still, I do not fear there will be a sharp increase in inflation from a weak dollar and I have no fear at all of moderate or low duration Vanguard bond funds as a refuge. These moderate or low duration bond funds change in price slowly enough, and adjust in yield quickly enough to ease any investment fear. A two year duration bond fund of highest quality can scarcely be a long term worry.

Subject: Bond Fund Refuge From: Terri To: All Date Posted: Wed, Jun 08, 2005 at 05:50:32 (EDT) Email Address: Not Provided Message: There is simply no reason to believe that credit quality of corporate debt is declining as a whole, though there are always companies with credit problems. However, Vanguard investment-grade bond funds carry only the highest of corporate quality bonds and I trust the credit selection implicitly. Still, if the highest rates corporate debt is worrisome there is always the comparable bond index or Treasury bond fund. The GNMA fund carries only government insured mortgage bonds. Vanguard selects bonds to minimize calls or pre-payment, but if this is a worry than the Treasury bond funds will have no possible credit or call or pre-payment problem. Through all the concern or fear of bond funds, I have found Vanguard bond funds a happy refuge.

Subject: Heal(ey) and Steel From: Pancho Villa To: All Date Posted: Tues, Jun 07, 2005 at 20:24:05 (EDT) Email Address: nma@hotmail.com Message: THOMAS HEALEY and ROBERT STEEL We must defuse the Medicare time bomb now While President George W. Bush remains focused on Social Security, an even bigger fiscal time bomb is ticking away in the US - Medicare. The Social Security trust fund is projected to become exhausted in 2041; but the public health system runs completely dry much sooner:in 2020. What is more, to bring Social Security into balance over the next 75 years would require a 15 per cent increase in pay-roll taxes today (or a corresponding reduction in benefits), while bringing Medicare into balance would require an immediate 107 per cent increase in revenue (or a 48 per cent reduction in outlays). Even more significant, the present under-funding of Medicare ($29,700bn, €24,198bn) is more than seven times that of Social Security ($4,000bn). Few leaders in Washington seem willing to face the fact that Medicare is a structurally broken system in far worse shape than Social Security that could bring the American economy to its knees in a relatively short amount of time. As accumulating evidence makes abundantly clear, Medicare is not just an undercapitalised system, it is a severely flawed model. One of its biggest defects is the inherent mismatch between revenues and expenditures. Medicare is largely funded through a payroll tax of 2.9 per cent, and through premiums from Supplementary Medical Insurance. Because they are tied to the rate of business growth, payroll revenues have proven to be woefully insufficient, particularly in economically stressed times such as the past few years. SMI premiums, for their part, only cover 12 per cent of total Medicare costs. Not surprisingly, the Medicare trustees predict that the programme's assets - which are held in Medicare trust funds to cover the hospital insurance portion of the health plan - will be exhausted by 2019. To illustrate the deterioration, four years ago the prediction was for depletion by 2025. Exacerbating the problem is the fact that over the past 40 years, medical costs have outstripped economic growth by three percentage points. One of the chief drivers of this increase has been dramatic advances in medical technology and patient treatment - obvious benefits that unfortunately carry a huge price tag. Faced with this looming crisis, why have no serious efforts been made to treat the root of the problem? Few, if any, incentives exíst to prudently manage or control the cost of medical treatment. In the case of retired people, they will undertake treatment as long as the value of that care is more than the co-payment for which they are responsible. In the case of providers of medical care - doctors, nurses and other health professionals - any desire to restrain costs through less expensive treatment alternatives is often overridden by self-interest or the perceived need for treatment that is, in fact, excessive. Finally, politicians have virtually no short-term inducements to tackle the Medicare problem. Any change that leaves the elderly worse off will lead to ballot box reprisals by a large and vocal segment of the population. On the other hand, pressure from much younger workers who fund Medicare is nearly non-existent. Given the magnitude of the problem, there is unlikely to be a single solution. Policies need to target the inequities caused by misaligned incentives if they are to bring costs and benefits closer together, Even this may be insufficient, however, creating the need for reductions in entitlements and/or increases in taxes and costs to beneficiarios (possibly involving some form of means-testing). Implicit in such policy change is the realisation that all stakeholders - not just the young - need to bear the burden of making Medicare sustainable. We cannot keep blindly passing on Medicare's costs to future generations. While this is a daunting task, it is not without precedent. A similar, albeit smaller, imbroglio involving Social Security was effectively addressed in the early 1980s by a bipartisan commission headed by Alan Greenspan. This presidentially-appointed panel was strikingly successful in strengthening the fabric of a fraying Social Security system. That model could - and clearly should - be adopted for Medicare. The sooner we get started the better; delay exacerbates the problem and makes solutions even more painful. Thomas Healey is a former assistant secretary of the Treasury and a retired partner of Goldman Sachs. Robert Steel is a former vice-chairman of Goldman Sachs, both are senior fellows at the Kennedy School of Government, Harvard University FT, Tuesday June 7 2005

Subject: Education, growth and taxes From: Pancho Villa To: All Date Posted: Tues, Jun 07, 2005 at 19:04:12 (EDT) Email Address: nma@hotmail.com Message: June 06, 2005 Education, growth and taxes Posted by John Irons at 06:04 PM I was at a panel last week sponsored by Tax Notes on the tax code and long-run growth. The panel featured interesting people and a lively discussion. However, I was shocked to hear one of the panelists, Chris Edwards of the conservative CATO institute, present a baffling argument that there are already too many subsidies for education. He claimed that a) you need a market failure to justify government intervention, and b) people already know that there is a high return to education, so there is no market failure, and so no reason for government intervention. There are many reasons that (a) is untrue - but since this was a room full of economists, let's let that go for now. As for (b), this is where I nearly fell out of my chair (I was sitting right next to Chris, so it would have been very noticeable!) First of all, this is a rather simplistic view of what a market-failure is - information asymmetries can cause market failures, but there are many other market failures that have nothing to do with information. In particular, it is very easy to imagine a huge range of positive spillovers from education - everything from a more informed and educated electorate to higher quality, more productive co-workers, who thereby increase the productivity of those around them. Positive externality ==> market failure ==> efficiency justification for public investment in education. Not too hard. Second, there are indeed very important information issues in education, especially higher education. The market for credit is known for having a range of information issues which can cause credit constraints and market failures. For many people, tuition and other college costs can be prohibitive, and the inability to access sufficient credit can limit their ability to attend college (or the college of their choice). These liquidity constrained students -- and the rest of society -- would clearly benefit from incentives (either direct subsidies or tax credits), and there is a clear role for public intervention. So there are very clear reasons for public support for education on pure economic efficiency grounds. Throw into that moral and equity considerations, and I think there is more than ample theoretical and empirical reasons to support education. In the context of long-run growth, more and higher quality education will almost certainly lead to more technological innovation and thus more productivity and growth in the long-run. Seems pretty simple to me. http://www.argmax.com/mt_blog/#

Subject: Vanguard Returns From: Terri To: All Date Posted: Tues, Jun 07, 2005 at 18:15:31 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 6/07/05 S&P Index is -0.5 Large Cap Growth Index is -0.8 Large Cap Value Index is 0.9 Mid Cap Index is 2.1 Small Cap Index is -1.3 Small Cap Value Index is -0.7 Europe Index is -0.7 Pacific Index is -2.9 Energy is 15.5 Health Care is 5.8 REIT Index is 3.9 High Yield Corporate Bond Fund is 0.6 Long Term Corporate Bond Fund is 7.8

Subject: Sector Stock Indexes From: Terri To: Terri Date Posted: Tues, Jun 07, 2005 at 18:20:38 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 6/07/05 Energy 15.9 Financials -3.1 Health Care 4.3 Info Tech -4.6 Materials -5.7 REITs 4.0 Telecoms -4.3 Utilities 9.8

Subject: 'The market for 'Lem...Textiles' ' (Part I?) From: Pancho Villa To: All Date Posted: Tues, Jun 07, 2005 at 16:09:27 (EDT) Email Address: nma@hotmail.com Message: Strike at Chinese textile mill boils over By Chris Buckley International Herald Tribune MONDAY, JUNE 6, 2005 BEIJING Thousands of workers in a Hong Kong-owned textile mill in southern China staged a strike and protested for higher wages and clashed with police, prompting riot police to use tear gas and arrest workers, Chinese media reported over the weekend. The strife erupted on Friday morning at the Futai Wool Mill in Zengcheng, near Guangzhou, and eyewitnesses said as many as 4,000 workers were at the factory gates, blocking traffic and chanting 'raise our wages,' the Guangzhou-based New Express reported on Saturday. When security guards attempted to break up the protest, clashes broke out, and workers smashed and burned the guards' motorbikes. The protesters were finally quelled by 300 riot police, who used tear gas to them break up and arrested 24 of them, the paper reported. The mill belongs to Fuxing Corp. and employs about 4,000 workers, said a staff member who declined to give his name. It was unclear whether the protest was related to recent limits placed on China's garment exports by the United States and European Union. Staff at the factory confirmed that a 'disturbance' had taken place but refused to answer other questions, as did the local police and officials. But Chinese officials have warned of the social strains that may result from slowing down the rapid growth of China's textile sector, which is fiercely competitive and pays wages that are low even by Chinese standards, and have condemned limits of 7.5 percent annually set on growth in key Chinese exports by major trading partners. The deputy prime minister, Wu Yi, told the visiting U.S. secretary of commerce, Carlos Gutierrez, that the limits were a 'serious problem' in the two countries' trade relations. 'The textile issue is a major matter of principle concerning China's livelihood,' she told him, Chinese newspapers reported on Sunday. 'The limits the U.S. has imposed on China's textile products have already severely impacted China's textile production and hit Chinese businesses and people's confidence in the multilateral trade system.' Guangdong Province, where the protest occurred, is the powerhouse of many of China's export businesses and produces about one-fifth of China's textile exports. Western textile workers earn wages about seven times those of their Chinese counterparts, Wang Shenyang, the president of the China Textile Industry Import and Export Council, recently said on state-run Chinese television. The workers at the Futai Wool Mill said they made 800 yuan a month, or $97, with little time off, the Chinese newspaper reported. The protest on Friday was set off by demands from local officials that the workers pay an inspection fee of $2 a month, a common way for local officials to extract revenue from migrant workers in China. Earlier in the week, the Chinese commerce minister, Bo Xilai, said the U.S. and EU limits on China's textile exports threatened thousands of businesses and more than 160,000 jobs in China's textile industry, which directly employs 19 million workers. Gutierrez and Bo had extensive talks about textiles and other trade issues, and the U.S. trade representative, Rob Portman, also visited Beijing on Saturday to discuss textiles with Bo and other Chinese officials, the official Xinhua news agency reported. Neither side reported any breakthrough in the dispute. U.S. trade officials visiting Beijing also sought to impress their Chinese counterparts with the rising tide of sentiment against trade liberalization in the United States, in Congress and elsewhere. A spokesman for China's textile industry said that the United States' recent limits on exports had shaken the confidence of investors and customers and that factories were already experiencing declines in orders, even of products not affected by the current limits. http://www.iht.com/articles/2005/06/05/business/textile.php

Subject: The Bush Economy From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 15:47:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/opinion/07tues1.html The Bush Economy With all of the debate about taxes, the economy and domestic spending, it is hard to imagine anyone supporting the notion of taking money from programs like Medicaid and college-tuition assistance, increasing the tax burden of the vast majority of working Americans, sending the country into crushing debt - and giving the proceeds to people who are so fantastically rich that they don't know what to do with the money they already have. Yet that is just what is happening under the Bush administration. Forget the middle class and the upper-middle class. Even the merely wealthy are being left behind in the dust by the small slice of super-rich Americans. In last Sunday's Times, David Cay Johnston reported that from 1980 to 2002, the latest year of available data, the share of total income earned by the top 0.1 percent of earners more than doubled, while the share earned by everyone else in the top 10 percent rose far less. The share of the bottom 90 percent declined. President Bush did not create the income gap. But the unheralded effect of his tax policy is its unequal impact on the modestly well to do. By 2015, those making between $80,000 and $400,000 will pay as much as 13.9 percentage points more of their income in federal taxes than those making more than $400,000, assuming the tax cuts are made permanent. Below $80,000, most taxpayers will see their share of taxes rise slightly or stay the same. Mr. Johnston's article quotes a prominent economist who argues that people care more about the chance to move from one income class to another (upward, of course) than about income distribution. But during the Bush years, the two main sources of class mobility - a good job and money for higher education - have increasingly failed to materialize for those who most need them. Last week's jobs report from the Labor Department confirmed that a strong labor market recovery has not taken hold. Wages for most working people failed even to outpace inflation in the past year. That might be more bearable if things were rough all over. But the share of economic growth that is going toward corporate profits, which flow to stockholders and bondholders who are concentrated at the top of the income scale, is at historic highs. Which brings us back to the super wealthy and the merely rich. The divide between rich and poor is unfortunately an old story, but income-class warfare among the top 20 percent of the scale is a newer phenomenon. One cause is that the further up the scale one goes, the more of one's income comes from investments, which under the Bush tax cuts enjoy about the lowest rates in the tax code. But many families making between $100,000 and $200,000 are not exactly on easy street. They don't face choices anywhere near as stark as those encountered further down the income ladder, but they face serious tradeoffs not experienced by the uppermost crust, particularly when hit with the triple whammy of college for the children, care for aging parents and preparing for their own retirement. There is something deeply wrong about a system that calls into question a comfortable retirement or a top-notch education for people who have broken into the top 20 percent of income earners. It starts to seem politically explosive when you consider that in a decade, those making between $100,000 and $200,000 will pay about five to nine percentage points more of their income in federal taxes than those making more than $1 million, assuming the Bush tax cuts are made permanent. This is not about giving wealthy people more money to invest back into the economy. At this level, it's really about giving more money to those who have nothing to do with it except amass enormous estates for their heirs. Fixing the problem will require members of Congress to summon the courage to say no to a president who wants more for the richest of the rich at the expense of everyone else. We're not holding our breath.

Subject: Crushing Upward Mobility From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 15:45:42 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/opinion/07tues2.html Crushing Upward Mobility The United States is rapidly abandoning a longstanding policy aimed at keeping college affordable for all Americans who qualify academically. Thanks to a steep decline in aid to poor and working-class students and lagging state support for the public college systems that grant more than two-thirds of the nation's degrees, record numbers of Americans are being priced out of higher education. This is an ominous trend, given that the diploma has become the minimum price of admission to the new economy. Greg Winter of The Times reported yesterday that the federal government has rejiggered the formula that determines how much families have to pay out of pocket before they become eligible for the student aid package, which consists of grants and low-interest loans. The new formula, which will save the government about $300 million in federal aid under the Pell program, will cause some lower-income students to lose federal grants entirely. The families of others will have to put up more money before they can qualify for financial aid. Perversely, single-parent households will have to pay more than two-parent households before they become eligible. The federal Pell Grant program, which is aimed at making college possible for poor and working-class students, has fallen to a small fraction of its former value. The states, meanwhile, have trimmed aid to public colleges, partly as a consequence of soaring Medicaid costs. The states have deepened the problem by shifting need-based tuition to middle-class and upper-class students under the guise of handing out so-called merit scholarships. The political clamor around the new formula is likely to lead to changes, but they will be aimed at upper-income families who are most able to pay. Tinkering with formulas in Washington will not solve this problem. The nation as a whole has been disinvesting in higher education at a time when college has become crucial to work force participation and to the nation's ability to meet the challenges of global economic competition. Until the country renews its commitment to making college affordable for everyone, the American dream of upward mobility through education will be in danger of dying out.

Subject: Slowing in Britain From: Terri To: All Date Posted: Tues, Jun 07, 2005 at 14:35:57 (EDT) Email Address: Not Provided Message: We should pay close attention to Britain, both for the economy and markets, since Britain has had a powerful housing market that appears to have softening this year and begun to slow the economy as well. Home prices are level or mildly declining. What will this mean for the economy, for homeowners, and for British investors?

Subject: Golf and Rich and Poor From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 13:52:44 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/national/07pinehurst.html?pagewanted=all In County Made Rich by Golf, Some Enclaves Are Left Behind By SHAILA DEWAN PINEHURST, N.C. - Golf has made Moore County rich. There are spas, country clubs and new $2 million homes. The United States Open, to be held later this month on the most famous of the county's 43 golf courses, is expected to bring $124 million to the state. But as developers rush to provide 'resort quality' amenities in the newest subdivisions, some neighborhoods have been left behind - without sewers, police service, garbage pickup or even, in some cases, piped water. These enclaves, Jackson Hamlet, Midway and Waynor Road, are virtually all black. They butt up against, or are even completely surrounded by, affluent towns that are mostly white: Pinehurst, Aberdeen and Southern Pines. The 500 residents of these unincorporated enclaves are close enough to point out sewer lines that run past their properties en route to new developments, or to watch garbage trucks trundle past without stopping. Though the towns have not annexed these hamlets about 60 miles southwest of Raleigh, and their residents cannot vote in municipal elections, they are subject to the towns' land use and zoning rules under what is called extraterritorial jurisdiction. When asked about extending basic services, the towns' officials say they must take care of those within their existing boundaries before taking on new neighborhoods. The county, on the other hand, says that many of its rural constituents do not have the services the enclaves are requesting, and that the problems of these more densely populated areas can be better addressed by towns. Excluding heavily minority areas from town boundaries is a common but little examined practice, particularly in small towns in the South, civil rights advocates and geographers say. With the U.S. Open beginning on June 16 on the Pinehurst No. 2 golf course, residents of the three black neighborhoods and their advocates are making a concerted effort for the first time to win more services, holding news conferences and giving tours. Historically, they are the very people who provided much of the labor that built the hotels in the Sandhills, as the area is known, tended the greens at the golf courses or worked on the all-black crew of caddies, long since replaced by electric carts. Ida Mae Murchison lives in Jackson Hamlet, a shady neighborhood of dirt roads hemmed in by Aberdeen and Pinehurst but claimed by neither. On one corner, a new apartment complex juts in; it was annexed by Pinehurst, which often expands to include areas where a developer has already paid for the infrastructure. At the rear, a place once called Buckety Ford, where Jackson Hamlet children fetched water, has been dammed to create a 200-acre lake surrounded by houses, also part of Pinehurst. 'I get the feeling that we're just forgotten, put on the shelf or the back burner or something,' Ms. Murchison said. 'But like I say, I don't want to offend anyone. I don't want to cause trouble.' Ms. Murchison was the first black chambermaid at the Carolina Inn, the gracious centerpiece of the 110-year-old Pinehurst resort, where she worked for nearly 50 years. Now 84 and retired, she lives alone, worrying because there are no police officers for her to call in case of trouble. Despite two nearby municipal police forces, her neighborhood is the responsibility of the county sheriff - whose deputies, she says, take at least 10 minutes to appear. In Midway, a black community almost surrounded by Aberdeen, the yards are teeming with flowers, grapevines, statues and birdbaths. But the languid perfume of honeysuckle is punctuated by an equally heavy stench of raw sewage. Randy Thomas, a food service manager at the Department of Corrections who has just adopted four young children, said he had to haul in sand every two months to cover the septic system leaks that trickle down his driveway. Mr. Thomas's neighbor James McDougal said his mother had to move out of her house down the street when she got too old to use the outhouse. The county will not allow a septic tank because the lot is too small, Mr. McDougal said. County Commissioner Michael Holden says the residents' request for services puts the county in a 'delicate situation,' in part because of competing demands for resources. 'I will admit Moore County waited way too long and should have been doing this stuff 20, 25 years ago,' Mr. Holden said, pointing out that in the past 10 years the county has used grant money to extend water or sewer service to some minority communities. But, he added, 'It's a matter of biting it off little by little, and doing chunks of it and moving forward.' In 2000, the state allotted a federal development grant to pay for water and sewer lines for a black enclave called Monroe Town. Every well there was substandard; county officials found a dead possum in one. But Monroe Town, which lies inside the subdivision that surrounds the Pinehurst No. 6 golf course, remains unincorporated and lacks other services, like garbage pickup. Without a grant, the county is disinclined to pay for infrastructure for the enclaves. Those seeking services are quick to point out that the county ranks 18th out of 100 in the state in median income, even though it has no major urban center, and that its tax burden is low, with a rate in the bottom 10 percent. In the past 10 years, the county's property tax revenue has more than doubled, and it ended the 2004 fiscal year with a $9.3 million surplus. Asked if the county could just pay outright for the pipes and other necessities (one estimate is that it would cost $1.5 million to $1.75 million to establish sewer services for Jackson Hamlet), Mr. Holden said, 'Then where do you stop?' Officials also say that these enclaves have been wary of annexation in the past, fearful of the higher taxes that come with being part of a municipality or of the potential destruction of their communities by developers. 'Some of the ones who are really pushing all this don't have everybody on board like they would like you to think,' said Bill Zell, the town manager of Aberdeen. Once services are established, the costs seem modest. A family in Jackson Hamlet that pays $270.96 a year in property taxes now, on a $50,000 home, would pay $382.56 if annexed by Pinehurst and $452.64 if annexed by Aberdeen. According to figures provided by the University of North Carolina Center for Civil Rights, which is helping the black communities, the actual cost to these families could decrease because they would no longer pay for septic tank maintenance, private garbage pickup and other expenses that their municipal taxes would cover. Andy Wilkison, the town manager of Pinehurst, said Jackson Hamlet and Monroe Town declined to consider being annexed in 1990 and 1991, respectively, in part to avoid higher taxes. 'I know what the maps look like and stuff,' Mr. Wilkison said, 'but the annexations have largely been places where people have come to us wanting to be annexed.' Waynor Road, which has neither sewer nor water service, is seeking annexation by Southern Pines, and the town is studying the economics of such a move. To officials, town boundaries are not a matter of race but money. Parcels are annexed after a developer pays for sewer and water hookups or if the area's tax base is likely to generate enough revenue to pay for itself. When Frank Quis, the mayor of Southern Pines, was asked about racial exclusion, he said: 'Are you telling me everyone on Waynor Road is of a certain race? I mean, that's kind of odd.' But Anita S. Earls, a lawyer with the University of North Carolina Center for Civil Rights, said that even if officials were not motivated by racism, historic racial inequities were part of the equation. 'We have not found a densely populated, small lot size, poor white community on the edge of a town,' Ms. Earls said. The exclusion of minority neighborhoods, sometimes called municipal underbounding, occurs across the country. In Modesto, Calif., Hispanics have exchanged visits with the Moore County residents and are suing for services. In 2003, a black community outside Zanesville, Ohio, got tap water after filing a civil rights complaint. But civil rights advocates say it is most prevalent in small towns across the South. 'I don't think it happens even in larger cities in North Carolina because the political dynamics are so different,' said Allan Parnell, the vice president of the Cedar Grove Institute for Sustainable Communities in Mebane, N.C., which did a study of racial exclusion by North Carolina towns. 'In larger towns there may be a larger black population that has some say in running the community.' Underbounding denies blacks political power while putting them at the mercy of politicians who do not represent them, Ms. Earls said. All of the Moore County Commissioners, elected at large, are white, and black officials, elected or appointed, are scarce in the three towns. Several elected officials said the lack of diversity in government was not an issue because they treated their constituents equally. 'Honey, I work with blacks and I love to work with the blacks,' said Virginia Saunders, in her 10th year as a county commissioner. 'I wish you could talk to some of the black people that I have helped.' But Maurice B. Holland Sr., who lives in Midway and is the only black member of the Aberdeen planning board, had a different view. 'There's no one in power to address the issues of the black community,' Mr. Holland said. 'The attitude seems to be, 'We know what's good for you.' '

Subject: Aid for Africa From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 11:57:57 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/06/opinion/06mon1.html Just Do Something Next month could be a historic turning point for the more than 300 million Africans who live on less than a dollar a day. Prime Minister Tony Blair of Britain has been busily lining up international support for his proposal to attack poverty in Africa by ramping up foreign aid. Serious studies commissioned by the British government and the United Nations have identified promising new paths toward economic and human development. The leading nations of Europe have pledged long-term financial support. Leading entertainers like Madonna, Bono, Will Smith and Elton John have announced a set of simultaneous concerts to take place in London, Rome, Berlin and Philadelphia to mobilize grass-roots enthusiasm. Only one crucial element is still missing - the wholehearted support of the United States government. Unless President Bush joins this effort in the five weeks remaining before the summit meeting to be held in July in Scotland, Africa's hopes will be disappointed and America's image in the eyes of a world that once looked to it for enlightened leadership will be further diminished. Mr. Blair will be in Washington this week trying to persuade Mr. Bush to do the right thing. This really should be a no-brainer. At a time when the image of the United States abroad is at rock bottom in many parts of the globe, President Bush could go a long way toward re-establishing the world's richest country as the moral leader it was in the last century. He can do that by supporting his most reliable international ally in this crucial effort and taking to heart the world's poorest and most wretched place. Two weeks ago, the European Union announced that its members would double their aid to poor countries by 2015. The announcement came after France, Britain and Germany - all members of the G-8 - had each laid out timetables for meeting the United Nations' target of increasing foreign assistance to poor countries to 0.7 percent of gross national income by 2015. The European announcements further isolated the American government, which gives only 0.18 percent, and has remained mute about getting to 0.7 percent. Africans, after long years of accepting the rule of brutal and corrupt dictators, are finally dragging themselves to their feet to say, 'Enough.' But there are two paths they can take. With help, African countries can take the route of development and progress, and finally enjoy lives that are about more than just scrounging day in and day out for food in one's stomach and shoes on one's feet. Without that help, those same countries can take the path that cycles back into civil war, poverty and life expectancies so low that 13-year-old girls are considered old women.

Subject: Oh the story is so much more complicated From: Mik To: Emma Date Posted: Tues, Jun 07, 2005 at 12:21:09 (EDT) Email Address: Not Provided Message: There are many African countries that are doing VERY well. In fact in 2003, the fastest growing countries in the world were not China or some Asian country, they were Mozambique and Uganda with 12% and 10% GDP growth respectively. Many more African countries are showing true democratic systems, free market principles and good fiscal discipline. But GDP growth is not the panacea for those millions who live on less than a dollar a day. Programs for improved Banking systems or improved Private Sector Participation do not filter through the large majority who need economic alleviation. This is a very serious issue as these countries start to see more of their own upperclasses become richer and richer. The growing gap between the wealthy and the poor sparks resentment. The poor have been promised a whole new way forward (now that most dictators have been removed) yet they still live in misery. I find it ironic that I have recently done a study on the World Bank contributions to India and am able to compare these contributions to African counties. In the case of grant money, a province of India with a population of just under 100 million people will see (in the road sector) a grant of over 500 million$, while a country like Ethiopia with a comparable population will see less than 100 million$. In essence, in this case, India is receiving 5 times more grant money than the African country. It is obvious that World Bank loans and grant money is fuelling much of Indias fantastic growth, yet the argument of the day is to only double Africa's grants? I don't get it, why does one region get 5 times more than another? Again this issue is very complicated. Yet the underlying fear is: what happens when that poor majority of Africa say 'this democratic thing is not good enough'?

Subject: Re: Oh the story is so much more complicated From: Emma To: Mik Date Posted: Tues, Jun 07, 2005 at 13:16:40 (EDT) Email Address: Not Provided Message: Excellent comment, Mik. I agree.

Subject: False Sales Make a Better Bottom Line From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 11:26:14 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/business/07place.html False Sales Make a Better Bottom Line, but Only for a While By STEPHANIE SAUL A HOUSE of cards ultimately collapses. And the channel-stuffing scheme at the pharmaceutical company Bristol-Myers Squibb was no exception. For several years, Bristol-Myers paid wholesalers to stockpile goods, which the company booked as legitimate sales. The practice is called channel stuffing. The result of the deception, which went on from at least 1999 to 2002, was that Bristol's bottom line looked good. Investors got a rosy picture. But it could only continue for so long. There was a limit to how much wholesalers could store. Ultimately, Bristol came clean and restated its earnings in 2002 and 2003, admitting it had inflated revenues by about $2.5 billion and profits by about $900 million during the period in question. The end of that chapter in Bristol's 118-year history apparently is in sight, with an agreement being negotiated between Bristol-Myers, which is based in New York, and the United States attorney in Newark, Christopher J. Christie. Mr. Christie's office has been investigating Bristol-Myers for several years and is said to be close to a deferred prosecution agreement that will allow Bristol to pay about $300 million in fines. Less clear is what will happen to several current and former company executives. While indictments could be possible, such agreements more frequently include requirements that company leaders pay back bonuses or stock profits they received, particularly if their compensation was sweetened by inflated company financial reports. The former Bristol chairman and chief executive Charles A. Heimbold Jr., for example, sold stock worth more than $23 million during a period when the company reported inflated profits. Mr. Heimbold, who was later appointed United States ambassador to Sweden, received more than $2 million in bonuses during the same period. Mr. Heimbold's successor, Peter R. Dolan, who had been president and was promoted to succeed Mr. Heimbold in 2001, sold about $2 million worth of stock and received more than $2 million in bonuses. Representatives for both Mr. Heimbold and Mr. Dolan have said the executives were not aware of any scheme to inflate profits at the time the fraud was occurring. Mr. Heimbold, who left his ambassadorship last year, could not be reached for comment. A Bristol-Myers spokesman said yesterday that Mr. Dolan and several other executives declined their 2002 bonuses in light of the corporate scandal. It appears that the government settlement will allow Mr. Dolan to keep his job as chief executive but force him to give up his title as chairman, a possible indication that Mr. Christie's office holds him at least indirectly responsible for some of the corporate mischief. James D. Robinson III, a former American Express chief and longtime member of Bristol's board, is expected to step in as chairman, a development first reported yesterday in The Wall Street Journal. The split of chairman and chief executive titles is a growing trend, a ripple effect of the scandals that have plagued corporate America. Requiring that those jobs be held by two people dilutes power, creating an informal system of checks and balances. In the last few years, Bristol-Myers appears to have cleaned up its act. And Wall Street reacted favorably yesterday to news of a possible settlement. Shares of Bristol-Myers closed at $25.42, up 20 cents. 'The scandal is very much in the past,' said Barbara A. Ryan, a Deutsche Bank analyst. But Ms. Ryan sees a potentially larger problem looming: a patent challenge to Bristol-Myers's best-selling product, Plavix, which prevents blood clots. Plavix generated $5 billion in sales last year for Bristol-Myers and its marketing partner on the drug, Sanofi-Aventis. Plavix, which ranks third in the world in sales, is worth 40 to 50 cents of the company's expected earnings this year of $1.41, according to Ms. Ryan. A loss of that brand could mean Bristol's $1.28 dividend would be cut. Ms. Ryan handicaps the litigation's outcome as tilted slightly in Bristol's favor, with a 30 percent possibility that the generic challenge will prevail. 'It think it's a serious threat,' said Ms. Ryan. A paper from the Friedman, Billings, Ramsey Group, another research firm, also said that the patent challenge had merit. The challenge, filed by Apotex, a Canadian maker of generic drugs, claims that the patent on Plavix is invalid because a former patent, which was held by Sanofi, expired in 2003, making the formulation for Plavix obvious to any scientist. Under patent law, obviousness is a basis for the denial of patent protection. Until the patent litigation is resolved, analysts say the issue will remain a major drag on the company's stock, which has been up by about 12 percent in the past year, but remains 60 percent off its highs of several years ago.

Subject: Being 'whip-sawed' ? From: Pete Weis To: All Date Posted: Tues, Jun 07, 2005 at 10:44:56 (EDT) Email Address: Not Provided Message: From The Financial Times: US mortgages could set off vicious cycle >By Richard Beales in New York >Published: June 6 2005 20:16 | Last updated: June 6 2005 20:16 >> If yields on 10-year US Treasuries fall much further, American homeowners will become big players in the Treasury markets. Without buying a single US government bond, they could push Treasury prices up and yields lower still. The reason: a phenomenon known in the mortgage market as a “convexity grab”. When US homeowners refinance and repay their old mortgages – which they do in droves when interest rates fall low enough – owners of mortgage-backed securities suddenly find that their bonds, which are based on pools of mortgages, are repaid faster than expected. To offset this, MBS investors are forced to buy long-dated assets such as 10-year Treasuries. That pushes Treasury prices higher and yields down further, encouraging more refinancing. “It becomes a vicious cycle,” said Walter Schmidt, manager of mortgage strategies at FTN Financial. The effect stems from the unusual structure of the US mortgage market. Homeowners usually borrow for 30 years at a fixed interest rate, set by reference to the yield on 10-year Treasuries. In markets such as the UK, cutting short a fixed-rate loan would cost the borrower money. But in the US, the typical mortgage allows homeowners to refinance at any time without penalty. Refinancing activity became frenzied in mid-2003 when 30-year mortgage rates fell to about 5.2 per cent, according to the Mortgage Bankers Association. Analysts estimate the next wave of refinancing could come if 30-year mortgage rates fall below about 5.5 per cent. That equates to 10-year Treasury yields of around 3.9 per cent. Treasury yields dipped below that level last week, but then rose towards 4 per cent. Mortgage refinancing leaves owners of MBS instruments holding cash instead of long-dated bonds. The cash can only be invested at lower yields than the bonds were earning before. For this reason MBS – unlike most bonds – typically lose value when interest rates fall, and vice versa. Bonds with this characteristic are said to have negative convexity. Refinancing also disrupts the “duration” of an MBS investor’s portfolio, a function of its yield and the time remaining until the investor expects to be repaid. As interest rates fall and homeowners refinance their mortgages, duration shortens. Because most investors try to maintain the average duration of their portfolios, they are left scrambling to find safe assets with long duration, such as 10-year Treasuries or interest rate swaps with similar maturity. About $5,500bn of mortgage-related securities were outstanding at the end of March, compared with about $4,000bn of US Treasury securities, according to the Bond Market Association. The huge volume of mortgage securities helps explain why the technical effect of MBS investors’ “convexity hedging” can exacerbate what begins as a market move based on fundamentals. Some convexity hedging occurred last week as the yield on the 10-year Treasury reached its lowest point in more than a year. But that activity dried up as Treasury yields widened again. “It’s been pretty well contained,” said Dale Westhoff, senior managing director at Bear Stearns. He added that the pent-up demand for mortgage refinancing is lower today than it was in 2003. Refinancing and convexity hedging activity could, however, build if 10-year Treasury yields move below about 3.9 per cent again. “People really start to get nervous when we go through those levels,” said Mr Westhoff. For now, MBS investors are waiting on the sidelines. If yields fall, they may need to act. But hedging prematurely could also cause problems. That is because, for MBS investors, rising yields feed on themselves, as homeowners become less likely to refinance their mortgages and investors sell long-dated assets to shorten the duration of their portfolios. After interest rates hit lows in 2003 and triggered convexity hedging, rates rose sharply. The widening yields caused a new wave of pain to MBS investors, who rushed to sell Treasuries. The market calls this being “whip-sawed”. The memory could be one factor limiting convexity hedging at least until the market decides Treasury yields are set to stay sustainably lower.

Subject: Re: Being 'whip-sawed' ? From: Terri To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 11:52:01 (EDT) Email Address: Not Provided Message: Seemingly, low long term interest rates are only beneficial to investors who are not shorting the bond market in some manner. Why should we worry?

Subject: 'Why should we worry?' From: Pete Weis To: Terri Date Posted: Tues, Jun 07, 2005 at 20:13:48 (EDT) Email Address: Not Provided Message: This article makes the same points I have read elsewhere. That mortgage backed securities providers like Fannie Mae are doing a lot of the purchasing of 10yr teasuries and that the dropping yield for the 10 yr bond is feeding real estate activity which is in turn causing outfits like Fannie Mae to roll the cash from closed out mortgages back into the 10 year bond. So when Alan Greenspan says he believes something different is going on from the past with regard to long term rates, he's definitely right. To find out why things are different from what would be expected for the 10 year bond, despite steady increases in the fed rate, it's instructive to look at what else in our economy is so different. And the immediate and obvious major difference is the unprecedented real estate activity. Just as the real estate frenzy promotes purchases of the 10yr bond as long as it lasts, any significant slowdown in real estate activity with the related slowdown in mortgage demand will cause the 10yr bond to rise, which inturn would bring about a selloff in the 10yr and higher mortgage rates... more selloff, etc. etc. In other words, just as the housing boom feeds on itself in the upswing, so will it feed on itself in the downswing - a point I've tried to make in previous posts. This will have a big impact on all of us, since the collapse of this housing pyramid (whenever it occurs) will see ever higher long term rates which will bring about selloffs in bonds and stocks and a more steeply weakening dollar (as Paul Krugman suggested). With a weakening dollar, inflation in food, energy, and staples will become more of a problem. Will we get double digit long term rates like we did in the 70's? We certainly could. What would a million dollar house at today's mortgage rates in a Southern California middle-class neighborhood go for if the buyer could only get a loan at 13.75% - which was the interest on the mortgage for my first house in 1980?

Subject: Re: 'Why should we worry?' From: Terri To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 20:45:39 (EDT) Email Address: Not Provided Message: Fannie Mae and Freddie Mac are simply buying and packaging and selling mortgages, but I can not in any way understand how this is harmful. I must think about this carefully. That long term interest rates are low strikes me as helpful. If there is a slowing or decline in housing activity, the economy will slow and I can not understand how that will drive up long term interest rates no matter what the dollar may do as a result. If international demand for American debt were to slow however, then long term interest rates would rise and there is a danger. The question is how a shock to the economy may come about, though a slowing in housing or a slowing of demand for dollars.

Subject: Re: 'Why should we worry?' From: Pete Weis To: Terri Date Posted: Wed, Jun 08, 2005 at 12:53:10 (EDT) Email Address: Not Provided Message: 'If there is a slowing or decline in housing activity, the economy will slow and I can not understand how that will drive up long term interest rates no matter what the dollar may do as a result.' It has to do with the reasons why or why not MBS investors would continue to supply money. In other words, if the supply of money to lend falls faster than the demand to borrow. There are a number of factors which influence the willingness of MBS investors to continue ponying up. Certainly the risk of default (in a risky real estate market) is one. Any steep fall in the dollar since these are denominated investments is another - if MBS investors finally come to the realization they are losing due to the low MBS yields vs. dollar droppage, and also a broadly held belief that rates have finally bottomed and are headed higher as we saw temporarily in June of 2003. What I'm saying is that demand tends to fall slowly, while supply can fall suddenly and steeply. 'Fannie Mae and Freddie Mac are simply buying and packaging and selling mortgages, but I can not in any way understand how this is harmful.' The fact that there has been so much scandle surrounding these two institutions along with the fact that we have seen the resignations of their top executives demonstrates that it not as 'simple' as many might think. Also considerable concern voiced by Greenspan and members of Congress is evidence of possible trouble ahead. Fannie and Freddie are mainstays for our mortgage market and in addition are counter-parties to derivative contracts (interest rate swaps). They have obligations on which they must not default, or we could all be in some trouble.

Subject: Re: 'Why should we worry?' From: Terri To: Pete Weis Date Posted: Wed, Jun 08, 2005 at 16:35:19 (EDT) Email Address: Not Provided Message: Then the problem envisoned would be a slowing in the housing market leading to a decline in international credit extension which would drive up interest rates. There are a number of economists who argue that it is likely there will be a decline in credit extension to us in coming years, but what I am thinking is that this decline will be compensated for by a loosening from the Federal Reserve. Suppose however I am wrong. What then? What if stocks and bonds sell off together? Fine questions implied, Pete. As for Fannie Mae and Freddie Mac, the corporations were smoothing earnings in a way that distorted a view of their stability, and this should not be tolerated, but I find no reason to believe the porfolios they had accumulated were not completely sound. I view the push against them by Alan Greenspan as concern for the implied subsidy of semi-government status and not for safety though I am here contradicting the Fed Chair.

Subject: Re: 'Why should we worry?' From: jimsim To: Terri Date Posted: Tues, Jun 07, 2005 at 23:47:38 (EDT) Email Address: Not Provided Message: I wonder who would buy a MBS from Fannie Mae or Freddie Mac? As I understand it, if the MBS pays better than 10 year rates, it will get cashed out as mortgage holders refinance. If the MBS pays worse than 10 year rates; why would you buy it? It doesn't make any sense.

Subject: Re: 'Why should we worry?' From: Jennifer To: jimsim Date Posted: Wed, Jun 08, 2005 at 11:24:40 (EDT) Email Address: Not Provided Message: Mortgage rates are set each week on Thursday according to the yield on the long term Treasury bond. There is always a premium for mortgages above the Treasury yield. Drops in yield of about half a percentage point are likely to lead to some early payment of loans, but only some pre-payment occurs and the premium in yield to begin with should compensate so there is a ready demand for mortgage packages.

Subject: Re: 'Why should we worry?' From: Pete Weis To: Jennifer Date Posted: Wed, Jun 08, 2005 at 14:38:20 (EDT) Email Address: Not Provided Message: Jennifer, how do lenders deal with the increasing new loan instruments like interest only loans which are often for very large mortgages and are often advertised for less than 3%. My wife and I have neighbors who received, a year or two ago, a type of ARM which enabled them to get a 3.625% rate which is fixed at that level for some years (they said 7 years) - I'm not sure about all the terms of their loan. Anyway, I realize that 30yr fixed mortgage rates are set as you point out. But what about the increasing numbers of loans at rates, atleast for a term of some years, that are below the 10yr bond? These types of loans have a lot to do with the continuation of a housing boom even though housing prices have gotten well beyond what home buyers have been traditionally able to afford.

Subject: Re: 'Why should we worry?' From: Jennifer To: Pete Weis Date Posted: Wed, Jun 08, 2005 at 15:51:09 (EDT) Email Address: Not Provided Message: Pete, there you have set out a puzzle. The types of mortgages you are referring to, interest only or the impossible sounding ARM of 3.625% fixed for 7 years, I do not understand. Who buys such mortgages? Why? Fannie Mae and Freddie Mac do not package such bonds to my knowledge? I wish I could respond intelligently, but I cannot. I will ask questions. We will gain an understanding.

Subject: Black, White or Gray From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 10:25:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/business/07race.html?pagewanted=all Black, White or Gray By CLAUDIA H. DEUTSCH Marcel T. Thomas, the chief executive of GE Aviation Materials, has been promoted three times since he joined the General Electric Company in 2001. His base salary of $205,000 ranks him 18th among 314 United States-based executives in his grade level at GE Transportation, his unit's parent company. Until this year he has received stellar evaluations and hefty bonuses. But this year, despite a big increase in his unit's sales and profits, he received a low rating and a negligible compensation increase. Mr. Thomas is black, and he believes that his treatment is a result of racial discrimination. On May 17, Mr. Thomas, who uses the first name Marc, sued G.E. He insists that racism is pervasive at G.E., not only at his unit's headquarters in Irving, Tex., but throughout the company, which is based in Fairfield, Conn. He is seeking to have the suit certified as a class action. G.E. insists the suit is specious, and notes that it has seven black officers, up from four in 2001, and that 2 of its 11 businesses, accounting for $28 billion in combined revenue, are run by blacks. Both sides are marshaling their arguments. But already the suit offers an example of how people can look at the same numbers and draw opposing conclusions. It shows that no matter how race-neutral its policies, no company can be certain that it has rooted out racism, particularly in locations far from where policies are set. It offers a powerful illustration that employees who feel wronged will not be satisfied by diversity programs or statistics showing that others in their group are progressing. If anything, it suggests that companies that are justifiably proud of the progress they have made may still lose sight of the problems they have not yet solved. 'G.E. has a well-run diversity program without any glaring holes,' said Carl Brooks, president of the Executive Leadership Council, an organization of black executives that has publicly praised G.E.'s record in promoting minorities. Yet, he concedes: 'Every company, even G.E., is still on a journey when it comes to really getting racism knocked.' Mr. Thomas is unimpressed with G.E.'s track record. He said that only 3.6 percent of the company's 4,500 junior executives - his level in the company - are black and only 4.9 percent of its senior executives and 3.3 percent of officers, making G.E.'s leadership team, he says, a 'restricted club.' (G.E. said the percentages are slightly higher - specifically, 3.9 percent of junior executives, 5.8 percent of senior executives and 3.5 percent of officers.) G.E. acknowledges that sales and earnings at his unit, Aviation Materials, have risen since Mr. Thomas took over early last year, but says his bad evaluation reflected the low ratings he got from subordinates - black and white - on aspects of his leadership style like listening skills, ability to train, or to build and lead teams. Management experts say that G.E. puts heavy weight on such employee feedback. 'When they fault someone who makes his numbers for being an interpersonal turkey, you can bet they have the data to support it,' said Noel M. Tichy, a professor at the University of Michigan's Business School who once worked for G.E. Mr. Thomas, 43, insists that G.E. retaliated against him for pointing to race- and age-related discrimination in his unit. He claims that a white man with his track record and no-nonsense style would be rated top notch. 'Only African Americans are accused of having arrogant and problematic leadership styles when they ask tough questions,' he said. Even the definition of what constitutes a racial slur is subject to dueling interpretations. Mr. Thomas, for example, was incensed by a PowerPoint presentation, created under his predecessor, that included a still from 'Sanford and Son,' a sitcom about a junk shop run by a black father and son, to illustrate what GE Aviation Materials is not. According to a G.E. spokesman, Gary Sheffer, that was a way of saying that the unit, which buys and sells used parts and equipment for aircraft, 'is not a junkyard operation, but a high-tech growth business.' Mr. Thomas's interpretation is that despite numerous black employees in the unit, management wanted to convey the impression that 'this unit is free of blacks.' Experts in diversity say that, as corporate America becomes more welcoming for African Americans, such mutually exclusive reactions are becoming more common. They note that G.E. joins Coca Cola, Kodak and Xerox on a growing list of corporations that have been lauded by black organizations for their treatments of minorities, yet have been sued. Each of those companies is helping African American employees form networking groups and find mentors. Each has put managers through diversity training and has formal procedures to handle complaints. And each offers examples of how it righted any wrongs suffered by black employees and terminated managers who perpetrated them. Each closely monitors the progress of blacks from the classroom through the pipeline and toward the boardroom. Each cites easily verified numbers showing the progress of minority employees. And each professes shock that it has been sued. Philip Harlow, chief diversity officer at Xerox, was most succinct: 'Any company can find itself the subject of a suit, but that doesn't mean the suit is valid.' Maybe not, but none of the suits have been summarily dismissed.'Companies that took early action against racism have taken their eye off the ball,' said David A. Thomas, a Harvard Business School professor and author of 'Breaking Through: The Making of Minority Executives in Corporate America.' Professor Thomas said that G.E.'s record on diversity had 'improved dramatically,' yet he would not be surprised if the accusations of pay and promotion inequities cited in Marcel Thomas's suit had merit. 'Companies forget that racists, like cockroaches, are plentiful on the planet,' he said. 'Stop calling the exterminator, and the problem will come up again.' G.E. denies it has grown lax. Deborah Elam, G.E.'s manager of diversity, recently added an employee to step up recruiting through black organizations like the National Association of Black Engineers, and has set up workshops for high-potential minority women. 'If anything, we have intensified our efforts,' she said. Such moves rarely mollify disgruntled employees, diversity experts say. They note that corporations face a quandary: as more blacks move up the ladder, those who feel stymied become doubly frustrated. 'Even if some people break through, you may have a multitude of frustrated people facing cultural barriers, not getting stretch assignments, and whose managers say, 'we're still not sure they've proven themselves',' said Frederick A. Miller, chief executive of the Kaleel Jamison Consulting Group, which specializes in corporate culture. Moreover, Mr. Miller contended that blacks remain underrepresented in upper echelons. 'African Americans are running out of patience with what they perceive as different rules for blacks and whites on the fast track,' he said. Some black executives at G.E. say that just does not apply to their company. Damian A. Thomas, the general manager of GE Corporate Sales, said that in 35 years with G.E., he never encountered racism. While he concedes that 'the flow of African Americans into our training programs could be better,' he recently persuaded his daughter to join the company. 'If I had any worries about racial or meritocracy issues, I would never have suggested that one of my children work for G.E.,' he said. But that sentiment is not universal among G.E.'s black employees. Mr. Thomas, who was widely interviewed the week the suit was filed, referred follow-up calls to his law firm, Sanford, Wittels & Heisler. David W. Sanford, a partner, said his firm had heard from 'scores' of current and former G.E. employees 'with stories that are consistent with Mr. Thomas's claims,' but would not name any of them. One former G.E. employee - an African American in his 50's, who worked for G.E. for 18 years after graduating from business school - contacted a reporter himself. He would not let his name be used because he is looking for a job, and fears being branded a troublemaker. He said that he had received stellar evaluations, had been promoted frequently and been 'paid equitably' in his first few years, and had even survived a layoff that had cost many white colleagues their jobs. But he hit a wall, he said, when he tried to get out of middle management. 'They kept telling me I didn't fit the profile for my boss's job,' he said. He added that he was promoted after he filed a complaint with the Equal Employment Opportunity Commission, but was terminated for 'poor performance' in late 1998, 'even though they couldn't point to anything tangible I was doing wrong.' Although he quickly found another job, he said he sued G.E. and settled for $100,000 - a settlement he said he now regretted accepting. Such stories bewilder G.E.'s black loyalists. They concede, for example, that some white subordinates make more than their black managers - but they say that is because they joined G.E. through acquisitions. 'You don't cut someone's pay because their G.E. counterpart is making less,' Ms. Elam said. Lloyd G. Trotter, an African American who has worked for G.E. for 35 years and is now chief executive of GE Consumer and Industrial, a $13 billion business, doubts that racism results in white employees getting jobs that their black colleagues covet. 'I didn't get every job I asked for, either, but nobody does,' he said. Mr. Trotter, who said he was 'surprised, angry and concerned' by the suit, said that G.E. penalizes managers who do not include diversity in their hiring plans, and quickly fixes inequities in pay between different groups of employees. Mr. Trotter and other black officers say they actively help other African Americans understand G.E.'s sometimes-quirky culture. 'We make sure they know things like, at G.E., staying silent in meetings, or using too many charts instead of articulating your points, is a kiss of death,' said Steven Thorne, a senior vice president for human resources who has been with G.E. for 32 years. Still, one thing G.E.'s fans and critics seem to agree on is that no company, not even G.E., has created a truly race-neutral workplace. 'G.E. is a true meritocracy, with checks and balances that prevent racist attitudes from being manifested as behavior,' Professor Tichy said. 'But when you have 360,000 employees, well, face it - you may have rogue managers who screw up.'

Subject: Textile Manufacture in China From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 10:20:18 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/business/worldbusiness/07textile.html A New Issue Is Complicating U.S. Trade Talks With China By KEITH BRADSHER HONG KONG - Heavy investment and hiring by Chinese textile and apparel companies late last year and early this year have complicated a trade dispute between the United States and China, a senior American negotiator acknowledged Monday after weekend talks that produced little progress. Chinese and foreign companies appear to have built and outfitted many more textile factories over the winter than was expected in anticipation of the end to American and European quotas. Those companies also hired large numbers of workers to run the new operations. James C. Leonard III, the United States deputy assistant secretary of commerce for textiles, apparel and consumer goods, said at a news conference here Monday that the American reimposition of quotas on seven categories of textiles and apparel last month should not cost any jobs in China. The quotas allow China to ship 7.5 percent more goods in each category than last year, he said. 'There's really no reason for them to, quote, lose jobs,' he said. But Mr. Leonard, who participated in talks over the weekend in Beijing that he and Chinese officials said produced no substantive agreements, also noted that companies had invested heavily in China. Textile executives said that while precise figures were hard to determine, the investment was extremely heavy and now made a solution to the current impasse more difficult. Chinese exports of cotton trousers to the United States soared 16-fold in the first quarter of this year while shipments of cotton knit shirts rose 14-fold after the quotas were lifted Jan. 1, according to trade figures. Many companies in Taiwan and Korea moved operations to China over the winter and hired workers, while companies with existing operations expanded, said Willy Willy Lin, the managing director of Milo's Knitwear International, a big apparel company based in Hong Kong. 'What are they going to do with all this machinery, and workers?' asked Mr. Lin, who is also the vice chairman of the Textile Council of Hong Kong, a trade association representing companies that own a large proportion of China's garment industry. 'People don't know what to do, the confusion is killing,' he said. The official New China News Agency reported Monday that Chinese officials were critical of the United States for persisting with limits on Chinese exports. 'The restrictions initiated by the U.S. government have imposed a severe impact on China's textile production,' Vice Premier Wu Yi said, according to the news agency. 'They also hurt the industry and the public's confidence' in free trade, the news agency said. Mr. Leonard said that further talks would be held with Chinese officials in the next two weeks and again in mid-July. He said that American and Chinese trade officials had not engaged in any substantive talks over the weekend about the value of the yuan, which the Bush administration contends is undervalued. Mr. Leonard also said that he doubted China would retaliate broadly for American textile limits by starting a trade war affecting other products. 'Personally, I don't think that will happen, textiles is only 6 percent of China's trade,' he said. When China joined the World Trade Organization in November 2001, it accepted special rules that allow other member nations, including the United States, to reimpose limits on its textile and apparel exports under certain circumstances for four years after the expiration of worldwide quotas. Mr. Leonard said Monday that W.T.O. members had agreed in 1994 to phase out over 10 years their quotas on apparel imports from each other, and that China had not been part of this preparatory phase for nearly seven years.

Subject: Britain Showing Signs of a Slowdown From: Emma To: All Date Posted: Tues, Jun 07, 2005 at 10:17:55 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/07/business/worldbusiness/07brit.html?pagewanted=all Britain Showing Signs of a Slowdown By ALAN COWELL LONDON - In grim procession, some of Britain's best-known retailers - from Boots to Marks & Spencer - have lined up recently to report or warn of lower profits. But these days, the gloom has an impact far beyond the dwindling profits from sales of digital cameras at Jessops or food at Sainsbury's. The reduced profits, real and expected, may be signs of a significant slowdown in an economy that has distinguished itself from the sluggish ones in Continental Europe through reliable growth - most of it driven by free-spending consumers. 'There are signs of stress,' said Vicky Redwood, an economist at Capital Economics, a consultancy here. 'There has been a sharp rise in personal bankruptcies and a rise in mortgage arrears and repossessions. You are starting to see some signs of trouble.' Just as this week's rejection by French and Dutch voters of a new European constitution will have different consequences for Britain and Continental Europe, Britain's economy is on a largely separate track from the economies of Europe. If the slowdown in Britain does take hold, it would raise complex tensions; for instance, Britons' need to save for pensions versus the economy's hunger for spending to keep growing and the government's promises not to raise taxes set against a swelling budget for schools, hospitals and other public services. Above all, a slowdown would illustrate the stunning change in the British economy over the last decade - a time when industrial jobs have been lost to the service industry, when retail spending has taken over as the engine of growth, when personal debt has soared and when the government, bucking its own advice to the rest of Europe, has made its spending a bigger proportion of the overall economy. While public spending as a share of national wealth has remained static in Europe's big economies - the European Union average is about 48 percent - public spending in Britain, fueled by higher taxes, rose to about 41 percent last year from around 37 percent in 1999 and is likely to continue rising, according to the Institute for Fiscal Studies, a private research group based here. And at the core of Britain's economy lies a phenomenon more familiar to Americans than to Europeans - a boom in real estate. For much of the late 1990's - and particularly in the early 2000's as investors sought alternatives to falling stock markets - soaring real estate prices encouraged Britons to embark on a collective spending spree, running up unheard-of debt on credit cards and mortgages, now totaling more than Ł1 trillion ($1.83 trillion). This year, a commission appointed by the opposition Conservative Party and led by Lord Griffiths of Fforestfach, who was an adviser to Margaret Thatcher when she was prime minister, concluded that personal debt had become a problem for 15 million Britons. The commission blamed banks for making credit too easily available. 'The sheer scale of consumer debt has made millions of households extremely vulnerable to shocks in the economy, both from fiscal mismanagement and external factors such as oil price rises, acts of terrorism and wars,' the report said. 'Debt is a time bomb which could be triggered by any number of shocks to the economy, at any time.' The credit-driven boom persuaded the Bank of England to raise interest rates from a low of 3 percent to 4.75 percent, their level for the last nine months. Now the higher rates are biting on the debt the spending has produced, turning spendthrifts, in some cases, into paupers. In one sign of the slowdown, the British Bankers' Association said that the number of mortgages initiated in February was down 35 percent from a year ago despite other signs that a slowdown in the housing market might be ending. Not only that, according to the British Retail Consortium, retail sales in April fell by 4.7 percent compared with April 2004. The slide brought 'the most difficult trading conditions in living memory,' said Kevin Hawkins, the director general of the consortium. Just last week, the Office for National Statistics said that the economy grew just 0.5 percent in the first quarter, the slowest in two years. The slowdown, said Ms. Redwood of Capital Economics, could well be prolonged 'given that it's a response to fundamental factors like a slowing housing market and high levels of debt.' In a service-driven, retail-fed economy, suddenly tight purse strings are not what the chancellor of the exchequer, Gordon Brown, needs to meet the growth figures in his ambitious, third-term public spending plans for schools and hospitals. Mr. Brown had forecast annual growth in the range of 3 percent to 3.5 percent in an economy that has grown consistently for more than 12 years - before the Labor Party came to power in 1997. 'Let us remember when some are pessimistic, I am not,' Mr. Brown said at a meeting of labor leaders two weeks ago. But most economists, along with the Organization for Economic Cooperation and Development in Paris, are expecting growth of 2 percent to 2.5 percent, still healthy by Continental European standards. If growth does not meet Mr. Brown's forecast, Ms. Redwood said, 'We think he will have to compensate by raising taxes as it becomes apparent that he has a black hole in his finances.' An economist at the Bank of America here, Lorenzo Codogno, said, 'Should the economy start slowing markedly, there will be some kind of shortfall in revenues, while on the spending side, you have a long-term commitment.' The most common forecast predicts that the Bank of England will begin to ease rates this summer or in the fall. Some economists are forecasting that the benchmark rate will decline to 4 percent by the end of this year, and fall further in 2006. With most of Europe's interest rates at 2 percent, however, the debate over the cost of borrowing - like so much in the British economy - shows just how distinct in economic terms Britain is compared with the Continent. Indeed, with the plan for a 25-nation European constitution now in trouble, the prospect of Britain's joining and adopting the euro as its currency looks even more remote than it did during the recent British election campaign. At that time, both Mr. Brown and Prime Minister Tony Blair indicated that membership was unlikely for now because the British and Continental European economies were not on the same track. That trend is only likely to be reinforced by the stinging 'no' votes in France and the Netherlands. 'We've got a recession in Italy; we've got low growth in Germany; we've got a downturn in France,' Mr. Brown said recently. 'Britain is continuing to grow.'

Subject: Low Long Term Interest Rates From: Terri To: All Date Posted: Tues, Jun 07, 2005 at 10:10:19 (EDT) Email Address: Not Provided Message: The persistence of low long term intrest rates strikes me as a reflection of moderate to weak international growth, an American labor market that is less than robust in job creation and far less in wage generation, and private and public capital flows to America. I do not consider low long terms rates a problem, rather the reverse. Low long term rates simply follow a trend that began in December 1981, a trend in which each interest rate cycle has brought lower lows and lower highs.

Subject: Cautiously Bullish From: Jennifer To: All Date Posted: Tues, Jun 07, 2005 at 09:53:43 (EDT) Email Address: Not Provided Message: Though there are always reasons for concern, when markets are vibrant we worry about prices being too high, when markets decline we worry about the economy, I do not find a price earning ratio for the S&P of 17.7 to be a long term worry. I am cautiously bullish.

Subject: Re: Cautiously Bullish From: Pete Weis To: Jennifer Date Posted: Tues, Jun 07, 2005 at 11:15:26 (EDT) Email Address: Not Provided Message: Jennifer. If S&P corporations had to expense executive compensation and pension plan expenses legitimately, at what level would the price-to-earnings ratio be calculated? How many more companies will file for bankruptcy to shed their pension plans? Will the new bankruptcy laws which will make it more difficult for Jack and Jill to file for bankruptcy make US corporations more responsible for funding their pension plans? From the NYT's: June 7, 2005 Pension Loopholes Helped United Hide Troubles By MARY WILLIAMS WALSH Loopholes in the federal pension law allowed United Airlines to treat its pension fund as solid for years, when in fact it was dangerously weakening, according to a new analysis by the agency that guarantees pensions. That analysis is scheduled to be presented at a Senate Finance Committee hearing today. A second report, by the comptroller general, found that most companies that operate pension funds are using the same loopholes. Those loopholes give companies ways - all perfectly legal - to make their pension plans look healthier than they really are, reducing the amount of money the companies must contribute. United's pension fund failure is now the biggest since the government began guaranteeing pensions 30 years ago. Most companies are able to keep their pension plans going, despite the chronic, hidden weakness, because they are generating enough cash to meet their obligations to current retirees. Only when a company files for bankruptcy, as United did in December 2002, and terminates its pension plan, as United has, does the government step in and make the plan's true economic condition apparent. 'We saw similar practices and events at Enron, but unfortunately, this time it's perfectly legal,' said Senator Charles E. Grassley, the Iowa Republican who is chairman of the finance committee. He said he had scheduled today's hearing because he wanted to find ways to keep pension disasters like the $10 billion failure at United from happening at other companies. 'The rules are full of serious holes that need to be fixed as soon as possible,' Senator Grassley said. 'No one should make the mistake that this is an airline-only problem. The reality is that companies everywhere have used the same arcane pension-funding rules' to shrink their contributions. Many analysts believe that the federal Pension Benefit Guaranty Corporation will one day require a bailout because it has been forced to pick up a number of large failed private pension plans. The more big defaults there are in the meantime, the more the eventual bailout will cost. The federal pension law was enacted in 1974 after a number of scandals in which companies went bankrupt and their workers discovered there was little or nothing set aside to pay the pensions they had been promised. The law was supposed to make pension failures a thing of the past by requiring companies to set aside money in advance - enough each year to pay the benefits the work force earned that year. The law also required that if a pension fund got into trouble, its sponsor was to quickly pump in more money, warn its employees about the problem and pay higher premiums to the federal pension insurance program. United did none of those things, even as its pension fund withered, because its calculations were making the fund look healthy. The fund is made up of four individual plans for various groups of employees. United's calculations followed the letter of the law until July 2004, when the airline announced that it owed $72.4 million to its pension fund but would not make the contribution. By that time, the company had filed for bankruptcy protection. The $72.4 million would have done little good by then, because the pension guaranty agency told the bankruptcy court that the pension fund had a shortfall of $8.3 billion. In its analysis, the Pension Benefit Guaranty Corporation found that in 2002, when United was determining how much it had to contribute to its four plans, it calculated that the plans for its pilots and its mechanics each had more money than needed. It further calculated that the plans for its flight attendants and its managerial workers were close to being fully funded, and did not need any special attention. On the basis of those calculations, United, a unit of the UAL Corporation, made no pension contributions that year. Those numbers are on file with the Labor Department. But they do not square with the pension numbers United provided to the Securities and Exchange Commission. That agency requires companies to calculate pension values in a different way. At United, that method showed the four pension plans to be only 50 percent funded; that is, they had only half as much money as they needed to make good on United's promises to its workers. Pension calculations done for S.E.C. filings have nothing to do with the rules for calculating contributions. But had United been required to use the S.E.C. pension numbers to determine its contribution that year, it would have had to pump money into the plans quickly. The pension law requires companies to make special catch-up contributions any time their pension funds fall below an 80 percent funded level, or even when they fall below 90 percent funded, if they stay at those levels for several years. A plan that was only 50 percent funded would be considered a real emergency. But the law allowed United to say its pension plans were fully funded, or nearly so, and, therefore, no more money was needed. United's employees were not informed that anything was amiss, as the law requires of badly weakened plans. Nor did United have to pay the higher premiums to the pension guaranty agency that the law expects. The discrepancy between a company's pension report to the S.E.C. and the Labor Department is but one example of the problems. At today's Senate hearing, David M. Walker, the comptroller general, is expected to testify that companies have so many ways of tweaking their pension calculations that they almost never have to make the special catch-up contributions that Congress required of plans that are slipping. A recent study by the Government Accountability Office, which Mr. Walker runs, examined eight years of records for the nation's 100 largest pension funds, and found that only six plans in the entire group ever had to pay the special contributions in that period. For two of the plans, it was already too late by the time the special contributions came due. Years of insufficient contributions had taken their toll, and those plans collapsed and were taken over by the government. The G.A.O. study attributes some of the misleading pension math to the use of inappropriate actuarial assumptions in projections and some to a process called 'smoothing,' in which actuaries attempt to eliminate short-term volatility by spreading changes over several years. But the pension agency's analysis of United's case shows that the rules for tracking contributions made in prior years have also caused a great deal of trouble. The rules allow companies that put in more than the required minimum in any given year to keep the excess amount on their books and to use it to offset their required contributions in years when cash is tight. These excess contributions from the past are kept in a running tab called a credit balance. The trouble is that at United, as at many companies, money contributed in the 1990's was invested in assets that lost value during the bear market that began in 2000. But the pension rules allow companies not only to keep their pension credit balances on the books at the original amount, but they are even permitted to allow their credit balances to compound in value at some interest rate determined by the plan's actuary. When United's calculations finally began to show that contributions were quickly needed, in 2003, the airline was able to satisfy the requirement with just a small amount of cash and lots of bookkeeping entries from its credit balance. Senator Grassley said he believed many companies were 'booking phony investment gains to hide that workers' pensions are going down the tubes.' He said he hoped the hearing would lead to legislation that would eliminate the loopholes that made such maneuvers possible. In a later session today, the finance committee is scheduled to hear from executives of some of the major airlines, and from the leaders of some of the unions for airline employees.

Subject: Re: Cautiously Bullish From: Pete Weis To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 11:24:57 (EDT) Email Address: Not Provided Message: 'Will the new bankruptcy laws which will make it more difficult for Jack and Jill to file for bankruptcy make US corporations more responsible for funding their pension plans?' I was being sarcastic here. Clearly US corporate responsibility to their employees (at least presently) will not be held to the same levels as Jack and Jill's obligation to pay their credit card bills. I wasn't suggesting that pension plans would be a long term drag on corporate profits. Instead they will be a long term drag on the US taxpayer and the US dollar. Still, what happens in the short term to the stock values of a company which files for bankruptcy?

Subject: Re: Cautiously Bullish From: Jennifer To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 11:35:08 (EDT) Email Address: Not Provided Message: Indexes are weighted by market capitalization. When a company has seriously weakened, its market capitalization will have shrunk to the point where there is almost no impact on an index should the company go bankrupt. Bankruptcy has taken place for decades, with little or no market disruption. I have no worry at all about failing companies beyond the personal problems for those immediately concerned. I am well enough diversified to avoid at least this worry.

Subject: Re: Cautiously Bullish From: Pete Weis To: Jennifer Date Posted: Tues, Jun 07, 2005 at 13:43:57 (EDT) Email Address: Not Provided Message: 'Bankruptcy has taken place for decades, with little or no market disruption.' Between 2000-2002 bankruptcies skyrocketed. The early 30's also saw many bankruptcies. I don't think large numbers of bankruptcies are good for either the stock market or bond market. I was questioning your suggestion regarding reported PE's. What if actual earnings are considerably less than reported due to significant expenses which are not reported and marks a break with reported earnings of the past. As the article suggests these under reported expenses do not become apparent until companies go into bankruptcy or perhaps their bond ratings begin to take a hit. What if we get a number of major bankruptcies by major companies (GM, Ford, Goodyear, Boeing, IBM, airlines ..) because their earnings are in worse shape than they were letting on? Not saying they would go permanently out of business but they might want to shed their obligations. This would definitely have a negative effect on the economy and the stock markets.

Subject: Re: Cautiously Bullish From: Terri To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 17:29:46 (EDT) Email Address: Not Provided Message: Corporate balance sheets are in generally excellent condition and I am simply not worried about debt or bankruptcy problems at present. Earnings are excellent and corporate saving are near record highs. There will be ample warnings from the bond market if balance sheets generally worsen in quality. Watch the Vanguard Long Term Investment-Grade Bond Fund for any weakness.

Subject: I respectfully disagree From: Pete Weis To: Terri Date Posted: Tues, Jun 07, 2005 at 20:34:16 (EDT) Email Address: Not Provided Message: This article was written back in March but I don't believe things have changed much. I know you feel differently, but I don't think much has changed since the late 90's with regard to honest accounting. Investment Banks are still assisting clients to hide debt and mislead investors with regard to real GAAP earnings. It's still a pretty corrupt system. So called stock analysts are nothing more than sales force. The SEC has been underfunded and understaffed and the few of the many offenders who have been caught end up paying small penalties relative to the billions they are making carrying on their ripoff of investors. Associated Press Quality of Corporate Earnings Still Weak Tuesday March 22, 1:47 pm ET By Rachel Beck, AP Business Writer ALL BUSINESS: Quality of Corporate Earnings Still Weak in Wake of Business Scandals NEW YORK (AP) -- Companies can talk all they want about how the quality of their earnings are improving in the wake of all the business scandals. Truth be told, they might not be practicing what they preach. At least that's the conclusion of a new study showing plenty of companies are still releasing earnings reports that paint a picture of their businesses that is rosier than reality. Not what they are doing is necessarily illegal in any way, but it gives off a perception that things are better than they really are. And maybe worst of all is that investors and Wall Street continue to let them get away with this. This kind of behavior was supposed to change after executives at WorldCom Inc., Enron Corp. and the like got caught inflating their corporate performance to boost their companies' stocks. Many then went on to cash in on the share price run-up. Such scandal certainly surprised investors, who were stunned to learn that companies long touting big earnings gains had really been losing major money. In recent years, securities regulators started enforcing stricter accounting rules that required companies to include profit figures based on the conservative Generally Accepted Accounting Principles, or GAAP, in their earnings news releases and were supposed to make it more difficult for companies to exclude all sorts of 'special costs' from their earnings reports. While those changes have forced companies to put more important data into financial reports, earnings still aren't up to the quality that they should be. Companies continue to try to spin their earnings news in their favor, often by touting their 'operating' or 'adjusted' results. 'Management still has great discretion over what goes into their earnings, and how they report those earnings,' said Philip Wolitzer, an accounting professor at Long Island University. New research by Merrill Lynch chief U.S. market strategist Richard Bernstein shows that the so-called improvement in corporate reporting hasn't been an improvement at all. His methodology shows that the quality of earnings in the recent profit cycle was comparable to the worst levels seen during most profit cycles in the 1990s -- when much of the accounting manipulation that led to the corporate scandals was going on. He measures quality by looking at the difference between operating and GAAP earnings for companies in the Standard & Poor's 500 stock index. The lower the gap between those metrics, the better the quality, largely because there are fewer write-downs and write-offs as well as a reduced level of accounting gimmickry. His findings show that operating earnings were on average 9.6 percent higher than those reported under GAAP in the second quarter of last year, and that difference climbed to 13.7 percent in the fourth quarter of 2004, signaling a deterioration in quality. The difference is still well below the 40.1 percent seen in the fourth quarter of 2002, but it's important to put the size of the recent gap into a better context -- it's more than double the low seen in March 2000 and well above the long-term average gap of 6.7 percent. 'The general perception is that the quality of earnings improved demonstrably during the recent profit cycle,' Bernstein said. 'Whereas that is clearly true relative to the extremely poor quality of earnings in 2000-2002, it is not true relative to history.' Just consider how drastic the gap at some companies can be. Ford Motor Co. earned 5 cents a share under GAAP in the fourth quarter while its adjusted earnings showed a gain of 28 cents per share. Wood products company Georgia-Pacific Corp. also had a wide difference, with its GAAP figures showing a 6 cent gain in earnings per share vs. the 51 cents a share it presented in operating earnings. Biotechnology firm Genzyme Corp. had a loss of 42 cents a share under GAAP, while its operating earnings were 52 cents a share, according to Merrill Lynch. Companies throughout corporate America argue that their adjusted earnings present a better gauge of their operations by excluding special or one-time costs. Wall Street, too, has long favored these results over GAAP to value and analyze stocks, and investors still let companies play down the negative results by continuing to focus on adjusted earnings when buying and selling stocks. That's a strategy they may want to rethink now that overall corporate profit growth is decelerating. Bernstein found that 78 percent of the 50 stocks in the S&P 500 with the biggest difference between adjusted and GAAP earnings fall at the low end of S&P's common stock rankings, which measure historical earnings and dividend growth. Included on that list: Delta Air Lines Inc., Advanced Micro Devices Inc. and LSI Logic Corp. Bernstein points out that 'lower quality' stocks tend to underperform when the profit cycle is slowing, which is happening right now. So while companies might like to push adjusted earnings, investors may not want to pin their hopes on that measurement. Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

Subject: Re: I respectfully disagree From: Terri To: Pete Weis Date Posted: Tues, Jun 07, 2005 at 22:03:53 (EDT) Email Address: Not Provided Message: I understand, and thank you for reminding me, but the questionable companies are not those whose bonds are included in Vanguard investment-grade bond funds. I will continue tomorrow, Pete. Thanks, thanks, as always.

Subject: Value and Value From: Terri To: All Date Posted: Tues, Jun 07, 2005 at 06:06:58 (EDT) Email Address: Not Provided Message: Above all the way to protect portfolios seems to be to look for value in purchase along with asset diversity and an income source to allow for patience with capital gains. We should find this can be achieved.

Subject: Black-and-white Warbler Preening From: Terri To: All Date Posted: Tues, Jun 07, 2005 at 05:51:34 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5443&u=17|11|... Black-and-white Warbler Preening New York City--Central Park, The Loch.

Subject: Women Find Their Place in the Field From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 20:35:28 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/dining/01farm.html?pagewanted=all Women Find Their Place in the Field By JULIA MOSKIN CHERYL ROGOWSKI planted her seeds of change in the black soil of Orange County, N.Y., in 1994. Her parents, first-generation Polish-Americans, built the W. Rogowski Farm, starting in the 1950's. Like most farmers in the area, they dedicated their land to the wholesale onion business. 'We sold 500 tons of onions every year,' Ms. Rogowski said, 'and never met any of the people who bought them.' In 11 years, starting with a crop of chili peppers seeded in her bedroom and planted in a remote field, Ms. Rogowski has transformed Rogowski Farm, raising 250 varieties of produce and forming intimate connections to its customers and employees. For her innovations, she won a $500,000 'genius award' last year from the John D. and Catherine T. MacArthur Foundation, the first given to a full-time farmer. 'What I know about farming is this: It's not enough to just drive the tractor anymore,' she said. Ms. Rogowski, 43, is one of thousands of women who have changed the face of American farming. Though American farms have steadily declined in jobs and capital for years, the number of farms operated by women has more than doubled since 1978, from just over 100,000 to almost 250,000 today, according to the United States Department of Agriculture. Almost 15 percent of American farms are now run primarily by women - a sea change from 1978, when the figure was 5 percent. On organic farms, according to the Organic Farming Research Foundation, the number is 22 percent. The concentration is especially high in the Northeast, where a small farm near an urban area can now survive solely through farmers' markets, restaurants, farm memberships (in which customers pay in advance for a season's worth of produce) and other direct outlets. 'Farming has changed, and farmers now have to do things they are traditionally really bad at: marketing, educating consumers, collective action, communication,' Ms. Rogowski said. 'And it can't be a coincidence that women are traditionally good at those things.' To expand her farm's business and its reach in its community, Ms. Rogowski arranged for weekly deliveries of produce to centers for the elderly, mentored immigrant farmers from Mexico and Guatemala, started a catering business that uses local produce, sells vegetables at eight weekly farmers' markets and is an activist for land use reform. 'Women farmers aren't a special-interest group,' she said. 'Our issues are the same as all American farmers - we all want to keep our farms, and we have to make money from them. But women have come up with a lot of the new ways of doing it.' Women's work has always been integral to American farming, but women were seldom considered farmers. Now, networks of female farmers are thriving in Vermont, Pennsylvania, Maine, Montana and Iowa. And a national conference for women in sustainable agriculture, the first of its kind, is scheduled for October in Burlington, Vt. At the Rodale Institute in Pennsylvania, an organic agricultural training center, all of this year's farm interns are women, which is also a first, said Jeff Moyer, the farm manager. All of the women interviewed for this article said they had experienced little resistance from their male colleagues. 'I can do every job on this farm that my dad or brother could do - operate the forklift, bag onions, haul manure,' Ms. Rogowski said. 'And the farmers around here, not to mention the guys who work for me, all know that.' Annie Farrell, 54, was a single mother when she started farming in Bovina, N.Y., in the 1970's. 'It was a man's world back then,' she said. A longtime supplier to New York City chefs, she was one of the first local growers to produce organic vegetables of restaurant quality. 'The kind of farming I wanted to do takes finesse and patience, and the men didn't seem too impressed.' The rise of small-scale 'market farming' has brought many women back to farming. 'Small tractors have become the fastest growing segment in the agricultural equipment industry,' said Barry Nelson, a spokesman for John Deere. 'We have more women buying tractors than ever before, and more small farms that need just one piece of heavy equipment. It's a lot easier to get started than it used to be.' Even so, according to the Department of Agriculture, women are far more likely than men to be farming on inherited land. Betsey Ryder's farm, in Brewster, N.Y., has been in her family since 1795. Today, Ryder Farm's motto is: 'Where the Ladies Drive the Tractors.' 'When I was growing up, family farms didn't seem like they had a financial future,' Ms. Ryder, 49, said. She trained as a nurse but kept finding herself back in the fields, she said. Like many American farmers, she has found it necessary to keep working away from the farm, which produces vegetables, fruit and flowers on 12 acres. 'Love brought me to farming, but health insurance and common sense brought me back to nursing,' she said. 'Maybe women are more susceptible to the romance of farming, or to the idea of holding on to the homestead.' Nancy MacNamara, of Newburgh, N.Y., farms on the piece of land she grew up on; her father was a commercial farmer. 'Women are finding our place in the field,' she said. Ms. MacNamara, 57, farms on only two acres but sells her hand-raised greens to such chefs as Thomas Keller of Per Se and Wylie Dufresne of WD-50. Like many of today's female farmers, Ms. MacNamara came of age during the 1970's, when she left her parents' farm 'to roam the world and be a wild hippie,' she said. But the turbulence of the 1970's eventually ebbed, depositing her back on the land with her two children. 'We had the rise of feminism at the same time as the rise of organic agriculture and the 'back to the land' movement,' she said. 'People - especially mothers - started to want to know where their food is coming from.' Ms. MacNamara started feeding New Yorkers by selling fruit off a truck in the East Village. 'We were maverick direct marketers,' she said. 'A lot of those people had never had a ripe peach before.' In the 1980's, as Americans grew more sophisticated about food, Ms. MacNamara started to experiment with growing fruit for flavor rather than for size or appearance. Like many small farmers, she worked to make the most of the land she had. She used the research of William Albrecht, a pioneering soil scientist. 'He said that if you feed the soil, then the soil will feed the plant and the fruit will taste the way it should,' she said. 'My father thought I was crazy to produce so few berries,' she added. 'But he could never have imagined how much chefs would pay for them.' Paulette Satur of Satur Farms imagined exactly that. Married to Eberhard Müller, the executive chef at Bayard's and formerly at Lutčce, she built a half-acre weekend garden into a 200-acre farm in about four years. Satur Farms employs about 50 people on its work crew, and supplies many of New York City's top restaurants and gourmet shops with lacinato kale, wild arugula, baby carrots and other vegetables. Ms. Satur, 49, says her ability to communicate with chefs and the Spanish-language skills that let her communicate with her work crew are her most important farming skills. 'Paulette is the farmer, even though she doesn't drive the tractor,' Mr. Müller said. Ms. Satur was raised on a dairy farm. 'I use a different skill set than my parents did on the farm, but growing up there made it possible for me to imagine myself as a farmer,' she said. 'For women farmers, that is a huge first step.' Eve Kaplan-Walbrecht, 32, whose first child is due on Friday, came of age a generation after many of her female colleagues. Ideas about sustainability, feminism and community-supported agriculture had already taken root in American agriculture, she said, and the idea of a female farmer was not new. She majored in environmental science at Harvard, has a master's degree in conservation biology and sustainable agriculture, and started a small organic farm, Garden of Eve, on Long Island, in 2001. She farms with her husband, Chris, who grew up on a dairy farm. She says that farm work includes traditionally male and traditionally female skills, and that a farm needs both. 'Like a baby,' she said, 'a farm needs as much nurturing as it can get. I can't imagine being a single parent to a farm.' To her surprise, Ms. Kaplan-Walbrecht said, she and her husband usually divide the farming duties along traditional gender lines. 'I hate to traffic in these stereotypes,' she said, 'but it's true that Chris is the one out on the tractor in freezing weather with bleeding fingers, and I am the one feeding the chickens.' 'But,' she added, 'I am usually also the one reading the spreadsheets.'

Subject: It pays to be a corporate crook.... From: Pete Weis To: All Date Posted: Mon, Jun 06, 2005 at 15:57:31 (EDT) Email Address: Not Provided Message: with our present administration. Just don't get caught stealing a loaf of bread or smoking marijuana or you will feel the full weight of the law and taxpayers will get to pony up for years of your incarceration. From NYT's: June 5, 2005 What's Good for Business, If No One Else WILLIAM H. DONALDSON'S abrupt exit last week as chairman of the Securities and Exchange Commission brought cheers from those who think that less regulation means more benefits for investors. They are eagerly embracing President Bush's nominee for the job, Representative Christopher Cox, a California Republican who is a big-business advocate. While the deregulationistas get ready to rumble, a lawsuit brought by the S.E.C. against Citigroup - which was settled last Tuesday - reminds us why the very rules that are despised by business are in fact good for investors. Without admitting or denying wrongdoing, Citigroup agreed to pay $208 million to settle the case. The S.E.C.'s complaint involved Citigroup's asset management arm and its in-house mutual fund operation, Smith Barney Fund Management. It demonstrates unambiguously why investors are best served by mutual funds that are run by an independent chairman. Requiring an independent chairman was one of Mr. Donaldson's signature regulations, and it drew loud boos from business leaders and fund companies. It went into effect last July. But the Citigroup matter also shows why the Depression-era legislation known as Glass-Steagall, written to eliminate the kinds of conflicts that financial supermarkets present, should not have been dismantled. Our story begins in 1997, when, according to the S.E.C., the Smith Barney funds began exploring alternatives to their transfer agent, the First Data Corporation. Transfer agents process investors' trades and perform administrative duties like distributing proxy materials and calculating net asset values daily. First Data had been the transfer agent to the Smith Barney funds for a decade. Smith Barney's fund operation is big: it offered about 105 funds to its customers at the time of the case and its assets under management were around $100 billion, the S.E.C. said. None of the funds' directors were affiliated with the fund company except the chairman, Heath B. McLendon, an officer of Citigroup Asset Management. Because most Smith Barney funds are sold by the firm's brokers, the work performed by the funds' transfer agent was less onerous than usual - First Data did not have to deal with customers' questions, for example. As a result, the Smith Barney funds generated rich profits for First Data. With the First Data contract set to expire in 1999, Citigroup hired Deloitte & Touche Consulting to analyze whether the funds should rehire the company or go a different route. Fearful that it might lose the Smith Barney business, First Data in March 1998 offered a $25 million 'fee concession' to Citigroup if it renewed. First Data also said it would allow Smith Barney brokers to use its proprietary accounting system to charge investors a processing fee on sales of non-Smith Barney funds, generating an estimated $40 million in revenue for Smith Barney each year. At the same time, First Data reminded Citigroup that it had provided $9 million in investment banking fees, asset management fees and other revenues to the firm, according to the complaint. In April 1998, Citicorp and Travelers proposed their historic merger, creating the world's premier financial supermarket and proving once and for all that Glass-Steagall was for fuddy-duddies. CITIGROUP, meanwhile, continued negotiating with other companies interested in taking over as transfer agent to Smith Barney's funds. First Data offered yet more concessions: half off its fees on revenue up to $80 million and 60 percent discounts on fee revenue beyond that. Citigroup estimated that it would earn profits of $258 million over five years under the rebate deal. Take note: under the arrangement, the rebates would go not to the funds but to Citigroup. On top of all that, First Data agreed to provide Citigroup Asset Management with enough assets to generate $1.5 million in management fees a year, and said it would make Salomon Smith Barney its 'investment banker of choice,' generating at least $3 million in banking fees annually. Because the concessions were going to Citigroup and not its funds, Deloitte questioned the deal and said that it 'may not be legally viable,' according to the S.E.C.'s complaint. But Citigroup went ahead. It made its own trust company the transfer agent and gave First Data a secondary role, as so-called subtransfer agent. That way, the rebates did not go directly to Citigroup Asset Management, but to its affiliated transfer agent. Deloitte objected, but according to an internal Citigroup memo cited in the S.E.C.'s complaint, the chairman for the boards of the Smith Barney funds was 'comfortable that the new First Data arrangement is supportable to the Fund boards.' The chairman did not inform the directors of the guarantees from First Data and the full extent of the rebates to Citigroup, the S.E.C. said, and the memo to the directors stated that the arrangement was in the best interest of the funds. Mr. McLendon, the funds' chairman at the time, did not return a phone call seeking comment. Linda Chatman Thomsen, director of enforcement at the S.E.C., said: 'This a very basic principle - that fiduciaries protect the financial interests of those to whom they owe an obligation. The services here were not some sort of cash cow that they were allowed to divvy up.' Yet that is just what Citigroup did, the S.E.C. said. From October 1999 through Sept. 30 last year, Citigroup made $104 million from the arrangement, less than had been projected because of the market decline beginning in 2000. Citigroup affiliates received an additional $17 million under the revenue guarantees. In addition to repaying what it made in the deal, Citigroup will pay $80 million in penalties and $19 million in interest. Under the terms of the settlement, the firm also agreed that if one of its affiliates wants to act as transfer agent for any of its mutual funds, the adviser to the funds must also seek competitive bids from outside transfer agents. An independent monitor must oversee the bidding. Mark K. Schonfeld, director of the S.E.C.'s Northeast office, said the competitive bidding requirement was a first. 'We included that because one of the problems here was the lack of transparency to the board,' Mr. Schonfeld said. 'We wanted to open up the process to the boards and ensure a fair bidding process.' ROBERT B. WILLUMSTAD, president and chief operating officer of Citigroup, said in a statement: 'Our most important mission is to assure our clients that their assets are secure in our care and that they can trust us to manage them with their interests at the forefront. We recognize that aspects of the transfer agency arrangements entered into six years ago did not reflect the way we think business should be done, and that is unacceptable.' It's a shame that the firm waited until the S.E.C. came calling to notice that the arrangement was unacceptable. As the commission said in its complaint, Citigroup kept the deal going until Sept. 30, 2004, well after conflicts of interest at mutual funds had appeared on the national radar screen. Just another reason investors should be wary of those who claim that the free markets - not regulators - are best at making conflicts go away.

Subject: What Are Mergers Good For? From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 15:20:58 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/magazine/05MERGERS.html?pagewanted=all What Are Mergers Good For? By GRETCHEN MORGENSON The Dark Side of the Deal To most investors, mergers are the stock market's equivalent of catnip. Takeover bids typically provide a nice boost to investors' portfolios and confirm their stock-picking smarts. And to hear the executives orchestrating them tell it, they always produce greater profits at the combined company down the road. Business publications and newspapers, including The Times, celebrate the deals with breathless tales of how they came together, complete with photographs of smiling executives shaking hands in front of a crowd. This year, with the stock market moving sideways, buyouts and the gains they generate are prized all the more. There have been a lot of them, too. This year, according to Thomson Financial, the first quarter's combinations were valued at $308.2 billion, up 17 percent from the value of deals announced in the same period in 2004. If this activity continues, 2005 will be the fourth-largest year in deal size. And yet, for all the profit and promise that mergers seem to hold, the truth about companies combining their operations is a darker one. Academic research suggests that few mergers add up to significantly more prosperous or successful companies and also that acquisitions during buyout booms, like the one we are in now, are more likely to fail than those made in other periods. And when one company acquires another using its own stock as currency, as commonly happens today, shareholders' stakes in the acquiring firm typically decline. What's worse, there is a disturbing trend among some of the most aggressive corporate acquirers to use deals to mask deteriorating financial results at their companies and to reap outsize executive pay. The complexity of folding companies into one another makes it more difficult, whether by accident or by design, for investors to fathom what's really going on. Because mergers require the extensive use of estimates on matters like job cuts and asset write-offs, for example, deals represent an opportunity for management to throw everyday expenses into the merger cost bucket and make operating results look better than they actually are. It's probably no coincidence that some of the biggest frauds in recent years have involved serial deal makers like Tyco International, Waste Management and WorldCom. (Long before a jury found him guilty of securities fraud in federal court in March, Bernard J. Ebbers, the chief executive of WorldCom, entertained himself and his friends aboard his 118-foot yacht called the Aquasition.) Perhaps the biggest downside to mergers, however, is their human toll. Deals that combine companies are becoming a bigger factor behind large-scale layoffs across the nation. Some Bad Unions of the Recent Past Robert F. Bruner, professor of business administration at the Darden School of Business at the University of Virginia, has compiled a list of colossal merger failures in a new book, ''Deals From Hell.'' High up on his roster is the Sony-Columbia Pictures merger in 1989, which cost $4.8 billion initially but ultimately resulted in a $2.7 billion write-off in 1994. Also on the list is the 1991 deal in which AT&T bought National Cash Register for $7.5 billion. Five years later, AT&T spun off NCR for $3.4 billion, for a loss of $4.1 billion. Another entry is the December 1994 purchase of Snapple Beverage by Quaker Oats for $1.7 billion, a deal that eventually produced a $1.5 billion loss. In late 1998 Mattel acquired the Learning Company, an educational software firm, for $3.8 billion in stock. Just over a year later, Mattel sold it for a loss. But the champion of all failed mergers, even years later, remains the AOL-Time Warner combination, announced in January 2000 just as the technology stock bubble was about to burst. Time Warner's chief executive, Jerry Levin, called the deal a ''transforming transaction'' -- an accurate assessment, as it would turn out, if not precisely in the way he hoped. The deal resulted in a $200 billion loss in stock-market value and a $54 billion write-down in the worth of the combined company's assets. What's more, in merging with AOL, Time Warner inherited accounting irregularities that attracted the attention of the Justice Department and the Securities and Exchange Commission. In December, the company agreed to pay $510 million to settle with the S.E.C. (neither admitting nor denying wrongdoing) and also to enter into a deferred-prosecution agreement with the Justice Department. Prosecutors said they would put off bringing criminal securities-fraud charges against the America Online unit as long as Time Warner adopted measures to correct past problems and engaged an independent monitor to oversee AOL's financial operations for two years. ''The AOL/Time Warner transaction dwarfs other deals from hell in almost all respects,'' Bruner writes. ''It leads the field in meltdown in value. The executive firings and resignations, the civil litigation, criminal investigation and the erasure of AOL from the corporation's name reveal a remarkable wipeout of the vision of the deal's architects.'' What Does It Profit a C.E.O.? Given all the forces that seem to be lined up in opposition to mergers, it may be a bit surprising that the deals keep on coming. But there are people for whom they make perfect sense: the executives and the Wall Street bankers behind them. There are several reasons for this -- for example, acquisitions enable companies to show earnings growth that rising stock prices, and therefore investors, require -- but the most compelling case for mergers may simply be the immense wealth that they generate. Executives began reaping big rewards from deals during the 1980's, when so-called golden parachutes were introduced. (Today those payouts look positively quaint.) Back then, shareholders viewed large payouts to managers at a company subject to takeover as a way to induce entrenched executives to consider a change in control there. Those inducements then became embedded in every executive's employment contract, growing to the gargantuan levels of today. The actual numbers associated with some of the bigger deals can be staggering. James Kilts, the chief executive of Gillette Company, stands to make $165 million from merging that venerable Boston company with the Cincinnati-based Procter & Gamble. That payout was so large that Joseph F. Turley, the company's former president, and Joseph E. Mullaney, a former vice chairman of Gillette's board, deplored the merger in an open letter to Gillette's directors. ''Thousands of Gillette's employees will soon receive pink slips,'' they wrote. ''Their 'leader' will receive $170 million.'' While the Gillette pay stands out, it is by no means a singular occurrence. In April, Toys ''R'' Us disclosed that 21 current and former officers and directors could receive more than $170 million for selling the toy retailer to an investment group that includes Kohlberg Kravis Roberts & Company and Bain Capital, two buyout firms, and Vornado Realty Trust, a real-estate investment trust. The $6.6 billion deal will result in a $63 million payout to John H. Eyler Jr., the toy retailer's chairman and chief executive officer who has been with the company since 2000. That includes some $30 million in stock options, $7.1 million in restricted stock, an $11 million cash severance if he leaves after the deal closes, $7 million in deferred compensation and $7.5 million to pay taxes generated by the payout. Last year, AXA, the French insurer, bid $1.5 billion for the MONY Group, a United States financial services company. In that deal, top MONY executives were set to receive $90 million in severance and other payments, but enraged MONY shareholders threatened to vote against the merger. Only then did the executives agree to forego about $7 million. ''Shareholders have to ask sometimes, Was this executive team motivated to do this deal only because they knew this pot of gold was waiting for them at the end of the rainbow?'' Pat McGurn, special counsel at Institutional Shareholder Services, an investor advisory firm in Rockville, Md., says. ''In some cases, it does border on what could be considered corporate waste.'' Unfortunately, shareholders find out how much of a merger's costs will wind up in the pockets of one or both company's executives only after the deals are announced. And because uncovering the payouts requires digging through complex corporate filings, some shareholders never learn about them at all. Michael S. Kesner, principal in charge of the executive compensation practice at Deloitte Consulting, says it is not uncommon for payouts to management to reach 8 percent of a merger's total cost. How to Justify a Merger: It's All About the Growth -- Really ''I speak with senior executives in the course of my research,'' Robert Bruner, the Darden business school professor, told me. ''They all tell stories about how they are charged with maintaining earnings growth. They can only get 5 to 6 percent growth organically, yet the C.E.O. has set a target that is much more ambitious, and they must make up the difference by acquisitions.'' Bruner is critical of this process, which he calls financial cosmetics. ''It invites the creation of growth for appearance rather than growth that creates wealth for investors and society,'' he says. Indeed, shareholders who own stock in companies that make a lot of acquisitions -- serial acquirers -- should consider whether the deals are being cooked up by executives concerned about a slowdown in growth inside their operations. (Of course, shareholders who expect rising stock prices are not without guilt themselves. As James A. Fanto, a professor at Brooklyn Law School, wrote in a study of mergers he conducted in 2000, ''It is not too strong an expression to say that investors have become addicted to these transactions.'') ''The only thing people get paid for these days is growth, not running a company well,'' Jack Ciesielski, editor of The Analyst's Accounting Observer in Baltimore, says. ''The cult of growth will always encourage companies to buy other companies to paper over the valleys in their earnings patterns.'' Perhaps the best -- or worst -- examples of acquisitions performed for earnings expediency were those made by Tyco International, a conglomerate, during the years it was run by L. Dennis Kozlowski. Founded in 1960 as a technology company, Tyco soon became a manufacturer of industrial products. By the late 1990's, however, it had begun promising investors that it would produce reliable earnings growth in excess of 20 percent a year. Kozlowski, who became chief executive in 1992, wanted to pattern his company after General Electric, which had produced remarkably steady earnings gains for years. Today Tyco has operations in fire and security services, health-care products and electronic components. In 2002, Kozlowski and an associate were accused of stock fraud and of looting the company of $600 million (a figure later reduced to $150 million). After an earlier mistrial, he is currently on trial for the second time in New York State Supreme Court in Manhattan. Whether or not Kozlowski is found guilty of fraud -- at the time this article went to press, the trial was winding down -- his acquisition record certainly turned out to be flawed. Since he left Tyco, the company has registered $9 billion in losses and impaired assets. Kozlowski, however, received more than $330 million in stock sales and other compensation in his last three years running Tyco. A good bit of his compensation was based on achieving certain financial results. Tyco cleared most, if not all, of these hurdles, at least in part because of its many acquisitions. For example, in 2001, according to Tyco's regulatory filings, Kozlowski received a cash bonus of $4 million, based on the company's 39 percent increase in net income, before nonrecurring items, and on its 31.3 percent increase in operating cash flow. That year, the company made more than 10 acquisitions that contributed to both net income and cash flow. The Bigger the Company, the More the C.E.O. Gets (Never Mind How the Company's Doing) An academic study from 2000 examined the relationship between chief-executive compensation and mergers in the banking world. Richard T. Bliss, a professor at Babson College in Massachusetts, and Richard J. Rosen, then a professor at the Kelley School of Business at Indiana University, studied bank mergers that occurred from 1986 to 1995. They found that these deals had a positive effect on the size of executive compensation and that even when an acquiring bank's stock declined following a merger, the compensation paid to the chiefs running the institutions grew significantly enough to offset any losses to their stockholdings. ''The net result is that even mergers which reduce shareholder value can be in a manager's private interest,'' Bliss and Rosen concluded. Their study found that more than three-quarters of the mergers in the sample led to a 10 percent or greater boost in executive compensation. The median change in compensation following a merger, the study showed, was an increase of between 20 and 30 percent of a chief executive's premerger pay. Bliss and Rosen also compared increases in chief executive compensation at banks where assets grew organically with those at institutions that grew, more quickly, by acquisition. For every $1 million in new assets a bank acquires through a merger, the study found, its chief executive received an increase in total compensation of $54, on average. For every $1 million in assets grown organically at a bank, its chief executive received an average $30 rise in compensation. But those are numbers from the mid-1990's and are probably a fraction of the riches that executives receive in mergers today. Exhibit A is James Kilts's $165 million in the Gillette-Procter & Gamble deal. Eric Kraus, a spokesman for Gillette, says that the merger is a ''historic opportunity'' for both shareholders and employees, and he adds that Kilts ''has taken a chronically underperforming company to an industry leader. . . . If the company didn't do well during his tenure as chairman, then he also wouldn't have done well, because his compensation is tied directly to performance.'' After the merger, according to Kraus, Kilts has agreed to keep the combined company's stock for at least 18 months. Lucien Bebchuk, a professor of law, economics and finance and director of the program on corporate governance at Harvard Law School, recently wrote a book with Jesse Fried on executive compensation titled ''Pay Without Performance.'' In it, he argues that when acquisitions enter the mix, top executives often get away with larger amounts of ''gratuitous payments'' than might otherwise be possible. One reason for this, he says, is that the gains typically made by the shareholders of a target company may lull them into complacency about outsize payments to top executives. In other words, since everyone is getting a little richer in the transaction, the fact that a couple of executives are getting a lot richer is less bothersome. In addition, Bebchuk claims, after a firm is acquired, its directors often step down. As a result, they have less reason to be worried about confronting angry shareholders. Why More Critics Don't Ask About the Payoffs for the Execs It does seem odd that few large shareholders have objected to the skyrocketing payouts to top executives in these deals. One that did was the California-based CalPERS, the nation's largest public pension fund, which last year took exception to the $16.5 billion merger of two health insurance companies, Anthem, based in Indianapolis, and WellPoint Health Networks, in California. Because the merger triggered certain changes in the employment contracts of the top executives at both companies, they received bonuses, severance payments and vested stock options totaling some $200 million. Leonard D. Schaeffer, WellPoint's chief executive, was entitled to $47 million in severance, stock options and enhanced retirement benefits. CalPERS criticized the payments. ''All this is doing is putting more money in the pockets of management, not putting money back into the company to assure the long-term value shareowners require,'' Rob Feckner, head of CalPERS Investment Committee, said last June. CalPERS voted against the merger, but to no avail. The deal closed in November, creating the largest health insurer in the United States, now known as WellPoint Inc. Such sweet deals for executives are exceedingly common. Last summer, for example, when Harrah's announced that it would acquire Caesars Entertainment for $5.2 billion, one of those who hit the jackpot in the deal was Wallace R. Barr, Caesars' chief executive. Under change-in-control provisions of his contract, Barr received almost $20 million. And if he resigned from Caesars ''for good reason'' after the two companies merged, the contract stated, he would be entitled to an additional $6.6 million. The merger is expected to close by the end of June. (Barr declined to comment.) Another combination from last summer involved two banks, Wachovia and SouthTrust. Under the terms of the $14.7 billion deal, Wallace D. Malone Jr., the chief executive of SouthTrust, stood to receive $59 million in stock, options and termination awards over the next five years if he left the bank. His annual pension was approximately $3.8 million. He remains vice chairman at Wachovia. A spokeswoman for the bank and Malone declined to comment. The single biggest factor behind these eye-popping numbers are stock options, which typically vest over a period of years but in a merger can be cashed in immediately. The 21 former officers and directors at Toys ''R'' Us, for example, are sharing $65 million in proceeds from the vesting of their options. (A spokeswoman for Toys ''R'' Us notes that Eyler has never sold a share of the company's stock since he took over as C.E.O. five years ago and that most of the directors have taken their pay in company stock. Thus, she says, the interests of the executives and directors are aligned with those of shareholders.) But executives also receive other goodies in one lump sum following a merger. First they get a hefty multiple of their average base pay -- usually 2.99 times the amount. (Any more than that and a federal tax kicks in.) Corporate executives involved in a merger may also receive enhanced retirement benefits, like a crediting of their service to age 65, even if they are nowhere near that. Another common merger perquisite for top executives is the continuation of medical and life insurance benefits and allowances for financial counseling and outplacement counseling. Reimbursement of all legal fees can also be a part of a contract. One apparent drawback to these enormous payments is the enormous tax bill they generate for executives. Happily for them, however, their contracts almost always require the companies to pay those bills. Enter the so-called excise tax gross-up provisions, which can be so colossal that, according to one pay expert, a major merger was scuttled not long ago because the cost of covering executives' tax bills generated by the deal exceeded $100 million. And while most companies claim that executive compensation is based on performance, supposedly aligning managers' goals with shareholders' interests, many of these huge payouts are triggered regardless of whether the executives performed well or not in the years before the deal. ''While much attention is focused on the failure of many mergers and acquisitions to create lasting shareholder value, less attention is paid to company performance leading up to the transaction,'' Tim Ranzetta, president of Equilar, a compensation analysis firm in San Mateo, Calif., says. ''It is not uncommon to see opportunistic transactions take place following a large drop in the target company's stock price or periods of chronic underperformance. It would seem illogical in situations like this that target executives would be 'rewarded' with a severance payout that can often approach three times their annual salary and bonus.'' One reason that shareholder outrage about these payments has been muted may be that few people, beyond the executives themselves and maybe the company's compensation committee, know how costly these pay deals are. Even with all the scrutiny of corporate governance in recent years, a full tally of what executives will earn under a change of control is undisclosed until the deal is struck. Experts say that many compensation committees do not even understand the size of these pay packages because they do not routinely ask their consultants for detailed lists of the various pay components. ''Sometimes I think the boards themselves are shocked at what they've done, the astronomical dollar levels they've paid out,'' Pat McGurn of Institutional Shareholder Services says. ''That's why we encourage companies to do exactly this scenario -- what would happen tomorrow if you triggered the C.E.O. payout? Shareholders should force directors to sit down and have that 'holy cow' conversation.'' Does the Urge to Merge Ever Cease? What may be most troubling about the lavish benefits and perquisites paid to executives is that they are doled out even as lower-level employees at the merging companies lose their jobs. ''One of the sine qua nons of a merger is that there is going to be some condensing of the operations,'' John Challenger, C.E.O. of Challenger, Gray & Christmas, an outplacement firm in Chicago, told me. ''So job cuts are automatic.'' For most executives that do deals, it is necessary to eliminate jobs after combining the companies' operations in order to clear the performance hurdles that investors demand. For example, the promise of the Hewlett-Packard and Compaq merger in 2002 was annual savings of $2.5 billion in operating costs; the company says it wound up saving more than $3 billion (ahead of schedule too). But those savings resulted ultimately in the loss of 17,900 jobs. According to Challenger's firm, merger activity accounted for the elimination of almost 77,000 jobs in the first quarter of 2005, or 27 percent of the total cuts that were announced. Merger-related cuts in the first quarter were 17 percent higher than they were in all of 2004. Industries registering the largest job losses so far this year are telecommunications, defense and consumer goods. The disparity between the way top managers and their lower-level colleagues are treated in a merger has the potential to create a backlash. ''I worry about merger-related job cuts,'' Robert Bruner says. But he adds that workers who have lost their jobs because of mergers have so far been able to find other jobs. Merger manias do, of course, fizzle out. As is true of so many parts of the economy, they are cyclical. ''Merger waves seem to come up every 20 or 30 years or so,'' Richard Sylla, professor of business history at the Stern School of Business at N.Y.U., says. ''The great merger wave from 1898 to 1902 was when U.S. Steel was created. In the 1920's there were a lot of public utilities merging, and then we had another wave in the 1960's, which was the conglomerate merger wave.'' The current one, which began in the early 1980's, is the fourth such American fever of the last century or so. In the 1960's, a combination of rising interest rates and investors' realizing that conglomerates were not necessarily the recipe for business success undermined that mania. The junk-bond-fed boom in the late 1980's ended when Michael Milken, at Drexel Burnham Lambert, drew prosecutorial scrutiny to his control of that part of the bond market. And sometimes government puts a stop to mergers: in the early 1900's, the government cracked down on a big railroad merger, Sylla notes, and in the 1930's regulations curtailed the mergers of public-utility holding companies. What might end today's fever? ''Rising interest rates and falling stock markets'' could curb mergers, Bruner says. ''And either self-regulatory systems of accounting and industry watchdogs as well as government regulators may challenge practices that have grown aggressive during the height of the boom.'' Till then, however, we can count on more mergers, more money paid to executives and fewer jobs for everyone else.

Subject: Hydie Sumner Wants Her Job Back From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 12:53:56 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/magazine/05SUMNER.html?pagewanted=all Hydie Sumner Wants Her Job Back By MIMI SWARTZ 'I like to think of myself as relatively easy to get along with,'' Hydie Sumner said, bafflement in her voice, her dark eyes scanning my face for affirmation. Sitting pensively in the sun room of her shaded San Antonio home on a glorious spring day, Sumner, 48, did look more like a woman who has been working, successfully, as a broker for Merrill Lynch than a woman who has been challenging the company -- successfully, in the end -- for almost a decade. Her demeanor was as placid as a lake on a windless day. She wore the female financial executive's uniform of good gold jewelry and a good dark suit. Her words were measured; her voice was modulated. Even Sumner's Tudor home was silent and serene: she lives alone, without the muss of husband, children or four-legged friends, unless you count the two stone canines standing guard by the front door. ''My only pets,'' she said. Just the ruddiness of her skin and a slight overuse of the words ''crisis,'' ''crisis management'' and ''crisis mode'' suggested her role of the last nine years or so. Merrill insists that the dark days of Sumner's tenure there, when she was subjected to unrelenting sexual discrimination, are long gone. As the firm wrote to me in an official statement: ''The conduct Sumner was subjected to 10 years ago in the San Antonio office was clearly unacceptable and we regret it. We have taken significant steps to prevent such behavior in any of our offices and have embraced programs to create an atmosphere where all our employees can reach their full potential.'' Sumner, however, needs more convincing. You could call her the plaintiff from hell. If you do not live in or around San Antonio, you may have missed Sumner's story. It was Sumner who was awarded $2.2 million from Merrill Lynch last April, a victory in a sex-discrimination case that was a piece of a 1997 suit filed on behalf of female brokers. While most of the women in that class action chose to settle their claims against Merrill, sign confidentiality agreements and get back to the business of living, Sumner chose instead to fight on -- through two mediations and a grinding public arbitration, despite ever-growing settlement offers, and against the advice of friends, family and an expanding cadre of attorneys -- until she got what she thought she deserved. That was victory and, more to the point, a victory that was the first on Wall Street to establish a class-wide ''pattern and practice'' of sex discrimination. For a lot of people, that would have been enough. But those who are victorious in federal discrimination suits may petition for reinstatement to their jobs, an option few of them actually desire. Sumner, however, is one who did -- again despite repeated warnings from her friends, her lawyer and even her therapist. She expects a ruling from the arbitration panel any day now. ''A lot of people can't understand why I want to go back,'' Sumner told me. So let her explain: ''First of all, I joined Merrill in 1991 to become a manager. I believed in the company. I still believe in the company. When I started, I was excelling without any help from them.'' As she told me this, her voice never dipped into despair or skidded toward anger; she kept a death grip on a positive spin. In fact, she considers that all she has been through since she joined Merrill has made her an even better executive for that very company. ''Obviously, I have negotiation experience,'' she said, with just a hint of sardonic humor, and then added, more seriously: ''I didn't fall apart on the stand. Those are things you need as a leader.'' Sumner also says she wants to go back to ensure that more women are hired. ''It's not about money,'' she said. ''It's about doing the job and showing that you can be a leader.'' Sumner was so good at making a plausible case for herself that I almost believed her. And yet it is still hard to fathom why she has chosen this path. After almost a decade of limbo -- living a solitary existence at the mercy of lawyers working on or against her case, employed by a financial firm she is reluctant to identify for fear of losing her job -- why does she now want to return to the place that abused and debased her for six years? ''Behind the scenes the joke is that I did this for 15 minutes of fame,'' she said. But then, 15 minutes of fighting Merrill became 15 months and then more, and still she hung on. At that last notion, a wry smile broke across Sumner's face. ''The way it's going,'' she said jokingly, ''it may be 15 years.'' The details that brought Hydie Sumner to this juncture are not very surprising, because we've heard them all before. The resistance of the financial industry to change has been well documented: the first class-action sex-discrimination suit against Merrill Lynch, for instance, was in 1973; Smith Barney and Morgan Stanley have also had to settle major sex-discrimination cases. Countless individual claims have been quietly settled. No one could argue that Sumner wasn't qualified to be a broker at Merrill Lynch when she arrived in 1991. She was 34, an M.B.A. who had earned a six-figure income in investment banking at good firms in Houston and Chicago. Her father was a successful investment banker in Hawaii, and it was assumed at home that she was eminently capable of following in his footsteps. When Sumner's husband was transferred to San Antonio, she eventually went to Merrill because it was large and prestigious and, in Sumner's mind, had ''good core values.'' No bells went off for Sumner when she was asked in an interview what her husband did for a living or when Stephen McAnally, her boss to be, told her he could pay her a starting base salary of only $18,000. McAnally told Sumner that after she had proved herself as a broker, she could advance to her goal of manager, a position that could pay significantly more. Believing in herself, Sumner signed on. The atmosphere in the San Antonio office, it would be revealed later in arbitration, was pure frat house. Male brokers made crude jokes about female employees, and McAnally did nothing. When Sumner complained about the atmosphere, McAnally told her that her job was to be his ''little ray of sunshine'' and go into ''these neighborhoods to clean them up.'' Women at Merrill were typically given less-lucrative accounts, and Sumner was no exception. (Reached at his salsa business in Fredericksburg, Tex., McAnally, who has left Merrill, declined to be interviewed. ''I have no comment,'' he said.) Sumner soldiered on. She followed the lead of other women in the office, keeping to herself and developing her network of clients. It was a classic clash of cultures: ambitious, often well-educated women pitted against easy-living, easygoing good ol' boys. ''They resented her efficiency,'' said Margret DeBruyn, her friend and a former co-worker. Sumner would probably have continued to put up with the abuse except for one thing: despite her hard work and excellent performance, McAnally never got around to sending her to Merrill's Management Assessment Center, where potential managers are evaluated. Then things got worse: Sumner and her husband divorced. Once, McAnally asked for ''favors'' in exchange for his help -- favors that Sumner, and later the arbitration panel, interpreted as sexual harassment. (At the hearing, McAnally said the charge was ''a boldfaced lie.'') According to her therapist, Peg Armstrong -- later a witness at the hearing -- Sumner was perplexed. ''Hydie was a high-performance person,'' Armstrong said. A competitive athlete as a child, she grew into a classic overachiever, earning as many degrees as she could, taking on more work than was necessary to advance. Instead, she was falling behind. In fact, Sumner's incessant determination to prove herself to the boys probably made matters worse. She likes to make things right. Often, she answered one of my e-mail messages with a series of her own, clarifying points, providing supporting information -- just the kind of Uber-helpfulness that can sometimes seem hectoring. Maybe, she suggested to McAnally, he would like to give female employees flowers for a job well done instead of oversize men's shirts. Maybe, she suggested, he might not want to refer to two blacks talking together as ''forming a ghetto.'' Sumner hurt her back in 1995 and again, more seriously, in 1996, and her requests for assistance -- to have her office reconfigured for greater comfort, to be excused from office moves -- fed her reputation as a ''man hater'' and ''bitchy.'' Still, she stayed on, intent on advancing. By 1996, however, other women in the office had had it. They decided to join forces with female employees from other states who felt discriminated against at Merrill; eventually they began laying the groundwork for a lawsuit, with the San Antonio office becoming what their attorney, Linda Friedman, would call ''an epicenter for the class action of the sexual-discrimination complaints.'' Merrill began conducting an internal investigation of the complaints in 1997. After the firm's attorneys visited the San Antonio office, McAnally proudly called all the women into a meeting and told them that he had been given a ''clean bill of health.'' Soon after that, Sumner resigned. Linda Friedman, with more than 20 years' experience, is arguably the most prominent sex-discrimination attorney in the country, but Sumner has her stumped. ''I haven't met many women the likes of Hydie,'' she said. ''She was very in touch with herself emotionally with what she was doing, but. . . . '' Friedman grew silent for a moment, trying to finish her thought. She came back with the word ''kamikaze.'' Sumner gave an affidavit in support of the class-action suit in 1997. The suit itself was settled in 1998, and as of this year, Merrill had made settlement offers totaling in excess of $100 million to about 900 women. Nearly 99 percent of them have taken the deal. But Sumner did not. Four years ago, she chose to go to mediation -- two mediations, as it turned out. It was problematic for Friedman and for Merrill's attorney, Michael Fortunato, that Sumner didn't seem to have an amount for which she would settle. ''She won't tell me,'' a dumfounded Friedman told an equally perplexed Fortunato. Sumner was trying to come up with a number -- she even consulted a separate attorney to help her do so. ''I have never seen a person approach a case in such a businesslike manner,'' that attorney, Peter Stanton, said. ''In fact, it got to be a pain in the neck -- meetings, e-mails back and forth and more meetings. It was as though she was making a very complicated business decision -- which she was.'' Stanton gently suggested that she settle her case and move on. Friedman encouraged her to come up with a number. ''I did not understand Hydie's choice,'' she said. ''Hydie had people on both sides who were saying, 'Wouldn't you rather have a resolution?''' Her answer was no. In February 2002, the teams met again, with the same outcome. (Sumner can't discuss the amount of money she was offered because of the confidentiality agreement she signed to go to mediation.) Sumner still didn't have a number; McAnally was no longer with the firm, and she wanted to know if he had resigned or was fired; also, although Merrill had not asked her to, she pre-emptively refused to sign anything that would prevent her from working there again. Fortunato faxed over an even bigger offer. Sumner turned him down again. She opted to go before a panel of arbitrators, whose decision both she and Merrill would have to abide. As the date of the public arbitration approached, Sumner said she felt the pressure to settle become more intense, not just from Merrill, but also from other women in the class. '''You could get zero,''' Sumner said, mimicking the other women. ''I can't tell you how many times I heard that. There was never a time anyone was saying to me, 'Oh, Hydie, let's go for it.''' This was, of course, understandable: the risks were not Sumner's alone; hers was one of the strongest cases, and if she lost, Merrill might greatly reduce settlement offers to the women who still had cases pending. Sumner started spending a lot of time alone: friends who settled with Merrill drifted away, and friends whose husbands disapproved of her fight did the same. Her therapist was deeply concerned. The night before the arbitration began, Armstrong called her with just one question: ''Was Anita Hill a winner or a loser?'' she asked. But Sumner won. Friedman showed and the panel agreed that the human-resources department had ignored complaints about McAnally. He did not help himself on the stand, explaining his sexist demeanor with, ''I don't think we ever had a sexual-harassment issue; I think it was more a language issue rather than sexual harassment.'' Sumner remained almost preternaturally calm on the stand, but listening to McAnally testify, she says, she felt something crack inside. Before he could finish answering a question about his regrets over moving Sumner's office after her back injury, she fled. At recess, Friedman found her sobbing furiously in the restroom. It was the only time her lawyer had seen Sumner lose her composure. ''That man ruined my life and career, and all he can say is in retrospect he wished he'd done something differently?'' she cried. But Sumner recovered quickly. When she thought her victory check might come late, she wrote to Merrill Lynch's C.E.O., Stan O'Neal, who in the wake of the hearing, issued a statement saying that he was offended that ''any employee would have to be subjected to a demeaning work environment.'' ''If you were, and are, truly 'offended' by what happened to me,'' Sumner wrote, ''I challenge you as the chairman and C.E.O. of Merrill Lynch to see that I am paid what the panel awarded me now.'' Not long after, she asked for her reinstatement hearing. It is highly unusual to ask for reinstatement in discrimination cases. In two decades, Linda Friedman had only one client make such a request. ''Most of the time when I ask my clients, 'Do you want reinstatement,' it's not just no, it's 'Hell, no!''' she said. ''Most people, having won a trial and having been compensated for their lost income, do not relish the thought of returning to the scene of the crime. I say most people, and then of course there's Hydie,'' Friedman continued, with a sigh. ''She doesn't win if she doesn't get the career she wanted.'' Peg Armstrong sees Sumner's motivation somewhat differently. ''She's trying hard to reinstate for herself that there are honorable people,'' she posited. ''She's struggling hard to say there is reinstatement for her spirit.'' Heartfelt metaphors, however, are not Sumner's style. ''I don't think my spirit's changed at all,'' she insisted with her impenetrable optimism. When I asked how she would feel returning to the firm that she had fought for so long, she insisted, in an even tone, ''There are lots of people who would love to see me back.'' Most of all, Sumner wants to go to the Management Assessment Center to be evaluated for that management job. ''I think it's hard for most people to figure me out,'' she admitted. ''To me, this is not an emotional decision. What Merrill did to me I think is horrific, but I don't hold it as a personal grudge or anything. I hope no one would do that. I feel if you've been through a war, you're a better leader.'' I watched Sumner's face for traces of mockery as she said that Merrill needs someone to point out its flaws, to keep it from making the mistakes of the past; there were none. She was simply incapable of believing that the company might not embrace her offer to be its conscience. Let others think that her intense focus had become a set of blinders. ''I just felt like I didn't have any other choice,'' she said. Sumner's friend Margret DeBruyn says she thinks that Sumner's fight has ''drained her.'' And a few weeks ago, when it seemed that the arbitration panel might be on the verge of making its ruling, Sumner's softer-than-usual voice seemed to betray a hint of anxiety and exhaustion -- but just a hint. She wouldn't admit to any emotional disturbance. ''If I'm not reinstated, I don't view this as a loss,'' she said. In fact, when we first met, Sumner made a point of telling me a story that she described as a ''defining moment'' in her life. It occurred when she was about 19 and her younger sister was 11. Her sister had gone for riding lessons, and Sumner, off in a barn, heard a shattering scream and ran to the ring to find her sister crumpled on the ground and the instructor paralyzed with fear. Sumner gathered her sister in her arms and held her as she died. Sumner related this event with dispassion, as if it were one of the slides in the PowerPoint presentation of her life. She had converted the tragedy for my benefit (and perhaps her own) into a story of pride in her ability to handle any crisis. The instructor was stricken, but she, Sumner, could take charge. ''As one friend told me, 'You are the person who, if the building's on fire, you would lead us out,''' she explained. Staying in control means everything, no matter what it costs. There was another story I liked better, one her mother told me. When Hydie was a little girl and riding competitively, her favorite equestrian event was one in which the rider takes as many jumps as she can in any order, within a set time. The toughest fences get the highest points. The event is called Gambler's Choice. The story reminded me of how much she had risked, and how much it had cost, to prove herself a winner. What else was left now, besides fighting Merrill? ''It was my understanding from Merrill's testimony that if I am reinstated, they will appeal the decision,'' Sumner said one day, just as I was leaving. The tiny smile at the corners of her mouth told me she was ready.

Subject: Physics vs economics From: Pete Weis To: All Date Posted: Mon, Jun 06, 2005 at 12:49:07 (EDT) Email Address: Not Provided Message: 'Physics has three laws that explain 99% of the phenomena, and economics has 99 laws that explain 3% of the phenomena.' - Andrew Lo

Subject: Believing in 'Gold' From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 12:07:30 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/magazine/05GOLD.html?pagewanted=all Believing (and Believing and Believing) in Bullion By STEPHEN METCALF On a recent early spring morning, I made my way down to the appropriately poker-faced and austere building that houses the Federal Reserve Bank of New York. In its sub-basement, 80 feet below street level, there is a vault that rests on the granite bedrock of Manhattan. ''No man-made floor could hold the weight of all this,'' Peter Bakstansky, a Fed spokesman, assured me. The vault holds 7,000 tons of gold. This represents the world's largest stash of the precious metal, and it is worth about $100 billion. To view it, you descend to an underground bunker and pass through a narrow passageway cut into a 90-ton steel cylinder. Like most people, I'd seen gold before, though only in small quantities -- a filling here, a vanity wristwatch there. In front of me now, stacked in bricks atop wooden pallets, lay some pretty serious bling. Gold is a majestic condenser of wealth. A standard bar is seven inches long, three and five-eighths inches wide, and about one and three-quarters inches thick. It weighs 27.4 pounds, and at the current market price -- roughly $420 a troy ounce, the unit in which gold is measured -- is worth about $170,000. As miraculous as gold is in itself -- it is soft, dense, ductile, sectile, highly conductive, all but indestructible and, of course, very beautiful -- when you look at any quantity of it, you immediately exchange it in your head for something else. One bar, college education; 10 bars, Brooklyn town house. The cage in front of me appeared fairly small. Filled to the ceiling with gold bars as it was, it might well hold the financial health of a nation in the balance. Most of the bullion at the New York Fed is kept -- in 122 separate lockers -- in custody for foreign countries. (Most American gold is in Fort Knox.) There is something ancient and strange about the vault, in which workers wear magnesium shoe covers to protect their toes from falling ingots. Egyptians were casting bars of gold thousands of years ago; but the thrust of human history has been away from hard money and toward virtual money, like paper bills, or even little electronic pulses shot off by the trillion across the ether. When I remarked that all this brute physical wealth represented an anachronism, Bakstansky seized upon the word brightly. ''Yes, exactly. Gold is an anachronism.'' ''And yet,'' I said, ''all these nations, they hold on to this anachronism, just in case. . . . '' At this, a light chill entered his voice. ''I don't think anyone in a policy-making position,'' he explained to me politely, ''seriously believes that everything else of value could disappear, leaving only gold.'' To a small but extremely avid subculture in the American financial community, gold doesn't mean bling, or King Midas, or them thar hills. Gold is money; and not just money, but the one true money. The gold subculture divides along several lines -- some of its members are gold speculators, some gold hoarders, some gold philosophers and some outright nut jobs -- but it unites behind a single idea: Paper money issued by governments, when not redeemable for actual gold, is fraudulent. Most of us accept the existence of dollar bills unconsciously. To the gold faithful, however, a dollar bill is ''ink money,'' or better yet, ''fiat currency,'' a nearly constant term of abuse at gold conferences and in gold chat rooms. ''Fiat currency -- it's a floating abstraction,'' Doug Casey, a star speaker on the gold circuit, bellowed at me over the phone. ''What's its worth? I don't know what it's worth! It's a figment of some government bureaucrat's imagination!'' The ''gold bugs,'' as they often are referred to with more than a hint of disdain, find gold appealing because they believe it represents the one enduring form of nonstate money. ''Money is far too important to be left in the hands of bankers, Congress or the Federal Reserve System,'' Gary North, a legendary gold bug who has edited financial newsletters for decades, told me via e-mail. North's Web commentaries include everything from advice regarding prostate problems (saw palmetto has helped his immensely) to a recently completed 700-page ''economic commentary'' on the Gospel of Luke, which he encourages readers to download onto their hard drives, in case he were to ''drop dead and the site is taken down for any reason.'' But the focus of his writings is politics, and North's politics aren't hard to pin down. His is the fierce libertarianism of the ardent gold bug. I had sought out Casey and North, two leading voices among gold enthusiasts, because after 20 years during which paper assets -- stocks, bonds, and the world's leading ''fiat currency,'' the dollar -- soared, gold was making a comeback. If you bought $10,000 worth of gold in 1980, by 2001 you would have lost $6,800. But then the long bull market in stocks ended, and the dollar, responding to the growing debt burden of the average American, not to mention the federal debt and our trade deficit, began a steep decline. And so, starting in 2001, gold, which like many commodities moves in the opposite direction of the dollar, began to recover some of its lost glamour as a store of value. The price of gold broke through the $300 barrier in February 2002, then the $400 barrier at the end of 2003. Could this be the dawn of the apocalypse that the gold bugs, whose prevailing attitude might best be described as a wishful pessimism, have been predicting? Could the dollar collapse, leaving only gold? ''I will accept questions by e-mail,'' North wrote me, adding, ''I will answer the following type question: 'In your article on [ ], you write that [ ]. But what about this? How could this work?''' I apparently phrased my first questions according to protocol, because North e-mailed me back, relaying his nine-point plan for returning gold to its proper status as the only money. Among his ideas: ''Government collects tax payments in gold. . . . Abolish legal tender law. . . . Let anyone set up a bank/warehouse company who wants to.'' Gold bugs are notoriously squirrelly, and North had warned me ahead of time: no questions regarding the future price of gold, and all questions must hew closely to his published work. When I e-mailed him again, asking whether the rising price of gold might be signaling doom, I must have crossed some invisible line. His one-sentence reply read simply, ''Here endeth the lesson.'' For the past 70 years, the United States has been conducting an experiment regarding the dollar. The experiment asks: Can the United States manage its currency responsibly, without having that currency backed by gold? The U.S. effectively went off the gold standard twice in the 20th century, and both times responsible men in positions of power foresaw cataclysm. ''This is the end of Western civilization!'' Lewis Douglas, Franklin Roosevelt's budget director, declared in 1933, when Roosevelt terminated the right of American citizens to demand gold in exchange for their dollars. ''Pravda would write that this was a sign of the collapse of capitalism,'' Arthur Burns, chairman of the Federal Reserve, warned Richard Nixon in 1971, when Nixon terminated the right of our international trading partners to demand gold in exchange for their dollars. In spirit, the gold bugs are the heirs to Douglas and Burns. Every day is the end of Western civilization -- or should be, now that our currencies float free of gold. In fact, the recent weakness of the dollar has become an idée fixe within the gold community, as it opens up one possible route back to an economic system ballasted by gold. Representative Ron Paul, a Republican from Texas who is gold's lonely advocate in Congress, put it to me this way: ''We will go back to the gold standard, even if it takes the near-destruction of the dollar to get there.'' James Sinclair is a 64-year-old American businessman in a tan blazer and navy blue slacks. From his manner and dress, he could be host to an Amway seminar. But when he speaks, he sounds more like a karma yogi. It's as if you're watching a movie dubbed with the wrong soundtrack. ''Silence is deep rest,'' Sinclair told me as we waited for sandwiches at a deli. ''It's the only way to restructure ourselves.'' Among the most famous gold speculators, Sinclair proclaimed in the 70's that gold, then at $150 a troy ounce, would hit $900. (It eventually peaked at $887.50; he sold his position the following day, for a profit of more than $15 million.) Then, with some analysts predicting that gold could go as high as $2,000, he declared the gold bull market dead. (Within months, he was proved right.) In 2001, with gold near its bear-market lows, Sinclair told Forbes magazine that it could hit $430. On the day I met him, gold was trading at $434. Sinclair remains a star attraction at gold conferences around the world, but in the 1980's he sold his brokerage firm and took his wife and two of his daughters to the foothills of the Berkshires, where he lives on a 40-acre equestrian compound featuring its own 9,000-gallon water system, its own electrical system and a shooting range. (''I like to cut a target every now and again,'' he told me. ''Get out my aggressions.'') Sinclair's private office sports the typical C.E.O. blandishments -- a massive mahogany desk, a wall-mounted flat-panel computer monitor -- but also a profusion of religious items. Incense always burns, and a temple gong sits in the corner, along with a prominently displayed statue of Ganesh. Behind the desk there is a full-color portrait of Bhagavan Sri Sathya Baba, whom Sinclair visits frequently in India. ''I am an enquiring soul,'' he replied, when I asked if he was Hindu. ''All the great minds have wandered the Indus Valley.'' Perhaps because he has found spiritual satisfaction elsewhere, Sinclair regards gold with dispassion. ''Gold is not to be loved or hated, accepted or refused,'' he said. ''Gold is not barbaric or angelic. It fixes nothing in itself. But it is a mirror.'' Sinclair sees the health of the dollar reflected in the price of gold, and the health of the dollar is now in foreign hands. ''We're not talking about what I want, but about what is,'' he told me, as he picked through a tuna salad. ''If we go over $529, that is not good news,'' he said, referring to the price of gold. ''Anyone cheering for a high price of gold should get on Prozac.'' Sinclair says that when the dollar acts successfully as the world's currency, gold naturally returns to its status as a mere commodity. In the parlance, it demonetizes -- it loses out to the dollar as the world's reserve currency. But a mismanaged dollar, he said, could cause gold to remonetize. Our world would look very different then. ''The first sign is the foreign banks will diversify out of dollars. Then they will cease buying dollars. And then they will sell them.'' What could happen then? ''Stagflation. . . . Expansion of U.S. federal deficit. Expenses rise and incomes drop.'' Are we talking apocalypse? ''The most likely crisis is the collapse in the common stock of the operating entity. In this case, the operating entity is the United States, and the common stock is its currency.'' We had made our way up a hill, to Sinclair's koi pond and its accompanying meditation gazebo. As if on cue, what appeared to be a military airplane flew across the sky. ''That's carrying Iraqi supplies,'' Sinclair told me. ''We have war and monetary easing at the same time,'' he said, shaking his head. ''Everything has its season. That includes gold. Do I have a bet on gold? You know I do. Will I one day unravel that bet? You know I will.'' The Daily Reckoning is a freewheeling Web site for libertarians, gold bugs and doom enthusiasts of every stripe. Its editorial director is Addison Wiggin, and before we met, I pictured an ''Addison Wiggin'' as an ancient gold-hoarding Yankee, and the offices of The Daily Reckoning as a cinder-block bunker patrolled by Minutemen. I was wrong on both counts. Wiggin is a sober, black-clad 37-year-old who is active in libertarian circles. The Daily Reckoning, meanwhile, is nestled in the lovely Mt. Vernon section of Baltimore, and its interior could pass for any 1990's dot-com, with a glass-enclosed conference room, exposed brick walls and a couple of nerdy 20-somethings in sneakers and T-shirts. The narrative Wiggin spun out for me over lunch is repeated, nearly verbatim, by almost everyone in the gold community. ''This is the blow-off phase for the Great Dollar Era. We're in an unsustainable trend right now,'' Wiggin told me, ticking off the miscalculations that have brought us to the brink of an economic apocalypse. To begin with, the U.S. has become the world's biggest debtor, with three outstanding obligations at alarming highs: consumer debt, or our mortgages and credit cards; the federal deficit; and our current account deficit with foreign countries. Federal Reserve Chairman Alan Greenspan, Wiggin continued, has simply shifted one bubble -- the 90's bubble in stocks and bonds -- into another, in real estate and ''overconsumption,'' or the American propensity to pay for an ever-more-lavish lifestyle on credit. But the real nightmare involves the U.S. dollar. If Asian central banks weary of buying Treasury bonds -- an asset denominated in the weakening dollar -- then look out below. ''What is that Dylan Thomas quote?'' Wiggin wondered over his fusilli. ''The dollar will not go gently into that great night.'' Wiggin offered up his analysis with a confident and steady aplomb. And for good reason. While no one in the mainstream financial elite seriously advocates a return to the gold standard -- the modern global economy is too fluid and dynamic for such austere discipline -- at this moment, the gold bugs' grim prognosis for the dollar happens to align with a more mainstream view. A low-level panic about the debt crisis, and its possible effect on the American economy, is gathering strength. ''Our little post-bubble workout is not over, not by any stretch of the imagination,'' Stephen Roach, the chief economist at Morgan Stanley and himself a noted pessimist, told me recently by phone. Roach says he firmly believes that an adjustment is necessary and inevitable, and that when it comes, it will be very, very painful. From appearances, Warren Buffett, the savviest investor who ever lived, agrees. His company, Berkshire Hathaway, has placed a $21 billion bet against the U.S. dollar. Meanwhile, the general tone is darkening. In February, Paul Volcker, the former Federal Reserve chairman, publicly stated in a speech that ''there are disturbing trends'' undergirding the U.S. economy, including ''huge imbalances, disequilibria, risks.'' These demand ''a strong sense of monetary and fiscal discipline,'' he said, gently chiding both the U.S. government and its citizens to live within their means. Volcker, a man known for his prudence and a cautious tone, let his words ring ominously. ''Altogether, the circumstances seem to me as dangerous and intractable as any I can remember,'' Volcker continued, referring to the very same warning signs as Addison Wiggin, ''and I can remember quite a lot.'' Recently, Comptroller General David Walker, surveying America's debt crisis, uttered a one-word synopsis for the long-term future: ''Argentina.'' Money is entirely conventional. It's a system of equivalence, a medium of exchange. In a society of any sophistication whatsoever, money is used reflexively. You hand me 50 cowrie shells, I give you a head of cattle. I give you a 20, you give me a tuna on rye and some change. As the greatest theorist of money, the German sociologist Georg Simmel, recognized, money is only money when it is in motion: ''When money stands still, it is no longer money according to its specific value and significance.'' Furthermore, the set of conventions that lend money its credibility as a medium of exchange must be universal and stable, so that the shells for which I relinquished my good cow today will be worth as much tomorrow, when I exchange them for something else. Money is built on motion and trust. Gold, like everything else, is a commodity whose price is established by supply and demand. But gold is unlike everything else in that an ancient fantasy of solidity attaches to it. We produce things, but to exchange them efficiently, we throw over them what economists refer to as ''the veil of money.'' Interest rate swaps, swap curves, swaptions -- the veil only thickens with time. If the gold bugs are apocalyptic, it's worth recalling the etymology of the word ''apocalypse'': to uncover or reveal. Gold holds out the promise, however chimerical, that one day we might pierce the veil of money. On the final leg of my tour of gold bugs, I visited the Blanchard Company in New Orleans. Blanchard is the largest retailer of gold to the American public, and it is owned and run by Donald Doyle, a soft-spoken man who might well be the living embodiment of the metal he sells: there is something soft but indestructible about his courtly Southern manner. After talking gold for the better part of an hour, we descended to the company vault. There he picked up two coins and placed one into each of my hands. They were ''Saint-Gaudens,'' named after the great American sculptor who designed them for Teddy Roosevelt. They had a face value of $20 and a value based on the amount of gold they contain -- probably a few hundred dollars. But the ornate coins were impossible to stack, and had been discontinued after a short run. On the open market now, thanks to their rarity, the coins together might fetch $800,000. They were heavy, and transfixingly beautiful, and even as I did the math in my head -- five coins, Brooklyn town house -- I heard Doyle say over my shoulder, ''And they sure feel good in your hands, don't they?''

Subject: Re: Believing in 'Gold' From: Pete Weis To: Emma Date Posted: Mon, Jun 06, 2005 at 13:33:59 (EDT) Email Address: Not Provided Message: In the coming sequel to The Italian Job the 'heros' break into a national bank and steal millions in 10 year US treasury certificates.... ya right.

Subject: On Hedge Funds From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 12:04:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/magazine/05HEDGE.html?ex=1275624000&en=2752ba8f8091401a&ei=5090&partner=rssuserland&emc=rss June 5, 2005 The Quantitative, Data-Based, Risk-Massaging Road to Riches By JOSEPH NOCERA Clifford Asness is probably going to be annoyed when he sees that this article begins with a discussion about how much money he makes, but there's no way around it. Asness is a very successful hedge-fund manager, and very successful hedge-fund managers make stupendous amounts of money, even by Wall Street's extravagant standards. And in the public mind, their staggering compensation tends to overshadow pretty much everything else. ''Filthy Stinking Rich'' was New York magazine's unambiguous take on the hedge-fund phenomenon some months ago. Last month, in its survey of the best-paid hedge-fund managers, Institutional Investor's Alpha magazine reported that the average pay for the top 25 hedge-fund managers was an astounding $251 million in 2004. Asness himself has written, in one of his better lines, that hedge funds ''are generally run for rich people in Geneva, Switzerland, by rich people in Greenwich, Conn.'' Asness likes to point out that he wrote that sentence before he moved his own hedge fund, AQR Capital Management, to Greenwich, Conn. He started AQR, with three partners, in the spring of 1998, when he was 31 and had just walked away from a high-paying job at Goldman Sachs, where he was one of the firm's brightest young stars. During AQR's first three years, Asness and his partners didn't make much money. But by 2002, the firm was doing well, investors were clamoring to get in and AQR was managing about $3 billion in assets. (It's up to around $13.5 billion today.) And the partners were getting rich. Asness cracked the Alpha list for 2002, taking down a reported $37 million. The next year, the magazine reported, he made $50 million. Asness won't discuss the specifics of his pay, but if you ask him what it's like to have that kind of money, he won't duck the question the way most hedge-fund managers do. Instead, he'll lean back on his couch, scratch his neatly trimmed beard for a minute and then offer a sheepish smile and an endearing, exaggerated shrug. ''To quote Dudley Moore in the movie 'Arthur,' '' he'll reply finally, ''it doesn't suck.'' Cliff Asness says things like that. It is one of the qualities that make him different from his brethren in the hedge-fund community, who tend to shroud themselves in secrecy, as if they're trying to protect some special formula they've devised for making investors -- and themselves -- money. They don't just shy away from talking about their pay; they shy away from talking about just about anything. Have you ever heard of Stephen Mandel Jr., or Daniel Och, or James Simons? Among hedge fundies, they are three of the most respected names in the business. Yet they studiously avoid having their names in the paper. Cliff Asness, on the other hand, is an outspoken, exuberant Ph.D. in financial economics who has built a public reputation for his willingness to write and say what's on his mind. In academia, he's known for the witty, biting papers he writes for such publications as The Financial Analysts Journal. (One recent title: ''Stock Options and the Lying Liars Who Don't Want to Expense Them.'') Among financial journalists, he is known as a cogent and articulate bear -- someone who can make a compelling case that stock-market returns over the next few decades will almost certainly be lower than the double-digit returns investors have come to expect as their birthright. And among the hedge-fund cognoscenti, Asness has become known as someone who has been thinking hard thoughts about the future of hedge funds. A hedge fund is nothing more than a private, largely unregulated pool of capital that can buy stocks, sell stocks or do just about anything else. It is Asness's essential belief that hedge funds -- or, rather, some hedge funds -- are doing things that are genuinely useful for investors, especially sophisticated institutional investors like pension funds and university endowments. You will not be surprised to learn that Asness includes AQR among the useful hedge funds. These are strange times for hedge funds. They are, right now, at the absolute forefront of the collective financial psyche. Every day, it seems, a half-dozen more young Wall Street hotshots abandon the millions they're making at the big firms like Goldman Sachs or Morgan Stanley and start hedge funds. There are now 8,000 of them, about 40 percent of which have been opened in the last four years, and money is absolutely pouring into them -- they're at $1 trillion and counting -- as institutions search for ways to generate positive returns in this difficult market. Just as business-school graduates once gravitated to venture capital or private equity or dot-coms, now they all want to work for hedge funds. Hedge funds have also become a huge force in the market. When hedge funds are enthusiastic about a stock, they have the collective buying power to drive up the price, at least for a while. When they turn on a stock, they can drive the price down. Some hedge-fund managers have become activists, buying up stakes in companies and then demanding change from management. One hedge fund -- Eddie Lampert's ESL Investments -- engineered a merger between Kmart and Sears. There are plenty of people, even in the hedge-fund world, who are convinced that we have entered bubble territory. Their secrecy, their power, the incredible amount of money flowing into them, the sense that everybody on Wall Street is trying to start a hedge fund and of course the staggering riches: it all seems a little crazy and out of control. Hedge funds right now feel a little like mutual funds in the late 1960's, or junk bonds in the 1980's, or dot-coms in the late 1990's. You just assume they are going to get their comeuppance eventually. Isn't that what always happens? But do you remember what happened after the mutual-fund boom burst? Or after the junk-bond craze? Or even after the dot-com insanity? It turned out, in every case, that underneath the craziness, something enduring was being created. The modern mutual-fund industry emerged in the wake of the early 1970's mutual-fund crash. Junk bonds today are a critical part of the world's financial scene. Amazon and eBay and lots of other real, profitable companies emerged from the dot-com mania, after all the pretenders were swept away in the rubble of the collapse. And so it is with hedge funds. There are hedge funds today -- big ones, run by serious people -- that are creating portfolios that are less risky than either the typical mutual-fund portfolio or the market itself. Certain hedge funds are becoming important tools for institutions that want to diversify their portfolios and become less dependent on the ups and downs of the overall stock market. Hedge-fund managers are convincing institutional investors that they are far better served not seeking outsize returns, because those returns entail taking too much risk. Cliff Asness uses a highly complex, computer-driven investing strategy. You and I will never be able to invest the way he does. And yes, he's become immoderately wealthy as a result. But if you can get past how much money he makes, you'll find he has something worth listening to. Boiled down, what Asness really does is try to understand the relationship between risk and reward. And in that broad and important sense, there are lessons in what he does for anyone in the market. Asness is hardly the first hedge-fund manager to employ techniques for managing investment risk; in fact, that concept goes back to the very origins of hedge funds. The man generally credited with coming up with the first such fund was a former Fortune magazine writer named Alfred Winslow Jones, who hung out his shingle in 1949 with $100,000 in capital and a new idea about making money in the market. He wanted to invest aggressively while still trying to protect investors' capital. These would seem to be contradictory goals, but here's how he went about it: Instead of simply buying stocks and hoping the wind was at his back, Jones also had a certain percentage of his portfolio on the ''short'' side -- that is, he was betting those stocks would go down. In doing so, he was limiting his fund's exposure the market, or as they say today, he was limiting his ''market risk.'' Since his shorts were likely to make money in a down market, they acted as protection -- a hedge! -- when his ''longs'' weren't doing well. Yet because Jones also borrowed money to buy more shares -- that was the aggressive part of his strategy -- when his stocks went up (as they usually did, for he was a very good stock picker), his returns were much higher than they might otherwise have been, despite having those shorts hedging his portfolio. Jones was enormously successful; between May 1955 and May 1965, his fund returned 670 percent, according to Fortune magazine, nearly twice as much as the best-performing mutual fund. But Jones was also an innovator in other ways. Because he wanted complete freedom to invest as he pleased -- and didn't want to deal with regulatory restrictions -- he never let more than 100 wealthy investors into any of his funds at any one time; under the rules, this allowed him to avoid registering with the Securities and Exchange Commission, which regulated mutual funds. And he used a fee structure that called for him to get a whopping 20 percent of the profits if he made money. Mutual funds, by contrast, collected fees based on the size of the fund: the more assets under management, the more the fund company made, no matter how well (or poorly) the fund performed. As hedge funds evolved, Jones's essential structure stuck. Hedge-fund managers made sure their investors were both wealthy and few in number; these days, the rules allow them to have up to 500 ''qualified'' investors and still avoid most S.E.C. regulation. (The theory is that wealthy investors should be able to look out for themselves and don't need as much government protection as the rest of us.) Of course they all adopted performance fees -- usually 20 percent, just like Jones. Hedge funds also became hooked on asset fees, just like their mutual-fund brethren. Today, when a hedge-fund manager says he charges ''2 and 20'' -- and many of them do -- he means he is taking a 2 percent asset fee as well as his 20 percent performance fee. To the extent that hedge funds remain the most Darwinian of investment vehicles, it is because most hedge funds simply can't afford to lose money for even a single year: if they do, investors and employees head for the exits, and the funds shut down. But that fee structure of ''2 and 20'' is what makes the business so potentially lucrative. A $4 billion hedge fund that gains 10 percent in a year and charges 2 and 20 has generated $160 million for itself. A $4 billion hedge fund that charges 2 and 20 and makes no money for investors still pockets $80 million thanks to its asset fees. What got lost over time was the idea that hedge funds were supposed to hedge. That was primarily because of the powerful bull market that began in August 1982 and ended in March 2000. Investors took outsize risks and invariably wound up being rewarded, because the market was going straight up. The bull market forgave a lot of investing mistakes. Hedging seemed unnecessary -- even a little silly. In fact, during the bull market, hedge funds became synonymous not with hedging but with the most extreme forms of investment risk-taking. Think for a moment about the hedge-fund giants who captured the public imagination in the 1980's and early 1990's -- George Soros, Julian Robertson, Michael Steinhardt and a handful of others. Those men were all swashbucklers who didn't want to control risk -- they wanted to embrace it. They ran billions of dollars, and their fame and fortune was based on their willingness to make stunning bets on markets, currencies, stocks, even on entire economies. When they bet right, they made hundreds of millions of dollars; Soros netted more than $1 billion when he made his legendary bet in 1992 against the British pound. And when they bet wrong? On Valentine's Day in 1994, Soros got caught on the wrong side of the yen and lost $600 million in one day. ''Making money took courage,'' says Steinhardt, who is now retired, with no small satisfaction. Today most people still think of the Soros-Steinhardt-Robertson model when they think of hedge funds. And indeed, there are still hedge funds that make the kind of big ''macro'' bets the grand old men were so justly famous for. But there are all kinds of other hedge funds as well. There are hedge funds that deal in distressed securities. Others are dedicated to short-selling. Still others deal in the various derivative markets. The main thing hedge funds have in common today is not the way they invest, but their structure -- including, of course, those lucrative fees. Since the end of the bull market, though, the idea of using hedge funds to actually hedge has been making a comeback. Some of the best hedge funds, like Maverick Capital and Lone Pine Capital (the latter is run by the aforementioned Stephen Mandel) use the classic A.W. Jones technique of having a certain percentage of their portfolios on the short side -- betting stocks will go down -- to limit their market risk. Others search for small inefficiencies in discrete segments of the financial world to eke out small but steady returns. All of them are offering institutional investors ways to generate returns that are less connected to the rise and fall of the market itself than, say, a mutual fund is. And then there's Cliff Asness, who runs something called a ''market neutral'' fund. Which means that although he's buying and selling stocks, the returns he generates aren't connected to the overall market at all. One crisp day this past April, Cliff Asness was sitting on a sofa at one end of his large corner office in a nondescript low-rise building in Greenwich. ''Sitting,'' however, doesn't quite do justice to what he was doing. One second he was scrunching into the sofa, the next he was leaning forward intensely, and the second after that, he was gesturing excitedly, as some new, interesting thought entered his head that he had to convey right that instant. He was like an exuberant, well-dressed, overgrown kid, so overflowing with enthusiasms that he couldn't contain himself. Except that the enthusiasm in question at that particular moment was the research that had led to one of his earliest published papers, ''OAS Models, Expected Returns and a Steep Yield Curve'' -- which, frankly, made it a little bewildering to be on the receiving end of his monologue. Realizing that I was pretty much lost, Asness finally stopped talking and let out a loud, self-aware cackle. ''This is so geeky!'' he said finally. Well, yes, it was. Asness did not emerge from the womb a fully formed geek. Growing up in Roslyn Heights, N.Y., he was an underachiever who played soccer and didn't spend a lot of time engrossed in his studies. Much to everyone's surprise -- including his own -- he did well on his SAT's, which got him into the University of Pennsylvania, from which he graduated with degrees in engineering and economics. It was the mid-1980's by then, and the bull market had begun, but Asness wasn't exactly walking around campus with The Wall Street Journal tucked under his arm. ''I tacitly assumed I would be applying to law school,'' he said, following in the footsteps of his father, a trial lawyer. When his father heard of his plans, however, he told his son: ''Why do you want to go to law school? You're good at this math stuff. You should do that.'' It was good advice. ''I think it's a little weird for a 20-year-old to be interested in finance,'' Asness said, but the academic, ''portfolio theory'' side of finance -- the geeky side -- had captured his imagination. By the late 1980's, the field of portfolio theory was undergoing enormous ferment. The long-accepted academic dogma, the so-called efficient-market hypothesis -- which states that the stock market is entirely efficient, with all available information already built into stock prices, and thus can't be beaten on any consistent basis -- was coming under at least mild assault. Accepted into the Ph.D. program at the University of Chicago's business school, Asness found himself right in the middle of the ferment. The dominant figure in the University of Chicago's finance department -- indeed, one of the dominant figures in all of academic finance -- is Eugene Fama. Fama is often described as the father of the efficient-market hypothesis, because in the 1960's and 1970's he wrote a series of elegant papers that laid out the theory with more clarity than anyone else had before, gave it its name and said, in effect, that it seemed to make a lot of sense. He also said, however, that it needed to be tested. To test it properly -- by going back and looking at the historic performance of stock prices -- you had to grapple with a series of issues that had yet to be worked out: how should a stock's riskiness be measured? What kind of risk-adjusted returns should a stock have if it were, in fact, acting ''efficiently''? And so on. Still, a series of early, crude tests seemed to bear out the theory, and in time, the central idea behind the efficient-market hypothesis even filtered down to the rest of us. Although Wall Street still makes most of its money convincing people that they can beat the market, it also peddles index funds, which have become popular precisely because people want to be in the market but don't believe they can beat it. By the time Asness got to Chicago in 1988, academics had begun to come to a better understanding of risk. Most of us think of risk as being related to the volatility of an individual stock -- that is, how much it bounces around from Point A to Point B. But new research was measuring how the risk characteristics of an individual stock changes the overall riskiness of an entire portfolio. Fama, along with a younger colleague named Kenneth French, was among those conducting a newer and deeper series of tests. In particular, they were working on a paper comparing the risk-adjusted historic returns of two different types of stocks -- value stocks versus growth stocks. (Growth stocks are typically those of companies whose investors are optimistic about their futures. Their stock prices are high relative to their actual corporate earnings and other measures. Value stocks are the opposite -- their stock prices are low compared with their earnings because the market is either pessimistic or nervous about their prospects.) A draft of that paper began circulating soon after Asness arrived on campus, and when it was finally published in 1992, under the unassuming title of ''The Cross Section of Expected Stock Returns,'' it created something of a sensation. It essentially showed that if you took a large, diverse portfolio of value stocks, which are cheap, and put it next to an equally large, equally diverse portfolio of growth stocks, which are expensive, the value stocks would outperform the growth stocks more than the efficient-market hypothesis suggested they should. Asness describes the results of that paper: ''Cheap beats expensive more than it should.'' Using a large universe of stocks, going back to 1927, Fama and French showed that if you divided the stocks into thirds, put the cheapest third in the ''value basket'' and the most expensive third into the ''growth basket,'' the value stocks outperformed the growth stocks in more than two-thirds of the years. This, of course, did not mean you couldn't lose money betting on value over growth -- no investment strategy is risk-free. It did mean that if you took this approach, history strongly suggested that the odds would be on your side. What's more, it seemed to make no difference whether the market had a good year or a bad year. The pattern stood up. There were years when the market was down, and cheap beat expensive -- and other years when the market was up, and cheap still beat expensive. In other words, this method didn't just reduce market risk, the way A.W. Jones did when he was devising the first hedge fund. It eliminated it entirely. To use hedge-fund lingo, the pattern was uncorrelated to the market. By his second year in the Ph.D. program, Asness had become Fama's teaching assistant and had enlisted both Fama and French as his thesis advisers. For his dissertation, Asness had his own idea about testing the efficient market: he would take a look at a popular short-term strategy called momentum investing, in which an investor buys a stock for the simple reason that it is going up. In an early draft, he called it the ''fool's strategy.'' (Most day traders during the Internet bubble were momentum investors, for instance.) ''I was nervous telling Fama that I wanted to investigate momentum investing,'' Asness says now. ''But his reply was the best thing he ever said to me: 'Sure you can write it. If the data shows something interesting, then write it.' What Gene really believes in is empirical testing. Go where the data takes you.'' And wouldn't you know it? Asness (along with other academics doing similar work) discovered that a large, diverse portfolio of momentum stocks also ''worked'' more than it should under the efficient-market hypothesis. Nobody can say with any assurance why these things worked. Asness guesses that in both cases, investors, as he puts it, ''overextrapolate.'' There is usually some bad news associated with value stocks -- and investors assume there will always be bad news, so they avoid these stocks more than they should. As for momentum, people often get too optimistic about growth stocks and pay too much for them. In the short term, that enthusiasm will often drive the prices higher. But eventually the enthusiasm will wane, and the stocks will come crashing down. Academics still argue about what these discoveries mean. Fama remains a committed efficient-market man. He says he thinks these findings don't overturn the hypothesis but suggest instead that academic finance needs a better model for measuring risk. Asness, however, came to the view that the market was not perfectly efficient: that human beings thought and acted in ways that created market anomalies. There is now an entire branch of economics that tries to explain the market in terms of the way humans behave -- both rationally and not. Asness does not classify himself as a strict behavioralist; ''I think the market is reasonably close to efficient,'' he says, ''but there are a lot of little inefficiencies.'' And in exploiting these inefficiencies a business could be built. After grad school, Asness landed at Goldman Sachs, where he spent a year and a half trading mortgage-backed securities on the fixed-income desk while finishing his dissertation. Then Goldman asked him to set up a ''quantitative research desk.'' The firm wanted Asness to somehow use the wealth of new research coming out of university finance departments to help it make money. Asness quickly hired two friends, Robert Krail and John Liew, both of whom he knew at the University of Chicago, and they began building a model that would combine both Fama and French's value insight with Asness's momentum insight. The computer model they developed -- and which, after many refinements, they still use today -- grabs a wealth of up-to-the-minute data to identify the cheapest value stocks (Fama and French), but only value stocks that seemed to have started on an upward swing (Asness). They buy a large block -- about 200 to 300 -- of those stocks. Then the model identifies stocks with the opposite characteristics: growth stocks whose rise is stalling. They sell an equally weighted amount of those stocks short. Unlike A.W. Jones, who had only a percentage of his portfolio on the short side, the Asness portfolio is perfectly balanced between longs and shorts. That is what makes his fund ''market neutral.'' It doesn't matter to him whether the market goes up or down. AQR makes money if its basket of value stocks beats its equally weighted basket of growth stocks -- the way the history suggests it should two-thirds of the time. Asness and his colleagues soon discovered that the strategy they had come up with worked not only with stocks but with currencies, commodities and even entire economies. (Yes, economies. Asness and his team use economic data to sort out ''overvalued'' versus ''undervalued'' countries, and then buy -- or short -- those countries' market indexes, their S.&P. 500 equivalents.) In time, they developed models that sorted out cheap versus expensive in all kinds of different investments. In 1995, Asness's group started an internal hedge fund for Goldman partners and a few clients, using the new model. The fund did so well that the firm rolled it out and began to market it. Within two years, Asness and his crew had $7 billion under management. Their run was amazing -- barely a down month, and some spectacularly good years. Like A.W. Jones, they borrowed money, using leverage as their way to take on more risk and boost returns; one year they returned more than 100 percent before fees. ''Intellectually,'' Asness says, ''I knew we couldn't sustain that kind of performance. It was a lucky period. But I was young and I was arrogant.'' And in his youth and his arrogance, he looked around him and saw that other Goldman hands were leaving to start hedge funds and that they were putting themselves in a position to make geometrically more money than he was making. For much of his time at Chicago, his working assumption was that he'd be an academic and make maybe $100,000 a year. At Goldman, by 1997, he was making millions, and he was unhappy. The firm wouldn't leave him alone to do his research and run money; it was always asking him to fly to Tokyo, or to make a presentation to clients, or to help some in-house portfolio manager whose performance was down. One member of his original group quit to open a hedge fund. ''That bugged me,'' Asness said. ''He was doing what we had all invented together.'' His colleagues kept pushing him to quit and kept meeting secretly to map out plans. Finally, in November 1997, he decided to break from Goldman. He gave notice two days after receiving a big bonus. The four founders of AQR -- Asness, Liew, Krail and an ex-Goldman hand named David Kabiller -- set up shop in New York City in March 1998. They immediately set out to rebuild their computer model and to raise money. By August 1998, they had $1 billion committed, which at the time was thought to be the largest sum ever raised for a hedge-fund startup. (Last year, a young former Goldman partner, Eric Mindich, started a hedge fund and raised the current record: more than $3 billion.) That first month, AQR made money. Then came a market event that all of Asness's historical stock research, and all his complex models, hadn't prepared him for -- a market that was not just a little bit inefficient, but that was insanely inefficient. The Internet bubble had begun. Remember earlier in this article, when I quoted Asness's funny line about hedge funds being ''run for rich people from Geneva, Switzerland, by rich people from Greenwich, Conn.''? There was a time when that was true -- when the vast majority of hedge-fund investors were, indeed, rich people trying to get richer. By the time Asness set up AQR, however, that was all changing. Although AQR had a few individuals among its investors -- some friends and relatives, mainly -- the fund was primarily marketed to large institutions, especially university endowments. The best of the institutional investors were sophisticated, they were demanding and they insisted on understanding the underlying strategy and having regular conversations with the fund managers. If an investor had asked George Soros or Michael Steinhardt for that kind of access, he would been given the back of the hedge-fund manager's hand. But the new breed of hedge-fund manager had a different mind-set. From Cliff Asness's point of view, sophisticated investors who understood his complex, quantitative approach were exactly the people he wanted as clients. They would understand how his approach fit into their overall portfolios. If he hit a bad patch, he had a far better chance of holding on to a big institution's money than that of a panicky rich person. Most of all, Asness and the other partners at AQR understood that the most forward-thinking of the endowments had themselves become influenced by what was going on inside academic finance and were trying to incorporate some of those ideas into the way they managed their own money. Indeed, in setting up his ''market neutral'' hedge fund, Asness was reacting to the changing demands of the marketplace. Even in the middle of a roaring bull market, these institutions had come to believe, first of all, that they shouldn't be completely reliant on a rising stock market for their returns. After all, someday the market was going to go down. Thus, having a diversified portfolio didn't just mean having a broad mix of stocks and bonds. It also meant going beyond the market and adding ''alternative'' asset classes. Timber, energy, real estate -- these were all assets that could help institutions diversify. And so could hedge funds, so long as they were the right kind of hedge funds. These hedge funds weren't set up to make the kind of huge gains Michael Steinhardt and George Soros made, but that was O.K. They had a different goal. They were trying to manage risk and produce a return that was commensurate with the risks they were taking. Just as important, by adding hedge funds that were uncorrelated to the market -- even ones that were moderately risky -- they were lowering the risk characteristics of their overall investments. The institutional money manager who led the way into hedge funds was David Swensen, who took over the Yale endowment in 1985. A former investment banker himself, Swensen had a deep understanding of both portfolio theory and the hedge-fund industry. He and his endowment colleagues got to know which were the best of the lot and sank money into a diverse range of hedge funds. Simultaneously, he cut way down on stocks, despite the bull market. The results are undeniable: over the past decade, Yale has generated annualized returns of 16.8 percent. (The S.&P. 500, by comparison, generated annualized returns of 10.8 percent during that period.) Seeing these results, other institutions -- Notre Dame, Stanford, Princeton among them -- began emulating Swensen's hedge-fund strategy. Which, it turns out, was a good thing for Cliff Asness and AQR. Had he been operating in the old days, when the clients were all wealthy individuals, his firm would never have survived the Internet bubble. His investors would have all cut and run and put their money in some fund that was investing in dot-coms. But the institutions understood what Asness was doing, and even though his fund shrank from that original $1 billion to $400 million over the next 20 months, a surprising number of them stuck by him. What he was doing made intellectual sense, and it would work again so long as the bubble eventually ended. Which had to happen, didn't it? Not that Asness was sanguine during the bubble. AQR's first year and a half in business was a time when investors completely lost their heads, when dot-coms with neither profits nor revenues had triple-digit stock prices and when millions of investors actually believed that the rules of investing had changed. It was a period of such utter insanity that it seemed to repudiate the essential mathematics that had always guided the market. That drove Asness completely crazy. He had never lost money for investors over any significant period; indeed, he'd never in his adult life been anything but a superstar. Now his new hedge fund was like a dripping faucet he couldn't turn off: every month, it seemed, it was down another 2 percent. The fundamental insight that drove his model -- cheap beats expensive more than it should -- simply didn't work during the Internet bubble. Expensive wasn't just beating cheap. It was crushing cheap. Outrageously expensive tech stocks just kept getting more expensive. During the height of the dot-com era, the fund fell about 20 percent. ''I snapped during the bubble,'' Asness concedes today. His partner John Liew looked at the bubble the way a statistician might -- it was a hundred-year flood, and there was nothing you could do but wait for it to recede. Intellectually, Asness agreed, but emotionally he could not distance himself from the awful downward slide. He had much of his own money in the fund; many of his investors were people he had known for years; even his father had put a good portion of his retirement money in the fund. The pressure was nearly unbearable. He railed about the stupidity of investors who were driving up the stock prices of tech stocks. One night in the middle of one such diatribe, his wife, Laurel, said, ''But Cliff, you always told me you made money when people acted stupidly.'' Asness stopped talking and looked up at her. He knew she was right. ''Now you're whining about it,'' she continued. ''I guess you just want them to be a little stupid.'' What Asness didn't do, however, was capitulate to the bubble. ''Our belief in the process never wavered,'' Liew said. ''The evidence was that the models we had devised had worked going back to the 1920's.'' In fact, the bubble gave Asness a cause. ''We try to make money by making a lot of little venal trades,'' Asness said. But fighting the bubble seemed to imbue him with some larger purpose. He began to see himself as on the side of good fighting evil. Bubbles, after all, put investment capital into the hands of company founders who know nothing about how to build companies. They finance lots of terrible ideas. And they hurt investors, who wind up losing money once the giddy ride ends. Mostly, though, it offended Asness that so many investors were willing to blindly toss aside decades of accumulated market history and data. By early 2000, he began to write a lengthy article exposing what he saw as the fallacies being used to justify crazy stock prices. It was unlike anything Asness had ever written. It was biting, sarcastic, tough-minded and occasionally even funny. He laid out the math for why even the stock prices of strong companies like Cisco Systems were not sustainable. He called the paper ''Bubble Logic.'' The draft of ''Bubble Logic'' that Asness showed me is dated June 1, 2000. As we all now know, the bubble had ended by then; the air began leaking out of it three months earlier. That March was the low point for Asness and his partners at AQR. Feeling that his father had too much money in the fund, Asness -- against his father's wishes -- tossed him out. (''If I was going to go down,'' he says now, ''I didn't want to take him with me.'') But in April, the fund made money, and it gained again in May, and when the year ended, AQR had made back a substantial chunk of its losses. It would be another year before the partners started making hedge-fund-like compensation themselves -- that's because it is standard practice for hedge funds to make back all their investors' money before they start tacking on that 20 percent performance fee again -- but the ship had righted itself. For months, an early draft of ''Bubble Logic'' had been circulating among Asness's friends in academia; it was discussed in online forums; it was even quoted here and there in business publications. But it was never published. There was no need to publish it. Asness says that if the bubble had lasted six more months, he would have been out of business. But it didn't. He had outlasted it. Once the bubble ended, the AQR model went back to working just the way the data say it is supposed to. Over the last five years, the firm's primary hedge fund is up an average of 13.2 percent a year after fees. Those are not George Soros-like numbers, of course, but AQR generates those returns with a little less risk than the overall market. More to the point, when it is added to an institutional portfolio of stocks and bonds, it reduces the overall riskiness of that portfolio. And though it does not seek out new investors, big institutions are banging down the door trying to get in. Why? Because once the Internet bubble ended, the market did go down, a lot. And the institutions that had loaded up on stocks for the past 18 years were suddenly losing money. So they all decided, en masse, to load up on hedge funds, to replicate what Yale was doing. Hedge funds, it turns out, had a fabulous run during the downturn; while the mutual-fund industry was losing more than $1 trillion, the hedge-fund community was essentially breaking even. The best of the hedge funds made money during the bust. Even CalPERS, the giant California state pension fund, began dabbling in hedge funds a few years ago. The real reason so many new hedge funds are being started these days is that the demand is insatiable. And that demand is coming from institutions. Every big institutional investor in the country -- if not the world -- wants what Yale has: a truly diversified portfolio that generates decent, positive returns with less risk than the market itself offers. And really, who wouldn't want that? ''David Swensen was so successful, and so eloquent in explaining what he did that he convinced folks that he had it figured out,'' says James Chanos, who runs Kynikos Associates, a short-selling hedge fund with more than $2 billion under management. ''It looked like he had found the Holy Grail.'' But here's the problem: there is no Holy Grail, not when it comes to investing. Or, more precisely, investing Holy Grails are, at best, temporary phenomena. As hedge funds proliferate, for instance, the quality of fund managers is bound go down, and that will hurt the performance of hedge funds. That's what happened when mutual funds became wildly popular, and it is already happening in hedge-fund land as well. (Hedge-fund returns are down slightly this year, for instance.) Let's face it: even though there are 8,000 hedge funds, are there really 8,000 great hedge-fund managers? Of course not. There is a second issue as well. You know those little inefficiencies that so many hedge-fund managers are trying to capture? Those strategies work well when there are only a handful of people employing them. But once there are hundreds of fund managers all trying to exploit the same inefficiencies, the anomalies tend to go away. The very fact that all these people are trying to do the same thing makes the market more efficient. As Chanos puts it, ''Success breeds imitation, and imitation breeds mediocrity.'' He adds: ''I think a lot of the institutions that are just getting into hedge funds now are going to be extremely disappointed. And there is going to be a gradual recognition that the fees aren't worth it.'' Most people I talked to in the hedge-fund world don't believe that the hedge-fund bubble will end in some giant cataclysm that threatens the foundations of the financial system. It is far more likely that the air will gradually come out of the bubble in ways that most of us will barely notice. Hedge funds with mediocre returns will go out of business. A lot of the power hedge funds now have in moving the markets will dissipate. Some scam artists -- who always emerge during bubbles of any sort -- will be exposed. Some hedge funds that have taken too much risk will crash and burn. New regulations will be put in place (indeed, next year the S.E.C. will require hedge funds to register with the agency.) Business-school grads will find the next hot thing to gravitate toward. And what will be left? There are those, like Chanos, who say they believe that hedge funds will contract over time and that what will be left is a cottage industry of successful funds that don't outlast their founders. But there are others who believe that the hedge funds that are left standing -- the funds run by grown-ups who understand how to manage risk, and who position their funds as an alternative asset class for institutions -- have a shot at becoming permanent institutions and a normal part of the investing landscape. There is, after all, something powerful in these ideas of managing market risk and generating returns that are uncorrelated to the market. This is not, however, a case in which a big idea eventually filters down to the rest of us. Theoretically, mutual funds could develop market-neutral funds like the one Asness runs; the regulations that limited how much short-selling a mutual fund could engage in were repealed years ago. But the fund industry has historically shied away from shorting stocks. For one thing, there's a strong psychological aversion to short-selling in the investing world. Rather than pumping money into companies to help them grow and prosper, the short-seller is rooting for a company's defeat. It seems somehow un-American, or at least not very nice. But other things once viewed as unseemly or un-American, like buying on credit, were quickly adopted by the masses once some smart guy figured out how to sell the idea in an appealing way. The real obstacle to the massification of hedging is that it is hard. What Cliff Asness does requires an immense amount of skill. There just aren't that many people who can do it well. And that's not going to change any time soon. Of course, if the mutual-fund industry did start rolling out such funds, it would further degrade the ability to make decent returns, because it would mean there would be yet more people trying to execute the same strategies. Around and around it goes. Asness, of course, is in the camp of those who would like to see hedge funds become a more permanent part of institutional portfolios. But he can see the impediments as well. Last year, he published a lengthy paper on the subject of hedge funds in The Journal of Portfolio Management. Titled ''An Alternative Future,'' it was written as a two-part series. In the first part, he laid out all the reasons that hedge funds could wind up achieving the same kind of permanence as mutual funds: the power of the ideas behind them, the attractiveness of using them to diversify institutional portfolios and so on. In the second part, he laid out all the reasons that it might not happen -- at least any time soon -- including the real possibility of lower returns in the near term, as well as ''those pesky fees,'' as he put it. In our various discussions, I pushed him often on the subject, but I could never get him to commit one way or the other. ''I'm very schizophrenic on the subject,'' he said toward the end of one of our talks. ''To me, the real question is whether these institutions are rationally going to accept lower returns. Or are they secretly hoping that even if everybody else is getting lower returns, their hedge funds will still be getting the big returns? If it's the latter, we'll have problems.'' Some things even Cliff Asness doesn't have the data to predict.

Subject: The Mobility Myth From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 11:34:19 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/06/opinion/06herbert.html The Mobility Myth By BOB HERBERT The war that nobody talks about - the overwhelmingly one-sided class war - is being waged all across America. Guess who's winning. A recent front-page article in The Los Angeles Times showed that teenagers are faring poorly in a tight job market because of the fierce competition they're getting from older workers and immigrants for entry-level positions. On the same day, in the business section, the paper reported that the chief executives at California's largest 100 companies took home a collective $1.1 billion in 2004, an increase of nearly 20 percent over the previous year. The paper contrasted that with the 2.9 percent raise that the average California worker saw last year. The gap between the rich and everybody else in this country is fast becoming an unbridgeable chasm. David Cay Johnston, in the latest installment of the New York Times series 'Class Matters,' wrote, 'It's no secret that the gap between the rich and the poor has been growing, but the extent to which the richest are leaving everybody else behind is not widely known.' Consider, for example, two separate eras in the lifetime of the baby-boom generation. For every additional dollar earned by the bottom 90 percent of the population between 1950 and 1970, those in the top 0.01 percent earned an additional $162. That gap has since skyrocketed. For every additional dollar earned by the bottom 90 percent between 1990 and 2002, Mr. Johnston wrote, each taxpayer in that top bracket brought in an extra $18,000. It's like chasing a speedboat with a rowboat. Put the myth of the American Dream aside. The bottom line is that it's becoming increasingly difficult for working Americans to move up in class. The rich are freezing nearly everybody else in place, and sprinting off with the nation's bounty. Economic mobility in the United States - the extent to which individuals and families move from one social class to another - is no higher than in Britain or France, and lower than in some Scandinavian countries. Maybe we should be studying the Scandinavian dream. As far as the Bush administration is concerned, the gap between the rich and the rest of us is not growing fast enough. An analysis by The Times showed the following: 'Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.' The social dislocations resulting from this war that nobody mentions have been under way for some time. But the Bush economic policies have accelerated the consequences and intensified the pain. A big problem, of course, is that American workers have been hurting badly for years. Revolutionary improvements in technology, increasingly globalized trade, the competition of low-wage workers overseas and increased immigration here at home, the decline of manufacturing, the weakening of the labor movement, outsourcing and numerous other factors have left American workers with very little leverage to use against employers. Many in the middle class are mortgaged to the hilt, maxed out on credit cards and fearful to the point of trembling that all they've worked for might vanish in a downsized minute. The privileged classes, with the Bush administration's iron cloak of protection, avoid their fair share of taxes, are reluctant to pay an honest dollar for an honest day's work (the federal minimum wage is still a scandalous $5.15 an hour), refuse to fight in their nation's wars, and laugh all the way to their yachts. The American dream was about expanding opportunities and widely shared prosperity. Now we have older people and college grads replacing people near the bottom in jobs that offer low pay, no pensions, no health insurance and no vacations. A fellow named Mark McClellan, who was bounced out of a management position when Kaiser Aluminum closed down in Spokane, Wash., told The Times in the 'Class Matters' series: 'I may look middle class. But I'm not. My boat is sinking fast.'

Subject: Faster Web Speeds Lower Prices in Japan From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 10:42:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/06/technology/06wireless.html?pagewanted=all&position= In Japan, Prices Go Down as Web Service Speeds Up By KEN BELSON TOKYO - Hiroki Wakabayashi may be the face of the new cellphone user. The 27-year-old computer engineer happily spends $100 or more a month for high-speed mobile service from NTT DoCoMo that lets him place calls as well as search Web sites, download songs and movie clips, and send e-mail as quickly as he can with a broadband Internet connection at home. 'With my old phone, talking was the focus,' said Mr. Wakabayashi, who uses the latest handset from NEC to browse the Web on his train commute to work. 'Now, using the phone to talk seems like a waste because e-mailing and Web browsing are so much easier.' Mr. Wakabayashi's enthusiasm should be welcome news to DoCoMo and Japan's other mobile carriers. The companies have spent billions of dollars since 2001 to introduce so-called third generation, or 3G, services capable of transmitting data at speeds up to 40 times as fast as the previous generation of digital mobile voice networks. (In the industry's lingo, the analog cellular networks of the 1980's are the first generation, while the second generation are the digital voice networks of the 1990's.) These new networks were built to expand capacity for voice calls and allow for high-speed data services that were supposed to generate new revenues to offset declines from standard voice calls. But that has not happened. That is because Japanese carriers are now locked in a bruising price war for 3G subscribers that has largely undone that promise. DoCoMo, for instance, posted its first-ever decline in revenue and in operating profits in the fiscal year that ended in March. American cellphone carriers, which are beginning to unveil third-generation data services of their own, should take heed. Like the Japanese carriers, Verizon Wireless, Cingular and others hope faster networks can persuade customers to pay more to use their cellphones for linking to the Internet. But Japan's experience suggests that data services may not turn into a pot of gold. In the last 18 months, the Japanese carriers have introduced all-you-can-use data plans for about $35 a month, significantly cheaper than earlier data service plans. (Subscribers still pay for bundles of minutes for voice calls, too.) The faster data services have persuaded millions of customers to upgrade their phones - and made Japan the world's most advanced cellphone market. But the deals have lowered total customer spending. Because talking is more expensive than sending data, Mr. Wakabayashi now spends about $30 less a month than he did with his older, slower service because 3G makes it easier to send e-mail messages to friends instead of calling. 'This has had a significant impact on our business,' said Masao Nakamura, the chief executive of DoCoMo, referring to flat-rate high-speed data plans, which are unlikely to disappear. 'Our hope is to get back to a growth trend within three years, or at least halt the down trend' by introducing new video services and the like to recoup lost revenue. Coming up with the right pricing plan is just one challenge for American carriers introducing similar 3G services. DoCoMo and its rivals, Au from KDDI and Vodafone Japan, have learned the hard way that networks have to be extensive and reliable, handsets plentiful and affordable and services practical and easy to use. 'The U.S. carriers have watched what has gone on overseas very closely,' said Roger Entner, vice president at Ovum, a telecommunications consultancy. 'They have to be careful because customers have been burned once or twice with the promises of 3G.' Of course, American carriers have the luxury of learning from mistakes the Japanese have made, particularly when it comes to designing attractive and reasonably priced handsets. A bigger hurdle is persuading Americans to use their phones to write e-mail messages, surf the Web and hold videoconferences. Sprint's wireless group, for instance, gets just 9.8 percent of its total revenue from data services, the highest percentage among cellular carriers in the United States. DoCoMo, by contrast, receives almost 26 percent of its revenues from data services. 'The American and European carriers are trying to answer the 3G question and the data question at the same time,' said Makio Inui, who follows Japanese phone companies for UBS Securities in Tokyo. 'Japanese carriers had already solved the data question' because their customers were heavy data service users before 3G was introduced. Even so, Japanese consumers have only flocked to 3G phones in the last year. It took DoCoMo, the market leader, about two years to attract its first million 3G subscribers - twice as long as expected - because the first advanced handsets were bulky and had weak batteries and few original features. DoCoMo's third-generation network coverage was also spotty. Vodafone has also stumbled with its service because it introduced handsets that were not tailored enough to meet the needs of Japan's finicky consumers. Yet in the past year, after the addition of more phones, coverage and services, DoCoMo more than tripled its 3G subscribers to 12.2 million, or about one quarter of its total customers. The company expects to double its 3G users this year. The second-largest carrier, Au, which uses a different 3G technology, has persuaded a vast majority of its 19.5 million subscribers to move over, while Vodafone Japan now has more than a million customers for its 3G network. In total, more than a third of all Japanese cellphone subscribers use next-generation services, one of the highest rates in the world. By contrast, just 200,000 or so subscribe to similar services in the United States. Despite the influx of new customers in Japan, heavy discounts have taken their toll on revenue. DoCoMo's 3G subscribers spent 9,650 yen ($89.44) a month last fiscal year, 6.1 percent less than the previous year. The company expects monthly spending by 3G customers to tumble a further 11.4 percent this year. To stem the decline, DoCoMo and its rivals are introducing new services to encourage consumers to transmit more data. The latest phones can download 40-second video clips and ring tones and store hundreds of photos. DoCoMo 3G subscribers can hold videoconferences with up to eight people. Some 3G handsets even include infrared readers that convert phones into television remote controls. Mr. Wakabayashi also uses the removable memory disk in his handset to transfer two-megapixel pictures he snaps with his phone to his computer. Many phones now have chips that turn phones into 'smart cards' that allow subscribers to pay for tickets, food and other items at 20,000 stores. DoCoMo plans to expand this service so commuters can use phones with special chips as train passes. DoCoMo's new generation of handsets can even scan two-dimensional bar codes pasted, say, at bus stops, which allows customers to get a bus schedule instantly, and an estimated time of arrival. Once on the bus, they can receive coupons sent to their cellphones from stores along the bus route. 'We think we are doing the same as Alexander Bell did by getting people used to using these services,' said Shun Mishima, the director of DoCoMo's corporate marketing group. Whether the carriers will make money from these services is another question.

Subject: Financial Aid Rules for College Change From: Emma To: All Date Posted: Mon, Jun 06, 2005 at 09:52:27 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/06/education/06aid.html?pagewanted=all Financial Aid Rules for College Change, and Families Pay More By GREG WINTER No matter how she parses it, Roberta Proctor cannot make sense of her son's college bill. Her income and her assets have not changed. If anything, she says, her family's finances have deteriorated somewhat. So, she wonders, how could she possibly owe an extra $6,000 for the coming school year, when tuition has not increased anywhere near that amount? But she does. Like the Proctors, Californians whose son just finished his freshman year at the University of Nevada, Las Vegas, thousands of American families might find it harder to qualify for financial aid this year and might be asked to contribute more money toward the cost of college because of changes to a complicated federal formula they barely know about, much less understand. Taken together, these changes, some based on overly optimistic predictions of inflation, have required families to count a greater share of their incomes and assets toward college expenses before becoming eligible for financial aid. As a consequence, tens of thousands of low-income students will no longer be eligible for federal grants; middle-class families are digging deeper into their savings; and some colleges are putting up their own money to make up the difference. 'This is not what we intended,' said Joe Paul Case, the financial aid director at Amherst College, in Massachusetts, who helped develop the formula that the government now uses for the bulk of the nation's students. 'There is certainly more duress than we had in mind.' The New York Times did an analysis of the formula on middle-class incomes in more than a dozen states to see whether families would have to spend a greater part of their income and assets before qualifying for financial aid than they did five years ago. Though the effects of the formula changes vary from state to state, The Times found that families with the same earnings and assets as in 2000 would typically have to pay an extra $1,749 before clearing the eligibility bar for financial aid in 2005, after adjusting for inflation. Though the formula will change in the future, sometimes to a family's advantage, the impact on campuses now is obvious, many university officials say, and often cuts across class lines. The University of California, Berkeley, for example, says that 1,000 of its middle- to upper-middle-class students will probably lose eligibility for federal subsidies on their student loans in the coming year, a change that typically means higher debts because of accrued interest. On the other side of the economic spectrum, Northeastern University, in Boston, says that 300 of its low-income students will not receive the federal grants they would have been eligible for last year. 'For some of those students, it's the difference between enrolling and not enrolling,' said Seamus Harreys, dean of student financial services at Northeastern. 'We're trying to figure how to get them through to graduation.' For millions of students, financial aid arrives in a mixture of grants and low-interest loans from the federal government, the states and the colleges themselves. The amount students receive is mostly based on an intricate formula, administered by the Department of Education, that looks at many aspects of a family's circumstances, including its income, its tax bill, its investments, its size and even the parents' ages. The Department of Education says that any changes to the formula are driven by a legal obligation to keep it current, reflecting what families can truly afford to pay. For example, the administration determined that more of a parent's assets must be counted toward college expenses this year because it predicted better economic circumstances, including substantially lower inflation. Under that scenario, the administration argues, families need to save less money for retirement. 'This is all statutory,' said Sally Stroup, assistant secretary for postsecondary education for the department. Some economists consider the administration's economic assumptions deeply flawed. The department's estimates for inflation were, in fact, far enough off that it has now revised the formula it will use for the 2006-2007 school year, much to the benefit of families with assets. But the latest round of changes will not help parents in the coming school year. Politics have also come into play. In 2003, Congress blocked the department from changing how the financial aid formula treats state taxes. That move would have rendered 92,000 students ineligible for Pell Grants, the nation's largest scholarship program at more than $12 billion a year, and reduced government spending for the program by $290 million, according to the Government Accountability Office. Last year, the administration found support among Congressional leaders seeking to constrain the growing cost of Pell Grants, and the changes have now taken effect. Much as with federal income tax, the federal financial aid formula allows families to deduct some of what they pay in state taxes to determine how much they have left over for college. With the consent of Congress, that amount was cut significantly in almost all states this year, in some cases by half. On paper, at least, that leaves families with more money to pay tuition and other expenses. In The Times's analysis of the current formula, the increase in what families must pay before clearing the eligibility bar for financial aid was larger for families in New York, Iowa and Colorado, where the consideration of a family's state tax burden has changed significantly under the formula in an effort to make it reflect typical tax payments. The increase was smaller in states like New Jersey and Connecticut, where the treatment of state taxes did not change or became more favorable for students. Even so, the formula dictates that more of a family's assets can be tapped this year to cover college expenses than in 2000, in many cases almost twice as much. So, assuming the average savings, stocks and other financial investments of middle-class families with assets, as reported by the Federal Reserve Board, all families in the analysis ended up owing more money before qualifying for financial aid, regardless of where they lived. The analysis looked at the changing requirements under the formula for families earning from $65,000 in 2000 to about $85,000 in 2005. That is the middle of the income range and slightly above it for parents from 45 to 54, peak ages for sending children to college. Finally, the analysis also took into account whether there was one parent or two. Without exception, single parents experienced larger increases - typically $549 larger - in the amount they would have to pay before reaching the eligibility mark for financial aid. The reason is that the rules shield less of their savings from college expenses, on the theory that they will need less for retirement. Families have vastly different financial circumstances, so the analysis cannot be used as a predictor of what any individual will owe. Nonetheless, many colleges say they have witnessed the effects of previous changes, some in the last year alone. At Washington & Jefferson College, in Pennsylvania, parents will typically have to contribute an additional $1,947 compared with last school year before qualifying for financial aid next year - an extra 17 percent - even though their incomes have risen only 4 percent. At DePaul University, in Chicago, the bar for financial aid will typically go up by $4,215, or 39 percent, though incomes have increased by only 12 percent. Emory University, in Atlanta, says the incomes of its students' families have generally not increased, yet they would typically have to pay an extra $4,000 before becoming eligible for financial aid under the government's rules. 'If there had been a $1,000 difference, that would be one thing. But when we saw these $6,000 and $7,000 differences routinely, we got really concerned,' said Julia Padgett, director of financial aid at Emory. The difference was drastic enough that Emory, like a few of its well-endowed counterparts, abandoned the government's rules for many of its families, a decision that required it to surrender federal money for those students and substitute it with its own. 'We just felt as if we had no ethical choice,' Mrs. Padgett said. Most colleges, however, say they are not wealthy enough to forsake federal aid, which includes money to pay students in work-study jobs. In fact, passing up federal money might only worsen a student's financial outlook, they say. 'It's really hard to explain to the family that although the federal formula may not make sense, and I may not agree with it, I have to go along with it,' said Michelle Vettorel, director of financial aid at Washington & Jefferson. When the bar for financial aid goes up, students may also lose the state grants, sometimes worth thousands of dollars a year, that are often tied to the federal formula. 'That's a huge concern,' said Gerard Cebrzynski, director of financial aid at Lake Forest College, outside of Chicago. 'We've seen several students who have lost their entire awards this year.' Still, some college officials say the hand-wringing is unwarranted. Whatever the changes to financial aid, they say, students as a whole have rarely stopped pursuing degrees and college attendance rates remain high nationally. 'I would not deny that this has impacted some people seriously,' said Joe Russo, director of student financial services at the University of Notre Dame. 'But nationally, has this caused enrollment to drop? It doesn't appear to have.' What the changes will probably do, many university officials and parents contend, is have a disproportionate impact on middle-class families, especially when it comes to tapping their assets. 'For the middle class, it means greater pressure put upon them to cobble together college funding at schools that are becoming increasingly expensive,' said James Boyle, president of College Parents of America, an advocacy group. 'It's another middle-class squeeze.'

Subject: Dividend Income From: Jennifer To: All Date Posted: Sun, Jun 05, 2005 at 20:45:34 (EDT) Email Address: Not Provided Message: Nice and helpful discussion on expected returns. For me, the idea is emphasis on dividends. Dividends from a diversified stock portfolio are even more stable than returns from long term bond funds. With enough dividend income I can keep a heavy concentration in stocks no matter how old I am.

Subject: Eastern Phoebe From: Terri To: All Date Posted: Sun, Jun 05, 2005 at 19:38:31 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4758 Eastern Phoebe New York City--Central Park, The Loch.

Subject: See a Bubble? From: Emma To: All Date Posted: Sun, Jun 05, 2005 at 14:32:26 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/magazine/05WWLN.html?pagewanted=all See a Bubble? By ROGER LOWENSTEIN It's a good time to be a financial-disaster writer. Disasters abound, and even when they don't, people are eager for your opinion on when the next bubble is going to pop. Scarcely a day goes by without a warning of some dire calamity -- in the dollar, in housing values, in pension funds. The way people crave financial info, we must be the best-informed, most economically literate society ever. But we do not sleep any better for it. Is all the anxiety warranted, or even productive? A few years ago, the chief claim on the public tranquillity was the fear of ''deflation,'' meaning that the price of just about everything would fall. Before that, it was fear of ''Y2K.'' Neither transpired. This is not to say that disaster never strikes. The number of bubbles and consequent meltdowns over the last quarter-century could fill a proper B-school syllabus. In order of appearance, oil drillers, precious metals, personal computer makers, the stock market, commercial real estate, Trump casinos, junk bonds, biotechs, Russia and Internet stocks each had their moments of glory and returned to earth. Not every bubble ends with a crash, but sometimes, because of a linkage or feedback mechanism, one loss triggers another and leads to a sort of contagion. In 1929, people who bought stocks on credit were forced to sell, which spurred more losses, more loan repayments and more forced selling. This is what people worry about: the Big One. Japan experienced a somewhat similar meltdown in the early 90's. Almost by definition, the spark for such calamities is unforeseeable. This explains our vigilance. What is less appreciated is that excessive, or inappropriate, vigilance also exacts a price. It does so in several ways. People who insulate their portfolios against phantom risks pay a toll, just as they paid to protect their computers against Y2K. In limiting risk, people also limit the opportunity for gain. It is common, today, for investors to own six or eight mutual funds, each of which is likely to be invested in hundreds of stocks. This will, they hope, assure that no little bump, no little meltdown, overly upsets their portfolios. But since when was investing about avoiding the bumps? Anyone investing for the longer term can safely ignore them. George Bernard Shaw observed that every profession is a conspiracy against the laity. The financial profession duly warns us of meltdown risk, but it has adopted a pinched definition of risk that has led us into fruitless and sometimes harmful diversions. The odds of a meltdown being necessarily uncertain, Wall Street fosters an overly precise, pseudoscientific approach. Investors are told to ''balance'' portfolios (rather than to select stocks), to ''allocate'' (rather than to ''invest'') their assets and to reckon with quarterly earnings forecasts down to the penny per share -- an absurd irrelevancy for someone whose retirement is years away. Wall Street properly worries about what might go wrong, but it has recast the issue in spurious terms, detaching us from the messy and often subjective considerations that might help us avoid truly perilous bubbles: those that (like the dot-coms) subject us to the risk of enduring loss. If you tune in to enough financial shows, you are bound to stop asking considered questions like ''Is the Web going to be full of other companies competing against this one?'' and to start toying with numerics like a stock's volatility or the percent of your holdings in a given ''sector.'' No wonder people are jittery: this stuff changes every second. To listen to the anchors on cable TV, we should reshuffle our portfolios in response to each new, tangential threat -- oil prices, the dollar, real estate. And, of course, we should diversify in the extreme. Diversification is insurance against the possibility that we might do something stupid; it also heightens the chance that we will do something stupid. People with flood insurance build their homes closer to the shore, and people in the 90's, having diversified, figured they could afford to take at least a small flier on dot-coms. Risk prevention can lead to risk. ately, our search for calamity has focused on those obscure but swiftly multiplying Wall Street beasts, ''hedge funds.'' When General Motors was downgraded to junk-bond status, it was not G.M.'s fate that seemed to preoccupy traders and journalists as much as the fact that some of these funds had suffered possibly dire losses. Why some private-investment partnerships (which is what hedge funds are) should be cause for general alarm has to do with their pervasive character. They are said to be everywhere -- determining the outcome of shareholder battles, roiling the art market, causing a run on convertible bonds. Markets were less worrisome when they were simpler, when they confronted us with fewer choices; hedge funds seem an embodiment of complexity. Also, the last near market meltdown was occasioned by the implosion in 1998 of Long-Term Capital Management, a Greenwich, Conn., bond-trading firm that was, indeed, a hedge fund. That is hardly reason to indict such funds for the next collapse. L.T.C.M.'s had more to do with its aggressive, leveraged portfolio than with anything intrinsic to its hedge-fund form. But it is human to look for a recurrence, and since Sept. 11, fear of things going drastically wrong has become a national instinct. The reason L.T.C.M. shook Wall Street was that many investment banks held the same positions that the fund did, setting the stage for chain-link losses. But most hedge funds today neither rise nor fall in synchrony. As my colleague Joseph Nocera observes in this issue, they invest in distinct asset types; they are the bits of the chain without the link. People worry about hedge funds, I think, because of a Galbraithian prejudice that easy money is bad money. At a dinner in Palm Beach, Fla., in March, I casually inquired of one hedge-fund steward how much he controlled. Came the reply, ''Six and a half billion dollars.'' I whistled and replied that 1 percent of $6.5 billion would be a decent living. (Hedge-fund managers often charge 1 percent of assets plus a fifth of any profits.) He smiled and held up two fingers: 2 percent. Do the math; this gentleman's firm will earn, annually, $130 million a year for switching on the lights each morning -- $260 million if his fund attains a ho-hum return of 10 percent. No wonder that the London Business School boasts a ''Hedge Fund Center'' and, according to a recent graduate's informal survey, Harvard Business School sent 60 percent more of its graduates to hedge funds last year than to the much bigger mutual-fund industry. But hedge funds are less an expression of risk-taking than of people's aversion to risk. Most funds deliberately try to hedge their bets (thus the name) by going both long and short -- that is, betting that one asset will rise while a related one falls. They are thus designed to be less volatile than ordinary stocks, which is why they are so fashionable. The risk isn't meltdown but mediocrity, a glimpse of which may be seen in the industry's recently lackluster returns. Real estate, the runner-up to hedge funds in the anxiety sweepstakes, could be another matter. A recent Lehman Brothers report, ''The Changing Landscape of the Mortgage Market,'' observed that U.S. homeowners have been ''very willing to increase their leverage . . . through products like IO loans and MTA ARMs.'' This refers to interest-only mortgages, and to those in which the rate begins at an alluring, below-market level but after an interim floats according to the yield on Treasury bills. Who in his right mind would take an ''IO- MTA ARM''? Hmmm, come to think of it, I did. Although my bank did not describe it this way, an adjustable-rate mortgage is a bet between the bank and the homeowner. If rates fall or remain stable, I win; if rates rise, I lose. Of course, if I lose, the bank might also lose. I might, heaven forbid, default. Why would a bank finance a home that under a conventional mortgage the borrower could not afford? Some computer in its vault was evidently mollified by the variability of the rate. What makes this bet rather interesting is that millions of other people have the same kind of loan that I do. If rates should take a sudden upturn, it is conceivable that a good many will default, in which case an instrument (a floating-rate mortgage) conceived to help the bank manage interest-rate risk will have resulted in increasing the bank's losses. The saving grace is that home loans generally are the last thing people default on. But imagine how scary it would be if, say, businesses extended floating-rate contracts to one another -- if virtually every company were dependent on making the right calculation about how these risk-avoidance vehicles would function. Well, actually, they do. They are called derivatives. Derivatives are contracts that call for one party to pay another according to the movement of an underlying yardstick, like a foreign currency, a bond, a stock or even the weather. Since the 1980's, Wall Street has marketed derivatives as a tool for making risk more palatable, and Alan Greenspan has consistently praised them for enabling firms to spread, or ''manage,'' their risk. For instance, a bank can hedge against the risk that one of its loans will sour. It simply -- well, not so simply -- purchases a ''credit default swap,'' which entitles it to a payoff if a specified company, G.M. for instance, goes into default or suffers a material downgrade in its credit rating. The party on the other side might be a hedge fund that is more sanguine on G.M.'s bonds or has a way (it thinks) to hedge that risk. Every financial firm uses some varieties of derivatives, which, again, are contracts that call for a payment (one way or other) depending on some underlying asset. Their growth has been explosive. Credit-default swaps, for instance, didn't exist a decade ago; today there are $8 trillion of them. No one has any idea of the losses that could ensue from a panic; credit-default swaps ''have never been stress-tested,'' notes the analyst James Bianco. Neither the Fed nor the S.E.C. has ever really clamped down on derivatives or insisted on a form of disclosure that would tell folks what is going on. So forget hedge funds; if you're searching for the next financial storm, try derivatives. (Nothing much you can do about them, either.) Come to think of it, most of the sudden financial disasters of the previous decade -- Orange County, L.T.C.M., Enron -- involved derivatives, too. There is a paradox here. A vehicle developed to help reduce individual risk has heightened risk to the system. At some point, the anxiety turned counterproductive. There was a time, of course, when people could buy only the homes they could afford and invested in only a few, carefully chosen stocks -- when traders could not run certain risks because no derivatives existed to provide a hedge. Today, whether you are a trader or homeowner, bank or corporate treasurer, our financial culture offers a prophylactic against every conceivable worry. Maybe weaving a giant insurance net is really the way to manage anxiety, but maybe it has us worrying about what we will do if the insurance fails. Perhaps, if there were fewer traders dulling their anxieties with financial Zoloft and fewer investment options available to the rest of us, we would make better decisions -- and sleep more soundly.

Subject: Re: See a Bubble? From: Pete Weis To: Emma Date Posted: Mon, Jun 06, 2005 at 11:57:29 (EDT) Email Address: Not Provided Message: 'But since when was investing about avoiding the bumps? Anyone investing for the longer term can safely ignore them.' Someone needs to define what the 'longer term' is. Is it 10 years, 20 years, 30 years or beyond? Seems like a very vague period of time. Most folks would say that Buffet is a long term investor. Yet he's sitting on a lot of cash right now and he has hinted he would like to offload some of the companies he has in Berkshire-Hathaway's portfolio, but as he says - 'he sits on the board of directors of these companies and has a responsibility to their shareholders.' It's funny. The writer of this piece runs us through worries a,b,c,d... and discounts all of them to some extent and gives a higher value to the last worry - derivitives (especially in the form of interest rate swaps). This is also one of Buffet's chief worries. But a blow up in derivatives would have a devastating effect on worries a,b,c,d...

Subject: Re: See a Bubble? From: Terri To: Pete Weis Date Posted: Mon, Jun 06, 2005 at 14:49:47 (EDT) Email Address: Not Provided Message: Since I do not trade markets, but try to find assets that are reasonably priced and buy and hold assets for a considerable period, the danger comes in failing to understand what are reasonable prices. As long as we buy at attractive prices and have enough income not to be worried about capital gains over a short period, there should be no fear of a bear market.

Subject: Another Drink? Sure. China Is Paying. From: Emma To: All Date Posted: Sun, Jun 05, 2005 at 13:21:37 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/business/yourmoney/05view.html Another Drink? Sure. China Is Paying. By EDUARDO PORTER GUESS who's paying for America's spending binge - for the ballooning credit card bills, the scramble for homes, the country's gaping budgetary hole? Poor countries have become the financiers of the United States, fueling one of the most extravagant consumption drives in world history. From 1996 to 2004, the American current account deficit - which includes the trade deficit as well as net interest and dividend payments - grew to $666 billion from $120 billion, swelling the nation's demand for foreign financing by $546 billion. The cash has come mostly from what the International Monetary Fund defines as emerging markets or developing countries - nations that have piled up mountains of cash even though most of their citizens are poor. High on the list is China, whose per-capita gross domestic product of $1,300 last year was a thirtieth that of the United States. Others are Russia, where G.D.P. per head was $4,100, and India, where it barely topped $600. The current accounts of developing countries swung from a deficit of $88 billion in 1996 to a surplus of $336 billion last year - a $424 billion change that has covered some four-fifths of the increase in the deficit of the United States. This pattern troubles some policy makers in the United States. In speeches in March and April, Ben S. Bernanke, the Federal Reserve governor nominated by President Bush to be chief economic adviser, argued that a main reason for America's swelling external deficit is 'the very substantial shift in the current accounts of developing and emerging-market nations, a shift that has transformed these countries from net borrowers on international capital markets to large net lenders.' The poor-country money, Mr. Bernanke said, pushed the current account of the United States deeper into the red. As the money arrived, it first lifted stock prices, encouraging both consumption and investment. When stocks tanked, it moved to the bond market, fueling the housing boom and yet more spending. There's nothing inherently wrong with taking money from poor places - it's not as if the United States is stealing it. Developing countries are providing the funds willingly. But it is rather odd. Conventional economic thought suggests that funds should flow the other way. Capital-rich industrial nations like the United States, where workers already have a large stock of capital goods to work with - like high-tech factories and advanced information technology networks - should be sending money to places rich in labor but with a meager capital stock. Developing countries, of course, use this money to grow out of poverty, investing in their own factories and schools. And precisely because capital is scarce and labor abundant, money invested in these countries should achieve a higher return. 'For the developing world to be lending large sums on net to the mature industrial economies is quite undesirable as a long-run proposition,' Mr. Bernanke said. So what's going on? The efforts of China and other developing countries to keep their currencies from rising against the dollar help explain why the flow of global money is trumping conventional wisdom. Yet other forces are at play. The climb in oil prices, for one, has produced big gains for countries like Nigeria, Russia and Saudi Arabia, which have put much of the cash in dollar assets. Most important, running a current-account surplus has become a matter of self-defense throughout the developing world. Many of the poor countries that are now lending money to richer ones previously were big borrowers and spenders themselves. Then they were hit by a series of financial crises. Starting with the currency collapse in Mexico in 1994, and continuing with the Asian currency crisis of 1997, the Russian debt crisis of 1998, the Brazilian currency devaluation of 1999 and the Argentine default of 2002, developing countries experienced large-scale capital flight, which forced painful devaluations and sharp economic contractions. Naturally enough, they took measures to reduce the chance of further jolts. Countries stricken by crisis or just trying to avoid it tightened their belts. They stimulated exports and inhibited imports - working to keep their exchange rates low. They reduced domestic investment and paid down foreign debt. And they amassed vast foreign reserve war chests to protect themselves in case investors ever decided to bolt again and take their capital with them. Russia's international reserves, for instance, mushroomed to $124 billion at the end of 2004 from $18 billion at the end of 1997. India's jumped to $126 billion from $24 billion over that period. Last year alone, according to the Institute of International Finance, a lobby group of big banks, international reserves of developing countries grew nearly $400 billion. The good news for the United States is that these forces are unlikely to change direction imminently. In an interconnected world, where investors can move billions across oceans at the touch of a button, these countries have little reason to shift strategies. Guillermo Calvo, the chief economist of the Inter-American Development Bank, who has seen his share of financial crises in Latin America, put it succinctly: 'Every country seeks more security. The only thing they can do is build up their war chest.' The United States gets to spend it.

Subject: Hunger for Energy Transforms India From: Emma To: All Date Posted: Sun, Jun 05, 2005 at 12:52:18 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/international/asia/05india.html?pagewanted=all Hunger for Energy Transforms How India Operates By SOMINI SENGUPTA NEW DELHI - Fed by a decade-long economic boom, India's ever-growing appetite for energy is quietly reshaping the way it operates in the world, changing relations with its neighbors, extending its reach to oil states as far flung as Sudan and Venezuela, and overcoming Washington's resistance to its nuclear ambitions. Hovering over India's energy quest is its biggest competitor: China, which is also scouring the globe to line up new energy sources. The combined appetite of the two Asian giants is raising oil prices and putting greater demands on world oil supplies. Already India's energy ambitions have led to developments unthinkable just a couple of years ago: a proposed pipeline to ferry natural gas from Iran across Pakistan; a new friendship with the military government in gas-rich Myanmar, formerly Burma; and budding talks with the United States to let India buy nuclear technology. Nuclear power is expected to top the agenda when Prime Minister Manmohan Singh visits Washington to meet with President Bush in July. While India covets new equipment to strengthen its feeble nuclear energy program, the United States has prohibited the sale of nuclear technology to India since it tested a nuclear bomb in 1998. 'International cooperation, international understanding of India's nuclear ambition,' Mr. Singh told foreign journalists on Monday, in an allusion to what New Delhi wants from the United States, 'can help to ensure our nuclear energy program moves forward at a faster pace.' To understand India's dire need for energy, consider the fate of its commercial capital, Mumbai, formerly Bombay. It was enveloped in darkness in May because of a severe power shortage. These days, the prime minister is engaged in a politically explosive argument with left-wing parties after suggesting that the government curtail giving free electricity to farmers. As the world's fifth-largest consumer of energy, India used energy at the equivalent of 538 million tons of oil daily in 2002, the most recent year for which figures were available from the International Energy Agency. That demand is expected to nearly double by 2030. Today, India imports about 70 percent of its oil; in another 20 years, the Indian government estimates, that will rise to an ominous 85 percent. India's demand for natural gas is also expected to grow, and most of it would have to be imported. 'Our dependence is rising,' Mani Shankar Aiyar, India's petroleum minister, said during a recent interview in his office. 'I welcome that, because it reflects India moving on.' Indeed, it is. 'Mutual dependencies' is the buzzword of the day, signaling the way oil and gas links among South Asian countries stand to rewrite the enmities of the past. 'The foreign policy of India will have a lot to do with energy,' said Ashutosh Varshney, a political scientist at the University of Michigan. 'That is a new imagination and one likely to stay.' That vision is not without its challenges. On the one hand, India seeks to cast itself as the model of democratic pluralism, as in its bid for a permanent seat on the United Nations Security Council. On the other, its hunt for fuel is pushing it to reach out to authoritarian governments like those of Sudan and Myanmar, which the United States has sought to isolate. In both of those countries, China's weight is also keenly felt. But India is quickly making inroads. It has persuaded a wary Bangladesh to agree, at least in principle, to a pipeline that would ship gas from Myanmar to India. Mr. Aiyar, the petroleum minister, has been shuttling to Saudi Arabia, India's largest oil supplier, to persuade it to invest in Indian oil and gas projects, among other things. He has also sought to lure foreign investors to explore for reserves in the Bay of Bengal, off India's eastern coast - what he buoyantly calls 'the North Sea of South Asia.' By far, New Delhi's most ambitious proposal is a $4 billion, 1,600-mile pipeline that would ferry natural gas from Iran across Pakistan to India, though a final deal is nowhere near fruition. [Talks resumed on Saturday, when Mr. Aiyar visited Islamabad.] Pakistan stands to collect handsome transit fees from the pipeline. But how it would ensure its security across vast, restive Baluchistan Province, where disgruntled tribal armies routinely attack gas installations, remains a mystery. Among Mr. Aiyar's 'fanciful dreams,' as he calls them, is yet another pipeline that would dispatch gas from Turkmenistan through Afghanistan, then into Pakistan and India. 'We now realize we have to get a large part of our energy from our extended neighborhood, and that means we have to engineer and structure new relationships,' said R. K. Pachauri, director general of Tata Energy Research Institute in Delhi. The nonprofit institute estimates that India will need to invest $766 billion in the energy sector to meet the growing demand over the next 25 years. India's changing relationships regarding energy are inspiring a delicate diplomatic dance with the United States. Publicly, Bush administration officials, including Secretary of State Condoleezza Rice on her visit here in March, have frowned on India's plans with Iran. India is pursuing nuclear technology as the United States and European nations are trying to get Iran to give up its own nuclear program. This week, a senior Indian official, Montek Singh Ahluwalia, was in Washington to meet with the secretary of energy, Samuel W. Bodman, to discuss, among other things, nuclear energy options. Whether the United States will turn a blind eye to the Iran pipeline or consider selling nuclear reactors to India remains uncertain. 'In some sense there's a delicate tightrope walk that's going on,' said Ashley J. Tellis of the Carnegie Endowment for International Peace in Washington. 'The Indians are trying to push the limits on what they can get away with, and the U.S. is trying to see how flexible India might be.' Mr. Aiyar did not miss an opportunity to remind the United States obliquely that India would not countenance interference in one of its foreign policy priorities - buying gas from Iran. 'We are sensitive to the concerns and interests of other nations,' he said, 'even as we expect other nations to be sensitive to our concerns and our requirements.' When it comes to molding and marketing India's energy needs, Mr. Aiyar - a leftist at heart, a diplomat by training and possibly the biggest extrovert in India's Congress Party-led government - likes to think grandly. He never tires of articulating a chief goal: to persuade China to cooperate rather than compete for oil and gas abroad. Some analysts greet the idea with skepticism. Sundeep Waslekar, an analyst with Strategic Foresight Group in Mumbai, notes that China can offer a much more comprehensive and lucrative package - including arms sales - to energy-supplying countries like Iran, Sudan, or the former Soviet republics of Central Asia. Unless India can offer something strategic to China - food, for instance - China would have little reason to join efforts. China-India energy cooperation in the oil and gas sector is 'a beautiful academic idea,' Mr. Waslekar said. 'I don't see how it could work politically.' Mr. Aiyar is unbowed. He offers the idea of an Asian gas grid that would stretch from former Soviet republics like Kazakhstan to the Persian Gulf all the way to China. Every chance he gets, he pushes the analogy of the European coal and gas community, the precursor to the European Union. He demands to know why China and India cannot create the Eastern equivalent. 'An Asian oil and gas community, which could eventually blossom as an Asian identity in the politics of the world,' he said. Of course, for now, a majority of Indians continue to live in the dark - that is to say, without electricity - and the most common fuels for Indian households remain among the worst for respiratory health: charcoal and animal dung.

Subject: Leaving Even the Rich Far Behind From: Emma To: All Date Posted: Sun, Jun 05, 2005 at 12:45:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/national/class/HYPER-FINAL.html June 5, 2005 Richest Are Leaving Even the Rich Far Behind By DAVID CAY JOHNSTON When F. Scott Fitzgerald pronounced that the very rich 'are different from you and me,' Ernest Hemingway's famously dismissive response was: 'Yes, they have more money.' Today he might well add: much, much, much more money. The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year. Call them the hyper-rich. They are not just a few Croesus-like rarities. Draw a line under the top 0.1 percent of income earners - the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more. The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is two and a half times the $1.2 million, adjusted for inflation, that group reported in 1980. No other income group rose nearly as fast. The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell. Next, examine the net worth of American households. The group with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent. The Bush administration tax cuts stand to widen the gap between the hyper-rich and the rest of America. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden. President Bush said during the third election debate last October that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers. The Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them. It is no secret that the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known. The Treasury Department uses a computer model to examine the effects of tax cuts on various income groups but does not look in detail fine enough to differentiate among those within the top 1 percent. To determine those differences, The Times relied on a computer model based on the Treasury's. Experts at organizations representing a range of views, including the Heritage Foundation, the Cato Institute and Citizens for Tax Justice, reviewed the projections and said they were reasonable, and the Treasury Department said through a spokesman that the model was reliable. The analysis also found the following: ¶Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. ¶Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000. ¶The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million - thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax. The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else is almost certainly much larger. The hyper-rich have emerged in the last three decades as the biggest winners in a remarkable transformation of the American economy characterized by, among other things, the creation of a more global marketplace, new technology and investment spurred partly by tax cuts. The stock market soared; so did pay in the highest ranks of business. One way to understand the growing gap is to compare earnings increases over time by the vast majority of taxpayers - say, everyone in the lower 90 percent - with those at the top, say, in the uppermost 0.01 percent (now about 14,000 households, each with $5.5 million or more in income last year). From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to the Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000. President Ronald Reagan signed tax bills that benefited the wealthiest Americans and also gave tax breaks to the working poor. President Bill Clinton raised income taxes for the wealthiest, cut taxes on investment gains, and expanded breaks for the working poor. Mr. Bush eliminated income taxes for families making under $40,000, but his tax cuts have also benefited the wealthiest Americans far more than his predecessors' did. The Bush administration says that the tax cuts have actually made the income tax system more progressive, shifting the burden slightly more to those with higher incomes. Still, an Internal Revenue Service study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent. But a Treasury spokesman, Taylor Griffin, said the income tax system is more progressive if the measurement is the share borne by the top 40 percent of Americans rather than the top 0.1 percent. The Times analysis also shows that over the next decade, the tax cuts Mr. Bush wants to extend indefinitely would shift the burden further from the richest Americans. With incomes of more than $1 million or so, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid. One reason the merely rich will fare much less well than the very richest is the alternative minimum tax. This tax, the successor to one enacted in 1969 to make sure the wealthiest Americans could not use legal loopholes to live tax-free, has never been adjusted for inflation. As a result, it stings Americans whose incomes have crept above $75,000. The Times analysis shows that by 2010 the tax will affect more than four-fifths of the people making $100,000 to $500,000 and will take away from them nearly one-half to more than two-thirds of the recent tax cuts. For example, the group making $200,000 to $500,000 a year will lose 70 percent of their tax cut to the alternative minimum tax in 2010, an average of $9,177 for those affected. But because of the way it is devised, the tax affects far fewer of the very richest: about a third of the taxpayers reporting more than $1 million in income. One big reason is that dividends and investment gains, which go mostly to the richest, are not subject to the tax. Another reason that the wealthiest will fare much better is that the tax cuts over the past decade have sharply lowered rates on income from investments. While most economists recognize that the richest are pulling away, they disagree on what this means. Those who contend that the extraordinary accumulation of wealth is a good thing say that while the rich are indeed getting richer, so are most people who work hard and save. They say that the tax cuts encourage the investment and the innovation that will make everyone better off. 'In this income data I see a snapshot of a very innovative society,' said Tim Kane, an economist at the Heritage Foundation. 'Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth. We are so wealthy in a world that is profoundly poor.' But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators. Speaking of the increasing concentration of incomes, Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony a year ago: 'For the democratic society, that is not a very desirable thing to allow it to happen.' Others say most Americans have no problem with this trend. The central question is mobility, said Bruce R. Bartlett, an advocate of lower taxes who served in the Reagan and George H. W. Bush administrations. 'As long as people think they have a chance of getting to the top, they just don't care how rich the rich are.' But in fact, economic mobility - moving from one income group to another over a lifetime - has actually stopped rising in the United States, researchers say. Some recent studies suggest it has even declined over the last generation.

Subject: Old Nantucket Warily Meets the New From: Emma To: All Date Posted: Sun, Jun 05, 2005 at 09:46:10 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/05/national/class/NANTUCKET-FINAL.html?pagewanted=all Old Nantucket Warily Meets the New By GERALDINE FABRIKANT NANTUCKET, Mass. - In spring, along with the daffodils, crowds on the ferry and workers raking the beaches, comes the ritual of real estate gossip. What properties changed hands over the winter? And who could possibly be paying those out-of-sight prices? That 15-acre waterfront parcel for sale for $15 million? It was snatched up after only one day on the market. Turns out the purchaser was Steven Rales, the billionaire entrepreneur who owns at least 61 acres next door and bought the parcel to protect his privacy and waterfront views, said Dalton Frazier, a local real estate agent. Have any other palatial estates expanded? Not so long ago H. Wayne Huizenga, the billionaire founder of Blockbuster and owner of the Miami Dolphins, wanted more elbow room and bought a neighboring house for $2.5 million. Richard Mellon Scaife, the publisher and heir to a banking fortune, bought an extra house too; he needed it for the staff. The real estate frenzy, even in the dead of winter, is only the most visible reminder that over the past decade or so this 50-square-mile, fishhook-shaped island off the Cape Cod coast has come to be dominated by a new class: the hyper-rich. They emerged in the 1980's and 1990's, when tectonic shifts in the economy created mountains of wealth. They resemble the arrivistes of the Gilded Age, which began in the 1880's when industrial capitalists amassed staggering fortunes, except that there are so many of them and they seem to be relatively anonymous. Like their precursors, they tend to be brash, confident and unapologetic. They feel they have earned their money, and they are not shy about spending it. They construct huge mansions, outdo one another in buying high-end status symbols like mega-yachts (100 years ago it was private railroad cars) and not infrequently turn to philanthropy. Their wealth is washing over the upper reaches of society as it did a century ago, bringing cultural and political clout as they take up positions on museum boards and organize presidential campaign fund-raising dinners. And they seem unconcerned about being accepted by the old money. If the blue bloods want to mix with them, fine. But if not, the hyper-rich are content to stick with their kind. If they cannot join an exclusive country club, they form their own. They are very good at creating a self-enclosed world where the criterion for admission is not the Social Register, but money. Once a low-key summer resort, Nantucket is rapidly turning into their private preserve, joining the ranks of other enclaves like Palm Beach, Aspen, the Hamptons and Sun Valley. Now that the hyper-rich have achieved a critical mass, property values have zoomed so high that the less-well-off are being forced to leave and the island is becoming nature's ultimate gated community. 'It's a castle with a moat around it,' said Michael J. Kittredge, a 53-year-old entrepreneur who realized a fortune when he sold his Yankee Candle Company seven years ago for about $500 million. He was relaxing in the living room of his 10,000-square-foot house, which has a basement movie theater and a 2,000-bottle wine cellar. A separate residence a quarter-mile away houses staff members and a gym. 'Successful people want to be with other successful people,' Mr. Kittredge said. 'Birds of a feather,' he added. 'On Nantucket you don't feel bad because you want a nice bottle of wine. If you order a $300 bottle in a restaurant, the guy at the next table is ordering a $400 bottle.' Dressed in blue jeans and a pink button-down shirt, he looked across the breadth of his swimming pool at a spectacular water view. The island, he said, is rapidly dividing into two types of people: 'the haves and the have-mores.' New-Fashioned Values Nantucket, with its vistas overlooking cranberry bogs and more than 80 miles of beaches, has always had its share of rich people. In the first half of the 19th century, owners of whaling ships amassed fortunes from oil and built the still well-preserved Federalist and Greek Revival mansions on upper Main Street. During the last century, Vanderbilts, Mellons, duPonts and other wealthy families built residences here. Over time, as inherited wealth smoothed the rough edges, their descendants morphed into American high society and evolved a signature style of living based on understatement and old-fashioned patrician values. Some of the scions of these older families are still here. They spend their time sailing, playing tennis and sometimes recalling the halcyon days of crossing the moors behind packs of beagles to hunt down rabbits. The mix of the old aristocratic families and the hyper-rich often plays out as a none-too-subtle tug of war between class and money. Nina Chandler Murray, an 85-year-old relative of the Poor family from Standard & Poor's, the investment credit rating firm, is convinced that the world of the elite was more genteel in the old days. 'Coming from a New England background, you had a honed discipline of what was expected,' Dr. Murray, a psychologist, said over iced tea and chocolate chip cookies on the porch of her hillside home above the harbor. 'Showing off money was a sin. It was not that status was not important, but marriage was very closely controlled and predetermined, and everyone knew where everyone else fit.' A family name alone was enough to place someone in the pecking order. Wealthy people dressed down. Women eschewed heavy jewelry. The uniform for a man was a plain shirt, faded 'Nantucket red' Bermuda shorts and Topsiders. Now, Dr. Murray suggested, the rule is: If you've got it, flaunt it. 'What has happened in America is that achievement is so important that everyone wants everyone else to know what they have done,' she continued. 'And in case you don't know, they want to tell you with a lethal combination of houses, cars and diamonds.' Dr. Murray was appalled at a recent dinner party when a woman leaned over to her and said, 'My husband paid $250,000 to join the golf club, and he doesn't even play golf.' Work Hard, Spend Hard Mr. Kittredge, who began his candle-making business at age 16 in his mother's kitchen and says he was raised in a 'lower-class to lower-middle-class' home, holds attitudes typical of many of the newcomers. When prodded he will say that he worked hard for his money and that others can do the same. He is unapologetic about spending it lavishly and says that he has paid his dues in the form of taxes, which he estimates at $500 million so far. He also says that the chasm between the old-timers and the newcomers is inevitable. 'Money makes a lifestyle,' he said. 'It creates a division between the old money and the new. It is a little bit of class jealousy. We go to a cocktail party and a guy is telling my wife about his airplane. So finally the question comes up: 'How do you get over to the island?' and she says, 'We come by plane.' And he says, 'What kind of plane?' and she says, 'A G-IV.' And so the wind comes out of the guy's sails.' 'The old money guy has a twin-prop airplane and that is pretty incredible,' Mr. Kittredge continued. 'For his time, that is pretty great. Now he is talking to a guy who is half his age who has a transcontinental jet. That is the end of the conversation. 'Or you meet someone and they start telling you about their boat. He has a 45-foot boat and he is very happy with it. Then he'll say, 'Do you have a boat?' And you say, 'Yes.' 'Well, what kind of boat do you have?' And you say, 'A Fed Ship.' And he says, 'How big is it?' That's how people rank them. So I have to say, 'It's 200 feet.' It's the end of the conversation. Is there envy? Yes, could be. Was he a wealthy guy in his day? Absolutely, but relative to today - no. The two worlds can mix as long as they don't talk too much.' The accouterments of wealth play a different role for the old-money clans than they do for the new wealthy, says Nelson W. Aldrich Jr., author of 'Old Money.' 'For many self-made men,' Mr. Aldrich said, 'homes, boats and even membership in expensive clubs are trophy signs of wealth. But for the older money, a boat may well be part of a tableau that has to do with family, with his grandparents and his children. It is part of his identity. If he walked away from the conversation, it was because he thought he was talking about his boat as part of his life. Instead he found he was talking about money, and he doesn't like being reminded that he lives in a competitive world.' Over time, some say, the new money will not prove much different. 'Ultimately, the new money becomes as insular as the old money because it gains the power to exclude,' said Michael Thomas, a novelist who, like his father, was a partner at Lehman Brothers and whose mother came from an old New England family. 'Once you have the power to exclude, you have what people have been seeking in old money.' The single greatest change brought by the hyper-rich is in the cost of housing. The average Nantucket house price last year jumped 26 percent, to $1.672 million, said H. Flint Ranney, a veteran real estate broker. Last fall one waterfront residence, with its own elevator, wine cellar, theaters and separate guesthouse, sold for $16 million, the year's record. 'Shame has somehow gone out the window,' Mr. Thomas said. 'There is no incentive to exercise control.' A handful of the new affluent indulge their fantasies with gusto. Michael S. Egan, the founder of Alamo Rent-a-Car, built his own baseball field, complete with a batting cage and stands. Roger Penske, the automotive tycoon and former race car driver, tussled for months with the Historic District Commission until he finally won permission to build a faux lighthouse that joins the two wings of his multimillion-dollar home. The investment banker Robert Greenhill likes to fly his Cessna jet to the Nantucket airport or his Cessna seaplane to his waterfront dock. The rise in real estate values has, of course, benefited many of the old-timers. With some of their fortunes eroding, they find they are sitting on an extremely valuable asset, a realization that adds a touch of ambivalence to their protests against changes that are all too obvious. One such change is at the airport. On high summer weekends, more than 250 Challengers, Gulfstreams and Citations a day might land there, vying for parking spaces. Some jets drop off passengers for a round of golf and whisk them away after. In easternmost Siasconset, the gray-shingled fishermen's cottages that occupied the corners of plots of sea grass and wildflowers are giving way to mansions in private cul-de-sacs. Here and there hedges have sprouted up, tall as windsurfers, to partition the property parcels. They separate the community, contributing to the ineffable sense that something familiar and precious about the ethos of the island is disappearing. 'At least one new family has built a hedge to avoid people seeing them as they pass by,' said Wade Green, 72, who has summered here for years. 'Those open paths had an old-fashioned elegance to them. It is part of an old and fading spirit of community. Blocking them off is an unfriendly and antipublic thing to do.' Not all the changes here are striking. Downtown, with its cobblestone streets and absence of traffic lights, could still pass as a quaint New England fishing village. But some harbingers horrify the old-timers: upscale restaurants, boutique windows displaying expensive designer jewelry and the arrival of the first ever chain store, a Ralph Lauren shop. On the sidewalks, class speaks through clothes. 'The old money wears Lily Pulitzer, J. McLaughlin and C K Bradley,' said one saleswoman, who wanted her name withheld to avoid offending customers. 'They wear gold hoops, and if they buy new jewelry it is pearls or they upgrade their diamond rings. The new money wears Juicy Couture, Calypso and big necklaces. They even go to different restaurants. The old people go to 21 Federal and the new people go to the Pearl. They don't want to mix. They want to show off for each other.' But the lines cross. A handful of the hyper-rich gravitate toward Lily Pulitzer to give themselves a blue-blood look. And some pedigreed teenagers lust for Juicy Couture. Daisy Soros, wife of the harbor designer Paul Soros and sister-in-law of the financier George Soros, has been coming to Nantucket since the 1960's, an era when few women, new money or old, dressed up. She thinks that the newcomers are beginning to influence the culture. 'Everybody is building monster houses now, and they are all dressing up,' Mrs. Soros said. 'Now even I wear Manolos,' she added with a laugh. Some say that too much is being made of all these distinctions. 'The only people who are truly class conscious,' said Roger Horchow, who realized his fortune when he sold his catalog business to Neiman Marcus in 1988 for $117 million, 'are the second tootsie wives of men with big bankrolls.' Why Wait? Build a New One When there is a division between the old and the new, it is apt to express itself on the most time-honored of battlefields: the putting green, the tennis court or the marine berth. The existing clubs are still the preserves of the old wealth, but new clubs are springing up to welcome newcomers, as well as some longtime residents who grew impatient with waiting lists. For years the Sankaty Head Golf Club had a waiting list that seemed to extend for decades. So in 1995, Edmund A. Hajim, an investment banker in Manhattan, and others created the Nantucket Golf Club, assiduously designed to look as if it had been around forever. It became such a hit that its list is now full, too, even at a cost of $325,000 (80 percent reimbursable upon departure), as opposed to the $30,000 it costs to join Sankaty Head. In the same way, the old Nantucket Yacht Club has spawned a rival, the Great Harbor Yacht Club. About 300 families have already bought memberships, which now cost $300,000. Some Nantucketers applaud the new clubs. 'Why shouldn't they start a club if they can't get into the old ones,' said Letitia Lundeen, who was raised in the social whirl of New York and Washington and now runs an antiques store here. The resentment of new money riles Liz Petkevich, whose husband, J. Misha Petkevich, an investment banker and former Olympic figure skater, helped found the new yacht club. Her husband worked hard for what he achieved, she said. 'Does that mean we are better than anyone else? No. But we should not be penalized because we cannot get into the old yacht club.' In the old days, the clubs were homogenous and dominated by white Anglo-Saxon Protestant families. 'When I first came here it was the tail end of the 'grande dame' era,' said David L. Hostetler, a sculptor, who arrived in 1971. 'The place was dominated by WASP women in Bermuda shorts. There were hardly any Jews.' Today the island's elite is diversified enough to support a synagogue where membership has reached 250 families and where the yarmulke worn during services is Nantucket red and decorated with miniature whales. One place where the old and the new do mix is charity events. As in cultural and philanthropic institutions from San Francisco to New York City, the old money has made room at the table for the new money to replenish the coffers. There are more and more fund-raising events, and they are no longer the low-key affairs they once were. Last year the annual cocktail party and auction for the Nantucket Historical Association instituted valet parking and a classical quartet in black tie. Some appreciate the infusion of money and energy that the newcomers have brought. 'The old money doesn't like to spend money because they worry about whether they can make it again,' Ms. Lundeen said. 'Even when they can spend it, they often think it's vulgar and unnecessary. The newcomers have brought the island up to par with their demands.' Everything New Is Old Old-time Nantucketers are given to trading what one of them called 'barbarian stories.' Did you hear that Rick Sherlund, a Goldman Sachs partner, annoyed some of his neighbors when he hired Jackson Browne to entertain at his anniversary party? Or that Jon Winkelried, another Goldman Sachs partner, had the nerve to close off a small road that people had been using for as long as anyone can remember? Or that Louis V. Gerstner, the former I.B.M. chief executive, hired a Boston litigator to help him push through a plan for a large new house on his $11 million waterfront plot? Aggressive behavior, Dr. Murray said, is natural to the species. 'And after all, why should they give it up?' she said. 'Look where it has gotten them. That is exactly how they made their money.' One Nantucketer was L. Dennis Kozlowski, the former chief executive of Tyco International, on trial a second time on charges of criminal larceny, accused of looting the company of tens of millions of dollars. His lavish New York apartment, with its $6,000 shower curtain, became a symbol of the over-the-top corporate lifestyle. To some, the multimillion-dollar party that Mr. Kozlowski gave on Sardinia to celebrate his wife's birthday - replete with a vodka-spewing ice sculpture fashioned after Michelangelo's 'David' - was a modern echo of the lavish celebrations of the Gilded Age. Subtler distinctions between old and new money lie in the attitude toward work. The financier David Rubinstein bought a 15-acre waterfront property, tore down the existing house, as many wealthy buyers have done, and put up an 8,000-square-foot home. The stunning view lets him watch the sun rise and set, and yet he has boasted to friends that he spends only 12 days a year here; a rock on his front lawn reads: 'I'd rather be working.' Robert E. Torray, who is a co-manager of a mutual fund family and has been flying here on his company's Gulfstream since the 1980's, is either on the golf course or working the phone in his cranberry red library. He likes it here because there are Wall Street moguls everywhere and wherever he goes he can talk business. That is hardly the attitude of some veteran summer residents, who find comfort in the thought that they can occasionally be fogged in without worrying about the office. For them, being rich means a license to break schedules and to play. 'If you are working,' said Nicki Gamble, whose husband, Richard, is an heir to the Proctor & Gamble fortune, 'it is very nerve-racking. The way to be here is not to be working.' Caught by a Boom The high cost of housing is squeezing middle-class people off the island. The former principal of Nantucket High School, Paul Richards, and his wife, Martina, a nurse, moved last year to Needham, Mass., after renting here for five years. 'The expense of that together with having two little children made a home beyond reach,' Mr. Richards said. 'It was frustrating to be driven away from two jobs that we very much enjoyed, but a starter home for our family would have cost over $600,000.' Linda Finney Williams, administrator of the Nantucket Zoning Board of Appeals, who has a 19-year-old son in college and an older daughter in law school, said, 'I'm hanging on by my fingernails.' 'The cost of living has risen so much that it's very hard on us.' The demand for labor is so great that every weekday roughly 400 workers fly in from the mainland for construction, gardening, plumbing and other services. The commute may be a nuisance, but the money makes it worthwhile. It also explains why building is so expensive; the additional costs are passed along to customers. John Sheehan, a 65-year-old construction worker who rises every day at 4:30 a.m. to catch a plane from Hyannis, does not complain. 'I have always been in the lower-middle-class area,' Mr. Sheehan said. 'But the times are good for me now. I'm making more money than I ever did and I'm living more comfortably.' To try to stem the outflow of workers the Nantucket Housing Office, a private nonprofit group, has proposed a one-time 'McMansion' tax of $8 per square foot on any construction space exceeding 3,000 square feet. The bill has several more hurdles, but if it is approved, the proceeds would be used to build housing for families making $120,825 a year or less. Some real estate agents worry that the hyper-rich will resent the tax, but so far wealthy homebuilders seem to regard it as a pittance compared with the other costs they incur. Despite the money to be made, some shop owners and other locals miss the way the island used to be. Though she applauds their self-confidence, Ms. Lundeen, the antiques dealer, says she is sometimes appalled by what she considers the cavalier ignorance of some women who are suddenly rich. 'They don't want to learn,' she said. 'I had a monogrammed tray and when I proposed it to a customer, she said, 'Why would I want other people's monograms?' These women have never inherited anything.' Robin Bergland, a young florist who moved here from Manhattan, has stopped providing flowers for weddings. 'The final straw was a wedding where a Wall Street executive tried to bill me for the wedding gown and medical expenses,' she said. 'He charged that the roses I used to decorate their party tent ruined the hem of the bride's dress and caused her aunt to trip and break her leg. 'I got threatening phone calls daily. I was terrified until I gave the case to my lawyer and they went away. There's no question it was unlikely to have happened five years ago.' The old summer people 'used to try and fit in,' said Arlene Briard, a taxi driver who has lived here 35 years. 'They didn't want to differentiate themselves by class or by a look that said how much money I have. When I sold TV Guides to people, I'd walk into a house, sit down and have a lemonade with people or play tennis with them at the yacht club. Now they get in my taxi and find a way to tell me that they belong to the Nantucket Golf Club. 'Class has a certain grace,' Ms. Briard said. 'Just because you can go to Chanel and buy a dress does not mean you have class. A person who just pays their bills on time can have class.'

Subject: Eastern Kingbird Feeding Young From: Terri To: All Date Posted: Sun, Jun 05, 2005 at 08:21:50 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4653&u=87|120|... Eastern Kingbird Feeding Young an Eastern Amberwing New York City--Central Park, The Pool. What a wonderful spring; watch for birds everywhere.

Subject: Chestnut-sided Warbler From: Terri To: All Date Posted: Sun, Jun 05, 2005 at 08:10:48 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5433&u=17|13|... Chestnut-sided Warbler New York City--Central Park, The Loch.

Subject: Bond Fund Returns From: Terri To: All Date Posted: Sun, Jun 05, 2005 at 07:44:53 (EDT) Email Address: Not Provided Message: John Bogle teahces that to gauge the return of a bond fund with fairly constant duration, take the current yield of the fund. Then, the Vanguard Long Term Investment-Grade Bond Fund which has a yield of 5% and a duration about 10 years should have a 5% return over the coming 10 years. The Long Term Bond Index has a little lower yield at 4.8% so the expected return will be lower. The portfolios are highly diversfied and high investment grade, so default of an issue is of almost no concern. The shorter the duration in investment grade bond funds, the lower in general the yield so the lower the expected return. Then, over the coming 10 years we can not expect more than 5% yearly returns from a Vanguard long term bond fund.

Subject: Realistic Portfolio Returns From: Terri To: All Date Posted: Sun, Jun 05, 2005 at 06:37:56 (EDT) Email Address: Not Provided Message: There is every reason to believe the Vanguard Total Stock Market Index can return a conservative 5% annually. After all, productivity growth for a decade has been above 2% a year, dividends are 1.6% and grow each year, and inflation will at least 1.4%. We have then a comfortable 5% growth in earnings, and this earnings growth will lead to rising prices for shares of stock over time. The growth of stock prices will not be even, but 5% returns for the Vanguard index fund appear realistic and conservative. The prime risk to the 5% long term stock market return would be a decline in price earning ratios. But, price earning ratios have been falling for 5 years and are only moderately above historical levels. Another risk of course is a lasting decline in economic growth in America, but there is the reason for some balance between stock and bond funds. The reason I choose the Vanguard Total Stock Market Index for the exercise is because of the broad diversification of the fund and the low cost which allows maximum fund returns to investors. Vanguard has no sales charges for the index fund, has low management costs, and there is little turnover so portfolio costs and tax implications are low. The point is to get index gains to investors. Then, is a 5% portfolio return realistic for a long term investor to expect? I believe so.

Subject: Re: Realistic Portfolio Returns From: David E.. To: Terri Date Posted: Sun, Jun 05, 2005 at 13:30:45 (EDT) Email Address: Not Provided Message: Terri, is the 5% return for TSM your expected nominal rate? Or the real rate? The real rate on bonds is 1%. The real rate in Japan is 0%. And the signs(reading Pimco's site) are that the US will also reach a real rate of 0% in the next 3-5 years. Unlike Roach, Pimco believes that rather than 'the emperor is naked' scenario, the likely scenario will be that 'the emperor has torn his pants'. An embarassing event, but not necessarily a disaster. With acceptance of 0% real rate in the bond market it is not unlikely that acceptance of a 2% real return in stocks will also happen. The good news is this means that the stock market can go up another 5-10%. After 3-5 years prices will either be in balance or out of balance. China only commits to keep the yuan steady for 3-5 years. Probably that is why Pimco feels the situation will remain steady for another 3-5 years.

Subject: Re: Realistic Portfolio Returns From: Terri To: David E.. Date Posted: Sun, Jun 05, 2005 at 18:53:31 (EDT) Email Address: Not Provided Message: I try to simplify as much as possible, so I am always thinking of nominal returns though I can use real returns if necessary. Should nominal bond yields continue to fall, the declining yield in bond funds will be more than made up with capital gains. The period of declining yields since January 2000 has given a return of more than 11% a year for the Vanguard Long Term Investment-Grade Bond Fund. If yields on bonds should rise, there will be price declines for constant duration bond funds that are gradually made up during the duration period. Lower interest rates or bond yields should bolster earnings, and be helpful to stock prices. Higher interest rates may be the worry for stocks we must discuss thoroughly. I will think over these comments carefully.

Subject: Re: Realistic Portfolio Returns From: Pete Weis To: Terri Date Posted: Sun, Jun 05, 2005 at 12:49:49 (EDT) Email Address: Not Provided Message: 'But, price earning ratios have been falling for 5 years and are only moderately above historical levels.' Terri. Stock options have been an increasingly larger expense for public companies since the middle 90's. But they are largely still not expensed. In addition there were major changes to the way pension plan gains or losses where included in company earnings reports back in the 80's. So how can we compare price-to-earnings ratios presently to that of the past? Furthermore, when you look back at the 30's and 70's, following bull markets, you find stretches where the PE of the S&P index remained below 10x earnings and that was back in the days when executive compensation was expensed and when you were losing money in your pension plan you had to include that in your bottom line.

Subject: Re: Realistic Portfolio Returns From: Terri To: Pete Weis Date Posted: Sun, Jun 05, 2005 at 18:41:51 (EDT) Email Address: Not Provided Message: Thank you for pointing to several argument against my position: options expenses to earnings are still not readily available and included in valuations, pension plan return estimates may allow and over-statement of earnings, and there have been times of much higher dividends and lower price earning ratios. Tighter accounting standards are however being applied now and excesses of 2000 should be less and less, or simply be more obvious. Eliot Spitzer has done a lot of course, but he will soon no longer be Attorney General, and the new SEC Chair may be less tough on enforcement. Stocks can trade at far more contracted multiples however, and there is the reason for bond fund income when nearing retirement. There is far more to be discussed.

Subject: Returns We Can Expect From: Terri To: All Date Posted: Sat, Jun 04, 2005 at 17:33:37 (EDT) Email Address: Not Provided Message: An Example: The Vanguard Long Term Investment Grade Bond Fund yields 5% and has about a 10 year duration. An investor can then count on a 5% yearly return over the coming decade from this fund. The Value Index has a dividend yield of 2.5%. I would guess very conservatively the fund will return another 2.5% from dividend growth and capital gains through the coming decade, so the total return would be 5%. The guess is a mix of the Investment Grade Bond and Value Index will give a conservative 5% yearly return. The more saved, the better in every way, but I think 5% is not too much to expect with quite a few portfolio combinations.

Subject: Re: Returns We Can Expect From: Terri To: Terri Date Posted: Sat, Jun 04, 2005 at 17:44:36 (EDT) Email Address: Not Provided Message: Remember as well that 5% gained in stock dividends and capital gains will be taxed no more than 15%. The Vanguard Utility Index has a 3.3% dividend, and I would expect dividend and capital gain increases to add another 1.7% yearly for a conservative 5% return over the long term. Of course, a sector return is less secure than a broad index return but this is simply an example of why I am reasonably confident in a 5% yearly return from a well diversified value oriented portfolio.

Subject: Lower Withdrawal Rates From: David E.. To: All Date Posted: Sat, Jun 04, 2005 at 15:12:35 (EDT) Email Address: Not Provided Message: Bad news, many are thinking 4-5% withdrawal rates are excessive. So either save 25% more or plan to spend 25% less. From Scott Burns-giving advice to an investor 'The established safe-withdrawal-rate rules of thumb are based on long periods of time in which yields were higher than they are today and stock valuations were lower. A growing school of thought believes future withdrawal rates should be reduced to reflect expected lower future returns. This would knock another 1.5 to 2 percentage points off the safe withdrawal rate. You don't hear much about this because it is information most people don't want to hear. Also, there are plenty of salespeople out there, calling themselves financial planners, who are still telling their clients that it is safe to withdraw 6 percent or 7 percent a year. Finally, there is the really big unknown. If you want your income to be constant, how much do you earn working part-time? That income will have to be replaced from your savings when you actually stop working. Multiply your earnings by 25, and that's the 'savings reserve' you need for your eventual full retirement.' http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2005/stories/060205dnbusburns.2d233d3c9.html

Subject: Re: Lower Withdrawal Rates From: Terri To: David E.. Date Posted: Sat, Jun 04, 2005 at 17:53:11 (EDT) Email Address: Not Provided Message: An important point, and I will play with a bunch of examples on projected returns. Thanks.

Subject: Critique of the Health Care System From: Emma To: All Date Posted: Sat, Jun 04, 2005 at 13:29:07 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/04/business/04interview.html An Insider's Critique of the Health Care System By ALEX BERENSON Many people think the health care system in the United States needs to be fixed. It may be a surprise that Henry A. McKinnell is among them. Mr. McKinnell is chairman and chief executive of Pfizer, the world's largest drug maker, which made $14 billion in profit last year, more than any other health care company. But in a new book, 'A Call to Action' ( McGraw-Hill), he says that the system needs radical changes. His description of the problems will ring true to anyone who has ever visited a doctor or filled a prescription, though some of his solutions - like higher drug prices for Europe - may strike readers as, well, a bit self-serving. In late May, Mr. McKinnell spoke about his book. Following are excerpts from the conversation: Q. What prompted you to write the book? A. I've been concerned for some time, many years, actually, that in the United States and countries abroad, that when it comes to health care, we're on the wrong track, and the problem starts with the definition of the problem, which is the high cost of health care. We know how to solve that problem. It's rationing access to medicine and treatment and it's price controls. And if we do that, my fear has long been that that carried to its logical extreme wouldn't be successful, that people would get frustrated, that they would get angry, and that's exactly what's happened. Q. Your main prescription seems to be health savings accounts, that you want people to have more accountability and you want them to be more involved in making decisions about their health care. A. The basic point I make is that we are in a crisis: it's not in health care, it's in sick care, and it's not because of bad people or bad intentions, it's because of the incentives. When you pay for procedures, don't be surprised that you get a lot of procedures. If people think that somebody else is paying for their health care, please don't be surprised that they spend a lot of money. So it's really the incentives I think we need to look hard at, and health savings accounts are only one example of how we can shift the incentives to people having ownership of their own health and therefore health care, as opposed to thinking that some third party pays the bill. Q. And you mention technology as a major force - you would like to see more technology, you would like to see people with more access to all their records? A. Oh, clearly. The corner supermarket has more technology than the typical hospital, and the fact that we don't have electronic medical records is a national disgrace. It means files are lost; we don't have any kind of efficiency within the health care system. I've never seen a number I really believe, but the best estimate I've seen is that administration costs in health care are 30 percent. Most businesses run on 4 to 6 percent. There's a lot to be done just on the efficiency side. But my basic problem is not just the use of technology for cost-saving, but the use of technology for better diagnosis, better patient care, better patient education. So, for example, when you see a doctor today, the first question is always the same. 'How are you?' Well, in an information-rich environment, the doctor would know more about you than you do, so he wouldn't have to ask, 'How are you?' He would start at a much later place in the process. Q. There are going to be a lot of people who are skeptical from the very beginning - A. I do address that - Q. You do - A. From the very beginning (laughs). Q. Can you address why should anyone trust the head of the world's largest drug company? A. Well, you don't have to trust me, but if you read the book, I think you'll begin to question a lot of things that we are doing within the system that just don't make a lot of sense. You don't have to trust me. But listen to the ideas, reject them if you wish, but if you find yourself agreeing to some of these ideas, let's then start a debate around why it is we do that and how can we do it differently.

Subject: In Kenya, a Woman Called Charity From: Emma To: All Date Posted: Sat, Jun 04, 2005 at 10:36:45 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/04/opinion/04sat4.html In Kenya, a Woman Called Charity Takes On the Establishment By HELENE COOPER NAIROBI The rich world is searching for ways to help Africa. At the meeting of industrialized countries in July, there will be pronouncements about how to funnel money to Africans beset by poverty, disease and wars. There will be talk about modalities, measurements and criteria, and how to bypass corrupt officials and get help to where it's needed. What the rich world should be talking about is how to give money to Charity Kaluki Ngilu. One year ago, Mrs. Ngilu, the Kenyan minister of health, was visiting a rural hospital when a woman outside stopped her. The woman held in her arms her son, 9 years old, sick with swamp fever from bad drinking water. The unconscious boy was covered in blood boils. The mother had brought him to the hospital but had no money, so the doctor refused to treat him. On most days, her story would end there: the boy would die, like thousands of other children who die every day in Africa of preventable and treatable diseases. But luck was with her. After confirming with the rural hospital's sole doctor that he indeed had turned the boy away because of money, an angry Mrs. Ngilu put the boy and his mother into the ministry car, ordering the driver to take them to the large regional hospital two hours away. 'I held the boy in my arms,' Mrs. Ngilu recalled. 'His blood was all over me.' That night, the health minister boarded a small plane back to Nairobi. The plane flew into a storm, buffeted by high winds. Convinced that everyone aboard would die, the passengers started talking about what they would do differently in their lives if they lived. Mrs. Ngilu said: 'I would want to die knowing that I changed something. That while I was health minister, I actually changed things.' Two days after the plane landed safely, Mrs. Ngilu made an announcement that took the entire government, including the president, by surprise, since she had not bothered to consult anyone. Kenya, she said, would offer health insurance to every Kenyan. Across the country, a firestorm erupted. President Mwai Kibaki asked her to withdraw her pledge, Mrs. Ngilu said. She refused. Members of the cabal of ministers who backed the president clashed publicly with Mrs. Ngilu, as did much of the local business lobby, who fretted they would be forced to provide health insurance for their workers. The complaints were justified: how in the world could a country like Kenya provide universal health insurance when 56 percent of the population lives below the poverty line? Some nine million people are so poor they can't even afford food every day. Mrs. Ngilu pressed on. Appearing in villages, she urged people to demand care when they showed up at their rural hospitals. 'Just defy them,' she said. 'Don't wait until you die. Carry your voter card and demand that they treat your children.' Clearly, much of this is bluster. Hospitals can't provide what they don't have. But Mrs. Ngilu wanted to establish the principle that hospitals should never turn away dying children. She also wanted her country's government to accept responsibility for a service that voters had not realized they could demand until then. Mrs. Ngilu was able to get her bill passed by Kenya's Parliament. All that's needed now is the money. Donors have shied away from financing ambitious projects in African countries where the government is corrupt. The Kenyan government is far from perfect. President Kibaki, who took office amid high hopes after the disastrous reign of Daniel arap Moi, has squandered much of that good will, among both the Kenyan people and the international community. There is reason to worry that if the government got enough money to drastically expand grass-roots hospital service, much of it could be misused. But Africa will never overcome poverty if the developed world waits until every country is corruption-free. When a government is unreliable, donors should find ways to concentrate on specific departments that are well run, like Mrs. Ngilu's. The health minister is a leader of the reformist wing of Mr. Kibaki's cabinet, and is one of his strongest critics. 'My own government went wrong a long time ago,' she said. 'Every time I see my colleagues I get angry. There is a total disconnect between policy and people.' Donors can also protect their money by demanding measurable improvements. They can track how their money is being spent, from hiring more nurses and doctors to training community workers to go door to door and talk to villagers about using condoms and about using treated bed nets to prevent malaria. And they can make the money contingent on specific government behavior. Born in the village of Mbooni in rural Kenya, Mrs. Ngilu was one of 13 children. She helped her mother haul buckets of water on her back every morning, while her father, a preacher, traveled. What disturbs her, she said, is that life is worse in rural villages today than it was back then. On the road, she encounters hundreds of families where both parents have died of AIDS and 13-year-old girls are left to raise their brothers and sisters. Some 1.5 million Kenyans have died of AIDS, and another two million are infected with H.I.V. She said she had not been invited to the Group of 8 summit in Scotland. 'If they invite me,' she said, 'I will go and tell them that the obituary pages of our newspapers are filled with pictures of young people.'

Subject: Peet's Coffee and Tea From: Emma To: All Date Posted: Sat, Jun 04, 2005 at 10:21:07 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/04/business/04coffee.html?pagewanted=all Rival Moving Beyond Roots Entwined With Starbucks BY ERIC A. TAUB EMERYVILLE, Calif. - Doug Welsh picked up the first of 12 glasses of coffee. He noisily slurped a spoonful, savored it briefly, then immediately spit it out. Mr. Welsh, the vice president for coffee at Peet's Coffee and Tea, a regional coffee retailer with its home here in the San Francisco Bay Area, was 'cupping' - testing samples of beans recently shipped from the Nairobi coffee auction. Mr. Welsh readily concedes that most customers would never know the difference. But buying what Peet's considers an inferior bean, he said, 'is not a road we want to go down.' In the Bay Area, Peet's has long been the Apple Computer of coffee, serving a small but intense group of aficionados who are convinced that the company's coffee is superior to that produced by the industry giant from Seattle: Starbucks. Now Peet's, which also sells over the Internet and by mail order, has significantly stepped up its expansion plans. It is opening more retail stores in the West and introducing its brand to a number of specialty and high-end grocery stores across the country, hoping to entice a growing group of coffee iconoclasts. 'Peet's grew out of a passion for specialty coffee,' said Kerri Goodman-Small, publisher of Hospitality News, a food service industry journal. 'Starbucks focuses on consistency and a variety of beverages.' For all their differences in size and style, Peet's and Starbucks are linked by their past: the current director of Peet's, Gerald Baldwin, helped found Starbucks before selling to Howard Schultz, who built it into the ubiquitous brand of today. Operating in Starbucks's very large shadow, Peet's is one of several small coffee retailers that are expanding from strong regional bases. These include Caribou Coffee from Minneapolis; Diedrich Coffee, based in Irvine, Calif.; It's a Grind from Long Beach, Calif.; and Tully's Coffee, with headquarters in Seattle. The passion for Peet's extends to Ruth Reichl, the editor in chief of Gourmet magazine. 'You only had to taste it once to see that, 'Oh, this is coffee,' ' said Ms. Reichl, who grew up in Berkeley but now lives in New York. Her old friends, she said, still bring her bags of Peet's whenever they visit from California. Operating out of a brick warehouse in this industrial area south of Berkeley, Peet's is a debt-free company that has managed to achieve a steady rise in sales since it went public in 2001. This last quarter, revenue grew 23 percent from a year earlier, to $40 million, while earnings rose 34 percent, to $2.4 million. In a stagnant market, its stock is up 3.3 percent since the beginning of the year. It closed Friday at $29.80, down 2 cents. By comparison, revenue for Starbucks for the quarter ended in April reached $1.5 billion, up 22 percent from the year-earlier period. Its net earnings for the period increased 27 percent, to $101 million. While Peet's has accelerated the opening of its retail stores, the company's business is built around selling beans, not drinks. Sales of whole beans account for 45 percent of Peet's retail revenue, compared with 5 percent at Starbucks. Peet's retail stores, said Patrick J. O'Dea, the company's president, are 'a fresh market for whole beans that happens to sell beverages.' 'When our stores are strong,' Mr. O'Dea said, 'our Internet, mail order and grocery businesses go up within a five-mile radius of the outlet. We're agnostic about where people buy our product. Retailing is a means to an end, not the end in itself.' Starbucks takes a different approach. Its retail stores were responsible for 85 percent of the company's revenue in the most recent six-month period. Retail operations are 'the primary driver of the company's revenue growth,' its latest financial report notes. Compared with Starbucks's 6,605 stores in the United States and an additional 2,656 abroad, the Peet's operation is about as noticeable as a fly on an elephant. Peet's operates just 99 outlets, up from 75 at the beginning of last year. It expects to open another 20 this year. The company plays on its 60's image, highlighting its Berkeley coffee house roots and filling 2,000 higher-margin mail orders a day to its nationwide roster of committed 'Peetniks' buyers. 'The key is Peet's can complement Starbucks,' said Matthew Difrisco, who has advised the company for Thomas Weisel Partners, a San Francisco venture capital firm that helped Peet's raise money after it went public. 'The Peet's customer is older, more mature and better educated.' Peet's continues to thrive by attracting consumers like Jenna Phillips, a Berkeley clothing designer who says she is 'a total Peet's devotee.' The coffee is 'stronger than Starbucks's,' she said, 'and it's not part of an evil empire.' Peet's retail stores, in a more subtle dig at Starbucks, reflect what it considers an all-American style. Rather than call its different cup sizes 'grande' and 'venti,' for example, it displays simply 'small,' 'medium' and 'large' on its in-store menu. 'If we were going to establish our own retail culture,' said Mr. Baldwin, Peet's director, 'we had to stop speaking Italian.' The company began operations in Berkeley in 1966, when Alfred Peet, a Dutch immigrant, opened his first store. A few years later, Mr. Baldwin and two partners opened their own coffee shop in Seattle, and contracted with Mr. Peet to supply their store with beans. They called their store Starbucks, and gradually expanded it to five stores. In 1984, the Starbucks partners bought the small Peet's chain. Three years later, believing that Peet's epitomized their zeal for coffee, they sold Starbucks to Howard Schultz. Mr. O'Dea says Peet's has not compromised quality, despite its accelerated growth. Coffee is still roasted manually, and all coffee is shipped the day it is roasted. The company maintains its own fleet of grocery store delivery trucks. Whole coffee at Peet's retail outlets is discarded after 10 days and brewed coffee is thrown out after 30 minutes. Starbucks says it follows equally rigorous standards. 'Freshness and quality are one and the same,' said Dub Hay, Starbucks's senior vice president for coffee and global procurement. Starbucks has longstanding relationships with coffee growers around the world, and recently opened a coffee farmers' support center in Costa Rica. To ensure freshness, Mr. Hay said, Starbucks sells only prepackaged whole bean coffee in its retail stores, and discards unsold brewed coffee after one hour. As for Peet's, it expects to benefit from the growing American taste for small affordable luxuries. And as long as growth does not reduce the appeal of its coffees and teas, Mr. Baldwin predicted that Peet's would remain successful. 'When Starbucks came to San Francisco, the press was filled with stories about how Peet's will get killed,' Mr. Baldwin said. 'We're fine.'

Subject: Japan Squeezes for Energy Efficiency From: Emma To: All Date Posted: Sat, Jun 04, 2005 at 09:38:41 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/04/business/worldbusiness/04energy.html?pagewanted=all Japan Squeezes to Get the Most of Costly Fuel By JAMES BROOKE TOKYO - Surging oil prices and growing concerns about meeting targets to cut greenhouse gases produced by burning fossil fuels have revived efforts around the world to improve energy efficiency. But perhaps nowhere is the interest greater than here in Japan. Even though Japan is already among the most frugal countries in the world, the government recently introduced a national campaign, urging the Japanese to replace their older appliances and buy hybrid vehicles, all part of a patriotic effort to save energy and fight global warming. And big companies are jumping on the bandwagon, counting on the moves to increase sales of their latest models. On the Matsushita appliance showroom floor these days, the numbers scream not the low, low yen prices, but the low, low kilowatt-hours. A vacuum-insulated refrigerator, which comes with a buzzer if the door stays open more than 30 seconds, boasts that it will use 160 kilowatt-hours a year, one-eighth of that needed by standard models a decade ago. An air-conditioner with a robotic dust filter cleaner proclaims it uses 884 kilowatt-hours, less than half of what decade-old ones consumed. 'It's like squeezing a dry towel' for the last few drips, said Katsumi Tomita, an environmental planner for the Matsushita Electric Industrial Company, maker of the Panasonic brand and known for its attention to energy efficiency. 'The honest feeling of Japanese people is, 'How can we do more?' ' A number of other affluent countries with few domestic energy resources of their own are responding in similar ways. In Germany, where heating accounts for the largest share of home energy use, a new energy saving law has as its standard the 'seven-liter house,' designed to use just seven liters of oil to heat one square meter for a year, about one-third the amount consumed by a house built in 1973, before the first oil price shock. Three-liter houses - even one-liter designs - are now being built. In Singapore, where year-round air-conditioning often accounts for 60 percent of a building's power bill, new codes are encouraging the use of things like heat-blocking window films and hookups to neighborhood cooling systems, where water is chilled overnight. In Hong Kong, many more buildings now have 'intelligent' elevator systems in which computers minimize unnecessary stops. Parking restrictions encourage bus and rail transit, and authorities are also pushing hybrid cars equipped with engines that shut down when idling. Other countries, including the United States, the world's largest energy consumer by far, have lagged behind, but even American consumers are starting to turn their backs on big sport utility vehicles and looking at more fuel-efficient cars in response to higher gasoline prices. But Japan is where energy consciousness probably reaches the highest levels. The country has the world's second-largest economy, but it produces virtually no oil or gas, importing 96 percent of its energy needs. This dependence on imports has prodded the nation into tremendous achievements in improved efficiency. France and Germany, where government crusades against global warming have become increasingly loud, expend almost 50 percent more energy to produce the equivalent of $1 in economic activity. Britain's energy use, on the same measure, is nearly double; the United States nearly triple; and China almost eight times as much. From 1973 to today, Japan's industrial sector nearly tripled its output, but kept its energy consumption roughly flat. To produce the same industrial output as Japan, China consumes 11.5 times the energy. At JFE Holdings, Japan's second-largest steel company, plastic pellets made from recycled bottles now account for 10 percent of fuel in the main blast furnaces, reducing reliance on imported coal. Japanese paper mills are investing heavily in boilers that can be fueled by waste paper, wood and plastic. Within two years, half of the electricity used in the nation's paper mills is to come from burning waste. Many easy steps were taken after the oil shocks of the 1970's. Now Japan is embarking on a new phase. Billions of dollars are being invested to reach a 2012 target of reducing Japan's emission of global warming gases to 6 percent below the 1990 level. These gases are released by burning oil, coal, and, to a lesser extent, natural gas - sources for about 81 percent of Japan's energy. As host nation for the Kyoto Protocol on cutting greenhouse gases, Japan takes its commitment seriously. But it faces a big challenge. Figures released last month show Japan was 8.3 percent over the 1990 level for the fiscal year ended March 2004. 'We are now at the stage where we only save energy by investing in equipment,' Mr. Tomita said of Matsushita's effort. 'If we can collect money in three years, we invest.' With the Japanese prime minister, Junichiro Koizumi, introducing its national campaign two months ago to meet the Kyoto targets, business is booming for energy service companies and consultants who advise companies on cutting energy bills. But Japan's flattening of industrial energy consumption has not been matched in the transportation and residential sectors, where energy consumption has more than doubled since 1973, roughly pacing Japan's economic growth over the period. Japan may be a mass transit nation, but now there is also a car for almost every Japanese household. Since 1970, the number of buses in Japan increased 23 percent, the number of trucks doubled, and the number of passenger cars increased more than sixfold, to 56 million. With personal use accounting for the bulk of April's $6.4 billion bill for imported oil, Tokyo is trying to encourage greater efficiency by pushing fuel taxes even higher, lifting the pump price for gasoline to $4.70 a gallon, the highest in a decade. During the 1990's, Japan's average fuel consumption per mile fell 13 percent. But since then, with more Japanese driving bigger cars, fuel efficiency growth has stalled. Japan finds hope in the history of its refrigerators, which have doubled in size since 1981 as their energy use per liter has plunged 80 percent. In hopes of working the same engineering magic on cars, Japan has extended its minicar tax breaks to hybrid cars - fuel-efficient vehicles that rely on a combination of a gasoline engine and an electric motor. Hybrid sales, while still relatively low in Japan, are growing fast. And in this environment, Toyota and Honda have become the world leaders in hybrid technology. 'We're entering the age of hybrid automobiles,' Hiroyuki Watanabe, Toyota's senior managing director for environmental affairs, recently told journalists at the 2005 World Exposition Aichi, in Nagoya. 'I want every car to have a hybrid engine.' The next energy-savings battleground is the home front. After $1.3 billion in subsidies, about 160,000 homes have solar power systems. Solar power remains two to three times as expensive as the electricity supplied to households. But homeowners say that with time, the 'free' electricity pays for the high installation costs. And the government is willing to devote taxes to the effort, preferring to spur rural employment through solar power installations to help reduce payments for foreign oil, coal and gas. Although residential subsidies may be phased out, a Japanese government plan calls for increasing solar power generation 15-fold during this decade. Japanese companies, notably Sharp, Kyocera, Mitsubishi and Sanyo, produce about half the world's photovoltaic solar panels, a roughly $10-billion-a-year market. With large commercial projects like a 4,740-panel generator going online at a filtration plant in Nara last month, Japan produces more than the combined total of the next biggest, Germany and the United States. Prime Minister Koizumi is a political conservative who believes that saving oil starts at home. Visitors to his official residence here walk past a boxy hydrogen fuel-cell generator, a prototype installed by Matsushita in April to power the residence and educate the nation's leadership. 'Fuel cells are the key to the door of a new era in which we utilize hydrogen as an energy source,' Mr. Koizumi told Parliament in 2002. 'We intend to put them into practical use within three years, either as power sources for automobiles or households.' His government has set goals for cutting power consumption even further for the four main household appliances: televisions, 17 percent; personal computers, 30 percent; air- conditioners, 36 percent; and refrigerators, 72 percent. Engineers have been attacking the problem of the power used by appliances on standby, a drainage that can account for 5 percent to 10 percent of a household's energy consumption. Still, while energy efficiency is seen as a patriotic act, many consumers in Japan are reluctant to part with working appliances, made with the Japanese ingenuity and attention to detail that ensure they will last for decades. 'The problem we are facing is over how much we induce consumers to trade in their appliances for more energy-efficient ones,' Hajimi Sasaki, chairman of the NEC Corporation, a major appliance maker, said in April at a news conference billed as 'Proposals Aimed at Overcoming Global Warming.' 'I drive a hybrid car, and last fall I put heat-cutting film on some of our windows,' he said. 'And I intend to buy a new refrigerator.'

Subject: Improving Values From: Terri To: All Date Posted: Sat, Jun 04, 2005 at 05:44:17 (EDT) Email Address: Not Provided Message: The stock market continues to be encouraging, for the longer stocks trade evenly the better valuations become. I do not care whether gains are made as long as value is being built in the market, for that sets a base for us and makes a lasting bear market less likely. This calm trading pattern is encouraging. Earnings continue to be ample, and price earning ratios gradually improve. A slow process, but it is happening.

Subject: Diversity and Protection of Portfolios From: Terri To: Terri Date Posted: Sat, Jun 04, 2005 at 06:39:56 (EDT) Email Address: Not Provided Message: Though it may not seem so, there will be a time when housing and real estate will cease to appreciate in value for some while, and it will be essential at such a time to have a diversified portfolio. There may be many people who are forgetting this principle of poirtfolio diversification during this period of ever rising real estate prices.

Subject: Meet the Flippers From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 15:51:12 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/realestate/03flippers.html?pagewanted=all&position= Meet the Flippers By JOANNE KAUFMAN MANY are the nights Paul Purcell lies awake asking himself large questions, deep questions, important questions: should he lay down the cheaper tiles and put his money into a costly light fixture - or vice versa? Where, exactly, should he move the walls and how far? Is a Sub-Zero refrigerator truly not negotiable? And, while he's thinking about it, must he spring for the undeniably sleek - and undeniably expensive - Bosch dishwasher, the one with no controls on the front? No, Mr. Purcell is not a contractor. And he's not renovating a house for himself. He is what might be called a Hamptons flipper - a weekend resident of that chic Long Island area who has made a sideline of buying, renovating and selling properties, often at a substantial profit. Over the last 15 years, Mr. Purcell and a partner flipped five properties to ever-increasing profits, including their most recent project, a cottage in Wainscott that they bought three years ago for $750,000. They gave it a new roof, a new kitchen, two new bathrooms and a fresh paint job. They sold it in December for $1.415 million. 'I'm not brilliant,' said Mr. Purcell, who has since split with his partner. 'I just always buy something I would love.' Given the state of the Hamptons' real estate market - local agents say prices have risen as much as 25 percent in the last year - Mr. Purcell has a lot of company in his pursuit of fixer-uppers with serious upside potential. Diane Flynn, a Manhattan-based television advertising producer, recently completed her seventh Hamptons investment project: a job on an 1895 farmhouse in Wainscott that will be on the market someday. Tom Woodard and Blanche Greenstein, who each have weekend homes in the Hamptons, have flipped a dozen houses since 1978. And Gary Simko, a senior vice president at a human resources firm in Manhattan, has flipped five properties since starting in 1991. The flippers are part of a larger national trend that, even as talk of a housing bubble grows, has a significant number of Americans investing in real estate. A survey conducted by the National Association of Realtors showed that 23 percent of all homes purchased in 2004 were for investment, a jump of 14 percent from the year before. And with home prices rising 15.1 percent in the last year alone across the nation, the Realtors association found that real estate has taken the place of Dow and Nasdaq offerings in many portfolios. 'We don't understand the stock market, and this is tangible,' said Bruce Karp, a lawyer in Manhattan, who with his partner Stephen Goldstone, began buying Hamptons investment properties nine years ago. Indeed, while many other resort areas have their share of flippers, the Hamptons, where property values seem to move in only one direction - up - are a particularly fertile area for investment buying. Just as in Manhattan, there's a scarcity of prime properties in desirable locations, which means that bidding wars are common and that prices are outlandish by any rational standard - like nearly $1.5 million for a 1,200-square-foot, three-bedroom cottage in Amagansett. Beyond that, 'there's ocean sun and sand and proximity to New York City,' said Lawrence Porter, a managing partner of Brown Harris Stevens in the Hamptons. 'People come from the city with a co-op-condo mentality. They don't have the vision to do the work, the restoration and the new construction. If you give them what they want, they're willing to pay a premium.' That's what the flippers are counting on. So they scour listings for houses with their own slightly warped list of 'must-haves' - things like bad floors, overgrown yards, peeling paint or years of clutter that can be fixed fairly easily but might scare off other buyers. 'We're not put off by holes in the roof or the floor or leaking basements,' said Mr. Woodard, who with Ms. Greenstein owns a Manhattan antiques shop and a carpet manufacturing business. 'We can see the possibilities.' Because they own homes in the area, these Hamptons speculators have an edge. They fully understand the import of phrases like 'south of the highway' and 'with a view of Georgica Pond.' At least as significantly, 'they've watched their home go up in value so that becomes an incentive to invest,' said Mr. Simko, who has a weekend place of his own in East Hampton. And, they often get an inside line on properties that clean up very, very well. 'When I see something I'm going to call one of the investors I've worked with before,' said Diane Saatchi, a senior vice president in the Corcoran Group's East Hampton office. 'I know they'll do a good job. And I know I'm going to have two deals: when they buy the property and when they sell it.' The rewards can be substantial. 'I tell investors out here you should be able to buy a property for a million, put a million into it and sell for $3 million, and generally people are exceeding that,' Ms. Saatchi said. Among the properties her clients have flipped are an East Hampton house bought for $2.1 million at the end of 2002, improved 'considerably' and then sold last year for about $4.4 million. Another East Hampton property that was purchased for $1.4 million was spruced up with a pool and basic landscaping and resold for $2.1 million to someone who is planning to redo the house and flip it yet again. But you need a bankroll to start, especially because the median price of a home in the area is hovering around $1 million. 'The in-and-out costs are high,' Ms. Saatchi said. 'There are taxes and a commission when you sell and people forget that.' There is also the chance that the market will finally cool off, making profits elusive. And not every flip goes smoothly. One property owned by Mr. Woodard and Ms. Greenstein sat on the market for a year and a half before it was sold. In 2002, Mr. Simko bought a ranch house in East Hampton, planning to add a second floor, which would have significantly increased the living space and the selling price. But, he discovered, because of structural issues, he would have had to rebuild the first floor before he could add anything on. 'I wasn't about to do that,' he said, 'so I made the best of what I had and reconfigured some space.' Then there's the stress of running a second business in what's meant to be free time. While many of their friends and neighbors are engaging in traditional Hamptons weekend pursuits like tennis, golf, swimming and partygoing, the flippers are visiting lumber yards and gravel yards, stopping at tile wholesalers and plumbing supply houses, going toe to toe with carpenters and plasterers. None of them does the actual construction, but they all become involved in improving the properties, from raising a roof to moving a driveway to carving out space for a pool. That can make their weekend vocation as time-consuming as their weekday jobs. There's no rest for the renovators. When Mr. Woodard goes to the store, he's looking for properties. Ditto when he picks up the dog from the vet; he's looking for properties. 'But the whole thing is getting out of hand,' he said. 'An acre of land that 20 years ago was $65,000 is now a million with no house on it. If it does have a house, it's a tear-down.' An entry-level purchase in the Hamptons these days means spending at least $650,000, said Patricia Wadzinski, a senior vice president in Corcoran's East Hampton office. 'It's getting harder to find undervalued houses,' she added. 'You have to constantly watch what's going on in the market, and if you see something that has potential you have to act immediately because if you don't someone else will.' Indeed, almost all the investors have some version of the one that got away. For Mr. Simko, it is a 1960's flat-roofed ranch near the village of East Hampton that he envisioned turning into a 'very sleek Palm Springs kind of Richard Neutra knockoff.' But hesitant in the market after 9/11, he was outbid. 'I've never gone back to look,' he added with a sigh. 'It would be too painful.' FOR some flippers, buying isn't the hard part. It's the letting go. Though none suffers from outright seller's remorse, they do have a certain nostalgia for the houses they have bought and sold. Mr. Woodard and Ms. Greenstein said they would like to keep every house they've done, a sentiment echoed by Ms. Flynn. 'I get tied to a house a little longer than I should,' she said. 'But you have to move on. That's life.' Still, the pleasure of watching their visions become reality, of turning an ugly duckling into a swan, can become addictive. 'You really get caught up in that real estate frenzy,' said Mr. Simko, who recently decided to quit the business. No looking, no buying, no fixing up for a year. 'I said to my Realtor, 'Don't show me anything.' It's been two weeks,' he added proudly. 'But it will be hard when it becomes summer and I'm out there a lot and see the 'For Sale' signs and not take action. That will be the true test.'

Subject: The Price of Gold From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 11:25:20 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/opinion/03fri1.html The Price of Gold If you could improve the lives of hundreds of millions of the world's most destitute people with a program that might - just might - temporarily reduce the profits of the global gold industry, most people would probably think it is worth doing. Even most members of Congress. That's why it has been so disturbing to see gold producers strong-arm Congress and the White House into blocking just such a desperately needed measure. Poor countries need debt relief. Some African governments spend three times as much on debt service as they do on health care. They could be using the money to train nurses, eliminate school fees and fight AIDS. More debt relief is needed, and a deal needs to be sealed at the summit of the Group of 8 industrial countries in July. A real solution has been postponed because the wealthy countries can't agree on how to finance it. But Britain offered a good answer: have the International Monetary Fund sell about $12 billion of its gold reserves, which have a total market value of about $43 billion. That would cover debt owed the fund, which accounts for 30 percent of the interest payments owed over the next 5 to 10 years by the affected countries. The fund could sell more gold to cancel debts owed the World Bank and other banks. This is the simplest and least painful solution. It would not require new contributions or hurt lending to middle-income countries, and it is the only one that has any hope of support from rich countries. But the United States has veto power over gold decisions in the monetary fund, so this idea needs approval from Congress - and the mining industry has blocked a vote. In January, a letter opposing the sale of I.M.F. gold was signed by 12 senators from Western states, including the Democratic leader, Senator Harry Reid of Nevada. The letter argued that the sale could drive down the price of gold. A similar letter was signed in March by 30 members of the House. Because few lawmakers spend much time thinking about the I.M.F., the letters -sparked by lobbyists from the National Mining Association and gold mining companies - persuaded the leadership that the gold proposal would not pass, even before it came up for discussion. The Bush administration, apparently unwilling to take on a Congressional fight, began in April to oppose gold sales outright. The gold industry is worried about a pricing hit that probably would never happen. In March, the monetary fund concluded that gold prices would not be affected, as it could sell the gold over several years while at the same time asking central banks to sell less. Gold-producing poor countries endorse I.M.F. gold sales. The president of the World Gold Council said recently that he would give them conditional support. Congress needs to debate the issue, not allow a special interest to deny help to hundreds of millions of poor people. President Bush should spend the political capital to push this good idea through the Republican-controlled Congress before the July summit.

Subject: A Work Race to the Top From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 11:23:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/opinion/03friedman.html A Race to the Top By THOMAS L. FRIEDMAN Bangalore, India It was extremely revealing traveling from Europe to India as French voters (and now Dutch ones) were rejecting the E.U. constitution - in one giant snub to President Jacques Chirac, European integration, immigration, Turkish membership in the E.U. and all the forces of globalization eating away at Europe's welfare states. It is interesting because French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day. Good luck. Voters in 'old Europe' - France, Germany, the Netherlands and Italy - seem to be saying to their leaders: stop the world, we want to get off; while voters in India have been telling their leaders: stop the world and build us a stepstool, we want to get on. I feel sorry for Western European blue collar workers. A world of benefits they have known for 50 years is coming apart, and their governments don't seem to have a strategy for coping. One reason French voters turned down the E.U. constitution was rampant fears of 'Polish plumbers.' Rumors that low-cost immigrant plumbers from Poland were taking over the French plumbing trade became a rallying symbol for anti-E.U. constitution forces. A few weeks ago Franz Müntefering, chairman of Germany's Social Democratic Party, compared private equity firms - which buy up failing businesses, downsize them and then sell them - to a 'swarm of locusts.' The fact that a top German politician has resorted to attacking capitalism to win votes tells you just how explosive the next decade in Western Europe could be, as some of these aging, inflexible economies - which have grown used to six-week vacations and unemployment insurance that is almost as good as having a job - become more intimately integrated with Eastern Europe, India and China in a flattening world. To appreciate just how explosive, come to Bangalore, India, the outsourcing capital of the world. The dirty little secret is that India is taking work from Europe or America not simply because of low wages. It is also because Indians are ready to work harder and can do anything from answering your phone to designing your next airplane or car. They are not racing us to the bottom. They are racing us to the top. Indeed, there is a huge famine breaking out all over India today, an incredible hunger. But it is not for food. It is a hunger for opportunity that has been pent up like volcanic lava under four decades of socialism, and it's now just bursting out with India's young generation. 'India is the oldest civilization, the largest democracy and the youngest population - almost 70 percent is below age 35 and almost 50 percent is 25 and under,' said Shekhar Gupta, editor of The Indian Express. Next to India, Western Europe looks like an assisted-living facility with Turkish nurses. Sure, a huge portion of India still lives in wretched slums or villages, but more and more of the young cohort are grasping for something better. A grass-roots movement is now spreading, demanding that English be taught in state schools - where 85 percent of children go - beginning in first grade, not fourth grade. 'What's new is where this movement is coming from,' said the Indian commentator Krishna Prasad. 'It's coming from the farmers and the Dalits, the lowest groups in society.' Even the poor have been to the cities enough to know that English is now the key to a tech-sector job, and they want their kids to have those opportunities. The Indian state of West Bengal has the oldest elected Communist government left in the world today. Some global technology firms recently were looking at outsourcing there, but told the Communists they could not do so because of the possibility of worker strikes that might disrupt the business processes of the companies they work for. No problem. The Communist government declared information technology work an 'essential service,' making it illegal for those workers to strike. Have a nice day. 'This is not about wages at all - the whole wage differential thing is going to reduce very quickly,' said Rajesh Rao, who heads the innovative Indian game company, Dhruva. It is about people who have been starving 'finally seeing the ability to realize their dreams.' Both Infosys and Wipro, India's leading technology firms, received more than one million applications last year for a little more than 10,000 job openings. Yes, this is a bad time for France and friends to lose their appetite for hard work - just when India, China and Poland are rediscovering theirs.

Subject: A Race to the Bottom From: David E.. To: Emma Date Posted: Fri, Jun 03, 2005 at 18:00:58 (EDT) Email Address: Not Provided Message: More bullshit from Friedman. The frame is not the workweek, the frame is the labor rate. The french are happy with their 35 hour work week. The french accept the trade off of free time for a lower weekly check. Surprisingly though, the 'lazy' french have productivity that is amongst the highest in the world. That means that when they work they get more done than most per hour. Conservatives love to make fun of the french. But to me, it seems that the french are worried about the right things. This is about who bears the costs of globalization. If the profits of globalization were shared with the losers in globalization, globalization would be easier to accept. But right now, globalization and immigration costs will hit only the working man. So why vote for a paycut? The french are rational, as usual, by refusing to go forward. But, without globalization, India and China will be held back from improving their economies. Social justice for the world requires that globalization proceed. I state this so that you can understand I am for globalization. I am unhappy about who will pay the costs of globalization. The current structure of globalization requires the working man to pay the costs of globalization. This is unfair, those who profit from globalization should help with the disruption costs. Retraining and education costs should be paid from globalization profits. And in case anybody thinks they are safe, so to hell with the rest, let me remind them that many professional tasks can with current technology be done cheaply by China and India. Lawyers, accountants, radiologists, economists, teachers, and government bureaucrats are on the list of jobs to go overseas. The next wave of lost jobs will be white collar. Plus the immigration of millions of desperate people applies even more pressure on wages. If no thought has been given to those whose lives are about to be destroyed, why would a french worker, and why would an american worker support globalization? I dont think the time for globalization support is now. No plan means that a few will gain incredible riches, and many will suffer poverty. Why should the many vote for poverty? But Cheers anyway! David

Subject: Re: A Race to the Bottom From: Terri To: David E.. Date Posted: Fri, Jun 03, 2005 at 21:08:28 (EDT) Email Address: Not Provided Message: Thank you for each interesting comment, David.

Subject: AIDS, Pregnancy and Poverty in Africa From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 11:05:46 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/international/africa/03mozambique.html?pagewanted=all AIDS, Pregnancy and Poverty Trap Ever More African Girls By SHARON LaFRANIERE PATRICE LUMUMBA, Mozambique - They met a year ago on the dirt road outside her aunt's house, in this struggling township where houses are built from bound-together reeds and the only water comes from wells. Flora Muchave was 14. Elario Novunga was 22, nicely dressed and, Flora said, full of promises. One stood out: Flora's family had been teetering on the edge of destitution since her father, a miner, died of AIDS in 2000. Elario said he would change that. 'He asked me to have sex with him, and he guaranteed everything I would need,' Flora recalled. 'He said he would take care of everything for me.' He lied. Elario gave Flora the equivalent of about $4 and a baby, whose impending birth has forced her to drop out of sixth grade. Before Flora's mother died in May, apparently of AIDS, she forgave her daughter for ignoring her warnings about fast-talking men. But she sketched out a bleak future for her only daughter. 'Now,' Flora recalled her sobbing from her deathbed, 'you are going to suffer.' Flora Muchave's cautionary tale is nothing new; Africa claims the world's highest adolescent birthrate and the world's lowest share of girls enrolled in primary school. But for the last 25 years, the trends had been positive. African girls, like girls elsewhere, were marrying later, and a growing percentage were in school. The AIDS epidemic now threatens to take away those hard-won gains. Orphaned and impoverished by the deaths of parents, girls here are being propelled into sex at shockingly early ages to support themselves, their siblings and, all too often, their own children. 'AIDS is reversing the trends that were improving for girls,' said Margie de Monchy, regional child protection officer for the United Nations Children's Fund. 'We really have to look at the kinds of lousy choices - and sometimes no choices - that they have for survival.' With 12 million children orphaned in sub-Saharan Africa because of AIDS, suffering abounds among boys as well as girls. But orphaned girls tend to fare worse, relief officials say, because they traditionally hold a lower status in African society, are more vulnerable to sexual exploitation and, for anatomical reasons, are more likely than boys to contract H.I.V. In Zimbabwe, a new Unicef study has found that orphaned girls are three times more likely to become infected than are girls whose parents are alive. In Zambia, orphaned girls are the first to be withdrawn from school. In Zambia's capital, Lusaka, impoverished relatives order some orphaned girls as young as 14 out on the street at night, telling them they must earn their keep, a recent survey found. In Lesotho, a growing number of adolescent girls are forced to work as maids or prostitutes, Unicef researchers have reported. 'Orphaned girls are at the absolute margins,' said James Elder, Unicef's spokesman in Zimbabwe. 'They are the very bottom of the barrel. They are much more likely to engage in risky behavior just to survive.' Patrice Lumumba, on the Indian Ocean a three-hour drive north of the capital, Maputo, is by no means Mozambique's poorest township. Most of its houses of reeds or concrete are well built and neatly maintained. Most residents have some semblance of furniture, even if only a set of plastic chairs hauled out for guests. But AIDS has hit hard here, like everywhere in southern Africa. One in every six people between the ages of 15 and 49 is infected with the virus in the surrounding Gaza Province. Of the town's 43,000 residents, 1,583 are orphans. One in four primary school students has lost at least one parent, according to Pedro Mausse, headmaster of the primary school. Flora's parents furnished their two-room reed house, which has a corrugated metal roof, with a wardrobe, dishes and two upholstered chairs. Flora said she remembers how her father's earnings from work in South Africa's mines kept the family supplied. After he died in 2000 at 36, she said, her mother's earnings as a cook for a Bible school - the equivalent of less than $35 a month - did not go far enough. She could no longer afford to hire a tractor or a pair of oxen to plow the family's two fields. 'It was hard to get food and clothes and soap,' said Flora, a short, plump girl with a ready smile, curly lashes and ebony skin. The whole situation made her more susceptible to Elario's blandishments, she said. 'Actually, I was cheated,' she said, smiling in embarrassment, as she waited for donated food outside a Unicef-financed organization. 'He is a big liar.' Flora's mother, Ester, was still working as a cook in a Bible school last October when a relative told her Flora was pregnant. 'At first I denied it,' Flora said. 'Then I started to cry. Then she started to cry. She said: 'I warned you against this. Now you are going to find out for yourself.' ' Her mother's death on May 9 is vivid in Flora's mind. That morning, she said, Ester called Flora and her 7-year-old brother to her bedside and ordered them to eat breakfast. 'I am told you are not eating, that you are spending all your time crying,' Flora recalled her saying. 'Whether you cry or not, I am still going to die. And I don't know who will provide for you.' Although Flora's body is unwieldy after eight months of pregnancy, she still looks like a typical adolescent. Her face is covered with acne, her black polyester blouse is frilly, her plastic thongs a cheerful yellow. But there is nothing childlike about her life anymore. Her father's relatives have abandoned her and her brother because her mother kept her husband's possessions after he died, flouting the tradition that says that a man's relatives, and not his wife, should inherit his wealth. Her mother's sister, a widow with five children, can offer little help. So it was Flora who, one Wednesday in May, hauled home a 66-pound sack of unmilled corn, 7 pounds of beans and a quart of cooking oil from a Unicef-supported center run by Reencontro, a Mozambican charity that assists people with AIDS and orphans. The next day, she balanced a 55-pound pail of water on her head and trekked half a mile home from the township's well. 'There isn't anyone to help,' she said, soaked to the skin from the pail's sloshing water, as she struggled to set the bucket down. 'The responsibility is in my hands, so I have to do it.' Workers for Reencontro are urging Flora to return to school, and Flora, who says she used to get good grades, is interested. 'But I don't know who would pay for the textbooks,' she said. Flora is but one of 639 orphaned girls here identified by Reencontro. Two years ago, a worker found Lisario Mariquele, already pregnant at 13, caring for her ailing mother and three younger siblings. Her father had died at least four years earlier, apparently of AIDS. Although a younger brother had made it to third grade, Lisario had never been to school before. What she knew was chores: hauling water, cooking over an open fire, kneeling over a wooden bowl with a heavy stick and pounding kernels of corn into paste. Her work multiplied last year after her son was born and her mother died of AIDS. One recent morning, Lisario stopped pounding corn long enough to chat, her arms and blouse spattered with white flecks of paste. Her son, Vincente, slept nearby on a dirty reed mat, anemic and plagued with diarrhea. The dirt yard around them was strewn with beer bottles, shoes, rags and other debris. Her son's father is named Joăo, she said. She never learned his last name or his age. She agreed to have sex, she said, because 'he promised to take care of me.' 'It was a mistake on my part,' she said. When the baby was born, she tracked down Joăo in a nearby township. She said he told her: 'The baby is yours.' Under pressure from Reencontro, she has now enrolled in first grade. Every other weekday afternoon, she lashes Vincente to her back with a strip of cloth and hikes to the school, where a two-hour class for adults is held under a tree. She is ill-equipped and unsure of herself there. One recent Wednesday, she had to borrow a pencil and a sharpener. She repeatedly checked her notes on elementary Portuguese, Mozambique's official language, against those of a classmate. 'I learned a lot of things,' she said the next morning, hurriedly wrapping a cloth around her naked baby. 'But I can't remember them now.'

Subject: India's Economy Tracks the Monsoon From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 11:04:54 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/business/worldbusiness/03monsoon.html Downpour or Drought? India's Economy Tracks the Monsoon By SARITHA RAI BANGALORE, India - Each year, stock market analysts, company chief executives, government planners and even foreign investors eagerly await word on an indicator pivotal to India's economy: the forecast for the June-September monsoon season. So on Thursday, when the government's weather research center backtracked from a rosy prediction in April and made a bleak forecast for rains in the first half of the season, it cast a pall on hopes for India's agricultural output and boded ill for the country's economic growth. The Center for Mathematical Modeling and Computer Simulation said Thursday that rains would be 34 percent below normal in June, a reversal of the April prediction of more than 22 percent above normal. The revision sent the benchmark Sensex index in Mumbai down 74 points, a 1 percent drop. The monsoon forecasts in India are riveting enough without twists and turns. While India - the world's second-fastest-growing economy, after China - has recently been better known for its high technology and outsourcing, about two-thirds of the country's one billion people still depend on farming for a livelihood, and agriculture accounts for about one-quarter of gross domestic product. Growth in the farm sector bolsters consumption in the villages, and any slowdown is bad news for rural demand. 'We sincerely hope and pray rains are bountiful this year and crops do not suffer,' India's finance minister, Palaniappan Chidambaram, was quoted by news services as saying on Thursday while introducing an insurance plan for farmers to protect them from the vacillations of the rains. Though the impact of the monsoon on the economy is waning somewhat, as nonagriculture sectors grow, the anxiety over the rains is still all pervasive even a month before the first official pronouncement. 'Financial analysts start calling us from the beginning of March, but so far the forecast has never been leaked,' said M. Rajeevan, director of the government's National Climate Center based in the Western city of Pune, which makes the official long-range monsoon forecast. This year's worry began when the rains did not reach the southwestern coast of Kerala as they generally do by June 1, heralding the start of the season. The earlier prediction - for the timely arrival and even distribution of the rains - immediately raised optimism about a third consecutive year of strong growth in India, after the 8.5 percent expansion in the year ended in March 2004 and the estimated growth of nearly 7 percent in the year ended this March. Investors greeted the prediction with a nearly 3 percent rise in the Sensex index in the following few days. Though floods from the monsoons cause death and destruction, only about a third of India's crops are grown on irrigated land and the rest rely on the rains, which also bring relief from the searing heat. 'Good rains ensure higher farm incomes and fuel favorable demand for products ranging from soaps to televisions to motorbikes,' said Alroy Lobo, co-head of institutional equities at Kotak Securities in Mumbai. The rural areas, where some 600 million Indians live, are markets with huge potential - and appetites - for growth. Companies like Hindustan Lever, the country's largest consumer products company, see a direct correlation between the monsoon and disposable income in the villages. The first scientific monsoon forecast by the India Meteorological Department, in 1886, was based solely on a single factor: slow-melting snow cover on the Himalayan Mountains in the north indicated delayed and scanty rains. And that turned out to be the case. Officials now rely on computers and sophisticated models to weigh multiple weather factors. But, as it has with this year's contradictory predictions, the modern computer forecast wizardry proved lacking last year. While timely, average and evenly distributed rainfall was predicted, the stop-start rains were 13 percent deficient. A resulting slowdown in the farm sector held down overall economic output. Some aspects of the monsoon forecast have remained unchanged for decades. The start date of the monsoon, critical for planting crops, is still done by direct study of cloud patterns and signals from the ocean. 'In the old days, there was much fanfare around the annual monsoon forecast,' recalled D. R. Sikka, who retired as director of the Indian Institute of Tropical Meteorology after five decades of predicting rainfall. In the 1960's 1970's, officials in the southern state of Kerala would send a message to the office of the prime minister in New Delhi at the first sign of clouds. In past decades, economic growth contracted to almost zero after a particularly bad monsoon. While the weather is still a potent influence, economic output more recently has dipped to around 4 percent in years of bad monsoons and rose past 8 percent during particularly good years. The contribution of agriculture to the gross domestic product has dropped from more than 40 percent in the 1960's and 70's to just 23 percent, according to Jyoti Narasimhan, principal analyst in the Global Macroeconomics Group at Global Insight, a research and forecasting firm based in Waltham, Mass. And, with the nonagricultural sector in China also strengthening, said Joydeep Mukherji, director of the sovereign ratings group at Standard & Poor's, 'the macroeconomic performance of both countries is less dependent than before on the bounty of the rain gods.'

Subject: Car Makers Still Trailing Japanese From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 10:15:47 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/03/automobiles/03harbour.html U.S. Car Makers Still Trailing Japanese By JEREMY W. PETERS DETROIT - While the Big Three domestic automakers made strides toward improving productivity last year, a study published Thursday found that the Big Three Japanese companies continued to build their vehicles faster and more efficiently than American companies. According to The Harbour Report, an influential gauge of productivity and profitability that is closely watched in the auto industry, Toyota, Nissan and Honda spent less time building their cars and trucks in North America last year than General Motors, Ford Motor and DaimlerChrysler. Toyota was the quickest, averaging 27.9 hours a vehicle. Ford was the slowest, averaging 37 hours a vehicle. Perhaps even more telling than the productivity gap was the gap in profitability. The report said that for the first three months of 2005, Nissan made the most money per vehicle, earning an average of $1,603. General Motors was at the opposite end of the spectrum, losing $2,331 on each vehicle. Ronald Harbour, the report's publisher and president of Harbour Consulting, said at a news conference here on Thursday that the productivity gains American auto companies have made in recent years were less significant given their shallow profits. 'They are very competitive from a manufacturing standpoint, but they've got to convince people to buy their products and to spend full price on them. And if they don't, this is the problem.' Mr. Harbour's report comes as G.M. and Ford, the nation's two largest automakers, are bracing for a particularly bad year. G.M., which lost $1.1 billion in the first quarter, has abandoned its earnings guidance for the year. Ford has told investors to expect at best break-even results for its automotive division. The Chrysler division of DaimlerChrysler, which is Detroit's lone success story this year, earned $186 per vehicle, the report said. Ford was the top earner per vehicle of the domestic automakers, turning a $620 profit in the first quarter. Still, that was less than half the profit of Honda, which earned $1,250, the least per vehicle of the Japanese companies. Toyota earned $1,488. Toyota came out as the most productive, which Harbour measures by the number of hours it takes to build a vehicle. Toyota improved by 5.5 percent over 2003, to 27.9 hours. Ford and Chrysler improved by 4.2 percent each, to 37 hours and 35.9 hours, respectively. General Motors improved 2.5 percent, to 34.3 hours. Honda's performance was largely flat compared with last year, at 32.02 hours a vehicle. Only Nissan declined in productivity, taking an average of 29.4 hours to build a vehicle. That was down 4.8 percent from 2003. Mr. Harbour said he did not believe that Toyota's productivity gains would level off anytime soon. 'They may be the most profitable, but they have convinced themselves that they are paupers,' he said. 'They are out every day looking for how can I squeeze another dime out, how can I make a little more improvement than I did yesterday.' A Toyota spokesman said that while the company was satisfied with its performance, it expected to improve even more. 'I'd be surprised if there were any areas we were not targeting for improvement,' the spokesman, Dan Sieger, said. 'We never consider ourselves on top of anything.' Guy D. Briggs, G.M.'s vice president for manufacturing and labor relations, said Thursday that G.M. saw Toyota's gains as even more reason to increase productivity. 'We do note that we've got to move a lot faster because the competition, especially Toyota, is improving,' he said.

Subject: Request on info on Credit Default Swaps From: Setanta To: All Date Posted: Fri, Jun 03, 2005 at 08:42:12 (EDT) Email Address: Not Provided Message: i remember an article on credit default swaps and insider trading by the issuers of CDS's. i'm participating on a course on CDS's and other derivatives and think it is something we (auditors) should be aware of when examining them. If anyone has a copy of the article could you email it to zakalwe77@hotmail.com. Thanks

Subject: Re: Request on info on Credit Default Swaps From: Terri To: Setanta Date Posted: Fri, Jun 03, 2005 at 11:43:16 (EDT) Email Address: Not Provided Message: Looking, looking, Dear Setanta.

Subject: Caution in Europe From: Terri To: All Date Posted: Fri, Jun 03, 2005 at 05:55:51 (EDT) Email Address: Not Provided Message: The more I read a sampling of European writers, the less concerned I am that the Constitution was rejected. There is a peculiar distance between the political elite in France and the Netherlands that really must be countered. Then if countering means delaying further integration for a while to gain more of a political closeness through leadership of French or Dutch classes, I am pleased with the message. The message rather than 'No to a market society,' is no to a market society that would strip away surety. There is entirely too much talk of the end of France or other European states as we know them unless they set aside social-economic protections that have been generations in developing.

Subject: A New SEC Chief From: Terri To: All Date Posted: Fri, Jun 03, 2005 at 05:51:21 (EDT) Email Address: Not Provided Message: These last 4 years, what diligence there has been by the SEC on securities law enforcement and investor protection has been driven by the work of Eliot Spitzer as New York Attorney General. With Spitzer likely to become Governor of New York, we must hope there has been a tradition set for the coming Attorney General for there is where investor protection will have to come from. This latest nomination to the SEC may prove a distressing move away from rights protection.

Subject: Re: A New SEC Chief From: Terri To: Terri Date Posted: Fri, Jun 03, 2005 at 05:52:46 (EDT) Email Address: Not Provided Message: The President expressed concern that tight securities restrictions hampered markets several years ago, and now we appear to have a response.

Subject: Opposition to Doubling Aid for Africa From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 05:39:35 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/politics/02prexy.html?ex=1118376000&en=b9c537fbc79e51f1&ei=5070&emc=eta1 President Bush Maintains Opposition to Doubling Aid for Africa By ELIZABETH BECKER and DAVID E. SANGER WASHINGTON - President Bush refused on Wednesday to budge on his administration's opposition to doubling aid for Africa, a major proposal on the agenda for a summit meeting of industrial nations next month in Scotland. The long-simmering dispute could culminate next week when Prime Minister Tony Blair of Britain, who has advocated the plan, visits Washington in advance of the July session, a meeting of the Group of 8. As host of the meeting, Mr. Blair set the agenda, and he argued during his successful campaign for a third term in office that the world's richest nations had to make a $25 billion increase in support for Africa. But Mr. Bush has been cool to the idea from the start and has resisted making new aid commitments. Asked Wednesday about the issue, Mr. Bush said, 'It doesn't fit our budgetary process.' Meeting the South African president, Thabo Mbeki, in the Oval Office on Wednesday morning, Mr. Bush also renewed his administration's declaration, first made by Colin L. Powell when he was secretary of state, that genocide was taking place in the Darfur region of Sudan. Mr. Bush has said almost nothing about Darfur this year, and several human rights groups have criticized him for paying too little attention to the issue. But on Wednesday he noted that the deputy secretary of state, Robert B. Zoellick, was on his way to the region for his second trip. Congress recently approved $50 million in additional aid for refugees in Sudan, and the United States has committed to providing transportation for Rwandan troops who are going into the area as part of an African Union force that is expected to number about 7,700 troops. If the word 'genocide' was on Mr. Bush's mind, it may be because he had dinner on Tuesday at Mr. Powell's home in Virginia. But Mr. Mbeki sat in silence when Mr. Bush used the term, refusing to declare that the Sudanese government was responsible for the killings in the region. 'It might be fine for some in the United States to make all kinds of statements,' he said later. 'If you denounce Sudan as genocidal, what next? Don't you have to arrest the president? The solution doesn't lie in making radical solutions - not for us in Africa.' While the Darfur crisis, along with the problem of AIDS, has dominated the administration's debate about assistance for Africa, Mr. Blair's call for a vast increase in the amount spent to fight poverty has created considerable tension between Washington and Britain. In March, Mr. Blair called on rich nations to double aid to Africa while challenging African nations to end the corrupt practices that have undercut so much aid in the past. Pointing to the poverty in Africa and the deaths of millions of children there each year, Mr. Blair called improving the continent 'the fundamental moral challenge of our time.' But he has run into opposition in Germany and Italy, which are both Group of 8 members. Mr. Bush's opposition, if it holds, could doom the effort at the meeting in Scotland. Mr. Bush has his own agenda for the session, including nuclear proliferation and the situation in Iraq. In an interview, Mr. Mbeki said his meeting with Mr. Bush had been part of a two-week campaign to speak with the leaders of the eight industrial countries about Mr. Blair's initiative, and to forge a consensus on how to help Africa. South Africa is the only African nation that will attend the annual summit meeting. 'President Bush responded extremely positively to all of the suggestions for the meeting,' he said, though he stopped short of saying that Mr. Bush had made any new commitments. Mr. Mbeki is seeking more development help for Africa, a reduction in agriculture subsidies that compete with African exports and relief of the debt of the poorest countries. He urged the wealthier nations to choose their own ways to help and noted that the European Union was considering imposing a new tax to finance the program. 'I am absolutely certain President Bush is willing to commit whatever is required,' he said. But in the United States, such a tax would be antithetical to Mr. Bush's philosophy, and a tax aimed at foreign assistance is most likely to run into considerable resistance within Mr. Bush's own party.

Subject: Protecting the Environment in Chile From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 05:30:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/international/americas/02chile.html From Thousand-Year-Old Sentinel to Traffickers' Booty By LARRY ROHTER ALERCE, Chile - The majestic tree that gives this town its name is one of Chile's principal national symbols. Streets, schools, suburban housing developments, hotels, gas stations, taxi fleets and even a record company and a brand of cellphone - all invoke and honor the towering and sturdy 'sequoia of South America,' as the alerce is sometimes called. But here in Alerce, as in many other parts of southern Chile, there are scarcely any alerce trees to be found these days. Predatory cutting and burning in defiance of laws meant to protect the species have reduced its range and numbers by half and created a lucrative black market in which alerce timber can fetch as much as $5,000 per cubic yard, if successfully spirited abroad. 'The corruption is tremendous, involving very important people,' said Adriana Hoffman, a former Environmental Protection Agency director. 'There is always plenty of talk about saving the alerce, but nothing gets done and as a result, we are losing part of our patrimony. What is going on is truly scandalous.' Despite its resemblance to the North American redwood, the alerce (pronounced ah-LER-say) is actually a relative of the cypress, with a tough, water-resistant reddish-brown wood that makes it much sought-after for use in building construction and furniture making. Slow-growing, largely because it favors soils poor in nutrients that other trees shun, it nonetheless grows to a height of 165 feet or more and a width of 15 feet, and some trees in protected areas are more than 3,600 years old. Since 1975, the export of alerce timber from Chile for commercial purposes has been banned under the Convention on International Trade in Endangered Species. To further protect the species, Chile in 1976 also approved laws that declared the alerce a 'national monument' and prohibited the cutting down of any live trees. But those regulations contained a loophole that loggers were quick to exploit. Since it is legal to harvest dead trees killed off by fire, lightning or disease, traffickers have been clandestinely helping the process along, environmental advocates say, in hopes of reaping big windfalls. Most often, loggers simply strip trees of their bark or set forest fires to scorch them and make them eligible for the death certificates that are required before they can be cut down and trucked to sawmills. But the traffickers have also been known to 'strangle' alerces with metal rings placed tightly around the trunk. On a recent cold and drizzly Saturday morning, José Darío Cárcamo, 68, and his son and grandson were scavenging for the remnants of trunks in what had once been a grove of alerce trees here. Their plan was to recover as many stumps as they could with their axe and power saw and then sell the wood, either to neighbors for fuel or to local artisans who prize the alerce as the raw material for carved souvenirs or musical instruments. 'When I was a young man, it seemed that there were still alerce forests everywhere,' said Mr. Cárcamo, a former woodsman. 'Now my grandson has only this, and God only knows what will be left for his grandson.' Government officials maintain that environmental groups here and abroad are exaggerating the threat. They argue that alerce stocks remain plentiful and that the official policy is working better than the alternatives suggested by critics. 'The alerce is not going to be wiped out this year or next, or in the next thousand years,' Carlos Weber, director of the National Forestry Corporation, the government agency that oversees all aspects of Chile's forest management, said in an interview in Santiago. 'We're not talking about 50 or 100 trees left, we're talking about hundreds of thousands of acres, far above what the market demands each year.' In an effort to safeguard the alerce, Chile has set up a network of national parks and other protected areas. But the government has crippled the environmental crimes division of the national police, and environmental advocates say they are worried at other signs of a lack of resources and political will to guarantee that the law is obeyed. 'It's an absurd responsibility and raises the question of whether the government is serious about enforcing environmental laws in southern Chile,' said Aaron Sanger, the representative in Chile of Forest Ethics, an American environmental group. 'The government has one ranger for every 900,000 acres in that region, so it is kind of hard for that ranger to do a good job of detecting illegal logging in these remote places.' Environmental groups charge that the illegal traffic in alerce wood is controlled by a mafia that has connections to powerful politicians. Last year, a judge near here received death threats after she began an investigation into charges that a federal senator had improperly pressured Mr. Weber to issue logging certificates to favored constituents. More recently, the mayor of Fresia, west of here, Nelson Schwerter, was arrested and accused of being a middleman in an alerce-smuggling scheme. He has accused judicial authorities of a political vendetta, but five woodcutters have identified the mayor as the person to whom they sold illegally logged alerce. Much of the alerce shipped abroad has been tracked to places like Britain and Japan. 'The alerce is mixed with other woods that are not on the protected list, and the customs people are none the wiser,' said Dr. Hoffman, now the director of Defenders of the Chilean Forest, a leading environmental group. 'There is little control and even less knowledge.' Yet in spite of the high price that alerce commands on the black market, commercial loggers have shown little interest in replanting the tree, for obvious economic reasons. Pine and eucalyptus grow fast enough that they are ready for cutting in as little as 20 years, while the alerce requires 1,000 years or more.

Subject: Living on a 'Ferry' From: Emma To: All Date Posted: Fri, Jun 03, 2005 at 05:28:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/garden/02olle.html?8hpib=&pagewanted=all The Scavenger's Guide to the Galaxy By RAUL A. BARRENECHE SAN FRANCISCO OLLE LUNDBERG has a client list most architects would kill for. In the last nine years, he has designed a minimalist pied-ŕ-terre in Pacific Heights for Lawrence J. Ellison, chief executive of Oracle; a weekend ranch for John Pritzker of the Chicago hotel dynasty; and a Napa home for Leslie Rudd, an owner of Dean & DeLuca. Although he is known for polished modernist houses for high-profile clients, Mr. Lundberg, 51, is no smooth-talking, Prada-draped operator. On the contrary, he is a slightly scruffy scrapmaster, a no-nonsense guy who lives in homes he fashioned from found parts. Architects are notoriously fond of industrial refuse, from the corrugated metal and chain-link fence that Frank Gehry installed around his Santa Monica bungalow in the 1970's to the shipping containers that Shigeru Ban stacked on a Manhattan pier this spring to create a temporary gallery. But Mr. Lundberg has taken the romance of refuse a step further by surrounding himself, at home and at work, with reclaimed materials. During the week, he and his wife, Mary Breuer, live aboard the Maritol, a decommissioned Icelandic car ferry docked at Pier 54 in the Mission Bay neighborhood of San Francisco. 'Is there discomfort?' said Ms. Breuer, 61. 'Yes, but the trade-off of living where we do is worth it.' On weekends, they drive two hours north to Cazadero, Calif., where they have assembled a cabin from materials salvaged from houses and offices that Mr. Lundberg's firm, Lundberg Design, built or remodeled. 'I like getting dirty,' Mr. Lundberg said. 'If you build a house yourself, it becomes more personal. It takes on a life of its own and keeps evolving.' Mr. Lundberg and his staff are well accustomed to getting dirty. They fabricate steel staircases, aluminum coffee tables and other custom items for clients in the expansive shop that is the centerpiece of their studio housed in a former mattress factory. Mr. Lundberg and Ms. Breuer started looking for industrial buildings to buy years ago. But despite the vacancies created by the dot-com crash, they could not find a suitable building. 'I'd seen tugboats that had been converted,' Mr. Lundberg said, 'so I thought, 'What about a small ship?' ' He found the Maritol, which was built in 1975, listed for $260,000 on a Web site, shiprepo.com, which deals in used and repossessed ships. He and Ms. Breuer flew to Iceland to buy it and hired five of the ship's crew members to deliver it through the Panama Canal to San Francisco, a seven-week trip. They spent another $600,000 repainting the exterior, rebuilding the engine, converting the electrical system to United States standards and other alterations required to make the ship habitable. (They pay $1,500 a month in docking fees.) The deck once filled with Volvos and Saabs is now a sunny, loft-like living room and bedroom. Mr. Lundberg spent $4,000 on a glass garage door to protect the open stern from spells of bad weather while the aft gangway is left open. In really big storms, the aft gangway itself is closed. Rough seas in winter can rock the boat 'enough so that you can see the propellers come out of the water, but not enough to spill a glass of water,' Mr. Lundberg said. The dining room is one deck down, just below the water line, in what had been a passenger cafeteria. Before leaving Iceland, Mr. Lundberg cut a hole in the car deck so that natural light can pass through the living area to the dining room one deck below. Meals are served at a table made from an 18-foot-long slab of cypress left over from the Slanted Door, a popular Vietnamese restaurant Mr. Lundberg designed in the newly restored Ferry Building. It was originally purchased for the restaurant from the Urban Tree Mill (urbantreemill.org), a nonprofit group based in Oakland, Calif., that recycles trees removed during street improvements. Ms. Breuer spends the most time on board, since she runs her business, a recruiting firm for design offices, from an upper deck. 'I feel like one of those salty John Steinbeck characters from 'Cannery Row,' ' she said. 'For eight or nine months a year, the water is calm and there's lots of sun.' Ms. Breuer and Mr. Lundberg have no real neighbors. The Maritol's commercial berth is eerily quiet, overlooking the wooden foundations of a dilapidated pier and the East Bay hills across the bay. 'We're in the middle of the city, but we enjoy a very quiet, private enclave,' Ms. Breuer said. The couple's weekend cabin is another work in progress. Nine years ago, they bought 16 acres for $158,000. The previous owner, a retired teacher, had started building a one-story cabin, but sold the property before completing it. There was no electricity or plumbing; a septic system was installed but not connected. Mr. Lundberg worked weekends to adapt the existing structure to his own design. Until the roof was finished, he and Ms. Breuer slept in a tent pitched in the living room. The cabin became fully habitable only four years ago, when the bathroom was completed. Like practically everything else in the house, the bathroom is made of leftovers from one of Mr. Lundberg's projects, in this case marble from an office lobby. The old-fashioned steel sash windows came from five different jobs, including the house in Pacific Heights that Mr. Ellison tore down to make way for the home designed by Mr. Lundberg. Others came from a demolished warehouse in San Mateo, Calif. 'I told the guys tearing it down that I'd pay them $50 a piece if they took the windows out carefully,' Mr. Lundberg said. Much of the furniture in the cabin was custom made for clients, but was not used because of imperfections, and was then adopted by Mr. Lundberg and Ms. Breuer. The aluminum coffee table, for example, was made for the Diva Hotel in San Francisco, which Mr. Lundberg remodeled in 1999, but it had a flaw in the casting. A cypress coffee table built for the Slanted Door restaurant was too thin; a custom Corten steel firewood holder left rust stains on a client's limestone floor. The pool is an old wooden water tank - 25 feet in diameter and 14 feet deep - from a cattle ranch one of his clients bought. 'She was ready to bulldoze it, but I told her she couldn't,' Mr. Lundberg said. 'So I took it.' He considered hiring a helicopter to deliver it to his property, 'but we were worried about the wind,' Mr. Lundberg said. So he took it apart and trucked it to his cabin in pieces. About 5 of the tank's 150 slats had holes in them, and Mr. Lundberg replaced them with pieces of redwood used in wine tanks at a nearby winery. 'When we swam in the pool the first year it smelled like cabernet,' he said. The only feature Mr. Lundberg and Ms. Breuer paid full price for was the copper roof, which cost about $25,000. 'I considered doing it in the shop,' Mr. Lundberg said. 'We have the technology, but it would have taken three seasons to do it.' Aside from his original purchase, his only cost was materials, which came to about $150,000, Mr. Lundberg said; to have the cabin built would have cost roughly $750,000, he estimated. Mr. Lundberg has built most of the cabin himself, but his staff has contributed plenty of work. Three or four times a year, Mr. Lundberg holds 'building parties,' in which employees help Mr. Lundberg with tasks like pouring the foundation, putting up wood framing and installing windows. It may sound like forced labor, but it's accompanied by kegs of beer and golf outings, and Mr. Lundberg and Ms. Breuer make the cabin available to employees when they aren't using it. 'It's great to come up here and build cool stuff and then eat like kings,' said Alan Owings, one of the designers in Mr. Lundberg's studio. Or like Vikings. When he's not building, Mr. Lundberg, the son of Swedish immigrants who looks every bit the towering Nordic hero, is cooking. 'We've got three smokers, two barbecues and a rotisserie where we usually cook a whole pig,' he said. 'We set up sawhorses as tables and can fit 30 people for dinner.' A party is officially a hit when Mr. Lundberg, or one of his guests, ceremoniously dons the metal Viking helmet that a neighbor gave him as a birthday present. 'Now it's a tradition,' Mr. Lundberg said. 'You have to drink to the point where you're willing to put on the helmet, and be photographed.'

Subject: It's a matter of survival From: Pete Weis To: All Date Posted: Thurs, Jun 02, 2005 at 21:23:59 (EDT) Email Address: Not Provided Message: A friend of my wife and myself is a real estate appraiser. She has done alot of appraisals in the past for Washington Mutual. But a while back she did two appraisals which did not come in high enough to validate the refinancing sought by the home owners. So another appraiser was brought in and he came in with a sufficiently high enough appraisal to enable the refinancing and for all involved to get their checks. It seems that Washington Mutual had previously held their home loans in-house and assumed the risk, but our friend says they are now selling their loans on the secondary market mostly through Fannie-Mae. She is now arranging to meet with local Washington Mutual people in an attempt to restore their business which was a major part of her overall business. She had some serious medical problems in the last couple of years and had to refinance her own home to cover expenses. I get the feeling she is going to accomodate what the folks at Washington Mutual want from her because it's a matter of survival for her. Anyway, I don't blame her if she does conform - in the end it comes down to those who except the risk at the end of the line. So it's the folks who are buying up the mortgage securities who are enabling this coming debacle and there is really no excuse for their foolishness - the evidence of the housing mania is very much out in the open for all to see. They will pay a heavy financial price, but few of us will escape the fallout. From The Washington Post: A Bane Amid The Housing Boom: Rising Foreclosures By Michael Powell Washington Post Staff Writer Monday, May 30, 2005; A01 PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years. There's Marciela Perez, who fell ill with cancer, lacked health insurance and stopped making mortgage payments. Barrel-chested Richard Hidalgo, who got divorced and could no longer make his monthly nut. And Mike O'Mara, a rawboned and crew-cut truck driver who took on too much debt, lost his job and fell behind on his mortgage. 'Mortgage companies convinced us to refinance, and each time our bill went up,' O'Mara said as he surveyed his narrow street from his shaded front porch. 'You fall behind and they swoop down on you.' Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a 'Depression-era' problem. The foreclosures fall particularly hard on black and Latino families. For some American homeowners, the greatest housing boom in U.S. history has delivered riches. They repeatedly tap their homes for equity and use the cash to purchase granite countertops, a BMW, even a trip to the Super Bowl. But there's a dark side -- a sharp rise in foreclosures that is destroying the single greatest generator of personal wealth for most Americans. Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods. Virginia, Maryland and the District have relatively low foreclosure rates -- analysts say troubled owners in those booming markets can still sell their homes before facing foreclosure. Should the nation's housing bubbles deflate, as many economists and federal officials expect, the foreclosures could prefigure a national crisis. Americans now shoulder record levels of housing debt -- more than 8 percent of homeowners spend at least half their income on their mortgage. 'We are clearly seeing a spike in foreclosures in a number of our major urban areas,' said Julie L. Williams, acting U.S. comptroller of the currency, whose agency regulates the nation's banks. 'It can lead to a downward spiral for neighborhoods. If we are not careful, the American dream can quickly turn into the American nightmare.' A recent study in Chicago found that rising foreclosures, and attendant social dislocation, fuel increases in crime rates. State and federal regulators place much of the blame for the foreclosure problem at the feet of mortgage brokers and bankers, who have crafted ever-riskier ways for Americans with poor credit to buy homes. Interest-only and adjustable-rate mortgages account for 63 percent of new mortgages. But many policymakers say the rise in foreclosures leads to a larger question: Is the push to boost homeownership -- successive presidential administrations have strongly promoted it -- backfiring? As home prices and personal debt rise to record levels, they note, homeownership has become an albatross for millions of Americans, destroying rather than creating wealth. Officials at Fannie Mae, the federally chartered mortgage giant designed to expand homeownership, suggest that the solution lies with more counseling and fine-tuning of mortgages for lower-income families. But the Pennsylvania Banking Department is skeptical. It commissioned a study of 14 counties -- urban, suburban and rural -- and found that foreclosures had spiked in each county in the past four years. 'We've had a national agenda that's putting people into homeownership who are not ready for it,' said A. William Schenck III, Pennsylvania's secretary of banking and a former bank president. 'This is a fact that the nation must deal with unless we want to wreck the credit of a lot of middle-class Americans.' A Rude Awakening Six years ago, Cynthia Boyd, 42, signed mortgage documents and lived a dream. The food aide at St. Christopher's Hospital for Children had taken ownership of a three-bedroom rowhouse in the Olney neighborhood of Philadelphia. 'This was the first house I'd ever owned,' she said. 'I didn't think it'd ever happen.' Then Boyd got sick and had family problems. She fell down a mortgage hole. She asked the original mortgage company to cut her a break, but it had already sold her mortgage to another lender. She tried -- unsuccessfully -- to file for bankruptcy in hopes of forestalling foreclosure. Soon her monthly payment doubled because she faced penalties for falling behind. She also owed $10,000 in back payments and attorney fees. Then the sheriff's office added a charge for processing the foreclosure: $4,000. Boyd felt like curling into a fetal position. 'I was fighting so hard to save my house,' she said. 'I just kept thinking to myself: You're going to lose your house.' For now, she is holding on to the house, but just barely. Stories like this are heard again and again in Philadelphia. 'When a lot of homeowners get into trouble, it doesn't take long to turn into big trouble,' said John Dodds, director of the Philadelphia Unemployment Project. At first glance, the high foreclosure rates in Pennsylvania seem paradoxical. The average Pennsylvania homeowner has one of the highest credit scores in the nation, saves more than the average American, and is less likely to be unemployed or divorced. But the Reinvestment Fund, a Philadelphia-based think tank, analyzed 22,979 foreclosures for the state Banking Department and found a more problematic profile. Those homeowners, most of whom are blacks, Latinos or working-class whites, live close to the economic margin. They have low incomes and little or no health insurance -- 40 percent of those who sought emergency foreclosure help cited medical costs as the cause of their distress. 'For lots of these folks, homeownership is a dangerous, precarious existence,' said Ira Goldstein, policy director for the fund. 'Foreclosures can become like a contagion in these neighborhoods.' Few of these homeowners were tutored in home buying, and 70 percent relied on 'subprime' mortgage brokers, which specialize in buyers with bad credit and charge interest rates between 8 and 12 percent, far above market interest rates of 6 percent or less. Said Williams, the acting comptroller of the currency: 'We've produced a new class of lenders willing to take on riskier and riskier borrowers at a very high price. Many of the products are nothing more than time bombs.' On average, at-risk Philadelphia homeowners purchased their homes in the mid- to late 1990s and faced a foreclosure filing four years later. Benigno Diaz, 55, was one of them. He cleans floors at the Philadelphia airport every night. A few years ago, he hurt his knee and went on disability -- which paid 60 percent of his annual $28,000 salary. He fell behind on his home loan. His mortgage company demanded that he make double payments to catch up. He couldn't manage that. Then he found his house was on a foreclosure list. 'I'm like, wow, are you kidding me, man?' Diaz said. He never bounced a check, he said -- 'I'm just two months behind.' He is hanging on for now. Irv Ackelsburg, a lawyer with Community Legal Services in Philadelphia, sees people like Diaz every week. They come in with folders stuffed with papers and panicked expressions. 'You see these people come in with huge costs and health problems and it breaks your heart,' he said. 'A lot of time you have to tell them, 'You're going to lose your home.' ' Hard Times in the Suburbs Pennsylvania's foreclosure problem is not just an urban phenomenon. Montgomery County contains a genteel stretch of suburbs north of Philadelphia. But from 2000 to 2003, county officials recorded almost 5,000 foreclosure filings, a 14.6 percent increase. Arline, Woodland and Lindbergh avenues run through Abington, a pleasant lower-middle-class town with ranch houses and cherry trees, children's slides and neatly tended gardens. On each of these blocks, three or four houses have gone into foreclosure in the past four years. Unlike those in northeast Philadelphia, the houses are easily resold -- the foreclosed-upon homeowners tend to simply fade away. 'We bought this in a foreclosure auction a year ago,' Becky Morrison, a mother of three, said as she stood in the doorway of her house in Abington. 'We rented it back to the previous owner. She was pretty sick -- I think she had trouble with her bills. I'm not sure where she went.' Losing a home is particularly destructive of personal wealth. A foreclosure often costs upward of $10,000 in various legal, sheriff and bank fees. And people who have gone through foreclosure end up paying more for insurance and credit card interest and can get turned down for jobs that require good credit. Fannie Mae, the home loan giant, has devised several programs to help distressed homeowners. It also has started its 'American Dream Commitment,' which aims to drive the percentage of homeowners still higher. Spokesman Alfred King acknowledges that many lower-income homeowners are experiencing trouble but says his company has no plans to temper its homeownership push. 'Sure, some people are being done a disservice when they get mortgages when they are not ready for it,' he said. 'But the desire for ownership is there. And there's compelling evidence that there's probably a mortgage product that works for them.' But few of those who work with the tens of thousands of distressed low-income homeowners in Pennsylvania see much evidence to support that proposition. Philadelphia Sheriff John D. Green has a front-row seat as these dramas play out. In mid-June, he will auction another thousand or so foreclosed homes. 'My staff and I watch the suffering every day,' he wrote recently in a letter to residents posted on his Web site. He said they 'witness the heart-wrenching scenes as families lose their primary means of wealth building and face eviction.'

Subject: Re: It's a matter of survival From: Terri To: Pete Weis Date Posted: Thurs, Jun 02, 2005 at 21:52:42 (EDT) Email Address: Not Provided Message: This is an important comment, and I should have made the same point. I have been told just this story in the last month about pressure for inflated appraisals, by a well known attorney with whom I went to school. I trust this friend implicitly and was surprised, though he was not surprised.

Subject: Re: It's a matter of survival From: Terri To: Terri Date Posted: Thurs, Jun 02, 2005 at 21:56:15 (EDT) Email Address: Not Provided Message: Remember that the Vanguard GNMA Bond Fund is completely Treasury insured. There is no credit risk to the portfolio. Now, who is buying private mortgage packages is another interesting question.

Subject: Re: It's a matter of survival From: Pete Weis To: Terri Date Posted: Thurs, Jun 02, 2005 at 22:50:15 (EDT) Email Address: Not Provided Message: One has to wonder - if at some point enough mortgages go into default mortgage securities investors will begin to sellout in ever larger numbers. This would force mortgage rates upward which could foster more defaults....

Subject: Re: It's a matter of survival From: Terri To: Pete Weis Date Posted: Fri, Jun 03, 2005 at 05:26:25 (EDT) Email Address: Not Provided Message: Then a potential problem of which to be aware is a stream of defaults, declining property value, and a selling of mortgages driving up interest rates. That is why I would be wary of holding private mortgage debt without more of an interest rate margin.

Subject: French Rail Workers Strike From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 19:43:04 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/international/02cnd-france.html?pagewanted=all French Workers Greet New Prime Minister With Rail Strike By ELAINE SCIOLINO PARIS - French workers greeted the new government of Prime Minister Dominique de Villepin today not with a show of solidarity, but with a national transportation strike. Four unions, demanding higher salaries, job creation and the protection of generous social benefits, rallied the country's railway workers to go ahead with a strike organized last week. The protest came as the popularity of President Jacques Chirac has plunged to the lowest level of his ten-year presidency. A poll conducted by TNS Sofres after French voters decisively rejected a Constitution for Europe on Sunday - a vote that was also a rebuff of Mr. Chirac's presidency - said 74 percent of voters did not trust him. Only 24 percent said they had confidence in President Chirac. Fifty-eight percent of those polled said that unemployment, at a five-year high of 10.2 percent, was their primary concern. The strike, which began Tuesday night and will last until Friday morning, forced the cancellation of up to 75 percent of commuter trains between Paris and its suburbs, and disrupted rush-hour traffic. Some 65 percent of national-line trains and 40 percent of the country's high-speed TGV trains were also out of service. 'With the nomination of Dominique de Villepin as prime minister, the president does not seem to have understood,' said the CGT - the Confédération Générale du Travail - one of the striking unions, in a communiqué today. It added that it was awaiting 'concrete actions' to 'eradicate unemployment, misery and poverty.' The turmoil in the country coincides with a fierce campaign by France to persuade the International Olympic Committee to choose Paris as host for the 2012 Olympic games. An extravagant parade and show on the Champs-Elysée on Sunday is intended to highlight this effort. Although Paris is considered by betting agencies to be the front-runner over London, New York, Madrid and Moscow, the committee's inspectors were greeted in Paris in March with a general strike. Now the French government will have to convince the committee of the reliability of its labor force, before the decision on a host city is made in early July. Since the disastrous outcome of the referendum, both Mr. Chirac and Mr. de Villepin, his protégé and now prime minister, have vowed to lower the country's 10.2 percent unemployment rate. Mr. de Villepin, whose previous posts as interior and foreign minister, gave him no experience in economics, is scrambling to assemble a new government capable of pulling the country out of its torpor. He is expected to fire Foreign Minister Michel Barnier, a former senior official in the European Union hierarchy who is considered too closely identified with the cause of European growth and unification. But another reason for Mr. Barnier's anticipated dismissal appeared to be the need to make room for Philippe Douste-Blazy, the current health minister. Mr. Douste-Blazy, 52, a medical doctor who has served also as a parliamentary deputy, the mayor of Toulouse and as culture minister, has no foreign policy experience. As culture minister, Mr. Douste-Blazy fought hard to protect the French tongue against what he called the 'tyranny of uniformity' of language with the ascendancy of American English because of the Internet and globalization. 'Global trade and communications mean the state must stand guard over the French language, which risks being overpowered by English as frontiers are opened,' Mr. Douste-Blazy wrote in 1997. He also created an unsuccessful 'Terminology Commission' to invent French terms for computer users. But Mr. Douste-Blazy was in line to get a better ministry with the cabinet reshuffle, perhaps the Interior Ministry. That post, however, is expected to go to Nicolas Sarkozy, Mr. Chirac's political foe and the head of Mr. Chirac's ruling center-right party who wants to replace him as president in 2007. If Mr. Douste-Blazy becomes foreign minister, Mr. de Villepin would be likely to have a strong voice in foreign policy for the remaining two years of Mr. Chirac's mandate, even though the prime minister generally confines himself to domestic affairs. The vote on the Constitution, sparked by fears that a stronger Europe would further degrade the French economy, was a protest vote against the center-right government of Mr. Chirac, who has failed to deliver on promises of more prosperity since his re-election three years ago. He is viewed with open contempt by large numbers of his citizenry. Economists and business executives doubt that the Chirac-de Villepin team is capable of making the tough reforms needed to reinvigorate the economy. 'It's always the same thing with the president,' said Ernest-Antoine Seilličre, president of Medef, the French employers' federation, in an interview with Luxembourg's RTL radio on Wednesday. 'He points the way, but at the same time he makes what already exists sacred.' Mr. Seilličre has long fought to lower the enormous taxes and other charges imposed on employers that add a cost of about fifty percent to the salary of every employee. Fifty-seven percent of the French say that Mr. de Villepin will not be able to restore a mood of trust in the country, while only 37 percent believe he can do so, according to a survey by the Ipsos polling agency published today. 'The generalities delivered by Dominique de Villepin with a smile on his lips last night seemed very empty,' the left-leaning daily Libération said in an editorial today about Mr. De Villepin's television interview Tuesday evening. 'The prime minister was content with vague promises, without giving any details of the policy he intends to conduct.' A part-time poet, author and career foreign diplomat, Mr. de Villepin said in passionate tones in the interview that he has given himself '100 days' to 'restore the confidence of the people.' Calling unemployment 'the big battle,' Mr. de Villepin added, 'I will lead it personally.' He continued with that war cry in his first visit with the people as prime minister today, stopping at an employment agency in the town of Serris, outside Paris. 'My fight, the fight of my whole government, it's employment,' Mr. de Villepin said. 'That's the battle we are going to lead in the service of French.' It is no surprise that Mr. de Villepin used the 100-day image. His hero is Napoleon Bonaparte, the emperor whose rule represented the height of French power, a sliver of time when ideological fervor and imperial ambition nearly conquered all of Europe. One of Mr. de Villepin's books, 'The 100 Days or The Spirit of Sacrifice,' is about the emperor's return to power from Elba for the final 100 days of his rule. It ended with his defeat at Waterloo and his final exile to the island of St. Helena.

Subject: European Stock Markets From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 19:41:09 (EDT) Email Address: Not Provided Message: Interestingly the European stock market as so often before has almost completely compensated for the rise in value of the dollar. The Europe Index is up 8.2% this year in domestic currencies and down -0.5% in dollars.

Subject: The social security non-crisis From: nikekr To: All Date Posted: Thurs, Jun 02, 2005 at 16:49:59 (EDT) Email Address: easygoing722000@yahoo.com Message: BY NOAM CHOMSKY 1 June 2005 IN THE debate over Social Security, US President Bush’s handlers have already won, at least in the short term. Bush and Karl Rove, his deputy chief of staff, have succeeded in convincing most of the US population that there is a serious problem with Social Security, which opens the way for considering the administration’s programme of private accounts instead of relying on the public pension system. The public has been frightened, much as it was by the imminent threat of Saddam Hussein and his weapons of mass destruction. The pressure on politicians is rising as leaders in the US House of Representatives hope to draft Social Security legislation by next month. For perspective, perhaps it should be noted that Social Security is one of the least generous public pension systems among advanced countries, according to a new report by the Organisation for Economic Co-operation and Development. The Bush administration wants to 'reform' Social Security — meaning dismantle it. A huge government-media propaganda campaign has concocted a 'fiscal crisis' that doesn’t exist. If some problem does arise in the distant future, it could be overcome by trivial measures, such as raising the cap on the regressive payroll tax. The official story is that the Baby Boomers are going to impose a greater burden on the system because the number of working people relative to the elderly will decline, which is true. But what happened to the Baby Boomers when they were zero to 20? Weren’t working people taking care of them? And it was a much poorer society then. In the 1960s the demographics caused a problem but hardly a crisis. The bulge was met by a big increase in expenditures in schools and other facilities for children. The problem wasn’t huge when the Baby Boomers were zero to 20, so why when they’re 70 to 90? The relevant number is what’s called the dependency ratio of working people to population. That ratio reached its lowest point in 1965. It won’t reach that point again until 2080, according to Social Security Administration figures. Projections that far ahead are meaningless. Furthermore, any fiscal problem that might arise in caring for the elderly 'boomers' has already been paid for, by the payroll tax rise of 1983, designed for this purpose. And by the time the last 'boomer' has died, the society will be far richer, with each worker producing far greater wealth. In other words, we’re already past the crisis. Anything that comes is just a matter of one or another kind of adjustment. Meanwhile a very real fiscal crisis is looming: namely, medical care. The United States has one of the most inefficient systems in the industrialised world, with per-capita costs far higher than other nations and among the worst health outcomes. The system is privatised, one reason why it’s so inefficient. But 'reforming' the health care system is not on the agenda. So we face an apparent paradox: The real and very serious fiscal crisis is no crisis, and the non-crisis requires drastic action to undermine an efficient system that is quite sound. Rational observers will seek differences between the Social Security and health care systems that might explain the paradox. The reasons are simple. You can’t go after a health system under the control of insurance companies and pharmaceutical corporations. That system is immune, even if it is causing tremendous financial problems, besides the human cost. Social Security is of little value for the rich but is crucial for survival for working people, the poor, their dependents and the disabled. And as a government programme, it has such low administrative costs that it offers nothing to financial institutions. It benefits only the 'underlying population,' not the 'substantial citizens,' to borrow Thorstein Veblen’s acid terminology. The medical system, however, works very well for the people who matter in a system where health care is effectively rationed by wealth, and enormous profits flow to private power for highly inefficient management. The underlying population can be treated with lectures on responsibility. The US Congress has recently enacted bankruptcy reform that tightens the stranglehold on the underlying population. About half of US bankruptcies result from medical bills. Opinion and official policy are out of step. As in the past, most Americans favour national health insurance. In a 2003 Washington Post-ABC News poll, 80 per cent regarded universal health care as 'more important than holding down taxes.' Social Security is based on an extremely dangerous principle: that you should care whether the disabled widow across town has food to eat. The Social Security 'reformers' would rather have you concentrate on maximising your own consumption of goods and subordinating yourself to power. That’s life. Caring for other people, and taking community responsibility for things like health and retirement — that’s just deeply subversive. http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/opinion/2005/June/opinion_June2.xml§ion=opinion&col=

Subject: Bond and Currency Surprises From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 14:32:17 (EDT) Email Address: Not Provided Message: This bond market needs much discussion, for it is quite exceptional and we should not be the least ashamed to admit to be several times over startled by it. We should be thinking carefully about it however, for our puzzlement. What is pleasing is to have had chance on chance to lock in a long term mortgage at a rate that would not have been guessed in 1999 or 2000. Also, as pleasing is an astonishing bull market run in bonds through a bear market period in stocks. As for currency, remember politics politics politics. Many economists seem to have forgotten about the votes on the European Constitution. I had vaguely hope for passings, but thought the chances were poor for many months. Why that was not seen more clearly given polls last year, is another puzzle. The dollar was not going to rise against the Euro after December.

Subject: The European Constitution From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 14:10:47 (EDT) Email Address: Not Provided Message: The vote against the European Constitution is mildly regrettable from the stance that a European integration has been a wonderful movement to peace across a once almost continually troubled continent. The economic promise is as wonderful, when we recall what life was life in Ireland or Spain 10 and 20 and 30 years ago. But, I rather think the assertion by large numbers of Europeans that they wish a carry over of the social-economic rights they have won through the years not at all discouraging. I find Europe full of promise and should regret any continued or further distancing of a political elite from the mass of voters. The European Union will be the stronger for a more transparent and assuredly humane constitution.

Subject: The Sugar Industry and Lobby From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 11:59:31 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/business/02sugar.html?pagewanted=all Fewer Friends in High Places for This Lobby By ALEXEI BARRIONUEVO and ELIZABETH BECKER CHICAGO - At the Ferrara Pan Candy Company, confectioners of everything from gummy bears to red hots, rail cars used to deliver three million pounds of sugar a week to its bustling plant just outside America's candy capital here. Today, the trains bring only half as much, barely enough to fill the factory's 65-foot sugar silos. That is largely because Ferrara, in an effort to avoid the high cost of government-protected American sugar, has been moving some of its century-old operations to Canada and Mexico. The reason for this decade-long shift can be traced to global economics and the domestic sugar industry, which is fast being branded as a spoiler nationally and internationally. 'Big Sugar' is in trouble not only here in Chicago, where it is losing some of its customers, but also in Washington, where it is losing some of its longtime political allies. Rightly or wrongly, the sugar industry is being blamed for an assortment of evils: undercutting the American food industries that rely on sugar, fighting global diet guidelines that aim to improve children's health and curb obesity, and, most recently, for hurting the chance for passage of the Bush administration's top trade priority, the Central American Free Trade Agreement, known as Cafta. 'More and more people have begun to realize that this is an indefensible program from a trade policy standpoint,' said Clayton K. Yeutter, a former United States trade representative and agriculture secretary, who is now senior adviser to the Food Trade Alliance, which represents companies in food processing, retailing and restaurants that are lobbying in favor of the agreement. 'Beneath the surface one can sense that the house of cards has begun to shake a bit.' With its old hardball tactics and the flamboyance of some of its barons, sugar's powerful lobby has long been a legend in Washington. The industry's leading family, the Fanjuls of Florida, lead a luxurious life and are large donors to both Democrats and Republicans. Now, with Cafta stalled in Congress, the Bush administration has singled out sugar as the chief spoiler. In one of the rare instances of a food lobby turning against one of its own, big agribusiness is siding with the administration against sugar. 'Sugar is fighting to maintain its program to the detriment of the rest of agriculture,' said Bob Stallman, the president of the American Farm Bureau federation. For the moment, the sugar industry appears poised to chalk up another victory by defeating Cafta. While that would surprise few in Washington, it could ultimately prove to be a hollow victory. Democrats, who are united in opposition to Cafta, say the Bush administration is using sugar as a scapegoat. 'Sugar isn't the reason this could be going down,' said Representative Sherrod Brown, the Ohio Democrat who is leading the fight against the trade deal. 'Sugar is only on the margins.' Indeed, the Congressional Hispanic caucus announced its opposition to Cafta last week, citing fear of job losses as the chief reason. Still, as American agribusiness depends more and more on foreign markets, sugar is the one commodity that keeps foreign competition at bay by relying on an outdated quota system, raising sugar costs for consumers by about $1.9 billion a year, according to the Government Accountability Office. Among other things, the system protects sugar beet and cane farmers by preventing imports of less expensive sugar from Brazil and other parts of Latin America that would undercut domestic prices. By contrast, farmers who grow corn, wheat, cotton, rice and soybeans are supported by $19 billion in taxpayer subsidies, a system that has less impact on consumers and is generally easier - though not always - to defend in trade negotiations. Phillip W. Hayes, spokesman for the American Sugar Alliance, rejects the charge that his industry opposes free trade. Rather than the slow dismantling of the American program through bilateral negotiations, domestic sugar producers say they want all countries to end their sugar subsidies at once in a global trade agreement. 'If everyone laid down their subsidies,' Mr. Hayes said, 'then we would give up our sugar program.' The sugar industry in the United States is blessed by geography and a single-minded focus on defending the quota program. Much of the American sugar program resides in Florida, home of cane growers that produce about a quarter of the nation's sugar. Cane sugar is also an important part of Louisiana's economy. Sugar beets are grown in North Dakota, Minnesota and other northern states that have consistently lobbied their lawmakers to oppose any threats to the program. Despite its small size, accounting for just 1 percent of American farm receipts and 61,000 direct jobs, sugar is the single largest agricultural donor to political campaigns. The Fanjul family, descendants of a Cuban sugar baron who was forced out after the 1959 revolution that brought Fidel Castro to power, operates the nation's largest cane-growing and refining operation through the Flo-Sun Company, based in Palm Beach, Fla. While Alfonso Fanjul Jr. donates to the Democrats, his brother, Jose Fanjul, contributed more than $200,000 for George W. Bush's re-election effort. Cafta, an economic pact with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, would eliminate most tariffs for American goods into those countries and enshrine the duty-free status of most goods coming from those countries. Sugar makes up only a fraction of the deal and would lead to opening up the American market to 1 percent more sugar from Central America, or, in the words of administration officials, only one teaspoonful a week per person. Ambassador Allen F. Johnson, America's chief international agricultural negotiator, said that the changes would be so small that there was nothing in Cafta that was a threat to the sugar industry. He suggested that the sugar lobby was short-sighted, risking its relationship with the administration ahead of legislation that would determine the billions of dollars in federal money to be divided among farmers into the next decade for crop subsidies, conservation and other agricultural programs. 'It is not in sugar's interest to be seen as the one holding us back,' he said, 'especially one year before the farm bill is to be debated.' Mr. Hayes, the sugar industry spokesman, said this was the first time the American industry had been publicly isolated in a political debate. 'We're a little confused about being singled out by agribusiness for hurting trade and by the administration that says we are hurting democracy and the country's strategic interests,' he said. 'That has never happened before.' In part, that may be because sugar's traditional sway over the confluence of money and politics is slipping. The sugar lobby gave $3.2 million during the 2004 elections, down from $3.4 million in 2000. The latest contributions were 6 percent of the $54.5 million given by agribusiness as a whole, though sugar's giving was the largest for a single commodity. The sugar lobby is accustomed to responding fiercely to challenges, but those victories are harder to come by these days. The sugar industry pressed the Bush administration two years ago, for example, to object to a scientific report that linked high sugar intake to obesity. The study, jointly conducted by the World Health Organization and the Food and Agricultural Organization, recommended limiting sugar to no more than 10 percent of daily calories. The administration pushed for an independent review, and sugar producers rallied support from groups around the world. They said the science in the report was flawed and that it overstated any potential link between sugar and obesity. Andrew Briscoe, president of the Sugar Association, pointed to several other studies that found that sugar was not a health hazard. He also noted that even as obesity in the United States has increased, per capita consumption of sugar has fallen. Much of the decline was because sugar has been replaced in many foods by lower-cost corn syrup. 'Any policy targeting sugar is very misguided,' Mr. Briscoe said, 'and will certainly not address the growing concern with obesity.' But despite an effort that not only challenged the report on its merits but also involved threats from the administration and Congress to reduce American financial support for the W.H.O., the institution made only modest changes to the report, retaining the 10 percent recommendation. 'In the case of sugar it was pure lobbying and not based on science,' said Derek Yach, the former executive director for noncommunicable diseases at W.H.O. and now a professor at Yale University. In 2003, the sugar lobby challenged a follow-up policy developed by W.H.O., objecting to any specific recommendations on limiting sugar use. This time, sugar interests raised the stakes, bringing in lobbyists from the Grocery Manufacturers of America, whose members include Coca-Cola and Nestlé. But in January 2004, European food companies, led by Nestlé and Unilever, reversed course. 'They had enough of the kind of heavy-handed lobbying that the U.S. sugar producers were doing,' Mr. Yach said. The grocery association also did an about-face. Ultimately, sugar lobbyists were successful in one pivotal respect: in the final compromise reached last May, the organization agreed to remove a footnote in the report referring to the scientific report's 10 percent recommendation. But the report still recommends limiting sugar levels to prevent obesity. At least as troubling to sugar interests, the World Trade Organization last year said the European Union's sugar subsidy program harmed developing countries and violated global trade laws. Although the European program differs from the American quota system, it put the sugar industry on notice that its days of manipulating the global market were coming to an end. To be sure, the sugar industry still has plenty of influence. It successfully lobbied to water down references to sugar in new American dietary guidelines released in January and helped eliminate any reference to sugar in the 2005 'food pyramid' recommendations. While it fights these battles, the sugar industry's worst nightmare could be a growing split with its best customers. Ferrara Pan Candy was among the first to move operations over the border, setting up a plant about a decade ago in San Luis Potosí, Mexico. Ferrara later added plants in Juárez, Mexico, and two in Canada near Toronto. 'It was sugar that forced us to move over the border,' said Salvatore Ferrara, the company's chief executive. His Italian grandfather started Ferrara in 1908. Tougher competition from South American candy makers and global pricing power now wielded by a handful of mass merchants like Wal-Mart have led other companies to move as well, including Brach's Confections and Kraft Foods, which relocated its Life Savers plant from Michigan to Canada in 2002. Sugar industry officials contend that candy companies move abroad because of the higher labor and health care costs in America rather than higher-priced sugar. Mr. Ferrara disagreed and said that labor represented only 3 percent to 6 percent of the total cost to make a piece of candy, while sugar can represent 30 percent to 70 percent, depending on the product. He said he now paid on average 15 cents a pound for sugar in Canada and Mexico versus 27 cents to 28 cents a pound in America. Imported candies, meanwhile, have flooded the American market. Nonchocolate candy imports made up 35 percent of the American total last year, up from 11 percent in 1996. Mark Puch, chief executive of Primrose Candy, another Chicago company, said Walgreen's pharmacy failed to renew a $2.5 million contract that Primrose had five years ago to make Starlight mints, choosing instead a cheaper Brazilian product. After steadily losing sales, Mr. Puch began, focusing on sugar-free candy and chewy caramels that use corn syrup. After a plan to set up a shared plant in Canada with Mr. Ferrara fell though, Mr. Puch and his brother set up an operation in China, which opened two months ago. It will soon quadruple Primrose's capacity. Mr. Puch hopes it is not too late. 'I was a little naďve,' he said. 'I always thought there would be some type of sugar reform.'

Subject: The Long Term Bond Market From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 10:19:02 (EDT) Email Address: Not Provided Message: There are many things that happen in the course of a day, so who ever knows why a day's market movement occurs. What I do know is that we have as difficult to explain and deep and long lasting and wild a bull market in long term bonds as I know of. Would I buy a long term Treasury at these rates even as a hedge? No. But, there are buyers and buyers beyonds central banks.

Subject: Comparing Values From: Terri To: Terri Date Posted: Thurs, Jun 02, 2005 at 10:39:26 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName The sort of value game I always play would now involve comparing a 3.91% yield on the long term Treasury with a 3.41% dividend for the Vanguard Utility Index. What you you hold these coming 10 years?

Subject: Heart Device Sold Despite Flaw From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 09:55:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/business/02guidant.html?pagewanted=all Heart Device Sold Despite Flaw, Data Shows By BARRY MEIER When the Guidant Corporation told doctors last week that a popular implantable heart defibrillator had failed in a small number of cases because of an electrical flaw, it also said that it had fixed the flaw in devices produced after mid-2002. But now data provided by Guidant to a Minnesota hospital suggests that the company continued to sell the potentially flawed devices for months after it changed the way it made the device and had begun selling the new ones. The Guidant data, which the company provided to doctors at Abbott Northwestern Hospital in Minneapolis, indicates that from May to September 2002, nine patients there received implants of defibrillators that were made before April 2002. It was during that month that the company first changed its manufacturing process to eliminate the risk of short-circuiting. A senior company official has said that Guidant to date has not received reports of such failures in units made after April 2002. A defibrillator, which is implanted under the skin in the chest, acts to shock a chaotically beating heart back into normal rhythm. The device at issue is known as the Ventak Prizm 2 DR Model 1861, or alternatively as the Prizm 2 DR. In response to questions from The New York Times, Guidant said late yesterday that it had continued to sell units out of inventory - those made before the fixes - because it believed that the devices were reliable. In its statement, the company said: 'After making these improvements, Guidant sold product manufactured before the improvements because the reliability data showed that the original PRIZM 2 DR, like the enhanced version, was a highly reliable life-saving product. Current data continues to support the reliability of this product.' Last week, Guidant, which is based in Indianapolis, told doctors and patients for the first time that the defibrillator failed because of the short-circuiting problem seen in 26 known cases, including one recent death. About 37,000 such units were made before Guidant made the April 2002 fix. An estimated 24,000 people still use one of those units. The company said last week that the overall failure rate of the units made before and after the fix is similarly low. Last week, Guidant urged physicians not to replace the units because it said the risks of doing so outweighed any dangers the device may pose. However, the apparent fact that Guidant sold older devices with the potential flaw when improved ones were available could pose a new round of problems for the company. The Food and Drug Administration is reviewing how Guidant officials handled problems related to the device. In addition, two plaintiffs' law firms filed an action yesterday against Guidant in Federal District Court in Indianapolis seeking damages in connection with the company's handling of the device. Guidant has previously said that it did nothing wrong. The company's image is also still rebounding from an episode in which a former unit, Endovascular Technologies, pleaded guilty in 2003 to 10 felonies and agreed to pay $92.4 million to settle charges that it covered up deaths and other problems related to a device that treated weakness in the main abdominal artery. Officials of Guidant have insisted that they made all required reports concerning the Model 1861 to the F.D.A., including the information in individual reports from doctors and hospitals about any apparent problems with the device. According to the Guidant data, the nine patients at the Minnesota hospital represented 16 percent of the 57 patients there who received a Model 1861 made before Nov. 1, 2002. Those devices were implanted from December 2000 to January 2003. It was in November 2002 that Guidant made a second change to the unit. Some doctors said they would be dismayed if the company allowed them to implant a device with a known flaw that had been corrected in other units. Typically, a device like a defibrillator is not sold until a company sales representative delivers the unit to the surgical suite and it is implanted. Because their batteries drain, a defibrillator needs to be replaced every five or six years. Guidant is one of the nation's largest makers of medical devices, with $3.8 billion in sales last year, about half of them from implantable defibrillators. In December, Johnson & Johnson announced it planned to buy Guidant in a deal worth $25.4 billion. After the disclosure last week of the Model 1861's problems, Johnson & Johnson said it remained committed to the deal. 'Guidant is an honorable company,' said Dr. Douglas Zipes, a cardiology professor at Indiana University School of Medicine who is also a consultant to Medtronic, another defibrillator maker. 'If they personally knew this device had the potential for failing, I can't imagine that they would go ahead and continue to sell it.' The implant data at issue was provided by Guidant to doctors at Abbott Northwestern after the death in March of one of their patients, a 21-year-old college student with a genetic heart disease that put him at high risk of sudden death. In earlier interviews, those doctors, Dr. Robert G. Hauser and Dr. Barry J. Maron, expressed anger at Guidant for failing to alert them earlier to the unit's problems, saying they would have replaced it in their patient had they known. Dr. Zipes is the editor of a medical journal that recently published on its Web site a case study about the Guidant unit written by Dr. Hauser and Dr. Maron, though he was unaware of any issue related to inventory devices when interviewed last week. The student, Joshua Oukrop, died during a bicycling trip in Moab, Utah. After Guidant inspected his Model 1861 defibrillator, implanted in late 2001, it concluded that the device had malfunctioned because of the short-circuiting problem. While it is not certain when the device failed, the short circuit can occur when the device builds a charge to deliver the high-energy shock needed in emergencies. Dr. Hauser, who at one time headed a company, Cardiac Pacemakers, that has become part of Guidant, said he now faced telling some of those patients that they might have to undergo surgery to remove and replace a device they probably should not have received. 'What am I supposed to tell these people?' asked Dr. Hauser. He agreed to provide a reporter with the implant data given to him by Guidant. Before sending it, personnel at Abbott Northwestern stripped out patient names and deleted portions of each device's serial number, which can also be traced to a patient. For each Model 1861 unit, the list gives the date of implant as well as a 'use before' date, or the date beyond which the device can no longer be implanted because it has remained in inventory too long. An F.D.A. spokeswoman, Julie Zawisza, said that, according to the agency's information, the shelf life or 'use before' date of the Guidant Model 1861 is 12 months after its battery is connected. Typically, that point marks a device's date of manufacture, and the unit goes into inventory a few weeks later, industry officials said. Based on that timeline, the Guidant implant data provided to Dr. Hauser suggests that nine devices with manufacturing dates before April 1, 2002, were implanted in patients at Abbott Northwestern after that time. For example, one device with a manufacturing date of August 8, 2001, was implanted in a patient on May 22, 2002, the data indicates. In addition, seven devices with manufacturing dates in February 2002, two months before Guidant started making fixes, were implanted in patients in July, August and September of that year, the data suggests. Guidant has said that in April 2002 it increased the spacing between a wire and a device component after determining that electricity could potentially arc between them and cause a short circuit. In November 2002, Guidant made another change by adding extra insulation around the component, which is called the backfill tube. The implant data from Abbott Northwestern shows that three patients received implants after November 2002 using devices with earlier apparent manufacturing dates. Both Dr. Hauser and Dr. Maron said that a senior Guidant executive, Dr Joseph M. Smith, had told them in recent weeks that the April 2002 fix had apparently solved the problem because the company had not received any reports of similar short circuits in units made since then. In a recent interview, Dr. Smith made the same statement to this reporter. In its statement yesterday, Guidant said: 'The reliability data supports the conclusion that Prizm 2 DR was reliable when launched in 2000, when enhanced in 2002, and that it remains reliable today.' Last week, in a notice sent to doctors about the potential electrical problem, Guidant referred only to the November 2002 change and stated that 'devices manufactured after this date are not affected.' Guidant has said it reported the November fix to the F.D.A. as part of an annual report to the agency, which it filed in August 2003. However, the company also said in response to an earlier inquiry from The Times that it did not report the April 2002 changes because it decided that F.D.A. regulations did not require the reporting of those 'manufacturing enhancements.' The company said that the changes did not have to be reported because they only 'added clarifications to existing manufacturing instructions and improved process consistency,' rather than reflecting changes to approved F.D.A. manufacturing techniques.

Subject: The Anger in Europe From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 09:44:38 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/02/international/europe/02europe.html?pagewanted=all 2 'No' Votes in Europe: The Anger Spreads By RICHARD BERNSTEIN BERLIN - Some are calling it a divorce; others, a disenchantment. Whatever you call it, the French 'non' on Sunday and the Dutch 'nee' on Wednesday have clearly left the European Union's proposed constitution a dead letter for now, frustrating the efforts of Europe's leaders to move to the next stage of integration. The impasse could stall efforts to develop common foreign policies and push the euro, a potent symbol of unification, into a downward spiral. But there is something at stake here far broader than the constitution itself, which the Dutch rejected emphatically on Wednesday, 61.6 percent to 38.4 percent, according to unofficial results. There is a disaffection, perhaps even a rebellion, against the political elites in France, Germany and Italy. The governing parties of the left and the right are saying the same things to their people: that painful, free-market economic reforms are the only path toward rejuvenation, more jobs, better futures. And the people, who have come to equate the idea of an expanded Europe with a challenge to cradle-to-grave social protections, are giving the same answer: We don't believe you. A French lawyer and commentator, Nicolas Baverez, who once wrote a book titled 'The Fall of France,' called the French vote 'an insurrection, a democratic intifada,' that reflected the 'despair and fears of the French in front of the decline of their country and the inability of their leaders to cope with the crisis.' The repercussions of this uprising will be felt widely. 'I think there's a revolt against the establishment that leaves governments from Great Britain to France to Germany to Italy singularly weak,' said Charles Kupchan, an associate professor of international relations at Georgetown University and a fellow at the Council on Foreign Relations, 'and that spells trouble for Europe and it spells trouble for an America that will be looking to Europe for help on many different fronts.' The public disaffection is different in each country, and more than economic matters are involved. Europeans are worried, among other things, that the rapid enlargement of the European Union, especially the prospect of Turkey's membership, will leave them more vulnerable to uncontrolled immigration, especially by Muslims. There is a sense, palpable in the Netherlands, that the whole European enterprise is controlled by unresponsive, unelected and unaccountable bureaucrats in Brussels who have it in their power to rob countries of their national identities. But in France, Germany and Italy, already beset by high unemployment, the worry that free-market reforms will only make matters worse predominates. A week before the French rejected the constitution, Germany's chancellor, Gerhard Schröder, called early elections, after local defeats had left him essentially without the authority to govern. Italy's prime minister, Silvio Berlusconi, has promised reforms but failed to deliver them, out of concern for mass discontent. The paradox here is that if the political elites and most economists are right in saying that free-market reforms and more competition are essential for these nations to match their economic competition, then the 'democratic intifada' could rob the faltering core of Europe of the very means it needs to rejuvenate itself. 'Old Europe lacks confidence and is therefore defensive, trying to freeze things rather than look forward, feeling that any change is bad,' Mark Leonard, a specialist on European Union affairs at the Center for European Reform, said in a telephone interview. 'It's a toxic brew of failure to build support for reform, terrible economic circumstances and elites that are tarnished and shop-soiled.' It would make things a bit too simple to depict public distrust of politicians in Europe these days as purely resistance to economic reform. Indeed, in Germany most people seem to accept the idea of reform, at least theoretically. The nub is that Germans are more strongly attached to a countervailing idea - that even as a country enacts reforms, it has a responsibility to protect people against their effects. 'We do need more liberalism,' said Janis M. Emmanouilidis of the Center for Applied Policy Research in Munich. He was speaking of economic liberalism in the European sense, meaning greater reliance on free markets, reduced benefits and less government protection for the work force. 'The problem is that you don't have that kind of tradition in France or Germany,' he continued. 'The intellectual elites in Germany argue in favor of economic liberalism in a couple of newspapers, like Frankfurter Allgemeine Zeitung and Süddeutsche Zeitung. But the rest of the elite looks at this from the standpoint of solidarity, of how you uphold solidarity in the face of reform.' This explains what might seem a paradox in the German situation: namely that in repudiating Mr. Schröder because they do not like his reform program, the Germans are turning to the conservatives' candidate for chancellor, Angela Merkel, who is likely to enact even tougher reforms than Mr. Schröder did. Of course, it does not help that unemployment keeps rising, to 12 percent now, just as Mr. Schröder's reforms have started to take a real bite out of the public welfare. In the view of many analysts, Mrs. Merkel will have a grace period in which to enact her program, during which Germany will have a real chance to lift itself out of its stagnation. The risk is that if the conservatives' reforms do not show results fairly quickly, the political pendulum will swing against her just as it has swung against Mr. Schröder. In France, too, those who favor liberal reforms say there is one figure who may have the convictions and the political skill to carry them out: Nicolas Sarkozy, who is expected to be reappointed interior minister and is a likely candidate for president in the next elections, in 2007. But Mr. Chirac himself seems to have reacted to the crushing defeat he suffered on Sunday by reaffirming his attachment to what he called the 'French model,' which seemed a coded way of putting tough reforms on the back burner, as he has done at similar moments in the past. 'There is a gap between what reality demands and what the French people want,' said the political philosopher Pierre Hassner. 'The elites weren't courageous enough to explain things.' In this sense a great part of the problem, many here say, is that French leaders themselves seem to be uncertain about the need for reform, or at least are inconsistent. 'Chirac is a victim of his own contradictions,' said Guy Sorman, a French commentator and a rare proponent of free-market liberalism in France. 'He said, 'I am for Europe but against liberalism,' but this is completely absurd because people understand that Europe is a liberal construction.'

Subject: Europe From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 07:31:16 (EDT) Email Address: Not Provided Message: What has happened to European stocks is that even as the Euro has lost more than 10% in value, European stocks have risen in compensation. This is the usual pattern with currency value loss in developed countries. Stocks prices compensate for currency value loss. I find this most encouraging. Also, Japan has been an exception. Japan is the worst bear market developed country since 1950.

Subject: Stock Patterns From: Terri To: All Date Posted: Thurs, Jun 02, 2005 at 06:15:32 (EDT) Email Address: Not Provided Message: The stock market has again recovered, and seems to be following along with bond prices. Energy and utilities and health care are leading the way, with REITs holding. Mid caps are strongest. Growth and value stocks are about even in strength, with a slight leaning to value.

Subject: Teaching and Tutoring From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 05:58:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/nyregion/01tutor.html Tutors Hold Key to Higher Test Scores, for a High Fee By HOPE REEVES Adam Fisher remembers walking home from elementary school thinking not about Mister Softee or Ms. Pac Man but about Ms. Grace, his third-grade teacher. Why, he wondered, had she explained a new math concept in such a roundabout way? If only she had laid it out like this, he recalls thinking, reworking the lesson in his head, then we would have understood it immediately. This was not the first time Mr. Fisher had pondered the art of teaching and learning. In fact, he had been tutoring his classmates since the previous year, having discovered that he had a knack for explaining concepts so the other kids understood them. A slender fellow with a goatee and a mass of curly hair, Mr. Fisher, 34, still tutors students. Only today his students are seeking higher test scores - and his tutorials cost $375 to $425 an hour. Mr. Fisher is among about 100 tutors working for Advantage Testing Inc., an Upper East Side test preparation firm. He joined nine years ago, with no formal teaching experience but a master's degree in music from Juilliard and a Harvard physics degree, and is now one of the firm's most senior tutors. He says he consistently raises SAT scores by more than 200 points and achieves similar results in graduate school exams. The faculty members, as Advantage calls its tutors, have made a profession of preparing students for tests like the SAT's and SAT II Subject Tests, the Graduate Record Exam, the Graduate Management Admission Test and the law school and medical college admissions tests. To apply for the job each had to meet the firm's prerequisite of scoring, cold, in the 99th percentile or above on any test in which they intended to tutor - for Mr. Fisher, the law school and graduate management test and the SAT. Tutors are paid $165 to $685 for a 50-minute session, depending on seniority. (Lower rates are offered to needy students, and the firm does some pro bono work.) But while Mr. Fisher earns over $100,000 a year, he insists he is not in the job just for the money. And a visit to the sparsely furnished Upper West Side apartment he shares with his wife and infant daughter lends credence to his claim. Sitting in his home office at Broadway and 73rd Street, his prized cello balanced against the bare wall, he says he tutors for three reasons: because he wants to be able to live comfortably in the city, he wants time to practice and perform his music and, most important, he loves to teach. 'I earn enough to raise a family in Manhattan,' he said. 'I'm a teacher who gets paid equitably. I don't feel guilty about that.' In fact, Mr. Fisher feels pretty good about what he does. He argues that test-prep can be much more than rote learning aimed at achieving a superficial score. To him, studying for a school entrance exam is an opportunity for a student to learn not only facts and procedures but also a systematic approach to learning itself. 'My job is not to teach a student the trick to getting a high score; my job is getting a student to make the knowledge theirs so it becomes part of them,' Mr. Fisher said. 'I view standardized tests not as a number that gets you into college but as a tool that prepares you for the rest of your life. 'When, not if, my students learn the 3,000 to 4,000 words for the SAT verbal section,' Mr. Fisher added, betraying a determination his students must quickly pick up on, 'those words become part of their life, something they can use forever.' Mr. Fisher's students seem to agree. Steve Feldman, a 23-year-old Manhattan resident, said that the three months Mr. Fisher tutored him for the law school exam prepared him well for the mental rigors of the law. Originally scoring in the 16th percentile, Mr. Feldman ended up in the 85th percentile. He was accepted to his first-choice school, Tulane University, and credits much of his success to his tutor's method and disposition. 'Even though he's a lot smarter than I am, he never made me feel that way,' Mr. Feldman said. 'He was so laid-back and patient, I instantly felt comfortable with him, and my score kept going up.' Mr. Feldman started with another Advantage tutor but switched to Mr. Fisher because he felt a quicker connection, he said, adding that he was impressed by how Mr. Fisher organized the sessions and by how well he understood the test. 'He knows the LSAT inside and out,' Mr. Feldman said. 'He would sit and watch me take a practice test and figure out, just by watching me, what I was having trouble with. Then we'd work on that until I had it down.' Though Mr. Feldman estimates that his two months of tutoring twice a week cost him 'three-quarters of a year's tuition' (Tulane Law charges $33,000 a year in tuition and fees), it was worth it, he said. 'This was an investment in my future.' Vanessa Gottlieb, on the other hand, started out with a high SAT score. Still, Mr. Fisher helped her raise it enough to gain early admission to Georgetown University. 'He's great at breaking down the fundamentals and brought my math to a whole new level,' she said. Ms. Gottlieb's mother, Shannon Such, said her daughter enjoyed the sessions. Possibly more impressive, she said, was how much Mr. Fisher seemed to care. 'I got the feeling he really enjoyed his work and liked helping these kids,' Ms. Such said. Indeed, Mr. Fisher glows when he talks of the mental gymnastics he must perform, confessing that his favorite part of the job is when a student gets really stuck. It is then, he says, that he gets to exercise his creativity. How to get this technique through to this kid? How to break down a complicated concept so each part is small enough to digest? That's what excites him. 'You can't imagine how rewarding it is to see a kid finally get it,' he said. 'They get that giddy feeling. You can see it on their faces, and half the time they wind up walking out of my office so distracted they forget their coat.'

Subject: Communications Industry Unions From: Emma To: All Date Posted: Thurs, Jun 02, 2005 at 05:55:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/business/01labor.html?pagewanted=all Unions Struggle as Communications Industry Shifts By MATT RICHTEL SAN FRANCISCO - Lisa Morowitz, a longtime union coordinator, knows the taste of defeat. She spends her days trying to organize Comcast cable workers. But not only are the workers declining to sign up, they have in many cases voted to end existing union ties. 'We're not winning, we're losing,' said Ms. Morowitz, who works for the Communications Workers of America, the dominant union in telecommunications. 'If we don't move the direction this industry is moving, we could become obsolete.' Even as unions struggle nationwide, with just 12.5 percent of the total work force unionized in 2004 compared with 22 percent in 1980, they face a particularly bleak future in the telecommunications industry. The industry was once a labor stronghold after the Bell monopolies became unionized in the late 1930's. But mergers, deregulation and technological change have reduced the number of jobs at the traditional phone companies while creating hundreds of thousands of jobs in cable and wireless companies, which are largely union-free. Since 1985, the number of union workers in telephone and data services has been cut in half, to fewer than 275,000, from 625,000. To slow the rapid decline, unions are fighting to organize workers at cable and wireless companies. They have had little success, outside a big victory in 2000 when they organized workers at Cingular Wireless. At Comcast, the nation's largest cable provider, workers have voted to decertify nearly two dozen union shops in the last three years. The labor battle took on newfound intensity last month when the Communications Workers of America published in three major newspapers a full-page letter signed by 112 members of Congress contending that Verizon Wireless was not cooperating with labor groups. Verizon Wireless countered by circulating among employees a document that favorably compares its benefits and wages to that of Cingular Wireless, the only wireless company with a union work force. In April, Verizon Wireless's chief executive, Dennis F. Strigl, sent a letter to members of Congress urging them not to sign the union petition, which he said was an unfair attack. The employees 'have repeatedly rejected the efforts of the union to insert itself between them and their company,' Mr. Strigl wrote. 'Unfortunately, the union will not take 'no' for an answer.' The communications workers union contends that Verizon Wireless has harassed organizers and moved three major call centers from the Northeast to southern states where it is tougher to organize. It plans to hold a pro-union rally Wednesday in Meriden, Conn., the site of a Verizon Wireless business customer service center. Also Wednesday, the union plans to organize a protest rally at Comcast's annual meeting in Philadelphia. The union has taken greatest aim at Comcast and Verizon Wireless. But it is trying to organize other companies, too. The C.W.A. and other international unions plan later this month to try to jump-start talks with T-Mobile, one of the five largest national wireless carriers, by negotiating with executives from its German parent company, Deutsche Telekom. But reversing the antiunion tide will be enormously difficult. In 1985, unions represented 375,000 workers at the Bells and 250,000 at AT&T, said Jeffrey H. Keefe, an associate professor of labor and employment relations at Rutgers University. In 2004, the union work force at the Bells dropped to about 229,000, while AT&T's union work force dipped below 30,000, Mr. Keefe said. The wireless industry, meanwhile, has grown to about 171,000 employees, with only about 22,000 workers at Cingular unionized. In the cable industry, which has 133,000 workers, only about 7,000 workers are unionized. In terms of pay and benefits, the difference between union and nonunion workplaces can be substantial, Mr. Keefe argues. Based on research compiled by Mr. Keefe and Harry C. Katz, a professor at Cornell University who studies collective bargaining, a union technician at a Bell company in 2003 earned on average $46,500 a year, compared with $39,400 for a technician in the wireless industry and $35,700 at a cable company. Mr. Katz said the erosion of collective bargaining in telecommunications was not as severe as in the garment and textile industries, but as bad, if not worse, than in many other industries. The unions, he said, need to modify their message to give workers a sense that organized labor can protect them in an era of great turbulence. 'Employees are not worried about losing a limb in a steel plant,' Mr. Katz said. Conveying a message that resonates with prospective members in the current environment is an issue 'the unions are struggling to answer.' Larry Cohen, executive vice president of the communications workers union, which represents 2.5 million workers worldwide, said the union had made some strides. In a rapidly changing industry, the union, he said, can negotiate better benefits, training and pay for workers and prevent management from eliminating jobs arbitrarily or changing work conditions. But given the antagonism of the industry to unions, Mr. Cohen said, workers are often too tired to fight. The battle with Comcast highlights challenges faced by the C.W.A. In November 2002, Comcast completed its acquisition of AT&T Broadband, a company in which union representation had been steadily growing. Since Comcast's takeover, 22 bargaining units from the former AT&T Broadband have voted to decertify their union status, including one in Fresno, Calif., where technicians voted 92 to 58 on May 12 to get rid of the union. In California alone, the union lost decertification votes at Comcast shops in Los Angeles, Sacramento and Modesto - all in 2003. Comcast still has 22 union shops. Comcast says workers are voting to decertify because they may be more satisfied with Comcast management, which it says is more receptive to worker needs than the national top-down management of AT&T Broadband. David L. Cohen, an executive vice president at Comcast who oversees human resources there, said the votes were evidence that workers under Comcast management did not feel they benefited from union representation. 'We take pride in providing a safe, enjoyable and productive work environment,' he said. Workers 'do not need to be represented by a union to gain all of the advantages.' But the company does aggressively lobby for its cause. One worker, a technician in Fresno who voted to retain the union in the recent election, and who spoke on the condition of anonymity out of fear he could lose his job, said that in the five weeks preceding the vote, the company flew in human relations managers to meet with workers collectively as well as individually by taking workers out for drinks and lunches. Some even rode with technicians on service calls, the worker said. Mr. Cohen, the Comcast executive, declined to talk about the specifics of the Fresno vote. 'We convey our message in all ways we're permitted to under the National Labor Relations Act,' he said. In at least once case, the National Labor Relations Board found that Comcast violated federal labor rules. In a ruling dated April 13, the labor board concluded that Comcast of Maryland had threatened, coerced and fired employees to dissuade them from working with the Teamsters. In that case, the board ordered the company to reinstate two workers to positions they previously held. The board also ordered Comcast to stop discharging or coercing employees involved in union activity and putting them under surveillance. The company has been vigilant in warding off union organizing efforts. A leadership training document Comcast published in January 2003 instructed managers on how to spot possible union activity. One section - titled 'Early Warning Signs' - urged managers to look for situations where 'employees not normally seen together are seen gathering' and for 'increased curiosity and questions about benefits and policies.' Managers are also told to look for employees who want things 'in writing.' In some cases, workers have been given written warnings about discussing union activities with colleagues on company time. At the same time, the Comcast manual also informs managers that among the best ways to prevent union inroads is for the company to offer competitive wages and benefits, provide excellent working conditions and to allow employees to express their complaints. 'We are anything but antiunion,' Mr. Cohen of Comcast said. Ms. Morowitz, 39, hopes to persuade those workers that being part of the union has big advantages. As the only full-time communications union staff member trying to organize Comcast, she focuses her time on California, which was a union stronghold in the days of AT&T Broadband. The union estimates there are about 6,000 Comcast workers in California, not including contract workers. She meets with Comcast workers, usually at the workers' request, telling them about the union election process. The meetings are held in secret, she said, because she said that Comcast had a history of harassing workers involved with union activism. The mood is often upbeat, but she said she was pessimistic about her meetings yielding any success. 'Comcast has so relentlessly bad-mouthed the union, we are unlikely to have a successful election,' she said. 'Even if we succeeded, the real question is, Can we get a contract?' Joining her at some meetings is Yonah Camacho Diamond, a service technician and union shop steward who works in San Francisco for SBC, which is unionized. Mr. Diamond, 34, said he was lobbying Comcast workers not for the sake of the union but because he believed that telecommunications on the whole is becoming inhospitable to workers. The days of the professional telecommunications worker 'are not long for existence,' Mr. Diamond said. 'I've got a good job at a good wage, with a pension and a 401(k). But that may not be available to me, or my son, in the future.'

Subject: Hey! From: Matt To: All Date Posted: Thurs, Jun 02, 2005 at 05:00:50 (EDT) Email Address: deoiuvante@yahoo.com Message: This site is f*cking hilarious!! I love it. Keep up he good work dude. I love all the excalmation points!!! LOFL!!!!

Subject: solving the new inequality From: Will To: All Date Posted: Thurs, Jun 02, 2005 at 03:25:29 (EDT) Email Address: voslyn@yahoo.com Message: www.pkarchive.org/economy/inequality.html Krugman says that understanding the cause is more a part of the solution than Freeman would like to admit. In another article he says that social acceptance of super-rich CEO's was the result of a changing social climate and all that jazz... economy/ForRicher.html Does Krugman have any ideas about how to change the common man's perception of the situation, and also how to attack the widening earnings gap from a social perspective rather than an economical one like the EITC? Also does anyone know of a site that analyzes things from a sociological perspective? Im about to peruse the links... thanks.

Subject: The French Non From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 21:45:16 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/opinion/01wed3.html The French Non No political leader in Europe can afford to ignore the resounding rejection of the new European Union constitution by French voters last Sunday. Coming right after a beleaguered Chancellor Gerhard Schröder of Germany was forced to call new elections, and right before the Netherlands is to cast what is likely to be another 'no' against the constitution today, the French referendum clearly shows a Europe suffering from an identity crisis. President Jacques Chirac has necessarily shifted swiftly to damage control, replacing Prime Minister Jean-Pierre Raffarin and bringing his popular political nemesis, Nicolas Sarkozy, back into the government. But shuffling old faces may not assuage the masses. While the European Union itself is in no danger of collapse, damage has been done to the dream of a continent that would continue to deepen and broaden its unity. Nestled in the explanations for why the French rejected the constitution - resentment of immigrants, concern over swelling unemployment, resistance to Turkey's entry - are two common strands. The first is fear. This includes the fear of losing their 35-hour work week thanks to an onslaught of cheap labor from new member states, the fear of losing the French identity, the fear of 'Anglo-Saxon' (read British and American) economic reforms. The second, equally alarming strand is a loss of common ground between business and political elites and ordinary people: the workers, farmers and poor who cast the majority of 'no' votes. Europe is now in for a prolonged period of reassessment and retrenchment. Perhaps that's just as well. Indeed, after today's Dutch referendum, further ratification votes should be suspended until a revised draft has been fashioned that takes account of the voter backlash. But it is important that new members in Central and Eastern Europe not be made to feel as if they are now a burden, especially since membership negotiations with other countries like Turkey, Bulgaria and Romania may now be further delayed. Turkey is certain to bristle at the overt hostility to its membership. The backlash will also make it even more difficult for governments weakened by the loss of confidence to pursue the economic reforms that their countries so urgently need.

Subject: Women Find Their Place in the Field From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 15:29:21 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/dining/01farm.html?ex=1118289600&en=17bd113d53a5bfb7&ei=5070 Women Find Their Place in the Field By JULIA MOSKIN CHERYL ROGOWSKI planted her seeds of change in the black soil of Orange County, N.Y., in 1994. Her parents, first-generation Polish-Americans, built the W. Rogowski Farm, starting in the 1950's. Like most farmers in the area, they dedicated their land to the wholesale onion business. 'We sold 500 tons of onions every year,' Ms. Rogowski said, 'and never met any of the people who bought them.' In 11 years, starting with a crop of chili peppers seeded in her bedroom and planted in a remote field, Ms. Rogowski has transformed Rogowski Farm, raising 250 varieties of produce and forming intimate connections to its customers and employees. For her innovations, she won a $500,000 'genius award' last year from the John D. and Catherine T. MacArthur Foundation, the first given to a full-time farmer. 'What I know about farming is this: It's not enough to just drive the tractor anymore,' she said. Ms. Rogowski, 43, is one of thousands of women who have changed the face of American farming. Though American farms have steadily declined in jobs and capital for years, the number of farms operated by women has more than doubled since 1978, from just over 100,000 to almost 250,000 today, according to the United States Department of Agriculture. Almost 15 percent of American farms are now run primarily by women - a sea change from 1978, when the figure was 5 percent. On organic farms, according to the Organic Farming Research Foundation, the number is 22 percent. The concentration is especially high in the Northeast, where a small farm near an urban area can now survive solely through farmers' markets, restaurants, farm memberships (in which customers pay in advance for a season's worth of produce) and other direct outlets. 'Farming has changed, and farmers now have to do things they are traditionally really bad at: marketing, educating consumers, collective action, communication,' Ms. Rogowski said. 'And it can't be a coincidence that women are traditionally good at those things.' To expand her farm's business and its reach in its community, Ms. Rogowski arranged for weekly deliveries of produce to centers for the elderly, mentored immigrant farmers from Mexico and Guatemala, started a catering business that uses local produce, sells vegetables at eight weekly farmers' markets and is an activist for land use reform. 'Women farmers aren't a special-interest group,' she said. 'Our issues are the same as all American farmers - we all want to keep our farms, and we have to make money from them. But women have come up with a lot of the new ways of doing it.' Women's work has always been integral to American farming, but women were seldom considered farmers. Now, networks of female farmers are thriving in Vermont, Pennsylvania, Maine, Montana and Iowa. And a national conference for women in sustainable agriculture, the first of its kind, is scheduled for October in Burlington, Vt. At the Rodale Institute in Pennsylvania, an organic agricultural training center, all of this year's farm interns are women, which is also a first, said Jeff Moyer, the farm manager. All of the women interviewed for this article said they had experienced little resistance from their male colleagues. 'I can do every job on this farm that my dad or brother could do - operate the forklift, bag onions, haul manure,' Ms. Rogowski said. 'And the farmers around here, not to mention the guys who work for me, all know that.' Annie Farrell, 54, was a single mother when she started farming in Bovina, N.Y., in the 1970's. 'It was a man's world back then,' she said. A longtime supplier to New York City chefs, she was one of the first local growers to produce organic vegetables of restaurant quality. 'The kind of farming I wanted to do takes finesse and patience, and the men didn't seem too impressed.' The rise of small-scale 'market farming' has brought many women back to farming. 'Small tractors have become the fastest growing segment in the agricultural equipment industry,' said Barry Nelson, a spokesman for John Deere. 'We have more women buying tractors than ever before, and more small farms that need just one piece of heavy equipment. It's a lot easier to get started than it used to be.' Even so, according to the Department of Agriculture, women are far more likely than men to be farming on inherited land. Betsey Ryder's farm, in Brewster, N.Y., has been in her family since 1795. Today, Ryder Farm's motto is: 'Where the Ladies Drive the Tractors.' 'When I was growing up, family farms didn't seem like they had a financial future,' Ms. Ryder, 49, said. She trained as a nurse but kept finding herself back in the fields, she said. Like many American farmers, she has found it necessary to keep working away from the farm, which produces vegetables, fruit and flowers on 12 acres. 'Love brought me to farming, but health insurance and common sense brought me back to nursing,' she said. 'Maybe women are more susceptible to the romance of farming, or to the idea of holding on to the homestead.' Nancy MacNamara, of Newburgh, N.Y., farms on the piece of land she grew up on; her father was a commercial farmer. 'Women are finding our place in the field,' she said. Ms. MacNamara, 57, farms on only two acres but sells her hand-raised greens to such chefs as Thomas Keller of Per Se and Wylie Dufresne of WD-50. Like many of today's female farmers, Ms. MacNamara came of age during the 1970's, when she left her parents' farm 'to roam the world and be a wild hippie,' she said. But the turbulence of the 1970's eventually ebbed, depositing her back on the land with her two children. 'We had the rise of feminism at the same time as the rise of organic agriculture and the 'back to the land' movement,' she said. 'People - especially mothers - started to want to know where their food is coming from.' Ms. MacNamara started feeding New Yorkers by selling fruit off a truck in the East Village. 'We were maverick direct marketers,' she said. 'A lot of those people had never had a ripe peach before.' In the 1980's, as Americans grew more sophisticated about food, Ms. MacNamara started to experiment with growing fruit for flavor rather than for size or appearance. Like many small farmers, she worked to make the most of the land she had. She used the research of William Albrecht, a pioneering soil scientist. 'He said that if you feed the soil, then the soil will feed the plant and the fruit will taste the way it should,' she said. 'My father thought I was crazy to produce so few berries,' she added. 'But he could never have imagined how much chefs would pay for them.' Paulette Satur of Satur Farms imagined exactly that. Married to Eberhard Müller, the executive chef at Bayard's and formerly at Lutčce, she built a half-acre weekend garden into a 200-acre farm in about four years. Satur Farms employs about 50 people on its work crew, and supplies many of New York City's top restaurants and gourmet shops with lacinato kale, wild arugula, baby carrots and other vegetables. Ms. Satur, 49, says her ability to communicate with chefs and the Spanish-language skills that let her communicate with her work crew are her most important farming skills. 'Paulette is the farmer, even though she doesn't drive the tractor,' Mr. Müller said. Ms. Satur was raised on a dairy farm. 'I use a different skill set than my parents did on the farm, but growing up there made it possible for me to imagine myself as a farmer,' she said. 'For women farmers, that is a huge first step.' Eve Kaplan-Walbrecht, 32, whose first child is due on Friday, came of age a generation after many of her female colleagues. Ideas about sustainability, feminism and community-supported agriculture had already taken root in American agriculture, she said, and the idea of a female farmer was not new. She majored in environmental science at Harvard, has a master's degree in conservation biology and sustainable agriculture, and started a small organic farm, Garden of Eve, on Long Island, in 2001. She farms with her husband, Chris, who grew up on a dairy farm. She says that farm work includes traditionally male and traditionally female skills, and that a farm needs both. 'Like a baby,' she said, 'a farm needs as much nurturing as it can get. I can't imagine being a single parent to a farm.' To her surprise, Ms. Kaplan-Walbrecht said, she and her husband usually divide the farming duties along traditional gender lines. 'I hate to traffic in these stereotypes,' she said, 'but it's true that Chris is the one out on the tractor in freezing weather with bleeding fingers, and I am the one feeding the chickens.' 'But,' she added, 'I am usually also the one reading the spreadsheets.'

Subject: Interest Rates and Housing From: Terri To: All Date Posted: Wed, Jun 01, 2005 at 15:02:50 (EDT) Email Address: Not Provided Message: These last 25 years Federal Reserve policy changes while directly effecting short term interest rates, have had an increasingly quick effect on mortgage rates. In turn the cost of refinancing has increasingly fallen. So, Fed policy has more quickly and in a more pronounced way effect the housing market. There was quite a dramatic turn in effect in 1991 and another in 2001. Paul Krugman has correctly pointed out how effectively Fed policy has worked through spurring or limiting the housing market. This last Fed tightening cycles however has not led to any meaningful slowing of the housing market, and this is different.

Subject: He Talks of Black Britain From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 12:16:08 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/theater/newsandfeatures/01kwam.html?pagewanted=all&position= He Talks of Black Britain, and the West End Listens By MATT WOLF LONDON - Kwame Kwei-Armah was starring in the popular television hospital drama 'Casualty' in 2001 when he decided to fly across the Atlantic to see August Wilson's 'King Hedley II.' The eighth play in Mr. Wilson's 10-play cycle about black American life in the 20th century, 'Hedley' was having a pre-Broadway tryout at the Kennedy Center in Washington. 'I was so touched by the magnitude of this man and his commitment to talk of and chronicle the African-American experience through the art form,' said Mr. Kwei-Armah, who has never met Mr. Wilson. 'I went back to my hotel room that night and said, 'O.K., I now know what I want to do; I want to chronicle the black British experience.' ' The product of that revelation, 'Elmina's Kitchen,' opened on the West End at the end of April to mostly warm reviews, making Mr. Kwei-Armah, at 38, the first homegrown black dramatist to have a play commercially produced on London's equivalent of Broadway. 'There's that feeling of a glass ceiling being smashed,' Mr. Kwei-Armah said. 'And I am tremendously humbled that it is my play that is involved with that kind of history.' That the play should be a groundbreaking event in London may strike Americans as odd, given the longer tradition of African-American playwrights dramatizing the black experience. But subjects like the lives of West Indians, former colonials, in Britain have rarely been given such a platform here, not to mention plays that examine the pressures on young black Londoners today to live outside the law. Mr. Kwei-Armah was sitting backstage earlier this month in his mostly bare dressing room at the Garrick Theater. For this West End run, he has been recruited to head the cast of his own play. And he is receiving star billing for his role as Deli, a single father struggling to protect his 19-year-old son from the temptations of Hackney's drugged-out streets, an area of East London known as Murder Mile. 'For me, the play is about choices,' said Mr. Kwei-Armah, a tall, imposing presence with a deep voice and a ready laugh, who wrote a handful of plays before 'Elmina's Kitchen.' 'I wrote it as a dark love letter to my son about the choices in life.' Mr. Kwei-Armah was referring to his 12-year-old son, also named Kwame, the oldest of his three children. Staging any play on the West End is a financial risk, but one that focuses on minorities and difficult social issues makes the gamble that much bigger. In the play's favor, it received broad critical approval and awards when it ran for 45 performances in repertory in 2003 at the National Theater, one of Britain's subsidized nonprofit theaters. In December, the National was also the site of the premiere of 'Fix Up,' the second installment in Mr. Kwei-Armah's planned trilogy. 'What you tend to do on things like this is say, 'Can I cope with the losses?' ' said Bill Kenwright, a London impresario who is leading the three-person consortium that moved 'Elmina's Kitchen' to the Garrick. 'And if the answer is yes, you do it; and if the answer is no, you do it, because what's life all about but doing it?' Mr. Kenwright is also producing 'The Big Life,' which opened to rapturous reviews on May 23. Taking place toward the end of the 1950's, it is the first musical set in a British black community to open on the West End. Mr. Kenwright put the cost of the two shows at about $1 million. Fortunately for him, he has more reliably commercial prospects, like Rob Lowe starring in 'A Few Good Men,' which opens on the West End in September. 'Elmina's Kitchen' has been playing to houses that are often less than two-thirds full. The play is running 'on a week-to-week basis,' he said. Sonia Friedman, a leading West End producer whose current ventures include the Andrew Lloyd Webber musical 'The Woman in White,' praised Mr. Kenwright as a 'fantastic maverick.' Still, Ms. Friedman said, any significant black presence on the West End 'has to be about more than one or two pieces; there has to be a concerted effort from everybody.' The problem, she continued, is that 'I don't feel the black audience feels the West End is for them.' Blacks have traditionally made up a smaller percentage of theatergoers on the West End than they do on Broadway, where even many of August Wilson's plays, including his most recent, 'Gem of the Ocean,' have lost money. And London has a much smaller black middle class to provide a pool of potential theatergoers, West End producers say. 'Elmina's Kitchen,' though, is attracting an unusually high proportion of black ticket-holders. On average, 400 to 450 people show up nightly at the 694-seat theater, said Steve Potts, Mr. Kenwright's marketing manager. He estimates that about 50 percent of the audience is black. When Mr. Kwei-Armah takes his curtain call each night, he surveys the house. 'I'm tremendously pleased when I look out and I see such a wonderfully diverse audience,' he said. 'What this symbolizes, which is wonderful, is a real maturity in our nation that these communities are able to fully interlock and appreciate each other's culture.' His play had its American premiere in January at the Center Stage in Baltimore and was, fittingly, directed by Marion McClinton, who also directed the 'King Hedley II' production that first inspired Mr. Kwei-Armah. Mr. Kwei-Armah grew up in northwest London as Ian Roberts, changing his name in his early 20's after tracing his roots to Ghana. His family was close-knit, but he says London's streets were far meaner then than they are now. 'Nearly every one of my cousins was stabbed or shot at by white skinheads,' he said. Mr. Kwei-Armah's way out was through entertainment, as he became famous for his acting, singing and appearances on 'Celebrity Fame Academy,' a British variant on 'American Idol.' Lately, he has focused on his writing. 'Fix Up' drew mixed reviews when it ran for 55 performances at the National but was well attended. (The theater was 88 percent full.) He is working on the last of the trilogy, which he plans to set in a Pentecostal church in Harlesden, another predominantly black area of London. He also has two screenplays in the works, a BBC documentary, and another theatrical piece (a commission, like the others) on his plate, not to mention occasional appearances as a cultural pundit on the BBC's weekly arts show, 'Newsnight Review.' 'On average, I do 19 hours a day, and, yeah, I'm slightly exhausted,' he said, but it's worth it. 'This sends out very good signals to young black boys in particular that we can dream and that we can see dreams coming true.'

Subject: Utilities and Materials From: Terri To: All Date Posted: Wed, Jun 01, 2005 at 12:14:03 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Though market relations change, notice the strength of the Vanguard Utility Index and the weakness of the Materials Index. Utilities, especially regulated utilities, have been attractive for several reasons these last years, but there is little concern with higher long term interest rates reflected in the stock prices. Materials share prices appear to reflect a weakening in international demand.

Subject: The Six-Figure Rootless Life From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 11:58:23 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/national/class/01ALPHARETTA-FINAL.html?pagewanted=all The Five-Bedroom, Six-Figure Rootless Life By PETER T. KILBORN ALPHARETTA, Ga. - Kathy Link is 41 with blond-streaked pigtails and, at 5-foot-9, straight as a spear. She is still in the red sun visor and tennis whites she wore leading her fitness class at the Forum Gym and winning at doubles afterward. Tucked by her seat is her color-coded itinerary. Kaleigh, 8, is red. With school over this afternoon in late August, she has already been dropped off at her soccer practice blocks from home. Kristina, 11, is dark green, and Kelsey, 13, is yellow. Kristina must get to her soccer practice four miles to the north, and Kelsey to her practice 14 miles to the south. Ms. Link (blue for work, light green for family and volunteering) surveys the clotted intersection at the mouth of her 636-house Medlock Bridge subdivision. After moving here four years ago and choking on traffic, she made a rule: 'Wherever I'm going has to be within one mile of the house,' she said. But she breaks the rule two or three times a day, driving 10 and 15 times the one-mile distance. She squeezes the wheel of her white, eight-seat, leather-upholstered 2003 GMC Denali S.U.V. 'Go, people,' she pleads. Her knuckles go white. Twice she taps the horn. A timid driver in a gray van three cars ahead tiptoes into the Atlanta-bound avalanche along Highway 141. Ms. Link impatiently pulls abreast, saying, 'I have to see who she is.' A rookie 'relo,' she decides, someone newly relocated to Alpharetta and to its traffic. She herself is a veteran relo, having moved three times in the past 10 years to help keep her husband's career on track. She admits she is beginning to feel the strain of her vagabond life. 'It's like I'm on a hamster wheel,' she says. Ms. Link and her husband, Jim, 42, a financial services sales manager for the Wachovia Corporation of Charlotte, N.C., belong to a growing segment of the upper middle class, executive gypsies. The shock troops of companies that continually expand across the country and abroad, they move every few years, from St. Louis to Seattle to Singapore, one satellite suburb to another, hopscotching across islands far from the working class and the urban poor. As a subgroup, relos are economically homogenous, with midcareer incomes starting at $100,000 a year. Most are white. Some find the salaries and perks compensating; the developments that cater to them come with big houses, schools with top SAT scores, parks for youth sports and upscale shopping strips. Others complain of stress and anomie. They have traded a home in one place for a job that could be anyplace. Relo children do not know a hometown; their parents do not know where their funerals will be. There is little in the way of small-town ties or big-city amenities - grandparents and cousins, longtime neighbors, vibrant boulevards, homegrown shops - that let roots sink in deep. 'It's as if they're being molded by their companies,' said Tina Davis, a top Alpharetta relo agent for the Coldwell Banker real estate firm. 'Most of the people will tell you how long they'll be here. It's usually two to four years.' The Links bought their first home 15 years ago in what was then the master planned community of Clear Lake City, Tex., now a part of Houston. In 1994, they moved to the old Baltimore suburb of Severna Park and three years later to Pittsford, N.Y., near Rochester. In another three years they bought a five-bedroom, four-bath home here, 25 miles north of Atlanta, where Mr. Link started work at an office of the First Union Corporation, which became part of Wachovia. The Population Sprawls Still inching along, Ms. Link passes strip malls. She goes by the gym, chiropractors, nail shops, colonnaded stucco banks, hair salons, 16-pump gas stations, self-storage lots, Waffle Houses, a tanning place and a salon that tattoos on lipstick and eyeliner so they will not fade in the pool. She dodges the orange barrels of road-widening crews spreading asphalt in a futile effort to keep up with a north Fulton County population that has swelled to 273,000 from 170,000 in the 90's, a decade when the city of Atlanta barely grew, to 416,000 from 394,000. Sidewalks start and stop. No one dares ride a bicycle or walk a dog. She crosses over Georgia 400, the clogged artery that pumps hundreds of thousands of commuters into Alpharetta's glass and brushed-metal office parks and, an hour's drive south, into downtown Atlanta. She passes developments that from the air look like petri dishes of tadpoles, each head a cul-de-sac. In new subdivisions, signs in fancy script trumpet 'price points,' to show relos where to roost: Brookdale, $300's; Wildwood, $400's; Wolf Creek, $300's to $500's; Quail Hollow, $500's; Inverness, $600's to $800's; White Columns, $700's to $1.5 million; Greystone, $900's to $4 million. The Hispanic landscaping crews are out with old Ford pickups tugging eight-foot flatbed trailers. They trim the edges of spongy Bermuda grass lawns and attack the grubs, fire ants and weeds. Toys and even garden hoses are tucked out of sight lest the subdivision homeowners' association issue warnings and fines. Garage doors, all motorized, must stay shut. After dropping off Kelsey and Kristina, Ms. Link has to double back and pick up Kaleigh and take her to golf. She will wait for Kelsey to finish soccer before picking up Kristina and taking her to cheerleading practice. Another mother will have to retrieve Kristina so that Ms. Link can be home when Kaleigh's math tutor comes. Jim (orange) cannot help. He is gone two to five days a week, to Boston, New York, Chicago, New Orleans, Dallas and most often Charlotte. Monday and Tuesday, the itinerary says, 'Jim in meetings, Charlotte.' For Wednesday, it says, 'Jim in meetings, Philadelphia.' A Different Segregation Today's relos are the successors of itinerant white-collar pioneers of the 1960's, like the computer salesmen for whom I.B.M. meant I've Been Moved. They are employees of multinational industry: pharmaceutical salespeople, electronic engineers, information technology managers, accountants, data analysts, plant managers, regional vice presidents, biotechnologists, bankers, manufacturers' representatives and franchise chain managers. They are part of a larger development that researchers are finding: an increasing economic segregation. A Brookings Institution analysis of census data last year reported that the percentage of people living in affluent or poor suburbs in 50 metropolitan areas increased from 1980 to 2000, and the percentage living in middle-income areas declined. Just how many relos there are is hard to determine. The tide rolls with corporate fortunes and the global economy, and relos are not singled out in census statistics. But in a survey from March 2002 to March 2003, the Census Bureau said that about three million people moved to another county, state or country because employers had transferred or recruited them. . With the spread of global industry's new satellite office parks, the relos churn through towns like Alpharetta; Naperville, Ill., west of Chicago; Plano, Tex., outside Dallas; Leawood, Kan., near Kansas City; Sammamish, Wash., outside Seattle; and Cary, N.C., which is outside Raleigh and, its resident nomads maintain, stands for Containment Area for Relocated Yankees. Converging on these towns, relos have segregated themselves, less by the old barriers of race, religion and national origin than by age, family status, education and, especially, income. Families with incomes of $100,000 head for subdivisions built entirely of $300,000 houses; those earning $200,000 trade up to subdivisions of $500,000 houses. Isolated, segmented and stratified, these families are cut off from the single, the gay and the gray and, except for those tending them, anyone from lower classes. Unlike their upper-middle-class kindred - the executives, doctors and lawyers who settle down in one place - relos forgo the old community props of their class: pedigree and family ties; seats on the vestry and the hospital board; and the rituals, like charity balls. Left with the class's emblematic cars, Lily Pulitzer skirts and Ralph Lauren shirts, their golf, tennis and soccer and, most conspicuously, their houses, they have staked out their place and inflated the American dream. 'What is the American dream?' said Karen Handel, chairwoman of the Fulton County Commission in Alpharetta. 'It's to have a house of your own, the biggest house you can afford, on the biggest lot you can afford, with a great school for your kids, a nice park to spend Saturday afternoon with your kids in, and deep in amenities that get into the trade-offs with traffic.' More so than the classes below and above them - the immobilized poor of old cities and rural backwaters, the factory-bound working class and the old- and new-money rich - this is a fluid, unstable group. Those who lose jobs or decline promotions to let the children finish high school where they currently are sometimes relocate in place. They call the midnight movers to haul them to cheaper subdivisions, or seize the equity gains on their homes to move up. The Link house stands on a cul-de-sac, up a slight rise with tall young oaks raining acorns over a small front yard and a curtain of cedar and pine bordering the back. It is three stories tall, with beige stucco walls and wide fieldstone panels flanking a varnished oak front door with leaded glass. The house has a two-story family room hung with folk art, a room for guests that holds the girls' upright piano, a master suite upstairs with a bathroom with a wide white vanity on each side of the door and a Jacuzzi enclosed in pinkish marble tiles. Three blocks away are the tennis courts, the pool, two soccer fields and the two-story community clubhouse. Alpharetta may be deep in Dixie, but its accent is not. Of the 30,000 people who live in the Links' census tract, 75 percent were born outside Georgia. Six percent are black, and 12 percent are Asian. Fewer than 3 percent are over 65; fewer than 2 percent are poor or unemployed. Two-thirds of the adults have had four or more years of college and earn more than $100,000 a year, twice the American family average. Their homes are worth an average of $400,000, twice the national average, and they have nearly twice as many rooms as the average house. 'Everybody here is in the top 10 percent of what they do,' Steve Beecham, a home mortgage broker, said, 'or they desire to be in the top 10 percent.' In politics, Republican candidates are shoo-ins. Few Alpharetta lawns sprouted campaign signs in November because the area's four contenders for the state legislature and a new candidate for Congress were all Republicans and ran unopposed. Just Passing Through When the Links began house-hunting in early 2000, Mr. Link said, 'school was No. 1.' After settling on the best school districts, he said, 'we looked within price points.' At their $300,000 limit, all they could afford in a good district near Atlanta was a three-bedroom, two-bath ranch-style house. 'I wanted four bedrooms, two and a half baths and a basement,' Ms. Link said, 'and I had to have a yard.' The house the Links eventually bought in Medlock Bridge, built in 1987, has 3,900 square feet and 1,100 more in a basement with a wall of windows facing the backyard. There is a recreation room with a bar, and a fifth bedroom. 'The basement is approximately the same size as my parents' entire house,' Mr. Link said. The Links paid $313,000 and took an 80 percent mortgage. Pleased though they have been with the house, the Links never considered it permanent. At the dishwasher one evening last September, Ms. Link said, 'Jimmy has been saying, 'This travel is killing me.' I'm shocked we're still here. Every home we went to, I said, 'Could you sell this house?' I did not think we would be here four years. Early on, I told Jimmy, 'Wherever you choose to work, we will make a life.' 'Jimmy's the one making the money. I want him to be happy and successful. Every area you move into, you buy into the lifestyle. Alpharetta is very big on tennis and soccer. We chose to participate in that.' Ms. Linka's favorite place was Pittsford, an affluent apple-pie town outside Rochester with a congenial mix of transient families and long-settled ones. 'Up there each town has its own little village and one main street where you can walk and ride your bike and get someplace safely,' she said. Kelsey and Kristina started school and soccer there. Ms. Link became a certified personal trainer and began volunteering. She joined the Junior League. Creating the Illusion of History The actual city of Alpharetta covers only 23 square miles in the northern half of Fulton County, but many subdivisions in adjoining unincorporated areas, like Medlock Bridge, carry Alpharetta ZIP codes. The city has no real core, although it has a small downtown with a Main Street, City Hall, some restaurants, a Methodist and a Baptist church, two beauty parlors, a variety store, a new gift shop called Everything Posh and a cemetery. Just off Main Street, flanking an alley between two small parking lots, a pair of white wooden arches proclaim 'Historic Downtown.' But they lead only to the back walls of stores. Nearby is the Alpharetta Historical Society, housed in a 100-year-old Queen Anne house. The house is a relo. A truck brought it up from Roswell in 1993. 'Illusionism is something that people have enjoyed for centuries,' Diana Wheeler, the director of community development, said. 'We're creating new applications. It's a matter of how it's carried out. It's a quality issue. You convert the illusion into something that has value to you. Maybe solid columns held up roofs, and hollow columns create the illusion they do. People will go to great lengths to impress others.' Tim Bryan builds illusions, designing million-dollar houses of at least 4,500 square feet. Mr. Bryan said clients 'want it to look like a house that's evolved over a century, to appear to have been lived in for 100 years or more, with the look of having been added onto.' To achieve the look, a Bryan house may have a section of brick and next to it one of stone, then one of cedar shake. With their price-pointed subdivisions, developers create pecking orders. 'We're all busy looking down on each other,' said Neal Martineau, 74, a retired advertising man who last summer was getting ready to move from just outside Alpharetta to West Virginia. ' 'I'm better than you are and I'm going to show you.' It's a kind of bullying. It's architectural bullying.' 'I'm faking it here,' Mr. Martineau said. 'I have property that does not have enough meadow to feed a horse, but I call it a horse farm.' 'The car may be the most visible sign of status,' he said. 'My Mercedes is indicative of who I am. I am also a bit of a fraud. I probably shouldn't have a Mercedes, but I'm happy to wear a Mercedes. It's a way I have of making myself feel important, to have someone look at the best car on the road and know I'm in it.' One result of Alpharetta's subdivision-dotted terrain is the isolation of families from people unlike themselves. Zoning and planning are partly responsible, and so is the traffic. Except for the commute to work, the orbit of Medlock Bridge residents consists of the schools, the community pool, the tennis courts, the clubhouse, the shops along Medlock Bridge Road and the St. Ives Country Club right across from the subdivision. Atlanta seems so far away. 'We haven't been to any cultural events or sporting events as a family because it's an all-night event,' Mr. Link said. People shop on the Internet. Rather than go to the car wash, they can call Tony Lancaster, who comes around in his van and brings the water, too. 'Anything a shop can do, I can do mobile,' Mr. Lancaster said. Their seclusion helps keep the neighborhood safe, which is important to the Links. 'We'll get a little rash of golf clubs stolen,' Mr. Link said. 'Mailboxes have been hit or bent. We'll see where cars have gotten keyed. But that's about it.' 'The good thing about it is that it is a very comfortable neighborhood to live in,' Mr. Link said. 'These are very homogenous types of groups. You play tennis with them, you have them over to dinner. You go to the same parties.' 'But we're never challenged to learn much about other economic groups,' he said. 'When you talk about tennis, guess what? Everybody you play against looks and acts and generally feels like you. It doesn't give you much of a perspective. At work, diversity is one of the biggest things we work on.' Alpharetta employers say that the $250,000 starting point for a detached, single-family house freezes out their secretaries and technicians, janitors and truck drivers, cashiers and data clerks. The prices exclude the city's own teachers and firemen. Of Alpharetta's 365 full-time city employees last fall, 112, or less than a third, lived in the city. Of 74 police officers, just the chief and two sergeants lived here. House cleaners, like Linda Bates, live 30 or 40 miles away. Ms. Bates works for Unlimited Cleaning Services, a company that supplies housekeepers with a checklist of the clients' requirements. A client may never speak to the cleaner or get the same one twice, and that is all right with Ms. Bates. 'If I have to be at a house at 8:30, I will leave my house at 7,' she said. 'We just clean the house and go, like the air-conditioning man. I never bother personal things. I never answer the telephone. I don't like being there when they get there.' Adjusting to Differences Kathy Link came from Highland Park, an old planned community of what are now multimillion-dollar homes four miles north of downtown Dallas. Jim Link grew up in a Houston subdivision, Bellaire, in a house where his parents have lived for 34 years. They went to Texas A&M University in College Station, met at a student pub where Mr. Link tended bar and married three years later, in 1988. She found work as an editor for an aerospace company. Mr. Link went into the insurance and mutual fund business, and from there he made the switch to banking. Hardy, trim and darker toned than his wife, in disposition still the affable bartender, Mr. Link mans the beer cooler at holiday parties at the Medlock Bridge clubhouse. Ms. Link is more reserved. Her tennis doubles partner's high-five is a slap. Hers is a tap. Often as she leaves the court one mother or another stops her and, taller than most, she settles an arm over the woman's shoulder as they walk. She pretends to have the time. The Links agree on most things. In November, they voted for President Bush. They splurge on their children's sports and tutoring and piano lessons and deny them computers and televisions in their rooms and cellphones. But her family was better off than his, and every now and then their views diverge on money. When he sees the occasional $140 charge for having her hair highlighted, she said, 'he cringes.' 'Kathy's goal for college for the kids,' he said, 'is like her mother's was for her, that they not have to work.' He worked, and it is fine with him if his children do. Ms. Link is happy in the $45,000 Denali that they financed. He is happy with the 2000 green Ford Taurus he bought used from CarMax for $10,000 in cash. They are clear of the troubles with credit card debt that built up after Kelsey and Kristina were born. Mr. Link earns something over $200,000, with bonuses based on the strength of the economy and his sales staff's success. Ms. Link earns around $4,000 from personal training and fitness instruction and plans to build on that as the children get older. They have about $100,000 equity in the house and about $10,000 in college funds they started for the girls last year. 'We do all the basic stuff out of salary,' Mr. Link said. 'Bonuses are free for everything else, like extra saving, big vacations and major repairs on the house.' Bonuses last year bought the family their first ski trip, a week after Christmas in Steamboat Springs, Colo. For all their moving, the Links try to carry on an upper-middle-class tradition of volunteering and knitting community ties. Barely settled in Medlock Bridge, Mr. Link ran for the board of the homeowners association and won. The board then made him president and, in effect, the mayor. He paid the $15,000 initiation fee for the family to join the St. Ives Country Club. Ms. Link joined a neighborhood group to play bunko, a social dice game favored by Alpharetta women, many of whom think of it as an excuse to get together and have a few glasses of wine. She began editing the subdivision's newsletter and set up an e-mail chain that reaches 350 Medlock Bridge homes. She spends two hours on Tuesday mornings at a Bible study meeting. And she has bored into the schools. She became a vice president of the elementary school PTA and took on its newsletter. She is a room parent for Kaleigh's third-grade class and organizes science projects there. At her kitchen computer command post, she tracks the girls' reports and test scores on school Web pages. Kelsey's October report showed a 97 average, but then she got a 78 on a Spanish test. In a week, she had a tutor. 'The women are like the rulers,' Kelsey said on a drive with her father during a weekend soccer tournament in Columbus, Ga. 'They have the big cars. The dads have the little cars and just go to work.' She said her mother thought that her father was too relaxed on the road. Mr. Link said, 'Kathy becomes impatient with me when I'm going 70 in a 65 zone.' 'No, Daddy,' Kelsey said. 'It's when you're going 60.' Lately, Ms. Link's frenzied schedule has been grinding her down. Early last summer she gave up bunko. In August she dropped her PTA jobs and the community newsletter. In October, she was asked to lead a fund-raising drive for Kristina's cheerleading squad and said no. 'I had never done that,' she said. But something else always seems to come up. She resumed editing the community newsletter because her successor gave it up. In November she learned of a school redistricting plan and shook her e-mail chain to mobilize opposition. All her activity began creating tension at home. On the sidelines of one of Kristina's soccer games in October, Mr. Link said: 'The single biggest thing to change is, Kathy has to be more judicious about how she volunteers. She would never give up Bible study. But she's now playing in three or four tennis leagues.' She agreed. 'I volunteer way too much,' she said. 'It doesn't mean you shouldn't be involved,' he told her, 'but it doesn't mean you have to be the leader.' Unexpected Challenges The Links are the first to say they have not really found a way to make their Alpharetta life work. They found good schools, safe streets, neighbors they like and a big house and a yard. But they did not count on the grueling traffic, on how far away everything seems, on how much is asked of volunteers to sustain the community, or on the stresses of a breadwinner's travels. They have no deep connections here, no old friends, no parents to sit for their children. Ms. Link thinks about Highland Park, with her Presbyterian church and easy access to Dallas. She thinks about Rochester. 'In Rochester,' she said, 'everything fell into place.' In Alpharetta what weighs on her is just the daily grind. 'We haven't found a church,' she said. 'We went church shopping. I would find places my children liked and I didn't or that I liked and they didn't. We found one, but it's a half-hour drive away. We don't have that kind of time.' 'It's all here,' she said, 'but it's an hour drive away. Here it's like, 'Get the heck out of my way.' It's like go, go, go. We're just going, going, going. I call it drowning. It's when you can't see the top of the water.' 'In Rochester,' she said, 'you could go to festivals and street fairs, and museums and farms and pick your own apples and not have a death grip on your child.' 'In Rochester I had two best friends,' she added. 'I don't have a girl best friend here in Alpharetta. There's no one person I can call up to confide in. I called up one girl, and I scared her.' Exploring a Change In the summer of 2003, Jim Link and Wachovia considered some organizational changes that might have led to a move for the family, but nothing came of them. Last summer the discussions resumed, and in September he was promoted. Starting Nov. 1, he became national sales manager for a broader range of the bank's money management services than he had been selling. 'It rounds me out,' he said, folding laundry in the family room and watching a Georgia Tech football game on television. Whether to leave Alpharetta was left hanging, he said. But they decided that the moving should stop for a while - nine years, at least, from the time Kelsey starts high school until Kaleigh finishes. With his BlackBerry, laptop and access to the Hartsfield-Jackson Airport, Mr. Link could do his new job from here. Wachovia leaves the choice up to him but tells him that moving to Charlotte should help his career. 'I told my boss, 'If you're willing to fund a full relocation package, I'm willing to do it,' ' he said. Back home from the family ski trip to Steamboat as the year ended, the Links seemed to be leaning toward one more move. 'I will remake myself to be a better mother and a better wife,' Ms. Link said. 'I've paid my dues.' Mr. Link said: 'We would try to be closer and more plugged in to the city. Kathy would continue volunteering, because that's how she gets involved. We would require that the kids be involved in something.' They were not telling friends, or the girls. Once word got around, they feared, teachers and coaches would start writing the girls off. Kelsey had figured it out. As they packed for Steamboat, Ms. Link said, 'she asked, 'Are we moving?' Jimmy couldn't lie. He said, 'It looks like it,' ' and told her to keep mum. They worry about Kristina. The shyest of the three girls, she was slow to take to Alpharetta. Then she bloomed. In her special-education reading class, she got 100's all fall and in January moved to a regular class. She won her soccer team's Golden Boot award for scoring the most goals. The Links called in Tina Davis, the real estate agent. Afternoons when the girls were in school, Ms. Link searched the Internet for homes and schools in Charlotte and found that it, too, was a sea of new subdivisions. The average commuting time is 24 minutes, the same as Atlanta. Then she found Myers Park, a prosperous, close-in community of 8,700 where most of the houses are more than 60 years old and 10 minutes from downtown. She found the Myers Park Presbyterian Church. 'It's like the one I went to in Highland Park,' she said. Mr. Link got home on Feb. 9 after three days in Phoenix. He found a long e-mail message from Wachovia. 'We got our paperwork,' the relocation package, he said. They told the girls after school. Kelsey took it easily, sad only that she would not be going to Northview High School with her friends. Kaleigh beamed, then frowned about losing friends and teachers. Kristina was in the kitchen with Ms. Link when Mr. Link came in. 'Your dad's got something to tell you,' Ms. Link said. 'We're moving to Charlotte,' he said. Kristina paused. She would be leaving Rebecca, a friend of five years 'I hate you,' she said. 'When?' 'In June,' he said. 'What about soccer?' She would keep playing here through May, they told her, and then get onto a team in Charlotte. She brightened a little. That night Mr. and Ms. Link went to dinner at Sia's, their favorite restaurant, just across Medlock Bridge Road. 'I'm happy,' she said. 'It's finally over. For four years, it's been when, when, when.' She told Jim: 'I'm wired to settle in wherever we move and make a life for you and the family. But I still want a one-mile radius. I'm not going to do another Alpharetta.' By Kristina's 12th birthday on April 16, pale green buds had broken out in the oaks in front of the Links' house. A landscaping crew was setting pink and white petunias into the new pine straw mulch around the shrubs. Inside, floors had been sanded and the master bath retiled in beige limestone. 'Finished basement,' the red headline on Tina Davis's sign out front said. Mr. Link left early that day to take Kelsey to a soccer game 30 miles away. Ms. Link and Kristina watched Kaleigh's Green Gators near home. 'Go, Kaleigh!' Ms. Link shouted. 'Get in the middle, Kaleigh. Go!' On the sidelines, a father turned to her. 'Kathy, what's this I hear you're leaving?' 'We are,' she said. 'Work stuff?' 'Wachovia,' she said. 'Charlotte.' 'We're going to miss you,' he said. 'It's kind of bittersweet,' she said. 'We want to be there nine years, but you never know.' • In May, the Links sold their house in Alpharetta for $420,000 and bought a Cape Cod in Charlotte for $627,500. It is half the size of the one in Alpharetta, but it is in leafy old Myers Park. The Myers Park Country Club, the Presbyterian church and top-rated public schools are less than a mile away. On a visit last week, the girls got library cards. They tried out for a soccer club and all three made the cut. They will move in July.

Subject: Notice Bond Yields From: Terri To: All Date Posted: Wed, Jun 01, 2005 at 10:13:50 (EDT) Email Address: Not Provided Message: Imagine a long term Treasury yield of 3.95%. I do not know of another bull market in bonds to match the Janaury 2000 through May 2005 period. The dollar is strong, bonds are strong, and, as pleased as I am, I am astonished.

Subject: And, the Dollar From: Terri To: Terri Date Posted: Wed, Jun 01, 2005 at 11:55:49 (EDT) Email Address: Not Provided Message: The Netherlands will almost certainly turn down the European Constitution, while European interest rates are higher than American, so the dollar could easily remain strong for a while. What else can replace the Euro but the dollar?

Subject: Aiding Africa as World Bank Policy From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 09:49:55 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/business/worldbusiness/01bank.html New World Bank Chief Says Aiding Africa Is His Top Goal By ELIZABETH BECKER WASHINGTON - When he becomes president of the World Bank on Wednesday, Paul D. Wolfowitz says, Africa will be his top priority. 'Nothing would be more satisfying than to feel at the end of however long a term I serve here that we played a role in changing Africa from a continent of despair to a continent of hope,' he said Tuesday at his first news conference. To underline that commitment, he will travel to Africa in June. Mr. Wolfowitz becomes the 10th president of the bank, the world's largest development organization, at a time when experts are again asking basic questions about what works in pulling countries out of poverty. One of the few things most development institutions agree on is the need for a large increase in development aid. The United Nations and the World Bank under James D. Wolfensohn, the departing president, have called for the world's rich nations to double the aid given to the poor. After meeting with most of the bank's own experts over the last two weeks and reading dozens of books on the debate, Mr. Wolfowitz said he was relieved to be taking over the institution at a time when people are willing to experiment and exhibit 'a certain open-mindedness. 'There's been a healthy change in the development approach,' he said. 'It's no longer one size fits all.' Surveying the array of issues tied up in the goal of reducing poverty, Mr. Wolfowitz said he would emphasize finding solutions in partnership with the countries involved; ensuring that women have the same opportunities as men; restoring the bank's role of building structures like roads, ports and bridges in poor countries; and coordinating the bank's efforts with other donors and institutions. 'The best approach is to put the people in developing countries in the driver's seat,' he said, adding that this often requires humility and patience. He also singled out corruption as a major problem in development. 'Corruption is the biggest threat to democracy since communism,' he said. Mr. Wolfowitz comes directly to the World Bank from the United States Defense Department, where he was the deputy secretary and involved with the Iraq war, with its divisiveness. He said he hoped to leave the Pentagon behind him in his new job. His arrival, however, has been greeted with a letter of protest signed by 303 groups from 62 countries. And he said he has had to convince skeptics within and outside the institution that he will not use the World Bank to pursue the foreign policy agenda of President Bush. 'I'll do that by being objective and credible,' he said. Mr. Wolfowitz said, however, that it has been far more common for foreign officials to ask him if he could help them out with his special access to the White House or Congress. Mr. Bush nominated Mr. Wolfowitz for the position in March and he won unanimous approval from the World Bank's board. The United States has named all of the bank's presidents since its founding as part of the United Nations system, a practice that is coming under increasing criticism. Africa will dominate Mr. Wolfowitz's work over the next months. After returning from his trip, he will attend the annual meeting of the Group of 8 industrial nations in Scotland in July. Prime Minister Tony Blair of Britain, the host, has placed Africa at the center of that agenda, and Mr. Wolfowitz has closely studied the report that Mr. Blair's commission on Africa prepared for the session. The report's recommendations include abolishing many of the agricultural subsidies of rich nations, increasing aid to Africa by $25 billion and strengthening protection of the environment, policies that are at odds with the administration and many in Congress. His reading list also includes: 'Why Globalization Works,' by Martin Wolf; 'The World's Banker,' by Sebastian Mallaby; 'Development as Freedom,' by Amartya Sen; and 'Voice for the World's Poor,' a collection Mr. Wolfensohn's speeches. Added to that pile of reading material was a thick study released on Tuesday by the Center for Global Development, a nonpartisan institute, listing the five tasks it says Mr. Wolfowitz needs to accomplish.

Subject: Japan's Unemployment Rate Falls From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 09:46:39 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/business/worldbusiness/01yen.html Japan's Unemployment Rate Fell to 6-Year Low in April By TODD ZAUN TOKYO - Japan's unemployment rate fell to a six-year low in April while shoppers spent more freely, both signs that the country's tentative recovery may be gaining traction. The jobless rate fell to its lowest level since December 1998, dipping to 4.4 percent in April from 4.5 percent in March, the government statistics agency said Tuesday. Meanwhile, spending by households headed by wage earners rose 3.6 percent in April from the month before. Together, the figures offered evidence that improved employment prospects were finally encouraging consumers to spend after years of keeping a tight grip on their cash. The reports also offered hope that the healthy 5.3 percent growth of the first quarter would continue, though economists say the pace is bound to slow somewhat. The continuing improvement in employment reflects a broader and deeper recovery than any of a handful of short-lived upturns in the 1990's, said Richard Jerram, an economist for Macquarie Securities in Tokyo. Those early turnarounds, built mostly on exports, excluded large swaths of the economy like finance and retail. But banks have eliminated most of the bad loans that hobbled their profits in the last decade, while retail sales are trending higher after a long pause. 'We've seen recoveries through the 1990's that didn't bring the unemployment rate down because they were too short term and not broad enough,' Mr. Jerram said. 'This is really the first recovery that's had a meaningful impact on the unemployment rate.' Tuesday's employment data showed the economy added 410,000 jobs in April. A separate report showed there were 94 jobs available for every 100 people looking for work in April, the highest ratio since November 1992. Japan's unemployment rate has been steadily dropping from a high of 5.5 percent in January 2003, when many Japanese companies trimmed work forces to raise profits. Not only are more people finding jobs, but there are signs of an improvement in the kinds of jobs available. Many companies had long been replacing full-time workers with part-timers and contract workers, but recent data showed an increase in full-time workers. Along with the increase in jobs, there are indications that a nine-year decline in income is coming to an end. In December, the semiannual bonus payment that most workers receive rose an average of 2.7 percent from a year earlier, its first increase in eight years. Bonus payments are a significant part of most workers' annual earnings, typically amounting to several months' worth of wages.

Subject: Brazilian Interest Rates and Growth From: Emma To: All Date Posted: Wed, Jun 01, 2005 at 09:45:08 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/06/01/business/worldbusiness/01brazil.html Brazilian Growth Slows, Restrained by 19% Interest Rates By TODD BENSON SĂO PAULO, Brazil - Brazil's economy grew at its slowest pace in more than a year last quarter, as soaring interest rates began to discourage consumer spending and capital investment. The government said Tuesday that the economy expanded 2.9 percent from January through March compared with the quarter a year earlier - well below most forecasts for about 3.5 percent growth. Compared with the last quarter of 2004, Brazil's economy, South America's largest, grew just 0.3 percent, its weakest performance since the second quarter of 2003. The government also revised downward its figures for 2004, trimming growth to 4.9 percent from 5.2 percent. Agriculture underpinned growth, as did exports, which moved briskly ahead despite a rally in the value of the currency that has made Brazilian products more expensive. Worldwide demand for commodities overwhelmed the currency effects, analysts said. But economists said the growth figures were proof that high interest rates - the benchmark rate is now 19.75 percent - are now holding back the Brazilian economy, which grew last year at its fastest pace in a decade as a result of demand for raw materials like soybeans and iron ore. The central bank has increased the benchmark rate nine times since September to curb inflation, which hovers around 8 percent. The sectors of the economy most sensitive to the cost of money have fared poorly. Industrial production slumped 1 percent from the previous quarter, and household consumption dropped 0.6 percent. Capital goods spending, an indicator of business investment, slid 3 percent from the previous quarter. Late Tuesday, Unibanco lowered its growth forecast for the year to 3 percent from 3.7 percent. Agriculture rose 2.6 percent in the quarter from the previous three months. Brazil is the world's top producer of beef, coffee, sugar and oranges. Exports rose 3.5 percent. Economists now look for an expansion of less than 3.5 percent this year, according to a central bank survey published Monday.

Subject: For Richer From: Will To: All Date Posted: Wed, Jun 01, 2005 at 07:33:56 (EDT) Email Address: voslyn@yahoo.com Message: pkarchive.org/economy/forricher.html : I found this article very interesting. I'm curious if Kruger has outlined any prospective solutions to the widening earnings gap? Also on Lou Dobbs said Social Security was 5th on his list, and Lou said we'll have you back to discuss 1-4. Anyone know what 1-4 is?

Subject: Re: For Richer From: Bobby To: Will Date Posted: Wed, Jun 01, 2005 at 09:16:10 (EDT) Email Address: robert@pkarchive.org Message: I believe that the Earned Income Tax Credit is the policy that Paul mentions favorably the most. Do a search for 'Earned Income Tax Credit' and you can find it. You can search by clicking on the link that says 'Search this Site' in the upper lefthand corner.

Subject: Re: For Richer From: Will To: Will Date Posted: Wed, Jun 01, 2005 at 07:53:39 (EDT) Email Address: voslyn@yahoo.com Message: It seems to me that most people are too concerned with living an entertaining (if detatched) life to be interested in economics or politics or even the obscene earnings gap! If awareness is not enough. How would you motivate the public towards action? I may not know enough to ask the right question... I know very little.

Subject: Re: For Richer From: Setanta To: Will Date Posted: Wed, Jun 01, 2005 at 10:46:20 (EDT) Email Address: Not Provided Message: good question, do you think there could be some way to convince the producers of The OC, Desperate Housewives, MTV Cribs et al. to include these topics in their episodes? somehow i think they won't. TV is about escapism, people do not want to confront the harsh realities of their lives, only to watch contrived people deal with contrived scenarios in a contrived manner. its a form of insulation. we have the same problem over here with Coronation Street and Eastenders. people (mainly women in my experience, but i suppose men use sport in the same manner!) who cannot deal with the tru-view hue of reality prefer the technicolor of TV Land. no longer are todays issues the main conversation topich over dinner tables or in the local tavern. something must be done to deal with this apathy. if we cannot engage with reality then we are a juicy target for (and probably deserve) subjegation by a particular group. perfect examples being the religious conservatism in the us, the far right in europe, the political arm of terrorists (sinn fein) here in ireland.

Subject: Our Dear Paul Krugman From: Terri To: All Date Posted: Wed, Jun 01, 2005 at 07:30:46 (EDT) Email Address: Not Provided Message: There is not a day that I am not grateful to Paul Krugman for the humane truths set down for us. We are so fortunate. Thank you all.

Subject: Re: Our Dear Paul Krugman From: Will To: Terri Date Posted: Wed, Jun 01, 2005 at 07:36:12 (EDT) Email Address: voslyn@yahoo.com Message: What about febterday?

Subject: Interest Rates From: Terri To: All Date Posted: Tues, May 31, 2005 at 22:02:23 (EDT) Email Address: Not Provided Message: Notice we have closed May with a long term Treasury yield of 4.01%; this after 8 Federal Reserve short term interest rate increases and more to come. Amazing. The dollar is strengthening against the Euro and Yen. As for sectors, energy is of course strongest while utilities and health care, especially the large drug companies, are next. The market as a whole is down slightly.

Subject: Watching New Love From: Emma To: All Date Posted: Tues, May 31, 2005 at 19:44:59 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/health/psychology/31love.html?pagewanted=all Watching New Love as It Sears the Brain By BENEDICT CAREY New love can look for all the world like mental illness, a blend of mania, dementia and obsession that cuts people off from friends and family and prompts out-of-character behavior - compulsive phone calling, serenades, yelling from rooftops - that could almost be mistaken for psychosis. Now for the first time, neuroscientists have produced brain scan images of this fevered activity, before it settles into the wine and roses phase of romance or the joint holiday card routines of long-term commitment. In an analysis of the images appearing today in The Journal of Neurophysiology, researchers in New York and New Jersey argue that romantic love is a biological urge distinct from sexual arousal. It is closer in its neural profile to drives like hunger, thirst or drug craving, the researchers assert, than to emotional states like excitement or affection. As a relationship deepens, the brain scans suggest, the neural activity associated with romantic love alters slightly, and in some cases primes areas deep in the primitive brain that are involved in long-term attachment. The research helps explain why love produces such disparate emotions, from euphoria to anger to anxiety, and why it seems to become even more intense when it is withdrawn. In a separate, continuing experiment, the researchers are analyzing brain images from people who have been rejected by their lovers. 'When you're in the throes of this romantic love it's overwhelming, you're out of control, you're irrational, you're going to the gym at 6 a.m. every day - why? Because she's there,' said Dr. Helen Fisher, an anthropologist at Rutgers University and the co-author of the analysis. 'And when rejected, some people contemplate stalking, homicide, suicide. This drive for romantic love can be stronger than the will to live.' Brain imaging technology cannot read people's minds, experts caution, and a phenomenon as many sided and socially influenced as love transcends simple computer graphics, like those produced by the technique used in the study, called functional M.R.I. Still, said Dr. Hans Breiter, director of the Motivation and Emotion Neuroscience Collaboration at Massachusetts General Hospital, 'I distrust about 95 percent of the M.R.I. literature and I would give this study an 'A'; it really moves the ball in terms of understanding infatuation love.' He added: 'The findings fit nicely with a large, growing body of literature describing a generalized reward and aversion system in the brain, and put this intellectual construct of love directly onto the same axis as homeostatic rewards such as food, warmth, craving for drugs.' In the study, Dr. Fisher, Dr. Lucy Brown of Albert Einstein College of Medicine in the Bronx and Dr. Arthur Aron, a psychologist at the State University of New York at Stony Brook, led a team that analyzed about 2,500 brain images from 17 college students who were in the first weeks or months of new love. The students looked at a picture of their beloved while an M.R.I. machine scanned their brains. The researchers then compared the images with others taken while the students looked at picture of an acquaintance. Functional M.R.I. technology detects increases or decreases of blood flow in the brain, which reflect changes in neural activity. In the study, a computer-generated map of particularly active areas showed hot spots deep in the brain, below conscious awareness, in areas called the caudate nucleus and the ventral tegmental area, which communicate with each other as part of a circuit. These areas are dense with cells that produce or receive a brain chemical called dopamine, which circulates actively when people desire or anticipate a reward. In studies of gamblers, cocaine users and even people playing computer games for small amounts of money, these dopamine sites become extremely active as people score or win, neuroscientists say. Yet falling in love is among the most irrational of human behaviors, not merely a matter of satisfying a simple pleasure, or winning a reward. And the researchers found that one particular spot in the M.R.I. images, in the caudate nucleus, was especially active in people who scored highly on a questionnaire measuring passionate love. This passion-related region was on the opposite side of the brain from another area that registers physical attractiveness, the researchers found, and appeared to be involved in longing, desire and the unexplainable tug that people feel toward one person, among many attractive alternative partners. This distinction, between finding someone attractive and desiring him or her, between liking and wanting, 'is all happening in an area of the mammalian brain that takes care of most basic functions, like eating, drinking, eye movements, all at an unconscious level, and I don't think anyone expected this part of the brain to be so specialized,' Dr. Brown said. The intoxication of new love mellows with time, of course, and the brain scan findings reflect some evidence of this change, Dr. Fisher said. In an earlier functional M.R.I. study of romance, published in 2000, researchers at University College London monitored brain activity in young men and women who had been in relationships for about two years. The brain images, also taken while participants looked at photos of their beloved, showed activation in many of the same areas found in the new study - but significantly less so, in the region correlated with passionate love, she said. In the new study, the researchers also saw individual differences in their group of smitten lovers, based on how long the participants had been in the relationships. Compared with the students who were in the first weeks of a new love, those who had been paired off for a year or more showed significantly more activity in an area of the brain linked to long-term commitment. Last summer, scientists at Emory University in Atlanta reported that injecting a ratlike animal called a vole with a single gene turned promiscuous males into stay-at-home dads - by activating precisely the same area of the brain where researchers in the new study found increased activity over time. 'This is very suggestive of attachment processes taking place,' Dr. Brown said. 'You can almost imagine a time where instead of going to Match.com you could have a test to find out whether you're an attachment type or not.' One reason new love is so heart-stopping is the possibility, the ever-present fear, that the feeling may not be entirely requited, that the dream could suddenly end. In a follow-up experiment, Dr. Fisher, Dr. Aron and Dr. Brown have carried out brain scans on 17 other young men and women who recently were dumped by their lovers. As in the new love study, the researchers compared two sets of images, one taken when the participants were looking at a photo of a friend, the other when looking at a picture of their ex. Although they are still sorting through the images, the investigators have noticed one preliminary finding: increased activation in an area of the brain related to the region associated with passionate love. 'It seems to suggest what the psychological literature, poetry and people have long noticed: that being dumped actually does heighten romantic love, a phenomenon I call frustration-attraction,' Dr. Fisher said in an e-mail message. One volunteer in the study was Suzanna Katz, 22, of New York, who suffered through a breakup with her boyfriend three years ago. Ms. Katz said she became hyperactive to distract herself after the split, but said she also had moments of almost physical withdrawal, as if weaning herself from a drug. 'It had little to do with him, but more with the fact that there was something there, inside myself, a hope, a knowledge that there's someone out there for you, and that you're capable of feeling this way, and suddenly I felt like that was being lost,' she said in an interview. And no wonder. In a series of studies, researchers have found that, among other processes, new love involves psychologically internalizing a lover, absorbing elements of the other person's opinions, hobbies, expressions, character, as well as sharing one's own. 'The expansion of the self happens very rapidly, it's one of the most exhilarating experiences there is, and short of threatening our survival it is one thing that most motivates us,' said Dr. Aron, of SUNY, a co-author of the study. To lose all that, all at once, while still in love, plays havoc with the emotional, cognitive and deeper reward-driven areas of the brain. But the heightened activity in these areas inevitably settles down. And the circuits in the brain related to passion remain intact, the researchers say - intact and capable in time of flaring to life with someone new.

Subject: Vanguard Fund Returns From: Terri To: All Date Posted: Tues, May 31, 2005 at 18:55:00 (EDT) Email Address: Not Provided Message: http://flagship5.vanguard.com/VGApp/hnw/FundsByName Vanguard Returns 12/31/04 to 5/31/05 S&P Index is -1.0 Large Cap Growth Index is -2.6 Large Cap Value Index is 0.3 Mid Cap Index is -0.6 Small Cap Index is -2.6 Small Cap Value Index is -2.1 Europe Index is -1.7 Pacific Index is -4.5 Energy is 13.1 Health Care is 5.4 REIT Index is 1.2 High Yield Corporate Bond Fund is -0.4 Long Term Corporate Bond Fund is 5.9

Subject: Sector Stock Indexes From: Terri To: Terri Date Posted: Tues, May 31, 2005 at 18:59:27 (EDT) Email Address: Not Provided Message: http://flagship2.vanguard.com/VGApp/hnw/FundsVIPERByName Sector Indexes 12/31/04 - 5/31/05 Energy 13.8 Financials -3.7 Health Care 4.0 Info Tech -4.4 Materials -6.7 REITs 1.3 Telecoms -4.9 Utilities 8.3

Subject: Drug Makers Still Withhold Data From: Emma To: All Date Posted: Tues, May 31, 2005 at 18:25:16 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/business/31trials.html?pagewanted=all Despite Vow, Drug Makers Still Withhold Data By ALEX BERENSON When the drug industry came under fire last summer for failing to disclose poor results from studies of antidepressants, major drug makers promised to provide more information about their research on new medicines. But nearly a year later, crucial facts about many clinical trials remain hidden, scientists independent of the companies say. Within the drug industry, companies are sharply divided about how much information to reveal, both about new studies and completed studies for drugs already being sold. The split is unusual in the industry, where companies generally take similar stands on regulatory issues. Eli Lilly and some other companies have posted hundreds of trial results on the Web and pledged to disclose all results for all drugs they sell. But other drug makers, including Merck and Pfizer, release less information and are reluctant to add more, citing competitive pressures. As a result, doctors and patients lack critical information about important drugs, academic researchers say, and the companies can hide negative trial results by refusing to publish studies, or by cherry-picking and highlighting the most favorable data from studies they do publish. 'There are a lot of public statements from drug companies saying that they support the registration of clinical trials or the dissemination of trial results, but the devil is in the details,' said Dr. Deborah Zarin, director of clinicaltrials.gov, a Web site financed by the National Institutes of Health that tracks many studies. Journal editors and academic scientists have pressed big drug makers to release more information about their studies for years. But the calls for more disclosure grew stronger after reports last year that several companies had failed to publish studies that showed their antidepressants worked no better than placebos. In August, GlaxoSmithKline agreed to pay $2.5 million to settle a suit by Eliot Spitzer, the New York attorney general, alleging that Glaxo had hidden results from trials showing that its antidepressant Paxil might increase suicidal thoughts in children and teenagers. At a House hearing in September, Republican and Democratic lawmakers excoriated executives from several top companies, including Pfizer and Wyeth, for hiding study results. In response, many companies promised to do better. At the same time, Merck and Pfizer have been criticized for failing to disclose until this year clinical trial results that indicated that cox-2 painkillers like Vioxx might be dangerous to the heart. Drug makers test their medicines in thousands of trials each year, and federal laws require the disclosure of all trials and trial results to the F.D.A. While too complex for many patients to understand, the trial results are useful to doctors and academic scientists, who use them to compare drugs and look for clues to possible side effects. But companies are not required to disclose trial results to scientists or the public. Some scientists and lawmakers say new rules are needed, and a bill that would require the companies to provide more data was introduced in the Senate in February. So far no hearings have been scheduled on the legislation. The bill's prospects are uncertain, said a co-sponsor, Senator Christopher J. Dodd, Democrat of Connecticut. The drug makers have been criticized both for failing to provide advance notice of clinical trials before they begin and for refusing to publish completed trial results for medicines that are already being sold. The two issues are related, because companies cannot easily hide the results of trials that have been disclosed in advance, said Dr. Alan Breier, chief medical officer of Lilly, the company that has gone furthest in disclosing results. 'You're registering a trial - at some point, the results have got to show up,' Dr. Breier said. He added that disclosing trial results was important both to give doctors and patients as much information as possible and to improve the industry's reputation, which has been damaged by several recent withdrawals of high-profile drugs. 'Fundamentally, what we're doing is in the interest of patients, and I think that that is the winning model, for academia, for industry and for the future,' he said. In September, Pharmaceutical Research and Manufacturers of America, an industry lobbying group known as PhRMA, said it would create a site for companies to post the results of completed trials. Then, under pressure from the editors of medical journals, the major drug companies in January agreed to expand the number of trials registered on clinicaltrials.gov, the N.I.H. site, which was originally created so patients with life-threatening diseases could find out about clinical trials. But Merck, Pfizer and GlaxoSmithKline, three of the six largest drug companies, have met the letter but not the spirit of that agreement, Dr. Zarin said. The three companies have filed only vague descriptions of many studies, often failing even to name the drugs under investigation, Dr. Zarin said. For example, Merck describes one trial as a 'one-year study of an investigational drug in obese patients.' Drug names are crucial, because the clinicaltrials.gov registry is designed in part to prevent companies from conducting several trials of a drug, then publicizing the trials with positive results while hiding the negative ones. If the descriptions do not include drug names, it is hard to tell how many times a drug has been studied. 'If you're a systematic reviewer trying to understand all the results for a particular drug, you might never know,' Dr. Zarin said. 'You don't know whether you're seeing the one positive result and not the four negative results - you don't have context.' Pfizer, Merck and GlaxoSmithKline say that they disclose their largest trials, which determine whether a drug will be approved. Though they would not discuss their policies in detail, executives and press representatives at the companies said generally that disclosing too much information about early-stage trials might reveal business or scientific secrets. Rick Koenig, a spokesman for Glaxo, said the company understood the concerns about disclosure and planned to add more information to clinicaltrials.gov. He declined to be more specific, saying Glaxo and other companies were discussing the issue with regulators and medical journal editors. In contrast, Lilly has registered all but its smallest trials at clinicaltrials.gov. Dr. Breier of Lilly said the company believed that it could protect its intellectual property and still increase the amount of information it released. Lilly has also posted the results of many completed studies to clinicalstudyresults.org, the Web site created last September by PhRMA. That site now contains some information on nearly 80 drugs that are already on the market. Both Lilly and Glaxo have posted detailed summaries of hundreds of studies. Pfizer, on the other hand, has posted only a few, and Merck has posted none. All the companies were meeting the group's guidelines for the site, said Dr. Alan Goldhammer, associate vice president for regulatory affairs at PhRMA. The lobbying group requires only that its members post a notice that a trial has been completed and a link to a published study or a summary of an unpublished study, he said. Studies completed before October 2002 are exempt from the requirements, and PhRMA has not set penalties for companies that do not comply. 'We're seeing pretty regular posting on a weekly basis, and as best we can assess right now, things are on track for meeting the goal we and our members set for ourselves,' Dr. Goldhammer said. The continued gaps in disclosure have caused some lawmakers to call for new federal laws. The bill introduced in February by Mr. Dodd and Senator Charles E. Grassley, Republican of Iowa, would convert clinicaltrials.gov into a national registry for both new trials and results and impose civil penalties of up to $10,000 a day for companies that hide trial data. But Mr. Dodd said that the chances the bill would pass in this Congress were even at best. 'I haven't had that pat on the back saying, 'This is a great idea, let's get going on this as fast as we can,' ' Mr. Dodd said. Dr. David Fassler, a psychiatry professor at the University of Vermont and a longtime proponent of more disclosure, said that trial reporting had improved in the last two years. But he said that a central federally run site, as opposed to the current mix of government and industry efforts, was the only long-term solution.

Subject: Paul Krugman Responds to a Lout From: Terri To: All Date Posted: Tues, May 31, 2005 at 15:40:22 (EDT) Email Address: Not Provided Message: http://delong.typepad.com/sdj/2005/05/why_oh_why_cant_12.html May 31, 2005 Why Oh Why Can't We Have a Better Press Corps? (Danny Okrent Jumps the Shark Once Again Edition) Paul Krugman writes: My thingie and Okrent's reply are up: http://forums.nytimes.com/top/opinion/readersopinions/forums/thepubliceditor/publiceditorswebjournal/index.html Something you can quote me on: 'Okrent is lying to cover his mistake when he accused me of blending data from the household and establishment surveys. He now claims that he was only referring to my estimate of how many payroll jobs the economy needs to add per month [to keep labor market conditions from deteriorating], which for some reason he thinks is based on the household survey. 'But that's not what he said to me: he claimed that the basic numbers I gave on job growth were mix-and-match. In fact, in our correspondence, when I said that it was all payroll data, he declared that 'your insistence that you relied only on one set of numbers is very puzzling. I don't see how the math works any other way; maybe you could further enlighten me.' 'In other words, he screwed up completely...' The New York Times: Public Editor's Web Journal (Forum/Message Board): Daniel Okrent, in his May 22 farewell column as the first public editor of The New York Times, criticized Paul Krugman, an Op-Ed columnist for the newspaper. Prof. Krugman, who disputed the validity of Mr. Okrent's comments in the public editor's regular reader-letters column in The Times on Sunday, elaborated in a longer e-mail message for this Web Journal -- with the understanding that Mr. Okrent's response would be posted simultaneously. * * * Krugman Lays Out Why He Believes Okrent Was Wrong When I asked Daniel Okrent for the specifics behind his final attack, he offered two examples of what he claimed was improper use of numbers. This was the first time I heard from him, or anyone else, about either alleged problem. Let me start with the example that, I think, sheds most light on what is going on: Mr. Okrent's claim that I engaged in 'blending, without explanation, numbers from the household survey and the establishment survey -- apples and oranges -- apparently in order to make a more vivid political point about Bush (5/25/04).' He's referring to two different surveys conducted by the Bureau of Labor Statistics, which provide alternative estimates of employment. Some people play games by mixing and matching numbers from the two surveys, and Mr. Okrent has apparently spent the past year firmly believing (without having checked with me) that I did the same thing, to score political points. But I didn't. All the numbers in my 5/25/04 column came from the establishment survey. Moreover, I not only played fair with my readers, I urged them to check the data for themselves. Here's what I wrote in the column: 'Go to the Bureau of Labor Statistics Web site at stats.bls.gov. Click on 'U.S. economy at a glance,' then on the green dinosaur next to 'Change in payroll employment' for a 10-year chart of monthly job gains and losses.' If Mr. Okrent had done that, he would have seen for himself that what I said about job growth was true. For his other example, Mr. Okrent criticized me for 'asserting that the 40 percent unemployed out of work for more than 15 weeks was a 20-year record' (2/10/04, 3/12/04) without acknowledging that the comparison only applies back to the redesign of the CPS questionnaire. See Polivka and Miller, 'The CPS After Redesign,' on the BLS Web site. This sounds like another accusation that I blended two sources of data, without telling readers. In fact, all I did was use the Bureau of Labor Statistics data series on long-term unemployment, which is available on the BLS Web site, where there is no indication given to the public of any problem with comparisons between different time periods. Lou Uchitelle did the same thing in an article published in the New York Times business section, 'The New Profile of the Long-Term Unemployed', two days after Mr. Okrent's blast. That article made the same point that I did in the columns Mr. Okrent criticized: long-term unemployment is unusually high. After Mr. Okrent directed me to Polivka and Miller, I checked it out; it's a 1995 research paper which suggested that the 1994 redesign of the Current Population Survey questionnaire might have raised estimates of long-term unemployment. It wasn't an official statement that pre-1994 comparisons are improper, and the BLS didn't consider the questions raised in that paper serious enough to warrant a warning for consumers of its data. Like most such consumers, I don't go hunting for research papers suggesting possible problems with the numbers unless the BLS says there's reason to be concerned otherwise, it would be impossible to get any work done. Let me also say that the issue is pretty trivial: adjusting the data might put long-term unemployment at a 10-year rather than 20-year high, but it's unarguably very high by historical standards. To summarize: when I asked Mr. Okrent for evidence of my malfeasance, he provided one example in which his description of what I did was simply wrong, and another in which he accused me of pulling a fast one on readers, when all I did was use official data in a standard way. In correspondence with Mr. Okrent, I pointed out that his specific attacks -- especially the blatantly wrong characterization of my 5/25/04 column -- were unfair. I asked him to do what he would have expected me to do, and admit that he had been in error. He refused. Let me repeat that Mr. Okrent never raised these issues as public editor. He now says that he didn't because he 'experienced your best-defense-is-a-good-offense approach, and found it futile to deal with it.' Maybe a description of some of my experiences with him will give some sample of what he found difficult to deal with. On 6/8/04, I made a numerical mistake, reading from the wrong line in a table of tax rates during the Reagan years. Although the mistake didn't change the column's conclusions, I reluctantly issued a correction. But I forgot to use the word 'correction,' which I hear got Mr. Okrent upset. Mr. Okrent questioned my assertion (10/12/04) that Congressional Budget Office estimates show tax cuts were responsible for two-thirds of the fiscal 2004 deficit. I explained that in each of its budget projections the CBO estimates how much of the change from its previous projection is due to changes in tax law, and that the Center on Budget and Policy Priorities adds these numbers up to calculate the CBO's implied estimate of the overall cost of tax cuts since 2000. I provided Mr. Okrent with the data used for that calculation. Mr. Okrent challenged my assertion (5/9/05) that the Bush Social Security 'progressive indexing' plan would impose its largest percentage reductions in retirement income on middle-income workers. I explained that the term 'retirement income' normally refers to income from all sources, not just Social Security benefits (the Social Security Administration says on its Web site that 'you should not count only on Social Security for your retirement income.') I supplied him with a study (pdf) that used Social Security Administration data to show that because high-income workers depend much less than middle-income workers on Social Security, they would have smaller percentage cuts in overall retirement income than middle-income workers. This was similar to a point I made, using different data, a week earlier (5/1/05), so I was surprised that Mr. Okrent even raised the issue. If Mr. Okrent was unsatisfied with my explanations in these and other cases, it was his right to demand a fuller explanation, and, if he was still unsatisfied, to say something specific in his column. I hope we aren't going to get into an extended period in which Mr. Okrent, who failed to air his concerns when that was his job, then failed even in private to provide examples that bear any resemblance to what he accused me of doing, keeps throwing out new accusations.

Subject: The Lout Responds From: Terri To: Terri Date Posted: Tues, May 31, 2005 at 15:48:17 (EDT) Email Address: Not Provided Message: http://delong.typepad.com/sdj/2005/05/why_oh_why_cant_12.html Annotations by Brad DeLong: Okrent Responds For a man who makes his living offering strong opinions, Paul Krugman seems peculiarly reluctant to grant the same privilege to others. And for a man who leads with his chin twice a week, he acts awfully surprised when someone takes a pop at it. Because only a fool or a supply-sider would eagerly engage in a debate on economics with Prof. Krugman, I'll try to eschew argument and stick to facts -- or, at least, the sort of statements that he himself represents as purely factual: 1. I offered him only three examples of 'shaping, slicing and selectively citing' (for some reason, he's left one out of his rebuttal) Note: the example Krugman left out is an Okrent complaint that is not about numbers at all--Okrent's complaint Krugman called a study by Jagadeesh Gokhale and Kent Smetters a 'Treasury Study' rather than a 'study by Treasury Department economists.' But the study was much more than a mere academic study by Treasury underling economists. It was a study commissioned by ex-Treasury Secretary Paul O'Neill and reviewed by then-OMB Director Mitch Daniels and ex-NEC head Larry Lindsey--but that's too long to get into a 700 word column CNN: The Financial Times reported Thursday that the Gokhale-Smetters study was commissioned by Paul O'Neill when he was treasury secretary, and Smetters told the paper that White House advisers Lawrence Lindsey and Mitch Daniels read and were 'very engaged' with it. The Treasury Department Thursday denied having anything to do with the study, which is likely to be published by the AEI in July, and Gokhale said it was meant only to be a 'talk piece.' because I was at home when he began bombarding me with outraged demands for retraction and apology; I'd completed my tenure as public editor the preceding week, and did not have any files with me. When I had the chance to consult some of my reader mail later in the week, some of his greatest mis-hits immediately came to the fore. I'll get to a few of those in point No. 5, below. 2. This was the first he heard from me on these specific issues partly because I learned early on in this job that Prof. Krugman would likely be more willing to contribute to the Frist for President campaign than to acknowledge the possibility of error. When he says he agreed 'reluctantly' to one correction, he gives new meaning to the word 'reluctantly'; I can't come up with an adverb sufficient to encompass his general attitude toward substantive criticism. But I laid off for so long because I also believe that columnists are entitled by their mandate to engage in the unfair use of statistics, the misleading representation of opposing positions, and the conscious withholding of contrary data. But because they're entitled doesn't mean I or you have to like it, or think it's good for the newspaper. 3. The mixing of household and establishment numbers in his 5/25/04 column: Missing from the BLS chart he cites is any number that even resembles the 140,000 new jobs each month needed to keep up with the growing population a statistic he cites in the column, and upon which he seems to have based some of his computations. To my knowledge, that number only appeared in the household survey. Note: to my--certain--knowledge, that number appears in neither the household nor the establishment survey: it's an estimate of the current trend growth rate of payroll employment driven by rising population. I have no idea who could have told Okrent it came from the household survey, or why. 4. The Polivka-Miller paper: On the substance, readers can come to their own conclusions by examining the report themselves, particularly the chart and related narrative addressing Duration of Unemployment on page 23 (pdf). Note: Polivka and Miller's numbers imply that the 1994 CPS survey redesign raised the reported average duration of unemployment by a week. Unemployment duration is reported at 19.6 weeks today. It averaged 15.4 weeks in the 1984-1993 decade before the survey redesign, and 14.2 weeks in the decade before that. It's not quantitatively important. On Prof. Krugman's defense of his unfamiliarity with it, he's effectively saying, 'If I didn't know about it, it must not be important.' This is a polemicist's dodge; no self-respecting journalist would ever make such an argument. 5. Some other examples of Krugmania that popped out of my copious files: His 1/27/04 assertion that the cost of unemployment insurance 'automatically' adds to the federal deficit. This two-fer misrepresents a pair of facts: that unemployment insurance is largely borne by the states, and that major federal contributions to the states come about only because of an act of Congress, which is hardly automatic. His 2/3/04 assertion that tax proposals offered by Democrats would help the 77 pecent of taxpayers in the 15 percent bracket or less. The most recent generally accepted figures available at the time indicated that the number was actually 64 percent. Note: I believe that 77% of *all* taxpayers are in the 15% bracket or less; 64% of those who pay *income* taxes to the Treasury are in the 15% bracket or less; there are a bunch of people who pay taxes but not income taxes. A very recent example that nonetheless escaped my memory until Prof. Krugman generously reminded me of it in his letter: His 5/9/05 column on progressive indexing. The column itself (without the ex post facto explanation) suggestively conflates 'retirement income' and 'social security benefits' without sufficient explanation, but with plenty of apparent point-making. Believe me -- I could go on, as could a number of readers more sophisticated about economic matters than I am. (Among these are several who, like me, generally align themselves politically with Prof. Krugman, but feel he does himself and his cause no good when he heeds the roaring approval of his acolytes and dismisses his critics as ideologically motivated.) But I don't want to engage in an extended debate any more than Prof. Krugman says he does. If he replies to this statement, as I imagine he will, I'll let him have what he always insists on keeping for himself: the last word. I hate to do this to a decent man like my successor, Barney Calame, but I'm hereby turning the Krugman beat over to him.

Subject: Re: The Lout Responds From: Paul G. Brown To: Terri Date Posted: Tues, May 31, 2005 at 19:25:39 (EDT) Email Address: Not Provided Message: Following all the fun at http://www.technorati.com. Funniest blog post so far (as well as the briefest). 'Krugman and Okrent! Fight! Fight! Fight!'

Subject: Economic hot topics? From: Gregory Kaplan To: All Date Posted: Tues, May 31, 2005 at 14:23:23 (EDT) Email Address: gkaplan@rice.edu Message: I'm looking for Krugman's, or others', brief takes on economic hot topics like social security, health care, housing, 'recovery,' etc. Is there an easy way to search for these?

Subject: Re: Economic hot topics? From: Terri To: Gregory Kaplan Date Posted: Tues, May 31, 2005 at 14:34:47 (EDT) Email Address: Not Provided Message: Use the search on the upper left corner of this page for Paul Krugman's essays.

Subject: Britain: Aid for Arts and Ethnicity From: Emma To: All Date Posted: Tues, May 31, 2005 at 12:40:29 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/arts/31essay.html?pagewanted=all In Britain, Aid for Arts Places 'Ethnic' Before 'Artist' By ALAN RIDING LONDON - Along with sports, culture has long offered ethnic minorities a path into the white-dominated societies of the West. Whether in theater, movies or popular music, leading artists of, say, African, Asian, Hispanic or Arab extraction have often become social trailblazers, demonstrating to peers and to national audiences alike that integration is possible. But this is also a process that can take years, even decades. Now the Arts Council England, the government-financed body that subsidizes the performing arts in England, has decided to speed things up by introducing affirmative action to culture. Specifically, it wants the 1,100 cultural organizations that receive its help to employ minorities, to present black, Asian and other ethnic art and to reach out to minorities unaccustomed to attending cultural events. Further, it has given the initiative teeth by linking its continuing financial support to the adoption and execution of so-called racial equality action plans. 'We will closely monitor the development of your action plan and your progress in meeting your race equality objectives,' the council noted in a 110-page instruction manual, 'and future funding may include considerations on your ability to meet race equality targets.' In other words, go multiethnic or risk bankruptcy. More than a few cultural administrators have been taken by surprise. Until now, while the council's beneficiaries have included ethnic minorities engaged in artistic activities, most of its $750 million annual budget has gone to mainstream theater, dance, opera and classical music. (Major museums are supported directly by the government.) Never before has the council tried to dictate quite so specifically how this money should be spent. So is this political correctness gone wild, as some critics have claimed, or it is merely a coherent way of using taxpayers' money to benefit society as a whole? Certainly no other Western country has tried to link culture and race so openly. In the United States, the National Endowment for the Arts traditionally backed community arts organizations representing ethnic minorities and their art forms, but it never opted for quotas. In 1996, this program, Expansion Arts, was discontinued when the budget was slashed by Congress. Today, with a budget of $121 million, the endowment includes merely reaching out to underserved minorities among possible criteria for approving grants. The British and the Americans, whose approaches were similar in the 1970's and 1980's, have now taken different routes. And in the case of the Arts Council England's new policy, this has meant building on the distinctive way that Britain has handled successive waves of immigrants, first blacks from the Caribbean, then Asians from the Indian subcontinent and most recently Eastern Europeans, Arabs and Africans from countries with no historical ties to Britain. While France, Europe's other major former colonial power, has always tried to absorb immigrants through assimilation, Britain has adopted what is known as a communitarian approach, one that admits different cultural practices and languages and, like the United States, recognizes hyphenated nationals, like Asian-Britons and Afro-Britons. This wide embrace has extended to artistic expression of all kinds. One result is that, as in the United States, minorities are relatively present in culture and show business here, notably on television and on stage, whether as actors, comedians or singers. The BBC, for instance, is anything but an all-white network today: it even has radio stations specifically for Asian audiences. The Royal Shakespeare Company and the National Theater routinely give black actors key roles, even as English kings. Yet, as was shown by this month's general election, not all is well with race relations in Britain. As the central plank of its campaign platform, the opposition Conservative Party pledged to limit the number of immigrants, refugees and asylum-seekers entering Britain. And while the Tories were again defeated, their drum-beating - amplified by the widely read and often xenophobic Daily Mail - led Tony Blair's Labor Party to promise tighter controls on immigration. Concern about erosion of the national identity has led to growing nationalism here, some of it political, more of it expressed culturally through the popularity of polls to choose the 'greatest' Briton or Britain's favorite book or painting. Yet, one in 10 of Britain's inhabitants comes from an ethnic-minority background. Just as Caribbean, Indian, Pakistani and Bangladeshi communities are settled here, London has become Europe's most cosmopolitan city. This poses a dilemma common to much of Western Europe: how to harmonize distaste for the social impact of, say, large-scale Muslim immigration with the reality that societies are changing irreversibly. The evidence suggests that, while antidiscrimination legislation can fight overt racism, culture can serve as a positive vehicle for ethnic integration. For this reason, many European governments do in practice subsidize minority artists. The difference is that, while France, Denmark, Spain, Italy and others help them first as artists and only secondly as minorities, the Arts Council England has chosen to address the racial question head-on. It has good reason for doing so: given the souring of European attitudes towards third world immigrants, time is of the essence. And it believes culture can do more. 'We are inviting our regularly funded organizations to work with us to promote race equality in the arts and to show how Britain's multicultural and cosmopolitan society is much enriched by many cultures and traditions,' Sir Christopher Frayling, the council's chairman, said, announcing the initiative. The first step, he added, was for these organizations, including the Arts Council England, to be multiethnic themselves. More broadly, the council expects its grantees to create partnerships with minority artists and organizations; to advertise their programs in minority media; to attract minority audiences; to promote events for target groups, like Black History Month; and to support minority-owned businesses 'wherever possible.' And there is a lot more in the council's manual, which at times reads like an edict. 'Don't' ignore prayer times or dietary and alcoholic restrictions of board members from ethnic minorities. 'Do' routinely integrate cast members of shows. 'Don't' assume it will be difficult to attract minority audiences in areas without large minority communities. 'Do' train new staff members in race equality. 'Don't' impose your tastes on minority artists. And so on. True, the council is not working in a vacuum. In theater, the Birmingham Repertory Theater frequently presents plays by Asian artists, while London's West End is currently offering an all-black musical, 'The Big Life,' and 'Elmina's Kitchen,' a play by a black writer from England, Kwame Kwei-Armah. This month, the British Film Institute is honoring black filmmaking in a program called 'Black World.' The Victoria and Albert Museum devoted a show to black fashion last year. That said, the Arts Council England (Scotland, Wales and Northern Ireland have their own arts councils) is nonetheless taking a daring step toward social engineering. It risks charges of cultural Stalinism if it cancels grants to groups that ignore its new policy. Yet it also has in its hands an instrument that can help people of all backgrounds accept the different colors, voices, customs and rhythms of a Britain in transition. The question now is: Will it work?

Subject: Central America: A Battle Over Trade From: Emma To: All Date Posted: Tues, May 31, 2005 at 11:51:10 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/opinion/31tue2.html A New Battle Over Free Trade The next trade dogfight is gearing up on Capitol Hill, this time over a trade pact with six Central American countries that altogether have a combined economy smaller than Connecticut's. The Central American Free Trade Agreement, or Cafta, would open up trade between the United States and El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic. It's far from a perfect trade pact, if any such thing ever existed. But Cafta still deserves to be approved. Opponents include many Democrats, labor unions and America's sugar industry, and some of their arguments are much better than others. One of the most powerful lobbying groups, the sugar industry, complains that Cafta would bring 109,000 tons of sugar imports into the country every year to compete with the local product. This is true, and to that we say, 'Bring it on.' The American sugar beet industry is one of the most coddled farm sectors in the world, and that's saying something. American consumers are paying inflated prices for sugar, and it is unfortunate that Cafta won't do more to redress that situation. As it is, the new Central American sugar would account for only 1 percent of consumption here. A complaint that is far more worrisome is that the Bush administration didn't push the Central American countries to link labor rights more forcibly to the trade agreement. The pact does include a provision for fining countries that are not enforcing labor laws, but the administration could have done better. Nevertheless, Cafta would still be a win for Central American workers. More factory jobs in these poor countries would do wonders to provide low- or no-income people with options. Denying poor people in Central America the benefits of better access to the American market is certainly not the way to lift them out of poverty. The most compelling argument against Cafta, however, is that it would siphon away American manufacturing jobs to Central America. That is happening anyway - industries like textile manufacturing will continue to migrate to lower-wage nations. The economic reality of our increasingly interconnected world is that countries are best off if they lower trade barriers and try to specialize in producing the goods in which they have a comparative advantage. Places like the United States and Europe have no business trying to compete with El Salvador over who can make the cheapest T-shirts. Poor countries have low-wage labor for unskilled manufacturing. America and Europe have the advantage in businesses that call for high-tech, high-skilled workers, good transportation and a sophisticated legal system. That classic free trade formula, for all the short-term pain it causes, provides for an overall gain in general economic prosperity. None of that is an excuse for ignoring American workers who are hurt in the process. President Bush should, for example, couple his push for Cafta with a promise to put more money, and teeth, into America's underfinanced, lackluster Trade Adjustment Assistance program, which is supposed to help workers whose jobs shift overseas because of trade. Deputy Secretary of State Robert Zoellick said in a recent speech that it would be wrong to 'leave hundreds of thousands of Central Americans in poverty and helplessness because of the shortsighted protectionism of U.S. labor unions.' He was right. But he should have gone a step further. We must also decide to help the American workers whose jobs are heading south, so that they, too, might benefit from the new world of global free trade

Subject: A prediction of Ireland c.2021 From: Setanta To: All Date Posted: Tues, May 31, 2005 at 11:26:15 (EDT) Email Address: Not Provided Message: The Central Statistics Office has confirmed what many of us privately suspected - Dublin between the canals will become a largely non-Irish zone within 16 years. During the same period, the white Irish middle classes will flee to the suburbs. We saw this pattern in the US during the 1970s and 1980s, but it has been halted somewhat in the past ten years. In continental Europe, particularly Holland, this trend has continued. In London, immigrant communities are over-represented in central London and thin out as you head towards the M25. This demographic shift is called the doughnut theory in the US, where the centres of cities are hollowed out and left to immigrants while the rich natives flee to the sanctuary of suburbs for better schools, a perception of greater safety and, frankly, to be ‘among their own'. So what does the CSO project? It states that Dublin's population will rise to two million by 2021, but the country as a whole will see population growth for the first time in centuries. The fastest growing region will be what is termed the 'mid-east' - Westmeath, Carlow, Kilkenny, Laois and Offaly. This region will see a 50 per cent growth in population in the next 16 years. After years of stagnation, the west of the country will see a 35 per cent increase in population. It is significant that a sizeable proportion of this increase in both cases will be made up of Dubliners moving out of the capital. ‘Dulchies' - a Dubs/Culchies hybrid - will form a large part of the new midlands population. Meanwhile, 112,000 Dubliners (or 10 per cent of today's population) will move away from the city. Replacing them will be nearly a quarter of a million immigrants, or just under a quarter of the present population. This is a monumental change. Dublin will be unrecognisable in 16 years. Let's paint a picture of what the country might look like in November 2021,100 years after independence. If the CSO projections are right and US or London models are anything to go by, Dublin will be predominately young and ethnic. Bars, clubs and shops will be totally different. Entire areas of Dublin 1, stretching in an arc from the docks to the Phoenix Park, are likely to be African. Rents are likely to be soggy in these places, as today's young white professionals move out to the suburbs and are replaced by poorer black families. Where rents are cheap, younger white artists and bohemians will move back in, giving the place the feel of Hoxton or Shoreditch in London or Williamsburg in Brooklyn. In the centre around Moore Street, one of Europe's most vibrant Chinatowns will emerge, with a huge import/export trade between Europe and China, routed through a tax-free zone just behind the GPO. Just north of these places, the new Ranelagh will emerge, full of chi-chi coffee bars run by lads with dreads, tattoos and bolts of metal through their extremities. The likes of Drumcondra - which at the moment has one of the city's oldest populations - will become very trendy, liberal and hip, a bit like the Islington of Dublin. It will be close enough to the ethnic areas to offer Mum and Dad cool, ethnic experiences such as Somalian cuisine on a Tuesday night, while at the same time far enough away to make sure that their white kids go to well-funded opt-out ‘educate together' schools.They like diversity, but not if it means little Seán has to sit in a rundown national school where 19 languages are spoken and lessons are delivered by alternating relief teachers from eastern Europe. You get the picture. There will be some clear positives from our population revolution. Dublin will be more tolerant, culturally much more diverse, there will be more creative types happy to live in such an environment and the standard at the Community Games will rise. But only a fool would ignore the likely adverse social and political ramifications of such developments. In the meantime, the suburbs will grow and grow. We will get a rainy version of Wisteria Lane from US sitcom Desperate Housewives: upmarket estates with fantastic looking, cosmetically-enhanced occupants. The new “exurbs'‘, rather than suburbs, will spring up beyond the new outer M50, which will span a great tarmac semi-circle from Drogheda to Arklow. The major question for the exurbs is whether they will be commuter dormitory towns, like Naas is today, or much more self-sufficient communities. America offers some interesting pointers. The exurbs of the US have become autonomous places, with their own businesses, employment, shopping centres, restaurants and a distinctly different living experience from the commuting one. They are the places that voted overwhelingly for George Bush last time. They are full of people who moved out, not because they had any great rustic dream, but because they probably didn't like their neighbours. There is full employment in America's exurbs and many companies have moved out there to large, cheap facilities. The crime rate is low, sporting facilities are good and, at least at a superficial level, these new suburbs feel safe, secure and prosperous. They vote for low taxes, self sufficiency and the freedom to own large fridges, 800 square metre kitchens and Ford Galaxys. For our political parties, the exurbs of the new Irish mid-east will pose a huge problem, because they will be atomised places. The local fiefdoms currently running the showin places like Parlon country will have to connect with people who have absolutely no roots in the area. For example, the 2002 census revealed that 62 per cent of the population change in Carlow since 1996 was the result of people from outside Carlow settling there for the first time, with no previous connection to the county. This figure will double or treble over the coming years. The political strategy will have to be a bit more than “throw on the county colours, give the two fingers to Dublin and make sure the council fits the new windows'‘. In the new exurbs, like Longford and Offaly, where people will shop, work and play in self-contained, gated communities, the feel will be more that of settlers than commuters. Culturally, the new settler suburbs of the mid-east will be exciting, particularly in terms of youth culture, because there will be a 43 per cent rise in the number of children between the ages of one and 14, while the numbers of teenagers and young adults will increase there by over one fifth. Local politics will have to reflect this. At the other end of the scale, the number of Irish people over the age of 80 will increase by about 66 per cent.This will create an entirely new group to be catered for, both in terms of health and entertainment. Expect an explosion of self-contained retirement villages, private hospitals like Beacon in Sandyford and third and fourth marriages of folk well into their 80s. Ireland in 2021 is likely to be a mixed jumble of black and white, rich and poor, old and young, and night and day. As for what it will mean to be Irish 100 years after the end of colonialism, your guess is as good as mine. www.davidmcwilliams.ie

Subject: The Amazon at Risk From: Emma To: All Date Posted: Tues, May 31, 2005 at 10:53:48 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/opinion/31tue3.html The Amazon at Risk Even the government of Brazil seemed shocked by the news that despite efforts to curb deforestation - including a $140 million package of conservation measures announced last year - the destruction of the world's largest tropical forest, the Amazon, proceeds apace. In the 12-month period ending last August, farming and logging, much if it illegal, destroyed 10,000 square miles of forest, an area almost the size of Massachusetts. This was the biggest one-year loss since 1995, when the Amazon shrank by about 11,000 square miles. Most of the Amazon lies in Brazil, but its destruction has been a matter of global concern ever since the 1980's, when satellite photographs documenting widespread burning of the forest first appeared. Like tropical forests everywhere, the Amazon is a storehouse of biodiversity, a source of medicines and an important antidote to global warming. Healthy forests absorb greenhouse gases. Blazing forests increase them. The struggle to save the Amazon has claimed many victims, notably Chico Mendes, an environmentalist shot to death by two ranchers in 1988, and Dorothy Stang, an American-born nun and advocate for the forest and for peasant farmers who was gunned down earlier this year. Brazilian authorities have been intermittently responsive, setting aside forest preserves, ending subsidies to cattle ranchers and passing laws requiring landowners to leave much of their forest land untouched. But the Amazon seems largely immune to law, especially in a country where there are not nearly enough police to enforce the rules, where economic growth seems to supersede everything and where powerful local politicians tend to have more influence than the national government. Right now, for instance, the biggest single threat to the Amazon is the explosive growth of soybean farming in the state of Mato Grosso on the forest's southern fringe, fueled mainly by soaring demand in China and Europe. As it happens, Mato Grosso's governor, Blairo Maggi, is also its soybean king - o rei da soja - who has been quoted as saying that a 40 percent increase in deforestation in Mato Grosso 'doesn't mean anything at all, and I don't feel the slightest guilt over what we are doing here.' There are people in the Brazilian government, in particular its environmental minister, Marina Silva, who believe there are better ways to assist Brazil's economy than by turning a valuable rain forest into cattle feed, which is essentially what Mr. Maggi is doing. But they need help - from multilateral lending agencies and corporations, which should make sound environmental practices a condition of future investment, and from environmental organizations, which must keep up the public pressure. Most of all they need help from Brazil's charismatic president, Luiz Inácio Lula da Silva, who must persuade himself and his country's agricultural oligarchy that the rain forest is not a commodity to be exploited for private gain.

Subject: Middleman Now Rich Man in Real Estate From: Emma To: All Date Posted: Tues, May 31, 2005 at 10:38:12 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/realestate/31brokers.html?pagewanted=all&position= Middleman Now Rich Man in Real Estate Boom By MOTOKO RICH BEDFORD, N.Y. - Earlier this month, Michael Neeley, a real estate broker in this leafy, upscale suburb, closed on the sale of a contemporary ranch house. A few days later, the sellers of that house bought another, larger ranch house. Then, in a chain reaction, the sellers of the larger house closed on a $900,000 four-bedroom new colonial house. Mr. Neeley had a stake in all three deals, as well as the sale of two more homes, both for prices well above $1 million. In less than two weeks, he said he cleared nearly $98,000 in commissions, after splitting with other brokers and his firm. The real estate boom has been good to agents like Mr. Neeley. Last year, he helped sell 48 houses, worth an aggregate of $56.7 million. This sum was nearly seven times the value of what he sold five years ago and more than any other agent in northern Westchester County, according to an analysis of multiple-listing data. He said he earned close to $900,000. 'I always wanted my business to grow,' said Mr. Neeley, 51, as he pulled away from an open house in his white Bentley Arnage this month. As the housing market has fueled the economy over the last five years, top real estate agents have been among the biggest beneficiaries. Until recently, the neighbors who drove the best cars, wore the best clothes and gave the best dinner parties were doctors, lawyers, bankers and stockbrokers. But now, with house prices skyrocketing and homes in the hottest markets selling in a matter of days, some real estate brokers are enjoying incomes and lifestyles that approach those of their wealthiest clients. Their success is inspiring a new generation of prospective sales agents, although the likelihood is high that many of them will not earn a decent living at it. Already, there are too many brokers. But the best and most experienced ones with proven track records are having a run beyond their wildest dreams. 'The real estate business used to be primarily housewives supplementing their husband's salaries by showing and selling a couple of houses a year,' said Dan Ginnel, president of Ginnel Real Estate, which is based in Bedford Hills, where Mr. Neeley works. 'Now some of these agents are selling over 50 houses and making investment banking-type salaries in their hometown in the home industry,' he said. In addition to the Bentley, Mr. Neeley's blossoming wealth has allowed him to buy four Mercedeses, two Jaguars and two Range Rovers. He spends lavishly on theater tickets, Tiffany jewelry, Louis Vuitton belts and shoes, and owns 28 pairs of Alain Mikli eyeglasses, which are color-coordinated with his wardrobe. Although real estate commissions - typically 5 or 6 percent of the sale price - have come under pressure as discount brokers have offered stripped-down services for as little as 2 percent, traditional brokers have held back the spread of cheaper online services, in part by restricting access to the property listings that brokers in a region share. Meanwhile, the volume of homes sold, coupled with increased sale prices, has helped lift total commission revenues over the last few years. Real estate agents in the United States collected $61.1 billion in commissions last year, up 43 percent from $42.6 billion in 2000, said Steve Murray, editor of Real Trends, a real estate industry newsletter. In the most frenzied markets, some are making sums that recall the bonanzas enjoyed by stockbrokers in the late 1990's. In Manhattan, the best real estate agents cleared over $2 million last year, said Pamela Liebman, the chief executive of the Corcoran Group. 'Everything is going for the superstars in these markets,' said Susan M. Wachter, professor of real state at the Wharton School of the University of Pennsylvania. 'The market's hot, the prices are high and if they have the Rolodex, they can just keep it going. Until, of course, it all stops, which may happen. This is the kind of industry that is cyclical.' Some agents are finding that their social status has risen along with their newfound wealth. 'You see it by the places they dine at, the clothes they wear and what they perceive as their familiarity with clients,' said Hilah R. Iaulus, a real estate lawyer and an adjunct associate professor at the New York University Real Estate Institute. Clients see their brokers 'much less like a person who is serving them and much more like a comrade or friend.' Such camaraderie has not changed the general impression that the public has of real estate agents. While the National Association of Realtors cites a survey it commissioned of public perceptions showing that Realtors rank higher than lawyers, a Harris Poll last year found that real estate brokers ranked the lowest of all professions, below accountants, stockbrokers and journalists, in terms of prestige. Such a poor image likely comes from the fact that agents earn their livings from commissions on closed deals, sometimes creating the perception that they will say or do anything to sell a house. Mr. Neeley said he believed that real estate agents had improved their image. 'Real estate to me is a profession, whereas before it was just sales,' he said. 'My image and people's perception of me is very important.' He said he always socialized with clients, but only recently has he earned an income that matched theirs. 'I look at how they spend their money and I'm getting more ideas,' said Mr. Neeley. Only a small fraction of real estate brokers ever break into the highest income brackets. Mr. Murray of Real Trends said that fewer than a third of all agents make more than the median United States household income of around $43,000. In fact, many real estate agents make barely anything at all. In Westchester, for example, there were 9,701 licensed brokers and sales agents in 2004, up 23 percent from 7,864 in 2000. Taking into account the fact that agents like Mr. Neeley sold dozens of the 6,157 single-family homes bought in Westchester last year, many agents in the county likely sold no homes. The oversupply of brokers has not stopped more people from flocking to the industry. 'When you see headlines about median prices continuing to grow, it attracts attention,' said Richard Haggerty, deputy executive officer of the Westchester County Board of Realtors. 'A lot of people become intrigued by that and go ahead and get their licenses.' Alexa McInerney, 24, is one of them. To her, real estate represents an easy way to make quick cash. 'Everyone I see I say, 'You should get your license,' ' said Ms. McInerney, who also works in Westchester. 'I tell them, 'What's so wrong with free money?' ' When Mr. Neeley, formerly a financial planner, decided in the late 1980's that he wanted to change careers, he chose to go to law school. 'I was attracted to the power and the control,' he said. 'I thought it would boost my self esteem.' To put himself through law school, Mr. Neeley bought, renovated and sold homes in and around Bedford and nearby Pound Ridge, where he grew up. At the time, he considered real estate to be a part-time job, not a full-time career. The experience gave him the taste for real estate. By the time he finished law school, he did not want to spend his day at a desk, and decided to try his hand at selling houses. Having grown up in the community, he quickly built a roster of clients. But by 2001, a drinking problem was undermining his work. Four years ago, he joined a 12-step alcoholic recovery program and stopped drinking. That coincided with the dramatic run-up in the housing market. 'In the old days, it took six months to sell a listing,' said Mr. Neeley, who sold just 11 houses in 2000. In the past couple of years, 'after two weeks, if it has not sold, we start to worry whether it is priced right.' He often earns more than one commission from a client because a seller is frequently a buyer, too. One morning earlier this month, Mr. Neeley accompanied Lauren Sugar, whose home is listed with him, to view a house he thought she and her husband might be interested in buying. After she spent 45 minutes touring the $1.395 million four-bedroom, contemporary-style house, Ms. Sugar said she wanted to bring her husband back the next day. On the drive back to the sales office, she asked Mr. Neeley about his strategy for selling her current house, which has been on the market for $2.9 million since March. Mr. Neeley explained that inventories of high-end properties were climbing, and suggested she let him give a party at the house for other agents. Mr. Neeley is famous for how he woos other brokers. At open houses, he gives out bottles of wine, gift certificates for manicures and car washes, and Mary Kay cosmetics. At some of his choicest properties, he gives evening parties for agents, serving wine or cocktails and food. (He sticks to bottled water.) 'It's a lot of time spent on weekends and evenings,' said Mr. Neeley. He never stops for lunch and clients who call to leave voice mail messages at 9 p.m. are surprised that he answers the phone. He is about to get busier: he has signed on with a firm in New Canaan so that he can sell homes in Connecticut, while continuing to work as a broker for Ginnel in New York. In fact, Mr. Neeley said he was so busy selling houses that he did not have time to buy one of his own. He rents half of a house owned by Mr. Ginnel and spends some nights in a rented apartment in Southport, Conn. 'I have owned a lot of houses in the past and I got too involved with fixing them up,' he said. 'It took away from being able to sell real estate.'

Subject: Diamond Polishing in Dynamic China From: Emma To: All Date Posted: Tues, May 31, 2005 at 10:35:15 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/business/worldbusiness/31diamonds.html?pagewanted=all Diamond Polishing Is One More Dynamic Facet of China By KEITH BRADSHER PANYU, China - India excels at polishing diamonds as tiny as a hundredth of a carat. Masters of this craft in Antwerp, Belgium, and in Tel Aviv excel at handling diamonds of a carat or more. But pushing into the broad middle as the newest diamond power is China, a nation long enamored of jade that ignored diamonds for much of its half century of communist rule. The past is no longer holding it back. Several dozen privately owned foreign companies, most of them very secretive, have set up diamond polishing and jewelry manufacturing operations in China, many based here in a city about 80 miles up the Pearl River from Hong Kong. With a potent mix of experience, cheap labor, advanced technology and strict quality controls, they are challenging the industry leaders, especially India. China now imports $800 million a year worth of rough diamonds and polishes them to become worth about $1.1 billion, accounting for 6 percent of the value added by the world's $4.6 billion diamond polishing industry. India, with a million diamond workers and an 80 percent share of the diamond polishing business, is nervous. Alarmed by the pace and skill with which China is improving, India's diamond industry leaders say that in diamonds, as in so many other businesses, China's advance cannot be stopped. 'In the better goods, definitely they have an edge over there, because the labor force is more organized, more skilled, and the work is more automated, and they have better infrastructure,' said Anoop Mehta, president of the Bharat Diamond Bourse in Mumbai. 'In the polishing, we definitely feel that over a period of time, they will take a larger market share.' Polishing and making diamond jewelry may be a relatively small field but it is just one of many industries where competition is growing between China and India, the world's two most populous nations. Their immense and low-paid work forces have already claimed large chunks of the global market for textile and apparel exports, with both countries jockeying for advantage now that the country-by-country quota system has been abolished. At the same time, China is trying to build a computer software services industry to rival India's, while India is building new roads and taking other steps in the hope that its manufacturers will be able to compete in China-dominated markets like consumer electronics. But while China may have better transportation and communication networks than India - as well as a rapidly growing consumer market and much better ties to overseas markets - it also has two long-term disadvantages. Wages and salaries are rising quickly in China, while the number of working-age adults will start flattening and then decline over the next two decades, the result of stringent family-planning policies. India's labor force, meanwhile, just keeps growing. So China has been pursuing industries, or segments of them, that require a bit more skill than India can offer. Its pursuit of the diamond industry - which started a decade ago and moved into high gear in the last two years with government help, including a simplification of regulations - is an example of a broader effort by China to move into higher value-added businesses and leave the lowest-paid jobs to poorer countries. China took over much of the international costume jewelry business in the 1980's and 1990's. But just as apparel makers in the country are no longer satisfied with making T-shirts and are now barreling into the apparel market for all but the most expensive clothing, diamond businesses in China have rapidly moved beyond India's area of continued dominance, the polishing of the smallest, poorest-quality diamonds. Many foreign entrepreneurs entering China's diamond business are Belgian, and some are Indian. Vijay Nahata, 47, an Indian-born entrepreneur who moved here nine years ago with just $4,000 in his pocket, said that the 1,600-employee polishing factory and nearby 600-employee jewelry factory that he has built mostly handles stones of three points, or three-hundredths of a carat, and above. 'We cannot manufacture the small size; it does not pay,' he said. He estimated that labor costs for cutting and polishing diamonds were $10 a carat in India, $17 a carat in China, $100 a carat in Israel and $150 a carat in Belgium. So while most diamonds polished here are still well under a carat, Mr. Nahata's workers in China are moving to bigger and bigger diamonds, including an eight-carat rock for an elaborate ring he plans to give his wife. Emma Muller, the editor of PolishedPrices.com, an online diamond data price service in Antwerp, said Chinese companies had some of the best quality control in the industry. 'They make a perfect job out of it,' she said, while Indian companies 'just don't finish the job.' Antwerp, a center of the diamond cutting and polishing industry since the 15th century, remains a trading center but, since the 1970's, has gradually lost much of the cutting and polishing of smaller diamonds to India. Now, it faces losses to China with the larger diamonds. 'There's no way Belgium can compete,' said Martin Rapaport, the chairman of the Rapaport Group, a diamond price, information and trading services company. Israeli wages are slightly lower, providing some insulation from Chinese competition. Mr. Nahata pays his workers by the piece, so their wages vary widely. He says the typical worker earns about $140 a month, above average by local standards, in addition to free room and board. Some earn considerably more, while the newly hired earn a minimum of $36 in their first month on the job. Wei Zhi Jing, a 22-year-old migrant worker with five years' experience, sports a diamond stud earring that he made in the dormitory in his spare time. On a recent night - the factory often has to run at night because of electricity shortages by day - he labored at a long workbench in Mr. Nahata's jewelry factory to produce an intricate ring with dozens of tiny diamonds. 'They are small; you have to be very careful to put them in the right position,' said Mr. Wei, who earns $300 a month for his combination of speed and quality. 'If they are not flat enough, you have to dismantle it and start again.' By contrast, in the United States, which does practically no diamond polishing, a factory jeweler earns $2,000 to $2,300 a month, according to the Manufacturing Jewelers and Suppliers of America, a trade group based in Providence, R.I., long the center of the United States jewelry making industry. United States jewelry imports from China, at $912 million last year, are already more than 60 times greater than jewelry exports to China. 'When you look at the trade deficit, it's obvious we're getting hammered,' said James F. Marquart, the president and chief executive of the trade group, which has lost two-thirds of its members in Rhode Island and Massachusetts over the last decade to bankruptcy and mergers. Mr. Nahata said that a delegation of two dozen Rhode Island jewelry executives recently visited his factories, seeking contracts for Chinese-made jewelry that they could distribute through their American marketing networks. The next big shift, diamond dealers say, could come when China revalues its currency, the yuan, which had long been set at a fixed rate of 8.28 to the dollar but which is the subject of growing international pressure for revaluation. Diamonds are priced in dollars around the world, and a stronger yuan would make them more affordable for Chinese consumers and more attractive as an investment here. Increased demand in China could push up global diamond prices, potentially having an impact on consumers in the United States, where almost half the world's polished diamonds are now sold. The biggest benefit would be to the diamond polishing and jewelry manufacturing industries in China, as China imposes steep tariffs on imported jewelry. 'Extra demand from China after a revaluation is going to run through diamonds like wildfire,' Mr. Rapaport said. Public interest in diamonds already appears to be growing in China, even though they remain quite expensive here. Sophia Yuen, a 25-year-old office clerk who quit her job this winter after marrying a local entrepreneur, wore a modest, $350 diamond engagement ring and a $710 diamond bracelet as she shopped in a modern shopping mall here in southeastern China one recent morning, at one of Mr. Nahata's Lucky Eight stores. Her mother still wears jade, popular for centuries in China, but Ms. Yuen, looking for yet more diamond jewelry, tried on thin $230 necklaces of white gold with small diamonds. 'Jade is outdated now,' she said. 'It's more fashionable, more convenient and lightweight to wear diamonds, and they make you look sharp.' Mr. Nahata said he had opened 40 Lucky Eight stores nationwide, though only 16 had actually received all the complex government approvals officially required for selling diamond jewelry. His willingness to move faster than regulations allow is typical of the success stories in China's diamond and jewelry industry. Until two years ago, the Chinese government kept stringent laws on the books limiting diamond transactions, one of many barriers to moving large sums of money in and out of the country. But city officials here in Panyu looked the other way as diamond and jewelry manufacturing started to become a big business in the late 1990's, giving the city a head start on the rest of the country. Connections help. Mr. Nahata has mah-jongg tables for entertaining on the first and second floors of his three-story villa, keeps bottles of Jack Daniels with his name on them at two local bars and has learned Mandarin, China's official language, as well as Cantonese, the local dialect. Asked about his hobbies, he lists tennis, drinking and mah-jongg, but adds that he has not been able to play tennis ever since he broke his elbow two years ago. 'I fell down drunk,' he said. But all that time with local officials pays dividends. Mr. Nahata said that officials have provided highly detailed personnel files for any prospective hire, and that has helped him avoid pilferage and robbery problems. Mr. Nahata predicted that China, as in many other light manufacturing industries, would quickly overrun all but the high end of the diamond market. 'China,' he said, 'is going to be the leader of the world in two years.'

Subject: After the Vote, No Signs of Collapse From: Emma To: All Date Posted: Tues, May 31, 2005 at 10:26:32 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/31/business/worldbusiness/31place.html After the Vote, No Signs of Collapse By FLOYD NORRIS PARIS - The unthinkable - at least to most French politicians - happened. And the European markets shrugged. 'If we believed the warnings of politicians about the effects of a no vote, then the European Union would be on the verge of a terrible catastrophe,' Robert Carnell, an economist at ING, wrote on Monday after French voters refused to ratify the constitution. 'Fortunately, these dire warnings were never a reality, and the European Union is not a rubble-strewn wasteland this morning.' In the aftermath of the vote, the most obvious result was to shake up French politics, with President Jacques Chirac hinting he would replace the prime minister, Jean-Pierre Raffarin. If he is ousted, Mr. Raffarin will leave as Mr. Chirac's two previous prime ministers did, with their reputations severely damaged and widespread doubts about whether they have any political future at all. The French stock market opened lower, but began to recover late in the morning, and ended with a small gain. Perhaps of more significance, the index is more than 2 percent above where it was on March 17, the day before the first poll indicated that French voters might reject the constitution. In light trading on a day when financial markets were closed in London and New York, the euro fell to its lowest level since October. But only part of the move reflects the weakness of the euro, since the dollar has also been gaining during that period against the British pound and the Japanese yen, said Julian Jessop, an economist with Capital Economics. The euro has suffered for reasons other than the fate of the constitution, notably the evidence of a slowdown in European economies, with Italy appearing to be in a recession. Some market speculation held that Eastern Europe would be worse affected by a French rejection, on the theory that it would set back the cause of European unity and reduce the chances of the euro being adopted in that region. But markets in the Czech Republic and Poland showed small gains. Even Turkey, whose desire to join the European Union was widely believed to have hurt the constitution's chances in France, showed a gain. But if the quiet market reaction belied the warnings of politicians, such as Jacques Delors, a former president of the European Commission, who forecast a 'political cataclysm,' and Romano Prodi, who was the commission's president when the constitution was written and who said a rejection would amount to 'the fall of Europe,' it is far less clear if the vote will be seen as a turning point for Europe. 'Talk of an apocalypse is surely overdone,' said Mr. Jessop, adding that the vote showed that Mr. Chirac and Mr. Raffarin were unpopular and that the French people were worried about the economy. 'We did not really need a referendum to tell us this.' Those opposing the constitution included elements of the left and the right in France, as did the supporters. Mr. Chirac argued that a vote for the constitution was a vote to reject what he saw as the ultra-free market policies of Anglo-Saxon countries. Opponents said the constitution enshrined such policies. If the campaign left the policy implications unclear, the vote could be seen as a rejection of the political leadership of France and, perhaps more broadly, much of Europe. Recent national elections in Spain, Greece and Portugal have resulted in the incumbent party being thrown out, and regional elections in France, Italy and Germany have seen widespread rejections of the ruling party. Only in Britain, where the economy has been much better, did an incumbent party win a new term of office. Whether that will persuade European leaders that their current policies need changing, and if so what changes are needed, remains to be seen. Mr. Carnell, the ING economist, said that the vote highlighted the still substantial differences within the European Union. 'By pushing European economies towards homogeneity, the constitution's failure has simply highlighted these differences,' he wrote. 'The result may well be that economies within the E.U. now pursue goals of integration and harmonization at different speeds, or not at all, and that Europe begins to evolve in a more pluralist fashion. In our view, there is nothing wrong with that.' If governments are seen to be promoting economic growth and competitiveness, both vis-ŕ-vis one another and the rest of the world, both the euro and stock markets may do better than if it appears governments read the referendum as a rejection of their efforts to make labor markets more competitive and pension systems less generous. 'If there are going to be setbacks, it's going to be because of a rise of a very unsavory populism with its protectionist tendencies,' said Maria Livanos Cattaui, the secretary general of the International Chamber of Commerce, which is based in Paris. The most visible immediate change seems likely to be a new face in the French prime minister's office. The precedent for the way Mr. Chirac's prime ministers have left office was perhaps set thousands of years ago in Massilia, a city founded by the Greeks. It is now known as Marseilles. 'Whenever Marseilles, one of the busiest and most brilliant of Greek colonies, was ravaged by a plague, a man of the poorer classes used to offer himself as a scapegoat,' wrote the historian James George Frazer, in his 1922 book, 'The Golden Bough.' 'For a whole year he was maintained at the public expense, being fed on choice and pure food. At the expiry of the year he was dressed in sacred garments, decked with holy branches, and led through the whole city, while prayers were uttered that all the evils of the people might fall on his head. He was then cast out of the city or stoned to death by the people outside of the walls.' Prime ministers have performed that role in Mr. Chirac's France. They last longer than a year, and they do not come from the lower classes. But both of Mr. Raffarin's predecessors left with few expecting them to ever hold office again. Mr. Raffarin seems likely to follow in that tradition. It is not clear what effect that scapegoating would have on policy. But the markets appear to be less concerned than are many French politicians.

Subject: Memories of a polio epidemic From: Setanta To: All Date Posted: Tues, May 31, 2005 at 09:53:19 (EDT) Email Address: Not Provided Message: Reporting from a children's ward in Baghdad, Patrick Cockburn was haunted by his own experiences as a polio victim in Cork in the Fifties. Here he recalls that boyhood ordeal It is very easy to get polio. I was six when I woke up with a headache and a sore throat in my bedroom in Brook Lodge, a crumbling Georgian mansion overlooking the Blackwater valley in Co Cork. My forehead felt hot and the sheets were damp from sweat. My mother sent for Dr Gowen, a neatly dressed, handsome man originally from England, and it did not take him long to diagnose why I was sick. A polio epidemic had started three months before, in early July 1956, 30 miles away in Cork city. An ambulance was called. It was a cream-coloured vehicle that stopped beside the tall green yew trees on the drive. I was crying as I was carried from my room on the second floor, down the elegant but rickety staircase and through the long dark hall on to the front lawn. The ambulance men, dressed in white coats, laid me on a stretcher. My mother, searching desperately for something comforting to say, said: 'The driver will turn on the siren and all the other cars will have to get out of the way.' I was not comforted. I sensed the anxiety of the people looking at me. 'I don't want him to sound the horn! I don't want it!' I sobbed. The journey in that ambulance was the first time that I was truly alone. I was taken to St Finbarr's, which, although I did not know it, was regarded with terror by people in Cork. They crossed the road outside to avoid walking close to its walls for fear of infection. There, I lay in bed in a crowded ward for three weeks. Nobody apart from the doctors and nurses was allowed to see me. I did not understand why the doctors, with solemn faces, would ask me once or twice a day to wiggle my toes or to try to raise my legs. Every few days a nurse would point to the door of the ward and I would see my parents, with fixed, almost manic smiles, waving from the other side of a glass porthole. The Cork epidemic, during which at least 50,000 people contracted the virus, was one of the last great outbreaks of polio anywhere in Western Europe. And yet my parents decided to take myself and my elder brother Andrew, who also contracted the disease, back there from London, where we had been living, just as other children were being hastily evacuated. They disastrously underestimated the threat because they were used to living dangerously. My father, Claud, was well known, indeed notorious, as a Communist who had resigned from a well-paid and prestigious job as New York correspondent of the London Times to start the anti-fascist newsletter The Week. He had also commanded a battalion in the Spanish Civil War after all its officers had deserted to the other side. My mother Patricia had travelled through the forest of the Congo to make a language map. During the Second World War their house in St John's Wood in London had been demolished by a V-2 rocket. Neither courted danger, but nor were they likely to listen to prudent counsel. I thought very little about this episode of my life until some 40 years later, when I was reporting from Iraq. In 1998 I was in Baghdad to write about the latest bombardment ordered by President Clinton. The city was blacked out and the anti-aircraft fire twinkled like fireflies in the night sky. Every few minutes an American missile would explode and as I sat by the open window in my room in the Al-Rashid Hotel I could feel warm gusts of air from the blasts brush against my cheek. The next day we visited hospitals and as I walked down a ward where the beds were filled with injured children, I began to remember St Finbarr's. It suddenly seemed strange to me that I should spend so many years as a journalist covering other people's crises yet I knew so little about the disaster that had had such an impact on my own life. I do not mean that I had never thought about the effect of having polio. In one sense, I thought about it all the time. It was part of my identity. I cannot run, I do not drive and I have a severe limp. But I did not think very much about how and why I had got polio. My parents never spoke about it much, although my father had written a moving chapter about the epidemic in the third volume of his autobiography, View From The West. A look at the files of local newspapers showed that he had been quite right in believing that the local press had suppressed news about polio from about 10 weeks into the outbreak. By the time I caught it at the end of September nothing about the disease was being printed. Almost nothing was written about the epidemic in the years that followed either. Encyclopaedias of Irish history say nothing about what happened in Cork in 1956 despite the fact that it paralysed the second largest city in the State for a year. Dr Kathleen O'Callaghan, the cool-headed doctor at St Finbarr's, told me she believed the reason for the lack of published information was simple terror: 'People were that frightened at the time that they tried to forget it.' I could understand that. It is a natural human reaction to deal with disasters by trying to forget them. It took me a long time to get better - or as well as I was ever going to get. At first, I was in a wheelchair, wore a hard plastic waistcoat and only gradually began to walk using wooden crutches and a calliper on one leg. Kitty, my nanny, would push me into the nearby village of Youghal on my red and white tricycle and later back up a steep hill by a disused quarry filled with gorse. My right leg was not strong enough to push the pedal down so I had to use a hand to push my knee down to keep the tricycle moving. My dependence on others meant that emotionally I was more like a four or five-year-old and, with the egotism of a small child, I expected everybody to have nothing to do except look after me. Doctors believed that for two years after the illness it was possible through exercise to revive damaged muscles. I was taken for physiotherapy and to the pool at the old Turkish baths, a red-brick building in Cork's South Mall, where I used to swim slowly with my legs trailing uselessly behind me. Later, I went to Whitechapel Hospital in London for a series of operations on my feet, the purpose of which was to transfer the muscles which had survived to do the work of those that had died. My legs were covered in plaster casts and itched mercilessly. Malcolm Muggeridge, a colleague of my father's, gave me a long thin Moroccan dagger to scratch inside the plaster. He was a kindly figure whose smile illuminated his entire face. I stopped using the plastic waistcoat and the wheelchair. Most important, my mother taught me to read via a form of gin rummy combined with poker in which the players scored by inventing short words. I read 19th-century books for boys, particularly G H Henty and Robert Louis Stevenson. I spent hours vainly trying to throw one of my old-fashioned wooden crutches just like Long John Silver, as portrayed in an illustration in Treasure Ireland. Stevenson can never have tried using a crutch as a missile because, whatever I did, the weight of the top of the crutch made it turn over in the air and rendered it ineffective as a weapon. When I was nine my parents sent me to St Stephen's School in Dublin where I still used crutches, until one day when I threw them away on a lawn behind the main schoolhouse. I could walk well enough without them and I was keen, with the conformity of a 10-year-old, to behave like the other boys. I was aware from an early age that I carried a lot of emotional scars from polio. But I also - probably rightly - thought there was not much I could do about it. I spent a lot of time reading by myself but I was not solitary and made friends easily. This was true at St Stephen's and later at Glenalmond, the public school in Scotland to which I was dispatched at the age of 13. There I was sociable but felt a certain remoteness, a gulf between myself and others that was my fault rather than theirs. I remember Robin McMillan, a friend in my houses at Glenalmond, later famous as an actor under the name of Robbie Coltrane, once saying to me in perplexity: 'You are a funny kind of introverted extrovert.' I knew a few years after 1956 that a vaccine had been discovered which would have prevented me catching the disease. I wondered whether my parents could have had me vaccinated in time, or whether I would have escaped illness had I been brought up in a country other than Ireland. In fact, there was little that could have been done. Church bells had famously rung out across America in 1955 to greet the first announcement of the successful mass field-test of the vaccine invented by Jonas Salk. But it took time for vaccination programmes to be implemented: the Cork epidemic had broken out just too soon for it to be stopped. The conquest of polio was one of the great American achievements of the 20th century. In terms of national prestige, finding a vaccine was the medical equivalent of the landing on the Moon. For those of my generation, there was a further nasty twist - post polio syndrome. Four decades or more after they caught the disease, many victims found that their muscles were weakening and they suffered easily from exhaustion. Some even suspected that the polio virus might have mysteriously reawakened somewhere deep in their spines. As a killer, polio never compared with cholera, typhus, malaria, yellow fever or consumption, but, during the 70 years that it existed in epidemic form, it carried an extra charge of fear because, like leprosy and smallpox, it disfigured and disabled the living. Aids is the only disease in the past half-century to create comparable terror. Before an effective vaccine was discovered nothing could be done to stop it. It inflicted and continues to inflict great suffering among its surviving victims. Very occasionally, well-meaning people suggest to me that sufferings in childhood build character and endurance. Even at the age of seven, I suspected I had acquired these supposed benefits at an excessive price.

Subject: Re: Memories of a polio epidemic From: Emma To: Setanta Date Posted: Tues, May 31, 2005 at 10:27:57 (EDT) Email Address: Not Provided Message: A moving remembrance and lesson on values.

Subject: The Capitol Flinches at Gun Safety From: Setanta To: All Date Posted: Tues, May 31, 2005 at 05:42:18 (EDT) Email Address: Not Provided Message: i like america and love americans, however, i am astounded by the cavelier attitudes to guns so prevalent in the land of opportunity. no civilised society should hold weapons in such high regard. whatever about home made bombs and chemical weapons, the worst WMD has to be 1000 pistols. how can the religious right share a bed with the arms lobby. one claims to hold the moral high ground, the other has a vested interest in instruments of death. i have to say, the second ammendment was the worst legacy the founding fathers could have left successive generations. Published: May 30, 2005 Timorous as ever before the gun lobby, Congress is preparing a wholesale sellout to the firearms industry that would bar injured citizens and communities from suing irresponsible gun manufacturers and dealers for legitimate damages. A House bill moving toward passage would scuttle a dozen court cases and allow no repetition of the $2.5 million settlement deservedly won by families victimized in the Washington-area sniper shootings. The bill was approved last week by the Judiciary Committee, which displayed its contempt for public safety by striking down even modest proposals to allow suits against dealers who knew they were selling guns to dangerous people on government watch lists of terrorists and criminal gangs. A government study last year found that while 44 such individuals had been spotted while shopping for guns, only nine were found to be ineligible to purchase the weapons under existing law. Yet these and other sensible ideas stood little chance against the gun lobby and its mouthpieces on the committee. Since the gun lobby probably picked up more supporters in last year's elections, chances are slim that the Senate will block this industrywide shield. Opponents prevented final passage last year by winning approval of amendments requiring child-proof locks on weapons and restoring the ban on semi-automatic weapons. These were poison pills the gun lobby refused to swallow, and the bill failed. Not this year, supporters vow, as they prepare an even stronger industry shield without a word of disapproval from President Bush.

Subject: China says 'NON' From: Pete Weis To: All Date Posted: Mon, May 30, 2005 at 21:59:10 (EDT) Email Address: Not Provided Message: China seems to be saying 'NON' to the US and EU in trade disputes. From the BBC: China ups stakes in textiles row China is to scrap export tariffs on 78 categories of clothing and textiles in an apparent escalation of a trade dispute with the US and European Union. Beijing introduced the tariffs to try to control bourgeoning Chinese clothing exports, but the EU and US still say too many such goods are being exported. With the EU now threatening to limit imports of such Chinese items, it appears that China is now retaliating. The US has already brought in limits on Chinese textile and clothing imports. Washington made the move on 14 May against Chinese cotton trousers, cotton shirts and underwear. The EU on Friday asked for formal talks with Beijing over two types of Chinese clothing and textiles - flax yarn and T-shirts. On Monday, the EU's executive commission insisted that it had grounds to act to stem the flood of Chinese imports and rejected China's claims that there was no evidence to justify the complaints. Global deregulation Under World Trade Organization rules, the US and EU can limit annual imports of Chinese clothing and textiles to a maximum of 7.5% more than the levels seen between March 2004 and February 2005. If countries take action to limit textile product exports from China, we will exclude those products from the export tariffs Chinese commerce ministry spokesman Both the US and EU can evoke this 7.5% 'safeguard rule' until 2008. The EU can now bring in the 7.5% level if no agreement can be reached with China within 90 days of the start of talks on Monday. The origins of this trade dispute between China on the one hand and the US and EU on the other was the end of a 30-year global agreement on clothing and textile exports on 1 January. Under the old Multi-Fibre Agreement, countries had annual limits on the amount of clothing and textiles they could sell abroad. Thanks to China's bourgeoning economy and low costs, it was inevitable that exports of such Chinese goods would boom following the end of the global quotas. But to try to at least control this growth, Beijing in January brought in export tariffs on 78 clothing and textiles goods. It also announced on 20 May that tariffs would be introduced on another 74 lines from 1 June, responding to continuing US and EU complaints. 'Chinese interests' Yet Beijing has now done an apparent about turn, saying that the 78 tariffs introduced at the start of the year would now be scrapped, and three of the proposed additional tariffs would now not be introduced. 'In total, 81 items will see export tariffs cancelled from June 1,' China's finance ministry said in a statement. Beijing had warned earlier this month that such a move was possible. 'If countries take action to limit textile product exports from China, we will exclude those products from the export tariffs,' commerce ministry spokesman Chong Quan said on May 21. On Sunday, Mr Chong also attacked the EU's threat of import limits. 'The decision not only transmitted an erroneous signal of trade protectionism for the textile industry sector of the EU, but also undermined the rights and interests of Chinese enterprises in global textile products trade integration,' he said. Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4592671.stm

Subject: El nuevo orden de los economistas From: Pancho Villa To: All Date Posted: Mon, May 30, 2005 at 14:46:19 (EDT) Email Address: nma@hotmail.com Message: El nuevo orden de los economistas J.BRADFORD DeLONG La mayor parte de las ciencias económicas se basa en conceptos establecidos a comienzos del siglo XX por el economista británico Alfied Marshall, que afirmó que 'la naturaleza no da saltos'. Pero los economistas nos encontramos cada vez más perturbados por la aparente incapacidad del juego de herramientas neomarshalliano que hemos construido para explicar nuestro mundo. El principal sesgo de estas herramientas es que deberíamos confiar en que el mercado va a solucionar los problemas que le planteemos, y que no deberíamos esperar que los pequeńos cambios (o ni siquiera los grandes) tengan consecuencias inmensas. Un salto tecnológico que aumente los salarios de los preparados y los formados hará que otros se preparen y formen, restaurando el equilibrio de forma que la desigualdad no aumente demasiado. Por consiguiente, un país con baja productividad laboral se convertirá en un lugar atractivo para la inversión extranjera directa, y el consiguiente incremento del coeficiente trabajo-capital aumentará la productividad. Por donde miremos, usando las herramientas de Marshall, vemos al equilibrio económico devolver las cosas ala normalidad, compensando y atenuando los efectos de las conmociones y las perturbaciones. La economía de Marshall ha resultado muy útil y ayudado alos economistas a dar sentido al mundo. Pero se tiene la sensación de que el progreso y el conocimiento exigen algo nuevo: una economía de círculos virtuosos, umbrales y efectos mariposa en los que pequeńos cambios provocan grandes consecuencias. A lo mejor siempre ha sido así. En comparación con los niveles de hace varios siglos, vivimos en un mundo de increíble riqueza. Dentro de dos generaciones, la alfabetización humana será casi universal. Pero hace tres siglos también existía el progreso tecnológico, desde el reloj mecánico y el molino de agua, hasta el cańón y la carabela, pasando por las cepas de arroz que permiten obtener tres cosechas anuales en Guangzhou, y la cría de ovejas merinas que pueden darse en los montes de Espańa. Pero estas innovaciones sólo sirvieron para aumentar la población humana, no para aumentar los niveles de vida medios. Si hoy dividiéramos equitativamente lo que producimos en todo el mundo, żobtendríamos un nivel de vida diez veces superior al de nuestros antepasados preindus-triales? żVeinte veces? żCien? żTiene siquiera sentido la pregunta? A David Laudes le gusta contar la historia de Nathan Meyer Rothschild, el hombre más rico del mundo en la primera mitad del siglo XIX, muerto con menos de sesenta ańos por la infección de un absceso. Si le diéramos a elegir entre la vida que llevó siendo el príncipe de las finanzas de Europa o vivir hoy en un estrato bajo en la distribución de la renta, pero con treinta ańos más para ver a sus nietos, żqué escogería? No cabe duda de que hoy vivimos en un mundo extraordinariamente desigual. Hay familias cerca de Xian, el corazón de lo que fue el imperio de la dinastía Tang, que disponen de áridas explotaciones de trigo de 0,80 hectáreas y una sola cabra. Hay otras familias en todo el mundo que podrían comprar esa explotación triguera con el sueldo de un solo día. J. Bradford DeLong es profesor de economía en la Universidad de California en Berkeley, y fue subsecretario del Tesoro durante la presidencia de Clinton. EL PAÍS, DOMINGO 29 DE MAYO DE 2005

Subject: Re: El nuevo orden de los economistas From: Terri To: Pancho Villa Date Posted: Mon, May 30, 2005 at 16:19:41 (EDT) Email Address: Not Provided Message: http://www.diario-expreso.com/mayo/dia20/html/editoriales3.asp The new world order of the economists By J. Bradford DeLong Most of the academic economists they are based on concepts raised at the beginning of century XX by the English economist, Alfred Marshall, that said that la nature does not give saltos. Nevertheless, to us the economists more and more trouble the apparent insufficiency to us of the tools of Marshall whereupon we explained the world. The central prejudice of those tools is that we must trust that the market solves the problems and that we do not have to hope that the changes small (or even the great ones) have enormous effects. A technological jump that elevates the wages of the described and professional workers will induce to others to become qualified and to professionalize itself, with which the balance will recover so that the inequality does not grow too much. Also, a country where the productivity of the manual labor is low will make attractive for the direct foreign investment and the resulting increase of the relation capital-work will elevate the productivity. To where it wants that we watch using the tools of Marshall, we will see that the economic balance maintains the things in its place compensating and attenuating to the effects of the shocks and the disturbances. The economy of Marshall has had a wonderful life and has helped the economists to include/understand the world. However, there is a feeling of which stops to advance and to include/understand will make lack somewhat new: an economy of virtuous circles, thresholds and effects butterfly in which the small changes have very great effects. Talvez always has been thus. For the standards of centuries ago we lived in a world of incredible wealth. Nevertheless, three centuries ago also there were technological advances, from the mechanical clock and the mill to the tube and carabela; the varieties of rice that can be harvested three times to the year in Guangzhou and the young of merinos lambs that prosper in hills of Spain. But those innovations single served to increase the human population, does not stop to elevate the mean levels of life. If nowadays we divided in equal parts what we produce at world-wide level, we would obtain a standard of life ten times superior to the one of our preindustrial ancestros? Twenty times? One hundred times? At least has sense the question? To David Landes it likes to tell the history of Nathan Meyer Rothschild, the richest man of the world in first half of the century XIX, that died before the sixty years of an infected abscess. If the option occurred him to live the life that took of prince of the European finances or a life nowadays in the lowest scales of the distribution of the entrance but with thirty years to see its greats-grandchild more, which would choose? There is no doubt that at the moment we lived in an extremely unequal world. There are families near Xian, in which it was the heart of the empire of the Tang dynasty, that they have dry farms of wheat of less than one hectare and one single goat. There are other families anywhere in the world who could buy that farm of wheat with the wage of a day. The economy of Marshall - the economy of the balance of comparative statics, of the movements of the curves of supply and demand and of the favorable answers is of little aid to explain that. Why, at world-wide level, stagnated during as much time the standards of life? Why the rate of growth has experienced an extraordinarily fast acceleration in a so short period? Where it is the economy of the inventions, the innovation, the adaptation and the diffusion? Not with Marshall. And why the present world is so unequal that it is difficult to find measurements of the global distribution that do not present/display divergences at least until the decade of 1980? They have passed generations since Robert Solow and Moses Abramovitz indicated that the tools of Marshall are of little aid to include/understand the modern economic growth. The true sources of growth are not in the supply and the demand and the allocation of limited resources for alternative uses, but in the technological and organizacional change, on which the economists very little must what say. The economic historians as Ken Pomeranz indicates that, before the industrial revolution, the differences in the mean levels of life in the civilizations outposts of Eurasia, were relatively small. At the end of century XVII, a farmer of the valley of the Yangtzé had a style of life different from the one of his contemporary of the valley of the Thames, but no was clearly superior or inferior. Two centuries later the things no longer were asi ': towards end of century XIX, the average standards of life in England and other countries to which the industrial revolution had extended were, for the first time in history, to years light of any neomalthusiano datum point of subsistence. The economic profits of the first years of the industrial era occurred in spite of the loss of a substantial proportion of the national entrance to maintain to a corrupt, declining and despilfarradora aristocracy. They occurred in spite of a triplicación of the population that almost exerted an extraordinary malthusiana pressure on the underlying resources to the economy and in spite of the mobilization of a proportion without precedents of the national entrance during a century military intensive against France, a power with a population three times superior to the one of England. How occurred exactly those profits? Which were the small differences that were so important? The economists begin to realize of which the most interesting questions to than always face were beyond the reach of the tools of Marshall. Without a doubt - so that she is successful and he can advance the economy must be very different within a generation from which is at the moment.

Subject: Untranslated version From: Pete Weis To: Terri Date Posted: Mon, May 30, 2005 at 19:05:25 (EDT) Email Address: Not Provided Message: It's ironic that the technological waves which brought us the industrial revolution to begin with and have brought us, in steps, to ever higher levels of living standards with more evenly distributed wealth have short term downsides. Surges in aggregate wealth brought on by these spurts in productivity (fostered most recently by the explosion in computer technology) bring on greater divisions of wealth. Those in the vast middle seem to lose ground, at least temporarily, with wealth replaced by debt. Economies seem to suffer 'dislocations' in such times. Thursday, May 19, 2005 Economists’ new world order By J. Bradford DeLong Most academic economics rely on concepts laid down at the beginning of the twentieth century by the British economist Alfred Marshall, who said that “nature does not make leaps.” Yet we economists find ourselves increasingly disturbed by the apparent inadequacy of the neo-Marshallian toolkit that we have built to explain our world. The central bias of this toolkit is that we should trust the market to solve the problems we set it, and that we should not expect small (or even large) changes to have huge effects. A technological leap that raises the wages of the skilled and educated will induce others to become skilled and educated, restoring balance so that inequality does not grow too much. So a country where labor productivity is low will become an attractive location for foreign direct investment, and the resulting increase in the capital-labor ratio will raise productivity. Wherever one looks, using Marshall’s toolkit, one sees economic equilibrium pulling things back to normal, compensating for and attenuating the effects of shocks and disturbances. Marshall’s economics has had a marvelous run, and has helped economists make sense of the world. Yet there is a sense that progress and understanding will require something new – an economics of virtuous circles, thresholds, and butterfly effects, in which small changes have very large effects. Perhaps this has always been so. By the standards of centuries ago, we live in a world of unbelievable wealth. Within two generations human literacy will be nearly universal. Yet three centuries ago there was also technological progress, from the mechanical clock and the watermill to the cannon and the caravel, and on to strains of rice that can be cropped three times a year in Guangzhou and the breeding of merino sheep that can flourish in the hills of Spain. But these innovations served only to increase the human population, not raise median standards of living. Today, if we divided up equally what we produce worldwide, would it give us a standard of living ten times that of our pre-industrial ancestors? Twenty times? A hundred times? Does the question even have meaning? David Landes likes to tell the story of Nathan Meyer Rothschild, the richest man in the world in the first half of the nineteenth century, dead in his fifties of an infected abscess. If you gave him the choice of the life he led as the finance-prince of Europe or a life today low-down in the income distribution but with thirty extra years to see his great-grandchildren, which would he choose? No doubt, we live today in an extraordinarily unequal world. There are families today near Xian, in what was the heartland of the Tang Dynasty Empire, with two-acre dry wheat farms and a single goat. There are other families throughout the world that could buy that wheat farm with one day’s wages. Marshall’s economics – the equilibrium economics of comparative statics, of shifts in supply and demand curves, and of accommodating responses – is of almost no help in accounting for this. Why, worldwide, did median standards of living stagnate for so long? Why has the rate of growth undergone an acceleration that is extraordinarily rapid over so short a period? Where is the economics of invention, innovation, adaptation, and diffusion? Not in Marshall. And why is today’s world so unequal that it is hard to find any measures of global distribution that do not show divergence at least up until the 1980’s? It has been generations since economists Robert Solow and Moses Abramovitz pointed out that Marshall’s toolkit is a poor aid for understanding modern economic growth. The real sources of growth are not to be found in supplies and demands and the allocation of scarce resources to alternative uses, but in technological and organizational change – about which economists have too little to say. Economic historians like Ken Pomeranz rightly point out that before the Industrial Revolution, differences in median standards of living across the high civilizations of Eurasia were relatively small. A peasant in the Yangtze Valley in the late seventeenth century had a different style of life than his or her contemporary peasant in the Thames Valley, but not one that was clearly better or worse. Two centuries later that was no longer the case: by the end of the nineteenth century, median living standards in Britain and other countries to which the Industrial Revolution had spread were, for the first time in recorded history, light-years above any neo-Malthusian benchmark of subsistence. The early industrial-era economic accomplishments occurred despite the loss of a substantial proportion of national income to support a corrupt, decadent, and profligate aristocracy. They occurred despite a tripling of the population, which put extraordinary Malthusian pressure on the economy underlying natural resource base, and despite the mobilization of an unprecedented proportion of national income for nearly a century of intensive war against France, a power with three times Britain’s population. How, exactly, did these accomplishments occur? What were the small differences that turned out to matter so much? Economists are now awakening to the realization that the most interesting questions they face were always beyond the reach of Marshall’s toolkit. Clearly, economics – if it is to succeed and progress – must be very different in a generation from what it is today. J. Bradford DeLong, Professor of Economics at the University of California at Berkeley, was Assistant US Treasury Secretary during the Clinton Presidency.

Subject: Re: Tractatus Logico-Philosophicus From: Pancho Villa To: Pete Weis Date Posted: Mon, May 30, 2005 at 20:36:01 (EDT) Email Address: nma@hotmail.com Message: http://www.quotationspage.com/quote/30291.html

Subject: Re: Tractatus Logico-Philosophicus From: Pete Weis To: Pancho Villa Date Posted: Mon, May 30, 2005 at 21:44:29 (EDT) Email Address: Not Provided Message: As you suggest Pancho, the comments I added regarding Brad Delong's essay are in the realm of 'senselessness' and beyond the limit of any useful comment. Not sure if my comments related much at all to Brad Delong's piece. I seem to jump at the the slightest opportunity to bring up this idea of surges in productivity leading to large buildups in middle-class debt and an upward shift of wealth distribution. My apologies.

Subject: Re: Dear Pete From: Pancho Villa To: Pete Weis Date Posted: Tues, May 31, 2005 at 15:12:18 (EDT) Email Address: nma@hotmail.com Message: Dear Pete, I just realized we may have a little linguistic problem (Lost in Translation). I am afraid my last comment may have caused misunderstanding. When I wrote 'don't bother' what I actually meant was 'Please don't worry about it, it's no prob.' Just making sure ... I was worried I may have offended you. (linguistic consultance coutesy of my sister in law)

Subject: Absolutely no problem From: Pete Weis To: Pancho Villa Date Posted: Tues, May 31, 2005 at 22:36:10 (EDT) Email Address: Not Provided Message: No problem here. Definitely no offense taken. I value your opinion highly Poncho. Your link introduced me to ideas which were new to me and worth thinking about and exploring further. Muchas Gracias. Tell your sister-in-law that I actually took 'don't bother' the way you had intended.

Subject: Re: Dear Pete From: Terri To: Pancho Villa Date Posted: Tues, May 31, 2005 at 18:29:03 (EDT) Email Address: Not Provided Message: You have a lovely sensitivity to you, and a sly sene of humor indeed.

Subject: Re: Tractatus Logico-Philosophicus From: Pancho Villa To: Pete Weis Date Posted: Mon, May 30, 2005 at 23:01:18 (EDT) Email Address: nma@hotmail.com Message: Dear Pete, don't bother. I think that I have to apologize

Subject: Re: Tractatus Logico-Philosophicus From: Terri To: Pancho Villa Date Posted: Tues, May 31, 2005 at 07:28:12 (EDT) Email Address: Not Provided Message: Dear Pete, the ideas you have are always appreciated and cause me much thought each day. When I argue, it is because the impact has been so much. Continue the observations and asides. Continue.

Subject: Re: Tractatus Logico-Philosophicus From: Pete Weis To: Terri Date Posted: Tues, May 31, 2005 at 22:54:56 (EDT) Email Address: Not Provided Message: Thank you Terri. I certainly will continue. I hate to view myself (and this does not relate to this particular post thread) as a constant pessimist. I actually hate the words pessimism and optimism, for I believe we either have some level of substance to what we say or we do not and being 'pessimistic' or 'optimistic' is not relevent to that end. Yet it haunts me that I can not see how we will be able to extract ourselves from the damage we have done to our present economic and political well being. I can visualize how it will fall apart but not how it gets put back together without causing a lot of pain in the process. And what worries me the most is the anger which will evolve from the pain and where it may be directed.

Subject: Lending standards will tighten From: Pete Weis To: All Date Posted: Mon, May 30, 2005 at 13:36:58 (EDT) Email Address: Not Provided Message: Growing foreclosures will lead to stricter lending standards, which will reduce the numbers of eligible buyers for a given house, which will reduce selling prices, which will lead to greater numbers of foreclosures, and so on. Loose lending practices and 'creative' lending have fueled the housing boom to a greater extent than have low long term rates. No one is looking after the interests of mortgage securities investors. From The Washington Post: A Bane Amid The Housing Boom: Rising Foreclosures By Michael Powell Washington Post Staff Writer Monday, May 30, 2005; A01 PHILADELPHIA -- To walk Thayer Street in northeast Philadelphia is to count, door by door, the economic devastation afflicting a working-class neighborhood. On a single block, 18 of the 42 brick rowhouses have gone into foreclosure in the past three years. There's Marciela Perez, who fell ill with cancer, lacked health insurance and stopped making mortgage payments. Barrel-chested Richard Hidalgo, who got divorced and could no longer make his monthly nut. And Mike O'Mara, a rawboned and crew-cut truck driver who took on too much debt, lost his job and fell behind on his mortgage. 'Mortgage companies convinced us to refinance, and each time our bill went up,' O'Mara said as he surveyed his narrow street from his shaded front porch. 'You fall behind and they swoop down on you.' Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a 'Depression-era' problem. The foreclosures fall particularly hard on black and Latino families. For some American homeowners, the greatest housing boom in U.S. history has delivered riches. They repeatedly tap their homes for equity and use the cash to purchase granite countertops, a BMW, even a trip to the Super Bowl. But there's a dark side -- a sharp rise in foreclosures that is destroying the single greatest generator of personal wealth for most Americans. Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods. Virginia, Maryland and the District have relatively low foreclosure rates -- analysts say troubled owners in those booming markets can still sell their homes before facing foreclosure. Should the nation's housing bubbles deflate, as many economists and federal officials expect, the foreclosures could prefigure a national crisis. Americans now shoulder record levels of housing debt -- more than 8 percent of homeowners spend at least half their income on their mortgage. 'We are clearly seeing a spike in foreclosures in a number of our major urban areas,' said Julie L. Williams, acting U.S. comptroller of the currency, whose agency regulates the nation's banks. 'It can lead to a downward spiral for neighborhoods. If we are not careful, the American dream can quickly turn into the American nightmare.' A recent study in Chicago found that rising foreclosures, and attendant social dislocation, fuel increases in crime rates. State and federal regulators place much of the blame for the foreclosure problem at the feet of mortgage brokers and bankers, who have crafted ever-riskier ways for Americans with poor credit to buy homes. Interest-only and adjustable-rate mortgages account for 63 percent of new mortgages. But many policymakers say the rise in foreclosures leads to a larger question: Is the push to boost homeownership -- successive presidential administrations have strongly promoted it -- backfiring? As home prices and personal debt rise to record levels, they note, homeownership has become an albatross for millions of Americans, destroying rather than creating wealth. Officials at Fannie Mae, the federally chartered mortgage giant designed to expand homeownership, suggest that the solution lies with more counseling and fine-tuning of mortgages for lower-income families. But the Pennsylvania Banking Department is skeptical. It commissioned a study of 14 counties -- urban, suburban and rural -- and found that foreclosures had spiked in each county in the past four years. 'We've had a national agenda that's putting people into homeownership who are not ready for it,' said A. William Schenck III, Pennsylvania's secretary of banking and a former bank president. 'This is a fact that the nation must deal with unless we want to wreck the credit of a lot of middle-class Americans.' A Rude Awakening Six years ago, Cynthia Boyd, 42, signed mortgage documents and lived a dream. The food aide at St. Christopher's Hospital for Children had taken ownership of a three-bedroom rowhouse in the Olney neighborhood of Philadelphia. 'This was the first house I'd ever owned,' she said. 'I didn't think it'd ever happen.' Then Boyd got sick and had family problems. She fell down a mortgage hole. She asked the original mortgage company to cut her a break, but it had already sold her mortgage to another lender. She tried -- unsuccessfully -- to file for bankruptcy in hopes of forestalling foreclosure. Soon her monthly payment doubled because she faced penalties for falling behind. She also owed $10,000 in back payments and attorney fees. Then the sheriff's office added a charge for processing the foreclosure: $4,000. Boyd felt like curling into a fetal position. 'I was fighting so hard to save my house,' she said. 'I just kept thinking to myself: You're going to lose your house.' For now, she is holding on to the house, but just barely. Stories like this are heard again and again in Philadelphia. 'When a lot of homeowners get into trouble, it doesn't take long to turn into big trouble,' said John Dodds, director of the Philadelphia Unemployment Project. At first glance, the high foreclosure rates in Pennsylvania seem paradoxical. The average Pennsylvania homeowner has one of the highest credit scores in the nation, saves more than the average American, and is less likely to be unemployed or divorced. But the Reinvestment Fund, a Philadelphia-based think tank, analyzed 22,979 foreclosures for the state Banking Department and found a more problematic profile. Those homeowners, most of whom are blacks, Latinos or working-class whites, live close to the economic margin. They have low incomes and little or no health insurance -- 40 percent of those who sought emergency foreclosure help cited medical costs as the cause of their distress. 'For lots of these folks, homeownership is a dangerous, precarious existence,' said Ira Goldstein, policy director for the fund. 'Foreclosures can become like a contagion in these neighborhoods.' Few of these homeowners were tutored in home buying, and 70 percent relied on 'subprime' mortgage brokers, which specialize in buyers with bad credit and charge interest rates between 8 and 12 percent, far above market interest rates of 6 percent or less. Said Williams, the acting comptroller of the currency: 'We've produced a new class of lenders willing to take on riskier and riskier borrowers at a very high price. Many of the products are nothing more than time bombs.' On average, at-risk Philadelphia homeowners purchased their homes in the mid- to late 1990s and faced a foreclosure filing four years later. Benigno Diaz, 55, was one of them. He cleans floors at the Philadelphia airport every night. A few years ago, he hurt his knee and went on disability -- which paid 60 percent of his annual $28,000 salary. He fell behind on his home loan. His mortgage company demanded that he make double payments to catch up. He couldn't manage that. Then he found his house was on a foreclosure list. 'I'm like, wow, are you kidding me, man?' Diaz said. He never bounced a check, he said -- 'I'm just two months behind.' He is hanging on for now. Irv Ackelsburg, a lawyer with Community Legal Services in Philadelphia, sees people like Diaz every week. They come in with folders stuffed with papers and panicked expressions. 'You see these people come in with huge costs and health problems and it breaks your heart,' he said. 'A lot of time you have to tell them, 'You're going to lose your home.' ' Hard Times in the Suburbs Pennsylvania's foreclosure problem is not just an urban phenomenon. Montgomery County contains a genteel stretch of suburbs north of Philadelphia. But from 2000 to 2003, county officials recorded almost 5,000 foreclosure filings, a 14.6 percent increase. Arline, Woodland and Lindbergh avenues run through Abington, a pleasant lower-middle-class town with ranch houses and cherry trees, children's slides and neatly tended gardens. On each of these blocks, three or four houses have gone into foreclosure in the past four years. Unlike those in northeast Philadelphia, the houses are easily resold -- the foreclosed-upon homeowners tend to simply fade away. 'We bought this in a foreclosure auction a year ago,' Becky Morrison, a mother of three, said as she stood in the doorway of her house in Abington. 'We rented it back to the previous owner. She was pretty sick -- I think she had trouble with her bills. I'm not sure where she went.' Losing a home is particularly destructive of personal wealth. A foreclosure often costs upward of $10,000 in various legal, sheriff and bank fees. And people who have gone through foreclosure end up paying more for insurance and credit card interest and can get turned down for jobs that require good credit. Fannie Mae, the home loan giant, has devised several programs to help distressed homeowners. It also has started its 'American Dream Commitment,' which aims to drive the percentage of homeowners still higher. Spokesman Alfred King acknowledges that many lower-income homeowners are experiencing trouble but says his company has no plans to temper its homeownership push. 'Sure, some people are being done a disservice when they get mortgages when they are not ready for it,' he said. 'But the desire for ownership is there. And there's compelling evidence that there's probably a mortgage product that works for them.' But few of those who work with the tens of thousands of distressed low-income homeowners in Pennsylvania see much evidence to support that proposition. Philadelphia Sheriff John D. Green has a front-row seat as these dramas play out. In mid-June, he will auction another thousand or so foreclosed homes. 'My staff and I watch the suffering every day,' he wrote recently in a letter to residents posted on his Web site. He said they 'witness the heart-wrenching scenes as families lose their primary means of wealth building and face eviction.'

Subject: Yellow Warbler Taking Flight From: Terri To: All Date Posted: Mon, May 30, 2005 at 12:04:48 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5347&u=17|4|... Yellow Warbler Taking Flight New York City--Central Park, Harlem Meer.

Subject: Palm Warbler Taking Flight From: Terri To: Terri Date Posted: Mon, May 30, 2005 at 12:05:30 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4418&u=869|102|... Palm Warbler Taking Flight New York City--Central Park, Harlem Meer.

Subject: Hear a Pop? Watch Out From: Emma To: All Date Posted: Mon, May 30, 2005 at 11:46:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/business/yourmoney/29view.html Hear a Pop? Watch Out NOW that even Alan Greenspan is talking about 'froth' in real estate markets, how concerned should people be - not just about the value of their own homes, but about the entire country? After all, we just had a big stock market bust and it barely dented the economy. Outside of brokers, speculators, and a few unlucky sellers, would a real estate crash really matter to the country as a whole? In a word, yes. To understand why, first look at how pervasive the effects of real estate are throughout the economy. Start with the so-called wealth effect. If people tend to spend more when their net worth increases, they'll spend less when it decreases. Economists use this rule of thumb: a $1 change in household wealth leads to a roughly 5-cent change in consumer spending. By that measure, a 10 percent decline in real estate prices would knock about half a percent off the gross domestic product. Even more significant for the economy, though, would be a collapse in home equity lending. The industry has been booming as housing prices have soared. But if prices stop rising, new borrowing against home equity will drop, and may disappear. That is important, because home equity lending amounted to more than $200 billion last year - or nearly 2 percent of the economy, according to Economy.com, a research group based outside Philadelphia. If all that borrowing - which freed up cash that was spent on new furniture, appliances, vacations, cars and the like - simply vanished, the effect could be large enough all by itself to send the economy into recession. But that's not all. The housing sector has even broader effects on the economy, by some estimates accounting for 25 percent of all activity. A decline in property values would most likely lead to declines in other industries, like construction, brokerage, banking and insurance. And these are important for future growth. Construction, for example, amounts to 4 percent to 5 percent of the economy, according to the Bureau of Economic Analysis. Then there's banking. Because of the leverage associated with real estate, a fall in values would affect banks and other lenders. It would probably lead to tightened credit standards, less lending and higher interest rates. If lenders begin to suffer steep losses, there is always the danger of financial contagion, in which problems at one institution ripple out to others it does business with. And there's a new wild card for the economy. In 2004, adjustable-rate mortgages made up a third of new mortgage originations. No one knows what the effect of the widespread use of A.R.M.'s would be in a down market. A climb in interest rates, of course, would put downward pressure on real estate prices, but A.R.M. borrowers would feel the pinch rapidly. If those borrowers started to default, lenders would be hurt. Adding it all up, it's easy to see how a drop in real estate prices would spell trouble for the economy. To put that in perspective, the International Monetary Fund conducted a detailed study in 2003 that assessed the potential economic impact of a property slump. Reviewing the experience in the United States and 13 other industrialized countries, the I.M.F. found that a real estate bust is far more dangerous to the economy than a stock market bust. The I.M.F. calculated that a housing-price decline less than half as large as a decline in stock prices typically causes twice as big a drag on the economy and that its effects last twice as long as those of a stock market crash. Just how big a decline was the I.M.F. looking at? The I.M.F. compared a 14 percent decline in real housing prices with a 37 percent decline in stock market prices - roughly the same size as the post-2000 stock market fall in the United States. The study's findings suggest that a housing crash could cause twice the damage, and for twice as long, as the last recession in the United States. While such a large decline in housing prices might come as a shock to Americans, the I.M.F. found that similar busts happen every 20 years, on average, in the countries studied. The Yale economist Robert J. Shiller, who studies the housing market, agrees. His research leads him to believe that the I.M.F. conclusions apply directly to the United States economy. So if a housing bubble is a bigger risk to the economy than a stock market bubble, what can be done to prevent it from bursting? The most attractive way for policy makers to cool the housing market would be to put pressure on lenders to tighten their credit standards. Some small steps in this direction have already been taken: Regulators have issued new guidelines on home equity lending, and new rules on first-mortgage loans are expected to follow soon. Recently, the Federal Reserve has also been trying a second approach: talking up long-term interest rates. Because the Fed doesn't control long-term rates directly, it relies on such indirect means to influence the long end of the market. So far, despite rising short-term rates, long-term rates have remained fairly steady. By drawing attention to that disparity and indicating that extremely low long-term rates aren't sustainable, the Fed has been trying to nudge the long end of the market toward higher rates. Some economists would suggest additional steps. According to Mark Zandi, chief economist at Economy.com, the most effective way the Fed could influence long term rates would be to drop the language of 'measured' tightening in its policy statements. Mr. Zandi says he believes that this would introduce uncertainty among lenders who have become too complacent. If all that fails, the Fed is left with a blunt instrument: further increases in short-term rates. And that approach may be as likely to cause problems as to avoid them. So the situation calls for subtle judgment, steely persistence and a tough hide. Just the kind of challenge that Mr. Greenspan has become famous for handling.

Subject: Exercises in Determining Value From: Terri To: All Date Posted: Mon, May 30, 2005 at 10:59:38 (EDT) Email Address: Not Provided Message: How do I determine value? When I buy assets I estimate an income stream for 5 and 10 years and buy according to how attractive the income stream is relative to Treasury securities. So, if I can surely earn 4.1% from a Treasury over the coming 10 years, what can I ear from the Vanguard Utility Index with a dividend yield of 3.4%? The estimate I make of utility earnings, using the earning growth rate of the past 3 to 5 years, gives me a conservative return base of 6% to 8%. How secure are the earnings? Well, in the case of public utilities, highly secure, for utilities must be judiciously protected, so utility costs are gradually passed to consumers. What then of the price to earning ratio? Am I to buy an asset that is currently reasonably valued? The same sort of exercise is followed with assets from drug companies to consumer staple companies to bond themselves.

Subject: Beyond housing From: Pete Weis To: All Date Posted: Sun, May 29, 2005 at 21:24:35 (EDT) Email Address: Not Provided Message: Why did America lead the world into the hightech age of pc's, networking and internet technology? What made it possible? Why wasn't it Europe or Japan? And whatever it was that made this possible for America - could it be employed to help America gain the lead in the next great technological boom? What will be the next tech boom - alternative energy or breakthroughs in medical science?

Subject: Education From: Terri To: Pete Weis Date Posted: Sun, May 29, 2005 at 21:36:17 (EDT) Email Address: Not Provided Message: Wonderful question, and an immediate answer. Education, education. The stunning emphasis on free form science education from the announcement of the Russian space program and successful orbit. Education and science education were emphasized from the late 1950s to the 1970s, from grade school and up. There were enriched programs and scholarships and low cost schools from Harvard to UCLA. Yes, a middle class family could easily send a child to Cornell and Columbia as to the fine state universities. California had wonderful schools, at each level, and no tuition at the state college level till the 1980s. Education at every level.

Subject: Re: Education From: Pete Weis To: Terri Date Posted: Mon, May 30, 2005 at 12:44:12 (EDT) Email Address: Not Provided Message: Terri. Education certainly played an important role. But Europe and Japan certainly had fine educational systems.

Subject: Re: Education From: Terri To: Pete Weis Date Posted: Mon, May 30, 2005 at 13:15:26 (EDT) Email Address: Not Provided Message: We had a more science based education system in general than Europe and a freer system than Japan. Education reached more broadly, and college education offered more in technical fields than in Europe and was vastly better than in Japan.

Subject: Belted Kingfisher Taking Flight From: Terri To: All Date Posted: Sun, May 29, 2005 at 19:08:48 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5442 Belted Kingfisher Taking Flight New York City--Central Park, The Loch.

Subject: Yellow-billed Cuckoo From: Terri To: Terri Date Posted: Sun, May 29, 2005 at 20:02:50 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=4769&u=18008|25|... Yellow-billed Cuckoo New York City--Central Park--Wildflower Meadow.

Subject: 'Non' to Constitution From: Terri To: All Date Posted: Sun, May 29, 2005 at 18:52:12 (EDT) Email Address: Not Provided Message: The proposed Constitution was startlingly complex and seemed to put public influence at more of a remove than I would have preferred, but I am sorry for the failure. Likely the Netherlands will vote similarly, and the cause will be as in France as growing sense of public displacement. Regrettable.

Subject: Re: 'Non' to Constitution From: Terri To: Terri Date Posted: Sun, May 29, 2005 at 21:44:08 (EDT) Email Address: Not Provided Message: There will be no pushing a decline in the social state much further. France makes that clear, and Netherlands will likely follow. There will soon be another, an early, election in Germany. Europe will not be America or even Britain in economics. Why should we be surprised? The French live well, and would hold the way they live. The union will hold however.

Subject: Re: 'Non' to Constitution From: Yann To: Terri Date Posted: Mon, May 30, 2005 at 04:59:59 (EDT) Email Address: Not Provided Message: Je suis d'accord avec toi, Terri.

Subject: Re: E unum pluribus From: Pancho Villa To: Terri Date Posted: Mon, May 30, 2005 at 14:24:26 (EDT) Email Address: nma@hotmail.com Message: A song for Europe No would be the right answer in next week's French and Dutch referendums — and a good one for Europe THE voters, quite plainly, are in a restive, perhaps even angry mood. That will be so even if the outcomes in the French referendum on the European Union's constitution on May 29th and the Dutch one on June 1st turn out to surprise the opinion pollsters by producing narrow votes in favour of the treaty. When this constitution was agreed upon by heads of government last year, few seriously envisaged that it might be rejected or even actively disliked by voters in two of the EU'S six founding members. It was countries in the Union's awkward squad — Denmark, Britain, Poland — that were expected to pose problems. That is the trouble when you draft ambitious measures designed to bring Europe closer to the people. The people then have the cheek to tell you what they think. But why, Euro-enthusiasts have been asking themselves, can't a clear majority of voters be persuaded by two fine arguments that we have offered to them? The first is that the constitution is a noble document designed to help today's enlarged EU march on more efficiently towards an 'ever closer union', one that (as the French Socialist Party says in its pro-constitution campaign) can be 'forte face aux Etats Unis'(strong in the face of the United States). The other is that the treaty is just a technical matter that will make little real difference and is too boring for voters to worry their pretty heads about. One reason, of course, is that the arguments are contradictory. That clash is easily solvable, for the second one is nonsense. Weighing in at almost 200 pages in its French version, this treaty contains a bill of rights, redefines the role and powers of the EU'S institutions, lays down new rules for how decisions will be made and provides a new text for European judges to interpret. That is no mere technical matter and fully deserves the term 'constitution', however much some worried Europhiles may now regret the word. Another reason, though, is that some voters may not really be offering their verdict on the constitution at all but instead on economic anxiety and their governments' record. That is, it is true, the trouble with referendums. Even if many do cast their ballots on the question actually posed, enough voters may cast protests to distort the result. And there is no doubt that economic anxiety is rife in Europe: that is why Germany's Gerhard Schroder took such a drubbing in regional elections on May 23rd (see next leader). Against that, however, lies the fact that there has been no shortage of debate about the real issue in either France or the Netherlands. There has been ample chance to focus most voters' minds on the constitution itself and indeed interest has run high. Yet there is also another point: that it is not entirely unreasonable to link economic anxieties with the treaty. It is not that the constitution will have much impact on the European economy if in the end it comes into force. Moreover the text is not, contrary to the claims of many French antis, 'ultra-liberal'. The Economist, which is proud to be liberal with or without the adjective, wishes it were so. But the treaty makes no stipulations about economic arrangements more radical than those that France did so much to craft in the Treaty of Rome in 1957, which provided for the abolition of obstacles to the free movement between member states of goods, persons, services and capital. If the new system would be ultra-liberal, then the European Union must always have been so. The truth, of course, is otherwise and so it will be in the future. Rather, the real link is not about policy but about confidence. At a time when people are so anxious about their futures, any sort of change feels alarming. And an accurate criticism of the change envisaged by the constitution is that it is highly ambiguous, not to say bewildering; it will transfer some more power away from national governments and to the EU, but with effects of which no one can be at all sure. E unum pluribus This newspaper's objections to the constitution are well known; any readers that would like a reminder can find our two previous leaders urging a rejection on our website at www.economist.com/euconstitution, along with the constitution we immodestly drafted ourselves in 2000. No doubt our specific ideas would be considered impractical for a Union of 25 member states, all with interests and ideas of their own. But there is a theme running through our constitution and rejectionist articles that has much in common with the anti-treaty feelings being seen in France and the Netherlands. This is that the divergence of views and national prejudices in the EU are so wide that it is a mistake to try to force more and more policy areas into a single framework. Indeed, there are already too many: every country has some complaint about policies being foisted on it from Brussels. Some of that is desirable, for the Union has always been in part a means by which national governments force their electorates to accept rules that they might not have been able to impose on their own. But such a process has limits, which are being shown all too clearly in these referendums. A process remote from the people is unlikely to remain popular for long. And a larger Union, whether at the old 15 countries, today's 25, or in future even larger, is likely to become more remote, not less-especially if it tries to take on more and more common policies. What is needed instead is a treaty that acknowledges the central popular concern: that an EU that is increasingly remote is also a threat to the diversity of Europe's nations and thus to national identity. Admittedly the draft constitution does leave plenty of scope for national variation; the French could nationalise (although not subsidise) their banks, if they were foolish enough to want to do so; the British could still privatise their hospitals. But the central thrust of the document is towards more centralisation. This is a big mistake. First, it cuts down on the range of political choices open to national electorates—and thus is antidemocratic and liable to provoke a backlash. Second, the EU is capable of producing some remarkably awful policies, which because of its consensual way of policymaking become almost impossible to change once established and eventually risk discrediting the whole project. Farms policy is the best example. Finally, it is more likely that good policy will be promoted in Europe by the power of example than by fiat from Brussels. France is likelier to embrace reform because it sees Britain or Spain flourishing with different sorts of policies than because Brussels tells it to. But for this process to work, it is essential that the maximum freedom of manoeuvre is left for national governments. America's slogan of 'E pluribus unum' means 'out of many, one'. Europe's, though, can and should be the reverse: out of one, many. Whether or not the French and Dutch electorates kill this current constitution, the EU'S future will depend on both permitting and exploiting the continent's very diversity. A Europe that allows different approaches to be tried, whether in single countries or in groups of countries, whether 'core' or 'non core', is likely to be one that survives. A defeat for the constitution would not be the catastrophe that some Europhiles seem to think: life would go on, even in Brussels, and a Union that has lasted for almost half a century is surely strong enough to deal with the occasional rebuff from voters. If it responds by taking a pause for thought, it might even benefit. The Economist May 28th 2005

Subject: Re: E unum pluribus From: Yann To: Pancho Villa Date Posted: Tues, May 31, 2005 at 05:46:03 (EDT) Email Address: Not Provided Message: Is this article by The Economist (and its arguments against the EU constitution, in general) really convincing?

Subject: Re: E unum pluribus From: Pancho Villa To: Yann Date Posted: Tues, May 31, 2005 at 08:29:29 (EDT) Email Address: nma@hotmail.com Message: Cher Yann, Au début, un enfant en apprenant ŕ marcher parfois trébuche, non? Et bien lŕ, il a trébuché. Mais il se relčvera, re-trébuchera, un jour marchera, apprendra ŕ courir, et deviendra (faudra faire gaffe ŕ la phase pré- et post- pubertaire) un adulte. (Faut laisser le temps au temps)

Subject: Re: 'Non' to Constitution From: Setanta To: Terri Date Posted: Mon, May 30, 2005 at 12:33:04 (EDT) Email Address: Not Provided Message: I agree with your comments Terri. it was a regrettable, but probably necessary defeat. the french voted against the government not the constitution. i don't know whether it was a masterstroke by the govt (the public vented their ire on the constitutional referendum as apposed to in an election) or whether it will come back to haunt them in the future! the constitution was an unwieldy, cumbersome document which probably should be redrafted. as to the entry of turkey into the EU, this issue is so divisive in Europe that it may be better to delay entry by a decade or two. personally, i have no problem with the turks or the idea turkish membership but know that portions of the german, italian and french people are vehemently against it. if it is going to cause a schism then it should be deferred. i can kind of understand the arguments; turkey will be the biggest and poorest nation changing the nature of the EU, turkey straddles asia and europe (in fact, was considered asian up to a few centuries ago), the moniker of the 'sick man of europe' from the first work war has stuck with the nation, it will be a mostly muslim state whereas all other member states are christian, it retains the death penalty (all other states totally apposed to capital punishment), its human rights records (up to very recently) were terrible, it has a long standing dispute with greece (current member state) and the internationally recognised portion of cyprus, it has a controversial relationship with the international pariah of north cyprus...the list goes on...

Subject: Re: 'Non' to Constitution From: Terri To: Setanta Date Posted: Mon, May 30, 2005 at 13:00:35 (EDT) Email Address: Not Provided Message: Yes, Setanta, I agree with your thought filled response. I reluctantly agree, but remember Turkey would have to affirm a dramatic social change to be part of the European Union and there has been my hope for most in Turket favor such change. But, you are right. Netherlands will likely also not approve the Constitution, but for more external worries than in France.

Subject: Re: E unum pluribus From: Pancho Villa To: Terri Date Posted: Mon, May 30, 2005 at 14:24:26 (EDT) Email Address: nma@hotmail.com Message: A song for Europe No would be the right answer in next week's French and Dutch referendums — and a good one for Europe THE voters, quite plainly, are in a restive, perhaps even angry mood. That will be so even if the outcomes in the French referendum on the European Union's constitution on May 29th and the Dutch one on June 1st turn out to surprise the opinion pollsters by producing narrow votes in favour of the treaty. When this constitution was agreed upon by heads of government last year, few seriously envisaged that it might be rejected or even actively disliked by voters in two of the EU'S six founding members. It was countries in the Union's awkward squad — Denmark, Britain, Poland — that were expected to pose problems. That is the trouble when you draft ambitious measures designed to bring Europe closer to the people. The people then have the cheek to tell you what they think. But why, Euro-enthusiasts have been asking themselves, can't a clear majority of voters be persuaded by two fine arguments that we have offered to them? The first is that the constitution is a noble document designed to help today's enlarged EU march on more efficiently towards an 'ever closer union', one that (as the French Socialist Party says in its pro-constitution campaign) can be 'forte face aux Etats Unis'(strong in the face of the United States). The other is that the treaty is just a technical matter that will make little real difference and is too boring for voters to worry their pretty heads about. One reason, of course, is that the arguments are contradictory. That clash is easily solvable, for the second one is nonsense. Weighing in at almost 200 pages in its French version, this treaty contains a bill of rights, redefines the role and powers of the EU'S institutions, lays down new rules for how decisions will be made and provides a new text for European judges to interpret. That is no mere technical matter and fully deserves the term 'constitution', however much some worried Europhiles may now regret the word. Another reason, though, is that some voters may not really be offering their verdict on the constitution at all but instead on economic anxiety and their governments' record. That is, it is true, the trouble with referendums. Even if many do cast their ballots on the question actually posed, enough voters may cast protests to distort the result. And there is no doubt that economic anxiety is rife in Europe: that is why Germany's Gerhard Schroder took such a drubbing in regional elections on May 23rd (see next leader). Against that, however, lies the fact that there has been no shortage of debate about the real issue in either France or the Netherlands. There has been ample chance to focus most voters' minds on the constitution itself and indeed interest has run high. Yet there is also another point: that it is not entirely unreasonable to link economic anxieties with the treaty. It is not that the constitution will have much impact on the European economy if in the end it comes into force. Moreover the text is not, contrary to the claims of many French antis, 'ultra-liberal'. The Economist, which is proud to be liberal with or without the adjective, wishes it were so. But the treaty makes no stipulations about economic arrangements more radical than those that France did so much to craft in the Treaty of Rome in 1957, which provided for the abolition of obstacles to the free movement between member states of goods, persons, services and capital. If the new system would be ultra-liberal, then the European Union must always have been so. The truth, of course, is otherwise and so it will be in the future. Rather, the real link is not about policy but about confidence. At a time when people are so anxious about their futures, any sort of change feels alarming. And an accurate criticism of the change envisaged by the constitution is that it is highly ambiguous, not to say bewildering; it will transfer some more power away from national governments and to the EU, but with effects of which no one can be at all sure. E unum pluribus This newspaper's objections to the constitution are well known; any readers that would like a reminder can find our two previous leaders urging a rejection on our website at www.economist.com/euconstitution, along with the constitution we immodestly drafted ourselves in 2000. No doubt our specific ideas would be considered impractical for a Union of 25 member states, all with interests and ideas of their own. But there is a theme running through our constitution and rejectionist articles that has much in common with the anti-treaty feelings being seen in France and the Netherlands. This is that the divergence of views and national prejudices in the EU are so wide that it is a mistake to try to force more and more policy areas into a single framework. Indeed, there are already too many: every country has some complaint about policies being foisted on it from Brussels. Some of that is desirable, for the Union has always been in part a means by which national governments force their electorates to accept rules that they might not have been able to impose on their own. But such a process has limits, which are being shown all too clearly in these referendums. A process remote from the people is unlikely to remain popular for long. And a larger Union, whether at the old 15 countries, today's 25, or in future even larger, is likely to become more remote, not less-especially if it tries to take on more and more common policies. What is needed instead is a treaty that acknowledges the central popular concern: that an EU that is increasingly remote is also a threat to the diversity of Europe's nations and thus to national identity. Admittedly the draft constitution does leave plenty of scope for national variation; the French could nationalise (although not subsidise) their banks, if they were foolish enough to want to do so; the British could still privatise their hospitals. But the central thrust of the document is towards more centralisation. This is a big mistake. First, it cuts down on the range of political choices open to national electorates—and thus is antidemocratic and liable to provoke a backlash. Second, the EU is capable of producing some remarkably awful policies, which because of its consensual way of policymaking become almost impossible to change once established and eventually risk discrediting the whole project. Farms policy is the best example. Finally, it is more likely that good policy will be promoted in Europe by the power of example than by fiat from Brussels. France is likelier to embrace reform because it sees Britain or Spain flourishing with different sorts of policies than because Brussels tells it to. But for this process to work, it is essential that the maximum freedom of manoeuvre is left for national governments. America's slogan of 'E pluribus unum' means 'out of many, one'. Europe's, though, can and should be the reverse: out of one, many. Whether or not the French and Dutch electorates kill this current constitution, the EU'S future will depend on both permitting and exploiting the continent's very diversity. A Europe that allows different approaches to be tried, whether in single countries or in groups of countries, whether 'core' or 'non core', is likely to be one that survives. A defeat for the constitution would not be the catastrophe that some Europhiles seem to think: life would go on, even in Brussels, and a Union that has lasted for almost half a century is surely strong enough to deal with the occasional rebuff from voters. If it responds by taking a pause for thought, it might even benefit. The Economist May 28th 2005

Subject: Re: E unum pluribus From: Yann To: Pancho Villa Date Posted: Tues, May 31, 2005 at 05:46:03 (EDT) Email Address: Not Provided Message: Is this article by The Economist (and its arguments against the EU constitution, in general) really convincing?

Subject: Re: E unum pluribus From: Pancho Villa To: Yann Date Posted: Tues, May 31, 2005 at 08:29:29 (EDT) Email Address: nma@hotmail.com Message: Cher Yann, Au début, un enfant en apprenant ŕ marcher parfois trébuche, non? Et bien lŕ, il a trébuché. Mais il se relčvera, re-trébuchera, un jour marchera, apprendra ŕ courir, et deviendra (faudra faire gaffe ŕ la phase pré- et post- pubertaire) un adulte. (Faut laisser le temps au temps)

Subject: Class Antagonism in the Black Community From: Emma To: All Date Posted: Sun, May 29, 2005 at 18:15:03 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/opinion/29sun3.html A Short History of Class Antagonism in the Black Community By BRENT STAPLES Bill Cosby spawned a cottage industry among opinion writers when he ascended a podium in Washington last year and harangued inner-city parents for doing too little to educate their children. He threw salt in the wound by saying those parents were spending too much on expensive sneakers and not enough on books. Those brief remarks have continued to reverberate through the court of public opinion. Conservatives are hailing Mr. Cosby as the tough love truth teller of the moment. Liberals have come close to describing him as a race traitor, as Prof. Michael Eric Dyson of the University of Pennsylvania recently pointed out in his incendiary book, 'Is Bill Cosby Right? Or Has the Black Middle Class Lost Its Mind?' Professor Dyson, who is known for rhetorical pyrotechnics, is fiercely critical of Mr. Cosby for what he sees as unfairly attacking the poor. But Mr. Dyson doesn't stop there. He also reaches into the past, attacking earlier members of the black elite for doing the same thing. Professor Dyson is at least aware that class conflict in the black community goes back to the very beginning. The most striking thing about the discussion that has followed the Cosby comments is the extent to which even well-educated Americans have been surprised to learn that class antagonism exists in the black community at all. This entrenched ignorance about black life was a long time in the making, and is only now being dislodged. Americans no longer bat an eye when a black actor portrays a surgeon, a chief executive or even a president of the United States. It was not so long ago, however, that black actors who could find work at all were largely limited to playing criminals, servants and simpletons, roles that confirmed the doctrine of black inferiority. Sidney Poitier was the exception, in movies like the one that cast him as a learned psychiatrist treating white patients. These movies were seen as groundbreaking, even in the North, because they offered black characters who were superior intellectually and in class terms to the whites they encountered on screen. But these glimpses of the black elite on film were not sufficient to counteract the race message that emanated from the American cultural apparatus through most of the 20th century. That message portrayed black Americans almost exclusively as ill-educated and poor, and argued by omission that the black elites and intelligentsia did not exist. Thus misinformed, the nonblack world came to think of the black community as a socially homogenous zone where class antagonisms did not exist. It should surprise no one that black elites pressed into close contact with the poor were often more class-obsessed and more condescending toward the commoners than their white counterparts. White elites, after all, could escape the poor by packing up and moving. The black elite would make its getaway when the walls of segregation came down. But for the first half of the 20th century, black doctors, dentists, lawyers and teachers often had to carve out enclaves in the areas set aside for blacks in cities like Philadelphia, Washington and Baltimore. Class was trickier in the black world, and not just because of physical proximity. The early black elite started and led the civil rights movement, which involved making common cause with the lower classes. But, as might be expected, the black upper classes took elaborate measures to insulate themselves from too much contact with 'the wrong kind of people.' This meant attending the right churches and joining the right clubs, some of which judged potential members through a complex set of criteria that often included class, education and skin tone. Black-against-black class barriers were particularly byzantine in Washington, which was the seat of a hypereducated black elite that was known as 'the colored 400.' As the historian Constance McLaughlin Green wrote in 'The Secret City,' her famous history of class-obsessed black Washington: 'Whites [who were] prone to think Negro social distinctions absurd lost sight of the obvious truth that the cultivated Negro had no more in common with the lower-class black than the white society leader with the white ditchdigger.' The elites enrolled their children in tony schools, where possible, and in childhood social organizations like Jack and Jill, where they learned public service and encountered their peers. The elites summered in black enclaves in Oak Bluffs on Martha's Vineyard and Highland Beach, Md., where the poor could not easily follow. To avoid segregated hotels and second-class treatment, they lodged in one another's homes when they visited other cities. This version of black life was shut out of the white press, which had little interest in black faces until they landed in a perp walk. The black community, however, kept tabs on the goings-on among those in the upper crust by voraciously reading the magazines and newspapers that made up the Negro press. The Pittsburgh Courier, The Baltimore Afro-American and The Chicago Defender offered black political news from Washington and abroad. But the Negro press specialized in society news that covered high-toned banquets and literary teas. In these ways, the black elites served the same basic functions as their white counterparts. They produced the literary class, led social movements and provided life examples for the upwardly aspiring poor. But they were often ferociously intemperate toward the poor. Comments like Mr. Cosby's would not have been at all out of place in the salons of the black elite in the 1940's or 50's or even more recently. That some of these people also adopted frankly bigoted views of the poor may be distasteful, but it is indisputably true. That the truth is finally out represents an important signpost along the way to a realistic discussion of race.

Subject: The China Scapegoat From: Emma To: All Date Posted: Sun, May 29, 2005 at 16:13:52 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/opinion/29kristof.html The China Scapegoat By NICHOLAS D. KRISTOF Beijing The most important diplomatic relationship in the world is between the U.S. and China. It's souring and could get much worse. Alas, the U.S. is mostly to blame for this. And the biggest culprit of all is the demagoguery of some Democrats in Congress. There are plenty of legitimate reasons to be angry with China's leaders, but its trade success and exchange rate policy are not among them. The country that is distorting global capital flows and destabilizing the world economy is not China but the U.S. American fiscal recklessness is a genuine international problem, while blaming Chinese for making shoes efficiently amounts to a protectionist assault on the global trade system. In fact, China's pegged exchange rate has brought stability to Asia, and the Chinese boom has tugged Japan out of recession and increased prosperity worldwide. In recent years, China has supplied almost one-third of the growth in the global economy (measured by purchasing power), compared with the 13 percent that came from the U.S. Moreover, the U.S. has a history of offering Asia economic advice that proves awful. U.S. pressure helped produce Japan's disastrous bubble economy and aggravated the 1997-98 Asian financial crisis. So when American officials urge an adjustment in the yuan exchange rate, the Chinese should keep a hand on their wallets. Over the last five years, President Bush has done an excellent job in managing relations with China - it's one of his very few successes in foreign policy - but lately he has engaged in protectionism. This month he reimposed quotas on certain Chinese textiles, and the Treasury warned China that it had better adjust its exchange rate or else. Mr. Bush abandoned his principles because he was under attack from Democrats waving the bloody shirt of lost jobs. Sure, China's cheap yuan has cost us manufacturing jobs - but it has also led to a flood of Chinese capital to America, keeping interest rates low. If we blame China for lost American jobs in making shirts, we should credit it for new American jobs in banking and construction. Americans are also unfair in accusing China of not stopping North Korea's nuclear program. The reality is that the North Koreans don't listen to the Chinese about anything, and many on each side look down on the other. Privately, some Chinese dismiss the North Koreans as 'Gaoli bangzi' or Korean hillbillies. And fortified by a bit of liquor, North Koreans denounce Chinese as unscrupulous, money-grubbing traitors. Whenever I meet North Koreans, I tell them that the Chinese government doesn't like me - and my status soars. China has been pushing hard in the last two years for a negotiated solution to the North Korean crisis, and it at least has a coherent policy on North Korea. That's more than you can say for the Bush administration. One of the biggest risks for U.S.-China relations is the - very outside - chance that President Bush will order a military strike on the North Korean nuclear complex at Yongbyon. Most experts say that the resulting radiation leakage would probably not harm nearby countries, and in any case South Korea and Japan would be more at risk than China. But any hint that radiation had reached the Chinese coast would provoke anti-American fury across China. There's a third big danger for U.S.-China relations, and this one is Beijing's fault: China's schools teach hatred of Japan, resulting in last month's street demonstrations in which Chinese protesters screamed slogans such as 'Japanese must die.' The next act in the drama will unfold at sea. Japanese ships may start exploring disputed waters for oil and gas in the late summer or fall, perhaps with military escorts. China's leaders will then be under tremendous popular pressure to send China's own military vessels to block what Chinese will see as an armed Japanese incursion. And then Japan will ask the U.S. for help under the U.S.-Japan security treaty. ... In the past, President Jiang Zemin protected the U.S.-Chinese relationship. But many Chinese scorned him as 'qin Mei,' or soft on the U.S. The new president, Hu Jintao, seems much less likely to go out on a limb to preserve good relations with the U.S. So it's time for Americans to take a deep breath. Poisonous trade disputes with China will only aggravate the risks ahead, strengthen the hard- liners in Beijing and leave ordinary Chinese feeling that Americans are turning into China-bashers. Sadly, they'll have a point.

Subject: How Should We Value REITs? From: Terri To: All Date Posted: Sun, May 29, 2005 at 16:01:29 (EDT) Email Address: Not Provided Message: http://flagship4.vanguard.com/VGApp/hnw/FundsHoldings?FundId=0123&FundIntExt=INT Whatever do these numbers mean? The Vanguard REIT Stock Index has a price earning ratio of 38.8, a return on equity of 9.1, and an earnings growth rate of -5.5%. The 4.06% adjusted dividend is about the lowest ever recorded. These numbers make absolutely no sense to me. What am I missing about valuation? There surely seems to be a speculative climate for homes in selected American regions, but I wonder if that extends to commercial real estate as well so I thought to use the REIT Index as a gauge. The earnings growth rate extends over 3 years and is heavily negative at -5.5%. So REIT earning have been slowing; actually the earning growth rate has been negative for more than 4 years, but REIT gain in price. How curious.

Subject: Re: How Should We Value REITs? From: Pete Weis To: Terri Date Posted: Sun, May 29, 2005 at 17:50:58 (EDT) Email Address: Not Provided Message: The following article appeared in MSN money near the end of 2002. People who deny there is a bubble will say the message in this article was clearly wrong since REITS are still highflyers here in 2005. Those who say there is definitely a bubble will say that the bubble simply has gotten bigger and will result in a bigger bursting. MSN Money: The Speculator 9 reasons REITs are about to get rocked Real estate trusts beat the market in 2000 and 2001, but a storm is gathering that will blow that trend away. Here's how we'll play it. By Victor Niederhoffer and Laurel Kenner What emerged was pent-up supply. It came out of left field. -- Justin Stein of Grubb & Ellis, quoted in Crain’s about the unexpected softness of the Manhattan real estate market in 2002 Somber black storm clouds are gathering over real estate investment trusts (REITs). REITs gained 26% in 2000 and 16% in 2001. The margin of superiority over the S&P 500 ($INX) -- some 100 percentage points over the two-year period -- was by far the greatest in at least 30 years. The Y2K numbers are particularly troubling because there is a strong tendency for large gains in REITs in any one year to be followed by below-average performance two years later. We consequently are planning to buy some S&P 500 shares and to take a small short position in five REIT stocks to take advantage of the divergence. We see a vast number of early warning signs that REITs are heading for a decline. Here are eight that are particularly troubling to us: Vacancy rates. National and local vacancy rates in the office, apartment and hotel sectors are expected to rise sharply in 2002. The rise will put pressure on rental rates. Already, tenants are negotiating better deals. The best research we know of on real estate cycles, a truly comprehensive PricewaterhouseCoopers study based on 20 years of prices for every major metropolitan statistical area broken down by type -- i.e., office, apartment, industrial, residential, hotel and warehouse -- indicates that rising vacancy rates are the most accurate signals of a decline in prices. And vacancy rates are rising, especially in commercial real estate such as offices and apartments. (Note that we're not talking about direct investment in single-family homes, which tend to hold their value barring a giant run-up in interest rates or a regional economic downturn, such as what defense cuts did to real estate in California and Connecticut in the early 1990s.) Downgrades. More and more well-connected, highly respected firms with every reason to be as friendly as possible to the REIT industry are beginning to lower their opinions of real estate’s prospects in 2002. Morgan Stanley analysts were quoted Dec. 17 in The Wall Street Journal as seeing “negative earnings momentum” and “no real catalyst for earnings expansion,” while Merrill Lynch, in a Dec. 19 research comment, saw “muted price appreciation” in “this late-cycle sector.” If brilliant analysts covering the industry full time, with many tempting reasons to be bullish at all times, are this cautious, we can almost see the lightning ready to strike. Fuzzy accounting. A recent report from Green Street Advisers, the most scholarly and studious firm of all we have encountered in the field, found evidence that REIT funds for operations, the measure most investors look at, were lower in 2001 than in 2000, but that companies are obfuscating the picture with non-recurring write-offs and extraordinary charges -- an all-too-familiar practice these days. (A REIT is a special corporate form that provides a lucrative tax break: it pays no income taxes so long as 90% of its taxable income is distributed to shareholders as dividends.) Popular books. The hottest growth area in the financial publishing industry is real estate. 'Investing In Real Estate' by Gary Eldred and Andrew McLean and 'J.K. Lasser’s Real Estate Investing' by Michael Thomsett are selling particularly well. Book sales tend to be a lagging indicator of what’s likely to make money. Recall the rash of day-trading and Dow 40,000 books that proliferated at the millennium, just before the stock market’s debacle. Slow economy. Real estate is driven by income and employment. We are in a recession now, but it hasn’t affected real estate...yet. S&P 500 membership. The arbiters of Standard & Poor’s, after intensive lobbying from the industry, added three REITs to the S&P 500 Index at the end of 2001 and beginning of 2002: Equity Office Properties (EOP, news, msgs) on Oct. 10; Equity Residential Properties (EQR, news, msgs) on Dec. 3; and Plum Creek Timber Co. (PCL, news, msgs) on Jan. 16. As our colleague and editor Jon Markman has shown, stocks that are removed from the index outperform the ones that are added. (Equity Office and Equity Residential are the top two REITS ranked by market cap. We should note both are controlled by Sam Zell, the Chicago investor famed for swooping in on distressed real estate.) Doc Greenspan. The venerable Fed chairman, who saw irrational exuberance in the stock market in December 1996 at Dow 6,437 and excessive inflation in late 2000 when he spearheaded repeated increases in the federal funds rate, is now sounding the horn for the great stability of real estate prices. (The inflation rate in the last quarter of 2000 was actually 3.4%.) He is pleased that the wealth effect from rising residential real estate values has cushioned us from the violent declines in consumer spending often triggered by layoffs and the drop in the stock market. Why does this remind us of a dying man clutching at straws? Luck. REITs have had an excess of good luck recently. In July 2001, privately held Silverstein Properties, one of New York’s biggest property owners, beat our three top office REITs -- Vornado Realty Trust (VNO, news, msgs), Brookfield Properties (BPO, news, msgs) and Boston Properties (BXP, news, msgs) -- to buy the Twin Towers of the World Trade Center for $3.2 billion in the city’s largest real estate transaction ever. It is regrettable that good luck tends to be mean-reverting, with expectations for future good luck remaining constant regardless of the past path. But stock market values over time tend to reflect good luck’s continuity. And one more reason… All that we need to add the final nail to the coffin, as far as we’re concerned, is a cover story in a major magazine extolling REITs’ great future prospects and current dividend yields. Such an article did appear in the Dec. 29, 1997, issue of Forbes, titled: “The Unstoppable REIT Juggernaut. Forget Industrial Stocks. For the next few years, real estate is where the action will be.” There was action, but not the sort contemplated by Forbes; $100 invested in industrial stocks at year-end 1997 resulted in a final sum of $150 by the end of 1999, some 100% higher than the same sum invested in REITs. This despite the many advantages of REITs cited in the article, including vastly improved earnings visibility, cheaper cost of capital, diversification and the high likelihood of takeovers. The article concluded with words just as true today as when written four years ago: “Could something go wrong and stop the REIT juggernaut? Long run, it is unstoppable, and big fortunes are being -- and will be -- made here.” But not by us in 2002. There is one overriding positive for REITs that everyone who’s bullish on the industry holds out as a rudder. Dividends of REITs are currently running at 7% a year, and those dividends have managed to increase for those that survived hard times through the economic cycle. These dividends obviously look very good compared with alternative yields of about 1.5% on stocks and 2% on Treasury bills. And yet, these same arguments on REITs held in 1987 when REITs underperformed the S&P 500 by some 50%. The dividend yields from REITs are consistently above reported funds from operations. Thus, they represent to us returns on capital, and these, as we know from our personal and financial lives, cannot continue without ultimately paying the piper. Excessive optimism would be troubling enough in any industry. But in real estate, the sector with the most notorious boom-and-bust cycle of all, it’s terrifying. We nevertheless resorted to our trusty pencils and backs of envelopes to support or refute our theory before we could consider unloading it on our faithful readers. Happily, the test bore us out. We found, going back to 1971, a --0.35 correlation between the return in REIT prices in one year and the change two years later. Thus, the change in 2000 inversely predicts the change in 2002. The chart below illustrates the terrible story of cyclicality just in the last 10 years. Results show total return, with reinvested dividends and capital appreciation.

Subject: Thinking of Value From: Terri To: Terri Date Posted: Sun, May 29, 2005 at 16:24:02 (EDT) Email Address: Not Provided Message: The yield on the long term Treasury bond is 4.07%, while the dividend yield on the Vanguard Utility Index Fund in 3.41%. The dividend yield is taxed at a preferred rate to bond interest. Then, if we think about holding an asset for 10 years, would we choose to hold the Utility Index or a long term Treasury?

Subject: Paul Krugman Replies to a Bully From: Emma To: All Date Posted: Sun, May 29, 2005 at 15:40:49 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/weekinreview/29publicletters.html?pagewanted=all In Daniel Okrent's parting shot as public editor of The New York Times, he levied a harsh charge against me: he said that I have 'a disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults.' He offered no examples of my 'disturbing habit,' and maybe I should stop there: surely it's inappropriate for the public editor to attack the ethics of one of the paper's writers without providing any supporting evidence. He responded to my request for examples with criticisms of specific columns. Those criticisms were simply wrong: in each of those columns I played entirely fair with my readers, using the standard data in the standard way. That should be the end of the story. I want to go back to doing what I have been doing all along: using economic data to inform my readers. PAUL KRUGMAN Princeton, N.J., May 24, 2005

Subject: Mozambique: Africa's Rising Star From: Emma To: All Date Posted: Sun, May 29, 2005 at 14:07:12 (EDT) Email Address: Not Provided Message: http://travel2.nytimes.com/2005/05/29/travel/29mozam.html?n=Top/Features/Travel/Destinations/Africa&pagewanted=all&position= Mozambique: Africa's Rising Star By JOSHUA KURLANTZICK AS the heavy rain pelted the windows of the taxi, Julio, my regular driver in Maputo, the capital of Mozambique, hardly seemed worried. He calmly piloted the cab through the flooding streets, as water rose above sidewalks and spilled onto people's front lawns. Approaching my hotel, near the beach in a low-lying area of the city, the rain picked up, and soon I felt my feet getting wet. I looked down, and saw rain coming through the bottom of the taxi, like a boat taking on water. Still, Julio wasn't concerned. 'No problem, no problem,' he said, and continued chatting on his mobile phone while driving. At that moment, the car stalled, leaving us stuck in the middle of a waterlogged street. 'No problem,' Julio said again. And he was right. Within five minutes, a group of men had emerged out of nowhere to help us push the car to the side of the road. They expertly tipped the cab on its side, letting the water run out the bottom like a child's toy. Julio smiled and shrugged, opened a big bottle of fruit juice, and lay down in his car until the rain stopped. Julio clearly had absorbed the laid-back Mozambique ethos. After nearly two decades of civil war, the country, a former Portuguese colony - and home to over 1,500 miles of undeveloped Indian Ocean beachfront, some of the finest diving and deep sea marlin fishing in the world, and a unique Afro-Iberian-Brazilian culture - is rediscovering its place as one of Africa's most alluring, and most relaxing, tourism destinations. This is, in fact, the country's second chance to get tourism right. Mozambique had one brush with mass tourism before - in the 60's and early 70's, before the decades-long war between the government and guerrilla insurgents, and then civil war afterward, which made this country off limits to most tourists. Back then it was a playground for white South Africans, thousands of whom would flock here on low-cost package vacations, rarely spending much money in the country itself. This time around, local travel specialists say the tourism ministry is rebuilding the infrastructure and focusing on the development of intimate resorts, hoping that a more-well-heeled class of traveler will follow. 'We need to promote Mozambique more as a boutique destination,' Sylvia Campos, a veteran Mozambican travel operator, told me over thimble-sized cups of European coffee at the Girassol Bahia, a boutique hotel in Maputo. 'We are trying to position ourselves for high-end tourism,' she said. 'We need good investments that will conserve the cultural landscape.' The Girassol is one of many new addresses in Maputo, which has witnessed a building boom since the civil war ended in 1992. When I arrived in Maputo in February to begin a weeklong trip to Mozambique, the city's broad, Iberian avenues, wide, zocalo-like public spaces, and new skyscrapers were on a much larger scale than my previous destination, Lilongwe, the tiny capital of neighboring Malawi. But Maputo, population roughly a million, still feels like a small town. At stoplights, Julio would frequently encounter friends in nearby cars; at the Girassol, Sylvia ran into one old pal after another, and was constantly getting up to kiss cheeks. And unlike residents of many African cities, which empty at night, Mozambicans crawl their vibrant city at all hours - snacking at sidewalk stands offering enormous yellow mangoes and papayas and popping into hundreds of bars for some of the Portuguese-language Afro-Brazilian funk that wafts out into the streets. All this activity makes Maputo one of the safer capitals in Africa - certainly safer than the wealthier, but more crime-ridden, cities of South Africa. Even heavy afternoon rains during monsoon season dissipate by early evening, hardly crimping any activity. On my days in Maputo, I would spend mornings wandering up from my hotel, the Holiday Inn, to the downtown, perched on a bluff overlooking the water - the city sits both on the Indian Ocean and at the confluence of three rivers. Walking along Avenida Julius Nyerere, a main drag, I passed strings of restored Iberian-style mansions, all pastel pink and yellow and fuchsia, with wide, wrap-around wrought-iron balconies, roofs of brown South American tile, and gardens of palm fronds and flame trees. It was like an African St.-Tropez, complete with exquisitely coiffed matrons in absurdly high heels walking ridiculously small white dogs. When I got lost, I could easily find directions; though Portuguese is the primary language, many young Mozambicans speak English. Occasionally, a structure would stand out amid the warren of Portuguese buildings: the totally restored colonial Polana Hotel, a temple in white, with white-suited waiters serving simmering white lattes inside a shimmering white building; or the towering main cathedral, completed in 1944 by Portuguese authorities who reputedly grabbed teenage girls and checked if they were virgins. If the girls weren't, they were counted as prostitutes and employed as manual laborers - a decision that undoubtedly didn't help Portugal's image in Maputo. Inside many of the older structures, enterprising Mozambicans have built gelaterias, cafes and restaurants featuring upscale versions of Mozambican food, one of the world's original fusion cuisines. Because Mozambique was influenced not only by Portugal and its own African roots but also by Arab traders and migrants from Portugal's Asian and Latin American colonies, Mozambique's cosmopolitan cuisine mixes Brazilian spices, Asian styles including Indian, and Portuguese and African produce -Portuguese cod steak and potatoes, local seafood and tropical fruits. Restaurants in Maputo showcase this fusion with flair; at each place recommended by locals, the food seemed to get more sumptuous. One night, plates of seafood tapas at Miramar, a seaside cervezaria that attracts hip young Mozambicans in short skirts and tight slacks, their mixed skin tones a sign of the integration of Africans and European and Brazilian migrants. The next evening, an enormous fish dinner at Costo del Sol, a local institution famous for its footlong prawns, grilled with Portuguese spices and piri-piri, a fiery African chili sauce. In Mozambique, the war can seem like an age ago, though there are reminders, like the national flag; Mozambique hasn't changed the flag's insignia, which still bears an assault rifle crossed with a shovel. One afternoon, I poked into the National Museum of the Revolution, which chronicles the revolt against Portuguese rule and subsequent war between the Socialist government and rightist guerillas through the 80's, ending in 1992. Inside the dimly lighted structure, a lone guard dozed in her chair. I wandered the musty exhibits - endless paeans to 'O Socialismo' and grainy photos of Mozambican leaders with Fidel Castro. 'Anyone been here today?' I asked the guard, who'd woken up. 'No, no one,' she replied, before promptly nodding off. My last evening in Maputo, I stayed in the new Catembe Gallery, a model for Mozambique's boutique tourism. Across a narrow stretch of water from downtown, in a fishing village near a local elephant preserve, Konraad Collier, a Belgian, had redecorated an old mansion, furnishing the rooms with exquisitely detailed local weavings, and adorning the walls with paintings by local artists. The tiny hotel - it housed less than 30 guests - had an intensely personal feel, with staff hanging out with guests at the bar late into the evening. 'We want to have a total experience for guests that makes the hotel feel like their home,' Konraad said. The next morning, I drove north along the narrow coastal highway, to spend four days at Barra, one of the Mozambican beach spots just beginning to be developed. Rather than braving the driving myself - the travel industry is still constrained by Mozambique's potholed roads - I'd hired Pedro Pinto of the local tour company Mozambique Adviser. Pedro's family had come to Maputo from Portugal in the early 1960's, and stayed after Mozambique's independence in 1975. As Pedro piloted our four-wheel-drive vehicle, we zoomed through the rugged coastal landscape. Outside Maputo, deep green fields of sugar cane dotted with thatched huts and jacaranda trees gave way to small markets stocked with cassava and the mildly alcoholic fruits of local cashew nut plants. We sucked the cashew nut fruits dry, wincing as their mild tannins dried our mouths. As we neared the beach, we passed both mosques and groups of Christians dressed in white, holding hands and praying in circles under palms along the side of the road. By sunset, we had arrived at the province containing Barra, the place where Portuguese explorer Vasco da Gama first landed in Mozambique, in the late 15th century, and proclaimed it 'Land of the Gentle People.' Like Catembe, my beach hotel, the South African-run Barra Lodge was a new boutique operation, much nicer than the bungalows on nearby beaches. The owners had tastefully decorated the place with local wood and Mozambican carvings, staff members remembered my name, and I even had a personal waiter, Teles, who served nearly all my meals and taught me Mozambican slang. On the other hand, Barra, set between the ocean and a freshwater bay, lacked some important amenities, like easily masterable bug netting. My first night, mosquitoes devoured my legs, leaving me looking like a chicken pox victim. (I soon learned how to use the netting.) Even so, Barra Lodge is already spawning imitators. Up the Mozambican coast, in the Bazaruto archipelago, South African and Saudi investors have recently opened boutique lodges offering exquisite diving, and people were buying up beach land to build private homes. Outside my room, Barra's attractions were obvious. Mozambique offers some of the finest diving of any country that borders the Indian Ocean, in part because the long war limited the fishing industry, preventing commerce from destroying fish and coral and fouling the water's visibility. And in comparison to many Asian beaches, where divers must sail miles from shore, in Barra the marine life was easily accessible and dives were cheap - less than $80 a dive. After just a 10-minute boat ride, I snorkeled off a nearby reef, where coral shaped like brains and razors retained their natural bright blues and reds, not yet worn into a dull brown. Two-yard-wide manta rays, giant eels, barracuda and schools of tiny, fluorescent blue pepperfish swam below. Enormous clams the size of a human being blended into the coral, until they slowly opened and closed their mammoth mouths. In the evenings, when the blazing sun began to set, I'd stroll along the beachfront. Over miles of white and ocher sand, I never saw more than two or three others, along with occasional fishermen in dugout canoes. Barra reminded me of Southeast Asia before the development of big resorts like Phuket. On my last evening in Mozambique, I strolled out to Barra Lodge's beachfront bar, where chefs were barbecuing piles of freshly caught prawns, kingfish and crab, and the waiters were bopping to Portuguese funk and passing around a local version of a mojito, a drink blending Mozambican cane sugar and fruit liquor. On the water, in the distance, dhows sailed around the tip of Barra beach, taking the last passengers of the day home. Two Mozambican women in long dresses and floral-patterned headscarves, with pots of fresh fish balanced on their heads, wandered in from the beach. With the full moon shining through wispy cirrus, and ocean breezes blowing in, I loaded plate after plate of seafood, tempted by the freshness of the prawns and crabs. After an hour of eating, I thought I was full. Then Teles brought over Mozambique's most famous fusion dish, curried crab - local crustaceans lightly stir-fried and then marinated in a thick red curry, with hints of Goan and Brazilian spices Portuguese curried crabs, in a rich, thick gravy. I reached for more.

Subject: Forecasting Federal Reserve Policy From: Emma To: All Date Posted: Sun, May 29, 2005 at 14:03:09 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/business/yourmoney/29fede.html?pagewanted=all An Indicator That's Almost as Good as a Time Machine By ROBERT D. HERSHEY Jr. AN investor's fantasy might be to glimpse stock or bond market prices for a trading session yet to come, perhaps next month or in 2010. Sorry. That kind of prescience can't be arranged. But there's another forward-looking resource, albeit less certain, to aid in financial decision-making, one that has the virtue of being not only readily obtainable but free as well. It is the market's up-to-the-minute forecasts on the future monetary policy of the Federal Reserve. Even beginning investors know the Fed's importance, because the interest rates it influences affect the financial markets, the economy - from housing to incomes to tourism - and even national elections. Knowledge of the Fed's likely moves may help you to decide whether to use an adjustable-rate mortgage or a conventional one, whether to shift money into stocks or bonds, and even which kinds of stocks or bonds to buy. The course of Fed policy is foreshadowed by various market indicators, the most revealing being the price of futures contracts on federal funds - overnight loans among financial institutions whose rate the Fed itself closely controls. The futures contracts send clues about what is usually the most important single issue facing the markets: What will the Fed do next? And the specific question on everyone's mind these days is this: Is the Fed, which has been raising rates for nearly a year and has five more policy meetings scheduled for 2005, about finished? The answer, judging from the consensus reflected in the futures contract for December, is: We're getting close. 'The funds market is telling us they're going to pause at at least two of these meetings,' said John Augustine, chief investment strategist at Fifth Third Asset Management in Cincinnati. Mr. Augustine points to the current federal funds rate of 3 percent and notes that a quarter-point increase at each meeting - the pattern that has lifted the rate in eight steps from 1 percent in mid-2004 - would put it at 4.25 percent by year-end. The December contract, however, is now trading at 3.72 percent. He said he believes that the Fed is likely to stop its credit-tightening in meetings toward the end of the year. These contracts, settled on the basis of the average rate for federal funds during the month, are traded on the Chicago Board of Trade. The August contract ended one recent session at 96.60, meaning that the market believed the funds rate for that month would be near the difference between that figure and 100, or 3.40 percent. You can follow the action online at www.cbot.com by clicking on '30-day fed funds.' Sometimes, analysts portray their readings of funds futures prices as odds or probabilities. For example, if you assume that the Fed will raise rates by a quarter point at both the June and August meetings, bringing the level to 3.50, then a reading of 3.72 would imply there was about an 80 percent chance of an increase at the next meeting, in September - 3.72 being about 80 percent of the distance from 3.50 to 3.75. Not surprisingly, the shorter the time period, the more accurate these forecasts have turned out to be. 'So far as predicting the funds rate over the next several months, the federal funds futures dominate other instruments,' said Brian P. Sack, senior economist for Macroeconomic Advisers in Washington. Investors can use such readings of market expectations as a benchmark for evaluating the general investment climate as well as predicting movements in the relationship between short- and long-term interest rates. If, for example, you think the consensus is correct for modestly higher interest rates this autumn, and you have not already made an adjustment, you may want to cut back on your fixed-income investments. If you're in real estate, a conventional mortgage may seem a better bet than an adjustable one. If you are convinced that the Fed will stop raising interest rates by early fall, you may be more comfortable buying longer-term bonds. The stock market implications are tricky. Rising rates are generally not good for stocks, but if investors become confident that the Fed has inflation under control, they could start pouring money into stocks, setting off a rally. An optimist may want to buy metals or other industrial stocks, while a pessimist may want to consider food or tobacco or other so-called defensive stocks. Of course, the futures contracts merely reflect current market sentiment, and if you're a contrarian who thinks that the Fed may have already made its last move, you may want to lock in today's rates and load up on bonds or certificates of deposit. In any event, knowing the consensus is a good starting point. 'The federal funds rate serves as an anchor for the financial system and other interest rates key off its current level and expected changes in it,' said a 2001 study by Raymond E. Owens and Roy H. Webb of the Federal Reserve Bank of Richmond. 'Accurate predictions of changes in the federal funds rate are, therefore, of great value to persons engaged in a wide variety of business activities.' Although Alan Greenspan, the Federal Reserve chairman, and other Fed officials tend to speak opaquely about monetary policy, the central bank since 1994 has increasingly managed to guide the markets along an intended path without surprises. Thus its formal statements after each of its eight meetings a year are scrutinized for the smallest nuance of intentions, currently whether the Fed sees itself continuing to nudge rates higher at a 'measured' pace. The next meeting is June 29-30. THE funds market can also move sharply on unexpected news about the economy. For example, after the government announced on May 6 a surprisingly big increase in payroll jobs for April, the October funds futures contract jumped to 3.59 percent from 3.49 percent in just a half-hour. 'There had been hopes that the Fed might be able to take a breather' in its persistent credit-tightening since mid-2004, said Ward McCarthy, managing director of Stone & McCarthy Research Associates in Princeton, N.J. 'The April employment data, I think, dashed a lot of such hopes.' But while the funds rate is the best predictor in the short run, Mr. Sack and other researchers have found that for periods longer than six months, other market instruments, including Treasury bills, display comparable predictive power. For this, Macroeconomic Advisers favors eurodollar futures, which trade very actively on the Chicago Mercantile Exchange and pay out at quarterly maturities based on the three-month London interbank offered rate, or Libor. Movements in Treasury bills can be misleading because yields can be depressed by a panic-driven flight to quality, analysts said. For the past year, there have usually been just two realistic choices for the policy makers - raising the funds rate by either one-quarter of a point or one-half a point. Sometimes there is a third choice, and when the situation seems complex, analysts at times seek supplementary information from other markets, such as options on funds futures, a relatively new and underdeveloped contract with rich potential as a provider of information. These options are also traded on the Chicago Board of Trade. The main complication in deriving the expected policy path from the funds futures rates is adjusting for the premiums that investors require for bearing the risks of going long or short the contract. The size of this premium, which needs to be subtracted from the futures rate, can be big enough to lure speculators with no firm view on the direction of Fed policy. (A study by the National Bureau of Economic Research last year found that the Fed itself makes only a minimal adjustment of just six-hundredths of a point for the premium on a six-month futures contract. That compares with an adjustment of 25 hundredths of a point that the bureau's researchers consider more accurate.) Even without refinements, knowing the likely course of policy is useful, with movements in funds futures especially revealing in reacting to fresh developments. 'Investors' exposure is not so much to what the Fed does,' Mr. Sack said, 'but to unexpected things the Fed does - to changes in the market's expectations.'

Subject: Gaining Health Insurance? From: Emma To: All Date Posted: Sun, May 29, 2005 at 13:50:05 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/national/29insure.html?pagewanted=all Health Leaders Seek Consensus Over Uninsured By ROBERT PEAR WASHINGTON - At a time when Congress has been torn by partisan battles, 24 ideologically disparate leaders representing the health care industry, corporations and unions, and conservative and liberal groups have been meeting secretly for months to seek a consensus on proposals to provide coverage for the growing number of people with no health insurance. The participants, ranging from the liberal Families USA to the conservative Heritage Foundation and the United States Chamber of Commerce, said they had made progress in trying to overcome the ideological impasse that has stymied action on the problem for eight years. The group, which first came together last October, has not endorsed any specific plan, but has discussed a range of options, including tax incentives for the purchase of insurance, changes in Medicaid to cover more low-income adults and the creation of insurance purchasing pools at the state level. 'This effort holds as much promise as any I've participated in over the last decade, probably more,' said Kate Sullivan Hare, the executive director of health care policy at the United States Chamber of Commerce. Historically, such efforts have failed because of profound disagreements over the proper role of government. The group is far from any final agreement, but persists in seeking common ground, even as the problems of the uninsured have been eclipsed on Capitol Hill by Social Security and other issues. The group also includes top executives from AARP, the A.F.L.-C.I.O., the American Hospital Association, the American Medical Association, America's Health Insurance Plans, the Blue Cross and Blue Shield Association, Johnson & Johnson, the National Conference of State Legislatures, the National Governors Association, Pfizer and the Service Employees International Union. The group's overarching goal is to agree, by the end of this year, on proposals that expand coverage to as many people as possible as quickly as possible. By meeting in secret, the group has tried to shield itself from political pressures. Some of the proposals under discussion could lead to increases in federal spending or regulation, at a time when the government already faces large deficits and Republicans generally oppose further expansion of government. Though federal policymakers talk little about the issue these days, the problems of the uninsured have been gaining urgency among people who provide and pay for health care, including employers. Increasingly, business executives say, health care costs hurt the global competitiveness of American companies. 'This is a crisis,' General Motors said in its latest annual report, noting that its health costs - $5.2 billion last year - had 'a tremendous impact' on its profitability. The Census Bureau says that 45 million people lacked health insurance in 2003, up by 1.4 million from 2002 and by 5.2 million from 2000. The National Academy of Sciences estimates that 18,000 adults die each year because they are uninsured and cannot get proper care. The number of uninsured may rise further as states like Tennessee and Missouri cope with soaring health costs by ending Medicaid coverage for tens of thousands of low-income people. Health policy has become a flash point of American politics, defining fundamental differences between Republicans and Democrats. The differences have widened since the collapse of President Bill Clinton's proposal for universal health insurance coverage in 1994. The latest quest for consensus grew out of talks between Ronald F. Pollack, the executive director of Families USA and Dr. William W. McGuire, the chairman of UnitedHealth Group, one of the nation's largest insurers. The 24-member group takes a pragmatic approach, members said, looking for incremental steps. 'People are uninsured for different reasons,' said Dr. Mary E. Frank, the president of the American Academy of Family Physicians and a participant in the talks. 'No one solution will work for everyone. We need different solutions for different groups of the uninsured.' E. Neil Trautwein, assistant vice president of the National Association of Manufacturers, said the consensus group was 'not biased in favor of big government solutions,' and assumed that health care would continue to be provided through a mix of private insurers and public programs. Mr. Trautwein said the talks reminded him of a medieval alchemist stirring together disparate and volatile ingredients. 'It could produce some wondrous proposal, or could blow sky-high,' he said. Members of the group acknowledge that cost could constrain their ambitions. They will retain budget analysts to estimate the costs of various options, from which their final recommendations will be selected. The group will present its recommendations to Congress and the Bush administration. Several members said they hoped to stick together and use their collective power to fight for the proposals. The group is applying lessons learned in the battle over the Clinton health plan. Members said they were listening carefully to one another, trying to build the trust. They are not trying to remake the health care system or guarantee insurance for every American through one big program, they said. The group is considering these options: ¶The federal government could require parents to arrange health insurance for their children up to a certain age, say 21. If the children were not eligible for public programs like Medicaid, the parents could obtain tax credits to help meet the cost. ¶If an employer does not offer health benefits to employees, the workers could designate amounts to be withheld from their paychecks, along with taxes. These amounts would eventually be forwarded to insurers to pay premiums. ¶The federal government could provide tax credits to low-income individuals and families or small businesses to help them pay for insurance. The full amount of the credit would be sent directly to the insurer. ¶Medicaid could be expanded to cover any adult with income below the official poverty level (about $9,600 for an individual). Each state would decide for itself whether to do this, and the federal government would provide financial incentives for states to take the option. ¶The federal government would offer small grants to states to help them establish insurance purchasing pools. Individuals and small businesses could buy coverage through these pools. Asked what had prompted the initiative, Stuart M. Butler, the vice president of the conservative Heritage Foundation, said: 'It's a coalition built of frustration. True believers on the left and the right have been stymied on this issue.'

Subject: When the Appraised Numbers Don't Match From: Emma To: All Date Posted: Sun, May 29, 2005 at 13:32:43 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/realestate/29cov.html?pagewanted=all&position= When the Numbers Don't Match By WILLIAM NEUMAN AS real estate prices have soared in recent months, some buyers have found that the apartments they've agreed to purchase were appraised for less than the sale price - with often knotty consequences. Sometimes, the collision of inflated prices and deflated expectations so unnerves buyers that they look for ways to get out of a deal. Other times, they still want to go ahead but are forced to find more cash or more creative financing, because a low appraisal means they can't borrow as much in the form of a traditional mortgage. A bank that is financing a home purchase uses an appraisal to make sure the price being paid reflects the market value of the property, so that it could recoup its capital if the borrower defaults. In setting a value for a property, appraisers rely primarily on data from comparable closed sales, known as 'comps.' But in areas where prices have been rising rapidly, closed sales may represent an outdated snapshot of a market, taken several months earlier when prices may have been significantly lower. According to a market report prepared by Halstead Property, the average price for all Manhattan apartment sales that closed in April was 17 percent higher than the average for December. In many parts of the city, prices have climbed even more rapidly, and, especially in those areas, the prices on contracts being signed today can be expected to be significantly higher than recent closings. Chris Peters, an executive vice president at Prudential Douglas Elliman, who manages the firm's Chelsea office, said that when he decided to sell an investment property he owns in Astoria, Queens, he thought he'd have no difficulty conducting the sale himself. He signed a contract in April with a buyer who agreed to pay $850,000 for the three-family house at 31-32 42nd Street. But when the appraisal came in at $720,000 and his buyer walked away, he realized he needed help. He dropped the price to $799,000 and asked Virgil Cannatella, an Elliman broker in the neighborhood, to handle the sale. He reasoned that a local broker would know where to look for comparable sales to satisfy an appraiser, something he hadn't been able to do. Mr. Peters, who found a new buyer this month, said that when he bought the Astoria house three years ago for $460,000, the appraisal had come in low, but it had not bothered him. 'I didn't really care if it underappraised,' he said. 'But when people are paying the prices they're paying today, they want them to comp out.' Banks will typically provide a mortgage for up to 80 percent of a property's appraised value. There have been complaints in some parts of the country that banks are sometimes ill-served by appraisers who are too quick to place an inflated value on a property without adequate proof. That leaves the banks vulnerable if buyers default. Low appraisals present a different sort of problem, however, and in this case, it is often buyers and sellers who suffer. Sari Sardell Rosenberg, a senior mortgage consultant with the Manhattan Mortgage Company, said the impact of a low appraisal is often greatest on first-time buyers trying to buy smaller apartments with limited funds. One of her clients agreed this month to buy a large alcove studio in Chelsea for $510,000, but the appraisal came in at $490,000. Ms. Rosenberg had another appraisal company review the valuation to see if the first appraiser had missed some comps, but even then she was unable to get the number raised. If the apartment had been appraised at the sale price, her client could have borrowed $408,000, with $102,000 down. But with the lower appraisal, the amount he could borrow, based on 80 percent of the valuation, was cut to $392,000. That meant her client had to come up with another $16,000 in cash. Ultimately, he turned to family members, who helped him cover the shortfall. 'On these smaller apartments it's significant,' Ms. Rosenberg said. 'You have people who are really trying to squeeze themselves to buy an apartment and $10,000, $20,000, it really bites.' In today's highly competitive market, many buyers, under pressure to seal a deal before competing bidders beat them out, are willing to sign a contract without a financing contingency, which would allow them to walk away if an appraisal came in low and they were unable to get a suitable mortgage. Because of that, they may find themselves forced to stay in a deal despite a low appraisal. Buyers who want to proceed with a deal despite a low appraisal have three basic options. They can come up with the extra cash to bridge the gap, in effect putting more equity into the purchase. They can get what mortgage brokers call a piggyback loan, either a home equity loan or a second mortgage, to cover the shortfall. Or they can get a first mortgage for up to 90 percent of the appraised value if they agree to pay private mortgage insurance, or P.M.I., which has the effect of adding about half a percentage point to the rate they pay on their loan. Melissa Cohn, president of the Manhattan Mortgage Company, said that buyers most frequently prefer a mortgage with a piggyback loan, because the interest payments on both loans are tax deductible, while mortgage insurance is not. Ms. Cohn said that after a year of paying P.M.I., homeowners can ask their lenders to have their property reappraised. If their loan equals 80 percent or less of the new valuation, they will be allowed to stop P.M.I. payments, Ms. Cohn said. Catherine Massey and Matthew Freeby were prepared for a low appraisal when they agreed in March to pay $210,000 for a one-bedroom apartment in a co-op building at 312 Nagle Avenue, at 193rd Street, in Washington Heights. Their broker, Denise Rosner, a senior vice president at Bellmarc Realty, explained to them that prices in the neighborhood had been rising precipitously, and that another one-bedroom in the same three-building complex had sold last December for $48,000 less. But they had looked around enough to have a sense of the market and they felt they were getting a fair deal. So it came as no surprise when an appraiser valued their apartment at $200,000. 'We had talked out the scenario with Denise and our mortgage broker and we knew it was a possibility,' said Ms. Massey, a graduate student who will be attending New York University in the fall. They are moving from San Diego and her husband, a doctor, will be working at Columbia-Presbyterian Hospital. The couple had signed a contract without a financing contingency, and planned to buy the apartment regardless of what the appraiser said it was worth. But Ms. Massey and Dr. Freeby did not want to put down more cash, because they were concerned that a strain on their financial reserves might dissuade the co-op board from approving their sale. So they arranged for a single mortgage of $168,000, or nearly 85 percent of the appraised value, plus private mortgage insurance. Their initial monthly mortgage payments are $967.11. They will pay an additional $45 a month in P.M.I. They closed on their apartment last Wednesday. In many cases, a low appraisal is a function of point of view. 'The buyers are looking forward and the appraisers are looking backward,' said Bill Sheppard, a vice president at Brown Harris Stevens in Brooklyn. 'The appraisers are saying, 'What have things sold for in the last year?' The buyers are saying, 'Prices are going up like this; in order for me to get this house I have to bid above the asking price.' ' Mr. Sheppard represented the seller of a house in Prospect Lefferts Gardens in Brooklyn who accepted an offer in December for $885,000, more than $15,000 above the asking price. The appraisal, however, judged the value of the house at about $780,000. The buyer, who had a financing contingency in his contract, then asked the seller to come down in price, saying he'd be willing to split the difference between the price they had agreed on and the appraisal. The seller refused and put the house back on the market. In another deal in the same neighborhood, Mr. Sheppard said, a three-story, one-family brownstone went to contract for $890,000 after a bidding war drove the price up last summer. The appraisal came in at $800,000 and the buyer, who had a financing contingency, said he wouldn't pay above the appraised value. 'The sellers had already committed to buying another house somewhere and they had to go through with the deal,' Mr. Sheppard said. There are several things that a broker can do to avoid appraisal problems. First, a broker should supply an appraiser with information on closed sales that support the price on the property. But closed comps are only the beginning. Jonathan J. Miller, the president of Miller Samuel, an appraisal firm, said he also looks at information about similar apartments that are in contract but not yet closed. Frequently, brokers can learn of sales in contract from their colleagues, and they can pass the information on to an appraiser. And if multiple bids have been made, Mr. Miller said, he will look at bid letters from other potential buyers as evidence to support a higher valuation. Some appraisers will also use the prices on similar listings in a building or neighborhood to assess the value of a property. When an appraisal does come in low, many mortgage brokers will simply go out and get a second or a third appraisal until they get one that matches their sale price. A broker can also request a review of an appraisal in hopes of getting it bumped upward. Many real estate brokers said that they shudder when they see that a lender has dispatched an appraiser from out of town. 'A broker has to be alert to a 516 area code that indicates an appraiser might not understand the workings of the Manhattan market,' said Shirley Hackel, a managing director at Warburg Realty Partnership. Brokers also must be alert to flaws in an appraisal. Richard Ferrari, a senior vice president at Prudential Douglas Elliman, said that last year he represented the buyer in a deal in which an out-of-town appraiser turned in an appraisal $100,000 below the selling price for an apartment on Central Park West, saying the unit had no park views. 'The appraiser never came to the apartment,' Mr. Ferrari said. 'Every window faces the park.' Mr. Ferrari challenged the valuation and the bank brought in a second appraiser, who determined that the apartment was worth the sale price. 'A really good broker is always present during the appraisal,' said Leonard Steinberg, a senior vice president with Prudential Douglas Elliman. On a recent deal, Mr. Steinberg said, he discovered that an appraiser working with an electronic measuring device had come away with a mistaken measurement for one room in a loft he was selling in the Flatiron district. 'It was mind-boggling to me,' Mr. Steinberg said. 'We were actually leaving and I said, 'How much did it measure out to?' He said, 'It's 4,100 square feet,' and it was actually like 4,900 square feet.' Together, they remeasured the room 'with an old-fashioned tape measure,' and the appraiser corrected his mistake. Kathleen M. Sloane, a vice president with Brown Harris Stevens, decided to take pre-emptive measures after watching a deal come apart last fall. An appraiser valued an apartment at the Christodora House on Tompkins Square Park in the East Village at $800,000, far below the $885,000 contract price, she said. The buyer was so upset by the low appraisal that he walked away. She later found another buyer for the apartment, but at a lower price. Now, Ms. Sloane advises sellers to have their own appraisal done before putting an apartment on the market. 'It is better to act in advance and get your own appraisal as a seller,' she said, 'so that when someone comes in you say, 'We have an appraisal of this property.' You should make available to your appraiser the same comps that we used for ours.' A low appraisal can have a serious financial impact, but the psychological repercussions can sometimes be just as devastating. Annie Cion Gruenberger, a managing director at Warburg Realty Partnership, was working as the broker for a young woman who went into contract for $780,000 on a one-bedroom apartment at the Mondrian, a condominium at 250 East 54th Street. 'Then some appraiser from upstate New York comes,' Ms. Gruenberger said. 'This man has no clue. I don't think he's done a New York City appraisal in months.' Ms. Gruenberger gave the appraiser information on comparable sales, and even took him to a new condo building across the street where apartments had been selling for considerably more. 'This guy comes in with an appraisal, I thought I'd shoot myself, something like $650,000,' she said. 'A ridiculous number.' The buyer was 'hysterical,' she said, and Ms. Gruenberger called in another appraiser, who came up with a valuation of about $745,000. The buyer, whose parents were helping pay for the apartment, was already ordering window treatments and kitchen fixtures. In addition, she had signed a contract without a financing contingency. But once they learned of the low appraisal, she said, the woman's parents became determined to get out of the deal, although they could still afford to buy the apartment. 'It was definitely not financial,' Ms. Gruenberger said. 'It was totally about power and being right.' In the end, the seller let them walk away from the deal without penalty, wishing to avoid a nasty fight over the deposit. Ms. Gruenberger said it was the first time in 13 years in real estate that she had lost a deal because of a low appraisal.

Subject: Is There a Bubble In Florida From: Emma To: All Date Posted: Sun, May 29, 2005 at 12:57:33 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/realestate/29nati.html?pagewanted=all&position= Is There a Bubble In Florida Waiting to Burst? By ROBERT JOHNSON LAKELAND, Fla. ERIC SITCHERAN, a New York City banker, has been researching the Florida housing market since 1999, looking for just the right time and place to buy. He waited through the uncertainties after Sept. 11 and delayed again as four hurricanes struck the state last year. While waiting, Mr. Sitcheran, 60, and his wife, Dawn, who are from Queens, and who plan to retire this summer, watched Florida housing prices outpace the increases across the nation. Hoping the market would take a breather long enough for them to decide on the right spot and builder, they nervously kept up with news about shortages of building materials and labor, dwindling inventories of available homes and lengthening delivery times for new construction. 'We kicked the tires a long time,' Mr. Sitcheran said. 'In an escalating market like this, it's hard to be patient. At the same time, you're leery of jumping in right when the bubble bursts.' After all, when the nation's expert on 'irrational exuberance' in the dicey world of securities wades in to warn about housing prices, as Alan Greenspan did recently, the jitters may be justified. Mr. Greenspan, the chairman of the Federal Reserve, cautioned about 'a little froth in this market.' And while he did not perceive a national bubble, he did say, 'It's hard not to see that there are a lot of local bubbles.' Florida could be one of those. The state's median price for homes hit a record $218,600 in April, a 26 percent increase over the same month last year. That compares with a 15.1 percent increase in the national median price, to $206,000, over the same period. Yet, despite warnings of a bubble, the inventory of available houses is down from a year ago, which seems like a reasonable cause for price increases. With builders in some areas unable to keep up with demand for new construction, the residential real estate game has a certain musical-chairs quality these days. Buyers may feel rushed, but they still need to look before they leap. The Sitcherans finally picked a lot and a builder's floor plan last December. Their $350,000 single-family house here in Lakeland, which is between Tampa and Orlando, was finished in early May. While the rise in home prices still hasn't taken a breather, Mr. Sitcheran said he can finally relax, and move into his new home. But while he was shopping for a place, he heard 'horrendous tales,' he said. 'You just hope it won't happen to you,' he said. Among the dark stories circulating around Florida: builders taking advantage of escalator clauses in contracts to raise prices on homes under construction, or switching lower-cost houses to less desirable lots when other customers bid up choice locations. Some builders have simply canceled contracts altogether, explaining to customers that costs are rising too fast to build for the agreed-upon price. The hurricane season officially starts on Wednesday in the precise world of meteorological record keeping. Last year's four hurricanes disrupted the plans of builders and home buyers, and real estate agents say the storms may well have kept prices from rising even faster, discouraging some Northerners - at least temporarily - from chancing such volatile weather. The hurricanes contributed to price increases as builders scrambled for materials and workers were absorbed by repairs to existing homes. Thousands of Florida homeowners are still awaiting repairs. Even if builders have enough materials, there may be no one to work with them. 'Every day, I'm in need of a subcontractor that I can't find,' said David Pelletz, president of Westfield Homes in Tampa. One result is that the building cycle on his houses, priced from $130,000 to $700,000, has risen by one-third, to six months during the last year. 'If someone came to me today and said, 'I want a home to be ready by next September so I can move to Florida and put my children in school down here,' I couldn't do it,' he said. Longer construction timetables make some builders nervous about locking in prices. Escalator clauses have become more common, allowing for increases as costs rise. Another alternative that was unthinkable to some builders until lately is to simply return deposits on homes that are not yet built and explain that a new price list will be available closer to the completion date. 'Some of the high-rise condominium builders have a two-year construction cycle,' said Toni Pacelli-Hinkley, executive director of the Builders Association of South Florida, in Miami Lakes. 'Who knows what prices will be by then? So some of those developers have had to cancel deals and tell people they will have to pay more.' Meanwhile, this year's hurricane forecast is for at least seven storms, which would be above-average activity. No one at the National Oceanic and Atmospheric Administration is predicting that any of those hurricanes will necessarily strike Florida. If the state suffers major property damage from even one hurricane this year, that would roil the Florida housing market. But would it help to burst the bubble by discouraging relocation, or make the shortage of available homes more severe? 'I think more hurricanes would drive prices up faster,' said Mike Hickman, president of Hickman Homes in Lakeland, which built Mr. Sitcheran's house. Some people may delay moving plans, he said, but not cancel them altogether. 'One reason these hurricanes are such big news is that we don't usually have so many - the public realizes that,' he said. Mr. Sitcheran, at least, did. 'They say that all those hurricanes last year were a once-in-a-century thing,' he said. 'I don't think that should keep you away.' And Mr. Hickman, past president of the Florida Association of Home Builders, is experiencing heavy demand in Lakeland. For much of the last 20 years that he has been developing subdivisions, most customers appeared only after he put in roads, some model homes and a landscaped entrance. But these days Mr. Hickman is getting deposits on his planned 600-home Morgan Creek Preserve development even though he hasn't built a single street, let alone a house there. 'I'm not even quoting prices yet,' he said, 'but people just want to put down a deposit and lock the price on lots,' which range from one-third to one-half acre. Prices have risen in Morgan Creek by 20 percent, to $55,000, just since January. Mr. Hickman attributes the increase to 'development and material costs, including the rising price of oil.' Having customers willing to pay higher prices doesn't mean Mr. Hickman can build any faster. He estimates that he won't be able to start any houses in Morgan Creek Preserve until the end of summer. But that doesn't worry Mr. Sitcheran, who feels he's sitting pretty with his new house in Mr. Hickman's nearby Highland Hills South development. When the house was finished recently, he had it appraised. 'It came in at $10,000 more than it cost me,' he said.

Subject: It's amazing From: Pete Weis To: Emma Date Posted: Sun, May 29, 2005 at 14:16:13 (EDT) Email Address: Not Provided Message: Almost every paper in America has had multiple articles about an overvalued real estate market. There's been a barrage of reports in the television news about a housing bubble. Robert Shiller, Paul Krugman and many other economists warn of a coming housing bust, and still the public continues what looks like panic buying - 'if I don't buy quickly I'll miss this train'. Many of the same people who were warning that the stock market was overblown in the late 90's are now saying the same thing about the housing market. But just as the masses were paying no attention back then, neither are they now. It's amazing to witness this mass hysteria, but frightening to realize that it will impact us all.

Subject: Re: It's amazing From: Terri To: Pete Weis Date Posted: Sun, May 29, 2005 at 15:30:46 (EDT) Email Address: Not Provided Message: Precisely what I do not understand. Likely even more than in 1999 or 2000, there is everywhere discussion of a housing bubble, and I would add a bubble in real estate or REITs, but everywhere there is buying and a growing wish to speculate. What a curious psychology. Since the importance to middle class America of the housing market is beyond the stock market, the danger is more and the damage could be worse. Then too, the Federal Reserve may have less ability to limit the damage of turn down in housing.

Subject: When the Joneses Wear Jeans From: Emma To: All Date Posted: Sun, May 29, 2005 at 12:55:02 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/national/class/CONSUMPTION-FINAL.html?pagewanted=all When the Joneses Wear Jeans By JENNIFER STEINHAUER BEACHWOOD, Ohio - It was 4:30 p.m., sweet hour of opportunity at the Beachwood Place Mall. Shoppers were drifting into stores in the rush before dinner, and the sales help, as if on cue, began a retail ritual: trying to tell the buyers from the lookers, the platinum-card holders from those who could barely pay their monthly minimum balance. It is not always easy. Ellyn Lebby, a sales clerk at Saks Fifth Avenue, said she had a customer who regularly bought $3,000 suits but 'who looks like he should be standing outside shaking a cup.' At Oh How Cute, a children's boutique, the owner, Kira Alexander, checks out shoppers' fingernails. A good manicure usually signals money. 'But then again,' Ms. Alexander conceded, 'I don't have nice nails and I can buy whatever I want.' Down the mall at the Godiva chocolate store, Mark Fiorilli, the manager, does not even bother trying to figure out who has money. Over the course of a few hours, his shoppers included a young woman with a giant diamond ring and a former airplane parts inspector living off her disability checks. 'You can't make assumptions,' Mr. Fiorilli said. Social class, once so easily assessed by the car in the driveway or the purse on the arm, has become harder to see in the things Americans buy. Rising incomes, flattening prices and easily available credit have given so many Americans access to such a wide array of high-end goods that traditional markers of status have lost much of their meaning. A family squarely in the middle class may own a flat-screen television, drive a BMW and indulge a taste for expensive chocolate. A wealthy family may only further blur the picture by shopping for wine at Costco and bath towels at Target, which for years has stocked its shelves with high-quality goods. Everyone, meanwhile, appears to be blending into a classless crowd, shedding the showiest kinds of high-status clothes in favor of a jeans-and-sweatsuit informality. When Vice President Dick Cheney, a wealthy man in his own right, attended a January ceremony in Poland to commemorate the liberation of Nazi death camps, he wore a parka. But status symbols have not disappeared. As luxury has gone down-market, the marketplace has simply gone one better, rolling out ever-pricier goods and pitching them to the ever-loftier rich. This is an America of $130,000 Hummers and $12,000 mother-baby diamond tennis bracelet sets, of $600 jeans, $800 haircuts and slick new magazines advertising $400 bottles of wine. Then there are the new badges of high-end consumption that may be less readily conspicuous but no less potent. Increasingly, the nation's richest are spending their money on personal services or exclusive experiences and isolating themselves from the masses in ways that go beyond building gated walls. These Americans employ about 9,000 personal chefs, up from about 400 just 10 years ago, according to the American Personal Chef Association. They are taking ever more exotic vacations, often in private planes. They visit plastic surgeons and dermatologists for costly and frequent cosmetic procedures. And they are sending their children to $400-an-hour math tutors, summer camps at French chateaus and crash courses on managing money. 'Whether or not someone has a flat-screen TV is going to tell you less than if you look at the services they use, where they live and the control they have over other people's labor, those who are serving them,' said Dalton Conley, an author and a sociologist at New York University. Goods and services have always been means to measure social station. Thorstein Veblen, the political economist who coined the phrase 'conspicuous consumption' at the beginning of the last century, observed that it was the wealthy 'leisure class,' in its 'manner of life and its standards of worth,' that set the bar for everyone else. 'The observance of these standards,' Veblen wrote, 'in some degree of approximation, becomes incumbent upon all classes lower in the scale.' So it is today. In a recent poll by The New York Times, fully 81 percent of Americans said they had felt social pressure to buy high-priced goods. But what Veblen could not have foreseen is where some of that pressure is coming from, says Juliet B. Schor, a professor of sociology at Boston College who has written widely on consumer culture. While the rich may have always set the standards, Professor Schor said, the actual social competition used to be played out largely at the neighborhood level, among people in roughly the same class. In the last 30 years or so, however, she said, as people have become increasingly isolated from their neighbors, a barrage of magazines and television shows celebrating the toys and totems of the rich has fostered a whole new level of desire across class groups. A 'horizontal desire,' coveting a neighbor's goods, has been replaced by a 'vertical desire,' coveting the goods of the rich and the powerful seen on television, Professor Schor said. 'The old system was keeping up with the Joneses,' she said. 'The new system is keeping up with the Gateses.' Of course only other billionaires actually can. Most Americans are staring across a widening income gap between them and the very rich, making such vertical desire all the more unrealistic. 'There is a bigger gap between the average person and what they are aspiring to,' Professor Schor said. But others who study consumer behavior say that the wanting and getting of material goods is not just a competitive exercise. In this view, Americans care less about emulating the top tier than about simply having a fair share of the bounty and a chance to carve out a place for themselves in society. 'People like having stuff, and stuff is good for people,' said Thomas O'Guinn, a professor of advertising at the University of Illinois who has written textbooks on marketing and consumption. 'One thing modernity brought with it was all kinds of identities, the ability for people to choose who you want to be, how you want to decorate yourself, what kind of lifestyle you want. And what you consume cannot be separated from that.' Falling Prices, Rising Debt Throughout the mall in this upscale suburb of Cleveland, high-priced merchandise was moving: $80 cotton rompers at Oh How Cute, $40 scented candles at Bigelow Pharmacy. And everywhere, it seemed, was the sound of cellphones, one ringing out with a salsa tune, another with bars from Brahms. Few consumer items better illustrate the democratization of luxury than the cellphone, once immortalized as the ultimate toy of exclusivity by Michael Douglas as he tromped around the 1987 movie 'Wall Street' screaming into one roughly the size of a throw pillow. Now, about one of every two Americans uses a cellphone; last year, there were 176 million subscribers, almost eight times the number a decade ago, according to the market research firm IDC. The number has soared because prices have correspondingly plummeted, to about an eighth of what they were 10 years ago. The pattern is a familiar one in consumer electronics. What begins as a high-end product - a laptop computer, a DVD player - gradually goes mass market as prices fall and production rises, largely because of the cheap labor costs in developing countries that are making more and more of the goods. That sort of 'global sourcing' has had a similar impact across the American marketplace. The prices of clothing, for example, have barely risen in the last decade, while department store prices in general fell 10 percent from 1994 to 2004, the federal government says. Even where luxury-good prices have remained forbiddingly high, some manufacturers have come up with strategies to cast more widely for customers, looking to middle-class consumers, whose incomes have generally risen in recent years; the median family income in the United States grew 17.6 percent from 1983 to 2003, when adjusted for inflation. One way makers of luxury cars have tapped into this market is by introducing cheaper versions of their cars, trying to lure younger, less-affluent buyers in the hope that they may upgrade to more prestigious models as their incomes grow. Mercedes-Benz, BMW and Audi already offer cars costing about $30,000 and now plan to introduce models that will sell for about $25,000. Entry-level luxury cars are the fastest growing segment of that industry. 'The big new trend that is coming to the U.S. is 'subluxury' cars,' said David Thomas, editor of Autoblog, an online automotive guide. 'The real push now is to go a step lower, but the car makers won't say 'lower.' ' The luxury car industry is just one that has made its products more accessible to the middle class. The cruise industry, once associated with the upper crust, is another. 'The cruise business has totally evolved,' said Oivind Mathisen, editor of the newsletter Cruise Industry News, 'and become a business that caters to moderate incomes.' The luxury end makes up only 10 percent of the cruise line market now, Mr. Mathisen said. Yet today's cruise ships continue to trade on the vestiges of their upper-class mystique, even while offering new amenities like on-board ice skating and wall-climbing. Though dinner with the captain may be a thing of the past, the ships still pamper guests with spas, boutiques and sophisticated restaurants. All that can be had for an average of $1,500 a week per person, a price that has gone almost unchanged in 15 years, Mr. Mathisen said. The industry has kept prices down in part by buying bigger ships, the better to accommodate a broader clientele. But affordable prices are only one reason the marketplace has blurred. Americans have loaded up on expensive toys largely by borrowing and charging. They now owe about $750 billion in revolving debt, according to the Federal Reserve, a six-fold increase from two decades ago. That huge jump can be traced in part to the credit industry's explosive growth. Over the last 20 years, the industry became increasingly lenient about whom it was willing to extend credit to, more sophisticated about assessing credit risks and increasingly generous in how much it would let people borrow, as long as those customers were willing to pay high fees and risk living in debt. As a result, to take one example, millions of Americans who could not have dreamed of buying their own homes two decades ago are now doing so in record numbers because of a sharp drop in mortgage interest rates, a surge in the number of mortgages granted and the creation of the sub-prime lending industry, which gives low-income people access to credit at high cost. 'Creditors love the term the 'democratization of credit,' ' said Travis B. Plunkett, the legislative director of the Consumer Federation of America, a consumer lobbying group. 'Over all, it has certainly had a positive effect. Many families that never had access to credit now do. The problem is that a flood of credit is now available to many financially vulnerable families and extended in a reckless and aggressive manner in many cases without thought to implications. The creditors say it has driven the economy forward and helped many families improve their financial lives, but they omit talking about the other half of the equation.' The Marketers' Response Marketers have had to adjust their strategies in this fluid world of consumerism. Where once they pitched advertisements primarily to a core group of customers - men earning $35,000 to $50,000 a year, say - now they are increasingly fine-tuning their efforts, trying to identify potential customers by interests and tastes as well as by income level. 'The market dynamics have changed,' said Idris Mootee, a marketing expert based in Boston. 'It used to be clearly defined by how much you can afford. Before, if you belonged to a certain group, you shopped at Wal-Mart and bought the cheapest coffee and bought the cheapest sneakers. Now, people may buy the cheapest brand of consumer goods but still want Starbucks coffee and an iPod.' Merchandisers, for example, might look at two golfers, one lower middle class, the other wealthy, and know that they read the same golf magazine, see the same advertisements and possibly buy the same quality driver. The difference is that one will be splurging and then play on a public course while the other will not blink at the price and tee off at a private country club. Similarly, a middle-income office manager may save her money to buy a single luxury item, like a Chanel jacket, the same one worn by a wealthy homemaker who has a dozen others like it in her $2.5 million house. Marketers also know that today's shoppers have unpredictable priorities. Robert Gross, who was wandering the Beachwood mall with his son David, said he couldn't live without his annual cruise. Mr. Gross, 65, also prizes his two diamond pinkie rings, his racks of cashmere sweaters and his Mercedes CLK 430. 'My license plate reads BENZ4BOB,' he said. 'Does that tell you what kind of person I am?' But a taste for luxury goods did not stop Mr. Gross, an accountant, from scoffing as David paid $30 for a box of Godiva chocolates for his wife. The elder Mr. Gross had been to a local chocolate maker. 'I went to Malley's,' he said, 'and bought my chocolate half price.' Yet virtually no company that has built a reputation as a purveyor of luxury goods will want to lose its foothold in that territory, even as it lowers prices on some items and sells them to a wider audience. If one high-end product has slipped into the mass market, then a new one will have to take its place at the top. Until the early 1990's, Godiva sold only in Neiman Marcus and a few other upscale stores. Today it is one of those companies whose customers drift in from all points along the economic spectrum. Its candy can now be found in 2,500 outlets, including Hallmark card stores and middle-market department stores like Dillard's. 'People want to participate in our brand because we are an affordable luxury,' said Gene Dunkin, president of Godiva North America, a unit of the Campbell Soup Company. 'For under $1 to $350, with an incredible luxury package, we give the perception of a very expensive product.' But the company is also trying simultaneously to hold on to the true luxury market, which has increasingly been seduced away by small, expensive artisan chocolate makers, many from Europe, that are opening around the country. Two years ago, Godiva introduced its most expensive line ever, 'G,' handmade chocolates selling for $100 a pound. Today it is available only in holiday seasons and only at selected stores. The New Status Symbols While the rest of the United States may appear to be catching up with the Joneses, the richest Joneses have already moved on. Some have slipped out of sight, buying bigger and more lavish homes in neighborhoods increasingly insulated from the rest of Americans. But the true measure of upper class today is in the personal services indulged in. Professor Conley, the New York University sociologist, refers to these less tangible badges of status as 'positional goods.' Consider a couple who hire a baby sitter to pick up their children from school while they both work, he said. Their status would generally be lower than the couple who could pick up their children themselves, because the second couple would have enough earning power to allow one parent to stay at home while the other worked. But the second couple would actually occupy the second rung in this after-school hierarchy. 'In the highest group of all is the parent who has a nanny along,' Professor Conley said. Status among people in the top tier, he said, 'is the time spent being waited on, being taken care of in nail salons, and how many people who work for them.' From 1997 to 2002, revenues from hair, nail and skin care services jumped by 42 percent nationwide, Census Bureau data shows. Revenues from what the bureau described as 'other personal services' increased 74 percent. Indeed, in some cases, services and experiences have replaced objects as the true symbols of high status. 'Anyone can buy a one-off expensive car,' said Paul Nunes, who with Brian Johnson wrote 'Mass Affluence,' a book on marketing strategies. 'But it is lifestyle that people are competing on more now. It is which sports camps do your kids go to and how often, which vacations do you take, even how often do you do things like go work for Habitat for Humanity, which is a charitable expense people can compete with.' In the country's largest cities, otherwise prosaic services have been transformed into status symbols simply because of the price tag. In New York last year, one salon introduced an $800 haircut, and a Japanese restaurant, Masa, opened with a $350 prix fixe dinner (excluding tax, tips and beverages). The experience is not just about a good meal, or even an exquisite one; it is about a transformative encounter in a Zen-like setting with a chef who decides what will be eaten and at what pace. And it is finally about exclusivity: there are only 26 seats. Today, one of the most sought-after status symbols in New York is a Masa reservation. And that is how the marketplace works, Professor Conley says. For every object of desire, another will soon come along to trump it, fueling aspirations even more. 'Class now is really like three-card monte,' he said. 'The moment the lower-status aspirant thinks he has located the nut under the shell, it has actually shifted, and he is too late. '

Subject: Poverty in Brazil Endures From: Emma To: All Date Posted: Sun, May 29, 2005 at 12:31:39 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/29/international/americas/29brazil.html Effort to Reduce Poverty and Hunger in Brazil Falls Short of Its Goals By LARRY ROHTER ACAUĂ, Brazil - This is one of the poorest places in Brazil, which is why President Luiz Inácio Lula da Silva had it included in the pilot version of his Zero Hunger program. But more than two years after that effort began, with a visit by the president and his cabinet to these arid backlands, the program here has fallen far short of expectations. Some of the promised projects to reduce hunger and poverty have simply not gotten off the ground, while others are mired in bureaucracy or have become entangled in partisan politics. Even the simple payment of $20 a month to poor families has generated problems, leaving out some who were supposed to get it and enrolling others who should not. 'The program leaves a lot to desire, not because nothing has improved, but because the steps have been so very slow and hesitant,' said the Rev. Gregório Leal Lustosa, the lone Roman Catholic priest in this and four neighboring municipalities. 'Often the money promised is not there, and when it is, there is difficulty in implementing the programs. So the mood is one of frustration.' Zero Hunger was supposed to be the centerpiece of the ambitious social transformation promised by Mr. da Silva, a former labor leader who was born into a peasant family not far from here and went hungry himself as a child. At the United Nations and other international forums, he has repeatedly praised the program as an unqualified success and a model for other third world countries, and chided rich countries for not helping more. But here, where the average daily wage is about $3 and full-time work is hard to find, there is a more nuanced view of Zero Hunger. While grateful for the monthly stipend, the recipients, like independent experts, are also acutely aware of the program's inefficiency, disorganization and vulnerability to political squabbling. Some of the problems clearly stem from the very top, in Brasília, the capital. After a slow start, Mr. da Silva dismissed the minister originally in charge of the program, which was subsequently stripped of its status as a separate ministry and quietly folded into the Ministry of Social Development. But many of the problems are local. At first, the program here, as elsewhere, was run by an administrative committee whose members were drawn from the community, led by a union leader in the governing Workers' Party as well as a member of the opposition. That was intended to insulate the program from political manipulation, but quarrels among committee members soon ensued, as did accusations of favoritism. Among the chief complaints is that benefits are incorrectly awarded and incorrectly denied. In the state capital, Teresina, more than 1,100 city employees were found to have been fraudulently enrolled, while here, some teachers' families ended up receiving stipends intended to eliminate child labor, rather than the agricultural day laborers who are meant to benefit. 'We found a lot of irregularities,' said Joăo Floręncio Rodrigues Batista, a critic of the initial administrative committee who became mayor here in January. 'It was supposed to be for poor families, but it ended up being for political families, for the sons and daughters of the members of the town council and other privileged types.' New managers of Zero Hunger here and elsewhere have had to start over. Beneficiaries have been required to re-register and produce their income statements, and will have to do so annually. That, of course, has generated new complaints, of 'another layer of bureaucracy staffed with ill-informed civil servants,' as Father Lustosa put it. Perhaps most frustrating to residents of this parched backland is that many of the water cisterns promised as part of the Zero Thirst component of the program have failed to appear. And the Light for All project, which was supposed to bring electricity to the backcountry here to spur agricultural production and income, is also bogged down: technical teams have visited twice, but no power lines have gone up. Similar problems have appeared all over the country, Brazilian and foreign experts say. Still, some signs of improvement are visible here. A few new stores, a cybercafe among them, have opened on the main street, and some existing shops and grocery stores have expanded because their patrons have a bit more money to spend. There is still no hospital here, but the one clinic has received some new equipment and supplies, giving many women here access to birth control for the first time. 'A lot of women here are always pregnant, and have a baby every year,' said Arlete de Assis Ferreira de Sousa, a 28-year-old peasant woman who is the president of a local farmers' cooperative. 'They don't have the money to feed or clothe them, and they want to change that situation with contraceptives.' The biggest change, however, may not be material. Zero Hunger's sponsors, perhaps to their own detriment, appear to have succeeded in mobilizing the poor, diminishing the traditional pattern of exchanging votes for social services. 'Now you don't have to go to a politician any more, the committee comes to you instead, and for me, that is an important difference,' said Enilson Araújo Cruz, a 28-year-old farmworker and community leader. 'Before, it felt like we were asking for a favor, but now it's not a gift, it's a social policy. We have more direct access and we decide our priorities ourselves, and not the politicians for us.'

Subject: ricardian theory From: jan To: All Date Posted: Sun, May 29, 2005 at 07:25:25 (EDT) Email Address: jan_a_devries@hotmail.com Message: I am looking for an article explaining why low wage segment in rich countries have most to fear from enhanced trading with low wage countries. While the country at large will benefit. I know there are articles/chapters in Krugmans books but just looking for something available on line. Level may be advanced. Thanks for help.

Subject: Re: ricardian theory From: Bobby To: jan Date Posted: Mon, May 30, 2005 at 01:07:11 (EDT) Email Address: robert@pkarchive.org Message: The two theories that predict low-skilled workers will be worse off are actually not connected with Ricardo. They are the Heckscher-Ohlin model and the Specific factors model. I have written a non-technical summary of both below in this post. Moreover, I've written a technical summary of the Heckscher-Ohlin Model at this link (I recommend that you print this out, since it has graphs). These models are also in Chapters 3 and 4 of Krugman and Obstfeld. You can also find them in the trade textbook by Markusen, Melvin et al. Of course the last two aren't online, but this is briefly what they say. As I said, the first model is called the Heckscher-Ohlin model. This model assumes among other things that the same technology and consumer preferences occur across countries. Initially, we should also assume that these countries are not open to international trade. Under these conditions, countries are called 'labor abundant countries' if they have much labor relative to other factors of production (labor and capital and land, etc. are called inputs or 'factors of production'). Due to their relatively high supply of labor, then these labor abundant countries will tend to have lower wages than those countries with less labor relative to other factors (such countries are called 'labor scarce' countries). Likewise countries with much capital relative to other factors (called 'capital abundant countries') have a high capital supply, and they will have lower capital prices than capital scarce countries, which have lower capital supply relative to their supplies of other factors. It is intuitive (and can be proven mathematically from the model's assumptions) that, for a good whose production uses a lot of labor relative to other factors (called a labor-intensive industry), low-wage (that is, labor-abundant) countries can produce that good more cheaply. Likewise, for goods whose production uses much capital relative to other factors, capital abundant countries which have cheaper capital can produce that good more cheaply. In general, a country will produce cheaply those goods whose production is intensive in the country's abundant factors. For a country that is labor-scarce and therefore has very high-wage labor, it will produce labor-intensive goods very expensively. Likewise, country will produce expensively those goods whose production is intensive in the country's scarce factors. When you open up trade, labor-abundant countries will expand their production of labor-intensive goods and contract their consumption of them, and therefore they will export labor-intensive goods. The reason for this is as follows: The world price of labor intensive goods is higher than the price that occurs in the country when it is closed to trade. When a country opens itself up to trade, it exposes itself to this world price. Therefore, when a labor-abundant country opens itself up to trade, its price of labor-intensive goods rises. This entices firms to expand their production of the labor-intensive good. A higher price also causes its consumers to consume less of the labor intensive good. Since the country is expanding its production of the labor-intensive good and contracting its consumption of it, it is now exporting it. Let's say that this country is scarce in capital. This means that the country's price of capital-intensive goods under closed trade is higher than the world price. Therefore, when the country opens up to trade, its price of the capital-intensive goods drops. Therefore, its firms will contract their production of capital-intensive goods. A lower price also induces consumer to consume more of the good. Since the country has contracted its production and raised its consumption of the capital-intensive good, it is now an importer of that good. In general, countries tend to export goods that are intensive in their abundant factors and import goods that are intensive in their scarce factors. This result is known as the Heckscher-Ohlin Theorem. What about wages and trade's effect upon labor? After opening up trade, our labor-abundant country has expanded its production of labor-intensive goods and contracted its production of capital-intensive goods. It is almost intuitive that the expansion of labor-intensive good production means that demand for labor and hence wages have risen (though, again, this can be proven mathematically from the model's assumptions). Likewise, the contraction of capital-intensive industries implies lower demand for capital and hence cheaper capital. Therefore, opening trade has helped laborers and hurt captalists in the labor-abundant country. In general, when a country opens up to trade the prices of its abundant factors rise and the owners of those factors are therefore made better off (in the case of labor-abundant countries laborers, who 'own' their labor were made better off). In addition, opening to trade causes the prices of a country's scarce factors to fall, thereby making the owners of scarce factors worse off. This result is known as the Stolper-Samuelson Theorem. What about the U.S.? The U.S. is scarce in skilled labor, abundant in capital and likely abundant in skilled labor. Therefore, under this theory, trade should make skilled labor and capital owners better off while making unskilled laborers worse off. The second model is called the 'specific factors model.' This is very simple. As said above, when a country opens up to trade, then industries in which it produces expensively will face a decline in their prices because they are exposed to the lower world price. This will tend to hurt the wages of everybody working in that industry and hurt the returns to capital of capital-owners whose investments are in that industry. In the long-run, workers can move from declining sectors to expanding ones and capitalists can move their capital out of declining industries and into expanding ones, so this is only a temporary problem. Three points should be noted about the Specific Factors model: Under this specific factors model, the adverse effects of opening to trade occur (1) only in a declining sector, and (2) it happens to all factors in that sector, regardless of whether they are skilled or unskilled labor or capital, etc. Finally, (3) their pain ends once they move to a better sector, so this is a temporary problem. On the contrary, the Heckscher-Ohlin model describes a decline the welfare (1) across all industries, and (2) it hurts only factors of production in which the country is scarce while helping abundant factors. Finally, (3) absent government redistribution, this change in welfare between scarce and abundant factors is permanent. Because it happens across all sectors, a factor does not make itself better off by moving to another sector. Of course, each of these models isolates an effect of international trade, and they can both be right simultaneously. Both of these effects should be happening simultaneously in reality. As an empirical matter, Krugman says that the effects of trade on low-skilled wages is only a minor factor that is swamped by things like technological change. As you say, the model predicts that the winners gain more than the losers from trade lose, and, therefore, the government can tax the winners and compensate the losers in amounts so that everyone is better off.

Subject: Re: ricardian theory From: Pete Weis To: jan Date Posted: Sun, May 29, 2005 at 10:57:17 (EDT) Email Address: Not Provided Message: Not sure if this is what you are looking for but try GLOBALIZATION: PROSPECTS, PROMISE AND PROBLEMS by Ralph E. Gomory and William J. Baumol at www.unc.org.tt/modules/mydownloads/ visit.php?cid=7&lid=16 or search the Paul Krugman archive on this site.

Subject: Interesting piece by Paul Krugman From: Pete Weis To: Pete Weis Date Posted: Sun, May 29, 2005 at 13:32:55 (EDT) Email Address: Not Provided Message: RICARDO'S DIFFICULT IDEA by Paul Krugman talks about how difficult it is to convey comparative advantage to non-economists. His frustration comes from the fact that comparative advantage is apparently one of the most important single concepts in economics. I say apparently because I admit I haven't spent the time to get even a cursory understanding of this concept myself. Most of us think in terms of absolute advantage which is much easier to understand. If you read this Paul Krugman essay (and I'm still reading and thinking about it), you come away with the impression that, although, he doesn't necessarily discount some short term disruption to segments of a nation's labor markets due to comparative advantage, he believes that the long term effect is beneficial. And although few understand this, it's obvious to those who do. So I wouldn't expect to find much written by Paul Krugman regarding segments of the labor market which he believes might suffer from comparative advantage (I could be wrong). He emphasizes the benefits. Paul Krugman wrote this essay quite sometime ago (while at MIT?) and I remember we had a brief discussion on this board about Ricardo's comparative advantage about a year or two ago. I did just what Paul Krugman said many who do not understand the concept do - I suggested it was a somewhat old idea and 'the Ricardian model assumed some conditions like geographical boundaries to labor markets which are no longer valid'. Well, if you post enough on these boards, you'll make an idiot out of yourself, if not sooner than later and often multiple times. Anyway, I need to spend time with this concept (comparative advantage) and do it with an open mind.

Subject: My Crow From: Terri To: All Date Posted: Sat, May 28, 2005 at 18:40:34 (EDT) Email Address: Not Provided Message: Jackdaws and crows and ravens are wonderfully adaptable birds. When you look at a crow closely, the crow looks back. I was walking about the Divinity School quad and I noticed a clump of black below a bush and walked there. There was a crow. I took off my jacket and picked up the crow and there was a call from a tree a few feet away. Another crow was on a low branch and cawed. Though I could feel no broken bone the crow in my jacket was obviously weak and I had to take her away. Quiet an awful feeling, for the crow in the tree cawed. I took the crow home and set her in a cage with a heat lamp and began to feed her berries through a large dropper. She ate and drank, but never once even tried to bite or claw me. Never. Again I found nothing wrong. The following morning the crow was stretching and completely alert. I fed her and this time I could feel real strength. Are they ever strong birds. So, I took her to the office and fed her and at the same time I had found her the day before I took her to the library and our bush. Since she seemed fine, I opened the cage and she just lifted away. Amazing, as she climbed in the sky another crow was suddenly there and the two circled and climbed and were gone towards the river. Oh my. Never did the crow try to strike at me for all the exams and feedings. There is a bird.

Subject: Re: My Crow From: j9 To: Terri Date Posted: Sun, May 29, 2005 at 18:19:35 (EDT) Email Address: Not Provided Message: Terri, That was my favorite reading of the weekend. Thank you.

Subject: Ovenbird for j9 From: Terri To: j9 Date Posted: Sun, May 29, 2005 at 19:07:40 (EDT) Email Address: Not Provided Message: http://www.calvorn.com/gallery/photo.php?photo=5427&u=17|16|... Ovenbird Searching for Termites New York City--Central Park, The Loch.

Subject: Portfolios From: Terri To: All Date Posted: Sat, May 28, 2005 at 17:31:19 (EDT) Email Address: Not Provided Message: The problem with bubbles is that they can last and last. We do not know for sure whether there is a broad housing or even a commercial real estate bubble, we do not know how long it may go on, or what effect there might be in an ending. Nonetheless, as in 2000, we need to be invested but to be prepared for a market turn. The question always is how? What are the securities to look and the proper mix?

Subject: Re: Portfolios From: Pete Weis To: Terri Date Posted: Sat, May 28, 2005 at 20:27:19 (EDT) Email Address: Not Provided Message: Terri. I'm assuming that you live off your investments and do not have a pension to provide additional support. If this is true the small interest you might earn from say three month treasuries would not get you by? On the other hand if you leave your money in the markets you are concerned that you could lose a significant amount of your life savings? There are funds like Permanent Portfolio which has held up very well in every scenario which has come our way during the last ten years and hedges against weakness in the dollar. We've have talked about New Zealand CD's which yield over 5% and you get additional boost from the falling dollar. I have invested in real estate over the years. I've lived through regional booms and busts. I've owned rental properties and know what it is to sweat whether or not rental income will offset expenses. I have some understanding about what persuades real estate investors to sell. I can tell you that the present real estate boom is the largest and broadest boom in US history. I can tell you that lending standards are perhaps the most lax in history. Most mortgages over the last year or so were either interest only or ARM's at the very time when a 30yr fixed makes the most sense for most folks. People who would like to buy a home on a 30yr fixed are priced out of the market in many areas because there are too many yahoos bidding housing up and getting interest only loans to manage it. It's a 'no-brainer' that this boom will collapse. But when it does it will be much, much more damaging than the 2000 stock market collapse. If the present stock market hasn't already headed south by the start of the housing bust it will soon after. So we will have both the housing and stock markets dropping in tandem. Lending standards will tighten substantially as lenders begin to absorb big losses. With the new standards, many buyers who qualify for a given house at today's prices will no longer qualify. The flood of prospective buyers for houses at today's prices will dry up. And no one will believe real estate is a good investment - at least not until the bloodbath is over. The boost housing has given the job market will be over. Our government will be having to decide what should be bailed out, what can be bailed out and what they can not afford to bailout. The dollar (as Paul Krugman recently pointed out) will begin to suffer from intense downward pressure and this in the end could be what finally pushes long term rates higher - much higher. This is were I see things headed and I'm preparing for that scenario as best I can. You must get some convictions about where things are headed and invest accordingly. Anyone who thinks things will go on roughly the same as they always have, IMO, are swimming in shark infested waters waiting for the chumming to begin. Warren Buffet can have a positive attitude about how much things might tank, which will allow him to vacuum up all the bargains when they hit rock bottom. For the rest of us it's survival.

Subject: Re: Portfolios From: Terri To: Pete Weis Date Posted: Sun, May 29, 2005 at 10:51:51 (EDT) Email Address: Not Provided Message: What a powerful essay. Know that I value all you write and often save the essays, and admire the clarity and interest generated. Though there seems to be a bubble in real estate following on a bubble in the stock market, and though bond prices are high, I still find reasonably priced investments. So, I would hope for a cushion in value if a housing market slowing or even a price decline in housing occurs. The fact that bond prices are high makes a cushion there less possible than in 2000, but I still find such a cushion for I have gained much these years. I believe weakness in the economy will be accompanied by low or lower long term interest rates, not higher rates. Paul Krugman believes the chain can be weakness in housing, weakness in the economy, but that should mena lower long term interest rates no matter the value of the dollar. Looking for yields in countries with strong currencies and higher interest rates makes sense. New Zealand and Canada and Switzerland appear attractive. In coming days we may know far more about the likely strength or weakness of the Euro. Vanguard does not offer an international bond fund, so I have preferred international stocks as a hedge against the dollar. The Permanent Portfolio may be most attractive as an investment, but I am unable to find enough information about the portfolio or the company. The website is either extremely poor or I simply am confused. I have spent time trying to learn about Permanent Portfolio to no real avail. I find Vanguard perfectly easy to get information from and have a choice of more than a hundred fund investments along with a fine brokerage.

Subject: Re: Portfolios From: Pete Weis To: Terri Date Posted: Sun, May 29, 2005 at 11:51:17 (EDT) Email Address: Not Provided Message: Terri. You have always sounded to me to be a savy, long term value investor. But remember when it comes to the dollar it's about supply and demand. Because we are such big spenders and are able to find big lenders, we have been borrowing heavily for so long to balance our current account deficit, we have flooded the world with dollars. A weakening in our economy will reduce demand for dollar denominated assets (stocks, real estate, treasuries, etc) since the risks for investors will outweigh the expected returns. When it comes to interest rates it's once again supply and demand. You may think that borrowing demand will drop in a slowing economy and eventually that would be true. But the supply of money for borrowing can drop faster than demand. There are probably some writings by economists regarding this and if I have this wrong someone should correct me. We live in an age where middle-class consumers live increasingly off of their credit cards to make up for the lack of wage growth as the staples of life are rising faster than wages so it's possible for borrowing demand to continue for some time. Yet one can visualize how fast mortgage securities investors might sell out of those investments in an environment of a collapsing housing market. A collapsing housing market will increase mortgage defaults dramatically. Buying mortgage securities packaged by Fannie Mae or Freddi Mac would become riskier. Investors would demand higher rates to offset the risk. Likewise as revolving credit becomes riskier higher interest rates will need to offset the risk. Most importantly, lending standards will rapidly become much more restrictive. All assets whose purchase involves borrowing will suffer in value. All businesses which sell these assets/goods will suffer profit losses. When this thing finally bottoms out (and the dollar finally reaches a bottom) and most folks will have had their fill of borrowing, there will be more money to lend than borrowers to borrow and rates will once again come down.

Subject: Re: Portfolios From: Terri To: Pete Weis Date Posted: Sun, May 29, 2005 at 12:28:16 (EDT) Email Address: Not Provided Message: A rapidly rising long term Treasury yield could easily result either from a decline in the value of the dollar, or a lack of liquidity in the mortgage market, or a sudden spurt in general prices. Should long term interest rates rise from 1 to 2 percentage points, there would be a slowing of economic growth that might be fairly rapid, for interest rate changes can have an almost immediate effect on refinancings. This is my prime worry. Then, for the resulting problem which Paul Krugman intimates is possible, there may be a lack of ability of the Fed to stimulate the economy by lowering short term rates. Do I have an answer? No.

Subject: Re: Portfolios From: PKnewbie To: Terri Date Posted: Sun, May 29, 2005 at 11:01:26 (EDT) Email Address: Not Provided Message: 'I still find reasonably priced investments' how do you determine what is reasonably priced? What models are you using to determine what to be invested in? What are the most important statistics you are using to determine value?

Subject: Re: Portfolios From: Terri To: PKnewbie Date Posted: Sun, May 29, 2005 at 11:26:31 (EDT) Email Address: Not Provided Message: Though this as other questions you have asked does not seem to be at all sincere, as Paul Krugman I too am a professor and rather adept at mathematical statistics and in a setting where what I do not know is easily questioned and often times answered. Of course, I somehow knew enough to figure out that regulated utilities were fine values several years ago. Should you would care to be sincere, please do so. Mocking does not effect me in the least, but I am willing to learn so teach away. Please do be polite and sincere as others are, and I always will be.

Subject: Re: Portfolios From: PKnewbie To: Terri Date Posted: Sun, May 29, 2005 at 12:57:46 (EDT) Email Address: Not Provided Message: Terri, I am lost by your response. You said in your previous post that you know how to find value, can you please teach us what it is you do to determine value. For example, can you tell us how to determine which vanguard funds we should purchase, ie Extended Market Index, Calvert Social Index, GNMA fund. Is there something on vanguard's website we should be looking for in determining the best investments. Do we need to look at other websites, or does vanguard's site provide all the relevant information. If you teach us, we can then use your methods and apply them to our own investments. If you don't teach us, how can we discuss these ideas?

Subject: Re: Portfolios From: Terri To: PKnewbie Date Posted: Sun, May 29, 2005 at 13:27:36 (EDT) Email Address: Not Provided Message: Sorry, sorry, sorry. I was mistaken by the question, and in no way wished tobe less than polite. I am not trying to teach, just thinking aloud so I can understand what I am doing. And looking for responses to help me learn more. There was a person in the past who would respond simply to be sarcastic. No matter. I will respond gradually. I love investing and spend time each day looking at alternatives, but indexing can be done on a set schedule with the only decision being how much to allocate each month to a Total Stock Market Index and a Total Bond Market Index. There we have a long term program that allows all sorts of mistakes to be avoided and is efficiently low cost. Study after study shows indexing awfully hard to beat. I try to go a little beyond and judge where there may be a little more value than the general idexes.

Subject: Re: Portfolios From: PKnewbie To: Terri Date Posted: Mon, May 30, 2005 at 10:01:15 (EDT) Email Address: Not Provided Message: Terri, but how do you determine value? that is my question, how do you go outside of indexing to know when to make certain investments and sell off others. What characteristics should we be looking for to determine value. What are we trying to judge?

Subject: Re: Portfolios From: Terri To: PKnewbie Date Posted: Mon, May 30, 2005 at 11:07:16 (EDT) Email Address: Not Provided Message: Terrific question that I think about when assets are at all interesting. Notice above, and there will be more. I try to play a game of determinging the value of an expected income stream against that of a Treasury bond. Then, I gauge current values. So, using the example above the REIT Index seems pricey in terms of income and current value, for earnings are declining and the price earning ratios are very high even though there are ample dividends. The only way REITs make sense to me is counting on substantial property price appreciation....

Subject: Re: Portfolios From: PKnewbie To: Terri Date Posted: Mon, May 30, 2005 at 14:29:51 (EDT) Email Address: Not Provided Message: Terri I understand that you look at income, but your comment saying 'I gauge current values' is what I'm trying to find out. Using your method, how would we know when to invest in growth stocks since they typically pay little or no dividends. Should be not invest in growth stocks? What about intl stocks vs us stocks, should we be looking at the dividend yield vs us bonds or intl bonds? Please explain.

Subject: Stay Thin, Live Longer From: Emma To: All Date Posted: Sat, May 28, 2005 at 17:19:10 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/health/27obese.html?ex=1117944000&en=307f2c521c972cad&ei=5070 Study Tying Longer Life to Extra Pounds Draws Fire By GINA KOLATA The new federal study suggesting that people tend to live longer if they are slightly overweight was challenged yesterday by scientists from the Harvard School of Public Health and the American Cancer Society as well as a heart disease researcher. But authors of the federal research said in interviews that they stood by their conclusions and that the criticisms were based on misrepresentations of what they had done. The study under attack was published last month by researchers at the Centers for Disease Control and Prevention and the National Cancer Institute. It concluded that people who are overweight but not obese have a lower death risk than people of normal weight. The scientists also reported that being very thin increased the risk of death, even if the thinness was longstanding and not due to illness. In a seminar and news conference yesterday at the public health school, in Boston, the critics said other studies, including their own, had found that the death risk from excess pounds increased continuously from normal weight to overweight to obesity. Dr. Scott M. Grundy, a heart researcher at the University of Texas Southwestern Medical Center, said excess weight clearly led to heart disease and death. Dr. Michael Thune of the American Cancer Society said the same applied to cancer. Other criticism came from Dr. Frank Hu, an associate professor of nutrition and epidemiology at Harvard. Dr. Hu, citing the Nurses' Health Study, which enrolled 120,331 women in 1976 and followed them, noted that as body mass index increases, 'the death rate increases dramatically.' He and a colleague, Dr. JoAnn Manson, said the federal analysis had failed to exclude smokers and people who were already ill. 'That can lead to serious underestimates of mortality linked to overweight and obesity,' Dr. Manson said. Dr. Walter Willett, chairman of the department of nutrition at the public health school, agreed, calling the analysis 'deeply flawed.' But Dr. Katherine Flegal of the disease control centers, the lead author of the contested paper, said she and her colleagues had analyzed their data in a variety of ways. They looked at the results both with and without current or former smokers and people who had chronic diseases, Dr. Flegal said. The results always came out the same, she said: there was no mortality risk from being overweight and little from being obese, except for the extremely obese. One of her co-authors, Dr. David F. Williamson of the centers, said one reason for the discrepancy between their results and other findings might be the populations under study. The Harvard group looked at nurses, and the cancer society looked at volunteers. 'We have data sets that are truly nationally representative of the U.S. population,' Dr. Williamson said. Another reason for the differing conclusions, Dr. Flegal and Dr. Williamson said, may be that the Harvard and cancer society researchers excluded large numbers of subjects from their analysis for one reason or another; one analysis of the nurses' study excluded nearly 90 percent of the deaths, Dr. Flegal said. Or, she added, the federal researchers, who used actual measured weights and heights, not self-reported ones, may have had more accurate numbers to work with. 'I don't know what to say' about the attack on the paper, Dr. Flegal said. 'I don't have a problem with people at a conference talking about their data, but I do have a problem with their talking about our data and saying we should have found the same things that they found.'

Subject: 15 Years on the Bottom Rung From: Emma To: All Date Posted: Sat, May 28, 2005 at 15:29:36 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/26/national/class/MEXICANS-FINAL.html?pagewanted=all 15 Years on the Bottom Rung By ANTHONY DePALMA In the dark before dawn, when Madison Avenue was all but deserted and its pricey boutiques were still locked up tight, several Mexicans slipped quietly into 3 Guys, a restaurant that the Zagat guide once called 'the most expensive coffee shop in New York.' For the next 10 hours they would fry eggs, grill burgers, pour coffee and wash dishes for a stream of customers from the Upper East Side of Manhattan. By 7:35 a.m., Eliot Spitzer, attorney general of New York, was holding a power breakfast back near the polished granite counter. In the same burgundy booth a few hours later, Michael A. Wiener, co-founder of the multibillion-dollar Infinity Broadcasting, grabbed a bite with his wife, Zena. Just the day before, Uma Thurman slipped in for a quiet lunch with her children, but the paparazzi found her and she left. More Mexicans filed in to begin their shifts throughout the morning, and by the time John Zannikos, one of the restaurant's three Greek owners, drove in from the North Jersey suburbs to work the lunch crowd, Madison Avenue was buzzing. So was 3 Guys. 'You got to wait a little bit,' Mr. Zannikos said to a pride of elegant women who had spent the morning at the Whitney Museum of American Art, across Madison Avenue at 75th Street. For an illiterate immigrant who came to New York years ago with nothing but $100 in his pocket and a willingness to work etched on his heart, could any words have been sweeter to say? With its wealthy clientele, middle-class owners and low-income work force, 3 Guys is a template of the class divisions in America. But it is also the setting for two starkly different tales about breaching those divides. The familiar story is Mr. Zannikos's. For him, the restaurant - don't dare call it a diner - with its $20 salads and elegant décor represents the American promise of upward mobility, one that has been fulfilled countless times for generations of hard-working immigrants. But for Juan Manuel Peralta, a 34-year-old illegal immigrant who worked there for five years until he was fired last May, and for many of the other illegal Mexican immigrants in the back, restaurant work today is more like a dead end. They are finding the American dream of moving up far more elusive than it was for Mr. Zannikos. Despite his efforts to help them, they risk becoming stuck in a permanent underclass of the poor, the unskilled and the uneducated. That is not to suggest that the nearly five million Mexicans who, like Mr. Peralta, are living in the United States illegally will never emerge from the shadows. Many have, and undoubtedly many more will. But the sheer size of the influx - over 400,000 a year, with no end in sight - creates a problem all its own. It means there is an ever-growing pool of interchangeable workers, many of them shunting from one low-paying job to another. If one moves on, another one - or maybe two or three - is there to take his place. Although Mr. Peralta arrived in New York almost 40 years after Mr. Zannikos, the two share a remarkably similar beginning. They came at the same age to the same section of New York City, without legal papers or more than a few words of English. Each dreamed of a better life. But monumental changes in the economy and in attitudes toward immigrants have made it far less likely that Mr. Peralta and his children will experience the same upward mobility as Mr. Zannikos and his family. Of course, there is a chance that Mr. Peralta may yet take his place among the Mexican-Americans who have succeeded here. He realizes that he will probably not do as well as the few who have risen to high office or who were able to buy the vineyards where their grandfathers once picked grapes. But he still dreams that his children will someday join the millions who have lost their accents, gotten good educations and firmly achieved the American dream. Political scientists are divided over whether the 25 million people of Mexican ancestry in the United States represent an exception to the classic immigrant success story. Some, like John H. Mollenkopf at the City University of New York, are convinced that Mexicans will eventually do as well as the Greeks, Italians and other Europeans of the last century who were usually well assimilated after two or three generations. Others, including Mexican-Americans like Rodolfo O. de la Garza, a professor at Columbia, have done studies showing that Mexican-Americans face so many obstacles that even the fourth generation trails other Americans in education, home ownership and household income. The situation is even worse for the millions more who have illegally entered the United States since 1990. Spread out in scores of cities far beyond the Southwest, they find jobs plentiful but advancement difficult. President Vicente Fox of Mexico was forced to apologize this month for declaring publicly what many Mexicans say they feel, that the illegal immigrants 'are doing the work that not even blacks want to do in the United States.' Resentment and race subtly stand in their way, as does a lingering attachment to Mexico, which is so close that many immigrants do not put down deep roots here. They say they plan to stay only long enough to make some money and then go back home. Few ever do. But the biggest obstacle is their illegal status. With few routes open to become legal, they remain, like Mr. Peralta, without rights, without security and without a clear path to a better future. 'It's worrisome,' said Richard Alba, a sociologist at the State University of New York, Albany, who studies the assimilation and class mobility of contemporary immigrants, 'and I don't see much reason to believe this will change.' Little has changed for Mr. Peralta, a cook who has worked at menial jobs in the United States for the last 15 years. Though he makes more than he ever dreamed of in Mexico, his life is anything but middle class and setbacks are routine. Still, he has not given up hope. Querer es poder, he sometimes says: Want something badly enough and you will get it. But desire may not be enough anymore. That is what concerns Arturo Sarukhan, Mexico's consul general in New York. Mr. Sarukhan recently took an urgent call from New York's police commissioner about an increase in gang activity among young Mexican men, a sign that they were moving into the underside of American life. Of all immigrants in New York City, officials say, Mexicans are the poorest, least educated and least likely to speak English. The failure or success of this generation of Mexicans in the United States will determine the place that Mexicans will hold here in years to come, Mr. Sarukhan said, and the outlook is not encouraging. 'They will be better off than they could ever have been in Mexico,' he said, 'but I don't think that's going to be enough to prevent them from becoming an underclass in New York.' Different Results There is a break in the middle of the day at 3 Guys, after the lunchtime limousines leave and before the private schools let out. That was when Mr. Zannikos asked the Mexican cook who replaced Mr. Peralta to prepare some lunch for him. Then Mr. Zannikos carried the chicken breast on pita to the last table in the restaurant. 'My life story is a good story, a lot of success,' he said, his accent still heavy. He was just a teenager when he left the Greek island of Chios, a few miles off the coast of Turkey. World War II had just ended, and Greece was in ruins. 'There was only rich and poor, that's it,' Mr. Zannikos said. 'There was no middle class like you have here.' He is 70 now, with short gray hair and soft eyes that can water at a mention of the past. Because of the war, he said, he never got past the second grade, never learned to read or write. He signed on as a merchant seaman, and in 1953, when he was 19, his ship docked at Norfolk, Va. He went ashore one Saturday with no intention of ever returning to Greece. He left behind everything, including his travel documents. All he had in his pockets was $100 and the address of his mother's cousin in the Jackson Heights-Corona section of Queens. Almost four decades later, Mr. Peralta underwent a similar rite of passage out of Mexico. He had finished the eighth grade in the poor southern state of Guerrero and saw nothing in his future there but fixing flat tires. His father, Inocencio, had once dreamed of going to the United States, but never had the money. In 1990, he borrowed enough to give his first-born son a chance. Mr. Peralta was 19 when he boarded a smoky bus that carried him through the deserted hills of Guerrero and kept going until it reached the edge of Mexico. With eight other Mexicans he did not know, he crawled through a sewer tunnel that started in Tijuana and ended on the other side of the border, in what Mexicans call el Norte. He had carried no documents, no photographs and no money, except what his father gave him to pay his shifty guide and to buy an airline ticket to New York. Deep in a pocket was the address of an uncle in the same section of Queens where Mr. Zannikos had gotten his start. By 1990, the area had gone from largely Greek to mostly Latino. Starting over in the same working-class neighborhood, Mr. Peralta and Mr. Zannikos quickly learned that New York was full of opportunities and obstacles, often in equal measure. On his first day there, Mr. Zannikos, scared and feeling lost, found the building he was looking for, but his mother's cousin had moved. He had no idea what to do until a Greek man passed by. Walk five blocks to the Deluxe Diner, the man said. He did. The diner was full of Greek housepainters, including one who knew Mr. Zannikos's father. On the spot, they offered him a job painting closets, where his mistakes would be hidden. He painted until the weather turned cold. Another Greek hired him as a dishwasher at his coffee shop in the Bronx. It was not easy, but Mr. Zannikos worked his way up to short-order cook, learning English as he went along. In 1956, immigration officials raided the coffee shop. He was deported, but after a short while he managed to sneak back into the country. Three years later he married a Puerto Rican from the Bronx. The marriage lasted only a year, but it put him on the road to becoming a citizen. Now he could buy his own restaurant, a greasy spoon in the South Bronx that catered to a late-night clientele of prostitutes and undercover police officers. Since then, he has bought and sold more than a dozen New York diners, but none have been more successful than the original 3 Guys, which opened in 1978. He and his partners own two other restaurants with the same name farther up Madison Avenue, but they have never replicated the high-end appeal of the original. 'When employees come in I teach them, 'Hey, this is a different neighborhood,' ' Mr. Zannikos said. What may be standard in some other diners is not tolerated here. There are no Greek flags or tourism posters. There is no television or twirling tower of cakes with cream pompadours. Waiters are forbidden to chew gum. No customer is ever called 'Honey.' 'They know their place and I know my place,' Mr. Zannikos said of his customers. 'It's as simple as that.' His place in society now is a far cry from his days in the Bronx. He and his second wife, June, live in Wyckoff, a New Jersey suburb where he pampers fig trees and dutifully looks after a bird feeder shaped like the Parthenon. They own a condominium in Florida. His three children all went far beyond his second-grade education, finishing high school or attending college. They have all done well, as has Mr. Zannikos, who says he makes about $130,000 a year. He says he is not sensitive to class distinctions, but he admits he was bothered when some people mistook him for the caterer at fund-raising dinners for the local Greek church he helped build. All in all, he thinks immigrants today have a better chance of moving up the class ladder than he did 50 years ago. 'At that time, no bank would give us any money, but today they give you credit cards in the mail,' he said. 'New York still gives you more opportunity that any other place. If you want to do things, you will.' He says he has done well, and he is content with his station in life. 'I'm in the middle and I'm happy.' A Divisive Issue Mr. Peralta cannot guess what class Mr. Zannikos belongs to. But he is certain that it is much tougher for an immigrant to get ahead today than 50 years ago. And he has no doubt about his own class. 'La pobreza,' he says. 'Poverty.' It was not what he expected when he boarded the bus to the border, but it did not take long for him to realize that success in the United States required more than hard work. 'A lot of it has to do with luck,' he said during a lunch break on a stoop around the corner from the Queens diner where he went to work after 3 Guys. 'People come here, and in no more than a year or two they can buy their own house and have a car,' Mr. Peralta said. 'Me, I've been here 15 years, and if I die tomorrow, there wouldn't even be enough money to bury me.' In 1990, Mr. Peralta was in the vanguard of Mexican immigrants who bypassed the traditional barrios in border states to work in far-flung cities like Denver and New York. The 2000 census counted 186,872 Mexicans in New York, triple the 1990 figure, and there are undoubtedly many more today. The Mexican consulate, which serves the metropolitan region, has issued more than 500,000 ID cards just since 2001. Fifty years ago, illegal immigration was a minor problem. Now it is a divisive national issue, pitting those who welcome cheap labor against those with concerns about border security and the cost of providing social services. Though newly arrived Mexicans often work in industries that rely on cheap labor, like restaurants and construction, they rarely organize. Most are desperate to stay out of sight. Mr. Peralta hooked up with his uncle the morning he arrived in New York. He did not work for weeks until the bakery where the uncle worked had an opening, a part-time job making muffins. He took it, though he didn't know muffins from crumb cake. When he saw that he would not make enough to repay his father, he took a second job making night deliveries for a Manhattan diner. By the end of his first day he was so lost he had to spend all his tip money on a cab ride home. He quit the diner, but working there even briefly opened his eyes to how easy it could be to make money in New York. Diners were everywhere, and so were jobs making deliveries, washing dishes or busing tables. In six months, Mr. Peralta had paid back the money his father gave him. He bounced from job to job and in 1995, eager to show off his newfound success, he went back to Mexico with his pockets full of money, and he married. He was 25 then, the same age at which Mr. Zannikos married. But the similarities end there. When Mr. Zannikos jumped ship, he left Greece behind for good. Though he himself had no documents, the compatriots he encountered on his first days were here legally, like most other Greek immigrants, and could help him. Greeks had never come to the United States in large numbers - the 2000 census counted only 29,805 New Yorkers born in Greece - but they tended to settle in just a few areas, like the Astoria section of Queens, which became cohesive communities ready to help new arrivals. Mr. Peralta, like many other Mexicans, is trying to make it on his own and has never severed his emotional or financial ties to home. After five years in New York's Latino community, he spoke little English and owned little more than the clothes on his back. He decided to return to Huamuxtitlán (pronounced wa-moosh-teet-LAHN), the dusty village beneath a flat-topped mountain where he was born. 'People thought that since I was coming back from el Norte, I would be so rich that I could spread money around,' he said. Still, he felt privileged: his New York wages dwarfed the $1,000 a year he might have made in Mexico. He met a shy, pretty girl named Matilde in Huamuxtitlán, married her and returned with her to New York, again illegally, all in a matter of weeks. Their first child was born in 1996. Mr. Peralta soon found that supporting a family made it harder to save money. Then, in 1999, he got the job at 3 Guys. 'Barba Yanni helped me learn how to prepare things the way customers like them,' Mr. Peralta said, referring to Mr. Zannikos with a Greek title of respect that means Uncle John. The restaurant became his school. He learned how to sauté a fish so that it looked like a work of art. The three partners lent him money and said they would help him get immigration documents. The pay was good. But there were tensions with the other workers. Instead of hanging their orders on a rack, the waiters shouted them out, in Greek, Spanish and a kind of fractured English. Sometimes Mr. Peralta did not understand, and they argued. Soon he was known as a hothead. Still, he worked hard, and every night he returned to his growing family. Matilde, now 27, cleaned houses until the second child, Heidi, was born three years ago. Now she tries to sell Mary Kay products to other mothers at Public School 12, which their son, Antony, 8, attends. Most weeks, Mr. Peralta could make as much as $600. Over the course of a year that could come to over $30,000, enough to approach the lower middle class. But the life he leads is far from that and uncertainty hovers over everything about his life, starting with his paycheck. To earn $600, he has to work at least 10 hours a day, six days a week, and that does not happen every week. Sometimes he is paid overtime for the extra hours, sometimes not. And, as he found out in May, he can be fired at any time and bring in nothing, not even unemployment, until he lands another job. In 2004, he made about $24,000. Because he is here illegally, Mr. Peralta can easily be exploited. He cannot file a complaint against his landlord for charging him $500 a month for a 9-foot-by-9-foot room in a Queens apartment that he shares with nine other Mexicans in three families who pay the remainder of the $2,000-a-month rent. All 13 share one bathroom, and the established pecking order means the Peraltas rarely get to use the kitchen. Eating out can be expensive. Because they were born in New York, Mr. Peralta's children are United States citizens, and their health care is generally covered by Medicaid. But he has to pay out of his pocket whenever he or his wife sees a doctor. And forget about going to the dentist. As many other Mexicans do, he wires money home, and it costs him $7 for every $100 he sends. When his uncle, his nephew and his sister asked him for money, he was expected to lend it. No one has paid him back. He has middle-class ornaments, like a cellphone and a DVD player, but no driver's license or Social Security card. He is the first to admit that he has vices that have held him back; nothing criminal, but he tends to lose his temper and there are nights when he likes to have a drink or two. His greatest weakness is instant lottery tickets, what he calls 'los scratch,' and he sheepishly confesses that he can squander as much as $75 a week on them. It is a way of preserving hope, he said. Once he won $100. He bought a blender. Years ago, he and Matilde were so confident they would make it in America that when their son was born they used the American spelling of his name, Anthony, figuring it would help pave his passage into the mainstream. But even that effort failed. 'Look at this,' his wife said one afternoon as she sat on the floor of their room near a picture of the Virgin of Guadalupe. Mr. Peralta sat on a small plastic stool in the doorway, listening. His mattress was stacked against the wall. A roll of toilet paper was stashed nearby because they dared not leave it in the shared bathroom for someone else to use. She took her pocketbook and pulled out a clear plastic case holding her son's baptismal certificate, on which his name is spelled with an 'H.' But then she unfolded his birth certificate, where the 'H' is missing. 'The teachers won't teach him to spell his name the right way until the certificate is legally changed,' she said. 'But how can we do that if we're not legal?' Progress, but Not Success An elevated subway train thundered overhead, making the afternoon light along Roosevelt Avenue blink like a failing fluorescent bulb. Mr. Peralta's daughter and son grabbed his fat hands as they ran some errands. He had just finished a 10-hour shift, eggs over easy and cheeseburgers since 5 a.m. It had been especially hard to stand the monotony that day. He kept thinking about what was going on in Mexico, where it was the feast day of Our Lady of the Rosary. And, oh, what a feast there was - sweets and handmade tamales, a parade, even a bullfight. At night, fireworks, bursting loud and bright against the green folds of the mountains. Paid for, in part, by the money he sends home. But instead of partying, he was walking his children to the Arab supermarket on Roosevelt Avenue to buy packages of chicken and spare ribs, and hoping to get to use the kitchen. And though he knew better, he grabbed a package of pink and white marshmallows for the children. He needed to buy tortillas, too, but not there. A Korean convenience store a few blocks away sells La Maizteca tortillas, made in New York. The swirl of immigrants in Mr. Peralta's neighborhood is part of the fabric of New York, just as it was in 1953, when Mr. Zannikos arrived. But most immigrants then were Europeans, and though they spoke different languages, their Caucasian features helped them blend into New York's middle class. Experts remain divided over whether Mexicans can follow the same route. Samuel P. Huntington, a Harvard professor of government, takes the extreme view that Mexicans will not assimilate and that the separate culture they are developing threatens the United States. Most others believe that recent Mexican immigrants will eventually take their place in society, and perhaps someday muster political clout commensurate with their numbers, though significant impediments are slowing their progress. Francisco Rivera-Batiz, a Columbia University economics professor, says that prejudice remains a problem, that factory jobs have all but disappeared, and that there is a growing gap between the educational demands of the economy and the limited schooling that the newest Mexicans have when they arrive. But the biggest obstacle by far, and the one that separates newly arrived Mexicans from Greeks, Italians and most other immigrants - including earlier generations of Mexicans - is their illegal status. Professor Rivera-Batiz studied what happened to illegal Mexican immigrants who became legal after the last national amnesty in 1986. Within a few years, their incomes rose 20 percent and their English improved greatly. 'Legalization,' he said, 'helped them tremendously.' Although the Bush administration is again talking about legalizing some Mexicans with a guest worker program, there is opposition to another amnesty, and the number of Mexicans illegally living in the United States continues to soar. Desperate to get their papers any way they can, many turn to shady storefront legal offices. Like Mr. Peralta, they sign on to illusory schemes that cost hundreds of dollars but almost never produce the promised green cards. Until the 1980's, Mexican immigration was largely seasonal and mostly limited to agricultural workers. But then economic chaos in Mexico sent a flood of immigrants northward, many of them poorly educated farmers from the impoverished countryside. Tighter security on the border made it harder for Mexicans to move back and forth in the traditional way, so they tended to stay here, searching for low-paying unskilled jobs and concentrating in barrios where Spanish, constantly replenished, never loses its immediacy. 'Cuidado!' Mr. Peralta shouted when Antony carelessly stepped into Roosevelt Avenue without looking. Although the boy is taught in English at school, he rarely uses anything but Spanish at home. Even now, after 15 years in New York, Mr. Peralta speaks little English. He tried English classes once, but could not get his mind to accept the new sounds. So he dropped it, and has stuck with only Spanish, which he concedes is 'the language of busboys' in New York. But as long as he stays in his neighborhood, it is all he needs. It was late afternoon by the time Mr. Peralta and his children headed home. The run-down house, the overheated room, the stacked mattress and the hoarded toilet paper - all remind him how far he would have to go to achieve a success like Mr. Zannikos's. Still, he says, he has done far better than he could ever have done in Mexico. He realizes that the money he sends to his family there is not enough to satisfy his father, who built stairs for a second floor of his house made of concrete blocks in Huamuxtitlán, even though there is no second floor. He believes Manuel has made it big in New York and he is waiting for money from America to complete the upstairs. Manuel has never told him the truth about his life up north. He said his father's images of America came from another era. The older man does not know how tough it is to be a Mexican immigrant in the United States now, tougher than any young man who ever left Huamuxtitlán would admit. Everything built up over 15 years here can come apart as easily as an adobe house in an earthquake. And then it is time to start over, again. A Conflict Erupts It was the end of another busy lunch at 3 Guys in late spring 2003. Mr. Peralta made himself a turkey sandwich and took a seat at a rear table. The Mexican countermen, dishwashers and busboys also started their breaks, while the Greek waiters took care of the last few diners. It is not clear how the argument started. But a cross word passed between a Greek waiter and a Mexican busboy. Voices were raised. The waiter swung at the busboy, catching him behind the ear. Mr. Peralta froze. So did the other Mexicans. Even from the front of the restaurant, where he was watching the cash register, Mr. Zannikos realized something was wrong and rushed back to break it up. 'I stood between them, held one and pushed the other away,' he said. 'I told them: 'You don't do that here. Never do that here.' ' Mr. Zannikos said he did not care who started it. He ordered both the busboy and the waiter, a partner's nephew, to get out. But several Mexicans, including Mr. Peralta, said that they saw Mr. Zannikos grab the busboy by the head and that they believed he would have hit him if another Mexican had not stepped between them. That infuriated them because they felt he had sided with the Greek without knowing who was at fault. Mr. Zannikos said that was not true, but in the end it did not matter. The easygoing atmosphere at the restaurant changed. 'Everybody was a little cool,' Mr. Zannikos recalled. What he did not know then was that the Mexicans had reached out to the Restaurant Opportunities Center, a workers' rights group. Eventually six of them, including Mr. Peralta, cooperated with the group. He did so reluctantly, he said, because he was afraid that if the owners found out, they would no longer help him get his immigration papers. The labor group promised that the owners would never know. The owners saw it as an effort to shake them down, but for the Mexicans it became a class struggle pitting powerless workers against hard-hearted owners. Their grievances went beyond the scuffle. They complained that with just one exception, only Greeks became waiters at 3 Guys. They challenged the sole Mexican waiter, Salomon Paniagua, a former Mexican army officer who, everyone agreed, looked Greek, to stand with them. But on the day the labor group picketed the restaurant, Mr. Paniagua refused to put down his order pad. A handful of demonstrators carried signs on Madison Avenue for a short while before Mr. Zannikos and his partners reluctantly agreed to settle. Mr. Zannikos said he felt betrayed. 'When I see these guys, I see myself when I started, and I always try to help them,' he said. 'I didn't do anything wrong.' The busboy and the Mexican who intervened were paid several thousand dollars and the owners promised to promote a current Mexican employee to waiter within a month. But that did not end the turmoil. Fearing that the other Mexicans might try to get back at him, Mr. Paniagua decided to strike out on his own. After asking Mr. Zannikos for advice, he bought a one-third share of a Greek diner in Jamaica, Queens. He said he put it in his father's name because the older man had become a legal resident after the 1986 amnesty. After Mr. Paniagua left, 3 Guys went without a single Mexican waiter for 10 months, despite the terms of the settlement. In March, an eager Mexican busboy with a heavy accent who had worked there for four years got a chance to wear a waiter's tie. Mr. Peralta ended up having to leave 3 Guys around the same time as Mr. Paniagua. Mr. Zannikos's partners suspected he had sided with the labor group, he said, and started to criticize his work unfairly. Then they cut back his schedule to five days a week. After he hurt his ankle playing soccer, they told him to go home until he was better. When Mr. Peralta came back to work about two weeks later, he was fired. Mr. Zannikos confirms part of the account but says the firing had nothing to do with the scuffle or the ensuing dispute. 'If he was good, believe me, he wouldn't get fired,' he said of Mr. Peralta. Mr. Peralta shrugged when told what Mr. Zannikos said. 'I know my own work and I know what I can do,' he said. 'There are a lot of restaurants in New York, and a lot of workers.' When 3 Guys fired Mr. Peralta, another Mexican replaced him, just as Mr. Peralta replaced a Mexican at the Greek diner in Queens where he went to work next. This time, though, there was no Madison Avenue address, no elaborate menu of New Zealand mussels or designer mushrooms. In the Queens diner a bowl of soup with a buttered roll cost $2, all day. If he fried burgers and scraped fat off the big grill for 10 hours a day, six days a week, he might earn about as much as he did on Madison Avenue, at least for a week. His schedule kept changing. Sometimes he worked the lunch and dinner shift, and by the end of the night he was worn out, especially since he often found himself arguing with the Greek owner. But he did not look forward to going home. So after the night manager lowered the security gate, Mr. Peralta would wander the streets. One of those nights he stopped at a phone center off Roosevelt Avenue to call his mother. 'Everything's O.K.,' he told her. He asked how she had spent the last $100 he sent, and whether she needed anything else. There is always need in Huamuxtitlán. Still restless, he went to the Scorpion, a shot-and-beer joint open till 4 a.m. He sat at the long bar nursing vodkas with cranberry juice, glancing at the soccer match on TV and the busty Brazilian bartender who spoke only a little Spanish. When it was nearly 11 p.m., he called it a night. Back home, he quietly opened the door to his room. The lights were off, the television murmuring. His family was asleep in the bunk bed that the store had now threatened to repossess. Antony was curled up on the top, Matilde and Heidi cuddled in the bottom. Mr. Peralta moved the plastic stool out of the way and dropped his mattress to the floor. The children did not stir. His wife's eyes fluttered, but she said nothing. Mr. Peralta looked over his family, his home. 'This,' he said, 'is my life in New York.' Not the life he imagined, but his life. In early March, just after Heidi's third birthday, he quit his job at the Queens diner after yet another heated argument with the owner. In his mind, preserving his dignity is one of the few liberties he has left. 'I'll get another job,' he said while baby-sitting Heidi at home a few days later. The rent is already paid till the end of the month and he has friends, he said. People know him. To him, jobs are interchangeable - just as he is to the jobs. If he cannot find work as a grillman, he will bus tables. Or wash dishes. If not at one diner, then at another. 'It's all the same,' he said. It took about three weeks, but Mr. Peralta did find a new job as a grillman at another Greek diner in a different part of New York. His salary is roughly the same, the menu is roughly the same (one new item, Greek burritos, was a natural), and he sees his chance for a better future as being roughly the same as it has been since he got to America. A Long Day Closes It was now dark again outside 3 Guys. About 9 p.m. Mr. Zannikos asked his Mexican cook for a small salmon steak, a little rare. It had been another busy 10-hour day for him, but a good one. Receipts from the morning alone exceeded what he needed to take in every day just to cover the $23,000 a month rent. He finished the salmon quickly, left final instructions with the lone Greek waiter still on duty and said good night to everyone else. He put on his light tan corduroy jacket and the baseball cap he picked up in Florida. 'Night,' he said to the lone table of diners. Outside, as Mr. Zannikos walked slowly down Madison Avenue, a self-made man comfortable with his own hard-won success, the bulkhead doors in front of 3 Guys clanked open. Faint voices speaking Spanish came from below. A young Mexican who started his shift 10 hours earlier climbed out with a bag of garbage and heaved it onto the sidewalk. New Zealand mussel shells. Uneaten bits of portobello mushrooms. The fine grounds of decaf cappuccino. One black plastic bag after another came out until Madison Avenue in front of 3 Guys was piled high with trash. 'Hurry up!' the young man shouted to the other Mexicans. 'I want to go home, too.'

Subject: Surge in G.E. Business in India From: Emma To: All Date Posted: Sat, May 28, 2005 at 14:06:31 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/business/worldbusiness/28electric.html Chief Sees Surge in G.E. Business in India By SARITHA RAI BANGALORE, India - Jeffrey R. Immelt, chairman and chief executive of General Electric, said Friday that he expected G.E.'s revenue in India to leap to more than $5 billion by 2010 from $800 million now. Describing India as a 'rising star,' Mr. Immelt said on a two-day visit that General Electric would aggressively expand in India, one of the world's fastest-growing economies, with new investment in financial services and manufacturing. 'We believe that India is at the beginning of a growth cycle,' Mr. Immelt said in a statement. He also spoke at a news conference in Mumbai Friday at the end of his India trip. India is a crucial market for G.E., as over half of its global revenue this year will come from outside the United States. According to its annual report, G.E. expects 60 percent of its growth to come from developing countries in the next decade. Mr. Immelt said the company would look for opportunities in advanced materials, energy, health care, financial services, security and water treatment. 'My intent is to bid on every new project and be a financial participant in almost all projects alongside offering our technology,' he said. For instance, the emergence of discount airlines, the open skies policy, the growing number of fliers and the demand for new and upgraded airports offer opportunities to businesses like GE Commercial Finance, GE Infrastructure and GE Aircraft Engines. On Thursday, Mr. Immelt announced in New Delhi that G.E. would join with an Indian health care company, MediCity, to build a $250 million medical center, modeled after the Mayo Clinic, in Gurgaon, a suburb of New Delhi. G.E. India and MediCity would collaborate to create a medical institute in high-end medical diagnostics and clinical research. The center, which will include a 1,800-bed multispecialty hospital incorporating alternative healing therapies, will open in 2007. General Electric, which is based in Fairfield, Conn., has units and joint ventures in India spanning technology and back-office outsourcing, credit cards and banking. The company currently employs more than 20,000 people in India. In Bangalore, for instance, G.E. has its biggest research and development center outside the United States, the Jack Welch Technology Center, that employs hundreds of scientists. G.E. held a 10 percent stake in the much-disputed $2.9 billion Dabhol Power Company, set up by the Enron Corporation in the western state of Maharashtra. The plant closed in 2001 after a payment conflict with the state that escalated into an international arbitration issue. G.E. said it wanted to resolve the dispute over Dabhol in a 'constructive and flexible' way. G.E. entered India in 1902, and in the mid-1990's set up software, research and development and back-office operations. It was among the first global corporations to tap India's inexpensive, educated labor pool by outsourcing.

Subject: Re: Surge in G.E. Business in India From: Pete Weis To: Emma Date Posted: Sun, May 29, 2005 at 12:14:11 (EDT) Email Address: Not Provided Message: Generous Electric (as my father-in-law who once worked for them called them) is a good example of a company benefiting from globalization (and comparative advantage? - although some of their advantage seems to come from cheaper overseas labor as described in this article). They are also the single largest spender with regard to the development of alternative energy sources and could end up being one of the biggest gainers in that regard.

Subject: Where's the Boeuf? From: Emma To: All Date Posted: Sat, May 28, 2005 at 14:03:37 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/opinion/27tournier.html Where's the Boeuf? By VINCENT TOURNIER Grenoble, France WITH its project for a European Constitution, is Europe reliving the history of the United States? The Europeans take the comparison very seriously: they baptized the assembly charged with writing the document the 'Convention,' in imitation of the Constitutional Convention in Philadelphia. The president of the Convention, Valéry Giscard d'Estaing, even proposed 'Federalist papers' on the model of those written by the founders of the American democracy. Americans would no doubt be astonished by the comparison. Even a cursory look at the Constitutions drawn up by both Conventions demonstrates how far off Mr. Giscard is. In a few pages, the American Constitution established a foundation for the growth of democracy. In 450 pages, the European Constitution - which establishes power-sharing among European Union members, provides for a foreign minister and full-time president and states more precisely the functions of the union and the member states - enshrines a plethora of rules and regulations while ignoring the fundamental needs of democracy. When the French vote on Sunday on whether to accept the Constitution, one can ask if a resounding 'non' that would send the document back to the drawing board would be a far greater service to Europe than the 'oui' that French and European Union officials are urging. Even before the 105 delegates to the Convention sat down to write the draft Constitution, the European-American comparison was strained. First, of course, the 25 European states are clearly more diverse than the 13 former colonies, with neither the same language nor the same cultural traditions. They are old nations whose identities have been fashioned over the centuries by wars that have pitted one against the other. That's why the debates about the 'European project' have mainly concerned each nation's prerogatives, each government putting a priority on preserving its sovereignty and assuring itself a leading role in the power structure. Discussions about democratic principles like the separation of powers and fundamental rights have been relegated to the background. Second, while the American Constitution stemmed from the fight for independence, the European Constitution is disconnected from history. Even though the union likes to say that Europe was born from the ashes of World War II, it is obvious that there is no particular reason for a European project at this particular moment. That has affected how the Constitution was conceived and written. The participants in the Convention (who were appointed, not elected) certainly have good intentions, but are they worthy of such a lofty task? In exceptional circumstances, when history demands it, exceptional personalities emerge, people with an acute sense of what the times demand. When things are quiet, second-raters take up the job. That is why the 'founders' of Europe have no hope of one day being considered in the same light as Washington, Madison and Franklin. That is also why, from the beginning, the European Union has been so marked by bureaucracy and run by unelected 'experts.' These two factors help explain what is called the 'democratic deficit' of the union: the absence of a separation of powers, the weak Parliament and an inaccessible judiciary whose final role hasn't even been decided yet. The Constitution does not offer any solutions for these problems, aside from minor alterations that don't deal with the underlying causes. The text, which has as many exceptions as rules, isn't written for the ordinary citizen, but for the bureaucrat. Even its equivalent of the Bill of Rights, presented as a great democratic advance, raises serious problems, to such a point that the national governments have had to introduce numerous safeguards to limit its effects. The question that Europeans face today is whether a united Europe is more important than these democratic considerations. Some countries have said yes by approving the Constitution; in others, like France, opposition has been running strong. Certainly, factors having little to do with the Constitution have contributed to public hostility in this country, like the unpopularity of the government and the troubled economy. The European message is also muddled. For some, the union has not kept its promises, notably with the single currency, which was presented as a miracle remedy for economic problems. In addition, the union is founded on a contradiction (protecting itself from globalization while preaching the opening of markets and frontiers); there is also the uncertainty about integrating the new members from Eastern Europe and, eventually, Turkey. So the French, understandably, regard the Constitution with distrust. Now, the French may have many defects, but they are also an old political people who have seen many constitutions come and go. It's an error to explain their reluctance simply as their traditional scorn, or worse, as a refusal of the idea of Europe. They are expressing a genuine unease that is founded in a Constitution whose flaws are admitted even by its supporters. By voting no, the French will not topple Europe - the union will continue under its current rules - but they may provide the impetus for a Constitution that would be truly democratic and a truly historic document. Vincent Tournier is a professor at the Institute of Political Studies in Grenoble. This article was translated by The Times from the French.

Subject: Hedge Funds Are Stumbling but... From: Emma To: All Date Posted: Sat, May 28, 2005 at 14:00:49 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/business/27hedge.html Hedge Funds Are Stumbling but Manager Salaries Aren't By RIVA D. ATLAS At hedge funds, the rich just keep getting richer. Across Wall Street, fees for businesses from trading stocks to investing in mutual funds have been falling. But at hedge funds, those exclusive investment partnerships for the wealthy and institutions like pension funds, fees have stayed dizzyingly high, even as billions of dollars have poured into the industry and performance, on average, has faltered. Last year, the top-paid hedge fund manager, Edward S. Lampert of ESL Investments, earned $1 billion, according to a survey to be released today by Alpha, a magazine published by Institutional Investor that follows hedge funds. That is the highest sum in the four years the magazine has been tracking these managers' incomes. The average hedge fund manager on Institutional Investor's list of the top 25 earners made $251 million in 2004, up from nearly $136 million three years earlier. The secret to the wealth of hedge fund managers is how they get paid. Instead of receiving a fixed percentage of the funds they manage, as mutual fund managers do, hedge fund managers generally make '1 and 20' - 1 percent of assets under management and 20 percent of profits. That means that a $1 billion hedge fund manager earns $10 million just for opening the doors, and a lot more if his fund performs well. Investors are willing to pay more for these managers' talents because, at a time when stocks are doing poorly and yields on short-term Treasury securities are low, hedge funds hold out the hope of a better return. This promise has become so seductive that the top hedge fund managers can basically name their price. 'You don't mind paying higher fees if you are getting rewarded properly,' said Michael Strauss, chief economist for Commonfund, which invests on behalf of foundations and endowments. Steven A. Cohen of SAC Capital Advisors, for example, takes as much as 50 percent of all profits his hedge funds earn, netting him $450 million last year, according to Institutional Investor. Even after this big cut, his funds still returned around 23 percent, not bad in a year when the Standard & Poor's 500-stock index rose 8.99 percent. Another manager on the list, Kenneth C. Griffin, has a novel twist on the fees he charges. His firm, Citadel Investment, which managed some $11 billion at year-end and has close to 1,000 employees - large for a hedge fund - does not charge a fixed fee for expenses. Instead, Mr. Griffin bills investors annually for whatever it cost to run the fund that year, a figure that fluctuates, but has been as high as 6 percent of assets, according to investors. Last year, Mr. Griffin's largest fund returned 9.87 percent, far below its compound average annual return of 26 percent. Spokesmen for Mr. Cohen and Mr. Griffin declined to comment. Still, some longtime investors in hedge funds worry that the steep compensation may make managers like Mr. Griffin less motivated to perform. Already, overall performance of hedge funds is faltering. Through April, hedge funds were down 0.7 percent, according to an index by Hedge Fund Research, a data firm. That is better than the S.&. P. 500, which was down about 4 percent in the period. But hedge fund investors are bracing for further losses for the month of May, after some complex derivatives trades went against a number of fund managers. 'When managers were earning double-digit returns, high expenses did not matter as much,' said Antoine Bernheim, publisher of the U.S. Offshore Funds Directory. 'But when you are in a low single-digit return environment, investors can end up breaking even or losing money. This is not a sustainable situation.' Somehow, though, hedge fund managers continue to attract huge sums under ever richer terms. Investors were clamoring to get into Eton Park, the $3 billion hedge fund started last November by Eric Mindich, a former Goldman Sachs executive. Investors in the new fund agreed not to withdraw any of their money for as long as three and a half years. Another recent start-up, by the financier Carl C. Icahn, charges a 2.5 percent fee for expenses and 25 percent of the profits. Many of the 25 managers on the Institutional Investor list of top earners had outstanding returns. Mr. Lampert's estimated $1 billion profit, for example, came after returning some 69 percent to his investors, who benefited from the spectacular rise in the price of Kmart, the discount retailer that Mr. Lampert has merged with Sears, Roebuck. The second-best performer on the list, James H. Simons of Renaissance Technologies, made $670 million after posting a 24.9 percent return last year, even after deducting his 5 percent management fee and 44 percent cut of the profits. A spokesman for Mr. Lampert declined comment; executives at Renaissance did not return calls. But other celebrated managers had disappointing results, yet continued to earn hundreds of millions. Last year, George Soros made $305 million, even as his Quantum Endowment Fund rose just 4.6 percent. Mr. Soros's large earnings reflects the fact that much of the money managed by his firm now represents his own capital. Outside investors pulled money from Soros Fund Management in recent years, after Mr. Soros announced that he would be investing more conservatively. His goal is to earn enough to support his charitable efforts, rather than to make big, risky bets like his famous multibillion-dollar gamble against the British pound in 1992. Mr. Soros is not the only manager aiming for lower, less volatile results. Much of the vast sums flowing into hedge funds these days comes from pension funds and other institutions, which prize predictable performance over outsize returns. The average pension fund is looking to make just 8 percent, after deducting fees, on its hedge fund investments, according to a recent study by the Bank of New York and Casey, Quirk & Associates, a consulting firm. That is a far cry from the returns of more than 25 percent generated by celebrated managers like Mr. Soros and Michael Steinhardt at their peaks. Now that the performance bar has been lowered, there is less incentive for managers to make more aggressive bets, consultants said, especially when they can still charge the same steep fees they did in the past. Investors in hedge funds say they are resigned to paying dearly for top hedge fund talent. 'It's the law of supply and demand,' said William Lawrence, chief executive of Meridian Capital Partners, which manages portfolios of hedge funds. 'Over time, if the fees are not borne out by performance, the market will react.'

Subject: Spread of AIDS in India From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:59:53 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/international/asia/27aids.html?pagewanted=all Spread of AIDS in India Outpaces Scant Treatment Effort By SOMINI SENGUPTA MUMBAI, India - On an ordinary Thursday morning at the city's largest public hospital, an ordinary group of Indians sat around a table, exchanging advice on life and death. A middle-aged man in a button-down shirt said he had long ago stopped having sex with his wife. A wisp of a woman sat quietly in a black burqa, her large eyes screaming bafflement at what she was being told. A plump woman in a brown sari requested that nothing be mailed to her home, for fear that her family would discover her secret. They were all living with AIDS. Two counselors issued a stream of instructions. Come to the hospital yourself if you want free medicines. Don't send relatives. Don't go to your village for so long this summer that you cannot come back in time for your next dose. Never skip a dose. 'There's no need to be afraid,' one said, though the counselors' noses were shielded by surgical masks. The scene in this sunny hallway of J. J. Hospital here in Mumbai, formerly Bombay, offered a front-line snapshot of the first efforts to treat AIDS in India, where stigma, poverty, an anemic public health system and the sheer scale of the pandemic combine in a daunting challenge. The government estimates that India has 5.1 million people infected with H.I.V., second only to South Africa. Only a year ago did the government start offering free drug therapy. Today, in a country that famously exports low-cost generic AIDS drugs across the world, less than 2 percent of the half-million Indians who are likely to need it receive free treatment. 'Our government works in a snail's pace,' said Neville Selhore, director of an advocacy group in Delhi called Sahara. 'The whole H.I.V. response has been very slow.' In a country of a billion people, 5.1 million cases are, as the government points out, a drop in the bucket. But as public health workers note, India is at a pivotal moment. It could go the way of South Africa, where a lack of treatment allowed the virus to explode, or that of Brazil, where early and aggressive treatment programs checked the spread of infection. Given India's population, the AIDS pandemic, if not immediately tackled, could far outstrip the devastation visited on many African countries, AIDS advocates warn. In January the World Health Organization called attention to India, as well as Nigeria and South Africa, for not moving fast enough on treatment. Among Indians, AIDS already is no longer confined to the high-risk groups who are believed to have been responsible for its early spread: prostitutes, their customers and users of injected drugs. Nor does it remain a city disease. The number of local districts considered high-prevalence areas doubled in 2004. Perhaps most worrisome, the majority of Indians who are infected do not know that they have the virus or are spreading it. Offering access to treatment, health workers say, is the best way to persuade people to be tested. It is also the only way to quash the stigma still associated with AIDS. 'India is at a real turning point,' said Ira C. Magaziner, chairman of the Clinton Foundation's H.I.V./AIDS Initiative. 'If they can address it now with treatment and prevention programs, they can turn it around.' [Former President Bill Clinton was in India on Thursday to announce a training program for 150,000 private doctors treating AIDS cases. His visit followed an announcement by the government that it had succeeded in slowing the growth rates of the infection. Compared with 520,000 new infections in 2003, government health officials announced, only 28,000 new cases turned up in 2004.] Still, the government is behind on its own treatment pledge. Last year, when India began its free drug therapy program, it promised to extend coverage to 100,000 patients by April of this year, but only 8,000 now receive it. The government recently repeated its 100,000 pledge, this time giving itself a deadline of 2007. The private sector, meanwhile, has proved more aggressive, serving at least 20,000 Indians who have purchased antiretroviral drugs, according to government estimates. But the kinds of doctors treating them, and how well, remains a mystery. One private practitioner in central Mumbai, Dr. Prakash Bora, said he had tended to 3,500 H.I.V.-positive people in the last 12 years. Patients visit his office, he said, to avoid the crowds, long lines and humiliation associated with the public system. As if on cue one evening, a government clerk walked in. He said he had done everything possible to avoid a public hospital; he had not even disclosed his H.I.V. status to his wife, and he declined to divulge his name to a reporter. The patient said he had not yet thought about how he would afford antiretroviral therapy if he should need it. At the moment he spends roughly $25 a month for vitamins and the traditional Ayurvedic medicines that Dr. Bora prescribes. Today, antiretroviral therapy for first-time patients costs about $25 a month at a city pharmacy, a hefty amount for many working-class Indians. Those who develop resistance to the first-line treatment, or those who need an alternative drug 'cocktail' pay more than twice that amount. The impact of India's new patent law, which bars Indian companies from producing new low-cost generic drugs, has yet to be felt. Sometimes, Dr. Bora said, if patients are buying their own medicines, a crimp in the family budget can force them to go off the medicines, or skip a dose or two to stretch out the prescription. That so few Indians have gotten government-financed treatment points to a host of problems, from the lack of confidence in public hospitals, to a shortage of trained doctors and supplies in parts of the country, to the scarcity of hospitals and health centers where testing and treatment are available. In short, AIDS has tested the fragility of a public health system financed by less than one percent of the country's gross domestic product. In one state, Manipur, the head of the state AIDS agency, Binod Kumar Sharma, said there was simply not enough medicine or money to meet the demand, nor enough equipment for tests. At the moment, he said, 432 people are under treatment, but another 1,500 are eligible. 'India has a long, long way to go in scaling up wide-scale access to testing and treatment,' Dr. Richard Feachem, director of the Geneva-based Global Fund for AIDS, Tuberculosis and Malaria, said in a telephone interview. 'Can India afford it? Certainly. Does India have the human resources, the institutional resources to mount an effective response? Certainly.' Of the $107 million allocated by the Global Fund for AIDS prevention and treatment programs in India, only $12 million has been disbursed. Dr. Feachem said that was because of 'a certain slowness in utilization of funds.' For their part, Indian government officials say a hasty distribution of antiretroviral drugs without proper training and infrastructure would cause other problems, including people dropping out of the treatment program. 'You cannot just start everything under a tree,' said Dr. S. Y. Quraishi, chief of India's National AIDS Control Organization. 'This is totally new in India,' Dr. Quraishi said. 'One of the problems is that patients themselves have to come forward. As word is going around, people are coming. Their numbers will go up.' He said that before the end of the year he hoped to make antiretroviral treatment available in 100 hospitals and health centers across India, up from 25 now. Why so few Indians are able to get treatment came into sharp relief at a Catholic-run hospice in a far-flung suburb in New Mumbai, about an hour's drive from J. J. Hospital. Only one of the 38 patients housed there gets free treatment from J. J. Hospital. The Catholic nuns who run the hospice, the Sisters of the Destitute, say they have no means to ferry their patients to the hospital, wait in line and return for follow-up appointments. The hospital asks each patient to bring a relative to monitor treatment. The hospice's patients have no one to bring. They have no money to commute to and from the hospital. 'There are many thousands in Bombay,' Sister Bede, the administrator, said. 'Many many are in need of it.' Of the 850 patients admitted to the hospice in the last five years, Sister Bede said, 350 have died.

Subject: A Crescent of Water Is Slowly Sinking From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:58:58 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/international/asia/27lake.html A Crescent of Water Is Slowly Sinking Into the Desert By JIM YARDLEY DUNHUANG, China - At the bottom of the mountainous dunes once traversed by traders and pilgrims on the ancient Silk Road, Wang Qixiang stood with a camera draped around his neck. He was a modern-day pilgrim of sorts, a tourist. He and his wife had traveled by train more than 2,000 miles from eastern China to the forbidding emptiness of the Gobi Desert to glimpse at a famous pool of water known as Crescent Lake. They came because the lake has been rapidly shrinking into the desert sand, and they feared it might soon disappear. 'It is a miracle of the desert,' said Mr. Wang, 67. In this desert oasis where East once met West and that is home to one of the world's greatest shrines to Buddhism, the water is disappearing. Crescent Lake has dropped more than 25 feet in the last three decades while the underground water table elsewhere in the area has fallen by as much as 35 feet. An ancient city that once served as China's gateway to the West, Dunhuang is now threatened by very modern demands. A dam built three decades ago to help local farming, combined with a doubling of the population, have overstressed a fragile desert hydrology that had been stable for thousands of years. 'I would call it an ecological crisis,' said Zhang Mingquan, a professor at Lanzhou University who specializes in the region's hydrology. 'The problem is the human impact. People are overusing the amount of water that the area can sustain.' Here as elsewhere in western China, the country's poorest region, the emphasis in recent decades has been on economic development at all costs. Isolated by the desert, Dunhuang has virtually no industry, so agriculture has dominated the local economy. In the 1970's, the government dammed the Dang River, which once flowed past the city, to provide better irrigation for farmland and to help relieve poverty. Farming did improve, but in a fashion that brought a larger burden: a desert oasis that had fewer than 100,000 people before the dam now has roughly 180,000. As more people arrived, the underground water table that is the city's main source of drinking water started dropping. The pressure now to preserve Dunhuang is amplified by the growing recognition of the city's major cultural and historic significance. The nearby Mogao Caves, painted with murals dating to the fourth century, were built by the monks who helped bring Buddhism from India. The caves have been designated as a World Heritage Site by the United Nations. The caves are a legacy of Dunhuang's emergence more than 2,000 years ago during the Han Dynasty as a crucial entranceway into China by the Silk Road, which served as the principal trade route to the West. Merchants and pilgrims made the journey by following the string of oases that skirted the brutal Taklamakan Desert, which many considered haunted by demons and ghosts. 'At times one can hear soughing, or sobbing, but suddenly one does not know where to turn. ... Thus many perish,' the seventh-century Chinese monk Xuanzang wrote of the voices he heard in the brutal heat. He described the desert as so bleak and empty that travelers stacked up bones as landmarks. Farming in Dunhuang also dates to the Han Dynasty, and among the tens of thousands of manuscripts found inside the Mogao Caves was a map that detailed the region's critical water sources. Now, in the village of Zhabacha, about seven miles north of the city center, the water table has dropped more than three feet in the past five years alone. Beneath a midday sun on Tuesday that had driven other farmers into their crumbling adobe homes, He Zhailin flooded a small plot of wheat with irrigated water. Mr. He said that he tripled his amount of cultivated land during the last decade and that some farmers had expanded even more. Until recently, he said, government officials had encouraged farmers to plant more crops. 'There was a lot of water so the government encouraged people to cultivate the land,' recalled Mr. He, 40. 'At the time, it never dried up.' Now, local officials have introduced a strict policy known as the 'Three Forbids' that bans any new farmland, forbids new migrants from moving to the city and prohibits any new wells. The need to protect the underground water is magnified by the fact that almost 90 percent of water from the Dang Reservoir is dedicated to agriculture. Mr. Zhang, the Lanzhou University professor, stressed that reducing consumption was the solution to the problem and noted that the supply of glacial melt from the Qilian Mountains that feeds the Dang River - and by extension the rest of the oasis - remained largely unchanged from centuries ago. Even so, there are proposals to divert water from a river in Tibet, though the likelihood of such a plan is far from certain. Conservation has become particularly crucial because Dunhuang has emerged as one of the leading tourist attractions in western China, giving the city a veneer of prosperity rare in rural regions. Last year, more than 430,000 tickets were sold to the Mogao Caves. In all likelihood, even more people visited Crescent Lake, which is nestled in the picturesque dunes known as the Singing Sands. The lake, also a World Heritage Site, began shrinking in the 1970's and is now about a third of its original size. In the 1990's, officials tried pumping in water but quit because the transfers were polluting the lake. More recently, reservoirs have been built a short distance away in hopes that water would seep into the ground and help Crescent Lake, also called Crescent Moon Lake and Crescent Spring. 'As local people, we are very worried,' said Fan Cun, who heads the agency overseeing the lake. 'We would have failed future generations if we watch this lake disappear.'

Subject: Relax? Not if You're FedEx From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:57:51 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/business/28interview.html Relax? Not if You're FedEx By CLAUDIA H. DEUTSCH Anyone who wants to know which way the economy is going can read the unemployment figures, the Consumer Price Index or other tea leaves emanating from Washington. Or call FedEx. 'We know a lot about how the economy really is doing, and Federal Reserve officials call us all the time,' Frederick W. Smith, chief executive of FedEx, said during a recent visit to The New York Times. Mr. Smith, of course, has more pressing business: running a $29 billion company. He expounded on FedEx's strategies and prospects. Following are excerpts from that conversation: Q. Lots of pundits have said that the Internet - and specifically e-mail - would spell disaster for document-shipping companies like FedEx. Has it? A. Not at all. The biggest part of our business has always been moving things, not paper. With the Internet, people in Mississippi can buy things from Macedonia, without regard to time or place or quantity. Q. With cost-cutting so rampant these days, are companies migrating toward lower-cost services - shipping by ground, say, instead of by air? A. People use air when an item has a short shelf life or a high value per pound. When personal computers sold for $4,000, they went by air; PC's got to be $800, shippers sent them by ground. Items like semiconductors or iPods will still go by air, particularly since, increasingly, they are manufactured outside this country. When iPods get to be $40, maybe they'll go by sea. Q. It seems that FedEx and United Parcel Service are chasing all the same markets. How do you differ? A. We all respond to each other's successes. After all, they just bought Overnite, which is their attempt to play catch-up with us in the less-than-truckload market. They're more involved in low-margin businesses like air and sea freight and operating warehouses for customers. Their theory is that they'll get the small shipping business from the same customers at a higher rate. We don't think that fundamental premise is correct. But if they are successful, we will have to be more aggressive. But for now, we remain organized into four operating companies: FedEx Express, FedEx Ground, FedEx Freight, which delivers parts to factories and such, and, of course, FedEx Kinko's. We think the advantages of focus trump those of consolidation. For example, FedEx Express has to be near customers to meet its promise of delivery by a specific time. So it operates several centers in Manhattan. But FedEx Ground's facility is in Queens, in less expensive space, because it doesn't promise to deliver by 8:30 or 10:30. Q. Where will your greatest growth come from? A. The biggest growth prospects are international. Our volumes coming off of China are up 50 percent year over year, and we've got a big and growing presence in India. And Kinko's will give us a lot of opportunities, too. It's no longer the corner copy shop, but a global digital printing system. If a Pfizer or an implement manufacturer wants sales material delivered to its 3,000-person sales force, bound a particular way, we can print it and distribute it in a couple of hours. Q. If your growth is going to come from shipping goods made elsewhere and shipping documents via electrons rather than messengers, what does that say about the prospects for jobs in the United States? A. A lot of the economy is indeed being supplied by goods that are produced offshore. And much of the reason for that is societal. We don't have national employment laws, which makes dealing with labor a real hassle. And there's a mismatch between our educational system and what the market needs. Universities in Hamburg and Yokohama still turn out people oriented to manufacturing; here, the few people attracted to that seem to go into the military-industrial complex. One reason we're such a litigious society is that we're producing lawyers at a vastly greater rate than our need for them. My son is graduating from law school. He's going to work in the FedEx sales department because he couldn't find a job as a lawyer.

Subject: The Unwanted-Job Myth From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:57:04 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/27/opinion/l27jobs.html The Unwanted-Job Myth To the Editor: The claim that there are 'jobs no American will take' has made its way into the heart of the debate over immigration reform ('Major Immigration Surgery,' editorial, May 20). Yet the circular reasoning behind this claim is fundamentally flawed. Sure, if employers in a given sector face an endless supply of low-wage labor, the quality of jobs in that sector will fall to levels that only those desperate for work will accept. But it doesn't follow that those with higher standards, be they immigrants or natives, would refuse these jobs if, in a tighter labor market, their wages were bid up. The claim that Americans won't take certain jobs is too often made by those whose profits depend on hammering down labor costs. The outcome of our immigration debate will improve if we face its inherent illogic. Jared Bernstein Washington, May 20, 2005

Subject: Major Immigration Surgery From: Emma To: Emma Date Posted: Sun, May 29, 2005 at 19:18:50 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/20/opinion/20fri2.html?ex=1117512000&en=0aa8e9e8b6a7fa38&ei=5070 Major Immigration Surgery The arrival last week of a sweeping, bipartisan immigration proposal in Congress brought forth the usual conflict between those who want a solution and those who just want an emotional issue to howl about. But this latest and most comprehensive package has already started earning support from Republicans and Democrats, business groups and unions, and several key Hispanic organizations. President Bush, who has been promising action on immigration for years, should quickly join them. The long-awaited legislation comes from Senators John McCain and Edward Kennedy and Representatives Jeff Flake and Jim Kolbe, both Republicans from Arizona, and Luis Gutierrez, a Democrat from Illinois. Senator McCain said as he introduced the bill that it embraced the goals set down by Mr. Bush: making the borders more secure, filling jobs no American will take and finding a route to legality for workers who are already here illegally. It is worth noting that three of the prime movers on this effort are from Arizona, a border state. They know firsthand about the hundreds who die each year trying to cross the desert from Mexico and about the many locals who are frantic about being overrun in this tragic human stampede. Given the political tides, Senator McCain and others have focused on how their package could improve security at the borders. More than a million undocumented people are caught trying to cross into the country each year. Many make it: an estimated 11 million people are in the country illegally. The goal is to get as many of these workers as possible to come out of their shadowy world. If that happened as planned, the strained government agencies that now deal with border issues could focus on immigrants with more sinister motives than the need for better wages. At the center of this bill is a new temporary visa program that would allow foreign workers to fill jobs that no Americans will take. Undocumented immigrants already in the country would be eligible for these visas, which could last up to six years. To apply for permanent status, these workers would have to clear a number of hurdles, including security checks and requirements to pay back taxes and fines of $2,000 or more, and be proficient in English. Even then, they would go to the back of the immigration line. That process should be difficult enough to keep this from being an amnesty program, but not be so daunting that nobody would bother to try. As Congressman Kolbe put it last week, this legislation 'doesn't try to solve the hemorrhaging immigration problem with simply a Band-Aid. This is major surgery.' The patient is definitely ready.

Subject: Urging Chinese Shift on Currency From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:56:27 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/business/worldbusiness/28yuan.html Japanese Expert Urges Chinese Shift on Currency; Beijing Still Hesitant By KEITH BRADSHER HONG KONG - China should let its currency appreciate 'sooner rather than later,' the president of the Asian Development Bank said Friday, even as the governor of China's central bank and some senior Chinese government economists tried to damp speculation that any move would come soon. Haruhiko Kuroda, president of the Asian Development Bank, a multilateral lending institution, told reporters that China needed to let the yuan rise to keep control of monetary policy and prevent inflation. Mr. Kuroda is regarded as one of Asia's most influential currency experts from his previous role overseeing Japan's currency policy. While consumer price inflation has slowed in China this spring, asset prices, especially real estate prices, have been rising quickly as strong foreign investment and a soaring trade surplus have produced large flows of money into China, Mr. Kuroda noted. But he stopped short of endorsing calls in Washington by some members of Congress for a sharp revaluation of the yuan, saying that any appreciation should occur gradually. 'China's authorities are well advised to move quickly, sooner rather than later,' he said, while later adding, 'The pace of exchange rate adjustment should be gradual to avoid any shock to the Chinese economy.' Mr. Kuroda declined to recommend a timetable for appreciation or a mechanism for managing a gradual appreciation. His comments buttressed the position of Treasury Secretary John W. Snow, who told the Senate Banking Committee on Thursday that the Bush administration wants to see an appreciation of the yuan, but not necessarily an immediate floating of the currency, which could result in sharp changes in its value. But Chinese officials have shown little enthusiasm in public lately for any appreciation in the yuan. Top officials at China's central bank, which has many Western-educated economists, have hinted at a need for appreciation over the past three years, even as other government agencies, with closer ties to exporters and real estate developers, have been more wary. But on Friday, the governor of China's central bank, Zhou Xiaochuan, said in Seoul that China would move cautiously in adjusting the exchange rate. Some senior Chinese government economists were also quoted on Friday in the Chinese-language International Business Daily, the official mouthpiece of the Ministry of Commerce in China, as questioning whether appreciation would be good for the Chinese economy. It would be best for the yuan exchange rate to remain stable for another two years, said Zhang Yansheng, a senior trade economist with the State Development and Reform Commission, the influential agency that oversees Chinese economic policy. He was quoted as saying that China's financial system was unprepared for the possible turbulence that loosening the exchange rate system would bring and that China's tools for managing currency risk were extremely undeveloped. Zhou Shijian, an international trade economist with the China International Economic and Trade Arbitration Commission and a former trade official, was quoted as saying China should wait until speculative bets on a yuan revaluation had tapered off and only then allow the currency to rise, by a maximum of 5 percent. By contrast, American officials have reportedly suggested an increase of 10 to 15 percent. Many currency experts outside China have warned that a gradual appreciation could invite increased flows of money into China from speculators seeking to profit on a continuing rise in the currency. But Mr. Kuroda dismissed this argument, saying that Chinese controls on capital inflows are effective, and that the incentive to bet on appreciation would dwindle as the currency moved closer to investors' perception of its true value. Mr. Kuroda declined to say how big an increase might be needed to balance flows of money in and out of China, but he noted that with Chinese trade surpluses now surging, the needed appreciation 'would be larger than people thought in the past.' Mr. Kuroda cited China's fast-rising foreign exchange reserves as evidence of the need for China to change policy. The People's Bank of China said on Thursday that these reserves grew by $49.2 billion just in the first quarter of this year, to $651.1 billion, as the central bank issued yuan in exchange for dollars in a successful effort to hold the yuan at 8.277 to the dollar, a peg maintained since the end of the Asian financial crisis in 1998. The Asian Development Bank, based in Manila, is primarily a lending institution, and usually leaves monetary issues to the International Monetary Fund. But Mr. Kuroda was for four years Japan's vice minister of finance for international affairs, overseeing government policy on the yen in particular, and then served as special adviser to the Japanese cabinet for many of the same issues for two years before assuming his current post on Feb. 1 this year. While the Asian Development Bank has previously endorsed currency appreciation in China in general terms, Mr. Kuroda's comments were the clearest, most detailed and most forceful by a top official of the bank so far. He started a lunch with a half-dozen foreign correspondents by making his remarks on the Chinese currency before taking any questions, and noted that he was speaking on the record.

Subject: Her Gift to Japanese Women From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:55:07 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/international/asia/28japan.html?pagewanted=all Fighting to Protect Her Gift to Japanese Women By JAMES BROOKE TOKYO IN the back of a theater here, two gray-haired women perched on the edge of their seats, nodding their heads, clapping their hands silently. On the stage, Beate Sirota Gordon, a snowy-haired American grandmother, implored Japanese women to rise in defense of the Japanese Constitution's equal rights clause, which was fundamental, she said, to their rights as women. She should know. At age 22, she wrote it. 'Japanese women should keep fighting for their rights,' Beate-san, as she is known here, said in Japanese to applause from the sold-out crowd. For half a century, Ms. Gordon and the 24 other Americans who drafted Japan's Constitution in six intense days in 1946 kept a pact of silence sworn to Gen. Douglas MacArthur, the postwar American occupation commander. That broke down about a decade ago, and since then Ms. Gordon has left the comfort of retirement and her Manhattan apartment once or twice a year for a lecture tour in Japan. But now she finds herself, at 81, at the front of a drive by Japanese women to protect 'her' Article 24, which proclaims 'the essential equality of the sexes.' Last year, a constitutional panel of Japan's ruling Liberal Democratic Party denounced the women's rights article as promoting 'egoism in postwar Japan, leading to the collapse of family and community.' 'I never thought they would attack it,' said Ms. Gordon, who only a few years ago was lionized in 'A String of Pearls,' a Japanese play about the writing of the Constitution, as seen through her eyes. Conservatives blame the 'American imposed' clause for a variety of social ills, including a plunging marriage rate, an anemic birthrate and increasing delinquency in the schools. The clause seems safe for now, but only because the conservatives decided in April to concentrate on winning parliamentary approval to change Article 9, which prohibits Japan from using war to settle disputes. 'It is a threat, and the women realize that, and that is why they are so vociferous,' Ms. Gordon said, referring to the reception she received on a punishing eight-city, 12-event speaking and interview tour through Japan in April. 'Beate's Gift,' a movie about the legacy of the equal rights amendment, recently opened in theaters around Japan. Hurried through production to parry conservative arguments, the movie splices interviews with successful professional women with Ms. Gordon's account of writing the equal rights article. 'There are now women governors, women mayors, women who are in the media, filmmakers, writers, presidents of companies,' Ms. Gordon said at the movie's April 30 debut. 'There are women who don't know what has gone on before. Knowing how different it was 60 years ago will encourage them to go on and protect these rights.' A RARE witness to history, Beate-san arrived in Japan at age 5 in 1929, traveling with her parents, Jewish émigrés, on a ship from Vladivostok, Russia. Her father, a pianist, was embarking on what became 16 years of teaching and giving concerts in Japan. Her first memory is arriving at Yokohama Harbor, looking at the dock crowded with people with black hair and black eyes, and asking, 'Mama, are they all brothers and sisters?' But within a decade she had acculturated, learning fluent Japanese through her contact with the stream of artists and intellectuals coming to the house. But she retained an outsider's eye. 'I saw the women walking behind the men in the street,' she recalled. 'I saw how the mothers prepared the food when the husband came home with his friends from the office. She would serve them dinner, without even talking, then go into the kitchen with the children.' As a teenager, she recalled, Japanese girlfriends would 'prepare for marriage, learning flower arranging, but would not even meet their future husbands.' The outbreak of war caught her at Mills College in Oakland, Calif., and her parents at home in Tokyo. During the war she made American government radio broadcasts beamed to Japan, researched Japan for Time magazine, and, in January 1945, became a United States citizen. After the war she raced to Tokyo to track down her parents, who had been detained in a mountain village. As one of a handful of Caucasians with a strong command of Japanese, she became the translator for the constitution writers. General MacArthur rejected two attempts by Japanese politicians to write constitutions that did little to weaken the country's feudal society and the role of the emperor, and decided the Americans would have to do it. The general's lawyer, Brig. Gen. Courtney Whitney, 'called us in and said, 'Ladies and gentlemen, you are now a constitutional assembly and you will now write a new draft of the Japanese Constitution, and it has to be done in seven days,' ' she recalled. 'We were stunned.' In her memoir, 'The Only Woman in the Room,' she recounts how in the grueling week of debates, almost all of the clauses that emerged from her Underwood typewriter ended up in the trash basket. 'Colonel Kades said, 'My God, you have given Japanese women more rights than in the American Constitution,' ' she recalled, referring to Lt. Col. Charles L. Kades, head of the constitutional steering committee. 'I said, 'Colonel Kades, that's not very difficult to do, because women are not in the American Constitution.' ' The test came when the draft was submitted to a group of Japanese ministers and politicians for approval. Japan's prewar civil code regarded wives as incompetent. In 1946, Japanese women had virtually no rights of inheritance, property or divorce, or even to choose their own husbands. 'Immediately they said, 'This doesn't fit our culture, doesn't fit our history; it doesn't fit our way of life,' ' Ms. Gordon said of a 2 a.m. confrontation. But during the previous 14 hours of debates, the young American woman had won the gratitude of the Japanese leaders for backing them in previous disagreements with the Americans. As she recalled it, 'Colonel Kades said, 'Miss Sirota has her heart set on the women's rights clause, so why don't we pass it?' ' Asked what 'her' article said, Ms. Gordon started reciting the text, then faltered. 'Oh, I have it right here,' she said, pulling from around her neck a pink printed silk scarf. 'This was made by my fan club here.' 'Marriage shall be based only on the mutual consent of both sexes and it shall be maintained through mutual cooperation with the equal rights of husband and wife as a basis,' she said, reading the scarf, which was printed in the six languages she speaks - English, Japanese, Russian, German, French and Spanish. 'With regard to choice of spouse, property rights, inheritance, choice of domicile, divorce and other matters pertaining to marriage and the family, laws shall be enacted from the standpoint of individual dignity and the essential equality of the sexes.' For critics who say these are imported concepts, Ms. Gordon told her audience that many of Japan's core cultural attributes were borrowed from overseas - Buddhism, ceramics, ancient court music and the character writing system. Conservatives who want to turn the clock back to more traditional roles for women will not succeed, she maintained. 'After 60 years, it would be very hard to amend it now, it is so much part of Japan's culture.'

Subject: Janus Funds: Everybody Loves a Loser From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:54:13 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/business/28nocera.html?pagewanted=all Janus Funds: Everybody Loves a Loser By Joseph Nocera YOU keep hearing that this is a rough year for hedge funds, and from the perspective of a hedge fund manager, I suppose that's true. General Motors bonds are downgraded to junk status - and the rumors begin flying that hedge funds holding the bonds are in trouble. Hedge fund losses are said to be 'piling up, sparking concerns about a shakeout in the business.' Or at least that's how our friends at The Wall Street Journal put it last week. But do you know how much hedge funds have lost, collectively, in this supposedly dismal year? Almost nothing - around 1 percent, according to the CSFB Tremont Hedge Fund Index. (To be fair, that was before the events of May.) And yet the doomsayers are at least partly right: because most managers have as their stated goal to generate positive returns in up markets and down ones, there are undoubtedly some funds facing problems right now because they are underwater. Hedge funds that lose money for any serious length of time tend to go out of business, plain and simple. Their investors - sophisticated institutions and rich people - pull their money out and put it elsewhere. Which is why, when hedge funds are down even a few percentage points, their managers can feel as though their backs are against the wall. Yes, successful hedge fund managers can make oodles of money. But they are in an unforgiving line of work. I wish our side of the investment business - the side that caters not to sophisticated institutions and rich people, but to the rest of us - were a little more unforgiving. The companies entrusted with our money are primarily the big mutual fund complexes. They have a combined $7.9 trillion of our assets - money we're hoping to use to send our children to college or to finance our retirement. Yet when fund companies make mistakes with our money, even gigantic mistakes, they don't usually have to worry about being forced out of business by disappointed investors. They're given years to pick themselves up and get back on track. Sure, assets under management dwindle, but inexplicably, plenty of assets remain. And though their stocks fall, they usually remain profitable. 'It's pretty hard to mess up a mutual fund company,' says Don Phillips, managing director of Morningstar, the research company. EXHIBIT A? I offer you the Janus Capital Group. Janus, you'll undoubtedly recall, was the hottest of hot fund companies during the Internet bubble, with every one of its go-go mutual funds seemingly going in only one direction: up, up and up. In early 2000, at the peak of the bubble, half the money pouring into mutual funds from investors went to Janus. At its peak, in September 2000, Janus had $318 billion in assets. But when the bubble burst, the Janus family of growth funds was absolutely crushed. From September 2000 to September 2002, the flagship Janus Fund lost almost 60 percent of its value, as did Janus Worldwide, another big-name fund. Janus Mercury and Janus Twenty were both down more than 60 percent. It turned out that Janus's fund managers had completely lost their minds in the bubble, far more than growth managers at many other big fund complexes. There was little or no investing discipline; many of the fund managers bought the same small handful of stocks; their portfolio construction was terrible; and they had stopped even thinking about whether the stocks they were buying were overvalued - much less worrying about it. To make matters worse, Janus spent the immediate aftermath of the bubble in denial. 'It was a very insular culture,' says Russel Kinnel, Morningstar's director of research. 'So many of the fund managers didn't know any other way.' Not until the end of 2001 did Janus fund managers start making serious changes to their portfolio mix. Many of the big brand-name Janus funds continued to struggle through 2002, and didn't start to perform well until 2003. By then, of course, Janus was caught breaching its investors' faith one last time: it was involved in the market timing scandal that the New York attorney general, Eliot Spitzer, brought to light. In April 2004, Janus paid $225 million to settle with the regulators. Here's the part I find most amazing. Despite everything Janus did wrong, despite losing hundreds of millions of dollars that individual investors had entrusted to them, not once during this entire time did Janus post an annual loss. In fact, except for the first quarter of 2004, when it put aside money to settle the market timing charges, it has never even had so much as a losing quarter. It has laid off 1,000 workers, but it still employs about 1,000 people. It has, right now, around $800 million in cash on the balance sheet - mutual fund companies are incredible cash generators. And though the stock has dropped from $50 in the glory days to around $14, the company still had $132 billion under management as of the end of March. That is a far cry from $318 billion, but it still puts Janus in the top dozen United States mutual fund families. Today, Janus has adult supervision. A week before the company settled with Mr. Spitzer, Steven L. Scheid, a former Charles Schwab executive, took over as chief executive. Even before Mr. Scheid became chief executive, the former tobacco analyst, Gary D. Black, a well-known figure on Wall Street, was named chief investment officer. THEY are an impressive pair. Mr. Black has imposed some investment discipline, has bulked up the research staff, and has generally imposed oversight and rigor. Mr. Scheid has changed the way Janus fund managers are paid, so that their incentives are better aligned with that of their investors. He's looking ahead, not back - as he should. He talks about new products, new ways of distributing Janus funds, new research abilities and the new compensation system. 'We now have a good, strong culture of accountability,' he said. Ken Worthington, an analyst for CIBC World Markets, said, 'Management is doing all the right things.' Mr. Scheid and Mr. Black have certainly been getting results of late, or at least what passes for results in the mutual fund business. Janus likes to point out that at the end of 2004, three-quarters of its equity funds were ranked in either the first or second quartile compared with their peers for one- and three-year results. Well, great. But that is partly because the big post-bubble declines are no longer included in the three-year numbers. (Janus's five-year numbers are still dismal.) And it's also because mutual funds are about 'relative returns,' that is, how well they do against similar funds, thus avoiding the question every hedge fund manager faces every day: Are they making their investors money? In the case of too many Janus funds, and this is true of most growth funds these days, the answer this year is no. (In fairness, the Janus family of funds did make money for investors in 2003 and 2004.) As of the end of April, the Janus Fund, which still has over $11 billion in assets, was down 6.3 percent. Over all, Janus' funds are down 5.2 percent this year, slightly better than their peers, but significantly worse than the Standard & Poor's 500. Janus can hardly be blamed for the fact that so many individual investors continue to stick with the firm. Individuals often have a hard time cutting their losses; instead, they become paralyzed. That paralysis is why Mr. Scheid and Mr. Black are getting this opportunity, years after the damage was done, to turn the place around. And, I'm guessing they will succeed. Someday, growth investing will be a winning strategy again, and enough time will have passed that the horrible post-bubble years will no longer be included in Janus' five-year performance numbers. When that happens, this tarnished brand will quite likely make at least some kind of comeback. Which is good. It means that the people who work for Janus will still have jobs, and that those incredibly patient - and beleaguered - individual investors will finally start to make some money with Janus again. So, yes, let's hope that Janus turns things around. But be honest about it, too. This second chance the company is getting? It doesn't really deserve it.

Subject: Is Your House Overvalued? From: Emma To: All Date Posted: Sat, May 28, 2005 at 13:53:23 (EDT) Email Address: Not Provided Message: http://www.nytimes.com/2005/05/28/business/28home.html?pagewanted=all Is Your House Overvalued? By DAVID LEONHARDT Four days after Alan Greenspan, the Federal Reserve chairman, pronounced the nation's housing market frothy, a new report on home prices this week suggested that he might have been understating the situation. Even after one of the steepest run-ups on record, home prices have jumped another 15 percent over the last year. While gleeful about their apparent riches, homeowners in many of the hottest areas are also growing concerned. How, exactly, does one know if the family palace is sitting atop a bubble about to burst? The answer might have less to do with the sale price of your neighbor's house and more to do with something most homeowners ignore: the local rental market. The easiest way to gauge a home's value is to borrow a tool from the stock market. In the most basic method of analyzing a stock, investors look at its price-to-earnings ratio, a comparison of a company's share price with its annual profit. The higher the ratio, the more expensive a stock is relative to its underlying value. Houses have their own version of such a ratio. Take the price of a typical house in an area, divide it by the amount that house would cost to rent for a year and the result is what might be called a rent ratio, an imperfect but still telling measure of real estate. That ratio today shows that housing is not nearly as overpriced as stocks were in the late 1990's. But many areas are showing signs of irrational exuberance. Rents act as a reality check of sorts for home prices, a way to see how economic fundamentals, rather than psychology, are affecting the market. In only a small number of areas - including Washington, Baltimore, Las Vegas, Jacksonville and the Long Island suburbs of New York - are rents rising at a decent clip. In the last five years, the rent ratio in many coastal cities has more than doubled, according to an analysis for The New York Times by Economy.com, a research company. In San Francisco and San Jose, Calif., it has spiked to nearly 35 on average - or about equal to the price-earnings ratio Microsoft's stock reached in 2000. In West Palm Beach, Fla., and San Diego, the ratio is almost 30. In New York, Miami and Los Angeles, it is about 25. A typical three-bedroom house in Mill Valley, Calif., about 10 miles north of the Golden Gate Bridge, now costs about $1 million, said Vanessa Justice, a real estate broker with Cagwin, Seymour & Hamilton there. A similar home would cost less than $40,000 a year to rent - for a rent ratio of more than 25. Some of these regions seem to be the places Mr. Greenspan was describing when he said last week that there were 'a lot of local bubbles' in housing. Speaking yesterday at a conference in Berlin, Roger W. Ferguson Jr., the Fed's vice chairman, said, 'Right now, housing prices in many markets in the United States are relatively high when judged by conventional valuation measures.' In the lands of rising rents, companies are adding jobs, giving workers more money to spend, and the population is growing. Near Logan Circle in Washington, for example, one-bedroom apartments at the Hudson, with stainless-steel appliances and dark-orange concrete floors, now rent for about $2,100 a month, up more than 5 percent since 2003. But in places where rents have trailed inflation or even fallen outright - the Bay Area of California and much of the New York region - the case for soaring home values looks harder to make. More families in these places seem to be relying on aggressive mortgage terms to buy homes. 'Investors think housing prices are going to go up 15 percent, 20 percent, every year - so they're not worried if it makes much sense in terms of intrinsic value,' said Edward E. Leamer, an economist at the University of California, Los Angeles, who has written about the price-to-earnings ratio of houses. 'But assets have fundamental values,' he said. 'That tends to be forgotten in these emotional surges that drive values up and down.' In the Washington area, the rent ratio remains just below 20, or almost exactly equal to the price-earnings ratio of the stock market today, as measured by the Standard & Poor's 500-stock index. More of the rise in home prices around Washington, in other words, seems to reflect economic changes than it does in other places. The growth of the federal government, especially the Department of Homeland Security, has strengthened the local economy. With one of the nation's best-educated work forces, the region has also attracted high-paying white-collar companies. Booz Allen Hamilton, the consulting firm, announced last year that it would add 4,600 jobs, paying almost $80,000 a year on average, in Herndon, Va., near Washington Dulles International Airport. The growth has created more demand for rented houses and apartments, even as thousands of renters have used low mortgage rates to buy their own homes. Two years ago, Christopher A. Barson, a 40-year-old interior designer, moved out of the first floor of a row house on Capitol Hill that cost about $1,700 a month, he said. He now lives in a loft-style apartment at the Hudson and pays $2,300 in rent. But there is a Starbucks in the bottom floor of his building and a Whole Foods supermarket across the street, and Mr. Barson does not have to battle the traffic to get into the city. 'The convenience factor is fabulous,' he said. A number of apartment buildings in northern Virginia have also recently been converted to condominiums, reducing the supply of rental units. Sandra Graves, an agent with Long & Foster, said she recently rented an apartment in Fairfax, Va., for $250 more a month than two years ago, largely because of a shortage of apartments in the area. In California, by contrast, tenant-protection laws are stronger, making conversions more difficult, said Howard Rubin, chairman of Oakwood Worldwide, which operates short-term corporate apartments. Over all, rents for Class A apartments, which are newer and bigger than others, have risen 13 percent over the last five years in the Washington area, nearly equal to inflation across the economy. In Boston, they have increased just 3 percent, according to Global Real Analytics, a research company based in San Francisco that publishes the National Real Estate Index. Class A rents have fallen 12 percent in Atlanta and 22 percent in San Jose, even as home prices have soared. New York rents have been roughly flat over the last five years. 'The rental market has obviously become more tied to underlying economic conditions at this point,' Mark Zandi, the chief economist of Economy.com, said. 'It's not necessary to have a strong economy to have booming house prices.' Rent ratios are hardly a perfect measure of a region's housing market. Comparable rental data exist for only about 50 metropolitan areas. And simply because home values have risen more than rents does not mean there is a bubble waiting to burst. For many reasons - the long-term decline in interest rates, the fall in mortgage costs as the Internet has increased competition and the extension of credit to low-income families - buying a home is easier for many families than it once was. It makes sense that house prices have risen in recent years, economists say. But rent ratios have many advantages. They account for many of the factors that people often cite as justifications for the surge in home prices, like the growth in incomes, population and house sizes. If a region is booming, rents and home prices alike should benefit. If it is busting, both would seem vulnerable. In places like the Bay Area, south Florida and much of the Northeast, though, the two parts of the housing market have become unhinged. Even in Las Vegas and in Riverside, Calif., where rents have risen, home prices have gone up so much more quickly that local rent ratios have soared above 23, from less than 12 in 2000, according to Economy.com. This kind of analysis also helps explain why most economists, even the nervous ones, consider today's housing market to be a different beast from the 1990's stock bubble. Nationwide, the rent ratio of houses remains around 17. At its peak five years ago, the ratio of the S.& P. 500 hit 35. Yahoo's price-to-earnings ratio nearly hit 1,000 in late 1999. Yahoo stock has since lost more than two-thirds of its value. Not even the most dour real estate analyst expects a plummeting of that magnitude for houses in San Francisco. On other hand, some economists say even Washington is in the midst of a run-up that is likely to end badly. Dean Baker, who predicted the stock market's fall and now says the housing market is headed for its own troubles, sold his Washington condominium, not far from Mr. Barson's loft apartment, last year for $445,000, after having bought it for $160,000 in 1997. Now Mr. Baker rents a similar-size apartment nearby. 'I felt stupid not doing it,' said Mr. Baker, co-director of the Center for Economic and Policy Research, a liberal group. 'To me, there's no doubt about the direction. The only question is timing.' Housing bears like him often point to the growing disconnection between rents and house prices. They also argue that history shows what can happen when house prices get ahead of themselves. After soaring in the 1980's, average house prices in the New York region fell significantly in the early 1990's. Adjusted for inflation, they did not return to their 1988 peak until 2002. Since then, they have risen more than 40 percent.

Subject: New Forum From: Bobby To: All Date Posted: Sat, May 28, 2005 at 12:16:38 (EDT) Email Address: robert@pkarchive.org Message: I had to replace the old message board because someone was hacking into it and erasing all of the messages. I'm sorry for this inconvenience. All old messages can be found in the Message Board Archive. Again, I'm sorry for the inconvenience. Message Board Archive www.pkarchive.org/MBArchive.html

Subject: Re: New Forum From: Terri To: Bobby Date Posted: Sat, May 28, 2005 at 13:46:56 (EDT) Email Address: Not Provided Message: Bobby, when the board is replaced can the last page of 50 messages be left? It takes time to read through, alas. Love you :)

Subject: Re: New Forum From: Terri To: Terri Date Posted: Sat, May 28, 2005 at 13:49:58 (EDT) Email Address: Not Provided Message: The board is a treasure for us, and I frequently look back to the messages, but the storage is difficult to use for the format is broken up. Thank you.

Subject: Re: New Forum From: Bobby To: Terri Date Posted: Tues, May 31, 2005 at 00:27:56 (EDT) Email Address: robert@pkarchive.org Message: I will try to leave the last 50 messages in the future. I would have liked to do that for this past board cleaning, except that I had to replace the entire board because someone was breaking into the last url and replacing the messages. I'm basically limited by the parameters of the system that Hotboards has put up. If there is a better message board (especially one that takes unlimited messages and thus needs no 'cleaning'), I would love to use it.