NEW YORK (Reuters) –
Warren Buffett's Berkshire Hathaway Inc posted its best quarter in nearly two years, as recovering stock markets boosted the value of its equity investments and derivatives bets.
Operating earnings for the second quarter nevertheless fell short of forecasts, reflecting lower underwriting gains, including from the Geico Corp auto insurance unit, and the impact of the recession on Berkshire's more economically sensitive manufacturing and service units.
“Warren hasn't been able to defy the laws of gravity,” said Thomas Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, which invests more than $3 billion and owns Berkshire shares. “Berkshire's operating companies are not trying to compromise their long-term results. They are taking the hits that come with an economic contraction.”
Net income for Omaha, Nebraska-based Berkshire rose 14 percent to $3.3 billion, or $2,123 per Class A share, from $2.88 billion, or $1,859, a year earlier. Earnings had previously fallen for six straight quarters.
Excluding investments, operating profit fell 22 percent to $1.78 billion, or $1,147 per share, from $2.27 billion, or $1,465. On that basis, analysts expected profit of $1,238 per share, according to Reuters Estimates. Revenue fell 2 percent to $29.61 billion.
Berkshire has close to 80 operating units that provide such products as insurance, carpeting, electricity and natural gas, ice cream, paint and underwear.
Results included $1.53 billion of derivatives gains. These were tied mainly to the performance of four market indexes in the United States, Europe and Japan, which rose between 8 percent and 23 percent in the quarter.
The derivatives are a major reason earnings had fallen in recent quarters. Accounting rules require Berkshire to report changes in their value with earnings. Berkshire said the bets will continue to generate “extreme volatility” in earnings.
Book value increased 11 percent from the first quarter and on a per-share basis rose to $73,806 from $66,248. Net income was the highest since the third quarter of 2007 and came on the heels of a first-quarter loss, Berkshire's first quarterly deficit since 2001, Reuters data show.
EQUITY HOLDINGS REBOUND
Berkshire's common stock holdings increased 22 percent from the first quarter to $45.79 billion, reflecting price changes as well the purchase of $350 million of stock.
The company is the largest shareholder of American Express Co and Wells Fargo & Co, whose shares rose a respective 71 percent and 70 percent in the quarter.
Berkshire also ended June with $30.37 billion of “other” investments, including in Dow Chemical Co, General Electric Co, Goldman Sachs Group Inc, Swiss Re and Wm Wrigley Jr Co.
Buffett has become something of a white-knight investor in the financial crisis. Berkshire ended June with $24.51 billion in cash, down from $25.55 billion at the end of March.
“The magnitude of the investments he has been able to make is because of his past discipline, and his credibility,” Russo said. “He had to weather a lot of criticism for not making the easy and early bets, but waiting for the big fat pitch.”
Berkshire did sell some stock, and said its sales of oil company ConocoPhillips shares continued in July.
While Berkshire on June 30 had $8.23 billion of paper losses on the stock index derivatives, that was down from $10.19 billion at the end of March.
Berkshire said it modified six of the derivative contracts during the quarter, reducing potential losses.
These derivative contracts now mature between 2018 and 2028, and Buffett has said he expects them to be profitable.
Meanwhile, liabilities on contracts tied to the default rates on junk bonds fell to $2.51 billion from $3.67 billion. Buffett has said these contracts may lose money.
INSURANCE UNDERWRITING, MANUFACTURING WEAKEN
While insurance investment income rose 31 percent to $1.16 billion, underwriting profit fell 77 percent to $83 million.
Berkshire said the decline came in part because customers of Geico had higher claims losses, and the weak economy caused them to raise deductibles and reduce coverage to save money.
Though premiums increased, Berkshire now expects underwriting gains at Geico to fall in 2009 from 2008.
Operating profit in noninsurance businesses fell 47 percent to $574 million, despite a 22 percent increase from utilities and energy operations.
Profit fell by two-thirds in manufacturing, servicing and retailing businesses such as industrial conglomerate Marmon Holdings, the carpet maker Shaw, and several jewelry and home furnishings businesses.
Berkshire said each manufacturing business “has taken actions to reduce costs, slow production and reduce or delay capital spending until the economy improves.”
The NetJets Inc unit, which provides private jet services to executives, lost $253 million before taxes.
Its longtime chief executive Richard Santulli stepped down this week and was replaced by David Sokol, who chairs Berkshire's MidAmerican Energy unit. Many analysts view Sokol a potential successor to Buffett as Berkshire's chief executive.
In Friday trading, Berkshire Class A shares closed up $1,150, or 1.1 percent, at $108,100, while its Class B shares rose $22.69, or 0.65 percent, to $3,540. Both remain more than one-fourth below their record highs set in December 2007.
(Reporting by Jonathan Stempel and Lilla Zuill; editing by Carol Bishopric and Andre Grenon)
Archive for August 7th, 2009
NEW YORK (Reuters) –
As the U.S. jumps on board the cash-for-clunkers bandwagon, the Obama Administration would do well to pay attention to what is happening in Hamburg’s sprawling harbor. The seaport city is one of the busiest ports in the world: nearly every car – new or used – passes through its docks on the way out of Germany. And this week, the police charged with patrolling the harbor released evidence showing that Germany’s hugely popular cash-for-clunkers program may have some unintended beneficiaries: organized-crime groups and individuals who export the old cars to the Third World instead of crushing them into scrap. (Watch a video on how the cars-for-clunkers process works.)
Under the German program, which started in February, anyone who scraps a car that is at least nine years old can apply for a government subsidy of 3,600 toward the purchase of a new car. The German federal government has earmarked about 7 billion for the plan, which has been so popular that car sales in Germany could hit a 10-year high of 3.5 million vehicles this year.
The plan is meant to help scrap dealers too. They get the old cars for free, the idea being that they can then earn money by selling the scrap metal to steel companies. But with scrap prices taking a dive, some dealers are eying the bigger profits that come from selling the cars abroad. “The problem is that there is no supervision of the companies to ensure that they actually scrap the cars,” says Frank Wolff, director of the environmental-crime division of the Hamburg police. “These firms are supposed to turn the cars into scrap, but instead, some are selling them to buyers in Africa.” (Read “Cash for Clunkers: How Big an Environmental Boost?”)
Over the past few weeks, Hamburg police at the shipyards have turned up 43 cars that had been declared scrapped but were illegally earmarked for export to buyers in Africa and Eastern Europe. The numbers so far seem small, but some law-enforcement experts warn that as many as 50,000 cars destined for the scrap heap have already been sold illegally – at the expense of German taxpayers.
The problem for the police is that German lawmakers were in such a hurry to approve the money to boost the car industry that they did not create sufficient controls to prevent abuse of the system. Dealers are supposed to scrap the cars, but if they don’t, it’s only considered a minor violation, not a criminal offense. “It just opens the door for abuse,” says Ronald Schulze, an official at the Federation of German Detectives. “We can’t charge them with fraud because lawmakers failed to define the crime.” (See the 50 worst cars of all time.)
Export-control officials dispute the experts’ estimate that up to 50,000 cars that should have been scrapped may have actually been sold. But there is no statistic to prove or disprove the claim. The cases that are known, such as the cars recently discovered at the Hamburg port, have sparked political furor – not surprising in an election year. Finance Minister Peer Steinbrueck demanded an investigation into suspected abuse, while the opposition Free Democrats called for establishing a special police unit to crack down on any clunker-related fraud.
But it is probably too late for Germany to do anything about its black market in clunkers. The abuse could have been prevented if lawmakers had also created a control system to track each car from the point of hand over to the scrap heap. And the police could have prosecuted dealers who sell the cars instead of scrapping them if lawmakers had made it a crime. Instead, the hands of the police are tied, and as Germany’s cash-for-clunkers program runs its course – it’s limited to 2 million cars – public interest in cases of abuse will likely fade.
Soon, though, the debate will get back to the plans’ central flaw. From Berlin to Baltimore, government subsidies to boost car manufacturers hit by the recession have been a huge short-term success. But where will the consumers come from when the government aid runs out? “These scrapping schemes bring forward sales that would have occurred later,” says Tim Urquhart, automotive analyst at IHS Global Insight in London. “They are just deferring the pain to 2011 and 2012.”
See the best cars from the 2009 Detroit Auto Show.
See the most important cars of all time.
View this article on Time.comRelated articles on Time.com: Germany’s Cash for Clunkers Black-Market Scandal What Happens to Clunkers Consumers Trade In? What Happens to Traded-In Cars in Cash for Clunkers? Germany’s Solution to Big Auto’s Woes: Scrap That Clunker! Germany’s Car Industry Crashes
Extinction hits ‘whole families’
By Victoria Gill
Science reporter, BBC News
Whole “chunks of life” are lost in extinction events, as related species vanish together, say scientists.A study in the journal Science shows that extinctions tend to “cluster” on evolutionary lineages – wiping out species with a common ancestor. The finding is based on an examination of past extinctions, but could help current conservation efforts. Researchers say that this phenomenon can result in the loss of an entire branch of the “tree of life”. The message for modern conservation, say the authors, is that some groups are more vulnerable to extinction than others, and the focus should be on the lineages most at risk. Lead researcher Kaustuv Roy, a biologist from the University of California, San Diego, focused on marine bivalves – including clams, oysters and mussels. The fossil record for these creatures dates back almost 200 million years. By tracing this documented timeline of evolution and extinction, the team was able to see the effects of “background extinctions” as well as the mass extinctions, such as the one around 65 million years ago during which the dinosaurs finally died out.
Many species have become extinct during the relatively stable periods between those global calamities. But even during such quiet periods, the team found that extinctions tended to cluster into evolutionary families – with closely-related species of clams vanishing together more often than would be predicted by chance. Richard Grenyer, a biologist from Imperial College London, who was not involved in the study, told BBC News that by going “way back into the fossil record” this study provided important evidence of the patterns of extinction. “Big groups of organisms tend to be similar to one another,” he explained. “Look at the large cats for example.” But genetic similarities also mean, said Dr Grenyer, that “a bad effect that affects one of them, will likely affect all of them”. “It’s like a casino of extinctions, with the odds rigged against certain groups.” Life’s libraryAccording to this pattern, the study’s authors point out, extinctions are likely to eliminate entire branches of the evolutionary tree. Professor Roy said: “If you have whole lineages more vulnerable than others, then very soon, even with relatively moderate levels of extinction, you start to lose a lot of evolutionary history.”
Julie Lockwood, an ecologist from Rutgers University in New Jersey, US, who did not take part in this study, explained that because extinction events “hit certain lineages extremely hard… we lose whole chunks of life.” “There are examples of modern species where the same thing is happening,” she told BBC News. “In seabirds for example, the same drivers – climatic change and habitat loss – are threatening whole groups of species.” Richard Greyner likened this loss to a fire in a library. “Because whole sections are lost – the whole of the physics section, or all of the romantic fiction, the overall loss is much worse than if you randomly burned every 400th book.” But Dr Grenyer said that this evidence could help to drive more focused, and therefore more effective conservation efforts. “We can use this information,” he said. “It doesn’t make the conservation of individual species any easier, but if we know the sorts of things that affect tigers, we can infer conservation biology about the tiger’s close relatives.”
Woman denies setting man on fire
A Greek woman has appeared in court accused of setting fire to a British tourist in Crete after he allegedly groped her in a bar. Stuart Feltham, 23, from Swindon, is recovering from second-degree chest and stomach burns in a private clinic. Maria Fanoudaki, a 26-year-old student, said she poured a drink over Mr Feltham after he made inappropriate advances, but denied setting fire to him. She faces a maximum sentence of five years in prison if she is convicted. The trial in the town of Iraklion in northern Crete was adjourned until Monday. ‘Absolute nonsense’ Ms Fanoudaki’s lawyer Nikos Maniadakis said: “He fondled my client’s breasts and buttocks and she poured her drink over him and left. “Shortly afterward she heard cries and saw her friends trying to extinguish him.” The woman was charged with assault on Thursday after she turned herself in to police. The story has made national headlines in Greece, where some have hailed the woman as a heroine. Mr Feltham’s parents have insisted reports their son sexually harassed the woman were “absolute nonsense”. Ian Feltham, 48, said his son was approached out of the blue by a complete stranger who threw accelerant over him. Stuart Feltham was at a bar in the town of Malia at the end of a two-week holiday with five friends.
MPs attack mortgage arrears fees
A committee of MPs has attacked the way some mortgage lenders levy high charges on customers who fall into arrears.The Treasury Committee said this practice was “intolerable” and demanded that the Financial Services Authority (FSA) put a stop to it. The committee also said some lenders were breaking the rules by using repossession as a first, rather than last, resort with borrowers in arrears. The FSA said it would publish proposals this autumn after a widespread review. “The FSA continues to take a robust position with firms as soon as we have evidence of wrongdoing and also to ensure borrowers are treated fairly throughout the lifetime of their mortgage,” said a spokeswoman. But the MPs in their report said they were shocked at what they perceived to be the FSA’s “leisurely” approach to enforcing the existing rules governing mortgage lenders. “We have heard evidence of charges as high as 35 from some lenders for simply sending a letter or making a phone call, and charges as high as 150 for a visit from a so-called ‘debt counsellor’,” said John McFall, chairman of the committee. “Such practices are intolerable and are placing additional financial as well as emotional strain on those already struggling to keep a roof over their head,” he added. Getting worseThe committee took evidence during a short inquiry in June and July.
It was told that nearly 400,000 homeowners in the UK were behind with their mortgage repayments by March this year. Although the increase in repossessions had slowed down recently, the committee said it was sure the problem of arrears and repossessions would become worse in the future. The main targets of the MPs’ criticisms were the sub-prime and specialist lenders, some of whom, the MPs were told, had a deliberate policy of trying to repossess borrowers’ homes as soon as they fell behind with repayments. This is against the rules on treating custom fairly, which are supposed to be enforced by the FSA. But the MPs said that in some cases, this was not happening. “The FSA and the Office of Fair Trading (OFT) must get a grip on this problem and crack down on lenders who are breaking the rules and mistreating customers in arrears,” said Mr McFall. ProfiteeringJust as alarming to the MPs were the stories they heard of some lenders imposing excessive extra fees for dealing with customers in arrears. The fees, the MPs said, appeared to be a source of extra profit for the lenders, rather than merely covering the extra administrative overheads involved. The committee demanded that the FSA and the OFT take action to eliminate excessive arrears charges and said all lenders should publish a breakdown of the fees they imposed. The MPs took a distinctly dim view of the FSA’s attitude to these problems. They accused the financial regulator of taking far too long to investigate firms accused of treating borrowers unfairly. “The FSA needs to start protecting consumers who have been made vulnerable by the recession and stop protecting the commercial interests of lenders trying to evict people from their homes,” said Which? chief executive, Peter Vicary-Smith. “The FSA must respond to the committee’s condemnation of its leisurely approach to enforcement by immediately publishing the names of the firms it is investigating.” ‘Shocked’Four firms are now facing enforcement action by the FSA after an earlier inquiry lasting a year and a half. But the MPs said the FSA’s reluctance to name and shame them, until they were found guilty, gave the impression the regulator was more interested in protecting the reputation of the lenders than protecting their customers. “I am shocked at the length of time it is taking the FSA to complete enforcement action against firms it suspects are breaking the rules,” said John McFall. “During this time, many thousands of consumers will have suffered detriment and some will have lost their homes,” he added. The committee of MPs said it also wanted an explanation from the government about why its mortgage rescue scheme had, so far, helped only six households, rather than its target figure of 6,000 families.
LOS ANGELES (Hollywood Reporter) –
Even with all the loose ends left dangling in the finale last year, is there a “Mad Men” fan in God's creation that actually believes the show's Season 3 premiere on AMC Sunday is going to tie each and every one of them up in pretty bows?
As two seasons of “Mad Men” are enough to indicate, that is not series creator Matthew Weiner's way. The “Sopranos” alumnus graduated from the David Chase School of Storytelling. You not only don't give the viewers what they want, you confound them by toying with their expectations. Maybe you even make them question those expectations in the first place. Want tidy resolutions to cliffhangers? Go watch “Desperate Housewives.”
Weiner certainly had his pick of explosive story lines to detonate. We already know Don Draper (Jon Hamm) has re-entered family life after wife Betty (January Jones) tells him she is pregnant with their third child; she hasn't told him of the torrid one-night stand committed in retribution for Don's own infidelities. Peggy (Elisabeth Moss) has finally told Pete (Vincent Kartheiser) of their child she gave up. Joan (Christina Hendricks) is to marry the man who raped her on the office floor. Sterling Cooper is on the verge of being reshaped in the wake of its merger to British ad agency Putnam Powell Lowe. Roger Sterling (John Slattery) has renounced his marriage to marry a comely young secretary.
All that should be revealed about the third-season premiere is that some of these sleeping dogs are roused, some are not. Some aren't even acknowledged. That's about as much detail as should be given rather than risk spoiling the fun (such is the peril of writing a “Mad Men” review, to risk telling too much even by saying what doesn't happen).
Perhaps the only predictable element of “Mad Men” is that the premiere is a return to form, the series is as spellbinding and elusive as Draper himself. If “Mad Men” is making some kind of significant creative recalibration this season, there's no evidence available in this episode.
The only significant new element to be found is the addition to the cast of Jared Harris as Putnam's financial officer, Lane Pryce. Together with Pryce's assistant, John Hooker (Ryan Cartwright), the interlopers' mere presence at Sterling Cooper carries a menacing undercurrent before either even so much as opens their mouths. The inevitable consequence of a merger being no different in 1963 or 2009, this installment of “Mad Men” reverberates in our recession-rocked era more so than the usual episode.
(Editing by DGoodman at Reuters)
LAS VEGAS – An 11-year-old boy died in the intense heat of Death Valley National Park after he and his mother became stranded in one of the world’s most inhospitable areas and survived for several days on bottled water, Pop-Tarts and cheese sandwiches, authorities said Friday.
Alicia Sanchez, 28, was found severely dehydrated and remained hospitalized in Las Vegas a day after being found with her dog, her dead son and a Jeep Cherokee buried up to its axles in sand.
She told rescuers in California’s San Bernardino County that her son Carlos died Wednesday, days after she fixed a flat tire and continued into Death Valley, relying on directions from a GPS device in the vehicle.
“It’s in about as remote and isolated an area as you can find,” Death Valley National Park Chief Ranger Brent Pennington told The Associated Press. “How she got to that point, I don’t know.”
Pennington said Sanchez was found by a ranger who followed tire tracks off a dirt road into the Owlshead Mountains near the China Lake Naval Air Station, just inside the southwest corner of the vast national park near the California-Nevada state line. The park covers an area nearly the size of Connecticut.
Summer temperatures commonly run above 120 degrees in Death Valley, with the average daytime August temperature about 113. The high temperature Tuesday and Wednesday was 111, with a low of 96 early Tuesday.
An autopsy on the boy is scheduled for next week, but foul play was not suspected in his death, San Bernardino County sheriff’s spokeswoman Cindy Beavers said.
The family’s pet dachshund survived the ordeal and was being cared for by San Bernardino County sheriff’s deputies, said Sgt. Tim Lotspeich, a deputy who assisted in the rescue about 20 miles east of the remote town of Trona, Calif. Trona is about 140 miles northeast of Los Angeles.
Officials said Sanchez and her son set out last Saturday with a case of 24, 16-ounce bottles of water and food on what was to be an overnight camping trip.
There were conflicting reports about when they became stranded. The San Bernardino County coroner’s office said it was Monday; Pennington and San Bernardino County sheriff’s officials said it was last Saturday.
By all accounts, no one reported them missing until Wednesday.
“We got multiple calls about 5 p.m. on Wednesday from family members concerned that they hadn’t heard from her,” Pennington said. “They said they received a text message Aug. 1 that said she was out in the desert changing a flat tire.”
Las Vegas Police Officer Bill Cassell, a department spokesman, would not release a missing persons report. He said investigators checked the woman’s apartment in Las Vegas and began coordinating a search with San Bernardino County sheriff’s officials.
Pennington said an air and ground search was launched at dawn Thursday, and the woman and her son’s body were found about 11 a.m.
He said a park ranger followed tire tracks on a dirt road into the desert, and at one point passed an abandoned tire and rim and water bottle.
The ranger found Sanchez waving for help outside the vehicle, which Pennington said apparently hit an underground animal den and became badly stuck in the sand. The boy’s body was inside the Jeep.
Sanchez was taken to Sunrise Hospital and Medical Center in Las Vegas, about 130 miles east of Trona. Hospital spokeswoman Ashlee Seymour said the woman was in fair condition but could not be interviewed.
Sanchez told authorities she couldn’t get a cell phone signal, and even hiked to the top of a peak to try. Authorities said the pair had no maps and quickly consumed the food and water they brought.
Pennington said cellular service is spotty and global positioning satellite directions can be unreliable on unmaintained roads and open desert in and around Death Valley.
“A GPS does not replace a map, a compass, checking in at the visitor center and letting people know where you’re going to be,” Pennington said.
He said searchers mistakenly looked late Wednesday for Sanchez in campgrounds in the Panamint Mountains, based on family members’ reports that she planned to camp in free sites and visit the Scotty’s Castle attraction in the far northeast corner of the vast national park.
The chief ranger said family members in the Midwest described Alicia Sanchez as a nurse who recently moved to Las Vegas and was working at a Las Vegas hospital. He said she had been due to work Wednesday evening.
Associated Press staff writer Gillian Flaccus in Tustin, Calif., contributed to this report.
After another day wrangling over healthcare reform, it was no small amount of frustration that inspired Rep. Henry Waxman to stand in front of a press gathering and not-so-subtly accuse the “blue dog” Democrats of being party turncoats. “I won't allow them to hand over control of our committee to Republicans,” Waxman said, threatening to have the bill bypass the Energy and Commerce Committee he chairs if the blue dogs didn't accept the deal before them. “I don't see what other alternative we have, because we're not going to let them empower Republicans on the committee,” he added, in case his point had been lost on anyone.
[Read 10 Things You Didn't Know About Henry Waxman]
That position, however, didn't last long. House Speaker Nancy Pelosi, who has cultivated a generally positive relationship with the blue dogs, said she would not support a move to bypass the committee. Waxman backtracked shortly afterward, striking a more conciliatory tone and offering up a package of concessions to the seven blue dogs on his committee.
The episode was widely heralded as a tidy illustration of the growing clout of the coalition of 52 mostly Southern, mostly fiscally conservative House Democrats. It also appeared to make an impression on high-profile House Republicans. “Good for them,” Minority Leader John Boehner said of the holdout blue dogs. He added that he would now consider shelving the nickname “lap dogs,” which he had previously taken to calling them.
But that particular moniker points to criticism within Democratic ranks as well: namely, that the blue dogs don't have the sort of substantial sway that their recent spate of press would suggest. “The blue dogs have really created this brand name,” says Burdett Loomis, a professor at the University of Kansas and author of a recent study on the subject, “Blue Dog House Democrats: Lead Dogs or Mythical Beasts?” Despite all of the attention they have garnered, he says, until recently there was little evidence that the coalition really mattered in Congress.
True, Loomis says, they have been a voice for fiscal moderates. Many come from either rural Southern districts or Northern blue-collar coal-mining towns, for example, “that aren't very hospitable to an extremely liberal member of Congress,” he says. Or, some would add, even moderately liberal: Thirty-two of the 52 blue dog Democrats' districts voted for Republican presidential candidate John McCain in the general election. “So the first thing they're doing in many ways is responding to their constituents,” says Loomis.
[Read Obama's 10 Top Friends and Foes in Congress]
But despite the tough talk, the blue dogs have not voted against the Democratic Party on many issues since the coalition was created after the 1994 Republican revolution ousted many of their ranks.
The blue dogs argue this doesn't mean they lack pull. Theirs is more of an inside game, they say, to get the Democratic leadership to change and modify its agenda. Under President Obama, however, they have begun to flex their muscle within the party in high-visibility arenas like healthcare reform. Last month, they also succeeded in passing pay-as-you-go legislation, known as PAYGO. The bill institutes across-the-board spending cuts if the cost of new laws isn't matched by increased revenues or cuts elsewhere in the budget. It is a measure for which the blue dogs had been fighting for 15 years, saidRep. Baron Hill, a Democrat from Indiana. The bill also represents “an unprecedented step forward in the blue dogs' fight to restore fiscal responsibility and accountability to the federal government,” he added.
But both liberal and conservative bloggers are fond of arguing that the fiscal conservatism of the blue dogs is overrated. They cite defense appropriations as one illustration. Despite a White House victory with the Congressional vote last month to kill the F-22 fighter jet program, the House defense appropriations bill contained no shortage of big weapons systems and planes with hefty price tags. This, critics note, is in direct opposition to Obama's military spending priorities–and comes after Defense Secretary Robert Gates has explicitly stressed that the Pentagon doesn't need the systems.
[Read 10 Things You Didn't Know About the F-22 Raptor]
But the big defense contractors that build them offer jobs in Congressional districts hit hard by the recession. In other areas, fellow lawmakers have noted that the blue dogs have not been immune from the influence of big lobby groups. “They are walking a fine line,” says Thomas Mann, an expert on Congress at the Brookings Institution. “They love to talk of fiscal responsibility, but they are the first to fight for higher Medicare reimbursement for providers in their districts and often the first to support higher agricultural subsidies. Their commitment to fiscal responsibility is limited.”
A recent report from the Center for Public Integrity found that the Blue Dog Political Action Committee “is on track to shatter all its fundraising records” this year, filling its coffers with 1.1 million in the first six months of 2009. The PAC received about half a million dollars from the healthcare industry. That's up 90 percent from the 2005 to 2006 cycle, CPI notes. Financial services and energy firms also contributed hefty sums in the hope of influencing upcoming votes on banking industry oversight and energy legislation.
PAC contributors are well aware that the upcoming legislation will be tough votes for the blue dogs to sell to their cost-conscious constituents. Some, for example, hail from coal-mining districts that worry about how the cap-and-trade bill's limits on emissions from fossil fuels will affect them. Because they have voted with the party on energy legislation, sometimes under heavy pressure from Democratic leadership, blue dogs have held firm on issues like healthcare reform.
[Read Senate Considers Healthcare Co-ops]
And so, as this week drew to a close and the congressional recess approached, Rep. Mike Ross, a blue dog from Arkansas who has emerged as a leader of the seven holdouts on Waxman's committee, enumerated the concessions that his coalition was able to win, including exempting businesses earning less than 500,000 per year from providing employee health insurance and cutting 100 billion in costs from the plan. He and his colleagues also were successful in delaying a vote. “We were able to reach an agreement that ensures that every member of Congress will have the entire month of August and the first week in September to read the bill and to visit with their constituents about it,” Ross said.
Equally important, the healthcare dust-up allowed the blue dogs to tout their conservative credentials. “Look, there's no secret here that Henry Waxman is much more to the left than I am,” Ross took pains to point out.
But Mann notes that despite requisite political theater, the blue dogs are aware that they have a vested interest in seeing that healthcare reform ultimately passes after the August recess. They know, he says, “that if they hold out for too much and this goes down, then they go down.”
That's because they are the most politically vulnerable of the Democrats. “Simply voting against healthcare reform,” Mann adds, “isn't going to insulate them from the downward draft if this thing blows up.” The administration “has put so many chits on this one program that if it goes down, [Democrats] really look like we're not fit to govern,” says one party operative. “In the end, the blue dogs and the liberals have the same calling here.”
But by creating a choke point in the influential House Energy Committee, “we're getting to see how the blue dogs arguably can be influential,” says Loomis. This influence will continue as Obama begins outlining some of his efforts to cut the deficit later this year. One congresssional staffer says that the president “will try to give something back politically to the blue dogs after what will be a series of tough votes on energy and healthcare reform for them.” It is a nod, many add, to their growing clout as majority members working alongside a Democratic president with a highly ambitious agenda.
Read Obama's 10 Top Friends and Foes in Congress
Read 10 Power Players in Obama's Washington
Read Who's Who in Obama's Inner Circle
See photos of the Obamas Behind the Scenes
DENVER – There was no Paula, but there was a Posh.
Victoria Beckham was on hand Friday for the first round of “American Idol” auditions in the post-Paula Abdul era. The former Spice Girl arrived at a downtown Denver hotel where call-back auditions were being held as scores of onlookers crowded against rope barriers, many snapping photos.
Fox, which airs the popular singing show, said Beckham and Katy Perry would be guest judges in Abdul’s place. But it wasn’t immediately clear whether Beckham did any judging Friday, and “Idol” spokeswoman Alex Gillespie declined to say what her role was. Perry was nowhere to be seen.
Judge Kara DioGuardi arrived in a limo wearing a black dress, telling local Fox affiliate KDVR that she was wearing black to mourn Abdul’s absence. DioGuardi called Abdul her mentor and the heart of the show.
“She was very kind, she showed me the ropes, so I have to give her the props for that,” DioGuardi said. “I hope she is happy and I hope she reconsiders.
Abdul announced this week she was leaving “Idol” after eight seasons. She would not discuss details about her “Idol” exit Thursday in a phone interview, nor would she address whether the door was still open for a return.
Lilly Scott, a contestant at the Denver auditions, told KDVR-TV in Denver that the show was “kind of lame” without Abdul. “I was really excited, but three is still good,” she said.
Beckham and host Ryan Seacrest were the first to arrive at the Denver hotel Friday. Seacrest chatted with fans and posed for pictures. He grabbed the cell phone of a woman who was taking video of him, aimed at her for a few seconds, then shook her hand and returned the phone.
Randy Jackson and Simon Cowell arrived last, and the crowd grew boisterous, some chanting “We love you Simon!”
Wearing his trademark white shirt and aviator sunglasses, Cowell joked with fans and shook hands.
“Why don’t you call me anymore?” he teased one woman. “I thought we were friends.”
One fan shouted, “I love how mean you are.”
“Good,” Simon replied. “I’ll be mean today.”
Melinda Doolittle, an “Idol” fan favorite who finished third in the show’s sixth season, said on her blog Friday that Abdul’s departure made her “incredibly sad.”
Each judge has a role, Doolittle wrote, “But Paula … sweet Paula, is the heart … the artist … the mama … the one who understands what you’re going through and empathizes with you.”
SIOUX FALLS, S.D. – The rare 3-week-old Amur tiger cub’s eyes haven’t completely opened yet, her belly bulges and her paws seem too large for her tiny head.
She is the lone survivor of a litter of six born last month at a South Dakota zoo — and workers there are doing everything they can to keep her alive. The orange- and black-striped cub gets a baby’s bottle filled with milk formula several times of day and spends her time in a darkened room inside a plastic tote bag with a heating pad and stuffed toy animal.
“We don’t want her to get the idea that she’s not a tiger,” said Elizabeth Whealy, the CEO and president of the Great Plains Zoo in Sioux Falls.
The cub, which has doubled her weight since birth to five pounds, was born along with five siblings July 18-19 as part of a nationwide captive Amur breeding program. Also known as the Siberian tiger, the Amur is one of the world’s rarest species and the largest of the big cats, weighing up to 500 pounds. There are believed to be about 400 of the critically endangered animals in the wild.
Two of the cub’s siblings were stillborn. Necropsies determined another died soon after birth from a ruptured bowel. A week later, one died of kidney failure and another of fluid in the lungs and abdomen.
Tiger expert Ron Tilson said the deaths are not surprising given the unusually large litter and the fact that it was the first pregnancy for 6-year-old Vika.
“That is really extraordinary because for the life of me I can’t ever remember six cubs being born,” said Tilson, director of conservation at the Minnesota Zoo and coordinator of the Association of Zoos and Aquariums’ Species Survival Plan for tigers.
During a feeding this week, the cub gives off a chuffle — a greeting noise — as a zoo worker held her bottle and rubbed her with a wet rag to stimulate her mother’s licking. First-time mothers like Vika are notorious for having difficulty either giving birth or nurturing their litter, Tilson said.
“Once a female gets through her first litter they become successively much better at raising the cubs and the survival rate goes way up,” Tilson said.
Whealy said the cub will be moved out of the veterinary care building and put on public display in three or four months.
On the Net:
Great Plains Zoo: http://www.gpzoo.org
American Zoo and Aquarium Association: http://www.aza.org
GENEVA – When launched to great fanfare nearly a year ago, some feared the Large Hadron Collider would create a black hole that would suck in the world. It turns out the Hadron may be the black hole.
The world’s largest scientific machine has cost 10 billion, has worked only nine days and has yet to smash an atom. The unique equipment in a 17-mile (27-kilometer) circular tunnel with cathedral-sized detectors deep beneath the Swiss-French border has been assembled by specialists in many countries, with 8,970 physicists eagerly awaiting the startup.
But despite the expense, thousands of physicists around the world, many of whom hope to conduct experiments here, insist that it will work and that it is crucial to mankind’s understanding of the universe.
The European Organization for Nuclear Research, known as CERN, said Friday it would restart the collider in November at half power under pressure from scientists eager to conduct experiments to unlock secrets of the universe.
But spokesman James Gillies told The Associated Press they would have to shut down yet again next year to finish repairs so that the Large Hadron Collider can operate at full energy of 7 trillion electron volts — seven times higher than any other machine in the world.
CERN has been working since late last year to repair the damage caused by a faulty electrical joint. The breakdown occurred nine days after the spectacular start up of the 10 billion machine last Sept. 10 when beams of subatomic particles were sent around the accelerator in opposite directions.
Fifty-three massive electrical magnets had to be cleaned and repaired after the failure. Tons of supercold liquid helium spilled out of the system, and a sooty residue had to be cleared from the tubes that are meant to be pristine, holding a vacuum in which subatomic particles can whiz around the tunnel at near the speed of light at temperatures colder than outer space.
Michio Kaku, a physics professor at City University of New York who is an outspoken critic of waste in big science projects, defends the CERN collider as a crucial investment.
“The Europeans and the Americans are not throwing 10 billion down this gigantic tube for nothing,” Kaku said. “We’re exploring the very forefront of physics and cosmology with the Large Hadron Collider because we want to have a window on creation, we want to recreate a tiny piece of Genesis to unlock some of the greatest secrets of the universe.”
He said the biggest cause of the “bad accident” last year was “probably due to human error caused by rushing the project.”
“But I view it as a temporary black eye. We’ll get it up and running,” Kaku said.
CERN expects repairs and additional safety systems to cost about 40 million Swiss francs (37 million) over the course of several years, covered by the 20-nation organization’s budget.
The collider emerged as the world’s largest after the U.S. canceled the Superconducting Super Collider being built in Texas in 1993. Congress pulled the plug after costs soared, and questions were raised about the value of the science it could produce.
Gillies says all 20 of CERN’s member nations have remained supportive and that four other countries — Cyprus, Israel, Serbia and Turkey — have asked to join. A fifth country — Slovenia — has expressed interest.
Japan, India, Russia and the U.S. are observer countries that have made sizable contributions to the CERN project.
CERN is now aiming to restart the machine in November with beams of subatomic particles initially running at 3.5 trillion electron volts, or TeV. That’s only half the level the machine was designed for, but it’s still 3 1/2 times higher than the second most powerful accelerator, the Tevatron at Fermilab outside Chicago. During last year’s brief startup phase, the CERN collider only operated at half the Fermilab level.
Even as the machine is being calibrated this winter, scientists will be able to conduct experiments, collecting data on the collisions of protons and lead ions in the accelerator.
They hope the higher energy will enable them to see particles so far undetected, such as the elusive Higgs boson, which in theory gives mass to other particles — and objects and creatures — in the universe.
Physicists have used smaller, room-temperature colliders for decades to study the atom. They once thought protons and neutrons were the smallest components of the atom’s nucleus, but the colliders showed that they are made of quarks and gluons and that there are other forces and particles. And they still have other questions about antimatter, dark matter and particle mass they want to answer with CERN’s new collider.
They hope the fragments that come off the collisions will show on a tiny scale what happened one-trillionth of a second after the so-called Big Bang, which many scientists theorize was the massive explosion that formed the universe. The theory holds that the universe was rapidly cooling at that stage and matter was changing quickly.
Some skeptics have expressed fears the high-energy collision of protons could imperil the Earth by creating micro black holes — subatomic versions of collapsed stars whose gravity is so strong they can suck in planets and other stars.
CERN and leading physicists dismiss the fears and maintain the project is safe.
The collider’s teething problems are typical of complicated accelerators, but it has been especially frustrating to physicists from around the world, who already have been waiting for years to conduct their experiments on the machine.
“But the LHC is an example of an enormously complicated machine that is pushing the edge of accelerator technology, and it is not surprising that it has had some unanticipated problems,” Neal Lane, former President Bill Clinton’s science adviser and former director of the National Science Foundation.
If the collider can be started soon, it will produce valuable results, said Lane, now a a physicist and public policy professor at Rice University.
But, he added, “If there are many more surprises, further delays, failure to meet design specifications over the next few years, then the field of experimental particle physics, worldwide, could be set back for a decade or more. The stakes are very high!”
Gillies told the AP that CERN management decided at the beginning of the year that it would not try to repair all parts of the collider this year.
“Otherwise, we would never have had a beam before halfway through next year,” he said.
Gillies said CERN experts have examined every one of the 1,600 superconducting magnets and each of the 10,000 electrical splices as well as copper protection to carry away any spillover current to prevent damage to the magnets if they heat up as happened Sept. 19.
They decided some of the splices need to be repaired before the collider goes to full power, but that they can operate safely up to 5 TeV without further repairs now.
That has been set as the highest energy for the collider before its next shutdown for maintenance, probably in November 2010. Then the further repairs will be made so that the energy level can be ramped up.
Rolf Heuer, who has taken over as CERN’s director-general since the failure, said the collider has been studied very carefully and is much better understood than a year ago.
“We can look forward with confidence and excitement to a good run through the winter and into next year,” Heuer said.
NEW YORK – John Smoltz may have thrown the last pitch of his storied career.
The Boston Red Sox cut the struggling Smoltz on Friday, a day after the New York Yankees sent the 42-year-old righty to yet another early exit.
Red Sox general manager Theo Epstein traveled down to New York to personally tell Smoltz that the team had designated him for assignment. The move gives Boston 10 days to trade, release or send Smoltz to the minors.
“When he woke up today, he said, ‘How can I help the team win?’” Epstein said. “But he’s a realist and understands the results have not been what we were looking for.”
After more than two decades with Atlanta, Smoltz signed with the Red Sox in January, hoping he could recover from surgery on his right shoulder. After eight starts, the numbers were not pretty for a pitcher with Hall of Fame credentials: 2-5 with an 8.32 ERA.
Boston made the move while in a three-way race with the Yankees and Tampa Bay, and with Smoltz still searching for answers after one of the worst outings of his career.
“Pretty humbled right now, the way things have gone,” Smoltz said Thursday night, after the Yankees chased him in the fourth inning of a 13-6 romp. “Time may not be on my side if this continues.”
He was right. The eight-time All-Star was not at his locker at Yankee Stadium, though his No. 29 jersey hung in his cubicle and his shower flip-flops were in his stall.
“He’s certainly not a quitter, that’s one thing he’s not,” Epstein said. “So it never entered his mind to stop pitching.”
Said Red Sox manager Terry Francona: “I think we appreciated what his pedigree and past was, and respected it a lot.”
“Just got to a point where we needed to help our team to be better,” he said.
Boston began the day in second place in the AL East, with a rotation minus injured Daisuke Matsuzaka and Tim Wakefield.
The Red Sox made a series of roster moves. They also designated lefty reliever Billy Traber for assignment, recalled right-hander Junichi Tazama from Triple-A Pawtucket and claimed infielder Chris Woodward off waivers from Seattle.
Smoltz started with two scoreless innings against the Yankees before fading. They tagged him for eight runs on nine hits and four walks in 3 1-3 innings.
“Even though he got hit, there was some cleanness starting to appear,” Red Sox catcher Jason Varitek said.
At 212-152 with 154 saves and a 3.32 ERA, Smoltz compiled a glittering resume after making his major league debut in 1988.
Along with aces Greg Maddux and Tom Glavine, Smoltz helped Atlanta to its only World Series championship, won a Cy Young Award and is the only pitcher with more than 200 victories and 150 saves.
Maddux retired after last season with the Los Angeles Dodgers. Glavine, like Maddux in his 40s and a 300-game winner, was abruptly cut by Atlanta in June before making his major league return.
Smoltz was one of the best big-game pitchers of his era, going 15-4 with four saves and a 2.65 ERA in the postseason. It was precisely his ability to win those clutch games that prompted the Red Sox to sign him to a 5.5 million, one-year contract, even though they knew he wouldn’t be able to play for much of the season.
Smoltz worked his way back through the minors, and made his Red Sox debut on June 25 at Washington. The last-place Nationals hit him hard and, except for occasional flashes, Smoltz never got into a prolonged rhythm.
Seeming intent on throwing hard and inside, Smoltz started well Thursday night against the Yankees. In the first inning, he got Derek Jeter on a grounder and struck out Johnny Damon and Alex Rodriguez.
“I think he still has some really good stuff. He ran into a really hot team last night,” Damon said Friday. “I hope there’s more baseball left for him.”
The Yankees chased Smoltz with an eight-run burst in the fourth. Melky Cabrera hit a three-run homer, and Smoltz handed the ball to Francona after an intentional walk to Rodriguez.
“I’m not doing it right now,” Smoltz said after the loss. “I’m a big enough man to stand up here and say I’m not doing it.”
BARNSTABLE, Mass. – Eunice Kennedy Shriver, a sister of President John F. Kennedy and a longtime champion for the disabled, was in critical condition Friday at a Massachusetts hospital. The 88-year-old Shriver’s husband, children and grandchildren gathered at her side at Cape Cod Hospital in Barnstable, said family spokesman Stephen Rivers.
California Gov. Arnold Schwarzenegger, the husband of Shriver’s daughter, Maria, was also there, said Aaron McLear, a spokesman for the governor.
Shriver has been weakened in recent years by a series of strokes. She lives in Hyannis Port, near the family compound where her brother, U.S. Sen. Edward Kennedy, has been staying as he undergoes treatment for brain cancer.
Sen. Kennedy left the compound Friday in a golf cart with his wife and dog, headed toward the area where the family sailboat is docked.
Shriver is the fifth of the nine Kennedy children. Edward Kennedy and Jean Kennedy Smith are her sole surviving siblings.
In an recent interview posted on eunicekennedyshriver.org, Sen. Kennedy said his sister has never backed down from the rest of competive clan.
“She always strived to be the best, and she in many respects has made such an extraordinary difference in the lives of so many people around the world,” he said.
Shriver is perhaps best known for her work to establish the Special Olympics, inspired in part by the struggles of her mentally disabled sister, Rosemary.
She organized the first Special Olympics in 1968 in Chicago. The two-day event drew more than 1,000 participants from 26 states and Canada. By 2003, the Special Olympics World Summer Games, held that year in Dublin, Ireland, involved more than 6,500 athletes from 150 countries.
AC Milan have completed the signing of Klaas-Jan Huntelaar from Real Madridafter the Dutch international striker successfully came through a medical at the San Siro on Friday.
Klaas-Jan Huntelaar struggled to make a big impact in his year and a half at Real Madrid.
Milan announced on their official Web site that Huntelaar had signed a four-year deal. No fee for the player was disclosed but reports have suggested a figure of 21 million secured Huntelaar’s services. Spanish giants Real are seeking to balance the books after a summer of massive spending and are set to offload other members of their Dutch contingent, with Wesley Sneijder, Rafael van der Vaart, Ruud van Nistelrooy and Arjen Robben all the subject of transfer speculation. Milan lost their star forward Kaka to Madrid earlier this summer, and will add Huntelaar to an attacking pool of Brazilians Ronaldinho and Alexandre Pato plus veteran Italian Filippo Inzaghi and Marco Borriello. Huntelaar becomes the latest in a long list of Dutchmen to join the Rossoneri, following in the footsteps of Marco van Basten, Ruud Gullit and Frank Rijkaard. “Milan, the club and city, is a special place for us Dutch,” he told reporters. “I know Van Basten very well, he was my coach at Ajax as well as in the national side. “I am calm, I’m really happy to be here, I know the football and the training in Italy are different to Spain, but I’m ready, I want both to start training and to start the new adventure itself. ”
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Huntelaar, who turns 26 on August 12, had seemed set to move to German club Stuttgart earlier this summer but the deal fell through. He had also been linked with English club Tottenham after failing to make a big impact following his 29 million move from Dutch side Ajax in January 2009. Huntelaar had been the Eredivisie’s top scorer in the 2007-08 season, but netted only eight goals in 19 appearances for Real after being brought in when compatriot van Nistelrooy was ruled out with a long-term injury.
Ronnie Biggs, the former fugitive who helped stage Britain’s “Great Train Robbery” in 1963, has been released from prison, marking the end of a criminal saga that has played out over 40 years and across four continents.
Biggs and 14 other men robbed a Royal Mail train of 2.6 million pounds (about 67 million in today’s terms). The gang, which included an antiques dealer, a boxer and a florist, beat the train’s driver unconscious with an iron bar; the victim never worked again and died seven years later. Biggs was sentenced to 30 years in prison for his part in the incident, but he escaped after 15 months by scaling a 30-ft. (9 m) wall and jumping into a furniture van. After more than 35 years on the run in Australia and Brazil, Biggs returned to the U.K. in 2001 for medical treatment. (See the top 10 heists of all time.)
U.K. Justice Secretary Jack Straw freed Biggs on compassionate grounds and announced his decision on Aug. 6 in an e-mailed statement. “The medical evidence clearly shows that Mr. Biggs is very ill and that his condition has deteriorated recently, culminating in his re-admission to hospital,” he said. “His condition is not expected to improve.”
Biggs, age 79 and severely ill with pneumonia, remains at a hospital in Norwich, where is to undergo minor surgery. Following a series of strokes, he can no longer walk, is fed through a tube and communicates by pointing to letters of the alphabet on a board. The three prison guards who stood watch over his hospital bed round the clock have been removed. Their departure comes just one day ahead of Biggs’ 80th birthday and the 46th anniversary of the train robbery on Aug. 8.
“I had a private moment with my dad to thank him for sticking with it,” his son Michael told reporters outside the hospital after the papers freeing his father were signed. “It was very emotional when the guards left.”
“My father still has a sense of humor – he shook hands with the prison guards and then just waved them off with his hands.”
Biggs demonstrated that same flamboyance during three decades on the run. After his escape from prison in 1965, he fled to Paris, where he underwent plastic surgery and obtained new identity papers, which he used to enter Australia. In 1969 he got wind that authorities had tracked him to Melbourne, so he smuggled himself onto a passenger liner to Panama and eventually made his way to Brazil. (See the top 25 crimes of the century.)
In 1974, tabloid journalists from Britain’s Daily Express broke the news that Biggs was hiding out in Rio de Janeiro. Scotland Yard’s subsequent efforts to extradite him were foiled after Biggs fathered a child, Michael, with Raimunda de Castro, a nightclub dancer and alleged prostitute; Brazilian law protected the parents of Brazilian citizens. And while Biggs could not legally work in Brazil, he was able to live freely and profit from coffee mugs and T shirts branded with his name and image. (TIME flashback 1981: “Biggs Bagged.”)
Owing to his minor celebrity status, Biggs also recorded vocals for the Sex Pistols song “No One Is Innocent,” which refers to the then fugitive in its chorus: “Ronnie Biggs was doing time, until he done a bunk, now he says he’s seen the light, and he’s sold his soul for punk.” (Doing a bunk is a colloquial phrase for leaving without permission, as from school.)
There were downsides to having a high profile. In 1981 a group of bounty hunters kidnapped Biggs, sneaked him into Barbados and asked the British government for a reward. But Barbados did not have an extradition treaty with the U.K., and Biggs again escaped justice.
In 2001, after 13,068 days on the run, Biggs returned to Britain on a chartered plane paid for by British tabloid the Sun. Having suffered a series of heart attacks, Biggs reportedly returned seeking medical attention. However, through his son he told reporters that he returned to spend his final days in his native land. “My last wish is to walk into a Margate pub as an Englishman and buy a pint of bitter.”
Giovanni Di Stefano, the family’s attorney, said he was pleased with Biggs’ release but remains mindful of the former prisoner’s health. “He is being released effectively to die, and that cannot be considered a victory,” he said. And what about that final pint? “This man is ill – he’s going to die. He is not going to any pub.”
See pictures of bobbies on the beat.
See the top 10 unsolved crimes.
View this article on Time.comRelated articles on Time.com: Milestones
NEW YORK – The economy’s most vexing problem, unemployment, is showing the first signs of easing. And Wall Street is celebrating.
Major stock indexes jumped more than 1 percent Friday after the government said the nation’s unemployment rate unexpectedly fell in July for the first time in 15 months and that employers cut fewer jobs. Bond prices fell, driving yields higher as investors left the safety of Treasurys.
The Labor Department report handed investors the best evidence yet that the economy could be climbing out of the recession. Analysts widely consider unemployment the biggest obstacle to a recovery in the economy, which is driven by consumer spending.
The surprise figures injected new life in a monthlong rally and provided validation for traders who have been betting since March that the economy is healing. The Dow Jones industrial average rose 114 points to cap its fourth straight weekly gain. The Dow is at its highest level since early November.
The government said employers shed 247,000 jobs in July, the fewest in a year. Economists had expected 320,000 lost jobs. The unemployment rate dropped to 9.4 percent from 9.5 percent in June, rather than rising to 9.6 percent as forecast.
“It really gave the market the proof that it needed to see,” said Burt White, chief investment officer at LPL Financial in Boston.
The report is often the most anticipated bit of economic news each month on Wall Street and nervousness about what it would reveal held stocks to modest moves most of the week. The exception came Monday when Ford Motor Co. said its monthly sales rose for the first time in nearly two years because the government’s cash for clunkers program was drawing customers. That, and good news about manufacturing, construction and banking, sent the Standard & Poor’s 500 index over 1,000 for the first time in nine months.
With the pop Friday, the S&P 500 index is up 14.9 percent in only four weeks and 49.4 percent from a 12-year low in early March.
Still, some analysts say the gains have come too quickly and question whether an economic rebound can ever live up to the expectations investors are now setting.
“We’ve run very fast, very quickly,” said Marc Harris, co-head of global research for RBC Capital Markets in New York. “I think we’re due to take a breath.”
The Dow rose 113.81, or 1.2 percent, to 9,370.07. The broader S&P 500 index gained 13.40, or 1.3 percent, to 1,010.48, while the Nasdaq composite index rose 27.09, or 1.4 percent, to 2,000.25.
About 2,300 stocks rose on the New York Stock Exchange, while about 700 fell. Consolidated volume rose to 7 billion shares from 6.8 billion Thursday.
For the week, the Dow added 2.2 percent, the S&P 500 index rose 2.3 percent and the Nasdaq rose 1.1 percent.
Meanwhile, bond prices fell as the jobs reading limited demand for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.76 percent late Thursday.
Financial and retail stocks rallied Friday along with the broader market.
Insurer American International Group Inc. posted its first quarterly profit since 2007. The insurance giant, which is now majority owned by the government, rose 4.61, or 20.5 percent, to 27.14.
The jump in retail stocks came a day after many posted lackluster July sales. A drop in unemployment could make consumers feel more confident about making purchases, which could help the recovery along. Their spending accounts for more than two-thirds of U.S. economic activity. Macy’s Inc. rose 98 cents, or 6.5 percent, to 15.99.
Analysts say some of the market’s recent gains are tied to short-covering, in which investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.
On other days, selling has been contained because investors don’t want to miss a rally that has surprised many traders with its strength. On Wednesday, the Dow fell only 39 points but it was the biggest drop in a month.
Investors will be looking for more insight into the economy when the Fed’s interest-rate committee concludes a two-day meeting on Wednesday. It is unclear when policymakers will decide the economy is strong enough to handle rate hikes that will be needed to keep inflation in check.
Light, sweet crude fell 1.01 to settle 70.93 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 14.78, or 2.7 percent, to 572.40.
The dollar mostly rose against other major currencies, while gold prices advanced.
Overseas markets also rallied on the U.S. jobs report. Britain’s FTSE 100 rose 0.9 percent, Germany’s DAX index gained 1.7 percent, and France’s CAC-40 rose 1.3 percent. Early Friday, Japan’s Nikkei stock average closed with a gain of 0.2 percent.
The Dow Jones industrial average closed the week up 198.46, or 2.2 percent, at 9,370.07. The Standard & Poor’s 500 index rose 23.00, or 2.3 percent, to 1,010.48. The Nasdaq composite index rose 21.75, or 1.1 percent, to 2,000.25.
The Russell 2000 index, which tracks the performance of small company stocks, rose 15.69, or 2.8 percent, for the week to 572.40.
The Dow Jones U.S. Total Stock Market Index — which measures nearly all U.S.-based companies — ended at 10,416.26, up 269.24, or 2.7 percent, for the week. A year ago, the index was at 12,905.73.
MIAMI – If there is one place where any bad feelings from the hearings on Sonia Sotomayor’s Supreme Court nomination could have lasting consequences, it’s Florida, the pesky swing state that the second-largest Puerto Rican community outside the island calls home.
Although Sen. Mel Martinez, who announced Friday that he would leave his seat a year early, broke ranks to vote in favor of Sotomayor and urged fellow Republicans to do likewise, both major GOP candidates to replace him came out against her.
Whether they or other Republicans will pay a price for opposing the nomination of Sotomayor, whose parents are from Puerto Rico, could prove critical in the race to replace Martinez and other statewide campaigns on the horizon.
Hispanics in key swing states overwhelmingly embraced the Democratic Party last year, weakening the argument that the nation’s fastest-growing electorate is up for grabs. But observers say Florida could set the tone for how much the Sotomayor vote influences future elections across the country. She was confirmed Thursday 68-31, with only nine Republicans voting in favor.
“Florida is ground zero,” said Janet Murguia, head of the nonprofit National Council of La Raza, a liberal-leaning Hispanic group.
Concentrated in central Florida’s I-4 corridor — the amusement park-studded stretch of land from Tampa through Orlando to Daytona Beach — there are more than 725,000 Puerto Ricans in the state and they have often voted for Republicans, especially in state and local elections. They could play a key role next year in deciding who fills Martinez’s seat. The nonprofit Pew Hispanic Center, combining voter registries and census data, estimates Puerto Ricans make up about 4 percent of the state’s voters.
“Right now, the Puerto Rican-rich I-4 vote is, without doubt, the most sought after vote in Florida because it is considered a swing vote that can make or break a statewide election,” said Republican consultant Ana Navarro. “I can’t help but believe this vote and the statements these candidates are making will be a very important factor for the Latino community, and in close races, these factors make a difference.”
Charlie Crist, the popular GOP governor who is leading in the polls for Martinez’s seat but must still burnish his conservative credentials, said he opposed Sotomayor’s record on gun rights, though he had previously tapped a judge to the Florida Supreme Court whom the National Rifle Association opposed.
Martinez, one of only two Hispanic U.S. senators, announced Friday that he would resign now rather than finishing out his term, allowing Crist to appoint a placeholder. Crist said he would not appoint himself.
Marco Rubio, the dynamic former state House speaker and other announced Republican candidate for the seat, also cited the Second Amendment in opposing Sotomayor’s nomination. He called her an activist judge because of her statements and record suggesting she would defer to Roe v. Wade, the 1973 Supreme Court ruling that legalized abortion nationwide.
Rubio, who is Cuban-American, said those who opposed the Sotomayor nomination were unfairly painted as anti-Hispanic.
Opponents are “certainly not going to say it’s a principled position,” he said.
Like other heavily Hispanic regions around the country, central Florida went for Obama last year, but historically, it has been known as the top swing section of the nation’s most notorious swing state.
Puerto Ricans there tend to be more recent arrivals with more business ties and more education than many of their counterparts in New York, home to the mainland’s largest community.
Angelette Aviles, who runs a Tampa marketing company and is active in the Republican Party, said she believes most Hispanic voters will be more focused on the economy and health care than the Sotomayor vote.
“People are going to remember this historic moment, rather than that it was a Republican who voted against her — unless the Democrats use it against them,” she said.
Emilio Perez, head of the Puerto Rican Chamber of Commerce of central Florida, agrees the Democratic Party will have to play up the issue to make it stick.
But he said if Rubio wins the primary, it will be harder, given his stance on Sotomayor, for him to attract Hispanic Democrats simply by saying, “I’m Latino, vote for Latino.”
Already the candidates have alienated some centrist Democrats like Roland Sanchez-Medina Jr., head of the Cuban American Bar Association. He likes Crist but was disappointed by his position on Sotomayor.
The short-term influence of the vote will likely be harder to identify outside Florida.
The only other senator up for re-election this coming year in a swing state where the Hispanic vote could make a difference is Republican John McCain of Arizona. While some Hispanics were surprised by his decision to vote against Sotomayor, he is generally popular and has long demonstrated a commitment to other Hispanic-related issues like immigration reform and Latin America
Swing states with large Hispanic populations like Colorado and New Mexico already elected Democratic senators in 2008. And in Nevada, Republican John Ensign isn’t up for re-election until 2012.
Still, Florida International University Political Science Professor Dario Moreno, who has done polling for Rubio, describes the Sotomayor case as a “micro” version of immigration in that Hispanics will be influenced not simply by the vote but by the tenor of the debate.
“Very few people are going to vote on the Sotomayor nomination,” he said, “but this is background noise to how sensitive each of the parties are to concerns of Hispanics.”
(This version CORRECTS last name of Angelette to Aviles instead of Thillet and the location of her marketing company to Tampa instead of Orlando.)
Buffett’s firm returns to profit
Celebrated US financier Warren Buffett’s investment firm has reported a jump in profits after making a loss in the first three months of the year.Between April and June, Berkshire Hathaway made a profit of 3.3bn (2bn), up 15% on the 2.88bn it made in the same period a year ago. In the first quarter, the company made a loss of 1.53bn. The dramatic turnaround in fortunes was due to rising stock markets boosting the value of its investments. Successful bets on derivative contracts – complex financial instruments such as futures and options – were an important factor in boosting profits. Revenues fell slightly to 29.61bn. The firm’s loss in the first quarter – its first in eight years – was in part due to badly-timed purchases of oil stocks. In April, ratings agency Moody’s downgraded Berkshire’s credit rating, from Aaa, the highest, to Aa2, meaning it thinks the company is less likely to pay back debt. Dubbed the “Sage of Omaha”, billionaire Mr Buffett is widely celebrated for his investment acumen.
‘Roman emperor’s villa’ unearthed
Archaeologists in Italy say they have unearthed the remains of a sumptuous villa thought to be the birthplace of the Emperor Vespasian.The ruins were found in the Roman city of Falacrine, about 80 miles (130km) north-east of Rome. The villa’s location and luxury suggest it was probably Vespasian’s birthplace, an archaeologist said. Vespasian lived from AD9-79. He was emperor from AD69-79, restoring peace after a period of civil war. The villa in Falacrine stretches over 14,000 sq m (16,750 sq yards). The archaeologist leading excavations there, Filippo Coarelli, said it was not marked as belonging to Vespasian’s family, but its extravagant trappings were an indication of its ownership. “It’s clear that such things could only belong to someone with a high social position and wealth. And in this place, it was the Flavians,” he said, referring to Vespasian’s dynasty. The villa was decorated with luxurious marble “coming from the whole Mediterranean area”, he told the Associated Press news agency. Vespasian, whose full name was Titus Flavius Vespasianus, had a successful military career before becoming governor of Africa and an aide to the emperor Nero. The Colosseum was begun under his rule with spoils of the AD70 conquest of Jerusalem. He was the founder of the Flavian dynasty of emperors.
Shares surge on US jobless data
Leading US and UK shares closed at their highest levels since last year after better-than-expected US jobless data boosted investor confidence.The US’s Dow Jones index jumped 114 points, or 1.2%, to close at 9,370.07, its highest level since early November. The UK’s FTSE 100 index finished up 41 points, or 0.9%, at 4,731.56 – its highest close since early October. Official figures showed that 247,000 US workers lost their jobs in July, far fewer than analysts had expected. ‘Due a break’With fewer workers being laid off, the unemployment rate fell to 9.4%, down from 9.5% in the previous month – the first drop since April 2008. The unexpected fall fuelled hopes of an economic recovery. The Dow finished higher for the fourth straight week, buoyed not only by the jobless data but also by encouraging manufacturing and home sales figures released earlier in the week. But analysts warned that the markets may be getting ahead of themselves. “We’ve run very fast, very quickly. I think we’re due a break,” said Marc Harris at RBC Capital Markets. Elsewhere, France’s Cac 40 index rose 1.3% and Germany’s Dax climbed 1.7%. ‘Consolidation’In the UK, the US unemployment figures sparked a rally in the FTSE. The index had spent most of the day in negative territory following downbeat results from Royal Bank of Scotland. RBS shares fell 12.1% after the bank said it had made just 15m this year. The results, which the bank described as poor, showed 7.5bn in write-offs such as bad debts. Chief executive also said that write-offs would remain high “for a while”. UK shares have risen this week after strong results from HSBC and Barclays banks, and figures from Lloyds Banking Group that met with expectations. They were also buoyed by the news that the Bank of England will pump another 50bn into the UK economy. However, analysts were not optimistic that the rebound in share prices would continue. “The best we could hope for in the UK is a consolidation around the 4,500 level. We don’t see a tremendous amount of short-term upside from where we are now,” said Tim Whitehead at Redmayne Bentley.
BANGALORE (Reuters) –
Colonial BancGroup Inc (CNB.N) said it faces a criminal probe by the U.S. Department of Justice (DoJ) related to accounting irregularities at its mortgage lending unit, and the struggling lender warned it may be put under receivership.
In a regulatory filing, the company said the Alabama State Banking Department may appoint the Federal Deposit Insurance Corp as receiver or conservator for its banking unit after August 12.
Earlier this week, the agency that investigates misuse of U.S. banking bailout money raided Colonial's mortgage warehouse lending division in Orlando, Florida.
The U.S. Securities and Exchange Commission also issued subpoenas to the company seeking disclosures related to its participation in the U.S. Treasury Department's Troubled Asset Relief Program (TARP) and its accounting for loan-loss reserves.
Colonial announced in December that it was to receive $550 million in TARP money. Shareholders subsequently filed a class action lawsuit accusing Colonial of failing to disclose that the TARP money was contingent on the company raising $300 million in private financing.
Taylor, Bean and Whitaker Mortgage Corp, the 12th-largest U.S. mortgage lender, had offered $300 million to help keep the troubled Montgomery, Alabama-based lender afloat, but the agreement fell apart last week.
In the following week, Taylor Bean shut down its mortgage lending operations after the Federal Housing Administration barred it from making loans that the agency insures.
The DoJ's allegations of irregularities relate to more than one year's audited financial statements and regulatory financial reporting, Colonial said in the regulatory filing.
Colonial said it intends to cooperate with the investigation.
The company operates 355 branches in Florida, Alabama, Georgia, Nevada and Texas and has over $25 billion in assets. If it fails, it would be the largest failure this year.
The company said it continues to explore all possible capital-raising alternatives to comply with the regulatory orders.
Colonial did not immediately return calls seeking comments. The State of Alabama Banking Department and the FDIC, which insures deposits of up to $250,000 per account, declined to comment.
In June, the banking unit had agreed to a cease-and-desist order with regulators, requiring the bank to increase capital levels and reduce problem assets, among other things.
The company has been badly battered by the credit crisis, as higher charge-offs and rising foreclosures in the bank's Florida construction-loan portfolio continue to strain its balance sheet.
The company's shares, which have lost 90 percent of their value in the past year, were down 19 percent at 57 cents in morning trade on the New York Stock Exchange. The stock traded as high as $13 in September last year.
(Additional reporting by Karey Wutkowski in Washington; Editing by Mike Miller and Deepak Kannan)
LOS ANGELES, CaliforniaMichael Jackson’s estate should gain “close to 100 million” through contracts negotiated since the pop star’s death, Jackson’s brother told CNN’s Larry King.
Jermaine Jackson tells CNN’s Larry King that brother Michael’s resting place is still undetermined.
A Los Angeles judge is expected to approve a series of agreements Monday, including a deal for a movie to be released this fall about Jackson’s final days before his June 25 death. Jermaine Jackson, in a wide-ranging interview taped for broadcast Friday night on CNN’s “Larry King Live,” said his mother, Katherine Jackson, has not decided on Jackson’s final resting place. He said he prefers the Neverland Ranch. “I’m just concerned about security and being secure in a peaceful setting,” he said. He stopped short of revealing if his mother has hinted her preference, saying, “At the end of the day, she will make the final decision.” Watch Jermaine Jackson explain his thoughts » Jermaine Jackson told King he had no reason to believe his brother was addicted to drugs, a suspicion that detectives revealed when they requested a warrant to search Dr. Conrad Murray’s Las Vegas, Nevada, home and office. “I have never seen him act abnormal around me or never known anything like that,” he said. He said he never talked about drugs with his brother “because it never came to my mind.” While the coroner’s report on what killed Jackson has been delayed indefinitely, evidence emerged that he shopped for a doctor who would give him the drug investigators suspect led to his death.
LKL exclusive: Jermaine Jackson’s new mission
Michael Jackson’s mom gets custody of kids
Dr. Allan Metzger, whose name appeared on a search warrant served last week, refused Jackson’s request in April for the anesthetic propofol, commonly known by the brand name Diprivan, Metzger’s attorney said. Investigators suspect Murray gave the drug to Jackson in the 24 hours before he died, according to a source, who asked not to be named because the individual was not authorized to speak to the news media. “If there was anything administered in my brother’s body that was not in the proper setting, meaning a hospital, then that will be dealt with,” Jermaine Jackson told King. While his mother’s lawyers are waging a court skirmish with the men now in control of the Michael Jackson estate, Jermaine Jackson expressed support for John Branca and John McClain. “These are people we have known for many, many years,” he said. “They are doing an incredible job. They have raised a lot of money, close to 100 million for the estate. They are following out Michael’s wishes accordingly.” Although his mother’s lawyer questioned what he called “a suspicious circle of relationships” involving Branca and McClain, Jermaine Jackson said, “Anyone that contests the will is going against Michael’s wishes.” Jackson’s will named Branca and McClain as executors, although for now they have only limited authority as “special administrators.” Los Angeles Superior Court Judge Mitchell Beckloff, who must approve any contracts made for the estate, will hold a hearing Monday to consider several. One agreement would bring in a minimum of 60 million from Columbia Pictures for the rights to make a documentary from video of Jackson’s preparations for his “This Is It” shows that had been planned in London, England. Court papers show the estate would get most of the money, after show promoter AEG Live takes out expenses and 10 percent. Michael Jackson’s three children are “doing fine” six weeks after their father’s death, Jermaine Jackson said. “They’re playing with my kids and they are coming back strong,” he said. When King asked if there was a chance the children might have show business careers, he said “there’s a great possibility.” “They love film and they love movies and they know a lot about animation,” he said. The arrangement for Debbie Rowe, the mother of the two eldest children, to have limited visitation with them is “perfect” and “wonderful,” he said. “We’ve talked about horses, she has a ranch.” He disputed suggestions that Michael Jackson was not the biological father of the children. “People come forth and say things just to get attention, but those are definitely Michael’s children. “You can look at the kids and tell that they are Michael’s kids,” he said. Jermaine said he did not know if Omer Bhatti, a 25-year-old Norwegian performer, was his brother’s son. “I would say it’s probably someone Michael endeared and wanted to be part of his life,” he said. At Jackson’s memorial service last month, Bhatti was seated in the front row between the pop star’s father and sister. “I’ve seen pictures of him dressed just like Michael with the hat and red shirt and everything,” he said. “But if he’s not his son, we are going to continue to give him love.” Joe JacksonMichael and Jermaine’s fathersaid in an interview with the Web site NewsOne that he believed Bhatti is Michael’s son. “He looks like a Jackson, he acts like a Jackson, he can dance like a Jackson,” Joe Jackson said.
Jermaine Jackson told King that the last time he was with his brother, they were singing a song together. “This song was so nice and he was singing the harmony, and so we started singing the harmony together, and I said ‘Michael, I love what you did on that song.’ He said, ‘Thank you. That means a lot coming from you.’ “
AKRON, Ohio (Reuters) –
Padraig Harrington played patiently on a course that is becoming increasingly difficult to negotiate to maintain a two-shot lead early in the WGC-Bridgestone Invitational second round on Friday.
Bidding for his first victory of the year on any of the leading tours, the Irishman followed his opening 64 with a one-under-par 69 on a tree-lined layout running fast and firm.
Harrington mixed two birdies with a sole bogey to post a seven-under total of 133 in the final World Golf Championships (WGC) event of the season.
Scott Verplank also carded a 69 to finish at five under, two ahead of fellow Americans Woody Austin (68) and Zach Johnson (70), plus Spaniard Alvaro Quiros (65).
World number one Tiger Woods, seeking a record seventh title at Firestone Country Club, was five strokes off the pace after returning a 70.
Harrington, competing in his first tournament since the British Open three weeks ago, was delighted to maintain control after covering the back nine in one-under 34.
“I'm obviously happy,” the 37-year-old Dubliner said. “I shot a good score yesterday that's given me a great chance at the tournament.
“Anything under 70 from here on in is going forward so I'm quite pleased to have shot 69. Even though you can shoot a low score, to do it two, three or four days in a row wasn't going to happen.
“You'd like to make some birdies but you're always aware that you don't want to drop shots,” Harrington said of his more cautious approach for the second round.
“That definitely showed up in my play today. There were times when I was a little bit conservative and it was good in one sense; I only short-sided myself once today.”
Harrington's only blemish came at the par-four eighth where he struck a tree with his drive and then pulled his approach well left, leaving himself very little green to work with to salvage his par.
His third shot ran 45 feet past the pin from where he two-putted for bogey.
“Besides that, I worked it around the golf course well today and my short game was sharp,” the three times major winner said. “I need to do a few things a bit better on the weekend, but I'm mostly happy with it.”
Woods, bidding for his fifth victory of the year on the PGA Tour, remained at two under overall after a round featuring two birdies and two bogeys.
“You just have to be very patient,” the 33-year-old American said. “This golf course is playing like it normally does, and it's very similar to a major championship.
“You can shoot some good numbers, but a good number this week is going to be somewhere in the high 60s and more than likely you can then move up the board.”
Thailand's Prayad Marksaeng and South African Tim Clark, who opened with matching 66s at Firestone, were among the late starters on Friday.
(Editing by Ken Ferris)
TAMPA, Fla. – An autopsy shows that cocaine use contributed to the heart disease that suddenly killed boisterous TV pitchman Billy Mays in June, officials announced Friday.
The 50-year bearded TV personality died of a heart attack in his sleep after going to bed at his Tampa condo the night of June 27. His wife found him unresponsive the next morning.
The Hillsborough County medical examiner’s office Friday said Mays had last used cocaine days before his death. The report said that although Mays died from heart disease, cocaine use was a contributing cause of death.
Mays was a pop-culture fixture with his energetic commercials pitching gadgets and cleaning products like Orange Glo and OxiClean.
The McKees Rocks, Pa., native developed his style demonstrating knives, mops and other “As Seen on TV” gadgets on Atlantic City’s boardwalk. For years he worked as a hired gun on the state fair and home show circuits, attracting crowds with his booming voice and genial manner.
He got his start on TV on the Home Shopping Network and then branched out into commercials and infomercials. He developed such a strong following that he became the subject of a reality TV series, Discovery Channel’s “Pitchmen.”