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http://noir.bloomberg.com/apps/news?pid=20601110&sid=aHZlMgqK4GZ8



Bristol-Myers Awaits Approval for Drug’s New Attack on Cancers
By Robert Langreth

March 22 (Bloomberg) -- In 1996, James Allison ( http://www.mskcc.org/mskcc/html/50929.cfm ), a California researcher, uncovered a way in mice to unleash the body’s disease-fighting immune system against cancer. While he was certain the approach could lead to a new kind of treatment against human tumors, he was unable at first to convince drug companies to pursue the idea.

“I hit a wall for a couple of years,” Allison, now at Memorial Sloan-Kettering Cancer Center in New York, said in an interview. “They thought the immune system could never take care of a big mass of tumors.”

Now, a skin-cancer drug based on the concept is close to getting U.S. clearance for its developer, Bristol-Myers Squibb Co. If the Food and Drug Administration approves the drug, called ipilimumab, by its scheduled March 26 deadline, it would become the first marketed medicine proven to extend survival in metastatic melanoma, skin cancer that has spread and is generally lethal.

The drug would also be the first in a new class of immune- boosting medicines able to treat an array of tumors. Instead of directly destroying tumor cells or disrupting their ability to grow like most cancer drugs, these treatments remove molecular brakes that prevent immune system cells from attacking cancer.

Ipilimumab sales in melanoma could reach $925 million by 2017, said Seamus Fernandez, an analyst at Leerink Swann & Co. in Boston “It’s not a stretch to say this would be a multi- billion dollar class” if the drug works in common forms of the disease such as prostate and lung cancer, he said. “Bristol is way ahead of everyone on the immunotherapy front.”

Approval Probable
...The FDA approval would be for patients who have failed other treatments. Yesterday, the company reported a study showing the drug also extended life as an initial therapy...

...The American Cancer Society reports that 68,000 Americans develop melanoma and 8,700 die from it each year.

‘Huge’ Potential
“The potential is huge” for ipilimumab-style drugs, Thomas Lynch, director of the Yale Cancer Center in New Haven, Connecticut, said in a telephone interview. Bristol-Myers’s treatment may “pave the way for a whole series of drugs” that prompt the immune system to destroy tumors, he said.

Bristol-Myers is testing ipilimumab in two trials in advanced prostate cancer patients, and plans to begin a final- stage trial in lung cancer later this year. It is testing five other immune-enhancing cancer drugs for multiple myeloma, kidney cancer, and other tumors.

One drug, called anti-PD-1, shrunk or stabilized tumors in 8 of 16 kidney cancer patients, researchers reported at a medical conference earlier this year...

...The company declined to make executives available prior to the FDA decision. The agency delayed its initial Dec. 25 decision on the drug until March 26.

Survival Data
In a trial of 676 melanoma patients who had failed other treatments, patients who received ipilimumab lived a median of 10 months, versus 6.4 months for patients in a control group, according to results published in the New England Journal of Medicine in August.

Doctors involved in the test said there are patients living on the drug for years.

“I have treated 250 patients with ipilimumab and at least 25 percent are alive two to five years after starting the therapy,” Anna Pavlick, of the melanoma program at the NYU Langone Medical Center in New York, said in an interview. Normally, they would succumb to the disease within three to six months, she said.

While there are drugs approved in the U.S. for skin cancer that has spread throughout the body, including the chemotherapy agent dacarbazine and interleukin-2, neither has been proven to prolong survival.

Los Angeles resident Susan Reed was 46 when a mole on her back turned red. By the time her doctor removed it in early 2007, the melanoma had spread to her lymph nodes. By June 2008, it metastasized into three inoperable tumors in her left lung.

‘Unbelievably Frightening’
“It was the most devastating thing I have ever encountered,” Reed, who is married with three teenage children, said. “You Google melanoma and every article that comes up is unbelievably frightening. I just couldn’t imagine I would not be there to watch them graduate from high school.”

With few options, Antoni Ribas, an oncologist at University of California, Los Angles, enrolled Reed into a trial of ipilimumab in September 2008. By December, her tumors started to shrink and have continued to get smaller since then, she said.

“It has saved my life,” said Reed, who gets one 90-minute infusion every three months, and says she has not experienced any side effects. “I feel so lucky.”

Ipilimumab is the result of two decades of research into the role of the immune system in combating cancer. It began when immunologist Allison was at University of California, Berkeley, and started looking at a molecule called CTLA-4 ( http://www.ncbi.nlm.nih.gov/gene/1493#general-gene-info ) that is involved in controlling T-cells the body uses to attack and kill cells infected with viruses and bacteria.

New Theory
Some researchers thought CTLA-4 acted as a gas pedal to turn on the immune system’s T-cells. Allison showed in 1995 that CTLA-4 did the opposite; it worked as a brake, preventing T-cells from rampaging out of control and destroying healthy cells.

Allison said he realized that blocking CTLA-4 might help treat cancer by allowing T-cells to remain active long enough to seek out and destroy a tumor. He made an antibody designed to turn off CTLA-4 and asked a researcher to test it in mice.

“Even in my own lab there were people who thought it wouldn’t work,” Allison said in an interview at his Memorial Sloan-Kettering office. He was amazed by the results, published in Science in March 1996. “The mice that got the antibody were alive; the ones that didn’t were completely dead,” he said.

Little Interest
The University of California patented the concept and Allison tried for two years to get a large biotechnology or drug company interested. “They couldn’t get their arms around the idea,” he said. Rights to the approach ended up with a biotech company called Medarex, which made a human version of the antibody and started testing it in cancer patients in 2000.

Bristol-Myers, which had been studying CTLA-4’s role in various diseases, formed a partnership with Medarex in 2005 and bought the company for $2.4 billion in 2009. Allison, a former consultant for Bristol-Myers, said he would receive a royalty if the drug is approved.

“Innumerable” melanoma drugs have failed in trials, NYU’s Pavlick said. It looked like ipilimumab would suffer the same fate when a 2007 study failed to reach its goal of proving the drug shrank tumors in more than 10 percent of melanoma patients.

One reason for the difficulty is ipilimumab’s novel mechanism, Allison said. While it primes the immune system to attack tumors, it doesn’t trigger the attack directly. It may take months for an immune system response to build up. After starting the therapy, some patients’ tumors continue to grow, and only later start to shrink, according to research reports.

Ipilimumab caused immune-related side effects including itchy skin and colon inflammation, researchers have reported. In the Phase 3 trial, 12 patients died from treatment-related side effects.

 

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http://noir.bloomberg.com/apps/news?pid=20601110&sid=aGlh_2gBs7UI


Lessons in Nuclear Safety Start With Manholes, Axes
by Peter Coy

March 24 (Bloomberg) -- Three Mile Island, Chernobyl, Fukushima. First the accident, then the predictable allegations in the postmortem: The design was flawed. Inspections were inadequate. Lines of defense crumbled, and reliable backups proved unreliable. Planners lacked the imagination or willpower to prepare for the worst.

There’s a way to break out of this pattern. Nuclear power plants will never be completely safe, but they can be made far safer than they are today.

The key is humility. The next generation of plants must be built to work with nature, and human nature, rather than against them, Bloomberg Businessweek reports in its March 28 edition. They must be safe by design, so that even if everything goes wrong, the outcome won’t be disaster.

In the language of the nuclear industry, they must be “walkaway safe,” meaning that even if all power is lost and the coolant leaks and the operators flee the scene, there will be no meltdown of the core, no fire in the spent fuel rods, and no bursts of radioactive steam into the atmosphere.

For inspiration, consider the manhole. If manholes were square, a cover that got jounced around by a passing vehicle could fall diagonally through the open hole. That’s why manholes aren’t square--they’re round, because no matter how you rotate a round cover, it can never fall through a round hole. The solution is brilliant in its simplicity, and cheaper than hiring armies of inspectors to go around making sure square covers are correctly aligned on square holes.

Manhole Wisdom
The beginnings of manhole wisdom are incorporated into nuclear power plants under construction in China, India, and probably soon in the U.S.

The plants use “passive” safety features, a label that sounds underwhelming until you consider its implications. Passive means that the reactor’s safety doesn’t depend on active interventions, such as operators flipping the correct switches or sensors and actuators working properly. The safety depends, rather, on physics.

The new Westinghouse AP1000 (the AP stands for Advanced Passive), for example, has a huge emergency water reservoir above the reactor vessel that’s held back by valves.

If the cooling system fails, the valves open and a highly reliable force takes over: gravity. Water pours down to cool the outside of the containment vessel. Then another highly reliable force, convection, kicks in. As the water turns to steam, it rises. Then it cools under the roof, turns back into a liquid, and pours down again.

Three Days
Westinghouse estimates that the pool contains enough water to last three days, after which pumps operated by diesel generators are supposed to kick in and add water from an on-site lake.

This isn’t an idea on the drawing board. Westinghouse, owned by Toshiba Corp., is about halfway to completion of one of the plants at Sanmen in China’s Zhejiang province. It’s supposed to go online in 2013.

In Vogtle, Georgia, excavation and non-safety-related construction has begun for two AP1000 reactors. Southern Co., the largest utility in the U.S. by market capitalization, has 1,400 workers on the site and is expecting a combined construction and operating license for them later this year.

France’s Areva SA and a venture between General Electric Co. and Hitachi Ltd. are among groups lined up behind Westinghouse in getting Nuclear Regulatory Commission certification for their own safer designs.

Obama Call
Critics continue to argue that there will never be a truly safe nuclear power plant, and it’s true: Any time you split atoms, there’s risk. But nuclear plants have one thing going for them that hasn’t changed since the leak at Fukushima. They generate badly needed electricity without creating greenhouse gases that cause global warming.

In his State of the Union address in January, U.S. President Barack Obama called for “building a new generation of safe, clean nuclear power plants in this country.”

In his fiscal 2012 budget request in February, Obama asked for $36 billion in government-backed loan guarantees for new nuclear reactors. Obama also asked for $125 million for what the Energy Department calls Generation IV nuclear reactors that the department said “will feature advances in safety and reliability to improve public confidence in nuclear energy while providing enhanced investment protection for plant owners.”

Nuclear power faces all sorts of challenges, including the multibillion-dollar construction cost of each new plant. Fukushima is a reminder that making the plants simpler and safer is the biggest challenge of all.

Ax Man
In late 1942, Enrico Fermi, the Italian physicist who was one of the key figures in the development of the atomic bomb, came up with nuclear power’s first safety mechanism: a man with an ax. In case of a runaway reaction, he decided, the ax man’s job was to cut a rope, dropping cadmium rods that would absorb neutrons and halt the reaction.

“The ax man received his hand-signaled instructions from Fermi, who stressed the speed necessary by holding one hand flat and depicting a chopping motion with the other,” recalled Edwin Blackburn, a millwright who was on the scene, in an Oak Ridge National Laboratory publication.

The ax man’s skills were never needed, but in the decades that followed, nuclear energy suffered a series of stigmatizing accidents.

Light Water
One reason for that is the almost total reliance on one particular design, the light water reactor, which has some inherent problems. The light water’s prominence dates to a fateful 1950s choice by Admiral Hyman Rickover, father of the nuclear Navy.

Rickover decided that the first nuclear submarine, the USS Nautilus, which was launched in 1955, would be powered by solid uranium oxide and would use water as both a coolant and a moderator. (A coolant carries heat from the reactor to produce power; a moderator slows down the neutrons emitted by the fuel so they have a better chance of interacting with other fissile materials to keep the reaction going. There’s no requirement that water perform either of those functions, but that’s the way light water reactors work.)

Rickover went with the design because it was likely to be ready soonest and because it produced plutonium-239, a bomb- making material, as a byproduct. It has some big drawbacks, as explained by physicist Robert Hargraves and nuclear engineer Ralph Moir in a 2010 article in the American Scientist.

Damaged Rods
The bundles of fuel rods are quickly damaged by heat and radiation. Short-lived byproducts such as xenon-135, which poisons the fission process, are tricky to manage--and contributed to the instability that led to the Chernobyl explosion. Long-lived byproducts are abundant and highly toxic. The water is corrosive and radioactive. To raise its boiling point, it must be pressurized to 150 times atmospheric pressure. That necessitates a costly network of vessels, pipes, and valves--and raises the risk of an explosive release of radioactive steam to the atmosphere. Overall, the design is the precise opposite of passive safety.

Rickover’s choice had lasting consequences. The first commercial nuclear power plant in Shippingport, Pennslyvania, used a design similar to that of the Nautilus, setting a pattern that endures to today.

Solid Fuel
“Maddeningly,” write Hargraves and Moir, “historical, technological, and regulatory reasons conspire to make it hugely difficult to diverge from our current path of solid-fuel, uranium-based plants.”

New reactors such as the Westinghouse AP1000 and Areva’s EPR don’t diverge from Rickover’s path. They too have the solid- *fuel cores and high-*pressure water cooling systems. But they are substantially safer than older light water reactors.

Areva says its EPR has four redundant safety systems instead of the two or three found on most current reactors. Westinghouse says the AP1000 is 100 times as safe as current plants.

Those claims, while subject to debate, are not mere corporate puffery. They’re based on engineering analyses that have been reviewed by the Nuclear Regulatory Commission as part of the plant certification. The Energy Department is also supporting development of small “plug-and-play” modular reactors such as the 125-megawatt mPower design from Babcock & Wilcox Co. and Bechtel Group.

The case for these new, safer plants doesn’t come through clearly because their existence conflicts with the agendas of both pro- and anti-nuclear organizations.

Older Designs
Utilities and manufacturers don’t want to imply that the older designs now in service are unsafe. In fact, Westinghouse points out in its marketing materials for the AP1000 that even the older reactors are twice as safe as the NRC requires.

“The plants we’re operating now are extremely safe as well,” says Beth Thomas, spokeswoman for Southern Co.

Nuclear opponents have even less reason to point out safety advances.

“My shortest answer is that we shouldn’t build more nuclear plants,” says Charles Perrow, a retired Yale University sociology professor who wrote extensively about the partial meltdown in 1979 at Three Mile Island nuclear power plant near Harrisburg, Pennsylvania. “There’s no way to make any system free of a disaster.”

If worse comes to worst, as it so often seems to, the safety systems that give the most confidence are the passive ones.

The International Atomic Energy Agency has created an elegant hierarchy of these passive systems. The ones at the highest level, Category A, require no signal inputs, no external power sources or forces, no moving mechanical parts, and no moving working fluid. Example: really thick concrete walls. Westinghouse’s reservoir above the AP1000’s containment vessel, clever as it is, doesn’t fit into Category A because it involves moving fluids and valves.

Bigger Departure
Generation IV reactors will be a much bigger departure. Many will do away with water, using elements such as helium or liquid sodium as a coolant. Most also get rid of solid uranium- 235 as a fuel, relying instead on different uranium isotopes, or liquid uranium mixtures, or even thorium as the primary fuel.

The profusion of creativity in nuclear design recalls the early days of the automobile, when the Stanley Steam Car coexisted with the Columbia electric buggy and internal combustion engines running on gasoline and diesel.

The comparison with cars goes deeper. Just as electric vehicles are staging a minor comeback after their early demise, some long-since-rejected concepts for nuclear energy are getting a second look as the faults of the incumbent technology become clearer.

New Design
The only requirement is that somehow a nuclear chain reaction must occur: A fissile material absorbs a neutron and splits, releasing energy and more neutrons that carry the process on. There are probably 1,000 conceivable combinations of the basic choices, an Oak Ridge official once calculated.

The new design that’s closest to commercial electricity generation is the pebble bed reactor, which has been under development for decades in Germany, then South Africa, and now China and the U.S.

Its uranium fuel is encased in more than 300,000 tennis- ball-sized “pebbles,” each one containing thousands of tiny graphite-coated fuel seeds, like a metal pomegranate. The radioactive fission products are absorbed in the coatings, and the fuel doesn’t get hot enough to melt down even if the plant loses all its cooling for days.

China Closest
China is closest to commercializing the pebble bed, pushing forward where the South Africans left off for financial reasons. Tsinghua University, working with Massachusetts Institute of Technology, already has a 10-megawatt experimental reactor in operation. It is building a 200-megawatt plant in Shidaowan in Shandong province with a unit of China Huaneng Group, the nation’s largest power group.

The Energy Department is leading a U.S. initiative, based at Idaho National Engineering and Environmental Research Laboratory in Idaho Falls, called the Next Generation Nuclear Plant. It, too, is a pebble bed design.

Energy Secretary Steven Chu has appointed a review committee to decide later this year whether to move on to the second phase of the project, which could lead to an operating pebble bed plant in the U.S. by around 2025, says David A. Petti, director of the Very High Temperature Reactor Technology Development Office at Idaho National Laboratory.

Scale Up
Pebble bed reactors don’t scale up well. Above 600 megawatts they lose their safety advantage over reactors with ordinary fuel rods, says Petti. At that scale the pebbles can get so hot that they can’t shed heat fast enough and can melt down just like any other uranium fuel, releasing radioactivity.

The sweet spot for pebble bed reactors is 250 to 600 megawatts, Petti says. He envisions them being located next to industrial plants, where their excess energy could be used to heat facilities and produce petrochemicals.

Liquid fuels are getting another look, too. As early as 1944, Fermi tested the world’s first liquid-fuel reactor in Chicago. It used uranium sulfate dissolved in water.

In 1965, Oak Ridge National Laboratory in Tennessee achieved criticality with a reactor using a more advanced liquid fuel: molten fluoride salt with uranium dissolved in it. The experiment ran for five years, then stopped when the money ran out. Now, scientists in India, France, and the U.S. are experimenting with another variety: liquid fluoride thorium reactors (known as “lifters”).

Perhaps the farthest-out design comes from a spinoff of Intellectual Ventures, a company headed by former Microsoft Corp. chief scientist Nathan Myhrvold and funded in part by Microsoft co-founder Bill Gates.

‘Massive Power’
TerraPower LLC, as the spinoff is known, used massive computing power to design a reactor that could run for decades on an isotope of uranium that is today considered waste.

The concept, first proposed in the 1950s, is to set up a slow-moving wave in which neutrons transmute inert, nonfissile fuel such as uranium-238 into fissile isotopes such as plutonium-239 that can split and throw off energy.

TerraPower says its spent fuel would not be useful for making weapons. The company, chaired by Gates, has been seeking a production partner and a host country. So far, no takers.

Wave Reactor
Technological breakthroughs such as the traveling wave reactor are part of the answer to nuclear safety, but not the answer in its entirety. Better management is crucial as well.

For many people, the most disturbing thing about the Fukushima disaster is that it occurred in a nation renowned for quality control. Japan invented poka-yoke, a design approach that is supposed to remove the possibility of doing things the wrong way. (It means mistake-proof. Round manhole covers are poka-yoke in spirit.)

The trouble with poka-yoke is that it lends itself mainly to preventing day-to-day types of mistakes, not strategic errors. On that score, Japanese regulators and officials of Tokyo Electric Power Co. (known as Tepco) appear to have underestimated the risk that a huge tsunami would overwhelm Fukushima’s defenses.

Katsuhiko Ishibashi, Japan’s leading seismologist and an adviser to the government, warned in 2007 of what he called genpatsu-shinsai -- meaning a quake-caused meltdown.

The oldest of the six reactors on the site was recently given a 10-year license extension in spite of regulators’ findings of inadequate management maintenance and Tepco’s spotty history of compliance with regulation. (In 2003, regulators forced it to suspend operations briefly at 10 reactors after evidence emerged that it had falsified inspection records.)

Made Safe
In fairness to Tepco, no system can be made safe against every risk.

“It’s a very difficult question,” says Tepco spokesman Hiro Hasegawa. “Maybe we should have prepared for the worst, worst, worst, worst, worst. But we can’t do anything if we consider every risk.”

Hasegawa says the utility did reinforce the Fukushima Dai- Ichi reactors after the 2007 quakes. And he says the 2003 tussle with regulators was caused in part by their overstrictness about a hairline crack in one key part.

There’s nothing particularly Japanese about what went wrong at Fukushima. It’s natural to minimize the risk of catastrophic events when you have no clear idea about how to deal with them, says J. Edward Russo, a management professor at Cornell University’s Johnson Graduate School of Management.

“It’s human nature to want to lower the probability of a particular disaster. They say, ‘We can’t plan for and pay for everything, so let’s knock that off the list.’ ”

Homer Simpson
Homer Simpson, the ultimate everyman-nuclear technician, would approve.

To be truly safe, the reactors of the future will have to withstand the worst that the Homer Simpsons of the world can throw at them.

Remember the cynical adage: Whoever invented the term “foolproof” underestimated the ingenuity of fools. Actually, it’s worse than that. In a genuine emergency, even calm, seasoned pros can make terrible decisions.

At Three Mile Island, operators refused to believe a dial that told them the reactor was boiling dry, preferring to trust another dial that was giving a different (and incorrect) interpretation, says Perrow, the Yale sociologist, who studied the accident in a 1984 book called Normal Accidents.

That’s where passive safety comes in.

The ideal system is one that’s inherently stable, like a ball at the bottom of a bowl. However it’s shaken, the ball tends to roll back to the bottom.

An inherently unstable system is the opposite, like a ball balanced on top of another ball. In some special cases, such as fighter aircraft, inherent instability is an asset.

Fighter Jets
Fighter jets are built to perform incredible dogfighting maneuvers, but the price for achieving that airborne maneuverability is radical instability: The onboard computer must send adjustment signals as many as 40 times a second to the engines and various wing surfaces to keep the plane flying true.

A nuclear plant should be like a ball in a bowl, not a jet fighter. In other words, stable and safe.

For future plants, safety can be designed in as a basic feature. Not so easy for existing plants, some of which may be with us for decades to come. For them, the solution is retrofitting where possible, greater vigilance, and creative thinking about what might go wrong.

A “premortem” might help. Gary Klein, a consultant to the Air Force Research Laboratory, advises institutions that deal with risk to analyze a failure before it even occurs.

‘Clever Enough’
Often, Klein says, planners will underestimate dangers by assuming they will be clever enough to surmount any difficulty that arises. Klein, who is senior scientist of MacroCognition in Yellow Springs, Ohio, removes that overconfidence bias in sessions with clients by asking participants to assume that a terrible accident, however unlikely, has already occurred. The challenge is to explain how it happened.

“You show you’re smart by trying to identify things that are plausible and worrisome,” says Klein. “It almost gets into a competition.”

To say nuclear power can be made much safer is not to say it can be made safe enough. That’s a political judgment, not a questions for nuclear engineers.

If Japan’s radiation nightmare continues to worsen, the outcry against nukes will be hard to ignore.

Some are already calling nuclear energy dead. Although that’s premature, NRG Energy Inc. said on Mar. 21 that it was slowing work at its South Texas nuclear plant expansion because of possible regulatory changes stemming from the Fukushima disaster. Those plants are based on evolutionary, Generation III+ designs.

Generation 4
On the other hand, Chinese executives confirmed on Mar. 22 that they are going ahead with building their Generation 4 pebble bed reactor.

“Japan’s Fukushima plant was using old technology while Chinese reactors are more advanced,” Cui Shaozhang, deputy general manager at Huaneng Nuclear Power Development, told Bloomberg News.

Those are the two faces of the nuclear debate. Fukushima could bring reactor development to a halt. Or it might stimulate the demand for safer designs. The future of atomic energy is at stake.

 

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List of new words
In addition to revised versions of Second Edition entries, the following new words were added:

•about round, adv.
•ambigram, n.
•banh mi, n.
•Barnard's star, n.
•bet-hedging, n.
•bet-hedging, adj.
•biker, n.
•biologic, adj. and n.
•calligram, n.
•car crash, n.
•couch surf, v.
•couch surfer, n.
•couch surfing, n.
•cream crackered, adj.
•crème de cassis, n.
•Divehi, n.
•dot-bomb, n. and adj.
•dotted line, n. and adj.
•drill-down, n.
•dubplate, n.
•Dutch colonial, adj. and n.
•ego-surf, v.
•ego-surfing, n.
•English colonial, adj. and n.
•fabless, adj.
•fnarr fnarr, int. and adj.
•gnasher, n.
•gremolata, n.
•headline, v.
•headlined, adj.
•headlining, adj.
•hentai, n.
•heteronormative, adj.
•heteronormativity, n.
•Hindutva, n.
•June, n.
•kleftiko, n.
•la-la land, n.
•lari, n.
•LOL, n.1
•LOL, int. and n.2
•lumpenintelligentsia, n.
•meep, n. (and int.)
•meep, v.
•muffin top, n.
•non-dom, n.
•non-domicile, n.
•non-domiciled, adj.
•OMG, int., (n.), and adj.
•pap, n.5
•pap, v.3
•party-crasher, n.
•party-crashing, n.
•party-crashing, adj.
•radioprotectant, adj. and n.
•rotograph, v.
•rotoscope, v.
•rotoscoped, adj.
•rotoscoping, n.
•rototill, v.
•rototilled, adj.
•rotten egg, n.
•Rotterdammer, n.
•Rottie, n.
•rottle, n.2
•rotty, adj.
•rouding time, n.
•rough-cut, adj.
•rough-cut, v.
•rough-dress, v.
•roughed-in, adj.
•rough-in, n.
•roughstock, n.
•roulade, v.
•roulading, n.
•roulette, v.
•roundman, n.
•round-nose, adj. and n.
•round-trip, v.
•roupily, adv.
•Roussanne, n.
•roustabouting, n.
•routed, adj.2
•router, n.6
•routery, n.
•routineness, n.
•rowdily, adv.
•rowed, adj.3
•rower, n.3
•rowlock, n.2
•Royal Free disease, n.
•royalness, n.
•rozzle, v.
•RSA, n.2
•Rt. Rev., n.
•Rt. Revd., n.
•Ru, n.
•rua, n.
•ruach, n.
•rub-a-dub, v.1
•rubber-banded, adj.
•rubberization, n.
•rubberize, v.1
•Rubisco, n.
•rubrene, n.
•rubrification, n.2
•rubus, n.
•ruck, v.7
•ruckly, adj.2
•rude, n.1
•rudimentarily, adv.
•ruesome, adj.
•ruff, n.10
•ruff, int. (and n.11)
•rufiyaa, n.
•Rugby sevens, n.
•rugelach, n.
•rugulate, adj.
•ruleful, adj.
•rumble-de-thumps, n.
•Ruminal, adj.1
•rumminess, n.1
•rumour control | rumor control, n.
•Rumping, adj.
•rumspringa, n.
•run-and-shoot, adj. and n.
•runathon, n.
•runchick, n.
•Rungu, n.
•runiform, adj.
•run-round, n.
•ruote, n.
•Rupert, n.
•RUPP, n.
•Ruppia, n.
•rural economics, n.
•Rurales, n.
•ruralite, n.
•Russellite, n.1 and adj.
•Russellite, n.2
•Russellite, n.3
•Russophilia, n.
•Russophobic, adj.
•Russophone, n. and adj.
•russula, n.
•rusticate, adj.
•rusticator, n.
•rusticle, n.
•Rusyn, n. and adj.
•Ruthenic, adj.1
•ruthenous, adj.
•Ruthian, adj.
•rutinic, adj.
•rutting, n.2
•ryanodine, n.
•ryotei, n.
•ryugi, n.
•Second Coming, n.
•singledom, n.
•Skidi, n. and adj.
•smack talk, n.
•smack talking, n.
•smack-talking, adj.
•spinback, n.
•state-run, adj.
•stonewash, n.
•stonewash, v.
•stonewashed, adj.
•suicide door, n.
•taquito, n.
•tetri, n.
•tinfoil hat, n.
•Wag, n.4
•wassup, int.
•yidaki, n.

http://www.oed.com/public/latest/latest-update/#new2

 

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http://noir.bloomberg.com/apps/news?pid=20601085&sid=aTbJbzJ3JJXI


Hoffmann-La Roche Family Pool Loses Voting Majority in Roche
By Allison Connolly

March 25 (Bloomberg) -- A pool of descendants of Roche Holding AG’s founder lost a voting majority in the Swiss drugmaker after a family member decided to become an independent stockholder.

Maja Oeri, a descendant of founder Fritz Hoffmann-La Roche, decided to exercise her shareholder rights separately, Bruno Dallo, the family’s representative at Scobag Privatbank AG of Basel, Switzerland, said in a statement. She holds a 5 percent voting stake. The pool, which was set up in 1948, now has 45.01 percent voting rights in Europe’s largest drugmaker by sales, according to the statement.

Family members are committed to keeping the Basel-based company independent, according to the statement. Novartis AG, Roche’s crosstown rival, holds about 33 percent of the voting stock and unsuccessfully sought talks almost a decade ago with Roche over a merger or collaboration.

“Although we do not believe that Roche is a takeover target, it opens up that theoretical possibility down the line,” Karl-Heinz Koch, an analyst at Helvea AG, said in a report today. He has a “neutral” rating on the stock.

There was no disagreement among the family members that led to Oeri’s decision, and she wants the company to remain independent, Dallo said in a phone interview today. He declined to say why she wanted to separate herself from the pool.

‘Committed’
“Even though it no longer holds a voting majority, the pool remains by far the most significant shareholder,” the family said in the statement. “It remains committed in the long term to the overall interests of the company with headquarters in Basel and to this company’s independence.”

Roche has two classes of stock -- bearer shares, which carry voting rights, and non-voting equity securities. The bearer stock rose 2.60 Swiss francs, or 1.9 percent, to 137.10 francs at 12:35 p.m. Zurich time. The non-voting stock climbed 70 centimes, or 0.5 percent, to 131 francs, giving the company a market value of 114 billion francs ($124.9 billion).

Oeri’s membership in the pool will be replaced by a charitable foundation which was set up by pool members, the statement said.

The pool will now consist of Vera Michalski-Hoffmann, Maja Hoffmann, Andre Hoffmann, Andreas Oeri, Sabine Duschmale-Oeri, Catherine Oeri, Joerg Duschmale, Lukas Duschmale and the charitable foundation Wolf.

The pool extended its shareholder pact in January 2009 for an unlimited period to make it difficult for other drugmakers to acquire it.

Novartis began building a major stake in Roche in 2001, and by the end of 2002 owned 33 percent. Daniel Vasella, who oversaw the investment as Novartis’s chief executive officer, stepped down as CEO last year and remains chairman. Eric Althoff, a spokesman for Novartis, didn’t immediately respond to a call seeking comment.

 

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http://noir.bloomberg.com/apps/news?pid=20601110&sid=aOQXfla4YdOs


Fannie Mae Was ‘Guaranteed to Fail’
A Review by James Pressley

March 30 (Bloomberg) -- A number, like a picture, can be worth 1,000 words. In England, 1066 means the Norman Conquest. The world over, 3.14159 screams pi.

For Fannie Mae and Freddie Mac, the figure to remember is 79.9 -- the percent ownership that the U.S. Treasury took in each when it seized control in 2008. If the stakes were 80 percent, the mortgage companies would land on the federal budget, as we’re reminded in “Guaranteed to Fail,” a valuable book on how two quasi-public companies became “the world’s largest and most leveraged hedge funds.”

Kiss all the political posturing about the U.S. public debt ceiling goodbye: With Fannie Mae and Freddie Mac’s debts tacked on, the total would lurch to $15.84 trillion, well over the current limit of $14.29 trillion, the authors say.

Books written by committee usually leave me cold. This one, by four professors at New York University’s Stern School of Business, is different. A balanced study, it rises above a clash between partisans on the right -- who call the companies “ground zero” in the meltdown -- and those on the left who blame deregulation and Wall Street excess.

“There is probably a little truth to both views,” the authors say. “But these arguments are beside the point.”

For decades, Democratic and Republican presidents alike have used housing subsidies as a cynical tool for combating ever-rising income inequality with easy credit. “Let them eat credit,” as economist Raghuram G. Rajan jokes.

Timely Prescription
The Obama administration is proposing to wind down Fannie Mae and Freddie Mac, making the timing for this book -- by Viral V. Acharya, Matthew Richardson, Stijn Van Nieuwerburgh and Lawrence J. White -- opportune. Part primer, part policy prescription, the text explains in simple language what these entities are, how they got so big, and why we must fix them.

Fannie Mae and Freddie Mac were once a fairly minor presence in residential mortgages. As publicly traded companies, though, they expanded their market share, from 4.4 percent in 1970 to 41.3 percent at the time the financial crisis hit, the authors say.

By then, the two government-sponsored enterprises, or GSEs, held combined mortgage portfolios of $1.43 trillion plus $3.5 trillion in guarantees on mortgage-backed securities. They had morphed into Godzilla hedge funds with government backing, the authors say.

Who needs such monsters? Many countries with far less government involvement in mortgages enjoy comparable home ownership rates and affordable housing, they show.

Instant Advantages
Fannie Mae and Freddie Mac’s growth reflected astonishing advantages they had over private rivals. They paid lower taxes, could borrow at cheaper rates and were required to hold less capital. How much less? When they guaranteed the credit risk of mortgage-backed securities, or MBS, the capital requirement was 0.45 percent -- just 45 cents per $100 of guarantees, the authors say; when they invested such securities, the buffer was 2.5 percent, or $2.50 per $100.

A federally insured bank, by contrast, faced a capital requirement of 4 percent for holding residential mortgages -- unless it held GSE MBS. In that case, the requirement fell to 1.6 percent, creating perverse incentives for banks to originate mortgages, sell them to the GSEs for securitization and buy them back as GSE MBS. Same risk, less capital.

Leveraged Bets
A race to the bottom was on -- a competition to churn out increasingly dicey mortgages -- only now it pitted Godzilla Fannie Mae and Freddie Mac against King Kong banks deemed to have “a too-big-to-fail government guarantee,” the authors say. Here was “a highly leveraged bet on the mortgage market by firms that were implicitly backed by the government with artificially low funding rates.” America, the bastion of free markets, became anything but when it came to mortgages.

Once Fannie Mae and Freddie Mac collapsed, the Federal Reserve stepped into the breach by purchasing more than $1.4 trillion in GSE debt and mortgage-backed securities. This marked the Fed’s biggest foray during the crisis, the authors say -- far bigger than its role in the rescues of Bear Stearns Cos., American International Group Inc. and Citigroup Inc.

It also created a conflict of interest, they say: If the Fed at some point needs to raise rates to head off rising prices, it would harm the value of the securities on its own balance sheet. Given how the public and politicians might perceive losses, the Fed could be tempted to let inflation grow.

Bad Bank
Ultimately, the only solution for the two mortgage companies is to wind them down, the authors say. For starters, they should stop investing in mortgage assets: Their $1.71 trillion portfolio could be gradually liquidated through a “bad bank” resembling the Resolution Trust Corp., the agency that mopped up after the savings-and-loan crisis in the late 1980s and early 1990s.

That leaves the trickier question of what to do about Fannie Mae and Freddie Mac’s second main function -- to guarantee mortgages against default. Here, the authors conclude that the insurance should be preserved through a public-private partnership in which private insurers would decide which guarantees to provide, price them and insure a slice of the total, say 25 percent. The government would cover the rest.

This proposal gives me pause. Taken as a whole, “Guaranteed to Fail” suggests that public and private parties rarely consort without making secret accords at the taxpayer’s expense. Still, the professors argue the case in convincing detail, and one can only admire their pragmatism.

_____________________

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aXCf34J1xi58


U.S. Charges FDA Chemist in $3 Million Inside-Trading Scheme
By Joshua Gallu and Justin Blum

March 29 (Bloomberg) -- A U.S. Food and Drug Administration chemist and his son were arrested by federal authorities and accused of reaping at least $3 million from trading on nonpublic information related to drug-approval applications.

Cheng Yi Liang, 57, and Andrew Liang, 25, face charges of conspiracy to commit securities and wire fraud, according to a Justice Department statement today. The Securities and Exchange Commission, in a parallel civil suit filed at federal court in Greenbelt, Maryland, said the elder Liang made $3.6 million by trading shares of 19 firms before 27 FDA decisions since 2006.

The chemist, who worked for the FDA’s Center for Drug Evaluation and Research, violated his duty as a federal employee not to engage in financial transactions using nonpublic government information and not to use such information for his personal benefit, according to the SEC. The agency is seeking disgorgement of illegal profits and unspecified fines.

“The insider trading laws apply to employees of the federal government just as they do to Wall Street traders, corporate insiders, or hedge fund executives,” Daniel Hawke, head of the SEC’s market abuse unit, said in a statement.

The SEC and Justice Department investigations are continuing.

Maximum Penalty
The maximum penalty for conspiracy to commit securities and wire fraud is five years in prison and a $250,000 fine, or twice the gross gain from the offense, according to the Justice Department. For wire fraud, the maximum penalty is 20 years in prison and a fine of $250,000, or twice the gross gain, the department said. For securities fraud, the top penalty is 20 years in prison and a fine of $5 million for each count.

Liang, identified by the SEC as a resident of Gaithersburg, Maryland, didn’t respond to a phone call to his home seeking comment.

“FDA is aware that one of its employees has been charged with insider trading,” Erica V. Jefferson, a spokeswoman for the agency, said in an e-mail statement. “The agency is cooperating fully with the authorities and will review the situation and take any appropriate action.”

Liang traded in smaller developmental drug companies, where a government decision would be more likely to have a significant impact on the stock price, the SEC said. He gained more than $1 million trading stock of Vanda Pharmaceuticals Inc. a Rockville, Maryland, firm that rose more than 600 percent a day after the FDA cleared sales of its schizophrenia drug Fanapt in May 2009, according to the lawsuit.

Computer Access
An FDA employee since 1996 who has worked in the CDER unit since at least 2001, Liang had computer access to the nonpublic records of the review process for each drug examined by the office, the SEC said.

He profited from share purchases ahead of 19 positive announcements and on short sales before 6 negative decisions, the SEC said. He also avoided losses by selling stock before two other negative decisions, the agency said. His average profit on each announcement was $135,015, according to the lawsuit.

In June 2006, Liang made more than $75,000 on short sales of Encysive Pharmaceuticals Inc. shares after accessing confidential FDA information that approval for Thelin, a drug to treat pulmonary arterial hypertension, wasn’t forthcoming, the SEC said. He also made about $380,000 in advance of a Jan. 21 announcement that Newton, Massachusetts-based Clinical Data Inc.’s Viibryd, a drug to treat a depressive disorder, had been approved, the SEC said.

Rather than use his own or his wife’s brokerage accounts, Liang directed the trading through seven accounts held by other people, the SEC said. He typically began building a position two to three weeks before an announcement, according to the lawsuit. Most proceeds were moved to his bank account, the SEC said.

Car Dealerships
Checks totaling at least $1.2 million were written from the accounts Liang used for trading to a bank account in his name, to him or his wife directly, or to credit-card companies to pay off his balances. About $65,000 worth of checks were written from the brokerage accounts to car dealerships to purchase an Infiniti sedan and a Honda Odyssey minivan registered to Liang and his wife.

Illegal trading profits were also transferred to bank and brokerage accounts benefiting Andrew Liang, who used the proceeds to fund his personal retirement account, pay about $92,000 to the U.S. Internal Revenue Service, pay a travel service and purchase two cars, the Justice Department said.

The FDA is barred from disclosing that a drug application has been filed, whether it is conducting a review and whether it has issued a so-called complete response letter that describes specific deficiencies in the application, according to the lawsuit. The FDA only discloses information when it approves a new drug, the SEC said.

‘Privileged Information’
“Cheng Yi Liang was entrusted with privileged information to perform his job of ensuring the health and safety of his fellow citizens,” Assistant Attorney General Lanny Breuer said in a statement. “According to the complaint, he and his son repeatedly violated that trust to line their own pockets.”

The SEC’s case is Securities and Exchange Commission vs. Cheng Yi Liang, 8:11-cv-00819-RWT, District of Maryland (Greenbelt Division). The criminal cases are U.S. v. Chen Yi Liang, 8:11-mj-01236-WGC, and U.S. v. Andrew Liang, 8:11-mj- 01237-WGC, District of Maryland.

 

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http://noir.bloomberg.com/apps/news?pid=conewsstory&tkr=GOOG:US&sid=aa_Fvx3OOmTo


Google Tests Fate in China as Mapping Application Deadline Looms
By Bloomberg News

March 30 (Bloomberg)

A March 4 opinion piece in the official People’s Daily, the mouthpiece of China’s Communist Party, compared Google with the British East India Company, whose sales of opium in the country was the root of two 19th-century conflicts...

...“In the 17-19th centuries, the East India Company made their contribution for the development of a British Empire where ‘‘the sun never sets’’ through the monopoly of trade, the opium trade and openly looting,” the People’s Daily piece said. “Google is essentially similar to the East India Company, but is smarter in its performance than the East India Company. Google does not burn and loot, and they are also good at camouflage.”...

...China fought the first Opium War with the British Empire in 1839-42, and a second from 1856-1860...

...The People’s Daily piece, which also called Google “a tool of U.S. expansionism and hegemony...”

...“Google faces major problems within China,” Tang said. “Unless Google is going to change the way they operate, unless they are willing to apologize to the Chinese government, unless they are willing to cooperate with the Chinese government to impose censorship according to the wishes of the Chinese government. Otherwise, there’s no deal...”

 

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http://www.npr.org/2011/03/24/13482...mmentKey:609d912b-e1c6-4331-b5cb-688717f75423


Sonofabitch. I'll be damned.

..."One major problem is that the east and west of Japan have different electric cycles and the capacity of the connectors are very much limited," he says.

That's partly an accident of history. Eastern Japan followed the German model and has a 50-cycle electrical power grid. The western part of Japan used the American model and has a 60-cycle grid. Transferring power from one grid to another requires a very expensive facility. And there are only three connections between eastern and western Japan. That bottleneck means the power transfer is just a trickle...

...Japan's electric infrastructure comprises two main power grids. One system, in the west of the country, operates at 60 hertz, like power in the U.S. The eastern parts of the country, where Tokyo and Fukushima are located, run on a 50-hertz system, like the one used in Germany.

http://www.npr.org/2011/03/24/13482...mmentKey:609d912b-e1c6-4331-b5cb-688717f75423

 

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Where your electricity comes from:

http://www.eia.doe.gov/energyexplained/images/charts/coal_regions_2009-large.jpg
2009 U.S. coal production ( millions of short tons )
Source: U.S. Energy Information Agency


http://www.eia.doe.gov/energyexplained/images/charts/coal_reserves_pyramid-large.jpg


​

http://www.eia.doe.gov/energyexplained/index.cfm?page=coal_where

 

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http://noir.bloomberg.com/apps/news?pid=20601110&sid=ampUllS_nHnk


IBM’s Nanotechnology Rips Up Drug-Resistant Germ Cells in Study
By Rob Waters

April 3 (Bloomberg) -- International Business Machines Corp., the world’s largest computer-services provider, may have a tiny solution for a $34 billion public health problem.

Engineers based in IBM’s San Jose, California, facility created nanoparticles 50,000 times smaller than the thickness of a human hair that can search out and obliterate the cell walls of bacteria that are resistant to antibiotic drugs. The minute structures harmlessly degrade, leaving no residue, according to a study describing the work in the journal Nature Chemistry.

When antibiotic drugs are used to attack a colony of bacteria, they sometimes leave behind survivors that become resistant to the medicine’s future use. IBM’s nanoparticles were able to find and destroy the cells of resistant germs during testing in laboratory dishes. They also caused no apparent harm in separate tests in mice, the research found.

IBM’s technology “goes outside the scheme of current antibiotics to something that physically destroys bacteria,” said Mario Raviglione, chief of the World Health Organization’s Stop TB department, in a telephone interview. “If this is proven to work in humans, it will simply revolutionize the way we deal with antimicrobial treatment.”

The nanoparticles, were designed to attack methicillin- resistant staphylococcus aureus, or MRSA, a widely circulating strain of drug-resistant bacteria. An IBM team led by James Hedrick collaborated with scientists at the Institute for Bioengineering and Nanotechnology in Singapore.

Talking to Drugmakers
IBM is also talking to pharmaceutical companies to prepare the particles for human testing, Hedrick said. He declined to name the companies.

Germs that resist antibiotics kill 100,000 U.S. hospital patients a year and cost the healthcare system as much as $34 billion annually, according to the Infectious Disease Society of America. Traditional antibiotics interfere with bacterial DNA to neutralize or prevent them from replicating. The nanoparticles, made of biodegradable plastic, were engineered to have a specific electrical charge that draws them to the oppositely- charged bacteria. The particles reach their target and attack.

“They rip holes in the membrane walls and the contents basically spill out,” said Hedrick, a researcher at IBM’s Almaden Research Center in San Jose, California, where scientists pioneer new technologies. “They’re very selective and once they do their job, they go away. They degrade into an innocuous by-product.”

Focused Particles
The particles are so focused on their bacterial target that they completely avoid damaging the red blood cells where the microbes lodge, Hedrick said in a telephone interview. “

Hedrick’s team designed a batch of the nanoparticles to attack MRSA, or methicillin-resistant staphylococcus aureus, a widely circulating strain of drug-resistant bacteria. Scientists at the nanotechnology institute in Singapore will now test the miniature polymers in larger animals.

Some 9 million children globally die of respiratory infections and diarrhea, many from pathogens impervious to drugs, the WHO’s Raviglione said.

 

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http://lse.teleborsa.it/Chart/InteractiveChart_Image.aspx?code=16.ATAD&period=5Years

​

Tatneft

 

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http://noir.bloomberg.com/apps/news?pid=20601080&sid=aDLG0tDv9RRE



VESLPMIS:IND Panamax Bulk In Service Tot

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=VESLPMIS%3AIND&img=png​

http://noir.bloomberg.com/apps/quote?ticker=VESLPMIS:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=VESLPMIS:IND

A panamax bulk carrier has capacity of 66,666 metric tons of coal.


____________________


VESLPMOO:IND Panamax Bulk On Order Total

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=VESLPMOO%3AIND&img=png​

http://noir.bloomberg.com/apps/quote?ticker=VESLPMOO:IND
http://noir.bloomberg.com/apps/cbuilder?ticker1=VESLPMOO:IND

 

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http://noir.bloomberg.com/apps/news?pid=20601082&sid=a0Xb6D78.wac


Uranium Companies in Play as Net Assets Exceed Shares
By Tara Lachapelle, Rita Nazareth and Christopher Donville

http://noir.bloomberg.com/apps/quote?ticker=MFURMDU:IND

http://noir.bloomberg.com/apps/chart?h=152&w=240&range=1y&type=gp_line&cfg=BQuote.xml&ticks=MFURMDU%3AIND
http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=MFURMDU%3AIND&img=png
Mid Uranium U308 represents the mid point between the best bid and offer known to MF Global, on physical uranium delivered to any western location. As long as the market is liquid, there will be prices (quoted in $USD/Lb).

http://noir.bloomberg.com/apps/cbuilder?ticker1=MFURMDU:IND
​

April 14 (Bloomberg) -- ...takeover speculation is increasing after Japan’s nuclear crisis made uranium miners 31 percent cheaper relative to book value...

While last month’s disaster at the Fukushima Dai-Ichi plant triggered fears of radiation, firms... are still projecting higher uranium prices as developing nations from India to China seek to meet power demand in the world’s fastest-growing economies...

...Toro, which is seeking to develop the Wiluna deposit in Western Australia, fell to 0.88 times the value of its assets minus liabilities from 1.09 times during the same span, the data show. The Australian company, with a market value of A$101.3 million ($106.3 million), also explores in Namibia.

“Being in Australia, plus they’ve got stuff in Africa, and that makes it an interesting play as well given the proximity to China, India... Over time, you’re not going to see the slowdown in India, China and Russia.”

Toro is awaiting regulatory approval for its $278 million Wiluna uranium mine...

...Most uranium producers can’t do a deal right now because companies like Cameco and Uranium One have shareholders who may block a transaction, he said. Vancouver-based Uranium One is controlled by Russia’s state-owned nuclear company Rosatom Corp.

Foreign Ownership
Cameco, the world’s third-largest uranium producer, is protected by Canadian incorporation rules that cap individual foreign ownership at 15 percent, said Murray Lyons, a spokesman for the Saskatoon, Saskatchewan-based company.

Newmont, the largest U.S. gold producer, took a stake in Paladin after completing the takeover of Vancouver-based Fronteer Gold Inc., a shareholder in the uranium company. Newmont of Greenwood Village, Colorado, holds 6.699 percent in Paladin, according to a notice filed with the Australian stock exchange yesterday.

Newmont probably doesn’t want to own the stake in Paladin indefinitely, Middlefield’s Lauzon said. Paladin may look attractive to a buyer after its share price dropped because it’s one of the only independent uranium producers that doesn’t count a company in South Korea, Japan or China as a major shareholder, he said.

Paladin in Play
Shares of Perth-based Paladin have dropped 24 percent since March 11, cutting its price-to-book ratio to 2.63 from 3.35. Paladin, with projects in Africa and Australia, doesn’t have major shareholders that would try to block a deal and being a uranium producer makes it more attractive than an exploration or development company... The company has a market value of $2.9 billion...

Uranium Fundamentals
While uranium has retreated 15 percent since March 11 to $58.25 per pound of U308, the tradable form of the metal, investment banks are still projecting gains.

Uranium Prices
China has 13 nuclear reactors and 27 under construction, according to the World Nuclear Association’s website. India plans to supply a quarter of electricity from nuclear reactors by 2050, up from 2.5 percent in 2007, the association said.

“The Chinese may tweak their nuclear plans, but they’re not going to walk away from them...”

State-Owned Acquirers
State-owned companies are the most likely acquirers, including China Guangdong Nuclear Power Group and ARMZ Uranium Holding Co., a unit of Russia’s Rosatom...

http://www.world-nuclear.org/info/reactors.html

 

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http://noir.bloomberg.com/apps/news?pid=20601082&sid=aMrRqwcwlr48


Search for Super Corn Seeks to Limit Nitrogen Use, Pollution
By Jon Birger

April 15 (Bloomberg) -- Marc Albertsen, the bespectacled, 62-year-old research director at Pioneer Hi-Bred, DuPont Co.’s seed-development unit, was catching up on paperwork one morning in July 2007 when he got a call from an assistant, Sharon Cerwick.

“Marc,” Cerwick said, “you’d better come out here and see this.”

Cerwick had been in the field inspecting rows of experimental corn planted next to Pioneer’s headquarters in Johnston, Iowa. The corn had been genetically engineered by Albertsen and his colleagues in hopes of achieving a new trait: more efficient use of nitrogen. That’s at the top of the corn growers’ wish list because the cost of ammonium nitrate fertilizer has soared 130 percent to $450 a ton since 2002. Albertsen and other seed scientists have been trying to build nitrogen-efficient stalks for at least five years, but their super corn is still five to 10 years away.

“You’re talking about our holy grail,” said Pamela Johnson, a National Corn Growers Association board member with 1,200 acres in Floyd, Iowa.

In the field, Albertsen discovered one row of corn whose leaves were afflicted by a V-shaped yellowing, the telltale sign of nitrogen deficiency. The other row -- the plants that had been engineered for nitrogen efficiency -- was green and thriving. Both had been planted in severely nitrogen-deficient soil, but the genetically engineered plants seemed unaffected.

Need for Nitrogen
The malnourished seedlings reminded Albertsen of the past: sickly cornstalks he had seen as a boy on his family farm near Danbury, Iowa. The healthy ones, growing in the same tired soil, spoke of the future. He immediately phoned his team in Woodland, California, where Pioneer was running an identical trial in central California farmland, and asked them to check their seedlings.

“Even today, it gives me goose bumps,” he said. “Their field checks came back with the same results.”

Other than water and sunlight, there’s nothing more important to growing corn -- the most-valuable U.S. crop, worth $66.7 billion in 2010 -- than nitrogen. Generous applications of nitrogen fertilizer are essential to the 180-to-200-bushel-an- acre yields that have become commonplace in big farm states such as Iowa and Illinois, double what farmers were producing 35 years ago, according to the U.S. Department of Agriculture. Wheat and rice growers around the world have seen yields plateau. Corn is the only major crop for which per-acre production continues to rise.

Environmental Damage
Such extraordinary productivity comes with an economic and environmental price. Nitrogen fertilizer is the biggest or second-biggest expense for most American farmers, said Rod Williamson, director of research at the Iowa Corn Growers Association. At an average cost of 60 cents a pound, the 150 pounds of nitrogen that farmers spread over each of the nearly 90 million acres of U.S. cornfields add up to a bill of around $8 billion a year.

Harder to quantify but no less costly is the damage fertilizer runoff does to aquatic life. More than half of the fertilizer American farmers apply to corn gets wasted. Some of it leaches into aquifers, polluting local drinking water. More of it ends up in rainwater runoff, flowing into the creeks and streams that feed the Chesapeake Bay, the Mississippi River, and other ecosystems.

Algae Blooms
The Mississippi runoff winds up in the Gulf of Mexico, where it spawns deadly algae blooms that steal oxygen from fish and plants. The Gulf is now home to the second-largest ocean dead zone, according to a 2010 study prepared by the Environmental Protection Agency and the USDA, and scientists are still debating which has been more damaging -- last year’s BP Plc oil spill or the ongoing nitrogen pollution from U.S. agriculture.

That isn’t the only environmental problem caused by nitrogen-heavy corn production. Another is climate change. Nitrogen fertilizer is produced from air, water and natural gas in a process that releases 3.6 tons of carbon dioxide per ton of fertilizer, according to an analysis by Yara International ASA, an Oslo-based chemical company. When the fertilizer breaks down in the soil, it releases nitrous oxide, a greenhouse gas that the EPA says is 310 times more effective at trapping heat in the atmosphere than carbon dioxide.

Ethanol Perception
Forty percent of the U.S. corn crop is now used to produce some 13 billion gallons of ethanol per year, according to the U.S. Energy Information Administration. As a result of the greenhouse gas produced during the corn/ethanol life cycle, academics such as Princeton University’s Timothy Searchinger and Duke University’s Robert Jackson now say that ethanol has a carbon footprint at least as large as gasoline’s. Many growers and ethanol advocates dispute that, but Johnson, the Iowa farmer and NCGA board member, believes U.S. corn producers must address these concerns to maintain support for ethanol.

“Reducing our use of nitrogen fertilizer is one of the ways we fight the perception that ethanol is a bad thing,” Johnson said.

All of which explains why DuPont is one of five major agribusinesses racing to develop nitrogen-efficient corn. If the fossil-fuel industry has as its mission the development of low- carbon “clean coal,” you might call this the quest for clean corn.

$1.5 Billion Market
The research and development divisions at Pioneer and its competitors -- Bayer AG’s CropScience unit, Dow Chemical Co.’s Dow AgroSciences unit, Monsanto Co. and Syngenta AG -- want to be first to market with a nitrogen-efficient corn seed that might use up to 30 percent less fertilizer per bushel. Analysts say the U.S. market for corn with such a trait could be worth nearly $700 million a year. Globally, the market opportunity could be as high as $1.5 billion, said Kevin McCarthy, an analyst for Bank of America Merrill Lynch.

“It’s without a doubt the single most important trait under development,” said Mark Gulley, an agricultural chemicals analyst at Soleil Securities in New York.

While the potential payoff is enormous, so too is the scientific challenge. Until now, the biggest advances in genetically modified crops have involved transplanting a single new gene (called a “transgene”) into corn DNA, which gives the plant a valuable new trait, such as resistance to the dreaded corn-borer bug. Unfortunately, there’s no single-gene solution for nitrogen efficiency.

“There may be 100 important genes that control nitrogen use, whereas with an insect-resistance trait, it’s only one,” said Fred Below, a professor of plant physiology at the University of Illinois at Urbana-Champaign.

Nitrogen Efficiency Quest
That’s because nitrogen utilization is not a single process, but rather multiple ones that start with roots’ uptake of nitrogen from the soil, continue with the movement of nitrogen through the stalk, and culminate with use of nitrogen during photosynthesis to grow ears and kernels.

Multiple genes control each process, and it is this complexity that has made the quest for nitrogen efficiency one of small and incremental victories -- which brings us back to Albertsen’s eureka moment in 2007.

As it turned out, the trial was not a complete success: The experimental seeds wound up yielding subpar amounts of corn when planted in nitrogen-rich soil. This only mildly discouraged Albertsen.

“It told me two things,” he said. “One was that maybe we could make this project work -- something that wasn’t certain when we embarked on it. And secondly, it endorsed our way of thinking about the genes that control uptake of nitrogen from the soil and how that nitrogen is transported and assimilated by the plant.” Up until then, he hadn’t been sure that genetically engineering a corn plant for nitrogen efficiency was possible.

Fertilizer Essentials
A tall, balding scientist with the soul of a farmer, Albertsen had been dreaming of nitrogen-efficient corn since he joined Pioneer 30 years ago. Iowa may be known for its rich farmland, but Albertsen grew up on a western Iowa farm with lousy soil.

“Fertilizer was always a big deal for us,” he said. Ill- timed rains could wash away thousands of dollars worth of the stuff, putting a severe dent in his family’s income. “Certain images -- like that V-shaped necrosis -- just got emblazoned in my mind.”

Albertsen’s farm upbringing is typical for scientists involved in seed research. Monsanto Chief Technology Officer Robb Fraley grew up on a farm in rural Illinois. Tom Wiltrout, who heads the global seeds division for Dow AgroSciences, got his early farm education on his grandparents’ 80-acre parcel in northern Indiana. All talk about using science to combat the caprice of Mother Nature and make farming less risky for folks like their parents and grandparents.

People to Feed
Their other goal: help feed a growing world population and slow rising food costs now contributing to unrest in the Middle East and other parts of the world. Corn futures have more than doubled, to $7.5925 a bushel, in the past year.

“World population is going to grow from 7 billion to 9 billion over the next 30 years, which will require a doubling of grain production,” Fraley said. “That’s a pretty big task.”

Historically, the availability of nitrogen has had a decisive impact on how much food farmers could produce. While nitrogen is abundant in the atmosphere, making up 80 percent of the air we breathe, nitrogen gas cannot be absorbed by corn, rice, wheat and other grains.

Legumes such as soybeans and peanuts can use atmospheric nitrogen; their root systems host “nitrogen-fixing” bacteria that help the plant convert nitrogen gas into ammonia. While some academics are working to create a nitrogen-fixing corn hybrid that would get all the nitrogen it needs from the air, the private sector seems reluctant to invest in such speculative research.

‘Change the World’
“I’m a believer that we will be able to fix nitrogen in corn some day and that it’s going to change the world,” said Nicholas Duck, head of corn and soybean research for Bayer CropScience. “That said, I think we are a long, long way from being able to understand how to do that.”

Natural sources of nitrogen available to early farmers, such as animal manure or plant decay, tended to be limited, putting a cap on what farms could produce. Then, in 1900, a German chemist named Fritz Haber made a discovery that would win him a Nobel Prize.

Haber found a way to make synthetic nitrogen fertilizer by pressure-cooking nitrogen and hydrogen into the plant food now known as ammonium nitrate. His discovery gave birth not just to modern agriculture but also to the modern world. (Haber is also known for supervising Germany’s poison-gas program during World War I.) Crop yields skyrocketed as farmers applied nitrates to their crops. More food allowed world population to soar from 1.6 billion people in 1900 to 6.6 billion today.

Corn Genome
The corn genome was decoded and sequenced in 2009 with the help of $29.5 million in funding from the National Science Foundation. Although seed scientists still have much to learn about how genes interact, they now understand which corn chromosomes control which functions of the plant. Attempts to genetically engineer corn for nitrogen efficiency involve identifying genes from other plants, other corn species, or even from bacteria that are thought to contribute to more efficient utilization of nitrogen. Those genes are then cloned and inserted into corn DNA with the help of a machine known as a “gene gun,” which fires microscopic gene-covered pellets into the cells.

Pioneer originated the use of gene guns on corn in the 1980s, but newer technologies have accelerated the discovery process. Gene guns are imprecise; scientists cannot control exactly where the transgenes get inserted within the corn genome.

DNA Sequencing
To achieve a desired trait, researchers used to have to repeat the process hundreds, if not thousands, of times, then grow each of the newly created embryos to maturity to see which of their gene modifications were successful. Today’s seed scientists use DNA sequencing and other advanced genomic technologies -- tools originally developed for medical research and drug development -- to identify which transgenes hit the mark. Only embryos that possess the most promising genetic profiles are grown to maturity.

All the companies involved in this research are pursuing similar strategies, and all say it will probably be the end of the decade before a corn seed genetically modified for nitrogen efficiency receives USDA approval. Syngenta and Dow, however, think they could have an interim product ready in half that time.

While seeds that contain transgenes must go through an exhaustive approval process, seeds developed through breeding are not similarly regulated.

Precision Breeding
Once upon a time, breeding was a low-tech endeavor. Not anymore. As with transgene research, the new embryos are all subjected to DNA sequencing, which allows scientists to identify hybrids with desirable chromosomes long before the seedlings ever sprout. Syngenta calls this precision breeding or marker- assisted breeding, and it is transforming the food industry. If you’ve noticed an improvement lately in your supermarket produce -- perhaps your watermelons are sweeter and crunchier -- this is not necessarily Mother Nature. It could be a direct product of precision breeding.

As it turns out, the big beneficiary of the 1990s genomics revolution has not been medicine but farming.

“We have identified a lot of human disease genes, but so far that has not yet paid off in cures,” said Michiel van Lookeren Campagne, the head of biotechnology R&D at Syngenta. “What we are seeing is a substantial economic impact in agriculture through better breeding.”

New Products
This year, both Syngenta and Pioneer began marketing drought-resistant corn hybrids created via precision breeding. Since the seeds aren’t genetically modified, they didn’t need USDA approval. Syngenta says its hybrid reduces yield loss in dry fields by as much as 15 percent. Pioneer asserts a 5 percent advantage. Now, Syngenta and Dow are applying the same strategies to nitrogen. Their level of success may determine whether corn and ethanol production are seen as food and energy solutions or environmental villains.

California has enacted a low-carbon fuel standard that limits the growth of the ethanol market. Environmental concerns are being used to lobby Congress and the EPA against wider introduction of E15 gasoline, which contains 15 percent ethanol, versus the 10 percent commonly sold now. Walt Wendland, the chief executive officer of two ethanol plants in Iowa -- Golden Grain Energy and Homeland Energy Solutions -- said that without widespread adoption of E15, the industry can’t sell all the ethanol it’s on pace to produce. “What are we supposed to do with all those gallons we can’t even blend?”

Easing Ethanol Footprint
Both Wendland and the NCGA’s Johnson are counting on nitrogen-efficient corn to blunt some of the attacks. Duke’s Jackson, author of a study that criticizes ethanol’s carbon footprint and questions the wisdom of ethanol subsidies, said nitrogen-efficient corn would be a positive step.

“I’m not sure it would be a game changer, but it would certainly be a major advance,” Jackson said. “It would be helpful for greenhouse gas emissions, for water quality, and for farmers in the economic sense.”

Still, it’s not clear that farmers would actually use less nitrogen even if presented with more efficient seeds. Matt Liebman, an agronomy professor at Iowa State University, contends that the reason corn utilizes nitrogen inefficiently has as much to do with farm practice as plant physiology.

“Farmers tend to apply fertilizer when it’s easiest, not when it’s best,” Liebman said.

Before Planting
Most farmers apply it in the fall after harvest or in the spring before planting. That’s easier, since there are no plants to get in the way, but there’s also no root system to hold the fertilizer in place, making the fertilizer more susceptible to runoff. “The best time to use fertilizer would be in June,” Liebman said. Most farmers won’t take their tractors onto their fields then.

Nitrogen-efficient corn seeds would give farmers a choice: Apply 20 percent to 30 percent less fertilizer and enjoy the same crop yields, or apply the same amount of fertilizer and get enhanced yields. Most farmers are likely to choose the latter option, since the desire to grow more is practically hard-wired into their DNA.

“The three most important traits in agriculture are yield, yield and more yield,” Syngenta’s van Lookeren Campagne said.

Fraley concedes that the primary goal of Monsanto’s nitrogen research is not to reduce fertilizer use but to boost production to 300 bushels an acre by 2030 -- nearly double the current U.S. average. “The real goal is to drive yields,” he said.

Clean corn, in other words, may not turn out to be radically cleaner after all.

 

[trysail]

This is the kind of shit that goes on when you put politicians in charge of money. I spent my whole goddamn life watching this crap and had my career destroyed because I wouldn't enable or condone it.

The frickin' politicians have always used public pension funds as a grab bag for patronage and as a means to reward their backers. They keep putting hacks, salespeople, an army of consultants, numbskulls and people like Goldman, Alex. Brown, Montgomery, Salomon, Merrill, Hambrecht, Robertson in charge. That's part of the reason state and local pension funds are so fucked up. The goddamn politicians just cannot keep their hands out of the cookie jar.

http://noir.bloomberg.com/apps/news?pid=20601110&sid=ah.4pfCQJ0Rg


Losing 84 Cents on Dollar Reveals Runaway Public Pensions
By Elliot Blair Smith

April 15 (Bloomberg) -- The deal came together behind the doors of a Louisiana psychiatric ward. John Skannal, 74, signed a document in October 2003 authorizing the sale of land handed down through eight generations of his family.

The buyer was a statewide pension plan for municipal law officers. The fund assembled golf and real estate holdings that lost 84 cents on each dollar the police spent on them over 10 years. The losses are emblematic of a decade in which the $1.2 billion program went from fully funded to $836.3 million short of meeting future retirement obligations.

The nine trustees of the Municipal Police Employees’ Retirement System made a series of decisions that taxpayers and 10,748 active and retired cops are now paying for. The board embraced bad investments, ignored warnings of weak financial controls that enabled its attorney to steal $1.2 million and set up conflicts of interest among its advisers, according to a review of thousands of pages of documents obtained under the state public records act and more than 50 interviews.

“It was like a gigantic playhouse,” says Nick Congemi, 68, chief of the Greater New Orleans Expressway Police in Metairie, who for years criticized the system’s leadership and investments. “These people have taken the futures away of good, decent law-enforcement officers who thought they could depend on this for the rest of their lives.”

$479.6 Billion Deficit
The irregularities in the Louisiana police plan show how trustees and employees of U.S. public pensions, operating with little or no oversight or transparency, can cost taxpayers and threaten the retirement income of government workers. Assets held by state systems are $479.6 billion less than what is needed to fund estimated obligations, according to official financial reports compiled by Bloomberg.

“The failure to govern public pensions appropriately inevitably hurts those who can least afford it: retirees, workers and taxpayers,” says Eleanor Bloxham, chief executive officer of Value Alliance, a Westerville, Ohio, governance consulting firm. “Such lapses can produce even greater harm than traditional financial crimes prosecuted by law enforcement.”

In California, Democratic Governor Jerry Brown brought civil charges last year when he was attorney general against a former CEO and a former board member of the $233.5 billion California Public Employees Retirement System, the largest in the U.S. State and federal proceedings are continuing. In March, Calpers documented six years of unreported gifts by members of the board and employees, and improper awarding of investment contracts that paid excessive fees.

Cuomo Probe
Before becoming New York’s Democratic governor, Andrew Cuomo probed corruption at the state’s $140.6 billion pension fund when he was attorney general, leading to eight guilty pleas and the payment to the state of more than $170 million.

Alan G. Hevesi, the former Democratic state comptroller who was the program’s sole trustee, was sentenced today to a minimum of one year in state prison after admitting he approved pension- fund investments in exchange for almost $1 million in gifts.

“I publicly disgraced myself,” Hevesi told a Manhattan judge at his sentencing hearing. “I have only myself to blame.”

Randy P. Zinna, 53, the former attorney for the Louisiana police fund, pleaded guilty last year to mail fraud after state and federal investigators accused him of embezzling to pay sports-gambling debts.

Louisiana’s 13 statewide plans had unfunded liabilities for fiscal 2010 of $20 billion, with enough assets to cover 65 percent of estimated obligations, according to their latest financial statements.

Funding-Review Panel
Among 45 U.S. states reporting data for fiscal 2009, Louisiana ranked 41st based on proportion of future pensions covered by assets, according to data compiled by Bloomberg. The Legislature next month will consider recommendations by a funding-review panel to increase mandatory contributions and require governance changes.

The law-enforcement fund, known as MPERS, was the fourth- worst funded among statewide plans. The program’s assets were 2 percent lower last June 30 than a decade earlier. Kelly Gibson, a Lafayette police lieutenant who is the board chairman, declined to discuss previous decisions.

“The only comment I will make is that the current board is working to correct any problems that face MPERS,” Gibson said in an e-mail.

Over the U.S. Independence Day holiday in July 1999, three police-retirement board members spent four days at a golf resort on Monterey Bay in California at the pension fund’s expense. It was a “due diligence” investigation of a potential “real estate investment,” according to their expense reports.

Former Pawn Shop Owner
The trustees were led by Bossier City Police Captain Bill Fields, a Corvette-driving former pawn shop owner who chaired the pension’s golf-course committee, and its vice chairman, Willie Joe Greene, a retired captain from nearby Keithville. Fields, now 58 and retired, and Greene, 73, declined requests to comment for this story.

The third member of the West Coast trip was retired New Orleans police Sergeant Larry Reech, 62, who says the trio visited golf courses on a former military base in which the New Orleans Firefighters’ Pension and Relief Funds had invested.

“We were looking at how they were being run, what kind of draw they had -- what kind of clientele -- where they were coming from, the demographics,” Reech says.

As for the stewardship of the board, “oversight was lacking,” he says. “There were mistakes made.”

Cotton Plantation
The committee was in the hunt for golfing properties near the homes of Fields and Greene in northern Louisiana, pension records show. It was close to the peak of the U.S. golf boom.

At the time, Fields cited the success of golfing investments by the Alabama Retirement System, the records show. He zeroed in on the Olde Oaks Golf Club in Haughton, Louisiana. With fairways lined by oak and cypress trees, the course was built on rolling hills carved out of a former cotton plantation owned since 1846 by the family of John Skannal, the man who later sold the officers’ fund an adjacent piece of land.

The course was designed by the professional golfer Hal Sutton, a Shreveport celebrity known for having defeated golfing legends Jack Nicklaus and Tiger Woods. Even after a consultant’s report said that construction was incomplete and some cart paths were damaged, the police fund paid $6.8 million to buy the property in July 2000, $400,000 more than recommended by GVI Consulting of Santa Ana, California, according to the police system’s records.

Playing Olde Oaks
Fields and Greene frequently played at Olde Oaks, enjoying a 50 percent police discount and riding a reserved cart, according to Ben Chavarria, the course manager. Even as the business generated losses, the pension poured $2 million more into upgrades. In the years since, the retirement system has spent $15.3 million to own and manage a property with an appraised value of $3.2 million, pension records show.

“If we bought a golf course, you would think that it would be a moneymaking venture,” says Congemi of Metairie, whose department patrols the 24-mile (39-kilometer) causeway across Lake Pontchartrain.

The Olde Oaks investment was a departure from the conventional blend of stocks and bonds that defined the pension program’s strategy for most of its 37-year history, based on plan records. The system’s holdings came to include undeveloped real estate, foreign currencies, hedge funds and high-yield fixed-income instruments known as junk bonds.

Surplus in 2001
The system had a $14.1 million surplus in the fiscal year ended June 30, 2001. Until the following year, trustees authorized annual cost-of-living increases to retirees. The average yearly pension in the program is $23,183. Under the plan, officers contribute 7.5 percent of their pay and qualify for benefits about equal to their salary after 30 years.

As pension reserves slipped to a $195.2 million deficit in 2002, the trustees revised their investment guidelines to allow greater risks in pursuit of increased returns, board minutes show. The new policies included exemptions for investments in raw land and below-investment-grade debt.

The retirement system also doubled the payback period for its unfunded liability to 30 years beginning in 2003 and raised the assumed rate of returns in 2006 to shrink the growing deficit. It was akin to refinancing a mortgage by extending the term of the loan and paying only interest without reducing the principal.

‘Poor Investment Choices’
In July 2004, three police chiefs, including William Landry of Gonzalez, sued the fund’s trustees in state court. The complaint sought a restraining order to halt “glaringly poor investment choices” that included golf courses, a $3 million headquarters building in Baton Rouge for the program’s staff of six and business trips by the board and consultants to Monterey, Las Vegas, San Diego and San Francisco.

“It was like see no evil, hear no evil, speak no evil,” says Landry, who has since retired. “It was cops ripping off cops. That, to me, was the biggest slap in the face.”

Less visible to members and state overseers, the board also eroded internal checks and balances by undercutting the independence of two professional advisers, according to the records and interviews.

With no public discussion of potential conflicts of interest, the trustees in August 2006 hired their independent actuary as chief investment officer. This gave him the dual responsibility of selecting the investments he had a duty to independently evaluate.

The actuary, Charles Hall, insisted on working at his Baton Rouge home and set his pay at $40,000, with the board’s consent. No other candidate was considered for the job, according to board minutes.

Hall’s Dual Role
With Hall as CIO until January 2007, the board bought $2.1 million in Lehman Brothers Holdings Inc. uncollateralized debt that has since lost 75 percent, as well as $201,916 in Goldman Sachs Group Inc. home-equity loans that have lost 49 percent, pension records show. Lehman entered bankruptcy proceedings in September 2008.

“To be completely independent, you cannot be the investment officer and serve as the actuary,” says John Sondergaard, retired actuary for the state’s fiscal watchdog, the Louisiana Legislative Auditor. After the agency informed the board it was concerned about Hall’s dual role, the trustees dropped the CIO position in January 2007 and retained him as actuary. Hall wasn’t accused of any wrongdoing.

“I think they were right. It was a conflict,” Hall says, adding that he was only trying to assist the board. He says he doesn’t recall the Lehman and Goldman investments.

‘Just Looks Bad’
In March 2006, trustees voted to buy hedge fund investments through Summit Strategies Group of St. Louis, which would collect commissions on the transactions. The board was also paying Summit $250,000 a year to independently screen money managers and provide advice on hiring them. The $70 million that the trustees agreed to pour into hedge funds would double Summit’s compensation. It took the board 19 months to address the double role it created.

“It’s not illegal; it just looks bad,” Bossier City Police Chief Mike Halphen, the board chairman at the time, told Dan Holmes, a Summit managing director, at a meeting in September 2007, according to a recording. The trustees began unwinding the investments.

Holmes, who consulted for the board and presented the hedge fund investment, said in a voicemail that the relationship didn’t constitute a conflict.

The use of independent consultants as money managers drew criticism in the internal investigation of Calpers, the California retirement program.

‘Could Raise Questions’
“It is difficult to see how an external manager could objectively advise Calpers on appropriate levels of management and other fees for its peers and competitors when that advice could raise questions about the level of its own asset- management fees,” the Steptoe & Johnson LLP law firm in Washington said it its board-commissioned report.

The Skannal family, who owned the Sligo Plantation underlying the Olde Oaks golf course, was land rich and cash poor. John C. Skannal once worked as a state trooper and drove Governor Earl Long home from a mental institution during his final term in office in 1960, according to his son A.C. Skannal.

Just before the elder Skannal’s 75th birthday in October 2003, a business partner named Dennis Bamburg visited him in the psychiatric ward of a Shreveport hospital where Skannal was being treated for dementia and alcoholism, according to a 2005 lawsuit the family brought against Bamburg in state court.

Witnessing a Signature
Bamburg obtained Skannal’s signature authorizing him to sell a piece of land next to the golf course, according to the lawsuit. Bamburg was negotiating with Fields of the police pension and a local representative of the fund, James Harris, 53, according to trial testimony. The police wanted to develop the land as a residential community.

In December 2003, the police board approved the purchase of 208 acres (81 hectares) and 70 lots from Skannal and Bamburg in three transactions that totaled $5.9 million, according to pension fund auditor’s records. That same month, the trustees hired Harris as property manager for its planned Olde Oaks development, a job that paid his firm, Twin Peaks LLC, almost $2 million over six years, not including five lots that he received as additional compensation, pension records show.

At the closing in February 2004, four representatives of the police fund -- Fields, Greene, Harris and Zinna -- witnessed Skannal’s signature and later testified he appeared to be of sound mind, in the family’s lawsuit against Bamburg. Skannal had been hospitalized for 112 of the previous 189 days, and his medical records ran to 8,000 pages, Skannal’s lawyer, John Odom of Shreveport told a state judge.

‘Grossly Impaired’
After the elder Skannal died in November 2005, his heirs carried on a suit he had filed eight months earlier in state court against Bamburg to overturn the deal. In March 2008, Judge Ford E. Stinson Jr. ruled that Skannal had been “grossly impaired” and that Bamburg had committed civil fraud in obtaining the signature. Zinna, Fields and Greene never told the pension board they testified at the trial, according to former chairman Halphen and other board representatives. Fields retired from the board in December 2004.

Bamburg, 63, declined to comment for this story. In the trial, he argued that Skannal had been of sound mind in the transaction. A state appeals panel partly overturned the lower court decision, and Bamburg remains in control of much of the former plantation.

As the residential development got under way, Zinna diverted pension-fund money from lot sales and payments to contractors to pay for his sports-gambling addiction, according to subsequent state and federal investigations.

Accountants’ Warnings
The police board already had evidence of financial irregularities in Olde Oaks-related investments from its independent accountants, New Orleans-based Duplantier, Hrapmann, Hogan & Maher LLP, board documents show. In a 2002 audit, the firm reported that unexplained discrepancies included $105,000 the pension plan transferred to the golf course that didn’t show up on the club’s ledger and $26,125 in “undeposited funds” that no employee could explain.

Duplantier, Hrapmann issued warnings each year even as trustees compounded the money-losing investment by buying another golf course in the Bossier City-Shreveport area -- at a sheriff’s auction -- and an undeveloped golf course community near Fredericksburg, Texas.

The board spent $73.4 million on three properties that are now worth $11.7 million to the plan, according to the system’s auditors. Homeowners and businesses may also have been cheated.

‘Zinna Took the Money’
Chester Pitts, a 61-year-old heavy-equipment contractor who lives at Olde Oaks, wrote two checks to the pension system totaling $158,612 in March and April 2005 for an option to buy 48 undeveloped lots, according to copies of the checks and a one-page contract prepared by Twin Peaks.

While Zinna endorsed the checks, bank copies show, the pension fund never received the money and Pitts never got the lots, according to both parties.

“The problem is that Zinna took the money,” Pitts says. Zinna denies that and says Pitts is owed nothing.

The trustees removed Zinna from managing Olde Oaks in April 2009 and asked another attorney, Randy Roche, to investigate. A title search at the county courthouse revealed that Zinna never deposited $725,563 in proceeds from as many as 22 Olde Oaks lot sales or even reported the transactions to the retirement system, Roche says. In addition, court records show, Harris signed for the police pension as the seller and for himself as the buyer in one $15,000 cash sale.

Checks for hundreds of thousands of dollars that the staff wrote for contractors were never delivered, Roche says. Zinna endorsed the checks and deposited them into his firm’s trust account, doling out slow and partial payments, Roche says.

Widow’s Savings
In September 2009, Zinna took most of the $570,000 entrusted to him by an unidentified 83-year-old widow and applied it toward what he owed the police, according to the federal criminal investigation. A month later, Greg Phares, chief investigator for the state Inspector General, served a subpoena and seized records at Zinna’s red bungalow office.

Zinna resigned from the pension system that month. He had diverted $5.1 million of police funds to himself, most of which he repaid, while also misappropriating $1.5 million from the police board and two other Louisiana public retirement systems, according to his plea agreement unsealed in January.

The Legislature plans next month to take up recommendations from the funding-review panel to increase taxpayer contributions that have almost tripled in less than a decade to pay for pension benefits, losses and expenses, according to the police plan’s most recent actuarial report.

Baton Rouge Budget
In Baton Rouge, the jump in pension costs amounted to $5 million last year, according to the city’s budget report. That is equal to 100 officers’ salaries, according to salary.com, a unit of Wayne, Pennsylvania-based human resources consultant Kenexa Corp. The city has frozen staff positions and is budgeting no raises.

Individual police officers also face the likelihood of paying more for their pensions. The state panel suggested raising their contributions to as much as 10 percent from 7.5 percent. Municipal authorities pay an amount equal to 25 percent of police payrolls into the pension system, up from 11 percent last year. They would pay 28 percent in the fiscal year beginning July 1 under state actuarial guidelines.

The state review panel also proposed restructuring the police pension board to include two mayors, an appointee from the Treasurer’s office and a representative of the state’s chief budget officer, giving taxpayers a direct voice for the first time. While two state legislators have been designated honorary trustees, neither has attended a board meeting in about a decade, board minutes show.

Awaiting Sentencing
As for Zinna, he still goes to work as he awaits sentencing, setting out bowls of food and water for the stray cats that visit him on his law office’s stoop. He faces as many as 20 years in federal prison. The state Supreme Court suspended his law license in July, and in December he allowed his state accounting certificate to lapse.

Stephen Street, the state inspector general who led the investigation with U.S. authorities, says that criminal law fell short of addressing all of the police pension system’s shortcomings.

“Randy Zinna is a symptom of a larger problem over there, which is a lack of oversight, a lack of accountability,” Street says. “You can’t conclude anything other than that.”

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=a1RTcdzRsnTg


U.S. Offers $2.1 Billion Backing for California Solar Plant
By Brian Wingfield

April 18 (Bloomberg) -- The U.S. offered a $2.1 billion loan guarantee to help Solar Trust of America LLC ( http://www.solartrustofamerica.com/ ) build the world’s largest solar-energy generating station in Southern California.

The project will have two units that combined will produce 484 megawatts of electricity to be transported over an eight- mile transmission line near Blythe, California, about 230 miles (370 kilometers) east of Los Angeles, according to an Energy Department statement. The U.S. guarantee will help build these units in the first phase of the project.

“This is the largest amount offered to a solar project through the loans program office,” Energy Secretary Steven Chu said today on a conference call.

Solar Trust’s project will generate more solar power than all other solar-concentrating projects in the world combined, Uwe T. Schmidt, the chairman and chief executive officer of the Oakland, California-based company, said on the call. Blythe will use mirrors to concentrate the sun’s energy rather than solar panels that convert light directly into electricity.

The project will create more than 1,000 construction jobs and avoid more than 710,000 tons of carbon-dioxide emissions each year, according to the statement.

The two units are part of a larger project capable of producing 1,000 megawatts of electricity. Southern California Edison Co., a subsidiary of Edison International of Rosemead, California, will buy all of the power from the facility.

Solar Trust has built roads, water access routes and fencing on the site. The company plans to start building the project in a few months.

“When we rev up the great American energy machine, we can out-compete any other nation,” Chu said.

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aZnDWnpduUO8


Czechs Back More Reactors, Boost CEZ as Germany Shuts Plants
By Ladka Bauerova

April 20 (Bloomberg) -- Some couples dream of a sunset wedding on a beach. Jana Sistikova and Antonin Pazdera exchanged their vows at a nuclear power station’s visitor center near the Czech Republic’s border with Germany.

As the wedding party filed past the four giant concrete cooling towers of the Temelin atomic plant on a cold April day, the newlyweds applauded CEZ AS’s plans to start building two more reactors at the site.

Like most Czechs, the couple agree with the government’s nuclear expansion program, even as Japan battles the worst atomic crisis since the 1986 Chernobyl disaster. “We support nuclear plants,” said Sistikova, 25, an elementary school teacher who lives in the nearby village of Chrastany. “This way of generating electricity is safe and has a future.”

An opinion poll taken after Fukushima found that 55 percent of Czechs believe the country should build more reactors. In Germany, by contrast, anti-nuclear sentiment stoked by Japan’s disaster has led Chancellor Angela Merkel to halt the oldest plants and press to speed up a total exit from nuclear energy.

Germany’s nuclear retreat pushed European power prices to a 19-month high this month and has boosted CEZ shares, up 8.7 percent since the accident, over utilities like E.ON AG and RWE AG, both down more than 5 percent. The volume of Czech power exports to Germany has jumped as much as fivefold.

CEZ Benefits
“The transmission capacities on the Czech-German border are very high, hypothetically allowing the Czech Republic to export over 20 terawatt-hours of electricity,” or about 25 percent of its total output, said Jan Tomanik, an analyst at Wood & Co. brokerage in Prague who advises clients to buy CEZ shares. “It allows CEZ to fully benefit from the upward move in the German power prices.”

CEZ shares gained as much as 1.1 percent and were up 0.2 percent to 880 koruna at 12:33 p.m. in Prague.

The Czech Republic currently exports one quarter of its electricity, the biggest percentage in the European Union, which also makes it the EU’s third-biggest exporter in absolute terms, according to the International Energy Agency.

The government “would have to be a bunch of fools” to put a lid on the Temelin project, Prime Minister Petr Necas said in the aftermath of the Fukushima disaster.

Lessen Dependence
The landlocked country of 10 million with very little seismic activity was a member of the Soviet-led Warsaw Pact during the Cold War and sees nuclear as a way to lessen dependence on Russian natural gas imports. With limited capacity for generating electricity from renewable resources such as wind, water and solar energy, atomic generation is also a route to cutting emissions.

Sixty-nine percent of Czechs think the nation’s six reactors are safe compared with 14.5 percent who think they aren’t, according to a survey by Sanep polling agency conducted March 19, more than a week after the March 11 earthquake and tsunami that triggered a partial meltdown at the Fukushima Dai- Ichi plant. Fifty-five percent believe the country should increase atomic capacity, the poll found.

The Czech nuclear plants, built according to a Russian design, are among Europe’s youngest. Dukovany was switched on in 1985. The construction of Temelin was temporarily halted after the 1989 collapse of the country’s communist regime and the two Russian-built reactors were subsequently equipped with Westinghouse Electric Corp.’s operating and safety systems. The plant was connected to the grid in 2000.

‘We’re Lucky’
“We’re lucky that nuclear energy enjoys huge support in the Czech Republic,” said Martin Roman, chief executive officer of CEZ, central Europe’s biggest utility. “It’s the most ecological source of energy, it has absolutely no CO2 emissions,” he said in an April 11 radio interview.

The flow of electricity to Germany is higher than the level before Merkel ordered the shutdown, and was almost five times that level from March 15 to March 20, according to data from Czech grid operators CEPS.

Over one-third of state-controlled CEZ’s electricity is generated by nuclear reactors, and the percentage may increase if CEZ adds two more reactors to Temelin as planned. France’s Areva SA, Westinghouse and a Russian-Czech group led by ZAO Atomstroyexport are competing for the project, estimated by analysts to be worth as much as $12 billion.

EU Safety Regulations
While the government has pledged it will stick to its 2013 deadline for choosing the winner of the tender, tightening of nuclear safety regulations in the EU could slow things down and add to the cost, Wood & Co.’s Tomanik said.

“The risk of stricter safety requirements being implemented for new reactors could negatively affect the capex and timeframe of the construction of the two new blocks at Temelin,” he said. “There is a risk Germany will try to push ahead with measures against nuclear energy on an EU-wide basis.”

The Czechs also face opposition from neighboring Austria, which feels threatened by the proximity of both Temelin and Dukovany nuclear plants to its northern border. Austrian activists and politicians have expressed worries about safety at the two plants.

Back in Temelin, no such fears plagued the newlyweds. The couple, who are due to have a baby girl in August, took their vows in the mansion that serves as the plant’s information center, where visitors can watch a movie on how nuclear power works and look at models of reactors. CEZ has held two weddings in Temelin so far this year and has bookings for six more.

“We were intrigued as soon as we saw the pictures,” Sistikova said after the ceremony. “Then we came to visit Temelin and decided it was perfect.”

 

[trysail]

I'm smart and experienced enough not to waste time attempting to fool the intelligent and informed— in any event, I like to think of myself as honest. I have absolutely no interest in pandering to or separating fools from their money and I am repelled by morons and disgusted by those who steal from the vulnerable and uninformed.

... human nature desires quick results, there is a particular zest in making money quickly, and remoter gains are discounted by the average man at a very high rate. The game of professional investment is intolerably boring and overexacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll. Furthermore, an investor who proposes to ignore near-term market fluctuations needs greater resources for safety and must not operate on so large a scale, if at all, with borrowed money— a futher reason for the higher return from the pastime to a given stock of intelligence and resources. Finally it is the long-term investor, he who most promotes the public interest, who will in practice come in for most criticism, wherever investment funds are managed by committees or boards or banks. For it is in the essence of his behaviour that he should be eccentric, unconventional and rash in the eyes of average opinion. If he is successful, that will only confirm the general belief in his rashness; and if in the short run he is unsuccessful, which is very likely, he will not receive much mercy. Wordly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.

-John Maynard Keynes
Chapter 12, "The State of Long-Term Expectation"
The General Theory of Employment, Interest, and Money
Harbinger Edition
New York, New York 1964.​

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aIBaJnFf0hhY


L’Oreal Chairman Agon Says He Sees No Synergies With Nestle
By Andrew Roberts

April 26 (Bloomberg) -- L’Oreal SA, the world’s largest cosmetics maker, doesn’t see “any possible synergies” with Nestle SA, damping speculation the Swiss foodmaker may increase its 30 percent stake in the company in 2014.

“There is no cooperation on the ground in the field between the two companies,” L’Oreal Chairman and Chief Executive Officer Jean-Paul Agon said in an April 20 interview at his office in Paris.

Nestle, the world’s largest food company, said this month that it will decide what to do with the L’Oreal stake in 2014, when restrictions on selling the holding to a third party are lifted. Chairman Peter Brabeck-Letmathe said April 14 that taking three years to decide will give the Vevey, Switzerland- based company time to reflect on its strategy.

L’Oreal, which makes Garnier shampoo and Maybelline makeup, distributes only a third of its products in food stores, and in countries where the company faces the same challenges as Nestle, “we find our own solutions,” Agon said. “I don’t see any possible synergies.”

L’Oreal fell as much as 91 cents, or 1.1 percent, to 84.77 euros in Paris trading and was down 0.7 percent as of 9:56 a.m. Nestle shares were little changed at 53.80 Swiss Francs in Zurich trading.

Disagreement
Analysts are split on what Nestle will do. Andrew Wood, an analyst at Sanford C. Bernstein, said that the Swiss company’s intention to wait three years makes him “slightly more wary” that Nestle may bid for the rest of L’Oreal. The food company is probably considering selling the stake or holding it, David Hayes, an analyst at Nomura, wrote in an April 15 note to clients.

Nestle bought a stake in Paris-based L’Oreal in 1974 from the Bettencourt family, which still owns about 31 percent. The maker of KitKat bars has agreed with L’Oreal’s 88-year-old main shareholder, Liliane Bettencourt, not to raise the holding until six months after her death. L’Oreal has a market value of about 51 billion euros ($74.5 billion), compared with 186 billion Swiss francs ($211 billion) for Nestle.

“The only thing I can say is that the situation as it has been for the last 37 years has been very positive, for Nestle, the Bettencourt family, all the other shareholders and the company,” Agon said. “Nestle is our loyal shareholder.”

Bettencourt Accord
Nestle and the Bettencourt family gave each other a right of first refusal over their stakes that runs through April 29, 2014, according to their accord. After that, Nestle would be able to sell its stake to a third party without offering it to the Bettencourt family.

“I don’t think Nestle has a position contrary to L’Oreal’s interests and independence,” Bettencourt said in an April 20 interview with Le Figaro. She plans to remain on the company’s board to show L’Oreal’s independence and has discussed the cosmetics maker with Brabeck, she said, according to the French newspaper.

Separately, Agon said L’Oreal will sell its stake in Sanofi-Aventis SA “if we need the cash to make big acquisitions.” He declined to say if that would be this year. L’Oreal owns 9.02 percent of France’s biggest drugmaker, according to Bloomberg data. Sanofi has a market value of about 69 billion euros.

L’Oreal plans to use its 1.55 billion-euro cash pile to make acquisitions and Agon has said he would like to have a Brazilian brand and an Indian brand in his portfolio. The French company has the capacity to spend as much as 20 billion euros on acquisitions, analysts at Exane BNP Paribas have said.

L’Oreal is “studying permanently all possible acquisitions,” Agon said in the interview.

Door-to-Door
What the company bids for, and when and where, will depend on a target’s availability and strategic fit, Agon said, adding that opportunities in emerging markets are limited. He ruled out making acquisitions to defend market share in Europe.

Avon Products Inc., whose sales reached $10.9 billion last year, has been touted as a possible takeover target for L’Oreal by beauty industry specialists including Strategic Resource Group’s Burt Flickinger.

Avon gets more than 40 percent of its sales from Latin America, where consumers are accustomed to buying cosmetics, skincare and fragrances from door-to-door vendors.

While getting into direct selling “is not on the agenda, never say never,” Agon said.

 

[trysail]

Sonofabitch. Ask your average man on the street if he's heard this and I'll wager you'll get a blank stare.

_____________________

http://noir.bloomberg.com/apps/news?pid=20601104&sid=ahFhzplBZ6RM


Turkey to Build Canal Through Istanbul to Bypass Bosporus
By Benjamin Harvey

April 27 (Bloomberg) -- Prime Minister Recep Tayyip Erdogan said Turkey will build a canal from the Black Sea to the Marmara Sea, turning the city of Istanbul into “two peninsulas and an island” and diverting shipping traffic from the Bosporus.

The “Istanbul Canal,” which will be up to 50 kilometers long (30 miles), 150 meters wide and 25 meters deep, will carry as many as 160 ships per day including the largest oil tankers, Erdogan said in a speech in Istanbul today. Planning will take two years, he said.

Erdogan declined to give a cost estimate or exact location for the canal, saying they would be kept secret to “avoid any kind of negativity or injustice” before the project begins. In response to a reporter’s question, Istanbul Mayor Kadir Topbas said the project would cost more than $10 billion and take eight years to build.

Turkey is seeking to keep shipping away from the Bosporus, a winding waterway that runs through the middle of the city of 12 million people. The U.S. Energy Information Administration calls the strait “one of the world’s busiest chokepoints” and “most difficult waterways to navigate.”

Around 2.9 million barrels of oil a day were transported through the Bosporus in 2009, down from 3.4 million in 2004, according to the U.S. agency’s list of world oil transit chokepoints. The decrease came as Russia shifted crude oil exports from the Black Sea toward Baltic ports, it said.

New bridges and highways will be built over the planned Istanbul Canal, which will be flanked by hotels and new apartment buildings, Erdogan said.

Erdogan said there would be no trouble funding the canal.

“Turkey deserves a crazy, magnificent project like this by 2023,” Erdogan said, referring to the 100th anniversary of the declaration of the Turkish Republic.

A former mayor of Istanbul, Erdogan is seeking re-election for a third term on June 12.

 

[trysail]

Current weighting of the S&P 500 by industry:

http://www.standardandpoors.com/spf/images/indices/Breakdown/SPUSA-500-USDUF--P-US-L--Brk.png​

You can tell a lot simply by observing the weightings ( over time ) of various industries in the S&P 500. In the big energy bubble that occurred from 1979-81, energy's weight got all the way up to about 29% in 1981. In the dot-com bubble, "info tech's" ( i.e., technology) weighting got as high as roughly 33% in 1999. The financial sector's weight exceeded 25% in the mid-oughts before the great residential real estate bubble exploded.


Moral Of The Story: If you're part of the herd, you'll eventually run off a cliff with the rest of the herd.

 

[trysail]

http://www.npr.org/2011/04/30/135844222/medicares-math-problem-taxes-benefits-trouble


Medicare's Math Problem:
Taxes - Benefits = Trouble
by NPR Staff
April 30, 2011

At age 78, Milton Jones feel like he's earned his Medicare benefits.

"I imagine so," he says. "I paid taxes all my life."

Today, Jones is retired. He volunteers and calls bingo once a week at his local community center. But for 30 years, he worked in Pittsburgh's steel mills.

"I'd mostly run a 983-Caterpillar," he says, "and I'd clean up the molten slag after the the ladle ran over."

It was hard, hot work. And Jones — like many seniors his age — says because he's paid in, he's earned the benefits Medicare pays out.

In Seattle, 68-year-old retired librarian Diane Rosolowsky qualified for Medicare shortly after a traumatic brain injury. She was grateful for the benefits she received.

Years earlier, when she helped run her husband's veterinary clinic, she told employees who scoffed at Medicare tax deductions on their paycheck, "'That's your prepaid medical care for when you are a senior citizen!' "

And in Brookline, Mass., 86-year-old Elane Shapiro says she didn't have to struggle with medical bills after her husband died and she was diagnosed with cancer.

"I was taken care of. I've always paid my taxes." she says.

"I think most people feel the way I do. If anyone talks about changing Medicare, we get very nervous."

In and Out
Some seniors get more than nervous, as U.S. Rep. Paul Ryan learned in a town hall meeting in his home state of Wisconsin this past week.

"Hey, c'mon!" Ryan told an increasingly hostile crowd. "If you're yelling, I just want to ask you to leave."

Ryan is the Republican point person for budget reform in the House. And Democrats are painting his plan as as an attack on Medicare, even as some Senate Democrats support a bipartisan plan that includes cuts similar to Ryan's.

There's a reason system current system is unsustainable, says Eugene Steuerle, a former Treasury Department official and senior fellow at Washington's Urban Institute. He boils it down to two simple numbers.

"An average couple retiring today has paid just a little over $100,000 in Medicare taxes" over the course of their working lives, Steuerle tells NPR's Guy Raz.

And what do they receive?

"About $300,000 in benefits" — even after adjusting for inflation.

No One To Say 'No'
How did the current system become so unbalanced?

It has to do, Steuerle says, with the way Medicare was built to work — by passing on an individual retiree's health care costs to the wide pool of current taxpayers.

"The incentive for me as a consumer to worry about the cost isn't very high," he says. "But the incentive for providers have this incentive to keep listing as many services as possible. The more services the hospital can list, the more they can collect."

A system like that works all right if health care costs stay low. But over the past few decades, they've risen dramatically. There are more and more people entering the Medicare system. Those people live increasingly longer lives. And most importantly, Steuerle says, no one is in charge of saying "no" to medical-cost inflation.

The result is a Medicare system that only pays for one third of itself. The shortfall is made up — in part — from other sources of revenue.

"It's also borrowing from China and Germany and a lot of other countries," Steuerle says.

Paying For Your Parents
That average, 66-year-old couple Steuerle talks about didn't really pay taxes for their own Medicare benefits, he says; they paid for their parents'. That's the way the system works: Current taxes pay for the benefits that go to current Medicare recipients.

But say demographics shift, health care costs rise. and fewer children are born to pay into the system. Then, the child-to-parent cost chain breaks down.

"Suppose you have a household with three children," Steuerle says. Those children pay for their parents' health care. But if those three children only have two children?

"To what extent does that mean I am entitled — from my children — to have all my health costs covered?" he says.

Stephanie Rennane, a research associate and colleague of Steuerle's, represents the generation struggling with that question. She's 25.

"If I talk to my friends, other people who are 25 right now, they say, 'Forget [Medicare]; it's not going to be around for us.' "

Slowing Growth
And bringing that system into balance, Steuerle says, is going to cost all of us.

"I don't see any way we can exempt any broad portion of the population from tackling our broad budget issues," he says.

That could mean higher taxes for everyone — including people currently on Medicare. And possible cuts to the program.

"But when we're talking about cuts in things like health care and elderly support programs," Steuerle says, "we're basically talking about cuts in a rate of growth."

Health care, in other words, is always growing. If it's going to grow by $100 billion next year but is trimmed to grow only by $80 billion, that's still called "a cut."

"So the language can be very misleading," Steuerle says. A rate of sustainable growth is the real goal of any sensible Medicare reform proposal, he says.

"That doesn't mean that your children aren't going to get more health care in the future. They are — partly because we're going to invent a lot better things to provide them with," Steuerle says.

"It just means the rate of growth that we now promise is totally unsustainable."



http://www.npr.org/2011/04/30/135844222/medicares-math-problem-taxes-benefits-trouble

 

[trysail]

... and here's the $64,000 question ( see article below ). If you can come up with the right answer to the conundrum posed by this article, not only can you be a hero, you can be a rich(er) hero.

For many decades, bank holding companies earned a return on equity that was roughly equivalent to that earned by the average large corporation ( i.e., roughly equal to the S&P 500's long run average return on equity ). In terms of mathematics, it's a simple equation: if you buy a corporation's stock at book value and the company earns 10-15% on equity, you will enjoy a rate of return of 10-15% on your investment. If you are an investment manager, achieving a 10-15% compound rate of return over the next 5-10 years is very likely to make you a hero.

Banking companies have historically been more leveraged than other firms. The average company in the S&P 500 has a ratio of equity-to-assets of ~35-40% while banking companies have historically had a ratio of equity-to-assets of 5-10%.

Bank stocks have always been cyclical. They have always been sensitive to the business cycle and the economy. In the past, purchases of well-managed banking companies at or below book value have almost always been well-rewarded.

IS it different this time?



__________________________

http://noir.bloomberg.com/apps/news?pid=20601087&sid=amsAYV5ggb1s&pos=4


Bank Stocks Shunned by Money Managers Turned Off by Derivatives
By Charles Stein

May 4 (Bloomberg) -- “Above all stick with what you know,” Warren Buffett cautioned investors in a 1974 Forbes magazine interview. “Don’t get too fancy.”

Banks, in the view of some of today’s best-performing money managers, are too fancy -- their businesses and finances too complicated to understand even as regulators have tried to make them more transparent. Investors owning few if any of the stocks in the group include Clyde McGregor, who runs Oakmark Equity and Income Fund, Delafield Fund’s John Delafield and Donald Yacktman of Yacktman Focused Fund.

The fund managers said they are frustrated by complex balance sheets stuffed with derivatives that make it hard to evaluate bank assets and how they will fare under different economic scenarios. They are also concerned that profits may be hurt by a slowdown in the economy, litigation over mortgage bonds and foreclosures, and new fee-crimping rules.

“We find it hard to believe the banks have cured all their bad asset problems, and they aren’t transparent enough for us to understand the risks,” McGregor, whose $20.5 billion fund beat 99 percent of peers over the past decade, said in a telephone interview from Chicago.

The 24-stock KBW Bank Index fell 8.6 percent in the past year, compared with the 13 percent increase by the Standard & Poor’s 500 Index, a benchmark for the broader market.

Book Value
The bank index is priced at roughly book value, or the value of total assets minus liabilities, which makes bank stocks cheap by historical standards, said Gerard Cassidy, an analyst at RBC Capital Markets in Portland, Maine. At the end of 2006, the index traded at two times book value, according to data compiled by Bloomberg.

Banks earnings in the first quarter provided few reasons for bearish investors to change their view. Net revenue at the six largest U.S. lenders -- Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley -- fell 13.3 percent from a year earlier, according to Bloomberg data. Profits excluding taxes, loan-loss provisions and one-time items slid 40.2 percent.

Bank stocks, as measured by the KBW index, fell 50 percent in 2008 and then more than doubled from March 9, 2009, when stocks reached a 12-year low, to the end of the year. 2009. Bank shares gained another 22 percent in 2010, Bloomberg data show.

McGregor’s Oakmark Equity and Income held no bank stocks as of March 31, according to Bloomberg data. He and co-manager Edward Studzinski got out in 2006 on concern that mortgage lending had gotten too aggressive.

The fund, which buys stocks and bonds and is part of part of Chicago-based Harris Associates LP, returned 8.7 percent annually in the past 10 years, almost twice the average gain by balanced mutual funds, data from Morningstar show.

Derivatives Problem
“Can you still make money in banks?” McGregor, 58, said. “Maybe. But we can build a portfolio that doesn’t demand owning them.”

The problem, he said, is the complexity of the banks, especially their use of derivatives. Derivatives are contracts whose value is based on stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates or the weather. Options and futures are the most common types of derivatives.

Unlike traditional loans, which can be studied and evaluated, derivatives are described by banks in general terms that makes it difficult to determine the quality of the underlying assets, McGregor said.

Rocket Science
In its 10-K annual report filed in February, Bank of America listed its credit derivatives, securities that let buyers guard against a borrower’s missed debt payments. The filing doesn’t say which specific debts the bank is buying protection for, and it describes the counterparties to the trades as “large multinational financial institutions.”

“We don’t know what we are being exposed to,” McGregor said.

It’s not a question of requiring more disclosure, which regulators have done in the past several years, according to George Shipp, manager of the $694 million Sterling Capital Special Opportunities Fund in Virginia Beach, Virginia.

“You need to be a rocket scientist to understand it,” Shipp, 52, said in a phone interview. He said he recently read through Goldman Sachs’s annual report and, even with pages of disclosure, “it is not something the layman is going to be able to figure out.”

His fund, which beat 97 percent of peers over the past five years, holds one bank, Boston-based State Street Corp.

Buffett’s Banks
Buffett, who once called derivatives “financial weapons of mass destruction,” doesn’t consider all banks too fancy. Berkshire Hathaway Inc., the Omaha, Nebraska-based holding company he has run since 1970, is the largest shareholder of Wells Fargo, according to Bloomberg data. His $10.1 billion stake in the San Francisco-based bank is Berkshire’s second- largest, after Coca-Cola Co. Buffett is the third-largest shareholder in U.S. Bancorp of Minneapolis, with $2 billion of stock at year-end.

“U.S. banking profitability will be considerably less in my view in the period ahead than it was in the early part of this century,” Buffett said April 30 at the annual meeting of Berkshire shareholders in Omaha. Buffett said profits would diminish as regulations forced banks to reduce leverage.

At the same meeting he described Wells Fargo and U.S. Bancorp as “very good operations.”

Delafield Fund
Delafield, who has been managing money since 1970, can’t remember the last time he owned a bank stock.

“It’s impossible from the outside to know the value of what they hold,” Delafield, 75, who runs the $1.4 billion Delafield Fund from New York for Tocqueville Asset Management LP, said in a phone interview.

The fund had 30 percent of its money in industrial stocks, 28 percent in basic materials and none in financials as of March 31, according to Morningstar data. It has gained 12 percent a year for the past decade, ranking first among midcap value funds.

The $1.4 billion FPA Capital Fund, the best-performing diversified U.S. stock fund over the past 25 years, owned no bank stocks as of March 31, Bloomberg data show. The fund gained 15 percent annually over that stretch, according to Morningstar.

“Back in 2007 many investors weren’t paying attention to the huge risks embedded on the balance sheets of financials,” Dennis Bryan, 49, co-manager of the Los Angeles-based fund since 2007, wrote in an e-mail. “Today more investors are closely monitoring those risks.”

Berkowitz the Bull
One of the biggest bulls on bank stocks is Bruce Berkowitz, manager of the $20 billion Fairholme Fund. He began buying lenders in the fourth quarter of 2009, convinced an improving U.S. economy would lift the banks along with it. Berkowitz, who in January 2010 was named Morningstar’s domestic stock manager of the decade, now has more than two-thirds of the fund’s equity in financial stocks, including Citigroup and Bank of America.

“The balance sheets look better than ever, the banks are making money and they are dealing with their issues,” Berkowitz, 52, said in a telephone interview from Miami, where his firm, Fairholme Capital Management LLC, is based.

Fairholme Fund fell 3.2 percent this year through May 2. In addition to Citigroup and Bank of America, its top 10 holdings as of Nov. 30 included New York-based banks Goldman Sachs and Morgan Stanley, Bloomberg data show.

Goldman Sachs is a favorite holding of billionaire investor Michael Price, who said some large banks stocks are “great” values.

“Some of the worst-performing things are big financials this year, which is kind of surprising,” Price said yesterday in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene. “We own Goldman, we buy Goldman on dips. I think Goldman’s a great large-cap financial value guy’s stock.”

Mortgage Pain
In an April 15 interview with Bloomberg Television, Bank of America CEO Brian T. Moynihan said that while the bank was making progress in many areas, “the mortgage business continues to push us back.”

Like other banks, the Charlotte, North Carolina-based company has tangled with investors, state and federal regulators, and mortgage insurers over claims that it owes money for loans made during the housing boom and for its handling of foreclosures. State attorneys general negotiating a settlement of foreclosure practices have reached agreements with lenders on some terms while failing so far to reach an accord on payments by the banks, a person familiar with the talks said this month.

The battles will be resolved, possibly by the end of the year, Berkowitz said. “It is only a matter of time before everyone settles up.”

Yacktman’s Focus
That’s not enough of a reason to buy for Yacktman, whose $2.9 billion Yacktman Focused Fund returned an average of 13 percent a year in the past decade, topping 99 percent of rivals. He held one large bank, U.S. Bancorp, as of March 31, Bloomberg data show.

“With a bank you create assets with a stroke of a pen,” Yacktman, 69, said in a telephone interview from Austin, Texas. “You’ve got a black box.”

Paul Singer, founder of hedge fund Elliott Management Corp., held one bank stock as of Dec. 31, a $65 million stake in Flagstar Bancorp Inc. of Troy, Michigan, according to Bloomberg data. Singer, 66, whose New York-based firm oversees $17.1 billion, said in a March interview with the Wall Street Journal that the “opacity” of bank financial statements means he can’t assess their strength or sensitivity to changes in interest rates and asset prices.

Break Them Up
“You don’t know the financial condition of Citigroup, JPMorgan, Bank of America, any of them,” said Singer, whose fund gained 14.3 percent a year since 1977 compared with the 11 percent increase for the S&P 500 Index, according to company data. Scott Tagliarino, a spokesman for the firm, said Singer wouldn’t comment beyond the interview.

Simon Johnson, a professor at Massachusetts Institute of Technology’s Sloan School of Management in Cambridge, Massachusetts, has pushed for breaking up the biggest banks as a way to make the financial system safer. It would also be a plus for investors, he said in a telephone interview from Washington.

“Shareholder value has been destroyed by the opaqueness of the big banks,” he said. “If you are a shareholder you want to see them split up. The added transparency would be a virtue.”

Sterling Capital’s Shipp said that while splitting off businesses such as investment banking would make big banks easier to understand, the remaining traditional lending business wouldn’t be too appealing.

“Garden variety banking, with all the competition and cheap money available, is not very attractive right now.”

Given all the problems facing banks, there are more compelling places to invest today, he said.

“Who needs the aggravation when I can buy Pepsi or McDonald’s.”


http://noir.bloomberg.com/apps/news?pid=20601087&sid=amsAYV5ggb1s&pos=4

 

[trysail]

Why getting a "tat" is idiotic ( aside from the fact that it's juvenile in the first place— you might as well put a sign on your forehead that says "I have poor judgment" ):



Tattoo Ink Stained By Safety Concerns
by Patti Neighmond
http://www.npr.org/2011/05/09/135845526/tattoo-ink-stained-by-safety-concerns

Tattoo history reaches back thousands of years, to Egyptian mummies and even ancient ice men. Interest has waxed and waned over centuries, but now, it's fair to say, tattoo body art has reached a pinnacle. By some estimates, nearly half of all adults younger than 40 sport at least one tattoo.

But federal health officials are concerned that not all inks are safe. And they worry that some tattoo salons are mixing their inks with other, unsafe products.

Gone are the days of the simple heart with "Mom" or a girlfriend's name inscribed. Today's tattoos are typically complex, extraordinarily detailed pieces of art.

"Part of Zulu's philosophy is that tattoo art is a form of fine art, just on another canvas [the skin]," says Khani Zulu, who owns Zulu Tattoo in Los Angeles with her tattoo artist husband, known simply as Zulu.

Zulu has gotten a lot of publicity for tattooing celebrities and is becoming renown as one of the oldest custom tattoo shops. There are no catalog designs to choose from here.

"You come in with an idea, and we design your tattoo specifically for you," says Khani Zulu. "It's unique, and we won't tattoo the same design on anyone else."

Design, of course, is only part of the artistry. Color is the other. And, there's a dramatic rainbow of choices with enticing names like sky blue, mint green, graffiti green, avocado, Georgia peach and dusty rose.

Zulu is confident about the safety of her inks. She's aware that some inks contain potentially harmful metals and plastics. So, when she chose a brand, Zulu says, she chose what seemed the most natural: vegetable-based organic pigments.

"It's pretty much as safe as you can get," she says.

'Nobody Knows For Sure What's Really In Them'
But health experts worry that not all inks are safe. They are especially concerned about trendier tattoo techniques, says cosmetic dermatologist Dr. Tina Alster.

"There are some chemicals that have been shown to be injected along with the tattoo inks to make them brighter or even psychedelic," says Alster, who is also a laser surgeon and director of the Washington Institute of Dermatological Laser Surgery. "There are some that actually glow in black light."

Glow-in-the-dark tattoos are quite popular with the night club set, Alster says. But the problem with inks today is that "nobody knows for sure what's really in them."

The Food and Drug Administration has the authority to regulate tattoo ink. But until recently, it hadn't, citing more pressing public health problems and a lack of consumer complaints. FDA chemist Dr. Bhakti Petigara Harp says that recently, the agency has started to see an increase in consumer complaints.

"We've seen such things as infections, swelling, cracking, peeling and blistering at [the] tattoo site," Petigara Harp says.

FDA's own investigation into the chemical composition of inks and their long-term safety has turned up some other concerns. For example, when tattoos fade, as they do over time, what happens to the ink? Where does it go in the body? Researchers are exploring that question, and they think the body rids itself of the inks as it does certain bacteria and other foreign matter.

But some inks — perhaps the reds, oranges, yellows and even whites — may be problematic. The skin cells containing the ink can be killed by sunlight and ink-breakdown products may disperse through the body, scientists say. Research has already found that certain types of pigment migrate from the tattoo site to the body's lymph nodes. This could potentially damage the lymphatic system, which filters out disease-causing organisms.

An FDA webinar in March opened the discussion about the safety of tattoo ink to the public and the industry and issued cautions to consumers considering a tattoo.

Questions Around Permanent Makeup, Too
Alster says the mystery surrounding ingredients in tattoos extends to the inks used in permanent makeup — such as tattooed eyeliner, lip liner and eyebrows.

"They often mix a lot of inks, and we don't know what the ingredients are," Alster says. "There are some, like cadmium, that are carcinogenic. Others cause granulomas, which is an allergic reaction in the skin."

And ironically, while permanent makeup tattoos are intended to enhance facial features, Alster says they don't age well.

"You can have a lip liner tattoo that traces a nice full lip as you are younger," but as you get older and the lip thins, the liner can end up outside the border of the lip, says Alster, making for a very odd appearance.

And removing permanent makeup, just like removing other tattoos, is more costly and complicated than getting it in the first place. Tattoos are typically removed using a high-speed laser that vaporizes the ink particles.

"So, when you hit them with a laser, they will actually get darker rather than lighter," Alster says. "That's because there are small amounts of iron or titanium oxide in those tattoo inks, and they form this irreversible pigment in the skin."