Gallimaufry

[trysail]

Trysail's Labor Day triathlon:

3:00-3:32
Run 4 miles

4:01- 5:45
Bicycle 20 miles

6:10-6:35
Swim 600 yards



http://www.swimacrossamerica.org/view.image?Id=4599

 

[trysail]

"PIGS"

http://media.npr.org/assets/img/2010/09/10/spreadsfinal_custom.jpg?t=1284131277&s=3​

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=conewsstory&tkr=PETR3:BZ&sid=a5qldhsnjMCA


Brazil’s Libra Field May Rival 8 Billion-Barrel Tupi
By Peter Millard

Sept. 13 (Bloomberg) -- Brazil’s deepwater Libra field may hold as much as 8 billion barrels of oil, rivaling nearby Tupi as the Americas’ biggest crude discovery in three decades, according to an official of the country’s Energy Ministry.

Initial estimates for the Santos Basin field off the coast of Brazil are between 7 billion and 8 billion barrels based on seismic and drilling data, Marco Antonio Almeida, head of oil and gas at the ministry, said today in Rio de Janeiro. That would rival the 5-billion-to-8-billion barrel estimate for Tupi.

“Libra is a well identified exploration opportunity,” Magda Chambriard, a director at Brazil’s oil regulator, told reporters today in Rio de Janeiro. “There are no bidding rounds in the world” for the amount of oil that Libra may hold, she said, adding that an independent certification firm hired by the regulator placed the reserves at about 7.9 billion barrels.

Brazil may possess more than 50 billion barrels of oil reserves in the so-called pre-salt region, which runs 800 kilometers along Brazil’s coast from Espirito Santo to Santa Catarina states, according to the national oil regulator. The biggest discoveries are in Santos, where a layer of salt traps oil located as much as 3,000 meters beneath the ocean surface.

A well currently being drilled at Libra on behalf of the oil regulator, known as the ANP, should be completed within 30 days and exploration rights for the field may be auctioned as soon as mid-2011, Almeida said. The licensing round will only take place once Congress approves a bill making state-controlled oil producer Petroleo Brasileiro SA the sole operator of all new blocks in the pre-salt, Almeida said.

Developing Tupi
Petrobras, as the Rio de Janeiro-based company is known, is developing Tupi, also in the Santos Basin. The 2007 discovery was the biggest in the Americas since Mexico’s Cantarell in 1976. Chambriard said in May that Libra may be larger than the 4.5-billion Franco field, also in the pre-salt.

Petrobras rose 69 centavos, or 2.5 percent, to 28.21 reais as of 2:30 p.m. in Sao Paulo, after earlier gaining as much as 2.9 percent. The stock declined 23 percent this year.

Petrobras plans to raise as much as 129 billion reais ($75 billion) in the world’s largest share sale as it seeks cash to develop the offshore fields. The offer includes about $42.5 billion of shares the company will sell to Brazil in exchange for the right to develop 5 billion barrels of oil reserves.

About 3.1 billion barrels will come from Franco while the Iara and Florim fields will account for another 1.07 billion. Petrobras will also receive the rights to oil at Tupi Northeast and South, as well as the Guara East fields.

 

[trysail]

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


Gene Therapy Stops Blood Disorder, Ending Need for Transfusion
By Rob Waters

Sept. 15 (Bloomberg) -- A 21-year-old man with a blood disorder who needed monthly transfusions to survive since he was 3 had his condition halted by a gene therapy procedure.

The man suffered from beta thalassemia, a common genetic disease that reduces red blood cell production. He was treated in Paris in 2007 and hasn’t needed a transfusion in two years, according to a study published today in the journal Nature.

The therapy, being developed by closely held Bluebird Bio of Cambridge, Massachusetts, is the latest in a series of successful gene treatments. Bluebird, backed by four venture capital firms and Genzyme Corp., the world’s largest maker of drugs for rare genetic diseases, plans to treat nine more patients who have thalassemia or sickle cell anemia. The company also is developing a gene therapy that has helped patients with a rare vision disorder to see.

“Major journals don’t publish papers very often based on one patient but this is a significant milestone,” said Nick Leschly, chief executive officer of Bluebird, formerly known as Genetix Pharmaceuticals Inc., in a telephone interview yesterday. “Thalassemia doesn’t just go away, so if you get a remission it means the treatment has worked.”

The authors of the study reported one possible side effect. About a year after the therapy, some of the patient’s red blood cell precursors carried high levels of a protein that has been linked in some reports with the development of both benign growths and blood cancer, said Derek Persons, a doctor and scientist at St. Jude’s Children’s Research Hospital in Memphis, in a commentary accompanying the study.

No Cancer Evidence
There was no evidence of a cancerous or precancerous state in the patient, said Philippe Leboulch, a professor at Harvard Medical School and the University of Paris who is leading the trial.

“Long-term follow-up of this and other patients will be needed before its efficacy and safety can be firmly established,” Persons wrote in his commentary.

Still, he said, the experiment “represents a major step forward for the gene therapy” of blood disorders.

Thalassemia and sickle cell anemia, a related disorder, are among the most common genetic diseases in the world, said Leboulch. About 150,000 people a year are born with each condition, he said.

Thalassemia is especially common in Africa, Southeast Asia and the Mediterranean region, where it afflicts as many as 10 percent of people, according to a 1999 study in the New England Journal of Medicine.

Therapy Revival
Gene therapy is experiencing a revival among scientists and drugmakers in recent years after failed experiments in the early 1990s ended in one death and some children developed leukemia. In November, the journal Science reported that brain damage in two 7-year-olds with an inherited condition called adrenoleukodystrophy was halted or reversed in another gene therapy experiment in Paris.

People with thalassemia are born with a defect in the globin gene that regulates the production of beta globin, a key ingredient of the hemoglobin found in red blood cells. This genetic glitch leaves them unable to provide enough oxygen to the blood.

Those with the most severe form, like the Paris patient, can’t survive without a monthly blood transfusion, Leboulch said. Regular transfusion leads to excess iron in their blood, so they also need regular chelation treatment to remove it.

Some patients with thalassemia can be treated with a bone marrow transplant from a healthy matched donor. The stem cells in the bone marrow rebuild the patient’s blood cell supply and allow them to produce healthy beta globin.

Drawbacks
There are drawbacks to this approach, Leboulch said. Many patients don’t have a matching donor and the procedure requires heavy chemotherapy to wipe out the patient’s own bone marrow. There also are risks that cells from the donor will attack those of the transplanted patient, he said.

In the gene therapy procedure, doctors took the patient’s bone marrow and injected into it a harmless virus carrying a corrected copy of the globin gene. The cells were later returned to the patient.

Over time, the new red blood cells became more numerous than the old, uncorrected ones. The patient then made an adequate supply of beta globin and stopped needing transfusions. With the Paris patient, the process took about a year, Leboulch said.

Today, the man is mildly anemic with hemoglobin a bit lower than it would be in a normal person and his condition has been stable for two years, Leboulch said.

“He has not required a drop of blood for two years,” Leboulch said. “He lives a normal life and he has a full-time job and a girlfriend.”

Leboulch expects to treat another patient early next year. It will take at least three years for clinical trials to prove to regulators that the therapy is safe and effective so it can be marketed clinically, Leschly said.

 

[trysail]

Model of Hurricane Ike's ( 2008 ) storm surge at Galveston:

http://www.nhc.noaa.gov/ssurge/HistoricalRuns/2008Ike_hourly.gif​

 

[trysail]

http://www.thetruthaboutcars.com/wp-content/uploads/2009/07/rare-earths-used-in-hybrids.jpg

​

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aqxlfjYTk99E


‘Clueless’ Investors Think Brokers Are Fiduciaries, Survey Says
By Alexis Leondis

Sept. 15 (Bloomberg) -- Three out of four U.S. investors mistakenly think that financial advisers at brokerage firms are required to put clients’ interests first, said a survey by several consumer and financial planning organizations.

Seventy-six percent of investors said financial advisers, a term used by major brokerage firms such as Bank of America Corp.’s Merrill Lynch to describe their salespeople, must uphold a fiduciary duty to their customers, according to the survey, which was released today by groups including the Consumer Federation of America, AARP and North American Securities Administrators Association, all based in Washington.

Brokers currently must meet a standard to offer clients “suitable investments,” whereas most registered investment advisers have a fiduciary obligation to put clients’ best interests first. Seventy-seven percent of investors knew that investment advisers have to abide by a fiduciary standard, the survey said.

“Investors are clueless when it comes to the different standards of care that apply to brokers and investment advisers,” Barbara Roper, director of investor protection for the Consumer Federation of America, said in a statement. “This lack of understanding is not because investors are stupid; it is because, bluntly stated, the policy itself is stupid.”

The Securities and Exchange Commission is due to submit a report to Congress in January on investor protection with the option to create a universal standard as part of the financial- services overhaul bill that became law July 21. The rule would apply to anyone who gives investment advice, including those insurance agents who are dually registered as brokers.

Same Rules Needed
Ninety-seven percent of survey respondents said they support a fiduciary standard for investment professionals providing advice, including requiring disclosure of any fees or commissions they may earn and any conflicts of interest that could potentially influence their advice.

About 90 percent of investors said that a stockbroker and an investment adviser who provide the same kind of investment advisory services should have to follow the same investor protection rules, based on survey findings.

“Older Americans expect financial professionals to put their client’s interest ahead of their own when giving investment advice, but that’s not a requirement for all professionals today,” said Nancy LeaMond, executive vice president of the AARP, which is an advocacy group for people age 50 and older. “The need for the SEC to be a watchdog for investors is even more urgent.”

Vacation Trips
Thirty-four percent of investors said that financial advice is the primary service offered by stockbrokers, even though their main job is actually to buy and sell stocks. Ninety-three percent said brokers should be required to disclose conflicts in advance, such as cash payments or vacation trips they would receive from a mutual-fund company in exchange for selling its product, compared with 86 percent in similar surveys from 2004 and 2007.

Sixty percent of respondents said they thought insurance agents had to uphold a fiduciary duty, which isn’t true. That compares to 96 percent who said the fiduciary requirement should extend to insurance agents giving investment advice, including selling annuities.

The staunchest opposition to a universal fiduciary standard is coming from insurance agents, according to a review of about 2,700 responses following a request by the SEC for comments on the effectiveness of the current standards. Responses from brokers indicate they are conditionally supportive of a universal fiduciary standard, though not one that is based on the principles outlined in the Investment Advisers Act of 1940.

Survey Methodology
The Securities Industry and Financial Markets Association, Wall Street’s main lobbying group, had been opposed to a fiduciary standard for brokers until last year when the group said it supported a single national rule for brokers and investment advisers.

Total assets managed by brokers registered with the Financial Industry Regulatory Authority and registered investment advisers were $10.37 trillion at the end of 2009, according to Boston-based consultant Cerulli Associates.

The survey was conducted in August among a sample of 2,012 people age 18 and over by Omaha, Nebraska-based Infogroup Inc., a provider of market research. Most of the findings were based on responses from the 1,319 people who identified themselves as investors.

The organizations sponsoring the survey include the CFA, AARP, NASAA, Certified Financial Planner Board of Standards Inc., Investment Adviser Association, Financial Planning Association and National Association of Personal Financial Advisors.

 

[trysail]

The truth of the matter is that the loudmouths, the idiots, the noisemakers, the screamers, the blabbermouths and the professional gossips of the media did far more damage than BP's well. That's a fact.


Remind me never to go in harm's way with those folk. They're not very bright and they panic easily.



_______________________________________________________


http://www.npr.org/templates/story/story.php?storyId=129940305


Scientists Say Worst Hasn't Happened In Gulf
by Elizabeth Shogren
All Things Considered
September 17, 2010


President Obama called the Gulf of Mexico oil spill the "worst environmental disaster America has ever faced." Others made similarly dire predictions: Oil would kill thousands of birds, fish and other wildlife; coastal wetlands would be destroyed; and oil would travel through the loop current up to the Atlantic Ocean.

Copyright © 2010 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, host:

And I'm Melissa Block.

BP says that on tomorrow it will seal off the Macondo Well once and for all. The well ruptured in April, and the explosion killed 11 workers. For nearly three months, millions of barrels of oil gushed into the Gulf of Mexico. Many predicted the spill would devastate the ecology of the Gulf Coast. Here's President Obama in June.

President BARACK OBAMA: Already, this oil spill is the worst environmental disaster America has ever faced.

BLOCK: Now, NPR's Elizabeth Shogren reports that many of those dire predictions simply haven't come true.

ELIZABETH SHOGREN: Three months ago, brown pelicans looked like sitting ducks. Louisiana's state bird was just off the endangered species list, and BP oil was inundating some islands where pelicans were busy incubating eggs or feeding chicks.

As biologists rescued oil-covered birds, they worry that many thousands would die when a much bigger wave of oil came in.

Mr. MICHAEL CARLOSS (Biologist, Louisiana Department of Wildlife and Fisheries): I like to kind of refer it to as almost a demon sitting offshore, you know, lurking some kind of evil nemesis, you know, waiting to come and impact. And that's the scary part.

SHOGREN: That was Louisiana state biologist Michael Carloss in June. Today, he says that demon never came.

Mr. CARLOSS: Based on what I've seen, we definitely dodged a bullet, and it has not been what it could have been by any means.

SHOGREN: Carloss says so far in Louisiana, about 300 dead pelicans have been found. And of the several hundred that were rescued, 86 died. But that's just a tiny fraction of Louisiana's approximately 100,000 birds. And when Carloss goes back to those nursery islands, he sees lots of strong, healthy youngsters.

Mr. CARLOSS: Now, there's all these young birds that are fledging, and they're learning to feed and fly.

SHOGREN: Scientists also were sounding dire warnings about the coastal marshes. This spring, Professor Robert Thomas from Loyola University in New Orleans was predicting that a vast oil slick would devastate them.

Professor ROBERT THOMAS (Scientist, Loyola University New Orleans): And once it coats those wetlands, once it contaminates oyster reefs, once it starts to contaminate the estuaries where 95 percent of the commercial fisheries in the Gulf of Mexico have their nursery grounds, a major calamity is what we're going to have to deal with.

Mr. KERRY ST. PE (Director, Barataria-Terrebonne National Estuary Program): But that didn't happen.

SHOGREN: Kerry St. Pe, a top expert in Louisiana's wetlands, says the biggest reason it didn't was BP's aggressive use of dispersants. Those chemicals that BP sprayed on the well broke up the oil into tiny particles and spread it throughout the water column. That helped keep the oil out at sea.

Mr. ST. PE: We still had oil impacting our internal estuaries but not near as much as could have happened.

SHOGREN: To St. Pe's surprise, he estimates that the level of destruction is about the same as from oil spills that most of the country never heard of. He expects the wetlands will recover within three to five years. He's already seeing bright green shoots emerging from marsh grasses that had been soaked in oil.

Mr. ST. PE: Ecologically, we're going to come back from this. The wetland plants that were impacted are re-sprouting. Those wetlands will remain largely intact.

SHOGREN: The outlook might have been much bleaker if as many people feared a big tropical storm had hit the region. Here's what Billy Nungesser, president of Louisiana's Plaquemines Parish, told CNN.

(Soundbite of archived interview)

Mr. BILLY NUNGESSER (President, Plaquemines Parish): Worst-case scenario is a Katrina-type storm would lift that oil up and blanket all of south Louisiana, not only killing the marsh but contaminating where we're sitting right here -the football field, the high school. I don't know if we'd ever clean it up.

SHOGREN: Small storms did propel some oil into Louisiana's wetlands and onto the beaches of other Gulf states, but the big blanket didn't come. Jane Lubchenco, who heads the National Oceanic and Atmospheric Administration, says even though hurricane season isn't over yet, that risk is gone.

Dr. JANE LUBCHENCO (Marine Ecologist, National Oceanic and Atmospheric Administration): There is so little oil left on the surface that that's just not a worry any more.

SHOGREN: Another fear was that something called the loop current would bring BP oil and its toxic effects into the Atlantic Ocean. But Lubchenco says the loop current was not reaching as far up into the Gulf as it usually does.

Dr. LUBCHENCO: So it just has not acted as a conveyor belt of oil outside the Gulf. We lucked out on that one.

SHOGREN: But the news isn't all good. Lots of BP oil did go to places where young sea turtles feed. Veterinarian Brian Stacy was part of a team that three months ago was snatching hundreds of the severely endangered animals from oily waters.

Dr. BRIAN STACY (Veterinarian): We're worried about the oceanic turtles being out there in it now. And in weeks to months, we'll be worried about hatchlings leaving the beach which essentially go to the same type of habitat and are going to be much smaller turtles and even more sensitive to the effects of oil.

SHOGREN: The government decided to move all of the turtle nests - hundreds of them - out of the Gulf Coast to the Atlantic Ocean. But a few weeks ago, with most of the surface oil gone, the government stopped moving nests. It's now leaving more than half of them along the Gulf Coast.

Even so, turtle expert Blair Witherington says the damage may already have been done, especially to the one- and two-year-old turtles.

Dr. BLAIR WITHERINGTON (Research Scientist, Florida Fish and Wildlife Conservation Commission): It could be that it is equal to or greater than our worst fears.

SHOGREN: Witherington says biologists don't know how many died without anyone seeing them. He says it's one of many unanswerable questions about the damage the spill is causing to the animals and plants that live in the open gulf.

Dr. WITHERINGTON: I mean, it's almost as if the spill occurred on Mars. And it's going to be awfully hard to get to these places and conduct the measurements that we really need to do. It's just going to be darned difficult.

SHOGREN: For example, how do you calculate how many tiny larval fish died after gobbling up drops of oil? Scientists are scrambling to find out what they can before evidence disappears.

While the well was still gushing, researchers, including Samantha Joye from the University of Georgia, discovered plumes of diluted oil and gas that stretched for miles in the deep water of the gulf.

Dr. SAMANTHA JOYE (Marine Sciences, University of Georgia): There is oil there. You can see it. You can smell it. And when you filter the water, it's visible on the filter, so these plumes do exist.

SHOGREN: Joye was back at sea in recent weeks, but she didn't find anywhere near the same concentrations of oil and gas in the deepwater. She did find lots of oil on the sea bottom, along with dead shrimp, worms and plankton.

So, is the BP spill the nation's worst environmental disaster? Worse, say, than the Exxon Valdez spill or the Dust Bowl of the 1930s? NOAA's Lubchenco says it is, even though many of scientists' fears weren't realized.

Dr. LUBCHENCO: You know, this is a major catastrophe, and it has had already devastating impacts.

SHOGREN: The spill pummeled the economy of the coast, as well as its ecology. But it could take years or even decades for experts to total up the damages, and some victims won't ever be counted.

____________________________________________________________

http://www.npr.org/templates/story/story.php?storyId=129953737



BP Close To Final Seal Of Ruptured Oil Well. Yawn.
by Robert Smith
Weekend Edition Saturday
September 18, 2010

It's easy in the news business to know when a big story begins. A plane crashes into a building. A levy crumbles. An explosion destroys a deep-water drilling rig.

But it's often difficult to pick the moment when the story ends. Families grieve for years. Cities rebuild slowly. Lawsuits slog through the courts.

In most big disasters, the effects linger for a long time — but the news cameras don't.

Perhaps that's why this weekend's long-awaited news from the Gulf of Mexico seems so anti-climactic. Today, crews working for BP are expected to permanently seal the well that spilled millions of barrels of oil into the Gulf. To quote Coast Guard Adm. Thad Allen, the crews are finally putting "a stake in the heart of this beast."

Coverage of this news has been underwhelming. Which is odd, because just a couple of months ago the drilling of this relief well was the height of drama. Through all those unsuccessful "top kills" and "junk shots," this was the thing that was going to save the Gulf: the legendary "bottom kill." Crowds would dance in the street. Louisiana shrimpers would embrace oil men on the beaches of Grand Isle.

But now that the momentous day is here, it feels like an afterthought. The well was capped from the top in mid-July. The surface oil dispersed. The beaches were raked mostly clean.

In mid-summer, the national news media packed up the satellite trucks and left the Gulf. And the TV viewers moved on.

Not that the residents of the Gulf Coast have that option. Sludge still lurks on the bottom of the Gulf. The deep-water drilling industry is paralyzed. Shrimpers and oystermen say business still hasn't come back. And the line to get money from BP and the relief fund gets longer every day.

See, the story still has drama. It just doesn't have dramatic pictures. No more grainy underwater video of the that pipe spewing oil. No more birds staring out from under slicked feathers.

The Pew Research Center estimated that for the first hundred days of the disaster, almost a third of television news coverage was devoted to the spill. Last week, stories from the Gulf made up only about 2 percent of the news — even though people told the Pew pollsters that it was still the topic they were most interested in.

Residents of the Gulf Coast still have plenty to worry about, but as of today they do have one less problem. This particular hole won't bother them again. The story of the Macondo well ends as it began: deep under the ocean floor — beyond the reach of news cameras.

___________________________________________________________


The BP Spill: Has the Damage Been Exaggerated?
By Michael Grunwald / Port Fourchon, La. Thursday, Jul. 29, 2010

President Obama has called the BP oil spill "the worst environmental disaster America has ever faced," and so has just about everyone else. Green groups are sounding alarms about the "Catastrophe Along the Gulf Coast," while CBS, Fox and MSNBC slap "Disaster in the Gulf" chryons on all their spill-related news. Even BP fall guy Tony Hayward, after some early happy talk, admitted the spill was an "environmental catastrophe." The obnoxious anti-environmentalist Rush Limbaugh has been a rare voice arguing that the spill — he calls it "the leak" — is anything less than an ecological calamity, scoffing at the avalanche of end-is-nigh eco-hype.

Well, Rush has a point. The Deepwater explosion was an awful tragedy for the 11 workers who died on the rig, and it's no leak; it's the biggest oil spill in U.S. history. It's also inflicting serious economic and psychological damage on coastal communities that depend on tourism, fishing and drilling. But so far — while it's important to acknowledge that the long-term potential danger is simply unknowable for an underwater event that took place just three months ago — it does not seem to be inflicting severe environmental damage. "The impacts have been much, much less than everyone feared," says geochemist Jacqueline Michel, a federal contractor who is coordinating shoreline assessments in Louisiana. (See pictures of the Gulf oil spill.)

Yes, the spill killed birds — but so far, less than 1% of the birds killed by the Exxon Valdez. Yes, we've heard horror stories about oiled dolphins — but, so far, wildlife response teams have collected only three visibly oiled carcasses of any mammals. Yes, the spill prompted harsh restrictions on fishing and shrimping, but so far, the region's fish and shrimp have tested clean, and the restrictions are gradually being lifted. And, yes, scientists have warned that the oil could accelerate the destruction of Louisiana's disintegrating coastal marshes — a real slow-motion ecological calamity — but, so far, shorelines assessment teams have only found about 350 acres of oiled marshes, when Louisiana was already losing about 15,000 acres of wetlands every year.

The disappearance of more than 2,000 square miles of coastal Louisiana over the last century has been a true national tragedy, ravaging a unique wilderness, threatening the bayou way of life and leaving communities like New Orleans extremely vulnerable to hurricanes from the Gulf. And while much of the erosion has been caused by the re-engineering of the Mississippi River — which no longer deposits much sediment at the bottom of its Delta — quite a bit has been caused by the oil and gas industry, which gouged 8,000 miles of canals and pipelines through coastal wetlands. But the spill isn't making that problem much worse. Coastal scientist Paul Kemp, a former Louisiana State University professor who is now a National Audubon Society vice president, compares the impact of the spill on the vanishing marshes to "a sunburn on a cancer patient." (See TIME's graphic "100 Days of the BP Spill.")

Marine scientist Ivor Van Heerden, another former LSU prof who's working for a spill response contractor, says "there's just no data to suggest this is an environmental disaster. I have no interest in making BP look good — I think they lied about the size of the spill — but we're not seeing catastrophic impacts," says Van Heerden, who, like just about everyone else working in the Gulf these days, is being paid out of BP's spill response funds. "There's a lot of hype, but no evidence to justify it."

The scientists I spoke with cite four basic reasons the initial eco-fears seem overblown. First, the Deepwater Horizon oil, unlike the black glop from the Valdez, is comparatively light and degradable, which is why the slick in the Gulf is dissolving surprisingly rapidly now that the gusher has been capped. Second, the Gulf of Mexico, unlike Prince William Sound, is balmy at more than 85 degrees, which also helps bacteria break down oil. Third, heavy flows of Mississippi River water helped keep the oil away from the coast, where it can do much more damage. Finally, Mother Nature can be incredibly resilient. Van Heerden's assessment team showed me around Casse-tete Island in Timbalier Bay, where new shoots of spartina grasses were sprouting in oiled marshes, and new leaves were growing on the first black mangroves I had ever seen that were actually black. "It comes back fast, doesn't it?" Van Heerden said. (See 12 people to blame for the Gulf oil spill.)

Van Heerden is controversial in Louisiana, so I should mention that this isn't the first time he and Kemp helped persuade me the conventional wisdom about a big story was wrong. Shortly after Hurricane Katrina, when the Army Corps of Engineers was still insisting that a gigantic surge had overwhelmed its levees, they gave me a tour that debunked the prevailing narrative, demonstrating that most of the breached floodwalls showed no signs of overtopping. Eventually, the Corps admitted that they were right, that the surge in New Orleans was not so gigantic, that engineering failures had drowned the city. But there was still a lot of resentment down here of Van Heerden and his big mouth, especially after he wrote an I-told-you-so book about Katrina. He made powerful enemies at LSU, lost his faculty job, and is now suing the university. Meanwhile, he's been trashed locally as a BP shill ever since he downplayed the spill in a video on BP's website.

Read more here: http://www.time.com/time/nation/article/0,8599,2007202,00.html#ixzz0v4ue1TEk

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=arHqkG_Z6c8o


Swedes Start Voting as Reinfeldt Set for Second Term
By Johan Carlstrom

Sept. 19 (Bloomberg) -- Swedes began voting today in elections that polls show will give Prime Minister Fredrik Reinfeldt’s tax-cutting government a second term in office after he presided over the European Union’s biggest economic rebound.

The ruling four-party bloc has led in all seven polls conducted in August and September by Stockholm-based Sifo, gaining 50 percent support or more in four of those polls. Its lead over the three-party Social Democrat-led opposition has ranged from 3.3 percentage points in an Aug. 8 poll to 9.7 percentage points in a Sept. 12 poll, with a 3.3 percentage point margin of error. Swedes started casting their ballots at 8 a.m. local time. Polling stations close at 8 p.m.

“The election campaign has centered around taxes and the economy and those are the government’s strong issues,” said Soeren Holmberg, a political science professor at Gothenburg University. “White-collar workers, primarily from the big cities, have deserted the opposition for the government.”

Reinfeldt, 45, has steered the largest Nordic economy through its worst recession since World War II, protected the welfare state, cut taxes and run the narrowest budget deficit in the EU. The main opposition party, the Social Democrats, may post its worst result in decades after failing to convince voters it is the sole guardian of the welfare state.

It is a “fateful” election, Reinfeldt said today in an interview with Sveriges Television. “A large share of voters don’t make up their minds until election day.”

Worst Performance
Most polls show the Social Democrats, led by Mona Sahlin, performing worse than in the 2006 election that led to their departure from government. That had been their poorest election result in more than 80 years.

The government, which pushed through 70 billion kronor ($10 billion) in income-tax cuts in its first term, plans to cut taxes on incomes and pensions by a further 25 billion kronor by 2015. The last four years of tax cuts for wage earners were equivalent to 2.3 percent of gross domestic product.

Reinfeldt’s coalition has also lowered payroll taxes, and cut the corporate tax rate to 26.3 percent from 28 percent, as well as abolishing the wealth tax -- a levy on net assets above a certain value. The government says its jobless benefit cuts succeeded in getting more people into the workforce, a claim backed up by labor statistics.

Unemployment dropped to 7.4 percent last month, 0.4 point lower than economists surveyed by Bloomberg had estimated. The rate was 8 percent in July and has receded from a peak of 9.8 percent in June last year.

Policies for Jobs
“We have the policies for jobs, we have taken good care of Sweden during the financial crisis, we have the policies to keep the economy together,” Reinfeldt told reporters at a Stockholm rally yesterday.

Employment has risen by 133,000 since the government came to power in 2006. The economy will expand 4.5 percent this year, the best performance in the 27-member EU, recouping most of last year’s 5.1 percent decline, according to the government.

The opposition bloc wants to re-introduce the wealth tax, raise income, payroll and gasoline taxes -- measures it says are needed to finance more generous welfare, unemployment and sickness benefits.

“To make those of us with high incomes pay more taxes is an important message and an ideologically important question,” Sahlin said at a Sept. 15 rally. Her party has ruled Sweden for 61 of the last 74 years mainly as a minority government. “Lower taxes for high income earners have not produced more jobs, but only contributed to a bigger divide.”

Anti-Immigration
Polls also show the anti-immigration Swedish Democrats may get into parliament for the first time since they were formed in 1988. The party is trying to cast itself as kingmaker, though both of the major blocs have ruled out any collaboration. Reinfeldt has said he may turn to the Green Party, currently part of the Social Democrat’s alliance, for support if his side wins a minority.

Support for the Swedish Democrats rose by 0.2 percentage point to 4.3 percent -- more than the 4 percent threshold to gain seats in parliament -- in a poll by Novus Opinion, based in Stockholm, presented on broadcaster TV4 on Sept. 16.

The government extended its lead over the opposition in the Novus poll to 8.9 percentage points with a 51.2 percent majority. Backing for the Social Democrats fell by 0.9 percentage point to 28.1 percent, which would be its worst result in a century.

The country’s budget law will probably prevent the Swedish Democrats from blocking the passage of fiscal legislation because a budget can only be obstructed if a parliamentary majority puts forward an alternative proposal.

Still, Sweden will pay a “high price” if neither of the blocs in parliament wins a majority, Reinfeldt said in an Aug. 30 interview. “It would be more difficult to govern Sweden and harder to take responsibility in a crisis.”

At yesterday’s rally, Reinfeldt urged voters to back “the alternative that’s closest to getting a majority and that’s the government.”

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aOC0M7zl7HBg


Munger Says Costco Beats Charity
By Andrew Frye

Sept. 17 (Bloomberg) -- Charles Munger, the business partner of billionaire philanthropist Warren Buffett, said private investment may advance society more than charity.

“I believe Costco does more for civilization than the Rockefeller Foundation,” Munger, 86, told students in a discussion at the University of Michigan on Sept. 14, according to a video posted on the Internet. “I think it’s a better place. You get a bunch of very intelligent people sitting around trying to do good, I immediately get kind of suspicious and squirm in my seat.”

Munger is a director at Costco Wholesale Corp., the largest U.S. warehouse-club chain, and has served as vice chairman of Buffett’s Berkshire Hathaway Inc. for more than three decades. Munger’s stake in Omaha, Nebraska-based Berkshire’s Class A shares is valued at more than $1.6 billion.

Buffett, the world’s third-richest person, has committed more than 99 percent of his wealth to charity and in June publicly challenged billionaires to give away half their fortunes. The Rockefeller Foundation, founded in 1913, supports agriculture in Africa, flood-protection in New Orleans and universal health initiatives, according to its website.

Charitable donations by Munger have aided California institutions including Stanford University, the Harvard-Westlake School and the Huntington Library. He is chairman of Good Samaritan Hospital of Los Angeles and gave $3 million to the University of Michigan’s law school to improve lighting.

In the discussion at Michigan’s Stephen M. Ross School of Business, Munger criticized the World Bank, the international lending institution that focuses on fighting poverty.

‘Folly and Stupidity’
“I’ve seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank,” Munger said. “I really have more confidence in building up the more capitalistic ventures like Costco.” A spokesman for the World Bank declined to comment. Costco’s Bob Nelson didn’t immediately return a call.

Costco shoppers pay an annual fee for discounts on groceries and other basics, as well as on pricier goods such as designer handbags and home furnishings. The Issaquah, Washington-based company has reported three straight profit increases, including net income of $306 million in the fiscal third quarter. The company has more than 140,000 employees, including part-time staff, according to its annual report.

Munger has previously touted charitable giving. In “Poor Charlie’s Almanack,” a collection of Munger’s speeches and remarks, the investor urges successful capitalists to make donations. Munger gave about $2.4 million in Berkshire stock to charities on Dec. 18.

‘Duty to Give Back’
“Those of us who have been very fortunate have a duty to give back,” Munger is quoted as saying in the almanac. “Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference.”

Buffett, 80, is depleting his fortune, estimated by Forbes Magazine in March at $47 billion, through donations. He has pledged the bulk of his wealth to the Bill & Melinda Gates Foundation and makes annual gifts to charities seeking to ease hunger, boost education in the U.S. and promote access to abortions. He joined with Bill Gates, the Microsoft Corp. co- founder, to start the Giving Pledge initiative to elicit greater gifts from billionaires.

The Gates Foundation has worked with the Rockefeller Foundation to increase the productivity of small farms in Africa. A spokeswoman for the Rockefeller Foundation had no immediate comment.

Buffett didn’t respond to a request for comment e-mailed to an assistant. Jason Maier, a spokesman for the Giving Pledge, didn’t return a call. Munger, through an assistant, declined to be interviewed. A spokesman for the University of Michigan confirmed Munger’s appearance this week.

 

[trysail]

We've got some serious dumbfucks here ( meaning, of course, the Greenpeace dolts ).



Greenpeace says it is aboard oil ship off UK coast
Greenpeace says it is occupying Chevron-operated drill ship off Britain's Shetland Islands
Tuesday September 21, 2010

LONDON (AP) -- Greenpeace says its activists have climbed aboard a Chevron-operated ship to keep it from starting drilling operations in the deep waters off Britain's Shetland Islands.

The environmental group says two of its activists used boats to reach the 228-meter (249-yard) Stena Carron drill ship and had attached themselves to the ship's chain. Greenpeace said Tuesday that the ship had been on its way to the Lagavulin oil field, where it was scheduled to begin exploratory drilling.

Greenpeace has just made an expedition to the Arctic where activists climbed aboard a rig operated by Scotland-based Cairn Energy.

A person who picked up the phone at Chevron Corp.'s U.K. headquarters said there was no one there who could answer journalists' questions.


http://finance.yahoo.com/news/Greenpeace-says-it-is-aboard-apf-820707797.html?x=0&.v=1

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aP6dS6xDHSrg


Novartis Wins U.S. Approval for First Multiple Sclerosis Pill
By Eva von Schaper

Sept. 22 (Bloomberg) -- Novartis AG won U.S. regulatory approval to sell its multiple sclerosis medicine Gilenya, beating Merck KGaA in a race to market the first pill to slow the crippling disease.

The Food and Drug Administration cleared the treatment for use against relapsing forms of multiple sclerosis, the Basel, Switzerland-based company said in a statement. A doctor will have to watch patients for six hours after their first dose of Gilenya, Novartis said. Regulators also recommend checking patients’ blood and eyes before treatment, a demand less restrictive than expected, said Karl-Heinz Koch, an analyst at Helvea SA in Zurich.

“We were like ‘Wow,’” Koch said in a telephone interview. “This is a very good outcome for Novartis. They’ll really be able to stir up the MS market.” Koch said he now believes Gilenya can achieve double his estimate of $1.4 billion in peak annual sales.

Regulators said doctors can prescribe the drug as the first treatment for MS patients, making it competitive with standard drugs such as Biogen Idec Inc.’s Avonex, Merck’s Rebif and Teva Pharmaceutical Industries Ltd.’s Copaxone. The drug “certainly has multibillion potential,” Trevor Mundel, Novartis’s head of drug development said in a telephone interview today.

Current Therapies
Multiple sclerosis affects 2.5 million people worldwide, many of whom have trouble sticking with current therapies because they’re difficult to use or have side effects, according to the National Multiple Sclerosis Society, a New York-based patient group.

Novartis fell 45 centimes, or 0.8 percent, to 56 Swiss francs at 2:15 p.m. in Zurich trading. Merck fell 1.78 euros, or 2.5 percent, to 70.45 euros in Frankfurt, the biggest drop since July 16.

Novartis changed the spelling of the pill’s name to Gilenya from Gilenia during the FDA’s review.

The review, initially set for six months, was delayed by three months when Novartis said May 25 that the FDA requested additional analysis of current data. Rival medicine Cladribine, from Darmstadt, Germany-based Merck, won a priority review in July, reducing to six months from 10 the time it will take the FDA to decide on approval, after the agency rejected an earlier application in November. Merck expects a decision on cladribine in the fourth quarter.

Novartis expects European regulators to decide on Gilenya’s approval within six months. The European approval is “on track”, Mundel said.

Immune System Attack
Multiple sclerosis causes the body to attack nerve cells through the immune system. Gilenya, known by the chemical name fingolimod, and cladribine blunt the attack by targeting white blood cells that harm the protective coating of nerve cells. Gilenya keeps lymphocytes, a type of white blood cell, from being released into the immune system, while cladribine works by killing lymphocytes.

Cladribine was cleared more than a decade ago to fight leukemia and has been approved as an MS treatment in Russia and Australia. Gilenya won approval in Russia on Sept. 10.

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601103&sid=aGTBNxe.hqgQ


S&P 500 Pensions Most Underfunded Since ’99, Credit Suisse Says
By Lu Wang

Sept. 23 (Bloomberg) -- U.S. corporate pensions face their biggest funding shortfalls since at least 1999, forcing companies to use profits and cash stockpiles to pay retirees instead of investing in their businesses, according to Credit Suisse Group AG.

Defined-benefit pension plans at companies in the Standard & Poor’s 500 Index are probably 75 percent funded, below the previous trough of 78 percent in 2008, leaving a total $402 billion in shortfalls, analysts David Zion and Amit Varshney estimated. Pension costs may keep rising next year, threatening earnings at 265 companies including Boeing Co., they said.

“Earnings estimates may have to come down,” the analysts wrote in a note dated Sept. 21. “Unless we see a spike in yields on high-grade bonds or a stock-market rally in the fourth quarter, it looks like the health of most pension plans will deteriorate this year,” and “pension contributions could become more of an ongoing drain on cash which may not be reflected in the market’s expectations.”

Corporate pensions have suffered after the S&P 500 posted its first negative total return over any decade and the Federal Reserve cut its benchmark interest rate to a record low in December 2008.

S&P 500 companies’ pension funding levels may have dropped $134 billion this year as bets on higher interest rates went awry and the stock market weakened, the analysts said. The benchmark for U.S. equities is up 1.7 percent this year while the yield on the two-year Treasury note touched a record low. The S&P 500 posted an average decrease of 0.9 percent a year from 1999 to 2009, including dividends, the first negative return for a decade since data began in 1927, according to S&P analyst Howard Silverblatt.

Pension Obligations
Pension costs for S&P 500 companies will increase to $53 billion in 2011 from $40 billion this year, Zion and Varshney forecast. As a result, 95 companies could have their earnings cut by at least 5 cents a share next year, assuming a 35 percent tax rate. Boeing, the world’s second-biggest commercial-jet builder, may see a reduction of 12 percent, or 57 cents a share, from the average analyst estimate, Credit Suisse said.

Other S&P 500 companies where 2011 earnings could fall more than 10 percent from analyst estimates because of pension obligations, according to Credit Suisse’s projections, are Vulcan Materials Co., Marsh & McLennan Cos., New York Times Co., Northeast Utilities, Honeywell International Inc. and Deere & Co.

“Higher pension costs could be one reason why 2011 earnings estimates may have to come down and we would expect some companies to start taking down their 2011 guidance when they announce third-quarter earnings,” the analysts wrote.

 

[trysail]

This is inexcusable shit ( see below ). This toxic crap should not be anywhere near the general public.

Part of the responsibility for this kind of stuff lies with the Federal Reserve whose low interest rate policy has made retirees abandon caution in their desparation for "income" ( the garbage below isn't income but only the chimera of it manufactured by prestidigitators and swindlers ).

RULE #1:
If you don't understand it, don't do it.
K.I.S.S.

RULE #2:
Never trust stockbrokers; they are salespeople.



http://noir.bloomberg.com/apps/news?pid=20601208&sid=a5gBz62peRVc


Retirees Duped by Derivatives With Structured Notes Sale Surge
By Zeke Faux

Sept. 23 (Bloomberg) -- Leona Miller, an 84-year-old retired beautician, says she was seeking safe and steady income from bonds two years ago when her Wachovia Corp. broker recommended she buy securities paying 9 percent interest.

Within six months, Miller had lost about 30 percent of her $20,000 investment and the bonds were converted into shares of Merck & Co. in a falling stock market. The San Diego resident, who still doesn’t understand what happened to her money, had purchased bonds known as structured notes that include built-in derivatives.

Sales to Miller and thousands of other individuals have driven structured note offerings up 58 percent to $31.9 billion through August, according to data compiled by Bloomberg. With U.S. interest rates near zero percent, investors are snapping up bonds such as reverse-convertible notes with knock-in put options or Leveraged CMS Curve and S&P 500 Index Linked Callable Notes, some with face values of as little as $10.

“People develop a product which makes a modicum of sense, then they extend it to the point of ludicrousness until it blows up,” said Satyajit Das, a former Citigroup Inc. derivatives banker. Das, the Sydney-based author of “Traders, Guns & Money” (FT Press, 2006), said investors are often “seduced” into purchases without understanding the risks.

The Securities and Exchange Commission’s enforcement division started a group this year focused on investigations into structured products, including those marketed to individual investors.

Hard to Understand
“We’re concerned about the sale of complex structured notes to retail customers because people don’t always understand the risks they’re exposed to,” said Kenneth Lench, head of the SEC’s Structured and New Products unit. “It’s very difficult for a person who isn’t immersed in this world to pick up a prospectus and really understand what are the different scenarios that would make an investment work out for them.”

Miller and Wells Fargo & Co., which acquired Wachovia in 2008, are in arbitration, according to her San Diego lawyer, Ronald Marron. In a February 2009 letter, the bank’s legal department told Miller that the broker “explained very thoroughly his recommendation.”

Individual investors are incapable of valuing structured notes and their underlying derivatives, said Kevin Kelly, manager of Phoenix-based hedge fund Tontine Capital, which specializes in the securities. Derivatives are contracts whose value is derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates.

‘You Don’t Know’
“If you don’t know what the components are worth, what are you doing trading in them?” said Kelly, who determines values based on computer models and negotiations with multiple banks.

Sales of structured notes in the first eight months of the year compare with $20.1 billion through August 2009, according to database StructuredRetailProducts.com. The growth shows investors are already forgetting the losses suffered when Lehman Brothers Holdings Inc. went bankrupt in September 2008 and defaulted on securities called principal-protected notes, which left investors holding paper that’s almost worthless.

U.S. clients of Zurich-based UBS AG, Switzerland’s biggest bank, allege in litigation pending since 2008 that they were misled into buying more than $900 million of the securities, which were aimed at “conservative, retirement-oriented investors.”

CMS Curve
Structured notes have become popular as the Federal Reserve has kept its target rate for overnight loans between banks at zero to 0.25 percent since December 2008. Reverse-convertible notes paid 13 percent interest on average this year, Bloomberg data show. That’s more than 10 times the average 1.2 percent rate on one-year certificates of deposit, according to Bankrate Inc. of North Palm Beach, Florida. U.S. investment-grade bonds yield 3.73 percent, Bank of America Merrill Lynch index data show.

The notes are increasingly targeted at individual investors to boost banks’ profit margins, Das said. Morgan Stanley charged a 3.5 percent fee on the CMS Curve notes, which it sold Aug. 20, according to a prospectus. Underwriting commissions for U.S. investment-grade bonds this year average 0.5 percent, Bloomberg data show.

Brokers are paid more to sell structured notes than some other financial products because the securities aren’t standardized, making it difficult for buyers to shop around, said Christopher Whalen, managing director and co-founder of the Torrance, California-based research firm Institutional Risk Analytics.

Racetrack Bets
JPMorgan Chase & Co. sold $223,000 of three-month reverse convertible notes on Aug. 26 that pay 12.3 percent annualized interest and are tied to the stock of Pittsburgh-based U.S. Steel Corp. Buyers were charged a fee of 5.1 percent, more than half of which compensated other brokers, the prospectus shows. The fee is five times the annual rate on stock mutual funds, according to the Investment Company Institute, a Washington- based trade group.

Justin Perras, a JPMorgan spokesman in New York, declined to comment.

“The whole marketplace is set up to be unfair and inefficient by design,” said Whalen. “It’s like betting with the touts out on the edge of the racetrack instead of going to the window in the clubhouse.”

Compensated for Risk
Banks from Bank of America Corp. to Morgan Stanley, this year’s two largest underwriters of structured notes as measured by Bloomberg data, create the products by bundling bonds with privately negotiated over-the-counter derivatives. That means investors can lose money because of a range of variables beyond interest rate movements, said Whalen, who predicted in March 2007 the mortgage-backed securities market would collapse and testified before the Senate Banking Committee two years later on derivatives regulation.

Investors can benefit from higher returns, such as the 12.3 percent on U.S. Steel reverse convertibles, if their bets work out. Buyers are compensated fairly for the risk they take on and don’t need to know how derivatives work to evaluate the securities, said Keith Styrcula, chairman of the Structured Products Association, a trade group in New York.

Issuers disclose potential pitfalls of the investments in documentation provided to buyers. Many of the products, such as principal-protected notes, are less risky than stocks because sellers guarantee investors won’t take losses even if the market falls, said Styrcula, a former JPMorgan structured-notes banker.

“There’s a reason the market is booming,” he said. “Investors are having successful experiences with structured investments, and they’re coming back as repeat buyers.”

Bundling Rule
Wall Street began selling the notes to individuals in the 1990s. At the time, government officials questioned whether the securities should be subject to the same rules as the derivatives they contain, which would have barred sales to the public, according to Philip McBride Johnson, a former Commodity Futures Trading Commission chairman. The passage of the Commodity Futures Modernization Act in 2000 settled the issue in the banks’ favor.

The law, which excluded most trades between institutions from oversight, allowed banks to sell OTC derivatives to individuals as long as they were bundled with bonds into so- called hybrid securities, said Johnson, now a lawyer at Skadden, Arps, Slate, Meagher & Flom LLP in Washington.

In the Lehman case, the notes were designed to pay interest dependent on market movements, with principal returned at maturity as long as the issuer didn’t fail.

“UBS properly sold Lehman structured products to UBS clients,” said Allison Chin-Leong, a bank spokeswoman. “Any client losses were the direct result of the unexpected and unprecedented failure of Lehman.”

‘Rotten Deal’
In April, New York-based Citigroup offered to buy Lehman notes back from more than 2,700 investors in Spain for 55 cents on the dollar, without admitting liability.

In Hong Kong, Lehman bond investors staged protests with bullhorns blaring a looped chant, “Rotten Deal -- Money Back.” Buyers included the elderly and poorly educated, according to a Hong Kong Monetary Authority investigation. Last year, banks agreed to pay investors at least 60 cents on the dollar in compensation.

Banks aren’t required to make markets for structured notes, just as they didn’t have to buy auction-rate securities, Whalen said. That $330 billion market collapsed in early 2008, leaving investors who sought higher-yielding alternatives to checking accounts with paper they couldn’t sell.

Seeking to settle with state and federal regulators, banks including Citigroup have since repurchased some of the securities, which are municipal bonds, corporate debt and preferred stock whose rates of return are periodically reset through auctions.

‘More Can Be Less’
“If you’re dealing with an unsophisticated person, and you’re selling them a very sophisticated product, how do you satisfy your regulatory obligations?” said Harvey Pitt, a former SEC chairman.

Risks should be disclosed clearly and concisely, he said. “More can be less” because long documents may confuse investors, said Pitt, founder of Washington-based consulting firm Kalorama Partners LLC.

Miller started managing her finances when her husband died and invested in structured notes in May 2008 at the recommendation of her broker, Robert Baldacci.

‘Like Anybody Else’
“I just wanted him to make some money for me, like anybody else,” Miller said. “You depend on them to take care of you. I assumed that bonds were safe.”

Miller lost money because the securities, issued by Eksportfinans ASA, an Oslo-based export-credit agency, were tied to the performance of Merck. A decline in the Whitehouse Station, New Jersey-based company’s share price to below $32 from $40 triggered the knock-in put option built into the note, allowing Eksportfinans to pay the debt with Merck shares worth $26 each.

Wachovia denied Miller’s request for compensation, according to the letter from the legal department, which also said Miller signed the prospectus and received a guide to structured notes.

“Mr. Baldacci recalled that you were familiar with Merck & Co. as they manufacture one of your medications,” Wachovia said in the letter, which was provided by Marron, Miller’s lawyer.

Last week, Miller chose to pursue the arbitration claim and withdrew a separate lawsuit against Wells Fargo and Eksportfinans that was filed in July, Marron said.

‘Suitability’ Questions
Kathryn Ellis, a spokeswoman for San Francisco-based Wells Fargo, and Baldacci, who no longer works for the bank, declined to comment. Jens Feiring, Eksportfinans’s general counsel, said he’s pleased Miller chose not to pursue legal action against the firm.

Most structured notes are more complex than the products Miller bought, Tontine Capital’s Kelly said. Morgan Stanley’s CMS Curve securities offer a fixed 10 percent rate for two years. The yield for the next 13 years is five times the difference between long-and short-term constant maturity swap rates, not to exceed 18 percent annually, earned when the Standard & Poor’s 500 Index doesn’t dip below 875, according to a regulatory filing.

If stocks plunge or short-term rates rise, the notes could pay no interest for more than a decade. Morgan Stanley also has quarterly options to unwind the transaction starting in 2012.

“It raises questions about suitability for the investor when you have products that are that complicated,” said Daniel Bergstresser, a Harvard Business School professor who’s studied structured notes. “Is that complexity a response to a legitimate desire the investor has or is it a smokescreen?”

The ‘D’ Word
Mark Lake, a spokesman for New York-based Morgan Stanley, declined to comment on the CMS Curve notes or sales practices. Bank of America, whose Merrill Lynch unit has the second-most brokers after Morgan Stanley Smith Barney, has underwritten $8 billion of structured notes in the U.S. this year, the most of any bank, Bloomberg data show. Morgan Stanley has sold $7.6 billion, the second most.

John Klock, 66, bought about $200,000 of structured notes starting in late 2007. He said he wouldn’t have made the purchase had his Merrill Lynch broker mentioned derivatives.

“He told me it was an index of stocks,” said Klock, a Newark, New Jersey-based lawyer. He said he’s waiting for a statement from his broker totaling the losses when he sold the notes back to Bank of America, which bought Merrill in 2009.

Selena Morris, a spokeswoman for Charlotte, North Carolina- based Bank of America, declined to comment.

“They don’t tend to mention the ‘D’ word very often,” Das, the author, said of the banks. “One of the reasons these products exist is to avoid having to tell the person that you’re dealing with that they’re trading in derivatives.”

 

[trysail]

It was as predictable as sunrise. They all got "Yale-envy." Cambridge Associates and the rest of consultant-world sprinkled holy water on it and gave it their imprimatur. They all said, "Me, too" and they all piled in at the same time. Result: they all lost their shirts.
___________________________________


http://noir.bloomberg.com/apps/news?...d=a3DonigD0wtI


Amherst-to-Yale Funding Need Follows Harvard’s Crisis Over Cash
By Michael McDonald

Sept. 23 (Bloomberg) -- Harvard University, Yale University and Stanford University, with combined endowments about equal to the gross domestic product of Lithuania, are among 15 of the wealthiest colleges and universities that borrowed $7.2 billion because their highbrow investing left them suddenly strapped for cash.

The unprecedented borrowing took place as the universities eliminated at least 2,000 jobs, froze faculty salaries and scaled back expansion plans. The taxable bonds are also straining their operating budgets, currently costing the 15 institutions about $360 million a year in interest, according to data compiled by Bloomberg.

The loans and interest are the continuing price the colleges are paying for embracing the endowment investing model pioneered by Yale’s David Swensen. The approach produced market-beating profits by loading up on real estate, private equity and hedge funds. During the worst collapse of credit since the Great Depression, the reliance on hard-to-sell assets left them short on cash both to meet investment commitments and run their campuses.

“They thought they were terribly clever and they took those risks and now they are paying for them,” said Andrew Hacker, professor emeritus of political science at the City University of New York’s Queens College, and co-author of “Higher Education?: How Colleges Are Wasting Our Money and Failing Our Kids -- and What We Can Do About It” (Times Books, 2010).

Taxable Bonds
At least 15 private nonprofit colleges and universities sold bonds to raise cash after the credit collapse, including six of eight schools in the Ivy League -- a group of selective institutions in the northeast U.S. -- according to reports from Moody’s Investors Service. Most of the securities mature in 2019.

The 15 colleges have never sold so much in taxable, long- term bonds before, according to John Nelson, head of Moody’s higher education group. The borrowing from December 2008 to November 2009 left the schools with 25 percent more debt on their books, Moody’s reports show. Overall, indebtedness of the 287 private, nonprofit universities tracked by the New York ratings company rose to a record $75.4 billion in 2009, almost doubling in five years, Nelson said.

The bonds were taxable, rather than tax-exempt, which carry lower interest rates. That’s because much of the proceeds were used as working capital to pay for operations and bolster reserves to guard against another panic, according to bond documents, rating reports and interviews with school finance officials. Some colleges also refinanced taxable commercial paper, which matures within a year.

Harvard’s Dilemma
Harvard, with $36.6 billion in its endowment at the end of fiscal 2008 -- more than any other institution of higher education in the world -- was forced to sell $1.5 billion of taxable bonds in December 2008, three months after Lehman Brothers Holdings Inc. went bankrupt, in the depths of the recession, and is paying $87.5 million a year in interest, according to data compiled by Bloomberg. The Cambridge, Massachusetts-based institution raised more than $800 million of working capital after it retired some debt and paid to end interest-rate swaps, according to its annual report and bond documents.

No Omelets
The university, which suffered the biggest drop in the year ended June 30, 2009, as its endowment fell 30 percent to $25.7 billion, removed hot breakfasts from weekday dormitory menus, reduced shuttle bus service between campuses, offered retirement incentives to staff and cut capital spending by 50 percent, including shelving an expansion in neighboring Allston, to help close budget gaps. John Longbrake, a Harvard spokesman, declined to comment.

Yale, whose endowment fell 29 percent to $16.3 billion in fiscal 2009, borrowed $1 billion in November at a cost of $29 million a year, according to data compiled by Bloomberg. The university, which cut $350 million from its annual budget by postponing $2 billion in construction, eliminating at least 600 jobs and reducing the number of new graduate students, used the money to add about “$190 million of additional working capital liquidity,” and pare existing debt, according to bond documents.

Steepest Losses
Tom Conroy, a Yale spokesman, and Swensen, the university’s endowment chief, declined to comment.

Universities with the biggest endowments faced the most severe cash crises because, in addition to suffering the steepest losses, they were the most dependent on investment earnings to finance their operating budgets, said William Jarvis, head of research at the Commonfund Institute, a division of the Wilton, Connecticut-based money manager Commonfund. Borrowing to raise cash was cheaper than selling assets tumbling in value and easier than making even deeper spending cuts, he said.

Harvard last year spent $1.44 billion out of its endowment to subsidize operations, or 37.6 percent of its total budget. Yale in fiscal 2009 spent $1.15 billion of its endowment, accounting for about 45 percent of its budget, according to Yale’s website.

“Normally when you have a calamitous event the worst impacts are on the weakest organizations,” Nelson of Moody’s said. “In this case, you had the strongest universities have the most-severe impacts because they were the dependent on investment income for a higher share of their operating budgets.”

Highest Rate
Top-rated Harvard borrowed at the highest rate for the 15 schools, selling 30-year bonds as credit markets collapsed that paid a coupon of 6.5 percent, 3.37 percentage points more the comparable Treasuries. Yale, which is also rated AAA, paid the lowest, selling $1 billion of 5-year bonds almost a year later at an annual rate of 2.9 percent.

Borrowing money was cheaper than the alternative, which was selling “the really good parts of the private equity portfolio,” said Tallman Trask, the chief executive officer of Duke University. The school in Durham, North Carolina, sold $500 million at rates as high as 5.15 percent in January 2009.

The endowment losses marked a reversal after the universities with the largest endowments produced the biggest gains for more than a decade by shifting investments away from public stocks and bonds into an ever-growing share of alternative assets. The strategy was popularized by Yale’s Swensen, who altered the university’s endowment approach after he was hired in 1985. Yale had the best-performing university endowment in the decade preceding the recession, growing at an annual average rate of 16.3 percent through June 30, 2008.

Plummeting Returns
Colleges were so confident of ever-increasing returns that they directed their cash on hand into the endowments to make more money, further fueling the crisis as returns plummeted. Harvard lost $1.8 billion of the $6.5 billion in its general operating account in the year ended June 30, 2009, because most of the cash was invested in the endowment.

“The entire structure was based on this idea that liquidity was free,” said Commonfund’s Jarvis.

As schools manage their money more conservatively to preserve cash, they will be unable to reproduce the returns they earned before the credit markets seized up, said Ronald Salluzzo, a college finance consultant at Attain, LLC, in Vienna, Virginia.

Harvard said on Sept. 9 its investments rose 11 percent to $27.4 billion in the year ended June 30, trailing the 13 percent average earned by a broad group of institutions compiled by Wilshire Associates.

Princeton, Stanford
Princeton University borrowed $1 billion in January 2009 at a rate as high as 5.7 percent to fund operating expenses and expects to spend all the money by the end of this year, according Emily Aronson, a spokeswoman. She declined to elaborate. The school, in Princeton, New Jersey, last year postponed $695 million in construction projects as it sought to close a budget gap.

Stanford University, near Palo Alto, California, the third- wealthiest university in the U.S., borrowed $1 billion in April 2009 as its endowment headed to a 27 percent drop. As the crisis lifted, it placed $800 million of the proceeds into money- market-like accounts, which provide ready access while earning next to nothing. It’s paying $36 million a year in interest for the money.

The average money-market fund paid an annualized yield of 0.1 percent as of Sept. 15, according to Crane Data LLC, a money-fund research company in Westborough, Massachusetts.

“At that point we didn’t know if things would get a lot worse,” said Randy Livingston, Stanford’s chief financial officer. “It gives us a great sense of security particularly given the dramatic continued volatility in the market.”

Stanford’s Cutbacks
Stanford dismissed 412, or 3.2 percent, of its non-faculty workers last year, froze about 50 faculty searches, postponed $1.1 billion in construction projects and closed its physics library.

The other universities and colleges that sold taxable bonds at the height of the credit crisis were: Brown University in Providence, Rhode Island; Amherst College in Amherst, Massachusetts; Vanderbilt University in Nashville, Tennessee; Johns Hopkins University in Baltimore; Emory University in Atlanta; Cornell University in Ithaca, New York; the University of Notre Dame in South Bend, Indiana; Pepperdine University in Malibu, California; George Washington University in Washington and Dartmouth College in Hanover, New Hampshire, according to Moody’s. Many of the institutions said in bond documents and annual reports they used the proceeds for working capital without disclosing details.

Notre Dame
“We felt like we’re going to be OK but it doesn’t hurt to have liquidity right now,” said John A. Sejdinaj, vice president for finance at the University of Notre Dame in South Bend, Indiana.

Notre Dame put $150 million it borrowed in January 2009 into an existing pool of working capital where the balance is invested in money-market funds, Sejdinaj said. The university, is paying about $6 million a year in interest because it felt it needed an additional source of liquidity beyond lines of credit and commercial paper, Sejdinaj said.

“We just decided in that environment we should have a little extra,” Sejdinaj said.



The following are schools that sold taxable bonds for working
capital and the amount borrowed:
Harvard University $1.5 billion
Yale University $1 billion
Stanford University $1 billion
Princeton University $1 billion
Cornell University $500 million
Duke University $500 million
Johns Hopkins University $400 million
Dartmouth College $250 million
Vanderbilt University $250 million
Emory University $250 million
George Washington University $200 million
University of Notre Dame $150 million
Amherst College $100 million
Brown University $100 million
Pepperdine University $50 million

 

[trysail]

http://www.nytimes.com/2010/09/24/business/24jelinek.html?partner=yahoofinance


Frederick Jelinek, Who Gave Machines the Key to Human Speech, Dies at 77
By STEVE LOHR
September 24, 2010

Frederick Jelinek, who survived the Nazi occupation of Czechoslovakia to become a pioneer in computer research in America, helping to make it possible for computers to decipher and translate human speech, died on Sept. 14 in Baltimore. He was 77.

The cause was a heart attack, his son, William, said. Mr. Jelinek was stricken while he was in his office at Johns Hopkins University, where he was a professor. He lived in Baltimore and New York.

Today, computerized speech recognition is becoming a mainstream technology. A few words spoken into a smartphone can summon an Internet search; doctors use voice-transcription software for patient records; drivers talk to speech-recognition systems in cars that reply with driving directions; and customer questions to call centers are increasingly being answered by automated speech systems.

But in the early 1970s, when Mr. Jelinek (pronounced JEL-eh-nek) joined I.B.M.’s Watson Research Center in Yorktown Heights, N.Y., it was by no means clear how computers might succeed at the daunting task of interpreting the vagaries of human speech.

In early speech research, there were two camps. One was the linguists. They argued that humans were best at recognizing speech and that therefore computer models should be based mainly on human language concepts — rules about syntax, grammar and meaning.

Mr. Jelinek, an electrical engineer, took a different tack, advocating the use of statistical tools. In this approach, spoken words are converted to digital form, and the computer is then trained to recognize words and appropriate word order in sentences, based on repeated patterns and statistical probability.

“Fred Jelinek’s underlying insight was that you don’t have to do it like humans,” said Alfred Spector, vice president for research at Google. “It was almost a 180-degree turn in the established approaches to speech recognition, and it led to most of the success in the field in the last two decades.”

In an interview in May, Mr. Jelinek recalled his debates with the linguists in his research group at I.B.M. The human analogy, he would argue, was misguided because machines do things differently than biological beings. “Airplanes don’t flap their wings,” he observed.

Other computer scientists championed statistics as the preferred path. “But Fred Jelinek was the giant in applying statistical techniques in speech recognition,” said David Nahamoo, an I.B.M. research fellow.

Frederick Jelinek was born on Nov. 18, 1932, in Kladno, Czechoslovakia. His father, Vilem, was Jewish and his mother, Trudy, had converted to Judaism. Because of his Jewish heritage Frederick was barred from attending school during the occupation and was instead taught in small groups organized by members of the Jewish community.

As Mr. Jelinek recalled in a speech in Prague in 2001, when he received an honorary degree, “My classmates as well as my teachers were being progressively sent to various concentration camps.”

His father was sent to the Terezin concentration camp outside Prague and died there. But the rest of the family were spared under the Nazi racial calculus: his mother, because she was not born Jewish, and the children, including a daughter, Susan, because they were deemed only half-Jewish, a lower priority.

In 1949, seeing limited opportunity under the Communist regime that took power after the war, the mother and two children emigrated to the United States and settled in New York, where Frederick completed high school and took night courses at City College in electrical engineering.

He did well enough to earn admission to the Massachusetts Institute of Technology, with tuition help from the National Committee for a Free Europe, an anti-Communist organization. At M.I.T., he thrived and earned bachelor’s, master’s and doctorate degrees.

Mr. Jelinek taught at M.I.T., Harvard and Cornell before joining I.B.M., where he worked for 21 years, leaving in 1993 for Johns Hopkins, where he was a professor of electrical and computer engineering and director of the Center for Language and Speech Processing.

After the end of Communist rule in 1989, Mr. Jelinek, who often visited the former Czechoslovakia, helped persuade I.B.M. to set up a computing center at Charles University in Prague.

His first trip back to his native country was in 1957. One evening he met with a boyhood friend, Milos Forman, then an aspiring film director and later an Academy Award winner. Mr. Forman invited Mr. Jelinek to a screening and there introduced him to one of the film’s screenwriters, Milena Tobolová.

“My father loved the movie, and he fell in love with my mother,” William Jelinek said.

They spent about a week together before he had to return to America. At a stopover in Munich, Mr. Jelinek called and proposed to Ms. Tobolová. “It was just fine with me,” Milena Jelinek said in an interview.

But her leaving the country was not fine with the Communist regime. The movie she had helped write, “An Easy Life,” was deemed decadent for its portrayal of student life in Czechoslovakia, complete with rock ’n’ roll, and she had attended anti-government rallies. She remained in Prague for more than three years while Mr. Jelinek tried to get her out.

Shortly after John F. Kennedy was elected president, Ms. Jelinek and a handful of other blacklisted Czechs were allowed to emigrate, presumably as a good-will gesture to the new American president, Ms. Jelinek said.

Ms. Jelinek left Czechoslovakia in January 1961, and the couple married in February. She is a retired associate professor of film studies at Columbia University and still lectures there.

In addition to his wife and his son, of Briarcliff Manor, N.Y., Mr. Jelinek is survived by a daughter, Hannah Sarbin of Larchmont, N.Y.; a sister, Susan Abramowitz of Montreal; and three grandchildren.

 

[trysail]

"Wall Street", the sequel.

The film review which appears below occasioned the following reaction:


I was always appalled and enraged by the ease with which Wall Street bamboozled John Q. Public. The public is astoundingly stupid— they're unbelievably gullible; that is why modern Wall Street has always gotten away with outright and constructive theft. The public has never distinguished a difference between the "buy side" and the "sell side." The public never comprehended the crucial legal and behavioral differences between a stockbroker and a fiduciary. The public's unwillingness to discriminate between the honest and the corrupt enabled the transformation of "Wall Street" into a den of thieves.

Before, say 1976, "Wall Street" was largely composed of "old moneyed" types who had been brought up to believe that their were certain things one simply did not do; they were educated to feel guilty about their privileged background and felt they bore a responsibility. They felt an obligation to engage and enforce "fair play" and to observe ethical standards. After the mid-'70s, "Wall Street" was infiltrated and eventually overrun by people unburdened by either educationally-instilled guilt or ethical standards. The traditional "old money" types were disgusted by and contemptuous of the newcomers.

Upstart firms such as Bear, Stearns and traditional firms such as Alex. Brown that had been infiltrated by fast-buck artists intentionally sought out employees who were "P.S.D." ( Poor Smart and Desperate [to get rich quick] ). All of Wall Street was eventually corrupted. The result was as predictable as sunrise.

I have always been amazed by "Wall Street's" capacity to get the public to believe the palpably untrue. Oliver Stone's film was laughable in its inaccuracy. You cannot imagine the depth of contempt for the types who— insecure to begin with and being taken in by Stone's film— began aping the dress and behavior displayed in the film. The thought of having to endure one more yahoo affecting braces and a contrasting collared shirt was enough to make me nauseous.

You got what you deserved.



http://www.ft.com/cms/s/2/7e55442a-c76a-11df-aeb1-00144feab49a.html


How ‘Wall Street’ changed Wall Street
By Francesco Guerrera
September 24 2010 22:07

In late 1987, Frank Partnoy, then a maths student at the University of Kansas, had an epiphany. As he sat in a cinema watching Wall Street, Oliver Stone’s depiction of the corrosive effects of greed on the financial industry, Partnoy decided he wanted to be part of it.

“I was naive but it actually inspired me. It made Wall Street seem exotic and alluring,” says Partnoy, 43, who went on to work for Credit Suisse First Boston and Morgan Stanley as a derivatives specialist, an experience he chronicled in his 1997 book Fiasco: Blood in the Water on Wall Street. Now a professor of law and finance at the University of San Diego, he says: “If you are a math major at the University of Kansas and you see a cheque with six zeroes, it is going to get your attention.”

He was not alone. In the two decades since its release, Wall Street and its lead characters, the father-of-all-evil Gordon Gekko (Michael Douglas in an Oscar-winning turn) and the corruptible ingénu Bud Fox (Charlie Sheen), have exuded an almost hypnotic attraction on scores of would-be bankers and traders.

“[The movie] became a cult phenomenon on business school campuses,” says Ken Moelis, 52, a former UBS banker who now runs his own advisory boutique and is one of Wall Street’s best-known dealmakers. “[After they joined the industry] these kids told me that they watched it so many times I thought they knew more about Gordon Gekko than their families.”

The film’s hold on the people it so roundly condemns is testament to its enduring influence on an industry with a notoriously short memory. As Rodgin Cohen, 66, a lawyer at Sullivan & Cromwell and a Wall Street doyen, says: “Bad people make good movies,” even if they are not entirely realistic.

A full 23 years after its premiere, most of the 20-plus real Wall Street denizens interviewed for this article displayed an encyclopaedic knowledge of the plot; Gekko’s ruthless attempt to raid an airline, aided by Fox’s inside tips until the young protégé’s conscience launches a successful takeover of his soul and both get their comeuppance. The real Wall Street, however, appeared to embrace Fox’s rags-to-riches social climbing while overlooking the story’s moral underpinnings. Not quite the reaction that Stone, the son of a stockbroker but known for polemical, political films such as Platoon and JFK, intended when he conceived a tale of the dangers of unbridled capitalism.

The film, however, took on a life of its own, defining a financial era in the eyes of the public and the industry it portrayed. Despite being neither a big box office nor critical hit, its influence on popular culture remains strong. Gekko-esque wisdom, such as “lunch is for wimps” and “greed is good” (the actual quote is “greed, for lack of a better word, is good”), has long since passed into common currency.

Indeed, many of those buying tickets for the sequel, Wall Street: Money Never Sleeps, released next month, will be alumni of the first film: the crowds lining up at this week’s New York premiere were made up largely of middle-aged men in suits pressed against barricades typically reserved for screaming teenagers.

For the inhabitants of the Street, the film’s impact went deeper and further than a collection of terse one-liners. “[Wall Street] inspired generations of financial people to ape the characters,” recalls a senior banker who joined the industry at that time. “All of a sudden, on trading floors there was a proliferation of suspenders [braces], slicked-back hair and Sun Tzu’s The Art of War [Gekko’s favourite book].

Although modern-day mobile phones are smaller than Gekko’s brick-like late-1980s contraption, visitors to old-school haunts such as the 21 Club in midtown Manhattan can still bump into crinkly gentlemen with gummed-up hair and braces – a bizarre case of life imitating art imitating life (Gekko’s look was itself inspired by that of 1980s financiers such as Carl Icahn and T Boone Pickens).

Wall Street was both a mirror and a high-water mark for the financial industry of the period. It chronicled the dramatic change that daring corporate raiders and the availability of cheap debt had introduced into a world of gentlemen’s agreements and handshakes in a cosy, old-boys’ network. Stone’s shorthand for that fading culture is the character of Lou Mannheim, the ageing stockbroker named after Stone’s father Louis, whose moralising – “Man looks in the abyss, there’s nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss” – proves a bland counterpoint to Gekko’s more watchable moral turpitude.

Jean-Yves Fillion, 51, a banker at BNP Paribas in New York, says: “The movie was a reflection of the industry as it was at the time but it also captured a turning point. Finance used to be about stability, values and about relationships. The movie was at the opposite end of the spectrum. It showed a different side of finance that was taking hold.”

Fillion, a self-confessed film buff, compares the original Wall Street to a “modern-day western, with a bad guy that was almost likeable – a good bad guy. That made the whole industry more attractive, more shiny and glamorous. Gordon Gekko is portrayed as an example of sophistication and innovation, he is almost seen as a hero”.

. . .

Why was Stone’s message in Wall Street undermined? Bill Winters, 48, a former head of JP Morgan’s investment bank, believes the filmmaker obscured the point he intended to make.

“I remember being surprised that a group of people was just figuring out that greed played a meaningful role in the way the business gets done on Wall Street,” he recalls. “I think the movie would have made a much more powerful point had the creators been a little bit subtler and cast the character not as a criminal but as ethically challenged, and styled him on those corporate raiders of the 1980s who took a tough, uncompromising stance against companies but did not actually break any laws.”

Yet the culture of greed that was obvious to a then 25-year-old banker such as Winters was still a surprise to most of the film’s non-Wall Street audience, partly because of the finance industry’s relatively low profile at that time among the wider public. Its release, just a few months after the stock market crash of October 1987, provided a timely account of an era of excess and revealed the ugly side of a money-making machine that has always tried to cover up its blemishes with fancy clothes and complex jargon. For the first time people were able to see not only the glory but the gory side of Wall Street.

Pat Huddleston, 48, a former official at the Securities and Exchange Commission (SEC), recalls how the movie played a part in his decision to become a regulator. “The way Oliver Stone wound up the story, with Bud seeing the light and embracing the values of his upbringing, reminded me that ordinary folks are the ones who suffer for the sins of the supposed kings of the universe represented by Gekko,” says Huddleston, who now runs Investor’s Watchdog, a private investor-protection firm that investigates suspected Ponzi schemes. “Given that I was following an impulse to work for David rather than Goliath, Wall Street helped me see that I could do that at the SEC. What I saw at the SEC, in the dark corners of the securities industry, confirmed the less than flattering portrait that the movie paints.”

Of course, others viewed it differently, seeing in this muscular, vivid portrait of money and its transformative social powers a modern parable for the American dream with braces replacing bootstraps. On Wall Street, as Gekko says to Bud, “If you are not on the inside, you are on the outside.”

Todd Thomson, 49, started his career as a management consultant before later joining the finance industry and for a period becoming an executive at Citigroup. He recalls how some of his classmates at Wharton Business School reacted to the film. “Wharton was my first exposure to people from Wall Street and people who wanted to go to Wall Street – and the focus was almost exclusively on making money,” says Thomson, who now runs his own investment fund. “A lot of people at Wharton came from nothing, a lot of them had backgrounds similar to Bud Fox. For them the life of Bud Fox was what they were aiming for: the dream of going from nothing and ending up with the penthouse apartment and a girlfriend with model looks.”

. . .

Money Never Sleeps again stars Douglas as Gekko, newly out of jail and looking to rekindle the old magic. It arrives at a time when there is nothing glamorous about finance in the eyes of a public that has lost jobs and homes in the most devastating financial crisis since the 1930s.

Just as the first film was inspired by the famous insider trading scandal involving the real-life arbitrageur Ivan Boesky (who reportedly once said “greed is healthy”), Money Never Sleeps borrows liberally from contemporary events. A common parlour game among bankers who have seen previews is to speculate on which real-life Wall Street titans have influenced the character of the vulture-like executive Bretton James, played by Josh Brolin.

The film also reprises the relationship between Gekko and a young protégé. Shia LaBeouf plays a trader who falls for his master’s fraud (clearly he hasn’t seen the original movie) while romancing Gekko’s daughter.

But it is not just the size of Gekko’s mobile phone that has shrunk since 1987. With the free market shown to be a lot less perfect than late-1980s zealots such as Ronald Reagan, Margaret Thatcher and Gordon Gekko had us believe, the reputation and social standing of bankers has also been cut down to size.

Stone’s cautionary precepts may, therefore, stand a greater chance of being heeded this time round. But can his new film hope to achieve anything approaching the resonance of the original? Those longing for memorable lines will not be disappointed. (“I once said, ‘Greed is good.’ Now it seems it’s legal;” “You are so Wall Street you make me sick. I am going to take a shower.”) But Partnoy, the banker-turned-professor, believes modern viewers will be less wide-eyed than those of his generation.

“The maths major at the University of Kansas now knows all about collateralised debt obligations and Wall Street,” he says. “When I show the original movie in class, the ethics of the students have changed 180 degrees. In the 1990s, it was seen as inspiring, today students get the morality tale right away,” he says.

The spotlight thrown on unglitzy parts of high finance has reduced Wall Street’s mystique. Forget swashbuckling corporate raids and daring trading strategies, the latest turmoil was caused by poor people who were given mortgages they could not pay and the nerds who securitised them in windowless offices. As Gekko languished in jail, Wall Street was taken over by lunch-eating wimps.

Paradoxically, as the “quants” elbowed the dealmakers aside, and super-fast computers replaced human beings on the trading floors, this less colourful industry became better known to the public. A period of long prosperity encouraged more people to dabble in investments.

Try as he might, Stone cannot shock many people the way he did two decades ago because his audience is both more knowledgeable about, and more inured to, the perils of finance.

Will the new film’s depiction of Wall Street’s current, more workmanlike, incarnation still exercise a gravitational pull on would-be traders? Bill Winters believes it will. “The-greed-is-good movement of the 1980s and 1990s carries on today,” he says. “Finance has always been a dog-eat-dog profession where some people became fabulously wealthy and some people get fired. There are a lot of bright kids that studied engineering and maths who want to go into finance because of the promise of great riches.”

Wall Street veteran Peter Solomon, 72, who was an executive at Lehman Brothers before founding his own firm in 1989, is unconvinced that a more penitent Gekko will increase his industry’s ability to learn from past mistakes.

“You go to a dinner party today and two or three of the guys who are there were in jail,” says Solomon, who met Stone before he began shooting the new movie. “It’s a great world because it’s so redeeming ... but I don’t think people learn lessons.”

Which is why the most prescient line in the 1987 film is perhaps not “greed is good” but the warning offered by Mannheim to the young Fox: “The main thing about money, Bud: it makes you do things you don’t want to do.

 

[trysail]

http://www.hpc.ncep.noaa.gov/winter_storm_summaries/graphics/2009_2010/feb05_06_2010.html



One of two (2) 2010 blizzards:

http://www.hpc.ncep.noaa.gov/winter_storm_summaries/graphics/2009_2010/winwx20100206A.gif​

 

[trysail]

Who am I?

* I own 1.1% of global oil reserves and 2.3% of global oil production ( my "proved" reserves of approximately 20 billion BOEs are roughly comparable to ExxonMobil's ).

* I am the 3rd largest non-state publicly traded oil company worldwide by proven reserves of hydrocarbons.

* I am the 5th largest non-state publicly traded oil company worldwide by production of hydrocarbons.

* I have sales of over US$80 billion and net income of over US$7 billion.

* I have owner-management; active managers own in excess of 25% of the company's 846,563,255 outstanding shares.



Valuation Measures
Market Cap (intraday): $47.88B
Enterprise Value (Sep 27, 2010): $55.61B
Trailing P/E (ttm, intraday): 6.2
Forward P/E (fye Dec 31, 2011): 5.8
PEG Ratio (5 yr expected)1: -27.85
Price/Sales (ttm): 0.52
Price/Book (mrq): 0.85
Enterprise Value/Revenue (ttm): 0.58
Enterprise Value/EBITDA (ttm): 3.81

Financial Highlights
Fiscal Year Ends: Dec 31
Most Recent Quarter (mrq): Jun 30, 2010

Profitability
Profit Margin (ttm): 8.11%
Operating Margin (ttm): 11.04%

Management Effectiveness
Return on Assets (ttm): 8.40%
Return on Equity (ttm): 14.04%

Income Statement
Revenue (ttm): $95.98B
Revenue Per Share (ttm): 113.32
Qtrly Revenue Growth (yoy): 28.50%
Gross Profit (ttm): N/A
EBITDA (ttm): $14.59B
Net Income Avl to Common (ttm): 7.78B
Diluted EPS (ttm): $9.19
Qtrly Earnings Growth (yoy): -16.10%

Balance Sheet
Total Cash (mrq): $3.91B
Total Cash Per Share (mrq): $4.61
Total Debt (mrq): $9.76B
Total Debt/Equity (mrq): 16.65
Current Ratio (mrq): 1.72
Book Value Per Share (mrq): $69.25

Cash Flow Statement
Operating Cash Flow (ttm): $12.00B
Levered Free Cash Flow (ttm): $4.72B



For comparison's sake:

ExxonMobil Corporation ( $61.75 as of 27 September, 2010 )

Valuation Measures
Market Cap (intraday): $314.78B
Enterprise Value (Sep 27, 2010): $318.53B
Trailing P/E (ttm, intraday): 11.9
Forward P/E (fye Dec 31, 2011)1: 9.8
PEG Ratio (5 yr expected): 1.27
Price/Sales (ttm): 0.99
Price/Book (mrq): 2.24
Enterprise Value/Revenue (ttm): 1.00
Enterprise Value/EBITDA (ttm): 6.67

Financial Highlights
Fiscal Year Ends: Dec 31
Most Recent Quarter (mrq): Jun 30, 2010

Profitability
Profit Margin (ttm): 7.75%
Operating Margin (ttm): 11.02%

Management Effectiveness
Return on Assets (ttm): 8.49%
Return on Equity (ttm): 19.97%

Income Statement
Revenue (ttm): $317.90B
Revenue Per Share (ttm): $67.01
Qtrly Revenue Growth (yoy): 25.00%
Gross Profit (ttm): $124.75B
EBITDA (ttm): $47.78B
Net Income Avl to Common (ttm): $24.64B
Diluted EPS (ttm): $5.18
Qtrly Earnings Growth (yoy): 91.40%

Balance Sheet
Total Cash (mrq): $13.27B
Total Cash Per Share (mrq): $2.61
Total Debt (mrq): $20.43B
Total Debt/Equity (mrq): 14.58
Current Ratio (mrq): 1.08
Book Value Per Share (mrq): $27.53

Cash Flow Statement
Operating Cash Flow (ttm): $39.61B
Levered Free Cash Flow (ttm): $11.11B

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601103&sid=apvi3jNxgdPU


Suburban Voters Sour on Obama, Imperil Democrats’ Hold on House
By Patrick O’Connor

Sept. 28 (Bloomberg) -- The Paisley Shop and Genes Urban Baby Boutique sit empty along a stretch of Lancaster Avenue in Wayne, Pennsylvania, where the median home price is more than $600,000.

The vacant storefronts in the Delaware County town serve as a reminder that not even the affluent Main Line suburbs by the Schuylkill River northwest of Philadelphia are immune to the economic pressures afflicting the rest of the U.S.

“It’s hard to get business,” said Donna Martella, 46, who owns Beethoven Wraps, a gift and gourmet food shop down the street from the two shuttered stores.

Philadelphia’s once reliably Republican suburbs, which have shifted course in recent years to provide decisive support for Democrats, from Governor Ed Rendell to President Barack Obama, are in play again this year.

While the jobless rate is lower than the 9.6 percent U.S. average -- 9.2 percent in Delaware County in July and 8.3 percent in Bucks County -- and household income in the counties is higher, million-dollar homes in places like Haverford can sit on the market for six months or longer. About one in 650 homes was in foreclosure in the two counties in August, compared with the state figure of one in 842, according to RealtyTrac Inc., a housing-data provider in Irvine, California.

That’s feeding broader fears about unemployment, record budget deficits and banks’ reluctance to lend.

Retaking the House
As a result, Democrats may lose two seats they picked up as part of the anti-Republican wave in 2006: those belonging to U.S. Representatives Patrick Murphy in Bucks County and Joe Sestak in Delaware, who is vacating his office to pursue an uphill Senate bid.

There are competitive congressional races this year in more than a dozen other suburban districts nationwide where Democrats beat incumbent Republicans in the last two elections. Republican victories in some of those races could help the party achieve its goal of picking up a net 39 seats to regain control of the U.S. House.

U.S. Representative Jim Himes is defending turf in the Connecticut suburbs north of New York City that Republicans held for 40 years before he won in 2008. Outside Chicago, Bill Foster and Debbie Halvorson face tough re-election fights. And fellow first-termers Alan Grayson and Suzanne Kosmas are clinging to seats in and around Orlando, Florida.

Reversal of Fortune
Two years ago, the Democrats had all the momentum.

Delaware, Bucks, Montgomery and Chester counties, the wealthiest in Pennsylvania, backed Obama in 2008, joining suburbs throughout the U.S. whose votes were central to his victory in the presidential campaign.

Obama won 50 percent of the nationwide suburban vote, up 3 percentage points from what Massachusetts Senator John Kerry garnered as the 2004 Democratic presidential nominee, according to a study of exit polls by the Pew Research Center for the People & the Press. Obama benefited from a 6-point improvement among self-described moderates and an 8-point jump among households earning more than $100,000 a year, the study showed.

That same year, Democrats picked up Republican seats in the Detroit suburbs, New Jersey towns east of Philadelphia and in Virginia communities across the Potomac River from Washington.

In Delaware County, Sestak, 58, easily won re-election after a surge of voter discontent had swept him into office in 2006, unseating a Republican incumbent. This year, his seat is up for grabs after he decided to pursue a Senate bid, where polls show him trailing Republican Pat Toomey.

‘Buyer’s Remorse’
So, too, is the seat held by fellow Democrat Murphy, 36, an Iraq War veteran from Bucks County, where Democrats have a 44 percent to 40 percent edge in voter registration. A Franklin & Marshall College Poll released Sept. 23 showed Republican Mike Fitzpatrick with a 14-point lead over Murphy among likely voters.

“These are voters that care about debt and deficits,” said Terry Madonna, director of the Center for Politics and Public Affairs at Franklin & Marshall in Lancaster who conducted the poll. “Many of them are having buyer’s remorse.”

Dave Callahan, the owner of Newtown Hardware House, a 141- year-old business in Bucks County, “was really excited” to vote for Obama two years ago.

“Maybe I shouldn’t have done that,” said Callahan, 65. He said he would probably vote for Republican Fitzpatrick in the congressional election, after backing Murphy in 2008, to send a message to Obama.

No Jobs
He said his business was down 20 percent in July and August, compared with a year earlier, attributing the decline to a slow housing market.

Eleanor Gardener, an independent whose 36-year-old daughter just lost her health insurance, voted for Obama in 2008. She’s not sure what she’ll do this year, after watching “quite a few” members of her family lose their jobs.

“They keep saying the jobs are coming back, but I don’t know anyone who’s getting a job,” said Gardener, 61, an accounting clerk from Primos, as she waited for a morning train on a platform across the street from one of the Wawa convenience stores that dot the landscape.

Delaware County, where Republicans hold a 3-point lead in voter registrations, is a mix of working class and affluent. Republicans have controlled the local governments for a generation, even in the lower-income sections of the county, said Harvey Glickman, a professor emeritus at Haverford College.

Main Line Republicans
“Small business owners vote Republican because they worry the trash won’t get picked up if they don’t,” Glickman said.

The area spawned voters who became known as Main Line Republicans, those who favored balanced budgets. Their influence has been undercut by a migration of Democrats from Philadelphia, Glickman said. Other Republicans left the party because they were opposed to increased federal spending under former President George W. Bush and the war in Iraq, he said.

Closer to the city, in neighborhoods like Drexel Hill, both Republicans and Democrats express alarm about the economy.

“People are angry,” Frank Havnoonian, 55, a Republican who voted for Senator John McCain, Obama’s 2008 opponent, said as he manned the counter of Drexel Hill Cyclery, a shop crammed with new bicycles and old parts that bears the scratches and grease stains of more than four decades in operation. “I say bring back the 1950s. It was an easier time.”

Losing Confidence
In Berwyn and Radnor, large stone cottages line leafy streets punctuated by small villages where mothers and high school kids shop and eat. The average household income was more than twice the national average in 2000, according to Census data.

“This is a swing district, so you have Republicans who had lost confidence,” said Pat Meehan, a Republican former U.S. attorney running to replace Sestak.

His Democratic opponent is Bryan Lentz, a former Army Ranger who served in Iraq. His resume was tailor-made for the anti-Bush wave in 2006 and he won a seat in Pennsylvania’s House.

“It was a good year to be a Democrat,” Lentz said. “And it had a lot to do with people being fed up with what they saw going on in Washington.”

This year, he said, voters “are fed up with bios.”

Fitzpatrick, a former U.S. representative running to reclaim the seat he lost to Murphy in 2006, thinks the shifting mood will make the difference this year.

“It’s better to be on the offensive than the defensive,” Fitzpatrick said, citing Murphy’s votes in favor of the health- care overhaul and the $814 billion economic stimulus package.

Anti-Incumbent
Still, Murphy had about $1 million more cash-on-hand than Fitzpatrick as of June 30, according to Federal Election Commission data.

Both Republicans Meehan and Fitzpatrick champion an extension of all Bush-era tax cuts, while pledging to bring down the deficit. Meehan released a seven-step plan to create jobs that included the extension or creation of six tax cuts, including those on capital gains and corporate income, and tax credits for businesses that hire new employees.

“My particular focus right now is that we do not talk about raising taxes in this kind of environment,” Meehan said.

Back in Wayne, a lot of voters are tired of politicians.

“I’m going to vote against every incumbent,” said Roger Galczenski, 64, the owner of Wayne Sporting Goods down the street from Beethoven Wraps. “I don’t care if they’re Republican or Democrat.”

 

[trysail]

Because of its unique ownership structure ( which probably cannot be duplicated ) which permits the lowest possible costs and eliminates many of the otherwise inherent conflicts-of-interest, it's difficult to see how Vanguard can ever be beaten unless management makes horrific misjudgments.
_________________________________



http://noir.bloomberg.com/apps/news?pid=20601208&sid=aCCYTOIvrWv0


Fidelity Loses Top Mutual-Fund Spot to Bogle’s Index Investing
By Charles Stein

Sept. 29 (Bloomberg) -- John Bogle has preached the virtues of low-cost indexing since the 1970s to investors willing to pay higher fees for big-name money managers at firms such as Fidelity Investments.

His persistence, which earned him the nickname “Saint Jack,” paid off this year when Vanguard Group Inc. unseated Fidelity as the largest U.S. mutual-fund company by assets, a distinction the Boston firm had held for more than two decades.

A decade bookended by bear markets has sapped U.S. investors’ faith in the ability of money managers to protect them from losses, spurring a rush into cheaper index funds pioneered by Vanguard. Bogle, 81, founded the Valley Forge, Pennsylvania-based firm in 1975 on the idea that most professionals can’t beat the market, so it’s not worth paying them to try. Edward “Ned” Johnson, 80, took over Fidelity two years later and built the family business by betting on star stock pickers such as Peter Lynch.

“It’s the triumph of indexing over active management,” Daniel Wiener, editor of Independent Adviser for Vanguard Investors, a New York-based newsletter, said in an interview. Index funds mimic the makeup of the market benchmarks they are designed to track, while active managers pick securities based on research.

Fidelity Magellan Fund, run by a prominent list of managers including Johnson, Lynch and Jeffrey Vinik, produced middle-of-the-pack returns in the past decade. Once the world’s largest mutual fund, Magellan is now one-fourth the size of the $87 billion Vanguard 500 Index Fund.

Attention to Costs
Vanguard has benefited as the stock market foundered, said Michael Miller, a managing director at the firm. The market in 2009 came through its first full decade of losses since the 1930s, and U.S. bond yields are near record lows this year.

“People pay more attention to costs when returns are less,” Miller said in a telephone interview.

The shift may be more than temporary, said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which manages $55 billion.

“It is possible investing has changed for good,” he said. “People don’t want to rely on stock pickers who have not earned their keep,” and active managers will have to “demonstrate that they have an edge that is worth the management fee they charge.”

On a dollar-weighted basis, stock-index funds charge an average of 29 cents per $100, compared with 95 cents for active funds, data from Denver-based research firm Lipper show.

Power of Marketing
Some of Vanguard’s success can be attributed to the “miracle of marketing,” said James Lowell, editor the FidelityInvestor.com, a Needham, Massachusetts, newsletter. The firm has sold investors on the benefits of indexing even though the strategy has yielded lackluster performance, said Lowell, who helps oversee $1.2 billion, mostly in active funds.

In the 10 years ended Aug. 31, actively run domestic stock funds returned 0.9 percent a year compared with an annual loss of 2 percent for index funds, data from Chicago-based Morningstar Inc. show. Fidelity’s equity funds returned an average of 2.1 percent a year versus 1.2 percent for Vanguard’s, according to Lipper.

Investors took a net $301 billion out of actively run equity funds in the U.S. from the start of 2008 through August, Morningstar estimates, while stock-index funds attracted $113 billion. The global financial crisis sent the S&P 500 sliding 57 percent from its peak October 2007 to its 12-year low in March 2009.

Vanguard also benefited from the popularity of bond funds. From Jan. 1, 2008, through Aug. 31, 2010, the company’s fixed- income portfolios pulled in $134 billion while Fidelity’s attracted $33 billion.

Passing Fidelity
The shift into index funds helped Vanguard snatch the No. 1 ranking from Fidelity in March. Johnson’s firm has topped the list each year since 1988, when it overtook Merrill Lynch & Co.

Vanguard had $1.31 trillion in fund assets as of July 31, compared with $1.24 trillion for its main rival, according to the most recent data from the Investment Company Institute, a Washington-based trade group.

Vanguard’s climb may also have been aided by its unusual business model. The company is owned by its mutual funds, which are owned by their investors.

“The ownership blueprint holds costs down and keeps the folks at Vanguard thinking like their customers,” Nancy Koehn, a professor at the Harvard Business School in Boston, said in an e-mailed response to questions.

Lynch Legacy
Fidelity is privately held, with 49 percent owned by the Johnsons and the rest by employees. The firm, while also offering cheap index funds, has been known for stock selection since the days of Lynch, who gained 29 percent a year before stepping down in 1990. From 1993 to 2007, funds led by stock pickers lured almost four times as much money as those that track benchmark indexes, Morningstar data show.

As the largest U.S. manager of money-market funds, Fidelity was also hurt as investors abandoned the short-term vehicles when yields fell below 1 percent last year.

Fidelity oversaw $442 billion in money funds as of Aug. 31, compared with $165 billion at Vanguard, according to Crane Data LLC in Westborough, Massachusetts. Fidelity’s money-fund assets fell 13 percent in 12 months.

“Our focus has never been on being the largest company, but on providing the best products and services for our customers,” Vincent Loporchio, a Fidelity spokesman, said in a telephone interview.

Edward C. Johnson II, the late father of the current chairman, took over the original Fidelity Fund, which is still operating, in 1943. Three years later, Fidelity was created to act as an adviser to the fund.

Fidelity’s Evolution
Once mainly a mutual-fund company, Fidelity now is “one of the world’s largest providers of financial services,” Loporchio said. The firm has expanded into stock trading, retirement plans and institutional money management.

In 2009, Fidelity reported operating income of $2.52 billion on revenue of $11.5 billion. The firm doesn’t report net income based on generally accepted accounting principles. Vanguard doesn’t release financial results.

In May, Fidelity named Abigail Johnson and Ronald O’Hanley to top roles after splitting responsibility for running the company. Abigail is Ned Johnson’s daughter. O’Hanley previously headed money management at Bank of New York Mellon Corp.

Vanguard had been catching up with Fidelity for at least a decade, since the bursting of the technology stock bubble in 2000 led to market declines through 2002.

At the end of 1999, Fidelity had $857 billion in mutual funds, 59 percent more than Vanguard, ICI data show. The tally comprises stock, bond and money-market funds. Each is priced at the end of the trading day based on the value of its assets.

$440 Billion Infusion
The ICI numbers do not include exchange-traded funds, a variation of index funds whose prices change as they trade through the day like stocks. Vanguard had $113 billion in ETF assets at the end of August, according to Boston-based State Street Corp. Fidelity has largely ignored that business.

In the 10 years ended Dec. 31, Vanguard’s stock and bond funds attracted $440 billion, compared with $101 billion for Fidelity, Morningstar estimates. This year through August, Vanguard pulled in $49 billion while Fidelity had withdrawals of $2.8 billion, according to the research firm.

Fidelity isn’t the only manager of actively managed stock funds to suffer at the expense of indexers. Investors at American Funds, run by Los Angeles-based Capital Group Cos., took out $29 billion this year while Baltimore-based Legg Mason Inc. had redemptions of $2.6 billion, Morningstar data show.

Wellington Fund
Indexing doesn’t explain all of Vanguard’s success. About 49 percent of the firm’s assets are in actively run funds, Rebecca Katz, a Vanguard spokeswoman, said in a telephone interview.

Among the firm’s active offerings are the $48 billion Wellington Fund and the $18 billion Vanguard Health Care Fund, the best-performing U.S. mutual fund over the past 25 years, according to Morningstar. The fund averaged annual returns of 15 percent, compared with 9.7 percent for the S&P 500, Bloomberg data show.

Still, almost 80 percent of the money Vanguard’s stock and bond funds attracted this year went to indexing, Morningstar said.

Indexing drew Kent Grealish, a financial adviser in San Bruno, California, outside San Francisco, to Vanguard in 2004. Grealish said he spent most of his career as a believer in stock selection. Over time, “I changed my attitude about my ability and the ability of others to beat the market,” he said in a telephone interview.

Industry Critic
His clients now essentially match the market’s performance at a low cost, he said. Vanguard’s biggest index fund, the $113 billion Total Stock Market Index Fund, charges clients as little as 7 cents for every $100 they put in, according to the firm.

For decades, said Harvard’s Koehn, Bogle has been touting his company’s simple approach and criticizing the financial industry for its supposed excesses.

“The world has changed profoundly, and Vanguard is sitting right where the market has arrived,” Koehn said in a telephone interview.

Bogle, who ran Vanguard until 1996, has stayed in the public eye by publishing articles and books and making media appearances. Bogle didn’t return a call seeking comment.

Fidelity developed a reputation for innovative products, solid customer service and for bringing mutual funds to a wider audience, said Russel Kinnel, director of fund research for Morningstar.

Lynch ran Magellan from 1977 to 1990, when his yearly gains were almost twice the S&P 500’s 15 percent. His books “One Up on Wall Street” and “Beating the Street” became best-sellers.

Mediocre Returns
More recently, the firm’s stock performance has been “mediocre,” Kinnel said. Fidelity’s equity funds beat 57 percent of their peers in the decade ended Dec. 31, Morningstar data show.

Magellan lost an average of 3.7 percent annually in the 10 years ended Aug. 31, compared with a decline of 1.8 percent for the S&P 500, Bloomberg data show. The fund’s assets have fallen to $20 billion from a peak of about $110 billion in 2000.

Fidelity still has some of the industry’s best-known managers.

Joel Tillinghast, who runs the $28 billion Low-Priced Stock Fund, topped all but one diversified U.S. mutual fund, Robert Rodriguez’s FPA Capital, over the past 20 years with gains averaging 14 percent, Morningstar data show.

Broader Business
Fidelity’s bond performance has been strong, said John Bonnanzio, editor of Fidelity Insight, a newsletter based in Wellesley, Massachusetts. Even so, the company has struggled to compete for investor attention with Pacific Investment Management Co., he said in a telephone interview.

“Fidelity doesn’t have the marketing zing Pimco can bring with Bill Gross,” Bonnanzio said.

Pimco, based in Newport Beach, California, has brought in $54 billion this year, the most among fund companies, according to Morningstar. Gross, named in January as Morningstar’s fixed- income manager of the decade, runs the world’s largest bond fund, the $248 billion Pimco Total Return Fund.

Fidelity operates a so-called fund supermarket that lets investors choose from more than 5,000 funds, most of them run by competitors. Its 401(k) business, the nation’s largest, offers both Fidelity and non-Fidelity funds to its 11 million accounts. The firm owns a discount brokerage that sells stocks, bonds, exchange-traded funds and other financial products.

“They have been preparing for the day when their funds couldn’t outperform,” Bonnanzio said.

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=a8eYONm3_OIM


Pentagon Losing Control of Bombs to China’s Monopoly
By Peter Robison and Gopal Ratnam

Sept. 30 (Bloomberg) -- A senior manager at a company that churns out metals routinely used in U.S. smart bombs pauses in mid-sentence when his phone rings: a Wall Street stockbroker looking for information. He makes a note to have an assistant call back -- someone who is fluent in English, not just Chinese.

“It’s a seller’s market now,” says Bai Baosheng, 43, puffing a cigarette in his office in Baotou, China, where his company sells bags of powder containing a metallic element known as neodymium, vital in tiny magnets that direct the fins of bombs dropped by U.S. Air Force jets in Afghanistan.

A generation after Chinese leader Deng Xiaoping made mastering neodymium and 16 other elements known as rare earths a priority, China dominates the market, with far-reaching effects ranging from global trade friction to U.S. job losses and threats to national security.

The U.S. handed its main economic rival power to dictate access to these building blocks of modern weapons by ceding control of prices and supply, according to dozens of interviews with industry executives, congressional leaders and policy experts. China in July reduced rare-earth export quotas for the rest of the year by 72 percent, sending prices up more than sixfold for some elements.

Military officials are only now conducting an inventory of where and how U.S. suppliers use the obscure but essential substances -- including those that silence the whoosh of Boeing Co. helicopter blades, direct Raytheon Co. missiles and target guns in General Dynamics Corp. tanks.

Warning Signs
“The Pentagon has been incredibly negligent,” said Peter Leitner, who was a senior strategic trade adviser at the Defense Department from 1986 to 2007. “There are plenty of early warning signs that China will use its leverage over these materials as a weapon.”

China may already be flexing its muscles amid a diplomatic spat with its East Asian neighbor Japan. China last week imposed a “de facto” ban on exports to Japan of the metals used in liquid crystal displays and laptop computers, Japanese Economy Minister Banri Kaieda said Sept. 28. That followed Japan’s detention of a Chinese fishing boat captain whose ship collided with two Japanese Coast Guard vessels. Japan later released the man.

No such ban exists, China’s Ministry of Commerce spokesman Chen Rongkai said.

New Factor
“What it does, clearly, is bring a new factor into the consideration of supply of critical materials,” said Dudley Kingsnorth, director of Industrial Minerals Co. of Australia, a forecaster in Perth.

The U.S. Congress’s investigative arm, the Government Accountability Office, in April warned of “vulnerabilities” for the military because of the lack of domestic rare-earth supplies. The House of Representatives Armed Services Committee will hold a hearing in October, the same month a Pentagon report on how to secure future supplies of the metals is due.

“The department has long recognized that rare-earth elements are important raw material inputs for many defense systems and that many companies in our base have expressed concern regarding the future availability of the refined products of these elements,” Brett Lambert, director of the Pentagon’s Office of Industrial Policy, said.

While two rare-earth projects are scheduled to ramp up production by the end of 2012 -- one owned by Molycorp Inc. in California and another by Lynas Corp. in Australia -- the GAO says it may take 15 years to rebuild a U.S. manufacturing supply chain. China makes virtually all the metals refined from rare earths, the agency says. The elements are also needed for hybrid-electric cars and wind turbines, one reason supply may fall short of demand in 2014 even with the new mines, according to Kingsnorth of Imcoa.

Doggy Day Care
Just how far U.S. manufacturing has waned is apparent at a factory in Valparaiso, Indiana, where dogs skitter across a bare concrete shop floor, their nails clicking. This brick plant on Elm Street once made 80 percent of the rare-earth magnets in laser-guided U.S. smart bombs, according to U.S. Senator Evan Bayh, a Democrat from Indiana. In 2003, the plant’s owner shifted work to China, costing 230 jobs.

Now the plant houses Coco’s Canine Cabana, a doggy day care the current tenants started to supplement sagging income from their machine shop. On most days dogs outnumber the 15 metalworkers, said Kathy DeFries, co-owner of Excel Machine Technologies Inc.

“When things got slow for manufacturing, we had this big empty shop floor,” said DeFries, nuzzling a floppy-eared puppy. “It’s a great stress reliever.”

Expensive to Mine
The rare earths are chemically similar elements, with names such as yttrium and dysprosium. China has the largest share of worldwide reserves, about 36 percent, and the U.S. is second, with 13 percent, the U.S. Geological Survey says. While the elements aren’t rare, they’re less frequently found in profitable concentrations, expensive for Western producers to extract and often laced with radioactive elements.

China produced 120,000 tons, or 97 percent, of the world’s 124,000-ton supply last year, according to the GAO. Half of that came from Baotou, said Kingsnorth. The raw elements have many applications. Neodymium is used by Chinese companies including magnet makers, who sell to U.S. suppliers of defense contractors.

Export Quotas
Export quotas and taxes for overseas buyers that the GAO says can reach 25 percent are pushing up prices of elements even in relatively large supply. For example, the cost of a kilogram of samarium powder, needed for the navigation system of General Dynamics’ M1A2 Abrams tank, jumped to $34 in early September, from $4.50 in June, according to U.K. researcher Metal Pages Ltd.

The U.S. and the European Union consider Chinese restrictions on a range of raw goods part of a strategy to draw in higher-paying manufacturing jobs by making them cheaper to buy inside China. The export taxes violate World Trade Organization rules because China pledged to limit them to 84 product categories when it joined the trade group in 2001, said Terence Stewart, managing partner of Washington law firm Stewart & Stewart. In 2010, China had taxes on 329, he said.

The U.S. and the EU filed a WTO complaint over raw materials including bauxite and coke last year. China’s commerce minister, Chen Deming, said Aug. 28 that the policies comply with WTO rules.

Some manufacturers in China are lobbying the ministry to back off the latest quotas because a dispute will disrupt the market, said Constantine Karayannopoulos, chief executive officer of Toronto-based Neo Material Technologies Inc., which has rare-earth production facilities in China.

Risk of Trade War
“It was very sudden and didn’t give the industry any time to adjust,” he said. “This quota action could risk a trade war.”

For Western companies, China’s policies are creating the real “unobtanium,” the fictional mineral fought over in James Cameron’s 2009 film “Avatar.”

It’s taking as long as 10 weeks to get neodymium magnets, double the previous wait time, said Joe Schrantz, group supply chain manager at Moog Inc. in East Aurora, New York. He said the company buys hundreds of thousands of magnets a year to make motors for cars, trucks and weapons including Raytheon’s AMRAAM -- or Advanced Medium-Range Air-to-Air Missile -- and Boeing’s Joint Direct Attack Munition, a tail fin kit for making precision-guided “smart” bombs out of ordinary weapons.

Rising Prices
Rising neodymium prices are forcing up the price of magnets, which typically cost between $2 and $30 apiece. That’s having a “significant” effect on profit, and suppliers say costs will keep going up, Schrantz said. The company is considering buying blocks of raw material and storing it.

“If everybody does that, then it’s going to get really crazy,” he said.

Neodymium, a silvery metal, is essential in a magnetic alloy developed separately by engineers at General Motors Co. in Detroit and Sumitomo Special Metals Co. in Japan in the 1980s. The magnets are now in millions of stereo speakers, computer disk drives and motors.

In missiles, they replace a hydraulic system of pumps and fluids that was costlier and heavier. Motors in weapons like the JDAM might be three times as big without advanced magnets, said Todd Brewster, senior design engineer at Kollmorgen, a unit of Washington-based Danaher Corp. The JDAM has been used extensively in Iraq and Afghanistan.

Hybrid-Electric Motors
A Chinese supplier makes neodymium magnets for hybrid- electric motors the Navy is developing to cut fuel use of Arleigh Burke-class destroyers, according to the GAO. The agency also says Lockheed Martin Corp.’s SPY-1 radar on Aegis destroyers contains samarium-cobalt magnets that will need to be replaced over 35 years. China is virtually the only supplier of yttrium needed for laser gun sights in the General Dynamics Abrams tank, the U.S. Geological Survey says.

“It’s amazing how this issue seems to have caught the country off guard,” said U.S. Representative Mike Coffman, a Colorado Republican who was a U.S. Marine Corps infantry officer. He noted that China’s capabilities have expanded significantly since 2001, when the U.S. Army canceled plans to buy Chinese-made berets under pressure from Congress. “How ironic is that we were concerned about berets?”

Jon Kasle, a spokesman for Raytheon of Waltham, Massachusetts, said his company hasn’t experienced supply shortages. Spokesmen for Bethesda, Maryland-based Lockheed Martin; General Dynamics, of Falls Church, Virginia; and Chicago-based Boeing declined to comment. “There is a particular need to focus on rare-earth minerals,” said Alexis Allen, spokeswoman for the Aerospace Industries Association, an Arlington, Virginia-based lobby group for defense contractors. “The Department of Defense should consider many alternatives to reliable access.”

Stockpile
One option is to stockpile the metals with allies. Since 1994 the Pentagon has sold off excess raw materials for $7 billion.

Another is subsidies of U.S. manufacturing. The U.S. House of Representatives approved yesterday a proposal by Representative Kathy Dahlkemper, a Pennsylvania Democrat, that would set up a research and development program at the Department of Energy to help U.S. rare-earth manufacturers such as Molycorp with measures including loan guarantees. To become law the bill, which cleared the House on a 325-98 vote, must have a matching Senate version and be signed by the president. Currently there is no such measure.

While Molycorp plans to mine almost 20,000 tons of rare earths annually by late 2012, it doesn’t yet have the capacity to refine the raw elements into metals.

‘No Substitute’
Complicating matters is that even the Pentagon has been unsure of its own needs. Stephen Luckowski, chief of materials manufacturing and prototype technology at the U.S. Army’s Picatinny Arsenal in New Jersey, told participants at a February conference in Cleveland that it took him a month to learn that rare-earth metals are in the nose of the Excalibur missile, and he still wasn’t certain of the exact supply route. Luckowski, a metallurgist, was sure the Army needed the rare earths. “That may be a case where you have no substitute,” he said.

China’s dominance in the materials comes as it scours the planet for resources to feed its economy, which is expanding more than 10 percent this year while the U.S. struggles with an almost 10 percent unemployment rate. The country has been snapping up oilfields, buying copper mines and investing in wind power. China is also expanding its military, developing an aircraft carrier, nuclear-powered submarines and ballistic missiles, the Pentagon said in an August report.

Deng’s Quotation
In the lobby of Bai’s company, a unit of state-owned Baotou Iron & Steel Group Co., a now-famous 1992 quotation by Deng is emblazoned in pink marble. It reads: “The Middle East has oil, and China has rare earths.” A May interview with Bai is regularly interrupted by calls from stockbrokers, analysts and fund managers looking to learn more about the company.

“Because export quotas are limited, we basically can choose our clients; we are no longer compelled to sell to just about anybody who comes knocking,” said Bai, who handles investor relations for Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. The shares have more than doubled in the past year, reaching 72.72 yuan on Sept. 29, giving the company a market value of $8.8 billion.

The company is especially proud of the samarium-cobalt magnets used in the Shenzhou 7 space capsule that lifted Chinese astronauts into space in 2008. They were developed at the nearby Baotou Research Institute of Rare Earths.

Environmental Costs
The export restrictions compensate for the heavy environmental toll, said Zhang Anwen, vice secretary of the Chinese Society of Rare Earths, a group of researchers in Beijing. “It’s unfair for the U.S. to be pointing fingers at China now,” he said. “To undo the damage done to the earth, we need to return the vegetation, increase water flow and treat the ground. It’s an extremely costly repair.”

Deng set China on its path with a 1986 initiative whose goals included acquisition of technology in “exotic materials” such as rare-earth metals, new energy compounds and high- capacity engineering plastics, according to a U.S. House of Representatives committee report.

That year Zhu Weiheng, an electrical engineer at the Chinese Academy of Sciences, wrote a report to Chinese officials suggesting they control exports of rare-earth minerals because of their high value in manufacturing. Zhu had studied at the Massachusetts Institute of Technology in Cambridge, Massachusetts, and in 1965 designed a motor for China’s first satellite, the East is Red. Later he spent part of Chinese leader Mao Zedong’s Cultural Revolution under arrest as a suspected spy.

‘Real Revolution’
By the early 1980s, Zhu was testing samples of neodymium iron boron, the alloy perfected by engineers at GM and Sumitomo. Two Chinese research institutes also developed it, said Zhu, 91. “It was a real revolution,” he said.

In 1990, Zhang Hong, the Chinese academy’s deputy director of technology, visited Magnequench, a GM unit in Indiana that used a spinning wheel to quench, or cool, the molten alloy into flakes to make magnets. Five years later, a group including then state-owned San Huan New Materials and Hightech Inc. agreed to buy Magnequench.

The Committee on Foreign Investment in the United States, a cross-agency board that reviews foreign takeover deals, allowed the purchase partly because the partners agreed to keep open facilities in the U.S.

Shipped to China
The company opened a new plant in Tianjin in 1998 and shut a former GM operation in Anderson, Indiana, four years later. Magnequench also purchased and later closed the factory in Valparaiso, where Kathy DeFries now boards dogs for $5 an hour. That plant’s tools were shipped to three San Huan operations in China, according to Shannon Song, a Beijing-based executive at Magnequench.

“What they were basically doing was replicating the production lines in China,” said Leitner, the former Pentagon official.

Indiana’s Bayh and Hillary Clinton, now U.S. secretary of state, both cited Magnequench as an example of the U.S. losing jobs and expertise to China. In the 1990s a dozen U.S.-based suppliers of magnets employed 6,000 people. Today there are four, employing 500, said Ed Richardson, vice president of Thomas & Skinner Inc. in Indianapolis, one of the survivors.

Business Decision
The plant closures were a business decision after the technology bust in 2000 hurt sales, Song said. Most of the Valparaiso factory’s business came from computer makers; defense was a minor share, she said. In 2001, labor costs in Anderson averaged $7.32 per kilogram of neodymium powder on top of $10.07 in direct production overhead, she estimates. In 2003 in Tianjin, labor costs were 16 cents and overhead $3.20.

“It was a question of letting the ship sink or doing something to cut the operating cost,” she said.

Toronto-based AMR Technologies Inc. bought Magnequench in 2005 and renamed the merged company Neo. The company’s shares rose to C$4.92 yesterday from as little as C$1.05 in early 2009.

San Huan, now known as Beijing Zhong Ke San Huan High-Tech Co., went public in 2000. Sales have risen more than fourfold, from 371 million yuan that year to 1.6 billion yuan in 2009. The stock has almost tripled in the past year, reaching 17.14 yuan on Sept. 29.

God and Magnets
“God created the universe from nothing and organized it with the help of a magnet,” the company declares on its website, in English and Chinese.

Shares of Aluminum Corp. of China Ltd. rose 18 percent over the past two days in Shanghai trading after its parent announced a plan to invest at least 10 billion yuan ($1.5 billion) to build a rare earth production base in Jiangxi province with a local partner.

A group of U.S. investors led by Denver-based private equity firm Resource Capital Funds wants to challenge China’s dominance by restoring the fortunes of Molycorp, the largest supplier of rare earths for much of the last century. Its mine, west of Las Vegas in California’s Mojave Desert, shut eight years ago, under pressure from Chinese competitors and regulatory scrutiny of wastewater spills.

Molycorp, based near Denver, says it needs $511 million to refurbish and expand. It raised $379 million in its July share sale, and has applied for a $280 million loan guarantee under a U.S. Department of Energy program for “innovative technologies.” The shares have almost doubled, closing at $26.73 yesterday from $14 in July.

Joshua Trees
Costs of environmental compliance will be steep, Molycorp warns in a filing that says it spent $3 million last year alone. Beyond a 300-foot-deep open pit, John Benfield, manager of quality assurance, points to a valley sheltering Joshua trees where slurry left after processing ore will be pumped and harden like concrete.

The trees, protected under California law, will be given new homes after their precise positions are measured with compasses. Their bark burns in the desert sun without the right orientation. Even so, only 20 percent of replanted trees survive, Benfield said.

The company will keep processing costs to $1.26 per pound, half the average in China, by recycling more water and using a single acid to separate elements, said Mark Smith, Molycorp’s CEO. Molycorp is also negotiating with potential partners to alloy metals and turn them into neodymium magnets in the U.S., creating as many as 900 jobs.

“It was a very, very strategic move that the Chinese made,” he said. “They created a very, very large number of jobs for the citizens of China. We ought to be looking at executing that exact same strategy here in this country.”

 

[trysail]

Ranked by percentage of households with investable assets
in excess of $1,000,000 ( excludes real estate and defined
benefit pensions )


State............# of Households.....# with $1MM...........%

1 Hawaii................... 444,202....... 30,793........... 6.93%
2 Maryland..............2,129,773...... 144,686........... 6.79%
3 New Jersey...........3,175,894...... 212,396........... 6.69%
4 Connecticut..........1,347,693....... 89,647............ 6.65%
5 Massachusetts.......2,521,928..... 150,844........... 5.98%
6 Alaska.................... 248,009....... 14,805........... 5.97%
7 Virginia................. 3,043,091..... 180,638........... 5.94%
8 New Hampshire..........514,667....... 29,790........... 5.79%
9 California..............12,653,856..... 716,316............5.66%
10 D.C........................262,976........14,533............5.53%
11 Delaware................343,322........ 18,412............5.36%
12 New York.............7,263,927...... 381,197............5.25%

U.S. Total.......... 116,136,617....5,555,002.......... 4.78%


Source:
http://www.phoenixmi.com/images/uploads/pdf_upload/StateRankingsMillionaires20062010.pdf

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=am3lOTz7whGM


West Virginia Drivers Most Likely to Collide With Deer
By Inyoung Hwang and Natalie Doss

Oct. 1 (Bloomberg) -- West Virginia motorists are the most likely in the U.S. to hit a deer for the fourth straight year, according to State Farm Mutual Automobile Insurance Co.

Vehicles struck deer 68,561 times in West Virginia in the two years ended June 30 for the highest rate per driver in the U.S., as larger populations of the animals encountered new roads and expanding city limits, State Farm said today in a statement. One in every 42 drivers in West Virginia is likely to hit a deer in the next 12 months, based on claims data and driver registration counts from the Federal Highway Administration last year, the largest U.S. automobile insurer said.

“We have more deer and a lot more people moving into their habitat,” Chris Ryan, supervisor of game management services at the West Virginia Division of Natural Resources, said in an interview on Aug. 23. “We’re in a state where about 80 percent is forested land. There are a lot of curvy, windy roads going through deer habitats.”

Deer collisions in the two years ended June 30 rose to 2.3 million nationwide. The average property damage per accident climbed 1.7 percent to $3,103, according to Bloomington, Illinois-based State Farm.

About 25 percent of business at auto-body shop Cole Collision Center in Beckley, West Virginia, during mating season comes from deer hits, said manager Robbie Hicks. He’s seen repairs costs as much as $14,000.

Blind Spots
“Business picks up in the fall,” he said. “One guy hit a deer coming up on the highway and it damaged his radiator, which caused the car to lose fluid and blew the motor. It’s unavoidable when deer jump out of blind spots. It’s made me more cautious.” Crashes peak in November amid the mating season, the Insurance Institute for Highway Safety said in a separate study.

Iowa has the second-highest frequency with 1 in 67. Michigan is third. Hawaii is the state where drivers are least likely to strike deer, with a 1 in 13,011 chance.

Urban sprawl contributes to the increase in collisions, said Joshua Millspaugh, professor of conservation at the University of Missouri. Deer can thrive in various surroundings, including urban areas, he said.

“We’re creating perfect habitats for these animals,” he said. “Areas with high human density are typically less hunted and deer populations can explode. These areas have unnatural food sources that are very good for deer. That’s why they’re eating homeowners’ shrubs.”

New York motorists have a probability of 1 in 145. New Jersey drivers have odds of 1 in 183, and Connecticut has a frequency of 1 in 320, State Farm said.

Hunting is the primary tool to manage deer populations, according to Millspaugh. Drivers should be alert during dawn and dusk hours when deer tend to be active, he said.

 

[trysail]

Deer hunting with automobiles:​

http://www.statefarm.com/aboutus/_images/images/likelihood_collision_with_deer.jpg​