Friday, November 30, 2007

FACEBOOK BACKS DOWN ON BEACON PROGRAM

From MTV.com:

Facebook has been forced to make a major about-face on its controversial new Beacon ad program after more than 50,000 users signed a petition objecting to the initiative. Beacon sends messages to users' friends about their purchases on sites like Travelocity, Blockbuster, eBay and Fandango. According to The New York Times, the petition's signers want to be able to opt out of the program completely with one click.

After the uproar, the company announced late Thursday that it was amending its policy and would no longer send messages about users' activities without getting explicit approval each time, the Times reports. The move by the site, which has more than 50 million active members, brought praise from a spokesperson for MoveOn.org, the political action group that started "Petition: Facebook, stop invading my privacy" 10 days ago.

Thursday, November 29, 2007

OIL PRICES RISE AFTER PIPELINE EXPLOSION

From Bloomberg:

Oil surged more than $4 a barrel, the most in a month, after an explosion cut Canadian oil shipments through Enbridge Inc. pipelines that typically provide about 15 percent of U.S. crude imports.

Enbridge closed four pipelines that supply an average of 1.5 million barrels a day after a blast yesterday killed two workers. The company said today a fire is still burning at the Clearbrook terminal in Minnesota where the pipelines meet.

``It's an important pipeline and it's also where it's being hit, these pipeline junctions are a nightmare,'' said Rob Laughlin, a senior broker at MF Global Ltd. in London. Oil ``could go up further if it's shut for some time.''

Crude oil for January delivery gained as much as $4.55, or 5 percent, to $95.17 a barrel in electronic trading on the New York Mercantile Exchange. That's the biggest gain since Oct. 31. The contract, which gained for the first time this week, traded at $94.24 at 10:45 a.m. in London.

``All our lines are shut down until we can safely start up the system,'' Denise Hamsher, a spokeswoman for Calgary-based Enbridge, said today by telephone. ``At least one or two lines will be shut down for quite sometime.''

Wednesday, November 28, 2007

FED OFFICIAL'S CANDID REMARKS CAUSE STOCKS TO RISE

From The New York Times:

Stocks soared on Wall Street today after a top Federal Reserve official appeared to open the door for additional interest rate cuts, pledging to follow “flexible and pragmatic policy making” as the central bank decides how to cope with the current financial upheaval.

The unusually candid remarks by the Fed’s vice chairman, Donald L. Kohn, were taken as a sign that the Fed would give serious consideration to a rate cut at its Dec. 11 meeting. The Dow Jones industrial average jumped more than 330 points.

FORD SETTLES IN ROLLOVER CASES

Keep in mind while reading this that the Ford/Firestone controversy occured in August of 1990.

From USA Today:

Ford Motor on Wednesday agreed to settle class-action lawsuits covering plaintiffs in four states who claimed its Explorer sport-utility vehicles were prone to rollovers, the company and an attorney for the plaintiffs said.

The settlement applies to about 1 million people in California, Connecticut, Illinois and Texas, said Kevin P. Roddy, a New Jersey attorney and co-counsel for the SUV owners who brought the lawsuit.

He said the settlement will be filed later Wednesday in Sacramento County Superior Court.

It will allow vehicle owners to apply for $500 vouchers to buy new Explorers or $300 vouchers to buy other Ford or Lincoln Mercury products, Roddy told The Associated Press.

The settlements apply to Explorers in model years 1991 through 2001, he said.

CONSUMER CONFIDENCE DROPS FOURTH CONSECUTIVE MONTH

From CNNMoney:

A key barometer of consumer sentiment dropped for a fourth consecutive month, sending the index near its lowest level in two years.

Rising gasoline prices, falling home sales and unstable financial markets have weighed on consumers' spending, the Conference Board reported.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index fell to 87.3 from a revised 95.2 in October. The reading marked the lowest level since October 2005 when it was 85.2. Analysts had expected 91.5.

"We expected a downward trend but it was significantly down," said Anika Khan, an economist at Wachovia.

Economists repeatedly pointed to the worsening housing crisis, tougher lending standards and rising energy prices for the dampened attitudes.

MORE BAD NEWS FOR EXISTING HOMES IN OCTOBER

From Reuters:

Existing home sales fell 1.2 percent in October to a record low 4.97 million-unit pace, according to a report on Wednesday that showed the downturn in the U.S. housing market was deepening.

Home prices fell at a record pace and the inventory of homes for sales increased as the housing market felt the pinch of tighter lending standards.

The median existing home price fell 5.1 percent from a year ago to $207,800 and the total housing inventory rose 1.9 percent in October to 4.45 million existing homes for sale, a 10.8 month supply at the current sales pace.

The sales pace was the lowest since the realty trade group began tracking both single-family and condo sales jointly in 1999.

Tuesday, November 27, 2007

CITIGROUP SELLS 4.9% STAKE TO ABU DHABI FUND

From The New York Times:

Citigroup announced last night that it was selling a $7.5 billion stake to a Middle Eastern sovereign fund in the latest bid to shore up its balance sheet.

The fund, the Abu Dhabi Investment Authority, has agreed to buy a 4.9 percent equity stake in a complex transaction that has been approved by federal regulators. It will have no role in the management or governance of Citigroup, nor any presence on Citigroup’s board.

Abu Dhabi’s 4.9 percent stake will make it Citigroup’s single largest shareholder, overtaking Prince Walid bin Talal of Saudi Arabia. He has owned close to a 5 percent stake since the early 1990s, when he made a similar investment to bail out the company. Together, their holdings will mean that nearly 10 percent of the Citigroup will be owned by Middle Eastern investors.

“This investment reflects our confidence in Citi’s potential to build shareholder value,” said A.D.I.A.’s managing director, Sheikh Ahmed bin Zayed al-Nahyan.

The investment from Abu Dhabi underscores Citigroup’s precarious capital position, and also highlights the growing petrodollar wealth of Mideast countries, which are buying up assets and taking stakes in numerous American companies.

Friday, November 23, 2007

BEIKOKU BANARE = QUITTING AMERICA

From The New York Times:

Many in Japan are starting to speak of “quitting America,” but they are not talking about a rise in anti-American political fervor. Rather, they mean a move away from American investments that is altering global capital flows and helping to weaken the dollar.

Japanese individuals are diverting more and more of that money away from the United States and the dollar and into higher-yielding global investments, ranging from high-interest Australian government bonds to shares in fast-growing Indian construction companies. Partly this “quitting America” — called beikoku banare in Japanese — reflects an increasing sophistication of Japan’s investors, who embraced mutual funds only a decade ago and are still learning to diversify. But it also offers one more sign that the world does not depend as much on the American economy as it once did.

In October alone, Japanese individuals pulled 33.9 billion yen, or about $300 million, out of mutual funds that invested solely in North American stocks and bonds, according to Daiwa Fund. In the same month, it said, Japanese individuals put 175.2 billion yen, or $1.6 billion, into funds investing in stocks and bonds in emerging countries.

In the last 12 months, Japanese individuals invested 1.97 trillion yen, or $17.5 billion, into emerging market mutual funds, according to Daiwa Fund, and during the same period, they removed 447 billion yen, or $4 billion, from North America-only mutual funds.

To be sure, some analysts caution that the popularity of emerging markets may prove to be a fad, especially if stock markets in China or India start falling as quickly as they rose. Analysts also say the dollar’s greater familiarity gives it an enduring appeal among many Japanese, who may return once the United States mortgage problems subside.

Some analysts predicted the eventual revival of short-term currency trading between the dollar and the yen, which had been an important support for the dollar’s value before August’s market turmoil.

“A lot of dollar-buyers are just sidelined now,” said Tohru Sasaki, chief exchange strategist in the Tokyo office of JPMorgan Chase Bank. “They’ll be back once currency markets settle down.”

TOPPS MEAT FILES CHAPTER 7 LIQUIDATION BANKRUPTCY

From USA Today:

Topps Meat, which issued the nation's second-largest beef recall ever, has filed papers to liquidate the company.

Topps was one of the largest makers of frozen hamburgers before potentially fatal bacteria were found in its patties, compelling it to halt production and issue the recall on Sept. 29.

Six days later Topps said it was closing its business, after it was forced to issue the recall of 21.7 million pounds of frozen hamburger, which is one year's worth of production.

In September, the USDA said three people were confirmed as getting E. coli from Topps products, with 22 other cases under investigation. Cases were found in Connecticut, Florida, Indiana, Maine, New Jersey, New York, Ohio and Pennsylvania.

Topps has up to 10,000 creditors and liabilities of $1 million to $100 million, according to its Chapter 7 filing in U.S. Bankruptcy Court in Newark. The company put its assets in the same range.

Topps recalled a year's worth of production — 21.7 million pounds of frozen hamburgers — after some meat was found contaminated with E. coli O157:H7, a potentially fatal bacteria. To date, 40 people in eight states have been sickened after eating Topps beef, the Centers for Disease Control said.

In late October, the USDA said a now-defunct Canadian firm, Rancher's Beef of Balzac, Alberta, was the likely source of bacteria-contaminated meat used by Topps.

The recall prompted the USDA to announce changes in how it will inspect meat plants. After being criticized for foot-dragging, the USDA also said it would move faster to encourage recalls. The agency cannot issue recalls.

Topps burgers contained at least three versions of the O157:H7 strain of E. coli bacteria, which can be fatal to humans. The strain is harbored in the intestines of cattle and can also get on their hides. Improper butchering and processing can cause the E. coli to get onto meat. Thorough cooking, to at least 160 degrees internal temperature, can destroy the bacteria.

AUTO ENTHUSIASTS MUST CHECK OUT THIS SPECIAL SECTION

For those who love automobiles, The New York Times has an excellent special section online reviewing the cars and trucks at the Los Angeles Auto Show. Last year, attending the Chicago Auto Show was one of the highlights of Business Club and on February 8, 2008, we will make the trip downtown for opening day. It's not too late to join. Go to wccbusinessclub.com for an application.

U.S. DOLLAR EROSION PUSHES EURO TO THE FOREFRONT

From USA Today:

Despite squeals of pain from European exporters, the strength of the euro is fast propelling Europe's single currency into a juggernaut.

Currency traders from Egyptian street hawkers to Asian central banks are looking to the euro as a better store of value as the U.S. dollar erodes. The shared 13-nation currency hit $1.4966 on Friday, another record high against the once steadfast dollar.

As well as being the world's currency of choice in central bank reserves, the dollar has long been the de facto second currency in street markets and on tourist menus around the world.

Today, market traders in Luxor — site of the ancient Egyptian city of Thebes — snub dollars in favor of euros or local currency. In Russia, shops, restaurants and hotels that once listed prices in the mighty dollar rather than the unstable ruble have increasingly pegged prices to the euro.

While these trends are unlikely to perturb currency markets, concern is growing that foreign investors may start dumping their dollar-holdings. In particular, traders are watching China's central bank for changes in its portfolio.

Most of China's $1.43 trillion reserves are in dollar-denominated assets such as U.S. Treasuries, and officials aren't happy about the U.S. currency's decline. Zhou Xiaochuan, head of China's central bank, urged U.S. Treasury Secretary Henry Paulson on Thursday to boost the dollar, according to the Xinhua government news agency.

The euro — introduced to financial markets in 1999 and in notes and coins form in 2002 — has risen as a share of global official reserves from 17.9% in 1999 to 25.8% in 2006, according to the International Monetary Fund. In the same period the dollar's share has fallen from 71% to 64.8%

Thursday, November 22, 2007

INDEX OF LEADING ECONOMIC INDICATORS FALLS IN OCTOBER

From The New York Times:

The economy may continue to slow into 2008, according to a measure of its performance over the next three to six months.

The Conference Board said yesterday that its index of leading economic indicators fell 0.5 percent in October after a 0.1 percent September increase that was smaller than previously estimated. A separate report showed consumer confidence weakened this month.

The figures, coming a day after the Federal Reserve lowered its growth forecast for next year, added to concern that the credit collapse is causing consumers and businesses to cut spending.

“There is a definite pattern of weakening here,” said Edward McKelvey, a senior economist at Goldman Sachs in New York, who correctly forecast the decline in the leading index. “It’s all consistent with deceleration in the economy and that includes some deceleration in the labor market.”

Ken Goldstein, a Conference Board economist, said in a statement: “The data are pointing to a continued slow economy. It might even slow a little more after the holidays.”

SMART CAR AVAILABLE IN U.S. IN JANUARY

From MSNBC:

The 8-foot, 8-inch Smart Fortwo micro car comes to U.S. shores in January, and even with gasoline prices well above the $3-a-gallon mark it remains to be seen whether Americans will flock to buy the tiny, two-seater car.

Ranging in price from $11,590 for the base version to $16,590 for a fully loaded Fortwo Passion convertible, the 1,800-pound car boasts 40 miles per gallon — a big draw for drivers worried about high gas prices.

Smart has already sold more than 770,000 Fortwos in 36 countries, and Smart USA is banking on robust sales in the United States. The Smarts on sale here will be made in France and sold through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group owned by racing icon Roger Penske. Penske is chairman of Smart USA, a division of Daimler AG’s Mercedes-Benz brand.

Smart says more than 30,000 consumers have put down a refundable $99 deposit to reserve a Smart car. Those deposits do not guarantee sales, but the company is hoping to move at least 30,000 units in the first year, said spokeswoman Jessica Gemmara.

Monday, November 19, 2007

FEWER SMALL EMPLOYERS OFFERING HEALTH INSURANCE

From USA Today:

Fewer small employers offered health insurance this year, despite the widespread availability of new, lower-cost high-deductible insurance plans, a survey released today by benefit firm Mercer shows.

Advocates of the high-deductible plans touted them as one solution to the growing number of uninsured, expecting the plans to appeal to small employers, who would continue to offer health insurance as a result.

"That's not happening," says Blaine Bos, a Mercer partner and one of the study authors. "In fact, the reverse is happening."

The study of nearly 3,000 employers found that the percentage of employers with 200 workers or fewer offering any kind of health insurance fell to 61% this year from 63% in 2006.

That drop came even as the cost of high-deductible plans with tax-free savings accounts averaged $5,970 per worker per year. That was $700 less than a comparable plan without a savings account and far lower than the $7,120 for the average HMO, the study says.

The finding bolsters concern that one of the biggest hurdles any state or national health reform effort will face is the question of what is affordable, says Bos. "Defining that number will be a real political and public policy issue as this debate stays on the table."

Friday, November 16, 2007

MIDDLE EASTERN INVESTMENTS IN U.S. INCREASE DRAMATICALLY

From AP via MSNBC:

Middle Eastern investments in U.S. companies has increased more than fivefold in 2007, leaping from $4.5 billion on 32 deals last year to nearly $25 billion on 42 deals so far this year, according to data compiled by Thomson Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, according to the latest Thomson data. During that period, $24.8 billion in investments were made in 258 deals.

Oil-rich countries have been enriched further in recent months by a run-up in the price of a barrel of oil, which has been hovering in the $90 range while many U.S. stocks continue to suffer from the housing and lending morass that's led some banks to absorb billions of dollars in losses.

The biggest deal so far this year involving Middle Eastern firms was General Electric Co.'s $11.6 billion sale of its plastics division, completed in August, to petrochemicals manufacturer Saudi Basic Industries Corp., a public company based in Riyadh that is 70-pecent owned by the Saudi Arabian government.

Firms based in the United Arab Emirates, a federation of seven oil-rich states, have invested nearly $10 billion in real estate, financial, power generation and other types of companies in the United States.

Earlier this year, Mubadala bought a 7.5 percent stake in the management operations of private-equity firm Carlyle Group for $1.35 billion, and this week unveiled a partnership with military contractor Northrop Grumman Corp. to collaborate on aerospace and aviation technologies.

Thursday, November 15, 2007

BUFFETT URGES CONGRESS TO KEEP ESTATE TAX



From The New York Times:

Warren E. Buffett urged Congress yesterday to maintain the estate tax, saying that plans to repeal the tax would benefit a handful of the richest American families and widen income disparity in the United States.

Mr. Buffett, the billionaire chairman of Berkshire Hathaway, told the Senate Finance Committee that advocates of repeal were “dead wrong” to call the tax a “death tax.”

It would be more appropriate to call it a “death present,” Mr. Buffett, 77, said. “A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy.”

Congressional Democrats are likely to seize on Mr. Buffett’s comments to bolster their argument that repeal of the estate tax amounts to a windfall for a few wealthy families. Republicans have pushed to eliminate the tax permanently or reduce the rate and exempt more estates by raising the value at which the tax takes effect.

Mr. Buffett said that in the last 20 years, tax laws have allowed the “superrich” to become richer.

“Tax law changes have benefited this group, including me, in a huge way,” he said. “During that time the average American went exactly nowhere on the economic scale: he’s been on a treadmill while the superrich have been on a spaceship.”

The chairman of the finance committee, Max Baucus, a Montana Democrat, said yesterday that fewer than 1 percent of United States households currently pay the tax. He said repeal lacked support in the Senate and the purpose of the hearing was to solicit ideas for replacing the shifting rules and uncertainty of the current system.

UNITED AND DELTA IN MERGER TALKS?

From USA Today:

UAL Corp.'s United Airlines and Delta Air Lines Inc. have been discussing a combination between the nation's second- and third-largest carriers that would keep the United name and the corporate headquarters in Chicago, The Associated Press has learned.

But Delta issued a statement denying "published reports that it had engaged in merger talk with United." CEO Richard Anderson was quoted as saying, "There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions."

United called the report of recent talks "wholly inaccurate."

However, on Oct. 12, 2006, then- Delta CEO Gerald Grinstein said during a stop in New York that he had previously received "feelers" from United about a possible merger.

The Wall Street Journal's online edition, citing unidentified people, said Andersen has informally talked about consolidation possibilities with counterparts at other airlines, including senior executives at United and Northwest Airlines.

Earlier Wednesday, Delta said in a statement that its board has established a special committee to work with management to review and analyze strategic options for the airline. Top executives have said recently they are trying to determine whether consolidation makes sense for Delta.

There is a sense of urgency in the most recent talks, which have been going on for some time and continued as recently as a week or so ago, an official with knowledge of the talks said Wednesday. The official spoke on condition of anonymity because the person was not authorized to speak publicly. The official stood by the assertions about the talks after learning of the statements by Delta and United.

"They want to get something done before a new administration gets in and so they get the clock ticking on" federal regulatory approval, the official said.

EUROPEANS FLOCK TO U.S. FOR CHRISTMAS SHOPPING

From USA Today:

Record numbers of Europeans are flocking to New York this fall — prime holiday shopping season — as the dollar sinks to new lows against the euro and British pound.

New York expects roughly 1 million western Europeans this month and December, 5% more than last year, says George Fertitta, CEO of tourism agency NYC & Co. Helping to boost Big Apple tourism: killer deals on merchandise because of an exchange rate that favors euros and pounds.

"A new class of Europeans are coming to America totally because of currency," says George Malkemus, president of luxury shoe retailer Manolo Blahnik USA.

Malkemus says he's selling more shoes from his Manhattan store than ever to Europeans despite there also being a London store. Shoppers can pay $600 for a pair of shoes that in London would cost the equivalent of $823.

Last week, the dollar sank to its lowest level ever against the euro, and to its lowest level against the pound in 26 years. One euro is worth $1.47. One pound is worth $2.06.

Foreigners also are snapping up U.S. real estate and could target U.S. companies if the dollar continues to erode, says Omer Esiner, a market analyst at currency trader Ruesch International.

Wednesday, November 14, 2007

RETAIL SALES SHOW SMALL GAIN IN OCTOBER

From AP via MSN:

Retail sales managed a small increase in October as consumers struggled with falling confidence caused by a steep slump in housing and tighter credit conditions.

The Commerce Department reported Wednesday that retail sales edged up 0.2 percent in October, compared to the previous month. It was the weakest showing since a 0.1 percent rise in August and represented a significant slowdown from a 0.7 percent jump in September sales.

CHINA EXPERIENCING PROBLEMS TAMING INFLATION

From The New York Times:

Consumer prices unexpectedly surged again last month in China despite price controls on a wide range of industries, and this month holds the prospect of even higher inflation.

For years, flat or falling prices for Chinese goods helped restrain inflation in the United States. But now rising costs for American imports from China are complicating the task of the Federal Reserve. The Fed has been cutting interest rates to help weak housing and credit markets in the United States, but has been wary that low rates might permit inflation to creep back into the economy.

Prices were 6.5 percent higher in October than a year earlier, accelerating from 6.2 percent in September, China’s statistical agency announced on Tuesday. The October inflation rate matched an increase of 6.5 percent in August, China’s highest inflation rate in nearly 11 years.

Rising prices are an especially dangerous problem for China, where public acceptance of one-party rule depends to a considerable extent on ever-rising prosperity. With food prices increasing the fastest — they were up 17.6 percent in October from a year earlier — many poor and working-class families are struggling to make ends meet.

Just this past Saturday in Chongqing, people began lining up before dawn when a Carrefour store offered a discount on large jugs of cooking oil, an essential for a lot of Chinese cooking. When the doors opened, a stampede ensued, killing 3 people and injuring 31. China’s commerce ministry responded on Monday by ordering a ban on limited-time sales promotions.

PPI INCREASES SLIGHTLY IN OCTOBER

From Reuters via USA Today:

Producer prices advanced by a smaller-than expected 0.1% in October as prices for energy and light trucks fell, Labor Department data showed Wednesday, while a key measure of core inflation at the producer level was flat with September.

The October gauge of prices paid at the farm and factory gate was below economists' forecasts for a 0.3% rise after a 1.1% increase in September.

Energy prices fell 0.8% in October after a 4.1% rise in September, while prices for light trucks, which include slow-selling sport-utility vehicles and pickups, fell 2.7% in October.

Core producer prices, which strip out volatile food and energy costs, were unchanged from September. They had been forecast to rise 0.2% after a 0.1% rise in September.

Core prices excluding cars and light trucks, however, rose 0.2% in October.

Tuesday, November 13, 2007

WAL-MART POSTS SURPRISINGLY GOOD RESULTS

From AP via Yahoo:

Wal-Mart Stores Inc. posted third-quarter earnings Tuesday of $2.86 billion, an 8 percent rise that beat Wall Street expectations as the world's largest retailer heads into the holiday shopping season.

The company earned 70 cents per share, up from 62 cents per share in the same period a year ago. The 70 cents includes an after-tax gain equal to 1 cent per share. Analysts surveyed by Thomson Financial had forecast earnings of 67 cents per share on revenue of $91.67 billion

Third-quarter sales at stores open at least a year, not counting fuel, were up 1.5 percent in the company's U.S. stores, same as a year ago. The company expects same-store sales for the fourth quarter to rise no more than 2 percent.

Monday, November 12, 2007

UPS PREDICTS SMALL INCREASE IN SHIPPING THIS HOLIDAY SEASON

From Reuters via MSN:

Package delivery company United Parcel Service Inc said on Sunday it expects to handle 22 million packages on its peak day ahead of the holidays this year, an increase of less than 5 percent from its forecast of 21 million in 2006.

UPS’ peak day is on December 19 this year.

Officials at the Atlanta-based company have predicted that package volume growth in this year’s peak holiday season will be “less robust” than in the previous four years, reflecting slowing U.S. economic growth, the housing sector slowdown and expectations for low fourth-quarter retail sales growth.

Main rival Memphis-based FedEx Corp has said it expects package volumes to reach 11.3 million on its peak day of December 17. Last year the company predicted a peak 9.8 million packages. A company spokesman said this year’s forecast includes a low-cost service that did not figure in last year’s prediction. A comparable forecast for this year would be 10.4 million, a gain of 6.1 percent.

PROGRESSIVE ADDS PETS TO AUTO INSURANCE

From AP via MSN:

Progressive Corp. is providing collision coverage for customers' dogs or cats at no additional premium cost. It will pay up to $500 if a customer's dog or cat is hurt or dies in a car accident.

There are over 150 million pets in the U.S., and Americans spend over $40 billion on their pets annually, according to a recent Insurance Information Institute study.

The Progressive benefit has been in place since Sept. 6, and it's still too soon to determine if the company's undetermined cost of offering it will be offset by better sales, Progressive spokeswoman Leah Knapp said.

Progressive is the third-biggest auto insurer, ranking behind State Farm and Allstate and slightly ahead of National Indemnity (Berkshire Hathaway), which includes GEICO.

Friday, November 09, 2007

MERCK MAKES SETTLEMENT PROPOSAL TO VIOXX PLAINTIFFS

From The New York Times:

Three years after withdrawing its pain medication Vioxx from the market, Merck has agreed to pay $4.85 billion to settle 27,000 lawsuits by people who claim they or their family members suffered injury or died after taking the drug, according to two lawyers with direct knowledge of the matter.

The settlement, one of the largest ever in civil litigation, comes after nearly 20 Vioxx civil trials over the last two years from New Jersey to California. After losing a $253 million verdict in the first case, Merck has won most of the rest of the cases that reached juries, giving plaintiffs little choice but to settle.

The settlement will help put Vioxx behind Merck, as well as sharply reduce its Vioxx-related legal defense fees, which are now running at more than $600 million annually.

Based on the fact that the 27,000 suits cover about 47,000 sets of plaintiffs, the average plaintiff will receive just over $100,000 before legal fees and expenses, which usually swallow between 30 and 50 percent of payments to plaintiffs. Plaintiffs who do not want to accept the settlement can pursue their own claims, but with so many of the top trial lawyers in the United States agreeing to the deal, they may have difficulty doing so.

Wednesday, November 07, 2007

AQUA DOTS TOYS RECALLED AFTER CAUSING COMAS

From CNN.com:

Millions of Chinese-made toys have been pulled from shelves in North America and Australia after scientists found they contain a chemical that converts into a powerful date rape drug when ingested. Two children in the U.S. and three in Australia were hospitalized after swallowing the beads.

With only seven weeks until Christmas, the recall is yet another blow to the toy industry -- already bruised by a slew of recalls this past summer.

In the United States, the toy goes by the name Aqua Dots, a highly popular holiday toy distributed by Toronto-based Spin Master Toys. They are called Bindeez in Australia, where they were named toy of the year at an industry function earlier this year.

It could not immediately be learned whether Aqua Dots beads are made in the same factories as the Bindeez product. Both are sold by Australia-based Moose Enterprises.

The toy beads are sold in general merchandise stores and over the Internet for use in arts and crafts projects. They can be arranged into designs and fused together when sprayed with water.

Scientists say a chemical coating on the beads, when ingested, metabolizes into the so-called date rape drug gamma hydroxy butyrate. When eaten, the compound -- made from common and easily available ingredients -- can induce unconsciousness, seizures, drowsiness, coma and death.

Naren Gunja from Australia's Poisons Information Center said the drug's effect on children was "quite serious ... and potentially life-threatening."

The recall was announced by the Consumer Product Safety Commission on Wednesday several hours after published reports about the recall in Australia.

The two U.S. children who swallowed Aqua Dot beads went into nonresponsive comas, commission spokesman Scott Wolfson said Wednesday afternoon.

In Australia, the toys were ordered off store shelves on Tuesday when officials learned that a 2-year-old boy and a 10-year-old girl were hospitalized after swallowing the beads. A 19-month-old toddler also was being treated.

CHICAGOANS CAFFEINE CHAMPS

Sure the Bears are in last place in the division, the Bulls have not won a game (0-4), the Cubs got bounced from the first round of the playoffs, and the White Sox were just plain horrible, but Chicagoans can hold their heads up high as a survey has shown the people in Chicago are the biggest consumers of caffeine in the United States. We're #1, we're #1, we're #1!

From Reuters via Yahoo:

The windy city is also the most wired, according to a survey that showed people in Chicago are the most caffeinated in the United States.

Chicagoans eat more chocolate and drink more cola than other U.S. urbanites, and are among the top consumers of energy drinks and coffee.

They are also likely to say caffeine is good for you, according to the poll conducted by Prince Market Research.

Tampa, Miami, Phoenix and Atlanta rounded out the top five most caffeinated cities, while residents of San Francisco, Philadelphia, New York, Detroit and Baltimore consumed the least caffeine.

Seattle took the top spot in just caffeinated coffee consumption. Nearly 60 percent of residents in the city said coffee would be the most difficult caffeine product to give up.

Half of all the people questioned in the poll said they drank coffee every day, followed by 21 percent who drank caffeinated cola.

Monday, November 05, 2007

BUSH ADMINISTRATION TO PUT FORWARD CONSUMER SAFETY PROPOSALS

From The New York Times:

The Bush administration on Tuesday will propose a significant expansion of the authority of the federal drug and consumer product safety agencies to inspect and certify imports, White House and other administration officials said Monday.

A White House official said a major part of the plan would entail stationing inspectors in foreign countries to examine drugs, food and other potentially dangerous products before they were shipped to American shores. The official said that with $2 trillion in imports annually, inspections at the ports had become ineffective.

The official said the plan would give the agencies the authority to certify the safety of products and to list certified products on a Web site that could be viewed by consumers.

Officials said that the plan would require significant budget increases for the Consumer Product Safety Commission and the Food and Drug Administration.

In Congress last Tuesday, the Senate Commerce Committee approved without objection legislation that would increase penalties, let the product safety agency publicly disclose reports of defective products and increase the maximum penalty on violations to $100 million, from $1.8 million.

Senior Democrats in both houses called for the resignation of Nancy A. Nord, the acting head of the Consumer Product Safety Commission, after she sent letters to Congress vigorously opposing the legislation. Ms. Nord’s letters closely resembled complaints raised by a coalition of manufacturing associations.

At the urging of industry groups, the White House has objected to a provision that would reward industry whistle-blowers for reporting defective products and another that would give state prosecutors the authority to enforce federal safety laws.

Consumer groups and Democratic lawmakers say those provisions are vital in restoring the credibility of federal safety efforts, while White House officials say the measures would encourage frivolous litigation.

CITIGROUP PUSHES PRINCE OFF OF CLIFF, WRITES DOWN ANOTHER $8-$11 BILLION

From USA Today:

With firm determination, Citigroup CEO Charles Prince declared earlier this year that 2007 was going to be the "year of no excuses."

Now he's run out of them.

Amid growing losses from subprime mortgages at the giant financial services firm, Prince, 57, retired under pressure on Sunday. He said it was "the only honorable course for me to take." Former Treasury secretary Robert Rubin, a board member and chairman of the company's executive committee, will serve as chairman of the board. Sir Win Bischoff, chairman of Citi Europe, will serve as acting CEO, the company said.

Citigroup also is lowering the value of some of its securities tied to subprime mortgages. It estimates the value of those securities, at fair market value today, would be $8 billion to $11 billion less than it expected just Sept. 30. That write-down would be in addition to a $6.5 billion write-down it has already taken. The company also said a special unit has been set up to handle the subprime mortgage problems. Citi said it has no plans to reduce its dividend.

Saturday, November 03, 2007

UNIONIZED MOVIE AND TV WRITERS TO STRIKE MONDAY

From The New York Times:

Hollywood’s two decades of labor peace shattered Thursday night, as movie and television writers declared they would embark on an industrywide strike for the first time since 1988, when both writers and Teamsters walked out.

The writers’ union announced this afternoon that the strike would begin on Monday morning.

Unless there is a last-minute settlement, the strike will pit union writers, whose position has been eroded by reality television and galloping technological change, against studios and networks that are backed by big corporate owners like General Electric and News Corp., but are also unsure of the future.

The walk-out threatens an instant jolt to television talk shows like “Late Show With David Letterman,” which rely on guild writers to churn out monologues and skits. “The Daily Show With Jon Stewart,” “The Colbert Report,” “Late Night With Conan O’Brien,” and “The Tonight Show With Jay Leno” will all revert to repeats on Monday, at least for the time being.

And if the strike drags on, audiences could see the eventual shutdown of soap operas, TV series and movie productions, as they exhaust their bank of ready scripts.

In the near term, a writers’ strike will have an immediate impact on more than 200,000 workers in the movie and TV industry here and the thousands more who produce or sell entertainment elsewhere in the United States and abroad. The dispute may also signal more labor trouble to come, as directors and actors face similar issues when their contracts expire next June.

UAW AND FORD REACH TENTATIVE AGREEMENT

From The New York Times:

The United Automobile Workers union reached a tentative agreement with the Ford Motor Company early this morning after a 41-hour marathon bargaining session, completing a series of new contracts with the American auto companies.

No details of the deal were released, but it is expected to resemble contracts reached earlier this fall for General Motors and Chrysler LLC.

Unlike the G.M. and Chrysler contracts, the agreement at Ford was reached without a strike. Analysts say that Ford, which lost $12.6 billion last year, is the weakest of the Detroit auto companies.

"Our bargaining committee came through for our active and retired members," the U.A.W.'s president, Ron Gettelfinger, said in a statement. He said that its bargaining team had "encouraged Ford to invest in product and people while addressing the economic needs of our active and retired members."

"We face enormous challenges – and we also have enormous potential," said U.A.W. Vice President Bob King, who directs the union's National Ford Department. "Our goals for this contract were to win new product and investment, to enhance job security and protect seniority – and we made progress in all these areas."

Any job guarantees will be closely scrutinized by union members at Ford, who have watched G.M. and Chrysler cut jobs since their new contracts were reached.

Ford had no immediate comment. Union leaders will review the contract next week, before it is presented to members for a vote.

Friday, November 02, 2007

MIXED EMPLOYMENT REPORT ISSUED

From The New York Times:

Two distinctly different views of the economy emerged today in a single report: the crucial employment survey issued by the Labor Department.

The economy added 166,000 jobs in October, the fastest pace in five months, according to employers. Payrolls grew at a pace more than twice what analysts had predicted, led by a sharp increase in the service sector.

But a survey of consumers showed that fewer Americans were employed last month over all. The labor force shrank by 211,000 jobs, and 465,000 Americans said they were no longer working.

The mixed employment report underscores the uncertainty on Wall Street, as analysts insist the fourth quarter will include a broad slowdown in growth and spending even as some recent reports suggest a sunnier outlook.

“You’ve got what’s good and what’s scary about this economy in this one report,” said Jared Bernstein, an economist at the Economic Policy Institute.

The estimate of job growth, which beat even the highest estimates, follows a downwardly revised 96,000 gain in September and a 93,000 gain in August, the Labor Department said. Still, payrolls are increasing at the slowest annual rate since June 2004.

The unemployment rate held steady at 4.7 percent in October, the highest rate since August 2006, but only because the survey found that more people stopped looking for work and were therefore not counted by the government as unemployed.

Manufacturing and retail jobs dropped sharply in October, underscoring analysts’ expectations that consumer spending and business activity will slow in the fourth quarter as problems in the housing market affect the broader economy.

Wages ticked up 0.2 percent, to $17.58, slightly below expectations, and are up 3.8 percent compared with those a year earlier. The length of the average workweek stayed flat at 33.8 hours.

Adding to the uncertainty about the report, most of the job gain — 103,000 of the 166,000 net new jobs — came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.

Thursday, November 01, 2007

NARDELLI SWINGS AX, CHOPS 11,000 CHRYSLER WORKERS

As we've discussed previously, Robert Nardelli was brought in to Chrysler to tame the labor union and fire thousands of workers. In his short tenure, he has negotiated a controversial contract that was barely ratified and less than a week later cut 11,000 jobs. Nardelli and Cerberus will be ruthless in cutting costs to make Chrysler more attractive for a future sale. Building the brand for the long term is not what Nardelli and Cerberus are about. They are only interested wringing every last penny of value from a once proud brand and extracting as much profit in as short of a time period as possible. When they are finished with Chrysler, they will sell what is left, likely a shell of the former company, and look for their next victim.

From The New York Times:

Chrysler LLC said today that it would cut up to 10,000 more hourly jobs, eliminate 1,000 salaried positions, and discontinue shifts at five assembly plants in the United States and Canada, in the first major steps under its new private owners.

The company also is dropping four models from its lineup, including the convertible version of its PT Cruiser sport wagon, as well as the Chrysler Pacifica, a crossover vehicle criticized as being too big and too expensive for family buyers.

Also leaving the lineup are the Dodge Magnum, a low-slung station wagon, and the Chrysler Crossfire two-seater. Both those vehicles are based on underpinnings from Mercedes-Benz, which is owned by Chrysler’s former parent, Daimler.

The job cuts, which will take effect through 2008, are in addition to a plan announced in February that would eliminate 13,000 North American positions. Altogether, they represent a 30 percent reduction in Chrysler’s 2006 work force of 80,000.

Today’s cuts, though expected, were more than twice as deep as some industry analysts anticipated.

Chrysler said the cuts at its factories would affect 8,500 to 10,000 workers. It said it would eliminate third shifts at plants in Belvidere, Ill., Toledo, Ohio, and Brampton, Ontario.

It also is eliminating the second shift of workers at the Jefferson North plant in Detroit and its plant in Sterling Heights, Mich.

The company also said it would reduce a shift at its Mack Avenue engine plant in Detroit, which has been working on three shifts.

The Canadian Auto Workers union president, Basil Hargrove, called the job cuts an “absolute disaster.”

“This is a huge hit to us,” he said during a news conference this morning in Toronto.

PERSONAL INCOME AND CONSUMER SPENDING REPORT ISSUED

From The New York Times:

Personal income and spending continued to grow in September, a government report showed today, suggesting strength in the economy even as analysts fear widespread troubles in the next few months.

Still, consumption began to slow, and manufacturers may be starting to feel the effects of a tightening housing market.

Personal spending, which accounts for two-thirds of the gross domestic product, grew at 0.3 percent in September, a slight deceleration from the 0.5 percent growth in August, the Commerce Department said today.

Spending is up 5.6 percent over the last 12 months, probably bolstered by a comparable rise in personal income, which has increased 6.8 percent over the last year.

Income rose 0.4 percent last month after an identical gain in August. Disposable income, a measure of the money employees take home after taxes, dipped to 0.4 percent from 0.5 percent in August.

Today’s report offered few surprises, though it could provide some comfort to economists who predict a decline in economic growth in the fourth quarter. Analysts are waiting for a worsening housing recession to make its way into the broader economy, but for now consumers appear to be comfortable with opening their wallets.

The personal consumption expenditures index, an inflation gauge closely watched by the Federal Reserve, also stayed steady. Core inflation, which excludes volatile food and energy prices, rose 1.8 percent on an annual basis, keeping pace with a downward trend over six months.

But overall inflation, as measured by the P.C.E. deflator, is up 2.4 percent for the year, above the Fed’s so-called comfort zone of 1 percent to 2 percent. That rise, compared with 1.8 percent in August, likely reflected the surging cost of crude oil, which pushes up gasoline and energy prices.

HOMES FACING FORECLOSURE DOUBLES IN 3RD QUARTER

From USA Today:

A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.

A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1% from 223,233 properties in the year-ago period, according to RealtyTrac.

The current figure was 33.9% higher than the 333,731 properties in foreclosure in the second quarter.

There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.